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Methanex (MEOH) Q4 Earnings Miss Estimates, Revenues Up Y/Y

Zacks Equity Research

Methanex Corporation MEOH recorded profit (attributable to shareholders) of $161 million or $1.68 per share in the fourth quarter of 2018, up from $68 million or 81 cents in the year-ago quarter.

Adjusted earnings per share (barring one-time items) in the quarter were $1.15, which missed the Zacks Consensus Estimate of $1.76.

Adjusted EBITDA of the chemical maker was $197 million, down from $254 million in the prior-year quarter.

Revenues increased roughly 13.5% year over year to $977 million in the quarter. Production totaled 1,885,000 tons, down from 1,942,000 in the year-ago quarter.

Average realized price for methanol was $401 per ton in the quarter, up from $350 per ton in the prior-year quarter, but down from $413 per ton in the preceding quarter.

Per the company, the quarterly results were impacted by volatility in the methanol pricing. Moreover, adjusted EBITDA was affected by lower sales of Methanex-produced methanol, lower average realized methanol prices along with higher costs on sequential comparison basis.

2018 Highlights

For 2018, revenues rallied 28.5% year over year to $3,932 million. The company recorded adjusted net income of $556 million or $6.86 per share, up from $409 million or $4.71 in the year-ago quarter.

Methanex Corporation Price, Consensus and EPS Surprise

 

Methanex Corporation Price, Consensus and EPS Surprise | Methanex Corporation Quote

Financials

For the fourth quarter of 2018, cash flow from operating activities was $218 million, up 5.8% year over year. As of Dec 31, 2018, the company had cash balance of $256 million, down from $375 million at the end of fourth-quarter 2017.

In 2018, Methanex returned $550 million to shareholders through dividend and share repurchases of 6.6 million common shares.

Outlook

Methanex expects average realized methanol prices to be sequentially lower in the first quarter of 2019. It expects production levels to be similar to the fourth quarter.

The company is witnessing a declining price environment and its margins tend to be lower compared with a stable price environment. As a result, Methanex anticipates adjusted EBITDA to be lower in the first quarter sequentially, excluding any impact from the IFRS 16 lease accounting change.

Price Performance

Shares of Methanex have lost 4.2% in the past year compared with the industry’s 17.6% decline.



Zacks Rank & Key Picks

Methanex currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space include Ingevity Corporation NGVT, Quaker Chemical Corporation KWR and Israel Chemicals Ltd ICL, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Ingevity has an expected earnings growth rate of 21.5% for 2019. The company’s shares have rallied 35.2% in the past year.

Quaker Chemical has an expected earnings growth rate of 21.1% for 2019. Its shares have surged 40% in a year’s time.

Israel Chemicals has an expected earnings growth rate of 5.4% for 2019. Its shares have rallied 45.3% in a year’s time.

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