Methanex Corp. Q3 FY2024 earnings call

• Third quarter average price was $356 per ton, sales ~1.4 million tons, adjusted EBITDA $216 million, adjusted net income $1.21 per share.
• Global methanol demand was stable, with higher demand for energy applications. Methanol to Olefins operating rates increased as supply improved.
• Supply in Asia and China saw increased Middle East supply, while Atlantic basin supply was tight due to feedstock constraints, maintenance, and outages.
• In New Zealand, one plant restarted but one will be indefinitely idled; Chile secured gas contracts; Egypt had gas curtailments; Trinidad idled Atlas plant and restarted Titan plant.
• Ended third quarter with ~$490 million cash, on track to repay $300 million bond, secured $650 million in term loan commitments for OCI transaction, plans to deleveraging and return to pre-OCI leverage level.

In the third quarter of 2024, Methanex had an average price of $356 per ton, produced sales of approximately 1.4 million tons, generated adjusted EBITDA of $216 million, and adjusted net income of $1.21 per share. Methanol production was lower in the third quarter due to temporary idling in New Zealand, gas constraints in Chile and Egypt, and idling of the Atlas plant in Trinidad. In New Zealand, one plant was restarted but one plant will be indefinitely idled due to gas supply. Chile secured gas contracts to operate two plants at full rates for non-winter months. Egypt had gas curtailments due to seasonal demand for power generation, but some supply limitations remain.

• Fourth quarter expected equity production ~1.9 million tons. October and November average realized price range ~$365-$375 per ton.
• Plan to repay $550 million-$600 million over 18 months to return to pre-OCI deal leverage level assuming $350 realized methanol price.
• Expect strong free cash flow profile from existing assets enhanced by OCI transaction, well-positioned for deleveraging and shareholder distributions depending on market conditions.

• Gas supply constraints in New Zealand with only enough gas for one plant indefinitely.
• Egypt gas curtailments due to seasonal demand for power generation still causing some supply limitations.
• Trinidad gas contract expiring in September 2026, need to secure longer-term gas.
• Geopolitical tensions in Iran potentially affecting methanol production and export levels.

Q: Dig in on the New Zealand guide, including production level and gas supply forecast.

A: Expecting one plant running at full rates in New Zealand, gas forecast enough for one plant operation indefinitely. Shutdown in gas sale due to domestic energy balance issues.

Q: Update on OCI deal, nat gasoline incident, and New Zealand one plant operation volume.

A: OCI deal in regulatory approval process, closing expected first half 2025; no active involvement in nat gasoline incident; one plant in New Zealand has ~800-850 thousand ton capacity, guidance on run rate in January.

Q: Gas procurement activity, Latin America gas deals, and G3 facility status.

A: Hedged on full gas position in Geismar, benefiting from spot pricing; locked in gas in Latin America for non-winter months, extended deals with ENAP and YPF; G3 facility running well, passed performance and reliability tests, operating above nameplate.

Q: Sustainability of geographical pricing disconnects.

A: Disconnect due to Atlantic basin supply tightness (temporary and structural) and Pacific basin demand, limited Middle East flows to Europe, high shipping costs for moving China methanol to Europe.

Q: Capital returns to shareholders, dividend and buyback plans.

A: Focus on pre-OCI deal leverage, plan to repay $550 million-$600 million, primary focus on deleveraging first, then consider shareholder distributions depending on market conditions.

Q: Difference in realized price vs posted price, and nat gasoline term loan.

A: Difference due to widening discount range from Atlantic market tightening; not involved in nat gasoline facility decision-making prior to OCI deal close.