Methanex Corp. Q1 FY2025 earnings call

Methanol markets were tight in the first quarter with supply constraints in the Atlantic and Pacific basins. In the Atlantic, supply improved as plants returned from outages. In the Pacific, Iran's operating rates were very low. Methanex's production in Geismar, Trinidad, and Egypt was affected, but G3 has restarted. Chilean plants operated at full rates. The company is progressing with the OCI acquisition, expecting it to close in Q2 2025. Priorities include safe operation, closing the OCI deal, and reducing leverage.

In the first quarter of 2025, Methanex achieved an average realized price of $404 per ton and produced approximately 1.7 million tons, generating adjusted EBITDA of $248 million and adjusted net income of $1.30 per share. Production in Geismar was lower due to a planned turnaround at G2 and an unplanned outage at G3, but G2 restarted in March and G3 has successfully restarted. In Chile, both plants operated at full rates with higher production due to better reliability. In Egypt, first quarter production was 20,000 tons lower than the fourth quarter due to gas curtailments. Methanex ended the first quarter with $1.031 billion of its share of cash and had access to a $500 million undrawn revolving credit facility.

Based on the second quarter European posted price and April/May pricing in other regions, the average realized price range for April and May is forecasted between approximately $360 and $370 per metric ton. Due to lower forecasted prices and lower produce sales from the G3 outage, adjusted EBITDA in the second quarter of 2025 is expected to be lower than the first quarter. The OCI transaction is expected to close in Q2 2025.

Potential tariffs could impact global economic activity and methanol demand. Supply constraints in regions like Iran, Egypt, and others due to gas curtailments or geopolitical issues. Uncertainty in methanol demand and pricing fluctuations.

Q: Ben Isaacson asked about capital allocation and flexibility on pivot to buybacks vs OCI deal.

A: Rich Sumner said capital allocation priorities are strong balance sheet and de-levering, not considering share repurchases now.

Q: Ben Isaacson asked about Iran port explosion and sanctions impact.

A: Rich Sumner said port explosion didn't impact methanol, Iran operating rates were low due to gas and sanctions, expecting increased flows to Coastal China.

Q: Joel Jackson asked about G3 plant challenges and confidence in operation.

A: Rich Sumner said startup conditions were addressed, plant is expected to run at high reliability.

Q: Josh Spector asked about China methanol prices and demand.

A: Rich Sumner said China cost curve is around $270-$280, monitoring impact of tariffs on China manufacturing.

Q: Steve Hansen asked about risk mitigation in OCI deal and G3 plant milestones.

A: Rich Sumner said integration team is working, G3 plant operated well at full rates after startup.

Q: Hassan Ahmed asked about feedstock and natural gas hedging.

A: Rich Sumner said monitoring natural gas prices, rolling hedge program in place, OCI deal will increase exposure.

Q: Nelson Ng asked about New Zealand gas supply and OCI transaction approvals.

A: Rich Sumner said New Zealand gas situation is dynamic, OCI transaction needs U.S. and European regulatory approvals.

Q: Matthew Blair asked about Q2 guide and MTO utilization.

A: Rich Sumner said Q2 guide is $360-$370, MTO utilization around 75%-80%.

Q: Laurence Alexander asked about trough scenarios and marine flex fuel.

A: Rich Sumner said planned for $250/ton trough, marine flex fuel demand uncertain with shipping companies' fuel decisions.