• Average Realized Price: $356 per ton, $4 higher than the previous quarter.
• Produced Sales: Approximately 1.4 million tons.
• Adjusted EBITDA: $216 million, higher compared to the second quarter of 2024.
• Adjusted Net Income: $1.21 per share.
• Cash Position: Approximately $490 million at the end of the third quarter.
• Debt to Adjusted EBITDA Leverage Ratio: Just under three times at a $350 per ton realized price.
• Term Loan Commitments: $650 million secured for the OCI transaction.
• European Quarterly Price: EUR570 per ton, a EUR35 per ton increase from the third quarter.
• North American Posted Price: $785 per metric ton, a $47 per ton increase from October.
• Expected Equity Production for Q4 2024: Approximately 1.9 million tons.

• Warning! GuruFocus has detected 6 Warning Signs with MEOH.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Methanex Corp (NASDAQ:MEOH) reported a higher adjusted EBITDA of $216 million for Q3 2024, driven by increased gas sales in New Zealand, insurance recovery in Egypt, and higher average realized methanol prices.
• The successful completion of G3's commercial and technical performance tests resulted in a production rate of 1.8 million tons per annum, indicating strong operational performance.
• Methanex Corp (NASDAQ:MEOH) secured new gas contracts in Chile, extending agreements until 2030 and 2027, which will support increased production capacity.
• The company maintained a strong financial position with $490 million in cash and access to a $500 million undrawn revolving credit facility.
• Methanex Corp (NASDAQ:MEOH) plans to repay a $300 million bond by December 2024, which will reduce its debt to adjusted EBITDA leverage ratio to just under three times.

Negative Points

• Methanex Corp (NASDAQ:MEOH) faced production challenges in New Zealand due to gas constraints, leading to the indefinite idling of one of the two Montanui plants.
• The company experienced lower methanol production in Q3 2024 compared to the previous quarter, attributed to temporary idling in New Zealand and gas constraints in Chile and Egypt.
• Methanex Corp (NASDAQ:MEOH) anticipates continued limitations on gas supply to industrial plants in Egypt, particularly during the summer months.
• The company is focused on deleveraging and plans to repay $550 to $600 million over the next 18 months, which may limit shareholder returns in the short term.
• Methanex Corp (NASDAQ:MEOH) faces increased competition in the Atlantic Basin, leading to higher discount levels from reference to realized prices.

Q & A Highlights

Q: Can you provide more details on the New Zealand production guidance and the constraints affecting it? A: We are currently running one plant at full rates in New Zealand. The decision to operate only one plant is based on the current gas supply outlook, which supports a one-plant operation. The imbalance in gas supply was primarily due to domestic energy demands, and we foresee this situation persisting, leading us to indefinitely idle one of the two Montanui plants. Rich Sumner, President, Chief Executive Officer, Director

Q: Could you update us on the OCI deal and any impacts from the recent fire at Natgasoline? A: We are progressing through the regulatory approval process for the OCI deal, expecting closure in the first half of 2025. Regarding Natgasoline, we are aware of the fire incident but are not actively managing it as we do not yet own the asset. We are monitoring the situation closely. Rich Sumner, President, Chief Executive Officer, Director

Q: What are the recent developments in gas procurement, particularly in Latin America? A: We have secured gas contracts in Chile and Argentina, allowing us to operate at full rates during non-winter months. We extended agreements with EAPP and YPF, which cover a significant portion of our gas needs until 2030 and 2027, respectively. This reflects improved domestic supply balances in Argentina. Rich Sumner, President, Chief Executive Officer, Director

Q: How sustainable are the current regional pricing disconnects in methanol markets? A: The disconnect is primarily due to tight supply in the Atlantic Basin and stable demand. Middle East flows are not significantly impacting Europe due to logistical constraints. In China, increased MTO operating rates have tightened the market. We expect these conditions to persist, maintaining the pricing gap between regions. Rich Sumner, President, Chief Executive Officer, Director

Q: What is Methanex's approach to capital returns to shareholders amid the OCI deal? A: Our primary focus is deleveraging post-OCI deal, aiming to reduce debt by $550 to $600 million. While share buybacks may be limited during this period, we are committed to maintaining a strong balance sheet and will consider shareholder distributions once we achieve our leverage targets. Rich Sumner, President, Chief Executive Officer, Director

For the complete transcript of the earnings call, please refer to the full earnings call transcript.