Methanex Corp. Q4 FY2024 earnings call

• Safety: Achieved the best safety performance on record in 2024 despite meaningful changes in operating assets.
• Financials: Fourth quarter adjusted EBITDA was higher than the third quarter due to a higher average realized price and increased produced sales. Full year 2024 saw growth in produced sales and adjusted EBITDA.
• Market dynamics: Tight market conditions in the Atlantic basin persisted through the quarter, while the Pacific basin tightened later. Global methanol demand increased by ~3 million tons in 2024, and demand is expected to grow similarly in 2025 driven by traditional chemical and energy applications.
• Operations: Production levels varied by region; Geismar had higher production with G3, Chile plants operated at full rates, Egypt production increased, and New Zealand restarted a plant. There was an inventory build of produced methanol in the fourth quarter.
• Financial position: Ended Q4 with $879 million in cash and access to a $500 million undrawn revolving credit facility. Repaid a $300 million bond and executed OCI acquisition financing. Priorities include closing the OCI transaction, integrating assets, deleveraging by repaying $550-$600 million in debt over 18 months, and maintaining a strong balance sheet.

In the fourth quarter, Methanex's average realized price was $370 per ton, with produced sales of approximately 1.5 million tons, generating adjusted EBITDA of $224 million and adjusted net income of $1.24 per share. For the full year 2024, the average realized price was $355, produced sales exceeded 6 million tons, and adjusted EBITDA was $764 million with adjusted net income of $252 million or $3.72 per share. Production in the fourth quarter was higher compared to the third quarter, with increases from Geismar (G3 operating at full rates in October and December, with a proactive shutdown in November for equipment inspection), Chile (both plants operating at full rates, with December production at 150,000 tons, the highest monthly level in Chile since 2007), Egypt (production increased as temperatures moderated and gas balances stabilized), and New Zealand (restart of Motunui 2 plant in November).

• 2025 equity production guidance is approximately 7.5 million equity tons, including the impact of turnarounds and gas feedstock availability outside of North America.
• First quarter 2025 average realized price range is forecasted to be between approximately $395 and $405 per metric ton, with expected significantly higher adjusted EBITDA compared to the fourth quarter.
• Policy not to comment on or update guidance between quarters.

• Gas supply risks: Egypt may experience curtailments in summer 2025; New Zealand faces risk of gas diversion for energy needs.
• Regulatory: Uncertainties around finalizing OCI deal regulatory approvals.
• Geopolitical: Iranian methanol production constrained by energy crisis, impacting global supply; trade route risks in the Red Sea.
• Tariffs: Marginal impact on business from potential U.S. trade tariffs, with limited volume affected.

Q: Update on the regulatory approvals for the OCI deal?

A: Progressing well as planned, with expectations to close in the first half, likely Q2.

Q: What's the insight into Iranian methanol industry output?

A: Imports to China have decreased significantly, indicating reduced production due to Iran's energy crisis, likely constraining supply through winter and into early 2025.

Q: How does production compare between Q1 and Q4 2025?

A: Production is expected to be similar to the fourth quarter, with an inventory build of produced methanol rather than overall inventory build.

Q: Gas availability risk in New Zealand?

A: There's a risk of gas diversion for energy needs, with one plant operating at less than full rates, and working on upstream supply sustainability.

Q: Impact of U.S. tariffs on methanol trade?

A: Marginal impact, with small volume of product flowing from Canada to the U.S. and no acute impact on business due to flexibility in supply chain and low volume affected.