Methanex(US:MEOH)2021-04-30 03:39Financial Data and Key Metrics Changes - The average realized methanol price increased to $363 per tonne, up by $81 compared to Q4 2020 [12] - Adjusted EBITDA rose to $242 million, an increase of $106 million over Q4 2020 [12] - Adjusted net income was $82 million or $1.07 per share, an increase of $70 million or $0.92 per share compared to Q4 2020 [12] Business Line Data and Key Metrics Changes - Production in Q1 2021 was 1.6 million tonnes, similar to Q4 results, with higher production from Atlas and Medicine Hat facilities offsetting lower production in New Zealand and Geismar [17] - New Zealand's production was lower due to reduced gas deliveries, with an estimated production of 1.5 million tonnes for 2021 [18] - Geismar's production was lower due to a planned turnaround, but record production levels were achieved post-turnaround [19] - Trinidad's production was higher than Q4 due to planned turnaround activities impacting the previous quarter [21] - Chile's production was higher, with the Chile I plant running nearly at full rates, while the Chile IV plant remained idle due to gas supply constraints [22] Market Data and Key Metrics Changes - Global methanol demand increased by approximately 5% compared to Q1 2020, with expectations to return to pre-pandemic levels later in 2021 [13][14] - The industry cost curve remains at approximately $260 to $280 per tonne, with spot prices in China above this range [15] - North American methanol price increased by $23 to $542 per tonne, while Asia Pacific price remained at $430 per tonne [16] Company Strategy and Development Direction - The company is focused on financial flexibility and liquidity, with plans to decide on the next steps for the Geismar three project later in 2021 [26][27] - The company aims to balance capital allocation between growth opportunities and returning excess cash to shareholders through dividends and share repurchases [26] - The company is optimistic about the global economic recovery and its impact on methanol demand, particularly as vaccines are rolled out [28] Management's Comments on Operating Environment and Future Outlook - Management noted that the pandemic has created challenges but highlighted the resilience of the business model [9][10] - The company anticipates similar realized methanol prices in Q2 2021 compared to Q1, based on posted prices so far [29] - Management expressed confidence in the recovery of methanol demand and the favorable industry conditions continuing into the second quarter [14][28] Other Important Information - The company has a strong liquidity position with over $850 million in cash and no debt maturities until the end of 2024 [25] - The company is monitoring industry operating rates and new capacity scheduled to start up later this year [28] Q&A Session Summary Question: Capital allocation priorities - The company prioritizes financial flexibility and liquidity, balancing growth investments with returning excess cash to shareholders [36][37] Question: Market share importance - Leadership in the industry is more important than specific market share targets, with a focus on optimizing operations [48] Question: Labor market conditions for G3 - The labor market is currently stable, but there may be cost pressures as economic activity increases [55][56] Question: Methanol demand and pricing - Demand is expected to recover, with tight markets and low inventories supporting a favorable pricing environment [64][68] Question: Impact of Uri on demand - The demand loss was primarily in China, with expectations for recovery as the pandemic situation improves [87][88] Question: Trade flow changes and Iran - Trade flows have been affected by supply chain disruptions, and the situation with Iran remains uncertain [120][121] Question: Industry supply state post-COVID - The company has faced challenges in maintenance and reliability due to COVID-19, impacting overall operational efficiency [125][127]