Methanex Corporation · TSX:MX
Methanex — Investor Presentation (November 2021)
37 slides from Methanex's investor presentation, Nov 18, 2021
Slide 1: Methanex: The Global Methanol Leader
Methanex: The Global Methanol Leader Investor Presentation | November 2021
Slide 2: Forward-looking statements and non-GAAP measures
Forward-looking statements and non-GAAP measures Information contained in these materials or presented orally, either in prepared remarks or in response to questions, contains forward-looking statements. Actual results could differ materially from those contemplated by the forward-looking statements
Slide 3: Methanex highlights
Methanex highlights
Slide 4: Industry leader well-positioned to capitalize on market recovery
Industry leader well-positioned to capitalize on market recovery Methanex is the world’s largest producer and supplier of methanol to major international markets Global methanol Positive long-term leader industry outlook Leading market share, global New industry supply is needed to production footpr
Slide 5: Business highlights
Business highlights 1 Robust methanol prices supported by higher global energy prices, ongoing industry supply challenges and demand recovery 2 Strong financial results and cash generation highlight the significant leverage of our earnings to methanol prices Finalized strategic shipping partnership
Slide 6: Strategic shipping partnership
Strategic shipping partnership • Strategic partnership between Methanex, Waterfront Shipping (WFS)1 and Mitsui O.S.K. Lines (MOL): – Expands on a 30-year methanol shipping relationship – Methanex and Waterfront Shipping to benefit from MOL’s broad shipping experience to enhance its shipping operatio
Slide 7: Continuing focus on ESG and sustainability
Continuing focus on ESG and sustainability Disclosures aligned with the Sustainability Accounting Standards Board (SASB) ENVIRONMENTAL • Ordered 8 new methanol dual-fuel vessels • Obtained International Sustainability & Carbon Certification for biomethanol production in the US • 59,000 MT of low-car
Slide 8: Global, pure-play methanol leader
Global, pure-play methanol leader 8
Slide 9: Industry leadership is core to our strategy and superior performance
Industry leadership is core to our strategy and superior performance Scale and flexibility enables Methanex to be the Estimated industry market share supplier of choice to customers around the world • Strong customers that are leaders in their industry 15% • Ability to optimize global sourcing plans
Slide 10: Clear competitive advantage from integrated global capabilities
Clear competitive advantage from integrated global capabilities Investing in industry-leading, secure, reliable supply from a global network of plants is a fundamental driver of long-term results • Network of production sites to supply every major global market • Fleet of dedicated ocean vessels • E
Slide 11: Methanex is well positioned on the global industry cost curve
Methanex is well positioned on the global industry cost curve • Methanex plants are competitive across a wide range of Illustrative methanol industry cost curve methanol prices ($/tonne) • We estimate that our assets are positioned on the low-to- mid portion of the industry cost curve • Steep high e
Slide 12: Methanex annual production capacity
Methanex annual production capacity Annual operating capacity1 Current Plant (000s tonnes) # of plants2 Gas supply Supply chain Multiple medium-to long-term physical contracts which New Zealand 2,200 3 include a base price and variable price component linked Asia Pacific to methanol prices North Ame
Slide 13: Positive long-term methanol industry outlook
Positive long-term methanol industry outlook
Slide 14: Methanol is an essential ingredient in modern life
Methanol is an essential ingredient in modern life TRADITIONAL CHEMICAL APPLICATIONS ENERGY-RELATED APPLICATIONS Essential ingredient used in countless industrial and Represents a growing demand segment for consumer products (approx. 50% of global methanol demand) methanol (approx. 50% of global met
Slide 15: Methanol is a clean-burning alternative fuel
Methanol is a clean-burning alternative fuel Marine fuel Vehicle Lower that meets fuel that emission environmental reduces fuel source regulations emissions • Shipping regulations (IMO 2020) require • Methanol is an affordable gasoline • Methanol is used as an alternative to cleaner-burning fuels su
Slide 16: IHS forecasts strong methanol demand growth over the next five years
IHS forecasts strong methanol demand growth over the next five years Methanol demand growth outlook 2021-2025 Global methanol demand growth forecast ~4% CAGR 100 +4% CAGR +3% CAGR Traditional chemical applications – steady growth +4% CAGR 3 5 82 10 31 • Demand growth linked to global economic growth
Slide 17: Limited new industry capacity additions after 2022
Limited new industry capacity additions after 2022 Estimated committed industry capacity additions 2021-2025 Country Plant Size Expected start-up timing New capacity additions (M tonnes) • New capacity additions are expected in the near-term with US Koch 1.7 2021 limited new project commitments beyo
Slide 18: New industry supply and improved operating rates needed to meet demand
New industry supply and improved industry operating rates are needed to meet growing methanol demand Source: IHS Chemical Supply & Demand Fall 2021 Update Supply/demand outlook 2021-2025 Estimated supply growth reflects IHS estimates of incremental production based on: • Estimated capacity additions
Slide 19: Positive methanol price outlook
Positive methanol price outlook Historical methanol price Strong near-term pricing outlook Third party price forecasts distribution 2011-2021 • Higher methanol prices and tight • Industry forecasts1 show pricing at: • Methanol prices have averaged market conditions supported by: – ~$330-$350/tonne i
Slide 20: Strong cash flow generation potential with significant leverage to methanol prices
Strong cash flow generation potential with significant leverage to methanol prices
Slide 21: Illustrative Adjusted EBITDA and free cash flow capabilities
Illustrative Adjusted EBITDA and free cash flow capabilities In $M, except where noted Annual Production1 Average realized Current production capability2 Current production capability plus Geismar 33 price per tonne Adjusted Adjusted Free cash flow Free cash flow Free cash flow Free cash flow EBITDA
Slide 22: Methanex cost structure
Methanex cost structure Natural gas Representative operating cost distribution • Flexible cost structure as approximately 60% of our natural gas supply contracts are linked to methanol prices: – North America: ~65% of current natural gas requirements under Logistics2 fixed price contract or hedges –
Slide 23: Disciplined and consistent capital allocation priorities
Disciplined and consistent capital allocation priorities
Slide 24: Consistent capital allocation priorities with emphasis on financial flexibility
Consistent capital allocation priorities with emphasis on financial flexibility Disciplined capital allocation framework… …with increased emphasis on financial flexibility • Debt service Maintain a strong and flexible balance sheet ~$100M lease principal payments ~$160M interest, debt repayment 1. T
Slide 25: Strong track record of balanced capital investment and shareholder distributions
Strong track record of balanced capital investment and shareholder distributions 10-year capital allocation history 10-year capital allocation mix $1,200 $500 $1,000 $450 $400 $800 40% $350 $/tonne 60% $M $600 $300 $400 $250 $200 $200 Capital investments $0 $150 2011 2012 2013 2014 2015 2016 2017 20
Slide 26: Committed to building on strong track record of returning excess cash
Committed to building on strong track record of returning excess cash to shareholders G3 significantly increases our Committed to returning excess cash to future cash generation capability shareholders Illustrative free cash flow capability ($M) • Ability to further de-lever and increase shareholder
Slide 27: Our Geismar 3 project has significant capital and operating cost advantages
Our Geismar 3 project has significant capital and operating cost advantages
Slide 28: Project overview
Project overview • Size: 1.8M tonne methanol plant • Location: Geismar, Louisiana adjacent to existing Geismar 1 and 2 plants (current capacity 2.2M tonnes) • Key dates: – July 2019 – reached a final investment decision – April 2020 – placed project on temporary “care and maintenance” – July 2021 –
Slide 29: Geismar 3 has distinct project advantages and robust project economics
Geismar 3 has distinct project advantages and robust project economics 1. Project returns – significant capital and operating cost advantages enhance project returns Based on remaining capital costs1 • Estimate IRR of 20-28% for methanol prices between $350 and $400/tonne, gas price of $2.90/mmbtu a
Slide 30: Geismar 3 project is significantly de-risked and well-positioned for success
Geismar 3 project is significantly de-risked and well-positioned for success Total project Construction labour cost • Strong project and construction management capability with prior Geismar 1 and 2 project experience $1.25B - Construction • G3 project is well-positioned in the construction market a
Slide 31: Forward-looking statements and non-GAAP measures
Forward-looking statements and non-GAAP measures This presentation, our Third Quarter 2021 Management’s Discussion and Analysis ("MD&A") as well as comments made during the First Quarter 2021 investor conference call contain forward-looking statements with respect to us and our industry. These state
Slide 32: Appendix
Appendix 32
Slide 33: Methanol production process
APPENDIX Methanol production process 1 2 3 4 Desulphurization of natural gas Reforming Methanol synthesis Distillation Refined Methanol Methanol Air Separator Reactors Desulphurization Unit Make-up Gas Purge Compressor Natural gas Compressor Steam Reformer Waste Heat Raw Recovery Methanol Autotherma
Slide 34: Global methanol industry demand
APPENDIX Global methanol industry demand By application By region Other Methanol-to- Traditional olefins (MTO) Europe 16% 18% 10% North Acetic Acid America 8% Methyl tert- 12% butyl ether (MTBE) 11% Other China 4% 60% Other fuel applications Formaldehyde AP (ex. China) 10% 26% 14% Dimethyl Biodiesel
Slide 35: Global methanol industry demand – by application
APPENDIX Global methanol industry demand – by application % of global Applications demand1 End uses • Used as wood adhesive for plywood, particleboard and other engineered wood products Traditional Formaldehyde ~26% • Also used as raw material for a variety of building and automotive products chemic
Slide 36: Illustrative Adjusted EBITDA and free cash flow capabilities assumptions
Illustrative Adjusted EBITDA and free cash flow capabilities assumptions 1 Reflects Methanex interest (63.1% Atlas, 50% Egypt). 2 Reflects estimated annual production of ~7.0M tonnes. 3 Reflects current estimated annual production of ~7.0M tonnes plus Geismar 3 (1.8M tonnes). 4 Adjusted EBITDA refle
Slide 37: Thank you
Thank you Investor Relations T: 604 661 2600 invest@methanex.com www.methanex.com linkedin.com/company/methanex-corporation @Methanex