Methanex Corporation · TSX:MX
Methanex — Investor Presentation (February 2023)
31 slides from Methanex's investor presentation, February 2023
Slide 1: The Global Methanol Leader
The Global Methanol Leader CORPORATE PRESENTATION FEBRUARY 2023
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, may contain forward-looking statements. Actual results could differ materially from those contemplated by the forward-looking stateme
Slide 3: Methanex is the world's largest producer and supplier of methanol
Methanex is the world’s largest producer and Leader in an Growing cash Well-positioned supplier of industry with flow capability in the transition to a low-carbon a positive long- + a disciplined methanol term outlook capital allocation economy to major Leading market share in an strategy Advantaged
Slide 4: 2022 performance snapshot
2022 performance snapshot Strong financial performance driven by robust methanol pricing $932M Adjusted EBITDA Cash and cash equivalents1 $806M $397 MT Average realized price $4.3B Revenue 10.8 9 Adjusted Earnings Per Share $4.79 mmt Operating Total sales plants Operating in $297M 1,400 11 Capital r
Slide 5: 9.3 mmt annual operating capacity across 11 plants and 6 production sites
9.3 mmt annual operating capacity across 11 plants and 6 production sites Operating Number Gas capacity of plants2 supply (mmt)1 0.64 1 Fixed price contract Financial hedges, fixed 2.20 2 price contracts, and spot market Methanol price linked 0.63 1 contract Methanol price linked 1.96 2 contract Met
Slide 6: Growing cash flow capability with G3 and further upside with improved gas availability
Growing cash flow capability with G3 and further upside with improved gas availability Strong free cash flow conversion across a range of methanol prices Adjusted EBITDA1 capability ($M) Free cash flow2 capability ($M) at various methanol prices ($/MT) at various methanol prices ($/MT) 1,900 1,500 1
Slide 7: Methanol is an essential ingredient in modern life
Methanol is an essential ingredient in modern life Chemical end uses Energy-related end uses Methanol is an essential A cleaner-burning fuel, chemical building block methanol can help improve air for hundreds of quality by reducing emissions consumer and industrial compared to traditional fuels prod
Slide 8: Strong methanol demand growth forecasted over the next five years
Strong methanol demand growth forecasted over the next five years Global methanol demand growth forecast to grow at ~3% CAGR or +14 mmt over next five years Methanol demand 2021: 88 mmt 28 mmt 16 mmt Energy-related demand – significant upside potential Methanol-to-olefins (MTO) – stable demand Growi
Slide 9: Methanol is a cleaner-burning alternative fuel
Methanol is a cleaner-burning alternative fuel Representing upside potential for long-term demand Lower emission Vehicle fuel that Marine fuel that meets fuel source reduces emissions environmental regulations Methanol is used as an alternative Methanol is an affordable gasoline Shipping regulations
Slide 10: Growing interest in methanol as a marine fuel
Growing interest in methanol as a marine fuel Cleaner burning, proven technology, easily transportable with existing infrastructure, and cost competitive Over 100 dual fueled vessels, including Waterfront Shipping vessels, are expected to be on the water by 2026-2027; representing approximately 3.0
Slide 11: Firm capacity additions unlikely to meet growing demand
Firm capacity additions unlikely to meet growing demand; tight market conditions support strong methanol prices Estimated industry capacity additions* New capacity additions MMT Pace of capacity additions to slow after the 8.0 recent start-up of CGCL, Koch, and Schekino Azot III between late 2020 an
Slide 12: Strong demand growth outpaces capacity additions; structural operating rate issues
Strong demand growth outpaces capacity additions requiring operating rates to increase; structural operating rate issues make this challenging Structural operating rate issues impacting Structural operating rates issues must be resolved for operating rates to meet growing demand over 50% of global c
Slide 13: Methanol's role in the low-carbon economy
Methanol’s role in the low-carbon economy Conventional methanol reduces air pollution and GHG emissions; methanol from renewable sources can support long-term decarbonization NATURAL NATURAL RENEWABLE RENEWABLE Feedstocks COAL GAS GAS NATURAL GAS BIOMASS ELECTRICITY Production REFORMING REFORMING CA
Slide 14: Price response required to incentivize new low-carbon methanol production
Price response Range of current capital and production costs for different forms of methanol USD $/tonne of methanol* required to incentivize new low-carbon methanol $2,380 production $1,620 In the long-term we expect methanol pricing will respond to incent investment $1,120 as demand for low and ze
Slide 15: Industry leadership is core to our strategy and strong performance
Industry leadership is core to our strategy and strong performance ~13% Methanex A leading global pure-play methanol producer Proman/Helm Methanex is the market Sabic leader Scale and flexibility enables Methanex to be the supplier of choice and attract and Yankuang retain customers around the world
Slide 16: Sustainable competitive advantage from integrated global capabilities
Sustainable competitive advantage from integrated global capabilities Investing in industry-leading, secure, reliable supply from a global network of plants is a fundamental driver of long-term success Industry leading customers Responsible Care Network of production sites to supply every major glob
Slide 17: Focused cost discipline
Focused cost discipline Our low-cost structure enables us to provide secure supply to our customers and create value throughout the cycle Natural gas Logistics Flexible cost structure as Fleet of ~30 leased and Network of owned and leased approximately 60% of our natural owned vessels supplemented t
Slide 18: Competitive position on attractive industry cost curve
Competitive position on attractive industry cost curve Illustrative methanol industry cost curve ($/tonne) Methanex assets competitive across a wide range of methanol prices due to position on cost curve Marginal producers on the high end of cost curve are high-cost coal and natural gas-based produc
Slide 19: Consistent capital allocation priorities with emphasis on financial flexibility
Consistent capital allocation priorities with emphasis on financial flexibility Maintain our business Maintenance capital and debt service. To manage cyclicality and maintain a strong and flexible balance sheet we: 1. Target higher cash balances: maintain a minimum of $300M cash plus remaining G3 ca
Slide 20: Strong liquidity and well-balanced debt maturities
Strong liquidity and well-balanced debt maturities position well for G3 and beyond Investment grade leverage metrics Excellent liquidity position Target 3x debt/EBITDA at ~$300/MT average realized methanol price with ~2x at Remaining G3 construction costs are mid-cycle of $350/MT fully funded with b
Slide 21: Geismar 3 is an industry-leading plant
Geismar 3 is an industry-leading plant First methanol production expected in Q4 2023 Investment strategy Key milestones Meeting growing demand for methanol 2023 • High voltage power Significant capital and operating cost energized savings from brownfield site advantages • Utility systems generates s
Slide 22: Geismar 3 project to generate significant EBITDA
Geismar 3 project to generate significant EBITDA at a variety of methanol prices and gas prices G3 potential EBITDA Range based on Henry Hub gas prices between $3 – 5/mmbtu. 2023 dollars. 22
Slide 23: Consistent track record of balanced capital investment and shareholder distributions
Consistent track record of balanced capital investment and shareholder distributions 10-year capital allocation history 10-year capital allocation mix $M $/tonne $1,200 $500 $450 $1,000 40% Shareholder $400 ~$2.3B distributions $350 $800 $300 $600 $250 $200 $400 $150 $100 60% Capital $200 ~$3.8B inv
Slide 24: Embedding sustainability: from strategy to action
Embedding sustainability: from strategy to action 1 Solutions focused and committed to continual improvement Safety Reduce Carbon Green Diversity + emissions capture methanol inclusion Achieve Reduce Scope 1 Complete a Pursuing green Implement a zero harm and Scope 2 feasibility methanol three-year
Slide 25: Strategic Priorities
Strategic Priorities Safety + reliability G3 project execution Feedstock strategy Advance sustainability Capital allocation execution initiatives Improve Responsible Progress G3 project Return excess cash to Care and safety safely, on time, and Negotiate economic Evaluate additional shareholders thr
Slide 26: 2023 Modeling Information
2023 Modeling Information 20% Sales mix Europe Financial profile (Methanex share) 30-35% 25-30% ~$80M ~$330M China North America + Latin America Depreciation + Lease Principal Payments Amortization 20% Asia Pacific ~$145M ~30% (ex. China) Gross Interest Expense Effective tax rate (mid- cycle pricing
Slide 27: Forward-looking statements and non-GAAP measures
Forward-looking statements and non-GAAP measures This presentation, our Fourth Quarter 2022 Management’s Discussion and Analysis ("MD&A") as well as comments made during the Fourth Quarter 2022 investor conference call contain forward-looking statements with respect to us and our industry. These sta
Slide 28: Appendix
Appendix 28 ‘the power of agiity
Slide 29: Global methanol demand by application
Global methanol demand by application APPENDIX % 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 chemical applications
Slide 30: Illustrative Adjusted EBITDA and free cash flow capabilities assumptions
Illustrative Adjusted EBITDA and free APPENDIX cash flow capabilities assumptions 1 Adjusted EBITDA reflects Methanex’s proportionate ownership interest. We target to hedge ~70% of our North American natural gas requirement. The unhedged portion of our North American natural gas requirements are pur
Slide 31: Thank you
Thank you Investor Relations T: 604 661 2600 invest@methanex.com www.methanex.com linkedin.com/company/methanex-corporation @Methanex