Methanex Corporation · TSX:MX
Methanex — Corporate Update (July 2021)
27 slides from Methanex's corporate update, July 2021
Slide 1: Extending Industry Leadership: Delivering Shareholder Value
Extending Industry Leadership: Delivering Shareholder Value July 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 update
Business update Board unanimously approved key decisions aligned with our capital allocation priorities • Restart construction on our advantaged Geismar 3 project • Strategic shipping partnership - proceeds of $145M • Reset quarterly dividend to $0.125/share 1 Positive methanol industry outlook with
Slide 6: Strategic partnership
Strategic 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 operations – Part
Slide 7: The timing is right to restart Geismar 3 construction
The timing is right to restart Geismar 3 construction Positive methanol industry outlook with new industry supply needed to meet growing methanol demand • Global methanol demand growth forecast of ~16M tonnes or ~20% (~4% CAGR)1 over the next five years • Industry capacity additions are expected in
Slide 8: Positive methanol industry outlook
Positive methanol industry outlook
Slide 9: 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 97 +4% CAGR +3% CAGR Traditional chemical applications – steady growth +4% CAGR 4 81 3 9 • Demand growth linked to global economic growth 30 2
Slide 10: 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 11: New industry supply and improved operating rates needed to meet growing demand
New industry supply and improved industry operating rates are needed to meet growing methanol demand Source: IHS Chemical Supply & Demand Spring 2021 Update Supply/demand outlook 2021-2025 Estimated supply growth reflects IHS estimates of incremental production based on the following estimated capac
Slide 12: Positive methanol price outlook
Positive methanol price outlook Historical methanol price Favorable near-term factors Third party price forecasts distribution 2011-2020 • Higher methanol prices and tight • Industry forecasts1 show pricing at: • Methanol prices have averaged market conditions supported by: – ~$330-$350/tonne in the
Slide 13: Strong financial position to execute on our capital allocation priorities
Strong financial position to execute on our capital allocation priorities
Slide 14: 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 ~$160M interest, debt repayment 1. T
Slide 15: Deleveraging initiatives strengthen balance sheet ahead of G3 restart
Deleveraging initiatives strengthen balance sheet ahead of G3 restart Strong liquidity position • Healthy cash balance underpinned by undrawn back- Amount ($M) Maturity up liquidity Cash on balance sheet (as of March 31, 2021) 827 n/a Add: strategic partnership transaction (late ’21) 145 Deleveragin
Slide 16: Intend to fund remaining Geismar 3 capital costs with cash on hand and future cash flow
Intend to fund remaining Geismar 3 capital costs with cash on hand and future cash flow • Expect to be able to fund Illustrative cash flow bridge Q2 2021 – Q4 2023 ($M) construction without incurring Uses of cash incremental debt at methanol Sources of cash prices of ~$275/tonne and higher 700 865 •
Slide 17: Committed to building on strong track record of returning excess cash to shareholders
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 • Board approved reset of quarterly dividend to $0.125/share Average Illustrative free cash flow c
Slide 18: Our Geismar 3 project has significant capital and operating cost advantages
Our Geismar 3 project has significant capital and operating cost advantages
Slide 19: 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 20: 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 21: 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 22: Forward-looking statements and non-GAAP measures
Forward-looking statements and non-GAAP measures This presentation, our First 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 23: Appendix
Appendix 23
Slide 24: Illustrative Adjusted EBITDA and free cash flow capabilities
Illustrative Adjusted EBITDA and free cash flow capabilities 1 Reflects Methanex interest (63.1% Atlas, 50% Egypt) In $M, except where noted 2 Reflects estimated annual production of ~7.0M tonnes Annual Production1 3 Reflects current estimated annual production of ~7.0M tonnes plus Geismar 3 (1.8M t
Slide 25: Anticipate ability to further de-lever and increase shareholder distributions during Geismar 3 construction
Anticipate the ability to further de-lever and increase shareholder distributions during the Geismar 3 construction period at methanol prices of ~$325/tonne or higher Q2 2021 – Q4 2023 proforma cash flow Footnotes Average realized price per tonne 1 Reflects Mx share of cash 2 Reflects proceeds from
Slide 26: 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 27: Thank you
Thank you Investor Relations T: 604 661 2600 invest@methanex.com www.methanex.com linkedin.com/company/methanex-corporation @Methanex