Methanex Corporation · TSX:MX
Methanex — Investor Presentation (August 2023)
33 slides from Methanex's investor presentation, August 2023
Slide 1: The Global Methanol Leader
The Global Methanol Leader CORPORATE PRESENTATION AUGUST 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 supplier of methanol to major international markets Strategy Competitive advantage Safety is the top priority We create value through our Safe, sustainable, and secure supply. We are committed to the leadership in the global Underpinned by our global inte
Slide 4: Why Invest?
Why Invest? Leader in an industry Growing cash flow Sustainable Well-positioned in Disciplined with a positive capability competitive advantage the transition to a capital allocation long-term outlook from integrated global low-carbon economy strategy capabilities Leading market share in an Advantag
Slide 5: Strategic Priorities for the Business
Strategic Priorities for the Business Focused on delivering value-generating initiatives in a safe and reliable way Safety + reliability Completing the G3 Executing our Advancing Capital allocation project safely, on feedstock strategy sustainability time and on budget initiatives Continuous improve
Slide 6: 9.3 mmt annual operating capacity across plants and production sites
9.3 mmt annual operating capacity across 11 plants and 6 production sites Operating Number Gas capacity of plants2 supply (mmt)1 Medicine Hat, Canada 0.64 1 Fixed price contract Geismar, USA Financial hedges, fixed price 2.20 2 contracts, and spot market Damietta, Egypt 0.63 1 Methanol price linked
Slide 7: Industry leadership is core to our strategy and strong performance
Industry leadership is core to our strategy and strong performance ~12% Methanex A leading global pure-play methanol producer Valenz (Proman) 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 w
Slide 8: 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 Responsible Care® Industry leading customers Network of production sites to supply every major glo
Slide 9: Geismar 3: Industry-leading plant with strong cash flow generation capability
Geismar 3: Industry-leading plant with strong cash flow generation capability Project highlights G3 potential EBITDA At various Methanol and gas prices 1.8 mmt methanol plant located adjacent existing G1 and G2 in Geismar, Louisiana Will be one of the lowest CO2 emissions intensity plants at <0.4 to
Slide 10: 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 ($M) at various Free cash flow2 capability ($M) at various average realized methanol prices ($/MT) average realized me
Slide 11: Methanol is difficult to substitute based on its unique chemistry
Methanol is difficult to substitute based on its unique chemistry, Traditional chemical Essential building block used in formaldehyde scale, ease of transport and cost applications expected to grow with GDP and acetic acid to make raw materials for building and automotive parts, paints, paper, plast
Slide 12: Global methanol demand and supply dynamics
Global methanol demand and supply dynamics 2022 global methanol demand of ~90 mmt; demand expected to grow at ~3.5% CAGR or +17 mmt over next five years Europe (including Russia) China Production Demand Production Demand 7% 12% 46% 60% More than ~85% of 50% of production production from coal- from R
Slide 13: 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 Methanol is a cleaner- Methanol provides a Multiple fuels needed to burning fuel and can reduce pathway to reducing CO2 support the marine industr
Slide 14: Potential demand growing every month with new ship orders and retrofits
Potential demand growing Benefits of Methanol as Marine Fuel every month with new • Biodegradable and safe to use when following normal procedures 6+ ship orders and retrofits • Available in over 120 ports globally; bunkering million tonnes potential demand Helping the shipping industry ability prov
Slide 15: Firm capacity additions unlikely to meet growing demand in the mid-term
Firm capacity additions unlikely to meet growing demand in the mid-term New capacity additions Estimated Methanol Industry Net Capacity Additions* MMT Besides G3, limited firm capacity addition 9.0 expected in the Atlantic market. Firm 8.0 additions outside the Atlantic include a 1.8 mmt plant in Ma
Slide 16: 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 producers in China Global me
Slide 17: Demand growth expected to outpace capacity additions in the mid-term
Demand growth expected to outpace capacity additions in the Structural operating rates issues must be resolved mid-term requiring operating rates for operating rates to meet growing demand to increase; structural operating ~3.5% CAGR or +17 mmt rate limits make this challenging demand growth over ne
Slide 18: 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 Long-term solutions focused, with options today Pathways we are exploring METHANEX TODAY FEASIBILITY STUDY FEASIBILITY STUDY
Slide 19: Price response required to incentivize new low-carbon methanol
Price response required Range of current capital and production to incentivize new costs for different forms of methanol USD $/tonne of methanol* low-carbon methanol $2,380 production We expect government policies and $1,620 regulations to lead to increased investment and demand for low and zero car
Slide 20: Embedding sustainability: from strategy to action
Embedding sustainability: from strategy to action1 Solutions focused and committed to continual improvement COMMITMENTS Advancing Reduce Scope 1 and Scope 2 GHG emission solutions for a intensity by 10%2 low-carbon Invest in lower-carbon methanol solutions future COMMITMENTS Protecting Continuously
Slide 21: Reducing emissions and exploring paths to lower-carbon methanol
Reducing emissions and exploring paths to lower-carbon methanol Providing solutions for the emerging low-carbon market supports our strategy of global methanol leadership Efficiency Projects Reduced-intensity Carbon Capture Renewable Natural Green Hydrogen We implemented four projects Expansion Proj
Slide 22: Focused cost discipline
Focused cost discipline Our flexible-cost structure enables us to provide secure supply to our customers and create value throughout the cycle Natural gas Logistics Natural gas Logistics ~ 50% Flexible cost structure as ~ 25% Fleet of ~30 leased and Network of owned and approximately 60% of our natu
Slide 23: Consistent capital allocation priorities balancing growth and shareholder returns
Consistent capital allocation priorities balancing growth and shareholder returns Maintain our business Sustaining capital (~$120M), debt service (~$145M) and lease payments (~$80M) To manage cyclicality and maintain a strong and flexible balance sheet we: 1. Target higher cash balances: maintain a
Slide 24: Strong Financial Position
Strong Financial Position Strong liquidity and well-balanced debt maturities Consistent track record of balanced capital investment and shareholder distributions Targeting investment grade leverage metrics Over the past ten years ~$2.3B returned to shareholders and ~$3.8B spend on capital investment
Slide 25: Why Invest?
Why Invest? Leader in an Growing cash Sustainable Well-positioned Disciplined industry with flow capability competitive in the transition capital a positive advantage from to a low-carbon allocation long-term integrated global economy strategy outlook capabilities 25 Methanex | The Global Methanol L
Slide 26: 2023 Modeling Information
2023 Modeling Information 20% Financial profile (Methanex share) Sales mix Europe ~$80M ~$330M 30-35% 25-30% Lease Principal Payments Depreciation + Amortization Americas China ~$145M ~30% 20% Asia Pacific Gross Interest Expense Effective tax rate (ex. China) H1 2023 realized (mid-cycle pricing) dis
Slide 27: Forward-looking statements
Forward-looking statements This presentation, our Second Quarter 2023 Management’s Discussion and Analysis ("MD&A") as well as comments made during the Second Quarter 2023 investor conference call contain forward-looking statements with respect to us and our industry. These statements relate to futu
Slide 28: Appendix
Appendix methans " the poner of agity 28
Slide 29: 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 ~3.5% CAGR or +17 mmt over next five years Applications % of global demand1 End uses Traditional Used as wood adhesive for plywood, particleboard and other engineered wood products For
Slide 30: Chemicals value chain
BUTADIENE AROMATICS Chemicals value chain OLEFINS PROPYLENE METHANOL ETHYLENE AMMONIA FEEDSTOCKS BASE CHEMICALS AND INTERMEDIATES PRODUCTS MARKETS/USES MDI/TDI POLYESTER CLOTHING, BOTTLES (PET), FABRIC TOLUENE PTA NYLON FABRIC, CARPET, AUTOMTIVE XYLENE CYCLOHEXANE PHENOL/ACETONE SOLVENTS, INTERMEDIA
Slide 31: Methanol-to-olefins (MTO) value chain
Methanol-to-olefins (MTO) value chain Food packaging, Polyethylene plastic bags Natural Gas or Coal Feedstock Pipes, window EDC PVC frames Ethylene Synthesis EO MEG PET Textile, bottles • MTO production Gas mostly integrated with downstream products Insulation cups, Ethyl benzene Styrene Polystyrene
Slide 32: Illustrative Adjusted EBITDA and free cash flow capabilities assumptions
Illustrative Adjusted EBITDA and free APPENDIX cash flow capabilities assumptions (non-GAAP measures) 1 Adjusted EBITDA reflects Methanex’s proportionate ownership interest. We target to hedge ~70% of our North American natural gas requirements. The unhedged portion of our North American natural gas
Slide 33: Investor Relations
Investor Relations T: 604 661 2600 [email protected] www.methanex.com linkedin.com/company/methanex-corporation @Methanex 33 Methanex | The Global Methanol Leader | Investor Presentation August 2023