Methanex Corporation · TSX:MX
Methanex — Investor Presentation (October 2022)
31 slides from Methanex's investor presentation, October 2022
Slide 1: The Global Methanol Leader
The Global Methanol Leader CORPORATE PRESENTATION OCTOBER 2022
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 + a disciplined in the transition to a low-carbon a positive long- methanol term outlook capital allocation economy to major Leading market share in an industry that needs
Slide 4: Safety is our number one priority
Safety is our number one priority Our commitment to Responsible Care is unwavering; we work everyday to put our values and safe practices into action to ensure the safety of our employees, contractors, visitors, and communities where we operate Recordable Injury Rate (Employees & Contractors) Injuri
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 N umber G as ca pacity of plants2 s upply ( mmt)1 0.64 1 Fixed price contract Financial hedges, fixed 2.20 3 2 price contracts, and spot market Methanol price linked 0.63 1 contract Methanol price linked 1.96 2 contr
Slide 6: Growing cash flow capability with G3 and potential restart of idled assets
Growing cash flow capability with G3 and the potential restart of idled assets with improved gas availability Adjusted EBITDA1 capability ($M) Free cash flow 2 capability ($M) at various methanol prices ($/MT) at various methanol prices ($/MT) 2,175 1,725 1,700 1,450 1,300 1,350 1,150 1,100 1,000 82
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 90 dual fueled vessels, including Waterfront Shipping vessels, are expected to be on the water by 2025-2026; representing approximately 2.0 m
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 requiring operating rates to increase
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 $2,380 low-carbon methanol production $1,620 In the long-term we expect methanol pricing will respond to incent investment $1,120 as demand for low and ze
Slide 15: Industry leadership is core to our strategy and strong performance
Industry leadership is core to our strategy and strong performance ~13% Methanex A leading global pure-play methanol producer Proman/Helm Methanex is the Sabic market leader Scale and flexibility enables Methanex to be the supplier of choice and attract and Yanuang retain customers around the world
Slide 16: Sustainable competitive advantage from integrated global capabilities
Sustainable competitive advantage from integrated global capabilities Investing in industry-leading, secure, reliable supply from a global network of plants is a fundamental driver of long-term success Responsible Care Network of production sites to supply every major global market Fleet of dedicate
Slide 17: Focused cost discipline
Focused cost discipline Our low-cost structure enables us to provide secure supply to our customers and create value throughout the cycle Natural gas Logistics Flexible cost structure as Fleet of ~30 leased and Network of owned and leased approximately 60% of our natural owned vessels supplemented t
Slide 18: Competitive position on attractive industry cost curve
Competitive position on attractive industry cost curve Illustrative methanol industry cost curve Methanex assets competitive across a wide range ($/tonne) of methanol prices due to position on cost curve We estimate that our assets are positioned on the low-to-mid portion of the industry cost curve
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 will: 1. Target higher cash balances: maintain a minimum of $300M cash plus remaining
Slide 20: Geismar 3 is an industry-leading plant
Geismar 3 is an industry-leading plant First methanol production now expected in Q4 2023; upper band of capital cost range lowered by $50 million to $1.30 billion Investment strategy Key milestones Meeting growing demand for methanol Q4 2022 • Pipe rack installation Significant capital and operating
Slide 21: 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. 2022 dollars. 21
Slide 22: 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 ~$2B distributions $350 $800 $300 $600 $250 $200 $400 $150 $100 60% Capital $200 ~$3B investm
Slide 23: Strong excess cash generation creates options
Strong excess cash generation creates options Illustrative cash flow waterfall Q1 2022 to 2024 at $400/MT $1,800 M ($300 M) $1,100 M @ $350/MT ($675 M) ($220 M) $1,405 M $1,100 M ($300 M) $705 M @ $350/MT Cash Illustrative Operating Remaining Dividend + Bond Excess cash balance FCF at cash G3 capex
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: Modeling information
Modeling information Sales mix 20% Europe Financial profile 30-35% ~$110M China 25-30% North America + Lease Principal Payments 20% Latin America ~$160M Asia Pacific (ex. China) Interest Expense ~$350M Depreciation + Amortization 2022 posted price discount rate guidance: 20% ~30% Gas cost structure
Slide 27: Forward-looking statements and non-GAAP measures
Forward-looking statements and non-GAAP measures This presentation, our First Quarter 2022 Management’s Discussion and Analysis ("MD&A") as well as comments made during the F irst Quarter 2022 investor conference call contain forward-looking statements with respect to us and our industry. These stat
Slide 28: Appendix
Appendix methan 28 ‘the power of agility |
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 changes in tax rates, and other items can impact actual ownership interest. Approximately 65% of our current free cash flow. Incremental free cash flow from G3 is Nor
Slide 31: Thank you
Thank you Investor Relations T: 604 661 2600 [email protected] www.methanex.com linkedin.com/company/methanex-corporation @Methanex