管理層發言
Good morning. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Methanex Corporation Second Quarter 2026 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference call over to the Vice President of Investor Relations at Methanex, Mr. Robert Winslow. Please go ahead, Mr. Winslow.
Good morning, everyone. Welcome to Methanex's second quarter 2026 Results Conference Call. Our 2026 second quarter news release, management's discussion and analysis, and financial statements can be accessed through our website at methanex.com. I would like to remind listeners that our comments today may contain forward-looking information, which, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from actual results. We may also refer to non-GAAP financial measures and ratios that do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Any references made on today's call reflect our 63.1% economic interest in the Atlas facility, our 50% economic interest in the Egypt facility, our 50% interest in the Natgasoline facility, and our 60% interest in waterfront shipping. To review the cautionary language regarding forward-looking statements and to find definitions and reconciliations of the non-GAAP measures, please refer to our most recent news release, MD&A, annual report, and investor presentation, all of which are posted on our website under the investor relations tab. I will now turn the call over to Methanex's President and CEO, Mr. Richard W. Sumner, for his comments followed by a question-and-answer period.
Thank you, Robert, and good morning, everyone. Appreciate you joining us today to discuss our second quarter 2026 results. Our second quarter average realized price of $529 per tonne and produced sales of approximately 2.2 million tonnes generated adjusted EBITDA of $577 million and adjusted net income of $300 million. This adjusted EBITDA, which includes a $12 million accrual for restructuring activities at our Trinidad and Tobago operations, increased versus the first quarter of 2026, largely due to a higher average realized price driven by the Middle East conflict combined with continued strong production from our enhanced asset base, particularly in North America. The resulting strong cash flows from operations allowed us to repay the remaining $290 million outstanding on the Term Loan A facility, while still ending the period in a strong financial position with more than $380 million of cash on the balance sheet. The continuing Middle East conflict has resulted in an impact on many industries, including methanol. We estimate that 15 to 20 million tonnes of annualized methanol supply is required to transit the Strait of Hormuz to reach end markets. During the second quarter, we believe some of this supply, mainly from Iran, came to market at significantly reduced volumes and almost entirely from preexisting inventories. We believe the significant supply gaps created through the second quarter were met with a combination of rapid drawdowns of inventory primarily in Asia, and through increasing demand rationalization, both methanol-to-olefin demand in China and other demand, particularly in Asia. This situation led to elevated and volatile methanol pricing across the world throughout the second quarter. There remains significant uncertainty as to the ultimate resolution of the ongoing conflict, and the extent of damage to methanol plants and broader infrastructure is still not clear. As we move into the third quarter, under current conditions, the impact of a more prolonged conflict will become even more severe on the methanol industry. We believe the 15 million to 20 million tonnes of production previously mentioned continues to be idle and that pre-conflict inventories are now meaningfully reduced. As a result, we would expect to see even less supply from the Middle East as we move through the third quarter, and this, combined with inventory now drawn to very low levels, means we would expect increasing pressure on industry supply to meet ongoing demand. Under current conditions, demand rationalization will increasingly be required until a resolution allowing Middle East production to resume and to reach the market on a more normalized basis is found. Turning to our operations in the second quarter. Our total equity methanol production of 2.2 million tonnes was slightly below first quarter production levels. Starting in North America, we produced a record high volume during the quarter of 1.6 million tonnes across Canada and the United States. We produced 1.127 million tonnes at Geismar, which is also a record level in a quarterly period for that site. We produced 180 thousand tonnes of methanol at the Beaumont plant in the second quarter, and our equity share of production at the Natgasoline joint venture was 204 thousand tonnes. At Beaumont, we took the plant offline in early June and safely executed a 30-day unplanned outage to repair the cooling tower with the plant restarting in early July. In Chile, we produced 327 thousand tonnes in the second quarter utilizing gas supply from Chile and Argentina. As expected, production was lower in the second quarter, as we shifted to operating one plant midway through the quarter due to the seasonal reduction of gas availability from Argentina during the Southern Hemisphere winter. In Egypt, our second quarter production was similar to that of the first quarter with the plant operating at full rates. The plant continues to operate well today, and we are closely monitoring the supply and demand balances in the country during the summer season when local residential gas demand typically peaks. In New Zealand, we produced 46 thousand tonnes in the second quarter, down from the prior quarter as we entered into various commercial arrangements to manage and optimize our gas supply entitlements given the meaningful short-term uncertainty and structural challenge in the gas market. We shut down the plant for May and June and restarted in early July at similar reduced operating rates to the first quarter. Lastly, on June 29, we announced the indefinite idling of our Titan plant in Trinidad and Tobago, as we were unable to come to terms on a commercially viable natural gas contract. We will continue to monitor future developments in Trinidad with a view to reassessing conditions over the coming years. I want to thank our excellent team members in the country for their professionalism through a difficult period. As a result of the commencement of restructuring activities, we recorded a $115 million non-cash after-tax asset impairment charge and a $12 million accrual for restructuring activities. Looking forward, our expected equity production for 2026 is approximately 9 million tonnes of methanol. Actual production may vary by quarter based on timing and turnarounds, gas availability, unplanned outages, and unanticipated events. Based on July and August contract price postings, and assuming market conditions remain consistent in this volatile macro environment, we expect our average realized price range for July and August will be approximately $460 to $485 per tonne. Assuming this pricing holds through September, and factoring in produced sales volumes similar to those of the second quarter, we expect another strong quarter of earnings, lower than in the second quarter due to lower pricing. Our priorities for 2026 are unchanged: to safely and reliably operate our assets and supply chain, and to complete the OCI integration plan and realize plan synergies. Now that the Term Loan A facility has been repaid, we are approaching our initial leverage target of approximately 3x adjusted debt to adjusted EBITDA. In this highly uncertain and volatile environment, we will continue to direct the majority of available free cash flow to building cash and reducing debt to move towards our longer-term leverage target range of 2 to 2.5x adjusted debt to adjusted EBITDA at mid-cycle pricing. As we make progress towards this goal, we will evaluate directing a modest amount of free cash flow towards share repurchases. We would now be happy to answer questions.
分析師問答
At this time, I would like to remind everyone in order to ask a question, press star and the number 1 on your telephone keypad. On today's event, we request everyone to please limit yourself to one question and one follow-up only. Thank you. Your first question comes from the line of Ben Isaacson with Scotiabank.
Thank you very much, and good morning, everyone. I just have one multipart question, Richard. On the Q4 call, so about six months ago, you said that we would not really see much Q1 margin capture from rising spot prices as it related to the start of the war, as you were going to honor contracts and discount rates that had already been negotiated. The thinking was that if you did not capture margin on the way up, then you would certainly capture it on the way down. I think why the stock is down a bit today is because it appears that the average selling price guide you are giving appears to be giving up margin not just on the way up but on the way down as well. So is that the wrong way to think about it? And can you remind us how exactly monthly contract prices are set, how those discount rates are set and adhered to? And then just a blue sky question: would it not be easier just to charge spot plus, say, a fixed premium or whatever the number is, $40 or so for customer service, availability, reliability, etcetera? Thank you.
Thanks, Ben. I think to answer that question, is it the wrong way to look at it? Maybe partially, but there is an explanation regarding spot. In a rising price environment, contract prices tend to lag the rising price. Some elements in our contracts have some reference to spot pricing, and some of our regions are more focused towards a spot-type of pricing element, Asia being the one that points more towards spot. So in a rising spot environment, you will have, I have to call it, a compression. You will realize more off of the discount in a rising price environment, and in a lower price environment you would realize less of that contract price because of those components in our contracts. So right now, when we gave our price guide for the third quarter, just remembering that from a market perspective, we saw a pretty meaningful impact through July and August, which was the period when we entered the temporary ceasefire and a lot of product got released in a very short period of time. That is now obviously stopped. That actual volume combined with sentiment meant we saw a pretty big downshift in spot price, particularly in Asia, but actually in regions around the world. So we effectively put that into our estimates for the quarter to be conservative. That is actually already started to reverse. So when we look at our price guide, we are probably already at the top end of the range. If market conditions continue because we do not see supply being released, we would expect things to tighten up and those realizations would be higher, based on that view. On your point about pricing: the market principle has been contract price postings. That is the way the industry prices. We are always looking at the way discounts have gone and the way some of the formulas work; we are always looking at, is there a better way to price? But as of today, we remain committed to our contract price postings, and that is the way we go to market to customers. Hopefully that answers your question.
That is great. Thanks, Richard. Appreciate it.
Your next question comes from the line of Joshua Spector with UBS.
Yes. Hey, good morning. So I just wanted to ask on the production guidance. You basically held that constant despite taking down supply. I mean what is the assumption behind that? Are you assuming you could run the Americas harder? Or am I just reading too much into a small change here?
Thanks, Joshua. When we look at that guide, we are looking at where we are today. We are slightly higher than the guide. So we have kind of already accounted for the back half of the year with Titan now being idled and under the assumption that what we have seen so far and where we are higher is really in Egypt and New Zealand. When we look at the back half of the year and how things are trending, we think we make up that volume. So we are around the 9 million tonnes and holding to that. I will also say that when we think about the tonnes, not all tonnes are created equal when it comes to earnings. Taking out Titan is a lot different than having higher Egypt volumes, so there is a benefit there certainly in terms of the cost competitiveness of the production that is really running well right now.
Okay. That makes sense. And I just wanted to follow-up on your comments you made around cash deployment and particularly buybacks. I guess we do not know how long higher prices are going to last, but you are clearly generating more cash here. We understand your goal of getting to 2 to 2.5x, but your stock is very volatile around people's views around war on, war off. It would seem like you have opportunistic opportunities to maybe deploy some cash towards buybacks and still have pretty good visibility to getting to your leverage target in six to 12 months. So why not consider doing something earlier, or is that something that is going through the thought process at all as you look at where your stock is over the next three to six months?
You know, we will make an assessment of where we are against our deleveraging plan, what is the forward view of cash generation, and where the share price is performing, and determine how much goes to share repurchases and also when we would open up the flexibility to do that. But I can say that it is in the thought processes right now.
Your next question comes from the line of Jeffrey Zekauskas with JPMorgan.
Thanks very much. Your cash flows were very strong this quarter, but it is a little difficult to tell if there are taxes that need to be paid or if working capital really needs to move up toward the end of the year. What do you think the relationship between your operating cash flow and your adjusted EBITDA will be this year? Roughly what percentage will be operating cash flow?
When we look at our adjusted EBITDA in a normalized environment on an annualized basis, the difference between adjusted EBITDA and operating cash flow is around $500 million, and that reflects our lease payments, our interest, our capital, and then cash taxes as well. During this period, we did have a significant working capital build that was around $150 million, and a lot of that is in our trade receivables. A pretty big chunk of the earnings we saw is captured in accounts receivable right now. In the event we get back to more normalized prices, we would expect that those earnings would come through. So the longer that does not come through, the more we are earning in terms of higher prices. On cash taxes, I will turn it over to Dean Richardson, our CFO, to speak to that.
Sure. Good morning, Jeffrey. We did accrue cash taxes in the quarter given the earnings, so you will see that the cash taxes paid on the cash flow is a modest amount and there is a payable that has been built. That is part of the build in our accounts payable. Our guide on taxes remains the same at about a 25% tax rate and about 50% cash taxability, and that is primarily due to the fact that, in this high price environment, our U.S. assets are not cash taxable. That is the micro answer. The macro answer Richard gave around the relationship between EBITDA and cash flow.
And when the Straits opened up, how much methanol do you estimate came through the Straits and how much have the Chinese increased their methanol production to make up for the tons they are not getting from elsewhere?
When we think about the Middle East and the 15 to 20 million tonnes, the big question is how the market stays in balance. We think of that amount during the second quarter, about a third of that was actually released during the quarter, and that was Iran coming out at smaller, reduced volumes throughout the quarter. During the temporary ceasefire period, we saw both Iran and other Gulf volumes being released. It was about a third total. Determining how much came out during the ceasefire versus other periods is difficult—the flows were lumpy and a lot of those shipments came into the market over July and August. Where we go from here depends on inventories and demand rationalization. Coastal inventories in China were drawn heavily and domestic operating rates in China have been strong, but there has not been a huge step-up of Chinese operating rates beyond that. The Chinese market has been somewhat sheltered by MTO shouldering most of the supply issue with Iran. As inventories are worked through and buffers are gone, it will put MTO coastal demand under pressure and likely start to pressure domestic markets. In many ways, the domestic industry has been sheltered because MTO has taken the brunt of lost Iranian product into the market.
Your next question comes from the line of Joel Jackson with BMO Capital Markets.
Good morning. I am looking at Beaumont. You took it down for the cooling tower repair. The cooling tower is back up. I know you talked about maybe being able to make some changes over time at that plant, maybe improving it. Would that be something you have to wait to do during a turnaround, or were you able to do some of the work in June?
Just a reminder more broadly on Beaumont and Natgasoline: we are very pleased so far with what we have seen from those assets a year from the point where we closed the deal. The operating rates we have seen so far have been above where we expected from a deal value perspective. We have done deep technical reviews of both assets, looked at inspection reports, and come up with lists of risks and vulnerabilities. Our goal is to reduce those through online maintenance, unplanned maintenance if required, and major turnarounds. The most work is done during a major turnaround. The cooling tower issue was a risk in our matrix and we had plans for online maintenance during the second half. But upon further inspection, the structural damage to the support of the cooling towers was too much, so we took the outage. The team executed that within 30 days, safely, and at the same time we addressed other vulnerabilities at the plant. Our goal is to continue to run safely and reliably and we believe we can do that on a long-term basis with both sites. We are still learning the assets. If you ask would we like to have a full turnaround cycle, yes. But we know the teams well now and our goal is to continue to operate at strong reliability and pursue opportunities to reduce risk, the next big opportunity being the scheduled turnarounds which are in the 2028–2029 time frame. The team has done a great job integrating.
At Geismar, the three plants seem to perform really well. You got over 1 million tonnes in a quarter. You have never done above 1 million before. Should we be modeling that going forward? Should we expect above 1 million tonnes now, ignoring turnarounds or any unplanned outages?
The goal is 4 million tonnes a year for the Geismar complex with about a 97% reliability rate. The plants perform across turnaround cycles and sometimes you dip based on catalyst life as you approach a turnaround, but over the average the target is to deliver 4 million tonnes of production there.
Your next question comes from the line of Hassan Ahmed with Alembic Global.
Morning, Richard. I wanted to revisit the 15 million to 20 million tonnes of capacity being impacted by the Middle Eastern conflict. I understand you mentioned that almost a third of that was released as the Strait opened up. As you cut through the noise, I'm trying to get a better sense of how much of those 15 to 20 million tonnes have actually been significantly adversely impacted—meaning what percentage of those 15 to 20 million tonnes will take a while to hit the market when navigation fully opens up?
Thanks, Hassan. When you ask how much of the production is impacted, effectively all of it is idle or constrained because it needs to transit the Strait of Hormuz and we do not have free navigation flowing now. About a third of that—during the second quarter—was released into the market from pre-existing inventories or inventories on vessels. We have not had production to back that up. The market has weathered the shortfall by drawing inventories through the supply chain and by demand rationalization. Coastal MTO demand is a major factor: typically 10 to 11 million tonnes on an annualized basis would be operating at high rates in a normal year. We have seen demand rationalization in the Middle East, India, and Southeast Asia, and that has made up for a portion. What we are not going to have once those inventories are worked through is the same levers to manage the shortage. That would require further demand rationalization and will start to pressure additional regions. Even if navigation reopens, there are questions about whether gas can get to methanol plants and whether owners, charterers, and insurers will be comfortable with shipping. So there is a long path back to pre-conflict normalcy.
Very helpful. I wanted to dig a bit deeper on the demand side. Particularly in light of some of the inventory statements you made. You talked about significant drawdowns of inventory in Asia. If pricing starts ticking up, what could a restock look like?
You are asking the right questions. It is hard to form firm views in this dynamic environment. On methanol specifically, supply chains have been depleted of inventory, especially in Asia. Coastal inventories in China are around 500 thousand tonnes now, down from about 1 million tonnes—so roughly a 1 million tonne draw in a quarter. Customer supply chains are tight. How this affects downstream products varies. China has continued to operate strongly and exports have supported some chemical value chains like acetic acid, which has helped fill gaps. How long that lasts without prices suppressing demand further downstream is the big question. The markets most acutely impacted are those where the Middle East is logistically advantaged—India, Southeast Asia, Taiwan. We do think if this continues, it will start to impact markets we serve. We are monitoring the situation closely with customers. Price is usually the mechanism that cuts demand, which can lead to inflationary pressures further down the chain and long-term demand risks. We are navigating this carefully and continually monitoring.
Your next question comes from the line of Nelson Ng with RBC Capital Markets.
Great. Thanks, and good morning, everyone. On shipping costs, I think the disclosure was higher logistics and other costs in Q2 compared to Q1 that reduced EBITDA by about $18 million. Can you provide a bit of color in terms of whether the majority of that was mainly higher shipping costs? Within shipping costs, is it just higher fuel costs, longer shipping routes, insurance, or other factors?
When we look at our shipping costs today, we are in a very different supply chain environment. Fuel cost was a big factor—bunker costs went up by about 40% during the quarter. Also, the spot vessel market has increased significantly and there is far less backhaul opportunity because refiners are limiting exports and cannot get the crude they need in many cases. That means a far less optimal fleet from both a shipping cost perspective and the miles-per-ton of methanol moved. We are avoiding spot exposure from a cost perspective, so we are relying more on our time-chartered vessels. Those two factors are probably causing a $30 million to $40 million headwind versus our run-rate plan for the year. Part of that showed up as roughly $18 million in Q2. All of that would normalize and go away in a different market environment.
And can you remind me what portion of your product you transport with your own ships versus using spot?
In a normal environment, about 80% is time-charter, and roughly 10% to 20% is COA and spot. In this environment, we are effectively using our time-charters to move our product and are closer to 100% on a contracted basis because there is no backhaul opportunity and the spot market is unattractive. So today we have effectively zero spot exposure.
Your next question comes from the line of Laurence Alexander with Jefferies.
Good morning. Two related questions on the demand side. Could you be a little more granular about where you are seeing demand shaking out this year by key end markets? And can you clarify to what extent you have visibility on the degree to which demand is getting pushed back, or are you hearing from the downstream chain significant efforts to shift or substitute away or just outright demand destruction? How much visibility have you been able to get over the last few months?
To put it in perspective on an annual basis, global demand is roughly 100 million tonnes—about 60% in China, 20% to 25% in Asia ex-China, and 15% to 20% in Atlantic regions. Today, we estimate demand is operating 5% to 10% lower than what we would normally expect at this time of year, largely because MTO is operating at lower rates—probably a 5 million tonne annualized reduction versus normal. Additionally, there is another roughly 3 million tonnes of demand impact spread across Middle East and South Asia markets where production or end uses like acetic acid are not operating fully. Outside of those areas, applications like formaldehyde are stable off a low base and housing-related demand remains weak. Some downstream products have not seen huge price spikes, which suggests we have not seen broad, permanent demand destruction yet. China has sheltered some of the pressure by exporting intermediate products, which has helped. We continue to monitor how pricing and inventories develop to understand whether this becomes more structural or remains a transient dislocation.
Your next question comes from the line of Matthew Blair with TPH.
Thank you, and good morning. Richard, do you think that Iranian methanol supply has been impaired going forward? If so, would that come from hits to the South Pars gas field in Iran or actual damage to any Iranian methanol plants?
It is still unclear today around what damage may exist. We have not seen reports that conclusively indicate methanol plants have been damaged, but we have heard reports about potential impacts to the South Pars gas field and that gas processing from those fields could be limited. It is difficult because we do not have direct access to on-the-ground information. We have not seen a period of stable operations through the last five months, so it is hard to know. If gas fields are impacted, you then prioritize gas to residential and other essential uses and methanol would be deprioritized. Navigation remains a big risk as well. As of today, we do not have visibility or information that confirms any long-term damage to methanol-producing facilities.
Sounds good. I also noticed Methanex itself has built inventory each of the past two quarters despite favorable methanol prices. Should we think about that as preparation for upcoming turnarounds in the back half of the year, or is that just normal course of business? Would you expect to draw down some of that inventory in the back half of the year?
I would not read too much into that inventory build. In this environment, customers have been cautious and are running low inventories, buying as little as possible until there is more normalcy. Small changes in our sales projections can lead to a build in inventory. Over time, those things typically reverse, but I would not read a lot into the current build.
Your next question comes from the line of Hamir Patel with CIBC.
Hi. Good morning. With your current customer commitments and the demand changes you are seeing, how do you think about your geographic sales mix for the remainder of the year? How might you look to optimize that?
We expect to stick to our guidance but probably on the low end for China volumes. With Titan idled, we would expect China sales to be lower and proportionality to lean less to China and more to markets outside of China, which is beneficial from an overall average realized price perspective.
Earlier on shipping you mentioned a $30 million to $40 million headwind you are seeing this year and $18 million in Q2. Should we expect most of the remainder to show up in Q3?
To clarify, that $30 million to $40 million is versus our run-rate or plan and is a material quarterly impact because bunker costs rose about 40% and the fleet is sub-optimized. About half of that came through in Q2, and the other half would be coming through in Q3. If things normalize, we would expect shipping costs to return to more normal levels in future quarters.
Next question comes from the line of Hassan Ahmed with National Bank of Canada.
Thanks for taking my question. Just on the Trinidad idling process, beyond the $12 million restructuring costs, are there any ongoing other cash costs or closure expenditures that you anticipate in Q3?
No, there will not be material additional cash costs. We still have our team there and we are going through restructuring planning to determine the size of the preservation team going forward. Those costs will continue to be incurred but they will not be material.
And touching on the acquired assets and their strong performance: you mentioned you are on track to realize synergies. Is there an opportunity you might exceed your original targets for the acquired assets?
We came out with $30 million of hard synergies. We have realized some of those and are running lower costs in certain areas. This year we are running higher costs to accelerate the extraction of those synergies, and we are on track for the $30 million in hard synergies by the end of the year. Regarding deal value, there are controllable and uncontrollable variables. Controllables include asset performance and capital deployment. We are doing better than assumed on those controllables relative to deal value. Uncontrollables are natural gas markets and methanol pricing. North American natural gas has continued to be more competitive than the $3.50/MMBtu assumption at deal value, and methanol prices have exceeded run-rate assumptions. Across all elements the transaction is performing extremely well. Our job is to control the controllables and continue to deliver on integration and synergies while maintaining safe, reliable operations.
Your next question comes from the line of Roger Neil Spitz with Bank of America.
Thank you. On Trinidad and natural gas contracts, can you speak to why you were unable to agree on a new supply contract? How was Titan not contributing EBITDA or free cash flow in the second quarter?
We were unable to negotiate a future gas contract as the existing gas contract was coming to an end. We terminated a gas contract earlier by a few months when we could not reach terms. The gas price under potential new contracts was linked to methanol prices and to other regional considerations, and when we assessed the netback economics for Titan within our supply chain, the economics did not work; we would not have been making money under the contemplated terms. Given that and the prospect of a less favorable contract, we took the decision to idle the plant.
And on the May 2027 maturity—given current methanol price levels, what are your thoughts on refinancing timing or considering outright repaying the debt?
You are correct that we have many options with regards to that maturity. As we build cash, our intention is to deploy it, but we have not made a final determination on early repayments versus refinancing. We are working through those options and will make a decision based on our cash position, leverage targets, and market conditions.
There are no further questions at this time. I will now turn the call back over to Mr. Richard W. Sumner.
All right. Well, thank you for your questions and interest in our company. We hope you will join us in October when we update you on our third quarter results.
This concludes today's conference call. You may now disconnect.