MEOH - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Methanex Corporation Q1 2021 Earnings Call. I would now like to turn the conference call over to Ms. Kim Campbell. Please go ahead.

Kim Campbell

you. Thank everyone. morning, Good first results our call. quarter to conference XXXX Welcome

the first from discussion to news and from that today its Our to materially on remind of assumptions would quarter that that annual methanex.com. management's website or comment may information. answers our included subject of effective the Relations to quarter actual and making provided to to and not were at our It to tab our may which listeners regarding like date. is report accessed XXXX first to guidance this conclusions like are today's be any I information. nature, release, are would also analysis I the the page risks drawing in projections, forward-looking performance can implied outcomes future the financial the reports our listeners as quarters. the for information. Investor and material comments between forecasts uncertainties Certain Methanex' contain your our on questions and Please cause stated update more XXXX by factors projections This outcome. information, our in differ or or statements policy MD&A financial our XXXX caution or today forward-looking to is refer

interest our economic reflects today's clarification, economic For XX% or flow the interest facility any references to our XX.X% remarks and the cash made in Egypt revenue, income EBITDA, in facility. Atlas in

analysts this CEO, question-and-answer events. like comments better and turn report the to over underlying associated to and we and Floren, company now identified this a We and in call impact the impact for Mr. compensation period. mark-to-market covering adjusted of specific addition, and the to measures these measure them In Methanex' to a manner. I non-GAAP John would make his exclude we items certain on our adjusted in report net performance, the to EBITDA - income report operating estimates President of share-based their with encourage

John Floren

hope healthy. you continuing We everyone. and are morning, stay safe to Good that

As pandemic hard months. for it's results, we believe through XX the operated deliver our that QX we've XXXX over to

Our business challenging navigate us planning to model and resilient and this execution period. enabled through have robust

our incredibly are have this agility who of proud commitment team shown worldwide We over tremendous year. and

teams adjusted strong other which keep our morning, we delivering reliable our highlight while supply and continually to model. first discuss of Our have business financial XXXX our to how work quarter results, our each to the operations safe I'm customers. methanol maintaining This pleased value

see operational the in We the market discuss methanol quarter. our review today share will what we our entering to also results and second outlook

quarter methanol fourth our the in financial XXXX. results. the quarter our by higher of realized $XX price up We compared XXXX, to to to Turning $XXX prices increasing tonne, per posted first average of

by million Our leverage adjusted the have over million demonstrate $XXX results of the to EBITDA $XXX that earnings ethanol of prices. fourth These higher quarter increased XXXX. our

the the fourth income increase also of million or million to share per of higher $X.XX in $X.XX $XX quarter, quarter. net adjusted share per an We recorded or compared first $XX

we Turning to methanol Global to methanol in continues this with ongoing compared quarter global in to current X% the demand first This higher demand first supply prices the and demand methanol market recover combined markets. the return later approximately steady industry XXXX. year. by increased pre-pandemic tight trajectory, methanol anticipate Methanol recovery, quarter. XXXX the led demand the first conditions quarter of challenges at levels and to to will of the

supply tight and tonne. methanol $XXX China, today. this in $XXX the in range remained low remains see quarter, and at to the to inventory We above continue set per industry Spot estimate We quarter. increased at posted and recently which conditions are global curve, second $XXX We per price, European levels which is contract $XX second or pleased favorable posted the persist our price China May cost Early approximately our We tonne. per price to second prices to into quarterly industry North and are $XXX which approximately remain per tonne. market conditions our American recover. price, in continues Asia is $XXX by remained Pacific industry set challenges tonne, demand methanol €XX and our quarter

to our operational results. Now turning

XXXX Atlas of the the to quarter and of in offset to production In Hat due facilities in was facilities quarter X.X fourth quarter similar the Zealand production production of first Our lower production results. of compared our fourth lower tonnes deliveries. New to lower of was at first our XXXX Geismar million first quarter. our New Zealand, Higher gas and quarter XXXX Medicine

In projects mentioned X.X million we tonnes. The larger last our production on our February availability Waitara that years. our quarter, two As first indefinitely. facility. site. production will be field We of consolidated the impact Winter improve quarter Zealand plant quarter significantly coming several idle did the two Motunui lower a are estimate completed not New Valley Geismar Uri Geismar, we plants in the turnaround gas gas to planned for development in in Storm large the XXXX at expected we was over completing fourth than production sector because in upstream

Geismar completed extremely record site. mid-XXXX. work We Geismar in and Following debottlenecking production running we be expect project project we plant facility XXXX, well, achieved has debottlenecking been levels the the our at and one at two to Geismar in complete the this have turnaround,

production first fourth In quarter our increase than for planned Methanex' as first nearly at the our than rates. I to current deliveries, the estimate production in fourth million quarter X.X tonnes, As XXXX activities turnaround higher the we higher in Geismar Chile, fourth Trinidad, Chile on an for gas quarter Based production Trinidad the in from tonnes, was a operating was tonnes X.X our quarter. In reflecting plant as operating to production in our be million full interest. of impacted ran two million quarter result, facilities capacity the our will increase XX%.

due southern impacting it months upstream plant driven experience by our gas deliveries lower persist. to is typically second constraints uncertain supply and idle declines winter Our will Chile remains long quarters, how Argentina. hemisphere and third in production deliveries in these gas We lower gas IV the

gas XXXX estimate production current for sufficient is our be the I first XXX,XXX to we was in to our for to Chile run tonnes. production Egypt, and Chile supply was plant, as Our XXX,XXX our quarter activities planned similar to fourth Hat, fourth ran operating impacted as first full turnaround rates. production higher Medicine quarter. in quarter the in our at nearly plant production quarter In the the In

sheet. balance our to turning Now

position until XXXX. the in debt revolving with maturities end no million We facility have over cash, million undrawn $XXX of strong with liquidity a a credit $XXX

approach disciplined allocation changed. Our has capital to not

next the exceed financial focus long project. shareholders meet deliver on well Over project us key operating hurdle is attractive cost on the capital term, Geismar opportunities through commitment that dividends positioned we're three A our XXXX our repurchases. on to in of we A unique and excess rate growth advantages. for our execute cash return believe to to share deciding steps our and with significant and commitments,

robust project. We decision-making for a have evaluating the process

execute project. our deciding of the including and consider to overall will industry recovery to financial carefully our outlook, and position global strength the ability Board Before management and on the our restart economic the many methanol factors, whether construction,

We next project decide on the to steps the for later expect this year.

conditions in XXXX. industry by we encouraged favorable so have far that seen are We the

rates up industry this current to supply monitor operating We impact and on and year, later demand new global the continue capacity balance. start scheduled the to

optimistic accelerate support additional announced that measures. global will out are fiscal rolled the recovery and We economic worldwide vaccines as as governments

flexibility and to liquidity For financial continue value. shareholder deliver long-term best to now, prioritize we ourselves to position

Now turning to the quarter. second outlook for the

first prices methanol be posted so similar production will similar based forecast compared anticipate second EBITDA We to in realized quarter. the to to the We our second that in of XXXX first the prices first will be quarter second results adjusted similar expect We the on quarter quarter quarter our quarter. far. the

plants continue secure safely to operating our our customers financial reliably, our focus delivering flexibility. We supply to and and reliable protecting and on

We to We would happy to answer be long-term value now shareholders. to are well questions. positioned deliver

Kim Campbell

to now. ready we're questions Operator, answer

Operator

Thank you.

CIBC. Sorry, [Operator on Jacob I mute. you. Bout, first Instructions] Our Thank was question,

ahead. open. Your Please go is line

Jacob Bout

Hi. Good morning, John.

John Floren

Jacob. morning, Good

Jacob Bout

question share in GX? just dividend, pretty in free the Maybe about just flow decent talk - here, buyback about quarter. priorities investment allocation, the capital First some cash for

John Floren

Yeah.

about our So allocation. nothing's changed, Jacob, capital strategy really in

at We prioritizing financial and this point. are flexibility liquidity

clarity reasons market company for three out come pandemic and demand take the changed. grow cash, more really, in we As the get certainly, the some and on nothing's We'll with to supply of how grows. But really is understood. much cash line

- that dividend As also three we or meet hurdle find certainly can and balanced long our then additional hurdle shareholders excess we'll exceed or cash rate, Geismar return approach to to And take our does. exceed a which through buybacks. as projects

in changed really strategy. capital So allocation nothing's our

Jacob Bout

GX put dividend? of increasing ahead you Would

John Floren

a Again, approach. we take balanced

amount and over size billion period, - dividends returned money. through doubled the growing at its company the share and looked So we investing think, of I repurchases we've, similar $X last by

So obviously, cash would project, when tonne distribution. free But of we realized, can brownfield methanol, go the a a cash to $XXX GX for or most complete depending have on constructing above the doing a price we're greenfield project. and additional of

So what will be. actual by a price lot the will be determined realized methanol for

Jacob Bout

you Are partner at for GX? a looking still

John Floren

have pursuing partner and GX, that. for to we're still a is preference Our

Jacob Bout

I’ll leave it Thank you. there.

John Floren

Thanks, Jacob.

Operator

Thank you.

Our from Scotiabank. next Ben question Isaacson,

Please open. ahead. is line go Your

Ben Isaacson

around eight you. rate discount the to year? get guided first that roughly, is [ph] XX half at for the increase Thank in it to XX I expect to below year need that And on think was we everyone. the came Or have John, of year. the rate for discount in morning, fall that for mean you XX guidance? the Does back good question it that do Methanex to

John Floren

our And realized haven't methanol. the to important point. at changed at we think Ben, is for Yes. look what's guidance this price I

So for the optimize decisions realized world, make there look at the are quarter, the some price we're And when markets. trying anomalies. pricing to around all when I we

was nice did freight Still Asia additional one realized impact of our for the discounts. to Pacific. we posted go allowed price product out posted sanctioned differentials in you have to Asia for with in based when I'm China China, China, really a quarter. one at it and look very compared this to there happy came how on it We price, pressure some And only price, really quarter. But and example, but

at XXXX. realized three is QX our since realized Our price price XX best

hitting I the not target on focus x there of the a on company. lot a the to maximize our globally, of think for make percent decisions overall pricing we trying we're realized the discount. focused But to is when me, price on So We're discount.

Ben Isaacson

Can been past, about share talk how market. Waitara And follow-up, That's that roughly, of your is purchase Valley how you bit tonnes, methanol what, at of important GX. about come right a are you? produced question kind market to Can is tonnes, then where commission tonnes, an just obviously share talk indirect in the the I share When important market and terms a you've to maybe XX% that Methanex. know look down impacts you. tonnes and IV Thank ability on just XX%, you Chile of idled going you in influence Titan, methanol now. how with market

John Floren

industry, leadership, this think safety, marketing, I new important clear the proving what's not we're that been care, clear in is on just and logistics, But out on that forever. technologies could leader we've go the responsible leader. but

The structure really the like So structure. the nice. important. industry industry leadership nature of We is is

So important. leadership's a we is share but up share more Market leadership don't get target. of market But is hung particular we part that, think important. on

and We had Medicine - in You're closed. go Chile - and Trinidad, Zealand. or right United and we've Zealand. suffering can Chile to But almost issues in back zero zero New years I point in had any four were and in production the maybe in States New we have last the we Hat didn't was some XX plants out,

part our always this So of business. we somewhere. issues of seems kind have is like It

trying leadership We share. have and always opposed we're running to to XX position as plants market optimize

Ben Isaacson

That’s Thanks so much, great. John.

Operator

you. Thank

Capital next Our Markets. Nelson RBC Ing, question,

ahead. Your go line is open. Please

Nelson Ing

And good everyone. morning, thanks. Great,

- market just to question are have about terms hot. and the First labor you any Gulf you're labor presume GX. if Can in - now. you looking what the in you pressures? the the Like comment market, there cost seeing I you of it see Coast But pretty into relates it's

John Floren

to Senior Yeah. Development. our Mike that's He's turn the obviously over Corporate really Herz. in there. He's with question one touch that down the I'll VP, market

Mike? So

Michael Herz

Yes.

where about people over come more expectation or see saw from a went before and and I'd activity recovering it perspective, it's be see GX that I'd in maintenance. say changes we saw about we We And our dip, economy. would where prices think thought in, materials. seen would our - it into I be care we we've obviously, as as today kicked year, say. last a COVID off activity you the labor So

John Floren

just I Yeah. add, on a would GX. that completed turnaround Nelson, there we just

lot experience of - under that. well as So to labor do the we We cost any as and completed our And not certainly, schedule availability different. with was that productivity and ahead used a of turnaround labor budget.

think that's indicator labor market a of So in I the the good today. really

I challenges and we months when from the be labor And not look now, or stages may think up to that be labor things for different make use economic competing now a quite one all of picks activity we different XX year decision, equally. XX get months GX the from could, not as is XX of the to created We the at construction projects. labor. as heated case could

is the GX, thinking equipment is is it. ahead So well And think about today, I all to what's important complete, I I when curve the pretty the at you're think when purchased. be engineering look of

a what its it's I call project putting the taking them So together. all now, and LEGO really pieces

the and product significantly and derisked productivity hourly has around - it's it's rates. been just So

about think we'll labor, things seven the two the to about restart there we our make with. to expect working we're A we is in some recommendation So get or as that are familiar with in the which we'll And from we transferred have and area years. decision. really area. that as [ph] I we're those that Board plants very plants construction labor the top-notch all Also, do team things the two think five The a of think make we project we about that built year. those this Chile in we to later last And the if And to firms a project important. GX their firms GX the

Nelson Ing

construction, you or restart at And if completion date? a to XXXX looking were would be you XXXX

John Floren

about its say From go, current our months. to Yes, we're we the XX months day going view. is XX

Nelson Ing

leave Thank you. great. it there. Okay, I’ll

Operator

Our next Holt. question, Matthew Blair, Tudor, Pickering,

go Please open. is ahead. line Your

Matthew Blair

morning, had in John. to I question Good the guidance. Hey. a regards

guess a I would Geismar it thought think coming I you been mentioned similar turnaround. of production out with quarter-over-quarter. higher have I little

and would what Chile Should think down anywhere from So I about be coming guess, we maybe here? lower production else?

John Floren

Yeah.

remarks, months for Chile. I as the lower winter part because gas think in the gas And to world in that time. that we always my coming get the diverted in we're of in I expect said deliveries heating into Matthew, winter more is

get QX. lower plant deliveries So through the we but expect did Chile the than winter, to we I run gas in probably

Matthew Blair

and in moves link, your you think than then And it. Got May mentioned it's spot to market North the the and at the your spot you're America spot what seeing recent was price perfect a in indicate in contracts And be small support better that you market what for Asia showing. I past, we're in stronger can pricing not pretty what would the times. could seeing about talk contract relative business But market? illiquid just

John Floren

Yeah.

inventories So we're markets, and seeing very low tight improving. very demand

to illiquid point spot markets. pricing environment. right you're and a Europe So America, those which very say things out, contribute the good to I'd is in Basin, North Atlantic usually small

markets. So indicative, some way but move really they're don't they in

of contracted. is the business For example, most

the more on availability there is spec. to time, customers it product, what's So getting of important on our

chain supply supply As not recreational disruptions, through material that's improve, go can their I'd needs. America in of I been that of they're a ability go lumber. say illustrated impacted. list list businesses enough around, whether to have a this have been there's And of aren't that and suppliers' their global because today pandemic long things North that could has meet available at things you just impacted. supply worried And vehicles, to really chains chains long really look about their their

China, earlier can that, methanol, price today. think supply make spot in the liquid being way real the China reliable is product I over a is maybe sanctioned availability prioritized And India. to market. of that said Having mentioned there So I its only and

but a sell when term need sanctioned balance, which the well can can on go new the as operates, We a more the how pricing or a arrives existing at places. couple things besides on in tight. see on the overall, But fairly markets are depending demand supply is product to China, lead short we're don't look going period. and to new supply, some some operate does of And China instances can in probably balanced, of to way it's the of India, supply in whether rest So methanol which sell and we lot pressure product recovers, keep impact only in balanced. we do to supply-demand Asia, we coke better, to the coming plant where

year, GDP next reported So forecast And I've U.S. IMF X.X%. the this X% seen it's maybe growth all the X% and about and year for demand.

really So to I good for positive will all think demand lead methanol. are numbers and those

So it's the service reliability all customers. demands being of about and to our me, to able

Matthew Blair

Great. Thank you.

Operator

Thank The you. Barclays. Leithead, question, next Mike

open. is Please line go ahead. Your

Mike Leithead

morning, John. Good thanks. Great,

John Floren

Mike. morning, Good

Mike Leithead

wanted the drill bit on into I First a down to first demand energy markets.

the seeing But MTO. world in rise applications. seems the cleaner what think release, I fuel for growing a strength given prices, the in what like in in oil in energy and applications. you late highlighted Obviously, other rapidly just the wondering of burning desire you're

just seeing in So what there? you're curious

John Floren

Yeah.

You're point XXXX. It MTO growth operated the to QX to olefin rates prices been really the continue and bright We some spot And right well over out, saw has strong. pandemic. XX% be the strong. and quite it's one through quite

continue the other - to So we year-over-year operate there what would expect growth look those there's been MTO well. If call quite we I energy, plants to well. on as

like the and demand. should in EXX normally room there, MTBE. normal, there, the the for which to pool good say And things I'd a cetera. MTBE for as pandemic. for more EX, levels back lot pre-pandemic standard, room the fuel be change to of not driving, driving there's with more is recent they do People been et China in especially kind grow there is have think I on much So as

traditional lots up which the of methanol about So and are now. demand right GDP of good by applications, XX% make there signs driven

predict where out hard as way the And vaccines of to out. see quite roll we're quite in So but States our lot down seeing roll seen certainly, a a -- especially area, future, it's the cases lining as we've and like up vaccines to significantly quickly. go seen favorable demand we've things Geismar places environment, United

to But better So should out, increased time vaccine and will activity roll this year. demand in lot future, spot our it's will the again, continue hard than economic see but to pent-up certainly resurface. a is today and probably last a anticipation of we that predict

Mike Leithead

Great. my Today, I apologize That's on said helpful. later the But parsing overly words I advance And maybe question said GX summer. here. I you think I'm year. just final by decision decision. this if follow-up quarter, think you last in

So with into all? world, just much some pushed I'm reading of too in being the that is Or the it? uncertainty out at

John Floren

you're much reading think I into it. No, too

We have the our summer. strategy session each with Board

recommendation signaled time, our I quarter think to to and we'll a at last I the that's make plan. Board plan still that that

Mike Leithead

you. Fair enough. Thank

John Floren

there'll Mike, a Having - further delay, said make a we're if a time, then restart why that, right? a bit staying year we that's later if there's further delay. So there's a of if positive ramp-up this be decision, obviously, there's

not So position today, decision we're but that a we the make recommendation make summer. by in to a will

Mike Leithead

very Thank you much.

Operator

Petrie, Citi. The you. question, next Thank Eric

line go Your is Please ahead. open.

Eric Petrie

John. morning, Good Hi.

John Floren

Eric. Morning,

Eric Petrie

you the US? to in an this think Year up the last methanol same? I X% estimated derivative - quarter. year, estimate it So demand as was Same about Chinese give how methanol down can period New Was X%. you impacted And demand global

John Floren

Yeah.

back not pre-pandemic to levels yet. we're So

but softer let's and of think QX. always QX a or I our in mentioned I business, mean lot a huge bit little opening below, remarks. Chinese demand impact a I in it's there's methanol Year China, not say, because QX the New in that variability of my of is always quarter.

QX, So but in X.X%, QX we sorry, year-over-year versus XXXX, X%. but -- demand look last about when at was down year,

pre-pandemic we'll later So levels, there to pretty we're we still we're close. And as back not I this mentioned, back but year. anticipate, get

lost X.X quarters said XXXX at around we million tonnes million lost demand. We that. entered that, to to now X%, view. and we've of had we've five our three that's year a which growth about focused So current demand having But X% as is

watch So come and sooner But we're of demand to pre-pandemic than and accordingly. now bit nicely does get we'll A later. a or back slowly? what back the that continue up But quickly adjust certainly, levels it and is signs to seeing could guess. certainly pick rather

Eric Petrie

did And In of heard impact? you know the an Uri I for don't if estimate I demand have say, destruction? terms you

John Floren

the In US? Sorry.

Eric Petrie

Yeah.

John Floren

down X% Yes,

Eric Petrie

methanol and a agreements same do as plants. follow-up then Trinidad work announced strategy term what's to gas short towards competitor question, And you their there? Okay. the a a Or in agreement? longer-term then Could restart the

John Floren

Yeah.

- to of the end allowed for some that our X-year been the to NGC our So that ended weren't We obviously, And able our profitable was throughout the government at something XXXX. us achieve before contract of with contract time strategy we we expiry have to the that. stay negotiating, cycle. the and get

month-by-month we and with So agreed to. if take-or-pay and we no - them down as we go wanted to shut village thought we had the

pandemic the hoped. one into the progress make with came was And was flexibility up, starting turn off we IV. Chile we we that to we plants only that well the of Titan As as had negotiations, as - didn't the it had

the decision to So made it off. turn we

we're plan on been negotiate going I gas situation. the I've We month-by-month to not NGC. the continue restart But a to pretty with think clear,

something millions dollars tens hire restart to and people have the to of certain have have more We to spend we plant. because of some

not is hopeful a we're plant, to our the will to current island. up. term. I'm sure and us, negotiating. But thing allow just month-by-month, far So get as medium the We're the our has sense that short in that on not what to it and for And longer we're it's but as start restart them we'll not competitor happen term, view more that, we're for - methanol us and to makes something thinking obviously, this still

been the matter the the profitable. I so experiencing phenomena, allow that a to able methanol haven't is of to And there ammonia It's stay sense just negotiating over something makes us we cycle yet. think achieve same gas. are producers that to

Eric Petrie

color. Thanks, John. Helpful

John Floren

Thanks.

Operator

Roberts, UBS. next The you. question, John Thank

is line ahead. go Please open. Your

Matt Skowronski

Morning. for Skowronski John. on This is Matt

of What replenished sense levels then inventories inventory global are in market vary And your the low levels? when mentioned right by You kind region? normal this is for to persist now. does can be

John Floren

say seeing methanol globally, low in only as but at we're well. not I'd customers tanks, levels inventory

there's future. can't supply if I wish I I happens, to could, But So take more really than inventories it that global more I some if don't When predict supply inventory. demand. replenish demand there's but the rebuild right will will time now, than know.

Matt Skowronski

Thank you.

Operator

Thank you.

Joel question, next Capital Markets. Jackson, Our BMO

is open. line ahead. Please Your go

Joel Jackson

morning, Hi. Good John,

John Floren

Joel. Hey,

Joel Jackson

couple of A questions, that you comments price I'll do on you I'm Maybe little reconcile one John, at gave? time. can a a of your some confused.

the call posted. the postings has ASP the gave that know QX months QX. I we you earlier So expect in yet. guidance similar already two know what are be mean We Europe to into you what to for methanol

of $XX a of higher than the to $XX QX. trending months You're tonne couple

about You the is a inventory bit talked then I is And think discount own pricing later inflated, said the you down good. was call, up, little looks in and your in maybe QX. give demand words

QX similar be pricing versus can QX? how So in

John Floren

guess your it's I definition of similar.

we're could similar It's this our similar. think. It be So to going we But at point, worse, be better. obviously view pricing. is not anticipating

Joel Jackson

How similar. define would you

John Floren

Similar achieved is where past. the to in we close

Joel Jackson

Okay.

lower guidance. number, didn't gave This the roughly million million Is or it I some tonnes gave higher? the last is, X.X or X.X quarter, have year. country-by-country that release, that it Is some production you is year, for guidance attributable do this would in for other same you you year? kind of the question second you about The plant-by-plant provide of

John Floren

But release off then backward to have Yes. head. of we that be what the have obviously, don't our I Joel. people number into doing. don't a my and number can I'd that might I turnarounds for offline, take that top probably competitive reasons, want,

I'll take with that - let's offline So you.

Joel Jackson

Can why I comfortable - releasing months okay not now? it was to ago when it ask just three why were you

John Floren

bit a with our I is weren't Chile Obviously, productions what a of by Zealand. volatility - got region, our more schedule New happened a today. a We no wildcard. at turnaround and bit we Argentinian when lot gas expecting think region look are in of we've a where

So that we're not in comfortable about specific now. that being right

Joel Jackson

much. very you Thank Okay.

Operator

you. Thank

Our Global. question, next Ahmed, Alembic Hassan

Your line open. go is ahead. Please

Hassan Ahmed

John. Morning,

John Floren

Morning.

Hassan Ahmed

demand. wanted I just John, to revisit

negative X.X%. and Obviously, like made Chinese of New was and I couple obviously, of down know a obviously the bunch comments. impact a of of in margins look a the sequentially polyolefins parts, at imagine Uri. MTO the product but I And mean, strong were sort You year-over-year super there would moving Year's up, take are super demand But QX. olefins, side I as strong. I economics, was

margins strong yield well. very were Asset as of sort

have sequentially So where that you demand sequential exclusively to Or of just possibly ex trying and came from, reduction Uri Uri there factors? to attribute sort would reconcile just that demand would been up? were other

John Floren

just we're versus 'XX so about QX QX clear, you talking And are 'XX?

Hassan Ahmed

Correct.

John Floren

Yeah.

methanol and QX was there So in in China. about QX lost in derivatives. the versus traditional demand When XXX,XXX was all talk that mainly China, I the 'XX that was 'XX, was about tonnes demand less

Hassan Ahmed

Understood.

QX, And Uri a quirky because be Again, Okay. All of moving sort of COVID, the it quarter now and like. it bit a on. right. of be

Iran meaningful I'd Just sort side were this changes not obviously, won't the like as whether or as And of the new rigid because get trade well better of could US, of flows. I the last of if a in into to any sense question as years. trying to well they parlay you saw think sort couple over sanctions in be administration as

And thinking flow going changes? you are any about you how meaningful trade are seeing forward? Iran So

John Floren

as it quirky on the I'd Yeah. trade call flows. well

are let's seeing in we're areas product from North traditional, America - that we say. come So in,

in probably going demand I North not not relationships point some that think It from. lot to geopolitical where needed mentioned I'm quirky tells still tomorrow, continues I going to not I I've it And that's and seeing. Europe. enough North we're chains. readjust I increase me a expert. the to Again, sure supply if to satisfy not of say already, it be at come me. Coke are future. to demand it a would predict solved in material don't will So America tomorrow? With the there's today. America like and solved if market Iran, while start spot But is to there's demand it's think a I'm takes is strained. If can't up so. what grows, gets

probably tomorrow, Korea where contracting So Europe say friends it to. It'll everybody again. Iranian we're a products let's and take to flowing all is happy to again places used season start for and

don't going on There's inside going and to on they onerous know resolve but those talking the how itself are table. deal. how it's on, nuclear what's of not I the talks and with I'm So the

make But some what watch actually judgments what things early time we'll again, I any if normalize. and think plans then it's make definitive happens to So there. over happen too about might

Hassan Ahmed

Very Thanks much. helpful, so John.

Operator

you. Thank

Our Cherilyn from Securities. question next Radbourne, TD is

open. is Please ahead. line go Your

Cherilyn Radbourne

very I mechanical view state And pricing that express just revisit that's morning. way, your I a And of could the we much. could view was industry for the after of hoping if of rest year Thanks it the supply, good COVID. the influencing year. that John, of how of your

John Floren

Yeah. do I competitors I and be only talk can don't because can't operations. like I about really to our speculating, talk about that. our I'd

extremely plants say place in conducted have you maintenance Now day-to-day onerous. everybody to keep to very safe regular on turnarounds quite in is the COVID three difficult. provisions The we've I'd environment, difficult. now put are

site during we well, on minimal environment. have the As people COVID

the we do maintenance than normally So environment in non-COVID. lot probably the less is COVID a that the

a into or people really XX Chile XX I New coming and of have and do doing with maintenance, Egypt challenging possible since the the you're but the usually, think we changing their from a you're of you turnaround when we turnaround. just accumulated own getting Zealand to of a catalysts, in do last fixing turnaround, when us our was our turnaround, do you're best you've the a Trinidad. And XX because look experts to at things places people job people like that lot lot when not it expertise help turnarounds we country, the on

You're a lot also doing inspection. of

So keeping problems is make but plants also before unplanned for on down you reasons. based inspection, maintenance go they reliable finding really

same vendors in, have experts expertise, they're own So of don't really when have that and you're a the have you whether you your these expertise. all coming don't of inspection capability depth lot or

time. over of sanctioned. leads think, Then countries you potential about, have So having to reliability as all probably like of I Iran, having poor talked we've this,

can maybe and things or they they and need can't do in catalysts the to turnarounds. other whether country that get not, they people materials get the So or different

it's you people XX XX a a but So planned these site talk -- lot years. whole We on of about about don't detail XXX the been for doing to calls three two turnaround, days on have for that's complicated. here work

a own I'd predict on out future. it's today. would And And and there issue. see say seeing at I look hard experience, complicated I when again, view regular to really plans really being maintenance that it's there's do turnarounds. change that to a we the reliable. it's we really But think are nothing my our less challenge But So been

Cherilyn Radbourne

wanted on fuel. marine I think the up you to picked your interest watch helpful. to a That's also what from clearly And get perspective investors there, have as Maersk. with should potential Okay. the methanol seems for judge momentum to which

John Floren

Yes.

of own don't investors at mind. to single-product what we back company, our R&D, So being chemical being doing. then way and I of with going out two that it's the which be methanol the on here prove never old fleet decided standard are, know forefront about into chemical I same next lot technology, space. others going commitment to methanol in and as are have will work, conversion capability. Then capability being innovation this front remember going that to - on happen, making an LNG, And And a But have ships digital talk we it's guys to years. to XX% one the boring the time. you dual I at when. I that never of remember company, labeled fuel naysayers and vessels the never be and it's all we Maersk field Methanol's to And of their we companies new scrubbers. like way find it's our going all running going over of to get its

really it's think I So exciting.

important and of example I last the XX or team you and diesel so and think ultra-low-sulfur the is the naysayers, XX on works really listening and it's make people ships that methanol, future. use is it's pathway the great they'll not that our can the And capability to thing the a life methanol. I here choices for There out to there pathway green winner the more just know lot this a flexible renewable a big ship. of years, that's but technology fuels. to to XXX% It's methanol. and for having looking customers of for is for of thing innovative, not have today, is a to being proving our

to built are overnight. I've have a methanol boilers, ships - is think making it's like significant it's now I fuel changed always on not can said, really this and get big like not jumping you it's So used. demand as fuel. blending, But as commitments companies board and that interesting

always So driver. a it's I've mid-decade said demand

demand the we this good. application So will methanol by for XXXX, for be think

Cherilyn Radbourne

we should term watching there that in short be the are any to that? gauge And milestones

John Floren

Well, XXX,XXX have shipping their Where ships couple fuel. of Each XXX,XXX a people per companies commitment runs there's I our demand a demand And very are have like where new to XX,XXX and that on made And vessels tonnes tonnes. - is you of are investments. their will dual-fuel we've around recently a ships this competitors XXX% Proman that spending that money. it. making their capability. all think dual running of methanol are large they been ships of year on seen building one our of XX,XXX to That's XX% our be

And history what you but the So about. the in the there big not get growth for scheme this excited of once is the of it's I things, think capability, I significant, have ship. potential

will and a of development interesting driver into pretty the be So demand future.

Cherilyn Radbourne

Thanks. for That’s all me.

Operator

Thank you.

question, next Bernard Polaris Horn, Management. Our Capital

ahead. go Please open. is line Your

Bernard Horn

Hi, Two good questions. morning.

of And very any situation the kind - new a it's there a is and on one. GX? causes like resolution follow-up it strange Zealand, there? of update have I the on New seems on First, I'm

John Floren

have to Yeah. but it before. already have until that drilling shared. are time. to But happened are. had that there information will what we rigs field us in get any we some they back that optimistic. They they're correct needs They run be to suppliers rates some we've the tell Pohokura But what's Bernie, that can with where onshore bringing field. happens, we're do to some to more than don't drilling, guiding field, take that We know the

Bernard Horn

you the get perhaps like there starting between trade-off it seemed on your Okay. going it getting last were going commented when in to But like now. GX, And first sounded easy earlier incentive or so things on you to was wasn't earlier. remarks, right later, some - it

in in likewise So comments see any and later supply do that the or online little the guess in fundamental you respect. mean do side earlier better the any on putting you reconciliation bit be comment demand GX there's I in there. - post-COVID that broader my is But to a world, changes would might your it

John Floren

Yeah.

have good view supply. a We on

to in post on, three there's the coke-methanol four the coming next plant So lot years. a not

the COVID construction. been along moved environment, been or has and in nothing's nothing So under sanctioned

lot in on coming four not three supply So a the of next to years.

question bigger the think I demand. is

So to view on two 'XX. what over to one what's demand look the And comes we'll GX come to looks it next up, have like then going to in a years. like as

later today. restart don't on, work whether the not. we're have we year on or will key working this a of a consideration part that to But Bernie, streams and decide view we that's that So be that

Bernard Horn

you interplay do And purchased with might your GX methanol? lastly, how anticipate

John Floren

Yeah.

what and purchased in and that's New to equity think So our our Titan in a losing bit our sell of that's being I goal. Zealand is well. we molecules. goal this being Chile little XX% the changed as about of quarter, But production XX% have Obviously, other and because

of our sales a GX, to commissioned is medium goal we our spot any our Chile, But more if probably - additional in probably didn't have term. delayed at early if product. production had on under we will and mix certainly we they look days, view New Zealand the then sales that So and but have XX%

Bernard Horn

the forward? GX affect going Okay. that wouldn't XX% And

John Floren

lower right. I And probably grow mean commissioned our sales. are a on today as our where little obviously spot position we bit That's we'd we and well.

Bernard Horn

Okay, for me. thanks. That’s all

Operator

you. Thank

question Polaris from Crawshaw, next Jason Capital Our Management.

Your line is go Please ahead. open.

Jason Crawshaw

on Hey, Quick just question side. the John. supply here

how the kind industry, come online much the could by As idled back you months think I easily. or much of X XX about last how relative capacity guess, to was fairly over

be many helpful? If kind how me would give you tonnes that just rough of estimate a of

John Floren

the we you normal. number really can to or I top don't off don't get head, production lower you. about average two the forward? sustainable the have last number Jason, of I specifically I'll call But rate my was than going industry quarters know. the number Is But to what traditional. the get of operating in that that the lost have versus I

Jason Crawshaw

Got it.

be fairly demand And question if good. the limited ultimately, come just years. latent the Okay. of demand basically strong, get be But demand. will meet I me if we've was interested how can That's next is Because talked greenfield, helpful. new much supply yes, you that to - to if back with is about know being can for that that capacity mean, number, I would couple

John Floren

would run be pricing, say, I at anybody that we what Yes, Jason, running. can would current would is that expect

because like off-line aren't the supply's So favorable. it's the economics not

be So of running. run can environment that world in $XXX, single price plant the should a in every

the So the look down percent reliable. a don't and couple QX resolved on operating And average, just me question But them if versus be at issues know. were for is 'XX. rates, get what overall QX 'XX more the they I I can and are of we

the tonne percent on - in what's X.X so couple tonnes, like million market, an million of that. something So a XX that which

Jason Crawshaw

long to it own how Yes. to of right, And the -- just, how long I my does you take kind does idle it guess, education, for if plant, restart? take

John Floren

you It depends it. how on idle

If right. factors of go and I of a depends to to would guess people with intention lot probably on and It how the hiring in you future, days, everything it if was XX it at as preserving restarting the well. time - idle some XX

Jason Crawshaw

you. Thank right. All

Operator

you. Thank

question, next Chris Crespi. Shaw, Our Monness,

Please Your line go ahead. is open.

Chris Shaw

on the Hi. is full and enough that running are both quick well? I tankers a the shipping benefit assume I meaningful market nice little - assume we your there well shipping. see had that Is just pretty it I just one on is margins ways. Or to ever as is a additive there the you're side there? little thing doing that something tight significant

John Floren

all methanol not and cargoes that backhaul are to their The we XX% the Yeah. backhauled. we XX% of is carry, do, which about

goods. of cost into goes revenue that of All

in out our netted logistics costs. it's So

of millions. us, meaningful. meaningful, me Hundreds of it's not dollars are still So to is it's millions but for meaningful. Millions of more hundreds

think know you what ships rates tonnage our XX% chemicals. a to So the XX% of you liquid of know carry, you I for number and can take on our we

So you revenue could as in structure, cost our back pretty into quickly. that shows line. not a a number But

quarter-over-quarter, has market But earnings. it the and we ships. our not have, but cleaning cargoes to gotten cargoes, COA team or might really at it's some excellent done in XX% for our great good and drive going spot our So it's changes developing XX%, an in depending on that and rates huge change job business

this. an had been we've doing since haven't we off-spec cargo So

deserves our of So a there. team credit lot

Chris Shaw

Thanks. Great. Go ahead.

Operator

Thank you.

open. next Extra is go Roche Please Your ahead. Roland from Investments from line is [ph] Our question

Unidentified Analyst

of you. John, good evening to and very largest from not good the around cash, morning go Probably allow to to to back cash capital. surprise first question that flow one a the to but me shareholders, of and get return you

EBITDA. is, first question QX to So million so $XXX guiding you're

flow, operating conversion. cash if flow so roughly it million XX% printed, straight, get just I You cash $XXX operating that's

I think around so printed that's free you of $XXX a XX%. cash million flow,

go of of receivable. a I capital million. up accounts that I that's swing $XX assume see you to working Now had

is guide it And fair question, to million coming is $XXX guide say to in conversion? do million you XX% in what you if how first through we've EBITDA, me, So the which is $XXX to go if XX% additional flow back $XXX then allow you Or to got done. that. this cash question around you free been anyhow you quarter, almost million cash second or

I you our you recommendation stack, look If is is. the no GX although at appreciate decision, there know do what

the been billion has million $XXX got you I CapEx, if announced So $X.X total numbers straight, spent. that

done. You just to the going million $XX be announced is

construction $XXX and then got still just straight, leaves $X.X amount loans, cash you with go million If you left. straight, billion. so you revolver And is construction $XXX $XXX a the that existing GX loan million just to CapEx get it to that hopefully, sit a million build ask within to I will me with on So to, the could the

will you're increased? executive And on paying you. all dividend You $XX think million. sitting And the million leave interest be of do out that does how a increased you expenses, annum? Are per when cash? So only Thank compensation $XX together? lot you is that a

John Floren

Yes.

hasn't So mentioned changed, as our allocation I already. capital

Our current financial at to and flexibility. time is this prefer view liquidity

at look to our opportunity our will lower our what We leverage. and debt

Black to one I seen do. like that events to thing significant in we'd We've years. XX three Swan XX think that's

a our view had debt on levels. that's huge So of impact our

have like We be project I But the more you into think generate as GX. carry that projects. prices methanol, sheet we a to pointed will we'll the go cash on a had we'll above as at in investments what approach, balance than the especially looking past, continue out. depending free in we cash $XXX balanced with on even

cash. we'll at time. and we're not probably the the we're to favoring well balance sheet, But we at So look all of debt on above, we'll same a down and hoard paying have going keep the bit traditionally little than as more

for conditions Never before that And We of return the tuned. dividend, share lots to instituted right we cash say if prices going projects through money at stay we're thinking and that very repurchases. that the us. of lots which decision move difficult cash build we're stay dividends done are shareholders. Certainly, time. cut since really to did the thought the is the a make and and distribute have So dividend, was decision were - we how and to to where to I'd they about today,

a there'll be, repurchases. approach between So dividend continued share and again balanced

we have of if lots cash pricing But of environment, continue we'll have changed. do really to to this nothing's things lots So with.

Unidentified Analyst

Right.

you just $XX second million? to the so answered the go to first back because one, question me allow You the

Ian Cameron

Yes.

its don't we've when speaking, have and yes, We So met, did prices. have that's the Cameron natural I capital build, but in that's right. CFO. something you're increase Ian a an you think methanol working Roland,

the our in of gas of as the also and little So gas mentioned a our your goes up methanol upside cost supplier our we inventory you bit the because with receivables, with remarks. share where arrangements

have there's capital that but more steady of out. anymore as working into prices fall, course, a opposite the if go so flatten a And environment, you wouldn't And release. see methanol you you effect, so

million. $XX were accurate nature you the in describing So of the

Unidentified Analyst

appreciate Okay. I it.

more So the last second back one. John, time that's literally sorry one, one to to the go

a So what to on dividend? needs happening from decision to the be now

John Floren

and see I that look we which environment. demand our Black think should we then events price dividend sure it's Well, make we'll saw. to a to have need through recovery, to Swan think like lead And sustainable at just positive we

is, normal in how but If to what looking like is today. see would three years, pricing is yet. if comments, from similar be room things -- we But we like little going And dividend my bit quite to today the we'd knew to be to recovery out there decided where environment, pricing how So yet, see We not the an conditions. see level we easy decision the vaccines or are a but more for dividend, increase think four to that demand was said normal get it earlier like roll haven't grow today recovers. next a more back to that that there the which and I business positive. in we're demand more in I

Unidentified Analyst

Okay. Thank you.

John Floren

you. Thank

Operator

Steve is you. Thank Raymond Hansen question last The James. from

line Please open. Your ahead. go is

Steve Hansen

contemplating of just sold out a to products comment remember Yeah. struck of going here. one think lot in in John, said selling new round as you're markets Thanks. that earlier it me of a interesting I very you you're now. is you that do you it that given time is China bigger the I'll where How China. and in, coming forward, to the growth course, Gulf. product about little environment one capacity

how So you just growth think tankage, to we situation sort. storage of those sort would some I is about the of that kinds additional regional markets, there should of that terminals, the there? need service infrastructure mean given

John Floren

Yeah.

obviously, we in about at we nice their charter ships end ships few coming their have we've ships, invest buy time. looked thing in that the or the ships, have So to when which a all time pipeline. The we'll need more of and

and more a achieve. a Asia targeting of at bit of is but a enough probably well in having well. to ships. deliveries we'll We're not as need there, And as GX that's storage We're lot few flexibility more have we of our go So to we a think, point, quite this bit But worried space. about we lot customers. all can are tankage getting our A direct to tankage, current - something planning.

about going our if And nice need. have So to decide we're job months front team GX XX once a the to still of decide, logistics product in super the does project. making restart is what the out we planning we on we actually thing

So that I'm about really not logistics. worried, Steve,

lots in And Our of needs area. team experts capability. options really what we have from meet of have this flexibility is and lots a we productive of the will to

because Titan production and of as New lower well. You'll have Zealand is noted, and our Chile

have today. logistics still commitments for we So those

think forward. look not not going lost, that you a what I so concern if going So at three incremental much is Geismar key be it's to incremental us more for production, net-net, we've versus logistics

Steve Hansen

Okay. Very really I'll helpful. saying methanol are markets boring. by good. That's just close

So don't worry.

John Floren

Thank you.

John Floren

of form that chemical Okay. efficiency used reliance chemicals construct Thanks, fuel the and consumer produce used homes, Methanol everybody. products technology lighter, used block make and cars then basis industrial to essential our many and stay improved is to an building It's connected. items. automotive insulate make components to the to

burning today. reliably, to XXXX. important continue financial for a in in encouraged favorable July. fuel, far methanol operating we've in our to supply shareholders. you Given remain and flexibility We rule long-term safely our central industry methanol plan for that we joining maintain company. thank outlooks is for applications deliver And as intact. economic so to our delivering countless by with you reliable the is interest Thank that industrial and seen to ensuring We'll we secure on dynamics in focused speak a and and you consumer remains value long-term We're believe us customers, again your clean

Operator

you ended. conference at disconnect The your time. this now Please Thank your Thank lines has for you. participation.

Methanex (MEOH) 30 Apr 212021 Q1 Earnings call transcript