) reported profit of $125 million or $1.24 per share in
second-quarter 2014, a more than two-fold year over year rise from
$54 million or 56 cents per share a year ago.
Barring one-time items other than stock-based compensation
expenses, earnings were $1.01 per share, missing the Zacks
Consensus Estimates of $1.02. Adjusted earnings fell sequentially
in the reported quarter due to lower methanol prices.
Methanex's adjusted earnings before interest, tax, depreciation
and amortization (EBITDA) was $160 million in the quarter, a
roughly 1.9% increase from $157 million recorded a year ago and a
decline of 37.3% from the first quarter of 2014. The sequential
decline in adjusted EBITDA was due to a decrease in average
realized price and sales of Methanex-produced methanol in the
Revenues rose roughly 8% year over year to $792 million in the
reported quarter and declined 18.2% sequentially. Revenues missed
the Zacks Consensus Estimate of $822 million.
Average realized price was $450 per ton in the quarter, up 5.9%
from $425 per ton a year ago but down from $524 per ton in the
first quarter of 2014. Total production was 1,216,000 tons, a 15.6%
rise from 1,052,000 tons in the prior-year quarter.
Methanex-produced methanol sales volume fell 1.9% year over year to
: Methanex produced 559,000 tons in the quarter, up 54.8% from
361,000 tons produced a year ago. With its three facilities
operating at full capacity, the company is capable of producing up
to 2.4 million tons a year at the site.
: Methanex's fully-owned Titan facility produced 203,000 tons in
the quarter, up roughly 20.1% from 169,000 tons produced in the
The Atlas facility, in which the company holds a 63.1% interest,
produced 191,000 tons, down roughly 5% year over year. The Atlas
facility faced ongoing production interruptions due to mechanical
problems with the air separation unit.
Methanex is encountering natural gas supply restrictions in
Trinidad. Although the company is trying to find a solution to this
problem, it continues to experience natural gas curtailments at the
: The facility produced 99,000 tons in the quarter, down 39.3% from
163,000 tons produced a year ago. Production during the reported
quarter was impacted by natural gas supply restrictions and the
company idled the plant in mid-June due to a lack of natural gas
availability. It has also been experiencing periodic natural gas
supply restrictions since mid-2012, which is expected to persist in
the future due to increased electricity demand during summer
: The facility produced 138,000 tons in the quarter, up 7% from
129,000 tons produced last year.
: Methanex's Chile operations produced 26,000 tons in the reported
quarter, down 10.3% from 29,000 tons a year ago. Methanex expects
to idle its Chile operations in early May due to lack of sufficient
natural gas feedstock to keep its plant operating through the
southern hemisphere winter. The company expects to restart its
operations later in 2014. The availability of sustainable natural
gas supplies from Chile and Argentina and the level of exploration
and development in southern Chile are instrumental in determining
the future of the Chile operations.
: Methanex is progressing with the relocation of two idle Chile
facilities to Geismar, LA (Geismar I and Geismar II). The company
expects to produce methanol from the 1 million ton Geismar 1
facility in late 2014 and from the 1 million ton Geismar 2 facility
in early 2016. During the reported quarter, Methanex's capital
spending related to these projects, barring capitalized interest,
was $100 million.
Consolidated cash flows from operating activities climbed around
92% year over year to $240 million in the reported quarter. Cash
and cash equivalents were $647.5 million as of Jun 30, 2014,
compared with $708.5 million as of Jun 31, 2013. Long-term debt was
$1,106.9 million, down 3.4% year over year.
During the quarter, the company returned over $100 million in
cash to shareholders in the form of dividends and share
In the second quarter, Methanex reached a settlement agreement
with Total Austral S.A. of Argentina and received a lump sum
payment of $42 million, or $27 million net of tax, to terminate the
obligations under its former long-term natural gas supply agreement
with Methanex in Chile.
Methanex stated that methanol prices were stable entering into the
third quarter. It also noted that methanol price will depend on a
number of factors such as economic health, operating rates, global
energy prices, new supply additions and demand. The company
believes that its healthy financial position, financial
flexibility, strong global supply network and competitive-cost
position will strengthen its stature as the global leader in the
methanol industry and enable it to maintain its position and invest
in growth initiatives.
Methanex is a Zacks Rank #4 (Sell ) stock.
Other chemical stocks worth considering include LyondellBasell
Industries NV (
), Marrone Bio Innovations, Inc. (
) and Ashland inc. (
). While LyondellBasell and Marrone Bio sport Zacks Rank #1 (Strong
Buy), Ashland holds a Zacks Rank #2 (Buy).
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