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Methanex's (MEOH) Q3 Earnings Miss, Revenues Beat Estimates

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·3-min read
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  • MEOH
  • BAS.DE
  • AKE.PA
  • OLN

Methanex Corporation MEOH logged a profit (attributable to shareholders) of $71 million or 93 cents per share in the third quarter of 2021 against a loss of $88 million or $1.15 in the year-ago quarter.

Adjusted earnings per share (barring one-time items) were $1.29 against a loss of $1.03 in the year-ago quarter. The bottom line, however, missed the Zacks Consensus Estimate of $1.32 per share.

Revenues climbed 85.5% year over year to $1,078 million in the quarter from $581 million a year ago and surpassed the Zacks Consensus Estimate of $1,035.7 million. The company benefited from year-over-year higher methanol prices and sales volumes in the quarter.

Adjusted EBITDA in the reported quarter increased more than six folds year over year to $264 million.

Operational Highlights

Production in the quarter totaled 1,480,000 tons, up around 7.9% year over year. However, production was sequentially low mainly due to the temporary closure of one plant in New Zealand, which was partially offset by higher operating rates in Egypt. Total sales volume in the third quarter was 2,757,000 tons, increasing around 2.9% year over year.

The average realized price for methanol was $390 per ton in the quarter, increasing 79.7% from $217 in the prior-year quarter. A tight methanol market with continuing industry supply bottlenecks led to higher methanol prices.

Financials

Cash and cash equivalents decreased 21% year over year to $932.4 million at the end of the third quarter. Long-term debt at the end of the quarter was around $2,148.8 million, decreasing 7.6%.

In the third quarter, cash flow from operating activities was $301 million, increasing more than eight folds year over year. The company paid out dividends worth $10 million during the reported quarter.

Outlook

Methanex said that its outlook for the methanol industry is positive for the coming days on the back of the ongoing favorable industry conditions. It anticipates global energy shortages and rising feedstock costs to steeply increase methanol prices in the fourth quarter. The company maintained that its Geismar 3 project will strengthen its portfolio and support its future cash generation, and also future shareholder distribution increases. It recently restarted the construction of the project. It seeks to generate a robust free cash flow by leveraging industry leadership and excellence, and low costs.

Price Performance

Shares of Methanex have surged 54% in the past year, outperforming the industry’s growth of 29.4%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Other Stocks to Consider

Currently, Methanex carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the basic materials space include Olin Corporation OLN, sporting a Zacks Rank #1, and Arkema S.A. ARKAY and BASF SE BASFY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin has a projected earnings growth rate of 717% for the current year. The company’s shares have grown 226.8% over a year.

Arkema has a projected earnings growth rate of 88.7% for the current year. The company’s shares have risen 42.5% over a year.

BASF has a projected earnings growth rate of 137.5% for the current year. The company’s shares have rallied 98.9% over a year.


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BASF SE (BASFY) : Free Stock Analysis Report

Methanex Corporation (MEOH) : Free Stock Analysis Report

Arkema SA (ARKAY) : Free Stock Analysis Report

Olin Corporation (OLN) : Free Stock Analysis Report

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