Methanex Q1 Earnings Call Highlights

Key Points

• Methanex reported Q1 results with an average realized price of $351/ton, produced methanol sales of about 2.2 million tons, adjusted EBITDA of $220 million and adjusted net income of $23 million, ending the quarter with nearly $380 million in cash after repaying $60 million of Term Loan A.
• The conflict in the Middle East has materially disrupted supply (roughly 20 million tons annually), driving a rapid price spike; Methanex estimates April–May realized prices of about $500–$525/ton and expects significantly stronger Q2 earnings and cash flows, though higher gas and shipping costs will largely be recognized with a lag into Q3 (roughly $30–$40 million).
• Capital allocation priorities remain deleveraging first: the company expects to repay a ~$290 million term loan in Q2 and will direct the majority of free cash flow to the 2027 bond, with share buybacks considered only afterwards if economically attractive.

Methanex NASDAQ: MEOH reported first-quarter 2026 results highlighted by higher pricing and steady production, while executives focused much of their commentary on major market disruptions tied to the conflict in the Middle East and the resulting impact on global methanol trade flows.

First-quarter results and balance sheet

President and CEO Rich Sumner said Methanex’s first-quarter average realized price was $351 per ton and produced methanol sales were approximately 2.2 million tons, generating adjusted EBITDA of $220 million and adjusted net income of $23 million. Sumner said adjusted EBITDA increased versus the fourth quarter of 2025 “primarily due to a higher average realized price, partially offset by slightly lower sales of Methanex produced methanol.”

Sumner added that cash flows from operations allowed the company to repay $60 million of its Term Loan A facility during the quarter, ending the period with “nearly $380 million on the balance sheet.”

Operational update across regions

Sumner said total equity methanol production was 2.4 million tons, “slightly higher” than the fourth quarter. In the U.S., Methanex produced 934,000 tons at its Geismar plants and 195,000 tons at the Beaumont plant. Its equity share of production at the Natgasoline joint venture was 203,000 tons. He noted U.S. assets ran at high rates except for “a short period early in the quarter” when output was reduced after a “significant short-term spike in natural gas prices in late January.”

In Chile, the company produced 398,000 tons, using gas supply from Chile and Argentina. Sumner said a third-party pipeline failure late in the fourth quarter was rectified early in the first quarter, allowing full rates for the remainder of the period. He said Methanex expects to idle one Chile plant “during the middle part of the second quarter,” aligning with winter gas availability.

In Egypt, Sumner said first-quarter production was similar to the prior quarter and the plant operated at full rates, while the company is “closely monitoring the regional situation for any potential impact on its gas supply.” In New Zealand, Methanex produced 158,000 tons, down moderately from the fourth quarter, and Sumner said “the structural gas outlook in New Zealand continues to be challenging.”

Methanex reiterated its 2026 equity production outlook of 9 million tons, while emphasizing quarterly variability due to turnarounds, gas availability, and outages.

Middle East disruption drives price spike; Q2 outlook improves

Sumner said the conflict in the Middle East, which began in late February and escalated into the second quarter, has “significantly disrupted global markets for energy and petrochemical supply, including methanol.” He cited that the Middle East supplies “approximately 20 million tons of methanol per annum to global markets,” and that supply “has been significantly reduced since the beginning of March.”

Despite the supply shock, Sumner said “overall methanol demand has remained relatively resilient, with no significant signs of customer shutdowns or demand destruction.” He described limited Middle East trade flows into China since late February, with “no trade flows from Middle East non-Iranian supply and very modest supply from Iran into coastal markets in China,” adding that downstream operations appear to have been supported by inventory drawdowns.

“Given these unprecedented events,” Sumner said methanol prices escalated rapidly across major regions through March and April, and the company expects “significantly stronger earnings and cash flows in the second quarter compared with the first quarter.” Based on April and May contract postings, Methanex estimated an average realized price for April and May of approximately $500 to $525 per ton. Assuming pricing holds through June and produced sales volumes are similar to the first quarter, Sumner said the company would expect a “significant increase” in adjusted EBITDA in the second quarter.

Sumner also cautioned that inventory timing will delay recognition of certain cost increases into the third quarter, including higher natural gas prices “linked to higher methanol,” and higher ocean freight costs tied to higher bunker fuels. In response to a follow-up question, he quantified the lag: “There’s a lag, probably about $30 million, $40 million of that 45 days that’ll be coming in in the third quarter,” referring to costs including shipping and gas.

Capital allocation: deleveraging first, buybacks evaluated later

Sumner said Methanex’s 2026 priorities are unchanged: safe and reliable operations, delivering on the OCI integration plan, and progressing deleveraging goals. Based on its short-term outlook, he said the company expects to repay the term loan of approximately $290 million in the second quarter.

After repaying the term loan, Sumner said Methanex will focus on directing the “majority” of free cash flow toward repaying the bond due in 2027, while evaluating share buybacks with a smaller portion of cash “if they represent an attractive investment for shareholders.”

On taxes and working capital, CFO Dean Richardson said the company’s tax rate guidance of 25% “does hold even in a different price, a higher price environment.” He said the cash portion of taxes could decline in a higher-price environment because more earnings would be in the U.S., where Methanex has “significant assets and loss carryforwards,” resulting in an estimated “about a 50/50 cash versus deferred” split. Richardson also said higher methanol prices would raise receivables and increase working capital, while inventories would not move materially because they are largely cost-based.

Key themes from Q&A: China, Trinidad and New Zealand, integration, shipping

• China and MTO rates: Sumner said China methanol pricing is “a demand-driven price more than a cost side price,” tied to “11 million tons of coastal MTO.” He put China pricing in the $400-$450 per ton range, while prices outside China were in the $550-$650 range. On operating rates, he said MTO rates were close to 85%-90% in Q4, averaged about 70%-75% in Q1, and have been “holding in around that 70% operating rate,” though he noted coastal inventories are now shifting and could pressure rates if the blockade persists.
• Trinidad gas negotiations: Sumner said the company is in discussions with NGC with its gas contract expiring in mid-September, and is considering outcomes “including a short-term deal, as well as the potential to have to idle the plants.” He described Trinidad as an “extremely tight gas market,” and said indications from negotiations “look challenging.”
• New Zealand gas outlook: Sumner said OMV, a major gas supplier, announced it would cease production on the Maui Gas Field by year-end; “if that were to happen, we…no longer are capable of running our plant.” He said Methanex is evaluating options to monetize its position, including producing methanol or selling gas, but emphasized the outlook is “structurally challenging.”
• OCI integration synergies: Asked about synergy targets, Sumner said progress is being made in areas such as insurance, logistics and terminal optimization, IT, and site optimization. He said some costs are currently duplicated (such as IT) and that the company expects to be “through that” by year-end, with synergies expected to begin in January 2027.
• Shipping environment: Sumner said the company is focused on avoiding spot vessel requirements, noting “2,000 ships locked in the Gulf right now,” longer supply chains, higher spot rates, and the disappearance of the backhaul market. He said Methanex’s owned fleet means it has “no exposure to the shipping market,” though per-ton costs may rise while remaining below competitors facing market rates.

In closing remarks, Sumner reiterated that Methanex believes current market dynamics “could be prolonged for some time,” while the company remains focused on safe operations and balance sheet actions. He said Methanex expects to update investors on second-quarter results in July.

About Methanex NASDAQ: MEOH

Methanex Corporation is a Vancouver, Canada–based company and one of the world's largest producers and suppliers of methanol. The company manufactures methanol, a key feedstock for a wide range of chemical products and industrial applications. Methanex markets its product to customers in energy, plastics, paints and coatings, and various chemical sectors, positioning the company as a critical link in the global supply chain for basic chemicals.

The company's core product, methanol, serves as a building block for downstream chemicals such as formaldehyde, acetic acid and methyl tertiary butyl ether (MTBE).

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