Methanex's Q2 Earnings Miss Estimates Despite Strong Methanol Pricing

Methanex posted net income attributable to shareholders of $198 million, or $2.45 per share, compared with $64 million, or 93 cents per share, in the prior-year quarter. Results included a $115 million non-cash asset impairment charge, net of tax, related to the Titan and Atlas facilities.

Quarterly revenues surged 75.1% year over year to roughly $1.4 billion but missed the Zacks Consensus Estimate of $1.41 billion.

Methanex Corporation Price, Consensus and EPS Surprise

Operational Highlights

Methanex produced 2,213,000 tons of methanol in the second quarter, up 36.5% from 1,621,000 tons a year ago. The increase mainly reflected contributions from the Beaumont and Natgasoline facilities and record production at Geismar. The figure beat our estimate of 2,193,000 tons.

Total methanol sales volume was 2,555,000 tons in the quarter, up from 2,133,000 tons in the year-ago period. Higher sales of Methanex-produced methanol more than offset lower purchased-methanol volumes. The figure lagged our estimate of 2,624,000 tons.

The average realized price was $529 per ton, up 41.4% from $374 per ton in the year-ago quarter, reflecting the significant global supply disruption caused by the Middle East conflict. The figure topped our estimate of $523 per ton.

Financials

Methanex ended the quarter with cash and cash equivalents of $383 million compared with $379 million at the end of the prior quarter. Cash flow from operating activities was $439 million, up 58.5% from $277 million in the year-ago quarter, primarily due to higher earnings from stronger realized pricing and increased produced-methanol sales, partly offset by working-capital outflows.

The company returned $14 million to shareholders through regular dividends during the quarter. Methanex also repaid the remaining $290 million of Term Loan A, fully retiring the facility, and had access to a $400 million unutilized revolving credit facility at quarter-end.

Outlook

Methanex continues to expect 2026 production of approximately 9 million tons of methanol on a Methanex-interest basis and 0.3 million tons of ammonia. Actual quarterly production may vary depending on natural gas availability, planned turnarounds, unplanned outages and other unforeseen events.

Based on July and August posted prices and assuming market conditions remain consistent, management expects the average realized price to be $460-$485 per ton for the two months. With a lower realized price and similar sales of produced methanol, Methanex expects adjusted EBITDA to decline sequentially in the third quarter.

MEOH’s Price Performance

Shares of Methanex have gained 62% over the past year compared with a 3.6% rise in its industry. 

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MEOH’s Zacks Rank & Other Key Picks

MEOH currently carries a Zacks Rank #2 (Buy). 

Other top-ranked stocks in the Basic Materials space include The Chemours Company CC, Carpenter Technology Corporation CRS and Ternium S.A. TX.  

Chemours is expected to report second-quarter results on Aug. 4. The Zacks Consensus Estimate for CC’s second-quarter earnings is pegged at 43 cents per share. It carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

CRSnis slated to report fiscal fourth-quarter results on July 30. The Zacks Consensus Estimate for earnings is pegged at $3.03 per share. CRS has a Zacks Rank #1 at present.

Ternium is scheduled to report second-quarter results on Aug. 4. The Zacks Consensus Estimate for TX’s second-quarter earnings is pegged at $1.29 per share. It currently carries a Zacks Rank #1.

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