Methanex Corporation

Good morning. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the MiFNx Corporation fourth quarter 2025 results conference call. All lights have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference call over to the Vice President of Investor Relations at Methanex, Mr. Robert Winslow. Please go ahead, Mr. Winslow.

Good morning, everyone. My name is Robert Winslow, and I recently joined Methanex as Vice President, Investor Relations. Welcome to Methanex's fourth quarter 2025 results conference call. Our 2025 fourth quarter news release and 2025 annual report were posted yesterday and can be accessed through our website at methanx.com. I would like to remind listeners that our comments today may contain forward-looking information which by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from actual results. We may also refer to non-GAAP financial measures and ratios that do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Any references made on today's call reflect our 63.1% economic interest in the Atlas facility, our 50% economic interest in the Egypt facility, our 50% interest in the NAC gasoline facility, and our 60% interest in waterfront shipping. To review the cautionary language regarding forward-looking statements and define definitions and reconciliations of the non-GAAP measures, please refer to our most recent news release, MD&A, annual report, and investor presentation, all of which are posted on our website under the Investor Relations tab. I will now turn the call over to Methanex's President and CEO, Mr. Rich Sumner, for his comments, followed by a question and answer period.

Thank you, Robert, and good morning, everyone. We appreciate you joining us today to discuss our fourth quarter 2025 results. I'd like to start the call by thanking all our global team members for their continued commitment to responsible care and safety, which remains at the core of our company's culture. Over 2024 and 2025, we've had the best two-year safety performance in our company's history. Even as we navigated significant changes to our asset portfolio, demonstration of these results, we've had zero Tier 1 process safety incidents over the past two years and recorded only 0.09 and 0.12 recordable injuries per 200,000 hours worked in 2024 and 2025, respectively, compared with the chemical industry average of 0.59 in 2024. These outstanding achievements are a testament continued focused on strong planning, hazard awareness, and reliable behaviors. Turning now to a financial and operational review of the company. Our fourth quarter average realized price of $331 per ton and produced sales of approximately 2.4 million tons generated adjusted EBITDA of $186 million and an adjusted net loss of $11 million. Adjusted EBITDA was lower compared to the third quarter of 2025 as higher sales of produced methanol were offset by a lower average realized price and the impact of immediate fixed cost recognition related to plant outages in the fourth quarter. Turning now to industry fundamentals, we're closely monitoring the current events in the Middle East region and its impact on global markets and our business. Looking back on the fourth quarter, we estimate that global demand increased in China by about 4%, while demand outside of China was relatively flat. Increased demand in China in the fourth quarter compared to the third quarter was driven by increased demand for methanol into energy applications and higher operating rates by methanol to olefin producers, the latter also being supported by high operating rates and import supply availability from Iran. Steady imports from Iran, particularly through October and November, also led to higher coastal inventories in China, which pushed pricing towards the $250 per metric ton rate Towards the end of the fourth quarter, we believe seasonal gas constraints significantly reduced Iranian output, leading to MPO producers reduced operating rates in response to decreasing supply. Through the first quarter of 2026, up until current market escalations, our average realized pricing has been quite stable, with some small increases on slightly tighter supply conditions. After considering first quarter posted prices and factoring in higher discounts, The current escalation in the Middle East brings significant uncertainty to reliability of methanol supply to the market from this region. We continue to see significantly reduced methanol supply from Iran, and we believe it is also impacting operations and trade flows from other producers. This has led to an increase in spot methanol pricing in Asia Pacific and Europe, with Chinese methanol prices now trading above $300 per metric ton. and European spot prices now trading close to $400 per ton. Now turning to our operations where our methanol production was higher in the fourth quarter compared to the third quarter. Starting with our newly acquired assets in Texas, we produced 216,000 tons at Beaumont and 186,000 tons from our equity share of Nat Gasoline. During the fourth quarter, Beaumont experienced a short unplanned outage, environmental compliance. We've been actively working with both of these manufacturing sites on integration plans, completing detailed reviews of systems and technical findings, and are pleased with the progress to date. In Geismar, production was slightly higher in the fourth quarter, as all three plants operated reasonably well, although we did experience some minor unplanned outages. In Chile, after completing a planned turnaround in September, we operated both plants at full rates for most of from Chile and Argentina. During December, a third-party pipeline failure caused a temporary restriction on gas supply to our facilities, and this resulted in approximately 75,000 tons of lost production. The gas supplier developed a resolution to this issue in early 26, and we're now operating both plants at full rates, which we expect to sustain through April. In Egypt, we had higher production in the fourth quarter as the third availability constraints. There's been stabilization of gas balances in the region, but some continued limitations on supply to industrial plants are expected going forward, particularly in the summer. The plant is currently operating at full rates and we're closely monitoring the regional situation for any potential impact on gas supply to the plant. In New Zealand, we produced 171,000 tons as increased gas supply was available in the non-winter season. Notwithstanding the short-term dynamic, structural gas supply availability in New Zealand continues to be challenging, and we're working with our gas suppliers and the government to optimize our operations in the country. Our expected equity production for 2026 is approximately 9 million tons of methanol. Actual production may vary by quarter based on timing of turnarounds, gas availability, unplanned outages, and unanticipated events. Mayor Mrakas, Now turning to our current financial position and outlook during the fourth quarter solid cash flows from operations allowed us to repay $75 million of the term loan a facility. Mayor Mrakas, And at the end the year in a strong cash position with 425 million on the balance sheet, since the start of 26 we've repaid a further 50 million and the balance of the term loan a facility is currently at 300 million. Our priorities for 2026 are to safely and reliably operate our business and continue to deliver on our integration plan. We remain focused on maintaining a strong balance sheet and ensuring financial flexibility, and our near-term capital allocation priority is to direct all free cash flow to the repayment of the term loan aid facility. Based on a forecasted first quarter average realized price between $330 and $340 per ton and similar produced sales, We expect slightly higher adjusted EBITDA in the first quarter of 2026 compared to the fourth quarter. We'd now be happy to answer your questions.