Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF OCTOBER 2018
 
METHANEX CORPORATION
(Registrant’s name)
 
SUITE 1800, 200 BURRARD STREET, VANCOUVER, BC V6C 3M1 CANADA
(Address of principal executive offices)
 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ¨             Form 40-F  ý

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No   ý

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 




NEWS RELEASE
newlogoa11.jpg
Methanex Corporation
1800 - 200 Burrard St.
Vancouver, BC Canada V6C 3M1
Investor Relations: (604) 661-2600
www.methanex.com 


For immediate release

October 24, 2018

METHANEX REPORTS THIRD QUARTER 2018 EARNINGS

VANCOUVER, BRITISH COLUMBIA - For the third quarter of 2018, Methanex (TSX:MX) (NASDAQ:MEOH) reported net income attributable to Methanex shareholders of $128 million ($1.61 per common share on a diluted basis) compared to net income of $111 million ($1.36 per common share on a diluted basis) in the second quarter of 2018. Adjusted EBITDA for the third quarter of 2018 was $293 million and Adjusted net income was $152 million ($1.92 per common share). This compares with Adjusted EBITDA of $275 million and Adjusted net income of $143 million ($1.75 per common share) for the second quarter of 2018.

John Floren, President and CEO of Methanex commented, "Our higher Adjusted EBITDA and earnings in the third quarter reflects our strong sales volume and higher average realized price. Our sales volume in the third quarter of 2.9 million tonnes matched previous record levels. Our average realized price increased to $413 per tonne in the third quarter compared to $405 per tonne in the second quarter of 2018 as marginally higher industry supply was matched by strong methanol demand which sustained tight market conditions."

"We are extremely pleased to have recorded Adjusted EBITDA of $874 million in the first nine months of 2018, surpassing the record annual Adjusted EBITDA in 2017 of $838 million. These results reflect the investments we have made over the past few years to increase our production capability, which have substantially improved our earnings power and ability to generate significant free cash flow at a wide range of methanol prices."

"In addition, we announced earlier this month that we restarted and produced methanol from our Chile IV plant for the first time since 2007. We expect the plant to ramp up to full production rates over the coming weeks and have also begun to receive natural gas from Argentina for the first time in 11 years. These achievements represent a significant step towards a two-plant operation in Chile, without seasonal restrictions, in the long-term."

"We returned $139 million to shareholders through our regular dividend and share repurchases during the third quarter. To September 30, 2018 we have repurchased 5,400,000 common shares, of the 6,590,095 approved, for approximately $366 million since the start of our normal course issuer bid on March 13, 2018."

We have $261 million of cash on hand at the end of the third quarter, a committed revolving credit facility and a robust balance sheet. Our balanced approach to capital allocation remains unchanged. We believe we are well positioned to meet our financial commitments, pursue our growth opportunities and deliver on our commitment to return excess cash to shareholders through dividends and share repurchases," Floren said.

METHANEX CORPORATION 2018 THIRD QUARTER NEWS RELEASE    PAGE 1



FURTHER INFORMATION
The information set forth in this news release summarizes Methanex's key financial and operational data for the third quarter of 2018. It is not a complete source of information for readers and is not in any way a substitute for reading the third quarter 2018 Management’s Discussion and Analysis ("MD&A") dated October 24, 2018 and the unaudited condensed consolidated interim financial statements for the three and nine month periods ended September 30, 2018, both of which are available from the Investor Relations section of our website at www.methanex.com. The MD&A and the unaudited condensed consolidated interim financial statements for the three and nine month periods ended September 30, 2018 are also available on the Canadian Securities Administrators' SEDAR website at www.sedar.com and on the United States Securities and Exchange Commission's EDGAR website at www.sec.gov.

FINANCIAL AND OPERATIONAL DATA
 
Three Months Ended
 
Nine Months Ended
($ millions except per share amounts and where noted)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Production (thousands of tonnes) (attributable to Methanex shareholders)
1,735

1,648

1,765

 
5,326

5,245

Sales volume (thousands of tonnes)
 
 
 
 
 
 
Methanex-produced methanol
1,790

1,729

1,753

 
5,403

5,299

Purchased methanol
802

709

757

 
2,124

1,656

Commission sales
279

329

261

 
929

862

Total sales volume 1
2,871

2,767

2,771

 
8,456

7,817

 
 
 
 
 
 
 
Methanex average non-discounted posted price ($ per tonne) 2
486

478

351

 
480

394

Average realized price ($ per tonne) 3
413

405

307

 
407

332

 
 
 
 
 
 
 
Revenue
1,044

950

720

 
2,955

2,199

Adjusted revenue
1,067

972

775

 
3,025

2,322

Adjusted EBITDA
293

275

143

 
874

584

Cash flows from operating activities
228

290

119

 
762

574

Adjusted net income
152

143

52

 
466

266

Net income (attributable to Methanex shareholders)
128

111

32

 
408

248

 
 
 
 
 
 
 
Adjusted net income per common share
1.92

1.75

0.60

 
5.71

3.03

Basic net income per common share
1.62

1.36

0.38

 
5.01

2.83

Diluted net income per common share
1.61

1.36

0.38

 
5.00

2.83

 
 
 
 
 
 
 
Common share information (millions of shares)
 
 
 
 
 
 
Weighted average number of common shares
79

82

86

 
82

88

Diluted weighted average number of common shares
79

82

86

 
82

88

Number of common shares outstanding, end of period
78

80

85

 
78

85

1 
Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). There was 20,000 MT of Tolling Volume produced in the third quarter of 2018 and 48,000 MT in the second quarter of 2018. There was no Tolling Volume in the third quarter of 2017.
2 
Methanex average non-discounted posted price represents the average of our non-discounted posted prices in North America, Europe and Asia Pacific weighted by sales volume. Current and historical pricing information is available at www.methanex.com.
3 
Average realized price is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, but including an amount representing our share of Atlas revenue, divided by the total sales volume of Methanex-produced and purchased methanol, but excluding Tolling Volume.


METHANEX CORPORATION 2018 THIRD QUARTER NEWS RELEASE    PAGE 2



A reconciliation from net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted net income per common share is as follows:
 
Three Months Ended
 
Nine Months Ended
($ millions except number of shares and per share amounts)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Net income (attributable to Methanex shareholders)
$
128

$
111

$
32

 
$
408

$
248

Mark-to-market impact of share-based compensation, net of tax
24

32

20

 
58

18

Adjusted net income
$
152

$
143

$
52

 
$
466

$
266

Diluted weighted average shares outstanding (millions)
79

82

86

 
82

88

Adjusted net income per common share
$
1.92

$
1.75

$
0.60

 
$
5.71

$
3.03


We recorded net income attributable to Methanex shareholders of $128 million during the third quarter of 2018 compared to net income of $111 million in the second quarter of 2018. The increase in earnings is primarily due to an increase in sales of Methanex-produced methanol, an increase in our average realized methanol price during the third quarter, and the change in the mark-to-market impact of share-based compensation.
We recorded Adjusted EBITDA of $293 million for the third quarter of 2018 compared with $275 million for the second quarter of 2018. Adjusted net income was $152 million for the third quarter of 2018 compared to Adjusted net income of $143 million for the second quarter of 2018. The increase in Adjusted EBITDA and Adjusted net income is primarily due to an increase in sales of Methanex-produced methanol and an increase in average realized price to $413 per tonne for the third quarter of 2018 from $405 per tonne for the second quarter of 2018.
Production for the third quarter of 2018 was 1,735,000 tonnes compared with 1,648,000 tonnes for the second quarter of 2018.
Total sales volume for the third quarter of 2018 was a record 2,871,000 tonnes compared with 2,767,000 tonnes for the second quarter of 2018. Sales of Methanex-produced methanol were 1,790,000 tonnes in the third quarter of 2018 compared with 1,729,000 tonnes in the second quarter of 2018.
To September 30, 2018 we have repurchased 5,400,000 common shares, of the 6,590,095 approved, for approximately $366 million since the start of our normal course issuer bid on March 13, 2018.
During the third quarter of 2018 we paid a $0.33 per common share quarterly dividend to shareholders for a total of $26 million.
We recently restarted our 0.8 million tonne Chile IV plant that has been idle since 2007 and expect the plant to ramp up to full production rates over the coming weeks. Additionally, the Argentine Government has granted permits to allow for the export of natural gas from Argentina to Chile and Methanex has begun to receive natural gas from Argentine suppliers in October 2018. We expect that our current gas agreements will allow for a two-plant operation in Chile during the southern hemisphere summer months and up to a maximum of 75% of a two-plant operation annually until mid-2020.
We continue to make good progress on a potential Geismar 3 production facility. We expect to spend approximately $50 to $60 million on this project prior to reaching a final investment decision by mid-2019. We believe that the potential Geismar 3 project would be advantaged relative to other projects being contemplated or under construction in the US Gulf.





METHANEX CORPORATION 2018 THIRD QUARTER NEWS RELEASE    PAGE 3



PRODUCTION HIGHLIGHTS
 
Q3 2018
Q2 2018

Q3 2017

 
YTD Q3 2018

YTD Q3 2017

(thousands of tonnes)
Operating Capacity 1

Production

Production

Production

 
Production

Production

New Zealand 2
608

478

252

502

 
1,217

1,385

Geismar (USA)
500

520

518

499

 
1,551

1,429

Trinidad (Methanex interest) 3
500

353

442

457

 
1,254

1,302

Egypt (50% interest)
158

128

165

71

 
458

389

Medicine Hat (Canada)
150

144

143

158

 
440

435

Chile 4
220

112

128

78

 
406

305

 
2,136

1,735

1,648

1,765

 
5,326

5,245

1 
Operating capacity includes only those facilities which are currently capable of operating, but excludes any portion of an asset that is underutilized due to a lack of natural gas feedstock over a prolonged period of time. Our current annual operating capacity is 8.5 million tonnes, including 0.9 million tonnes related to our Chile operations. The operating capacity of our production facilities may be higher than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies at these facilities. Actual production for a facility in any given year may be higher or lower than operating capacity due to a number of factors, including natural gas composition or the age of the facility's catalyst. 
2 
The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility.  
3 
The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities.
4 
The production capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock.
Key production and operational highlights during the third quarter include:
New Zealand produced 478,000 tonnes compared with 252,000 tonnes in the second quarter of 2018. Production in the third quarter of 2018 is higher than the second quarter of 2018 by 226,000 tonnes as major turnaround activities were completed at the end of June. However, production in New Zealand was impacted in the third quarter as we experienced gas constraints as a result of natural gas suppliers completing planned and unplanned maintenance activities. We expect the gas constraints to be resolved in the fourth quarter.
Geismar production rates continue to be strong, with production of 520,000 tonnes.
Trinidad produced 353,000 tonnes (Methanex interest) compared with 442,000 tonnes in the second quarter of 2018. Production in Trinidad was lower in the third quarter of 2018 compared to the second quarter of 2018 primarily as a result of interruptions to the electricity supply to the site and mechanical issues at both plants during the quarter. Additionally, we continue to experience gas curtailments in Trinidad.
The Egypt facility produced 256,000 tonnes (Methanex interest - 128,000 tonnes) in the third quarter of 2018 compared with 330,000 tonnes (Methanex interest - 165,000 tonnes) in the second quarter of 2018. Mechanical issues primarily related to the supply of off spec natural gas at the Egypt facility resulted in lower production in the third quarter of 2018 compared to the second quarter of 2018. Natural gas supplied to the facility following the outage has since met specifications.
Medicine Hat produced 144,000 tonnes during the third quarter of 2018, and 143,000 tonnes in the second quarter of 2018. We experienced CO2 supply constraint during both the second and third quarters of 2018. CO2 supply resumed late in the third quarter of 2018 and is expected to continue for the foreseeable future.
Chile produced 112,000 tonnes, including 20,000 tonnes produced through a tolling arrangement with natural gas from Argentina. This compares to 128,000 tonnes during the second quarter of 2018, including 48,000 tonnes through the tolling arrangement.


METHANEX CORPORATION 2018 THIRD QUARTER NEWS RELEASE    PAGE 4



CONFERENCE CALL
A conference call is scheduled for October 25, 2018 at 12:00 noon ET (9:00 am PT) to review these third quarter results. To access the call, dial the conferencing operator ten minutes prior to the start of the call at (416) 340-2216, or toll free at (800) 273-9672. A simultaneous audio-only webcast of the conference call can be accessed from our website at www.methanex.com and will also be available following the call. A playback version of the conference call will be available until November 8, 2018 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 9757508#.
ABOUT METHANEX
Methanex is a Vancouver-based, publicly traded company and is the world’s largest producer and supplier of methanol to major international markets. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX" and on the NASDAQ Global Market in the United States under the trading symbol "MEOH".
FORWARD-LOOKING INFORMATION WARNING
This third quarter 2018 press release contains forward-looking statements with respect to us and the chemical industry. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond the Company's control. Readers are cautioned that undue reliance should not be placed on forward-looking information as actual results may vary materially from the forward-looking information. Methanex does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law. Refer to Forward-Looking Information Warning in the third quarter 2018 Management's Discussion and Analysis for more information which is available from the Investor Relations section of our website at www.methanex.com, the Canadian Securities Administrators' SEDAR website at www.sedar.com and on the United States Securities and Exchange Commission's EDGAR website at www.sec.gov.
NON-GAAP MEASURES
The Company has used the terms Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, Adjusted revenue and operating income throughout this document. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP. These measures represent the amounts that are attributable to Methanex Corporation shareholders and are calculated by excluding the mark-to-market impact of share-based compensation as a result of changes in our share price and the impact of certain items associated with specific identified events. Refer to Additional Information - Supplemental Non-GAAP measures on page 14 of the Company's MD&A for the period ended September 30, 2018 for reconciliations to the most comparable GAAP measures. Unless otherwise indicated, the financial information presented in this release is prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

-end-

For further information, contact:



Kim Campbell
Manager, Investor Relations
Methanex Corporation
604-661-2600

METHANEX CORPORATION 2018 THIRD QUARTER NEWS RELEASE    PAGE 5



3
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Share Information
Methanex Corporation’s common shares are listed for trading on the Toronto Stock Exchange under the symbol MX and on the Nasdaq Global Market under the symbol MEOH.


Transfer Agents & Registrars
AST Trust Company (Canada)
320 Bay Street
Toronto, Ontario Canada M5H 4A6
Toll free in North America: 1-800-387-0825
Investor Information
All financial reports, news releases and corporate information can be accessed on our website at www.methanex.com.


Contact Information
Methanex Investor Relations
1800 - 200 Burrard Street
Vancouver, BC Canada V6C 3M1
E-mail: invest@methanex.com
Methanex Toll-Free: 1-800-661-8851
Management's Discussion
and Analysis for the
Three and Nine Months Ended
At October 23, 2018 the Company had 78,053,368 common shares issued and outstanding and stock options exercisable for 846,554 additional common shares.
THIRD QUARTER MANAGEMENT’S DISCUSSION AND ANALYSIS ("MD&A")
Except where otherwise noted, all currency amounts are stated in United States dollars.
FINANCIAL AND OPERATIONAL HIGHLIGHTS

A reconciliation from net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted net income per common share is as follows:
 
Three Months Ended
 
Nine Months Ended
($ millions except number of shares and per share amounts)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Net income (attributable to Methanex shareholders)
$
128

$
111

$
32

 
$
408

$
248

Mark-to-market impact of share-based compensation, net of tax
24

32

20

 
58

18

Adjusted net income
$
152

$
143

$
52

 
$
466

$
266

Diluted weighted average shares outstanding (millions)
79

82

86

 
82

88

Adjusted net income per common share
$
1.92

$
1.75

$
0.60

 
$
5.71

$
3.03

1
The Company has used the terms Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, Adjusted revenue and operating income throughout this document. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures on page 14 of the MD&A for reconciliations to the most comparable GAAP measures.

We recorded net income attributable to Methanex shareholders of $128 million during the third quarter of 2018 compared to net income of $111 million in the second quarter of 2018. The increase in earnings is primarily due to an increase in sales of Methanex-produced methanol, an increase in our average realized methanol price during the third quarter, and the change in the mark-to-market impact of share-based compensation.
We recorded Adjusted EBITDA of $293 million for the third quarter of 2018 compared with $275 million for the second quarter of 2018. Adjusted net income was $152 million for the third quarter of 2018 compared to Adjusted net income of $143 million for the second quarter of 2018. The increase in Adjusted EBITDA and Adjusted net income is primarily due to an increase in sales of Methanex-produced methanol and an increase in average realized price to $413 per tonne for the third quarter of 2018 from $405 per tonne for the second quarter of 2018.
Production for the third quarter of 2018 was 1,735,000 tonnes compared with 1,648,000 tonnes for the second quarter of 2018. Refer to the Production Summary section on page 4 of the MD&A.
Total sales volume for the third quarter of 2018 was a record 2,871,000 tonnes compared with 2,767,000 tonnes for the second quarter of 2018. Sales of Methanex-produced methanol were 1,790,000 tonnes in the third quarter of 2018 compared with 1,729,000 tonnes in the second quarter of 2018.
To September 30, 2018 we have repurchased 5,400,000 common shares, of the 6,590,095 approved, for approximately $366 million since the start of our normal course issuer bid on March 13, 2018.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 1
MANAGEMENT’S DISCUSSION AND ANALYSIS



During the third quarter of 2018 we paid a $0.33 per common share quarterly dividend to shareholders for a total of $26 million.
We recently restarted our 0.8 million tonne Chile IV plant that has been idle since 2007 and expect the plant to ramp up to full production rates over the coming weeks. Additionally, the Argentine Government has granted permits to allow for the export of natural gas from Argentina to Chile and Methanex has begun to receive natural gas from Argentine suppliers in October 2018. We expect that our current gas agreements will allow for a two-plant operation in Chile during the southern hemisphere summer months and up to a maximum of 75% of a two-plant operation annually until mid-2020.
We continue to make good progress on a potential Geismar 3 production facility. We expect to spend approximately $50 to $60 million on this project prior to reaching a final investment decision by mid-2019. We believe that the potential Geismar 3 project would be advantaged relative to other projects being contemplated or under construction in the US Gulf.

This Third Quarter 2018 Management’s Discussion and Analysis dated October 24, 2018 for Methanex Corporation ("the Company") should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements for the three and nine month periods ended September 30, 2018 as well as the 2017 Annual Consolidated Financial Statements and MD&A included in the Methanex 2017 Annual Report. Unless otherwise indicated, the financial information presented in this interim report is prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Methanex 2017 Annual Report and additional information relating to Methanex is available on our website at www.methanex.com, the Canadian Securities Administrators' SEDAR website at www.sedar.com and on the United States Securities and Exchange Commission's EDGAR website at www.sec.gov.



METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 2
MANAGEMENT’S DISCUSSION AND ANALYSIS



FINANCIAL AND OPERATIONAL DATA
 
Three Months Ended
 
Nine Months Ended
($ millions except per share amounts and where noted)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Production (thousands of tonnes) (attributable to Methanex shareholders)
1,735

1,648

1,765

 
5,326

5,245

Sales volume (thousands of tonnes)
 
 
 
 
 
 
Methanex-produced methanol
1,790

1,729

1,753

 
5,403

5,299

Purchased methanol
802

709

757

 
2,124

1,656

Commission sales
279

329

261

 
929

862

Total sales volume 1
2,871

2,767

2,771

 
8,456

7,817

 
 
 
 
 
 
 
Methanex average non-discounted posted price ($ per tonne) 2
486

478

351

 
480

394

Average realized price ($ per tonne) 3
413

405

307

 
407

332

 
 
 
 
 
 
 
Revenue
1,044

950

720

 
2,955

2,199

Adjusted revenue
1,067

972

775

 
3,025

2,322

Adjusted EBITDA
293

275

143

 
874

584

Cash flows from operating activities
228

290

119

 
762

574

Adjusted net income
152

143

52

 
466

266

Net income (attributable to Methanex shareholders)
128

111

32

 
408

248

 
 
 
 
 
 
 
Adjusted net income per common share
1.92

1.75

0.60

 
5.71

3.03

Basic net income per common share
1.62

1.36

0.38

 
5.01

2.83

Diluted net income per common share
1.61

1.36

0.38

 
5.00

2.83

 
 
 
 
 
 
 
Common share information (millions of shares)
 
 
 
 
 
 
Weighted average number of common shares
79

82

86

 
82

88

Diluted weighted average number of common shares
79

82

86

 
82

88

Number of common shares outstanding, end of period
78

80

85

 
78

85

1 
Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). There was 20,000 MT of Tolling Volume produced in the third quarter of 2018 and 48,000 MT in the second quarter of 2018. There was no Tolling Volume in the third quarter of 2017.
2 
Methanex average non-discounted posted price represents the average of our non-discounted posted prices in North America, Europe and Asia Pacific weighted by sales volume. Current and historical pricing information is available at www.methanex.com.
3 
Average realized price is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, but including an amount representing our share of Atlas revenue, divided by the total sales volume of Methanex-produced and purchased methanol, but excluding Tolling Volume.



METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 3
MANAGEMENT’S DISCUSSION AND ANALYSIS



PRODUCTION SUMMARY
 
Q3 2018
Q2 2018

Q3 2017

 
YTD Q3 2018

YTD Q3 2017

(thousands of tonnes)
Operating Capacity 1

Production

Production

Production

 
Production

Production

New Zealand 2
608

478

252

502

 
1,217

1,385

Geismar (USA)
500

520

518

499

 
1,551

1,429

Trinidad (Methanex interest) 3
500

353

442

457

 
1,254

1,302

Egypt (50% interest)
158

128

165

71

 
458

389

Medicine Hat (Canada)
150

144

143

158

 
440

435

Chile 4
220

112

128

78

 
406

305

 
2,136

1,735

1,648

1,765

 
5,326

5,245

1 
Operating capacity includes only those facilities which are currently capable of operating, but excludes any portion of an asset that is underutilized due to a lack of natural gas feedstock over a prolonged period of time. Our current annual operating capacity is 8.5 million tonnes, including 0.9 million tonnes related to our Chile operations. The operating capacity of our production facilities may be higher than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies at these facilities. Actual production for a facility in any given year may be higher or lower than operating capacity due to a number of factors, including natural gas composition or the age of the facility's catalyst.     
2 
The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility (refer to the New Zealand section below).  
3 
The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities (refer to the Trinidad section below).
4 
The production capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock.
New Zealand
The New Zealand facilities produced 478,000 tonnes of methanol in the third quarter of 2018 compared with 252,000 tonnes in the second quarter of 2018. Production in the third quarter of 2018 is higher than the second quarter of 2018 by 226,000 tonnes as major turnaround activities were completed at the end of June. However, production in New Zealand was impacted in the third quarter as we experienced gas constraints as a result of natural gas suppliers completing planned and unplanned maintenance activities. We expect the gas constraints to be resolved in the fourth quarter. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition.
United States
The Geismar facilities produced 520,000 tonnes during the third quarter of 2018 compared to 518,000 tonnes during the second quarter of 2018.
Trinidad
The Trinidad facilities produced 353,000 tonnes (Methanex interest) in the third quarter of 2018 compared with 442,000 tonnes (Methanex interest) in the second quarter of 2018. Production in Trinidad was lower in the third quarter of 2018 compared to the second quarter of 2018 primarily as a result of interruptions to the electricity supply to the site and mechanical issues at both plants during the quarter. Additionally, we continue to experience gas curtailments in Trinidad.
Egypt
The Egypt facility produced 256,000 tonnes (Methanex interest - 128,000 tonnes) in the third quarters of 2018 compared with 330,000 tonnes (Methanex interest - 165,000 tonnes) in the second quarter of 2018. Mechanical issues primarily related to the supply of off spec natural gas at the Egypt facility resulted in lower production in the third quarter of 2018 compared to the second quarter of 2018. Natural gas supplied to the facility following the outage has since met specifications.

The Egypt facility has previously experienced periodic natural gas supply restrictions. The strong efforts of the Egyptian governmental authorities to fast-track existing and new upstream gas supply in Egypt has led to improved gas deliveries in 2017 and 2018. As a result, we expect to receive 100% of contracted gas supply for the foreseeable future.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 4
MANAGEMENT’S DISCUSSION AND ANALYSIS



Canada
The Medicine Hat facility produced 144,000 tonnes during the third quarter of 2018 and 143,000 tonnes in the second quarter of 2018. We experienced CO2 supply constraints during both the second and third quarters of 2018. CO2 supply resumed late in the third quarter of 2018 and is expected to continue for the foreseeable future.
Chile
The Chile facility produced 112,000 tonnes during the third quarter of 2018, including 20,000 tonnes produced through a tolling arrangement with natural gas from Argentina. This compares to 128,000 tonnes during the second quarter of 2018, including 48,000 tonnes through the tolling arrangement. The tolling arrangement expired at the end of September 2018.

We recently restarted our 0.8 million tonne Chile IV plant that has been idle since 2007 and expect the plant to ramp up to full production rates over the coming weeks. Additionally, the Argentine Government has granted permits to allow for the export of natural gas from Argentina to Chile and Methanex has begun to receive natural gas from Argentine suppliers in October 2018. We expect that our current gas agreements will allow for a two-plant operation in Chile during the southern hemisphere summer months and up to a maximum of 75% of a two-plant operation annually until mid-2020. The future of our Chile operations is primarily dependent on the level of natural gas exploration and development in southern Chile and our ability to secure a sustainable natural gas supply to our facilities on economic terms from Chile and Argentina.
FINANCIAL RESULTS

For the third quarter of 2018, we reported net income attributable to Methanex shareholders of $128 million ($1.61 per common share on a diluted basis) compared with net income attributable to Methanex shareholders for the second quarter of 2018 of $111 million ($1.36 per common share on a diluted basis).

For the third quarter of 2018, we recorded Adjusted EBITDA of $293 million and Adjusted net income of $152 million ($1.92 per common share). This compares with Adjusted EBITDA of $275 million and Adjusted net income of $143 million ($1.75 per common share) for the second quarter of 2018.

We calculate Adjusted EBITDA and Adjusted net income by including amounts related to our equity share of the Atlas facility (63.1% interest) and by excluding the non-controlling interests' share, the mark-to-market impact of share-based compensation as a result of changes in our share price and the impact of certain items associated with specific identified events. Refer to Additional Information - Supplemental Non-GAAP Measures on page 14 of the MD&A for a further discussion on how we calculate these measures. Our analysis of depreciation and amortization, finance costs, finance income and other expenses and income taxes is consistent with the presentation of our consolidated statements of income and excludes amounts related to Atlas.


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 5
MANAGEMENT’S DISCUSSION AND ANALYSIS



We review our financial results by analyzing changes in Adjusted EBITDA, mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses and income taxes. A summary of our consolidated statements of income is as follows:
 
Three Months Ended
 
Nine Months Ended
($ millions)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Consolidated statements of income:
 
 
 
 
 
 
Revenue
$
1,044

$
950

$
720

 
$
2,955

$
2,199

Cost of sales and operating expenses
(784
)
(712
)
(625
)
 
(2,156
)
(1,686
)
Mark-to-market impact of share-based compensation
29

39

24

 
70

22

Adjusted EBITDA (attributable to associate)
35

37

37

 
112

112

Amounts excluded from Adjusted EBITDA attributable to non-controlling interests
(31
)
(39
)
(13
)
 
(107
)
(63
)
Adjusted EBITDA (attributable to Methanex shareholders)
293

275

143

 
874

584

 
 
 
 
 
 
 
Mark-to-market impact of share-based compensation
(29
)
(39
)
(24
)
 
(70
)
(22
)
Depreciation and amortization
(61
)
(63
)
(58
)
 
(183
)
(175
)
Finance costs
(23
)
(24
)
(25
)
 
(71
)
(71
)
Finance income and other expenses
1

(2
)
4

 
3

9

Income tax expense
(43
)
(33
)
3

 
(121
)
(43
)
Earnings of associate adjustment 1
(21
)
(18
)
(18
)
 
(58
)
(55
)
Non-controlling interests adjustment 1
11

15

7

 
34

21

Net income (attributable to Methanex shareholders)
$
128

$
111

$
32

 
$
408

$
248

Net income
$
148

$
135

$
38

 
$
481

$
290

1 
These adjustments represent depreciation and amortization, finance costs, finance income and other expenses and income taxes associated with our 63.1% interest in the Atlas methanol facility and the non-controlling interests.
Adjusted EBITDA (attributable to Methanex shareholders)

Our operations consist of a single operating segment - the production and sale of methanol. We review the results of operations by analyzing changes in the components of Adjusted EBITDA. For a discussion of the definitions used in our Adjusted EBITDA analysis, refer to How We Analyze Our Business on page 17 of the MD&A. Changes in these components - average realized price, sales volume and total cash costs - similarly impact net income attributable to Methanex shareholders.

The changes in Adjusted EBITDA resulted from changes in the following:
($ millions)
Q3 2018
compared with
Q2 2018

Q3 2018
compared with
Q3 2017

YTD Q3 2018
compared with
YTD Q3 2017

Average realized price
$
21

$
273

$
554

Sales volume
25

5

48

Total cash costs
(28
)
(128
)
(312
)
Increase in Adjusted EBITDA
$
18

$
150

$
290

Average realized price
 
Three Months Ended
 
Nine Months Ended
($ per tonne)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Methanex average non-discounted posted price
486

478

351

 
480

394

Methanex average realized price
413

405

307

 
407

332



METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 6
MANAGEMENT’S DISCUSSION AND ANALYSIS



Methanex’s average realized price for the third quarter of 2018 increased to $413 per tonne compared to $405 per tonne in the second quarter of 2018, increasing Adjusted EBITDA by $21 million. For the three and nine months ended September 30, 2018, Methanex's average non-discounted posted price increased to $486 per tonne and $480 per tonne from $351 per tonne and $394 per tonne for same periods in 2017. Our average realized price for the three and nine months ended September 30, 2018 increased compared to the same periods in 2017 driven by the higher average non-discounted posted prices (refer to Supply/Demand Fundamentals section on page 11 of the MD&A for more information).

Our average realized price for the third quarter of 2018 was $413 per tonne compared with $307 per tonne in the third quarter of 2017. The increase in average realized price for the third quarter of 2018 compared with the third quarter of 2017 increased Adjusted EBITDA by $273 million. For the nine months ended September 30, 2018, our average realized price increased to $407 per tonne from $332 per tonne for the same period in 2017. This change in average realized price increased Adjusted EBITDA by $554 million.
Sales volume
Methanol sales volume excluding commission sales volume in the third quarter of 2018 was 154,000 tonnes higher than the second quarter of 2018 and 82,000 tonnes higher than the third quarter of 2017. The increase in the third quarter of 2018 compared to the second quarter of 2018 increased Adjusted EBITDA by $25 million. The increase in the third quarter of 2018 compared to same period in 2017 increased Adjusted EBITDA by $5 million. For the nine months ended September 30, 2018 compared with the same period in 2017, methanol sales volume excluding commission sales volume was 572,000 tonnes higher and this resulted in higher Adjusted EBITDA by $48 million.
Total cash costs
The primary drivers of changes in our total cash costs are changes in the cost of Methanex-produced methanol and changes in the cost of methanol we purchase from others ("purchased methanol"). We supplement our production with methanol produced by others through methanol offtake contracts and purchases on the spot market to meet customer needs and to support our marketing efforts within the major global markets.

We have adopted the first-in, first-out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we produce or purchase. Accordingly, the changes in Adjusted EBITDA as a result of changes in Methanex-produced and purchased methanol costs primarily depend on changes in methanol pricing and the timing of inventory flows.

In a rising price environment, our margins at a given price are higher than in a stable price environment as a result of timing of methanol purchases and production versus sales. Generally, the opposite applies when methanol prices are decreasing.

The changes in Adjusted EBITDA due to changes in total cash costs were due to the following:
($ millions)
Q3 2018
compared with
Q2 2018

Q3 2018
compared with
Q3 2017

YTD Q3 2018
compared with
YTD Q3 2017

Methanex-produced methanol costs
$
(24
)
$
(43
)
$
(90
)
Proportion of Methanex-produced methanol sales
(7
)
(3
)
(51
)
Purchased methanol costs
(8
)
(79
)
(142
)
Other, net
11

(3
)
(29
)
Decrease in Adjusted EBITDA due to changes in total cash costs
$
(28
)
$
(128
)
$
(312
)

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 7
MANAGEMENT’S DISCUSSION AND ANALYSIS



Methanex-produced methanol costs
Natural gas is the primary feedstock at our methanol facilities and is the most significant component of Methanex-produced methanol costs. We purchase natural gas for more than half of our production under agreements where the unique terms of each contract include a base price and a variable price component linked to the price of methanol to reduce our commodity price risk exposure. The variable price component of each gas contract is adjusted by a formula related to methanol prices above a certain level. For the third quarter of 2018 compared with the second quarter of 2018, Methanex-produced methanol costs were higher by $24 million, primarily due to changes in the source of production and their relative costs sold from inventory. For the three and nine months ended September 30, 2018 compared with the same periods in 2017, Methanex-produced methanol costs were higher by $43 million and $90 million, respectively, primarily due to the impact of changes in realized methanol prices on the variable portion of our natural gas cost.
Proportion of Methanex-produced methanol sales
The cost of purchased methanol is directly linked to the selling price for methanol at the time of purchase and the cost of purchased methanol is generally higher than the cost of Methanex-produced methanol. Accordingly, an increase in the proportion of Methanex-produced methanol sales results in a decrease in our overall cost structure for a given period. For the third quarter of 2018 compared with the second quarter of 2018, a lower proportion of Methanex-produced methanol sales decreased Adjusted EBITDA by $7 million. For the three and nine months ended September 30, 2018 compared with the same periods in 2017, a lower proportion of Methanex-produced methanol sales decreased Adjusted EBITDA by $3 million and $51 million, respectively.
Purchased methanol costs
Changes in purchased methanol costs for all periods presented are primarily a result of changes in methanol pricing and the timing of purchases sold from inventory.
Other, net
Other, net relates to unabsorbed fixed costs, logistics costs, tolling margins, selling, general and administrative expenses and other operational items. For the third quarter of 2018 compared with the second quarter of 2018, other costs were lower by $11 million, primarily due to lower selling, general and administrative expenses and lower unabsorbed fixed costs in New Zealand during the quarter. For the three and nine months ended September 30, 2018 compared with the same periods in 2017, other costs were higher by $3 million and $29 million, primarily due to higher logistics costs from increased sales volume, higher selling, general and administrative expenses and other operational items including an insurance settlement recorded in 2017.
Mark-to-Market Impact of Share-based Compensation

We grant share-based awards as an element of compensation. Share-based awards granted include stock options, share appreciation rights, tandem share appreciation rights, deferred share units, restricted share units and performance share units. For all share-based awards, share-based compensation is recognized over the related vesting period for the proportion of the service that has been rendered at each reporting date. Share-based compensation includes an amount related to the grant-date value and a mark-to-market impact as a result of subsequent changes in the fair value of the share-based awards primarily driven by the Company’s share price. The grant-date value amount is included in Adjusted EBITDA and Adjusted net income. The mark-to-market impact of share-based compensation as a result of changes in our share price is excluded from Adjusted EBITDA and Adjusted net income and analyzed separately.


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 8
MANAGEMENT’S DISCUSSION AND ANALYSIS



 
Three Months Ended
 
Nine Months Ended
($ millions except share price)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Methanex Corporation share price 1
$
79.10

$
70.70

$
50.30

 
$
79.10

$
50.30

Grant-date fair value expense included in Adjusted EBITDA and Adjusted net income
2

4

2

 
10

9

Mark-to-market impact due to change in share price
29

39

24

 
70

22

Total share-based compensation expense, before tax
$
31

$
43

$
26

 
$
80

$
31


1 
US dollar share price of Methanex Corporation as quoted on the NASDAQ Global Market on the last trading day of the respective period.


For all periods presented, the mark-to-market impact on share-based compensation is primarily due to increases in the Methanex Corporation share price.
Depreciation and Amortization
    
Depreciation and amortization was $61 million for the third quarter of 2018 compared with $63 million for the second quarter of 2018 and $58 million for the third quarter of 2017. Depreciation and amortization for the nine months ended September 30, 2018 was $183 million compared with $175 million for the same period in 2017. The decrease in depreciation and amortization for the third quarter of 2018 compared to the second quarter of 2018, despite higher sales of Methanex-produced methanol, is primarily due to the recognition of unabsorbed depreciation associated with production outages which were higher in the second quarter of 2018. The increase in depreciation and amortization for the three and nine months ended September 30, 2018 compared with the same periods in 2017 is primarily due to depreciation on an increased asset base and higher sales of Methanex-produced methanol.
Finance Costs
 
Three Months Ended
 
Nine Months Ended
($ millions)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Finance costs
$
23

$
24

$
25

 
$
71

$
71

Finance costs are primarily comprised of interest on borrowings and finance lease obligations. Finance costs are comparable for all periods presented.
Finance Income and Other Expenses
 
Three Months Ended
 
Nine Months Ended
($ millions)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Finance income and other expenses
$
1

$
(2
)
$
4

 
$
3

$
9

The change in finance income and other expenses for all periods presented is primarily due to the impact of changes in foreign exchange rates.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 9
MANAGEMENT’S DISCUSSION AND ANALYSIS



Income Taxes

A summary of our income taxes for the third quarter of 2018 compared to the second quarter of 2018 and the nine month period ended September 30, 2018 compared to the same period in 2017 is as follows:
 
Three months ended
September 30, 2018
 
Three months ended
June 30, 2018
($ millions except where noted)
Net Income

Adjusted
Net Income

 
Net Income

Adjusted
Net Income

Amount before income tax
$
191

$
207

 
$
168

$
187

Income tax expense
(43
)
(55
)
 
(33
)
(44
)
 
$
148

$
152

 
$
135

$
143

Effective tax rate
23
%
26
%
 
20
%
24
%

 
 
Nine months ended
September 30, 2018
 
Nine months ended
September 30, 2017
($ millions, except where noted)
Net Income

Adjusted
Net Income

 
Net Income

Adjusted
Net Income

Amount before income tax
$
602

$
620

 
$
334

$
347

Income tax expense
(121
)
(154
)
 
(44
)
(81
)
 
$
481

$
466

 
$
290

$
266

Effective tax rate
20
%
25
%
 
13
%
23
%


We earn the majority of our income in New Zealand, Trinidad, the United States, Egypt, Canada and Chile. In Trinidad and Chile, the statutory tax rate is 35%. The statutory rates in Canada and New Zealand are 27% and 28%, respectively. The United States statutory tax rate applicable to Methanex was 36% in 2017 and is 23% for 2018 and the Egypt statutory tax rate is 22.5%. As the Atlas entity is accounted for using the equity method, any income taxes related to Atlas are included in earnings of associate and therefore excluded from total income taxes but included in the calculation of Adjusted net income.

The effective tax rate based on Adjusted net income was 26% for the third quarter of 2018 compared to 24% for the second quarter of 2018. The effective tax rate based on Adjusted net income was 25% for the nine month period ended September 30, 2018 compared to 23% for the same period in 2017. Adjusted net income represents the amount that is attributable to Methanex shareholders and excludes the mark-to-market impact of share-based compensation and the impact of certain items associated with specific identified events. The effective tax rate differs from period to period depending on the source of earnings and the impact of foreign exchange fluctuations against the United States dollar on our tax balances. In addition, the effective tax rate is impacted by changes in tax legislation in the jurisdictions in which we operate.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 10
MANAGEMENT’S DISCUSSION AND ANALYSIS



SUPPLY/DEMAND FUNDAMENTALS
Demand
Methanol demand in the third quarter of 2018 remained strong. Demand for energy-related applications, which represents approximately 45% of global demand, was healthy as a result of higher energy prices and a rebound in MTO operating rates as several MTO producers resumed production following planned maintenance activities in the second quarter and first half of the third quarter of 2018. We continue to observe high operating rates for MTO facilities. We continue to monitor the progress of new MTO units that are currently under construction and targeted to come online in the near to medium term. The future operating rates and methanol consumption from MTO producers will depend on a number of factors, including pricing for their various final products, the degree of downstream integration of these units with other products and the impact of the olefin industry feedstock costs, including naphtha, on relative competitiveness. Traditional chemical demand, which represents approximately 55% of global demand, was steady. Growth in demand from traditional chemical applications is generally correlated to GDP and industrial production growth rates.
Supply
Methanol industry supply improved marginally in the third quarter of 2018 compared to the second quarter of 2018 as new supply in the US was offset by various production outages globally. The Natgasoline plant began commercial methanol production in Beaumont, Texas late in the second quarter. The majority of future large-scale capacity additions are expected to be in North America and the Middle East. Yuhuang Chemical is progressing plans to complete a 1.8 million tonne plant in St. James Parish, Louisiana. There are a number of other projects under discussion in North America; however, we believe that there has been limited committed capital to date. In Iran, Marjan Petrochemical Company announced the start-up of their 1.7 million tonne plant late in the third quarter; however, the operational status of that plant is uncertain. We expect that production from this plant along with other plants under construction in Iran will add just over four million tonnes of capacity in the coming years; however, the start-up timing and future operating rates at these facilities will depend on various factors. Caribbean Gas Chemical Limited (CGCL) is constructing a 1.0 million tonne plant in Trinidad with announced production towards the end of the decade. We anticipate that new capacity additions in China will be modest due to a continuing degree of restrictions placed by the Chinese government on new coal-based capacity additions. We expect that production from new methanol capacity in China will be consumed domestically.
Methanol Price
Our average realized price increased in the third quarter to $413 per tonne from $405 per tonne in the second quarter. Strong methanol demand combined with various production outages supported the strength in methanol prices.
Leading into the fourth quarter, tight market conditions supported strong pricing with October posted prices increasing to $496 per tonne in North America and $495 per tonne in Asia and European pricing increasing to €428 per tonne for the fourth quarter. The methanol price will ultimately depend on the strength of the global economy, industry operating rates, global energy prices, new supply additions and the strength of global demand.







 
Methanex Non-Discounted Regional Posted Prices 1
(US$ per tonne)
Oct 2018

Sep 2018

Aug 2018

Jul
2018

North America
496

485

485

496

Europe 2
500

490

490

490

Asia Pacific
495

480

480

490

1    Discounts from our posted prices are offered to customers based on
various factors.
2 
€428 for Q4 2018 (Q3 2018 – €419) converted to United States dollars.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 11
MANAGEMENT’S DISCUSSION AND ANALYSIS



LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities in the third quarter of 2018 were $228 million compared with $290 million for the second quarter of 2018 and $119 million for the third quarter of 2017. Cash flows from operating activities for the nine month period ended September 30, 2018 were $762 million compared with $574 million for the same period in 2017. The changes in cash flows from operating activities resulted from changes in the following:
($ millions)
Q3 2018
compared with
Q2 2018

Q3 2018
compared with
Q3 2017

YTD Q3 2018
compared with
YTD Q3 2017

Change in Adjusted EBITDA (attributable to Methanex shareholders)
$
18

$
150

$
290

Deduct change in Adjusted EBITDA of associate
2

2


Dividends received from associate
12

1

(9
)
Cash flows attributable to non-controlling interests
(8
)
18

44

Non-cash working capital
(128
)
(39
)
(34
)
Income taxes paid
30

(9
)
(55
)
Share-based payments
13

(7
)
(38
)
Other
(1
)
(7
)
(10
)
Increase (Decrease) in cash flows from operating activities
$
(62
)
$
109

$
188


We generated cash from operating activities before changes in non-cash working capital of $294 million during the third quarter of 2018 compared to $228 million in the second quarter of 2018. The change in non-cash working capital in the third quarter of 2018 decreased cash flows from operating activities by $66 million compared to an increase in cash flows from operating activities of $62 million in the second quarter of 2018. The net change in non-cash working capital of $128 million was primarily the result of the timing of sales of methanol on trade receivables.

To September 30, 2018 we have repurchased 5,400,000 common shares, of the 6,590,095 approved, for approximately $366 million since the start of our normal course issuer bid on March 13, 2018.

During the third quarter of 2018 we paid a quarterly dividend of $0.33 per common share for a total of $26 million.

We operate in a highly competitive commodity industry and believe it is appropriate to maintain a strong balance sheet and financial flexibility. At September 30, 2018, our cash balance was $261 million, including $38 million of cash related to our Egypt entity consolidated on a 100% basis and $17 million of cash related to our joint venture interests in ocean going vessels consolidated on a 100% basis. We invest our cash only in highly rated instruments that have maturities of three months or less to ensure preservation of capital and appropriate liquidity.

In addition to normal course principal repayments in the third quarter, our Egypt entity repaid an additional $37.5 million ($18.8 million Methanex share) of principal on the Egypt limited recourse debt facility and distributed $80 million to its shareholders ($40 million Methanex share) in accordance with amended terms of the debt facility reached in late 2017. The early repayment of $37.5 million in the third quarter of 2018 along with the $62.5 million early repayment in the first quarter of 2018 relieves the previous early repayment restrictions on shareholder distributions from the Egypt entity. Future distributions from the Egypt entity to its shareholders will not require an equal early principal repayment of the Egypt limited recourse debt facility.

During the quarter, 50% owned subsidiaries of Methanex issued other limited recourse debt for $80 million ($40 million Methanex share) to refinance the borrowings on two in service ocean going vessels. The proceeds were used to repay other limited recourse debt facilities outstanding of $60.6 million. The debt is non-recourse to Methanex with quarterly repayments of principal and interest until maturity in mid-2031.

We have a committed revolving credit facility with a syndicate of highly rated financial institutions that expires in December 2022. Refer to note 6 of the Company's unaudited condensed consolidated interim financial statements for further discussion of the terms of the credit facility and long-term debt. We do not have any debt maturities until December 2019 other than normal course obligations for principal repayment related to our Egypt and other limited recourse debt facilities.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 12
MANAGEMENT’S DISCUSSION AND ANALYSIS



Capital Projects and Growth Opportunities
We recently restarted our 0.8 million tonne Chile IV plant that has been idle since 2007. The Chile IV project was completed on time and on budget. Our planned capital expenditures directed towards maintenance, turnarounds and catalyst changes for operations, including our 63.1% share of Atlas and 50% of Egypt, is currently estimated to be approximately $175 million from October 1, 2018 to the end of 2019.

We continue to make good progress on a potential Geismar 3 production facility. We expect to spend approximately $50 to $60 million on this project prior to reaching a final investment decision by mid-2019. We believe that the potential Geismar 3 project would be advantaged relative to other projects being contemplated or under construction in the US Gulf.

We believe we are well positioned to meet our financial commitments, pursue our growth opportunities and deliver on our commitment to return excess cash to shareholders through dividends and share repurchases.
ANTICIPATED CHANGES TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

In 2016, the IASB issued IFRS 16, Leases ("IFRS 16"), which eliminates the current operating/finance lease dual accounting model for lessees and replaces it with a single, on-balance sheet accounting model, similar to the current finance lease accounting. The standard replaces IAS 17, Leases ("IAS 17") and related interpretations and is effective for annual periods beginning on or after January 1, 2019.

IFRS 16 may be applied using a retrospective or modified retrospective approach on transition. The Company plans to transition to IFRS 16 in accordance with the modified retrospective approach and as such will not be required to restate comparative periods. Upon adoption, the incremental lease liability for leases currently classified as operating under IAS 17 will be measured at the present value of lease payments remaining in the lease term discounted using the Company’s incremental borrowing rates on the date of transition. The lease asset will be measured as if IFRS 16 was always in effect, resulting in an adjustment to retained earnings on transition.

The Company is currently completing its transition project and quantifying the impact of the new standard under the modified retrospective approach. The recognition of all leases on balance sheet is expected to materially increase the assets and liabilities on the Consolidated Statement of Financial Position upon adoption. The increase primarily relates to ocean vessels, terminal facilities and other right of use assets currently accounted for as operating leases and disclosed in the commitments and contingencies note of the Company’s consolidated annual financial statements.

In addition, the nature and timing of certain expenses related to leases previously classified as operating and presented in cost of sales and operating expenses will now change and be presented in depreciation and amortization and finance costs.
The Company expects that adoption of IFRS 16 will significantly impact the consolidated financial statements. The Company will provide the quantitative impact of this standard in the Company's consolidated annual financial statements.

CONTROLS AND PROCEDURES

During the third quarter of 2018, no changes were made in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 13
MANAGEMENT’S DISCUSSION AND ANALYSIS



ADDITIONAL INFORMATION – SUPPLEMENTAL NON-GAAP MEASURES

In addition to providing measures prepared in accordance with International Financial Reporting Standards ("IFRS"), we present certain supplemental non-GAAP measures throughout this document. These are Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, Adjusted revenue and operating income. These measures do not have any standardized meaning prescribed by generally accepted accounting principles ("GAAP") and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental non-GAAP measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance and liquidity of the Company’s ongoing business on an overall basis. We also believe Adjusted EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies.
Adjusted EBITDA (attributable to Methanex shareholders)

Adjusted EBITDA differs from the most comparable GAAP measure, net income attributable to Methanex shareholders, because it excludes the mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses and income taxes. Adjusted EBITDA includes an amount representing our 63.1% share of the Atlas facility and excludes the non-controlling shareholders' interests in entities which we control but do not fully own.

Adjusted EBITDA and Adjusted net income exclude the mark-to-market impact of share-based compensation related to the impact of changes in our share price on SARs, TSARs, deferred share units, restricted share units and performance share units. The mark-to-market impact related to share-based compensation that is excluded from Adjusted EBITDA and Adjusted net income is calculated as the difference between the grant-date value and the fair value recorded at each period-end. As share-based awards will be settled in future periods, the ultimate value of the units is unknown at the date of grant and therefore the grant-date value recognized in Adjusted EBITDA and Adjusted net income may differ from the total settlement cost.
The following table shows a reconciliation from net income attributable to Methanex shareholders to Adjusted EBITDA:
 
Three Months Ended
 
Nine Months Ended
($ millions)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Net income (attributable to Methanex shareholders)
$
128

$
111

$
32

 
$
408

$
248

Mark-to-market impact of share-based compensation
29

39

24

 
70

22

Depreciation and amortization
61

63

58

 
183

175

Finance costs
23

24

25

 
71

71

Finance income and other expenses
(1
)
2

(4
)
 
(3
)
(9
)
Income tax expense
43

33

(3
)
 
121

43

Earnings of associate adjustment 1
21

18

18

 
58

55

Non-controlling interests adjustment 1
(11
)
(15
)
(7
)
 
(34
)
(21
)
Adjusted EBITDA (attributable to Methanex shareholders)
$
293

$
275

$
143

 
$
874

$
584


1 
These adjustments represent depreciation and amortization, finance costs, finance income and other expenses and income tax expense associated with our 63.1% interest in the Atlas methanol facility and the non-controlling interests.


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 14
MANAGEMENT’S DISCUSSION AND ANALYSIS



Adjusted Net Income and Adjusted Net Income per Common Share

Adjusted net income and Adjusted net income per common share are non-GAAP measures because they exclude the mark-to-market impact of share-based compensation and the impact of certain items associated with specific identified events. The following table shows a reconciliation of net income attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted net income per common share:
 
Three Months Ended
 
Nine Months Ended
($ millions except number of shares and per share amounts)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Net income (attributable to Methanex shareholders)
$
128

$
111

$
32

 
$
408

$
248

Mark-to-market impact of share-based compensation, net of tax
24

32

20

 
58

18

Adjusted net income
$
152

$
143

$
52

 
$
466

$
266

Diluted weighted average shares outstanding (millions)
79

82

86

 
82

88

Adjusted net income per common share
$
1.92

$
1.75

$
0.60

 
$
5.71

$
3.03



Adjusted Revenue (attributable to Methanex shareholders)
Adjusted revenue differs from the most comparable GAAP measure, revenue, because it excludes revenue relating to 50% of the Egypt methanol facility that we do not own and includes an amount representing our 63.1% share of Atlas revenue. It also includes commission earned on volume marketed on a commission basis related to both the 36.9% of the Atlas methanol facility and the 50% of the Egypt methanol facility that we do not own. A reconciliation from revenue to Adjusted revenue is as follows:

Three Months Ended
 
Nine Months Ended
($ millions)
Sep 30
2018

Jun 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Revenue
$
1,044

$
950

$
720

 
$
2,955

$
2,199

Methanex share of Atlas revenue 1
86

95

84

 
274

256

Non-controlling interests' share of revenue 1
(62
)
(72
)
(27
)
 
(201
)
(129
)
Other adjustments
(1
)
(1
)
(2
)
 
(3
)
(4
)
Adjusted revenue (attributable to Methanex shareholders)
$
1,067

$
972

$
775

 
$
3,025

$
2,322


1 
Excludes intercompany transactions with the Company.
Operating Income

Operating income is reconciled directly to a GAAP measure in our consolidated statements of income.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 15
MANAGEMENT’S DISCUSSION AND ANALYSIS



QUARTERLY FINANCIAL DATA (UNAUDITED)

Our operations consist of a single operating segment - the production and sale of methanol. Quarterly results vary due to the average realized price of methanol, sales volume and total cash costs. A summary of selected financial information is as follows:

 
Three Months Ended
($ millions except per share amounts)
Sep 30
2018

Jun 30
2018

Mar 31
2018

Dec 31
2017

Revenue
$
1,044

$
950

$
962

$
861

Adjusted EBITDA
293

275

306

254

Net income (attributable to Methanex shareholders)
128

111

169

68

Adjusted net income
152

143

171

143

Basic net income per common share
1.62

1.36

2.02

0.81

Diluted net income per common share
1.61

1.36

2.00

0.81

Adjusted net income per common share  
1.92

1.75

2.03

1.70


 
Three Months Ended
($ millions except per share amounts)
Sep 30
2017

Jun 30
2017

Mar 31
2017

Dec 31
2016

Revenue
$
720

$
669

$
810

$
585

Adjusted EBITDA
143

174

267

139

Net income (attributable to Methanex shareholders)
32

84

132

24

Adjusted net income
52

74

140

41

Basic net income per common share
0.38

0.96

1.47

0.28

Diluted net income per common share
0.38

0.89

1.46

0.28

Adjusted net income per common share
0.60

0.85

1.56

0.46


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 16
MANAGEMENT’S DISCUSSION AND ANALYSIS



HOW WE ANALYZE OUR BUSINESS

Our operations consist of a single operating segment - the production and sale of methanol. We review our financial results by analyzing changes in the components of Adjusted EBITDA, mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses and income taxes.

The Company has used the terms Adjusted EBITDA, Adjusted net income, Adjusted net income per common share, Adjusted revenue and operating income throughout this document. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures section on page 14 of the MD&A for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

In addition to the methanol that we produce at our facilities, we also purchase and re-sell methanol produced by others and we sell methanol on a commission basis. We analyze the results of all methanol sales together, excluding commission sales volume. The key drivers of changes in Adjusted EBITDA are average realized price, cash costs and sales volume, which are defined and calculated as follows:
PRICE
The change in Adjusted EBITDA as a result of changes in average realized price is calculated as the difference from period to period in the selling price of methanol multiplied by the current period total methanol sales volume, excluding commission sales volume and Tolling Volume, plus the difference from period to period in commission revenue.
 
CASH 
COSTS
The change in Adjusted EBITDA as a result of changes in cash costs is calculated as the difference from period to period in cash costs per tonne multiplied by the current period total methanol sales volume, excluding commission sales volume and Tolling Volume in the current period. The cash costs per tonne is the weighted average of the cash cost per tonne of Methanex-produced methanol and the cash cost per tonne of purchased methanol. The cash cost per tonne of Methanex-produced methanol includes absorbed fixed cash costs per tonne and variable cash costs per tonne. The cash cost per tonne of purchased methanol consists principally of the cost of methanol itself. In addition, the change in Adjusted EBITDA as a result of changes in cash costs includes the changes from period to period in unabsorbed fixed production costs, consolidated selling, general and administrative expenses and fixed storage and handling costs.
 
SALES VOLUME
The change in Adjusted EBITDA as a result of changes in sales volume is calculated as the difference from period to period in total methanol sales volume, excluding commission sales volume and Tolling Volume, multiplied by the margin per tonne for the prior period. The margin per tonne for the prior period is the weighted average margin per tonne of Methanex-produced methanol and margin per tonne of purchased methanol. The margin per tonne for Methanex-produced methanol is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne. The margin per tonne for purchased methanol is calculated as the selling price per tonne of methanol less the cost of purchased methanol per tonne.
 

We own 63.1% of the Atlas methanol facility and market the remaining 36.9% of its production through a commission offtake agreement. A contractual agreement between us and our partners establishes joint control over Atlas. As a result, we account for this investment using the equity method of accounting, which results in 63.1% of the net assets and net earnings of Atlas being presented separately in the consolidated statements of financial position and consolidated statements of income (loss), respectively. For purposes of analyzing our business, Adjusted EBITDA, Adjusted net income, Adjusted net income per common share and Adjusted revenue include an amount representing our 63.1% equity share in Atlas. Our analysis of depreciation and amortization, finance costs, finance income and other expenses and income taxes is consistent with the presentation of our consolidated statements of income and excludes amounts related to Atlas.

We own 50% of the 1.26 million tonne per year Egypt methanol facility and market the remaining 50% of its production through a commission offtake agreement. We account for this investment using consolidation accounting, which results in 100% of the revenues and expenses being included in our financial statements. We also consolidate less than wholly-owned entities for which we have a controlling interest. Non-controlling interests are included in the Company’s consolidated financial statements and represent the non-controlling shareholders’ interests in the Egypt methanol facility and any entity where we have control. For purposes of analyzing our business, Adjusted EBITDA, Adjusted net income, Adjusted net income per common share and Adjusted revenue exclude the amounts associated with non-controlling interests.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 17
MANAGEMENT’S DISCUSSION AND ANALYSIS



FORWARD-LOOKING INFORMATION WARNING

This Third Quarter 2018 Management’s Discussion and Analysis ("MD&A") as well as comments made during the Third Quarter 2018 investor conference call contain forward-looking statements with respect to us and our industry. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Statements that include the words "believes," "expects," "may," "will," "should," "potential," "estimates," "anticipates," "aim," "goal" or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

More particularly and without limitation, any statements regarding the following are forward-looking statements:

expected demand for methanol and its derivatives,
expected new methanol supply or restart of idled capacity and timing for start-up of the same,
expected shutdowns (either temporary or permanent) or restarts of existing methanol supply (including our own facilities), including, without limitation, the timing and length of planned maintenance outages,
expected methanol and energy prices,
expected levels of methanol purchases from traders or other third parties,
expected levels, timing and availability of economically priced natural gas supply to each of our plants,
capital committed by third parties towards future natural gas exploration and development in the vicinity of our plants,
our expected capital expenditures,
anticipated operating rates of our plants,
expected operating costs, including natural gas feedstock costs and logistics costs,
expected tax rates or resolutions to tax disputes,
expected cash flows, earnings capability and share price,
availability of committed credit facilities and other financing,
 

our ability to meet covenants or obtain or continue to obtain waivers associated with our long-term debt obligations, including, without limitation, the Egypt limited recourse debt facilities that have conditions associated with the payment of cash or other distributions and the finalization of certain land title registrations and related mortgages which require actions by Egyptian governmental entities,
expected impact on our results of operations in Egypt or our financial condition as a consequence of civil unrest or actions taken or inaction by Egyptian governmental entities,
our shareholder distribution strategy and anticipated distributions to shareholders,
commercial viability and timing of, or our ability to execute future projects, plant restarts, capacity expansions, plant relocations or other business initiatives or opportunities,
our financial strength and ability to meet future financial commitments,
expected global or regional economic activity (including industrial production levels),
expected outcomes of litigation or other disputes, claims and assessments, and
expected actions of governments, governmental agencies, gas suppliers, courts, tribunals or other third parties.

We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following:

the supply of, demand for and price of methanol, methanol derivatives, natural gas, coal, oil and oil derivatives,
 
our ability to procure natural gas feedstock on commercially acceptable terms,
operating rates of our facilities,

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 18
MANAGEMENT’S DISCUSSION AND ANALYSIS



receipt or issuance of third-party consents or approvals, including, without limitation, governmental registrations of land title and related mortgages in Egypt and governmental approvals related to rights to purchase natural gas,
the establishment of new fuel standards,
operating costs, including natural gas feedstock and logistics costs, capital costs, tax rates, cash flows, foreign exchange rates and interest rates,
the availability of committed credit facilities and other financing,
 
global and regional economic activity (including industrial production levels),
absence of a material negative impact from major natural disasters,
absence of a material negative impact from changes in laws or regulations,
absence of a material negative impact from political instability in the countries in which we operate, and
enforcement of contractual arrangements and ability to perform contractual obligations by customers, natural gas and other suppliers and other third parties.

However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including, without limitation:

conditions in the methanol and other industries including fluctuations in the supply, demand and price for methanol and its derivatives, including demand for methanol for energy uses,
the price of natural gas, coal, oil and oil derivatives,
our ability to obtain natural gas feedstock on commercially acceptable terms to underpin current operations and future production growth opportunities,
the ability to carry out corporate initiatives and strategies,
actions of competitors, suppliers and financial institutions,
conditions within the natural gas delivery systems that may prevent delivery of our natural gas supply requirements,

 
competing demand for natural gas, especially with respect to domestic needs for gas and electricity in Chile and Egypt,
actions of governments and governmental authorities, including, without limitation, implementation of policies or other measures that could impact the supply of or demand for methanol or its derivatives,
changes in laws or regulations,
import or export restrictions, anti-dumping measures, increases in duties, taxes and government royalties and other actions by governments that may adversely affect our operations or existing contractual arrangements,
world-wide economic conditions, and
other risks described in our 2017 Annual Management’s Discussion and Analysis and this Third Quarter 2018 Management’s Discussion and Analysis.

Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one’s own due diligence and judgment. The outcomes implied by forward-looking statements may not occur and we do not undertake to update forward-looking statements except as required by applicable securities laws.


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 19
MANAGEMENT’S DISCUSSION AND ANALYSIS




Methanex Corporation
Consolidated Statements of Income (unaudited)
(thousands of U.S. dollars, except number of common shares and per share amounts)

 
Three Months Ended
 
Nine Months Ended
 
Sep 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Revenue
$
1,043,525

$
719,696

 
$
2,955,296

$
2,199,209

Cost of sales and operating expenses
(783,743
)
(624,505
)
 
(2,155,976
)
(1,686,215
)
Depreciation and amortization
(61,353
)
(57,929
)
 
(183,273
)
(174,910
)
Operating income
198,429

37,262

 
616,047

338,084

Earnings of associate (note 5)
14,844

18,889

 
54,142

57,644

Finance costs
(23,087
)
(24,866
)
 
(71,038
)
(71,495
)
Finance income and other expenses
1,144

3,814

 
2,554

9,442

Income before income taxes
191,330

35,099

 
601,705

333,675

Income tax (expense) recovery:
 
 
 
 
 
Current
(27,508
)
(11,460
)
 
(78,153
)
(52,398
)
Deferred
(15,956
)
14,743

 
(42,884
)
8,923

 
(43,464
)
3,283

 
(121,037
)
(43,475
)
Net income
$
147,866

$
38,382

 
$
480,668

$
290,200

Attributable to:
 
 
 
 
 
Methanex Corporation shareholders
$
128,057

$
32,381

 
$
408,106

$
248,096

Non-controlling interests
19,809

6,001

 
72,562

42,104

 
$
147,866

$
38,382

 
$
480,668

$
290,200

 
 
 
 
 
 
Income per common share for the period attributable to Methanex Corporation shareholders
 
 
 
 
 
Basic net income per common share
$
1.62

$
0.38

 
$
5.01

$
2.83

Diluted net income per common share (note 7)
$
1.61

$
0.38

 
$
5.00

$
2.83

 
 
 
 
 
 
Weighted average number of common shares outstanding (note 7)
79,263,939

85,769,423

 
81,517,418

87,727,375

Diluted weighted average number of common shares outstanding (note 7)
79,341,597

85,819,984

 
81,592,080

87,781,012


See accompanying notes to condensed consolidated interim financial statements.


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 1
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)



Methanex Corporation
Consolidated Statements of Comprehensive Income (unaudited)
(thousands of U.S. dollars)

 
Three Months Ended
 
Nine Months Ended
 
Sep 30
2018

Sep 30
2017

 
Sep 30
2018

Sep 30
2017

Net income
$
147,866

$
38,382

 
$
480,668

$
290,200

Other comprehensive income (loss):
 
 
 
 
 
Items that may be reclassified to income:
 
 
 
 
 
Change in fair value of cash flow hedges (note 10)
10,926

(17,755
)
 
(2,502
)
(96,509
)
Forward element excluded from hedging relationships (note 10)
(15,255
)
12,538

 
(13,289
)
71,651

Items that will not be reclassified to income:
 
 
 
 
 
Actuarial gains on defined benefit pension plans


 
845


Taxes on above items
1,023

1,629

 
3,433

8,194

 
(3,306
)
(3,588
)
 
(11,513
)
(16,664
)
Comprehensive income
$
144,560

$
34,794

 
$
469,155

$
273,536

Attributable to:
 
 
 
 
 
Methanex Corporation shareholders
$
124,751

$
28,793

 
$
396,593

$
231,432

Non-controlling interests
19,809

6,001

 
72,562

42,104

 
$
144,560

$
34,794

 
$
469,155

$
273,536


See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 2
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)



Methanex Corporation
Consolidated Statements of Financial Position (unaudited)
(thousands of U.S. dollars)

AS AT
Sep 30
2018

Dec 31
2017

ASSETS
 
 
Current assets:
 
 
Cash and cash equivalents
$
260,687

$
375,479

Trade and other receivables
599,081

536,636

Inventories (note 2)
322,461

304,464

Prepaid expenses
37,199

26,548

Other assets (note 3)
70,066


 
1,289,494

1,243,127

Non-current assets:
 
 
Property, plant and equipment (note 4)
3,023,436

2,998,326

Investment in associate (note 5)
179,962

188,922

Deferred income tax assets
68,911

102,341

Other assets (note 3)
85,243

78,026

 
3,357,552

3,367,615

 
$
4,647,046

$
4,610,742

LIABILITIES AND EQUITY
 
 
Current liabilities:
 
 
Trade, other payables and accrued liabilities
$
622,015

$
626,817

Current maturities on long-term debt (note 6)
33,610

55,905

Current maturities on other long-term liabilities
103,793

65,226

 
759,418

747,948

Non-current liabilities:
 
 
Long-term debt (note 6)
1,425,323

1,446,366

Other long-term liabilities
442,131

404,885

Deferred income tax liabilities
271,594

266,432

 
2,139,048

2,117,683

Equity:
 
 
Capital stock
453,083

480,331

Contributed surplus
1,594

2,124

Retained earnings
1,081,937

1,088,150

Accumulated other comprehensive loss
(81,902
)
(69,841
)
Shareholders' equity
1,454,712

1,500,764

Non-controlling interests
293,868

244,347

Total equity
1,748,580

1,745,111

 
$
4,647,046

$
4,610,742


See accompanying notes to condensed consolidated interim financial statements.


METHANEX CORPORATION 2018 THIRD QUARTER    PAGE 3
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)



Methanex Corporation
Consolidated Statements of Changes in Equity (unaudited)
(thousands of U.S. dollars, except number of common shares)

 
Number of
Common
Shares

Capital
Stock

Contributed
Surplus

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Shareholders'
Equity

Non-
Controlling
Interests

Total
Equity

Balance, December 31, 2016
89,824,338

$511,465
$2,568
$1,124,104
$(41,302)
$1,596,835
$208,515
$1,805,350
Net income



248,096


248,096

42,104

290,200

Other comprehensive loss




(16,664)
(16,664
)

(16,664
)
Compensation expense recorded for stock options


377



377


377

Issue of shares on exercise of stock options
79,906

2,392




2,392


2,392

Reclassification of grant date fair value on exercise of stock options

746

(746
)





Payments for repurchase of shares
(5,074,800
)
(28,982
)

(202,850
)

(231,832
)

(231,832
)
Dividend payments to Methanex Corporation shareholders



(76,366
)

(76,366
)

(76,366
)
Distributions made and accrued to non-controlling interests






(22,876
)
(22,876
)
Balance, September 30, 2017
84,829,444

$485,621
$2,199
$1,092,984
$(57,966)
$1,522,838
$227,743
$1,750,581
Net income



68,039


68,039

16,858

84,897

Other comprehensive income (loss)



403

(11,875)
(11,472
)

(11,472
)
Compensation expense recorded for stock options


111



111


111

Issue of shares on exercise of stock options
18,368

667




667


667

Reclassification of grant date fair value on exercise of stock options

186

(186
)





Payments for repurchase of shares
(1,077,558
)
(6,143
)

(48,145
)

(54,288
)

(54,288
)
Dividend payments to Methanex Corporation shareholders



(25,131
)

(25,131
)

(25,131
)
Distributions made and accrued to non-controlling interests






(8,424
)
(8,424
)
Equity contributions by non-controlling interests






8,170

8,170

Balance, December 31, 2017
83,770,254

$480,331
$2,124
$1,088,150
$(69,841)
$1,500,764
$244,347
$1,745,111
Net income



408,106


408,106

72,562

480,668

Other comprehensive income (loss)



548

(12,061)
(11,513
)

(11,513
)
Compensation expense recorded for stock options


281



281


281

Issue of shares on exercise of stock options
75,014

2,953




2,953


2,953

Reclassification of grant date fair value on exercise of stock options

811

(811
)





Payment for shares repurchased
(5,400,000
)
(31,012
)

(334,688
)

(365,700
)

(365,700
)
Dividend payments to Methanex Corporation shareholders