Form 6-K METHANEX CORP For: Dec 31

January 26, 2022 5:19 PM EST

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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 JANUARY 2022
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
mx_logoa07.jpg
Methanex Corporation
1800 - 200 Burrard St.
Vancouver, BC Canada V6C 3M1
Investor Relations: (604) 661-2600
www.methanex.com
For immediate release

January 26, 2022
Except where otherwise noted, all currency amounts are stated in United States dollars.
METHANEX REPORTS RECORD FOURTH QUARTER 2021 RESULTS
Generated outstanding 2021 financial results of net income attributable to Methanex shareholders of $482 million and Adjusted EBITDA of $1,108 million.
Robust methanol prices coupled with strong production leading to records for both net income attributable to Methanex shareholders of $201 million and Adjusted EBITDA of $340 million in the fourth quarter.
Higher production in Chile, New Zealand and record production in Geismar led to a 31% increase in production in the fourth quarter compared to the third quarter.
Construction of the Geismar 3 project progressing to plan and is well-positioned to be completed on-time and on budget by late 2023/early 2024.
In the fourth quarter returned $68 million to shareholders through our share repurchase program and dividend.
Received all regulatory approvals for the strategic shipping partnership with Mitsui O.S.K. Lines, Ltd. and expect to receive proceeds of approximately $145 million in the first quarter of 2022.
VANCOUVER, BRITISH COLUMBIA - For the fourth quarter of 2021, Methanex (TSX:MX) (NASDAQ:MEOH) reported net income attributable to Methanex shareholders of $201 million ($2.51 net income per common share on a diluted basis) compared to net income of $71 million ($0.93 net income per common share on a diluted basis) in the third quarter of 2021. The increase in net income is primarily due to the higher average realized price and higher sales of Methanex-produced methanol. Adjusted EBITDA for the fourth quarter of 2021 was $340 million, and Adjusted net income was $185 million ($2.43 Adjusted net income per common share). This compares with Adjusted EBITDA of $264 million and Adjusted net income of $99 million ($1.29 Adjusted net income per common share) for the third quarter of 2021.
In the fourth quarter, strong market conditions supported high methanol prices while cost pressures from higher natural gas and coal prices led to restrictions in methanol industry production. We increased our average realized price to $445 per tonne in the fourth quarter, a 14% or $55 per tonne increase compared to $390 per tonne in the third quarter.
For the year ended December 31, 2021, Methanex reported significantly higher net income attributable to Methanex shareholders of $482 million ($6.13 net income per common shares on a diluted basis), Adjusted EBITDA of $1,108 million and an Adjusted net income of $460 million ($6.03 Adjusted net income per common share). This compares with a net loss attributable to Methanex shareholders of $157 million ($2.06 net loss per common share on a diluted basis), Adjusted EBITDA of $346 million and an Adjusted net loss of $123 million ($1.62 Adjusted net loss per common share) for the year ended December 31, 2020.
We ended the quarter with $932 million in cash and returned $68 million to shareholders through our regular dividend and share purchase program. We repurchased 1,435,193 common shares, of the approved 3,810,464, for approximately $63 million since the start of the normal course issuer bid on September 16, 2021.
John Floren, President & CEO of Methanex, said, “I am extremely proud of the record financial results we delivered in 2021 amid the continuing impact of COVID-19. In 2021, we took actions to strengthen our asset portfolio by restarting the construction of G3, restarting Chile IV and completing the G2 debottlenecking project. In the fourth quarter, the strong fundamentals of the methanol industry, coupled with our high levels of production and strong and consistent execution of our strategy enabled us to generate strong free cash flow and deliver one of the strongest operational and financial performances in our history." Mr. Floren continued, "Our capital allocation priorities remain the same. We are well positioned to maintain our business, pursue attractive growth opportunities and continue our long track record of returning excess cash to shareholders through a sustainable dividend and share buybacks."
METHANEX CORPORATION 2021 FOURTH 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 fourth quarter of 2021. It is not a complete source of information for readers and is not in any way a substitute for reading the fourth quarter 2021 Management’s Discussion and Analysis ("MD&A") dated January 26, 2022 and the unaudited condensed consolidated interim financial statements for the period ended December 31, 2021, 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 period ended December 31, 2021 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 EndedYears Ended
($ millions except per share amounts and where noted)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Production (thousands of tonnes) (attributable to Methanex shareholders) 1
1,933 1,480 1,607 6,514 6,614 
Sales volume (thousands of tonnes)
Methanex-produced methanol1,672 1,435 1,480 6,207 6,704 
Purchased methanol810 1,023 1,192 3,750 2,994 
Commission sales322 299 196 1,227 1,042 
Total sales volume 1
2,804 2,757 2,868 11,184 10,740 
Methanex average non-discounted posted price ($ per tonne) 2
579 476 334 492 297 
Average realized price ($ per tonne) 3 4
445 390 282 393 247 
Revenue1,253 1,078 811 4,415 2,650 
Adjusted revenue 4
1,110 963 755 3,932 2,399 
Net income (loss) (attributable to Methanex shareholders)
201 71 (27)482 (157)
Adjusted net income (loss) 4
185 99 12 460 (123)
Adjusted EBITDA 4
340 264 136 1,108 346 
Cash flows from operating activities283 301 98 994 461 
Basic net income (loss) per common share
2.66 0.93 (0.35)6.34 (2.06)
Diluted net income (loss) per common share
2.51 0.93 (0.35)6.13 (2.06)
Adjusted net income (loss) per common share 4
2.43 1.29 0.15 6.03 (1.62)
Common share information (millions of shares)
Weighted average number of common shares76 76 76 76 76 
Diluted weighted average number of common shares
76 76 76 76 76 
Number of common shares outstanding, end of period
75 76 76 75 76 
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.
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    The Company has used Average realized price ("ARP") throughout this document. This is a non-GAAP ratio that does not have any standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other companies. ARP 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. It is used by management to assess the realized price per unit of methanol sold, and is relevant in a cyclical commodity environment where revenue can fluctuate in response to market prices.
4 Note that Adjusted net income, Adjusted net income per common share, Adjusted revenue, Adjusted EBITDA, and Average realized price are non-GAAP measures and ratios 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 the Non-GAAP Measures section on page 14 of the MD&A, available SEDAR at www.sedar.com, for a description of each non-GAAP measure.
METHANEX CORPORATION 2021 FOURTH QUARTER NEWS RELEASE                                 PAGE 2


A reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted EBITDA, Adjusted net income (loss), Adjusted revenue, and the calculation of Adjusted net income (loss) per common share is as follows:
Three Months EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Net income (loss) attributable to Methanex shareholders$201 $71 $(27)$482 $(157)
Mark-to-market impact of share-based compensation(19)33 45 (23)39 
Depreciation and amortization87 91 87 363 357 
Finance costs34 37 41 144 165 
Finance income and other expenses4 (2)(1)— 
Income tax expense (recovery)22 28 (10)110 (62)
Earnings of associate adjustment26 19 84 42 
Non-controlling interests adjustment(15)(13)(11)(51)(38)
Adjusted EBITDA (attributable to Methanex shareholders)$340 $264 $136 $1,108 $346 

Three Months EndedYears Ended
($ millions except number of shares and per share amounts)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Net income (loss) attributable to Methanex shareholders$201 $71 $(27)$482 $(157)
Mark-to-market impact of share-based compensation, net of tax(16)28 39 (22)34 
Adjusted net income (loss)$185 $99 $12 $460 $(123)
Diluted weighted average shares outstanding (millions)76 76 76 76 76 
Adjusted net income (loss) per common share$2.43 $1.29 $0.15 $6.03 $(1.62)


A reconciliation from revenue to Adjusted Revenue is as follows:
Three Months EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Revenue$1,253 $1,078 $811 $4,415 $2,650 
Methanex share of Atlas revenue(78)(61)(20)(255)(115)
Non-controlling interests' share of revenue(65)(54)(36)(228)(136)
Adjusted Revenue$1,110 $963 $755 $3,932 $2,399 


We recorded net income attributable to Methanex shareholders of $201 million in the fourth quarter of 2021 compared to net income of $71 million in the third quarter of 2021. The increase in net income is primarily due to the higher average realized price and higher sales of Methanex-produced methanol. Our average discount percentage, the percentage difference between the Methanex average non-discounted posted price and the Methanex average realized price, was wider in the fourth quarter of 2021 than we have historically seen. Our Asia Pacific non-discounted posted price encompasses the whole Asia Pacific region, including China where there are different market fundamentals. This wider global discount percentage was mainly due to a sustained higher price in the Asia Pacific market ex-China compared to the China market. Starting in 2022, we have introduced a separate posted methanol price for China to better reflect the different market fundamentals in China compared to the other countries in the region.
We recorded Adjusted EBITDA of $340 million for the fourth quarter of 2021 compared to $264 million for the third quarter of 2021. We recorded Adjusted net income of $185 million for the fourth quarter of 2021 compared to Adjusted net income of $99 million for the third quarter of 2021. Adjusted EBITDA and Adjusted net income for the fourth quarter of 2021 are higher than the third quarter of 2021 primarily due to the increase in our average realized methanol price to $445 per tonne from $390 per tonne and a higher proportion of Methanex-produced methanol sales.
We sold 2,804,000 tonnes in the fourth quarter of 2021 compared to 2,757,000 tonnes for the third quarter of 2021. Sales of Methanex-produced methanol were 1,672,000 tonnes in the fourth quarter of 2021 compared to 1,435,000 tonnes in the third quarter of 2021.
METHANEX CORPORATION 2021 FOURTH QUARTER NEWS RELEASE                                 PAGE 3


Production for the fourth quarter of 2021 was 1,933,000 tonnes compared to 1,480,000 tonnes for the third quarter of 2021. Production is higher for the fourth quarter of 2021 primarily due to the restart of our Chile IV facility, and higher operating rates in New Zealand and Geismar. The impact of higher production on sales of Methanex-produced methanol will carryforward to the first quarter, as it generally takes between 30 to 60 days for produced methanol to make its way through the supply chain to customers.
Construction on our highly advantaged Geismar 3 project is progressing to plan and is well-positioned to be completed on-time and on-budget by the end of 2023 or early 2024. All major equipment is now on site which reduces the risk of supply chain issues or inflation. Our capital cost estimate for the project is $1.25 to $1.35 billion and we have spent $508 million to the end of 2021. We expect approximately $750 to $850 million of remaining capital costs before capitalized interest.
On September 16, 2021 we commenced a normal course issuer bid to repurchase up to 3,810,464 common shares. To December 31, 2021, we repurchased 1,435,193 common shares under the bid for $63 million.
In the fourth quarter of 2021 we paid a $0.125 per common share quarterly dividend to shareholders for a total of $9 million.
At December 31, 2021, we have a strong liquidity position including a cash balance of $932 million and $900 million of undrawn backup liquidity.
PRODUCTION HIGHLIGHTS
(thousands of tonnes)
Annual Operating Capacity1
2021
Production
2020
Production
Q4 2021 ProductionQ3 2021 ProductionQ4 2020 Production
New Zealand 2
2,200 1,348 1,672 405 268 439 
USA (Geismar) 3
2,200 1,989 2,040 605 478 556 
Trinidad (Methanex interest) 4
1,960 1,161 998 296 296 161 
Chile 1,700 807 836 334 124 195 
Egypt (50% interest)630 581 578 144 155 145 
Canada (Medicine Hat)640 628 490 149 159 111 
9,330 6,514 6,614 1,933 1,480 1,607 
1Operating 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. 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. We review and update the operating capacity of our production facilities on a regular basis based on historical performance. 
2The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition and availability. Annual Operating Capacity is currently 2.2 million tonnes based on the natural gas composition expected for the foreseeable future. The Waitara Valley plant is currently idled indefinitely due to insufficient natural gas availability.
3For the comparative 2020 periods presented, our operating capacity in Geismar was 2.0 million tonnes. In the fourth quarter of 2020, we completed the debottlenecking project at our Geismar 1 facility and in Q2 2021 we completed the debottlenecking project at our Geismar 2 facility. As a result, we have increased our operating capacity for 2021 by 0.2 million tonnes to 2.2 million tonnes.
4The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities. The Titan plant remains idled indefinitely since the expiry of its gas contract with the National Gas Company of Trinidad and Tobago Limited ("NGC"). We continue to engage with the NGC to negotiate terms for a new gas contract for Titan.

METHANEX CORPORATION 2021 FOURTH QUARTER NEWS RELEASE                                 PAGE 4


Key production and operational highlights during the fourth quarter and production outlook for 2022 include:

New Zealand produced 405,000 tonnes compared to 268,000 tonnes in the third quarter of 2021. In New Zealand, our production levels were higher in the fourth quarter of 2021 compared to the third quarter of 2021 as we operated both Motunui plants throughout the full period of the fourth quarter, following the completion in late August of the short term commercial arrangement with Genesis Energy to idle one plant and make natural gas available to support a tight New Zealand electricity market. Based on our outlook for natural gas in New Zealand, we estimate production for 2022 to be approximately 1.5 million tonnes.
Geismar produced a quarterly record 605,000 tonnes in the fourth quarter of 2021 compared to 478,000 tonnes in the third quarter of 2021. Geismar production is higher for the fourth quarter of 2021 compared to the third quarter of 2021 as we operated the plants at high rates throughout the fourth quarter. In the third quarter, production was impacted by a precautionary outage of approximately two weeks during Hurricane Ida. Geismar is now realizing the benefits of increased capacity for a full quarter following the completion of debottlenecking projects on both plants and recently completed planned turnarounds. With the completion of two Geismar debottlenecking projects, the annual operating capacity for the Geismar facilities has increased by 10%, to 2.2 million tonnes.
Trinidad produced 296,000 tonnes (Methanex interest) in the fourth quarter of 2021 compared to 296,000 tonnes in the third quarter of 2021. Production levels in Trinidad were comparable in the fourth quarter of 2021 and the third quarter of 2021 as we continued to run our Atlas plant at high operating rates. Titan remains idled indefinitely.
Chile produced 334,000 tonnes in the fourth quarter of 2021 compared to 124,000 tonnes in the third quarter of 2021. Production for the fourth quarter of 2021 is higher compared to the third quarter of 2021 as we restarted the Chile IV plant in early October when the Southern hemisphere winter months ended and seasonal demand for natural gas in the region decreased from its peak, allowing our gas suppliers to deliver higher volumes. We expect to have sufficient gas to operate both Chile plants through the Southern hemisphere summer months to the end of April 2022. We estimate production in 2022 to be approximately 1 million tonnes.
Egypt produced 288,000 tonnes (Methanex interest - 144,000 tonnes) in the fourth quarter of 2021 compared to 310,000 tonnes (Methanex interest - 155,000 tonnes) in the third quarter of 2021. Production levels in Egypt were lower in the fourth quarter compared to the third quarter of 2021 due to minor operating constraints.
Medicine Hat produced 149,000 tonnes in the fourth quarter of 2021 compared to 159,000 tonnes in the third quarter of 2021. Production for the fourth quarter of 2021 is slightly lower compared to the third quarter of 2021 due to weather related constraints in the fourth quarter.
CONFERENCE CALL
A conference call is scheduled for January 27, 2022 at 11:00 am ET (8:00 am PT) to review these fourth quarter results. To access the call, dial the conferencing operator fifteen minutes prior to the start of the call at (416) 340-2217, or toll free at (800) 806-5484. The passcode for the call is 6947035#. 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 February 26, 2022 at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 6095224#.
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".
METHANEX CORPORATION 2021 FOURTH QUARTER NEWS RELEASE                                 PAGE 5


FORWARD-LOOKING INFORMATION WARNING
This fourth quarter 2021 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 fourth quarter 2021 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 (loss), Adjusted net income (loss) per common share, Adjusted revenue and Average realized price throughout this document. These items are non-GAAP measures and ratios 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 - Non-GAAP Measures on page 14 of the Company's MD&A for the period ended December 31, 2021 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:


Sarah Herriott
Director, Investor Relations
Methanex Corporation
604-661-2600
METHANEX CORPORATION 2021 FOURTH QUARTER NEWS RELEASE                                 PAGE 6


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mx_logoa07.jpg
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 Months and Year Ended
December 31, 2021
At January 25, 2022 the Company had 74,401,908 common shares issued and outstanding and stock options exercisable for 1,547,054 additional common shares.
FOURTH 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 (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share is as follows:
Three Months EndedYears Ended
($ millions except number of shares and per share amounts)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Net income (loss) attributable to Methanex shareholders$201 $71 $(27)$482 $(157)
Mark-to-market impact of share-based compensation, net of tax(16)28 39 (22)34 
Adjusted net income (loss) 1
$185 $99 $12 $460 $(123)
Diluted weighted average shares outstanding (millions)76 76 76 76 76 
Adjusted net income (loss) per common share 1
$2.43 $1.29 $0.15 $6.03 $(1.62)
1     The Company has used the terms Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, and Adjusted revenue throughout this document. These items are non-GAAP measures and ratios 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 - 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 $201 million in the fourth quarter of 2021 compared to net income of $71 million in the third quarter of 2021. The increase in net income is primarily due to the higher average realized price and higher sales of Methanex-produced methanol. Our average discount percentage, the percentage difference between the Methanex average non-discounted posted price and the Methanex average realized price, was wider in the fourth quarter of 2021 than we have historically seen. Our Asia Pacific non-discounted posted price encompasses the whole Asia Pacific region, including China where there are different market fundamentals. This wider global discount percentage was mainly due to a sustained higher price in the Asia Pacific market ex-China compared to the China market. Starting in 2022, we have introduced a separate posted methanol price for China to better reflect the different market fundamentals in China compared to the other countries in the region.
We recorded Adjusted EBITDA of $340 million for the fourth quarter of 2021 compared to $264 million for the third quarter of 2021. We recorded Adjusted net income of $185 million for the fourth quarter of 2021 compared to Adjusted net income of $99 million for the third quarter of 2021. Adjusted EBITDA and Adjusted net income for the fourth quarter of 2021 are higher than the third quarter of 2021 primarily due to the increase in our average realized methanol price to $445 per tonne from $390 per tonne and a higher proportion of Methanex-produced methanol sales.

We sold 2,804,000 tonnes in the fourth quarter of 2021 compared to 2,757,000 tonnes for the third quarter of 2021. Sales of Methanex-produced methanol were 1,672,000 tonnes in the fourth quarter of 2021 compared to 1,435,000 tonnes in the third quarter of 2021. (refer to Supply/Demand Fundamentals section on page 12 of the MD&A for more information)
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 1


In the fourth quarter of 2021 we produced 1,933,000 tonnes compared to 1,480,000 tonnes for the third quarter of 2021. Production is higher for the fourth quarter of 2021 primarily due to the restart of our Chile IV facility, and higher operating rates in New Zealand and Geismar. The impact of higher production on sales of Methanex-produced methanol will carryforward to the first quarter, as it generally takes between 30 to 60 days for produced methanol to make its way through the supply chain to customers. Refer to the Production Summary section on page 4 of the MD&A.
Construction on our highly advantaged Geismar 3 project is progressing to plan and is well-positioned to be completed on-time and on-budget by the end of 2023 or early 2024. All major equipment is now on site which reduces the risk of supply chain issues or inflation. Our capital cost estimate for the project is $1.25 to $1.35 billion and we have spent $508 million to the end of 2021. We expect approximately $750 to $850 million of remaining capital costs before capitalized interest.
On September 16, 2021 we commenced a normal course issuer bid to repurchase up to 3,810,464 common shares. To December 31, 2021, we repurchased 1,435,193 common shares under the bid for $63 million.
In the fourth quarter of 2021 we paid a $0.125 per common share quarterly dividend to shareholders for a total of $9 million.
At December 31, 2021, we have a strong liquidity position including a cash balance of $932 million and $900 million of undrawn backup liquidity.

This Fourth Quarter 2021 Management’s Discussion and Analysis dated January 26, 2022 for Methanex Corporation ("the Company") should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements for the period ended December 31, 2021 as well as the 2020 Annual Consolidated Financial Statements and MD&A included in the Methanex 2020 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 2020 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 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 2


FINANCIAL AND OPERATIONAL DATA
Three Months EndedYears Ended
($ millions except per share amounts and where noted)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Production (thousands of tonnes) (attributable to Methanex shareholders) 1
1,933 1,480 1,607 6,514 6,614 
Sales volume (thousands of tonnes)
Methanex-produced methanol1,672 1,435 1,480 6,207 6,704 
Purchased methanol810 1,023 1,192 3,750 2,994 
Commission sales322 299 196 1,227 1,042 
Total sales volume 1
2,804 2,757 2,868 11,184 10,740 
Methanex average non-discounted posted price ($ per tonne) 2
579 476 334 492 297 
Average realized price ($ per tonne) 3 4
445 390 282 393 247 
Revenue1,253 1,078 811 4,415 2,650 
Adjusted revenue 4
1,110 963 755 3,932 2,399 
Net income (loss) (attributable to Methanex shareholders)
201 71 (27)482 (157)
Adjusted net income (loss) 4
185 99 12 460 (123)
Adjusted EBITDA 4
340 264 136 1,108 346 
Cash flows from operating activities283 301 98 994 461 
Basic net income (loss) per common share
2.66 0.93 (0.35)6.34 (2.06)
Diluted net income (loss) per common share
2.51 0.93 (0.35)6.13 (2.06)
Adjusted net income (loss) per common share 4
2.43 1.29 0.15 6.03 (1.62)
Common share information (millions of shares)
Weighted average number of common shares76 76 76 76 76 
Diluted weighted average number of common shares
76 76 76 76 76 
Number of common shares outstanding, end of period
75 76 76 75 76 
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.
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    The Company has used Average realized price ("ARP") throughout this document. This is a non-GAAP ratio that does not have any standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other companies. ARP 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. It is used by management to assess the realized price per unit of methanol sold, and is relevant in a cyclical commodity environment where revenue can fluctuate in response to market prices.
4 Note that Adjusted net income, Adjusted net income per common share, Adjusted revenue, Adjusted EBITDA, and Average realized price are non-GAAP measures and ratios 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 the Non-GAAP Measures section on page 14 of the MD&A, available SEDAR at www.sedar.com, for a description of each non-GAAP measure.

METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 3


PRODUCTION SUMMARY
(thousands of tonnes)
Annual Operating Capacity1
2021
Production
2020
Production
Q4 2021 ProductionQ3 2021 ProductionQ4 2020 Production
New Zealand 2
2,200 1,348 1,672 405 268 439 
USA (Geismar) 3
2,200 1,989 2,040 605 478 556 
Trinidad (Methanex interest) 4
1,960 1,161 998 296 296 161 
Chile 1,700 807 836 334 124 195 
Egypt (50% interest)630 581 578 144 155 145 
Canada (Medicine Hat)640 628 490 149 159 111 
9,330 6,514 6,614 1,933 1,480 1,607 
1Operating 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. 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. We review and update the operating capacity of our production facilities on a regular basis based on historical performance.     
2The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility. The New Zealand facilities are capable of producing up to 2.4 million tonnes annually, depending on natural gas composition and availability. Annual Operating Capacity is currently 2.2 million tonnes based on the natural gas composition expected for the foreseeable future. The Waitara Valley plant is currently idled indefinitely due to insufficient natural gas availability. (refer to the New Zealand section below).
3For the comparative 2020 periods presented, our operating capacity in Geismar was 2.0 million tonnes. In the fourth quarter of 2020, we completed the debottlenecking project at our Geismar 1 facility and in Q2 2021 we completed the debottlenecking project at our Geismar 2 facility. As a result, we have increased our operating capacity for 2021 by 0.2 million tonnes to 2.2 million tonnes. (refer to the United States section below).
4The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities. The Titan plant remains idled indefinitely since the expiry of its gas contract with the National Gas Company of Trinidad and Tobago Limited ("NGC"). We continue to engage with the NGC to negotiate terms for a new gas contract for Titan. (refer to the Trinidad section below).
New Zealand
The New Zealand facilities produced 405,000 tonnes of methanol in the fourth quarter of 2021 compared to 268,000 tonnes in the third quarter of 2021. In New Zealand, our production levels were higher in the fourth quarter of 2021 compared to the third quarter of 2021 as we operated both Motunui plants throughout the full period of the fourth quarter, following the completion in late August of the short term commercial arrangement with Genesis Energy to idle one plant and make natural gas available to support a tight New Zealand electricity market.

Based on our outlook for natural gas in New Zealand, we estimate production for 2022 to be approximately 1.5 million tonnes.
United States
The Geismar facilities produced a quarterly record 605,000 tonnes in the fourth quarter of 2021 compared to 478,000 tonnes in the third quarter of 2021. Geismar production is higher for the fourth quarter of 2021 compared to the third quarter of 2021 as we operated the plants at high rates throughout the fourth quarter. In the third quarter, production was impacted by a precautionary outage of approximately two weeks during Hurricane Ida. Geismar is now realizing the benefits of increased capacity for a full quarter following the completion of debottlenecking projects on both plants and recently completed planned turnarounds. With the completion of two Geismar debottlenecking projects, the annual operating capacity for the Geismar facilities has increased by 10%, to 2.2 million tonnes.
Trinidad
Trinidad produced 296,000 tonnes (Methanex interest) in both the fourth quarter of 2021 and the third quarter of 2021. Production levels in Trinidad were comparable in the fourth quarter of 2021 and the third quarter of 2021 as we continued to run our Atlas plant at high operating rates. Titan remains idled indefinitely.
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 4


Chile
Chile produced 334,000 tonnes in the fourth quarter of 2021 compared to 124,000 tonnes in the third quarter of 2021. Production for the fourth quarter of 2021 is higher compared to the third quarter of 2021 as we restarted the Chile IV plant in early October when the Southern hemisphere winter months ended and seasonal demand for natural gas in the region decreased from its peak, allowing our gas suppliers to deliver higher volumes. We expect to have sufficient gas to operate both Chile plants through the Southern hemisphere summer months to the end of April 2022. We estimate production in 2022 to be approximately 1 million tonnes.

The future of our Chile operations is primarily dependent on the level of natural gas exploration and development in southern Chile and Argentina and our ability to secure a sustainable natural gas supply to our facilities on economic terms from Chile and Argentina.
Egypt
Egypt produced 288,000 tonnes (Methanex interest - 144,000 tonnes) in the fourth quarter of 2021 compared to 310,000 tonnes (Methanex interest - 155,000 tonnes) in the third quarter of 2021. Production levels in Egypt were lower in the fourth quarter compared to the third quarter of 2021 due to minor operating constraints.
Canada
Medicine Hat produced 149,000 tonnes in the fourth quarter of 2021 compared to 159,000 tonnes in the third quarter of 2021. Production for the fourth quarter of 2021 is slightly lower compared to the third quarter of 2021 due to weather related constraints in the fourth quarter.


FINANCIAL RESULTS

For the fourth quarter of 2021, we reported net income attributable to Methanex shareholders of $201 million ($2.51 net income per common share on a diluted basis) compared to net income attributable to Methanex shareholders for the third quarter of 2021 of $71 million ($0.93 net income per common share on a diluted basis) and net loss attributable to Methanex shareholders for the fourth quarter of 2020 of $27 million ($0.35 net loss per common share on a diluted basis). For the year ended December 31, 2021, we reported net income attributable to Methanex shareholders of $482 million ($6.13 net income per common share on a diluted basis) compared to net loss for the same period in 2020 of $157 million ($2.06 net loss per common share on a diluted basis). Net income attributable to Methanex shareholders for the fourth quarter of 2021 and for the year ended December 31, 2021 is higher compared to the same period in 2020 primarily due to higher average realized price, partially offset by higher cash costs as our biggest feedstock, natural gas, is contracted at a majority of our production sites with links to methanol pricing which was higher in 2021.

For the fourth quarter of 2021, we recorded Adjusted EBITDA of $340 million and Adjusted net income of $185 million ($2.43 Adjusted net income per common share). This compares with Adjusted EBITDA of $264 million and Adjusted net income of $99 million ($1.29 Adjusted net income per common share) for the third quarter of 2021 and Adjusted EBITDA of $136 million and Adjusted net income of $12 million ($0.15 Adjusted net income per common share) for the fourth quarter of 2020. For the year ended December 31, 2021, we recorded Adjusted EBITDA of $1,108 million and Adjusted net income of $460 million ($6.03 Adjusted net income per common share) compared to Adjusted EBITDA of $346 million and Adjusted net loss of $123 million ($1.62 Adjusted net loss per common share) for the same period in 2020.

We calculate Adjusted EBITDA and Adjusted net income (loss) 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 - 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 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 5


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 (loss) is as follows:
Three Months EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Consolidated statements of income (loss):
Revenue$1,253 $1,078 $811 $4,415 $2,650 
Cost of sales and operating expenses (919)(858)(715)(3,340)(2,355)
Egypt insurance recovery — —  10 
Mark-to-market impact of share-based compensation(19)33 45 (23)39 
Adjusted EBITDA (attributable to associate)60 40 15 181 72 
Amounts excluded from Adjusted EBITDA attributable to non-controlling interests
(35)(29)(20)(125)(70)
Adjusted EBITDA attributable to Methanex shareholders 340 264 136 1,108 346 
Mark-to-market impact of share-based compensation19 (33)(45)23 (39)
Depreciation and amortization (87)(91)(87)(363)(357)
Finance costs (34)(37)(41)(144)(165)
Finance income and other expenses(4)(3)1 — 
Income tax (expense) recovery(22)(28)10 (110)62 
Earnings of associate adjustment 1
(26)(19)(8)(84)(42)
Non-controlling interests adjustment 1
15 13 11 51 38 
Net income (loss) attributable to Methanex shareholders$201 $71 $(27)$482 $(157)
Net income (loss)$221 $87 $(18)$556 $(125)
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 18 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)Q4 2021
compared with
Q3 2021
Q4 2021
compared with
Q4 2020
2021
compared with
2020
Average realized price$138 $405 $1,461 
Sales volume(13)13 
Total cash costs(65)(188)(712)
Increase in Adjusted EBITDA$76 $204 $762 
Average realized price
Three Months EndedYears Ended
($ per tonne)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Methanex average non-discounted posted price579 476 334 492 297 
Methanex average realized price445 390 282 393 247 

METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 6


Methanex’s average realized price for the fourth quarter of 2021 was $445 per tonne compared to $390 per tonne in the third quarter of 2021 and $282 per tonne in the fourth quarter of 2020, resulting in an increase of $138 million and an increase of $405 million in Adjusted EBITDA, respectively. For the year ended December 31, 2021, our average realized price was $393 per tonne compared to $247 per tonne for the same period in 2020, increasing Adjusted EBITDA by $1.5 billion.
Sales volume
Methanol sales volume excluding commission sales volume in the fourth quarter of 2021 was 24,000 tonnes higher than the third quarter of 2021 and 190,000 tonnes lower than the fourth quarter of 2020. The increase in sales volume in the fourth quarter of 2021 compared to the third quarter of 2021 increased Adjusted EBITDA by $3 million. The decrease in sales volume for the fourth quarter of 2021 compared to the same period in 2020 decreased Adjusted EBITDA by $13 million. For the year ended December 31, 2021 compared to the same period in 2020, methanol sales volume excluding commission sales volume was 259,000 tonnes higher, increasing Adjusted EBITDA by $13 million.

Total sales volume was comparable for the third and fourth quarters of 2021. Total sales volume in the fourth quarter of 2021 was lower compared to the fourth quarter of 2020, due to lower demand from methanol-to-olefins (“MTO”) producers as a result of planned maintenance activities and the continued impact from China's government-mandated industrial operating rate restrictions. Total sales volume for the year ended December 31, 2021 was higher compared to the same period in 2020, reflecting overall recovery in methanol demand following the low demand experienced in the first half of 2020 relating to the onset of the COVID-19 pandemic (refer to Supply/Demand Fundamentals section on page 12 of the MD&A for more information).
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 apply 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)Q4 2021
compared with
Q3 2021
Q4 2021
compared with
Q4 2020
2021
compared with
2020
Methanex-produced methanol costs$(58)$(99)$(220)
Proportion of Methanex-produced methanol sales38 29 (54)
Purchased methanol costs(42)(127)(424)
Logistics costs(5)(5)(11)
Egypt insurance recovery— — (5)
Other, net14 
Decrease in Adjusted EBITDA due to changes in total cash costs$(65)$(188)$(712)
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 7


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 methanol revenue to reduce our commodity price risk exposure. The variable price component of each gas contract is adjusted by a formula linked to methanol sales prices above a certain level. For the fourth quarter of 2021 compared to the third quarter of 2021 and the fourth quarter of 2020, Methanex-produced methanol costs drove a decrease in Adjusted EBITDA of $58 million and $99 million, respectively. For the year ended December 31, 2021 compared to the same period in 2020, Methanex-produced methanol costs led to a decrease in Adjusted EBITDA of $220 million. Changes in Methanex-produced methanol costs for all periods presented are primarily due to the impact of higher realized methanol prices impacting Methanex revenue and the variable portion of our natural gas cost, changes in spot gas prices and changes in the mix of production sold from inventory.
Proportion of Methanex-produced methanol sales
The cost of purchased methanol is 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 fourth quarter of 2021 compared to the third quarter of 2021 and the fourth quarter of 2020, a higher proportion of Methanex-produced methanol increased Adjusted EBITDA by $38 million and $29 million, respectively. For the year ended December 31, 2021 compared to the same period in 2020, a lower proportion of Methanex-produced methanol sales decreased Adjusted EBITDA by $54 million.
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, as well as the volume of purchased methanol. For the fourth quarter of 2021 compared to the third quarter of 2021 and the fourth quarter of 2020, the impact of higher purchased methanol costs decreased Adjusted EBITDA by $42 million and $127 million, respectively. For the year ended December 31, 2021 compared to the same period in 2020, higher purchased methanol costs decreased Adjusted EBITDA by $424 million, a combination of higher purchased methanol price and the increase of 756,000 tonnes of purchased methanol sales volume.
Logistics costs
Logistics costs vary from period to period primarily depending on the levels of production from each of our production facilities, the resulting impact on our supply chain, and variability in bunker fuel costs. Logistics costs in the fourth quarter of 2021 increased compared with the third quarter of 2021 and the fourth quarter of 2020 by $5 million for both comparative periods due to higher bunker fuel costs. For the year ended December 31, 2021 compared to the same period in 2020, logistics costs increased by $11 million, primarily due to the mix of production and higher bunker fuel costs.
Other, net
Other, net relates to unabsorbed fixed costs, selling, general and administrative expenses and other operational items. For the fourth quarter of 2021 compared to the third quarter of 2021 and for the year ended December 31, 2021 compared to the same period in 2020, other costs were comparable. For the fourth quarter of 2021 compared to the fourth quarter of 2020, other costs were lower by $14 million, as fewer plant outages and higher production in the fourth quarter of 2021 resulted in lower unabsorbed costs.
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 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 8


Three Months EndedYears Ended
($ millions except share price)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Methanex Corporation share price 1
$39.55 $46.04 $46.08 $39.55 $46.08 
Grant-date fair value expense included in Adjusted EBITDA and Adjusted net income
3 22 16 
Mark-to-market impact due to change in share price 2
(19)33 45 (23)39 
Total share-based compensation expense (recovery), before tax
$(16)$35 $47 $(1)$55 
1 US dollar share price of Methanex Corporation as quoted on the NASDAQ Global Market on the last trading day of the respective period.
2For all periods presented, the mark-to-market impact on share-based compensation is primarily due to changes in the Methanex Corporation share price.
Depreciation and Amortization
    
Depreciation and amortization was $87 million for the fourth quarter of 2021 compared to $91 million for the third quarter of 2021 and $87 million for the fourth quarter of 2020. Depreciation and amortization for the year ended December 31, 2021 was $363 million compared to $357 million for the same period in 2020. Depreciation and amortization for the fourth quarter of 2021 compared to the third quarter of 2021 was lower due to higher unabsorbed depreciation incurred in the third quarter as a result of plant outages, partially offset by higher Methanex produced methanol sales. Depreciation and amortization for the fourth quarter of 2021 is comparable to the fourth quarter of 2020. For the year ended December 31, 2021 compared to the same period in 2020, depreciation and amortization is marginally higher.
Finance Costs
Three Months EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Finance costs before capitalized interest
$40 $42 $45 $165 $168 
Make-whole interest (early redemption of 2022 bonds) — —  15 
Less capitalized interest(6)(5)(4)(21)(18)
Finance costs
$34 $37 $41 $144 $165 
Finance costs are primarily comprised of interest on borrowings and lease obligations.
Finance costs are lower for the fourth quarter of 2021 compared to the third quarter of 2021 as a result of the repayment of the limited recourse debt for Egypt in the third quarter. Finance costs are lower for the three months and year ended December 31 2021 compared to the same period in 2020 as a result of the one-time make-whole interest payment incurred when we early redeemed our 2022 bonds in the third quarter of 2020. Capitalized interest relates to interest costs capitalized for the Geismar 3 project. Refer to the Liquidity and Capital Resources section on page 13 of the MD&A.
Finance Income and Other Expenses
Three Months EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Finance income and other expenses
$(4)$$(3)$1 $— 
The change in finance income and other expenses for all periods presented is primarily due to the impact of changes in foreign exchange rates and changes in interest income earned on cash balances, along with individually immaterial other expenses.
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 9


Income Taxes

A summary of our income taxes for the fourth quarter of 2021 compared to the third quarter of 2021 and the year ended December 31, 2021 compared to the same period in 2020 is as follows:
Three Months Ended December 31, 2021Three Months Ended September 30, 2021
($ millions except where noted)Per consolidated statement of income
Adjusted 1, 2, 3, 4
Per consolidated statement of incomeAdjusted
Net income before income tax$243 $216 $115 $140 
Income tax expense(22)(31)(28)(41)
Net income after income tax$221 $185 $87 $99 
Effective tax rate9 %14 %24 %29 %

Year Ended December 31, 2021Year Ended December 31, 2020
($ millions, except where noted)Per consolidated statement of income
Adjusted 1,2,3,4
Per consolidated statement of incomeAdjusted
Net income (loss) before income tax$666 $606 $(187)$(169)
Income tax recovery (expense)(110)(146)62 46 
Net income (loss) after income tax$556 $460 $(125)$(123)
Effective tax rate17 %24 %33 %27 %
1     Adjusted net income (loss) before income tax reflects amounts required for the inclusion of 63.1% of Atlas income and 50% of Egypt, as well as amounts required to exclude the mark-to-market impact of share-based-compensation expense or recovery. The most directly comparable measure in the financial statements is net income (loss) before tax.
2     Adjusted income tax recovery (expense) reflects amounts required for the inclusion of 63.1% of Atlas income and 50% of Egypt, as well as amounts required to exclude the tax impact of mark-to-market impact of share-based-compensation expense or recovery, calculated at the appropriate applicable tax rate for their respective jurisdictions. The most directly comparable measure in the financial statements is income tax recovery (expense).
3     Adjusted effective tax rate is a non-GAAP ratio and is calculated as adjusted income tax expense or recovery, divided by adjusted net income (loss) before tax.
4     Adjusted net income (loss) before income tax, Adjusted income tax (expense) recovery are non-GAAP measures. Adjusted effective tax rate is a non-GAAP ratio. These do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Management uses these to assess the effective tax rate. These measures and ratios are useful as they are a better measure of our underlying tax rate across the jurisdictions in which we operate.                    


We earn the majority of our income in Chile, Egypt, Trinidad, New Zealand, Canada, and the United States. The statutory tax rate applicable to Methanex in Chile decreased in the quarter from 44.5% to 35% resulting from a reduction in the applicable tax rate applied retrospectively. The statutory tax rate applicable to Methanex in Egypt is 30%. In Trinidad the statutory tax rate is 35%. The statutory tax rate in New Zealand is 28%. In Canada, the statutory tax rate applicable to Methanex is 24.5% and the United States statutory tax rate applicable to Methanex is 23%. We accrue for taxes that will be incurred upon distributions from our subsidiaries when it is probable that the earnings will be repatriated. 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 14% for the fourth quarter of 2021 and 29% for the third quarter of 2021. The effective tax rate based on Adjusted net income was an expense of 24% for the year ended December 31, 2021 compared to a tax recovery of 27% on an Adjusted net loss for the same period in 2020. Adjusted net income (loss) 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. In the fourth quarter of 2021 the effective tax rate is lower primarily due to the lower tax rate applicable in Chile applied retrospectively to undistributed earnings and other net changes in our tax provision associated with the resolution of certain outstanding audits, tax disputes and other matters.

METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 10


The following table shows a reconciliation of Net income (loss) to Adjusted net income (loss) before tax, and of Income tax recovery (expense) to Adjusted income tax recovery (expense):
Three Months EndedYears Ended
($ millions except per share amounts and where noted)Dec 31
2021
Sep 30
2021
Dec 31
2021
Dec 31
2020
Net income (loss)$221 $87 $556 $(125)
Adjusted for:
Income tax (recovery) expense22 28 110 (62)
Earnings from associate (35)(21)(98)(30)
Share of earnings of associate's income before tax 52 34 151 44 
Net income before tax of non-controlling interests (25)(21)(90)(35)
Mark-to-market impact of share-based compensation (19)33 (23)39 
Adjusted net income (loss) before tax $216 $140 $606 $(169)
Income tax recovery (expense) $(22)$(28)$(110)$62 
Adjusted for:
Inclusion of tax expense of associate (18)(12)(53)(15)
Removal of tax expense of non-controlling interest 6 16 
Tax on mark-to-market impact of share-based compensation 3 (4)1 (5)
Adjusted tax recovery (expense) $(31)$(41)$(146)$46 
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 11


SUPPLY/DEMAND FUNDAMENTALS
Demand
In 2021, global methanol demand continued to recover from impacts related to the COVID-19 pandemic. We estimate that global methanol demand grew by 5% in 2021 to approximately 86 million tonnes. This increase was driven by a strong recovery in demand for traditional chemical applications from increased manufacturing activity. Energy related demand was also strong but was slightly offset by lower demand from methanol-to-olefins ("MTO").

In the fourth quarter of 2021, global methanol demand decreased by approximately 2% compared to the third quarter. Demand from traditional chemical applications was strong due to increased manufacturing activity. Demand from MTO producers was lower in the fourth quarter due to planned maintenance activities and the continued impact from China's government-mandated industrial operating rate ("dual-control policy") restrictions. Demand from other energy-related applications was steady.

Over the long term, we believe that traditional chemical demand for methanol, which represents over 50% of global methanol demand, is influenced by the strength of global and regional economies and industrial production levels. We believe that demand for energy-related applications will be influenced by energy prices, pricing of end products, and government policies that are playing an increasing role in encouraging new applications for methanol due to its emissions benefits as a fuel. The future operating rates and methanol consumption from MTO producers will depend on a number of factors, including the pricing for their various final products, the degree of downstream integration of these units with other products, the impact of olefin industry feedstock costs, including naphtha, on relative competitiveness and plant maintenance schedules.
Supply
The methanol industry continued to run at lower operating rates in 2021 due to various planned and unplanned outages. The run-up in energy prices in 2021 impacted feedstock cost and availability, which made it difficult for supply to increase back to pre-COVID levels. In the fourth quarter, there were several plant outages, particularly in Iran and in China where there was a diversion of natural gas and coal to meet seasonal power demand.

We expect most large-scale capacity additions to be in North America, the Middle East (Iran) and China over the next few years. In North America, we are building a 1.8 million tonne plant, the Geismar 3 project, which will be our third plant in Louisiana, with commercial operations targeted for the end of 2023 or early 2024. There are other large-scale projects under discussion in North America; however, we believe that none have yet reached a final investment decision. In Iran, we continue to monitor projects at various construction stages including the Sabalan plant which is the only project nearing completion. In China, we anticipate some capacity additions over the near-to-medium term and the closure of some small-scale, inefficient and older plants. We expect that new capacity built in China will be consumed in that country.
Methanol Price
Methanol prices fluctuated during the fourth quarter. Prices increased early in the quarter due to tight supply and rising energy prices before moderating later in the quarter. Overall, we increased our average realized price in the fourth quarter of 2021 to $445 per tonne, an increase of $55 per tonne, compared to $390 per tonne in the third quarter of 2021.

Future methanol prices will depend on the strength of the global economy, industry operating rates, global energy prices, new supply additions and the strength of global demand.
The following table outlines our recent regional non-discounted posted prices. Methanol is a global commodity and future methanol prices are directly impacted by changes in methanol supply and demand. Based on the diversity of end products in which methanol is used, demand for methanol is driven by a number of factors including: strength of global and regional economies, industrial production levels, energy prices, pricing of end products and government regulations and policies. Methanol industry supply is impacted by the cost of production, methanol industry operating rates and new methanol industry capacity additions.
Methanex Non-Discounted Regional Posted Prices 1
(US$ per tonne)Feb 2022Jan 2022Dec 2021Nov 2021Oct 2021
North America619 619 642 692 609 
Europe 2
590 590 575 575 575 
Asia Pacific480 500 520 600 510 
China430 430 
n/a 3
n/a 3
n/a 3
1    Discounts from our posted prices are offered to customers based on    various factors.
2    €505 for Q1 2022 (Q4 2021 – €490) converted to United States dollars.
3    Began posting a China specific price in 2022; prior to 2022 the Asia Pacific price applied to both markets.
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 12


LIQUIDITY AND CAPITAL RESOURCES

We operate in a highly competitive commodity industry and therefore are committed to maintaining a strong balance sheet and financial flexibility. At December 31, 2021, our cash balance was $932 million, including $83 million of cash related to our Egypt entity 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.

A summary of our sources and uses of cash for the three months and year ended December 31, 2021, compared to the same periods in 2020, is as follows:
Three Months EndedYear Ended
($ millions, except as otherwise noted)Dec 31
2021
Dec 31
2020
VarianceDec 31
2021
Dec 31
2020
Variance
Cash provided by operating activities$283 $98 $185 $994 $461 $533 
Cash (used in) provided by financing activities(219)(372)153 (643)234 (877)
Cash used in investing activities(64)(72)(253)(278)25 
Increase in cash and cash equivalents$ $(346)$346 $98 $417 $(319)

Cash flows from operating activities in the fourth quarter of 2021 were $283 million compared to $98 million for the fourth quarter of 2020. Cash flows from operating activities were higher in the fourth quarter of 2021 compared to the fourth quarter of 2020 primarily as a result of higher earnings. Cash flows from operating activities in the year ended December 31, 2021 were $994 million compared to $461 million for the same period in 2020, and were higher primarily as a result of higher methanol pricing and higher earnings.

Cash used in financing activities in the fourth quarter of 2021 was $219 million, which, in addition to regular lease and interest payments, included distributions to our non-controlling interest and shares repurchased under our normal course issuer bid. Cash used in financing activities in the fourth quarter of 2020 was $372 million, primarily relating to the repayment of $250 million of unsecured notes in the fourth quarter of 2020, as well as regular lease and interest payments. Cash used in financing activities for the year ended December 31, 2021 was $643 million, which includes the repayment of the construction facility drawn in 2020, distributions to our non-controlling interest, dividends to and repurchase of shares from Methanex shareholders, as well as lease and interest payments. Cash provided by financing activities for the year ended December 31, 2020 was $234 million, primarily due to the issuance of our $700 million senior unsecured notes in 2020, offset by the repayment of our $250 million of unsecured notes, lease and interest payments, and further offset by dividend payments to Methanex shareholders in 2020.

During the fourth quarter of 2021 we paid a quarterly dividend of $0.125 per common share for a total of $9 million.

Cash used in investing activities relates to capital spend on maintenance and major projects including our Geismar 3 plant currently under construction. For more information on our capital projects, please see Capital Projects and Growth Opportunities below.
Capital Projects and Growth Opportunities

The Geismar 3 project is a 1.8 million tonne methanol plant under construction in Geismar, Louisiana adjacent to our Geismar 1 and Geismar 2 plants with significant capital and operating cost advantages. We have capitalized $508 million on the project, before capitalized interest and finance charges. We estimate that there are $750 to $850 million of remaining capital expenditure over 2022-2023. The expected total cost for the project is $1.25 billion - $1.35 billion. All major equipment is now on site which reduces the risk of supply chain issues or inflation. Commercial operations are targeted at the end of 2023 or early 2024.

Our planned operational capital expenditures directed towards maintenance, turnarounds, and catalyst changes, including our 63.1% share of Atlas and 50% of Egypt, is currently estimated to be approximately $130 million for 2022. This reflects higher levels of spend compared to 2021, when our planned operational capital expenditures were limited in certain locations for periods of time by COVID-19 restrictions.
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 13


Strategic Partnership

In July 2021, we reached key commercial terms for a strategic shipping partnership between Methanex, Waterfront Shipping (a Methanex subsidiary) and Mitsui O.S.K. Lines, Ltd. ("MOL") whereby MOL will acquire a 40% minority interest in Waterfront Shipping for $145 million. Methanex will retain the remaining 60% majority interest in Waterfront Shipping and continue to operate it as a key element within our globally integrated supply chain. Subsequent to the end of the period, we received all regulatory approvals and expect to receive the sale proceeds in the first quarter of 2022.
ADDITIONAL INFORMATION – NON-GAAP MEASURES

In addition to providing measures prepared in accordance with IFRS, we present certain additional non-GAAP measures and ratios throughout this document. These are Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue, Average realized price, Adjusted net income (loss) before income tax, Adjusted income tax expense/recovery, and Adjusted effective tax rate. These non-GAAP financial measures and ratios reflect our 63.1% economic interest in the Atlas Facility and our 50% economic interest in the Egypt Facility, and are useful as they are a better measure of our underlying performance, and assist in assessing the operating performance of the company's business. These measures, at our share of our facilities, are a better measure of our underlying performance, as we fully run the operations on our partners' behalf, despite having less than full share of the economic interest. Adjusted EBITDA is also frequently used by securities analysts and investors when comparing our results with those of other companies. 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 and ratios 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.
These measures should be considered in addition to, and not as a substitute for, net income (loss) and revenue reported in accordance with IFRS.
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.

METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 14


The following table shows a reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted EBITDA:
Three Months EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Net income (loss) attributable to Methanex shareholders$201 $71 $(27)$482 $(157)
Mark-to-market impact of share-based compensation(19)33 45 (23)39 
Depreciation and amortization 87 91 87 363 357 
Finance costs 34 37 41 144 165 
Finance income and other expenses4 (2)(1)— 
Income tax expense (recovery)22 28 (10)110 (62)
Earnings of associate adjustment 1
26 19 84 42 
Non-controlling interests adjustment 1
(15)(13)(11)(51)(38)
Adjusted EBITDA attributable to Methanex shareholders$340 $264 $136 $1,108 $346 

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 Net Income (Loss) and Adjusted Net Income (Loss) per Common Share

Adjusted net income (loss) and Adjusted net income (loss) per common share are a non-GAAP measure and a non-GAAP ratio, respectively, 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 (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share:
Three Months EndedYears Ended
($ millions except number of shares and per share amounts)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Net income (loss) attributable to Methanex shareholders$201 $71 $(27)$482 $(157)
Mark-to-market impact of share-based compensation, net of tax(16)28 39 (22)34 
Adjusted net income (loss)$185 $99 $12 $460 $(123)
Diluted weighted average shares outstanding (millions)76 76 76 76 76 
Adjusted net income (loss) per common share$2.43 $1.29 $0.15 $6.03 $(1.62)

Management uses these measures to analyze net income (loss) and net income (loss) per common share after adjusting for our economic interest in the Atlas and Egypt facilities, for reasons as described above. The exclusion of the mark-to-market portion of the impact of shared based compensation is due to these amounts not being seen as indicative of operational performance and can fluctuate in the intervening periods until settlement, at which time they are included appropriately as the cost of employee compensation.

METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 15


Adjusted Revenue (attributable to Methanex shareholders)
Adjusted revenue differs from the most comparable GAAP measure, revenue, because it excludes revenue marketed on a commission basis related to 36.9% of the Atlas methanol facility that represents our partner's share, and excludes revenue relating to 50% of the Egypt methanol facility that we do not own. 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 EndedYears Ended
($ millions)Dec 31
2021
Sep 30
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Revenue$1,253 $1,078 $811 $4,415 $2,650 
Non-Methanex share of Atlas revenue 1
(78)(61)(20)(255)(115)
Non-controlling interests' share of revenue 1
(65)(54)(36)(228)(136)
Adjusted revenue attributable to Methanex shareholders$1,110 $963 $755 $3,932 $2,399 
1    Excludes intercompany transactions with the Company.

Management uses Adjusted revenue to determine revenue attributable to Methanex's share of operations as it is a better measure of our underlying performance as we fully run the operations on our partners' behalf, despite having a less than full share of the economic interest.
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)Dec 31
2021
Sep 30
2021
Jun 30
2021
Mar 31
2021
Revenue $1,253 $1,078 $1,068 $1,016 
Net income attributable to Methanex shareholders201 71 107 105 
Basic net income per common share2.66 0.93 1.40 1.37 
Diluted net income per common share2.51 0.93 1.31 1.19 
Adjusted EBITDA 340 264 262 242 
Adjusted net income185 99 95 82 
Adjusted net income per common share
2.43 1.29 1.24 1.07 

Three Months Ended
($ millions except per share amounts)Dec 31
2020
Sep 30
2020
Jun 30
2020
Mar 31
2020
Revenue $811 $581 $512 $745 
Net income (loss) attributable to Methanex shareholders(27)(88)(65)23 
Basic net income (loss) per common share (0.35)(1.15)(0.85)0.30 
Diluted net income (loss) per common share (0.35)(1.15)(0.85)0.21 
Adjusted EBITDA 136 40 32 138 
Adjusted net income (loss)12 (79)(64)
Adjusted net income (loss) per common share 0.15 (1.03)(0.84)0.10 


METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 16


Methanex Corporation
Quarterly History (unaudited)
2021Q4Q3Q2Q12020Q4Q3Q2Q1
METHANOL SALES VOLUME
(thousands of tonnes)
Methanex-produced 1
6,207 1,672 1,435 1,582 1,518 6,704 1,480 1,531 1,717 1,976 
Purchased methanol3,750 810 1,023 903 1,014 2,994 1,192 836 418 548 
Commission sales 1
1,227 322 299 345 261 1,042 196 311 271 264 
11,184 2,804 2,757 2,830 2,793 10,740 2,868 2,678 2,406 2,788 
METHANOL PRODUCTION
(thousands of tonnes)
New Zealand1,348 405 268 306 369 1,672 439 340 450 443 
USA (Geismar)1,989 605 478 484 422 2,040 556 513 441 530 
Trinidad (Methanex interest)1,161 296 296 294 275 998 161 167 241 429 
Egypt (50% interest)581 144 155 134 148 578 145 153 147 133 
Canada (Medicine Hat)628 149 159 159 161 490 111 81 145 153 
Chile807 334 124 128 221 836 195 118 204 319 
6,514 1,933 1,480 1,505 1,596 6,614 1,607 1,372 1,628 2,007 
AVERAGE REALIZED METHANOL PRICE 2
($/tonne)393 445 390 376 363 247 282 217 211 267 
($/gallon)1.18 1.34 1.17 1.13 1.09 0.74 0.85 0.65 0.63 0.80 
ADJUSTED EBITDA1,108 340 264 262 242 346 136 40 32 138 
PER SHARE INFORMATION
($ per common share attributable to Methanex shareholders)
Basic net income (loss)6.34 2.66 0.93 1.40 1.37 (2.06)(0.35)(1.15)(0.85)0.30 
Diluted net income (loss)6.13 2.51 0.93 1.31 1.19 (2.06)(0.35)(1.15)(0.85)0.21 
Adjusted net income (loss)6.03 2.43 1.29 1.24 1.07 (1.62)0.15 (1.03)(0.84)0.10 

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.
2    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.


METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 17


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 and Adjusted revenue 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 - 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, 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 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, 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, 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 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 18


FORWARD-LOOKING INFORMATION WARNING

This Fourth Quarter 2021 Management’s Discussion and Analysis ("MD&A") as well as comments made during the Fourth Quarter 2021 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", "targets", "plan," "predict" 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 and anticipated timing and rate of return of such 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,
the timing of the closing of the sale of a minority interest in our Waterfront Shipping subsidiary,
    
expected cash flows, cash balances, earnings capability, debt levels and share price,
availability of committed credit facilities and other financing,
our ability to meet covenants associated with our long-term debt obligations,
our shareholder distribution strategy and expected 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, including our Geismar 3 Project,
our financial strength and ability to meet future financial commitments,
expected global or regional economic activity (including industrial production levels) and GDP growth,
expected outcomes of litigation or other disputes, claims and assessments,
expected actions of governments, governmental agencies, gas suppliers, courts, tribunals or other third parties, and
the potential future impact of the COVID-19 pandemic.
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,
receipt or issuance of third-party consents or approvals or 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,
METHANEX CORPORATION 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 19


the availability of committed credit facilities and other financing,
the expected timing and capital cost of our Geismar 3 Project,
global and regional economic activity (including industrial production levels) and GDP growth,
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,
our ability to meet timeline and budget targets for the Geismar 3 Project, including the impact of any cost pressures arising from labour costs,
the signing of definitive agreements and the receipt of regulatory and other customary approvals in respect of the sale of a minority interest in our Waterfront Shipping subsidiary,
competing demand for natural gas, especially with respect to any domestic needs for gas and electricity,
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,
the impacts of the COVID-19 pandemic, and
other risks described in our 2020 Annual Management’s Discussion and Analysis and this Fourth Quarter 2021 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 2021 FOURTH QUARTER
MANAGEMENT’S DISCUSSION AND ANALYSIS                                          PAGE 20




Methanex Corporation
Consolidated Statements of Income (Loss) (unaudited)
(thousands of U.S. dollars, except number of common shares and per share amounts)
Three Months EndedYears Ended
Dec 31
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Revenue$1,252,683 $811,323 $4,414,559 $2,649,963 
Cost of sales and operating expenses(918,958)(715,139)(3,339,510)(2,355,123)
Depreciation and amortization(87,045)(87,020)(363,084)(357,129)
Egypt insurance recovery (note 11) —  9,839 
Operating income (loss)246,680 9,164 711,965 (52,450)
Earnings of associate (note 4)34,627 6,165 97,743 29,577 
Finance costs (note 5)(34,062)(41,133)(144,406)(164,837)
Finance income and other expenses(4,362)(2,536)1,036 278 
Income (loss) before income taxes242,883 (28,340)666,338 (187,432)
Income tax (expense) recovery:
Current(36,067)(7,217)(115,767)(25,196)
Deferred 14,115 17,608 5,340 87,301 
(21,952)10,391 (110,427)62,105 
Net income (loss)$220,931 $(17,949)$555,911 $(125,327)
Attributable to:
Methanex Corporation shareholders$200,586 $(26,820)$482,358 $(156,678)
Non-controlling interests20,345 8,871 73,553 31,351 
$220,931 $(17,949)$555,911 $(125,327)
Income per common share for the period attributable to Methanex Corporation shareholders
Basic net income (loss) per common share$2.66 $(0.35)$6.34 $(2.06)
Diluted net income (loss) per common share (note 7)$2.51 $(0.35)$6.13 $(2.06)
Weighted average number of common shares outstanding (note 7)75,536,074 76,197,342 76,039,118 76,196,395 
Diluted weighted average number of common shares outstanding (note 7)75,877,216 76,197,342 76,243,777 76,196,395 

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2021 FOURTH QUARTER
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)                           PAGE 1


Methanex Corporation
Consolidated Statements of Comprehensive Income (Loss) (unaudited)
(thousands of U.S. dollars)
Three Months EndedYears Ended
Dec 31
2021
Dec 31
2020
Dec 31
2021
Dec 31
2020
Net income (loss)$220,931 $(17,949)$555,911 $(125,327)
Other comprehensive income (loss):
Items that may be reclassified to income:
Change in fair value of cash flow hedges (note 10)(513,246)143,962 289,824 31,194 
Forward element excluded from hedging relationships (note 10)508,804 (163,048)(101,401)(35,775)
Realized losses (gains) on foreign exchange hedges reclassified to revenue(2,124)976 (1,064)1,804 
Items that will not be reclassified to income:
Actuarial gain (loss) on defined benefit pension plans7,499 (5,413)7,499 (5,413)
Taxes on above items2,162 5,473 (42,919)(2,325)
3,095 (18,050)151,939 (10,515)
Comprehensive income (loss)$224,026 $(35,999)$707,850 $(135,842)
Attributable to:
Methanex Corporation shareholders $203,681 $(44,870)$634,297 $(167,193)
Non-controlling interests 20,345 8,871 73,553 31,351 
$224,026 $(35,999)$707,850 $(135,842)

See accompanying notes to condensed consolidated interim financial statements.
METHANEX CORPORATION 2021 FOURTH QUARTER
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)                           PAGE 2


Methanex Corporation
Consolidated Statements of Financial Position (unaudited)
(thousands of U.S. dollars)
AS ATDec 31
2021
Dec 31
2020
ASSETS
Current assets:
Cash and cash equivalents$932,069 $833,841 
Trade and other receivables551,367 412,000 
Inventories (note 2)459,556 308,696 
Prepaid expenses35,963 33,746 
Other assets9,842 6,634 
1,988,797 1,594,917 
Non-current assets:
Property, plant and equipment (note 3)3,686,149 3,677,056 
Investment in associate (note 4)217,319 194,025 
Deferred income tax assets98,169 137,524 
Other assets99,186 92,529 
4,100,823 4,101,134 
$6,089,620 $5,696,051 
LIABILITIES AND EQUITY
Current liabilities:
Trade, other payables and accrued liabilities$835,951 $600,953 
Current maturities on long-term debt (note 6)11,775 39,771 
Current maturities on lease obligations98,301 97,516 
Current maturities on other long-term liabilities17,191 27,152 
963,218 765,392 
Non-current liabilities:
Long-term debt (note 6)2,146,417 2,323,601 
Lease obligations618,800 624,718 
Other long-term liabilities193,749 327,491 
Deferred income tax liabilities212,705 213,392 
3,171,671 3,489,202 
Equity:
Capital stock432,728 440,723 
Contributed surplus1,928 1,873 
Retained earnings1,251,640 843,606 
Accumulated other comprehensive loss(2,720)(137,102)
Shareholders' equity1,683,576 1,149,100 
Non-controlling interests271,155 292,357 
Total equity1,954,731 1,441,457 
$6,089,620 $5,696,051 

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2021 FOURTH QUARTER
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)                           PAGE 3


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
Income (Loss)
Shareholders'
Equity
Non-
Controlling
Interests
Total
Equity
Balance, December 31, 201976,196,080 $440,472$1,783$1,039,819$(150,389)$1,331,685$298,675$1,630,360
Net income (loss)— — — (156,678)— (156,678)31,351 (125,327)
Other comprehensive loss— — — (3,531)(6,984)(10,515)— (10,515)
Compensation expense recorded for stock options— — 137 — — 137 — 137 
Issue of shares on exercise of stock options5,900 204 — — — 204 — 204 
Reclassification of grant date fair value on exercise of stock options— 47 (47)— — — — — 
Dividend payments to Methanex Corporation shareholders— — — (36,004)— (36,004)— (36,004)
Distributions made and accrued to non-controlling interests— — — — — — (36,455)(36,455)
Equity contributions by non-controlling interest— — — — — — 5,500 5,500 
Realized hedge losses recognized in cash flow hedges— — — — 20,271 20,271 — 20,271 
Acquisition of non-controlling interest— — — — — — (6,714)(6,714)
Balance, December 31, 202076,201,980 $440,723$1,873$843,606$(137,102)$1,149,100$292,357$1,441,457
Net income   482,358  482,358 73,553 555,911 
Other comprehensive income   4,903 147,036151,939  151,939 
Compensation expense recorded for stock options  113   113  113 
Issue of shares on exercise of stock options7,300 252    252  252 
Reclassification of grant date fair value on exercise of stock options 58 (58)     
Payment for shares repurchased(1,435,193)(8,305)