Methanex Reports Higher Adjusted EBITDA in the First Quarter of 2014

Methanex Reports Higher Adjusted EBITDA in the First Quarter of 2014 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 04/29/14 --   For the
first quarter of 2014, Methanex (TSX: MX)(NASDAQ: MEOH) reported
Adjusted EBITDA(1) of $255 million and Adjusted net income(1) of $160
million ($1.65 per share on a diluted basis(1)). These figures
compare with Adjusted EBITDA(1) of $245 million and Adjusted net
income(1) of $167 million ($1.72 per share on a diluted basis(1)) for
the fourth quarter of 2013.   
John Floren, President and CEO of Methanex commented, "This was
another excellent quarter. Increased production resulting from our
2013 capacity growth initiatives in New Zealand and Medicine Hat,
together with higher methanol pricing, contributed to robust EBITDA
and earnings results this quarter." Mr. Floren added, "The methanol
industry environment remains favorable. In Q4 2013, we saw methanol
prices rise rapidly as a result of industry supply constraints. Late
in Q1 2014, several idle plants resumed operation which resulted in
methanol pricing moderating to levels seen prior to the supply
disruptions. Industry demand remains steady, particularly for
methanol into energy, and limited new supply additions are expected
in the near to medium term."  
Mr. Floren added, "We continue to target methanol production from our
Geismar 1 facility in late 2014 and Geismar 2 in early 2016. These
two facilities are expected to provide a two million tonne increase
in our operating capacity to eight million tonnes by 2016, at a time
when new market supply is expected to be limited."  
Mr. Floren concluded, "With approximately $700 million of cash on
hand, an undrawn credit facility, robust balance sheet, and strong
cash flow generation, we are well positioned to deliver on our growth
projects, continue to grow our business and deliver on our commitment
to return excess cash to shareholders. Our announcement today of a
new 5% normal course issuer bid share repurchase program, along with
a 25% increase in our quarterly dividend, reflects that commitment."  
A conference call is scheduled for April 30, 2014 at 12:00 noon ET
(9:00 am PT) to review these first quarter results. To access the
call, dial the conferencing operator ten minutes prior to the start
of the call at (41
6) 340-2218, or toll free at (866) 226-1793. A
playback version of the conference call will be available until May
21, 2014 at (905) 694-9451, or toll free at (800) 408-3053. The
passcode for the playback version is 3924003. Presentation slides
summarizing Q1-14 results and a simultaneous audio-only webcast of
the conference call can be accessed from our website at
www.methanex.com. The webcast will be available on the website for
three weeks following the call.  
Methanex is a Vancouver-based, publicly traded company and is the
world's largest producer and supplier of methanol to major
international markets. Methanex shares are listed for trading on the
Toronto Stock Exchange in Canada under the trading symbol "MX" and on
the NASDAQ Global Market in the United States under the trading
symbol "MEOH". 
FORWARD-LOOKING INFORMATION WARNING  
This First Quarter 2014 press release contains forward-looking
statements with respect to us and the chemical industry. Refer to
Forward-Looking Information Warning in the attached First Quarter
2014 Management's Discussion and Analysis for more information. 


 
 
(1) Adjusted EBITDA, Adjusted net income and Adjusted net income per common 
    share are non-GAAP measures which 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 items considered by management 
    to be non-operational. Refer to Additional Information - Supplemental   
    Non-GAAP Measures section of the attached Interim Report for the three  
    months ended March 31, 2014 for reconciliations to the most comparable  
    GAAP measures.                                                          

Interim Report for the Three Months Ended March 31, 2014    
At April 29, 2014 the Company had 96,523,956 common shares issued and
outstanding and stock options exercisable for 1,665,436 additional
common shares. 
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  


 
 
CIBC Mellon Trust Company                                                   
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                                          

FIRST QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS 
Except where otherwise noted, all currency amounts are stated in
United States dollars. 
FINANCIAL AND OPERATIONAL HIGHLIGHTS 


 
 
--  A reconciliation from net income attributable to Methanex shareholders
    to Adjusted net income(1) and the calculation of Adjusted net income per
    common share(1) is as follows: 
 
                                                  Three Months Ended        
                                         -----------------------------------
($ millions except number of shares and       Mar 31      Dec 31      Mar 31
 per share amounts)                             2014        2013        2013
----------------------------------------------------------------------------
 
Net income attributable to Methanex                                         
 shareholders                               $    145    $    128    $     60
  Mark-to-market impact of share-based                                      
   compensation, net of tax                       15          34          28
  Write-off of oil and gas rights, net of                                   
   tax                                             -           5           -
----------------------------------------------------------------------------
Adjusted net income (1)                     $    160    $    167    $     88
----------------------------------------------------------------------------
Diluted weighted average shares                                             
 outstanding (millions)                           97          97          96
Adjusted net income per common share (1)    $   1.65    $   1.72    $   0.92
----------------------------------------------------------------------------
 
--  We recorded Adjusted EBITDA(1) of $255 million for the first quarter of
    2014 compared with $245 million for the fourth quarter of 2013. The
    increase in Adjusted EBITDA(1) was primarily due to an increase in our
    average realized price to $524 per tonne for the first quarter of 2014
    fr
om $493 per tonne for the fourth quarter of 2013 and an increase in
    sales of Methanex-produced methanol. 
--  Production for the first quarter of 2014 was 1,226,000 tonnes compared
    with 1,194,000 tonnes for the fourth quarter of 2013. Refer to the
    Production Summary section. 
--  Sales of Methanex-produced methanol were 1,228,000 tonnes in the first
    quarter of 2014 compared with 1,190,000 in the fourth quarter of 2013. 
--  We continue to progress our Geismar relocation projects. We are
    targeting to be producing methanol from Geismar 1 in late 2014 and from
    Geismar 2 in early 2016.  
--  During the first quarter of 2014, we paid a $0.20 per share dividend to
    shareholders for a total of $19 million. 
--  We announced today that the Board of Directors has approved a 25%
    increase to our quarterly dividend to shareholders, from $0.20 per share
    per quarter to $0.25 per share per quarter, effective with the dividend
    payable June 30, 2014. 
--  We also announced today that the Board of Directors has approved a 5%
    normal course issuer bid under which the Company may repurchase up to
    4.8 million common shares. 
 
(1) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to Additional   
    Information - Supplemental Non-GAAP Measures section for a description  
    of each non-GAAP measure and reconciliations to the most comparable GAAP
    measures.                                                               

This First Quarter 2014 Management's Discussion and Analysis ("MD&A")
dated April 29, 2014 for Methanex Corporation ("the Company") should
be read in conjunction with the Company's condensed consolidated
interim financial statements for the period ended March 31, 2014 as
well as the 2013 Annual Consolidated Financial Statements and MD&A
included in the Methanex 2013 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 2013 Annual Report and additional
information relating to Methanex is available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. 
FINANCIAL AND OPERATIONAL DATA 


 
 
                                                  Three Months Ended        
                                          ----------------------------------
($ millions, except per share amounts and     Mar 31      Dec 31      Mar 31
 where noted)                                   2014        2013        2013
----------------------------------------------------------------------------
 
Production (thousands of tonnes)                                            
 (attributable to Methanex shareholders)       1,226       1,194       1,063
 
Sales volumes (thousands of tonnes):                                        
  Methanex-produced methanol (attributable                                  
   to Methanex shareholders)                   1,228       1,190       1,030
  Purchased methanol                             654         663         588
  Commission sales                               296         274         219
----------------------------------------------------------------------------
  Total sales volumes (1)                      2,178       2,127       1,837
 
Methanex average non-discounted posted                                      
 price ($ per tonne) (2)                         613         557         474
Average realized price ($ per tonne) (3)         524         493         412
 
Adjusted EBITDA (attributable to Methanex                                   
 shareholders) (4)                               255         245         149
Cash flows from operating activities             179         162         118
Adjusted net income (attributable to                                        
 Methanex shareholders) (4)                      160         167          88
Net income attributable to Methanex                                         
 shareholders                                    145         128          60
 
Adjusted net income per common share                                        
 (attributable to Methanex shareholders)                                    
 (4)                                            1.65        1.72        0.92
Basic net income per common share                                           
 (attributable to Methanex shareholders)        1.51        1.33        0.64
Diluted net income per common share                                         
 (attributable to Methanex shareholders)        1.50        1.32        0.63
 
Common share information (millions of                                       
 shares):                                                                   
  Weighted average number of common shares        96          96          95
  Diluted weighted average number of                                        
   common shares                                  97          97          96
  Number of common shares outstanding, end                                  
   of period                                      97          96          95
----------------------------------------------------------------------------
(1) Methanex-produced methanol includes volumes produced by Chile using     
    natural gas supplied from Argentina under a tolling arrangement.        
    Commission sales represent volumes marketed on a commission basis       
    related to 36.9% of the Atlas methanol facility and the portion of the  
    Egypt methanol 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) 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 volumes of Methanex-produced (attributable to Methanex  
    shareholders) and purchased methanol.                                   
(4) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to Additional   
    Information - Supplemental Non-GAAP Measures section for a description  
    of each non-GAAP measure and reconciliations to the most comparable GAAP
    measures.                                                               
----------------------------------------------------------------------------
----------------------------------------------------------------------------

PRODUCTION SUMMARY 


 
 
                                  Q1 2014               Q4 2013      Q1 2013
(thousands of tonnes)     Capacity(1)   Production   Production   Production
----------------------------------------------------------------------------
 
 
New Zealand (2)                   608          500          400          309
 
Atlas (Trinidad) (63.1%                                                     
 interest)                        281          249          268          248
 
Titan (Trinidad)                  218          149          173          181
 
Egypt (50% interest)(3)           158          139          159          133
 
Medicine Hat (Canada)             140          122           86          131
 
Chile I and IV                    430           67          108           61
 
Geismar 1 and 2                                                             
 (Louisiana, USA)(4)                -            -            -            -
----------------------------------------------------------------------------
                                1,835        1,226        1,194        1,063
----------------------------------------------------------------------------
(1) The production capacity of our facilities may be higher than original   
    nameplate capacity as, over time, these figures have been adjusted to   
    reflect ongoing operating efficiencies. Actual production for a facility
    in any given year may be higher or lower than annual production capacity
    due to a number of factors, including natural gas composition or the age
    of the facility's catalyst.                                             
(2) The annual production capacity of New Zealand represents the two Motunui
    facilities and the Waitara Valley facility (refer to New Zealand section
    below).                                                                 
(3) On December 9, 2013, we completed a sale of 10% equity interest in the  
    Egypt facility. Production figures prior to December 9, 2013 reflect a  
    60% interest.                                                           
(4) We are relocating two 1.0 million tonne idle Chile facilities to        
    Geismar, Louisiana and are targeting to be producing methanol from      
    Geismar 1 in late 2014 and Geismar 2 by early 2016.                     

New Zealand  
Our New Zealand methanol facilities produced 500,000 tonnes of
methanol in the first quarter of 2014 compared with 400,000 tonnes in
the fourth quarter of 2013. With all three facilities now operating,
we are able to produce up to 2.4 million tonnes annually, depending
on natural gas composition. During the first quarter 2014, production
was primarily impacted by an upstream supplier who performed major
maintenance on an offshore gas platform resulting in losses of 50,000
tonnes. We continue to work with suppliers in New Zealand to secure
gas that will allow our New Zealand facilities to operate at full
capacity.  
Trinidad  
In Trinidad, we own 100% of the Titan facility with an annual
production capacity of 875,000 tonnes and have a 63.1% interest in
the Atlas facility with an annual production capacity of 1,125,000
tonnes (63.1% interest). Production in Trinidad during the quarter
was impacted by a combination of minor unplanned outages and gas
curtailments. The Titan facility produced 149,000 tonnes in the first
quarter of 2014 compared with 173,000 tonnes in the fourth quarter of
2013. The Atlas facility produced 249,000 tonnes in the first quarter
of 2014 compared with 268,000 tonnes in the fourth quarter of 2013.   
We continue to experience some natural gas curtailments to our
Trinidad facilities due to a mismatch between upstream commitments to
supply the Natural Gas Company of Trinidad and Tobago (NGC) and
downstream demand from NGC's customers, which becomes apparent when
an upstream supplier has a technical issue or planned maintenance
that reduces gas delivery. We are engaged with key stakeholders to
find a solution to this issue, but in the meantime expect to continue
to experience gas curtailments to the Trinidad site. 
Egypt  
On a 100% basis, the Egypt methanol facility produced 278,000 tonnes
in the first quarter of 2014 (Methanex share of 139,000 tonnes)
compared with 273,000 tonnes (Methanex share of 159,000 tonnes) in
the fourth quarter of 2013. Production during the first quarter of
2014 and the fourth quarter of 2013 continued to be impacted by
natural gas supply restrictions.  
The Egypt facility has experienced periodic natural gas supply
restrictions since mid-2012 which have resulted in production below
full capacity. This situation may persist in the future and become
more acute during the summer months when electricity demand is at its
peak. Refer to page 23 of the Risk Factors and Risk Management
section of our 2013 Annual Report for further details. 
Medicine Hat, Canada  
During the first quarter of 2014, we produced 122,000 tonnes at our
Medicine Hat facility compared with 86,000 tonnes during the fourth
quarter of 2013. The Medicine Hat facility experienced an unplanned
outage in the fourth quarter of 2013 and restarted on January 10,
2014. 
Chile  
During the first quarter of 2014, we produced 67,000 tonnes in Chile
operating one plant at approximately 30% of production capacity,
supported by natural gas supplies from Chile and from Argentina
through a tolling arrangement.  
As a result of the short-term outlook for gas supply in Chile and
Argentina, we anticipate idling our Chile operations in early May due
to insufficient natural gas feedstock to keep our plant operating
through the southern hemisphere winter. We are continuing to work
with Empresa Nacional del Petroleo (ENAP) and others to secure
sufficient natural gas to sustain our operations and while a restart
of a Chile plant is possible later in 2014, the restart is dependent
on securing a sustainable natural gas supply to our facilities on
economic terms from Chile and Argentina to operate over the medium
term.  
The future of our Chile operations is primarily dependent on the
level of natural gas exploration and development in southern Chile
and our ability to secure a sustainable natural gas supply to our
facilities on economic terms from Chile and Argentina. 
Geismar, Louisiana  
We continue to progress our two Geismar relocation projects. We are
targeting to be producing methanol from the 1.0 million tonne Geismar
1 facility in late 2014 and from the 1.0 million tonne Geismar 2
facility in early 2016. During the first quarter of 2014, we incurred
$130 million of capital expenditures related to these projects,
excluding capitalized interest. 
FINANCIAL RESULTS  
For the first quarter of 2014 we recorded Adjusted EBITDA of $255
million and Adjusted net income of $160 million ($1.65 per share on a
diluted basis). This compares with Adjusted EBITDA of $245 million
and Adjusted net income of $167 million ($1.72 per share on a diluted
basis) for the fourth quarter of 2013.  
For the first quarter of 2014, we reported net income attributable to
Methanex shareholders of $145 million ($1.50 per share on a diluted
basis) compared with net income attributable to Methanex shareholders
for the fourth quarter of 2013 of $128 million ($1.32 income per
share on a diluted basis).  
We calculate Adjusted EBITDA and Adjusted net income by including
amounts related to our equity share of the Atlas (63.1% interest) and
Egypt (50% interest) facilities and by excluding the mark-to-market
impact of share-based compensation as a result of changes in our
share price and items which are considered by management to be
non-operational. Refer to Additional Information - Supplemental
Non-GAAP Measures section 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.   
A reconciliation from net income attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
net income per common share is as follows:  


 
 
                                                  Three Months Ended        
                                          ----------------------------------
($ millions except number of shares and       Mar 31      Dec 31      Mar 31
 per share amounts)                             2014        2013        2013
----------------------------------------------------------------------------
 
Net income attributable to Methanex                                         
 shareholders                               $    145    $    128    $     60
  Mark-to-market impact of share-based                                      
   compensation, net of tax                       15          34          28
  Write-off of oil and gas rights, net of                                   
   tax                                             -           5           -
----------------------------------------------------------------------------
Adjusted net income (1)                     $    160    $    167    $     88
----------------------------------------------------------------------------
Diluted weig
hted average shares                                             
 outstanding (millions)                           97          97          96
Adjusted net income per common share (1)    $   1.65    $   1.72    $   0.92
----------------------------------------------------------------------------
 
(1) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to Additional   
    Information - Supplemental Non-GAAP Measures section for a description  
    of each non-GAAP measure and reconciliations to the most comparable GAAP
    measures.                                                               

We review our financial results by analyzing changes in Adjusted
EBITDA, mark-to-market impact of share-based compensation,
depreciation and amortization, write-off of oil and gas rights,
finance costs, finance income and other expenses and income taxes. A
summary of our consolidated statements of income is as follows: 


 
 
                                                Three Months Ended          
                                      --------------------------------------
                                           Mar 31       Dec 31       Mar 31 
($ millions)                                 2014         2013         2013 
----------------------------------------------------------------------------
 
Consolidated statements of income:                                          
  Revenue                               $     968    $     881    $     652 
  Cost of sales and operating                                               
   expenses, excluding mark-to-market                                       
   impact of share-based compensation        (692)        (634)        (497)
  Adjusted EBITDA of associate (Atlas)                                      
   (1)                                         17           26            9 
----------------------------------------------------------------------------
                                              293          273          164 
Comprised of:                                                               
  Adjusted EBITDA (attributable to                                          
   Methanex shareholders) (2)                 255          245          149 
  Attributable to non-controlling                                           
   interests                                   38           28           15 
----------------------------------------------------------------------------
                                              293          273          164 
Mark-to-market impact of share-based                                        
 compensation                                 (18)         (37)         (31)
Depreciation and amortization                 (35)         (35)         (30)
Write-off of oil and gas rights                 -           (8)           - 
Earnings of associate, excluding                                            
 amount included in Adjusted EBITDA                                         
 (1)                                           (9)          (9)          (8)
Finance costs                                 (11)         (13)         (15)
Finance income and other expenses               -            2           (2)
Income tax expense                            (52)         (29)         (12)
----------------------------------------------------------------------------
Net income                              $     168    $     144    $      66 
----------------------------------------------------------------------------
Net income attributable to Methanex                                         
 shareholders                           $     145    $     128    $      60 
----------------------------------------------------------------------------
 
(1) Earnings of associate has been divided into an amount included in       
    Adjusted EBITDA and an amount excluded from Adjusted EBITDA. The amount 
    excluded from Adjusted EBITDA represents depreciation and amortization, 
    finance costs, finance income and other expenses and income tax expense 
    relating to earnings of associate.                                      
(2) This item is a non-GAAP measure that does not have any standardized     
    meaning prescribed by GAAP and therefore is unlikely to be comparable to
    similar measures presented by other companies. Refer to Additional      
    Information - Supplemental Non-GAAP Measures section for a description  
    of the non-GAAP measure and reconciliation to the most comparable GAAP  
    measure.                                                                

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 section.  
The changes in Adjusted EBITDA resulted from changes in the
following:  


 
 
                                                 Q1 2014            Q1 2014 
                                           compared with      compared with 
($ millions)                                     Q4 2013            Q1 2013 
----------------------------------------------------------------------------
 
Average realized price                     $          58      $         209 
Sales volume                                           7                 27 
Total cash costs                                     (55)              (130)
----------------------------------------------------------------------------
Increase in Adjusted EBITDA                $          10      $         106 
----------------------------------------------------------------------------

Average realized price 


 
 
                                                    Three Months Ended      
                                             -------------------------------
                                                Mar 31     Dec 31     Mar 31
($ per tonne)                                     2014       2013       2013
----------------------------------------------------------------------------
 
Methanex average non-discounted posted price       613        557        474
Methanex average realized price                    524        493        412
----------------------------------------------------------------------------

Entering the first quarter of 2014, methanol prices were higher as a
result of strong demand and industry supply issues, primarily in Asia
Pacific. Late in the first quarter, several plants returned to
operation and pricing began to moderate (refer to Supply/Demand
Fundamentals section). Our average non-discounted posted price for
the first quarter of 2014 was $613 per tonne compared with $557 per
tonne for the fourth quarter of 2013 and $474 per tonne for the first
quarter of 2013. Our average realized price for the first quarter of
2014 was $524 per tonne compared with $493 per tonne for the fourth
quarter of 2013 and $412 per tonne for the first quarter of 2013. The
change in average realized price for the first quarter of 2014
increased Adjusted EBITDA by $58 million compared with the fourth
quarter of 2013 and increased Adjusted EBITDA by $209 million
compared with the first quarter of 2013.  
Sales volume  
Methanol sales volumes excluding commission sales volumes were higher
for all periods presented and this increased Adjusted EBITDA by the
amounts noted in the table above. 
Total cash costs  
The primary drivers of changes in our total cash costs are changes in
the cost of methanol we produce at our facilities (Methanex-produced
methanol) and changes in the cost of methanol we purchase from others
(purchased methanol). All of our production facilities except
Me
dicine Hat and Chile are underpinned by natural gas purchase
agreements with pricing terms that include base and variable price
components. We supplement our production with methanol produced by
others through methanol offtake contracts and purchases on the spot
market to meet customer needs and support our marketing efforts
within the major global markets.  
We have adopted the first-in, first-out method of accounting for
inventories and it generally takes between 30 and 60 days to sell the
methanol we produce or purchase. Accordingly, the changes in Adjusted
EBITDA as a result of changes in Methanex-produced and purchased
methanol costs primarily depend on changes in methanol pricing and
the timing of inventory flows.  
The impact on Adjusted EBITDA from changes in our cash costs are
explained below:  


 
 
                                               Q1 2014              Q1 2014 
                                         compared with        compared with 
($ millions)                                   Q4 2013              Q1 2013 
----------------------------------------------------------------------------
 
Methanex-produced methanol costs       $           (25)     $           (50)
Proportion of Methanex-produced                                             
 methanol sales                                      6                    3 
Purchased methanol costs                           (27)                 (78)
Other, net                                          (9)                  (5)
----------------------------------------------------------------------------
                                       $           (55)     $          (130)
----------------------------------------------------------------------------

Methanex-produced methanol costs  
We purchase natural gas for the New Zealand, Trinidad and Egypt
methanol facilities under natural gas purchase agreements where the
unique terms of each contract include a base price and a variable
price component linked to the price of methanol to reduce our
commodity price risk exposure. The variable price component of each
gas contract is adjusted by a formula related to methanol prices
above a certain level. For the first quarter of 2014 compared with
the fourth quarter of 2013 and the first quarter of 2013,
Methanex-produced methanol costs were higher by $25 million and $50
million, respectively, primarily due to the impact of higher realized
methanol prices on the variable portion of our natural gas costs and
changes in the mix of production sold from inventory.  
Proportion of Methanex-produced methanol sales  
The cost of purchased methanol is directly linked to the selling
price for methanol at the time of purchase and the cost of purchased
methanol is generally higher than the cost of Methanex-produced
methanol. Accordingly, an increase in the proportion of
Methanex-produced methanol sales results in a decrease in our overall
cost structure for a given period. For the first quarter of 2014
compared with the fourth quarter of 2013 and the first quarter of
2013, a higher proportion of Methanex-produced methanol sales
increased Adjusted EBITDA by $6 million and $3 million, respectively.
Sales of Methanex-produced methanol increased in the first quarter of
2014 primarily as a result of higher production from New Zealand.  
Purchased methanol costs  
Changes in purchased methanol costs for all periods presented are
primarily as a result of changes in methanol pricing. 
Other, net  
We have commenced the process of building a manufacturing
organization in Geismar, Louisiana. Under IFRS, costs incurred
related to organizational build-up are not eligible for
capitalization and are charged directly to earnings as incurred.
During the first quarter of 2014, we incurred approximately $3
million of Geismar organizational build-up costs compared to $2
million in the fourth quarter of 2013 and nil in the first quarter of
2013. The remaining organizational build-up costs are estimated to be
approximately $25 million. The remaining change in other, net
compared to the fourth quarter of 2013 primarily relates to an
insurance settlement recorded in the fourth quarter of 2013.  
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 the
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
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.  


 
 
                                               Three Months Ended           
                                    ----------------------------------------
                                          Mar 31        Dec 31        Mar 31
($ millions except share price)             2014          2013          2013
----------------------------------------------------------------------------
 
Methanex Corporation share price                                            
 (1 )                                 $    63.94    $    59.24    $    40.63
 
Grant-date fair value expense                                               
 included in Adjusted EBITDA and                                            
 Adjusted net income                           7             4             6
Mark-to-market impact due to change                                         
 in share price                               18            37            31
----------------------------------------------------------------------------
Total share-based compensation                                              
 expense                              $       25    $       41    $       37
----------------------------------------------------------------------------
 
(1) US dollar share price of Methanex Corporation as quoted on NASDAQ Global
    Market on the last trading day of the respective period.                

The Methanex Corporation share price increased from US $59.24 per share
at December 31, 2013 to US $63.94 per share at March 31, 2014. As a
result of the increase in the share price and the resulting impact on
the fair value of the outstanding units, we recorded an $18 million
mark-to-market expense on share-based compensation in the first
quarter of 2014 compared with a $37 million mark-to-market
share-based compensation expense in the fourth quarter of 2013 and a
$31 million expense in the first quarter of 2013.  
Depreciation and Amortization   
Depreciation and amortization was $35 million for the first quarter
of 2014 compared with $35 million for the fourth quarter of 2013 and
$30 million for the first quarter of 2013. Depreciation and
amortization was higher in the first quarter of 2014 compared with
the first quarter of 2013 primarily due to higher sales volumes of
Methanex-produced methanol.  
Finance Costs 


 
 
                                               Three Months Ended           
                                    ----------------------------------------
                                         Mar 31        Dec 31        Mar 31 
($ millions)                               2014          2013          2013 
----------------------------------------------------------------------------
 
Finance costs before capitalized                                            
 interest                             $      16     $      16     $      16 
Less capitalized interest                    (5)         
  (3)           (1)
----------------------------------------------------------------------------
 
Finance costs                         $      11     $      13     $      15 
----------------------------------------------------------------------------

Finance costs before capitalized interest primarily relate to interest
expense on the unsecured notes and limited recourse debt facilities.
Capitalized interest relates to interest costs capitalized for the
Geismar projects. 
Finance Income and Other Expenses 


 
 
                                                Three Months Ended          
                                      --------------------------------------
                                           Mar 31       Dec 31       Mar 31 
($ millions)                                 2014         2013         2013 
----------------------------------------------------------------------------
 
Finance income and other expenses       $       -    $       2    $      (2)
----------------------------------------------------------------------------

The change in finance income and other expenses for all periods
presented was primarily due to the impact of changes in foreign
exchange rates. 
Income Taxes  
A summary of our income taxes for the first quarter of 2014 compared
with the fourth quarter of 2013 is as follows:  


 
 
                           Three Months Ended        Three Months Ended     
                             March 31, 2014           December 31, 2013     
                        ------------------------- --------------------------
                                        Adjusted                   Adjusted 
($ millions, except             Net          Net           Net          Net 
 where noted)                Income    Income(1)        Income    Income(1) 
------------------------------------------------- --------------------------
 
Amount before income tax  $     220    $     210     $     173    $     203 
Income tax expense              (52)         (50)          (29)         (36)
------------------------------------------------- --------------------------
Amount after income tax   $     168    $     160     $     144    $     167 
------------------------------------------------- --------------------------
 
Effective tax rate               24%          24%           17%          18%
----------------------------------------------------------------------------
 
(1) This item is a non-GAAP measure that does not have any standardized     
    meaning prescribed by GAAP and therefore is unlikely to be comparable to
    similar measures presented by other companies. Refer to Additional      
    Information - Supplemental Non-GAAP Measures section for a description  
    of the non-GAAP measure and reconciliation to the most comparable GAAP  
    measure.                                                                

For the first quarter of 2014, the effective tax rate was 24% compared
with 17% for the fourth quarter of 2013. Adjusted net income
represents the amount that is attributable to Methanex shareholders
and excludes the mark-to-market impact of share-based compensation
and items that are considered by management to be non-operational.
The effective tax rate related to Adjusted net income was 24% for the
first quarter of 2014 compared with 18% for the fourth quarter of
2013. Entering the first quarter of 2014, all previously unrecognized
tax benefits in Canada and New Zealand were fully utilized, which
contributed to an increase in the effective tax rate.  
We earn the majority of our earnings in Trinidad, Egypt, Chile,
Canada and New Zealand. In Trinidad and Chile, the statutory tax rate
is 35% and in Egypt, the statutory tax rate is 25%. The statutory
rates in Canada and New Zealand are 25% and 28%, respectively. 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.  
SUPPLY/DEMAND FUNDAMENTALS  


 
 
             Methanex Non-Discounted Regional Posted Prices (1)             
                                  Apr          Mar          Feb          Jan
(US$ per tonne)                  2014         2014         2014         2014
----------------------------------------------------------------------------
 
United States                     599          632          632          632
Europe (2)                        565          610          610          610
Asia Pacific                      480          590          590          590
----------------------------------------------------------------------------
(1) Discounts from our posted prices are offered to customers based on      
    various factors.                                                        
(2) EUR412 for Q2 2014 (Q1 2014 - EUR450) converted to United States        
    dollars.                                                                
----------------------------------------------------------------------------

We estimate that methanol demand, excluding methanol demand from
integrated methanol to olefins facilities, is currently approximately
57 million tonnes on an annualized basis.  
Entering the first quarter of 2014, we experienced rising methanol
prices due to continued supply constraints, primarily in Asia
Pacific. During the quarter, several plants returned to operation and
pricing began to moderate. Our average non-discounted price in the
first quarter of 2014 was $613 per tonne compared with $557 per tonne
in the fourth quarter of 2013. We recently announced our North
American non-discounted price for May at $565 per tonne and our Asia
Pacific price at $460 per tonne.  
The outlook for methanol demand growth continues to be strong.
Traditional chemical derivatives consume about 60% of global methanol
demand and growth is correlated to industrial production.  
Energy-related applications consume the remaining 40% of global
methanol demand, and the wide disparity between the price of crude
oil and that of natural gas and coal has resulted in an increased use
of methanol in energy-related applications, such as direct methanol
blending into gasoline, DME and biodiesel production. Growth of
direct methanol blending into gasoline in China has been particularly
strong and we believe that future growth in this application is
supported by numerous provincial fuel-blending standards, such as M15
or M85 (15% methanol and 85% methanol, respectively).  
China is also leading the commercialization of methanol's use as a
feedstock to manufacture olefins. The use of methanol to produce
olefins, at current energy prices, is proving to be cost competitive
relative to the traditional production of olefins from naphtha. There
are now three methanol-to-olefins (MTO) plants operating in China
which are dependent on merchant methanol supply and which have the
capacity to consume over 3 million tonnes of methanol annually. There
are other MTO plants which are integrated and purchase methanol to
supplement their production when required. We believe demand
potential into energy-related applications and olefins production
will continue to grow.  
The methanol price will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand. Over the next few
years, there is a modest level of new capacity expected to come
on-stream relative to demand growth expectations. We are relocating
two idle Chile facilities to Geismar, Louisiana and are targeting to
be producing methanol from the first 1.0 million tonne facility by
late 2014 and the second 1.0 million tonne facility in early 2016. A
1.3 million tonne Celanese plant is currently under construction in
Bishop, Texas. We expect that production from new capacity in China
will be consumed in that country and that higher cost production
capacity in China will need to operate in order to satisfy demand
growth. 
LIQUIDITY AND CAPIT
AL RESOURCES  
Cash flows from operating activities in the first quarter of 2014
increased by $17 million to $179 million compared with $162 million
for the fourth quarter of 2013 and increased by $61 million compared
to $118 million for the first quarter of 2013. The changes in cash
flows from operating activities resulted from changes in the
following:  


 
 
                                                  Q1 2014           Q1 2014 
                                            compared with     compared with 
($ millions)                                      Q4 2013           Q1 2013 
----------------------------------------------------------------------------
 
Change in Adjusted EBITDA (attributable                                     
 to Methanex shareholders)                  $          10     $         106 
Exclude change in Adjusted EBITDA of                                        
 associate (Atlas)                                      9                (8)
Cash flows attributable to non-                                             
 controlling interests                                 10                23 
Non-cash working capital                               (9)              (44)
Income taxes paid                                       4                (2)
Share-based payments                                  (16)              (19)
Other                                                   9                 5 
----------------------------------------------------------------------------
Increase in cash flows from operating                                       
 activities                                 $          17     $          61 
----------------------------------------------------------------------------

During the first quarter of 2014, we paid a quarterly dividend of $0.20
per share, or $19 million. Additionally, on April 29, 2014, the Board
of Directors approved a 25% increase to our quarterly dividend to
shareholders, from $0.20 to $0.25 per share per quarter. The
increased dividend will apply commencing with the dividend payable
June 30, 2014 to holders of common shares of record on June 16, 2014. 
On April 29, 2014, the Board of Directors approved a 5% normal course
issuer bid, which allows us to repurchase for cancellation up to 4.8
million shares. 
We operate in a highly competitive commodity industry and believe it
is appropriate to maintain a conservative balance sheet and retain
financial flexibility. At March 31, 2014, our cash balance was $709
million, including $52 million related to the non-controlling
interest in Egypt. 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. We have a strong
balance sheet and an undrawn $400 million credit facility provided by
highly rated financial institutions that expires in mid-2016.  
Our planned capital maintenance expenditure program directed towards
maintenance, turnarounds and catalyst changes for existing operations
is currently estimated to total approximately $140 million to the end
of 2015. Capital expenditures during the first quarter, excluding the
Geismar projects, were $15 million. We are relocating two methanol
plants from our Chile site to Geismar, Louisiana. During the first
quarter of 2014, capital expenditures related to the Geismar projects
were $130 million, excluding capitalized interest. The remaining
budgeted capital expenditures related to the Geismar projects are
$505 million, excluding capitalized interest.  
We believe we are well positioned to meet our financial commitments,
invest to grow the Company and continue to deliver on our commitment
to return excess cash to shareholders. 
SHORT-TERM OUTLOOK  
Entering the second quarter, methanol prices have moderated with
additional supply re-entering the market, primarily in Asia Pacific.
The methanol price will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand. We believe that
our financial position and financial flexibility, outstanding global
supply network and competitive-cost position will provide a sound
basis for Methanex to continue to be the leader in the methanol
industry and to invest to grow the Company. 
CONTROLS AND PROCEDURES  
For the three months ended March 31, 2014, no changes were made in
our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting. 
ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES  
In addition to providing measures prepared in accordance with
International Financial Reporting Standards (IFRS), we present
certain supplemental non-GAAP measures. These are Adjusted EBITDA,
Adjusted net income, Adjusted net income per common share and
operating income. These measures do not have any standardized meaning
prescribed by generally accepted accounting principles (GAAP) and
therefore are unlikely to be comparable to similar measures presented
by other companies. These supplemental non-GAAP measures are provided
to assist readers in determining our ability to generate cash from
operations and improve the comparability of our results from one
period to another. We believe these measures are useful in assessing
operating performance and liquidity of the Company's ongoing business
on an overall basis. We also believe Adjusted EBITDA is frequently
used by securities analysts and investors when comparing our results
with those of other companies. 
Adjusted EBITDA (attributable to Methanex shareholders)  
Adjusted EBITDA differs from the most comparable GAAP measure, net
income attributable to Methanex shareholders, because it excludes
depreciation and amortization, finance costs, finance income and
other expenses, income tax expense, mark-to-market impact of
share-based compensation, Geismar project relocation expenses and
charges and write-off of oil and gas rights. Adjusted EBITDA includes
an amount representing our 63.1% interest in the Atlas facility and
our 50% interest in the methanol facility in Egypt.  
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 share appreciation rights, tandem share
appreciation rights, deferred share units, restricted share units and
performance share units. The mark-to-market impact related to
performance share units that is excluded from Adjusted EBITDA and
Adjusted net income is calculated as the difference between the grant
date value determined using a Methanex total shareholder return
factor of 100% and the fair value recorded at each period end. As
share-based awards will be settled in future periods, the ultimate
value of the units is unknown at the date of grant and therefore the
grant date value recognized in Adjusted EBITDA and Adjusted net
income may differ from the total settlement cost.  
The following table shows a reconciliation from net income
attributable to Methanex shareholders to Adjusted EBITDA: 


 
 
                                                Three Months Ended          
                                      --------------------------------------
                                           Mar 31       Dec 31       Mar 31 
($ millions)                                 2014         2013         2013 
----------------------------------------------------------------------------
 
Net income attributable to Methanex                                         
 shareholders                           $     145    $     128    $      60 
  Mark-to-market impact of share-based                                      
   compensation                                18           37           31 
  Depreciation and amortization                35           35           30 
  Write-off of oil and gas rights               -            8            - 
  Financ
e costs                                11           13           15 
  Finance income and other expenses             -           (2)           2 
  Income tax expense                           52           29           12 
  Earnings of associate, excluding                                          
   amount included in Adjusted EBITDA                                       
   (1)                                          9            9            8 
  Non-controlling interests adjustment                                      
   (1)                                        (15)         (12)          (9)
----------------------------------------------------------------------------
Adjusted EBITDA (attributable to                                            
 Methanex shareholders)                 $     255    $     245    $     149 
----------------------------------------------------------------------------
 
(1) These adjustments represent depreciation and amortization, finance      
    costs, finance income and other expenses and income tax expense         
    associated with the non-controlling interest in the methanol facility in
    Egypt and our 63.1% interest in the Atlas methanol facility.            

Adjusted Net Income and Adjusted Net Income per Common Share  
Adjusted net income and Adjusted net income per common share are
non-GAAP measures because they exclude the mark-to-market impact of
share-based compensation and items that are considered by management
to be non-operational, including Geismar project relocation expenses
and charges and write-off of oil and gas rights. The following table
shows a reconciliation of net income attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
net income per common share:  


 
 
                                                Three Months Ended          
                                      --------------------------------------
($ millions except number of shares        Mar 31       Dec 31       Mar 31 
 and per share amounts)                      2014         2013         2013 
----------------------------------------------------------------------------
 
Net income attributable to Methanex                                         
 shareholders                           $     145    $     128    $      60 
  Mark-to-market impact of share-based                                      
   compensation                                18           37           31 
  Write-off of oil and gas rights               -            8            - 
  Income tax recovery related to above                                      
   items                                       (3)          (6)          (3)
----------------------------------------------------------------------------
Adjusted net income                     $     160    $     167    $      88 
----------------------------------------------------------------------------
Diluted weighted average shares                                             
 outstanding (millions)                        97           97           96 
Adjusted net income per common share    $    1.65    $    1.72    $    0.92 
----------------------------------------------------------------------------

Operating Income  
Operating income is reconciled directly to a GAAP measure in our
consolidated statements of income. 
QUARTERLY FINANCIAL DATA (UNAUDITED)  
A summary of selected financial information for the prior eight
quarters is as follows: 


 
 
                                              Three Months Ended            
                                 -------------------------------------------
($ millions, except per share        Mar 31     Dec 31     Sep 30     Jun 30
 amounts)                              2014       2013       2013       2013
----------------------------------------------------------------------------
 
Revenue                            $    968   $    881   $    758   $    733
Adjusted EBITDA (1,2)                   255        245        184        157
Net income (1)                          145        128         87         54
Adjusted net income (1,2)               160        167        117         99
Basic net income per common share                                           
 (1)                                   1.51       1.33       0.91       0.57
Diluted net income per common                                               
 share (1)                             1.50       1.32       0.90       0.56
Adjusted net income per share                                               
 (1,2)                                 1.65       1.72       1.22       1.02
----------------------------------------------------------------------------
 

 
 
                                              Three Months Ended            
                                 -------------------------------------------
($ millions, except per share        Mar 31     Dec 31     Sep 30     Jun 30
 amounts)                              2013       2012       2012       2012
----------------------------------------------------------------------------
 
Revenue                            $    652   $    668   $    608   $    613
Adjusted EBITDA (1,2)                   149        119        104        113
Net income (loss) (1)                    60       (140)        (3)        52
Adjusted net income (1,2)                88         61         36         44
Basic net income (loss) per                                                 
 common share (1)                      0.64      (1.49)     (0.03)      0.56
Diluted net income (loss) per                                               
 common share (1)                      0.63      (1.49)     (0.03)      0.50
Adjusted net income per share                                               
 (1,2)                                 0.92       0.64       0.38       0.47
----------------------------------------------------------------------------
 
(1) Attributable to Methanex Corporation shareholders.                      
(2) These items are non-GAAP measures that do not have any standardized     
    meaning prescribed by GAAP and therefore are unlikely to be comparable  
    to similar measures presented by other companies. Refer to Additional   
    Information - Supplemental Non-GAAP Measures section for a description  
    of each non-GAAP measure and reconciliations to the most comparable GAAP
    measures.                                                               

FORWARD-LOOKING INFORMATION WARNING  
This First Quarter 2014 Management's Discussion and Analysis ("MD&A")
as well as comments made during the First Quarter 2014 investor
conference call contain forward-looking statements with respect to us
and our industry. These statements relate to future events or our
future performance. All statements other than statements of
historical fact are forward-looking statements. Statements that
include the words "believes", "expects", "may", "will", "should",
"potential", "estimates", "anticipates", "aim", "goal" or other
comparable terminology and similar statements of a future or
forward-looking nature identify forward-looking statements.  
More particularly and without limitation, any statements regarding
the following are forward-looking statements: 


 
 
--  expected demand for methanol and its derivatives, 
--  expected new methanol supply or restart of idled capacity and timing for
    start-up of the same, 
--  expected shutdowns (either temporary or permanent) or restarts of
    existing methanol supply (including our own facilities), including,
    without limitation, the timing and length of planned maintenance
    outages, 
--  expected methanol and energy prices, 
--  expected levels of methanol purchases from traders or other third
    parties, 
--  expected levels, timing and availability of economically priced natural
    gas supply to each of our plants, 
--  capital committed by third parties towards future natural gas
    exploration 
and development in the vicinity of our plants, 
--  our expected capital expenditures, 
--  anticipated operating rates of our plants, 
--  expected operating costs, including natural gas feedstock costs and
    logistics costs, 
--  expected tax rates or resolutions to tax disputes, 
--  expected cash flows, earnings capability and share price, 
--  availability of committed credit facilities and other financing, 
--  ability to meet covenants or obtain or continue to obtain waivers
    associated with our long-term debt obligations, including, without
    limitation, the Egypt limited recourse debt facilities that have
    conditions associated with the payment of cash or other distributions
    and the finalization of certain land title registration and related
    mortgages that require action by Egyptian governmental entities, 
--  our shareholder distribution strategy and anticipated distributions to
    shareholders, 
--  commercial viability and timing of, or our ability to execute, future
    projects, plant restarts, capacity expansions, plant relocations, or
    other business initiatives or opportunities, including the planned
    relocation of idle Chile methanol plants to Geismar, Louisiana
    ("Geismar"), 
--  our financial strength and ability to meet future financial commitments,
--  expected global or regional economic activity (including industrial
    production levels), 
--  expected outcomes of litigation or other disputes, claims and
    assessments, 
--  expected actions of governments, government agencies, gas suppliers,
    courts, tribunals or other third parties, and 
--  expected impact on our operations in Egypt or our financial condition as
    a consequence of civil unrest or actions taken or inaction by the
    Government of Egypt and its agencies. 

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

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


 
 
--  conditions in the methanol and other industries including fluctuations
    in the supply, demand for and price of methanol and its derivatives,
    including demand for methanol for energy uses, 
--  the price of natural gas, coal, oil and oil derivatives, 
--  the success of natural gas exploration and development activities in
    southern Chile, 
--  our ability to obtain natural gas feedstock on commercially acceptable
    terms to underpin current operations and future production growth
    opportunities, 
--  the ability to successfully 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 our Geismar project,
    including cost pressures arising from labour costs, 
--  competing demand for natural gas, especially with respect to domestic
    needs for gas and electricity in Chile and Egypt, 
--  actions of governments and governmental authorities, including, without
    limitation, the 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, 
--  satisfaction of conditions precedent contained in the Geismar 1 natural
    gas supply agreement, and 
--  other risks described in our 2013 Management's Discussion and Analysis
    and this First Quarter 2014 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 anticipated in forward-looking statements
may not occur and we do not undertake to update forward-looking
statements except as required by applicable securities laws. 
HOW WE ANALYZE OUR BUSINESS  
Our operations consist of a single operating segment - the production
and sale of methanol. We review our results of operations by
analyzing changes in the components of Adjusted EBITDA (refer to the
Additional Information - Supplemental Non-GAAP Measures section 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
("Methanex-produced methanol"), we also purchase and re-sell methanol
produced by others ("purchased methanol") and we sell methanol on a
commission basis. We analyze the results of all methanol sales
together, excluding commission sales volumes. 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 COST  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.                                
 
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 volumes   
           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 and Adjusted net
income per common share include an amount representing our 63.1%
equity share in Atlas.  
On December 9, 2013, we completed the sale of a 10% equity interest
in the Egypt methanol facility. At March 31, 2014, 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 with the other investors'
interests in the methanol facility being presented as
"non-controlling interests". For purposes of analyzing our business,
Adjusted EBITDA, Adjusted net income and Adjusted net income per
common share exclude the amount associated with the other investors'
non-controlling interests. 


 
 
Methanex Corporation                                                        
Consolidated Statements of Income (unaudited)                               
(thousands of U.S. dollars, except number of common shares and per share    
 amounts)                                                                   
 
                                                  Three Months Ended        
                                           ---------------------------------
                                                    Mar 31           Mar 31 
                                                      2014             2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Revenue                                      $     968,478    $     651,899 
Cost of sales and operating expenses              (709,872)        (527,995)
Depreciation and amortization                      (34,811)         (29,817)
----------------------------------------------------------------------------
Operating income                                   223,795           94,087 
Earnings of associate (note 4)                       7,411            1,286 
Finance costs (note 6)                             (10,838)         (15,451)
Finance income and other expenses                     (363)          (1,627)
----------------------------------------------------------------------------
Income before income taxes                         220,005           78,295 
Income tax expense:                                                         
  Current                                          (26,378)          (4,391)
  Deferred                                         (25,288)          (7,671)
----------------------------------------------------------------------------
                                                   (51,666)         (12,062)
----------------------------------------------------------------------------
Net income                                   $     168,339    $      66,233 
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex Corporation shareholders                145,102           60,267 
  Non-controlling interests                         23,237            5,966 
----------------------------------------------------------------------------
                                             $     168,339    $      66,233 
----------------------------------------------------------------------------
 
Income per share for the period                                             
 attributable to Methanex Corporation                                       
 shareholders                                                               
  Basic net income per common share          $        1.51    $        0.64 
  Diluted net income per common share        $        1.50    $        0.63 
 
Weighted average number of common shares                                    
 outstanding (note 7)                           96,298,231       94,514,188 
Diluted weighted average number of common                                   
 shares outstanding (note 7)                    96,997,489       95,717,869 
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Comprehensive Income (unaudited)                 
(thousands of U.S. dollars)                                                 
 
                                                  Three Months Ended        
                                           ---------------------------------
                                                    Mar 31           Mar 31 
                                                      2014             2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Net income                                   $     168,339    $      66,233 
  Other comprehensive income, net of taxes:                                 
    Items that may be reclassified to                                       
     income:                                                                
      Change in fair value of forward                                       
       exchange contracts                              148             (184)
      Change in fair value of interest rate                                 
       swap contracts                                
 (266)            (296)
      Realized loss on interest rate swap                                   
       contracts reclassified to finance                                    
       costs                                         2,213            2,591 
----------------------------------------------------------------------------
                                                     2,095            2,111 
----------------------------------------------------------------------------
Comprehensive income                         $     170,434    $      68,344 
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex Corporation shareholders                145,728           61,460 
  Non-controlling interests                         24,706            6,884 
----------------------------------------------------------------------------
                                             $     170,434    $      68,344 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Financial Position (unaudited)                   
(thousands of U.S. dollars)                                                 
 
                                                    Mar 31           Dec 31 
AS AT                                                 2014             2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                  $     709,213    $     732,736 
  Trade and other receivables                      575,987          534,130 
  Inventories (note 2)                             304,766          313,809 
  Prepaid expenses                                  22,372           20,533 
----------------------------------------------------------------------------
                                                 1,612,338        1,601,208 
Non-current assets:                                                         
  Property, plant and equipment (note 3)         2,344,819        2,230,938 
  Investment in associate (note 4)                 223,662          216,095 
  Other assets                                      66,044           65,253 
----------------------------------------------------------------------------
                                                 2,634,525        2,512,286 
----------------------------------------------------------------------------
                                             $   4,246,863    $   4,113,494 
----------------------------------------------------------------------------
 
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Trade, other payables and accrued                                         
   liabilities                               $     650,407    $     618,181 
  Current maturities on long-term debt                                      
   (note 5)                                         42,724           41,504 
  Current maturities on other long-term                                     
   liabilities                                     106,665           85,648 
----------------------------------------------------------------------------
                                                   799,796          745,333 
Non-current liabilities:                                                    
  Long-term debt (note 5)                        1,106,942        1,126,802 
  Other long-term liabilities                      120,462          188,520 
  Deferred income tax liabilities                  173,493          147,506 
----------------------------------------------------------------------------
                                                 1,400,897        1,462,828 
Equity:                                                                     
  Capital stock                                    541,275          531,573 
  Contributed surplus                                3,087            4,994 
  Retained earnings                              1,252,507        1,126,700 
  Accumulated other comprehensive loss              (4,918)          (5,544)
----------------------------------------------------------------------------
  Shareholders' equity                           1,791,951        1,657,723 
  Non-controlling interests                        254,219          247,610 
----------------------------------------------------------------------------
  Total equity                                   2,046,170        1,905,333 
----------------------------------------------------------------------------
                                             $   4,246,863    $   4,113,494 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Changes in Equity (unaudited)                    
(thousands of U.S. dollars, except number of common shares)                 
 
                                                                Accumulated 
                 Number of              Contri-                       Other 
                    Common   Capital      buted    Retained   Comprehensive 
                    Shares     Stock    Surplus    Earnings            Loss 
----------------------------------------------------------------------------
Balance,                                                                    
 December 31,                                                               
 2012           94,309,970 $ 481,779 $   15,481  $  805,661  $      (13,045)
Net income               -         -          -      60,267               - 
Other                                                                       
 comprehensive                                                              
 income                  -         -          -           -           1,193 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options           -         -        223           -               - 
Issue of shares                                                             
 on exercise of                                                             
 stock options     587,689    13,088          -           -               - 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options           -     4,132     (4,132)          -               - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders            -         -          -     (17,534)              - 
Distributions to                                                            
 non-controlling                       
                                     
 interests               -         -          -           -               - 
Equity                                                                      
 contributions                                                              
 by non-                                                                    
 controlling                                                                
 interests               -         -          -           -               - 
----------------------------------------------------------------------------
Balance, March                                                              
 31, 2013       94,897,659   498,999     11,572     848,394         (11,852)
Net income               -         -          -     268,900               - 
Other                                                                       
 comprehensive                                                              
 income                  -         -          -       5,362           4,855 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options           -         -        499           -               - 
Sale of partial                                                             
 interest in                                                                
 subsidiary              -         -          -      61,447           1,453 
Issue of shares                                                             
 on exercise of                                                             
 stock options   1,203,310    25,497          -           -               - 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options           -     7,077     (7,077)          -               - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders            -         -          -     (57,403)              - 
Distributions to                                                            
 non-controlling                                                            
 interests               -         -          -           -               - 
----------------------------------------------------------------------------
Balance,                                                                    
 December 31,                                                               
 2013           96,100,969   531,573      4,994   1,126,700          (5,544)
Net income               -         -          -     145,102               - 
Other                                                                       
 comprehensive                                                              
 income                  -         -          -           -             626 
Compensation                                                                
 expense                                                                    
 recorded for                                                               
 stock options           -         -        227           -               - 
Issue of shares                                                             
 on exercise of                                                             
 stock options     422,987     7,568          -           -               - 
Reclassification                                                            
 of grant date                                                              
 fair value on                                                              
 exercise of                                                                
 stock options           -     2,134     (2,134)          -               - 
Dividend                                                                    
 payments to                                                                
 Methanex                                                                   
 Corporation                                                                
 shareholders            -         -          -     (19,295)              - 
Distributions to                                                            
 non-controlling                                                            
 interests               -         -          -           -               - 
----------------------------------------------------------------------------
Balance, March                                                              
 31, 2014       96,523,956 $ 541,275 $    3,087  $1,252,507  $       (4,918)
----------------------------------------------------------------------------
 
                                                Non-                   
                     Shareholders'       Controlling             Total 
                            Equity         Interests            Equity 
-----------------------------------------------------------------------
Balance,                                                               
 December 31,                                                          
 2012            $       1,289,876  $        187,861  $      1,477,737 
Net income                  60,267             5,966            66,233 
Other                                                                  
 comprehensive                                                         
 income                      1,193               918             2,111 
Compensation                                                           
 expense                                                               
 recorded for                                                          
 stock options                 223                 -               223 
Issue of shares                                                        
 on exercise of                                                        
 stock options              13,088                 -            13,088 
Reclassification                                                       
 of grant date                                                         
 fair value on                                                         
 exercise of                                                           
 stock options                   -                 -                 - 
Dividend                                                               
 payments to                                                           
 Methanex                                                              
 Corporation                                                           
 shareholders              (17,534)                -           (17,534)
Distributions to                                                       
 non-controlling                                                       
 interests                       -            (5,265)           (5,265)
Equity                                                                 
 contributions                                                         
 by non-                                                               
 controlling                                                           
 interests                       -             1,000             1,000 
-----------------------------------------------------------------------
Balance, March                                                         
 31, 2013                1,347,113           190,480         1,537,593 
Net income                 268,900            41,867           310,767 
Other                                                                  
 comprehensive                                                         
 income                     10,217             2,849            13,066 
Compensation                                                           
 expense                                                               
 recorded for                                                          
 stock options                 499                 -               499 
Sale of partial                                                        
 interest in                                                           
 subsidiary                 62,900            47,100           110,000 
Issue of shares                                                        
 on exercise of                                                        
 stock options              25,497                 -            25,497 
Reclassification                                                       
 of grant date                                                         
 fair value on                                                         
 exercise of                                                           
 stock options                   -                 -                 - 
Dividend                                                               
 payments to                                                           
 Methanex                                                              
 Corporation                                                           
 shareholders              (57,403)                -           (57,403)
Distributions to                                                       
 non-controlling                                                       
 interests                       -           (34,686)          (34,686)
-----------------------------------------------------------------------
Balance,                                                               
 December 31,                                                          
 2013                    1,657,723           247,610         1,905,333 
Net income                 145,102            23,237           168,339 
Other                                                                  
 comprehensive                                                         
 income                        626             1,469             2,095 
Compensation                                                           
 expense                                                               
 recorded for                                                          
 stock options                 227                 -               227 
Issue of shares                                                        
 on exercise of                                                        
 stock options               7,568                 -             7,568 
Reclassification                                                       
 of grant date                                                         
 fair value on                                                         
 exercise of                                                           
 stock options                   -                 -                 - 
Dividend                                                               
 payments to                                                           
 Methanex                                                              
 Corporation                                                           
 shareholders              (19,295)                -           (19,295)
Distributions to                                                       
 non-controlling                                                       
 interests                       -           (18,097)          (18,097)
-----------------------------------------------------------------------
Balance, March                                                         
 31, 2014        $       1,791,951  $        254,219  $      2,046,170 
-----------------------------------------------------------------------
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Consolidated Statements of Cash Flows (unaudited)                           
(thousands of U.S. dollars)                                                 
 
                                                  Three Months Ended        
                                           ---------------------------------
                                                    Mar 31           Mar 31 
                                                      2014             2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
CASH FLOWS FROM OPERATING ACTIVITIES                                        
  Net income                                 $     168,339    $      66,233 
  Deduct earnings of associate                      (7,411)          (1,286)
  Add (deduct) non-cash items:                                              
    Depreciation and amortization                   34,811           29,817 
    Income tax expense                              51,666           12,062 
    Share based compensation expense                25,246           36,313 
    Finance costs                                   10,838           15,451 
    Other                                             (277)             464 
  Income taxes paid                                (11,358)          (8,783)
  Other cash payments, including share-                                     
   based compensation                              (34,709)         (17,555)
----------------------------------------------------------------------------
  Cash flows from operating activities                                      
   before undernoted                               237,145          132,716 
  Changes in non-cash working capital (note                                 
   9)                                              (58,074)         (15,037)
----------------------------------------------------------------------------
                                                   179,071          117,679 
----------------------------------------------------------------------------
 
CASH FLOWS FROM FINANCING ACTIVITIES                                        
  Dividend payments to Methanex Corporation                                 
   shareholders                                    (19,295)         (17,534)
  Interest paid, including interest rate                                    
   swap settlements                                (21,001)         (21,211)
  Repayment of long-term debt and limited                                   
   recourse debt                                   (19,520)         (18,267)
  Cash distributions to non-controlling                                     
   interests                                       (18,097)          (5,265)
  Proceeds from limited recourse debt                    -           10,000 
  Proceeds on issue of shares on exercise                                   
   of stock options                                  7,568           13,088 
  Other                                             (1,015)              81 
----------------------------------------------------------------------------
                                                   (71,360)         (39,108)
----------------------------------------------------------------------------
 
CASH FLOWS FROM INVESTING ACTIVITIES                                        
  Property, plant and equipment                    (15,828)         (33,619)
  Geismar plants under construction               (12
7,914)         (43,398)
  Other assets                                      (4,863)            (792)
  Changes in non-cash working capital                                       
   related to investing activities (note 9)         17,371           (1,296)
----------------------------------------------------------------------------
                                                  (131,234)         (79,105)
----------------------------------------------------------------------------
  Decrease in cash and cash equivalents            (23,523)            (534)
  Cash and cash equivalents, beginning of                                   
   period                                          732,736          727,385 
----------------------------------------------------------------------------
  Cash and cash equivalents, end of period   $     709,213    $     726,851 
----------------------------------------------------------------------------
 
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
 
Methanex Corporation                                                        
Notes to Condensed Consolidated Interim Financial Statements (unaudited)    
Except where otherwise noted, tabular dollar amounts are stated in thousands
of U.S. dollars.                                                            

1. Basis of presentation:  
Methanex Corporation (the Company) is an incorporated entity with
corporate offices in Vancouver, Canada. The Company's operations
consist of the production and sale of methanol, a commodity chemical.
The Company is the world's largest producer and supplier of methanol
to the major international markets of Asia Pacific, North America,
Europe and South America.  
These condensed consolidated interim financial statements are
prepared in accordance with International Accounting Standards (IAS)
34, Interim Financial Reporting, as issued by the International
Accounting Standards Board (IASB) on a basis consistent with those
followed in the most recent annual consolidated financial statements. 
These condensed consolidated interim financial statements do not
include all of the information required for full annual financial
statements and were approved and authorized for issue by the Audit,
Finance & Risk Committee of the Board of Directors on April 29, 2014. 
2. Inventories:  
Inventories are valued at the lower of cost, determined on a first-in
first-out basis, and estimated net realizable value. The amount of
inventories included in cost of sales and operating expenses and
depreciation and amortization for the three months ended March 31,
2014 is $691 million (2013 - $469 million). 
3. Property, plant and equipment:  


 
 
                   Buildings,                                               
                        Plant       Plants                                  
                Installations        Under    Oil & Gas                     
                  & Machinery Construction   Properties    Other       Total
----------------------------------------------------------------------------
 
Cost at March                                                               
 31, 2014       $   3,115,259   $  525,641  $    86,779  $83,598  $3,811,277
Accumulated                                                                 
 depreciation at                                                            
 March 31, 2014     1,349,657            -       79,085   37,716   1,466,458
----------------------------------------------------------------------------
Net book value                                                              
 at March 31,                                                               
 2014           $   1,765,602   $  525,641  $     7,694  $45,882  $2,344,819
----------------------------------------------------------------------------
 
Cost at December                                                            
 31, 2013       $   3,100,597   $  393,044  $    86,312  $82,556  $3,662,509
Accumulated                                                                 
 depreciation at                                                            
 December 31,                                                               
 2013               1,317,329            -       78,228   36,014   1,431,571
----------------------------------------------------------------------------
Net book value                                                              
 at December 31,                                                            
 2013           $   1,783,268   $  393,044  $     8,084  $46,542  $2,230,938
----------------------------------------------------------------------------

The Company is relocating two idle Chile facilities to Geismar,
Louisiana with Geismar 1 targeted to be producing methanol by late
2014 and Geismar 2 in early 2016. During the three months ended March
31, 2014, the Company incurred capital expenditures related to the
Geismar projects of $130 million, excluding capitalized interest. The
remaining budgeted capital expenditures for these projects are $505
million, excluding capitalized interest. 
4. Interest in Atlas joint venture:  
a) The Company has a 63.1% equity interest in Atlas Methanol Company
Unlimited (Atlas). Atlas owns a 1.8 million tonne per year methanol
production facility in Trinidad. The Company accounts for its
interest in Atlas using the equity method. Summarized financial
information of Atlas (100% basis) is as follows:  


 
 
                                                    Mar 31           Dec 31 
Consolidated statements of financial                                        
 position as at                                       2014             2013 
----------------------------------------------------------------------------
 
Cash and cash equivalents                    $      58,539    $      20,776 
Other current assets                               137,892          161,765 
Non-current assets                                 370,686          378,890 
Current liabilities                                (43,694)         (47,359)
Long-term debt, including current                                           
 maturities                                        (56,752)         (56,752)
Other long-term liabilities, including                                      
 current maturities                               (134,336)        (136,730)
----------------------------------------------------------------------------
Net assets at 100%                           $     332,335    $     320,590 
----------------------------------------------------------------------------
 
Net assets at 63.1%                          $     209,703    $     202,292 
Long-term receivable from Atlas                     13,959           13,803 
----------------------------------------------------------------------------
 
Investment in associate                      $     223,662    $     216,095 
----------------------------------------------------------------------------
 
                                                  Three Months Ended        
                                           ---------------------------------
                                                    Mar 31           Mar 31 
Consolidated statements of income                     2014             2013 
----------------------------------------------------------------------------
 
Revenue                                      $     116,027    $      85,366 
Cost of sales and depreciation and                                          
 amortization                                      (98,398)         (79,298)
----------------------------------------------------------------------------
Operating income                                    17,629            6,068 
Finance costs, finance income and other                                     
 expenses                                           (2,750)    
      (3,421)
Income tax expense                                  (3,134)            (609)
----------------------------------------------------------------------------
Net earnings at 100%                         $      11,745    $       2,038 
----------------------------------------------------------------------------
Earnings of associate at 63.1%               $       7,411    $       1,286 
----------------------------------------------------------------------------

b) Contingent liability:  
The Board of Inland Revenue of Trinidad and Tobago has issued
assessments against Atlas in respect of the 2005, 2006 and 2007
financial years. All subsequent tax years remain open to assessment.
The assessments relate to the pricing arrangements of certain
long-term fixed price sales contracts that extend to 2014 and 2019
related to methanol produced by Atlas. Atlas has partial relief from
corporation income tax until mid-2014.  
The Company has lodged objections to the assessments. Based on the
merits of the cases and legal interpretation, management believes its
position should be sustained. 
5. Long-term debt:  


 
 
                                                    Mar 31           Dec 31 
As at                                                 2014             2013 
----------------------------------------------------------------------------
 
Unsecured notes                                                             
 
  $350 million at 3.25% due December 15,                                    
   2019                                      $     344,744    $     344,530 
  $250 million at 5.25% due March 1, 2022          246,736          246,650 
  $150 million at 6.00% due August 15, 2015        149,644          149,581 
----------------------------------------------------------------------------
                                                   741,124          740,761 
Egypt limited recourse debt facilities             386,587          404,722 
Other limited recourse debt facilities              21,955           22,823 
----------------------------------------------------------------------------
Total long-term debt (1)                         1,149,666        1,168,306 
Less current maturities                            (42,724)         (41,504)
----------------------------------------------------------------------------
                                             $   1,106,942    $   1,126,802 
----------------------------------------------------------------------------

(1) Long-term debt is presented net of deferred financing fees. 
During the three months ended March 31, 2014, the Company has made
repayments on its Egypt limited recourse debt facilities of $18.6
million. The Company also made repayments on its other limited
recourse debt facilities of $0.9 million.  
At March 31, 2014, management believes the Company was in compliance
with all significant terms and default provisions related to
long-term debt obligations. 
6. Finance costs:  


 
 
                                                  Three Months Ended        
                                           ---------------------------------
                                                    Mar 31           Mar 31 
                                                      2014             2013 
----------------------------------------------------------------------------
 
Finance costs                                $      15,521    $      16,518 
Less capitalized interest related to                                        
 Geismar plants under construction                  (4,683)          (1,067)
----------------------------------------------------------------------------
                                             $      10,838    $      15,451 
----------------------------------------------------------------------------

Finance costs are primarily comprised of interest on borrowings and
finance lease obligations, the effective portion of interest rate
swaps designated as cash flow hedges, amortization of deferred
financing fees, and accretion expense associated with site
restoration costs. Interest during construction is capitalized until
the plant is substantially completed and ready for productive use.  
The Company has interest rate swap contracts on its Egypt limited
recourse debt facilities to swap the LIBOR-based interest payments
for an average aggregated fixed rate of 4.8% plus a spread on
approximately 75% of the Egypt limited recourse debt facilities for
the period to March 31, 2015. 
7. Net income per common share:  
Diluted net income per common share is calculated by considering the
potential dilution that would occur if outstanding stock options and,
under certain circumstances, tandem share appreciation rights (TSARs)
were exercised or converted to common shares.  
Outstanding TSARs may be settled in cash or common shares at the
holder's option and for purposes of calculating diluted net income
per common share, the more dilutive of the cash-settled and
equity-settled method is used, regardless of how the plan is
accounted for. Accordingly, TSARs that are accounted for using the
cash-settled method will require adjustments to the numerator and
denominator if the equity-settled method is determined to have a
dilutive effect on diluted net income per common share.  
Stock options and, if calculated using the equity-settled method,
TSARs are considered dilutive when the average market price of the
Company's common shares during the period disclosed exceeds the
exercise price of the stock option or TSAR. A reconciliation of the
denominator used for the purposes of calculating basic and diluted
net income per common share is as follows: 


 
 
                                                    Three Months Ended      
                                             -------------------------------
                                                      Mar 31          Mar 31
                                                        2014            2013
----------------------------------------------------------------------------
 
Denominator for basic net income per common                                 
 share                                            96,298,231      94,514,188
  Effect of dilutive stock options                   699,258       1,203,681
----------------------------------------------------------------------------
Denominator for diluted net income per common                               
 share                                            96,997,489      95,717,869
----------------------------------------------------------------------------

8. Share-based compensation:  
a) Share appreciation rights (SARs), tandem share appreciation rights
(TSARs) and stock options:  
(i) Outstanding units: 
Information regarding units outstanding at March 31, 2014 is as
follows: 


 
 
                              SARs                          TSARs           
                  ----------------------------  ----------------------------
                                      Weighted                      Weighted
(per share amounts   Number of         Average     Number of         Average
 in USD)                 Units  Exercise Price         Units  Exercise Price
----------------------------------------------  ----------------------------
 
Outstanding at                                                              
 December 31, 2013   1,093,117   $       32.02     1,858,585   $       31.83
  Granted              203,190           73.13       303,850           72.66
  Exercised           (190,229)          28.90      (283,750)          30.21
  Cancelled            (10,750)          33.95        (6,900)          35.69
----------------------------------------------  ----------------------------
Outstanding at                                                              
 March 31, 2014      1,095,328   $       40.17     1,871,785   $       38.69
----------------------------------------------  ------------
----------------
 
                                                    Stock Options           
                                         -----------------------------------
                                             Number of      Weighted Average
(per share amounts in USD)                       Units        Exercise Price
----------------------------------------------------------------------------
 
Outstanding at December 31, 2013             1,219,420        $        19.15
  Granted                                       45,600                 73.13
  Exercised                                   (422,987)                17.72
  Cancelled                                     (2,500)                35.90
  Expired                                      (22,835)                22.82
----------------------------------------------------------------------------
Outstanding at March 31, 2014                  816,698        $        22.75
----------------------------------------------------------------------------
 
                          Units Outstanding at          Units Exercisable at
                             March 31, 2014                March 31, 2014   
                   ----------------------------------  ---------------------
                       Weighted                                             
Range of Exercise       Average              Weighted               Weighted
 Prices               Remaining      Number   Average       Number   Average
(per share amounts  Contractual    of Units  Exercise     of Units  Exercise
 in USD)           Life (Years) Outstanding     Price  Exercisable     Price
-----------------------------------------------------  ---------------------
 
SARs:                                                                       
  $23.36 to 31.74           4.2     546,138 $   29.13      426,457 $   28.49
  $31.88 to 73.13           6.3     549,190     51.15      109,000     38.24
----------------------------------------------------------------------------
                            5.2   1,095,328 $   40.17      535,457 $   30.47
----------------------------------------------------------------------------
 
TSARs:                                                                      
  $23.36 to 31.74           4.1   1,026,745 $   28.91      812,678 $   28.18
  $31.88 to 73.13           6.3     845,040     50.57      180,560     38.10
----------------------------------------------------------------------------
                            5.1   1,871,785 $   38.69      993,238 $   29.98
----------------------------------------------------------------------------
Stock options:                                                              
  $6.33 to 25.22            2.1     388,035 $    8.76      388,035 $    8.76
  $28.43 to 73.13           3.4     428,663     35.41      307,163     29.69
----------------------------------------------------------------------------
                            2.7     816,698 $   22.75      695,198 $   18.01
----------------------------------------------------------------------------

(ii) Compensation expense related to SARs and TSARs:  
Compensation expense for SARs and TSARs is measured based on their
fair value and is recognized over the vesting period. Changes in fair
value each period are recognized in net income for the proportion of
the service that has been rendered at each reporting date. The fair
value at March 31, 2014 was $82.1 million compared with the recorded
liability of $72.3 million. The difference between the fair value and
the recorded liability of $9.8 million will be recognized over the
weighted average remaining vesting period of approximately 1.9 years.
The weighted average fair value was estimated at March 31, 2014 using
the Black-Scholes option pricing model.  
For the three months ended March 31, 2014, compensation expense
related to SARs and TSARs included an expense in cost of sales and
operating expenses of $18.2 million (2013 - expense of $17.0
million). This included an expense of $14.4 million (2013 - expense
of $15.0 million) related to the effect of the change in the
Company's share price for the three months ended March 31, 2014.  
(iii) Compensation expense related to stock options:  
For the three months ended March 31, 2014, compensation expense
related to stock options included in cost of sales and operating
expenses was $0.2 million (2013 - $0.2 million). The fair value of
each stock option grant was estimated on the grant date using the
Black-Scholes option pricing model. 
b) Deferred, restricted and performance share units:  
Deferred, restricted and performance share units outstanding at March
31, 2014 are as follows: 


 
 
                                   Number of       Number of      Number of 
                              Deferred Share      Restricted    Performance 
                                       Units     Share Units    Share Units 
----------------------------------------------------------------------------
 
Outstanding at December 31,                                                 
 2013                                346,814          44,131        946,446 
  Granted                              4,200           7,000        139,160 
  Granted performance                                                       
   factor(1)                               -               -         55,677 
  Granted in-lieu of                                                        
   dividends                           1,012             152          2,381 
  Redeemed                           (27,052)              -       (334,062)
  Cancelled                                -               -         (6,663)
----------------------------------------------------------------------------
Outstanding at March 31, 2014        324,974          51,283        802,939 
----------------------------------------------------------------------------
(1) Performance share units have a feature where the ultimate number of     
    units that vest are adjusted by a performance factor of the original    
    grant as determined by the Company's total shareholder return in        
    relation to a predetermined target over the period to vesting.          

Compensation expense for deferred, restricted and performance share
units is measured at fair value based on the market value of the
Company's common shares and is recognized over the vesting period.
Changes in fair value are recognized in net income for the proportion
of the service that has been rendered at each reporting date. The
fair value of deferred, restricted and performance share units at
March 31, 2014 was $77.7 million compared with the recorded liability
of $64.0 million. The difference between the fair value and the
recorded liability of $13.7 million will be recognized over the
weighted average remaining vesting period of approximately 1.6 years. 
For the three months ended March 31, 2014, compensation expense
related to deferred, restricted and performance share units included
in cost of sales and operating expenses was an expense of $6.8
million (2013 - expense of $19.1 million). This included an expense
of $3.1 million (2013 - expense of $15.7 million) related to the
effect of the change in the Company's share price for the three
months ended March 31, 2014.  
9. Changes in non-cash working capital:  
Changes in non-cash working capital for the three months ended March
31, 2014 were as follows: 


 
 
                                                  Three Months Ended        
                                           ---------------------------------
                                                    Mar 31           Mar 31 
                                                      2014             2013 
----------------------------------------------------------------------------
 
Decrease (increase) in non-cash working                                     
 capital:                                                                   
  Trade 
and other receivables                $     (41,857)   $     (24,428)
  Inventories                                        9,043          (33,127)
  Prepaid expenses                                  (1,839)           3,891 
  Trade, other payables and accrued                                         
   liabilities, including long-term                                         
   payables included in other long-term                                     
   liabilities                                       6,267           37,708 
----------------------------------------------------------------------------
                                                   (28,386)         (15,956)
Adjustments for items not having a cash                                     
 effect and working capital changes                                         
 relating to taxes and interest paid               (12,317)            (377)
----------------------------------------------------------------------------
Changes in non-cash working capital having                                  
 a cash effect                               $     (40,703)   $     (16,333)
----------------------------------------------------------------------------
 
These changes relate to the following                                       
 activities:                                                                
  Operating                                  $     (58,074)   $     (15,037)
  Investing                                         17,371           (1,296)
----------------------------------------------------------------------------
Changes in non-cash working capital          $     (40,703)   $     (16,333)
----------------------------------------------------------------------------

10. Financial instruments:  
Financial instruments are either measured at amortized cost or fair
value. Held-to-maturity investments, loans and receivables and other
financial liabilities are measured at amortized cost.
Held-for-trading financial assets and liabilities and
available-for-sale financial assets are measured on the Consolidated
Statements of Financial Position at fair value. Derivative financial
instruments are classified as held-for-trading and are recorded on
the Consolidated Statements of Financial Position at fair value
unless exempted. Changes in fair value of held-for-trading derivative
financial instruments are recorded in earnings unless the instruments
are designated as cash flow hedges.  
The euro hedges and Egypt interest rate swaps designated as cash flow
hedges are measured at fair value based on industry-accepted
valuation models and inputs obtained from active markets.  
The Egypt limited recourse debt facilities bear interest at LIBOR
plus a spread. The Company has interest rate swap contracts to swap
the LIBOR-based interest payments for an average aggregated fixed
rate of 4.8% plus a spread on approximately 75% of the Egypt limited
recourse debt facilities for the period to March 31, 2015. These
interest rate swaps had an outstanding notional amount of $302
million as at March 31, 2014. The notional amount decreases over the
expected repayment period. At March 31, 2014, these interest rate
swap contracts had a negative fair value of $13.1 million (December
31, 2013 - negative $19.8 million) recorded in current liabilities.
The fair value of these interest rate swap contracts will fluctuate
until maturity.  
The Company also designates as cash flow hedges forward exchange
contracts to sell euro at a fixed USD exchange rate. At March 31,
2014, the Company had outstanding forward exchange contracts
designated as cash flow hedges to sell a notional amount of EUR33.4
million in exchange for US dollars. The euro contracts had a positive
fair value of $0.2 million recorded in current liabilities. Changes
in fair value of derivative financial instruments designated as cash
flow hedges have been recorded in other comprehensive income.  
The carrying values of the Company's financial instruments
approximate their fair values, except as follows: 


 
 
                                                    March 31, 2014          
                                         -----------------------------------
As at                                       Carrying Value        Fair Value
----------------------------------------------------------------------------
 
Long-term debt excluding deferred                                           
 financing fees                            $     1,164,140   $     1,199,539
----------------------------------------------------------------------------

There is no publicly traded market for the limited recourse debt
facilities. The fair value disclosed on a recurring basis and
categorized as Level 2 within the fair value hierarchy is estimated
by reference to current market prices for debt securities with
similar terms and characteristics. The fair value of the unsecured
notes disclosed on a recurring basis and also categorized as Level 2
within the fair value hierarchy was estimated by reference to a
limited number of small transactions in March 2014. The fair value of
the Company's unsecured notes will fluctuate until maturity. 


 
 
Methanex Corporation                                                        
Quarterly History(unaudited)                                                
 
                   Q1 2014      2013        Q4        Q3        Q2        Q1
----------------------------------------------------------------------------
 
METHANOL SALES                                                              
 VOLUMES                                                                    
(thousands of                                                               
 tonnes)                                                                    
 
Methanex-                                                                   
 produced            1,228     4,304     1,190     1,045     1,039     1,030
Purchased                                                                   
 methanol              654     2,715       663       715       749       588
Commission sales                                                            
 (1)                   296       972       274       237       242       219
----------------------------------------------------------------------------
 
                     2,178     7,991     2,127     1,997     2,030     1,837
----------------------------------------------------------------------------
 
METHANOL                                                                    
 PRODUCTION                                                                 
(thousands of                                                               
 tonnes)                                                                    
 
New Zealand            500     1,419       400       349       361       309
Atlas, Trinidad                                                             
 (63.1%)               249       971       268       254       201       248
Titan, Trinidad        149       651       173       128       169       181
Egypt (50%) (2)        139       623       159       168       163       133
Medicine Hat           122       476        86       130       129       131
Chile                   67       204       108         6        29        61
----------------------------------------------------------------------------
 
                     1,226     4,344     1,194     1,035     1,052     1,063
----------------------------------------------------------------------------
 
AVERAGE REALIZED                                                            
 METHANOL PRICE                                                             
 (3)                                                                        
($/tonne)              524       441       493       438       425       412
($/gallon)            1.58      1.33      1.48      1.32      1.28      1.24
 
PER SHARE                                               
                    
 INFORMATION ($                                                             
 per share) (4)                                                             
Basic net income                                                            
 (loss)               1.51      3.46      1.33      0.91      0.57      0.64
Diluted net                                                                 
 income (loss)        1.50      3.41      1.32      0.90      0.56      0.63
Adjusted net                                                                
 income (5)           1.65      4.88      1.72      1.22      1.02      0.92
 
----------------------------------------------------------------------------
 
Methanex Corporation                                                        
Quarterly History(unaudited)                                                
 
                        2012          Q4          Q3          Q2          Q1
----------------------------------------------------------------------------
 
METHANOL SALES                                                              
 VOLUMES                                                                    
(thousands of                                                               
 tonnes)                                                                    
 
Methanex-                                                                   
 produced              4,039       1,059       1,053       1,001         926
Purchased                                                                   
 methanol              2,565         664         641         569         691
Commission sales                                                            
 (1)                     855         176         205         276         198
----------------------------------------------------------------------------
 
                       7,459       1,899       1,899       1,846       1,815
----------------------------------------------------------------------------
 
METHANOL                                                                    
 PRODUCTION                                                                 
(thousands of                                                               
 tonnes)                                                                    
 
New Zealand            1,108         378         346         210         174
Atlas, Trinidad                                                             
 (63.1%)                 826         180         255         264         127
Titan, Trinidad          786         189         186         196         215
Egypt (50%) (2)          557         129          62         164         202
Medicine Hat             481         132         117         118         114
Chile                    313          59          59          82         113
----------------------------------------------------------------------------
 
                       4,071       1,067       1,025       1,034         945
----------------------------------------------------------------------------
 
AVERAGE REALIZED                                                            
 METHANOL PRICE                                                             
 (3)                                                                        
($/tonne)                382         389         373         384         382
($/gallon)              1.15        1.17        1.12        1.15        1.15
 
PER SHARE                                                                   
 INFORMATION ($                                                             
 per share) (4)                                                             
Basic net income                                                            
 (loss)               (0.73)      (1.49)      (0.03)        0.56        0.24
Diluted net                                                                 
 income (loss)        (0.73)      (1.49)      (0.03)        0.50        0.23
Adjusted net                                                                
 income (5)             1.90        0.64        0.38        0.47        0.41
 
----------------------------------------------------------------------------
(1) Methanex-produced methanol includes volumes produced by Chile using     
    natural gas supplied from Argentina under a tolling arrangement.        
    Commission sales represent volumes marketed on a commission basis       
    related to the 36.9% of the Atlas methanol facility and the portion of  
    the Egypt methanol facility that we do not own.                         
 
(2) On December 9, 2013, we completed a sale of 10% equity interest in the  
    Egypt facility. Production figures prior to December 9, 2013 reflect a  
    60% interest.                                                           
 
(3) Average realized price is calculated as revenue, excluding commissions  
    earned and the Egypt non-controlling interest share of revenue but      
    including an amount representing our share of Atlas revenue, divided by 
    the total sales volumes of Methanex-produced (attributable to Methanex  
    shareholders) and purchased methanol.                                   
 
(4) Per share information calculated using amounts attributable to Methanex 
    shareholders.                                                           
 
(5) This item is a non-GAAP measure that does not have any standardized     
    meaning prescribed by GAAP and therefore is unlikely to be comparable to
    similar measures presented by other companies. Refer to Additional      
    Information - Supplemental Non-GAAP Measures section for a description  
    of the non-GAAP measure and reconciliation to the most comparable GAAP  
    measure.                                                                

  
Contacts:
Sandra Daycock
Director, Investor Relations
Methanex Corporation
604-661-2600 or Toll Free: 1 800 661 8851
Website: www.methanex.com
 
 
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