Earnings Call: Q3 2019

Oct 31, 2019

Ladies and gentlemen, thank you for standing by. Welcome to the Methanex Corporation Q3 2019 Earnings Call. I would now like to turn conference call. Our 2019 third quarter news release, management's discussion and analysis and financial statements can be accessed from the reports tab of the Investor Relations page on our website at methanex.com. I would like to remind our listeners that our comments and answers to your questions today may contain forward looking information. This information by its nature is subject to risks and uncertainties that may cause the stated outcomes to differ materially from the actual outcome. Certain material factors or assumptions were applied in drawing the conclusions or making the forecast or projections, which are included in the forward looking information. Please refer to our third quarter 2019 MD and A and to our 2018 annual report for more information. I would also like to caution our listeners that any projections provided today regarding Methanex's future financial performance are effective as of today's date. It is our policy not to comment on or update this guidance between quarters. For clarification, any references to revenue, EBITDA, cash flow or income made in today's remarks reflect our 63.1 percent economic interest in the Atlas Facility and our 50% economic interest in the Egypt facility. In addition, we report our adjusted EBITDA and adjusted net income to exclude the mark to market impact on share based compensation and the impact of certain items associated with specific identified events. We report these non GAAP measures in this way to make them a better measure of underlying operating performance, and we encourage analysts covering the company to report their estimates in this manner. I would now like to turn the call over to Methanex's President CEO, Mr. John Floren, for his comments and a question and answer period. Good morning. In the third quarter of 2019, we recorded adjusted EBITDA of $90,000,000 and adjusted net loss of $21,000,000 or $0.27 per share. Adjusted EBITDA was lower in the 3rd quarter compared to 2nd quarter, primarily because of lower average realized price, which is only partially offset by higher sales volume of Methanex produced methanol and improved costs compared to the second quarter. Our average realized price was $2.72 per tonne in the third quarter, which will reflect a decline of $54 per ton from the $3.26 per ton that we realized in the 2nd quarter as our posted prices were lower across all regions, and we recorded a discount rate of 17.5%. When prices declined, our discount rate tends to be higher our guidance of 15%. We estimate that the industry cost curve, which is set in China, is currently around $2.60 per ton and current prices in China are slightly below this range. We recently posted our November North American price, which remains unchanged at 3 40 $2 per tonne and our Asia Pacific price, which remains unchanged at $2.95 per tonne. Our European contract price is set on a quarterly basis and our 4th quarter posted price is per tonne. Methanol industry demand in the third quarter of 2019 increased slightly compared to the second quarter of 2019. Traditional chemical demand declined slightly as a result of planned and unplanned downstream outages. Nationwide safety and environmental inspections in China and a slowdown in manufacturing activity, particularly in the automotive and construction demand segments. Demand into energy related applications was strong as 2 new methanol to olefins or MTO plants with the combined capacity to consume 3,600,000 tons of methanol annually started up the end of June. This new MTO demand was partially offset by planned maintenance activities at some existing MTO plan. We continue to see steady operating team. We observed some high cost producers in China reduced operating rates in the quarter when spot prices dipped below the industry cost curve. We're excited to welcome 3 new ocean going vessels powered by methanol fuel technology to our waterfront shipping fleet during the quarter. These vessels can run on methanol, fuel oil, marine diesel or gas oil. We have 1 additional methanol powered vessel joining the fleet in the coming weeks, And with this addition, approximately 40% of our fleet will be capable of running on methanol fuel technology. Now turning to our operational results. In New Zealand, we post we produced 469,000 tons during the third quarter compared to 446,000 tons in the second quarter. Upstream natural gas producers in New Zealand are completing significant field development projects to increase production. However, we do not expect we are revising our guidance to approximately 80% operating rates for our New Zealand operations in 2020 or approximately 1,900,000 tons. In Trinidad, our plants operated well. We produced 474,000 tons during Q3 compared to 384,000 tons in Q2. Production was higher in the 3rd quarter as our 2nd quarter production was impacted by a turnover at the Titan plant and a short unplanned outage at our Atlas facility. We continue to guide to approximately 85% operating rates for our Trinidad operation. In Chile, we produced 146,000 tons during the third quarter of 2019 compared 290,000 tons during the second quarter. Production was lower in the third quarter as only the Chile IV plant operated during the quarter. Later late in the second quarter, we began the 1st phase of the refurbishment of our Chile 1 plant, which was scheduled to match lower natural gas deliveries during the Southern Hem year winter months. The Chile 1 plant restarted in early October, both plants are operating at high rates today We expect significantly higher production in the fourth quarter compared to the third quarter from our Chile facilities during their summer months when we receive higher gas deliveries. In addition, we were very pleased that will underpin approximately 25 percent of a 2 plant operation through the end of 2025. This gas agreement and the completion of the 1st phase of of the Chile 1 refurbishment reflect important steps to returning our assets in Chile back to full operating rates over the coming years at very low capital costs. In the near term, we continue to guide to annual operating rates of up to 75% of a 2 plant operation, or annual production of up to approximately 1,300,000 tons per year. In Egypt, we completed the necessary repairs at our facility and started our plant safely in August following the unplanned outage that began in early April. We estimate that the outage had an impact of approximately $20,000,000, reflecting our 50% share of Egypt on our Q3 adjusted EBITDA results. We have insurance that covers repairs and business interruption subject to deductibles. However, no insurance recoveries have been recorded today. Now, turning to our approach to We believe we're well positioned to meet our financial commitments, execute on our growth projects in Chile and Louisiana and deliver on our commitment to returning excess cash to shareholders through dividends and share repurchases. In terms of our financial commitments, our expected maintenance capital expenditures for the remainder of 2019 are estimated to be $30,000,000, primarily related to turnarounds planned for 2020. We continue to advance 2 near term growth projects to increase our production capacity for very low capital cost. In Chile, we continue to work with gas suppliers in Chile and Argentina, and they were optimistic they will be able to secure sufficient gas to underpin of full to plant operation over the medium term. In Louisiana, we continue to make progress on the debottlenecking opportunities at our existing Geismar I and Geismar II facilities to increase production by approximately 10% or 200,000 tons per year for a few tens of 1,000,000 of dollars. We are completing the necessary work required, including construction of a pipeline to bring CO2 to the site and the necessary work at the Geismar II plant. We expect that the incremental production capacity will be phased in over the next couple of years. We have begun construction of our 3rd plant in Geismar, Louisiana, an advantage growth opportunity for our company which we believe will create significant long term value for shareholders. Geismar III will be a 1,800,000 tonne methanol plant located adjacent to the Geismar I and Geismar II facilities. We expect this project will deliver outstanding returns based on a substantial capital and operating cost advantages. We believe we are well positioned to complete this project as we have a rigorous and well defined execution plan and experienced team in place and a robust and flexible financing plan. We ended the quarter with $857,000,000 in cash on the balance sheet In September, we issued $700,000,000 in 10 year notes and subsequent to the quarter, and we used $350,000,000 of the proceeds to repay the unsecured notes that were due at the end of this year. The remaining proceeds are at earmarked to fund Geismar 3 construction expenditures. In addition, we have a strong liquidity position with an $800,000,000 construction loan facility for the Geismar III project, that remains undrawn and a $300,000,000 undrawn revolver revolving credit facility to provide further financial flexibility to manage potential unforeseen business stress. As we have stated previously, we have a preference for a strategic partner for G3 project and we continue to pursue that option. Up to June 30, 2019, we repurchased nearly 1,100,000 shares of the approximately 3,900,000 shares approved under the normal course issuer bid. We did not repurchase shares in the 3rd quarter. Now turning to the outlook for our outlook for the 4th quarter. Based on posted methanol prices so far this quarter, we expect average realized prices in Q4 to be slightly lower than Q3. We expect production in the fourth quarter to be substantially higher than the third quarter as both of our Chile plants are operating during the Southern Hemisphere summer months and our Egypt plant is back online. We expect adjusted EBITDA in the fourth quarter to be higher than the 3rd quarter. I would now be happy to there will be a brief pause while the participants register for questions. Thank you for your patience. The first question is from Mike Leithead with Barclays. Please go ahead. I guess, first, if I look at the supply demand commentary you provided in your release, it appears you saw methanol demand up a bit sequentially. Prices were down call it 15%, 20% sequentially. So I was hoping maybe you could give a little bit more color on what seeing on the supply side and maybe where you're seeing incremental supply that drove such a move in the quarter? Yes. So I mentioned already pricing is slightly below the cost curve in China. We've seen the industry outside China operate very well the last two quarters and better than on average over the past number of years, which has caused a little bit extra supply. Got it. That makes sense. And then just on Geismar 3, could you provide us with any update on your discussions for central partner for this project. Is that still on the table at this point? Or any update there would be helpful. Our preference is to have a partner for the project and we're pursuing that We're in a discussion with a couple of parties about potential partnerships and, well, you should expect us to approach a couple of party a time to gauge interest. And discussions are ongoing and our preference is still to have a partner for about 30% of the project. Great. Thank you. Thank you. The next question is from Eric Petrie with Citi. Please go ahead. Hi, good morning, John. Good morning. Percent quarter over quarter. If I exclude the 2 new MTO plants, what was underlying demand growth or was it flat? Well, the traditional chemical, as we mentioned, was down slightly quarter over quarter. We saw quite a few unplanned and planned outages in the downstream. I already mentioned in my remarks that the automotive and construction sectors are a bit weak as well. Okay. And secondly, China methanol inventory still look like they remain elevated around 900,000 metric tons, where it's normalized levels? And is it an important driver to getting prices higher in the region? Yes, we see inventory levels at that level, but I wouldn't call it high because remember, we've got a lot more demand, as a result of the additions of MTO. I think the challenge in China today is lack of storage capability, even though demand has gone up significantly over the past year of storage has not kept pace. And the years we are experiencing, we see situations during the quarter where ships are lined up to try and unload cargoes because the tanks are full, and that's more of a, as a result of not enough storage with can lead to some pricing of distressed cargoes. So we think, we need to see more storage built to to meet the increased demand for Methanol, especially on the coast in China. Thank you. The next question is from Jacob Bout with CIBC. Please go ahead. I wanted to ask some questions around the gas contracts in Chile. And maybe a bit about the structure of these gas contracts, what was the origin? Is this conventional, nonconventional? And is there any price participation with the supplier? Yes. So these are, for about 25% of our requirements for the 2 plant operation. These are all this all gas is on the Chile side of the border, all unconventional. All the activity in Chile has been going after tight gas over the last five or sears. So this is tight gas. And there is a sharing mechanism in this contract that works similar to what I've guided to before, where about 1 third we share with the producer above $200 methanol. In that kind of ballpark. Okay. And then in Egypt, Can you quantify what the losses were from the outages in the quarter? And then how much are you actually expecting to be covered by insurance Yes. So we, in my opening remarks, I mentioned our half about $20,000,000 EBITDA impact in the quarter. There are some deductibles, like I mentioned, and, we have made an insurance claim, and we expect to be able to collect on an that insurance claim, less the deductibles. And is this going to extend into 4th quarter into 2020? The outage or the insurance claim? These outages losses that you're Yes. So with the plan came up back up in early October, it has been running extremely well since then. So the issue is behind us. And We've made the insurance claim and, whether we get it in Q4 or Q1, it's too early to tell, but, we expect to be able to collect on the insurance. Okay. Leave it there. Thanks John. Thank you. The next question is from Joel Jackson with BMO Capital Markets. Please go ahead. Hi, good morning, John. Good morning. John, would you want to give some sort of valuation, metrics around what you would be looking for in a 30% stake in some of the different conditions at G3. And then also as you've been starting to price out long lead time items, how maybe CapEx is faring expectations for CapEx is faring in that 1,300,000,000 dollars, $1,400,000,000 range for G3? Said, the Egypt plan came up in early August, not October. I apologize. But for G III, we're having partnership discussions, like I said, for about 30%. Not just financial considerations, but strategic considerations. We're talking to potentially other producers of methanol that may be looking build our own facilities somewhere around the world where we could partner together or a customer, somebody that might consuming 600,000 tons or so of methanol as several locations around the world where they eat methanol and this would help them backward integrate into some equity tons. So both of those kinds of conversations are ongoing, not with Chinese company, not with American companies, but other other parts of the world. What was the second part of your question, Joel? Now that you're getting some long lead time items trying to get price, how your CapEx is varying within that $1,210,100,000,000 range? Yes. So all of the long lead items that we placed the purchase orders for have come back either what we had been indicated in a quote or less. So, we're not seeing any surprises on the capital side. I'd say, I was just down there a few weeks ago. Some of the other competing projects that we expected to be FID ed over the coming months seemed to be somewhat delayed. So as far as productivity and labor availability and getting way more comfortable today than I was even 3 months ago about our ability to, acute on this project within the range of capital we provided. Thanks Joel. Thank you. The next question is from Hassan Ahmed with Alembic Global. Please go ahead. Sorry, I was on mute. John wanted to revisit the demand side of things. It seems that the energy related demand sort of up quite nicely quarter on quarter in Q3. And conventional demand was down a tad bit. So So, I mean, Celanese recently reported their Q3 numbers and they were talking about as much as 25% of their acetic asset capacity down in the quarter. And it seems also SIP can and Saudi, had a turnaround as well. So as I think through that and sort of think about the negative sort of conventional demand growth that you guys saw in Q3. Should we expect a lot of that demand growth to come back now in Q4? Yes. We saw the same thing you mentioned. We saw some unplanned and planned downtime from, especially on the chemical side of the equation. We do plan to see this part of the 5% demand for methanol, the chemical side to grow at IP and GDP growth rates. So provided we're seeing positive GDP and IP growth rates we would expect those demands to grow at those amounts. Now having said that quarter by quarter, they do vary. But usually Q4 in any given year is a a strong demand quarter for methanol, especially into chemical products. And, you know, we're not seeing anything that would change our beliefs around that. Understood. Understood. And as a follow-up, in your earlier remarks, you talked about sort of Chinese environmental inspections, again, sort of popping up in the like, are you seeing any sort of environmental sort of curtailments at all within the Chinese methanol industry? Yes, we're seeing some and not only in the methanol, but in the downstream product more. There have been quite a few industrial accidents in China, and that is leading to these inspections and safety is a big concern for us and for the Chinese. So I think our, we're probably going to continue to see these inspections, both on methanol and methanol derivative plants, going forward. Thank you. The next question is from John Roberts with UBS. The timing of the 10% debottlenecks for Geismar 1 and 2, is that being done to take advantage of any of the synergies with Geismar 3 or because of the upcoming downtime at those sites? No, you should this is nothing to do with Geismar III. This is totally isolated project. Similar, John, this is similar to what we did in Madison a number of years ago where we had a CO2 source across the fence from an ammonia plant and by introducing CO2 into our production process. Because we have excess hydrogen, we can get more methanol for the same pit. So we've contracted for CO2 in Louisiana with a supplier of CO2, and we're in the process of building a pipeline to bring that to our our site. When we did the G1 turnaround earlier this year, we put in the necessary equipment to be able to introduce CO2 in the system, and we'll do the same when we do the Geismar 2, turnaround in the coming quarters. So that work has been done CO2 pipeline has to be built. So you should think of the first G1, sometime in the end of next first quarter next year and then about a year after for G2. But that's just roughly guidelines for today, and we still have to complete the work. And then are you seeing any higher shipping costs from IMO 2020? And do you expect to have to eat that or just reduce the netbacks? Yes. So we are in our budgeting process right now for next year. And we obviously try to forecast what's going to happen to Well, methanol, I guess we have a better view, but the ultra lows sulfur diesel market, you see both sides, you see some people think that that's going to spike in price and others think that there's enough refining capacity to meet the demand. And I guess nobody will know until we actually get the demand in Q1. But yes, will experience higher fuel costs, which will lead to higher freight in our, supply chain and we'll continue to price methanol based on the cost curve and based on the supply demand balances. So we and other suppliers, if nothing changes on the price side would be eating that additional freight. The next question is from Steve Hansen with Raymond James. Please go ahead. John, just a quick one here on the partners you for G3. How should we think about the timing of your procedural partner given that you've now started construction I only ask because every month that passes now, the project arguably derisks a little more. And I'm just thinking that that's got to be a difficult or a sliding scale backdrop for ongoing negotiations. So are you able to think about a timeline or some sort of like milestone that you would like to have a partner locked up by and given the context of current negotiations, how should we think about that? Yes, so we wanted to have the partner before we FID, but here we are. I'd agree with you that as time goes by, the project does get considerably derisked. We still preference to have a partner, for this project. And that may impact the buy in price as the project gets de risked, but our store carbon is to have a partner pursue that. And like I said before, we're not talking to 10 parties at the same time. We're talking to a couple. And we've put some fairly aggressive timelines as we're talking to our potential partners because if there's no interest, we'd like to go on to some other potential partners. So we'll continue to pursue that strategy. And we're optimistic we'll secure a partner and we'll continue to work towards that. Okay, helpful. And then just quickly on the supply side, as it relates to Iran, lots of talk about potential Iranian startups at some point. What is your supply chain telling you? What have you seen in the channel? Has there been any indications on shipping from either busier or one of the other projects as yet? Just anything you're seeing on that front would be helpful. Yes. We don't have any special intelligence from Iran because being a U. S. Traded company, we obviously can't be doing any business at all with Iran. We have seen the Iranian production in the quarter operate much better than we had anticipated. So they continue to run and they continue to be able to ship mainly to China and India. So that was a bit of the upside on the supply side as well. I read the same things you do, Steve, about the next plant. I really don't have any special intel over and above what you read in I read. Okay, thanks. And just I was squeeze in one last one if I may on the chilly ramp for Q4. Can you just give us some better context? I know you noted that ChileOne has restarted, but can you just give us a sense for what kind of ramp or what kind of utilization we should expect in Q4? Yes. So what I've guided to is 75% operating rate for the year for the 2 planned operation. What I've said is full rates for plan 1 and plan 4 for 9 months when we're not experiencing their winter and one plant operation during their winter. So I would expect provided everything goes well with the operational plans full rates in Q4. Okay, very good. Thank you. Thank you. The next question is from Jonas Oxgaard with Bernstein. Please go ahead. Martin. I'm looking at your non U. S. Margins. Historically has been a strong correlation between the margins and the price, presumably due to the raw material formula. But that seems to have broken down lately. The margins have been much lower than the pricing suggests. Has something changed in your formulas? Or how should I think about this? No, I think we we've guided to this in the past. So about 55% to 60% of our gas today is this formula based gas and that's mainly in outside North America. Within South America, you should think a more fixed price gas in our portfolio. We do have some fixed price gas in other parts, but mainly it's formula outside North America and fixed in North America. Yes. I was only looking at the, at the non U. S. Or non North America margins. So nothing has really changed. And is there a good reason for why the margin is lower than it's historically been at these methanol prices then? I'd have to take it offline. I don't have the numbers in front of me. So, I mean, Egypt didn't run during the quarter. And we have, that's a very high margin business for us. So, we didn't have any any sales, very few sales for me, so that could have impacted, but I'd have to look at the numbers. Okay. Thank you. Thank you. The next question is from Nelson Ng with RBC Capital Markets. Please go ahead. Great. Thanks. So, John, just for New Zealand, could you just give a bit more color in terms of the gas market there and I guess the I presume there isn't a spot market, so you can't really get more gas in 2020. In terms of that 80% utilization? And then I guess the second question relates to kind of longer term for New Zealand in 2021, like do you generally expect the utilization and gas availability to improve? Well, we've been experiencing a lot of maintenance activities in the upstream in the last number of quarters. So I thought it would be best to guide to what we expect as opposed to disappointing, each and every quarter. Just how we think about New Zealand, it's two point 4,000,000 tons at full capacity. That's assuming we get the high CO2 gas, which we haven't got for 10 years. So the actual capacity we've gotten the last 10 years around 2.2. Now there is higher CO2 of gas available and we're still actively trying to contract that, but we haven't done that yet. So the way I think about it without the high CO2 gas, it's a 2,200,000 ton, facility. And we've been experiencing like I said, shortage is because of maintenance and other activity. I guess the good news is Shell has sold their business to OMD and OMD of our investing 100 of 1,000,000 of dollars, not only in the infrastructure, but in developing existing reserves as well as a lots of other activity from TAS and other 2 right. There is no spot market there for gas or very little spot market. So all the gas that we would consume in our plants is contracted. So the country itself just redetermined the reserves in Egypt up by 20 percent year over year, which I think is very positive. So, yes, I think we're going to have probably similar, operating rates that we had year next year, but 'twenty one and beyond, we're optimistic we can get to the 2.2 and possibly the 2.4 if we can get the high CO2 gas. And I know our team there is working hard towards that goal. Okay, got it. My next question relates to the NCIB, like obviously you've taken a pause in Q3. I was just wondering what your what you need to see in your balance sheet or cash flow to start repurchases again? Yes. So what I've said is that we've had this target of about $200,000,000 of cash on the balance sheet. That's not borrowed money. That's actually generated excess cash to the operations. We're increasing that guidance to $300,000,000 as we're completing the G3 project. Beyond the $300,000,000, we would plan to return excess cash to shareholders through the dividend and share repurchases. The dividend is going to be We look at it once a year around April time and make a call whether we grow it or keep it the way it is. And we'll look at it again around the ATM time. When we look at our internal numbers, above $300 methanol realized, we believe that we can complete the project on our own. And have a little bit of excess cash, to repurchase shares. So it'll be a factor of methanol price. And like I said, we'll still want to build that that cash balance up to $300,000,000 before we would start to exercise the NCIB again. Thank you. The next question is from Matthew Blair with Tudor Pickering. Hey, good morning. So your net leverage is moving up with the debt issuance. Can you remind us of any sort of, I guess, like max targets or parameters and What are the chances that you have to issue equity down the road here? Issuing equity is probably I never say never, but, highly unlikely. Maybe I'll ask Guy and our CFO to comment on the leverage. Yes, our target leverage from a balance sheet perspective is 2 to time, 2 to 3 times debt to EBITDA. And as we've described before, we live within that range in methanol prices above $300 a ton. So $300 a ton we achieve a leverage ratio of around three times. And if you go higher than that, obviously it goes a lot lower. And that's how we've been running our balance sheet. Sounds good. And then just a clarification on the commentary on global methanol demand. I think in Q2, you said that your estimate for global methanol demand was up 3% year over year. And then the commentary talked about a slight improvement in Q3. So I guess should we be thinking about like a 3% to 4% year over year growth rates, for global methanol demand this past quarter? Yes, I think going forward, it's about 3% to 4% including the MTO. So it depends on how the MTO runs. And it's hard for us to forecast the future operating rates of our customers, whether they have problems or take downtime, but I think that's a good range of growth. Great. Thank you. Thank you. The next question is from Chris Shaw with Monness Crespi. Please go ahead. Yes, good morning, John. How are you doing? Good. Good. Thanks, Chris. I had a question and clarification on the $20,000,000 EBIT impact from Egypt. Is that just costs that you guys had to spend or was that just sort of reflective of the volume you didn't produce as well? Or can you good color on that. So if I mentioned, we obviously have insurance for both the equipment and business interruption with a deductible. So that's combination of both. Okay. And then I had a question about the new Trinidad plant that's coming up. I thought Trinidad was think you guys were always having some problems getting gas down there. And I'm just curious, do you have any like color on why, how that plant was developed and I'm not sure who's the owner down there and will they have enough gas and will that impact your gas availability at all? Well, since that isn't my project, I'm not going to make any comments on it. I've guided to 85% operating rates for our plants based on what we've been told to expect for gas and I'm comfortable with that guidance at this time. Do you know who the owner of that plan is or is it Yes, it's Japanese plus I think a small shareholding local Trinidad company. The last question is from Cherilyn Radbourne with TD Securities. Please go ahead. Most of my questions have been asked, so I'll just ask a couple of quick ones. I was also looking for clarification on the $20,000,000 referenced with respect to Egypt, would that have related just to the plant outage or would that have also included additional logistics costs that you might have incurred from a supply chain perspective? That's just the insurable amount, which is the equipment plus some, lost margin, I would say business interruption. No, I think one of the reasons our logistics costs were higher in quarter was because of the outage and we had to reconfigure our supply chain as a result. So bringing product into the Mediterranean from farther distances, which led to higher costs on our logistics. And that would be shown in our logistics costs as opposed to in the insurance claim. Okay. So that should normalize in Q4 and going forward then as well. Yes. But I'll again, I'll remind you that, we will be paying higher for fuel starting January because of the new IMO regulation. So we expect it to normalize Q4, but see our logistics costs go up starting next year because of the higher fuel costs. Okay. And then just in terms of the gas supply in Chile, Can you just clarify how far out you've now contracted gas to support up to 75% of a 2 plant operation? Yes. So we have 25 percent contracted out through, 2025 and that's a Chile contract. The balance we're getting from Argentina different lengths of contracts, but they're shorter term and we're in the process of renegotiating those. Thank you. This concludes the question and answer session. I would now like to turn the meeting back over to Mr. Florin. Thank you. We remain focused on strengthening our global leadership position in the methanol industry, enabling us to deliver secure reliable methanol supply, which is our competitive advantage and makes us a preferred supplier to customers around the world. Our balanced approach to capital allocation remains unchanged. We believe we're well positioned to meet our financial commitments execute on our growth projects in Chile and Louisiana and deliver on our commitment to returning excess cash to shareholders through dividends and share repurchases. Thank you for the Please disconnect your lines