TORONTO - Chemtrade Logistics Income Fund (TSX: CHE.UN) ('Chemtrade' or the 'Fund') today announced results for the three months ended March 31, 2024.

The financial statements and MD&A will be available on Chemtrade's website at www.chemtradelogistics.com and on SEDAR+ at www.sedarplus.com.

First Quarter 2024 Highlights

Revenue of $418.2 million, a decrease of $53.0 million or 11.2% year-over-year, driven by lower selling prices for caustic soda, merchant acid and Regen acid, and lower selling prices and volumes for sodium nitrite, partially offset by higher selling prices and volumes for water products and higher selling prices for sodium chlorate, Hydrochloric Acid (HCl) and chlorine.

Adjusted EBITDA(1) of $109.9 million, a decrease of $21.7 million or 16.5% year-over-year, reflecting reduced revenues, which more than offset improved margins for several products.

Net earnings of $42.0 million, a decrease of $37.6 million or 47.2% year-over-year, mainly due to lower Adjusted EBITDA and higher net finance costs, partially offset by lower income taxes.

Cash flows from operating activities of $2.4 million, a decrease of $52.0 million or 95.6% year-over-year, mainly due to changes in working capital and lower Adjusted EBITDA, partially offset by lower income taxes and lower interest paid.

Distributable cash after maintenance capital expenditures(1) of $59.9 million, a decrease of $27.7 million or 31.6% year-over-year, reflecting lower cash flows from operating activities. For the last twelve months ended March 31, 2024, Chemtrade's Payout ratio(1) was 28%.

Maintained a strong balance sheet throughout the quarter, with a Net debt to LTM Adjusted EBITDA(1) ratio of 1.9x at the end of Q1 2024, an improvement from 2.2x at the end of Q1 2023.

Chemtrade now expects 2024 Adjusted EBITDA to be at the higher end of the previously communicated guidance range of $395.0 million to $435.0 million, reflecting its first quarter performance and outlook for the remainder of 2024.

In January 2024, the monthly distribution rate was increased by 10% to $0.055 per unit per month or $0.66 per unit per year.

Chemtrade intends to implement an NCIB to buy back a portion of its outstanding units.

Scott Rook, President and CEO of Chemtrade, commented on the first quarter 2024 results, 'We started the new year on great footing with respect to both our operational performance and our financial performance. Adjusted EBITDA in the first quarter was above our internal expectations, with strong execution in both of our operating segments helping to support profitability. Our water solutions portfolio remained a standout performer in our Sulphur and Water Chemicals (SWC) segment, continuing to benefit from the investments we have made in this business line in recent years. Meanwhile, continued solid pricing and demand for HCl and chlorine helped to offset a portion of the impact from materially lower caustic soda index pricing on a year-over-year basis in the Electrochemicals (EC) segment and our sodium chlorate business also continues to generate strong cash flow in this segment.'

'Based on our strong first quarter performance and improved outlook for the balance of 2024, we now expect that our Adjusted EBITDA for the full year of 2024 will be at the higher end of our previously communicated guidance range of between $395.0 million and $435.0 million,' Mr. Rook continued. 'Achieving the higher end of our guidance range for Adjusted EBITDA in 2024 would mean that we've had three consecutive years of Adjusted EBITDA being significantly above historic levels which reaffirms the step change in our business. With the biennial maintenance turnaround at our North Vancouver chlor-alkali facility having been successfully executed in the second quarter of 2024 and with caustic soda index pricing now seemingly on an upward trajectory, amongst other factors, we continue to expect that Chemtrade will generate stronger Adjusted EBITDA in the second half of 2024 than in the first half of the year.'

'We remain very excited about the growth opportunities ahead of Chemtrade, several of which we are investing in during 2024 and that are expected to contribute more meaningfully to results in 2025 and beyond. Construction on the expansion and quality upgrade project at our Cairo, Ohio ultrapure sulphuric acid facility is nearing completion and we are looking forward to commissioning the upgraded and expanded facility in the second half of the year. In addition, we continue to undertake a number of smaller projects in our Water Chemicals business, given the strategic, high-return growth opportunities we are seeing in this area. This includes expanding manufacturing capabilities for our higher growth specialized products. Although our financial results this quarter were below the record first quarter results we delivered in 2023, we believe that Chemtrade remains very well-positioned for continued success moving forward, with our diversified portfolio offering a compelling combination of defensiveness and growth. Chemtrade is also looking to supplement our organic growth initiatives with M&A, should we identify an opportunity that fits strategically within our portfolio and has synergistic value. We will target acquisitions with annual Adjusted EBITDA of between $10 million and $50 million,' concluded Mr. Rook.

Consolidated Financial Summary of Q1 2024

Revenue for the first quarter of 2024 was $418.2 million, compared to $471.2 million in the first quarter of 2023. The lower revenue was primarily due to: (i) significantly lower selling prices for caustic soda and lower sales volumes of sodium chlorate in the EC segment and (ii) lower volumes and selling prices of merchant acid mainly due to reduced by-product supply and lower volumes and selling prices of sodium nitrite in the SWC segment. Partial offsets to these factors included higher selling prices for water solutions products in the SWC segment, as well as higher selling prices for sodium chlorate, HCl and chlorine in the EC segment.

Adjusted EBITDA for the first quarter of 2024 was $109.9 million, compared to $131.7 million in the first quarter of 2023. The decrease in Adjusted EBITDA was primarily due to: (i) significantly lower selling prices for caustic soda in the EC segment and (ii) lower gross profit for sodium nitrite and lower volumes for merchant acid in the SWC segment. This decrease was partially offset by: (i) an improvement in margins for water solutions products and improved margins for Regen acid in the SWC segment and (ii) higher selling prices for sodium chlorate and higher selling prices for HCl and chlorine in the EC segment.

Distributable cash after maintenance capital expenditures for the first quarter of 2024 was $59.9 million or $0.51 per unit, compared to $87.6 million or $0.76 per unit in the first quarter of 2023. This decrease primarily reflects the same factors that impacted Adjusted EBITDA, as noted above. Chemtrade's distribution Payout ratio for the twelve months ended March 31, 2024 was 28%.

Chemtrade maintained a strong balance sheet through the first quarter of 2024. As of March 31, 2024, Chemtrade's Net Debt to LTM Adjusted EBITDA ratio was 1.9x, compared to 2.2x on March 31, 2023. This year-over-year balance sheet improvement reflects a combination of cash generation, Adjusted EBITDA growth over the last twelve months as compared to the prior twelve months, the sale of the P2S5 business in November 2023 for gross proceeds of approximately US$43.0 million, and a reduction in debt. As of the end of the first quarter of 2024, Chemtrade had US$397.8 million undrawn on its revolving credit facilities, in addition to $27.5 million of cash on hand.

Segmented Financial Summary of Q1 2024

The SWC segment reported revenue of $230.6 million for the first quarter of 2024, compared to $262.5 million for the first quarter of 2023. Adjusted EBITDA in the SWC segment was $51.4 million for the first quarter of 2024, compared to $55.4 million for the first quarter of 2023.

The decrease in SWC revenue was primarily due to: (i) lower volumes of merchant acid mainly due to reduced by-product supply; (ii) lower selling prices for merchant acid and (iii) lower volumes and selling prices of sodium nitrite. Partial offsets to the lower SWC revenue included higher selling prices for water solutions products and higher volumes of Regen acid. The same factors that affected SWC revenue also contributed to lower SWC Adjusted EBITDA, with the exception of lower merchant acid selling prices, where the impact was largely offset by reduced costs mainly due to risk-shared supply contracts.

The EC segment reported revenue of $187.6 million for the first quarter of 2024, compared to $208.7 million for the first quarter of 2023. Adjusted EBITDA in the EC segment was $82.5 million for the first quarter of 2024, compared to $99.9 million for the first quarter of 2023.

The decreases in EC revenue and Adjusted EBITDA were primarily due to significantly lower selling prices of caustic soda and lower sales volumes of sodium chlorate. These factors were partially offset by higher selling prices for sodium chlorate, HCl and chlorine. MECU netbacks declined by approximately $260 year-over-year, with higher netbacks for HCl and chlorine offsetting approximately 25% of the decline in caustic soda.

Corporate costs for the first quarter of 2024 were $23.9 million, compared with $23.7 million in the first quarter of 2023.

About Chemtrade

Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America's largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite and sodium hydrosulphite. Chemtrade is also the largest producer of high purity sulphuric acid for the semiconductor industry in North America. Chemtrade is a leading regional supplier of sulphur, chlor-alkali products, and zinc oxide. Additionally, Chemtrade provides industrial services such as processing by-products and waste streams.

Caution Regarding Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements within the meaning of certain securities laws, including the Securities Act (Ontario). Forward-looking statements can be generally identified by the use of words such as 'anticipate', 'continue', 'estimate', 'expect', 'expected', 'intend', 'may', 'will', 'project', 'plan', 'should', 'believe' and similar expressions. Specifically, forward-looking statements in this news release include statements respecting certain future expectations about: that 2024 result will be weaker than 2023; that 2024 Adjusted EBITDA will be at the higher end of the previously communicated guidance range of $395 million to $435 million; that we will generate stronger Adjusted EBITDA in the second half of 2024; our ability to commission the expanded Cairo facility and the timing thereof; that growth opportunities being invested in this year will contribute meaningfully to results in 2025 and beyond; our ability to expand manufacturing capacity for higher growth Water products and produce new specialized products; our belief that Chemtrade remains well-positioned for continued success moving forward; our intention to supplement organic growth initiatives with M&A and our ability to identify strategic opportunities and the quantum thereof; our belief that the mid-point of the 2024 Adjusted EBITDA range of $415 million represents a sustainable level of mid-cycle earnings with the current business portfolio; the expected stated maintenance capital expenditures, growth capital expenditures, lease payments, cash interest and cash tax; our expectations regarding lower 2024 Adjusted EBITDA compared to 2023 due to expected lower average selling prices for caustic soda due to lower NE Asia index prices, the expected impact of a turnaround at the North Vancouver chlor-alkali plant, the expected lower sales volumes of sodium chlorate; the anticipated higher cost of raw materials for water treatment chemicals and the expected stronger Canadian dollar relative to the U.S. dollar; our intention to invest between $60.0 million and $90.0 million in growth capital expenditures and its allocation between the ultrapure sulphuric acid business, water treatment chemicals and other organic growth projects; the expected cost and timing of construction completion, and the expected timing of start-up and commercial ramp-up of the Cairo project; our ability to be the first North American UPA plant to meet the quality requirements of the next generation semiconductor nodes, our ability to retain our position as the top North American supplier to the semiconductor industry; our intention to update the expected return of the Cairo project and timing thereof; the ability of our KPCT joint venture Arizona planned project to generate an acceptable level of return and the timing thereof; our belief that the business has undergone a step-change improvement since prior to COVID; the expected minimal impact of the increase in cash distributions on leverage and on our ability to execute growth initiatives while maintaining a healthy balance sheet; our intention to implement a Normal Course Issuer Bid and timing, parameters and TSX acceptance thereof; our expectation that our key leverage ratio will remain below two times EBITDA at the end of 2024; our intention to allocate capital across strategic growth investments, strong balance sheet maintenance and return of capital to unitholders and our intention and ability to pursue value-enhancing initiatives, including our ability to retire our maturing convertible debentures and the timing thereof.

Forward-looking statements in this news release describe the expectations of the Fund and its subsidiaries as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation the risks and uncertainties detailed under the 'RISK FACTORS' section of the Fund's latest Annual Information Form and the 'RISKS AND UNCERTAINTIES' section of the Fund's most recent Management's Discussion & Analysis.

Although the Fund believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon. With respect to the forward-looking statements contained in this news release, the Fund has made assumptions regarding: there being no significant North American lockdowns or stay-at-home orders issued due to a pandemic outbreak in 2024; there being no service slowdowns, delays, and/or interruptions that can affect our operations due to rail disruptions; there being no significant unplanned downtime nor labour disruptions affecting Chemtrade's principal manufacturing facilities; the stated North American MECU sales volumes and sodium chlorate production volumes; the 2024 realized MECU netback being lower than 2023 by the stated amount ; the stated average CMA NE Asia caustic spot price index and the stated U.S. dollar average foreign exchange rate and the stated range of LTIP costs.

Except as required by law, the Fund does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

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