CHEMTRADE LOGISTICS INCOME FUND RESPONSIBLE CARE®
OUR COMMITMENT TO
SUSTAINABILITY
2024 Q1 2024 Earnings Review
May 16, 2024
1
Q1 2024 Earnings Call
Agenda
- Q1 2024 Financial Results Review
- 2024 Guidance & Assumptions
- Outlook for Key Products
- Organic Growth Projects
- Investment Highlights
- Q&A
2
Agenda | Financial Results | 2024 Guidance | Outlook for Key | Organic Growth | Investment | Appendix |
Review | and Assumptions | Products | Projects | Highlights | ||
CAUTION REGARDING FORWARD- LOOKING STATEMENTS
Certain statements contained in this presentation 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. Forward-looking statements in this presentation describe the expectations of Chemtrade Logistics Income Fund ("Chemtrade") and its subsidiaries as of the date hereof. These statements 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 Chemtrade's latest Annual Information Form and the "RISKS AND UNCERTAINTIES" section of Chemtrade's most recent Management's Discussion & Analysis. Although Chemtrade 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. Except as required by law, Chemtrade 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. Further information can be found in the disclosure documents filed by Chemtrade with the securities regulatory authorities, available on www.sedarplus.com.
One of the measures referred to in this presentation is Adjusted EBITDA, which is EBITDA modified to exclude only non-cash items such as unrealized foreign exchange gains and losses. Non-IFRS and other financial measure are fully defined in our MD&A.
3
Q1 2024 Consolidated Quarterly Results
C$ Millions, except per unit metrics and ratios
Q1 2024 results represented a solid start to 2024 and were ahead of Chemtrade's internal
expectations, albeit below the record Q1 results achieved in 2023.
Q1 2024 | Q1 2023 | Change ($) | Change (%) | |
Revenue | 418.2 | 471.2 | (53.0) | (11)% |
Net Earnings (Loss) | 42.0 | 79.5 | (37.6) | (47)% |
Adjusted EBITDA (1) | 109.9 | 131.7 | (21.7) | (17)% |
Cash Flows from Operating Activities | 2.4 | 54.4 | (52.0) | (96)% |
Distributable cash after maintenance capital | 59.9 | 87.6 | (27.7) | (32)% |
expenditures (1) | ||||
DCPU (1) (2) | 0.51 | 0.76 | (0.25) | (33)% |
LTM Payout ratio (%) (1) (3) | 28% | 28% | n/a | n/a |
Net debt (1) | 913.7 | 978.0 | (64.3) | (7)% |
Net debt to LTM Adjusted EBITDA (1) | 1.9x | 2.2x | n/a | n/a |
- Adjusted EBITDA is a Total of segments measure; Distributable cash after maintenance capital expenditures is a non-IFRS financial measure and DCPU (Distributable cash after maintenance capital expenditures per unit) and Payout ratio are non-IFRS ratios. Net debt to LTM Adjusted EBITDA is a Capital management measure that includes Net debt, which is a non-IFRS financial measure. See Appendix for more information.
- Based on weighted average number of units outstanding for the period.
(3) Payout ratio for the last twelve months. | 4 | |||||
Agenda | Financial Results | 2024 Guidance | Outlook for Key | Organic Growth | Investment | Appendix |
Review | and Assumptions | Products | Projects | Highlights | ||
Q1 2024 SWC Results
C$ Millions
Revenue
- SWC Revenue was $230.6 million in Q1 2024.
- SWC Revenue declined by $31.9 million or 12% year-over-year, primarily due to: o Lower volumes of merchant acid mainly due to reduced by-product supply.
- Lower price of merchant acid.
- Lower volumes and selling prices of sodium nitrite from maintenance work carried over from Q4 2023. The project is now complete, and the implemented upgrades will greatly enhance the long-term performance of the business by boosting the efficiency and reliability of the operations.
- Partial offsets to the lower revenue included:
- Higher selling prices for water solutions products.
- Higher volumes of Regen acid.
Adjusted EBITDA
- SWC Adjusted EBITDA was $51.4 million in Q1 2024.
- SWC Adjusted EBITDA decreased by $4.1 million or 7% year-over-year.
- The same factors that impacted revenue, as noted above, also impacted Adjusted EBITDA with the exception of lower merchant acid selling prices, where the impact was offset by reduced costs mainly due to risk-shared supply contracts.
Agenda | Financial Results | 2024 Guidance | Outlook for Key | Organic Growth |
Review | and Assumptions | Products | Projects | |
Revenue | |
$262.5 | $230.6 |
Q1 2023 | Q1 2024 |
Comparable Revenue |
Adjusted EBITDA | |
$55.4 | $51.4 |
Q1 2023 | Q1 2024 |
Comparable Adj. EBITDA | |
5 | |
Investment | Appendix |
Highlights | |
Q1 2024 EC Results
C$ Millions
Revenue
- EC Revenue was $187.6 million in Q1 2024.
- EC Revenue declined by $21.1 million or 10% year-over-year, primarily due to:
- Significantly lower selling prices for caustic soda.
- Lower sales volumes of sodium chlorate.
- Partial offsets to the lower revenue included:
- Higher selling prices for sodium chlorate.
- Higher selling prices for HCl and chlorine.
Revenue | |
$208.7 | $187.6 |
Q1 2023 | Q1 2024 |
- 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.
Adjusted EBITDA
- EC Adjusted EBITDA was $82.5 million in Q1 2024.
- EC Adjusted EBITDA declined by $17.4 million or 17% year-over-year, primarily due to the same factors that impacted revenue, as noted above.
Agenda | Financial Results | 2024 Guidance | Outlook for Key | Organic Growth |
Review | and Assumptions | Products | Projects | |
Adjusted EBITDA | |
$99.9 | $82.5 |
Q1 2023 | Q1 2024 |
6 | |
Investment | Appendix |
Highlights | |
Q1 2024 Corporate Costs
C$ Millions
Corporate Costs
- Corporate costs were $23.9 million in Q1 2024.
- Corporate costs were relatively consistent year-over-year.
Corporate Costs | |
+1% | |
$23.7 | $23.9 |
Q1 2023 | Q1 2024 |
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Agenda | Financial Results | 2024 Guidance | Outlook for Key | Organic Growth | Investment | Appendix |
Review | and Assumptions | Products | Projects | Highlights | ||
Net Debt / LTM Adjusted EBITDA
3.5x
3.2x
2.4x 2.2x 2.2x
1.8x 1.7x 1.7x 1.9x
Agenda | Financial Results | 2024 Guidance |
Review | and Assumptions | |
Balance Sheet
As of March 31, 2024
- Net debt to LTM Adjusted EBITDA of 1.9x at the end of Q1 2024, down from 2.2x at the end of Q1 2023
- Leverage expected to remain at or below 2.0x at the end of 2024
- Based on 2024 guidance and anticipated Growth capital expenditures of $60 million - $90 million and other assumptions.
- Revolving Credit Facilities of US$650.0 million - mature in December 2026
- US$397.8 million undrawn as of end of Q1 2024, in addition to C$27.5 million of cash on hand.
- Board of Trustees approved a Normal Course Issuer Bid
- Will enable Chemtrade to repurchase a portion of its units with available funds that are not required for operations or investment.
- Will evaluate other opportunities to optimize capital structure and may supplement growth via M&A
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Outlook for Key | Organic Growth | Investment | Appendix |
Products | Projects | Highlights | |
2024 Guidance
C$ Millions
2024 Guidance
▪ Reflecting a stronger than anticipated start to the |
year and the outlook for the balance of 2024, |
Chemtrade now expects 2024 Adjusted EBITDA to be |
Adjusted EBITDA
(C$ millions)
at the higher end of its previously communicated |
guidance range of $395.0 million and $435.0 million. |
▪ Achieving the higher end of the 2024 Adjusted EBITDA |
guidance range would make 2024 one of Chemtrade's |
three highest ever years for Adjusted EBITDA. |
▪ Anticipate that H2 2024 will be stronger than H1 2024. |
▪ Chemtrade considers the mid-point of 2024's |
$295.6
$265.3
$280.4
$430.9
$502.6
$395.0-$435.0
anticipated Adjusted EBITDA of $415.0 million to |
represent a sustainable level of mid-cycle earnings |
with the current business portfolio. |
* 2024 Adjusted EBITDA Guidance | ||
Agenda | Financial Results | 2024 Guidance |
Review | and Assumptions | |
2019 | 2020 | 2021 | 2022 | 2023 | 2024* |
Adjusted EBITDA | Guidance Range | Lawsuit Provisions | |||
9
Outlook for Key | Organic Growth | Investment | Appendix |
Products | Projects | Highlights | |
2024 Guidance
C$ Millions
2024 | 2023 | Three months ended | ||
Guidance | Actual | |||
2024 Guidance ($ million) | March 31, 2024 | March 31, 2023 | ||
Adjusted EBITDA (1) | $395.0 - $435.0 | $502.6 | $109.9 | $131.7 |
Maintenance Capital Expenditures (1) | $85.0 - $105.0 | $104.2 | $15.4 | $17.5 |
Growth Capital Expenditures (1) | $60.0 - $90.0 | $62.1 | $19.9 | $10.4 |
Lease Payments | $55.0 - $65.0 | $58.3 | $14.6 | $14.1 |
Cash Interest (1) | $45.0 - $55.0 | $42.4 | $11.0 | $10.9 |
Cash Tax (1) | $30.0 - $50.0 | $14.7 | $9.0 | $1.6 |
- Adjusted EBITDA is a Total of segments measure. Maintenance capital expenditures, Cash interest and Cash tax are Supplementary financial measures. Growth
capital expenditures is a non-IFRS financial measure. See Appendix for more information. | 10 | |||||
Agenda | Financial Results | 2024 Guidance | Outlook for Key | Organic Growth | Investment | Appendix |
Review | and Assumptions | Products | Projects | Highlights | ||
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Disclaimer
Chemtrade Logistics Income Fund published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 12:31:07 UTC.
