TORONTO--(BUSINESS WIRE)-- Chemtrade Logistics Income Fund (CHE.UN:CA) (“Chemtrade” or the “Fund”) today announced results for the three-month period ended March 31, 2025. 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 2025 Highlights
- Revenue of $466.3 million, an increase of $48.1 million or 11.5% year-over-year driven by higher selling prices for several key products and the weaker Canadian Dollar, which more than offset lower volumes of caustic soda and chlorine.
- Adjusted EBITDA(1) of $120.1 million, an increase of $10.1 million or 9.2% year-over-year. Excluding the impact of foreign exchange, Adjusted EBITDA was 3.3% higher than 2024, primarily owing to higher selling prices for several products partially offset by higher input costs.
- Net earnings of $49.1 million, an increase of $7.1 million year-over-year primarily owing to higher Adjusted EBITDA, favourable unrealized foreign exchange gains and lower tax expense partially offset by higher finance costs.
- Cash flows from operating activities of $11.6 million, an increase of $9.2 million or 382.4% year-over-year, mainly due to higher Adjusted EBITDA.
- Distributable cash after maintenance capital expenditures(1) of $62.1 million, an increase of $2.2 million or 3.6% year-over-year reflecting higher cash flow from operating activities, partially offset by higher lease payments, and higher Maintenance capital expenditures(1). Distributable cash after maintenance and capital expenditures per unit(1) increased by 3.8% to $0.53 per unit year-over-year.
- Uncertain macro-economic conditions make it particularly challenging to forecast results. We have taken this uncertainty into account and given our strong start to 2025 and our visibility on the balance of the year, we are raising our Adjusted EBITDA guidance to the higher end of the previously communicated range of $430.0 to $460.0 million.
- During the first quarter of 2025, Chemtrade increased its monthly distribution rate by approximately 5% to $0.0575 per unit or $0.690 per unit per year. Chemtrade’s Payout ratio(1) for the first quarter of 2025 was 32%.
- During the first quarter of 2025, Chemtrade purchased approximately 3.9 million units as part of its normal course issuer bid (NCIB). Chemtrade is authorized to purchase approximately 11.7 million units under its current NCIB which expires in June 2025 and as of May 9th, 2025, it has acquired 10.4 million units. Chemtrade intends to renew its NCIB, subject to approval from regulatory authorities.
- Chemtrade continues to maintain a strong balance sheet, with a Net debt to LTM Adjusted EBITDA(1) ratio of 1.98 at the end of the first quarter of 2025.
- During the first quarter of 2025, Chemtrade issued an additional $125.0 million aggregate principal amount of 6.375% Notes due August 28, 2029, resulting in an aggregate principal amount of $375.0 million outstanding on these Notes.
- Chemtrade is introducing Chemtrade Vision 2030, a strategic framework targeting strong total unitholder returns, supported by 5-10% annual growth in Adjusted EBITDA and Distributable cash after maintenance capital expenditures per unit, disciplined capital allocation, and a continued focus on high-return growth investments.
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1) Adjusted EBITDA is a Total of Segments measure, Distributable cash after maintenance capital expenditures is a non-IFRS measure and Net debt to LTM Adjusted EBITDA, Distributable cash after maintenance and capital expenditures per unit and Payout ratio are non-IFRS ratios. Maintenance capital expenditures is a Supplementary financial measure. Please see Non-IFRS and Other Financial Measures for more information. |
Scott Rook, President and CEO of Chemtrade, commented on the first quarter 2025 results, “We started 2025 on solid footing, building on our momentum to deliver another solid quarter. Our diverse product portfolio continues to prove its strength, and our team remains agile and resilient in response to the dynamic market conditions. Despite persistent macroeconomic and geopolitical volatility, we have not seen any material negative impacts on our business to date. While we are concerned with economic uncertainty, we are confident in our improved expectation that 2025 Adjusted EBITDA will be at the higher end of our previously communicated guidance range.”
“Looking ahead we remain optimistic in the longer-term outlook for Chemtrade, as we continue to build upon the foundational improvements in our business and our strong growth track-record established in recent years. From 2021 to 2024, we grew Chemtrade’s Adjusted EBITDA at a note-worthy 19% compounding growth rate and we believe we are well positioned to continue this growth,” Mr. Rook continued. “While it’s challenging to make long-term projections, given the high level of macro-economic uncertainty, we are sharing our Chemtrade Vision 2030 strategic roadmap which provides a framework for growing Adjusted EBITDA to between $550 million and $600 million by 2030 with a target to generate strong Total Unitholder Returns. Chemtrade Vision 2030 underscores our confidence in our core business, backed by balanced, thoughtful capital allocation and strategic, high return growth investments.”
“Regardless of the broader market backdrop, we remain focused on executing our strategy with discipline. We remain well positioned to deliver on strategic value-generating opportunities in 2025 and beyond. We have a resilient and growing product portfolio, strong financial flexibility and exceptional team.” Mr. Rook concluded.
Consolidated Financial Summary of Q1 2025
Revenue for the first quarter of 2025 was $466.3 million $48.1 million higher than revenue for the first quarter of 2024. The weaker Canadian dollar relative to the U.S. dollar during the first quarter of 2025 compared with the first quarter of 2024 had a positive impact on consolidated revenue of $21.0 million. Excluding the impact of foreign exchange, revenue increased by $27.1 million or 6.5% year-over-year. This increase was primarily due to: (i) higher selling prices and volumes of water solutions products, merchant acid, and Regen acid in the Sulphur and Water Chemicals (SWC) segment; and (ii) higher selling prices for caustic soda, HCl, and sodium chlorate in the Electrochemicals (EC) segment. These factors were partially offset by lower sales volumes of caustic soda, lower sales volumes and selling prices for chlorine, and lower revenue in Brazil in the EC segment.
Adjusted EBITDA for the first quarter of 2025 was $120.1 million, which was $10.1 million higher than the first quarter of 2024. The weaker Canadian dollar relative to the U.S. dollar during the first quarter of 2025 compared with the first quarter of 2024 had a positive impact on consolidated Adjusted EBITDA of $6.5 million. Excluding the impact of foreign exchange, consolidated Adjusted EBITDA increased by $3.6 million or 3.3% year-over-year. This increase was primarily due to: (i) higher selling prices and volumes of Regen acid and water solutions products in the SWC segment; and (ii) higher selling prices for caustic soda, HCl, and sodium chlorate in the EC segment. Partial offsets to the above positive factors included: (i) lower sales volumes of caustic soda, lower sales volumes and selling prices for chlorine, and lower revenue in Brazil in the EC segment; and (ii) higher corporate costs.
Distributable cash after maintenance capital expenditures for the first quarter of 2025 was $62.1 million or $0.53 per unit, compared with $59.9 million or $0.51 per unit in the first quarter of 2024. This increase was primarily due to the same factors that had a positive impact on Adjusted EBITDA, as noted above. Chemtrade’s Payout ratio for the twelve months ended March 31, 2025 was 37%.
Chemtrade maintained a strong balance sheet through the first quarter of 2025. As of March 31, 2025, Chemtrade’s Net debt was $949.8 million and its Net Debt to LTM Adjusted EBITDA ratio was 1.98. As of the end of the first quarter of 2025, Chemtrade also maintained ample financial liquidity with US$542.3 million undrawn on its credit facilities, in addition to $28.9 million of cash on hand.
Segmented Financial Summary of Q1 2025
The SWC segment reported revenue of $271.0 million for the first quarter of 2025, compared to $230.6 million for the first quarter of 2024. Adjusted EBITDA in the SWC segment was $59.5 million for the first quarter of 2025, compared to $51.4 million for the first quarter of 2024. The weaker Canadian dollar relative to the U.S. dollar during the first quarter of 2025 compared with the first quarter of 2024 had a positive impact on SWC revenue and SWC Adjusted EBITDA of $12.9 million and $1.7 million, respectively.
Excluding the impact of foreign exchange, as noted above, SWC revenue in the first quarter of 2025 increased by $27.5 million or 11.9% year-over-year. The increase in comparable SWC revenue was primarily due to higher selling prices and volumes of merchant acid, Regen acid and water solutions products. Excluding the impact of foreign exchange, as noted above, SWC Adjusted EBITDA in the first quarter of 2025 increased by $6.4 million or 12.5% year-over-year. The increase in comparable SWC Adjusted EBITDA was primarily due to higher selling prices and volumes of Regen acid and higher selling prices and volumes for water solutions products, which more than offset higher input costs. Higher input cost for merchant acid were offset by selling prices.
The EC segment reported revenue of $195.3 million for the first quarter of 2025, compared to $187.6 million for the first quarter of 2024. Adjusted EBITDA in the EC segment was $88.2 million for the first quarter of 2025, compared to $82.5 million for the first quarter of 2024. The weaker Canadian dollar relative to the U.S. dollar during the first quarter of 2025 compared with the first quarter of 2024 had a positive impact on EC revenue and EC Adjusted EBITDA of $8.1 million and $5.3 million, respectively.
Excluding the impact of foreign exchange, as noted above, EC revenue in the first quarter of 2025 was similar to 2024. The impact of higher selling prices for caustic soda, HCl, and chlorine on EC revenue was offset by lower sales volumes of caustic soda, lower sales volumes and selling prices for chlorine, and lower revenue in Brazil. MECU netbacks increased by approximately $165 year-over-year, due to caustic soda as higher netbacks for HCl offset lower netbacks for chlorine. Excluding the impact of foreign exchange, as noted above, EC Adjusted EBITDA for 2025 was similar to 2024. The factors that affected EC revenue also had an impact on EC’s Adjusted EBITDA on a year-over-year basis.
Corporate costs for the first quarter of 2025 were $27.7 million, compared with $23.9 million in the first quarter of 2024. The increase in corporate costs was primarily due to $3.4 million of higher realized foreign exchange losses in 2025 and $1.6 million of expenses related to the Superior lawsuit, partially offset by $0.9 million of lower long-term incentive plan costs.
2025 Guidance
Uncertain macro-economic conditions make it particularly challenging to forecast results. We have taken this uncertainty into account and given our strong start to 2025 and our visibility on the balance of the year, we are raising our Adjusted EBITDA guidance to the higher end of the previously communicated range of $430.0 to $460.0 million. Based on our guidance assumptions, including the anticipated spending on Growth capital expenditures and capital allocation, Chemtrade’s implied Payout ratio(1) for 2025 is approximately 45%.
Achieving the higher end this range would mark the third-highest annual Adjusted EBITDA in Chemtrade’s history. This level of Adjusted EBITDA shows the significant step-change in Chemtrade’s Adjusted EBITDA and cash flow generation compared to pre-pandemic levels, as it would be the fourth consecutive year at a higher level of earnings.
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2025 Guidance |
2024 Actual |
Three Months ended Actual |
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($ million) |
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March 31, 2025 |
March 31, 2024 |
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Adjusted EBITDA(1) |
$430.0 - $460.0 |
$470.8 |
$120.1 |
$109.9 |
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Maintenance capital expenditures (1) |
$100.0 - $120.0 |
$104.5 |
$17.1 |
$15.4 |
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Growth capital expenditures(1) |
$40.0 - $60.0 |
$81.3 |
$7.2 |
$19.9 |
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Lease payments |
$65.0 - $75.0 |
$65.4 |
$17.8 |
$14.6 |
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Cash interest (1) |
$45.0 - $55.0 |
$45.7 |
$14.4 |
$11.0 |
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Cash tax (1) |
$45.0 - $55.0 |
$42.1 |
$8.7 |
$9.0 |
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(1) 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 Non-IFRS And Other Financial Measures. |
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Key Assumptions |
2025 Assumptions |
2024 Actual |
2023 Actual |
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Approximate North American MECU sales volumes |
168,500 |
172,000 |
181,000 |
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2025 realized MECU netback being higher than 2024 (per MECU) |
CAD $30 |
N/A |
N/A |
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Average CMA(1) NE Asia caustic spot price index per tonne(2) |
US$450 |
US$385 |
US$455 |
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Approximate North American production volumes of sodium chlorate (MTs) |
254,500 |
270,000 |
283,000 |
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USD to CAD average foreign exchange rate |
1.380 |
1.370 |
1.349 |
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Long term incentive plan costs (in $ millions) |
$12.0 - $18.0 |
$23.3 |
$17.3 |
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(1) Chemical Market Analytics (CMA) by OPIS, A Dow Jones Company, formerly IHS Markit Base Chemical. |
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(2) The average CMA NE Asia caustic spot price for 2025 and 2024 is the average spot price of the four quarters ending with the third quarter of that year as the majority of our pricing is based on a one quarter lag. |
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Chemtrade Vision 2030
The high level of macro-economic uncertainty makes it challenging to make long term projections. Nonetheless, to support its longer-term growth vision, Chemtrade is announcing a roadmap aimed at delivering sustainable growth and enhanced value for unitholders – Chemtrade Vision 2030. The Chemtrade Vision 2030 provides insight into how Chemtrade’s leadership team is strategically thinking about its future growth, underscoring the strength of its business and its ability to drive meaningful unitholder value in the years ahead.
Chemtrade Vision 2030 builds on Chemtrade’s strong foundation and operational momentum, while outlining a strategy to deliver strong total unitholder returns . Central to this plan is Chemtrade’s objective to grow Adjusted EBITDA and Distributable cash after maintenance capital expenditures per unit by an average of 5% - 10% annually through a combination of organic growth initiatives, continued investment in high-return projects – particularly in the water solutions and Ultrapure acid businesses – and disciplined execution of external growth opportunities.
To further enhance unitholder value on a per unit basis, Chemtrade also intends to reduce the number of units outstanding through additional unit purchases. At the same time, Chemtrade’s monthly distribution will remain an important element of unitholder returns. As earnings and cash flow continue to grow, the opportunity exists for additional potential increases to this attractive monthly distribution.
Chemtrade Vision 2030 positions Chemtrade to generate between $550 million and $600 million in annual Adjusted EBITDA by 2030. While the path to this target may evolve based on new opportunities, Chemtrade’s approach will remain disciplined and focused on maximizing long-term value creation. Chemtrade will continue to prioritize capital allocation with significant capital being returned to unitholders and toward the highest value-enhancing opportunities, whether through organic investments or strategic acquisitions. Chemtrade also remains committed to maintaining a prudent balance sheet, targeting to keep its key leverage ratio below 2.5 times, with flexibility to modestly exceed this threshold in the short-term for strategic opportunities, with a clear timeline to bringing leverage expeditiously back to target levels.
Update on Organic Growth Projects
Chemtrade remains focused on its long-term objective of delivering sustained earnings growth and generating value for investors. To accomplish this, Chemtrade has identified various organic growth initiatives. In 2025, Chemtrade plans to invest between $40.0 million and $60.0 million in growth capital expenditures, which includes expansions of water treatment chemicals, upgrades to ultrapure sulphuric acid production, and other organic growth projects.
Construction of the Cairo, Ohio ultrapure acid project is complete, and the project is in the startup process. Commercial ramp up is expected to begin towards the end of 2025. This will be one of the first ultrapure sulphuric acid plants in North America that is expected to meet the quality requirements for next generation semiconductor nodes. This project will further bolster Chemtrade’s position as a leading North American supplier of ultrapure sulphuric acid to the semiconductor industry.
Update on External Growth
Subsequent to the end of the first quarter, on May 5, 2025 Chemtrade entered into an agreement with certain subsidiaries of Thatcher Group Inc. to purchase their aluminum sulphate water treatment chemicals businesses in Florida, New York, and California for USD $30.0 million, representing a multiple of roughly 5x expected Adjusted EBITDA. Commenting on the transaction Scott Rook said, “We are pleased to announce this new addition to our water business. This transaction fits with our strategy to grow our water treatment chemicals business through incremental small investments that add more meaningfully to earnings over time.”
Distributions and Capital Allocation Update
During the first quarter of 2025, Chemtrade purchased approximately 3.9 million units as part of its normal course issuer bid (NCIB). Chemtrade is authorized to purchase approximately 11.7 million units under its current NCIB which expires in June 2025 and as of May 9th, 2025, it has acquired 10.4 million units. Chemtrade intends to renew its NCIB, subject to approval from regulatory authorities. Purchases of units are effected through the facilities of the TSX and/or alternative Canadian trading systems and are made by means of open market transactions, or such other means as may be permitted by the TSX, including block purchases of units, at prevailing market rates. The timing and amount of any purchases are subject to management’s discretion.
During January 2025, Chemtrade issued an additional $125.0 million aggregate principal amount of 6.375% Notes due August 28, 2029, resulting in an aggregate principal amount of $375.0 million outstanding on these Notes. The Fund incurred transaction costs of $2.5 million. The Fund used the net proceeds of the issuance to reduce indebtedness and for general corporate purposes. This issuance is consistent with Chemtrade’s capital structure optimization with a reduced reliance on potentially dilutive financial instruments such as convertible debentures.
Rohit Bhardwaj, CFO of Chemtrade, commented on Chemtrade’s capital allocation, “Our capital allocation strategy remains firmly grounded in financial discipline and a commitment to long-term value creation for our unitholders. We continue to strike a thoughtful balance between returning capital to unitholders and investing in strategic growth opportunities, while preserving the financial flexibility needed to support our evolving priorities. We remain focused on deploying capital into high-return growth initiatives, particularly within our water solutions and Ultrapure acid platforms, leveraging internally-generated cash flow and available credit to fund these investments. At the same time, we are committed to delivering steady capital returns through a combination of monthly distributions and unit repurchases under our NCIB. We maintain a strong and resilient balance sheet, supporting our ability to weather potential volatility while ensuring that Chemtrade has the flexibility to pursue additional attractive, value-accretive opportunities as they arise. Looking ahead, we will continue to take a disciplined approach to capital deployment, prioritizing opportunities that drive sustainable earnings growth and support long-term unitholder value.”
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 a leading 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.
NON-IFRS AND OTHER FINANCIAL MEASURES
Non-IFRS financial measures and non-IFRS ratios
Non-IFRS financial measures are financial measures disclosed by an entity that (a) depict historical or expected future financial performance, financial position or cash flow of an entity, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity, (c) are not disclosed in the financial statements of the entity and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by an entity that are in the form of a ratio, fraction, percentage, or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the entity.
These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS and, therefore, are unlikely to be comparable to similar financial measures presented by other entities. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate Chemtrade’s financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines Chemtrade’s non-IFRS financial measures and non-IFRS ratios, their compositions, and why management uses each measure. It includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, Chemtrade’s non-IFRS financial measures and non-IFRS ratios are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable.
Distributable cash after maintenance capital expenditures
Most directly comparable IFRS financial measure: Cash flows from operating activities
Definition: Distributable cash after maintenance capital expenditures is calculated as cash flow from operating activities less lease payments net of sub-lease receipts, maintenance capital expenditures incurred, including unpaid amounts, and adjusting for cash interest and current taxes, and before decreases or increases in working capital.
Why we use the measure and why it is useful to investors: It provides useful information related to Chemtrade’s cash flows including the amount of cash available for distribution to Unitholders, repayment of debt and other investing activities.
Distributable cash after maintenance capital expenditures per unit
Definition: Distributable cash after maintenance capital expenditures per unit is calculated as distributable cash after maintenance capital expenditures divided by the weighted average number of units outstanding.
Why we use the measure and why it is useful to investors: It provides useful information related to Chemtrade’s cash flows including the amount of cash available for distribution to Unitholders, repayment of debt and other investing activities.
Payout ratio
Definition: Payout ratio is calculated as Distributions declared per unit divided by Distributable cash after maintenance capital expenditures per unit.
Why we use the measure and why it is useful to investors: It provides useful information related to Chemtrade’s cash flows including Chemtrade’s ability to pay distributions to Unitholders.
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Three months ended |
Twelve months ended |
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