Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — Investor Presentation (February 2024)
46 slides from Chemtrade Logistics Income Fund's investor presentation, February 2024
Slide 1: Responsible Care: Our Commitment to Sustainability
RESPONSIBLE CARE® OUR COMMITMENT TO SUSTAINABILITY 2024 Investor Presentation | February 2024
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION Certain statements contained in this presentation constitute forward-looking statements within the meaning of certain securities laws, including the Securities Act (Ontario). Forward- REGARDING looking statements can be generally identified by the use of words such as “anticipate”, “continue
Slide 3: Chemtrade Investment Highlights
Chemtrade Investment Highlights ▪ Diversified exposure to industrial and consumer end-markets, given extensive product portfolio. ▪ Significant regional market share across products including sulphuric acid, Ultrapure sulphuric Market Leadership acid, sodium chlorate, water chemicals, and caustic so
Slide 4: Another Year of Record Results in 2023
Chemtrade Another Year of Record Results in 2023 Record results in 2023 reflected continued Adjusted EBITDA1 strong performance across the organization: (C$ millions) ▪ Higher realized selling prices across numerous key products and more favourable foreign exchange rates. ▪ Benefitted from diversity
Slide 5: 2024 Guidance
2024 Guidance C$ Millions 2024 Guidance ▪ Chemtrade announced in January 2024 that Adjusted EBITDA (C$ millions) we expect 2024 Adjusted EBITDA to be between $395.0 million and $435.0 million. $395.0-$435.0 ▪ While Adjusted EBITDA in 2024 is expected to be below the record high 2023 level, achieving
Slide 6: 2024 Guidance
2024 Guidance C$ Millions ▪ While Adjusted EBITDA in 2024 is expected to be below 2023, the mid-point of 2024’s Adjusted EBITDA of $415.0 million is more representative of a sustainable level of mid-cycle earnings with the current business portfolio. Below are the key factors relative to 2023: ▪ Low
Slide 7: Financial Prudence
Financial Prudence Capital Structure and Capital Allocation ▪ Financial Leverage Target: Net debt to Adjusted EBITDA(1) < 3.0x. Strong Balance ▪ Net debt to Adjusted EBITDA (1) of 1.7x at the end of 2023, down from 2.2x at the end of 2022. Sheet ▪ Outstanding principal of convertible debentures redu
Slide 8: Financial Prudence: Distribution Increase
Financial Prudence Distribution Increase LTM Payout Ratio (1) In January 2024, Chemtrade announced a 10% increase to its monthly distribution to 5.5 cents per month or $0.66/unit on an annualized basis. ▪ Increase reflects improved sustainable long-term outlook 30% for Chemtrade’s cash flow. 28% ▪ N
Slide 9: Chemtrade Operating Segments
Chemtrade Operating Segments Sulphur and Water Chemicals (SWC) ▪ Manufactures and markets sulphur-based products, water treatment products, and specialty chemicals. LTM Revenue ▪ One of North America’s largest suppliers of industrial sulphuric acid, including Regen acid for the petroleum industry an
Slide 10: Global Macro Trends: Chemtrade Advantaged Position
Global Macro Trends Chemtrade Advantaged Position Energy Semi-Conductor Water ▪ Elevated electricity costs globally. ▪North American strategic focus on ▪ Increasing regulations and ▪ Energy-intensive industrial onshoring semi-conductor population growth support production. increased demand for coagu
Slide 11: Organic Growth Projects Update
Organic Growth Projects Update Chemtrade plans to allocate $60 million - $90 million for Growth capital expenditures(1) to support its organic growth projects in 2024, including approximately $40 million for ultrapure sulphuric acid business. (1) Growth capital expenditures is a non-IFRS financial m
Slide 12: Chemtrade Defensive Attributes
Chemtrade Defensive Attributes Chemtrade is better-positioned than many chemical manufacturers to weather an economic downturn. ▪ This is owing to the defensive attributes of many key products, our diverse product portfolio that is benefitting from a number of varied tailwinds, and our strengthened
Slide 13: Chemtrade Key ESG Targets
Chemtrade Key ESG Targets ENVIRONMENTAL SOCIAL GOVERNANCE GHG and other air emissions Workforce Health and Safety Governance of Environmental and Social Issues ▪ Reduce, offset or displace 2021 baseline ▪ Achieve employee occupational injury/illness ▪ Demonstrate ESG leadership by reporting direct G
Slide 14: Chemtrade Investment Highlights
Chemtrade Investment Highlights ▪ Diversified exposure to industrial and consumer end-markets, given extensive product portfolio. ▪ Significant regional market share across products including sulphuric acid, Ultrapure sulphuric Market Leadership acid, sodium chlorate, water chemicals, and caustic so
Slide 15: Appendix
APPENDIX 15 Investment Financial Capital Operating Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Allocation Segments Growth Attributes Highlights
Slide 16: Chemtrade Management Team
Chemtrade Management Team Management Team Scott Rook Rohit Bhardwaj Tim Montgomery Alan Robinson Bramora Rebello Tejinder Kaushik Susan Paré President and Chief Financial Group Vice- Group Vice- Vice-President Vice-President General Counsel Chief Executive Officer President President, Human Resource
Slide 17: Chemtrade Board of Trustees
Chemtrade Board of Trustees Board of Trustees Douglas Muzyka Lucio Di Daniella Emily Moore Luc Doyon Katherine Rethy Gary Merasty Scott Rook Chair of the Clemente Dimitrov Chair of the Trustee Trustee Trustee CEO, Trustee Board Chair of the Chair of the Responsible Compensation Audit Care Committee
Slide 18: Chemtrade Financial Overview
Chemtrade Financial Overview CHE.UN Unit Price - Last Twelve Months Unit Price (1) $8.77 $10.50 $10.00 $9.50 Market Capitalization (1) $1.0 billion $9.00 $8.50 $8.00 Enterprise Value (1) $1.8 billion $7.50 $7.00 $6.50 Net debt to Adjusted EBITDA (2) 1.7x Volume 1.5M 1.0M Distribution / Yield $0.66 p
Slide 19: Chemtrade Company History
Chemtrade Company History December 2002 August 2003 August 2005 July 2001 Acquired Peak Chemicals Acquired SHS Operations Acquired Pulp Chemicals IPO on TSX (Expanded Sulphuric Acid business; (Sodium Hydrosulphite) (Sodium Chlorate; Crude Tall Oil) diversified end markets) (Spun out of Marsulex) US$
Slide 20: Sulphur and Water Chemicals (SWC) Segment
Sulphur and Water Chemicals (SWC) Segment 20 Investment Financial Capital Operating Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Allocation Segments Growth Attributes Highlights
Slide 21: SWC Segment Key Products
SWC Segment Key Products Key Products Primary End-Uses Competitive Advantages Key Competitors • Largest facilities are closely connected to Regen Ecovyst; Veolia North America; PVS Chemical Gasoline production customers (connected via pipeline at most sulphuric acid Solutions Inc. facilities) • Nort
Slide 22: SWC Segment Product Outlook
SWC Segment Product Outlook Water Chemicals Sulphuric Acid ▪ Realized significantly improved profitability in ▪ Regen acid, used in gasoline alkylate 2023, reflecting strong pricing and lower raw production, continues to experience strong material costs. demand. Chemtrade maintains an optimistic ▪ M
Slide 23: Electrochemicals (EC) Segment
Electrochemicals (EC) Segment 23 Investment Financial Capital Operating Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Allocation Segments Growth Attributes Highlights
Slide 24: EC Segment Key Products
EC Segment Key Products Key Products Primary End-Uses Competitive Advantages Key Competitors Pulp & paper; soaps and detergents; aluminum; oil & gas exploration and Caustic soda refining; lithium-ion battery production; • North America: Access to low-cost hydroelectric • North America: Univar; ERCO
Slide 25: EC Segment Sodium Chlorate Outlook
EC Segment Sodium Chlorate Outlook Sodium Chlorate ▪ Brandon, Manitoba plant is the largest and one of the lowest cost sodium chlorate plants globally*. ▪ Chemtrade’s sodium chlorate plants operate in Forecast energy regulated markets supplied by renewable hydroelectric energy and could remain advan
Slide 26: EC Segment Chlorine and HCl Outlook
EC Segment Chlorine and HCl Outlook North Vancouver Chlor-Alkali Facility - Biennial Maintenance Turnaround ▪ Biennial maintenance turnaround at North Vancouver facility is expected to take place during Q2 2024 and last for approximately three weeks, impacting EBITDA for the Electrochemicals segment
Slide 27: EC Segment Caustic Soda Outlook
EC Segment Caustic Soda Outlook Caustic Soda ▪ 2024 Guidance assumes realized caustic soda pricing based on an average NE Asia index price of US$375 per tonne, as compared to US$455 per Forecast tonne in 2023. ▪ Realized pricing in Q1 2023 was notably strong, as it reflected NE Asia index pricing of
Slide 28: Q4 and Full Year 2023 Consolidated Results
Q4 and Full Year 2023 Consolidated Results C$ Millions, except per unit metrics and ratios Full Year Full Year Q4 2023 Q4 2022 Change (%) 2023 2022 Change (%) Revenue 422.0 456.7 (8)% 1,846.8 1,813.4 2% Net Earnings (1) 11.7 (11.7) n/a 249.3 109.1 128% Adjusted EBITDA (2) 84.6 104.3 (19)% 502.6 430.
Slide 29: Full Year 2023 Results
Full Year 2023 Results C$ Millions, except per unit metrics and ratios Revenue ▪ Revenue was $1,846.8 million for the full year 2023 period. ▪ 2022 revenue was negatively impacted by the North Van turnaround. Revenue ▪ Adjusting for the impacts of the North Van turnaround ($15.0 million) and F/X ($5
Slide 30: 2023 Adjusted EBITDA Improvement
2023 Adjusted EBITDA Improvement Adjusted EBITDA for 2023 improved by $71.8 million compared to 2022, primarily due to: ▪ Higher selling prices for sodium chlorate (net of lower volumes), ▪ Higher margins for water products, ▪ A weaker Canadian dollar relative to the U.S. dollar, ▪ No turnaround at
Slide 31: 2024 Guidance
2024 Guidance C$ Millions 2024 Actual Actual 2024 Guidance ($ million) Guidance 2023 Results 2022 Results Adjusted EBITDA (1) $395.0 - $435.0 $502.6 $430.9 Maintenance Capital Expenditures (1) $85.0 - $105.0 $104.2 $99.8 Growth capital expenditures (1) $60.0 - $90.0 $62.1 $21.6 Lease Payments $55.0
Slide 32: 2024 Guidance Assumptions
2024 Guidance Assumptions C$ Millions 2024 2023 2022 Key Assumptions Assumptions Actual Actual Approximate North American MECU sales volumes 173,000 181,000 184,000 2024 realized MECU Netback being higher or (lower) than 2023 CAD ($210) N/A N/A per MECU* Average CMA (1) NE Asia caustic spot price in
Slide 33: Key Sensitivities: Annual Impact on Adjusted EBITDA
Key Sensitivities Annual Impact on Adjusted EBITDA Caustic Soda Price ▪ Change of US$50/DMT = CA$12.5 million Sodium Chlorate Price ▪ Change of CA$50/metric tonne = CA$13.4 million CA$/US$ exchange rate ▪ Change of 1 cent = CA$4.0 million (favourable if C$ weakens) 33 Investment Financial Capital Op
Slide 34: Non-IFRS Financial Measures and Ratios
Non-IFRS Financial Measures and 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
Slide 35: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios 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 act
Slide 36: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios 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
Slide 37: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios C$ Millions, except per unit metrics and ratios For the twelve months ended Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 LTM Cash flow from operating activities $ 401.5 $ 407.5 $ 421.8 $ 386.4 $ 369.2 Add (Less): LTM lease payments net of sub-lease receipts (58.3) (
Slide 38: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios C$ Thousands, except per unit metrics and ratios Net debt – Most directly comparable IFRS financial measure: Total long-term debt, Debentures, lease liabilities, and long-term lease liabilities, less cash and cash equivalents Definition: Net debt is calculated
Slide 39: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios C$ Thousands, except per unit metrics and ratios Growth capital expenditures – Most directly comparable IFRS financial measure: Capital expenditures Definition: Growth capital expenditures are calculated as Capital expenditures less Maintenance Capital expendit
Slide 40: Capital Management Measures
Capital Management Measures Capital management measures are financial measures disclosed by an entity that (a) are intended to enable an individual to evaluate an entity’s objectives, policies and processes for managing the entity’s capital, (b) are not a component of a line item disclosed in the pr
Slide 41: Total of Segments Measures
Total of Segments Measures Total of segments measures are financial measures disclosed by an entity that (a) are a subtotal of two or more reportable segments, (b) are not a component of a line item disclosed in the primary financial statements of the entity, (c) are disclosed in the notes of the fi
Slide 42: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Three months ended December 31 2023 2022 Net earnings $ 11,677 $ (11,747) Add (Less): Depreciation and amortization 57,423 54,922 Net finance (income) 33,716 37,187 Income ta
Slide 43: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Adjusted EBITDA for the twelve months ended Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 LTM Net earnings (loss) $249.3 $225.9 $230.5 $ 178.0 $ 109
Slide 44: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Adjusted EBITDA for the year ended December 31 2023 2022 2021 2020 2019 Net earnings (loss) $ 249.3 $ 109.1 $ (235.2) $ (167.5) $ (99.7) Add (Less): Depreciation and amortiza
Slide 45: Supplementary Financial Measures
Supplementary Financial Measures Supplementary financial measures are financial measures disclosed by an entity that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity, (b) are
Slide 46: Supplementary Financial Measures
Supplementary Financial Measures Cash interest Represents interest expense related to long-term debt, interest on Debentures, pension interest expense and interest income. Cash tax Represents current income tax expense. 46 Investment Financial Capital Operating Organic Defensive Investment Macro Tre
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