Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — Investor Presentation (January 2019)
28 slides from Chemtrade Logistics Income Fund's investor presentation, Jan 21, 2019
Slide 1: December 2018 Business Update
DECEMBER 2018 BUSINESS UPDATE
Slide 2: 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”, “ex
Slide 3: Unique portfolio providing growth and yield
Unique portfolio providing growth and yield 3
Slide 4: Chemtrade Overview
CHEMTRADE OVERVIEW Worldwide provider of industrial chemicals and services Primarily industrial inorganic chemicals Electrochemicals Water and specialty chemicals Critical but non-core services to industrial users or producers of chemicals Significant market shares; competitive advantage
Slide 5: Since Our IPO We Have
SINCE OUR IPO WE HAVE: Diversified our product portfolio Increased our geographic reach Enhanced quality of earnings Sustained distributions Maintained balance sheet strength 5
Slide 6: Chemtrade Locations
CHEMTRADE LOCATIONS 6
Slide 7: 4 Pronged Strategy
4 PRONGED STRATEGY 1 Growth Increased size, scale and diversity of earnings 2 Business Model Mitigates Commodity Risks 3 Operational Excellence Ensures sustainable earnings through improved operations, assets and people 4 Financial Prudence Maintains distributions and balance sheet strength 7
Slide 8: Chemtrade's M&A Track Record
CHEMTRADE’S M&A TRACK RECORD Chemtrade’s Demonstrated Ability to Successfully Complete Acquisitions 8
Slide 9: Operating Reporting Segments
OPERATING REPORTING SEGMENTS SPPC Sulphuric Acid (regen, ultra pure, merchant) and other sulphur products WSSC Water Solution Chemicals (alum, PACl, ACH) Certain Specialties (KCl, sodium nitrite, P2S5) EC Sodium Chlorate and Chlor-alkali (caustic soda, HCl, chlorine) 9
Slide 10: Business Model Fit
BUSINESS MODEL FIT SULPHUR PRODUCTS WATER SOLUTIONS ELECTROCHEMICALS (EC) AND PERFORMANCE AND SPECIALTY CHEMICALS (SPPC) CHEMICALS (WSSC) Wide diversity of sources Three sources Approx 60% of revenue of earnings of earnings: based on risk shared contracts - NA sodium chlorate Includes specialty - SA
Slide 11: 2018 Results
2018 RESULTS A few items had a large impact on 2018 results Litigation Reserve of $100MM (for anti-trust litigation related to General Chemical). Main lawsuit has been settled, but a few smaller ones still outstanding North Vancouver Chlor-alkali – poor rail service in Q1 and extended planned
Slide 12: Q3 2018 Summary Results
Q3 2018 SUMMARY RESULTS Revenue ($M) EBITDA ($M)* Distributable Cash ($M) 89 450 418 90 60 54 400 85 82 400 50 47 80 350 40 75 300 70 30 2017 2018 2017 2018 2017 2018 • Adjusted EBITDA from continuing operations (excludes litigation reserve) Revenue - increase driven by higher sales volume & selli
Slide 13: Balance Sheet
EQUITY (92.6M units) C $1.2B SENIOR SECURED CREDIT (March 2023 maturity) Total Drawn US $524M Available ~ US $326M Accordion (undrawn) US $400M BALANCE SHEET CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES (As at September 30, 2018) Three series (Jun. 2021, Aug. 2023, Apr. 2024) C $472M CANEXUS DEBT:
Slide 14: Debt Maturity
DEBT MATURITY C$M Bank $144 CHE Deb Electrochem Deb $643 $75 $84 $127 $201 2017 2018 2019 2020 2021 2022 2023 2024 14
Slide 15: Concluding Remarks: Confident in Our Outlook for 2018 & Improvements in 2019
CONFIDENT IN OUR CONCLUDING REMARKS OUTLOOK FOR 2018 & IMPROVEMENTS IN 2019 15
Slide 16: 2018 Outlook
2018 OUTLOOK Q4 tends to be seasonally lower Regen (reduced gasoline demand) and this year, Beaumont’s main pipeline- connected refinery is taking an extended outage Demand for water products is lower in the winter months In EC, chlorine demand is weaker and this leads to lower caustic soda
Slide 17: Steady to Robust Markets Expected to Continue
20 19 STEADY TO ROBUST MARKETS EXPECTED TO CONTINUE 17
Slide 18: 2019 Outlook: Chlor-Alkali Markets
2019 OUTLOOK Particularly interested in caustic soda and hydrochloric acid markets in the north-west HYDROCHLORIC ACID Regaining strength CAUSTIC SODA Demand remains firm, pricing continues to have upward momentum (despite recent volatility) Strong pricing forecast at least through 2023 Contin
Slide 19: 2019 Outlook: Sodium Chlorate
2019 OUTLOOK Pulp production remains strong, resulting in high utilization rates Improved market dynamics with closure of competitor plant in Quebec. Although selling price increases not fully reflecting improved fundamentals Industry expected to continue to SODIUM CHLORATE operate at high utili
Slide 20: 2019 Outlook: Sulphuric Acid
2019 OUTLOOK MERCHANT ACID Reduced supply from Vale (≈ 3% of merchant acid demand) Firm demand, reduced supply has led to price increases and positive momentum expected to continue in 2019 SBS transitioning back to old distribution arrangement – positive impact on margins SULPHURIC ACID Demand
Slide 21: 2019 Outlook: Aluminum Sulphate
2019 OUTLOOK ALUMINUM SULPHATE Alum demand is firm Prices increasing, although raw materials escalating & squeezing margins Margins expected to expand when raw materials stabilize ALUMINUM SULPHATE Prices are increasing (ALUM) 21
Slide 22: Non-IFRS Measures
Non-IFRS Measures 22
Slide 23: Non-IFRS Measures
CHEMTRADE Non-IFRS Measures Non-IFRS Measures EBITDA and Adjusted EBITDA - Management defines EBITDA as net earnings before any deduction for net finance costs, taxes, depreciation and amortization. Adjusted EBITDA also excludes other non-cash charges such as gains and losses on the disposal and wri
Slide 24: EBITDA/Adjusted EBITDA
CHEMTRADE EBITDA/Adjusted EBITDA Three months ended Nine months ended September 30, September30, September30, September 30, ($'000) Peois Poot Pets Petr Net earnings (loss) from continuing operations $ 9,194 $ 22,413 $ (34,332) $ 33,365 Add: Depreciation and amortization 53,596 52,411 160,667 148,56
Slide 25: Segmented Results - SPPC
U7 \ | 4. ) \ oe CHEM TRADE Segmented Results - SPPC SPPC - Three months ended Nine months ended September 30, September 30, September 30, September 30, ($'000) 2018 2017 2018 2017 Revenue $ 129,572 $ 125,639 $ 380,683 $ 380,361 Gross profit 15,006 10,176 27,018 40,913 Adjusted EBITDA 22,237 25,215
Slide 26: Segmented Results - WSSC
Oy CHEMTRADE Segmented Results - WSSC WSSC - Three months ended Nine months ended September 30, September 30, September 30, September 30, ($000) 2018 2017 2018 2017 Revenue $ 116,601 $ 103,055 $ 327,869 $ 316,761 Gross profit 11,402 11,908 33,082 44,927 Adjusted EBITDA 24,114 21,089 65,371 73,868 Lo
Slide 27: Segmented Results - EC
© CHEM TRADE S Segmented Results - EC Ec- Three months ended Nine months ended September 30, September 30, September 30, September 30, ($'000) Pots P 2017 2018 Pott North American sales volumes: Sodium chlorate sales volume (000's MT) 103 110 305 255 Chlor-alkali sales volume (000's MECU) 51 54 132
Slide 28: Cash Flow
G CHEMTRADE Cash Flow Three months ended Nine months ended September 30, September 30, September 30, September 30, ($'000) 2018 2017 2018 2017 Cash flow from operating activities $ 102,567 $ 70,452 $ 164,611 $ 89,130 Less: Cash flow used in operating activities of discontinued operations _— _— — (3,
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