Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — Investor Presentation (August 2023)
48 slides from Chemtrade Logistics Income Fund's investor presentation, August 2023
Slide 1: 2023 Investor Presentation
RESPONSIBLE CARE® OUR COMMITMENT TO SUSTAINABILITY 2023 Investor Presentation | August 2023
Slide 2: Caution Regarding Forward-Looking Statements
Certain statements contained in this presentation constitute forward-looking statements within the CAUTION 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”, “estimat
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 acid, Market Leadership sodium chlorate, water chemicals, and caustic sod
Slide 4: Delivering Record Performance
Chemtrade Delivering Record Performance Record results generated in 2022. Adjusted EBITDA (C$ millions) Expect 2023 Adjusted EBITDA will exceed To exceed $450 $450 million. This strength reflects: ▪ Improved and robust end-market demand across most key products $430.9 ▪ Higher realized pricing for s
Slide 5: Financial Prudence
Financial Prudence Capital Structure and Capital Allocation ▪ Financial Leverage Target: Net debt to Adjusted EBITDA(1) < 2.2x Strong Balance ▪ Net debt to Adjusted EBITDA (1) of 1.8x at the end of Q2 2023, down from 3.2x at the end of Q2 2022 Sheet ▪ Outstanding principal of convertible debentures
Slide 6: Global Macro Trends: Chemtrade Advantaged Position
Global Macro Trends Chemtrade Advantaged Position Energy Semi-Conductor Water ▪ Globally elevated electricity costs ▪ North American strategic focus on ▪ Increasing regulations and driven by Ukraine conflict. onshoring semi-conductor population growth support ▪ Energy-intensive industrial production
Slide 7: Organic Growth Projects Update
Organic Growth Projects Update Chemtrade plans to allocate $70 million - $100 million for Growth capital expenditures(1) to support its organic growth projects in 2023. (1) Growth capital expenditures is a non-IFRS financial measure. See Appendix for more information Cairo, Ohio: Ultra-Pure Acid Exp
Slide 8: Chemtrade Defensive Attributes
Chemtrade Defensive Attributes Chemtrade is better-positioned than many chemical manufacturers, should an economic downturn occur. ▪ This is owing to the defensive attributes of many key products, its diverse product portfolio that is benefitting from a number of varied tailwinds, and its strengthen
Slide 9: 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 direct ▪ Achieve employee occupational injury/illness ▪ Demonstrate ESG leadership by reporting m
Slide 10: 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 acid, Market Leadership sodium chlorate, water chemicals, and caustic sod
Slide 11: Appendix
APPENDIX 11 Investment Financial Capital Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Structure Growth Attributes Highlights
Slide 12: Chemtrade Management Team
Chemtrade Management Team Management Team Scott Rook Rohit Bhardwaj Tim Montgomery Alan Robinson Emily Powers Tejinder Kaushik Susan Paré President and Chief Chief Financial Group Vice-President Group Vice- Group Vice-President Vice-President General Counsel and Executive Officer Officer Manufacturi
Slide 13: Chemtrade Board of Trustees
Chemtrade Board of Trustees Board of Trustees Douglas Muzyka Lucio Di Clemente Daniella Dimitrov Luc Doyon Emily Moore David Mutombo Katherine Rethy Scott Rook Chair of the Board Chair of the Chair of the Audit Trustee Chair of the Trustee Trustee CEO, Trustee Compensation Committee Responsible Care
Slide 14: Chemtrade Financial Overview
Chemtrade Financial Overview Unit Price (1) $8.92 CHE.UN Unit Price - Last Twelve Months $10.50 $10.00 $9.50 Market Capitalization (1) $1.0 billion $9.00 $8.50 $8.00 Enterprise Value (1) $2.0 billion $7.50 $7.00 $6.50 Net debt to Adjusted EBITDA (2) 1.8x Volume 2.0M 1.5M Distribution / Yield 1.0M $0
Slide 15: Financial Prudence: Capital Structure and Capital Allocation
Financial Prudence Capital Structure and Capital Allocation Equity (CHE.UN) Capital Allocation Priorities: ▪ 116.2 million units outstanding, as of June 30, 2023. 1. Maintaining a strong balance sheet 2. Investing in financially accretive organic growth opportunities Long-Term Debt 3. Return of capi
Slide 16: Chemtrade Company History
Chemtrade Company History December 2002 August 2003 August 2005 July 2001 Acquired Peak Chemicals Acquired SHS Operations Acquired Pulp Chemicals IPO on TSX (Expanded Sulphuric Acid business; (Sodium Hydrosulphite) (Sodium Chlorate; Crude Tall Oil) diversified end markets) (Spun out of Marsulex) US$
Slide 17: Chemtrade Operating Segments
Chemtrade Operating Segments Electrochemicals (EC) Sulphur and Water Chemicals (SWC) Segment Segment LTM Revenue 42% 58% SWC EC Electrochemicals Acids & Non-Acid Water Chlor-alkali - #1 producer in UP Acid - #1 supplier to Alum - #1 supplier to Canada Semi- conductors (1) drinking water plants (1) L
Slide 18: Electrochemicals (EC) Segment
Electrochemicals (EC) Segment 18 Investment Financial Capital Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Structure Growth Attributes Highlights
Slide 19: 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 refining; Caustic soda lithium-ion battery production; chemical • North America: Access to low-cost hydroelectric • North America: Univ
Slide 20: 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. ▪ With utility costs
Slide 21: EC Segment Chlorine and HCl Outlook
EC Segment Chlorine and HCl Outlook Chlorine and HCl ▪ Merchant chlorine prices remain strong due to tighter Long Term Market Demand industry supply and robust end-market demand in North America. 2020: Oil WTI: US$39/bbl US & Can Rigs: 522 ▪ North American rig counts remain high, signaling continued
Slide 22: EC Segment Caustic Soda Outlook
EC Segment Caustic Soda Outlook Caustic Soda ▪ After historically high pricing in 2022, NE Asia spot index pricing has declined Forecast steadily year-to-date in 2023. ▪ Taiwan contract pricing suggests pricing has reached a trough, with improvement over the balance of 2023 and into 2024 and 2025. ▪
Slide 23: Sulphur and Water Chemicals (SWC) Segment
Sulphur and Water Chemicals (SWC) Segment 23 Investment Financial Capital Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Structure Growth Attributes Highlights
Slide 24: SWC Segment Key Products
SWC Segment Key Products Key Products Primary End-Uses Competitive Advantages Key Competitors Regen • Largest facilities are closely connected to customers Ecovyst; Veolia North America; PVS Chemical Solutions Gasoline production sulphuric acid (connected via pipeline at most facilities) Inc. Ultrap
Slide 25: SWC Segment Product Outlook
SWC Segment Product Outlook Sulphuric Acid Water Chemicals ▪ Regen acid, used in gasoline alkylate production, ▪ Realizing margin expansion as pricing catches up continues to experience strong demand. to raw material costs. Any weakness in raw Chemtrade maintains an optimistic near-term materials co
Slide 26: Q2 2023 Consolidated Quarterly Results
Q2 2023 Consolidated Quarterly Results C$ Millions, except per unit metrics and ratios Q2 2023 represents Chemtrade’s highest quarterly Adjusted EBITDA ever Q2 2023 Q2 2022 Change ($) Change (%) Revenue 470.0 446.4 23.6 5% Net Earnings (1) 87.3 34.8 52.5 151% Adjusted EBITDA (2) 144.2 81.7 62.5 76%
Slide 27: Q2 2023 Earnings Results
Q2 2023 Earnings Results 27 Investment Financial Capital Organic Defensive Investment Macro Trends ES&G Appendix Highlights Performance Structure Growth Attributes Highlights
Slide 28: Q2 2023 SWC Results
Q2 2023 SWC Results C$ Millions Revenue ▪ Revenue was $280.3 million for the period Revenue ▪ Weaker CAD improved revenue by $12.2 million. <-1% $12.2 ▪ Excluding impact of F/X, revenue declined by $1.4 million or <1%. ▪ Lower selling prices of merchant acid primarily due to lower sulfur $269.5 $268
Slide 29: Q2 2023 EC Results
Q2 2023 EC Results C$ Millions Revenue ▪ Revenue for the period was $189.7 million. ▪ Q2 2022 revenue was negatively impacted by the biennial maintenance turnaround at Revenue North Van. $18.9 Adjusting for the impacts of the North Van turnaround ($15.0 million) and F/X ($8.9 $8.9 ▪ million) revenue
Slide 30: Q2 2023 Corporate Costs
Q2 2023 Corporate Costs C$ Millions Corporate Costs Corporate Costs $23.8 $22.3 ▪ Long-term incentive plan costs lower by $2.0 million year- over-year. ▪ Higher realized foreign exchange provided $1.4 million gain year-over-year. Q2 2022 Q2 2023 Partially offset by: ▪ Short-term incentive compensati
Slide 31: 2023 Guidance
2023 Guidance C$ Millions 2023 Guidance Adjusted EBITDA ▪ In June 2023, Chemtrade announced that it (C$ millions) >$450.0 believes 2023 Adjusted EBITDA will exceed $450 million. ▪ Achieving 2023 guidance would represent a new record annual Adjusted EBITDA for the Company, following a record year in
Slide 32: 2023 Guidance
2023 Guidance C$ Millions Updated Prior Actual 2023 Guidance ($ million) 2023 Guidance 2023 Guidance 2022 Results Adjusted EBITDA (1) >$450 At or above 2022 $430.9 Maintenance Capital Expenditures (1) $80 - $105 $80 - $105 $99.8 Growth capital expenditures (2) $70 - $100 $110 - $140 $21.6 Lease
Slide 33: 2023 Guidance: Key Assumptions
2023 Guidance C$ Millions Updated 2023 Prior 2023 2022 Key Assumptions Assumption Assumption Actual Approximate North American MECU sales volumes 180,000 185,000 184,000 2023 average MECU Netback being lower than 2022 average per CAD $60 CAD $60 N/A MECU* Average CMA (1) NE Asia caustic spot price
Slide 34: Key Sensitivities
Key Sensitivities Annual Impact on Adjusted EBITDA Caustic Soda Price ▪ Change of US$50/DMT = CA$13 million Sodium Chlorate Price ▪ Change of CA$50/metric tonne = CA$14.3 million CA$/US$ exchange rate ▪ Change of 1 cent = CA$3.9 million (favourable if C$ weakens and vice versa) 34 Investment Financi
Slide 35: 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 36: 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 37: 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 38: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios C$ Thousands, except per unit metrics and ratios Three months ended June 30 2023 2022 $ 119,318 Cash flow from operating activities $ 83,976 Add (Less): Lease payments net of sub-lease receipts (14,507) (12,586) (Decrease) Increase in working capital (3,536) (2
Slide 39: Non-IFRS Financial Measures and Ratios
Non-IFRS financial measures and ratios C$ Millions, except per unit metrics and ratios For the quarter ended Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 $ 421.8 $ 386.4 $ 369.2 $ 357.8 $ 295.7 LTM Cash flow from operating activities Add (Less): LTM lease payments net of sub-lease receipts (55.5) (53.6)
Slide 40: Non-IFRS Financial Measures and Ratios: Net Debt
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 41: Non-IFRS Financial Measures and Ratios: Growth Capex
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 42: 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 43: 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 44: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Three months ended June 30 2023 2022 Net earnings (loss) $ 87,325 $ 34,835 Add (Less): Depreciation and amortization 53,186 53,229 Net finance costs (income) 5,457 9,801 Inco
Slide 45: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) LTM Adjusted EBITDA for the quarter ended Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 LTM Net earnings (loss) $230.5 $ 178.0 $ 109.1 $ (59.7) $(15
Slide 46: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Adjusted EBITDA for the year ended December 31 2022 2021 2020 2019 2018 $ (131.5 Net earnings (loss) $ 109.1 $ (235.2) $ (167.5) $ (99.7) ) Add (Less): Depreciation and amort
Slide 47: 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 48: Supplementary Financial Measures
Supplementary Financial Measures Cash interest Represents interest expense related to long-term debt, interest on Debentures, and pension plan interest expense, net of interest income. Cash tax Represents current income tax expense. 48 Investment Financial Capital Organic Defensive Investment Macro
Chemtrade Logistics Income Fund — Investor Presentation (August 2023) on 6ix