Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — Investor Presentation (November 2023)
45 slides from Chemtrade Logistics Income Fund's investor presentation, November 2023
Slide 1: Our Commitment to Sustainability
RESPONSIBLE CARE® OUR COMMITMENT TO SUSTAINABILITY 2023 Investor Presentation | November 2023
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 sod
Slide 4: Delivering Record Performance
Chemtrade Delivering Record Performance Record results generated in 2022. Adjusted EBITDA (C$ millions) Anticipate 2023 to be another record year, with Adjusted EBITDA expected To exceed $490 to exceed $490 million. This strength reflects: ▪ Improved and robust end-market demand across most key prod
Slide 5: 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 Q3 2023, down from 2.2x at the end of 2022 Sheet ▪ Outstanding principal of convertible debentures red
Slide 6: Global Macro Trends Chemtrade Advantaged Position
Global Macro Trends Chemtrade Advantaged Position Energy Semi-Conductor Water ▪ Elevated electricity costs globally. ▪ North American strategic focus ▪ Increasing regulations and ▪ Energy-intensive industrial on onshoring semi-conductor population growth support production shifting from Europe to pr
Slide 7: Organic Growth Projects Update
Organic Growth Projects Update Chemtrade plans to allocate $50 million - $75 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 Expa
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, our diverse product portfolio that is benefitting from a number of varied tailwinds, and our 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 or offset or displace 2021 baseline ▪ Achieve employee occupational injury/illness ▪ Demonstrate ESG leadership by reporting direct
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 Market Leadership acid, sodium chlorate, water chemicals, and caustic sod
Slide 11: Appendix
APPENDIX 11 Investment Financial Capital Macro Organic Defensive Investment ES&G Appendix Highlights Performance Structure Trends 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 Financial Group Vice- Group Vice- Group Vice- Vice-President General Counsel Chief Executive Officer President President, President Informatio
Slide 13: Chemtrade Board of Trustees
Chemtrade Board of Trustees Board of Trustees Douglas Muzyka Lucio Di Daniella Dimitrov Emily Moore Luc Doyon Katherine Rethy David Mutombo Scott Rook Chair of the Clemente Chair of the Audit Chair of the Trustee Trustee Trustee CEO, Trustee Board Chair of the Committee Responsible Care Compensation
Slide 14: Chemtrade Financial Overview
Chemtrade Financial Overview CHE.UN Unit Price - Last Twelve Months Unit Price (1) $8.60 $10.50 $10.00 $9.50 Market Capitalization (1) $1.0 billion $9.00 $8.50 $8.00 Enterprise Value (1) $1.9 billion $7.50 $7.00 $6.50 Net debt to Adjusted EBITDA (2) 1.7x Volume 1.5M Distribution / Yield 1.0M $0.60 p
Slide 15: Chemtrade Company History
Chemtrade Company History December 2002 August 2003 August 2005 July 2001 Acquired Peak Chemicals Acquired SHS Operations Acquired Pulp Chemicals IPO on TSX (Expanded Sulphuric Acid business; (Sodium Hydrosulphite) (Sodium Chlorate; Crude Tall Oil) diversified end markets) (Spun out of Marsulex) US$
Slide 16: 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 UP Acid - #1 supplier to Alum - #1 supplier to in Canada Semi- conductors (1) drinking water plants (1) L
Slide 17: Sulphur and Water Chemicals (SWC) Segment
Sulphur and Water Chemicals (SWC) Segment 17 Investment Financial Capital Macro Organic Defensive Investment ES&G Appendix Highlights Performance Structure Trends Growth Attributes Highlights
Slide 18: 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 19: SWC Segment Product Outlook
SWC Segment Product Outlook Water Chemicals Sulphuric Acid ▪ Significantly improved profitability, reflecting ▪ Regen acid, used in gasoline alkylate lower raw material costs and recent production, continues to experience strong commercialization initiatives. demand. Chemtrade maintains an optimisti
Slide 20: Electrochemicals (EC) Segment
Electrochemicals (EC) Segment 20 Investment Financial Capital Macro Organic Defensive Investment ES&G Appendix Highlights Performance Structure Trends Growth Attributes Highlights
Slide 21: 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 22: 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 23: EC Segment Chlorine and HCl Outlook
EC Segment Chlorine and HCl Outlook Chlorine and HCl ▪ Merchant chlorine prices remain strong due to tight Long Term Market Demand industry supply and robust end-market demand in North America. 2020: Oil WTI: US$39/bbl US & Can Rigs: 522 ▪ North American rig counts are lower year-over-year, but rema
Slide 24: EC Segment Caustic Soda Outlook
EC Segment Caustic Soda Outlook Caustic Soda ▪ After historically high pricing in 2022, NE Asia spot index pricing declined steadily in H1/23. Forecast ▪ Taiwan contract pricing and industry consultants suggest pricing has reached a trough, with improvement into 2024 and 2025. ▪ Chemtrade’s access t
Slide 25: Q3 2023 Consolidated Quarterly Results
Q3 2023 Consolidated Quarterly Results C$ Millions, except per unit metrics and ratios Q3 2023 Q3 2022 Change ($) Change (%) Revenue 483.5 519.9 (36.4) (7)% Net Earnings 70.8 75.3 (4.6) (6)% Adjusted EBITDA (1) 142.1 137.1 5.1 4% Cash Flows from Operating Activities 129.2 143.5 (14.3) (10)% Distribu
Slide 26: Q3 2023 SWC Results
Q3 2023 SWC Results C$ Millions Revenue ▪ Revenue was $290.5 million for the period Revenue ▪ Weaker CAD improved revenue by $5.9 million. Excluding impact of F/X, revenue declined by $26.9 $5.9 million or 9%, primarily due to: o Lower selling prices of merchant acid and sulphur products due to lowe
Slide 27: Q3 2023 EC Results
Q3 2023 EC Results C$ Millions Revenue Revenue $3.8 ▪ Revenue was $193.0 million for the period. ▪ Weaker CAD improved revenue by $3.8 million. Excluding impact of F/X, revenue declined $208.4 $189.2 by $19.2 million or 9%, primarily due to: o Significantly lower selling prices of caustic soda o Low
Slide 28: Q3 2023 Corporate Costs
Q3 2023 Corporate Costs C$ Millions Corporate Costs Corporate Costs ▪ Corporate costs increased primarily due to: $25.8 $20.6 o Provisions recorded for non-income tax related audits during Q3 2023 o $1.1 million higher short-term incentive compensation costs compared to Q3 2022 Q3 2022 Q3 2023 o Hig
Slide 29: 2023 Guidance
2023 Guidance C$ Millions 2023 Guidance Adjusted EBITDA ▪ Chemtrade announced that it now expects (C$ millions) 2023 Adjusted EBITDA will exceed $490 >$490.0 million. ▪ Achieving 2023 guidance would represent a new record annual Adjusted EBITDA for the Company, following a record year in 2022. ▪ The
Slide 30: 2023 Guidance
2023 Guidance C$ Millions Updated Prior Actual 2023 Guidance ($ million) 2023 Guidance 2023 Guidance 2022 Results Adjusted EBITDA (1) >$490 >$475 $430.9 Maintenance Capital Expenditures (1) $80 - $105 $80 - $105 $99.8 Growth capital expenditures (2) $50 - $75 $70 - $100 $21.6 Lease Payments $50 - $6
Slide 31: 2023 Guidance
2023 Guidance C$ Millions Updated 2023 Prior 2023 2022 Key Assumptions Assumption Assumption Actual Approximate North American MECU sales volumes 180,000 180,000 184,000 2023 realized MECU Netback being higher or (lower) than 2022 CAD $90 CAD ($60) N/A per MECU* Average CMA (1) NE Asia caustic spot
Slide 32: Key Sensitivities Annual Impact on Adjusted EBITDA
Key Sensitivities Annual Impact on Adjusted EBITDA Caustic Soda Price ▪ Change of US$50/DMT = CA$14.0 million Sodium Chlorate Price ▪ Change of CA$50/metric tonne = CA$14.3 million CA$/US$ exchange rate ▪ Change of 1 cent = CA$4.1 million (favourable if C$ weakens and vice versa) 32 Investment Finan
Slide 33: 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 34: 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 35: 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 36: Non-IFRS financial measures and ratios
Non-IFRS financial measures and ratios C$ Millions, except per unit metrics and ratios For the quarter ended Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 LTM Cash flow from operating activities $ 407.5 $ 421.8 $ 386.4 $ 369.2 $ 357.8 Add (Less): LTM lease payments net of sub-lease receipts (56.6) (55.5)
Slide 37: 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 38: 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 39: 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 40: 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 41: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Three months ended September 30 2023 2022 Net earnings $ 70,784 $ 75,341 Add (Less): Depreciation and amortization 54,741 56,598 Net finance (income) (2,429) (25,864) Income
Slide 42: 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 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 LTM Net earnings (loss) $225.9 $230.5 $ 178.0 $ 109.1 $ (59.
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 year ended December 31 2022 2021 2020 2019 2018 Net earnings (loss) $ 109.1 $ (235.2) $ (167.5) $ (99.7) $ (131.5) Add (Less): Depreciation and amorti
Slide 44: 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 45: 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. 45 Investment Financial Capital Macro Organic Defensive Investment ES&G Appendix
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