Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — Investor Presentation (November 2024)
40 slides from Chemtrade Logistics Income Fund's investor presentation, November 2024
Slide 1: Our Commitment to Sustainability
RESPONSIBLE CARE® OUR COMMITMENT TO SUSTAINABILITY Chemtrade Logistics Income Fund (TSX: CHE.UN) NOVEMBER 2024 Investor Presentation
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 at a Glance
Chemtrade at a Glance Leading Industrials Chemicals Provider $2.2 Billion $1.3 Billion $445 Million - $460 Million Enterprise Value(1) Market Capitalization(2) 2024 Adjusted EBITDA(3) Guidance Geographic Split Segment Split & Key End Markets TSX: CHE.UN Historical Unit Price *LTM Q3 2024 Revenue *LT
Slide 4: Company History
Company History Adjusted EBITDA Growth and Activities Achieved Record Revenue and EBITDA Results $445-$460* Scott Rook $900mm Appointed Added President & CEO US$860mm Chlor-Alkali Portfolio Adjusted Strengthened Sulphur EBITDA & & Water Segments Acquisitions $503 $431 $283 $296 $280 $265 $221 $186 $
Slide 5: Chemtrade's Footprint
Chemtrade’s Footprint Transcontinental Reach Sulphur & Water Chemicals • 12 facilities in Canada and 41 in the United States 2 • Strategic locations near 3 2 customers create a high 1 1 barrier to entry given 2 3 transportation costs 1 3 Electrochemicals 1 • Operating facilities in 2 1 1 BRAZIL 1 Ca
Slide 6: Chemtrade Products
Chemtrade Products Product Line Key Attributes Market Attribute Relative Strength by Product Adjusted EBITDA Comparison by Products Growth Risk Shared Competitive Product Line Prospects Contracts Advantage EBITDA margin (%) Water Chemicals Caustic Soda Chlorine and HCl Regen Acid Brazil Regen Chlori
Slide 7: Operating Segments: Sulphur & Water Chemicals (SWC)
Operating Segments Sulphur & Water Chemicals (SWC) #1 Alum supplier to drinking water plants #2 Supplier of water coagulants #2 in poultry litter treatment Top Ultrapure acid supplier to semiconductors #2 Regen acid supplier to refineries Top 3 Merchant acid supplier *Management estimates for North
Slide 8: Operating Segments: Electrochemicals (EC)
Operating Segments Electrochemicals (EC) #1 Chlor-alkali producer in Canada Top 3 Sodium chlorate supplier in North America EC manufactures and markets sodium chlorate and chlor-alkali products with cost advantaged hydroelectric energy position EC Revenue Chlorine and HCl $741 EC supplies over 7
Slide 9: SWC Segment Looking Ahead
SWC Segment Looking Ahead Sulphuric Acid (H2SO4) Water Solutions Alum, ACH, Regen Ultrapure Merchant PACI, Ferric Gasoline production Semiconductor manufacturing, Wood pulp, industrial chemicals, car Municipal and industrial water speciality batteries, batteries, steel production, water treatment an
Slide 10: EC Segment Looking Ahead
EC Segment Looking Ahead Electrochemicals Caustic Soda (NaOH) Chlorine (Cl2) Hydrochloric Acid (HCI) Sodium Chlorate (NaCI3) Pulp & paper, soaps & detergents, Water treatment, chemical pH adjustor in water treatment, oil & Pulp & paper bleaching aluminum, oil & gas, lithium-ion processes (mainly PVC
Slide 11: Macro Trends
Macro Trends Capturing Secular Tailwinds Growing Water Treatment Chemicals Demand Growing Demand for Semiconductors US$646Bn 5% CAGR (2023 – 2033) US$12Bn 12% CAGR (2022 – 2032) Expected semiconductor Expected growth in global water 2023 North American chemical Expected growth in U.S. capital invest
Slide 12: Targeted Growth Key Drivers
Targeted Growth Key Drivers Key Targets For Chemtrade Overall Growth Targeted growth for EBITDA and Distributable cash per unit of GDP+ per year. Caustic Soda Upside Caustic Soda appears to have reached the bottom of cycle and now positioned to rebound heading into 2025. Every US$50/DMT change
Slide 13: Balanced Capital Allocation
Balanced Capital Allocation Strong Cash Flow Generation Strong Cash Flow Generation has driven 35% 160% reduction in payout ratio and balanced 30% 135% 140% capital allocations. 25% 109% 120% 100% 20% 72% 80% Activities in 2024 include: 15% 60% 10% 30% January 2024 increased monthly 25% 40% 5% 20%
Slide 14: Historical Capital Allocation
Historical Capital Allocation 2021-Sept 2024 Capital Allocation Split Growth Capital Expenditures Total Growth Capital Expenditures of $151M (2021 – YTD September 2024) $62 Growth $57 Capex, Distributions, $151 $221 $22 Debt Reduction and Other, $383 $11 2021 2022 2023 YTD Sept 2024 Debt Reduction (
Slide 15: Balance Sheet
Balance Sheet Conservative Financial Approach Strong Balance Sheet Net Debt & Leverage(1) Maintain a strong balance sheet through cycle. Steady state target leverage of 2.0x - 2.5x. Convertible Debentures to EBITDA Net Senior Debt to EBITDA Total Net Debt Excess of $800 million of liquidity av
Slide 16: Operational Excellence
Operational Excellence Continued Focus Chemtrade has an organization-wide focus on Operational Excellence across five key areas. Delivering continuous improvements in Engagement, Operating Discipline, and Conditions to build a zero-injury culture. Safety Chemtrade has succeeded in moving into th
Slide 17: ESG Key Targets
ESG Key Targets Continued Focus Environmental, Social and Governance 2023 Highlights 9 Chemtrade GHG intensity 58% below NA chemical industry average Target: below NA chemical industry average RESPONSIBLE CARE® 9 88% of electricity from hydroelectricity OUR COMMITMENT TO SUSTAINABILITY Target: >
Slide 18: Valuation Market Comparison
Valuation Market Comparison Recent Third-Party Precedent Transactions Water Chemicals Regen Acid Transaction: US ALCO Water Treatment Transaction: Veolia (North American Chemicals Regeneration Services Business) Transaction Value: $1,450M Transaction Value: $620M LTM EV/EBITDA: 10.2x LTM
Slide 19: Investment Highlights
TSX: CHE.UN Investment Highlights Market Diversified exposure to industrial and consumer end-markets, with extensive and resilient product portfolio that offers a compelling combination of defensiveness and growth. Leadership Significant regional market share across product portfolio with several mu
Slide 20: For more information
TSX: CHE.UN For more information: investor-relations@chemtradelogistics.com Business Overview Growth Capital Allocation Operational Excellence ESG Excellence Investment Highlights Appendix 20
Slide 21: Appendix
Appendix Business Overview Growth Capital Allocation Operational Excellence ESG Excellence Investment Highlights Appendix 21
Slide 22: Management Team
Management Team Scott Rook Joined Chemtrade in 2019 as COO; CEO since March 2021 President & CEO More than 28 years’ experience in the chemical industry including commercial, operational, and business leadership roles Previously Senior VP, Commercial at Ascend Performance Materials Rohit Bhardwaj Jo
Slide 23: Board of Trustees
Board of Trustees Douglas Muzyka Trustee since November 2020 Chair of the Board Corporate Director Previously Senior VP and Chief Science and Technology Officer of E.I. DuPont de Nemours Lucio Di Clemente Trustee since July 2009 Chair of the Governance and Nominating Committee Executive mentor, corp
Slide 24: 2024 Guidance
TSX: CHE.UN 2024 Guidance Revised 2024 Prior 2024 2023 Nine months ended Actual C$ millions Guidance Guidance Actual Sept. 30, 2024 Sept. 30, 2023 Adjusted EBITDA (1) $445.0 - 460.0 $430.0 - 460.0 $502.6 $362.3 $418.0 Maintenance Capital Expenditures (1) $100.0 - $110.0 $100.0 - $110.0 $104.2 $68.4
Slide 25: ESG Key Targets
ESG Key Targets Continued Focus Chemtrade has comprehensive ESG targets and initiatives in place. Category Area of Focus Key Targets Progress in 2023 Approximately 11% of Scope 1 GHG emissions Reduce, offset or displace 2021 baseline direct GHG emissions emitted from sources we were either reduced,
Slide 26: North Vancouver Lease Renewal
North Vancouver Lease Renewal Chemtrade remains in active discussions with the Vancouver Fraser Port Authority regarding a new lease for its North Vancouver chlor-alkali facility. Chemtrade has been actively engaging with the community and the feedback received has been overwhelmingly supportive a
Slide 27: Key Sensitivities
TSX: CHE.UN Key Sensitivities: Annual Impact on Adjusted EBITDA Caustic Soda Price Change of US$50/DMT = C$13.0 million Sodium Chlorate Price Change of CA$50/metric tonne = C$13.3 million C$/US$ exchange rate Change of 1 cent = C$3.8 million (favourable if C$ weakens) Business Overview Growth
Slide 28: Non-IFRS Financial Measures and Ratios
TSX: CHE.UN 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
Slide 29: Non-IFRS Financial Measures and Ratios
TSX: CHE.UN 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 ope
Slide 30: Non-IFRS Financial Measures and Ratios
TSX: CHE.UN Non-IFRS Financial Measures and Ratios 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 inform
Slide 31: Non-IFRS Financial Measures and Ratios
TSX: CHE.UN Non-IFRS Financial Measures and Ratios C$ millions, except per unit metrics and For the twelve months ended ratios Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 LTM Cash flow from operating activities $345.3 $332.3 $ 349.5 $ 401.5 $ 407.5 $ 421.8 $ 386.4 $ 369.2
Slide 32: Non-IFRS Financial Measures and Ratios
TSX: CHE.UN Non-IFRS Financial Measures 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 as the total of long-term debt, the pri
Slide 33: Capital Management Measures
TSX: CHE.UN 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 disclos
Slide 34: Non-IFRS Financial Measures and Ratios
TSX: CHE.UN Non-IFRS Financial Measures 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 expenditures, plus Investments in a joint ventu
Slide 35: Total of Segments Measures
TSX: CHE.UN 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 not
Slide 36: Total of Segments Measures
TSX: CHE.UN Total of Segments Measures Adjusted EBITDA Most directly comparable IFRS financial measure: Net earnings (loss) Three months ended Nine months ended C$ thousands September 30 September 30 2024 2023 2024 2023 Net earnings $ 60,080 $ 70,784 $ 116,634 $ 237,642 Add (Less): Depreciation and
Slide 37: Total of Segments Measures
TSX: CHE.UN Total of Segments Measures Adjusted EBITDA Most directly comparable IFRS financial measure: Net earnings (loss) Twelve Months Ended C$ millions Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Net earnings (loss) $ 128.3 $ 139.0 $ 211.7 $ 249.3 $ 225.9 $ 230.5 $ 17
Slide 38: Total of Segments Measures
TSX: CHE.UN Total of Segments Measures Adjusted EBITDA Most directly comparable IFRS financial measure: Net earnings (loss) Adjusted EBITDA for the year ended December 31 C$ millions 2023 2022 2021 2020 2019 Net earnings (loss) $ 249.3 $ 109.1 $ (235.2) $ (167.5) $ (99.7) Add (Less): Depreciation an
Slide 39: Supplementary Financial Measures
TSX: CHE.UN 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 enti
Slide 40: Supplementary Financial Measures
TSX: CHE.UN 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. Business Overview Growth Capital Allocation Operational Excellence E
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