Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — CIBC Western Institutional Investor Conference 2024
42 slides from Chemtrade Logistics Income Fund's conference presentation, January 2024
Slide 1: CIBC Western Institutional Investor Conference
RESPONSIBLE CARE® OUR COMMITMENT TO SUSTAINABILITY CIBC Western Institutional Investor 2024 Conference | January 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 sod
Slide 4: Delivering Record Performance
Chemtrade Delivering Record Performance Anticipating record results in 2023 Adjusted EBITDA with Adjusted EBITDA expected to (C$ millions) exceed $490 million. To exceed $490 This strength reflects: ▪ Improved and robust end-market demand across most key products ▪ Higher realized pricing for severa
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: 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 7: 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 8: 3-5 Year Outlook
Chemtrade 3-5 Year Outlook Outlook for Base Business Sulfur and Water Chemicals (SWC) Electrochemicals (EC) ▪ Ultrapure – Significantly Higher ▪ Chlor-Alkali - May pull back slightly from elevated earnings in 2022 and 2023 ▪ Regen/Merchant - Flat ▪ Sodium Chlorate - May pull back slightly ▪ Water Ch
Slide 9: Organic Growth Projects Update
Organic Growth Projects Update Chemtrade plans to allocate $60 million - $90 million for Growth capital expenditures(1) to support its organic growth projects in 2024. (1) Growth capital expenditures is a non-IFRS financial measure. See Appendix for more information Cairo, Ohio: Ultra-Pure Acid Expa
Slide 10: Defensive Attributes
Chemtrade Defensive Attributes Chemtrade is better-positioned than many chemical manufacturers, should an economic downturn occur. ▪ This is owing to the defensive attributes of many key products, our diverse product portfolio that is benefitting from a number of varied tailwinds, and our strengthen
Slide 11: 2024 Guidance
2024 Guidance C$ Millions ▪ 2023 Adjusted EBITDA guidance above $490.0 million, the highest level Chemtrade has ever achieved ▪ 2024 Adjusted EBITDA guidance range of $395.0 million to $435.0 million ▪ Implied payout ratio (1) of 45% for 2024, assuming the midpoint of guidance compared to 22% for th
Slide 12: 2024 Guidance
2024 Guidance C$ Millions ▪ Chemtrade’s Adjusted EBITDA in 2024 is expected to be below the record high 2023 level, but still in the range of Chemtrade’s second highest Adjusted EBITDA, achieved in 2022. ▪ Chemtrade considers the mid-point of 2024’s anticipated Adjusted EBITDA of $415 million to rep
Slide 13: 2024 Guidance Key Assumptions
2024 Guidance Key Assumptions 2023 2022 2024 Assumptions Assumptions Actual Key Assumptions Updated in Q4 Approximate North American MECU sales volumes 173,000 180,000 184,000 2024 realized MECU Netback being lower than 2023 (per MECU) CAD ($210) NA N/A Average CMA(1) NE Asia caustic spot price inde
Slide 14: 2024 Guidance Capital Allocations
2024 Guidance Capital Allocations 2024 Distributable Cash Estimate (C$ Millions) EBITDA Midpoint of Guidance Range $ 415.0 Distributable Cash Midpoint of Guidance Range $ 170.0 2024 Allocations 1) Organic Growth Investing $60-$90M in growth projects 2) Distributions Increasing distribution by 10% to
Slide 15: 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 16: 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 17: Appendix
APPENDIX 17 Investment Financial Capital Operating Macro Organic Defensive 2024 Investment ES&G Appendix Highlights Performance Structure Segments Trends Growth Attributes Guidance Highlights
Slide 18: 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 19: Board of Trustees
Chemtrade Board of Trustees Board of Trustees Douglas Muzyka Lucio Di Clemente Daniella Dimitrov Emily Moore Luc Doyon Katherine Rethy Scott Rook Chair of the Board Chair of the Chair of the Audit Chair of the Trustee Trustee CEO, Trustee Compensation and Committee Responsible Care Corporate Committ
Slide 20: 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 $0.60 p
Slide 21: Company History
Chemtrade Company History December 2002 August 2003 August 2005 July 2001 Acquired Peak Chemicals Acquired SHS Operations Acquired Pulp Chemicals IPO on TSX (Expanded Sulphuric Acid business; (Sodium Hydrosulphite) (Sodium Chlorate; Crude Tall Oil) diversified end markets) (Spun out of Marsulex) US$
Slide 22: Sulphur and Water Chemicals (SWC) Segment
Sulphur and Water Chemicals (SWC) Segment 22 Investment Financial Capital Operating Macro Organic Defensive 2024 Investment ES&G Appendix Highlights Performance Structure Segments Trends Growth Attributes Guidance Highlights
Slide 23: 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 24: 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 25: Electrochemicals (EC) Segment
Electrochemicals (EC) Segment 25 Investment Financial Capital Operating Macro Organic Defensive 2024 Investment ES&G Appendix Highlights Performance Structure Segments Trends Growth Attributes Guidance Highlights
Slide 26: 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 27: 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 28: 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 29: 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 30: 2024 Key Sensitivities Annual Impact on Adjusted EBITDA
2024 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$3.8 million (favourable if C$ weakens and vice versa) 30 Investment
Slide 31: 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 32: 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 33: 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 34: 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 Q4 2022 LTM Cash flow from operating activities $ 407.5 $ 369.2 Add (Less): LTM lease payments net of sub-lease receipts (56.6) (52.4) LTM (decrease) Increase in working capital 17.1
Slide 35: 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 36: 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 37: 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 38: 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 39: 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 Q4 2022 LTM Net earnings (loss) $225.9 $ 109.1 Add (Less): LTM depreciation and amortization 215.0 217.0 LTM net finance cos
Slide 40: 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 41: 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 42: 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. 42 Investment Financial Capital Operating Macro Organic Defensive 2024 Investmen
Chemtrade Logistics Income Fund — CIBC Western Institutional Investor Conference 2024 on 6ix