Chemtrade Logistics Income Fund · TSX:CHE.UN
Chemtrade Logistics Income Fund — Investor Presentation (May 2024)
40 slides from Chemtrade Logistics Income Fund's investor presentation, May 2024
Slide 1: Investor Presentation May 2024
RESPONSIBLE CARE® OUR COMMITMENT TO SUSTAINABILITY 2024 Investor Presentation May 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 Market Diversified exposure to industrial and consumer end-markets, with extensive product portfolio. Significant regional market share across extensive product portfolio and several multi-year tailwinds. Leadership Strong Commercial Excellence and Profitability initi
Slide 4: Chemtrade Operating Segments
Chemtrade Operating Segments Sulphur and Water Chemicals (SWC) ▪ Manufactures and markets sulphur-based products and services, water treatment chemicals, and specialty chemicals. LTM Revenue (1) ▪ One of North America’s largest suppliers of industrial sulphuric acid, including Regen acid for the pet
Slide 5: 2024 Guidance
2024 Guidance C$ Millions Achieved Record Adjusted EBITDA in both 2022 and 2023 ▪ Strong performance across the organization with higher selling prices and Commercial Excellence and Profitability initiatives driving improved margins; focus on Productivity & Reliability keeping plants operational and
Slide 6: 2024 Guidance
2024 Guidance C$ Millions While Adjusted EBITDA in 2024 is expected to be below 2023, the mid-point of 2024’s Adjusted EBITDA guidance of $415.0 million is more representative of a sustainable level of mid-cycle earnings for the current business portfolio. Below are the key factors that are expected
Slide 7: Financial Prudence
Financial Prudence Capital Structure and Capital Allocation Strong Balance ▪ Financial Leverage Target: Net debt to LTM Adjusted EBITDA(1) < 3.0x. ▪ Net debt to LTM Adjusted EBITDA (1) of 1.9x at the end of Q1 2024, down from Sheet 2.2x at the end of Q1 2023. ▪ Monthly Distribution raised by 10% in
Slide 8: 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 9: Organic Growth Projects Update
Organic Growth Projects Update Chemtrade plans to allocate $60 million - $90 million for Growth capital expenditures to support its organic growth projects in 2024, including approximately $40 million for its Ultrapure sulphuric acid business. Cairo, Ohio: Ultra-Pure Acid Expansion and Upgrade Proje
Slide 10: Chemtrade Defensive Attributes
Chemtrade Defensive Attributes Chemtrade is better-positioned than many chemical manufacturers to weather an economic downturn. This is owing to the defensive attributes of many key products, a diverse product portfolio that is benefitting from a number of varied tailwinds, and Chemtrade’s strengthe
Slide 11: Chemtrade Key ESG Targets
Chemtrade Key ESG Targets 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, offset, or displaced in 2023 own or control (Scope 1 emissions) by 50% b
Slide 12: Chemtrade Investment Highlights
Chemtrade Investment Highlights Market Diversified exposure to industrial and consumer end-markets, with extensive product portfolio. Significant regional market share across extensive product portfolio and several multi-year tailwinds. Leadership Strong Commercial Excellence and Profitability initi
Slide 13: Appendix
APPENDIX 13 Organic Investment Operating 2024 Capital Defensive Investment Macro Trends Growth ESG Appendix Highlights Segments Guidance Allocation Attributes Highlights Projects
Slide 14: Chemtrade Management Team
Chemtrade 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 B
Slide 15: Chemtrade Board of Trustees
Chemtrade 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 Compensation and Corporate Governance Executive
Slide 16: Chemtrade Financial Overview
Chemtrade Financial Overview Unit Price (1) $8.79 CHE.UN Unit Price - Last Twelve Months $9.50 $9.00 Market Capitalization (1) $1.0 billion $8.50 $8.00 $7.50 Enterprise Value (1) $1.9 billion $7.00 $6.50 Net debt to Adjusted EBITDA (2) 1.9x Volume 1.5M Distribution / Yield 1.0M $0.66 per share / 7.5
Slide 17: Chemtrade Company History
Chemtrade Company History December 2002 August 2003 August 2005 July 2001 Acquired Peak Chemicals Acquired SHS Operations Acquired Pulp Chemicals IPO on TSX (Expanded Sulphuric Acid business; (Sodium Hydrosulphite) (Sodium Chlorate; Crude Tall Oil) diversified end markets) (Spun out of Marsulex) US$
Slide 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 sulphuric Ecovyst; Veolia North America; PVS Chemical Gasoline production customers (connected via pipeline at most acid Solutions Inc. facilities) • Nort
Slide 19: SWC Segment Product Outlook
SWC Segment Product Outlook Water Chemicals Sulphuric Acid ▪ Expect another strong year for water chemicals ▪ Regen acid, used in gasoline alkylate production, in 2024, reflecting continued robust demand and continues to experience strong demand. pricing. Chemtrade maintains an optimistic near-term
Slide 20: EC Segment Key Products
EC Segment Key Products Key Products Primary End-Uses Competitive Advantages Key Competitors Pulp & paper; soaps and detergents; aluminum; oil & Caustic soda gas exploration and refining; chemical processes • North America: Access to stable, regulated and • North America: Univar; ERCO Worldwide; rel
Slide 21: 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 22: EC Segment Chlorine and HCl Outlook
EC Segment Chlorine and HCl Outlook North Vancouver Chlor-Alkali Facility - Biennial Maintenance Turnaround ▪ Biennial maintenance turnaround at North Vancouver facility was completed successfully in Q2 2024, with the facility now back to normal operating rates. The estimated impact to Q2 2024 Adjus
Slide 23: EC Segment Caustic Soda Outlook
EC Segment Caustic Soda Outlook Caustic Soda ▪ 2024 Guidance assumes realized caustic soda pricing based on an average NE Asia index price of US$375 per Forecast tonne, as compared to US$455 per tonne in 2023. ▪ Caustic soda pricing expected to remain a year-over- year headwind in Q2 2024. ▪ Every U
Slide 24: Q1 2024 Consolidated Quarterly Results
Q1 2024 Consolidated Quarterly Results C$ Millions, except per unit metrics and ratios Q1 2024 results represented a solid start to 2024 and were ahead of Chemtrade’s internal expectations, albeit below the record Q1 results achieved in 2023. Q1 2024 Q1 2023 Change ($) Change (%) Revenue 418.2 471.2
Slide 25: 2024 Guidance
2024 Guidance C$ Millions Three months ended 2024 2023 Guidance Actual 2024 Guidance ($ million) March 31, 2024 March 31, 2023 Adjusted EBITDA (1) $395.0 - $435.0 $502.6 $109.9 $131.7 Maintenance Capital Expenditures (1) $85.0 - $105.0 $104.2 $15.4 $17.5 Growth Capital Expenditures (1) $60.0 - $90.0
Slide 26: 2024 Guidance Assumptions
2024 Guidance Assumptions C$ Millions 2024 2023 Key Assumptions Assumptions Actual Approximate North American MECU sales volumes 173,000 181,000 2024 realized MECU Netback being higher or (lower) than 2023 per MECU* CAD ($210) N/A Average CMA (1) NE Asia caustic spot price index per tonne (2) US$375
Slide 27: Key Sensitivities Annual Impact on Adjusted EBITDA
Key Sensitivities Annual Impact on Adjusted EBITDA Caustic Soda Price ▪ Change of US$50/DMT = C$12.5 million Sodium Chlorate Price ▪ Change of CA$50/metric tonne = C$13.4 million C$/US$ exchange rate ▪ Change of 1 cent = C$3.8 million (favourable if C$ weakens) 27 Organic Investment Operating 2024 C
Slide 28: 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 29: 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 30: 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 31: Non-IFRS financial measures and ratios
Non-IFRS financial measures and ratios C$ Millions, except per unit metrics and ratios For the twelve months ended Q1 2024 Q1 2023 LTM Cash flow from operating activities $ 349.5 $ 386.4 Add (Less): LTM lease payments net of sub-lease receipts (58.8) (53.6) LTM (decrease) Increase in working capital
Slide 32: 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 33: 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 34: 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 35: 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 36: Total of Segments Measures
Total of Segments Measures C$ Millions Adjusted EBITDA – Most directly comparable IFRS financial measure: Net earnings (loss) Three months ended March 31 2024 2023 Net earnings $ 41,955 $ 79,533 Add (Less): Depreciation and amortization 44,890 52,140 Net finance (income) 5,642 (12,736) Income tax ex
Slide 37: 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 twelve months ended Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 LTM Net earnings (loss) $211.7 $249.3 $225.9 $230.5 $ 178.
Slide 38: 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 2023 2022 2021 2020 2019 Net earnings (loss) $ 249.3 $ 109.1 $ (235.2) $ (167.5) $ (99.7) Add (Less): Depreciation and amortiza
Slide 39: 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 40: 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. 40 Organic Investment Operating 2024 Capital Defensive Investment Macro Trends G
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