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Chemtrade Logistics Income Fund Issues 2022 Guidance

TORONTO–(BUSINESS WIRE)–Chemtrade Logistics Income Fund (TSX: CHE.UN) today issued 2022 Guidance.

2022 Guidance

Chemtrade expects its 2022 Adjusted EBITDA(1) to range between $265 million and $295 million.

Chemtrade’s guidance is based on numerous assumptions. Certain key assumptions that underpin the guidance are as follows:

  • There will be no significant lockdowns or stay at home orders issued in North America due to a resurgence of COVID-19 during 2022.
  • None of the principal manufacturing facilities (as set out in Chemtrade’s AIF) incurs significant unplanned downtime.
  • Key assumptions in the Electrochemicals (EC) Segment are as follows:

    • North American Metric Electrochemical unit (“MECU”) production volume of approximately 185,000;
    • Biennial maintenance turnaround at the North Vancouver chlor-alkali facility, which is scheduled for the second quarter of 2022, will last for approximately three weeks and is expected to have a negative EBITDA impact of approximately $11 million;
    • The average NE Asia Caustic spot price Index for the year ended September 30, 2022, which is a key determinant for prices realized during 2022 will be US$440 per tonne which is US$150 per tonne higher than the prior year; and
    • North American production volume of sodium chlorate of approximately 365,000 tonnes.
  • A foreign exchange rate of US$1 per C$1.234.
  • Long term incentive plan accruals of between $10 million and $15 million.
  • Chemtrade also expects:

    • Maintenance Capital Expenditures to range between $72 million and $77 million.
    • Cash Interest to range between $55 million and $60 million.
    • Cash Taxes to range between $6 million and $10 million.
    • Lease Expense to range between $50 million and $55 million.

As a result of the sale of two of its specialty chemicals businesses in November 2021, effective January 1, 2022, Chemtrade has reconfigured its operating segments. Sulphur Products and Performance Chemicals (SPPC) will be combined with the remaining products of the Water Solutions and Specialty Chemicals (WSSC) segment to form a new segment called Sulphur and Water Chemicals (SWC). The Electrochemicals (EC) and Corporate segments will remain unchanged.

Chemtrade’s guidance for 2021 was that it expected 2021’s Adjusted EBITDA(1) to range between $245 million and $260 million, which included approximately $19 million of EBITDA relating to the two specialty chemicals businesses which were sold in November 2021. Excluding the benefit of the lawsuit settled during the fourth quarter of 2021 (as described in Chemtrade’s third quarter Management’s Discussion and Analysis report), Chemtrade now expects to be at or above the top of this guidance range.

About Chemtrade

Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America’s largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite, sodium hydrosulphite and phosphorus pentasulphide. Chemtrade is a leading regional supplier of sulphur, chlor-alkali products, liquid sulphur dioxide, and zinc oxide. Additionally, Chemtrade provides industrial services such as processing by-products and waste streams.

(1) Non–IFRS Measures

EBITDA and Adjusted EBITDA –

Management defines EBITDA as net earnings before any deduction for net finance costs, taxes, depreciation and amortization. Adjusted EBITDA also excludes other non-cash charges such as gains and losses on the disposal and write-down of assets, and unrealized foreign exchange gains and losses. EBITDA and Adjusted EBITDA are metrics used by many investors and analysts to compare organizations on the basis of ability to generate cash from operations. Management considers Adjusted EBITDA (as defined) to be an indirect measure of operating cash flow, which is a significant indicator of the success of any business. Adjusted EBITDA is not intended to be representative of cash flow from operations or results of operations determined in accordance with IFRS or cash available for distribution.

EBITDA and Adjusted EBITDA are not recognized measures under IFRS. Chemtrade’s method of calculating EBITDA and Adjusted EBITDA may differ from methods used by other income trusts or companies, and accordingly may not be comparable to similar measures presented by other organizations.

A reconciliation of net earnings to EBITDA and Adjusted EBITDA is provided in Chemtrade’s Management’s Discussion & Analysis in quarterly reports. See Financial Reports or SEDAR.

Caution Regarding Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements within the 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”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions. Specifically, forward-looking statements in this news release include statements respecting certain future expectations about: the Fund’s expected adjusted EBITDA range for 2022; the expected 2022 range of long term incentive plan accruals, maintenance capital expenditures, cash interest, cash taxes and lease expense. Forward-looking statements in this news release describe the expectations of the Fund and its subsidiaries as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation the risks and uncertainties detailed under the “RISK FACTORS” section of the Fund’s latest Annual Information Form and the “RISKS AND UNCERTAINTIES” section of the Fund’s most recent Management’s Discussion & Analysis.

Although the Fund believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon. With respect to the forward-looking statements contained in this news release, the Fund has made assumptions regarding: there being no significant North American lockdowns or stay-at-home orders issued; there being no significant disruptions affecting Chemtrade’s principal manufacturing facilities; the stated North American MECU and sodium chlorate production volumes; the length and timing of the North Vancouver facility’s turnaround and the quantum of its EBITDA impact; the 2022 average NE Asia caustic spot price index; and the stated U.S. dollar foreign exchange rate.

Except as required by law, the Fund does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

Contacts

Rohit Bhardwaj

Chief Financial Officer

(416) 496-4177

Ryan Paull

Business Development Manager

(973) 515-1831

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