Chemtrade Logistics Income Fund (CHE-UN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $474.2 million, down 1.9–2% year-over-year, with net earnings of $60.1 million, a 15% decrease, impacted by the P2S5 sale and rail work stoppages.

• Adjusted EBITDA for Q3 2024 was $137.2 million, down 3–3.5% year-over-year, but up 1.9% excluding the impact of the rail work stoppage and P2S5 sale.

• Cash flows from operating activities increased 10.9–11% year-over-year to $143.2 million.

• Distributable cash after maintenance capex was $65.9 million, down 23.7–24% year-over-year.

• Strong balance sheet maintained, with net debt to LTM Adjusted EBITDA at 1.8x and $596 million undrawn on credit facilities.

Financial highlights

• Q3 2024 DCPU was $0.56, down from $0.74 in Q3 2023; payout ratio for the twelve months ended September 30, 2024, was 40%.

• Net debt decreased by $76.2 million year-over-year to $810.7 million; ample liquidity with US$596 million undrawn on revolver and $16.3 million cash on hand.

• Corporate costs declined 6.6% year-over-year, aided by FX gains and lower audit provisions, partially offset by higher LTIP costs.

• SWC segment Q3 2024 revenue was $280.5 million, down 3.4% year-over-year due to the P2S5 divestiture; excluding this, revenue rose 0.5%.

• EC segment Q3 2024 revenue was $193.7 million, up 0.3% year-over-year, with higher HCI and sodium chlorate prices offset by lower chlorine prices and volumes.

Outlook and guidance

• 2024 Adjusted EBITDA guidance raised to $445–$460 million, the second highest in company history, with leverage expected to remain below 2x at year-end and payout ratio at 40%.

• Maintenance capex expected at $100–$110 million; growth capex at $70–$80 million; lease payments at $60–$70 million.

• Guidance reflects strong YTD results and positive Q4 outlook; 2024 expected to be second highest year for Adjusted EBITDA.

• Key assumptions: North American MECU sales volumes of 175,000, sodium chlorate production of 265,000 MTs, and average NE Asia caustic spot price of US$385/tonne.

• Cairo ultrapure sulphuric acid project on track for completion in 2024, with commercial ramp-up in 2025.