Chemtrade Logistics Income Fund (CHE-UN) Q2 2024 earnings summary

Executive summary

• Q2 2024 results exceeded expectations, with revenue at $448.1M (down 4.7–5% year-over-year) and net earnings of $14.6M, a sharp decline from $87.3M in Q2 2023, mainly due to a biennial maintenance turnaround and the sale of the P2S5 business.

• Adjusted EBITDA was $115.1M, down 20.2% year-over-year; excluding the turnaround, the decrease was 7.8%.

• Full-year 2024 Adjusted EBITDA guidance was raised to $430–$460M, a 7% increase at the midpoint, reflecting strong H1 results and positive momentum into H2.

• Distribution increased 10% to $0.66/unit annualized, with a 7% yield and a payout ratio of 35%.

Financial highlights

• Distributable cash after maintenance capex was $47.8M, down 50% year-over-year; cash flows from operating activities were $102.2M, down 14–14.4%.

• Net debt at quarter-end was $887.8M, down 4.3% year-over-year; net debt to LTM Adjusted EBITDA at 2.0x.

• Corporate costs rose 26% year-over-year to $28.2M, driven by higher incentive compensation and FX losses.

• Distributable cash after maintenance capex per unit was $0.41 in Q2 2024, down from $0.82 in Q2 2023.

Outlook and guidance

• 2024 Adjusted EBITDA guidance raised to $430–$460M, a 7% increase at midpoint; 2024 is projected to be the second highest EBITDA year on record.

• Maintenance capex for 2024 is $100–$110M; growth capex $70–$100M, with $50M for ultrapure sulphuric acid and over $37M spent in H1.

• MECU netbacks expected to be $95/ton lower than 2023, with strong chlorine and hydrochloric acid pricing mitigating lower caustic soda prices.

• Water chemicals and ultrapure acid businesses expected to remain strong, with new capacity and product upgrades supporting future growth.

• Key assumptions include no major pandemic lockdowns, no significant rail or labor disruptions, and lower caustic soda prices.