Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.DB.E

Alternate Symbol(s): CGIFF | T.CHE.UN | T.CHE.DB.G | T.CHE.DB.H

Chemicals Basic Materials

Chemtrade Logistics Income Fund is a Canada-based company that operates a diversified business providing industrial chemicals and services to customers in North America and around the world. The Company's segments include Sulphur and Water Chemicals (SWC), and Electrochemicals (EC). SWC segment markets, removes and/or produces merchant, Regen and sulphuric acid, sodium hydrosulphite, elemental sulphur, liquid sulphur dioxide, hydrogen sulphide, sodium bisulphite, and sulphides, and provides other processing services. This segment also manufactures and markets a variety of inorganic coagulants used in water treatment, including aluminum sulphate, and a number of specialty chemicals, including sodium nitrite. EC segment manufactures and markets sodium chlorate and chlor-alkali products including caustic soda, chlorine and HCl, largely for the pulp and paper, oil and gas and water treatment industries. These products are marketed primarily to North American and South American customers.

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Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures > Scotia comments

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Post by incomedreamer11on Nov 15, 2023 8:35am

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Scotia comments

Textbook Q3 Beat/Raise; But Street Still Calling for a Q4 Miss; '24 Could Be Softer Than '23

OUR TAKE: Mixed. CHE posted a well-rounded Q3 beat ($142M vs. $111M), and increased its ‘23 guide to >$490M. This implies >$72M for Q4 vs. the Street already at $90M (we recently noted how a pull forward of EBITDA could disappoint at the end of the year). The tone of the call could be a little downbeat, with ‘24 EBITDA unlikely to beat or match ‘23, while CHE’s core verticals (caustic soda and merchant acid) soften.

EC EBITDA beat by 33% ($84M vs. $63M), with higher selling prices for chlorate, chlorine, and HCl continuing to offset lower caustic prices, as well as reduced sodium chlorate volume. MECU netbacks are now expected to be $90/MECU higher y/y vs. CHE’s previous assumption of $60 lower.
SWC EBITDA beat by 16% ($84M vs. $72M), with regen acid strength (price + volume) and higher selling prices of water solutions products more than offsetting weakness in merchant acid (price + volume). Given lower raws for water solutions, it’s possible we see margins weaken in ‘24 vs. Q3.
LTM payout of 22%. If sub-40% is sustainable, how long will it be until investors push for a distribution increase? Recall, the distribution was halved when COVID started – March ‘20.
Leverage improved to 1.7x, from 1.8x q/q.