TORONTO, May 13, 2014 /CNW/ - Chemtrade Logistics Income Fund (TSX:
CHE.UN) today announced results for the three months ended March 31,
2014. The first quarter financial statements and MD&A will be
available on Chemtrade's website at chemtradelogistics.com and on SEDAR at sedar.com.
Mark Davis, President and Chief Executive Officer of Chemtrade, said,
"Chemtrade had a good start to the year. The highlight of the quarter
was the completion of the acquisition of General Chemical in late
January and the related $345.0 million equity issue. We are making good
progress towards integrating the acquired business and are pleased with
the performance of the combined businesses."
As previously disclosed, Chemtrade reconfigured its North American
business segments at the beginning of 2014. A new segment, Water
Solutions & Specialty Chemicals ("WSSC"), was introduced which includes
the newly acquired and legacy water treatment businesses, the General
Chemical specialty chemical businesses, and the legacy phosphorus
pentasulphide operations, as well as the former Pulp Chemicals segment.
Chemtrade's Sulphur Products & Performance Chemicals ("SPPC") segment
now includes the newly acquired sulphuric acid businesses. Comparative
numbers for 2013 have been restated to reflect the reorganization. The
International segment is unchanged.
The results for the first quarter include costs of $17.7 million related
to the acquisition of General Chemical that was completed on January
23, 2014 ("Acquisition Related Costs").
Revenue in the quarter was $273.9 million compared with $210.0 million
in the first quarter of 2013. The primary reason for the revenue
increase was the approximately two months of revenues from the General
Chemical businesses. Cash flow from operating activities for the first
quarter (including the effect of the Acquisition Related Costs) was
negative $40.3 million (2013: positive $2.6 million).
Distributable cash after maintenance capital expenditures for the first
quarter was $14.3 million, or $0.26 per unit (2013: $27.0 million, or
$0.65 per unit) or $32.0 million, or $0.56 per unit excluding
Acquisition Related Costs. During the first quarter of 2014 and the
comparable period of 2013, distributable cash benefited from
maintenance capital expenditures being lower than the anticipated
annual run rate. Maintenance capital expenditures during 2014 are
expected to range between $55.0 and $60.0 million.
Adjusted cash flows from operating activities for the period were $18.0
million (2013: $29.6 million). The decrease was primarily due to
Acquisition Related Costs in the first quarter of 2014. EBITDA for the
first quarter was $28.2 million (or $45.2 million excluding Acquisition
Related Costs) compared with $35.2 million in the first quarter of
2013.
Net loss for the first quarter of 2014 was $21.6 million compared with
net earnings of $4.3 million in the same period in 2013. The decrease
is primarily due to higher net finance costs due to the fair value
adjustments on the convertible unsecured subordinated debentures
("debentures") and the write-down of previously deferred financing
costs related to the former credit facilities that were repaid in the
first quarter of 2014. Finance costs were also higher due to the
additional debt incurred to finance the General Chemical acquisition.
The acquisition also resulted in higher levels of depreciation and
amortization in the first quarter of 2014 relative to the same period
of 2013. These additional expenses were partially offset by higher
income tax recoveries in 2014 compared with 2013.
SPPC generated revenue of $145.6 million and EBITDA of $35.0 million
compared with $125.8 million and $33.5 million, respectively, in 2013.
The main reason for the increased revenue was the inclusion of the
General Chemical businesses for about two months.
WSSC, the new segment, reported first quarter revenue of $87.8 million
compared with $33.4 million in 2013. EBITDA was $24.9 million compared
with $9.4 million in 2013. In addition to the water treatment and
specialty chemicals businesses of General Chemical, WSSC also includes
the businesses transferred from SPPC, and the former Pulp Chemicals
business. The higher revenue and EBITDA generated in this segment was
primarily due to the inclusion of two months of results for the newly
acquired business.
International reported revenue of $40.5 million for the first quarter,
compared with $50.8 million in the first quarter of 2013. This
reduction in revenue reflected lower volume and prices of sulphur and
lower prices of sulphuric acid, caused by the generally weak conditions
in international markets for sulphur and sulphuric acid. EBITDA for
the quarter was $3.4 million, compared with $2.4 million last year
demonstrating once again how Chemtrade's business model helps mitigate
the impact of typical chemical commodity risks on financial results.
Corporate costs during the first quarter of 2014 were $35.1 million,
which was $25.0 million higher than the first quarter of 2013. The
primary reason for the higher costs is Acquisition Related Costs of
$17.7 million. LTIP expenses were $3.0 million higher than the first
quarter of 2013. Finally, corporate costs now include corporate costs
of the acquired business.
Mr. Davis said, "The General Chemical acquisition has made a significant
difference to the scale and scope of Chemtrade's operations. While the
first quarter only includes about two months of earnings from the
acquired business, the full effect of the benefits will become apparent
over the course of this year as the integration progresses. We remain
confident that our businesses will generate sufficient cash flow to
allow us to reduce leverage in addition to sustaining our current
distribution rate."
Distributions
Distributions declared in the first quarter totalled $0.30 per unit,
comprised of monthly distributions of $0.10 per unit.
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: capital expenditures;
financial results due to acquisition integration; and the
sustainability of the Fund's distributions. Forward-looking statements
in this news release describe the expectations of the Fund and its
subsidiaries as of the date hereof. These statements 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 disruptions affecting
the operations of the Fund and its subsidiaries, whether due to labour
disruptions, supply disruptions, power disruptions, transportation
disruptions, damage to equipment or otherwise; the ability of the Fund
to obtain products, raw materials, equipment, transportation, services
and supplies in a timely manner to carry out its activities and at
prices consistent with current levels or in line with the Fund's
expectations; the timely receipt of required regulatory approvals; the
cost of regulatory and environmental compliance being consistent with
current levels or in line with the Fund's expectations; the ability of
the Fund to successfully access tax losses and tax attributes; the
ability of the Fund to obtain financing on acceptable terms; currency,
exchange and interest rates being consistent with current levels or in
line with the Fund's expectations; and global economic performance.
The Fund disclaims any intention or obligation to update any
forward-looking statement even if new information becomes available, as
a result of future events or for any other reason. The forward-looking
statements contained herein are expressly qualified in their entirety
by this cautionary statement.
Further information can be found in the disclosure documents filed by
Chemtrade Logistics Income Fund with the securities regulatory
authorities, available at sedar.com.
A conference call to review the first quarter 2014 results will be
webcast live on chemtradelogistics.com and newswire.ca on Wednesday, May 14, 2014 at 8:30 a.m. ET.
SOURCE Chemtrade Logistics Income Fund
