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Chemtrade Logistics Income Fund Announces 2007 Second Quarter Results

TORONTO, August 1, 2007 – Chemtrade Logistics Income Fund (TSX:  CHE.UN) today announced results for the three months ended June 30, 2007.  Chemtrade reported solid operating results as demand for most of the Fund’s products remained strong in the second quarter.  During the second quarter of 2007, the operating businesses generated EBITDA of $21.1 million, which is $0.9 million higher than the level generated in the second quarter of 2006.  The improvement would have been even higher but for the restructuring costs of $0.5 million recorded during the second quarter of 2007.  The strong operating results were offset by higher corporate costs, in particular, accruals relating to the Fund’s Long Term Incentive Plans (“LTIP”).

Cash available for distribution for the period was $10.5 million, or $0.31 per unit (2006:  $12.6 million, or $0.37 per unit), generated from revenue of $130.2 million (2006:  $134.6 million) and earnings before interest, income taxes, depreciation and amortization (“EBITDA”) of $16.3 million (2006:  $19.0 million).  Net earnings for the second quarter were $5.1 million compared with $4.9 million in the same period in 2006.  The results for the second quarter of 2007 include accruals of $3.1 million related to payments the Fund’s 2006 transitional LTIP and accruals for the 2006 and 2007 LTIPs payable in future years, as well as costs of $0.5 million relating to the cessation of SHS powder production at the Leeds plant.

For the six months ended June 30, 2007 cash available for distribution was $17.2 million (2006:  $24.2 million), or $0.51 per unit (2006:  $0.72 per unit).  EBITDA was $27.3 million (2006:  $34.7 million), revenue was $258.8 million (2006:  $256.5 million) and net earnings were $4.5 million (2006:  $8.7 million).  Both the cash available for distribution and the EBITDA numbers include $2.5 million relating to the cessation of powder SHS production at the Leeds plant.

Mark Davis, Chief Executive Officer of Chemtrade, said, “The demand for our products and services, particularly sulphuric acid, continues to strengthen as the year progresses.  The initiatives we have taken recently to improve our operating reliability, optimize our supply chain and stabilize and improve our SHS business are having positive impacts.”

Sulphur Products & Performance Chemicals (“SPPC”) generated revenue of $78.0 million (2006:  $70.9 million) in the second quarter, reflecting higher volumes and prices for merchant acid and higher volumes of SHS.  EBITDA was $14.9 million compared with $13.1 million in 2006.  The 2007 second quarter EDITDA includes final restructuring costs of $0.5 million related to the closing of the Leeds liquid SHS plant in December 2006.  The strong pricing for merchant acid, together with a full quarter’s production from Chemtrade’s two key regen plants were the main drivers for the improved results.  The results include two months contribution from the liquid SHS business acquired from Olin Corporation on April 30, 2007.  However, compared to the same period last year, the benefits of the acquisition were more than offset by comparatively higher net zinc costs, as these costs were unusually low in 2006.

Pulp Chemicals reported second quarter revenue of $14.6 million compared with $12.9 million in 2006, and EBITDA was $4.4 million, compared with $5.3 million in 2006.  Higher volumes and improved pricing were offset by higher salt costs, which were anticipated following a change of supplier at the end of 2006.  International reported revenue of $37.5 million for the second quarter compared with $50.7 million reported in 2006.  The decrease is due primarily to the Fund’s adopting recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3855, which required certain sales transactions to be recorded on a net margin basis.  EBITDA for the second quarter was steady at $1.8 million.

Mr. Davis said, “Our operations are running well and are benefiting from our constant attention to improving efficiencies and strengthening customer relationships.  The strengthening of demand for some of our products and the completion of our major plant turnarounds should more than offset the high costs for some inputs we had previously mentioned.  We continue to expect that earnings in the second half of this year will be stronger than the first half and that the next twelve months earnings will be stronger than the twelve months just ended.”

Distributions

Distributions declared in the second quarter totalled $0.30 per unit, comprised of monthly distributions of $0.10 per unit.

Review of Strategic Alternatives

On February 28, 2007, the Fund announced that the Board of Trustees had initiated a process and engaged BMO Capital Markets and Scotia Capital as financial advisors to identify and evaluate strategic alternatives available to Chemtrade.  Chemtrade continues to evaluate the strategic alternatives available to maximize Unitholder value.  There can be no assurance that the review will result in any specific strategic or financial transaction.

Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world.  Chemtrade is one of the world’s largest suppliers of sulphuric acid, liquid sulphur dioxide and sodium hydrosulphite, and a leading processor of spent acid.  Chemtrade is also a leading regional supplier of sulphur, sodium chlorate, phosphorous pentasulphide, and zinc oxide.

This news release contains certain statements which may constitute “forward-looking” statements within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario).  The use of any of the words “anticipate”, “continue”, estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements.

This news release contains forward-looking statements about the objectives, strategies, financial condition, results of operations and businesses of the Fund.  These statements are “forward-looking” as they are based on current expectations about our business and the markets we operate in, and on various estimates and assumptions.

  • Forward-looking statements in this news release describe our expectations as of the date of this news release.
  • Our actual results could be materially different from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate.  As a result, we cannot guarantee that any forward-looking statement will materialize.
  • Forward-looking statements do not take into account the effect that transactions or non-recurring items announced or occurring after the statements are made may have on our business.
  • We disclaim 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.
  • Risks that could cause our actual results to differ materially from our current expectations are discussed in the RISKS AND UNCERTAINTIES section of our MD&A.

Further information can be found in the disclosure documents filed by Chemtrade Logistics Income Fund with the securities regulatory authorities, available at www.sedar.com.

A conference call to review the second quarter 2007 results will be webcast live on www.chemtradelogistics.com and www.newswire.ca/webcast on Thursday, August 2, 2007 at 10:00 a.m.

To view this entire news release including financial statements, download the PDF.

* * * *

For further information:

Mark Davis
President & CEO 

Tel: (416) 496-4176

Rohit Bhardwaj
Vice President, Finance & CFO 

Tel: (416) 496-4177

Website: www.chemtradelogistics.com

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