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Chemtrade Logistics Income Fund More Than Doubles Third Quarter Net Earnings and Distributable Cash

TORONTO, November 4, 2008 – Chemtrade Logistics Income Fund (TSX:  CHE.UN) today announced results for the three months ended September 30, 2008.  Continuing high prices for sulphuric acid resulted in significant increases in revenue and earnings for Chemtrade’s Sulphur Products & Performance Chemicals and International segments, which were the primary contributors to the third quarter’s higher results.

Adjusted cash flows from operating activities for the third quarter were $33.1 million (2007:  $15.4 million) and distributable cash after maintenance capital expenditures for the period was $30.0 million, or $0.89 per unit (2007:  $14.3 million, or $0.42 per unit), generated from revenue of $394.0 million (2007:  $143.2 million) and earnings before interest, income taxes, depreciation and amortization (“EBITDA”) of $38.2 million (2007:  $19.4 million).  Net earnings for the third quarter were $19.5 million compared with $7.0 million in the same period in 2007.

For the nine months ended September 30, 2008 adjusted cash flows from operating activities were $80.4 million (2007:  $35.5 million), and distributable cash after maintenance capital expenditures was $72.0 million (2007:  $31.4 million), or $2.14 per unit (2007:  $0.94).  EBITDA was $90.2 million (2007:  $46.7 million), and revenue was $886.0 million (2007:  $402.1 million).  Net earnings for the first nine months of 2008 were $42.8 million (2007:  $11.5 million).

Mark Davis, President and Chief Executive Officer of Chemtrade, said, “Chemtrade’s financial performance in the third quarter was outstanding.  While high margins for sulphuric acid contributed significantly, all of our businesses again performed well.  These results reflect the excellent efforts made by our employees, particularly given our Beaumont plant was offline for almost five weeks in the quarter.  We are repairing the Beaumont plant and continue improving the operational reliability of all our assets by investing in upgrades of our facilities.”

Sulphur Products & Performance Chemicals (“SPPC”) generated revenue of $164.6 million and EBITDA of $26.2 million compared with $84.6 million and $16.8 million, respectively, in 2007.  The higher revenue reflected substantially higher prices for merchant acid.  The higher EBITDA was due primarily to improved margins on sulphuric acid as higher pricing more than offset the increase in sulphur costs.  Additionally, earnings from SHS products were also stronger than in the same period in 2007.  As noted, Chemtrade’s Beaumont, Texas plant was offline for the last five weeks of the third quarter following an explosion in the plant’s furnace on August 21, 2008.  Chemtrade expects the plant to be back online in late 2008.

Pulp Chemicals reported third quarter revenue of $14.0 million compared with $14.8 million in 2007.  EBITDA was $5.0 million, which was steady with 2007, reflecting lower costs for salt which last year were high due to the transition to a new supplier, and other cost saving initiatives.

International reported revenue of $215.4 million for the third quarter, compared with $43.8 million in 2007.  This was a result of significantly higher prices and volume for sulphuric acid and significantly higher prices for sulphur.  Third quarter tightness of acid and sulphur supply in global markets continued the market conditions in which spot sales of uncommitted small volumes of sulphuric acid and sulphur resulted in high margins for the International business.  International generated EBITDA for the quarter of $9.4 million compared with $2.3 million last year.

Mr. Davis said, “In our core North American markets demand for our products is expected to remain stable, while the tight supply/demand conditions in our key sulphuric acid markets continues to support strong pricing.  Sulphuric acid prices tend to vary on a regional basis depending on that region’s supply/demand balance.  The current pricing environment for acid in our key North American regions is expected to remain stable throughout 2009.  While there are clear signs that the global market for commodities including seaborne sulphuric acid is changing rapidly, our International business model is based on matched contracts and its earnings should return to historical run rates as we have indicated.  Despite the current economic and financial turmoil, we expect to generate distributable cash after maintenance capital expenditures in excess of $2.00 per unit for the 12 months to September 30, 2009 which is well in excess of our $1.20 per unit distribution rate.”

Commenting further, Mr. Davis said, “The Chemtrade business model has always been designed to deliver long term sustainable earnings.  Many of our contracts (acid, regen and sodium chlorate) are multi-year and contain risk sharing clauses that mitigate the effect that commodity fluctuations could have on our earnings.  This has been our business model ever since our IPO.  This business model and the initiatives we continue to implement to strengthen the business, provide a strong foundation for long-term cash generation sufficient to grow our business and sustain our $1.20 per unit annual distribution rate over the long term regardless of the peaks and valleys of commodity pricing.”


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

Settlement with EPA

Chemtrade also announced that it believes it has agreed to a settlement with the U.S. Environmental Protection Agency (“EPA”) and certain States whereby new emission limitations will be established at each of Chemtrade’s five sulphuric acid manufacturing facilities.  The agreement arises from a broader EPA initiative regarding the United States’ sulphuric acid manufacturing industry.  Chemtrade’s plants will meet these stricter limits by various agreed dates ranging from December 2009 to December 2012.  Further details are contained in the Fund’s MD&A.

Mr. Davis said, “We are very pleased with the result of our dialogue with the EPA.  The technical improvements we have agreed to make to our plants will further lessen the environmental impact of our operations.  Our largest expenditure will be at our Riverton, Wyoming facility to enhance our ability to store and handle the by-product resulting from improved emissions control and provides Chemtrade with the opportunity to further develop a positive commercial contribution from marketing this product in a manner similar to our other plant locations.”

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  A conference call to review the third quarter 2008 results will be webcast live on and on Wednesday, November 5, 2008 at 2:00 p.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


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