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Chemtrade Logistics Income Fund Reports Strong 2011 Second Quarter Operating Results

TORONTO, August 4, 2011 – Chemtrade Logistics Income Fund (TSX:  CHE.UN) today announced results for the three months and six months ended June 30, 2011.  The second quarter financial statements and MD&A will be available on Chemtrade’s website at and on SEDAR at

The results for the second quarter include costs of approximately $13.2 million associated with the acquisition of Marsulex Inc. (Marsulex) that was completed on June 24, 2011 (“Acquisition Costs”).  Revenue in the quarter was $195.3 million compared to $137.4 million in 2010. The revenue increase in the quarter reflects improved business conditions over last year.  Higher prices for sulphuric acid in the Sulphur Products & Performance Chemicals (SPPC) and International segments, as well as higher volumes of sulphuric acid in SPPC were the primary drivers for the revenue increase. Cash flow from operating activities for the period (including the effect of the Acquisition Costs) was negative $21.1 million (2010:  positive $5.3 million)

Excluding the Acquisition Costs, distributable cash after maintenance capital expenditures for the second quarter of 2011 was $14.2 million, or $0.45 per unit and aggregate EBITDA was $20.9 million. This compares with second quarter 2010 distributable cash after maintenance capital expenditures of $8.8 million or $0.29 per unit and EBITDA of $15.6 million.

For the six months ended June 30, 2011, excluding the Acquisition Costs distributable cash after maintenance capital expenditures was $39.5 million (2010:  $21.3 million), or $1.27 per unit (2010:  $0.70 per unit) generated from revenue of $364.8 million (2010: $264.2 million).   EBITDA, excluding Acquisition Costs was $50.5 million (2010:  $37.7 million).  Cash flow from operating activities was  $1.0 million (2010:   $34.7 million), and net earnings for the first six months of 2011 were $49.0 million (2010:  $12.2 million).

Mark Davis, President and Chief Executive Officer of Chemtrade, said, “Chemtrade’s businesses continued to perform well in the second quarter.  Demand in our markets was solid during the quarter with the strongest performance in our SPPC segment which benefitted from higher volumes and prices for most of its products.”

SPPC generated revenue of $104.6 million in the second quarter compared with $82.0 million in 2010.  The main reasons for the increase in revenue were higher prices and volume for sulphuric acid and sulphur.  EBITDA for the second quarter was $20.6 million compared with $13.2 million in the second quarter of 2010.  The higher EBITDA relative to the second quarter last year was due primarily to the improved business conditions, but also reflected the full quarter contribution from the Beaumont plant this year compared with only part of the second quarter last year.

Pulp Chemicals reported second quarter revenue of $13.0 million compared with $11.2 million in 2010, reflecting higher volumes of sodium chlorate.  This revenue improvement was more than offset by higher electricity and maintenance costs relating to some operational issues that have since been rectified. EBITDA for the second quarter was $3.4 million compared with $4.0 million in 2010.

International reported revenue of $77.7 million for the second quarter compared with $44.3 million in 2010.  This reflected higher prices for sulphuric acid and sulphur.  The revenue gains were offset by higher costs for the products resulting in EBITDA for the quarter of $3.9 million, which is indicative of normal course business for International.

Corporate costs during the second quarter of 2011 were $20.1 million, which was $14.8 million higher than the second quarter of 2010.  The main reason for the increase was the Acquisition Costs of approximately $13.2 million.

Marsulex Acquisition and Equity Offering

On May 5, 2011, Chemtrade announced that it had entered into a definitive arrangement agreement with Marsulex to purchase all of the Marsulex businesses other than Marsulex Environmental Technologies Corporation.   The aggregate transaction value of $419.5 million was funded by a bought deal equity offering of subscription receipts and syndicated secured credit facilities.  On May 26, 2011 Chemtrade completed an issuance of 10.99 million subscription receipts, including the exercise in full of the underwriters’ over-allotment option, for gross proceeds of $149.5 million.  On June 24, 2011 Chemtrade completed the acquisition of Marsulex.   On July 1, 2011 Chemtrade announced it had sold the petroleum coke (petcoke) business that had been acquired as part of the Marsulex acquisition as it was a non-core asset for Chemtrade.  Proceeds of the sale were U.S. $25.5 million (to be adjusted for working capital), and the majority was used to pay down debt.

Mr. Davis said, “The integration of the Marsulex businesses is proceeding well, and we continue to be pleased with the assets we have acquired and the people who have joined the Chemtrade team.  We have taken several initiatives to realize synergies and remain confident we will attain our target of annualized cost savings of $10 million over the next 18 months.  The increased size, scale and scope of products and services, supported by risk-shared and fee-based agreements enhances our business model and provides an even stronger base for future growth. Our increased size, strong balance sheet and business model is more than sufficient to sustain our current distribution rate.”


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

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”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions are intended to identify forward-looking statements.  These statements are based on a number of material factors and assumptions and involve known and unknown risks and uncertainties that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.  As a result, we cannot guarantee that any forward-looking statement will materialize.  Forward-looking statements in this news release describe the expectations of Chemtrade as of the date of this news release.  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.

This news release contains forward-looking statements about the objectives, strategies, financial condition, results of operations and businesses of Chemtrade, including, but not limited to:

  • the ability of Chemtrade to attain the targeted cost saving synergies and the timeframe within which to attain them; and
  • the ability of Chemtrade to sustain its current distribution  rate.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management’s assessment of the relevant information currently available.  Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than those for which it is disclosed herein.

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 second quarter 2011 results will be webcast live on and on Friday, August 5, 2011 at 10:00 a.m. ET.

* * * *

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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