Chemtrade Logistics Income Fund, Toronto, saw a slight dip into the loss column for the third quarter ending Sept. 30, 2019, to C$163,000 ($0.00 per diluted unit) on revenue of $395.6 million from the year-ago net earnings of $9.2 million ($0.10 per unit) and $418.2 million, respectively. Adjusted EBITDA was $90 million, up from $53.8 million.
“Our results for the third quarter reflect a continuation of the operating conditions we experienced in the second quarter,” said Chemtrade President and CEO Mark Davis. “In general, all our plants operated well. We are continuing to see the benefits of the initiatives we took last year to strengthen our operations and adjust to changing market conditions. This is most evident in our SPPC (Sulfur Products & Performance Chemicals) segment that continues to benefit from changes we made to our operations and from strong selling prices for sulfuric acid.
“In our WSSC (Water Solutions & Specialty Chemicals) segment, water treatment products continue to improve margins as pricing in contract renewals more than offset raw material cost increases. Our EC (Electrochemicals) segment continued to be negatively affected by low caustic soda and HCl prices,” he continued.
“Our SPPC segment and water products continued to perform well in the third quarter,” added Davis. “The biggest impediment to better financial results was caustic soda prices. Although current prices are disappointing, the long-term outlook remains positive.”
Despite the near-term weakness in chlor-alkali products, Chemtrade is maintaining its adjusted EBITDA guidance of $335-$375 million for 2019, although it expects that results will be at the low end of the range.
Distributions declared in the third quarter totaled $0.30 per unit.
Chemtrade reported a nine-month loss at $87.1 million ($0.94 per unit) on revenue of $1.2 billion from the year-ago net loss of $34.3 million ($0.37 per unit) and $1.2 billion, respectively. Adjusted EBITDA was $225.3 million up from $131.2 million.
Chemtrade had no update or comment to analysts on the August announcement that it plans to sell its specialty potassium and adjuvant units (GM Aug. 16, p. 1). Both units are within Chemtrade’s WSSC segment. The company said $204.5 million of assets, along with $17.3 million of liabilities directly associated with these assets, have been presented as held for sale. Chemtrade said the two businesses generated some C$14 million in adjusted EBITDA for the year ending June 30, 2019.
Chemtrade said the sale will allow the company to pay down long-term debt, strengthen its balance sheet, and provide added flexibility to pursue further organic and other growth opportunities.
The Potassium Chloride business, based in Midlothian, Texas, produces high-purity products used for the pharmaceuticals, nutraceuticals, food applications, and metal refinement industries. Chemtrade said it is the sole North American-based manufacturer of an Active Pharmaceutical Ingredient (API) class potassium chloride product supported by an active Drug Master File, and has a specialized production process that creates crystals that are ideal for time-release applications.
The company said its product is also used in high-end metal refinement, particularly for tantalum, which is used in semi-conductors found in electronic products such as cell phones. It said potash is its main raw material for its specialty products.
The Vaccine Adjuvant unit is based in Berkley Heights, N.J., and its aluminum-based products are used to improve the efficacy of animal and human vaccines.
| 3Q-19 ($ 000) | SPPC | WSSC | EC |
| Revenue | 127,798 | 122,432 | 145,423 |
| Operating Income | 9,650 | 10,075 | 14,663 |
| 3Q-18 ($ 000) | SPPC | WSSC | EC |
| Revenue | 129,572 | 116,601 | 172,021 |
| Operating Income | 12,639 | 10,946 | 34,704 |
| YTD-19 ($ 000) | SPPC | WSSC | EC |
| Revenue | 385,318 | 343,330 | 448,992 |
| Operating Income | 41,550 | (42,816) | 54,934 |
| YTD-18 ($ 000) | SPPC | WSSC | EC |
| Revenue | 380,683 | 327,869 | 496,395 |
| Operating Income | 19,728 | 26,765 | 79,691 |