Toronto-based Chemtrade Logistics Income Fund reported second-quarter net earnings of $14.6 million, down 83.3% from the year-ago $87.7 million mainly due to lower adjusted EBITDA, which was off 20.2%, to $115.1 million from last year’s record $144.2 million.
Higher net finance costs and higher income tax expense also impacted the company’s second-quarter earnings. Revenue for the quarter was $448.1 million, down 4.7% from last year’s $470 million.
“While adjusted EBITDA was lower on a year-over-year basis, it is worth noting that this is in comparison to record quarterly adjusted EBITDA reported by Chemtrade in the second quarter of 2023,” said Scott Rook, Chemtrade President and CEO. “Further, the biennial maintenance turnaround at our North Vancouver chlor-alkali plant was conducted during the current quarter.”
Rook said strong hydrochloric acid and chlorine pricing helped mitigate the impact of significantly lower caustic soda index pricing during the quarter. Sodium chlorate volumes and pricing were also up year-over-year.
Chemtrade said it plans to invest $70-$100 million in growth capital expenditures in 2024, including approximately $50 million for the company’s ultrapure sulfuric acid business at its Cairo, Ohio, facility. Chemtrade said the Cairo project is on track to finish construction later this year, with commercial ramp-up beginning in 2025. The company said this will be the first ultrapure sulfuric acid plant in North America.
Chemtrade also reported that it has put on hold a second large ultrapure sulfuric acid growth project in Casa Grande, Ariz., undertaken via a joint venture with KPCT Advanced Chemicals LLC. The company has also decided to cease sodium chlorate production at its Prince George, B.C., facility following a production curtailment by the plant’s principal customer earlier this year. Chemtrade said the facility is being converted to a sodium chlorate dissolving operation, which is expected to be completed during the third quarter of 2024.
Chemtrade boosted its full year adjusted EBITDA guidance to $430-$460 million, up from the previous guidance of $395-$435 million and the company’s second highest year for adjusted EBITDA ever.