Full Quarter Contribution of General Chemical Business Boosts Results
TORONTO, Aug. 7, 2014 /CNW/ - Chemtrade Logistics Income Fund (TSX: CHE.UN) today announced results for the three and six months ended June 30, 2014. The second quarter financial statements and MD&A will be available on Chemtrade's website at www.chemtradelogistics.com and on SEDAR at www.sedar.com.
The results for the second quarter include the first full quarter of contribution from the acquisition of General Chemical that was completed on January 23, 2014. Revenue in the quarter was $318.1 million compared to $217.5 million in 2013. The primary reason for the increase in revenues was the addition of the General Chemical business, offset partially by lower revenues in the SPPC segment due to lower volumes of sulphuric acid.
Distributable cash after maintenance capital expenditures for the second quarter was $37.3 million, or $0.62 per unit (2013: $21.4 million, or $0.51 per unit), generated from revenue of $318.1 million (2013: $217.5 million). During the second quarter of 2014, distributable cash benefited from maintenance capital expenditures being lower than the anticipated annual run rate.
Adjusted cash flows from operating activities for the period were $44.6 million (2013: $30.3 million). EBITDA for the second quarter was $59.5 million compared with $36.0 million in the second quarter of 2013. Net earnings were $40.9 million compared with $10.0 million in the same period in 2013. The increase is primarily due to a large non-cash income tax recovery in the second quarter of 2014 of $23.8 million, mostly related to the sale of the Montreal East facility, partially offset by fair value adjustments on outstanding convertible debentures of the Fund and transaction costs related to the issuance of new convertible debentures in June 2014.
For the six months ended June 30, 2014, distributable cash after maintenance capital expenditures was $51.6 million (2013: $48.4 million), or $0.89 per unit (2013: $1.16 per unit) generated from revenue of $592.0 million (2013: $427.6 million). EBITDA was $87.7 million (2013: $71.2 million). Adjusted cash flow from operating activities was $62.6 million (2013: $59.9 million), and net earnings for the first six months of 2014 were $19.3 million (2013: $14.3 million).
Mark Davis, President and Chief Executive Officer of Chemtrade, said, "The second quarter was a solid quarter for Chemtrade. The acquired business performed as we expected it to and substantially improved our results. Our integration efforts continue to move ahead according to plan."
As previously disclosed, Chemtrade reorganized its North American business segments at the beginning of 2014. A new segment, Water Solutions & Specialty Chemicals ("WSSC"), was introduced which includes the newly acquired and legacy water treatment businesses, the General Chemical specialty chemical businesses, and the legacy phosphorus pentasulphide operations, as well as the former Pulp Chemicals segment. Chemtrade's Sulphur Products & Performance Chemicals ("SPPC") segment now includes the newly acquired sulphuric acid business. Comparative numbers for 2013 have been restated to reflect the reorganization. The International segment is unchanged.
SPPC generated revenue of $151.2 million and EBITDA of $34.1 million compared with $134.7 million and $31.1 million, respectively, in 2013. The main reason for the increased revenue was the inclusion of the newly acquired business, offset partially by lower volumes of sulphuric acid due to a supplier producing lower volumes than in 2013 due to a plant turnaround. EBITDA was negatively affected by higher sulphur costs not yet fully recovered by price increases.
WSSC reported second quarter revenue of $116.2 million compared with $33.9 million in 2013, and EBITDA of $33.2 million which was $24.0 million higher than the second quarter of 2013, due primarily to the inclusion of the acquired business.
International reported revenue of $50.7 million for the second quarter, compared with $49.0 million in 2013. EBITDA for the quarter was $4.4 million, which was $1.7 million higher than last year, due to improved conditions for sulphuric acid in certain international markets.
Corporate costs during the second quarter of 2014 were $12.3 million. This was $5.4 million higher than the second quarter of 2013, due primarily to LTIP expenses that were $2.6 million higher than the second quarter of 2013, and higher costs due to the increased scale of the business following the acquisition.
Mr. Davis said, "The benefits of the increased scale and scope of Chemtrade's operations are evident in the second quarter results and the full benefits will become more apparent over the balance of this year as our integration efforts start to contribute and the issues incurred by the legacy business are behind us. In July, we further improved our balance sheet by reducing debt with the proceeds of the sale of the Montreal East facility. We expect that our businesses will generate sufficient cash flow to allow us to continue reducing leverage, sustaining our current distribution rate and improving and growing our business. We remain confident in our ability to meet our objectives of providing both yield and growth to our unitholders."
Distributions declared in the second quarter totalled $0.30 per unit, comprised of monthly distributions of $0.10 per unit.
Caution Regarding Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking statements within the meaning of certain securities laws, including the Securities Act (Ontario). Forward-looking statements can be generally identified by the use of words such as "anticipate", "continue", "estimate", "expect", "expected", "intend", "may", "will", "project", "plan", "should", "believe" and similar expressions. Specifically, forward-looking statements in this news release include statements respecting certain future expectations about: the successful integration of the acquired business; future cash flow generation; the ability to de-leverage and to sustain our distribution rate; and growth prospects. Forward-looking statements in this news release describe the expectations of the Fund and its subsidiaries as of the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation the risks and uncertainties detailed under the "RISK FACTORS" section of the Fund's latest Annual Information Form and the "RISKS AND UNCERTAINTIES" section of the Fund's most recent Management's Discussion & Analysis.
Although the Fund believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon. With respect to the forward-looking statements contained in this news release, the Fund has made assumptions regarding: there being no significant disruptions affecting the operations of the Fund and its subsidiaries, whether due to labour disruptions, supply disruptions, power disruptions, transportation disruptions, damage to equipment or otherwise; the ability of the Fund to obtain products, raw materials, equipment, transportation, services and supplies in a timely manner to carry out its activities and at prices consistent with current levels or in line with the Fund's expectations; the timely receipt of required regulatory approvals; the cost of regulatory and environmental compliance being consistent with current levels or in line with the Fund's expectations; the ability of the Fund to successfully access tax losses and tax attributes; the ability of the Fund to obtain financing on acceptable terms; currency, exchange and interest rates being consistent with current levels or in line with the Fund's expectations; and global economic performance.
The Fund disclaims 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. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.
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 2014 results will be webcast live on www.chemtradelogistics.com and www.newswire.ca on Friday, August 8, 2014 at 10:00 a.m. ET.
SOURCE Chemtrade Logistics Income Fund