That's a pretty serious step up from the $380M midpoint used in the previous full-year guidance, and even if we just assume a similar result as in 2022, we can expect the distributable free cash flow to come in very strong as well. With an EBITDA result of almost $132M in the first quarter of the year, Chemtrade is now fairly confident its previous guidance was too conservative and it has now hiked the full-year EBITDA guidance to a level of 'at or above the 2022 EBITDA result', which implies an EBITDA of at least $430M. This decrease was well-anticipated and not a deterrent as the underlying free cash flow was expected to remain strong. The previous guidance called for an EBITDA of $360-400M which was a low double-digit decrease from the $431M EBITDA result generated in 2022. This resulted in a full-year guidance increaseĬhemtrade must be feeling pretty comfortable the very strong Q1 result was not just a one-off as the company has increased its full-year guidance. That's a very remarkable result although the maintenance capex incurred in the first quarter is a bit lower than what we should generally expect this year.Ĭhemtrade currently pays a monthly distribution of C$0.05 per unit, and it goes without saying the C$0.15 paid during the first quarter was very well-covered by the incoming distributable cash flow result as the payout ratio was less than 20%. After adding back the working capital investments and deducting the sustaining capex and lease payments, the distributable cash flow was approximately C$87.6M or C$0.76 per unit. The image below shows how the reported operating cash flow of $54.4M is the starting point of the calculation. And that's why we should look at Chemtrade from a distributable cash flow perspective. While that sounds great, keep in mind it includes about C$33M in revaluation gains on the convertible debentures. The bottom line with a net income of almost $79.5M represents an EPS of C$0.69. The explanation is pretty straightforward as the company recorded a C$33.2M change in the fair value of the convertible debentures and as this was included in the finance expenses and income, it also had an impact on the bottom line of the income statement. That's an increase of almost 40% compared to the first quarter of last year.Ĭhemtrade had to deal with higher SG&A expenses, but on the other hand, it was able to report a net finance income of almost C$13M compared to a finance expense of almost C$29M in the first quarter of last year. The total revenue in the first quarter of the year increased to just over C$471M resulting in a gross profit of just under C$110M. While the revenue in this division increased by 29%, the adjusted EBITDA increased by in excess of 50% to just under C$100M. Although the adjusted EBITDA in the SWC division ( Sulphur and Water Chemicals ) decreased despite the higher revenue, the electrochemicals division performed much better than anticipated thanks to elevated prices for the chlor-alkali products (chlorine, HCl and caustic soda). Although business was pretty slow in that segment, the other business divisions definitely made up for it. The first quarter of the year was surprisingly strong for Chemtrade Logistics as the company was facing the impact of increased maintenance activity levels at its customer base for the Regen acid business. This article is meant as an update to my previous article, and to get a better understanding of Chemtrade's business model and growth plans, I'd like to refer you to the February article. Plenty of reasons to have another look at Chemtrade Logistics again.ĭata by YCharts The first quarter was much stronger than I had anticipated Chemtrade initially made it clear investors should not expect the 2023 performance to be as strong but after posting a record result in the first quarter of this year, Chemtrade has hiked its full-year guidance and now expects its EBITDA result to be at least as high as last year's result. I discussed Chemtrade Logistics Income Fund ( OTC:CGIFF) ( TSX: CHE.UN:CA) earlier this year after publishing excellent results for the financial year 2022. Kittisak Kaewchalun /iStock via Getty Images Introduction
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