CHE-UN.TO
Chemtrade Logistics Income Fund reports significant increases in revenue, cash flows and earnings for 2008 second quarter
Tuesday July 29, 5:00 pm ET
TORONTO, July 29 /CNW/ - Chemtrade Logistics Income Fund (TSX: CHE.UN - News) today announced results for the three months ended June 30, 2008. The continuing high price for sulphuric acid was the main driver of significant increases in revenue and earnings for Chemtrade's Sulphur Products & Performance Chemicals and International segments, which were the primary contributors to the second quarter's strong results.
Cash flows from operating activities for the second quarter were $33.7 million (2007: $8.5 million) and Distributable cash after maintenance capital expenditures for the period was $24.1 million, or $0.72 per unit (2007: $10.5 million, or $0.31 per unit), generated from revenue of $274.3 million (2007: $130.2 million) and earnings before interest, income taxes, depreciation and amortization ("EBITDA") of $29.8 million (2007: $16.3 million). Net earnings for the second quarter were $13.8 million compared with $5.0 million in the same period in 2007. The results for the second quarter of 2008 include higher unrealized losses on natural gas and foreign exchange hedges and lower realized foreign exchange gains, partially offset by lower accruals related to the Fund's long-term incentive program.
For the six months ended June 30, 2008 cash flows from operating activities were $39.8 million (2007: $14.3 million), and Distributable cash after maintenance capital expenditures was $42.0 million (2007: $17.2 million), or $1.25 per unit (2007: $0.51). EBITDA was $52.0 million (2007: $27.3 million), and revenue was $492.1 million (2007: $258.8 million). Net earnings for the first six months of 2008 were $23.3 million (2007: $4.5 million). The numbers for the year-to-date include a recovery of restructuring costs of $1.2 million in 2008 whereas there was an expense of $2.0 million recorded in 2007 relating to the cessation of powder SHS production at the Leeds plant.
Mark Davis, President and Chief Executive Officer of Chemtrade, said, "All of our businesses reported higher earnings in the second quarter, although, as with the first quarter of this year, it was the continuing high margins for sulphuric acid in our Sulphur Products & Performance Chemicals and International segments that were the primary contributors to the improved results."
Sulphur Products & Performance Chemicals ("SPPC") generated revenue of $127.0 million and EBITDA of $23.9 million compared with $78.0 million and $14.9 million, respectively, in 2007. The higher revenue reflected substantially higher prices for merchant acid and sulphur. These were partially offset by the effect of the stronger Canadian dollar. The higher EBITDA was due primarily to improved margins on sulphuric acid. Higher acid prices more than offset higher sulphur costs and foreign exchange impact. As well, Chemtrade's two major regen plants took maintenance turnarounds in the first quarter last year, whereas in 2008 part of the turnaround of Chemtrade's largest plant took place in the second quarter.
Pulp Chemicals reported second quarter revenue of $14.4 million compared with $14.6 million in 2007. EBITDA was $5.0 million compared with $4.4 million reflecting lower costs for salt which last year were high due to the transition to a new supplier.
International reported revenue of $132.9 million for the second quarter, compared with $37.5 million in 2007. This was a result of significantly higher prices and volume for sulphuric acid, and significantly higher prices for sulphur. Spot sales of uncommitted small volumes of sulphuric acid and sulphur resulted in high margins due to the continuing tightness in global markets. Also, during the volatile market conditions prevalent in 2008, this segment was able to leverage its market knowledge and infrastructure to significantly add value to suppliers and customers and thereby earn incremental margin. International generated EBITDA for the quarter of $8.8 million compared with $1.8 million last year.
Mr. Davis said, "Our ongoing initiatives to strengthen our business and improve our operations have enabled us to take advantage of the robust market for sulphur products and expand our margins in each of the last three quarters. We expect the sulphuric acid market to remain buoyant through at least 2008 and 2009 and that our margins will continue to expand. Although we anticipate increased maintenance capital spending, we expect to generate substantially similar Distributable cash after maintenance capital expenditure over the next 12 months relative to the 12 month period ended June 30, 2008."
Distributions
Distributions declared in the second quarter totalled $0.30 per unit, comprised of monthly distributions of $0.10 per unit.
Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of the world's largest suppliers of sulphuric acid, liquid sulphur dioxide and sodium hydrosulphite, and a leading processor of spent acid. Chemtrade is also a leading regional supplier of sulphur, sodium chlorate, phosphorous pentasulphide, and zinc oxide.
