Chemtrade Logistics Income Fund (TSX: CHE.UN) ('Chemtrade') today issued 2024 Guidance and increased the level of monthly distributions to unitholders.
Capital Allocation Update - Increase in monthly distribution and suspension of DRIP
Chemtrade's management and board of trustees periodically assess Chemtrade's capital structure and capital allocation to ensure that it's positioned to deliver maximum long-term value to unitholders. The current distribution level was established at the onset of the COVID pandemic in March 2020. During the pandemic, Chemtrade also initiated a DRIP.
Chemtrade's balance sheet has significantly improved over the past few quarters and leverage has decreased with a Net debt to Adjusted EBITDA ratio of 1.7x at September 30, 2023. Chemtrade's business has also strengthened as evidenced by two consecutive record years in terms of Adjusted EBITDA generated. While 2023 is unlikely to represent the new Adjusted EBITDA run-rate, Chemtrade believes that its business has undergone a step-change improvement from the pre-COVID levels. In light of the improved sustainable long-term outlook for Chemtrade's cash flow, Chemtrade is increasing its monthly distribution of 5-cents per month by 10% to 5.5-cents per month effective with the distribution that will be declared during the month of January 2024. This distribution represents a Payout ratio(1) of 45% based on the midpoint of Chemtrade's guidance for 2024.
In addition, as part of its updated capital structure and capital allocation strategy, Chemtrade is suspending its DRIP effective with the distribution declared in January 2024 and payable in February 2024 at which time all distributions of the Fund will be paid only in cash. The increase in the level of cash distributions is expected to have minimal impact on Chemtrade's leverage and is not expected to impede Chemtrade's ability to execute growth initiatives while maintaining a healthy balance sheet.
About Chemtrade
Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America's largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite and sodium hydrosulphite. Chemtrade is also the largest producer of high purity sulphuric acid for the semiconductor industry in North America. Chemtrade is a leading regional supplier of sulphur, chloralkali products, and zinc oxide. Additionally, Chemtrade provides industrial services such as processing byproducts and waste streams.
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, forwardlooking statements in this news release include statements respecting certain future expectations about: Chemtrade's expected Adjusted EBITDA range for 2023 and 2024; the expected stated maintenance capital expenditures, growth capital expenditures (including allocation of such amounts), lease payments, cash interest and cash tax; the expected Net debt to Adjusted EBITDA ratio at the end of 2024. Forwardlooking statements in this news release describe the expectations of the Fund and its subsidiaries as of the date hereof. These statements are based on assumptions and 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 North American lockdowns or stay-at-home orders issued during 2023; there being no significant unplanned downtime or labour disruptions affecting Chemtrade's principal manufacturing facilities; the stated North American MECU sales volumes; the stated 2024 realized MECU Netback being lower than 2023; the stated 2024 average CMA NE Asia caustic spot price index; the stated North American sodium chlorate production volumes; the stated U.S. dollar foreign exchange rate and the stated long term incentive plan costs. Except as required by law, the Fund does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.
Contact:
Tel: (416) 496-4177
CHEMTRADE LOGISTICS INCOME FUND 
