Chemtrade Announces Strong Results for Q2 2025, Raises Guidance for 2025 to $475M - $500M; Implementing New NCIB & Redeeming Convertible Debentures

Executive Summary

• Chemtrade Logistics Income Fund reported second-quarter 2025 financial results, highlighting a 10.8% year-over-year increase in revenue to $496.7 million and a 19.9% increase in Adjusted EBITDA to $138.0 million.
• The company announced the acquisition of Polytec, Inc., a provider of turnkey water treatment solutions, for US$150 million (approx. 6.5x LTM Adjusted EBITDA), with a closing expected in Q4 2025.
• Management raised the full-year 2025 Adjusted EBITDA guidance to a range of $475.0 million – $500.0 million and announced the redemption of all outstanding 6.50% convertible debentures due October 31, 2026.

Key Details

• Q2 2025 Financial Performance:
  • Revenue: $496.7 million (up $48.6 million or 10.8% YoY). Excluding FX and maintenance turnaround impacts, revenue was $32.3 million higher YoY.
  • Adjusted EBITDA: $138.0 million (up $22.9 million or 19.9% YoY). Excluding FX and maintenance turnaround impacts, Adjusted EBITDA was $2.4 million higher YoY.
  • Net Earnings: $9.7 million (down $4.9 million or 33.6% YoY), primarily due to non-cash impairments of $28.4 million (Prince George sodium chlorate plant) and $15.1 million (sodium nitrite CGU).
  • Cash Flow from Operations: $83.4 million (down $18.8 million or 18.4% YoY).
  • Distributable Cash After Maintenance CapEx: $71.5 million (up $23.7 million or 49.6% YoY), or $0.63 per unit (up 54.2% YoY).
  • Payout Ratio (LTM): 33%.
  • Net Debt: $982.8 million; Net Debt to LTM Adjusted EBITDA ratio: 2.0x.
  • Liquidity: US$510.0 million undrawn on credit facilities plus $20.1 million in cash.
• Segment Performance:
  • Sulphur and Water Chemicals (SWC): Revenue $302.4 million; Adjusted EBITDA $76.2 million.
  • Electrochemicals (EC): Revenue $194.2 million; Adjusted EBITDA $92.1 million (up significantly from $65.1 million in Q2 2024). MECU netbacks increased by approx. $165 YoY.
• M&A Activity (Polytec, Inc.):
  • Agreement to acquire Polytec, Inc. for US$150 million.
  • Valuation multiple: approx. 6.5x LTM Adjusted EBITDA.
  • Target: Provider of turnkey water treatment solutions with operations in four U.S. states.
  • Closing: Expected Q4 2025, subject to regulatory approval.
• Guidance Update:
  • 2025 Adjusted EBITDA Guidance raised to $475.0 million – $500.0 million (previous: $430.0 million – $460.0 million).
  • Implied Payout Ratio for 2025: approx. 40%.
• Capital Allocation & NCIB:
  • Purchased 2.2 million units in Q2 2025; total 11.2 million units acquired under the expired NCIB (authorized for 11.7 million).
  • Filed notice of intention for a new NCIB (up to 10% of public float), anticipated to commence approx. August 19, 2025.
  • Debenture Redemption: Will redeem all outstanding 6.50% convertible unsecured subordinated debentures due Oct 31, 2026 on September 15, 2025.
  • Redemption Price: ~$1,024.58 per $1,000 principal.
  • Aggregate Principal Amount: $100,000,000.
  • Funding: Cash on hand and/or draws on credit facilities.
• Strategic Initiatives (Vision 2030):
  • Targeting mid-cycle annual Adjusted EBITDA of $550 million – $600 million by 2030.
  • 2025 Growth CapEx Guidance: $40.0 million – $60.0 million.
  • Cairo, Ohio ultrapure acid project: Construction complete, undergoing quality validation trials; commercial ramp-up expected end of 2025.

Notable Quotes

• Scott Rook, President and CEO: “Chemtrade delivered another strong quarter in Q2, with double-digit growth in revenue, Adjusted EBITDA, and distributable cash... Although global trade tensions persist, our robust first half performance and resilient business provide us with the confidence to once again raise our full-year Adjusted EBITDA guidance for 2025.”
• Rohit Bhardwaj, CFO: “In particular, our successful leverage reduction strategy has provided Chemtrade with the financial flexibility to successfully pursue compelling growth opportunities such as the acquisition of Polytec while continuing to maintain a conservative balance sheet... the redemption will result, on a like basis, in lower interest costs.”