TORONTO, May 11, 2016 /CNW/ - Chemtrade Logistics Income Fund (TSX: CHE.UN) today announced results for the three months ended March 31, 2016. The first quarter financial statements and MD&A will be available on Chemtrade's website at chemtradelogistics.com and on SEDAR at sedar.com.
Revenue in the first quarter of 2016 was $336.1 million compared with $326.0 million in the first quarter of 2015. The primary reason for the increase was the positive impact of the stronger US dollar on US dollar denominated revenues. Higher volumes of water chemicals products also contributed to the increase, partially offset by lower selling prices and lower sales volumes of sulphur in the Sulphur Products and Performance Chemicals (SPPC) and International segments. Adjusted cash flows from operating activities for the first quarter were $42.3 million (2015: $45.4 million).
Distributable cash after maintenance capital expenditures for the first quarter was $37.5 million, or $0.54 per unit (2015: $41.7 million, or $0.61 per unit). During the first quarter of 2016 and the comparable period of 2015, distributable cash benefited from maintenance capital expenditures being lower than the respective anticipated annual run rates. Maintenance capital expenditures during 2016 are expected to be approximately $50.0 million.
Adjusted EBITDA for the first quarter was $54.0 million compared with $58.1 million in the first quarter of 2015.
Net earnings for the first quarter of 2016 were $28.8 million compared with a net loss of $9.0 million in the same period in 2015. The increase in net earnings was primarily due to unrealized foreign exchange gains, lower net finance costs, and an income tax recovery during the first quarter of 2016, partially offset by higher levels of depreciation and amortization compared with the same period of 2015.
Mark Davis, President and Chief Executive Officer of Chemtrade, said, "Most of our businesses operated well in the first quarter and our financial results continued to benefit from the strong US dollar. Sales of regenerated acid were higher than last year, and our water chemicals business is showing signs of stability after some recent competitive pressure. These positive performances were offset by higher sourcing costs in our SPPC segment due to supply issues faced by two of our major sulphuric acid suppliers. We expect these conditions to improve as the year progresses."
The SPPC segment generated revenue of $159.5 million and Adjusted EBITDA of $35.7 million compared with $160.8 million and $40.4 million, respectively, in 2015. The SPPC segment sells sulphuric acid as well as sulphur. The main reason for the decreased revenue was lower selling prices for sulphur, which more than offset the positive impact of the stronger US dollar. Decreased EBITDA was due to lower margins for sulphuric acid, partially offset by the positive impact of the stronger US dollar of approximately $2.7 million.
The Water Solutions and Specialty Chemicals segment reported first quarter revenue of $120.8 million compared with $108.3 million in 2015. EBITDA was $30.7 million compared with $29.2 million in 2015. The higher revenue and EBITDA generated in this segment is primarily due to the higher volumes of water chemicals products and the positive impact of the stronger US dollar of approximately $2.3 million.
The International segment reported revenue of $55.8 million for the first quarter, compared with $57.0 million for the first quarter of last year. The lower revenue was due to lower volumes of sulphur. EBITDA for the quarter was $2.6 million, compared with $4.8 million last year, which was an exceptionally strong quarter. The lower EBITDA reflects lower margins for sulphuric acid in international markets.
Corporate costs during the first quarter of 2016 were $15.1 million, which was $1.2 million lower than the first quarter of 2015. The primary reasons for the decrease are lower accruals for Chemtrade's long term incentive plans, which were $2.4 million lower than the first quarter of 2015, offset partially by the negative impact of foreign exchange of approximately $0.8 million.
Mr. Davis said, "Our businesses are all operating well. Our ability to deal with significant supply issues yet still serve both our producer and end market customers demonstrates the strength of our distribution network and customer relationships. The relatively muted effect of these disruptions on our financial results is due to our diverse product portfolio and sources of earnings and our risk mitigating business model. We met the temporary challenges presented in our SPPC segment and still generated distributable cash that was comfortably ahead of our distributions to unitholders. Our organic growth strategies are moving ahead according to our plans. Finally, we remain confident that our business model and strong balance sheet will allow us to not only sustain our distributions to unitholders, but also to continue pursuing growth opportunities."
Distributions declared in the first 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: capital expenditures; the resolution of supplier issues; and the ability of our business model and balance sheet to maintain distributions and enable growth. 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 first quarter 2016 results will be webcast live on chemtradelogistics.com and newswire.ca on Thursday, May 12, 2016 at 8:30 a.m. ET.
SOURCE Chemtrade Logistics Income Fund
For further information: Mark Davis, President and CEO, Tel: (416) 496-4176; Rohit Bhardwaj, Vice-President, Finance and CFO, Tel: (416) 496-4177