Favourable market conditions and Marsulex acquisition drive performance
TORONTO, Feb. 23, 2012 /CNW/ - Chemtrade Logistics Income Fund (TSX: CHE.UN) today announced results for the three months and year ended December 31, 2011. The financial statements and MD&A will be available on Chemtrade's website at www.chemtradelogistics.com and on SEDAR at www.sedar.com.
The results for the year and fourth quarter include the contribution from the acquisition of Marsulex Inc. ("Marsulex") that was completed on June 24, 2011. For the year ended December 31, 2011, Distributable cash after maintenance capital expenditures was $73.2 million or $2.01 per unit. The comparable numbers for 2010 were $36.3 million and $1.18 per unit. Revenue for the year was $880.6 million (2010: $558.1 million). EBITDA of $114.8 million was $43.4 million higher than the level generated in 2010. Cash flow from operating activities was $77.1 million (2010: $56.9 million), and net earnings for 2011 were $60.3 million (2010: $28.1 million).
For the fourth quarter, revenue was $247.2 million compared with $151.3 million in 2010. The revenue increase was due to higher prices for sulphuric acid and sulphur and higher volume of sulphuric acid, as well as the contribution from the acquired businesses. Aggregate cash flow from operating activities for the period was $38.0 million, which was $35.0 million higher than the fourth quarter of 2010.
Distributable cash after maintenance capital expenditures for the fourth quarter of 2011 was $12.3 million or $0.29 per unit. This included the impact of higher than normal spending on capital projects that had not been executed earlier in the year. The comparable numbers for the fourth quarter 2010 were $6.3 million or $0.21 per unit. Aggregate EBITDA for the fourth quarter of 2011 was $32.6 million compared with $14.1 million in 2010. The significantly higher results generated in the Sulphur Products & Performance Chemicals ("SPPC") segment is primarily due to the inclusion of the Marsulex businesses.
Mark Davis, President and Chief Executive Officer of Chemtrade, said, "Chemtrade had an exceptional year in 2011. Business conditions were favourable for most of our products throughout the year and our plants operated well. Most importantly we continued to execute on our strategy of increasing the size, scale and scope of our operations. The Marsulex acquisition not only expanded and extended our businesses but also did so with businesses that are compatible with our business model. Finally, late in the year we also maintained our balance sheet strength and flexibility with the issuance in December of $80.0 million principal amount of convertible debentures, using some of the net proceeds to repay debt incurred for the Marsulex transaction".
SPPC generated revenue of $150.1 million and EBITDA of $34.6 million in the fourth quarter compared with $82.3 million and $18.3 million, respectively, in 2010. The main reason for the increase in revenue was the inclusion of the Marsulex businesses, but higher prices and higher volumes for sulphuric acid were also positive factors. The primary reason for the higher EBITDA during the fourth quarter of 2011 was the inclusion of the results of the recently acquired Marsulex businesses.
Pulp Chemicals reported fourth quarter revenue of $12.7 million compared with $12.9 million in 2010, reflecting lower volumes of sodium chlorate. The segment generated EBITDA of $3.1 million compared with $3.7 million in 2010. The reduction in EBITDA was due to higher maintenance costs related to some operational issues in 2011.
International reported revenue of $84.5 million for the fourth quarter, compared with $56.0 million in 2010. This reflected higher prices and volumes for sulphuric acid and higher prices for sulphur. The higher price environment also resulted in higher cost of sales, and therefore EBITDA of $4.8 million was similar to the fourth quarter of 2010.
Corporate costs during the fourth quarter of 2011 were $9.9 million, which was $2.8 million lower than the fourth quarter of 2010. The main reason for the decrease was a reduction in LTIP accruals which were $2.2 million lower than a year ago.
Mr. Davis said, "The integration of the Marsulex operations is substantially completed, and we continue to be pleased with the quality of the assets and the people that are now part of Chemtrade. Although the results for the first six months of the integration cannot be used as an indicative run rate, the synergies and the added earning potential of the larger Chemtrade are clearly evident. We will continue to invest in our capital and human resources to improve the quality and cost competitiveness of our capital assets. Although the general economic climate is uncertain, we expect demand for our products and services to remain stable and believe the quality, scope and scale of our business combined with our business model and strong balance sheet, are more than sufficient to sustain our current distribution rate."
Distributions declared in the fourth 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: prices and demand for commodities, products and services; capital expenditures; and the sustainability of the Fund's distributions. 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 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 fourth quarter and full year 2011 results will be webcast live on www.chemtradelogistics.com and www.newswire.ca/en/webcast on Friday, February 24, 2012 at 10:00 a.m. ET.
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For further information:
President and CEO
Tel: (416) 496-4176
Vice-President, Finance and CFO
Tel: (416) 496-4177