Chemtrade Reports Q1 2025 Results, Raises EBITDA Outlook, Unveils Vision 2030 Roadmap
Chemtrade Logistics Income Fund has released its financial and operating results for the first quarter ended March 31, 2025. The company’s results highlight a robust start to the year, with strong revenue growth, improved earnings, and increased cash flow. These results underscore Chemtrade’s ongoing operational resilience and its ability to navigate challenging macroeconomic conditions. The Fund also provided an update on its capital allocation strategy, including distribution increases and unit repurchases, and introduced its long-term strategic plan, “Chemtrade Vision 2030.”
Q1 2025 Financial and Operating Highlights
Chemtrade reported revenue of $466.3 million for the three-month period ended March 31, 2025, representing an 11.5% increase over the $418.2 million reported in the same period of 2024. This $48.1 million year-over-year growth was primarily driven by stronger selling prices across several key products and a weaker Canadian dollar, which positively impacted the translation of U.S. dollar-denominated revenue. These favorable factors more than compensated for lower sales volumes of caustic soda and chlorine.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) reached $120.1 million in Q1 2025, an increase of $10.1 million or 9.2% compared to Q1 2024. Excluding the effects of foreign exchange, Adjusted EBITDA grew by 3.3% year-over-year. This increase was mainly attributed to improved pricing for several products, although higher input costs partially offset these gains.
Net earnings for the quarter totaled $49.1 million, up $7.1 million from the same period last year. The increase was largely the result of higher Adjusted EBITDA, as well as favorable unrealized foreign exchange gains and lower tax expenses. These were partly offset by an increase in finance costs associated with higher debt levels and interest rates.
Cash flows from operating activities rose substantially, reaching $11.6 million in Q1 2025, compared to $2.4 million in the prior-year quarter. This represents a 382.4% year-over-year increase and reflects stronger operating performance and improved working capital management.
Distributable cash after maintenance capital expenditures was $62.1 million for the quarter, an increase of $2.2 million or 3.6% compared to Q1 2024. On a per-unit basis, distributable cash after maintenance capital expenditures increased by 3.8%, rising to $0.53 per unit from $0.51 per unit. The increase was driven by higher cash flows from operating activities, partially offset by increased lease payments and higher maintenance capital expenditures.
Outlook and Guidance
Chemtrade noted that the current macroeconomic environment remains uncertain, with persistent volatility in currency markets, inflation, and global supply chains. Nevertheless, the company remains confident in its operational outlook for the remainder of the year. Reflecting both a strong start to 2025 and improved visibility into future performance, Chemtrade announced that it is raising its full-year Adjusted EBITDA guidance to the upper end of its previously provided range. The company now expects Adjusted EBITDA for 2025 to be closer to the high end of the $430 million to $460 million range.
Capital Allocation and Distribution Update
In a move that reflects management’s confidence in the company’s financial stability and future growth prospects, Chemtrade increased its monthly distribution rate during the first quarter of 2025. The new monthly distribution is $0.0575 per unit, which translates to an annualized rate of $0.690 per unit. This represents an approximate 5% increase compared to the previous distribution level.
The payout ratio, a measure of distributions as a percentage of distributable cash, was a conservative 32% for the first quarter of 2025. This level provides ample room for reinvestment and additional capital return initiatives while maintaining balance sheet flexibility.
Normal Course Issuer Bid and Unit Repurchases
As part of its capital allocation strategy, Chemtrade has been actively repurchasing units under its Normal Course Issuer Bid (NCIB). During Q1 2025, the Fund repurchased approximately 3.9 million units. Under its current NCIB, which is set to expire in June 2025, Chemtrade is authorized to repurchase up to 11.7 million units. As of May 9, 2025, the company had already repurchased approximately 10.4 million units. Chemtrade intends to renew the NCIB upon expiry, subject to approval by the relevant regulatory authorities.
Debt and Balance Sheet Position
Chemtrade continues to maintain a solid financial position with a disciplined approach to leverage. At the end of the first quarter, the company reported a Net Debt to Last Twelve Months (LTM) Adjusted EBITDA ratio of 1.98. This ratio remains well within management’s target range and reflects prudent financial management in the face of ongoing market volatility.
Additionally, Chemtrade issued an extra $125.0 million in aggregate principal amount of its 6.375% senior unsecured notes due August 28, 2029, bringing the total outstanding amount of these notes to $375.0 million. The proceeds from this issuance are expected to support general corporate purposes, including refinancing of existing debt and capital investments aligned with Chemtrade’s long-term strategic goals.
Introducing Chemtrade Vision 2030
Looking ahead, Chemtrade unveiled its long-term strategic framework titled “Chemtrade Vision 2030.” This initiative outlines the company’s ambitions to drive meaningful growth and deliver strong total unitholder returns over the next five years.
Key targets of Vision 2030 include:
- 5–10% annual growth in Adjusted EBITDA and Distributable Cash after Maintenance Capital Expenditures per unit.
- A disciplined approach to capital allocation, balancing reinvestment in high-return projects with continued returns to unitholders.
- A focus on strategic growth initiatives, including capacity expansions, acquisitions, and investments in sustainability and operational efficiency.
Management emphasized that this strategy is grounded in maintaining financial discipline, supporting operational excellence, and ensuring Chemtrade remains well-positioned to benefit from long-term trends in the chemicals and industrial sectors.
Chemtrade’s first quarter results for 2025 reflect a strong start to the year, with solid growth across key financial metrics, disciplined execution of its strategic plan, and a clear commitment to enhancing long-term unitholder value. With improved financial flexibility, enhanced distributions, and a forward-looking strategic roadmap in place, Chemtrade is well-positioned to navigate economic headwinds and capitalize on emerging opportunities through 2025 and beyond.