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Chemtrade Logistics (TSE:CHE.UN)
TSX:CHE.UN
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Chemtrade Logistics
(TSX:CHE.UN)
65Neutral
Positive Factors
Currency Impact
The stronger USD is beneficial, with each $0.01 USD appreciation adding $3-4M to earnings.
Financial Performance
CHE continues to deliver more robust earnings and appears inexpensive with ample free cash flow to pursue ongoing buybacks and other initiatives.
Valuation
Chemtrade continues to look attractively valued, despite recent share price outperformance.
Negative Factors
Market Conditions
CHE continues to trade below ~5x, at the low end of its decade-long valuation range, even though U.S. chemicals names are trading near the high end of valuation ranges.
Operational Challenges
A possible small blip to Q3 earnings from rail strike issues.
Product Demand
Chlorine is showing weakness, and there is likely some downtick in chlorate due to more closed pulp mills.
Chemtrade Logistics (CHE.UN) vs. S&P 500 (SPY)
Market Cap
C$1.12B
Dividend Yield6.84%
Average Volume (3M)273.62K
Price to Earnings (P/E)9.0
Beta (1Y)0.96
Revenue Growth-3.23%
EPS Growth-50.02%
CountryCA
Employees1,474
SectorBasic Materials
Sector Strength59
IndustryChemicals
Share Statistics
EPS (TTM)1.07
Shares Outstanding116,282,135
10 Day Avg. Volume220,036
30 Day Avg. Volume273,620
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.66
Price to Cash Flow (P/CF)2.90
P/FCF Ratio5.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$13.00Price Target Upside34.72% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Chemtrade Logistics Business Overview & Revenue Model
Company DescriptionChemtrade Logistics Income Fund (CHE.UN) is a publicly traded provider of industrial chemicals and services primarily serving the North American market. The company operates in several sectors, including sulphur products and performance chemicals, water solutions and specialty chemicals, and electrochemicals. Chemtrade supplies a broad range of products used in industries such as pulp and paper, oil refining, food production, and municipal water treatment.
How the Company Makes MoneyChemtrade Logistics generates revenue through the sale of industrial chemicals and services across its various business segments. The sulphur products and performance chemicals segment provides sulphuric acid and other sulphur products, which are essential for numerous industrial processes. The water solutions and specialty chemicals segment offers products used for water treatment and other specialty applications. The electrochemicals segment produces sodium chlorate and other chemicals used in pulp and paper bleaching and other industrial applications. The company's revenue model is based on long-term supply agreements, strategic partnerships, and a diversified customer base across multiple industries, which help stabilize earnings and mitigate market volatility.
Chemtrade Logistics Financial Statement Overview
Summary
Chemtrade Logistics has demonstrated strong profitability and operational efficiency, as reflected in its income statement metrics. However, the negative revenue growth and declining free cash flow are potential concerns that could impact future financial stability. The balance sheet remains relatively leveraged, yet manageable, with a satisfactory equity ratio.Income Statement
Chemtrade Logistics has shown significant improvement in profitability metrics over recent years. The gross profit margin for 2024 was approximately 24.1%, while the net profit margin was around 7.1%, both indicating solid profitability. However, the revenue growth rate was negative at -3.2% compared to 2023, suggesting a contraction in sales. EBIT and EBITDA margins stood at 13.6% and 23.4%, respectively, reflecting efficient operational performance.70
Positive
Balance Sheet
The company's balance sheet shows a moderate debt-to-equity ratio of 1.10, indicating reliance on debt but within an acceptable range for the industry. The return on equity (ROE) was 15.5%, suggesting good profitability relative to shareholder equity. The equity ratio was 35.8%, showing a stable capital structure, though there is room for improvement in reducing leverage.65
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth of -30.7% from 2023 to 2024, indicating a potential area of concern. The operating cash flow to net income ratio was strong at 2.74, implying robust cash generation relative to net income. The free cash flow to net income ratio was 1.28, reflecting efficient cash conversion.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.79B | 1.85B | 1.81B | 1.37B | 1.38B | Gross Profit |
| 430.55M | 420.65M | 353.90M | -3.85M | 33.73M | EBIT |
| 243.39M | 315.38M | 219.15M | -142.69M | -131.14M | EBITDA |
| 417.42M | 562.33M | 445.83M | 92.91M | 119.51M | Net Income Common Stockholders |
| 126.91M | 249.32M | 109.11M | -235.21M | -167.48M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 25.50M | 21.52M | 72.57M | 13.91M | 12.51M | Total Assets |
| 2.28B | 2.11B | 2.16B | 2.05B | 2.50B | Total Debt |
| 899.26M | 863.95M | 1.04B | 1.19B | 1.38B | Net Debt |
| 873.76M | 842.42M | 970.32M | 1.18B | 1.37B | Total Liabilities |
| 1.47B | 1.40B | 1.59B | 1.67B | 1.89B | Stockholders Equity |
| 818.36M | 707.14M | 566.21M | 379.85M | 605.82M |
| Cash Flow | Free Cash Flow | |||
| 162.00M | 235.07M | 253.75M | 132.90M | 184.87M | Operating Cash Flow |
| 347.80M | 401.46M | 369.19M | 219.04M | 261.95M | Investing Cash Flow |
| -185.80M | -118.46M | -108.88M | 96.53M | -74.79M | Financing Cash Flow |
| -159.30M | -333.53M | -203.00M | -314.12M | -187.86M |
Chemtrade Logistics Technical Analysis
Negative
9.65
Price Trends
9.96
Negative
10.44
Negative
10.05
Negative
Market Momentum
-0.08
Negative
44.13
Neutral
54.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CHE.UN, the sentiment is Negative. The current price of 9.65 is below the 20-day moving average (MA) of 9.70, below the 50-day MA of 9.96, and below the 200-day MA of 10.05, indicating a bearish trend. The MACD of -0.08 indicates Negative momentum. The RSI at 44.13 is Neutral, neither overbought nor oversold. The STOCH value of 54.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CHE.UN.
Chemtrade Logistics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $11.62B | 20.02 | 7.32% | 3.18% | -4.65% | -14.19% | |
73 Outperform | $32.36B | 19.99 | 7.47% | 3.82% | -0.08% | 4.76% | |
73 Outperform | $5.13B | 19.05 | 6.48% | 6.37% | 5.08% | ― | |
73 Outperform | $138.64B | 27.17 | 8.63% | 5.96% | 24.95% | -17.19% | |
65 Neutral | C$1.12B | 9.01 | 16.64% | 6.84% | -3.23% | -50.02% | |
64 Neutral | C$1.53B | 73.50 | -3.83% | 9.01% | -2.75% | -165.76% | |
47 Neutral | $2.65B | -3.07 | -22.25% | 3.27% | 3.70% | -29.53% |
* Basic Materials Sector Average
Performance Comparison
TSE:CHE.UN
Chemtrade Logistics
9.74
1.77
22.21%
TSE:FTS
Fortis
65.55
14.26
27.80%
TSE:NPI
Northland Power
19.67
-1.66
-7.77%
TSE:ALA
AltaGas
39.47
10.80
37.67%
TSE:ENB
Enbridge
63.69
18.13
39.79%
TSE:SPB
Superior Plus
6.43
-2.87
-30.86%
Chemtrade Logistics Earnings Call Summary
Earnings Call Date: Feb 28, 2025 | % Change Since: -0.72% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
Chemtrade demonstrated resilience in Q3 2024 with strong financial performance and strategic growth initiatives, despite facing challenges such as rail work stoppage impacts and segment-specific declines. The outlook remains positive with continued investments in high-growth areas.Highlights
Solid Financial Performance
Chemtrade delivered a strong third quarter with EBITDA increased by 1.9% year-over-year, despite challenging comparisons due to record results in Q3 2023.
SWC Segment Growth
The water solutions business within the SWC segment showed year-over-year improvement driven by higher selling prices, contributing to increased margins.
Successful Mitigation of Rail Work Stoppage Impact
Chemtrade successfully minimized the financial impact of a significant rail work stoppage, limiting the effect on EBITDA to $5.8 million.
Strong Cash Flow and Balance Sheet
Chemtrade's cash flow generation remains robust, supporting a healthy balance sheet with a net debt to LTM EBITDA ratio of 1.8x and over USD 600 million of available liquidity.
Capital Allocation and Growth Investments
Continued investment in growth with about $19 million of growth CapEx in Q3, focusing on long-term unitholder value through growth initiatives and unit buybacks.
Positive Outlook for 2025
Anticipated continued strong performance in key segments, notably in Water Chemicals, and ongoing strategic investments in growth areas like ultrapure acid and water chemicals.
Lowlights
Decline in SWC Segment EBITDA
EBITDA for the SWC segment declined by $3.5 million or 4.3% year-over-year, impacted by lower revenue and margins in the regen business.
Challenges in Sodium Chlorate Business
The sodium chlorate business faced reduced volumes due to production curtailments by a major customer, leading to manufacturing consolidation.
Impact of Rail Work Stoppage
The quarter was affected by a work stoppage at Canada's two largest railways, impacting EBITDA by $5.8 million.
Weakness in Brazil
Revenue in Brazil declined year-over-year, attributed to customer production changes.
Company Guidance
During Chemtrade Logistics Income Fund's Q3 2024 earnings call, key guidance metrics were discussed. The company adjusted its 2024 EBITDA guidance to be between $445 million and $460 million, despite challenges like a work stoppage at Canada's two largest railways. This adjustment marks 2024 as potentially the second-highest EBITDA year in the company's history, following 2023. The company maintained a strong balance sheet with a net debt to LTM EBITDA ratio of 1.8x and over USD 600 million in available liquidity. In their Sulphur and Water Chemicals segment, revenue increased by $1.4 million or 0.5% year-over-year, while EBITDA declined by $3.5 million or 4.3%. Their Electrochemicals segment saw a 5.4% increase in EBITDA, excluding the rail work stoppage impact. Additionally, corporate costs lowered by $1.7 million or 6.6% year-over-year. The updated guidance implies a payout ratio of 40%, underscoring the sustainability of their attractive monthly distribution.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.