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Special Note Regarding Forward-looking Statements
This presentation contains certain statements which may constitute “forward-looking” statements within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario). The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. This presentation contains forward-looking statements about the objectives, strategies, financial condition, results of operations and businesses of Chemtrade Logistics Income Fund. These statements are “forward-looking” as they are based on current expectations about our business and the markets we operate in, and on various estimates and assumptions. Forward-looking statements in this presentation describe our expectations as of the date of this presentation. Our actual results could be materially different from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, we cannot guarantee that any forward-looking statement will materialize. Forward-looking statements do not take into account the effect that transactions or non-recurring items announced or occurring after the statements are made may have on our business. We disclaim 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. Risks that could cause our actual results to differ materially from our current expectations are discussed in the RISK FACTORS section of our Annual Information Form and the RISKS AND UNCERTAINTIES section of our most recent Management’s Discussion & Analysis. Further information can be found in the disclosure documents filed by Chemtrade Logistics Income Fund with the securities regulatory authorities, available on www.sedar.com.
Note: unless otherwise specified, all dollar amounts in this presentation are in Canadian dollars. This presentation contains non-IFRS financial measures and data, including, but not limited to, EBITDA, EBITDA margin, distributable cash, free cash flow conversion, payout ratio, leverage and General Chemical’s financial measures, which are prepared in accordance with US GAAP.
3
Strengthening and Expanding our Platform
Water Treatment Chemicals
•Largest North American manufacturer of inorganic coagulants
•Builds on Chemtrade’s existing Western Canadian platform
Sulphuric Acid
•Critical sulphuric acid regen and production services provided primarily to over-the-fence pipeline customers under long-term contracts
•Complements Chemtrade’s existing sulphuric acid and regen expertise with geographical expansion
Specialty Chemicals
•Leading North American manufacturer of API(2) grade potassium chloride (“KCl”)
•Sole North American manufacturer of sodium nitrite
•Niche manufacturer of high-efficacy vaccine adjuvants
•Provides Chemtrade with new avenues for growth
Strengthens our presence in water treatment chemicals and sulphuric acid; expands our platform into specialty chemicals
General Chemical’s three operating businesses strengthen and expand Chemtrade’s platform
On December 4, 2013, Chemtrade entered into a definitive agreement to acquire General Chemical for US$860 million in cash(1)
1. Subject to Purchase Price adjustments and customary closing conditions.
2. API: Active Pharmaceutical Ingredient.
4
Acquisition Highlights
Highly Accretive Acquisition
Purchase Price US$860 million(1), all cash consideration
LTM(2) Adjusted EBITDA of US$110 million (C$112 million)
- Implies 7.2x purchase multiple including US$10 million of expected annual pre-tax synergies (7.8x w/out)
- Highly realizable cost synergies – fully phased-in within one year
Key Statistics Highly accretive to distributable cash per unit: 16.7% on LTM basis (3)
Payout ratio reduces to 49.9% on LTM basis
Financing Fully committed:
- US$1.0 billion senior secured credit facilities (US$600 million term loan and US$400 million revolver)
- An approximate $300 million equity raise planned
- Fully committed credit facilities for Purchase Price plus transaction expenses whether or not the planned equity raise is completed prior to closing
Structure Transaction to be implemented through a Delaware merger
Unanimously supported and recommended by Board of Trustees
Conditions Customary closing conditions
Expected Closing December, 2013 or early January, 2014
Note: All LTM metrics converted to C$ at LTM average CAD/USD FX rate of 1.018
1. Subject to Purchase Price adjustment; Purchase Price converted to C$ at spot CAD/USD FX rate of 1.0587 as of November 29, 2013.
2. LTM as of September 30, 2013.
3. General Chemical capex adjusted to account for incremental run-rate maintenance capex of $7.1 million for annual maintenance capex of $20.9 million for General Chemical assets.
Transformative acquisition expected to lead to meaningful DCPU accretion; Fully underwritten financing with expected transaction closing in early 2014
5
SHS Operation
Leading North American supplier of Sodium Hydrosulphite
Pulp Chemicals
Leading regional supplier of sodium chlorate, toll processor of CTO
Kemmax/Ruhrtrans
Leading independent sulphur removal company in Germany
Peak Chemicals
Expanded sulphuric acid business, diversified end markets
Marsulex
Increased presence in core products, expanded geographic reach and enhanced quality of earnings
General Chemical
Further strengthens and expands Chemtrade’s platform
2002 December
2003 August
2005 May
2005 August
2011 June
2014 (Pending)
CREATING A STRONGER, MORE RESILIENT BUSINESS
Demonstrated Ability to Successfully Integrate Acquisitions
6
$26
$44 $54 $59 $65 $69
$119
$81 $71
$115
$142 $143
$10
$112
$265
12.7%
15.1% 15.6%
13.9%
11.8% 12.6%
10.1%
14.8%
12.7% 13.0%
15.4%
21.2%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sept-13PF LTM
Chemtrade General Chemical Synergies EBITDA Margin
SHS Operation ($98 mm)
Pulp Chemicals($117 mm)
Kemmax/Ruhrtrans;
Peak($216 mm)
Marsulex($420 mm)
Transaction Continues Chemtrade’s Strong Growth Trajectory
1. Including pro forma annualized cost synergies of US$10 million, translated to Canadian dollars.
Continued expansion and strengthening of the Chemtrade platform
2002 to 2012 EBITDA CAGR of 18.3%
Pro forma EBITDA increases by 85%(1)
Industry-leading pro forma EBITDA margins
Track Record of Growth (EBITDA)
Nearly doubles LTM EBITDA and results in industry-leading margins
($ millions)
7
Strategy is Delivering Superior Returns
Source: FactSet Note: Market data as of November 29, 2013.
Chemtrade has delivered a 16.4% CAGR since IPO vs. 7.2% for the S&P TSX during the same period
Total Return: Chemtrade Relative to S&P/TSX Composite
Chemtrade
S&P/TSX Composite
$0
$100
$200
$300
$400
$500
$600
$700
Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13
8
Water Treatment Chemicals
$223 57%
Sulphuric Acid$93 24%
Speciality Chemicals
$69 18%
Corp/Other; $51%
General Chemical Business Overview
Water Treatment Chemicals
Largest North American manufacturer of inorganic coagulants used in water treatment process
- Products include Aluminum Sulphate, Other Aluminum Salts, Iron Salts, Alkali and Disinfectant
Sulphuric Acid
Regeneration and production services provided primarily to over-the-fence pipeline customers under long-term contracts
- Acid Regeneration, High Strength Sulphuric Acid, Merchant Acid and By-Products
Specialty Chemicals
Provides niche chemicals
- Products include Sodium Nitrite and High-Purity Potassium Chloride and Vaccine Adjuvants
Overview
Broad geographic scope and diverse product portfolio
LTM Revenue US$390 million
Note: LTM as of September 30, 2013
(US$ millions)
9
Products serve primarily municipal & industrial customers
Aluminum sulphate (“Alum”) and related blends – Most established coagulant used in water treatment
Other Aluminum Salts – Aluminum chlorohydrate ("ACH") and polyaluminum chloride ("PAC") used to remove impurities in water and manage pH
Iron Salts (ferric) – Can yield improved organic removal versus other coagulants
Disinfectant – Liquid aluminum sulphate used in distribution system disinfection
Strategically located facilities in close proximity to established, stable customer base to minimize freight costs
Water Treatment Overview
Product Offering Overview 39 Facilities Serving Diverse Customer Base
10
Product Offering Overview Three Pipeline-Connected Facilities
Richmond,
California
Anacortes,
Washington
Augusta,
Georgia
Sulphuric Acid Overview
Anacortes, WA Augusta, GA Richmond, CA
Products serve primarily refineries & industrial customers
An integrated, essential component of customers’ supply chains, providing over-the-fence supply of sulphuric acid and steam as key building blocks
Acid Regeneration – Regeneration of spent sulphuric acid
High Strength Sulphuric Acid
Merchant – Sales of sulphuric acid to a wide range of end customers in proximity to production plants
Other – By-products including sodium bisulphite (“SBS”), steam, and H2S processing
Long-term, mostly take-or-pay contracts with cost pass-through provisions
11
Product Offering Overview Products and Facilities
Specialty Chemicals Overview
Midlothian, Texas
Syracuse, New York
Berkeley Heights,
New Jersey
Sodium Nitrite High-Purity
Potassium Chloride Vaccine Adjuvants
Syracuse, NY Berkeley Heights, NJ Midlothian, TX
Three Facility Locations
Customers include major pharmaceutical, food processing, chemical, nutritional, industrial and other companies
Sodium Nitrite
- Sole North American manufacturer of sodium nitrite used in corrosion inhibitors, dyes, pigments, printing, food processing and emerging oil & gas applications
API grade Potassium Chloride
- Leading North American manufacturer of custom pharmaceutical formulations, food additive as salt alternative
Vaccine Adjuvants
- Niche manufacturer of animal vaccine adjuvants used in veterinary preventive medicine
Operates three manufacturing facilities fully compliant under federally-regulated guidelines
12
Industrial & Manufacturing
35%
Water Treatment34%
Pulp & Paper11%
Oil & Gas9%
Food / Pharma9%
Metals & Mining: 2.0%
Pulp & Paper
Chemicals (Toll-contract)
Plastics & Fibres
Paints & Dyes
Metal Treatment
Custom Pharmaceutical
Municipalities
Agriculture
Chemicals
Mining
Metals
Environmental
Rendering
Building Materials
General Chemical has Well-Balanced End-Market Exposure
Note: Based on 2012 revenue data
End-Market Exposure Detailed End-Market Exposure
Salt Alternative
Vitamin / Nutraceutical
Tantalum Refinement
Dialysis
Processed Meat
Custom Pharmaceutical
Detailed End-Market Exposure
Revenue base supported by a variety of complementary end-markets
Regen / Hydrogen sulfide (H2S) Processing
Metals & Mining
13
Acquisition Aligned with Chemtrade’s Four-Pronged Strategy
Growth
• Adds significant scale to Chemtrade’s existing platform
• Meaningful growth opportunities in both Water Treatment and Specialty Chemicals
Operational Excellence
• North American manufacturer with broad product portfolio of inorganic chemical solutions
Attractive Business Model
• High quality earnings consistent with our risk mitigating business model derived through a diverse customer base, risk-shared contracts and market leading positions across different geographies
Financial Prudence
• Industry-leading EBITDA margins and robust free cash flow conversion
• Highly accretive to DCPU and lowers payout ratio
• Maintains strong balance sheet
14
Water Treatment Chemicals Specialty Chemicals
Growth: Attractive Growth Opportunities
Proprietary licensed alkali technology – Lower maintenance pH corrector alternative to dry lime or caustic soda
- 10-year exclusivity for 43 states and Canada
- Allows General Chemical to provide efficient and non-hazardous alkali alternative
Demonstrated platform for bolt-on acquisitions
Other niche opportunities for further growth
Augments existing portfolio with products serving new end-markets with attractive growth profiles
Opportunities for new applications and end-market expansion
- Sodium Nitrite
Only FDA-approved provider for use in processed meat additives
Potential oil & gas opportunities
- Potassium Chloride
Pharma, vitamin and nutraceutical applications
Food additive as a salt alternative
15
Operational Excellence: New Products, Services and Geographies
Iron salts (ferric)
PAC
Proprietary licensed alkali technology
API grade potassium chloride
Sodium nitrite
Vaccine adjuvants
Steam
Expands North American Geographical Footprint into Key New Markets Addition of a Number of
New Products and Services
Expands footprint into key new markets with broader product and service offering
Chemtrade 23
General Chemical 45
Pro Forma 68
2
2
Western Canada
North-West U.S.
South-West U.S.
Eastern Canada
North-East U.S
South-East U.S.
8 82 2 3 3 3 3 4 4 3 3
1
38 6
13 15
8 82 2 3 3 3 3 4 4 3 3
1
38 6
13 15
8 82 2 3 3 3 3 4 4 3 3
1
38 6
13 15
8 82 2 3 3 3 3 4 4 3 3
1
38 6
13 15
8 82 2 3 3 3 3 4 4 3 3
1
38 6
13 15
8 83 3 3 3 3 3 4 4 3 3
12
8 6
13 15
16
Industrial & Manufacturing
31%
Water Treatment
2% Pulp & Paper29%
Oil & Gas23%
Food / Pharma
2%
Metals & Mining
7%
Fertilizer6%
Industrial & Manufacturing
32%
Water Treatment
14%
Pulp & Paper 23%
Oil & Gas 18%
Food / Pharma
4%
Metals & Mining
6%
Fertilizer 4%
Attractive Business Model: Broadens Chemtrade’s End-Market Exposure
Adds new municipal water treatment chemicals customer base
Entry into new end-markets including food and pharmaceuticals provides additional growth opportunities
Adds over 1,500 customers
Pro Forma Revenue Chemtrade Revenue
Well-balanced, diverse revenue base with attractive new end-markets
Note: Based on 2012 revenue data; General Chemical share of pro forma revenue converted to C$ at average 2012 CAD/USD FX rate of 0.9996; Industrial & Manufacturing includes chemicals, distribution,
electronics, textile, utilities and other; Chemtrade revenue data excludes International segment
17
Diverse Water Treatment Chemicals Revenue Base
Note: Based on Water Treatment Chemicals 2012 gross revenue
Long-term contracts that generally have take-or-pay as well as cost and capex pass-through provisions
Attractive Business Model: Business Model Enhances Quality of Earnings
--
25%
50%
75%
100%
125%
-- 10 20 30 40
Cu
mu
lati
ve R
ev
en
ue (
%)
Facilities
39
Critical and largely non-discretionary nature of water treatment chemicals add to business model resilience
Risk-Sharing Acid Business Model
Market leadership enhancing quality of earnings:
- Only N.A. manufacturer of sodium nitrite
- Leading N.A. manufacture of API grade KCl, with custom formulations
Leading Market Positions in Specialty
Diversity: no single customer represented more than 8% of General Chemical 2012 revenue
Strong customer retention through provision of business-critical services
Exceptional Customer Base Attributes
18
Chemtrade General Chemical Pro Forma
Number of facilities
Canada | U.S. | Int.
27
10 | 13 | 4
45
7 | 38 | n.a.
72
17 | 51 | 4
Gross Revenue 2012 Split
Canada | U.S. | Int.28% | 43% | 29% 10% | 90% | n.a. 23% | 57% | 20%
Revenue (C$ millions) $858 $396 $1,254
EBITDA (C$ millions) $143 $112 $265
EBITDA Margin (%) 16.7% 28.2% 21.2%
Capex (C$ millions) $48 $21 $69
Free Cash Flow Conversion (%)(1) 66.3% 81.3% 73.9%
Distributable Cash (C$ millions) $86 n.a. $144
DCPU (C$) $2.06 n.a. $2.41
Operating
Profile
Financial
Profile
(LTM
Sep-30
2013)
1. Free cash flow conversion defined as (EBITDA – capex) / EBITDA.
2. General Chemical gross revenue split is based on location footprint.
3. Gross revenue.
(4)
(5)
(5)
(4)
(3)
4. Includes environmental liability payments; adjusted to account for incremental $7.1 million run-rate maintenance capex.
5. Includes pro forma annualized cost synergies.
(2) (2)
(4,5)
(4,5)
Financial Prudence: Highly Complementary Acquisition
19
66.3%
73.9%
Chemtrade Pro Forma
Peer Benchmark: 61.8%
Financial Prudence: Industry-Leading Margins and Robust Free Cash Flow Conversion
Significantly enhanced EBITDA margin and free cash flow conversion
Industry-Leading EBITDA Margins Robust Free Cash Flow Conversion(1)
Note: LTM as of September 30, 2013; General Chemical capex adjusted to account for incremental run-rate maintenance capex of $7.1 million for total maintenance capex at $20.9 million; Peer Benchmark
based on median of LTM metrics for selected peers: Alzo Nobel, Arkema, Ashland, Axiall, Cabot, Canexus, Celanese, Clariant, Cytec Industries, Dow Chemical, DuPont, Eastman Chemical, Ecolab, Evonik,
H.B. Fuller, Kemira, Koppers, Lonza Group, Methanex, Olin, Omnova, Penford, PPG Industries, Quaker Chemical, Rockwood Holdings, Royal DSM, RPM International, Solvay, Stepan, Superior Plus and
Westlake Chemical
1. Free cash flow conversion defined as (EBITDA – capex) / EBITDA.
LTM
EBITDA
Margin
LTM
FCF
Conversion
16.7%
21.2%
Chemtrade Pro Forma
Peer Benchmark: 14.3%
20
58.2%
49.9%
Chemtrade Pro Forma
$2.06
$2.41
Chemtrade Pro Forma
Highly Accretive to DCPU
Financial Prudence: Highly Accretive to DCPU and Reduces Payout Ratio
Source: Company filings
Note: LTM as of September 30, 2013; Distributable cash is defined as EBITDA less interest, taxes and maintenance capex; does not include impact of pension & OPEB contributions; pro forma includes US$10 million
of expected run-rate cost synergies and assumes taxable income reduced by interest expense resulting in approximately 50% of General Chemical EBIT taxable. General Chemical capex adjusted to account for
incremental run-rate maintenance capex of $7.1 million for total maintenance capex at $20.9 million
DCPU
(LTM)
($/unit)
Payout
Ratio
(LTM)
Modest cost synergies support meaningful accretion and payout ratio reduction
Meaningful Reduction in Payout Ratio
21
Financial Prudence: Maintains Strong Balance Sheet
Prudent use of incremental leverage capacity
Sources of Financing
Senior Credit Facilities
US$1.0 billion Senior Secured Credit Facilities comprised of:
- US$400 million revolver with US$150 million optional accordion
5-year term
Approximately US$155 million available pro forma as of September 30, 2013(1)
- US$600 million Term Loan
5-year term
No amortization over life of loan, bullet maturity, fully pre-payable without penalty
Equity Raise
An approximate $300 million equity raise planned
Fully committed credit facilities for Purchase Price plus transaction expenses whether or not the planned equity raise is completed prior to closing
• Pro forma LTM senior secured leverage of 3.3x (2)
• Strong near-term cash flow generation supports de-leveraging 1. Includes US$216 million drawn on revolver plus ~US$30 million impact from outstanding letters of credit.
2. Senior secured leverage calculated as per credit agreement.
22
Demonstrated Prudent Capital Management
Proven Track Record of Maintaining Distributions
Chemtrade has proven its ability to reduce leverage while maintaining its distribution
1.0x
2.8x 2.5x
2.0x 2.0x 1.8x 1.8x
1.6x 1.7x 1.7x 1.6x
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13
Senior Debt to LTM EBITDA
Since the Marsulex acquisition:
• Senior secured leverage has been steadily reduced from 2.8x post-acquisition to below 2.0x within one year
Strong Deleveraging Profile
$1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13
Annualized Distributions per UnitThroughout this deleveraging process, we have maintained our annual distribution of $1.20/unit
Source: Company filings
23
Executing on our Four-Pronged Strategy
Growth
Operational Excellence
Business Model
Financial Prudence
The acquisition of General Chemical strengthens and expands our platform
25
$86
$144
$112$10
($43)
($21)
CurrentChemtrade
DistributableCash
GeneralChemicalEBITDA
Synergies IncrementalInterest andCash Taxes
IncrementalMaintenance
Capex
Pro-FormaDistributable
Cash
DCPU: $2.06Payout Ratio:
58.2%
DCPU: $2.41Payout Ratio:
49.9%
(1)
Distributable Cash Bridge (LTM Current to Pro Forma)
DCPU Reconciliation
Note: LTM as of September 30, 2013; Distributable cash is defined as EBITDA less interest, taxes and maintenance capex; does not include impact of pension & OPEB contributions. General Chemical capex adjusted
to account for incremental run-rate maintenance capex of $7.1 million for total maintenance capex of $20.9 million
1. Assumes taxable income reduced by interest expense resulting in approximately 50% of General Chemical EBIT being taxable.
2. LTM EBITDA calculated per reported EBITDA in each period (normalization adjustments not made).
3. Excludes General Chemical one-time capex pertaining to Water Treatment Chemicals growth.
($ millions)
Distributable Cash Impact
($ millions) ChemtradeGeneral
Chemical Adjustments Pro-Forma
LTM EBITDA(2) 143.5 111.7 10.2 265.4
Less: Cash Interest (19.5) -- (25.9) (45.4)
Less: Taxes (1) (3.4) (15.1) (1.9) (20.4)
Less Maintenance Capex(3) (34.6) (13.8) (7.1) (55.5)
Distributable Cash 86.0 82.8 (24.7) 144.1
Units 41.7 -- 18.2 59.9
DCPU 2.06 2.41