Chemtrade narrows 2026 EBITDA guidance to C$495–515 million
Key Facts
Chemtrade Logistics Income Fund reported results for the three and nine months ended September 30, 2026, on November 13, and narrowed its full-year adjusted EBITDA guidance to C$495–515 million from C$485–525 million, according to its statement. The revision tightens the previous range while keeping both ends within the framework the company announced earlier in the year. The announcement came in a quarter when revenue rose but adjusted operating profitability declined year over year. The company said its outlook remained largely in line with its guidance at the start of the year. It also attributed volatility in prices for key products and raw material inputs to geopolitical events.
Quarterly revenue was C$633.1 million, up C$100.4 million, or 18.8%, from the same period last year, the company said. Excluding the impact of foreign exchange, the increase was C$92.9 million. Chemtrade attributed revenue growth to higher prices for merchant acids, sulfur products and Regen acid in its Acid & Specialty Chemicals segment. Revenue from the acquisition of Polytec also supported the total. These factors were partly offset by lower prices for chlor-alkali products and reduced sodium chlorate sales volumes. The quarter therefore combined sales growth with pressure in some products and volumes.
Adjusted EBITDA, by contrast, fell to C$145.1 million, down C$6.1 million, or 4.0%, year over year. The decline was C$8.3 million excluding the impact of foreign exchange, according to the statement. The company attributed the decrease mainly to lower netbacks for chlor-alkali products and reduced sodium chlorate sales volumes, as well as lower margins in Water Solutions. Lower corporate costs, Polytec’s contribution and higher EBITDA from sulfur products partly eased the pressure. The results show that higher revenue did not prevent a decline in adjusted profitability during the quarter. Performance across product segments remained mixed, with support from sulfur and the acquisition offset by weakness in chlor-alkali and sodium chlorate.
Net earnings rose to C$47.3 million, up C$5.0 million from the year-earlier quarter, which the company attributed mainly to lower financing costs. Cash flow from operating activities was C$156.1 million, up C$5.9 million, or 3.9%, year over year. Chemtrade said the improvement in cash flow was mainly related to lower working capital and interest paid. Distributable cash after maintenance capital expenditures was C$75.7 million, or C$0.68 per unit, compared with C$77.8 million and C$0.69 per unit in the third quarter of 2025. The company kept its monthly distribution at C$0.06 per unit and announced on October 21 that the distribution for that month, payable on November 30, would go to unitholders of record on October 30. The differing trends in earnings, cash flow and distributable cash highlight mixed signals for the period.
Net debt was C$1.2 billion on September 30, while net debt to last-12-month adjusted EBITDA was 2.48 times, the company said. The chief executive said sulfur costs remained at historically high levels during the third quarter. He added that the fourth-quarter sulfur settlement was 13% lower than in the third quarter, which management expects to support Water Solutions margins. Management expects a significant improvement in the fourth quarter compared with the same period in 2025. That outlook puts the coming quarter at the center of investor attention as they track the effects of sulfur costs and margins on results.
Unitholders are scheduled to vote at a special meeting expected to be held on December 7, 2026, on a plan to convert the fund into a corporation. Approval will require at least 66 2/3% of votes cast. Chemtrade announced the proposed conversion on October 9, with completion expected around December 18, subject to approvals, in exchange for holders receiving one share for each unit. The company said the proposed conversion is intended to give it greater flexibility and easier access to broader capital pools, particularly outside Canada. The company does not expect the conversion to change its distribution policy, while the new company’s board is expected to set a quarterly distribution policy starting in 2027. The first quarterly distribution is expected to be declared for the quarter ending March 31, 2027.