Where there is Uncertainty, there is Opportunity

Where there is Uncertainty, there is Opportunity

An argument is made that there are just too many question marks about the near future; wouldn’t it be better to wait until things clear up a bit? You know the prose: Maintain buying reserves until current uncertainties are resolved,” etc…Before reaching for that crutch, face up to two unpleasant facts: The future is never clear and you pay a very high price for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.

Warren Buffet

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While most value investors are typically considered a risk-averse lot, that’s more to do with the price they’re willing to pay for a given investment. Often the types of situations that attract them are fraught with uncertainty and are perceived by the crowd as being downright dangerous. As companies constantly evolve and change in response to industry or company-specific challenges and opportunities, the lack of clarity around those changes - and the risks that are entailed in the potential outcomes – can cause share prices to diverge widely from the underlying value of the business. The ability to recognize and take advantage of that dynamic is a key element of what sets the best investors apart from the crowd. There are two kinds of events that create uncertainty (volatility) which can offer the investor who can think for himself, an opportunity to take advantage of the herd-like behaviour of the crowd. 

The first revolve around individual companies, such as earnings misses, unexpected news, M&A activity, restructurings and legal issues – things that can make prices and valuations change relatively quickly. In general, prices change much faster than the fundamentals of businesses change. It is the individual investor’s job to investigate what made the price change and then figure out whether the facts have changed as much as the price, if they haven’t changed that much that can be an opportunity to buy something cheap.

The other major source of uncertainty is when a macro event or trend causes the markets to move. These can be industry – specific, but more often than not it involves interest rate moves, currency moves, political instability, and the overall economic outlook. The market reflects at any moment what the stock market crowd think a business is worth, so if macroeconomic factors force people to buy and sell a companies’ stock  while ignoring the long term fundamentals of the company, this can create a disconnect with the price of its stock and what the underlying company is really worth. This can create an opportunity for the observant self-aware investor who can think for himself, to move in and take advantage of the disconnect between the stock's price and its value.

Stockwatch...Toromont Announces 2024 Fourth Quarter and Full Year Results And Increases Quarterly Dividend

Stockwatch...Toromont Announces 2024 Fourth Quarter and Full Year Results And Increases Quarterly Dividend

Canada Newswire, Feb 11, 2025 5:28 PM EST

TORONTO , Feb. 11, 2025 /CNW/ - Toromont Industries Ltd. (TSX: TIH) today reported its financial results for the three months and year ended December 31, 2024

"Results in 2024, and in particular Q4, reflect good execution across most markets against a strong order backlog. For the year, bottom line results were below the strong comparator last year, in part due to the reduced activity in the residential sector. Overall the team performed well in Q4, improving on last year's bottom line," stated Michael S. McMillan , President and Chief Executive Officer of Toromont Industries Ltd. "The Equipment Group executed well with improved new equipment deliveries in both the construction and mining segments. While rental markets remain generally constrained, utilization levels improved toward the end of 2024. CIMCO revenue and bottom-line improvements demonstrated the team's strong execution while they continued to build their backlog throughout the year. Our solid financial position was maintained while we continued to exercise disciplined capital allocation, investing in the business to support organic initiatives and our heavy rents business acquisition. Our team is committed to building strong partnerships with our suppliers and customers, while executing and allocating our resources with discipline in order to deliver sustainable growth over the long term."

Considering the Company's strong financial position and long-term outlook, the Board of Directors today increased the quarterly dividend by four cents per share (8.3%) to 52 cents per share. Toromont has paid dividends every year since 1968 and this is the 36th consecutive year of dividend increases. The next dividend is payable on April 4, 2025 to shareholders on record on March 7, 2025.

HIGHLIGHTS:

Consolidated Results

• Revenue increased $80.0 million or 7% in the fourth quarter compared to the similar period last year, with higher revenue in both groups, with Equipment Group up 5% and CIMCO up 23%. Higher revenue in the Equipment Group resulted from solid new equipment deliveries against order backlog. Product support revenue was healthy and rental revenue increased in the quarter. CIMCO's growth reflects good package revenue and higher product support activity levels in Canada .
• Revenue increased $398.9 million (up 9%) to $5.0 billion for the year. Revenue increased in both groups, with the Equipment Group up 8% and CIMCO up 16% compared to 2023. Growth reflects higher new equipment sales and solid execution against order backlog. Product support increased in both groups, reflecting continued activity in end markets. Our growth in technician labour workforce reflects our long‑term strategic objectives.
• Gross profit margins ⁽¹⁾ increased 40 bps to 27.2% in the fourth quarter with higher gross margins in the Equipment Group offset by lower CIMCO margins.
• Gross profit margins decreased 180 bps to 25.1% for the year. The Equipment Group reported lower margins in all areas, except for product support margins which remained relatively unchanged, while CIMCO margins increased on good execution in all areas. Sales mix was unfavourable, with a higher proportion of equipment revenue to total, accounting for 70 bps of the reduction.
• Operating income ⁽¹⁾ increased 3% in the quarter, reflecting the higher revenue and gross margins offset by higher expense levels. Operating income as a percentage of sales decreased to 16.2% from 16.7% in the prior year, reflecting the higher expenses in the current period.
• Operating income decreased 5% in the year, and was 13.3% of revenue compared to 15.2% in the similar period last year. Although revenue was higher, lower income resulted due to lower gross margins and higher expenses.
• Net earnings from continuing operations increased $2.2 million or 1% in the quarter versus a year ago to $156.3 million . EPS was $1.91 (basic) and $1.90 (fully diluted), 2% higher compared to the same period last year.
• For the year, net earnings from continuing operations decreased $22.6 million or 4% to $506.5 million compared to the similar period last year. EPS was $6.18 (basic) and $6.13 (fully diluted), 4% lower compared to last year.
• Bookings ⁽¹⁾ for the fourth quarter increased 3% compared to last year with higher bookings at CIMCO offset by lower bookings in the Equipment Group. On a year-to-date basis, bookings increased 9% with both groups reporting higher bookings: Equipment Group up 6% and CIMCO up 30%.
• Backlog ⁽¹⁾ of $1.1 billion as at December 31, 2024 , was down slightly from $1.2 billion as at December 31, 2023 . Backlog remains healthy, reflecting continued good order intake, offsetting deliveries and progress on construction and delivery schedules.

Equipment Group

• Revenue was up $57.0 million or 5% to $1.2 billion for the quarter. New equipment sales increased 7%, with good activity and deliveries in the mining, construction and material handling markets. Rental revenue increased 6%, largely due to higher RPO (rental with a purchase option) fleet revenue. Product support activity was also up 4% in Q4.
• Revenue was up $335.4 million or 8% to $4.6 billion for the year. New equipment sales, product support and rental activity were higher across most markets and product groups, partially offset by lower used equipment.
• Operating income increased $0.8 million (unchanged as a percentage) in the fourth quarter, as the higher revenue and gross margins were largely offset by higher expenses.
• Operating income decreased $48.0 million or 7% to $616.7 million in the year. Higher revenue was more than offset by lower gross margins and higher expenses. Operating income margin decreased to 13.5% versus 15.7% in the comparable period last year, primarily reflecting lower gross margins.
• Bookings in the fourth quarter were $487.4 million , a decrease of 9% from the comparable period last year, as improved bookings in construction, power systems and material handling were more than offset by lower mining orders, which tend to be lumpy. Year-to-date bookings were $2.0 billion , an increase of 6% from the similar period last year. Construction and material handling bookings increased 17% and 18% respectively, reflecting good market activity. Mining and power systems orders were lower against a strong comparable last year. Both mining and power systems orders have more variability over time due to the nature of orders.
• Backlog of $708.4 million at the end of December 2024 was lower by $248.9 million or 26% from the end of December 2023 , reflecting deliveries against opening backlog partially offset by good new bookings.

CIMCO

• Revenue increased $23.0 million or 23% compared to the fourth quarter last year. Package revenue was higher, up 47%, with good execution on package project construction and improvements in equipment delivery schedules. Product support revenue was up 4%, reflecting good market activity in Canada supported by the increased technician workforce, offset by slightly lower US activity.
• Revenue increased $63.4 million or 16% to $460.6 million for the year as package revenue was up 28% on good execution on package project construction, in both the recreational and industrial markets. Product support activity was up 6%, with higher activity in Canada , partially dampened by lower activity in the US.
• Operating income increased $5.8 million or 47% for the quarter, as higher revenue was partially offset by lower gross margins and lower relative expenses.
• Operating income was up $13.9 million or 35% to $53.5 million for the year, reflecting improved gross margins and higher revenue. Operating income margin increased to 11.6% (2023 – 10.0%) reflecting higher gross margins on good execution.
• Bookings increased 124% in the fourth quarter to $126.0 million , and increased 30% for the year to $318.5 million . For the year, higher bookings in the US, up 167%, were partially offset by lower bookings in Canada , down 7%. Recreational bookings were 146% higher while industrial bookings were 12% lower. Booking activity can be variable over time based on customer decision making and construction schedules.
• Backlog of $342.3 million as at December 31, 2024 was up $87.1 million or 34% from last year, with an increase in both Canada and the US. Industrial backlog increased 10%, with a strong increase in the US, partially offset by a decrease in Canada . Recreational backlog was up 78%, reflecting strong increases in both Canada (+82%) and the US (+74%).

Financial Position

• Toromont's share price of $113.64 at the end of December 2024 , translated to a market capitalization ⁽¹⁾ of $9.2 billion and a total enterprise value ⁽¹⁾ of $9.0 billion .
• The Company maintained a strong financial position. Leverage, as represented by the net debt to total capitalization ⁽¹⁾ increased to -9% at the end of December 31, 2024 compared to -17% at the end of December 2023 . The change in the ratio reflects cash used for investment in working capital and capital expenditures, including the acquisition of Tri-City, supported by continuing cash inflow from operations.
• The Company purchased and cancelled 1,321,500 common shares for $160.4 million under the Normal Course Issuer Bid program in the year ended December 31, 2024 (353,000 common shares for $37.5 million in 2023).
• The Company's return on equity ⁽¹⁾ was 19.2% for 2024, compared to 23.1% for 2023, while return on capital employed ⁽¹⁾ was 25.7% for 2024, compared to 30.4% for 2023. Both metrics decreased year over year reflecting higher investments in working capital and the lower net earnings levels.

"We are pleased with our team's performance in 2024, given the changing market dynamics," stated John M. Doolittle , Executive Vice President and Chief Financial Officer of Toromont Industries Ltd. "We are mindful of the uncertain economic and political environment and continue to monitor and focus on controllables. The recent announcements on the tariffs between the US and Canada has created additional economic turbulence for every company engaged in cross border trade. Our team is engaged, monitoring and developing an appropriate action plan to navigate the potential impacts over the short and longer term when details become available. We will maintain our focus on operating and financial disciplines to manage our cost structure, while we invest in capacity and capabilities to provide exceptional service to our customers today and in the future. The strong order backlog and improved operating disciplines, along with our strong financial position, position us well for the future."

CORPORATE DEVELOPMENT

As previously announced, on January 31, 2025, the Company acquired 60% of the shares of AVL Manufacturing Inc. ("AVL") for consideration of $67.5 million cash plus the issuance of 110.4 thousand Toromont shares (nominally $13 .5 million based on 5 day average share price as at signing) for a total consideration of $81.0 million (subject to post-closing adjustments). In addition, the Company has committed to purchase the remaining 40% at various dates through to 2031. The initial purchase price was funded with cash on hand. AVL is a leader in the design and fabrication of power generation and storage enclosures. AVL has operations in Hamilton, Ontario and currently serves the data center market across eastern North America . The Company has not yet finalized its determination of fair value of the assets acquired and liabilities assumed. The acquisition, while accretive, is not expected to have an overall material impact on Toromont's combined revenue, earnings or balance sheet in the near-term.

FINANCIAL AND OPERATING RESULTS

All financial information presented in this press release has been prepared in accordance with International Financial Reporting Standards ("IFRS"), except as noted below, and are reported in Canadian dollars. This press release contains only selected financial and operational highlights and should be read in conjunction with Toromont's audited consolidated financial statements and related notes and Management's Discussion and Analysis ("MD&A"), as at and for the year ended December 31, 2024, which are available on SEDAR at www.sedar.com and on the Company's website at www.toromont.com .

The Company's audited consolidated financial statements and MD&A contain detailed information about Toromont's financial position, results, liquidity and capital resources, strategy, plans and outlook, which investors are encouraged to read carefully.

QUARTERLY CONFERENCE CALL AND WEBCAST

Interested parties are invited to join the quarterly conference call with investment analysts, in listen-only mode, on Wednesday, February 12, 2025 at 8:00 a.m. (EDT) . The call may be accessed by telephone at 1‑888‑669‑1199 (North American toll free) or 416-945-7677 ( Toronto area). A replay of the conference call will be available until Wednesday, February 19, 2025 by calling 1‑888‑660‑6345 (North American toll free) or 289‑819-1450 ( Toronto area) and quoting passcode 69004. The live webcast can also be accessed at www.toromont.com .

Presentation materials to accompany the call will be available on our investor page on our website.

NON-GAAP AND OTHER FINANCIAL MEASURES

Management believes that providing certain non-GAAP measures provides users of the Company's audited consolidated financial statements and MD&A with important information regarding the operational performance and related trends of the Company's business. By considering these measures in combination with the comparable IFRS measures set out below, management believes that users are provided a better overall understanding of the Company's business and its financial performance during the relevant period than if they simply considered the IFRS measures alone.

The non-GAAP measures used by management do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Accordingly, these measures should not be considered as a substitute or alternative for net income or cash flow, in each case as determined in accordance with IFRS.

Management also uses key performance indicators to enable consistent measurement of performance across the organization. These KPIs are non-GAAP financial measures, do not have a standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers.

Gross Profit / Gross Profit Margin

Gross Profit is defined as total revenue less cost of goods sold.

Gross Profit Margin is defined as gross profit (defined above) divided by total revenue.

Operating Income / Operating Income Margin

Operating income is defined as net income from continuing operations before interest expense, interest and investment income and income taxes and is used by management to assess and evaluate the financial performance of its operating segments. Financing and related interest charges cannot be attributed to business segments on a meaningful basis that is comparable to other companies. Business segments do not correspond to income tax jurisdictions and it is believed that the allocation of income taxes distorts the historical comparability of the performance of the business segments.

Operating income margin is defined as operating income (defined above) divided by total revenue.

Net debt to total capitalization/equity are calculated as net debt divided by total capitalization and shareholders' equity, respectively, as defined below, and are used by management as measures of the Company's financial leverage.

Net debt is calculated as long-term debt plus current portion of long-term debt less cash and cash equivalents. Total capitalization is calculated as shareholders' equity plus net debt.

Market capitalization represents the total market value of the Company's equity. It is calculated by multiplying the closing share price of the Company's common shares by the total number of common shares outstanding.

Total enterprise value represents the total value of the Company and is often used as a more comprehensive alternative to market capitalization. It is calculated by adding debt/net debt (defined above) to market capitalization.

The calculations are as follows:

Order bookings represent the retail value of firm equipment or project orders received during a period. Backlog is defined as the retail value of equipment units ordered by customers with future delivery, and the remaining retail value of package/project orders remaining to be recognized in revenue under the percentage of completion method. Management uses order backlog as a measure of projecting future equipment and project deliveries. There are no directly comparable IFRS measures for order bookings or backlog.

Return on Capital Employed ("ROCE")

ROCE is utilized to assess both current operating performance and prospective investments. The adjusted earnings numerator used for the calculation is income before income taxes, interest expense and interest income (excluding interest on rental conversions). The denominator in the calculation is the monthly average capital employed, which is defined as net debt plus shareholders' equity, also referred to as total capitalization, adjusted for discontinued operations.

ROE is monitored to assess profitability and is calculated by dividing net earnings by opening shareholders' equity (adjusted for shares issued and shares repurchased and cancelled during the year).

ABOUT TOROMONT

Toromont Industries Ltd. operates through two business segments: the Equipment Group and CIMCO. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory, spanning the Canadian provinces of Newfoundland and Labrador , Nova Scotia , New Brunswick , Prince Edward Island , Québec, Ontario and Manitoba , in addition to most of the territory of Nunavut . The Equipment Group includes industry-leading rental operations and a complementary material handling business. CIMCO is one of North America's leading suppliers of thermal management solutions that enable customers to reduce energy consumption and emissions, use natural refrigerants and monitor and control their operating environments autonomously. Both segments offer comprehensive product support capabilities. This press release and more information about Toromont Industries Ltd. can be found at www.toromont.com .

For more information contact:

John M. Doolittle
Executive Vice President and
Chief Financial Officer
Toromont Industries Ltd.
Tel: 416-514-4790

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Source

https://money.tmx.com/quote/TIH/news/6102905401286018/TOROMONT_ANNOUNCES_2024_FOURTH_QUARTER_AND_FULL_YEAR_RESULTS_AND_INCREASES_QUARTERLY_DIVIDEND

Stockwatch...Chemtrade Logistics Income Fund Announces Fourth Quarter and Full Year 2024 Financial Results

Stockwatch...Chemtrade Logistics Income Fund Announces Fourth Quarter and Full Year 2024 Financial Results

Business Wire, Feb 28, 2025 12:01 AM EST

Chemtrade Logistics Income Fund Announces Fourth Quarter and Full Year 2024 Financial Results

Reiterates 2025 Guidance for Adjusted EBITDA of Between $430.0 Million and $460.0 Million

Chemtrade Logistics Income Fund (TSX: CHE.UN) (“Chemtrade” or the “Fund”) today announced results for the three- and twelve-month periods ended December 31, 2024. The financial statements and MD&A will be available on Chemtrade’s website at www.chemtradelogistics.com and on SEDAR+ at www.sedarplus.com .

Fourth Quarter 2024 Highlights

• Revenue of $446.5 million, an increase of $24.5 million or 5.8% year-over-year. Excluding $5.7 million in the prior year period related to the P ₂ S ₅ business sold in Q4 2023, revenue increased by $30.2 million or 7.3% year-over-year.
• Adjusted EBITDA ⁽¹⁾ of $108.6 million, an increase of $23.9 million or 28.3% year-over-year. Excluding $1.8 million in the prior year period related to the P ₂ S ₅ business sold in Q4 2023, Adjusted EBITDA increased by $25.7 million or 31.1% year-over-year.
• Net earnings of $10.3 million, a decrease of $1.4 million year-over-year, primarily due to the gain on sale of the P ₂ S ₅ business in Q4 2023 offset by higher Adjusted EBITDA.
• Cash flows from operating activities of $100.0 million, an increase of $1.4 million or 1.4% year-over-year.
• Distributable cash after maintenance capital expenditures ⁽¹⁾ of $39.5 million, an increase of $26.0 million or 192.5% year-over-year.

Full Year 2024 Highlights

• Revenue of $1,787.0 million, a decrease of $59.7 million or 3.2% year-over-year. Excluding $40.3 million in the prior year period related to the P ₂ S ₅ business sold in Q4 2023 and a $10.5 million negative impact from the biennial maintenance turnaround at the North Vancouver chlor-alkali facility in 2024, revenue was similar to 2023.
• Adjusted EBITDA ⁽¹⁾ of $470.8 million, the second highest annual Adjusted EBITDA in Chemtrade’s history. Excluding the negative impacts in 2024 from the biennial maintenance turnaround at the North Vancouver chlor-alkali facility ($17.9 million), the work stoppage at the Canadian railways ($5.8 million) and $6.6 million in the prior year period related to the P ₂ S ₅ business sold in Q4 2023, Adjusted EBITDA earned during 2024 was similar to the record level of Adjusted EBITDA generated during 2023.
• Net earnings of $126.9 million, a decrease of $122.4 million year-over-year, due to higher net finance costs, unrealized foreign exchange losses, lower Adjusted EBITDA and a gain on sale of the P ₂ S ₅ business in 2023, partially offset by lower depreciation and amortization expenses.
• Cash flows from operating activities of $347.8 million, a decrease of $53.7 million or 13.4% year-over-year, primarily due to lower Adjusted EBITDA and changes in working capital, partially offset by lower income taxes paid.
• Distributable cash after maintenance capital expenditures ⁽¹⁾ of $213.1 million, a decrease of $69.9 million or 24.7% year-over-year, reflecting lower cash flows from operating activities and higher lease payments.
• During 2024, Chemtrade returned $131.1 million of capital to unitholders in the form of unit buybacks under its NCIB and monthly distributions. This represented 61.5% of Distributable cash after maintenance capital expenditures ⁽¹⁾ .
• Maintained a strong balance sheet throughout 2024, with a Net debt to LTM Adjusted EBITDA ⁽¹⁾ ratio of 1.8x at 2024 year-end. Chemtrade took several actions during 2024 to optimize its capital structure, including completing a substantial issuer bid (SIB) for its Fund 2020 8.50% debentures and redeeming the remaining Fund 2020 8.50% debentures subsequent to the completion of the SIB. Chemtrade also issued Notes with an aggregate principal amount of $250.0 million with a coupon of 6.375% and a due date of August 28, 2029.
• In January 2024, Chemtrade increased its monthly distribution rate by 10% to $0.055 per unit or $0.660 per unit per year. Chemtrade’s Payout ratio ⁽¹⁾ for 2024 was 37%. Subsequent to year-end, in January 2025, Chemtrade increased its monthly distribution rate by approximately 5% to $0.0575 per unit or $0.690 per unit per year.
• In June 2024, Chemtrade commenced a normal course issuer bid (NCIB), under which the Fund is authorized to purchase up to approximately 11.7 million of its units. As of December 31, 2024, approximately 5.1 million units were purchased as part of the NCIB.
• Chemtrade reaffirms its 2025 Adjusted EBITDA guidance of $430.0 million to $460.0 million. Achieving the midpoint of this range would mark the third-highest annual Adjusted EBITDA in Chemtrade’s history.

(1) Adjusted EBITDA is a Total of Segments measure, Distributable cash after maintenance capital expenditures is a non-IFRS measure and Net debt to LTM Adjusted EBITDA and Payout ratio are Non-IFRS ratios. Please see Non-IFRS and Other Financial Measures for more information.

Scott Rook, President and CEO of Chemtrade, commented on the fourth quarter and full year 2024 results, “2024 was another year of strong financial and operational performance for Chemtrade, delivering the second highest annual Adjusted EBITDA result in our history. We are particularly encouraged by the growth in our water products, where profitability has almost doubled over the last three years. Our ability to deliver strong performance, despite a dynamic operating environment, reflects the resilience of our business, the strength of our strategy, and the passion of our team. With consistent execution and our ongoing focus on operational excellence, we continued to generate strong cash flow, supporting our ability to invest in strategic growth, further strengthen our competitive position, and return capital to unitholders through our attractive distribution and the NCIB we instituted during the year.”

“Looking ahead, we are well-positioned to build on this momentum. Our track-record of investing in high-return projects to drive organic growth has yielded strong results, as is evident in our water chemicals business. In terms of individual products, water chemicals was the largest contributor to our consolidated Adjusted EBITDA in 2024, and this business line’s stability, paired with a long-term growth trend makes it core to our strategy moving forward. Our key growth areas of water chemicals and ultrapure acid continue to have strong outlooks, and we are acting on opportunities to expand our leadership in these product lines. Many of our other core product lines continue to provide us with a stable foundation and contribute to the resilience of our earnings. With respect to our North Vancouver chlor-alkali facility, we continue to have active lease negotiations with the Vancouver Fraser Port Authority. The next step for us it to go through the rezoning process with the District of North Vancouver, which is required in order for us to obtain approval to proceed with our planned safety improvements for the site. We look forward to sharing additional updates on this process as they become available.”

“We enter 2025 on strong footing with a clear strategy to generate long-term unitholder value. The earnings power of our business has taken a notable step-change in recent years, and we remain diligently focused on leveraging all of the tools at our disposal to deliver strong total unitholder returns. With a sharp strategic focus, a strong balance sheet, and a dedicated team, we are confident in our ability to navigate an evolving market and deliver value for our unitholders well into the future.”

Consolidated Financial Summary of Q4 2024

Revenue for the fourth quarter of 2024 was $446.5 million, compared to $422.0 million in the fourth quarter of 2023. Excluding $5.7 million of revenue in the prior year period from the P ₂ S ₅ business sold in the fourth quarter of 2023, consolidated revenue increased by $30.2 million or 7.3% year-over-year. This increase was primarily due to: (i) higher volumes of water solutions products and higher selling prices for Regen and merchant acid in the Sulphur and Water Chemicals (SWC) segment; and (ii) higher selling prices for caustic soda, HCl, chlorine, and sodium chlorate in the Electrochemicals (EC) segment. These factors were partially offset by lower sales volumes of sodium chlorate, which more than offset the higher selling prices for sodium chlorate in the EC segment.

Adjusted EBITDA for the fourth quarter of 2024 was $108.6 million, compared to $84.6 million in the fourth quarter of 2023. Excluding $1.8 million of Adjusted EBITDA in the prior year period related to the P ₂ S ₅ business sold in the fourth quarter of 2023, Adjusted EBITDA increased by $25.7 million or 31.1% year-over-year. This increase was primarily due to: (i) lower input costs resulting in improved margins for water solutions products, improved margins for sodium nitrite as 2023 experienced higher costs, and higher pricing for Regen and merchant acid in the SWC segment; and (ii) higher selling prices for caustic soda, HCl, chlorine, and sodium chlorate in the EC segment. Partial offsets to the above positive factors included: (i) lower sales volumes of sodium chlorate in the EC segment; and (ii) higher Corporate costs due mainly to realized foreign exchange losses.

Distributable cash after maintenance capital expenditures for the fourth quarter of 2024 was $39.5 million or $0.33 per unit, compared with $13.5 million or $0.12 per unit in the fourth quarter of 2024. This increase primarily reflects the same factors that impacted Adjusted EBITDA, as noted above, as well as lower maintenance capital expenditures, partially offset by higher lease payments. Chemtrade’s Payout ratio ⁽¹⁾ for the twelve months ended December 31, 2024 was 37%.

Chemtrade maintained a strong balance sheet through the fourth quarter of 2024. As of December 31, 2024, Chemtrade’s Net debt was $864.2 million and its Net debt to LTM Adjusted EBITDA ratio was 1.8x. As of the end of 2024, Chemtrade also maintained strong financial liquidity with US$521.5 million undrawn on its credit facilities, in addition to $25.5 million of cash on hand.

Segmented Financial Summary of Q4 2024

The SWC segment reported revenue of $260.1 million for the fourth quarter of 2024, compared to $243.8 million for the fourth quarter of 2023. Adjusted EBITDA in the SWC segment was $62.5 million for the fourth quarter of 2024, compared to $40.8 million for the fourth quarter of 2023. The P ₂ S ₅ business that was sold in the fourth quarter of 2023 contributed $5.7 million of SWC revenue and $1.8 million of SWC Adjusted EBITDA in the fourth quarter of 2023.

Excluding the impact of the P ₂ S ₅ business as noted above, SWC revenue in the fourth quarter of 2024 increased by $22.0 million or 9.2% year-over-year. The increase in comparable SWC revenue was primarily due to: (i) higher volumes of water solutions products; and (ii) higher selling prices and volumes for merchant and Regen acid. Excluding the impact of the P ₂ S ₅ business as noted above, SWC Adjusted EBITDA increased by $23.5 million or 60.2% year-over-year. The increase in comparable SWC Adjusted EBITDA was primarily due to: (i) lower input costs resulting in an improvement in margins for water solutions products; (ii) an improvement in margins for sodium nitrite relative to 2023, as that period was affected by lower volumes due to an extended turnaround and disposal costs for a related by-product; and (iii) higher selling prices for Regen and merchant acid.

The EC segment reported revenue of $186.4 million for the fourth quarter of 2024, compared to $178.2 million for the fourth quarter of 2023. Adjusted EBITDA in the EC segment was $83.5 million for the fourth quarter of 2024, compared to $73.3 million for the fourth quarter of 2023.

EC revenue in the fourth quarter of 2024 increased by $8.2 million or 4.6% year-over-year, primarily due to higher realized MECU netbacks of approximately $230 year-over-year, with HCl and chlorine accounting for approximately 55% of the improvement. A partial offset to EC revenue growth was lower sales volumes of sodium chlorate, which more than offset higher selling prices for sodium chlorate. EC Adjusted EBITDA increased by $10.2 million or 13.9% year-over-year. The factors that affected EC revenue also had an impact on EC’s Adjusted EBITDA on a year-over-year basis.

Corporate costs for the fourth quarter of 2024 were $37.3 million, compared with $29.4 million in the fourth quarter of 2023. The increase in corporate costs was primarily due to the inclusion of $7.4 million of realized foreign exchange losses in the fourth quarter of 2024 compared with $0.2 million of realized foreign exchange gains in the fourth quarter of 2023. Excluding realized foreign exchange gains and losses, corporate costs were similar on a year-over-year basis, with lower legal and other costs partially offset by $2.1 million of higher incentive compensation costs.

Update on Organic Growth Projects

Chemtrade remains focused on its long-term objective of delivering sustained earnings growth and generating value for investors. To accomplish this, Chemtrade has identified various organic growth initiatives. In 2025, Chemtrade plans to invest between $40.0 million and $60.0 million in growth capital expenditures, which includes expansions of water treatment chemicals, upgrades to ultrapure sulphuric acid production, and other organic growth projects.

Construction of the Cairo, Ohio ultrapure acid project is now complete and the project is in the startup process. The commercial ramp up will begin to take place in 2025. This will be one of the first ultrapure sulphuric acid plants in North America that is expected to meet the quality requirements for next generation semiconductor nodes. This project will further bolster Chemtrade’s position as a leading North American supplier of ultrapure sulphuric acid to the semiconductor industry.

Chemtrade also previously identified a second large ultrapure sulphuric acid growth project, undertaken via a joint venture with KPCT Advanced Chemicals LLC and located in Casa Grande, AZ. Together with its joint venture partner, Chemtrade made the decision to put the project on hold until it can be assured the project generates an acceptable level of return.

Distributions and Capital Allocation Update

Distributions declared in the fourth quarter of 2024 totalled $0.165 per unit, comprised of monthly distributions of $0.055 per unit, which reflects a 10% increase in the monthly distribution rate beginning with the distribution declared during the month of January 2024. This distribution was well-covered by Chemtrade’s cash flow generation during 2024, with a Payout ratio in 2024 of 37%.

In January 2025, Chemtrade announced an additional increase to its monthly distribution by approximately 5% to 5.75 cents per month, effective with the distribution declared during the month of January 2025. This distribution represents a Payout ratio of 48% based on the mid-point of Chemtrade’s guidance for 2025. The increase in the level of cash distributions is expected to have a minimal impact on Chemtrade’s leverage and is not expected to impede Chemtrade’s ability to execute growth initiatives while maintaining a healthy balance sheet.

Chemtrade’s balance sheet has continued to improve in recent years, with a Net debt to LTM Adjusted EBITDA of 1.8x at December 31, 2024. Chemtrade’s business has also strengthened as evidenced by the last three years representing the three highest years for Adjusted EBITDA in Chemtrade’s history.

Chemtrade implemented an NCIB, under which Chemtrade is authorized to purchase up to 11.7 million units over a 12-month period ending June 2, 2025. As of December 31, 2024, approximately 5.1 million units were purchased as part of the NCIB, representing roughly 4% of its units outstanding. For the period from January 1, 2025 to February 26, 2025, an additional 2.7 million units were purchased by the Fund under the NCIB’s automatic share purchase plan. Purchases of units are effected through the facilities of the TSX and/or alternative Canadian trading systems and are made by means of open market transactions, or such other means as may be permitted by the TSX, including block purchases of units, at prevailing market rates. The timing and amount of any purchases are subject to management’s discretion.

During January 2025, Chemtrade issued an additional $125.0 million aggregate principal amount of 6.375% Notes due August 28, 2029, resulting in an aggregate principal amount of $375.0 million outstanding on these Notes. The Fund incurred transaction costs of $2.5 million. The Fund will utilize the net proceeds of the issuance to reduce indebtedness and for general corporate purposes.

Chemtrade’s management and Board of Trustees continue to assess opportunities to further adjust and optimize Chemtrade’s capital structure and capital allocation. This could potentially include supplementing its organic growth initiatives with modest M&A, should Chemtrade identify an opportunity that fits strategically within its portfolio and has synergistic value. The acquisitions Chemtrade would target would primarily be those with annual Adjusted EBITDA in the $10.0 - $50.0 million range.

Rohit Bhardwaj, CFO of Chemtrade, commented on Chemtrade’s capital allocation, “As we close out a successful 2024 and begin 2025, we remain committed to a disciplined and unitholder-friendly capital allocation strategy that balances capital returns to unitholders, strategic growth investments and financial prudence. During 2024, we returned $131.1 million of capital to unitholders, representing 61.5% of our Distributable cash after maintenance capital expenditures. We remain focused on high-return opportunities that enhance our long-term earnings potential, while preserving financial flexibility. In line with this approach, we continue to invest in our key growth areas, including water chemicals and ultrapure acid, fully funded through internally generated cash flow and available credit. At the same time, we are committed to delivering sustainable returns to our unitholders through a balanced mix of distributions and unit purchases under our NCIB. We have also taken proactive steps over the past year to strengthen our balance sheet, reducing near-term debt obligations, optimizing our capital structure, enhancing liquidity and aggressively reducing potentially dilutive debt instruments. By extending debt maturities and securing more favourable financing, Chemtrade is well-positioned to navigate market conditions while maintaining the flexibility to pursue strategic, value generating opportunities. Looking ahead, we will continue to take a thoughtful approach to capital deployment, ensuring that we create long-term value for our unitholders while maintaining financial strength.”

Statement on potential US tariffs

The current US administration has stated its intention to levy a 25% tariff on Canadian products being exported to the US effective March 1, 2025. The tariffs being contemplated are unprecedented and it is difficult to estimate the impact on the overall economy, Chemtrade’s suppliers and customers.

There are three main products in the portfolio that are imported into the US from Canada – sodium chlorate, chlorine, and merchant sulphuric acid. If these products are subject to tariffs, Chemtrade will work diligently to mitigate their impact, including by passing these costs on to US customers. While Chemtrade is optimistic that it will be successful in passing a significant portion of the costs to customers, this situation is without precedence. Chemtrade’s success would depend upon, among other things, the impact of tariffs on customers' businesses and industry dynamics in the US.

Chemtrade benefits from a weaker Canadian dollar relative to the US dollar, which could be a potentially mitigating factor. The current exchange rate of approximately US$1 = C$1.44 is weaker than the exchange rate assumed in Chemtrade’s above noted 2025 guidance. Chemtrade discloses its sensitivity to exchange rates, as well as its foreign exchange hedge positions in its Management’s Discussion and Analysis document.

About Chemtrade

Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America’s largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite and sodium hydrosulphite. Chemtrade is also a leading producer of high purity sulphuric acid for the semiconductor industry in North America. Chemtrade is a leading regional supplier of sulphur, chlor-alkali products, and zinc oxide. Additionally, Chemtrade provides industrial services such as processing by-products and waste streams.

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Source

https://money.tmx.com/quote/CHE.UN/news/6669375551558905/Chemtrade_Logistics_Income_Fund_Announces_Fourth_Quarter_and_Full_Year_2024_Financial_Results

Stockwatch...Stella-Jones Announces Fourth Quarter and Year-End Results

Stockwatch...Stella-Jones Announces Fourth Quarter and Year-End Results

GlobeNewswireFeb 27, 2025 7:00 AM EST

Stella-Jones Announces Fourth Quarter and Year-End Results

Company Focused on Sustained Profitable Growth

• Annual sales of $3,469 million , up 5% vs the prior year
• Operating income of $503 million
• EBITDA ⁽¹⁾ of $633 million, or 18.2% margin ⁽¹⁾
• EPS of $5.66, compared to $5.62 in 2023
• Strong operating cash flow of $408 million
• Increasing quarterly dividend by 11% to $0.31 per share
• Reaffirms 2023-2025 financial objectives

MONTREAL, Feb. 27, 2025 (GLOBE NEWSWIRE) -- Stella-Jones Inc. (TSX: SJ) (“Stella-Jones” or the “Company”) today announced financial results for its fourth quarter and year ended December 31, 2024.

“We concluded another year of sales and EBITDA growth, reflecting the enduring strength of our business and unwavering customer-centric approach,” said Eric Vachon, President and Chief Executive Officer of Stella-Jones. “We achieved solid results in our infrastructure product categories, even in the face of softer market demand for utility poles. We acquired new customers, maintained our expanded EBITDA margin of over 18%, and delivered strong operating cashflows. Given our conviction in the long-term fundamentals of our business, we have also increased the quarterly dividend for the 21 ^st consecutive year.”

“As we turn to 2025, we remain confident in the growth prospects of our current infrastructure business, supported by the accelerated need to strengthen North America’s aging electrical grid, and the opportunities in railway ties to drive increased profitability. We also look to build even stronger customer relationships by expanding our offering to our infrastructure customers. As we drive forward, we will continue to focus on optimizing our operating model and generating a healthy EBITDA margin. With our strong cash flow-generating business and disciplined capital allocation strategy, we are confident that our actions will continue to enhance shareholder value.”

Financial Highlights (in millions of Canadian dollars, except ratios and per share data)	Three-month periods ended December 31 ,				Years ended December 31 ,
	2024		2023		2024		2023
Sales	730		688		3,469		3,319
Gross profit (1)	138		137		724		688
Gross profit margin (1)	18.9%		19.9%		20.9%		20.7%
Operating income	81		89		503		499
Operating income margin (1)	11.1%		12.9%		14.5%		15.0%
EBITDA (1)	115		120		633		608
EBITDA margin (1)	15.8%		17.4%		18.2%		18.3%
Net income	52		56		319		326
Earnings per share (“EPS”) - basic and diluted	0.93		0.98		5.66		5.62
Weighted average shares outstanding (basic, in ‘000s)	55,966		57,076		56,403		57,963
Net debt-to-EBITDA (1)					2.6x		2.6x

⁽¹⁾ These indicated terms have no standardized meaning under GAAP and are not likely to be comparable to similar measures presented by other issuers. For more information, please refer to the section entitled “Non-GAAP and Other Financial Measures” of this press release for an explanation of the non-GAAP and other financial measures used and presented by the Company and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures.

FOURTH QUARTER RESULTS

Sales for the fourth quarter of 2024 amounted to $730 million, up 6% from sales of $688 million for the same period in 2023. Excluding the currency conversion of $14 million, pressure-treated wood sales rose $31 million, or 5% due to higher railway ties sales attributable to an increase in Class 1 volumes and improved residential lumber sales, while utility poles sales were relatively unchanged. Lower logs and lumber sales were driven by a decrease in log sales activity, compared to the fourth quarter last year.

Pressure-treated wood products:

• Utilit y poles (53% of Q4-24 sales) : Utility poles sales totaled $385 million in the fourth quarter of 2024, compared to sales of $383 million in the corresponding period last year. Excluding the currency conversion effect, sales decreased by 2%, due to lower volumes from non-contract business, offset in large part by favourable price adjustments to cover increased costs.

• Railway ties (26% of Q4-24 sales) : Sales of railway ties amounted to $193 million, compared to $165 million in the same period last year. Excluding the currency conversion effect, railway ties sales rose 15%, largely explained by the timing of Class 1 shipments. For the year, Class 1 volumes increased modestly when compared to 2023.

• Residen tial lumber (13% of Q4-24 sales) : Residential lumber sales totaled $93 million, up from $82 million of sales generated in the same period in 2023, reflecting a 12% organic sales growth. The increase in residential lumber sales stemmed from favourable pricing attributable to the increase in the market price of lumber, as well as higher sales volumes, when compared to the same period last year.

• Industrial produc ts (4% of Q4-24 sales) : Industrial products sales amounted to $31 million, up from $27 million last year. The organic sales growth of 11% was mainly attributable to higher sales for railway bridges and crossings.

Logs and lumber:

• Logs and lumber (4% of Q4-24 sales) : Logs and lumber sales totaled $28 million, down 10% compared to the same period last year.

Gross profit was $138 million in the fourth quarter of 2024, relatively unchanged compared to the gross profit of $137 million in the fourth quarter of 2023. As a percentage of sales, gross profit decreased from 19.9% in the fourth quarter of 2023 to 18.9% in the fourth quarter of 2024 due to a less favourable sales mix.

Net income for the period amounted to $52 million, or $0.93 per share, compared with $56 million, or $0.98 per share, in the corresponding period of 2023.

2024 RESULTS

Sales for the year ended December 31, 2024 reached $3,469 million, up 5%, versus sales of $3,319 million in 2023. Excluding the contribution from the acquisition of the Baldwin assets of $25 million and the currency conversion effect of $36 million, pressure-treated wood sales rose $110 million, or 3%. Infrastructure sales, namely utility poles, railway ties and industrial products, grew organically by $144 million or 6%, while residential lumber sales decreased by $34 million. Favourable pricing across all the infrastructure product categories and higher railway ties volumes were partially offset by lower volumes for utility poles and residential lumber. The decrease in logs and lumber sales compared to last year was largely attributable to less logs sales.

Pressure-treated wood products:

• Utility poles (49% of 2024 sales) : Utility poles sales increased to $1,705 million in 2024, compared to sales of $1,571 million in 2023. Excluding the contribution from the acquisition of assets of Baldwin in July 2023 and the currency conversion effect, utility poles sales increased by $88 million, or 6%, driven by sales price adjustments to cover increased costs. This increase was offset in part by lower volumes when compared to last year. Incremental multi-year commitments were secured from new and existing customers but volumes were impacted by the slower pace of purchases and a deferral in the execution of projects by utilities, largely influenced by economic factors, including inflation and utilities’ supply chain constraints, as well as timing of utilities’ rate-based funding.

• Railway ties (26% of 2024 sales) : Railway ties sales were $890 million in 2024, compared to sales of $828 million in 2023. Excluding the currency conversion effect, railway ties sales increased $51 million, or 6%. The increase was attributable to higher volumes, mainly for non-Class 1 business due to the replenished level of railway ties inventory, as well as improved pricing, when compared to last year.

• Residential lumber (18% of 2024 sales) : Sales in the residential lumber category decreased to the lower end of the Company's $600 to $650 million target range for this product category, at $614 million in 2024, compared to sales of $645 million in 2023. Excluding the currency conversion effect, residential lumber sales decreased $34 million, or 5%, all explained by lower sales volumes due to softer consumer demand. The average market price of lumber remained relatively unchanged in 2024 when compared to 2023.

• Industrial products (4% of 2024 sales) : Industrial products sales were $154 million in 2024 compared to sales of $148 million in 2023. Excluding the currency conversion effect, industrial product sales increased five million dollars, or 3%, mainly driven by higher sales for railway bridges and crossings.

Logs and lumber:

• Logs and lumber (3% of 2024 sales) : Sales in the logs and lumber product category were $106 million in 2024, down from $127 million in 2023. The decrease in sales was explained by less logs sales activity.

Gross profit increased to $724 million in 2024, compared to $688 million in 2023, representing a margin of 20.9% and 20.7% respectively. Similarly, EBITDA increased to $633 million in 2024 compared to $608 million in 2023, largely due to the sales growth of the Company’s infrastructure product categories. EBITDA margin remained relatively unchanged at 18.2% in 2024, compared to 18.3% in 2023.

Net income in 2024 was $319 million, compared to net income of $326 million in 2023. Despite the lower net income, earnings per share in 2024 was higher at $5.66 versus $5.62 in 2023 due to the continued repurchase of shares through the Company’s normal course issuer bids.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended December 31, 2024, Stella-Jones used the cash generated from operations of $408 million to invest in its network as well as return $153 million to shareholders. In 2024, the Company invested a net amount of $88 million to maintain its assets and enhance productivity and $34 million to complete its growth investments for utility poles. Over the 2022 to 2024 period, approximately $130 million was invested in growth capital expenditures. The dividend paid in 2024 amounted to $1.12 per share, representing a 22% increase compared to 2023. As at December 31, 2024, the Company had returned to shareholders $348 million out of the $500 million committed for the 2023 to 2025 period.

As at December 31, 2024, the Company maintained a healthy financial position with available liquidity of $802 million. Its net debt-to-EBITDA ratio stood slightly above the target range at 2.6x, as the appreciation of the closing rate of the U.S. dollar relative to the Canadian dollar resulted in a higher value of the Company’s net debt denominated in U.S. dollars, when expressed in Canadian dollars.

Subsequent to year-end, the Company amended the U.S. Farm Credit Agreement in order to, among other things, extend the term of the Revolving Credit Facility of US$150 million from March 3, 2028 to February 4, 2030.

REAFFIRMING 2023-2025 FINANCIAL OBJECTIVES

The following is a summary of the Company’s 2023-2025 financial objectives:

(in millions of dollars, except percentages and ratios)	2023-2025 Objectives
Sales	approx . $3,600
EBITDA margin	> 17%
Return to Shareholders: cumulative	> $500
Net Debt-to-EBITDA	2.0x-2.5x

The Company assumed that the Canadian dollar will trade, on average, at Can $1.36 per U.S. dollar for 2025.

QUARTERLY DIVIDEND INCREASED 11% TO $0.31 PER SHARE

On February 26, 2025, the Board of Directors declared a quarterly dividend of $0.31 per common share payable on April 18, 2025 to shareholders of record at the close of business on April 1, 2025. This dividend is designated to be an eligible dividend.

ABOUT STELLA-JONES

Stella-Jones Inc. (TSX: SJ) is a leading North American manufacturer of products focused on supporting infrastructure that are essential to the delivery of electrical distribution and transmission, and the operation and maintenance of railway transportation systems. It supplies the continent’s major electrical utilities companies with treated wood utility poles and North America’s Class 1, short line and commercial railroad operators with treated wood railway ties and timbers. It also supports infrastructure with industrial products, namely timbers for railway bridges, crossings and construction, marine and foundation pilings, and coal tar-based products. Additionally, the Company manufactures and distributes premium treated residential lumber and accessories to Canadian and American retailers for outdoor applications, with a significant portion of the business devoted to servicing Canadian customers through its national manufacturing and distribution network.

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Source

https://money.tmx.com/quote/SJ/news/8583169465004134/StellaJones_Announces_Fourth_Quarter_and_YearEnd_Results