CHEMTRADE LOGISTICS INCOME FUND $21.25 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics- .com; Units outstanding: 62.9 million; Market cap: $1.3 billion; Dividend yield: 5.7%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base metal processors, whose operations create sulphur, acid and other by-products. Chemtrade converts these substances into useful chemicals, like sulphuric acid.
The company reported that its revenue rose 56.9% in the quarter ended September 30, 2014, to $324.6 million from $206.9 million a year earlier.
That’s largely due to General Chemical Corp., which Chemtrade bought for $900 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products.
Chemtrade’s cash flow jumped 81.9%, to $44.6 million from $30.3 million. However, cash flow per unit rose at a slower pace of 23.4%, to $0.95 from $0.77, on more units outstanding after the General Chemical purchase.
In the wake of the General acquisition, Chemtrade’s debt stands at $878.8 million, or 68% of its market cap. However, it has now received the $120 million of proceeds from the sale of its Montreal facility to Suncor Energy (symbol SU on Toronto). Chemtrade will use these funds to pay down debt.
The company pays monthly distributions of $0.10 a unit, for a 5.7% yield.
Chemtrade is still a buy.
