CHEMTRADE LOGISTICS INCOME FUND $21.38 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics .com; Units outstanding: 68.5 million; Market cap: $1.5 billion; Dividend yield: 5.6%) 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’s revenue rose 55.4% in the three months ended December 31, 2014, to $313.3 million from $201.6 million a year earlier.
That’s largely due to General Chemical, 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 93.7%, to $31.9 million from $16.5 million. However, cash flow per unit rose at a slower pace of 22.5%, to $0.49 from $0.40, on more units outstanding after the General purchase.
In the wake of the General acquisition, Chemtrade’s debt stands at a high $771.0 million, or 51.4% of its $1.5-billion market cap.
However, the company’s steady cash flow will let it pay down that debt, and its dividend looks safe. Chemtrade pays monthly distributions of $0.10 a unit, for a high 5.6% yield.
Chemtrade is still a buy.
