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Chemtrade Logistics (TSE:CHE.UN)
TSX:CHE.UN
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Chemtrade Logistics
(TSX:CHE.UN)
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Rating:66Neutral
Price Target:
C$17.00
▲(10.89% Upside)
Action:DowngradedDate:02/27/26
The score is driven primarily by improved operating performance and steady cash generation, tempered by materially higher leverage. Technical signals are neutral-to-mixed, while reasonable valuation and a solid dividend support the mid-60s overall; earnings call messaging was positive on longer-term initiatives but highlighted meaningful near-term pricing and turnaround headwinds.
Positive Factors
Operating Cash Generation
Consistent, multi-year operating cash generation provides durable financial flexibility: it funds sustaining capex, supports the dividend, and creates capacity to pay down debt or fund growth projects. Reliable cash flow cushions earnings cyclicality and supports long-term capital allocation.
Diversified Chemicals & Services Model
A diversified mix of manufacturing, merchant sales, water-chemicals services and logistics provides multiple revenue streams and recurring contract exposure. This breadth reduces dependence on any single end market and supports more stable demand and customer retention over multi‑quarter horizons.
Strong SWC Margins & Operational Improvements
A structurally high-margin SWC segment combined with steady reliability gains in regen acid and planned Cairo/Tulsa ramps strengthens the firm’s core profitability. Higher-margin, service-oriented water chemicals improve durable earnings quality and are reinforced by segment reporting transparency.
Negative Factors
Elevated Leverage
A materially more levered balance sheet increases sensitivity to profit swings and reduces financial flexibility. Higher leverage raises interest and refinancing risk, constrains ability to opportunistically invest or return capital, and lengthens recovery time after industry downturns.
Earnings and Margin Volatility
Historic swings in margins and episodic peaks make future profitability less predictable and complicate multi‑period planning. Volatility undermines forecastable FCF, can stress covenant headroom under weaker cycles, and raises execution risk for sustained margin improvement initiatives.
Raw Material Cost Exposure
Material input cost volatility (sulphur, caustic) directly compresses margins when pass‑through is limited or delayed. Persistent commodity swings and periodic oversupply create structural margin risk for merchant and SWC businesses and can offset operational gains over multiple quarters.
Chemtrade Logistics (CHE.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$1.73B
Dividend Yield4.73%
Average Volume (3M)237.16K
Price to Earnings (P/E)11.0
Beta (1Y)0.92
Revenue Growth10.20%
EPS Growth-11.22%
CountryCA
Employees1,474
SectorBasic Materials
Sector Strength58
IndustryChemicals
Share Statistics
EPS (TTM)0.34
Shares Outstanding113,066,600
10 Day Avg. Volume226,508
30 Day Avg. Volume237,163
Financial Highlights & Ratios
PEG Ratio0.86
Price to Book (P/B)2.17
Price to Sales (P/S)0.84
P/FCF Ratio9.44
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$18.50Price Target Upside20.68% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)1.41
Revenue Forecast (FY)C$2.15B
Chemtrade Logistics Business Overview & Revenue Model
Company DescriptionChemtrade Logistics Income Fund offers industrial chemicals and services in Canada, the United States, and South America. It operates through Sulphur Products & Performance chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), and Electrochemicals (EC) segments. The SPPC segment removes and/or produces, and markets merchant, regenerated, and ultra-pure sulphuric acid, sodium hydrosulphite, elemental sulphur, liquid sulphur dioxide, hydrogen sulphide, sodium bisulphite, and sulphides. This segment also offers industrial services, such as processing by-products and waste streams. Its WSSC segment manufactures and markets various inorganic coagulants used in water treatment, including aluminum sulphate, aluminum chlorohydrate, polyaluminum chloride, and ferric sulphate; and a range of specialty chemicals, such as sodium nitrite and phosphorus pentasulphide. The EC segment manufactures and markets sodium chlorate and chlor-alkali products, including caustic soda, chlorine, and hydro-chloric acid for the pulp and paper, oil and gas, and water treatment industries. Chemtrade Logistics Income Fund was founded in 2001 and is headquartered in Toronto, Canada.
How the Company Makes MoneyChemtrade generates revenue through the production and sale of a diverse range of industrial chemicals and specialty products. Its primary revenue streams come from the sale of chemicals used in various applications, including water treatment, mining, and manufacturing. The company also earns income from logistics services, which involve the transportation, storage, and handling of chemicals. Key partnerships with industrial clients in sectors like utilities, mining, and oil and gas facilitate long-term contracts that provide stable revenue. Additionally, Chemtrade benefits from economies of scale and operational efficiencies, allowing it to maintain competitive pricing and secure ongoing business with established customers.
Chemtrade Logistics Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 19, 2026
Earnings Call Sentiment Positive
The call conveyed a generally positive operational narrative — 2025 was a record year with clear improvements in Regen acid reliability, progress on Cairo and Tulsa facility qualifications, and enhanced reporting transparency with the water chemicals segment split. Near-term challenges were highlighted, including sulphur-driven margin percentage pressure, temporary softness in caustic spot prices, heavier 2026 turnarounds (including a Q2 North impact), and a one-time reporting delay tied to the Polytec acquisition. Management expects many headwinds to normalize or recover in the second half of 2026, and sustaining/growth CapEx frameworks were clarified for modeling.Q4-2025 Updates
Positive Updates
Record 2025 Performance
Company reported 2025 as a record year for Chemtrade, with management thanking employees for strong results and signalling overall strong full-year performance.
Strong SWC Segment Margin in 2025
SWC (water chemicals) segment delivered EBITDA margins of approximately 23% in 2025, demonstrating robust profitability for the segment despite cost volatility.
Operational Improvements in Regen Acid and Reliability
Regen acid business has shown steady year-over-year improvement in performance and reliability, with management noting ongoing incremental gains and a positive multi-year trend.
Cairo and Tulsa Facility Upgrades Driving Quality and Volume Ramp
Cairo facility approvals are progressing positively with many samples out and management expecting sales volume ramping in H2 2026; Tulsa received targeted upgrades using Cairo learnings to achieve higher quality and potential advanced-node qualification.
Segment Reporting and Visibility Improvement
Water chemicals will be broken out as a separate segment beginning with Q1 2026 reporting (released in May), improving modeling and transparency for revenue, EBITDA and margins by segment.
Capital Expenditure Framework and LTIP Guidance
Sustaining capital expected around $120M–$130M annually; growth CapEx guidance of roughly $35M–$50M (management noted $35M–$50M of growth CapEx does not include potential North Vancouver rezoning-related spend). Long-term incentive (LTIP) guidance provided in a $22M–$28M range for modeling.
Negative Updates
Sulphur Cost Spike and Margin Pressure
Significant sulphur cost escalation in 2025 pressured SWC segment margins (margin percentage reduced even as management sought to protect EBITDA); management noted margin percentage tends to fall when raw material costs spike.
Caustic Soda Spot Weakness vs Guidance
Spot caustic soda prices are below the $450/ton assumption used in guidance early in 2026 due to temporary oversupply (notably China) and weaker end-market demand; management now plans on a recovery toward guidance levels only in H2 2026.
Heavier Turnarounds and Q2 Impact
2026 will have heavier-than-recent turnarounds in SWC (lumpier outage schedule tied to customer turnarounds), with a North turnaround occurring in Q2 that will negatively impact Q2 results.
Merchant Acid Pricing Likely Lower Than 2025
Merchant acid benefited from unusual 2025 spot opportunities (competitor outages); management expects merchant acid pricing in 2026 to be modestly lower than 2025, reverting toward more normal levels.
Delayed Audited Reporting Due to Polytec Acquisition
Q4/Full-year results were released on an unaudited basis due to the timing and additional work from closing the Polytec acquisition late in November 2025, delaying completion of audit procedures.
Corporate Compensation Variability
Unit appreciation in 2025 drove LTIP expense to the higher end of the $22M–$28M range, increasing corporate costs in 2025; while program-level corporate costs are expected to be similar in 2026, LTIP remains variable and can raise corporate expense.
Company Guidance
Management's 2026 guidance emphasized several quantified assumptions: caustic soda pricing was assumed around US$450 (Q1 spot was weaker but a rebound is expected in H2), the SWC segment referenced a 2025 EBITDA margin of about 23% (with margins under pressure from elevated sulphur costs), growth CapEx was discussed in the roughly $35–$55 million range (management clarified the $35–$50M discussed excludes any North Vancouver rezoning spend), sustenance CapEx is typically $120–$130 million, LTIP expense guidance is $22–$28 million (with 2025 at the higher end), and seasonal/operational dynamics point to Q2–Q3 as the strongest quarters (Q1 and Q4 weakest) alongside heavier SWC turnarounds in 2026 and a planned Cairo sales ramp in the second half.Chemtrade Logistics Financial Statement Overview
Summary
Operations and profitability have recovered meaningfully versus prior loss years, with solid 2025 margins and consistently strong operating cash flow. The key offset is balance-sheet risk: leverage rose sharply in 2025 (debt-to-equity ~1.72), and earnings have shown volatility since the 2023 margin peak.Income Statement
Profitability has strengthened meaningfully versus the 2020–2021 loss years, with 2025 showing solid operating performance (EBIT margin ~15% and net margin ~7%). Revenue rebounded in 2025 (up ~2.9% year over year) after a slight dip in 2024, but the topline trajectory is not consistently upward. A key weakness is earnings volatility: net margin peaked in 2023 (~13.5%) and then normalized lower in 2024–2025, suggesting profits can swing with market/operating conditions.72
Positive
Balance Sheet
Leverage is the main constraint. Debt-to-equity moved up to ~1.72 in 2025 from ~1.10 in 2024, indicating a meaningfully more levered capital structure year over year. Equity has also trended unevenly over time, and while returns on equity are currently healthy (about 18% in 2025), the higher debt load increases sensitivity to downturns and reduces balance-sheet flexibility compared with a more conservatively financed peer.56
Neutral
Cash Flow
Cash generation is a positive: operating cash flow has been consistently strong in recent years (roughly $348M–$401M during 2023–2025), and free cash flow improved in 2025 (up ~21% year over year). However, cash conversion is not perfect—free cash flow is about half of net income in 2025, and operating cash flow relative to earnings is below 1x in 2024–2025, implying working-capital or cash-timing headwinds and less “cushion” if profitability softens.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.00B | 1.79B | 1.85B | 1.81B | 1.37B |
| Gross Profit | 460.09M | 430.55M | 420.65M | 353.90M | -3.85M |
| EBITDA | 523.56M | 417.42M | 562.33M | 448.99M | 92.91M |
| Net Income | 139.39M | 126.91M | 249.32M | 109.11M | -235.21M |
Balance Sheet | |||||
| Total Assets | 2.53B | 2.28B | 2.11B | 2.16B | 2.05B |
| Cash, Cash Equivalents and Short-Term Investments | 27.42M | 25.50M | 21.52M | 72.57M | 13.91M |
| Total Debt | 1.33B | 899.26M | 863.95M | 1.04B | 1.19B |
| Total Liabilities | 1.76B | 1.47B | 1.40B | 1.59B | 1.67B |
| Stockholders Equity | 775.11M | 818.36M | 707.14M | 566.21M | 379.85M |
Cash Flow | |||||
| Free Cash Flow | 178.48M | 162.00M | 235.07M | 253.75M | 132.90M |
| Operating Cash Flow | 355.07M | 347.80M | 401.46M | 369.19M | 219.04M |
| Investing Cash Flow | -428.57M | -185.80M | -118.46M | -108.88M | 96.53M |
| Financing Cash Flow | 76.01M | -159.30M | -333.53M | -203.00M | -314.12M |
Chemtrade Logistics Technical Analysis
Positive
15.33
Price Trends
15.43
Negative
14.70
Positive
13.22
Positive
Market Momentum
-0.09
Negative
49.90
Neutral
82.24
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CHE.UN, the sentiment is Positive. The current price of 15.33 is below the 20-day moving average (MA) of 15.37, below the 50-day MA of 15.43, and above the 200-day MA of 13.22, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 49.90 is Neutral, neither overbought nor oversold. The STOCH value of 82.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CHE.UN.
Chemtrade Logistics Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | C$850.23M | 2.75 | 30.02% | ― | 20.52% | 1196.33% | |
66 Neutral | C$1.73B | 11.01 | 18.28% | 4.73% | 10.20% | -11.22% | |
63 Neutral | C$5.62B | 35.38 | 9.35% | 1.87% | -0.65% | 46.15% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% |
* Basic Materials Sector Average
TSE:CHE.UN
Chemtrade Logistics
15.33
6.07
65.48%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.