Mark Davis – President & Chief Executive Officer Rohit Bhardwaj – Vice President, Finance & Chief Financial Officer

Jacob Bout – CIBC World Markets Jeremy Mersereau – National Bank Financial Alexandra Syrnyk – BMO Nesbitt Burns Damir Gunja – TD Newcrest Welcome to the Chemtrade Logistics Income Fund first quarter results conference call. At this time all participants are in a listen-only mode.

Following the presentation we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions.

(Operator Instructions) I would like to remind everyone that this conference call is being recorded today, Thursday, May 16, 2013 at 8:30 AM Eastern Time. I will now turn the conference over to Mark Davis, President and Chief Executive Officer.

Thank you for joining us for our conference call and webcast today. As usual, joining me today is our Rohit Bhardwaj, our Chief Financial Officer.

Before I commence the review I would like to remind you that our presentation contains certain forward-looking statements that are based on current expectations and are subject to a number of uncertainties and risks and actual results may differ materially. Further information identifying risks, uncertainties and assumptions and additional information on certain non-IFRS measures referred to in this call can be found in the disclosure documents filed by Chemtrade with the Securities Regulatory Authorities available at sedar.com.

Chemtrade had a good start to 2013. Business conditions were a little more unsettled in the first quarter than we experienced throughout 2012.

Despite this, our business showed a great deal of resilience and posted steady results. We continue to benefit from the diversity of our products, services, and customer base and from most of our business being based in North America whose economy appears to be more stable than certain other geographies.

These factors are strengthened by the risk sharing and fee based contracts with our customers and suppliers that are at the heart of our business model and continue to be a key basis for our ability to produce high quality earnings even in volatile economic times. For the first quarter of 2013 we generated distributable cash after maintenance capital expenditures of $27 million or $0.65 per unit.

This result benefitted from a capital expenditure run rate below our annual estimates, but even ignoring this benefit our first quarter results continued to be strong and generated distributable cash well in excess of our cash distributions of $0.30 per unit for the quarter. The under-spending on maintenance CapEx is a timing issue and the expenditure run rate we have previously indicated will be spent by year end as we continue to enhance the quality of our asset base.

From our perspective the general economic conditions during the first quarter of 2013 felt weaker than the first quarter of 2012 although this was not evident in the demand for our products. From a pricing perspective there was some regional downward pressure on prices in some of our main product categories including sulfuric acid.

However, as we’ve mentioned in the past, sulfuric acid fundamentals vary on a geographic basis and the long term reliability is very important to both byproduct suppliers and customers. Most importantly the risk sharing nature of our key supply contracts dampens the effect of price movements.

This was evidenced in the SPPC results which posted lower revenue but higher EBITDA than the first quarter last year. Recently, fundamentals for sulfuric acid in the US have improved with the disruption of production of byproduct sulfuric acid at the Kennecott, Utah copper smelter.

This smelter annually produces roughly a million tons of sulfuric acid. Kennecott has declared force majeure to its sulfuric acid customers.

The length and the extent of this disruption is not yet known. Although we generally do not participate in this region in a material way, the reduction in supply has resulted in a tightening of conditions for sulfuric acid across North America.

I’ll have a few comments on our outlook for the year after Rohit now reviews the quarter’s financials.

As Mark noted, business conditions were challenging in some of our markets during the quarter. Revenue was $210.1 million, a decrease of $17.8 million over 2012.

The primary reason for this decrease was lower revenues in the international segment. For the three months ended March 31, 2013 distributable cash after maintenance CapEx was $27 million or $0.65 per unit compared with $24.3 million or $0.58 per unit in 2012.

Aggregate EBITDA for the first quarter of 2013 was $35.2 million compared with $34.2 million in the first quarter of 2012. EBITDA showed improvement despite lower revenue as we had higher sales volumes for certain products particularly within the SPPC segment.

Turning to segmented results for the quarter, SPPC generated revenue of $145 million and EBITDA of $39.3 million compared with $148.1 million and $38.2 million respectively in 2012. The main reason for the decreased revenue was lower prices for sulfuric acid and for sulfur relative to 2012.

Despite a decrease in revenue there was an improvement in EBITDA mainly due to higher sales volumes of sulfuric acid and slightly improved margins for several products within the segment. Pulp chemicals reported first quarter revenue of $14.2 million compared with $13.1 million in 2012 reflecting increased volumes of sodium chlorate.

The increased volume was the primary reason for EBITDA being $400,000 higher than the level generated during the first quarter of 2012. International reported revenue of $50.8 million for the first quarter compared with $66.7 million in 2012.

This significant reduction in revenue reflected lower prices of sulfur and of sulfuric acid and lower volumes of sulfuric acid caused by the generally weak conditions in international markets for sulfur and sulfuric acid. EBITDA for the quarter was $2.4 million and this was only slightly lower than the $2.6 million last year.

As we have mentioned in the past, our business model helps mitigate the impact of typical chemical commodity risks on financial results. Maintenance CapEx in the first quarter were $2.6 million compared with $3.2 million in 2012.

This is significantly lower than our expected run rate. We still continue investing and improving the quality of our assets and still expect the 2013 maintenance CapEx to be approximately $35 to $40 million.

Excluding unrealized foreign exchange gains and losses, corporate costs during the first quarter of 2013 were $10.1 million which is slightly higher than the first quarter of 2012. Of these costs LTIP expenses were $700,000 higher than the first quarter of 2012.

During the first quarter of 2013 net finance costs, excluding the adjustment for the changes in the value of debentures were $1.2 million lower than costs during the first quarter of 2012. This was primarily due to lower levels of debt and lower interest rates relative to the first quarter of 2012.

Additionally, during the first quarter of 2012 we incurred $400,000 of debt extinguishment cost related to the repayment of debt in that quarter. Our balance sheet at March 31, 2013 was in sound shape.

As at March 31 $230.7 million were drawn on our approximately $400 million credit facility leaving a significant amount of liquidity. Our senior leverage ratio remains below two times EBITDA.

Having a fully revolving credit facility provides us with tremendous flexibility as repayments do not automatically reduce the size of the facility. I hand now back to Mark.

As I said at the beginning of the call it was a good start to the year. While we’re not immune from volatile or weak economic conditions, our operating results over the past several years are proof that our business model works in mitigating the effect of such conditions on our results.

Our growth over the years has diversified our product and service offerings and our geographic and customer mix. Our customer base is stable and our focus on operational excellence continues to strengthen our ability to be an efficient and reliable supplier.

Importantly, our business model of long term risk sharing and fee based contracts protects us from typical industrial chemical risk that could affect our earnings. We will continue to focus on the key building blocks that have made us successful namely operational excellence, supply reliability, and an engaged and active work force.

We will also continue to optimize our existing assets while seeking opportunities to expand the size, scale, and scope of our business with new businesses that complement our business model. As mentioned, while our 2013 maintenance CapEx program was off to a slow start, we still expect to spend $35 to $40 million this year which means that the last three quarters of 2013 will have a higher than normal run rate.

We expect we should start achieving this higher run rate during the second quarter of 2013. While acquisition has been the primary growth driver over Chemtrade’s history, we always maintain a focus on incrementally growing our existing businesses.

We’ve talked before about our program at Pulp Chemicals which will make us a low cost producer. In the industrial chemicals business being a low cost provider is essential for long term viability.

We also previously discussed one of our smaller products ultra pure acid. This product is used in the semiconductor industry and thus quality is extremely important with impurities being measured in the parts per trillion.

In April 2011 we announced that we were spending approximately $12 million to expand our ultra pure facility in Tulsa Oklahoma to serve this growing market. This expansion has been completed and demand from the semiconductor industry continues to be strong.

As a result, we are embarking on another project to further expand this facility. This second project will enable us to increase our network of ultra pure acid capacity by about 20% to ensure we capture this growing demand and solidify our place as the market leader for this product.

We remain confident in our ability to meet our objectives of providing both yield and growth to our unit holders. Thank you for your attention and operator Rohit and I would now be pleased to answer any questions.

This force majeure at Kennecott, realistically what type of volume or revenue uptick do you expect that you can get from this?

I’ll give you a multifaceted answer. First actually there’s virtually no information about how long Kennecott is going to be down, the extent of its downturn or how much product it may or may not have.

So, that’s the first point. The second point actually is as we’ve said over the years we generally don’t participate either in that geography in a strong way or do we actually sell a lot of our product on the spot market.

We’re into actually long term contracts that actually make sure that our byproduct suppliers have a long term base for their product and spot contracts isn’t the way to do that. So, a long winded answer to say is that it’s impossible to quantify right now but if you pull that much asset off the market for a significant period of time it should have an effect on all markets of rising price as they try to fill that hole.

But, it’s not quantifiable today.

So effectively just tightening up the market?

Yes. It could conceivably be shorting the market in time, it depends on how long they’re off or if they come back how hard they run.

But right now actually there’s very little information from Kennecott actually about any of that.

My next question was just on the pricing side. I’ve got a chart here in front of me of spot pricing throughout the world so US Gulf, Europe and Chile and when you take a look at the pricing it’s about half of levels where we were at say just over a year ago, say 18 months ago.

I guess the question here is at what point if we continue to see pricing come off, at what point do we have to start worrying about a meaningful margin squeeze for you guys?

Again, I’ll give you a multifaceted answer. I guess as we said in our call too, acid is generally a geographic supply/demand game.

So, if the question drives towards at what point do you see a significant margin squeeze in our North American business which is…

North America has been particularly strong and I guess with this force majeure that will help but…

It’s been resilient As opposed to - I wouldn’t say particularly strong as in 2008. The North American economy I think is in better shape than a number of other economies around the world and actually that’s your demand base and we haven’t seen any real erosion from our contract customers on the demand they require.

As long as actually that’s the case, is any really low priced international asset, and we’ve said this before too, might affect our pricing on the geographic margins of our sales area, Gulf Coast in particular but not in the heartland because it’s expensive and logistically difficult to get it there. The last point I’ll actually make on that answer for you is if you remember, our contracts with our byproduct suppliers are risk shared contracts so to the extent that pricing goes down we share that hurt and it’s a great stabilizer for earnings.

So, a long answer to say that I think as long as the North American economy continues to tick over, so demand for our contract customers remains about where it is, there might be periphery effects but I don’t see a really strong downward pressure on our margins.

Then the last question is just around growth so you talked about the ultra pure opportunity. I guess (a) what type of opportunity is that, and then (b) if we think a little longer term as far as other organic growth opportunities or other markets maybe you can talk a bit about that?

What I’ve said before about ultra pure is it’s consistent Tier 2. It’s a really nice – it’s actually not a material movement in the yardstick.

So, we’ll make more money from our ultra pure business. The capital expenditures are not extreme, it’s just a nice example of what we do to try to actually grow organically our businesses.

So, that’s really the ultra pure story and it’s a good robust market. Look, we’re continually looking to actually do things to optimize or make more money out of or our existing asset base.

We’ve said before that most of our products are mature products serving mature industries so we’re looking for small increments and actually hopefully those small increments all add up to actually something material that keeps on advancing our EBITDA. There’s no big game changer in our existing product portfolio.

I was just wondering if you could help explain the dynamic that caused the higher demand in sulfuric acid so if there’s any subsectors that are doing particularly well?

I don’t really think we actually – we sold more but again, it’s not material. The only real demand increase that we talked about, about sulfuric acid would be in the ultra pure market in the semiconductor industry which is a very, very small subset of the acid market.

So, then is it safe to assume then that the other products beyond sulfuric acid, the margin improvement was quite high?

If you look at the entire SPPC it’s only up by $1 million so we said that there were slightly better margins across most products in that segment but nothing that stands out in any particular way, it’s pretty well spread out.

Maybe a qualitative question, you provided an outlook only a few months ago, do you think that your outlook has improved over when you last reported it for Q4?

What are we saying Q4 it’s supposed to be Q1 2013?

Yes, is it about the same then?

Yes.

Lastly, the long term debt climbed a little bit, $20 million, I’m just wondering why that would be?

We tend to have some seasonality in our working capital movement so typically Q1 have been a draw on working capital. I mean, one of the key reasons in this quarter was we had, as you will recall, really high CapEx booked in Q4 and that worked its way through our payable system and got paid out in Q1 and therefore that led to an increase in our revolver usage but we expect over the year for it to come down again.

You did touch on this a bit as far as the CapEx goes, so if I understood correctly then Q2 through Q4 should be relatively stable then?

What we said is we expect by the end of the year to spend our 35 to 40. We expect to start achieving that run rate in Q2.

Now whether Q2 jumps up to that run rate or not we have yet to see because when we book our CapEx, it depends on a few other factors when we close out projects and stuff, so we do expect to start seeing it ramp up. It’s hard to say it will precisely be at the run rate but it should start achieving that.

The main reason for actually highlighting that point is that if people focus too much on distributable cash, we want to make sure that doesn’t give people a distorted view because we under spent CapEx in Q1. Again, not intentionally but it will catch up over time so that’s the point.

Just a question about the remaining CapEx to be spent. In your pulp chemical segment I think you had previously talked about $10 to $15 million left to complete that project.

Is that still what you’re looking for?

Actually, it will probably be at the high end of that range. So as I said, we’ll get these projects complete by the end of 2013 so we’ve still got most of that to be booked yet for the rest of the year.

To be clear, that’s not part of the $35 million that we’ve talked about for maintenance CapEx, that’s outside of that.

Then is there any other, in terms of growth CapEx, anything else on top of that, that we should be thinking about? For instance, associated with the ultra pure acid expansion?

The ultra pure is there. Now, if you recall we had an ultra pure expansion about 18 months ago as well so this one is about half of that one so it’s not as big as the last expansion but that should come in by the end of the year as well.

Just touching on the strength or the solid business you’re seeing in North America specifically SPPC, can you just remind us maybe from a cash flow perspective what the split between Canada and the US might be? And, I guess any comments you might have on the difference between the two markets if you’re seeing any sort of weakness on the Canadian side whereas the US is arguably improving.

We don’t really give out a precise split between our US and Canadian business. Having said that, I don’t even think that is that relevant because conditions for most of our products are pretty stable across North America.

I think Mark’s point about the Gulf Coast maybe being affected is really [inaudible] but it really won’t come into play in the big picture, it hasn’t so far. So, there really is no meaningful distinction between Canada and the US for us right now.

If you’re getting at some people talking about maybe the US economy being stronger than the Canadian economy, we don’t see that in demand for our products. It’s pretty consistent.

There’s no remarkable distinguishing factor between our Canadian and US businesses.

Thank you all for joining us and we look forward to seeing some of you at our AGM which is in about 40 minutes from now. Thanks very much.