Thank you, Stephanie. Good morning, everyone.

I hope you're all doing well. We want to thank you for joining us today, albeit virtually.

Also joining me today is our CEO, Scott Rook. We are, however, in some different locations.

Thank you, Rohit. Good morning and thank you to everyone that's joining us for today's call.

I hope you're all doing well and staying safe. Before I get started, I would like to first thank all of the Chemtrade employees for their hard work and dedication during the first quarter of 2021.

We continue to operate our sites safely during these difficult times, and that is a reflection of the commitment of our employees. Turning now to our outlook.

Due to the economic uncertainty that we face from COVID-19, we're still not able to predict the key elements necessary to provide meaningful guidance. As Rohit mentioned, Q1 2021 presented challenges for our business on a number of fronts.

COVID-19 continued to have an impact on our SPPC and our EC businesses. Additionally, the Gulf Coast cold weather impacted not only several of our locations, but also several of our customers and raw material suppliers.

Finally, Rohit quantified our sensitivity to the U.S./Canadian exchange rate. And this is a factor when comparing 2021 results with 2020.

As we look ahead, we see improved performance, particularly in the second half of 2021. And we see continued strengthening in 2022, particularly in the SPPC and Electrochem businesses.

Chemtrade is well-positioned to benefit from a resurgence in demand across many products, as we move closer towards post-COVID recovery. As mentioned, our earnings are impacted by the exchange rate.

However, the impact is reduced at the cash level. In the next few years, our strategy will be to deliver earnings growth driven by three factors.

They are: Number one, a market recovery from post-COVID-19; two, organic growth coming from ultrapure acid, our water business and hydrogen; and number three, our operational efficiencies driven through productivity and reliability initiatives.

Thank you very much. First question is on the chlorine shortage.

Can you talk about how that is impacting your business? How you run your plants conversion rates to hydrochloric acid, et cetera?

Sure. So, we have seen a -- well, we are seeing a shortage in the chlorine market and so therefore, increased chlorine demand for us.

In our MD&A, we called out that we see -- that we're running higher rates at our chlor-alkali facility and the -- we are running at a rate of 190,000 MECU. And so that's a reflection, both of more demand for chlorine and HCL and since caustic soda is a byproduct, therefore, we're able to sell caustic as well.

Second question is -- thank you for the update that you gave on semiconductors. Just one question on that.

Because at the backlog, is there a backlog and demand for ultrapure acid with you right now? Or is it really just lost sales until we start to see some of the bottlenecks improve?

And then maybe a second part to that, what is your ultimate goal in terms of where you want to be with ultrapure acid?

All right. So, there -- we do not have a current backlog.

We are seeing increased demand for our ultrapure, and we're able to meet that demand. And we see this growing.

And what's our ultimate goal, we want to be -- we want to remain the primary supplier of ultrapure acid in North America and be the market leader in North America.

But I think it takes up what 25% of your -- of your asset is ultrapure. Is that something you could eventually hope to get towards 50%?

Well, I think, for the way it works is, we already debottleneck and get some capacity expansions previously. So, it's not as straightforward as just converting one into the other.

You really have to -- the next step of the next step change will have to be additional capacity that it has been installed. It's not that -- it's not like HCL and chlorine will be just going to adaptand go one way or the other.

I could feel it requires only to structure that needs to be invested in. So, it will be -- and from a volume basis, we sell more than a million tons of merchant sulfuric acid.

Ultrapure, you're talking about less than 10% of that is going to be the overall U.S. market.

So, it's really not a volume game. It's really a question of making investment in the purification and the downstream part of ultrapure.

And then just last question for me. Can you just remind us where you stand right now on leverage?

What is your target and how long do you think it'll take to get to that target?

So, we look at it in three different ways. So, the first way we look at it, as you obviously don't want to be crimped from a covenant perspective.

So you always try and be well ahead of that. So there's a lot of room between our covenant and our senior debt.

Then in terms of our targets, we have two targets. One is total debt to EBITDA which include that convertible unsecured subordinated debentures and as longer term target base be below four and on our bank -- senior bank debt, our longer term target is to be below three and potentially even two and a half.

So, the way we're going to get there is really by two things. One, obviously is the earnings growth, which has the biggest impact on leverage ratio.

And secondly, as you do start to get back to those levels of earnings, we've also used that excess cash flow between some organic growth and the balance going towards debt reduction. So, it will -- growth rate -- to get to those levels you're looking at two to three years and dependent upon how strong the company is.

That's great. Thank you very much.

You are welcome.

Hi. Good morning, everyone.

I have a few questions. I'll ask one by one.

If you look at SPPC, it's been, I think, eight quarters in a row year-over-year sales decline, a little bit of currency headwinds now. When would you expect that business -- for grabbing you to turn to getting a year-over-year comp -- like in Q2, should we expect continued sales decline, year-over-year decline and could we get to growth year-over-year by the end -- by the second half?

So, I will answer -- sorry, Scott, go ahead.

Yeah. So, Joel, we are seeing -- well, we will see -- I feel confidence that the second half of this year in the SPPC segment is going to be -- well, it's certainly going to be stronger than the first half of this year.

We would -- what we saw in this business was, was late in Q1 of last year and in Q2, very large drop-off in refining rates in North America. We saw some pickup in Q3 and Q4, but then in Q1 of this year refining rates, particularly on the West Coast dropped off due to the stay-at-home orders.

So, we saw another drop in the West Coast after Q1, but we're seeing that pickup. And so, as we -- I feel that Q2 of this year is going to be stronger than Q1, and then Q3, we see even more demand.

And it looks like 2022 from miles driven is certainly going to get close again to 2019 levels.

Okay. And when would you expect -- then the next question WSSC.

You have a bit of -- you had a tough comp in Q1 2020, when would you expect WSSC to also turn back to growth? Now you got be able to pass-through some inflation -- some cost inflation.

But similar question, what would you expect WSSC return to growth again?

So, Joel …

Sorry, go ahead Rohit.

I am just going to say that -- so there's short-term spike in sulphur that we've seen -- from the start of the year, it's up -- tripled and almost tripled. So, in the short-term, that's a challenge, because usually business is annual contracts and they will come up throughout the year, but they -- it does take time to reset those.

But as you will know from the experience in 2020, when our water was up, over $20 million in the year before, is that once you get past that initial spike and gone through the cost, you actually do have higher margins for some period of time. So, we fully expect that 2022 is going to be quite strong for the water.

So, Joel, just to add on to that, if I can. Recall that, again as Rohit had mentioned too, 2020 was a very strong year of growth for the WSSC business, greater than $20 million higher.

And so, there's underlying market growth, demand growth as well as pricing and the impact of raw materials. And so, this business is definitely impacted by the big run-up in sulphur and sulfuric acid prices.

With many of our customers are municipal cities and -- but so -- and our agreements with these are public -- publicly available, they're annual contracts. And so, as those contracts expire -- and they expire throughout the year so there's a rolling basis of these contracts.

And as those contracts will walk, the new ones would reflect the higher raw material costs.

So would that mean you would expect those contracts -- like, would you expect the worst of the inflation to happen kind of middle of this year? So, we're still figuring out some strategic Q3 and as again Q4 and early next year and things refreshing and then you can start to get the pass-through.

So, Joel, as we -- one has to see how the Tampa index of sulphur evolves through the year, because if you follow it historically, it's obviously we have, it can be very volatile, it can go up and down pretty violently. And so, we have to see what happens in Q3 and Q4 for sulphur.

If Tampa sulphur stays where it is, then you asked me, right -- but I -- as we get into rolling to next year, we'll start to have it fully priced in. And then, obviously, typically then that’s goes down.

You hang on to the pricing for some period of time, but extended margins. So -- but it's difficult to answer your question without knowing the sulphur is going to go up at certain time .

Okay. Thanks for that.

Very helpful. So, my final question would be, it looks like the payout ratio this year is going to be plus or minus 100%.

So, would you agree with that assessment? And then, Scott, will it -- in a time to reconsider the distribution again, or do you think at this top part of the cycle you have enough cushioning still working?

Yes. So, we are comfortable.

We are comfortable when our Board is comfortable with the distribution where it is. And look, we're thinking about this business in terms of where we want to be two and three years from now.

And as I talked about, we have a plan to grow earnings and that's going to come from market recovery, organic growth and our operational objectives. And we feel confident and comfortable with the distribution where it is.

Would you get about 100% here give or take?

No, I don't think -- we have decided not to give guidance. And I don't really want to be that precise with where we think 2021 is going to be.

But I think the bigger question is, even if that were true, I think Scott's remarks are still there. That's about it.

So, from a distribution quality perspective, I don't think 2021 payout ratio is a big .

Thank you very much.

Yeah. Good morning, guys.

for me, if I may? Rohit, first of all, on the core costs, pretty noisy period.

Can you just give us a sense for the run rate we should expect it going forward? Should it be more normal through the balance of the year on corporate outlook?

Yeah. So, the normal run rate should be around roughly $17 million, $18 million or in that range for quarter.

Out if it's -- we really have a hard time predicting outcome because it's very sensitive to movements the unit price -- or my remarks are more on a normal basis. We should be in that range.

We don't really expect. So we've had -- you have to see all the time and that's done.

We had some government grants that we both knew that are a lot more to book in this year. So, when I look ahead, I really don't see a lot of unusual things, the rest of the year, other then if and but in contract to predict.

Okay. Good.

That's helpful. Just turning to Electrochem for a moment.

I think you've mentioned twice that the rate for hire and I apologize. I thought I missed it, but I think you might've mentioned a rate where you're running currently in North Vancouver.

Could you just maybe give us a sense for where that rate is today and how far we need to go to get back to capacity? And over what timeframe, just give us a sense for how that business is going to start to recover here?

Sure. So, that business, we talked about and we mentioned in our MD&A that we have moved -- that the production up to 190,000 MECU.

So, last year we shared that the rates were 155,000 roughly MECU. And so that's -- we produce chlorine molecule.

We produce caustic. So that plant for us could do -- that's -- we could do 5% or 10% in the work on that, more volume coming out of that plant then we get into turnaround schedules and that type of thing.

But for us -- so, there's more volume that -- a little more volume that's available for us, but it's primarily price. And so, the price appreciation that we're beginning to see right now is on cost, et cetera.

And we've talked a lot about that. We are -- we have also seen increases in chlorine, and we're beginning to see increases in HCL.

And so, another comment, we have options for the chlorine molecule as we look at it and we can -- with that chlorine molecule, we can sell it as chlorine, or we could sell it as hydrochloric acid, and then our margins depend on whether it's HCL or chlorine and as well as well as how far we have to move it. And so, for us, our preference would be to not to move it very far, because the longer we move it to the more it costs.

So, we're better off if we can sell HCL in Western Canada, that's the best thing for us and the most profitable. And then, again, the farther away we have to move it, is there -- is a drop in margin for us.

Understood. Helpful.

And so, just to follow on that question. If there's optionality in that molecule, is that a decision point that you're going to be executing at some point?

I mean, I'm trying to understand -- I know you shifted your production base last year to offset some of the volatility -- in the market. Are you contemplating it back, that's the question?

Well, again, so back in 2017 and 2018, the oil prices were relatively high. We're actually close to those oil prices right now.

But rig counts across North America were over a thousand rigs. And so, there was very, very strong demand for HCL, particularly in Western Canada.

And so, we're watching that. And with higher oil prices now, we're really just beginning to see the rig counts move up and you can see those just as easily as we can.

There's been a small bump up in rig counts, but if oil stays where it is, we're watching it very closely. And we're thinking that rig counts will go up in particularly in Western Canada.

So the best thing that we can do is, is to sell a lot of HCL in Western Canada, and that's a very good thing for us. But, right now we can sell all of the chlorine molecule.

And so, that's good. But for now, it's a question of optimizing the product mix.

Very helpful. Thank you.

Good morning, gentlemen.

Good morning.

Thanks for the detailed run-through. Really appreciate that.

Just kind of digging down a little bit more near term, not to be myopic about it. But if we're kind of looking out on the water chemical side in terms of the compression that we might see in margins, should we go back to that period?

I guess you -- two years ago, when you had a little bit compression at that time for the same reasons and use that as kind of the example for looking into this year, maybe a couple of quarters where you have margin pressure and then recovery sort of thing, or what's your view on how we should be thinking about how we build that out?

Yeah. So, I think, the last time there was a pretty big run-up in both acid and aluminum.

And since then we have made quite a few changes in the business. So we -- so it shouldn't be as severe as what occurred back then, because it had a change in the business.

But you can use that as your starting point and then go and go as far as that. Now again, this is -- sorry.

I should point that this subject to what continues to happen, that Tampa index assumptions for the next couple of quarters.

Okay. And what about aluminum?

It's starting to move up as well. So is that -- are you seeing that beginning to factor in or no?

Yeah. We do tend to buy -- we tend to carry a fair bit of inventory of that.

So, we will be cited for a period of time, but at this stage it's not as big a factor.

Okay. And then going over to back to caustic, I think your guidance is now $20 lower versus 2020 was $40 lower.

So, if I kind of build that out, it looks like it's what you're calling for U.S. 2020 per metric ton.

And current prices are certainly well above that in Northeast Asia. So, are you just being conservative about the caustic soda or -- and when should we start to really see that kick in -- is the three month lag?

So, I have to think that Q2 is kind of where you start seeing some dividends there.

So, probably more Q3. I would say Q2 is still based on what was happened in Q1.

There is some appreciation going on, but that's not -- the only thing to keep in mind is that the Northeast index is the U.S. dollar index, so there's a bit of impact on the exchange as well.

Okay. And then on HCL, your burn rate was, I think, in the 20s and you guys had sort of like pushed some out for industrial production because you had no other outlet for.

And now we've got energy coming back and the fracking and the rig counts and all that, beginning to slowly recovery here. What's your plans in terms of the actual burn rate?

You obviously -- I think Scott, you flagged that you'd like to see forecast in Western Canada. So what is your plans for stepping up the burn rate in North Van?

Well, look, we would -- what's the plan, our plan would -- our plan is to move as much HCL into Western Canada as we can. That's what we're concerned.

What do we think that that's going to be? I think that's going to slowly creep up from where it is right now, just as rig counts increase in Western Canada, to be frank.

I mean, that's what it's going to be. We would like to see that that's going to be maybe 30% second half of this year, but you'll see.

That -- it's early for us. It's hard to predict.

So, in 2019 we did about just under -- about 37% was converted into HCL. If you look back in 2018, et cetera, we're in the 40% range.

Last year, we were in the low 20%. So -- but the thing -- to keep in mind that we retain flexibility.

So if the fracking start to recovers, we will not be missing that opportunity. We can make these decisions on our daily routine basically.

And we keep enough slack in our system that we can easily tack on the opportunity.

So, is that quick -- it's that quick to adjust?

Yes.

Very good. And last one from me guys.

Just if you look at sort sodium chlorate, one of the things about the market in general it's a rational oligopoly. And to the extent -- I'm sure you're waiting for everybody to go back to work and see how this really shakes out in terms of whether or not it's a Hybrid model, people working from home, working in the office or whatever the case may be on a number of organizations.

But as everybody goes back to work, do you sense that there could be amongst yourselves and your competitors, this laying up of capacity again, at some point to kind of rationalize the market to the new secular trend?

Well, like it is -- right now, I would say -- right now, there's enough spare capacity in the market right now where rationalization could take place. And I think that -- so I think that we're going to -- we are certainly going to watch it as people come back to school and go back to the offices and -- the rate at the people start using office paper again.

The other thing to watch it is that, we have -- we have had a couple of customers that have closed, and that the -- where there -- the industry has seen pulp mills that were producing office paper that have closed. And so, we'll be watching to see if demand picks up, if any -- of those customers decide to restart mills and overall how much demand goes back.

And then, for us, we'll make decisions after that.

Very good. Thanks, Scott.

Great. Thanks.

Just a quick clarification for Scott. You mentioned the -- two paper mill customers that have shutdown their operations over the past six months.

Are they temporary shutdowns or temporary mothballs? And if demand picks up, they will reopen, or have they -- or are they looking to kind of repurpose those mills longer term?

Yeah. Look, our understanding right now is that the plan are those mills -- are those mills are going to stay closed, that that's -- we've asked that question and our understanding is that the plan is that they will stay closed.

I'll say that, we've been given a caveat that it's possible if demand were to really pick back up, they could restart. And as I have asked that question, I've been told about number of mills and that there were -- there have been a number of lumber mills that closed.

And then, with the big increase in lumber right now that mills have restarted. So -- but what I've been told is that those meals, at least for the pulp mills that we're talking about, they don't have any immediate plans to reopen.

Okay. Got it.

And then the next question relates to the Wage subsidy. So, do you expect to receive the Wage subsidies in Q2 and Q3?

I wasn't too sure. Like what the requirements were from your perspective.

It should be under claim a little bit in Q2, but we think what we claimed in Q1 this year was, beyond just -- what should be in that -- as in catch up on 2020 claims. So, it is unlikely to be material.

And then after Q3 and Q4, they've extended it past June, but based on what we see right now, we don't think that's going to be a big factor for us.

Okay. Got it.

And then, just one last thing on ultrapure. You mentioned that there's a good demand on a medium term and longer term, and you're still looking to kind of place the rest of the volume that you have from the customer loss.

From your perspective, like, if you're seeing a lot of growth in a few years time, like -- and given that there is kind of a lead time to grow your capacity, like, does it make sense to start growing your capacity now? Because I think Rohit, you mentioned that the small capacity additions of and debottlenecking has been done.

Like, can you just walk us through the cost and the process or the lead time to improve -- to increase capacity? And does it make sense to do that ahead of selling out on your own existing line?

Yeah. So -- okay.

So, we're focused on with our ultrapure. There's two things going on.

The number one, we're working to improve our quality on our existing lines. And so, as the -- as customers -- because our customers are producing smaller node sizes, the quality requirements increased significantly.

And so, we've been working with them and we have plans and we're spending capital to increase the capacity -- or I'm sorry -- to increase the quality so that our products will be suitable for the -- what the market's looking for. At the same time, we're looking at that demand over three to four to five years, and looking at when we're going to need additional capacity.

And right -- and so, we're looking at that and our plans right now say that two to three years from now, we'll probably need capacity. And so, we're looking at that and planning accordingly.

Okay. Any color on the cost or the investment required to improve the quality.

And then if you were to improve capacity?

It depends on -- a lot of it depends on where that capacity is added. One of the key things you need for ultrapure acid is volume that comes out of associated acid plants.

So, clearly, you'll do it where you add that capacity. And then the other question for us is, do we -- do this by ourselves, do we partner with somebody, because in the end, this is a business that we do not going to invest in the end customer.

Because we only supply one and through that business whereas typically the portfolio then you have some value-added in the middle. So, you're going to have to figure out that going to be leverage partnerships on capital.

And it's not just about the cost of capital, it's about expertise as well. So, there are a few moving parts there.

So, we really can't give you a definitive answer, but the best way seriously looking at this because the U.S. is going to significantly increase the production of chips and therefore the demand for ultrapure acid.

Okay. Great.

Thanks for the color. I'll leave it there.

Yeah. Thank you.

Hey, guys. Thanks for taking my questions.

I'm just calling for Endri. Most of the questions I had have been answered.

I may have missed this. But Rohit, could you just remind us about the covenants please?

Our bank covenants?

Yeah.

Yeah. So, the bank covenant started this year off at 5.25 and the end of the year -- and ended the quarter below four.

So, there's a lot of Bloomberg plus we just -- I don't know what that one said yet, but we did another amendment. We pushed out the step down through 2022 and they get phased out in 2023.

So, those covenants will be up -- they will not up until, they will be up today or -- and you don't get back to anything you can actually see once you step down should apply. But they -- we are really also like to have ample room.

Okay. Great.

And you mentioned in the opening remarks. I may have missed it.

But you said driving to back to 2019 levels in 2022, but how did you see April again? That's what I missed there.

So, I think what Scott mentioned was the U.S. highly classic data suggested that April Hydra traffic was back to pre-pandemic levels.

That was the comment on April.

Okay. Great.

That's all my questions. Thank you.

All right. Thank you for my side.

And Scott, do you have anything you'd like to add?

No, I'd just like to thank everyone for their time. Thank you very much.

Have a nice day. Bye.