Thank you, Sara. Good morning, everyone.

And thank you for joining us today. We also have Scott Rook, our CEO, on the call this morning.

And like the last few calls, both of us are in different locations. I’d like to highlight that we will have a slide presentation to accompany our earnings results discussion today, you should be able to view the presentation on the webcast link provided, and the slides will also be available for download from our website.

I will begin by reviewing results for the third quarter of 2021. And then I will provide an update to our 2021 full year’s earnings guidance and underlying assumptions and key sensitivities, after which Scott will follow with remarks on the current state and outlook for the business.

And then following that, we'll have a Q&A session. Before I start on the Q3 results, I'd 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 statutory authorities available at, sedar.com. One of the non-IFRS measures that we'll refer to in this call is adjusted EBITDA, which is EBITDA modified to exclude only certain non-cash items, for the unrealized foreign exchange gains and losses.

For ease, what our company presentation will refer to adjusted EBITDA, we will just refer to it as EBITDA and other marks, as opposed to adjusted EBITDA. Both of these terms are fully defined in our MD&A.

Starting with aggregate results for the third quarter of 2021, revenue was $365 million, an increase of $19.2 million from the third quarter of 2020. The increase in revenue for the third quarter is mainly due to higher volumes and fighting for chlor-alkali products.

The higher volume was due to higher demand for chlorine and hydrochloric acid or HCL, which allowed us for higher operating rates at our North Vancouver facility. The higher volumes combined with higher pricing for HCL and chlorine give a lift to revenue for the period.

This was partially offset by the continued strength of the Canadian dollar relative to the U.S. dollar, which had a negative impact on revenues of $15.2 million.

The Canadian dollar relative to the U.S. Dollar was significantly stronger during the third quarter at US$1 equaling CAD 126 compared to the same period of 2020 when US$1 equals CAD 133.

Consolidated EBITDA of $67.3 million was $2.6 million higher than the third quarter of 2020. Higher corporate costs due to higher Long Term Incentive Plan, or LTIP accruals and in the summer Canadian dollar partially offset the stronger business performance.

Distributable cash of $19.3 million was $7.2 million higher than the same period of 2020. As a reminder, every CAD 0.01 of increase in the Canadian dollar per U.S.

dollar is expected to reduce annual EBITDA by roughly $2.1 billion and distributable cash by $1.1 billion and vice versa. Shifting now to the individual segment results for the quarter, Sulphur Products and Performance Chemicals or SPPC generated revenue of $109.2 million in the third quarter of 2021, which was $3.9 million higher than the third quarter of 2020.

Despite the negative $5.1 billion impact of the stronger Canadian dollar. The increase in revenue is due to higher selling prices for sulphur products, Regen and merchant acid partially offset by lower sales volumes of acid products.

We are pleased to see the SPPC segment continue to rebound as COVID-19 restrictions were lifted in North America, and miles driven returned to pre-pandemic levels. As our -- as a reminder, our Regen business serves gasoline refineries.

We also benefited from higher pricing in Regen and merchant acid to improve demand and higher sulfur costs. In ultrapure assets we have made good progress replacing sales volume that was lost from the previously disclosed large end use customer.

EBITDA for the period was $33.5 million of which $2.5 million -- which was $2.5 million higher than 2020. The labor disruption at our large byproducts supplier Vale had a negative impact of roughly $6 million in EBITDA, the stronger Canadian dollar had a negative impact of $1.5 million.

Our Water Solutions and Specialty Chemicals or WSSC segment reported third quarter revenue of $119.4 million, which was similar to the third quarter of 2020. The stronger Canadian dollar had a negative impact on revenue of $5.7 million.

However, higher prices for water products offset the foreign exchange impact and lower sales volumes of water products. EBITDA for the period was $25.7 million, which was $3.5 million lower than same period in 2020.

As previously disclosed, escalating raw material costs, especially for sulfuric acid and aluminum have caused a reduction to margins. While selling prices are being adjusted to pass-through cost increases, given the upward trajectory of raw material costs, it will take additional time before selling prices fully offset raw material increases.

As a reminder, the water products business is generally a contract business with municipal customers that typically requires annual commitments and pricing. As a result, our ability to recoup raw material cost increases typically lags because they're unable to adjust selling prices until contracts come up for renewal.

This is creating a short-term headwind for the business as raw materials are rising, but there should be a tailwind benefit when raw materials are declining. Electrochem Chemical or EC segment reported third quarter revenue of $136.4 million, a $15.7 million increase over the third quarter of 2020.

The higher revenue was primarily due to higher sales volumes and selling prices for chlor-alkali products and higher sales volumes for sodium chlorate. Sales volume for caustic soda HCl and chlorine increased by 20%, 22% and 24% respectively, compared to the same period of 2020.

Selling prices for HCl and Chlorine increased by 27% and 26%, respectively. This was partially offset by lower selling prices for sodium chlorate and the negative impact of $4.4 million due to the stronger Canadian dollar.

EBITDA for the period was $33.7 million compared to $24.5 million in 2020, an increase of $9.2 million. The factors that benefited revenue also benefited EBITDA and more than offset the impact of the stronger Canadian dollar of $2.3 million.

Corporate costs for third quarter of 2021 were $25.7 million compared with $20.1 million in the same period in 2020. Excluding unrealized foreign exchange gains, corporate costs were $5.6 million higher in the same period of 2020.

The increase in corporate costs was primarily due to a $6.7 million increase in LTIP costs. The higher LTIP expenses were partially offset by lower discretionary spending during the period compared with 2020.

Turning now to our balance sheet. We maintain senior credit facilities that consists of a US$325 million term loan and a US$525 million revolving credit line, which in total represents an aggregate credit facility of US$850 million.

We continue to maintain ample liquidity with US$271.2 million undrawn on the Fed facility at the end of the quarter. As of September 30, 2021, Chemtrade was compliant with all debt covenants contained in it’s credit agreement with a senior debt-to-EBITDA ratio of approximately 3.5%.

Chemtrade has no debt maturities until August 2023. Also, as a reminder, our decision to borrow mainly in US dollars provide a long-term hedge against currency fluctuation.

I also like to highlight the recent completion of the sale of the assets relating to the two Specialty Chemicals within the WSSC business, Potassium Chloride and Vaccine Adjuvants. The sale to Rotella’s LLC closed on November 2, and generated US$155 million in gross proceeds which are used to pay down debt in a credit facility.

Based upon the midpoint of guidance for 2021 and after making a pro forma adjustment for the loss of the full year EBITDA of the disposed business, this repayments will reduce Chemtrade;s senior debt to EBITDA ratio by approximately 0.7 times. So this will have or this has had a significant impact on deleveling the balance sheet and positioning Chemtrade to focus it’s resources on its core business.

The earnings from these businesses will be included in our earnings until the closing of the sale, which occurred on November 2. Subsequent to the end of the third quarter of 2021, Chemtrade settled the lawsuit relating Canexus Corporation’s North American Terminal Operations or NATO assets for $21 million.

A net benefit of approximately $17.6 million will be recorded in corporate costs during the fourth quarter of 2021. I’ll now shift to our financial outlook.

We released our guidance for 2021 last quarter. And I'd like to take a few minutes to provide an update to that forecast and wise assumptions.

For the full year 2021, we reiterate our prior guidance, but now expect to be at the higher end of the range. This does consider the loss of earnings from the assets sold on November 2, but excludes the benefit of the lawsuit settlement during the fourth quarter of 2021.

The guidance is detailed in the slide, so I won't read it out. There are a few significant factors to be considered when comparing 2021 EBITDA range and actual EBITDA achieved in 2020.

And these are shown on the slide. The key assumptions driving that outlook are in our MD&A and shown on the slide.

I won't read these out for you but will remind you that our caustic soda price generally lags the Northeast Asia spot index by a quarter. The key sensitivities that will have an annual – that have an annual impact on our EBITDA are shown in the slide.

Again, I won't read this out. I'll now hand the call over to Scott for some comments on the longer-term outlook for Chemtrade’s business, Scott?

Thank you, Rohit. Good morning, everyone.

And thank you for joining us on today's third quarter earnings call. I hope all of you are doing well.

As you heard from Rohit’s update on the third quarter, we now have two solid quarters of positive momentum. And we're really excited about the outlook for our earnings.

I’ll now spend some time updating you on our view of longer term outlook strategy. One of the primary goals of our strategy is to deliver sustained earnings growth, which will result in an improved balance sheet and reward investors.

Additionally, Chemtrade will focus on being -- on being a leading example for corporate environmental, social, and governance for ESG responsibility. This is ingrained in our culture.

And we will continue to strive towards making a positive impact for our employees, customers, shareholders and the society we operate in. There are three components to our strategy.

The first component, is being positioned to benefit from market recovery, as the COVID-19 vaccine does get rolled out and the economy returns to more normal levels. The second, is that we are diligently pursuing organic growth opportunities that will deliver increased size, scale and diversity of our earnings.

In the near- term, we're focused on organic growth opportunities that we find attractive. And in several years as our balance sheets for instance, we will consider acquisitions again.

And finally, a key area of focus for us is our operational excellence. We are passionate about improving our productivity, assets and people to drive sustainable earnings.

We see our business and our balance sheet improving with time. The market recovery component of our strategy is clearly starting to materialize.

First, beginning with the EC business, which includes our chlor-alkali product line. In the third quarter, we saw significant improvement in the caustic soda market.

As you may know, the caustic market price for North Vancouver production is closely tied to the Northeast Asia spot price. In the third quarter, China curtailed caustic production as part of their national policy to reduce energy consumption.

And IHS report in October indicated production was capped at 50 to 70% of capacity. China also reduced production rates on alumina, which requires caustic as a key feedstock.

This has required alumina producers outside of China to run at higher rates to meet global demand. The result in impact is an increase in demand for exports of caustic soda from China coupled with lower supply that's driving the higher Northeast Asia spot.

We expect this trend to continue providing a nice lift to caustic soda pricing. In the last few weeks, we saw dramatic increases in the Northeast Asia caustic price, with prices hitting over $900 per ton, an all time high.

In the industry production IHS reported that the average price for the month of October was $777, which is a dramatic increase from earlier this year. As a reminder, every $50 per ton increased in caustic pricing, the business generates about 10 and a $10.5 million in greater margin.

For perspective, even if the Northeast Asia spot price was $400 per ton, which it was prior to the recent dramatic run up, and if it stayed flat at that level for three quarters of next year that would mean roughly a $25 million improvement over our outlook this year. HCL demand and pricing also continued to improve with oil prices moving higher and fracking activity picking up.

This is particularly true for Western Canada, where our chlor-alkali production is based. Chlorine demand and pricing also continued to benefit from strong demand for PVC and bleach products combined with the capacity in the US that was rationalized earlier this year.

Additionally, there have been multiple weather related events in 2021 that reduced production, particularly in the US Gulf Coast. We expect prices will remain at these levels driven by strong demand.

Improved fundamentals for products chlorine and HCL have the added benefit of allowing us to maintain high operating rates at the North Vancouver facility, thereby selling more caustic soda. We are seeing some modest improvement in demand for sodium chlorate as offices and schools reopen and demand for printing paper recovers.

In the WSSC business, as Rohit mentioned, we are seeing higher raw material costs, particularly with our largest product line, aluminum sulphate. As I mentioned in my comments on the caustic soda market, the curtailments that China has made an alumina production are impacting global supply dynamics and driving pricing higher.

Alumina is a key feedstock for an aluminum sulphate product. So, the higher pricing is negatively impacting our water business.

We're also seeing higher pricing for sulfuric acid, which is the other key raw material used to make aluminum sulfate. So, these raw material increases in the water business will offset some of the gains that we are expecting in the caustic soda market in the DC business.

However, we will look to pass the higher costs on to our end customers as the contracts and bids are renewed. This has been an ongoing process that will provide a tailwind to the business when the raw materials revert to historical levels.

In the SPPC business, regen sulfuric acid has maintained its momentum on improved volume led by higher North American refinery utilization. In the third quarter, schools across North America reopened signifying another milestone in the post-COVID-19 return to normalcy.

US highway traffic data as returned to pretend pre-pandemic levels, further confirming that we are seeing about the daily lives. We expect the driving miles in 2022 will be back to pre-pandemic levels.

The merchant acid market is also benefited from the recovery in industrial production. This market was very tight in the third quarter, resulting in strong demand for our product in higher price.

The key raw material in sulfuric acid, sulfur has also commanded higher pricing. But the merchant acid business has been able to pass the majority of these costs through to end users.

The Ultrapure acid business has made good progress offsetting the reduction in demand at one of our customers that was previously disclosed. We have been working closely with a number of customers to grow our share of their business and we expect our Ultrapure business to be back to near sold out levels in 2022.

So, this is a nice transition point to discuss the organic growth opportunities. We remain focused on the significant potential for growth that we're seeing in our current businesses.

As we have previously mentioned, the single largest opportunity for our organic growth is our Ultrapure sulfuric acid that mainly supplies the semiconductor industry. The long-term fundamentals for semiconductor industry remains strong with leading global semiconductor manufacturers announcing US expansion plans coupled with the US government's commitment to supply domestic chip manufacturing capacity as a matter of national security.

As I mentioned, we have seen a strong recovery in demand for ultrapure acid and expect to return to 2020 sales level next year. We have been evaluating options to add capacity to meet the growing needs of our key customers.

I am pleased to announce that our Board has approved an expansion of approximately 60% of our ultrapure acid capacity at our Cairo, Ohio facility. In addition to adding capacity at our site, we will also improve the quality capability of the site.

We expect that the Cairo facility will be the first site in the United States, capable of producing ultrapure acid, at the quality level needed for the new fabrication plants in the US. The estimated cost of our expansion is approximately CAD 50 million, with a targeted return rate of 25% and an expected turned up in 2024.

We are also making solid progress in developing our co-production of hydrogen, that's part of the sodium chlorate process. We have been pursuing several opportunities in the hydrogen market that will allow us to fully monetize these hydrogen strings.

Our plant manufacturing sites use hydroelectric power, so we are generating green hydrogen, which is important from an ESG perspective and financial return. We are excited to leverage this unique position to help us reduce the global carbon footprint while also creating a sustainable earning stream.

I'll now spend a few minutes talking about the operational excellence initiatives, we've been working on. Starting with productivity and reliability initiative that we initiated in 2020, we are making progress on a number of projects that will help us reduce waste and our business.

You can read some of these projects on the slide. The projects are critical to generating sustainable earnings and will help offset from some of the inflationary cost increases going forward.

These projects have become even more important as inflation was picked up in the last quarter. We remain committed to supporting these initiatives with the ultimate goal to develop a culture of continuous improvement that leverages the best practices and technology, to drive improved performance.

I would now like to discuss our ESG approach and how we will be implementing systems company-wide to help us track our performance. Targets will be set and integrated into our long-term strategic planning, which will include: environmental, such as greenhouse gas; waste and energy management; social; workforce and operational safety; emergency preparedness; and employee diversity and inclusion; governance, a focus on business ethics; management of our legal and regulatory environment and proactively governing our environmental and social issues.

Some of our recent ESG highlights include our focus on renewable energy, where 96% of electricity used after 17 largest facilities are generated from renewable hydroelectric sources in 2020. From a waste generation standpoint, over 75% of our industrial waste is high clay alumina or HCA.

In 2020, we repurpose 27% and reduced landfill costs. Our target for next year is to reprocess an additional 30% of our HCA waste.

And most importantly, on safety in 2020, employee injury frequency, excluding COVID was at a seven year low. This has created a culture, where our employee retention rate in 2020 was 86.6%.

So in summary, we are excited about the momentum we are seeing in the post COVID-19 recovery. Our earnings growth remains well positioned to benefit from the recovery.

Commercially, we will continue to pursue organic growth opportunities in Ultrapure and hydrogen. Operationally, we will continue to focus on driving productivity and reliability to reduce costs.

Additionally, we'll be a leading example for corporate ESG responsibility. These initiatives are critical to our business performance.

And we remain committed to seeing them come to fruition. In conclusion, we see a strong recovery in many parts of our business, as we enter into 2022 with strong momentum and an improved balance sheet.

Thank you, Rohit and I will now be happy to take questions.

Hi, good morning, gentlemen. I had a few questions.

I'm going ask them one by one. Appreciate the reiterated color on the upside cost sensitive cost pricing, when caustic prices go up double in a couple of months.

Do you capture pricing that quickly? Again, I know, you'll get into discussions in November or December?

Is that – does that work for you to capture the benchmark or when you have such a high rate of increases over a short period of time you get demand distraction, you get much more intense discussions, how do they work?

So Joel, this is Scott. So right now, demand is very strong.

And so – so we do capture those price increases. But remember that – that our pricing – our pricing on costing is generally set on last quarters, the average for last quarter caustic price.

Sorry. I'm asking for Q1?

I'm asking for Q1 pricing, exactly. Sorry to interrupt.

I'm asking for November and December early December IHS benchmarks, doubling in a couple of months, can you capture that for Q1 will the discussion be more intense?

I believe we can capture that.

And then you raise NSU production this year to the current 90,000 times been its been higher, to see in the last few years. What will NSU production be next year?

Can you keep that 190 rates going until the turnaround in North band? And then and then what will production be 2020 do you think?

Yeah. So, in 2022 Joel, we do have – turnaround at Northland, right.

So we lose some production there. So I think, we should still be able to be in that, 198-ish range.

Because the ones the plant harder for the rest of the year and just take the downtime for probably in Q2 when we do our turnaround?

That's helpful. And what was corporate cost of like it 2022?

So we should be back. I mean, there's been a lot of noise.

So I'll qualify my response that the outcrop is one that is hard for us to give an accurate response, I would say that, generally our normal run rate is between $65 million and $70 million. And then we'll have to see where they’ll depends on next year.

And they'll depend on outperformance and so it could be a bit higher than that based on how they perform.

And just finally, if I understand your color on WSSC. So we should expect a margin contraction and then as the annual contracts for alum that keep rolling, then you should get margin expansion across 2022 later in the year.

Is that makes sense.

Yes. And that's really, if you look back at 2020, that's really what happened in that year.

Thank you.

Yes, thanks, guys. Just a question on the ultrapure side to start, it sounds like you've been able to fill that book a little bit sooner or faster than expected.

Is there been one or two customers that have stepped up for that production volume or what's changed and it's allowed you to get back to fill the holes that?

So, yes, we have filled up our business faster. If you remember, at the beginning of this year, I said it might take 18 months to or more.

And we've done that, and actually a little under 12 months. So what's driving that I think is just the strong demand for chips.

So number one, it's the strong demand for chips. And there's a shortage of acid in the US.

So imports have to come in order to meet the full demand, imports coming in, have been infected or affected by the supply chain industry disruptions that we've all seen. Number two, Chemtrade made improvements in a quality.

We invested capital during 2020 to upgrade our quality, and I think it took time to get that approved by our customers, including new customers. But we've seen -- we have -- the customers have approved the material after we've made quality improvements.

And we're seeing the benefit of stronger volume. So we have new customers that we've brought on, that we've gotten qualified.

And so we have increased both that existing customers as well as new.

Okay. Helpful.

And if I'm thinking about the margin profile for the new volume, or the new customers, the ultrapure market is pretty opaque, I think for most of us. So, is there been a tightening in that market?

And should the new volumes that you're recovering with here? Should they be at better margins than prior, or is it just the recovery of the volume, or the earnings you'd lost earlier?

I'm trying to get any differential to the new customer lines and the margin perspective?

So I would say right now equal to two, the margins that we have, let's say, in 2019, and 2020. We are seeing competition coming in with imports.

So there's two things going on. There's competition coming in with imports, but there's also improvements that we're making in quality.

And so I think we are -- we feel that products that have improved quality should have higher prices. So the market is out bettter.

I can just add one thing to that, Steve. So what's going to be actually interesting is, when you look a couple of years out, we know there's going to be additional capacity required in the US.

And that's what's going be interesting is as you look at pricing based on that reinvestment economics, logically pricing should go up once we get that new capacity coming in, because we're now competing with older assets, by and large, and then there'll be -- should be a pricing reset three years out definitely.

Okay. Can you just remind us what the hit was?

I think you stated it back at the time when the customer way to opened up, but what was a rough hit on this time that you remember?

So we didn't get it actually quantified, what we had said was that if you look at SPPC 80% of SPPC is the three types of acid. And within that about a quarter of it was Ultrapure.

And this was a very significant customer. So I think that's where we left it.

And I think we didn't really go much deeper than that.

Okay, brilliant, and just one last one, if I may, as you referenced some modest up-tick on volume side, is it demand is recovering? I mean, how are you thinking about sort of the opportunity there, from recovery standpoint, and any pricing benefits that you might be seeing?

Well, so let's, this is a Scott. We are seeing a modest up-tick in volume.

I mean, it's a couple of percent up-tick in volume. But I'll also say that raw material prices are going up.

And so pricing should at least follow that.

Okay, so a flat margin profile at best was some of the cost inflation, but better volumes on the margin?

Yes.

Okay. That's helpful.

Thanks. I'll jump back in queue.

Good morning.

Hey, David.

Just looking at the Ultrapure again, I think initially, when you're sort of thinking about this, you're contemplating perhaps bringing on a partner to get you down to sort of five nanometre capability and that sort of thing. So how does that fold in?

What is the capability that you're going to have to Cairo to kind of get to the smaller scale overall? And maybe just kind of give us the spread of the timing of the CapEx over the next couple of years?

Okay, great. So, we have been considering a -- we have considered a partner and -- but we chose not to go with a partner for the Cairo expansion.

Our team has been working on the design of a plant for over 18 months. And as I previously mentioned, we made improvements to our production process in 2020, and even some in 2021.

And we've seen good results from that that gave us confidence that we could -- that we can design that this facility to meet the demands of customers for the new fab plants. We have been working very closely with those fab plants.

And, and again, that's why we have the confidence that we can do that. Now, that being said, the expansion in Cairo is the first expansion of more expected to come.

And so we're certainly not precluding or excluding working with a partner on it. Let's say that the next expansion project, which could be quite sizable.

Okay. And to be clear, so just when you talk about the new fabs coming in, so you can get down to five nanometer and below?

Yes.

Okay. Very good.

Yes.

Go ahead, Scott.

That’s exactly what we're -- that's what this plan is targeted for.

Very good. Okay.

And the spread of CapEx, probably Rohit.

Yeah. So, I think we will be starting this up in, let's say, middle of 2022-ish.

And then, we expect to get online by 2024. So you can take it from there, and as we get closer to the plans, we will give you a little bit more granularity on the actual spend on the CapEx.

Okay, very good. And you're up to your guidance a bit this year, looks like your $5 million came from caustic, and about $2 million, a bit of recovery on FX here.

But as you contemplate, I know, I don't know, when you think about -- you're going to be thinking about putting 2022 guidance, but you're in a bit of a conundrum here, because obviously, with the blazing hot prices that we're seeing in chemical space, little bit of rollover recently. How do you think about that in terms of setting your guidance for next year timing, and you've got obviously caustic chlorine, hydrochloric merchant region, ultrapure, all working, now a chlorate recovery.

So other than water, and just chlorate pricing in a few other small areas, things seem to be firing on all cylinders, and maybe just talk about how -- what we should be thinking of? I mean, can you get to those numbers that we talked about in the past, like, 340 350 in EBITDA?

So I'll start with that, and then I’ll ask Rohit to add some color on that. Simply the biggest unknown that I feel that we have right now is what's going to happen to caustic soda, caustic soda has gone basically in 10 months from $190 up to $900, right.

And so it was just an explosive run up, however, last week, it fell from $900, down to price in the $500s, I think in -- where it's going to settle out? We don't know.

We certainly don't know. And so we're going to give ourselves some time and continue to study this market.

And that's the biggest unknown, everything else, I think we feel like we have a good handle, it looks as good as we can on what's going to happen next year. But caustic, it's a very difficult commodity to forecast.

Okay. And when do you -- when are you putting out the 2022 guidance?

I mean, I'm sure it's probably going to be 4Qs, you're going to make sure about this, or how you're going to…?

We might do it a bit earlier than that. We might actually do that this in January, maybe middle to late January is when we'll probably put it out.

So we won't wait until the annual results.

Got it. Okay.

And congratulations on the sale, especially chemicals, and I think Rohit, that you'd, sort of, mentioned in the past that you might be able to get improved terms with respect to rate, term and covenant. And as your debt load eases, maybe you can talk about that, and just a setup on the balance sheet?

Sure. So, when the pandemic started, we went out and got modified covenant package just to be safe.

And so clearly, we don't need that now that we've paid down the debt using the proceeds, even removing the earnings from specialty chemical business. So, we will be most likely talking to our lenders to modify the covenants to a more traditional covenant package.

And in that, when we got the relief, our borrowing costs went up by 50 basis points across the grid. So, we fully expect to roll that back and go back to traditional governance package.

And we’re also looking at -- we've got three years left on the term. The Canadian lending market is pretty flat to being pretty normal.

So, five year, 10 years are pretty common. So we look at whether we -- what extensions we do there.

And finally, we look at the size of the facility to because the facility is quite large and now we’ll have a very large undrawn revolving facility. And so, we will look at whether that makes sense or not to say some fan bases, et cetera.

So there'll be a few things going there. But all in all, I think the balance sheet is still -- is definitely in a lot better shape.

We still would like to get that down, total back down a little bit. And as you know, we do have these organic growth opportunities.

So clearly, we want to maintain the flexibility. So we can fund these organic growth opportunities too.

Very good. And last one for me, just and hand the line over.

Scott, maybe think about the chlorine prices have started to check back as well. And any central demand supply factors that play there in the market?

And does that -- when you look at the equation of chlorine versus hydrochloric acid, does that make you consider burning more hydrochloric acid because the chlorine market's been very robust as well. So, how do you think about the balance of converting that into hydrochloric acid?

Yes. So historically, there's been a very clear winner for us.

And that's HCL in the fracking industry in Western Canada. That was by far our preferred outlet for the chlorine molecule.

During the past year, as the chlorine market has tightened up, chlorine prices have come up nicely. And so, I'll say the clear advantage of HCL has not been as strong, so that that's not been as strong.

Right now, we see, certainly, as we look out for the next six months, it appears to us that the chlorine market is going to stay pretty tight. So that's what it looks like.

And we'll see how that plays out. But, we also see right now, with high oil prices, we're beginning to see fracking activity, not beginning, we've seen that fracking activity and fracking demand is picking up.

And so -- and that's also pushing up HCL prices, so that I expect to continue as well. And so, we might find ourselves well, I think we'll still find ourselves where our preferred outlet is HCL into the fracking industry in Western Canada.

Excellent, very helpful. Thanks, Scott.

Thanks, Rohit.

Welcome.

Good morning.

Good morning

Good morning

I want to go back to the ultrapure market and just any commentary you have on supply dynamics over the next say three to five years, whatever capacity is being built?

So the capacity is being built. The demand over the next three to five years should increase by more than 75% I would say.

A 75% increase in COVID-19, which is very, very strong. So that would be -- that would be in line or maybe even slightly conservative relative to the announced fabrication expansions coming from the major players here in the US and that would include TSMC, Intel, Samsung and others.

So, if you look at their -- if they bring the fans on or as they bring the fans on per their announcements the market should have, well the market demand will grow by 75% or more. Now in terms of expansions there -- our expansion in Cairo, but clearly the market is going to -- is going to need more significant expansions.

And so, my comment was that this is our first inhouse expansion, in fact to have more coming out before law.

Sorry in 75% increase in total demand and how many tonnes of that?

Yes. So that's going to be in the increase so let's say of 75, that be 75,000 tonnes.

Maybe just turn to the chlorate market. I know the complaint historically has been lack of rationalized -- rational behavior within the industry.

What are the current dynamics right now?

I think we are you know -- we're still -- what the answer is that was there were the 2 sales that took place of the 2 businesses obviously and during those sale processes there was some irrational behavior. So, I think we’ll get a better sense of this, I think too, when there are a few, when you see some contract renewals and we see, how people are going to deal with the increase in energy costs principally, and because, people are behaving rationally, they should definitely be passed through and so I think it's a bit early for us to tell because the one of the sales concluded midway through this year.

So we'll really see next year and we'll get a good sense.

So expect clarity, what we are getting it next year?

I would say by middle of next year. Because these are not, are not calendar contracts, they do come up at different times.

Okay. Last question here is just on alumina prices and I know you talked about it reverting back to historic levels.

When do you think that'll be?

Depend on the trajectory of the -- because you're playing a catch up game, right? So, if raw materials keep escalating, then you keep falling, you don't catch up.

So really, it comes -- will depend on when raw material costs stabilize. Once they're stabilized, probably I'd say, a few months after that -- a couple quarters after that is when we start to actually see benefit of lower costs.

So a couple years of lower margins, or how do you think about that?

We have to see what happens, if raw materials let's say – raw materials stabilize the middle of next year, then by end of next year, we should be kind of starting to see the recovery in our selling price. But again, if the materials keep going up, then you know, we could keep deferring the catch up by let say 6 months.

Thank you guys.

Thank you.

Hi, good morning. Thanks for taking my questions and congrats on the good quarter.

Question for me. I'll start from the Ultrapure extended capacity.

I just wanted to clarify that 60% increase at the care facility, how much does that represent an increase on your overall production of Ultrapure?

Yeah. So we have not shared, let's say our total capacity.

Let's say our total capacity north of the capacity of our individual size. And so, I don't plan to share that right now.

But again, we're -- what we are sharing is that the investment is going to be $50 million, and we're expecting or targeting a 25% return on that.

Okay. And if I may a follow-up on that.

Scott, have you had any preliminary discussions to sell that capacity or is this too early at this point?

No, we are well into the discussions to sell for capacity.

Okay. That sounds great.

And next couple of questions for Rohit actually. If you can please remind us, what is your target debt level that you've been targeting?

So, our -- yeah, so we'd like our total debt, which includes convertible debentures to be below four times EBITDA and our senior debt to be 2.5 or below. So senior debt we're -- once we've paid off the using the proceeds of the sale, we are pretty close to that or will be pretty close to that.

And total debt we’re still got a bit of ways to go, but there's no upcoming maturity. So this is really more of a longer term target for us.

Okay. Great.

Thanks. The last one for me with everything on demand actually going up for most of your products, how are you thinking about dividends for next year, or a distributor I should say?

So, I mean, clearly, our board looks at that all the time and we have our views on it as well. But I think given our debt, given that we have organic growth opportunities, we believe that for now, the distribution that was set is a good level and there are better uses of capital, but time of course, our board and we will look at it.

But I think at this stage, the better use of capital is to reduce debt to have flexibility because we do have some interesting organic growth opportunities, which is kind of different from the historic view.

Okay. That’s great.

That’s it for me. Thank you.

Thank you very much. And good morning, everybody, and congrats on the good quarter.

Just two questions for me. Number one, the company is clearly moving out of recovery mode into slowly growth mode, and you've committed to this $50 million project right now, which is great.

I guess my question is, as we look forward, if you had a bigger war chest, where would you be putting that money right now? Where are there low hanging fruit opportunities to get return similar to that 25% that you just mentioned?

Can you maybe just talk about the segments or the products or maybe even the time in terms of where you'd like to see those investments being made?

Sure, Ben. So the number one is ultrapure.

So the expansion that that we're doing in Cairo is the first expansion. But given the expected total demand in the market, the North American market for ultrapure, the market is going to need a sizable expansion.

And so that is a project that we are looking at very closely, and thinking about what's the right way to meet the needs of the market. So with that number two.

Number two, would be our hydrogen. So we have – we previously announced, they're our first commercial deal, if you will, for hydrogen at our facility in British Columbia.

We have our – the hydrogen that we produced in Brandon is five times the amount of the hydrogen that's in BC. And so there are a number of options that we are looking at for hydrogen that – all of which would require – would require some capital and bring that to marketplace.

But again, as we've said, it's green hydrogen, which should commend a premium in the market, and there are nice opportunities, but we're evaluating those opportunities as well, and thinking about what's the right topic just by bringing that to the marketplace, and do that in a way that we can balance growth in the company with leverage. And then number three would be some of the specialty products that we have in our water treatment business.

So we have nice opportunities in the pack in ACH market, we have other specialty products that we're developing. Our capacity is – our production is – the demand right now is very close to our capacity with some of those products.

And we have opportunities, we think that we're looking at to add capacity, and so add significant capacity in water treatment. So those are three main areas that we're thinking about all of which would be capital but would be nice growth projects for the company.

That's a great answer. And before I get to my second question, just to pull up on this.

Are the returns that you're projecting similar to the 25%, or are they more kind of mid-teens or how do you think about, I mean, you said, number one, two, and three. Do you want to put a little bit into everything to diversify or is it really you want to finish number one first, and ultrapure before moving on to hydrogen, et cetera?

Right now it's still little early to say. I would say that in the ultrapure we -- you know, that I think 25% is a reasonable number there.

And then the others, that I think -- that's a good number. It's a good number to strive towards -- strive to meet, like but so that's all.

That's, I think that's enough for now.

Okay. That’s perfect.

Let me just move on quickly to my last question, which is, when you were thinking about kind of mid cycle run rate margins or EBITDA margins for the three segments. You know, when I look at that SPPC, you guys have done a great job being consistent in that 30% area?

You know, plus or minus a little bit over quite a long time. Do you expect that to continue in the water treatment segment?

Again, same thing, you’ve been in the kind of low 20s. And that's a step change higher than what we've seen in the past few years.

Sorry, going back going 2019, 2018, 2017. How do you expect that to be in the long run?

Obviously, I'll leave the EC segment, because that's a little bit more volatile. But can you talk about the water and the softer segments?

Yes. I think there was fair, I think, in the water segment, the thing to keep in mind, although one day a huge factor though is the Specialty Chem business, you know, was at a higher margin as you'd expect.

Right.

But, I mean, that’s how make a huge difference. But the water business, I think, you know, once we get back to, you know, raw material being stable then I think there's no reason why we shouldn't be back to those kinds of margin levels.

And again, in the sulfer in the SPPC segment there's nothing structurally that's different that should not allow us to be back at those mid-cycle margins.

Okay, so then just an EC, like, roughly 30% is kind of the run rate that we should be thinking about when everything is back to normal.

So, you're talking about EC?

Yes, yes. Sorry.

Just asking on EC?

EC is a tough one, right, because we have to see what does a mid-cycle look like.

Fair enough.

So, that one actually-- down here.

Yes, that's fine. Thank you very much.

Welcome.

Yes. Sorry, just one follow-up on the Ultrapure opportunity.

Are you able to provide us with any context as to how these new contract discussions might be structured? Are they going to be multiyear agreements?

And will pricing the resets on a regular basis? I'm just trying to understand how the margin profile is going to vary with some of this new business, if at all, or how consistent you think it might be relative to where you've been in the past?

Yes. So, what I can share right now is that what I see is a longer term commitment, which is different than what we've had before.

And so by longer term, I'll say multiyear agreement, coupled with stable demand -- I'll say a growing demand profile, not stable, but less stable in terms of demand. So, we have seen volatility in the past, which, if we're going to make this investment, we don't -- I don't want to see that volatility if we're going to make this investment.

So that's what we're structuring our longer term agreements. Of course, was also tied into that our future quality requirements.

So that's a piece of it, as well.

And just to I understand that business a little bit better, like with the merchant business, you're exposed to some degree of sulphur prices. What are the exposures there to think about for the input cost perspective that could push your margins around a little bit if at all?

Yeah. I think it's the real input there as input sulphur and typically in the SPPC segment, we are able to offset that maybe takes a bit of a lag, but generally speaking, that industry is pretty good at passing through sulphur.

And of course, we've got the byproduct that we do sharing of selling price changes there. The other input cost is a bit of energy that we use for our Regen business, but most of the Regen contracts are such that you pass-through change the natural gas.

So, there is -- a way the volatility there is not so much driven from the input side. It could really more from the pricing side.

Okay, helpful. Thank you.

Sorry, no further question at this time. I'd now like to turn the conference back to Rohit Bhardwaj.

Thank you for your attention, and Scott, do you have any closing remarks?

No. I just like to say thanks to everyone for your time, and have a great rest of the day.

Okay, bye.

Bye.