Chemtrade second quarter 2026 results. Our news release, financial statements, presentation and prepared remarks have been posted on our investor relations website at chemtradelogistics.com.

Before we proceed, I would like to remind everyone that today's call will contain certain forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties. Actual results may differ materially from those expressed or implied.

Additional information regarding these risks, uncertainties and assumptions, as well as information on certain non-IFRS and other financial measures referred to today, can be found in our disclosure documents filed with the securities regulators and available on sedarplus.com. One of the non-IFRS measures we'll refer to today is adjusted EBITDA, which is EBITDA modified to exclude non-cash items, such as unrealized foreign exchange gains and losses.

While our slide deck and disclosure documents refer to adjusted EBITDA, we may refer to it as EBITDA during the call. With that, we would now like to open up the lines for your questions.

Vincent, you may open up the line for Q&A.

Oh yeah, hi team. Thanks for the time.

It's Robert on here for Steve. Just wanted to start off on the water solutions side.

You noted that sulfur has risen further in Q3, although you're seeing some softening through the balance of the year. Just given the lag in repricing the water solutions book, when do you now expect the maximum margin pressure from sulfur to kind of occur?

Then as contracts roll over, when should we expect kind of the margin profile to begin showing a meaningful sequential recovery?

Thanks, good morning, Robert. Appreciate that.

This is Scott. Sulfur as we know has jumped up considerably, close to all-time highs.

The outlook for sulfur is that it's at its peak, and then at some point here before long, it's going to come down. We obviously don't know that.

We'll see. Our expectations are that sulfur is not going to go higher.

That's our expectation, and that it will fall. As you know and others know, as we sell to city municipalities across North America, we sell on annual fixed prices.

We sell to over 1,000 customers. Our contracts are being renewed all the time, every month.

The contracts that are being renewed right now are built and based off of our outlook for sulfur, which is at close to an all-time high. Those contracts are rolling on, and they'll be good for a year.

Our team, as we work very aggressively to raise price when, as we can, based on raw materials, and then, in our water business especially, we tend to hold on to those price increases over time, as raw materials fall. We're not expecting future increases, but every contract that's coming on is based off of the latest high raw material profile.

Got it. Thanks.

That's great color there. Then, just shifting to North Van quickly.

Of that kind of $75 to $125 million capital requirement that you guys disclosed, can you help us just frame the expected phasing of that spend over the next several years? Then how much should we think of that balance as truly incremental capital versus maintenance or growth spending that would otherwise have kind of been incurred there in North Van over those years?

Understand. Our plan had been to deploy that capital over roughly a four-year period, and that would be done primarily in conjunction with our turnarounds, which would be every other year.

Our plan had been to deploy that capital primarily in '28 and in '30. As we deploy that capital, we would also be spending a little bit less on our maintenance capital there, and so there is some overlap between the capital that we have here for the safety upgrades, as well as, let's say, our normal turnaround costs.

That's what we had planned. With the injunction that's been filed, what we're expecting is that there's going to be a hearing based on that injunction, we believe next year in '27, and then a decision would come 4 to 6 months after that.

If the decision is favorable for that, that would still work out for us with the plan that we had to deploy capital in '28 and '30. If that timing did not work out, then that could have an impact on that '28 spend.

I think the one thing I'll add to that is, part of our capital that we are put in place is to put in liquefaction capabilities on our own land, so that'll be brand new equipment. We'll stop using the older equipment on the port side, so that just tells you in the future, that will require less maintenance for the first several years because it'll be brand new equipment.

That's great. Thanks for the color all.

I'll pass the line. Thank you.

Hi. If we did that CapEx plan at North Van '28, 2030 kind of lumpy, would we expect CapEx the next four years to look like something like $185 million next year, 235 in '28, 185 in '29, what did I say, 235 in 2030, something like that?

Joel, one of the things is, there could be one disconnect between us recording CapEx and cash flow because we may be ordering some long lead-time items, et cetera, it's hard to tell you exactly how the cash flow will line up. As we get further into the engineering in the next few months, we can definitely provide a little bit more granular timing for you, too, you can model it out.

That's right. I think we can be clear with that, but I do want to emphasize that, yeah, the spend particularly in '28 will be impacted based on the outcome of the injunction or the hearing that would be next year, so.

Okay. Your guidance is that EBITDA will be about flat with last year.

You're trailing down, I think $15 to $20 million EBITDA year-over-year through the first half of the year. You have to make that up in the second half of the year.

Can you talk about which of the businesses of segment story are you going to see that EBITDA growth the most, and maybe you can talk about Q3 versus Q4 cadence of further growth?

I think one thing to keep in mind is, in the EC segment, prices for chlor-alkali were trending down all through last year, all through 2025, which means that the first-half comparisons in '26 were often up against tougher comparables in '25. As those prices were declining during the back half of '25, and now they're kind of stable, we will be picking up some of that gap just because those lower prices were reflected in the second half of 2025.

Most of what we're talking about, that normalization will happen within the EC segment. We expect right now that the acid segment will continue to outperform last year, there'll be some of that coming from there.

A big chunk of that will come from EC.

Just to add on to that, we had a relatively heavy turnaround schedule in the first half of this year. That will be lighter and that's in our news release as well, as we look at the second half of this year.

Just sneak one more in. If we think about 2027, just building blocks for a bridge, we don't know caustic price, we'll be things like that.

Can you think of things that are clear sort of bridge items, like of course the $7 million for the North Van biennial turnaround won't be there next year, you'll get more from Ultrapure. Can you just give some building blocks for what '27 could like, what's it takes, ignoring commodity price movements?

Sure. That's right.

I'll I'll start, I'll start with, with water, and, and and I think that, that based on the movement of raw materials and and the fact that where our contracts are and what's happening with contracts that are rolling on right now, the I think I think it's fair to say that the outlook for water, will be, will will be strong. I think as you build your model, I would start with, with that.

I would, I would also build in, say, that, as we've highlighted Ultrapure is, we are ramping up supply to to two fabs, two chip producers in the second half of this year. I think that's that goes in there.

I think that, acid will continue to be strong. The the regen should continue to be strong.

That's good. We're obviously not going to have a turnaround in, in North Vancouver.

That's that's that. Then, like I I think it's fair to say, no one We don't know and no one knows what's what's going to happen with, with chlor-alkali, in particular caustic pricing.

What what we can share, what we can share is what the the industry experts look at, the the market experts for chlor-alkali show, and what we we know is that caustic pricing over time tend, or it it has very high correlation with, with oil, naphtha, and natural gas prices coming out of the Middle East. There and I think you go look at, there's very high correlation there.

So, the that would lead to, to some general opti- let's say, there the outlook is that there's there will be some modest pickup with caustic, and, and I think that's that's a reasonable assumption.

Thank you.

Hi, good morning. Scott, the potential hydrochloric acid demand growth that you pointed to as a substitute for sulfuric acid in certain industries, how meaningful could that be?

Hamir. A substitute for hydrochloric, I'm not sure, hydrochloric, I'm trying to think what comment I might have made.

So

I can follow up with Rohit after on that. The other question I wanted to ask about was I know Canfor's closing their Northwood mill later this year.

I'm

guessing you're freight advantaged to have been a supplier there. What percent of your EC volumes would likely need to be repositioned?

I'm guessing perhaps less favorable margins on wherever else you have to position it.

Look, we won't comment on any specifics with customers, but what we will say is that as we shared in our guidance, our volume outlook for chlorate for this year is generally flat with the outlook for this year, maybe slightly ahead. That's unchanged for the rest of this year.

As we look out into next year, won't give specific comments other than to say that it's possible that, it is in the news that Canfor is closing the Northwood mill. Possible that some of that volume might be moved to one of Canfor's other mills.

Won't give that or any specifics on that, but it's possible some volume would move there. We and the industry have seen mills continue to close, one to a couple a year for the past many years, and so that is continued to be built in to our model.

Over the past several years, the industry with the chlorate the industry has been rational, and I would expect that to continue to happen.

The only thing I'll add is, as you may recall from last year, we actually did discontinue producing sodium chlorate at Prince George, which was on site with Canfor. That was a decision we took actually last year, and so we are supplying chlorate from our one plant that is in Brandon, Manitoba.

We do some dissolving, as we had said in Prince George, but the freight advantage that you refer to is not as significant because we did discontinue producing at Prince George.

Okay. Fair enough.

Thanks. That's all I had.

I'll turn it over.

Thanks. Good morning.

I just wanted to go back to the North Van injunction and hearing. Just curious if you can elaborate who the other party is.

Is it residents of the region, or someone else? Just wanted to see how confident you are in kind of getting a favorable decision there.

What we can do

is

we can point you to the application for judicial review is actually a public document that you can look at. I don't think we want to get into kind of the specifics other than saying that what we said in our news release is that we intend to become joined to that action and basically defend it and oppose the relief being sought.

I don't think we want to get more specifics on that. If you are unable to find the judicial review, we can, after the call, we can send you a link to it, but it is public information.

Okay. Great.

Then, maybe just going back to the $75, $125 million CapEx, just any risk of that CapEx spend moving higher, or cost overruns, etc.? Just wanted to see the work you've done to lock down the scope and and/or pricing, just as you spend this over the next couple of years.

Gary, I would say that we feel comfortable with that range. That's a fairly broad range, and we do feel comfortable with that.

That's an initial number. Right now, our team is moving ahead, and we're pretty far along in the design phase of those several capital projects.

Then the next step after the design phase is to move into what we call detailed engineering, and from that we'd get a cost estimate, and we would start to pinpoint that number with a more narrow range than what we have there. With that, I think we feel comfortable with that range.

We are moving ahead with the detailed engineering work. We are also moving ahead to request the building permits from the district.

We want to go ahead and move quickly, request the building permits, get those approvals, and then make decisions about how we move forward with that spend primarily for '28.

Okay. Then, maybe as a related question, as this construction and upgrades are being done, any risk that the facility needs to be kind of paused as you're doing these upgrades, or kind of business as usual?

Our plan is to be business as usual. Our plan has been to do the majority of the work in '28 and '30, as I mentioned.

With our plan with that, there would be minimal to no impact on our regular business cycle.

Okay. If I can sneak just one more in, Scott, you mentioned, just on the caustic side, very high-level comments, but anything else that you can share in terms of dynamics there, expectations for pricing recovery later this year into next year, etc.?

The outlook is for gradual and modest increase in caustic soda, which, look, I think that makes sense, and it's rational, and we'll see if that plays out. The caustic market has been somewhat volatile.

I think a lot of the volatility has been coming from increased production of PVC in China, and we don't need to go into too many details there, but if you have questions, we could follow up with that. There has been an increase in production from what we've seen in China in PVC, and that has been having an impact.

As you and others know, in May of this year, we saw caustic prices jump by $150 a ton, they had been at $350 or a little lower in Q1. After the campaign in Iran started, those prices jumped up to $500, and there was a view that that was going to be in place for a while.

Then what we saw is that China got involved in the market, particularly with PVC, and caustic prices have fallen. I'll just leave it with that.

The outlook is for gradual increase in caustic soda prices, and we're hopeful that that's the case. If you want to discuss that further, we can certainly follow up with you.

Okay. Great.

Those are my questions. Thank you.

Good morning, everyone. Thanks for taking my questions.

Understanding that you wouldn't want to speculate on potential outcomes at this point, can you maybe comment on why you weren't named as a respondent in the judicial review?

What the applicant is asking for is the judicial review into the decision-making of the City Council. We are not part of that decision-making, so that's why we were not named.

We are going to be asked to be joined to that, because in the end, it does pertain to our facility. It's not unexpected that we wouldn't be named because it's really a review of the decision-making of the Council.

Understood. Thanks.

Then with the last of the convertible debentures eliminated, do you plan to accelerate your buybacks under the NCIB?

When we look at our capital allocation, we look at organic growth opportunities in front of us, we look at our distribution policy, and we look at, obviously for buybacks, and we look at leverage. We were buying very aggressively when our leverage was 1.7, but then we also did a very value-added acquisition of Polytec.

Our leverage now is 2.5, when we allocate stuff, we do kind of balance the whole thing. At this point, we feel the current rate of buying is consistent with our leverage targets and all the other uses of capital we have.

That's the only reason why we've tempered it a little bit from where it was when we were 1.7 times levered.

Got it. Thanks.

I'll turn it over.

Thank you.

hi guys. Thanks for the quick follow-up here.

Just on Cairo, how should we think about the utilization ramp there kind of through the back half of this year and into next year? Then the release mentioned that you're progressing with a couple additional kind of fab manufacturers.

How should we think about that as far as do you need those customers basically to hit your return utilization metrics, or is your existing kind of book of business sufficient to hit that? Thanks.

So, look, what I'll, the color that I'll add is, we are ramping up in the second half of this year sales, to two of, of advanced-node, chip producers in, in North America. We're we're very excited, with that.

I think this puts us this puts us on schedule, that we had for the for the ramp-up of the of the plant. Um, I think it is I think that's exciting news, and, we're we're qualified well to, to supply acids to the most advanced chips that are being produced in in North America.

I won't comment on, I'm not going to share comments in terms of, what's what's going to be the rate of of the facility, but as as we go into, I as we go into, 2027 and then to '28, our view is that, is is that Cairo will will be filling up, quickly. I'll just, I'll just leave it, at that.

We're excited, to be selling those to two of the most advanced node producers in North America. Then we, we continue to work with others, and we would expect, that we'll have other qualifications, as we move in into '27.

Great. Thanks so much.

I'll turn the line.

Okay.

Thank you, Vincent. I'd just like to say thanks to everyone for joining the call today.

Thanks to the Chemtrade team for the very strong results in Q2, and wish everyone a nice day. Thanks.