Superior Plus Announces Record Fourth Quarter, Achieves Full-Year Results In-Line with Guidance and Expects Adjusted EBITDA Growth of 5% in 2024
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Record fourth quarter 2023 Adjusted EBITDA(1) of
$213.6 million , a 17% increase from the prior year quarter -
Certarus achieved record fourth quarter Adjusted EBITDAof
$47.2 million , a 21% organic increase from the prior year quarter -
Strong fourth quarter net earnings of
$77.5 million and full-year net earnings of$77.0 million , representing earnings per share accretion from ($0.58 ) in 2022 to$0.23 in 2023 -
Full-year 2023 Pro Forma Adjusted EBITDA(1) of
$643.3 million , in-line with increased guidance -
Certarus achieved full-year 2023 Adjusted EBITDA(1) of
$187.0 million , in-line with increased guidance, and expects Adjusted EBITDA growth of 15% to 20% in 2024
In announcing these results,
(1) Adjusted EBITDA and Pro Forma Adjusted EBITDA are Non-GAAP Financial Measures. See “Non-GAAP Financial Measures and Ratios” section below.
Segmented Information
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Three Months Ended |
Years Ended |
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(millions of dollars) |
2023 |
2022 |
2023 |
2022 |
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EBITDA from operations(1) |
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113.8 |
116.7 |
302.5 |
284.9 |
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Canadian Propane Adjusted EBITDA(1) |
50.2 |
58.3 |
133.9 |
144.8 |
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Wholesale Propane Adjusted EBITDA(1) |
16.3 |
22.7 |
63.4 |
48.7 |
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Certarus pro forma Adjusted EBITDA(1)(2) |
47.2 |
– |
187.0 |
– |
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227.5 |
197.7 |
686.8 |
478.4 |
(1) EBITDA from operations and Adjusted EBITDA are Non-GAAP Financial Measures. See “Non-GAAP Financial Measures and Ratios” section below.
(2) Certarus Adjusted EBITDA is pro forma for the year ended
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Financial Overview |
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Three Months Ended |
Year Ended |
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(millions of dollars, except per share amounts) |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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985.8 |
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1,070.3 |
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3,353.7 |
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3,379.8 |
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Gross Profit |
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513.7 |
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429.2 |
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1,612.9 |
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1,189.8 |
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Net earnings (loss) for the period |
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77.5 |
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63.0 |
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77.0 |
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(87.9) |
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Net earnings (loss) for the period attributable to Superior per share, diluted |
$ |
0.27 |
$ |
0.27 |
$ |
0.23 |
$ |
(0.58) |
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EBITDA from operations(1) |
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227.5 |
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197.7 |
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595.1 |
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478.4 |
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Adjusted EBITDA(1) |
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213.6 |
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182.6 |
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551.6 |
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449.8 |
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Adjusted EBITDA per share(1)(2) |
$ |
0.77 |
$ |
0.79 |
$ |
2.13 |
$ |
2.00 |
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Adjusted EBTDA per share(1)(2) |
$ |
0.63 |
$ |
0.64 |
$ |
1.66 |
$ |
1.61 |
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Net cash flows from operating activities |
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37.8 |
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35.3 |
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550.0 |
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248.7 |
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Net cash flows from operating activities per share, diluted(2) |
$ |
0.14 |
$ |
0.15 |
$ |
2.12 |
$ |
1.11 |
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Cash dividends declared on common shares |
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44.7 |
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36.2 |
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170.5 |
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140.5 |
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Cash dividends declared per share |
$ |
0.18 |
$ |
0.18 |
$ |
0.72 |
$ |
0.72 |
(1) EBITDA from operations, Adjusted EBITDA and Adjusted EBTDA are Non-GAAP Financial Measures. See “Non-GAAP Financial Measures and Ratios” section below.
(2) The weighted average number of shares outstanding for the three months and year ended
Leadership Team Update
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As part of the company’s continuing evolution as a leading low-carbon energy distribution company, Superior has taken further steps to transform its leadership team. The role of Chief Operating Officer (COO) for the propane distribution business has been eliminated and
Andy Peyton , who fulfilled this role, has left the company. This change provides a flatter organizational structure, greater visibility into the propane business and closer working relationships between the company’s leadership and the propane teams.
2024 Expectations
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Superior is expecting Adjusted EBITDA growth in 2024 of approximately 5% compared to 2023 Pro Forma Adjusted EBITDA of
$643.3 million (USD$475.5 million ). See below for key assumptions related to this expectation:
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2024 Expected Growth |
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Certarus Adjusted EBITDA |
15% - 20% |
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1% - 5% |
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Canadian Propane Distribution Adjusted EBITDA |
1% - 5%(1) |
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Wholesale Propane Distribution Adjusted EBITDA |
1% - 5%(2) |
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Capital Expenditures(3) |
~ USD |
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Corporate Operating Costs(3) |
~ USD |
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Leverage Ratio(3) |
~ 0.2x reduction |
(1) Reflects removal of ~ USD
(2) Reflects removal of ~ USD
(3) Capital Expenditures (2023 – USD
Additional key assumptions for the above forward-looking information can be found under the “Financial Outlook” sections in Superior’s 2023 Fourth Quarter MD&A.
Debt and Leverage Update
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Superior is focused on managing both Net debt and its Leverage Ratio. Superior’s Leverage Ratio on
December 31, 2023 was 3.8x, compared to 4.1x atDecember 31, 2022 . Over the past several years, Superior was in an aggressive growth through acquisitions phase that supported an elevated targeted Leverage Ratio range of 3.5x to 4.0x while it executed on and integrated acquisitions. Going forward, Superior will employ an organic growth focused strategy that will seek growth through self-funded reinvestment in the businesses. As a result, over the next several years, the company is targeting to reduce its Leverage Ratio each fiscal year, with a long-term target of ~3.0x.
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Effective
January 1, 2024 , Superior will begin reporting results inU.S. dollars to improve year over year comparability given foreign exchange rate fluctuations, as the majority of its business activities are denominated inU.S. dollars. -
Historical comparative financial information in
U.S. dollars can be found in Superior’s MD&A for the year endedDecember 31, 2023 .
Quarterly Dividend
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Superior is declaring a quarterly common share dividend of
$0.18 per share, payable to shareholders of record as ofMarch 29, 2024 . The common share dividend will be payable onApril 15, 2024 .
MD&A and Financial Statements
Superior’s MD&A, the unaudited Consolidated Financial Statements and the Notes to the audited Consolidated Financial Statements as at and for the year ended
2023 Fourth Quarter Conference Call
A conference call and webcast to discuss the 2023 fourth quarter and full year financial results will be held at
About
Superior is a leading North American distributor of propane, compressed natural gas, renewable energy and related products and services, servicing approximately 936,500 customer locations in the
Forward-Looking Information
Certain information included herein is forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking information may include statements regarding the objectives, business strategies to achieve those objectives, expected financial results (including those in the area of risk management), economic or market conditions, and the outlook of or involving Superior and its businesses. Such information is typically identified by words such as “anticipate”, “believe”, “continue”, “estimate”, “expect”, “plan”, “forecast”, “future”, “outlook, “guidance”, “may”, “project”, “should”, “strategy”, “target”, “will” or similar expressions suggesting future outcomes.
Forward-looking information in this document includes: Superior’s future financial position, expected 2024 Adjusted EBITDA, expected Capital Expenditures, expected Corporate Operating Costs and expected Leverage Ratio for 2024.
Forward-looking information is provided to provide information about management’s expectations and plans for the future and may not be appropriate for other purposes. Forward-looking information herein is based on various assumptions, and expectations that Superior believes are reasonable in the circumstances. No assurance can be given that these assumptions and expectations will prove correct. Those assumptions and expectations are based on information currently available to Superior, including information obtained from third-party industry analysts and other third-party sources, and the historic performance of Superior’s businesses and businesses it plans to acquire or has acquired. Superior cautions that the assumptions used to prepare such forward-looking information, including Superior’s expected 2024 Adjusted EBITDA, expected Capital Expenditures, expected Corporate Operating Costs and expected Leverage Ratio for 2024, could prove to be incorrect or inaccurate.
In preparing the forward-looking information, Superior considered numerous economic and market assumptions regarding foreign exchange rates, competition, expected average weather and economic performance of each region where Superior and Certarus operate, including key assumptions listed under the “Financial Outlook” sections in Superior’s 2024 Fourth Quarter MD&A. Additional key assumptions or risk factors with respect to the forward-looking information include, but are not limited to no material divestitures; anticipated financial performance; current business and economic trends; and the amount of future dividends paid by Superior.
The forward-looking information is also subject to the risks and uncertainties set forth below. By its very nature, forward-looking information involves numerous assumptions, risks and uncertainties, both general and specific. Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, as many important factors are beyond our control, Superior’s actual performance and financial results may vary materially from those estimates and expectations contemplated, expressed or implied in the forward-looking information. These risks and uncertainties include risks relating to incorrect assessments of value when making acquisitions, failure to realize expected cost-savings and synergies from acquisitions, increases in debt service charges, colder average weather than anticipated, the loss of key personnel, fluctuations in foreign currency and exchange rates, fluctuations in commodity prices, increasing rates of inflation, inadequate insurance coverage, liability for cash taxes, counterparty risk, compliance with environmental laws and regulations, reduced customer demand, operational risks involving our facilities, force majeure, labour relations matters, our ability to access external sources of debt and equity capital, and the risks identified in (i) our MD&A under the heading “Risk Factors” and (ii) Superior’s most recent Annual Information Form. The preceding list of assumptions, risks and uncertainties is not exhaustive.
When relying on our forward-looking information to make decisions with respect to Superior, investors and others should carefully consider the preceding factors, other uncertainties and potential events. Any forward-looking information is provided as of the date of this document and, except as required by law, Superior does not undertake to update or revise such information to reflect new information, subsequent or otherwise. For the reasons set forth above, investors should not place undue reliance on forward-looking information.
Non-GAAP Financial Measures and Ratios
Throughout this news release, Superior has identified specific terms, including ratios, that it uses that are not standardized measures under International Financial Reporting Standards (“Non-GAAP Financial Measures”) and, therefore may not be comparable to similar financial measures disclosed by other issuers. Information to reconcile these Non-GAAP Financial Measures to the most directly comparable financial measures in Superior’s annual financial statements is provided below. Certain additional disclosures for these Non-GAAP Financial Measures, including an explanation of the composition of these financial measures, how they provide helpful information to an investor, and any additional purposes management uses for them, are incorporated by reference from the “Non-GAAP Financial Measures and Reconciliations” section in Superior’s 2023 Fourth Quarter MD&A dated
Adjusted EBITDA is consistent with the Segment profit (loss) disclosed in Note 26 Reportable Segment Information of the audited consolidated financial statements for the year ended
Adjusted EBTDA is calculated as Adjusted EBITDA less cash interest expense. Cash interest expense is the sum of interest on borrowings, interest earned on Vendor Note and interest on lease liability which are found in Note 19 Supplemental Disclosure of consolidated statements of net earnings (loss) in the audited consolidated financial statements for the year ended
Corporate Operating Costs are defined as Corporate Segment profit (loss) disclosed as Note 26 Reportable Segment Information of the audited consolidated financial statements for the year ended
Capital Expenditures are inclusive of purchases of property, plant and equipment and intangible assets, net of proceeds on disposition of assets and lease additions.
Leverage Ratio is determined by dividing Superior’s Net Debt by its Pro Forma Adjusted EBITDA, both of these components are Non-GAAP Financial Measures. Proforma Adjusted EBITDA is Adjusted EBITDA calculated on a 12-month basis giving effect to acquisitions adjusted to the first day of the calculation period. Proforma Adjusted EBITDA was calculated by taking the sum of the year ended
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