Superior Plus Outlines the “Superior Way Forward,” a Strategic Roadmap Targeting EBITDA from Operations of $700 Million to $750 Million in 2026

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TORONTO--(BUSINESS WIRE)--Superior Plus Corp. (“Superior”) (TSX:SPB) will outline today at its 2021 Investor Day the 2021-2026 strategic roadmap “Superior Way Forward” focused on accelerating growth, improving operational efficiency and maximizing shareholder returns. Our strategic roadmap which we have defined as the Superior Way Forward, is ambitious but we believe it is achievable, and is designed to capitalize on our strengths.


Main Objectives

  • Targeting EBITDA from operations between $700 million and $750 million in 2026
  • Accelerating growth in U.S. Propane Distribution through the planned execution of $1.9 billion of accretive acquisitions
  • Driving additional growth across the entire business through organic growth and operational improvement
  • Differentiating with a digital modernization strategy to position Superior as an optimized, digitally-based logistics business with best-in-class operations and customer experience
  • Focus on disciplined and dynamic capital allocation approach to drive shareholder returns

The key themes of the Superior Way Forward are:

  • Growing through acquisitions – consolidating a highly fragmented U.S. propane market and capitalizing on a robust pipeline of small and medium-scale acquisition opportunities
  • Continuous improvement – optimizing operational efficiency and investing in innovation and technology to drive improvements
  • Organic growth – employing effective sales and marketing programs to drive growth
  • Talent management – continue to attract and retain diverse top talent
  • Commitment to ESG – continued focus on the environment, commitment to safety and employee wellness
  • Strong balance sheet – long-term Total Debt to Adjusted EBITDA Leverage Ratio target of 3.0x to 3.5x and access to low-cost capital

The Superior Way Forward Summary

“We are setting out to become the leader in creating value through differentiation and best-in-class operations in the North American retail propane industry. We envision a Superior Plus that is one of the industry's most modern and sophisticated businesses, leveraging technology to improve our delivery efficiency and service offering in new and innovative ways,” said Luc Desjardins, President and Chief Executive Officer. “This commitment to innovation and best-in-class operations has uniquely positioned Superior as a buyer of choice in the propane distribution industry and is allowing us to accelerate our growth through the execution of accretive acquisition opportunities.”

Targeting $700 million to $750 million of EBITDA from operations by 2026

Superior has set a goal of achieving EBITDA from operations in the range of $700 million to $750 million in 2026 through acquisitions, continuous improvement, organic growth and an anticipated post-pandemic recovery in commercial volumes. This represents a 10% - 11% EBITDA from operations Compound Annual Growth Rate (“CAGR”) (1) from 2020. In addition, Superior is targeting generating aggregate Free Cash Flow in the range of $2.6 billion to $2.8 billion from 2021 to 2026.

These financial goals are based on Superior’s long-term operating plan and represent performance targets that management is seeking to achieve. They are driven by numerous expectations and assumptions and are subject to certain risks which are outlined in more detail in the forward-looking section below.

2021 Virtual Investor Day

Superior’s Investor Day will be held virtually on Tuesday, May 25, 2021 at 1 PM EDT. The presentation will be broadcast live via webcast with video and will be accessible by web browser. It will also be available on Superior’s website following the event.

Webcast attendees can pre-register to receive the web access information. Attendees may also register on the day of the event.

Event details:
2021 Investor Day – Superior Plus
May 25, 2021
Start: 01:00 p.m. Eastern Time (Toronto / New York)

Please click the registration link below to access the platform.:

https://onlinexperiences.com/Launch/QReg/ShowUUID=3EC7D901-BAE6-4FAE-9FEB-FA8AED30EE4A

(1)

EBITDA CAGR based on EBITDA from operations of $402 million for the year ended December 31, 2020, excluding the Specialty Chemicals segment.

About the Corporation

Superior is a leading North American distributor and marketer of propane and distillates and related products and services, servicing over 780,000 customer locations in the U.S. and Canada.

Forward Looking Information

This press release contains certain forward-looking information within the meaning of applicable Canadian securities laws which is provided for the purpose of presenting information about management’s current expectations and plans. Readers are cautioned that such information may not be appropriate for other purposes. Superior’s actual results could differ materially from those expressed in, or implied by, this forward-looking information, and accordingly, no assurances can be given that any of the results anticipated by the forward-looking information will transpire or occur. Unless otherwise indicated, all figures are presented in Canadian dollars.

Forward-looking information is predictive in nature, depends upon or refers to future events or conditions, or includes words such as “expects”, “anticipates”, “plans”, “predicts”, “believes”, “estimates”, “intends”, “targets”, “projects”, “forecasts”, “goals” or negative versions thereof and other similar expressions or future or conditional verbs such as “may”, “will”, “should”, “would” and “could”. Forward-looking information in this news release includes, without limitation, statements regarding future growth in EBITDA from operations, targeted Free Cash Flow, capital expenditures, targeted Total Debt to Adjusted EBITDA Leverage Ratio; expected acquisition opportunities, acquisition spending, probability of completing acquisitions and achievement of realized synergies from acquisitions; expected reductions in operational expenses; potential annual returns from organic growth; expectations relating to commercial customer recovery; and the future operations, business, financial condition, financial results, priorities, ongoing objectives, strategies and outlook of Superior and its business segments.

Forward-looking information is provided for the purpose of providing information about management’s expectations and plans about 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, however, they are subject to the risks and uncertainties set forth below and no assurance can be given that these assumptions and expectations will prove to be correct. These assumptions and expectations are based on information currently available to Superior, including information obtained from third party industry analysts and other third party sources, as well as on management’s current plans and its perception of historical trends, the historic performance of Superior’s business segments, current conditions and expected future developments. These assumptions and expectations include, without limitation, anticipated financial performance, current business and economic trends, expected economic growth, the amount of future dividends paid by Superior, Superior’s future dividend policy, business prospects, availability and utilization of tax basis, acquisition opportunities and probability of successfully negotiating and completing acquisitions, achievement of realized synergies from acquisitions, financing availability, absence of any material regulatory developments, currency, exchange and interest rates, weather, trading data and cost estimates. In particular, key assumptions and expectations underlying Superior’s targeted 2026 EBITDA from Operations in the range of $700 million to $750 million and targeted aggregate Free Cash Flow of $2.6 billion to $2.8 billion include the following: 2-3% annual organic growth; $5 million to $15 million in commercial customer recovery from the Covid-19 pandemic; $50 million to $55 million in operating expense improvements; completion of $1.9 billion in acquisitions at multiples consistent with historic multiples for Superior’s acquisitions as well as achieved synergies from acquisitions consistent with historical averages at approximately 25% over the relevant period; no material divestitures; 2021 operating results consistent with Superior’s consolidated 2021 Adjusted EBITDA guidance; and, in respect of the targeted Free Cash Flow, also assumes Adjusted EBITDA in the range of $3.2 billion to $3.5 billion; maintenance capital expenditures in the range of $300 million to $400 million; and lease repayments in the range of $240 million to $250 million over the relevant period. In addition, significant assumptions underlying the consolidated 2021 Adjusted EBITDA guidance referenced above are set forth under the “Financial Outlook” section of Superior’s first quarter MD&A.

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 the control of Superior, 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 incorrect assessments of value and potential synergies when making acquisitions, inability to successfully conclude negotiations and complete acquisitions, competition for acquisition opportunities, increases in debt service charges, the loss of key personnel, fluctuations in foreign currency, exchange rates and commodity prices, variability in cash flows and potential impact on dividends, 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 and assumptions identified in (i) Superior’s first quarter MD&A under the heading "Risk Factors" and (ii) Superior's most recent Annual Information Form, both of which are filed electronically at www.sedar.com. The preceding list of assumptions, risks and uncertainties is not exhaustive.

When relying on Superior’s 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, neither Superior nor Superior LP undertakes to update or revise such information to reflect new information, subsequent or otherwise. For the reasons set forth above, investors and others should not place undue reliance on forward-looking information.

Non-GAAP Financial Measures

Throughout this news release, Superior has used the following terms that are not defined by International Financial Reporting Standards (“GAAP”), but are used by management to evaluate the performance of Superior and its businesses. Since non-GAAP financial measures do not have standardized meanings prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies, securities regulations require that non-GAAP financial measures are clearly defined, qualified and reconciled to their nearest GAAP financial measures. Except as otherwise indicated, these non-GAAP financial measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods. The intent of non-GAAP financial measures is to provide additional useful information to investors and analysts. The measures may also be used by investors, financial institutions and credit rating agencies to assess Superior’s performance and ability to service debt. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with GAAP. Other issuers may calculate non-GAAP financial measures differently.

Investors should be cautioned that Adjusted EBITDA, EBITDA from operations and Free Cash Flow should not be construed as alternatives to net earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of Superior’s performance.

Superior Non-GAAP financial measures are identified and defined as follows:

EBITDA from operations

EBITDA from operations is defined as Adjusted EBITDA excluding costs that are not considered representative of Superior’s underlying core operating performance, including gains and losses on foreign currency hedging contracts, corporate costs and transaction and other costs. Management uses EBITDA from operations to set targets for Superior (including annual guidance and variable compensation targets). EBITDA from operations is reconciled to net earnings before income taxes. Please refer to the Results of Operating Segments in the Q1 2021 MD&A for the reconciliations.

Adjusted EBITDA

Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, losses (gains) on disposal of assets, finance expense, restructuring costs, transaction and other costs, and unrealized gains (losses) on derivative financial instruments. Adjusted EBITDA is used by Superior and investors to assess its consolidated results and ability to service debt. Adjusted EBITDA is reconciled to net earnings before income taxes. Adjusted EBITDA is a significant performance measure used by management and investors to evaluate Superior’s ongoing performance of its businesses. Adjusted EBITDA is also used as one component in determining short-term incentive compensation for certain management employees. The EBITDA of Superior’s operating segments may be referred to as EBITDA from operations. Please see the “Reconciliation of Earnings (Loss) before Income Taxes to Adjusted EBITDA” section of Superior’s Q1 2021 MD&A.

Total Debt to Adjusted EBITDA Leverage Ratio and Pro Forma Adjusted EBITDA

Adjusted EBITDA for the Total Net Debt to Adjusted EBITDA Leverage Ratio is defined as Adjusted EBITDA calculated on a 12-month trailing basis giving pro forma effect to acquisitions and dispositions adjusted to the first day of the calculation period (“Pro Forma Adjusted EBITDA”). Pro Forma Adjusted EBITDA is used by Superior to calculate its Total Net Debt to Adjusted EBITDA Leverage Ratio.

To calculate the Total Net Debt to Adjusted EBITDA Leverage Ratio divide the sum of borrowings before deferred financing fees and lease liabilities by Pro Forma Adjusted EBITDA. The Total Net Debt to Adjusted EBITDA Leverage Ratio is used by Superior and investors to assess its ability to service debt.

Capital Expenditures

Efficiency, process improvement and growth-related expenditures will include expenditures such as acquisition of new customer equipment to facilitate growth, system upgrades and initiatives to facilitate improvements in customer service.

Maintenance capital expenditures will include required regulatory spending on tank refurbishments, replacement of chlorine railcars, replacement of plant equipment and any other required expenditures related to maintaining operations.

Organic Growth

Organic growth calculated as increase in EBITDA from Operations year over year excluding the impact of acquisitions.

Free Cash Flow

Calculated as Adjusted EBITDA less maintenance capital expenditures and capital lease repayments. Free Cash Flow is used by Superior to calculate cash flows available to pay interest and cash taxes, pay dividends, make acquisitions, for capital expenditures and repay debt.

For additional information with respect to financial measures which have not been identified by GAAP, including reconciliations to the closest comparable GAAP measure, see Superior's Q1 2021 MD&A, available on SEDAR at www.sedar.com

For further information about Superior, please visit Superior’s website at: www.superiorplus.com or contact: Beth Summers, Executive Vice President and Chief Financial Officer, Tel: (416) 340-6015, or Rob Dorran, Vice President, Investor Relations and Treasurer, Tel: (416) 340-6003, E-mail: investor-relations@superiorplus.com, Toll Free: 1-866-490-PLUS (7587).


Contacts

Beth Summers
Executive Vice President and Chief Financial Officer
Tel: (416) 340-6015
or
Rob Dorran
Vice President, Investor Relations and Treasurer
Tel: (416) 340-6003
E-mail: investor-relations@superiorplus.com
Toll Free: 1-866-490-PLUS (7587)

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