Superior Plus (SPB) Q3 2024 earnings summary

Executive summary

• Announced a major transformation strategy focused on operational excellence, capital efficiency, and organic growth, moving away from acquisition-led expansion and maximizing value from the existing portfolio.

• Launched Superior Delivers, targeting at least $50 million in incremental EBITDA by end of 2027 through over 100 initiatives in customer growth, cost efficiency, and capital utilization, primarily from propane operations.

• Reduced quarterly dividend by 75%, freeing up approximately CAD 135 million annually for share repurchases and investments, shifting capital allocation from dividends to buybacks.

• Certarus segment continues to show strong growth, with a 15% year-over-year increase in EBITDA and a 24% increase in delivered volumes, despite competitive and pricing pressures.

• Retooled executive leadership and revised compensation to align management incentives with shareholder interests.

Financial highlights

• Q3 Adjusted EBITDA was $17.4 million, down $1.2 million from Q3 2023, mainly due to lower propane business results, partially offset by Certarus.

• Q3 2024 revenue was $359.4 million, down from $395.5 million in Q3 2023; gross profit was $209.1 million, compared to $215.4 million last year.

• Net loss for Q3 was $62 million, an $18.3 million improvement over the prior quarter, driven by higher income tax recovery and lower restructuring costs.

• Adjusted EBITDA from operations for Q3 was $25.2 million, slightly down from $26.1 million year-over-year.

• Net cash flows from operating activities were $4.5 million in Q3, down from $39.1 million in Q3 2023.

Outlook and guidance

• 2024 Adjusted EBITDA growth guidance revised from 5% to flat versus 2023 pro forma, reflecting year-to-date performance, warmer weather, and increased competition.

• Propane growth expected at the low end of original estimate (~1%), Certarus expected to grow 10% over normalized 2023 results.

• 2024 capital expenditure guidance lowered from CAD 230 million to CAD 190 million, reflecting improved capital efficiency and cautious Certarus investment.

• Incremental EBITDA from Superior Delivers expected to begin in 2025.

• Will provide further details and proof points at the April 2025 Investor Day.