Superior Plus (SPB) Q3 2024 earnings summary

Executive summary

• Announced the Superior Delivers transformation strategy, targeting at least $50 million in incremental EBITDA by end of 2027 through over 100 initiatives focused on operational excellence, capital efficiency, and organic growth, moving away from acquisition-led expansion.

• Shifted capital allocation from dividends to share repurchases, reducing the quarterly dividend by 75% from C$0.18 to C$0.045 per share, freeing up approximately CAD 135 million annually for share repurchases and investments.

• Q3 2024 Adjusted EBITDA was $17.4 million, down 6% year-over-year, mainly due to lower propane business results, partially offset by Certarus growth.

• Net loss for Q3 2024 was $62 million, an $18.3 million improvement over the prior quarter, driven by higher income tax recovery and lower restructuring costs.

• Certarus segment delivered strong growth, with Q3 Adjusted EBITDA up 15% year-over-year to $30.3 million, driven by a 24% increase in volumes despite competitive pressures.

Financial highlights

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

• Adjusted EBITDA for Q3 2024 was $17.4 million ($0.06/share), down from $18.6 million ($0.07/share) in Q3 2023.

• Net loss per share (basic and diluted) was $0.27 in Q3 2024, compared to $0.34 in Q3 2023.

• Cash flows from operating activities were $4.5 million in Q3 2024, down from $39.1 million in Q3 2023.

• Capital expenditures for Q3 2024 were $48.3 million, up from $33.2 million in Q3 2023, mainly due to Certarus fleet expansion.

Outlook and guidance

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

• Leverage expected to remain near 4.0x for 2024, with a long-term target of 3.0x by early 2027.

• Superior Delivers initiative expected to begin contributing incremental EBITDA in 2025, with full run-rate by end of 2027.