TORONTO, ONTARIO–(Marketwired – Oct. 27, 2016) – Superior Plus Corp. (TSX:SPB) –
Financial Overview
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30 | September 30 | |||||||||||
| (millions of dollars, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||
| Revenue | 429.0 | 472.2 | 1,440.6 | 1,707.1 | ||||||||
| Gross Profit | 123.5 | 126.2 | 472.0 | 490.3 | ||||||||
| Net earnings (loss) from continuing operations | 52.8 | (48.3 | ) | 137.0 | (29.1 | ) | ||||||
| Net earnings (loss) from continuing operations per share, basic | $ | 0.37 | $ | (0.38 | ) | $ | 0.97 | $ | (0.23 | ) | ||
| Net earnings (loss) from continuing operations per share, diluted | $ | 0.36 | $ | (0.40 | ) | $ | 0.94 | $ | (0.23 | ) | ||
| EBITDA from operations (1)(3)(4) | 34.8 | 54.4 | 209.6 | 231.3 | ||||||||
| Net cash flows from operating activities | 32.1 | 91.9 | 160.9 | 291.9 | ||||||||
| Net cash flows from operating activities per share – basic | $ | 0.23 | $ | 0.73 | $ | 1.13 | $ | 2.31 | ||||
| Net cash flows from operating activities per share – diluted | $ | 0.23 | $ | 0.73 | $ | 1.13 | $ | 2.31 | ||||
| Adjusted operating cash flow before transaction costs (2)(5) | 13.0 | 23.1 | 135.3 | 142.3 | ||||||||
| Adjusted operating cash flow before transaction costs per share – basic (2)(5) | $ | 0.09 | $ | 0.18 | $ | 0.95 | $ | 1.12 | ||||
| Adjusted operating cash flow before transaction costs per share – diluted (2)(5) | $ | 0.09 | $ | 0.18 | $ | 0.95 | $ | 1.12 | ||||
| Adjusted operating cash flow (2) | (8.3 | ) | 23.1 | 94.0 | 142.3 | |||||||
| Adjusted operating cash flow per share – basic (2) | $ | (0.06 | ) | $ | 0.18 | $ | 0.66 | $ | 1.12 | |||
| Adjusted operating cash flow per share – diluted (2) | $ | (0.06 | ) | $ | 0.18 | $ | 0.66 | $ | 1.12 | |||
| Cash dividends declared | $ | 25.8 | $ | 22.8 | $ | 76.7 | $ | 68.3 | ||||
| Cash dividends declared per share | $ | 0.18 | $ | 0.18 | $ | 0.54 | $ | 0.54 | ||||
| (1) | EBITDA from operations is a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” and “Reconciliation of Net Earnings Before Income Taxes to EBITDA from Operations” for further details and the calculation and reconciliation. |
| (2) | Adjusted operating cash flow (“AOCF”) is a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” for further details and the reconciliation. |
| (3) | EBITDA from operations excludes realized losses from foreign currency hedging contracts that hedge U.S. denominated earnings for risk management purposes. Comparative figures have been reclassified to reflect the current period presentation. |
| (4) | EBITDA from operations, AOCF and AOCF per share includes the results of CPD up to the August 9, 2016 date of disposition. For the three and nine months ended September 30, 2016, CPD contributed $0.04 per share and $0.16 per share to AOCF per share, respectively. For the three and nine months ended September 30, 2015, CPD contributed $0.09 per share and $0.22 per share to AOCF per share, respectively. |
| (5) | Transaction costs for the three and nine months ended September 30, 2016 include $1.1 million and $19.7 million, respectively, in costs related to the terminated acquisition of Canexus Corporation (“Canexus Acquisition”) and $20.2 million and $21.6 million, respectively, in costs related to the divesture of the Construction Products Distribution (“CPD”) business. Refer to “Transaction Costs” in the Third Quarter MD&A (the “MD&A”) for further details. |
Highlights
- For the quarter ended September 30, 2016, Superior generated AOCF per share before transaction costs of $0.09, consistent with management’s expectations, and Superior’s 2016 financial outlook of AOCF per share has been confirmed at $1.40 to $1.60. Superior’s 2016 financial outlook excludes expenses related to the terminated Canexus Acquisition and the divesture of the CPD business (the “Sale of CPD”). See “2016 and 2017 Financial Outlook” for further details.
- On August 9, 2016, Superior sold its CPD business for total cash consideration of US$325 million (approximately $428 million CAD) to Foundation Building Materials, LLC. The proceeds from the Sale of CPD were used to repay indebtedness under Superior’s credit facility and to redeem the $150.0 million outstanding principal amount of its 6.00% convertible unsecured debentures due June 30, 2018. The Sale of CPD resulted in an after-tax gain of $173 million. See Note 4 of Superior’s third quarter unaudited condensed consolidated financial statements for further details.
- Superior is introducing its 2017 financial outlook of AOCF per share of $1.45 to $1.75, a 7% increase compared to the 2016 financial outlook based on the midpoint of the respective financial outlooks. Excluding the contribution of CPD in 2016 of $0.16 per share, the midpoint of the 2017 financial outlook represents an anticipated 20% increase in AOCF per share. See “2016 and 2017 Financial Outlook” for further details.
- Superior’s total debt to EBITDA as at September 30, 2016 (before transactions costs) was 2.2X. Superior’s forecasted December 31, 2016, total debt to EBITDA ratio is expected to be 1.8X to 2.2X, which is below Superior’s previous target range of 3.0X to 3.5X. Superior is introducing its new target total debt to EBITDA of 3.0X. See “Debt Management Update” in the MD&A for additional details.
- Superior’s total debt, including convertible debentures, as at September 30, 2016 was $508 million, which was $365 million lower than total debt of $873 million as at December 31, 2015.
- Superior suspended the operation of its Dividend Reinvestment Plan and Optional Share Purchase Program (the “DRIP”) after the payment of the August 2016 dividend, paid on September 15, 2016.
Segmented Information
| Three months ended | Nine months ended | |||||
| September 30 | September 30 | |||||
| (millions of dollars) | 2016 | 2015 | 2016 | 2015 | ||
| EBITDA from operations(1)(2): | ||||||
| Energy Distribution | 3.9 | 11.3 | 107.6 | 114.4 | ||
| Specialty Chemicals | 25.3 | 29.4 | 74.9 | 84.9 | ||
| Construction Products Distribution | 5.6 | 13.7 | 27.1 | 32.0 | ||
| 34.8 | 54.4 | 209.6 | 231.3 | |||
| (1) | EBITDA from operations excludes realized losses from foreign currency hedging contracts that hedge U.S. denominated earnings for risk management purposes. Comparative figures have been reclassified to reflect the current period presentation. See “Non-GAAP Financial Measures”. |
| (2) | EBITDA from operations excludes the results of the fixed-price energy services business as the segment was divested during Q1 2016. Comparative figures have been reclassified to reflect the current period presentation. |
Energy Distribution
- EBITDA from operations for the third quarter was $3.9 million compared to $11.3 million in the prior year quarter. Results were $7.4 million lower due primarily to a decrease in gross profit, partially offset by a decrease in operating costs.
- The Canadian propane distribution (“Canadian propane”) business generated gross profit of $53.4 million in the third quarter compared to $60.7 million in the prior year quarter, a decrease of $7.3 million due to lower sales volumes in the industrial and wholesale segments, partially offset by higher average sales margins.
- Canadian propane average sales margins were 22.8 cents per litre in the third quarter compared to 21.7 cents per litre in the prior year quarter due to an increase in average retail sales margins and benefits from procurement initiatives. Average retail sales margins in the third quarter of 2016 benefitted from the continued low price environment for the wholesale cost of propane and sales mix. In addition, Canadian propane margins were impacted by market fundamentals in the supply portfolio management business and weaker basis differentials compared to the prior year quarter. Superior anticipates the impact from the low price environment on propane margins will moderate for the remainder of 2016 as both retail pricing and the wholesale cost of propane normalize.
- Canadian propane sales volumes were 16% lower than the prior year quarter due primarily to a decrease in industrial and wholesale volumes. Industrial sales volumes were lower due to a decrease in oilfield volumes, which were negatively impacted by reduced demand related to the continued decline in oilfield activity. Wholesale volumes were lower due to a reduction in wholesale opportunities in the natural gas liquids market compared to the prior year quarter.
- The U.S. refined fuels business generated gross profit of $19.8 million in the third quarter compared to $22.7 million in the prior year quarter. Gross profits decreased $2.9 million or 13% due primarily to lower sales margins and lower sales volumes resulting from increased competition in the commercial fuels and wholesale segment.
- U.S. refined fuels average sales margin of 6.2 cents per litre in the third quarter compared to 6.6 cents per litre in the prior year quarter due primarily to increased competition in the commercial fuels and wholesale segment.
- Sales volumes within the U.S. refined fuels business were 6% lower than the prior year quarter due primarily to a decrease in wholesale and commercial fuels volumes related to increased competition.
- Other services gross profit was $7.6 million in the third quarter consistent with the prior year quarter.
- Cash operating and administrative costs were $76.9 million in the third quarter, a decrease of $2.9 million or 4% compared to the prior year quarter. Operating expenses in the current year quarter were lower due to a decrease in wages related to the reduced volumes in the Canadian propane business and the positive impact of lower commodity prices on fuel expenses.
- Keith Wrisley, President of the U.S. refined fuels business, retired effective October 17, 2016, and Andrew Peyton assumed the role of President effective October 3, 2016. Mr. Peyton has held senior positions within the fuel distribution industry over the past 10 years and brings significant propane industry knowledge, business development and operational experience.
- Energy Distribution EBITDA from operations for 2016 is anticipated to be consistent with 2015. EBITDA from the Canadian propane and U.S. refined fuels businesses should benefit from ongoing operational and procurement improvements and sales and marketing initiatives. Gross profits in the Canadian propane business are anticipated to be consistent with 2015 as lower volumes related to the warmer weather in the first quarter and decline in oilfield activity are anticipated to be offset by improvements in average margins and new customer sales volumes. Gross profits in the U.S. refined fuels business are anticipated to be modestly lower than 2015 due to a decrease in expected average margins in the commercial and wholesale business, partially offset by the strengthening of the U.S. dollar on the translation of U.S. denominated gross profit. Cash operating costs are anticipated to be lower than 2015 due to continuous improvement initiatives and reduced volumes related to weather, partially offset by the translation of U.S. denominated operating expenses. Average weather, as measured by degree days, for the remainder of 2016 is anticipated to be consistent with the 5-year average.
- Energy Distribution EBITDA from operations for 2017 is anticipated to be consistent to modestly higher than 2016. Gross profits in the Canadian propane distribution are anticipated to be consistent to modestly higher than 2016 due to increased sales volumes related to sales and marketing initiatives and normal weather, partially offset by a decrease in oilfield volumes. U.S. refined fuels gross profits are anticipated to be higher than 2016 due to increased sales volumes related to sales and marketing initiatives and normal weather. Average weather for 2017, as measured by degree days, is anticipated to be consistent with the 5-year average. Operating conditions for 2017 are anticipated to be similar to 2016.
Specialty Chemicals
- EBITDA from operations for the third quarter was $25.3 million compared to $29.4 million in the prior year quarter.
- Sodium chlorate gross profit was modestly lower than the prior year due to a decrease in sales volumes and average selling prices. Sodium chlorate sales volumes were 7% lower than the prior year quarter due to a decrease in sales volumes associated with purchases under the Tronox agreement. Excluding the Tronox volumes, North American sodium chlorate sales volumes were 11% higher than the prior year quarter.
- Chlor-alkali gross profits were modestly higher than the prior year quarter due to a decrease in caustic potash production costs.
- Specialty Chemicals gross profits in the third quarter were positively impacted by a gain of $0.4 million on the translation of USD denominated working capital compared to a gain of $4.7 million in the prior year quarter.
- Cash operating and administrative costs of $37.0 million were $2.6 million or 7% lower than the prior year quarter due to the decrease in Tronox-related and plant operating expenses.
- The North Vancouver plant was shut down from August 6, 2016 to September 8, 2016 for repairs related to the equipment failure previously disclosed in the second quarter of 2016. The impact of the shutdown to the third quarter results was not material due to the significant inventory levels and the short length of time required for the repairs.
- Specialty Chemicals EBITDA from operations for 2016 is anticipated to be lower than 2015. Sodium chlorate EBITDA is anticipated to be higher in 2016 due to the termination of the Tronox agreement and related plant expenses. EBITDA from the chlor-alkali segment is anticipated to be lower in 2016 due to a decrease in netback prices for hydrochloric acid, caustic soda and caustic potash. Hydrochloric acid netback prices and volumes are anticipated to be lower than 2015 due to reduced demand related to the continued decline in oilfield activity experienced and expected to continue for the remainder of 2016. Caustic potash netback prices and volumes are anticipated to be lower than 2015 due to weakness in the agriculture sector. Caustic soda netback prices are anticipated to decrease compared to 2015 due to sales mix.
- Specialty Chemicals EBITDA from operations for 2017 is anticipated to be consistent to modestly higher than 2016. Sodium chlorate EBITDA is anticipated to be consistent to modestly lower than 2016 as modest improvements in sodium chlorate pricing are expected to be offset by increases in electricity mill rates. Chlor-alkali EBITDA is anticipated to be consistent to modestly higher than 2016 due to an increase in netback prices for caustic soda, chlorine and hydrochloric acid and improvements in caustic potash volumes. Operating conditions for 2017 are anticipated to be consistent with 2016.
Construction Products Distribution
- EBITDA from operations for the third quarter was $5.6 million compared to $13.7 million in the prior year quarter as the CPD business was sold to Foundation Building Materials on August 9, 2016. Superior has included the results of the CPD business for the period Superior owned the business in the third quarter.
Corporate Related
- Interest expense for the third quarter was $8.8 million compared to $11.6 million in the prior year quarter. Interest expense was $2.8 million lower than the prior year quarter due to lower average effective interest rates, reduced average debt levels and the benefit from an interest rate swap settlement.
- Corporate costs were $6.1 million in the third quarter which was $1.9 million higher than the prior year quarter due primarily to an increase in long-term incentive plan costs and professional fees. Long-term incentive plan costs were higher due to fluctuations in Superior’s share price compared to the prior year quarter. Corporate costs exclude one-time transaction costs for the Canexus Acquisition in the third quarter of $1.1 million and $20.2 million related to the Sale of CPD.
- Superior’s total debt (including convertible debentures) to Compliance EBITDA (before transaction costs) was 2.2X as at September 30, 2016 compared to 3.2X at December 31, 2015. See “Debt Management Update” for additional details.
- Realized losses on foreign currency hedging contracts were $6.0 million compared to $14.8 million in the prior year quarter. Realized losses were $8.8 million lower due to the increase in Superior’s effective average hedge rate and a decrease in the notional hedges settled in the quarter.
- Realized losses on foreign currency hedging contracts for the remainder of 2016 are anticipated to be lower than 2015 due to an increase in Superior’s effective average hedge rate. During the third quarter Superior settled its foreign exchange hedging contracts for 2016 and 2017 and re-entered new foreign exchange hedging contracts for 2016 and 2017 at market rates on August 12, 2016. See “Foreign Exchange Hedging Contracts” in the MD&A for further details.
- Realized losses on foreign currency hedging contracts for 2017 are anticipated to be lower than 2016 due to an increase in Superior’s effective average hedge rate due to the settlement of foreign currency hedging contracts discussed above. See “Foreign Exchange Hedging Contracts” in the MD&A for further details.
2016 and 2017 Financial Outlook
Superior expects 2016 AOCF per share of $1.40 to $1.60, consistent with the financial outlook provided at the end of the second quarter of 2016. Superior’s 2016 financial outlook is stated before the impact of transaction costs related to the terminated Canexus Acquisition and the Sale of CPD. EBITDA from operations, AOCF and AOCF per share for 2016 include the results of CPD up to the August 9, 2016 date of disposition. For the nine months ended September 30, 2016, CPD contributed $0.16 per share to AOCF per share.
Superior is introducing its 2017 financial outlook of AOCF per share of $1.45 to $1.75, a 7% increase compared to the 2016 financial outlook using the midpoint of the respective financial outlooks. As previously noted in the individual business financial outlook sections, the Energy Distribution and Specialty Chemicals results are anticipated to be consistent to modestly higher than 2016. The positive impact from the decrease in the realized losses on foreign exchange hedging contracts in the 2017 financial outlook is offset in part by the loss of the CPD business contribution compared to 2016.
For additional details on the assumptions underlying the 2017 financial outlook, see Superior’s 2016 MD&A.
Debt Management Update
Superior remains focused on managing both its total debt and its total debt to EBITDA. Superior’s total debt (including convertible debentures) to Compliance EBITDA (before transaction costs) was 2.2X as at September 30, 2016, compared to 3.2X at December 31, 2015. The debt levels and the total leverage ratio as at September 30, 2016 are lower as the proceeds from the Sale of CPD were used to reduce indebtedness.
Superior is introducing its new target total debt to EBITDA of 3.0X. Superior is forecasting a total debt to EBITDA range of 2.0X to 2.4X as at December 31, 2016 and 1.8X to 2.2X as at December 31, 2017, which is below the target range.
MD&A and Financial Statements
Superior’s MD&A, the unaudited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements for the three and nine months ended September 30, 2016, are available online at Superior’s website at www.superiorplus.com under the Investor Relations section and on www.sedar.com.
2016 Third Quarter Conference Call
Superior will be conducting a conference call and webcast for investors, analysts, brokers and media representatives to discuss the 2016 Third Quarter Results at 10:30 a.m. EST on Friday, October 28, 2016. To participate in the call, dial: 1-866-223-7781. An archived recording of the call will be available for replay until midnight, November 28, 2016. To access the recording, dial: 1-800-408-3053 and enter pass code 1254933. Internet users can listen to the call live, or as an archived call, on Superior’s website at www.superiorplus.com under the Events section.
Non-GAAP Financial Measures
Throughout the third quarter earnings release, Superior has used the following terms that are not defined by GAAP, but are used by management to evaluate the performance of Superior and its business. Since non-GAAP financial measures do not have standardized meaning 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 be 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 do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate non-GAAP financial measures differently.
Investors should be cautioned that EBITDA, EBITDA from operations, compliance EBITDA and AOCF 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.
Non-GAAP financial measures are identified and defined as follows:
Adjusted Operating Cash Flow
AOCF is equal to cash flow from operating activities as defined by IFRS, adjusted for changes in non-cash working capital, other expenses, non-cash interest expense, current income taxes and finance costs. Superior may deduct or include additional items in its calculation of AOCF; these items would generally, but not necessarily, be items of a non-recurring nature. AOCF is the main performance measure used by management and investors to evaluate Superior’s performance. AOCF represents cash flow generated by Superior that is available for, but not necessarily limited to, changes in working capital requirements, investing activities and financing activities of Superior.
The seasonality of Superior’s individual quarterly results must be assessed in the context of annualized AOCF. Adjustments recorded by Superior as part of its calculation of AOCF include, but are not limited to, the impact of the seasonality of Superior’s businesses, principally the Energy Distribution segment, by adjusting for non-cash working capital items, thereby eliminating the impact of the timing between the recognition and collection/payment of Superior’s revenues and expenses, which can differ significantly from quarter to quarter.
EBITDA
EBITDA represents earnings before taxes, depreciation, amortization, finance expense, and certain other non-cash expenses, and is used by Superior to assess its consolidated results and those of its operating segments. The EBITDA of Superior’s operating segments may be referred to as EBITDA from operations.
EBITDA from Operations
EBITDA from operations is defined as EBITDA excluding gains/(losses) on foreign currency hedging contracts. For purposes of this MD&A, foreign currency hedging contract gains and losses are excluded from the results of the operating segments. Comparative figures for the prior periods have been reclassified to reflect this change.
Compliance EBITDA
Compliance EBITDA represents earnings before interest, taxes, depreciation, amortization and certain other non-cash expenses calculated on a 12-month trailing basis, giving pro forma effect to acquisitions and divestitures, and is used by Superior to calculate compliance with its debt covenants and other credit information. See Note 15 to the unaudited condensed consolidated financial statements for a reconciliation of net earnings to compliance EBITDA.
Payout Ratio
Payout ratio represents dividends as a percentage of AOCF less maintenance capital expenditures, CRA and other tax payments and capital lease repayments and is used by Superior to assess its financial results and leverage. Payout ratio is not a defined performance measure under GAAP. Superior’s calculation of payout ratio may differ from similar calculations used by comparable entities.
Reconciliation of Net Earnings Before Income Taxes to EBITDA from Operations(1)(2)(3)
|
For the three months ended September 30, 2016 |
Energy Distribution |
Specialty Chemicals |
Construction Products Distribution |
||||
| Net earnings (loss) before income taxes | (10.1 | ) | 5.0 | (35.2 | ) | ||
| Add: | |||||||
| Depreciation included in selling, distribution and administrative costs and amortization of intangible assets | 14.4 | – | 0.7 | ||||
| Depreciation included in cost of sales | – | 13.7 | – | ||||
| Realized losses (gains) on foreign currency hedging contracts | (0.1 | ) | 5.6 | 0.5 | |||
| Losses (gains) on disposal of assets | (1.0 | ) | 0.2 | 39.5 | |||
| Finance expense | 0.7 | 0.1 | 0.1 | ||||
| Unrealized losses on derivative financial instruments | – | 0.7 | – | ||||
| EBITDA from operations | 3.9 | 25.3 | 5.6 | ||||
|
For the three months ended September 30, 2015 |
Energy Distribution |
Specialty Chemicals |
Construction Products Distribution |
||||
| Net earnings (loss) before income taxes | (6.3 | ) | (4.3 | ) | 10.2 | ||
| Add: | |||||||
| Depreciation included in selling, distribution and administrative costs and amortization of intangible assets | 14.0 | – | 1.8 | ||||
| Depreciation included in cost of sales | – | 15.9 | – | ||||
| Realized losses on foreign currency hedging contracts | – | 13.3 | 1.5 | ||||
| Losses on disposal of assets | 1.0 | – | – | ||||
| Finance expense | 0.7 | 0.2 | 0.2 | ||||
| Unrealized losses on derivative financial instruments | 1.9 | 4.3 | – | ||||
| EBITDA from operations | 11.3 | 29.4 | 13.7 | ||||
|
For the nine months ended September 30, 2016 |
Energy Distribution |
Specialty Chemicals |
Construction Products Distribution |
||||
| Net earnings (loss) before income taxes | 94.9 | 9.1 | (21.4 | ) | |||
| Add: | |||||||
| Depreciation included in selling, distribution and administrative costs and amortization of intangible assets | 43.2 | – | 4.8 | ||||
| Depreciation included in cost of sales | – | 40.9 | – | ||||
| Realized (gains) losses on foreign currency hedging contracts | (0.1 | ) | 24.6 | 3.6 | |||
| Losses (gains) on disposal of assets | (0.5 | ) | 0.5 | 39.4 | |||
| Finance expense | 2.2 | 0.3 | 0.7 | ||||
| Unrealized gains on derivative financial instruments | (32.1 | ) | (0.5 | ) | – | ||
| EBITDA from operations | 107.6 | 74.9 | 27.1 | ||||
|
For the nine months ended September 30, 2015 |
Energy Distribution |
Specialty Chemicals |
Construction Products Distribution |
||||
| Net earnings before income taxes | 89.2 | 8.9 | 23.0 | ||||
| Add: | |||||||
| Depreciation included in selling, distribution and administrative costs and amortization of intangible assets | 38.7 | – | 5.3 | ||||
| Depreciation included in cost of sales | – | 44.7 | – | ||||
| Realized losses on foreign currency hedging contracts | 4.6 | 28.3 | 3.1 | ||||
| Losses on disposal of assets | 1.3 | 0.2 | – | ||||
| Finance expense | 2.0 | 0.6 | 0.6 | ||||
| Unrealized (gains) losses on derivative financial instruments | (21.4 | ) | 2.2 | – | |||
| EBITDA from operations | 114.4 | 84.9 | 32.0 | ||||
| (1) | See the unaudited condensed consolidated financial statements for net earnings before income taxes, depreciation and amortization included in selling, distribution and administrative costs, depreciation included in cost of sales, customer contract-related costs, finance expense and unrealized (losses) gains on derivative financial instruments. |
| (2) | EBITDA from operations excludes realized losses from foreign currency hedging contracts that hedge U.S. denominated earnings for risk management purposes. Comparative figures have been reclassified to reflect the current period presentation. See “Non-GAAP Financial Measures” for additional details. |
| (3) | EBITDA from operations excludes the results of the Fixed-price energy services business as substantially all assets were divested during Q1 2016. Comparative figures have been reclassified to reflect the current period presentation. |
Adjusted Operating Cash Flow Reconciled to Net Cash Flow from Operating Activities(1)(2)
| Three months ended | Nine months ended | ||||||||
| September 30 | September 30 | ||||||||
| (millions of dollars) | 2016 | 2015 | 2016 | 2015 | |||||
| Net cash flow from operating activities | 32.1 | 91.9 | 160.9 | 291.9 | |||||
| Add (Deduct): | |||||||||
| Non-cash interest expense | 3.5 | 1.6 | 6.3 | 7.1 | |||||
| Changes in non-cash operating working capital | (9.5 | ) | (54.1 | ) | (13.5 | ) | (108.9 | ) | |
| Discontinued operations | 13.4 | (2.5 | ) | 14.2 | (1.8 | ) | |||
| Cash income tax expense | (0.9 | ) | (0.7 | ) | (3.8 | ) | (2.0 | ) | |
| Finance expense recognized in net earnings | (46.9 | ) | (13.1 | ) | (70.1 | ) | (44.0 | ) | |
| Adjusted Operating Cash Flow | (8.3 | ) | 23.1 | 94.0 | 142.3 | ||||
| (1) | See “Non-GAAP Financial Measures”. |
| (2) | See the unaudited condensed consolidated financial statements for net cash flow from operating activities and changes in non-cash working capital. |
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, Superior LP 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: future financial position, consolidated and business segment outlooks, expected EBITDA from operations, expected AOCF and AOCF per share, expected leverage ratios and debt repayment, expectations in terms of the cost of operations, business strategy and objectives, development plans and programs, business expansion and cost structure and other improvement projects, expected product margins and sales volumes, market conditions in Canada and the U.S., continued improvements in operational efficiencies and sales and marketing initiatives in Energy Distribution, impact on results and leverage from the Sale of CPD, future economic conditions, future exchange rates, exposure to such rates and incremental earnings associated with such rates, expected weather, expectations for to the global economic environment, our trading strategy and the risk involved in these strategies, the impact of certain hedges on future reported earnings and cash flows, commodity prices and costs, the impact of contracts for commodities, demand for propane, heating oil and similar products, demand for chemicals including sodium chlorate and chlor-alkali, effect of operational and technological improvements, anticipated costs and benefits of business enterprise system upgrade plans, future working capital levels, expected governmental regulatory regimes and legislation and their expected impact on regulatory and legislative compliance costs, expectations for the outcome of existing or potential legal and contractual claims, our ability to obtain financing on acceptable terms, expected life of facilities and statements regarding net working capital and capital expenditure requirements of Superior or SuperiorLP.
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. No assurance can be given that these assumptions and expectations will prove to be 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. Such assumptions include anticipated financial performance, current business and economic trends, the amount of future dividends paid by Superior, business prospects, availability and utilization of tax basis, regulatory developments, currency, exchange and interest rates, trading data, cost estimates, our ability to obtain financing on acceptable terms, the assumptions set forth under the “Financial Outlook” sections of our MD&A and are 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 or Superior LP’s actual performance and financial results may vary materially from those estimates and intentions contemplated, expressed or implied in the forward-looking information. These risks and uncertainties include incorrect assessments of value when making acquisitions, increases in debt service charges, the loss of key personnel, fluctuations in foreign currency and exchange rates, 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, 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 should not place undue reliance on forward-looking information.
For more information about Superior, visit our website at www.superiorplus.com.
Beth Summers
Senior Vice President and Chief Financial Officer
(416) 340-6015
[email protected]
Superior Plus Corp.
Rob Dorran
Vice President, Investor Relations and Treasurer
(416) 340-6003 or Toll Free: 1-866-490-PLUS (7587)
[email protected]
www.superiorplus.com
