Superior Announces Third Quarter Results, Launches Superior Delivers Initiative and Reduces Dividend in Favour of Share Repurchases

Superior Plus Corp. (“ Superior ” or “ the company” ) (TSX: SPB) today released its third quarter results for the period ended September 30, 2024. Unless otherwise expressed, all financial figures are expressed in U.S. dollars.

“Superior Plus is transforming,’” said Allan MacDonald, President and Chief Executive Officer. “Today we are announcing Superior Delivers, a program that will drive significant gains in our profitability and cash flow over the next three years. This program will fuel customer growth, reduce capital intensity, improve operational efficiency, and boost margins, positioning us as North America’s leading energy solutions provider.”

“Separately, our decision to redirect 75% of our annual dividend payments, approximately C$135 million, to share repurchases will enhance per-share value and significantly increase our financial flexibility in the long term. This approach gives us greater ability to accelerate de-leveraging and fund investment opportunities when the time is right. We’re confident these steps will create lasting value for shareholders,” MacDonald continued.

“With respect to the quarter, we were pleased with our propane business, which performed in line with our expectations and Certarus, despite increased competitive pressures, delivered a strong quarter, growing EBITDA by 15%,” continued MacDonald.

Quarterly Dividend and Common Share Repurchases

• Superior is declaring a quarterly common share dividend of C$0.045 per share, payable to shareholders of record as of December 31, 2024. The common share dividend will be payable on January 15, 2025.
• The company is introducing a change to its capital allocation strategy with a shift in priority from dividends to share repurchases. This change enables the company to focus on share repurchases and provides additional financial flexibility over the long-term.

Superior Delivers Strategic Initiative

• As one of the largest propane businesses in North America, the execution of Superior Delivers will place the company in strong position to capture market share over the long-term by utilizing scale and leveraging a more efficient and more profitable operating model. An intense focus on operational efficiency is expected to unlock at least $50 million of incremental annual Adjusted EBITDA by the end of 2027.
• This growth and efficiency initiative is expected to grow our customer base, improve asset efficiency and increase customer profitability through dynamic margin and operating cost initiatives across our propane divisions.
• Superior’s team is well equipped and fully committed to this plan. Improvements to capital efficiency have already begun, and the company expects incremental EBITDA from Superior Delivers will begin in 2025. Additional details regarding Superior Delivers will be shared at the company’s Investor Day in April 2025.

Certarus Q3 Business Update

• Achieved Adjusted EBITDA of $30.3 million in Q3 2024, an increase of $4.0 million compared to Q3 2023 Adjusted EBITDA of $26.3 million.
• Delivered volumes of 7,039,000 MMBTU in Q3 2024, an increase of 24% compared to 5,671,000 MMBTU in the prior year quarter and MMBTU per average MSU increased from 8,645 in the prior year quarter to 8,967.
• Continued to increase industry leading fleet of mobile storage units (“MSUs”), adding 27 units during the quarter for a total of 797 as of September 30, 2024.

Debt and Leverage Update

• The company continues to focus on managing both Net Debt and its Leverage Ratio. The company’s Leverage Ratio at September 30, 2024 was 4.0x, compared to 3.8x at June 30, 2024. Q3 is historically a higher-leverage quarter due to seasonally lower cash flow causing a temporary increase in Net Debt. Superior now expects leverage to remain near 4.0x in 2024. The company’s medium-term Leverage Ratio target of ~3.0x remains in place.

Normal Course Issuer Bid

• Superior’s current NCIB expires on November 9, 2024. To facilitate the company’s change to its capital allocation strategy to prioritize share repurchases, Superior expects to purchase under the current NCIB prior to its expiry and is in the process of applying to the TSX for review and approval of the renewal of its NCIB to allow the company to purchase Common Shares representing up to 10% of the public float (as defined under the rules of the TSX) for a further 12 months. The NCIB is intended to augment Superior’s ongoing return of capital to shareholders through dividends. Superior believes that, from time to time, the Common Shares trade in price ranges that do not fully reflect their value. In such circumstances, Superior believes that acquiring its Common Shares represents an attractive and desirable use of funds.

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 quarter ended September 30, 2024 provide a detailed explanation of Superior’s operating results. These documents are available online on Superior’s website at Superior Plus Financial Reports and on Superior’s profile at SEDAR+ .

2024 Third Quarter Conference Call

A conference call and webcast to discuss the 2024 third quarter financial results will be held at 10:30 AM EST on Thursday, November 7, 2024. To register as a participant, please use the following link: Register Here . The webcast will be available for replay on Superior's website at: https://www.superiorplus.com/ under the Events section.

About Superior Plus

Superior is a leading North American distributor of propane, compressed natural gas, renewable energy and related products and services, servicing approximately 770,000 customer locations in the U.S. and Canada. Through its primary businesses, propane distribution and compressed natural gas, renewable natural gas and hydrogen distribution, Superior safely delivers clean burning fuels to residential, commercial, utility, agricultural and industrial customers not connected to a pipeline. By displacing more carbon intensive fuels, Superior is a leader in the energy transition and helping customers lower operating costs and improve environmental performance.

Forward-Looking Information

Forward-looking information in this document includes: Superior’s future financial position, expected 2024 Adjusted EBITDA growth, growth of free cash-flow, expected EBITDA impact of Superior Delivers, expected 2024 capital expenditures, near term Certarus business conditions and CNG demand, anticipated increases in shareholder value, improved efficiency of the Propane business, expected improvement to operating margins, increased financial flexibility resulting from capital allocation decisions, growth of propane customer base, improved propane asset efficiency, expected increased customer profitability, timing and results of Superior Delivers program, expected Leverage Ratio at 2024 and the company’s mid-term target leverage ratio.

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 has acquired. Superior cautions that the assumptions used to prepare such forward-looking information 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 Third Quarter MD&A.

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 the success and of, and timing to achieve, the initiatives being pursued pursuant to the Superior Delivers program, ongoing capital requirements of the businesses, weather differing materially from the five year average weather, market conditions, demand and competition for CNG in jurisdictions where Certarus operates, economic activity in the oil and gas sector, commodity prices, 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, , 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 and equipment, 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 2024 Third Quarter MD&A dated November 6, 2024, available on www.sedarplus.com .

Adjusted EBITDA is consistent with the Segment profit (loss) disclosed in Note 19 Reportable Segment Information of the interim consolidated financial statements for the three months ended September 30, 2024. Adjusted EBITDA from operations is the sum of U.S. Propane, Canadian Propane, Wholesale Propane and Certarus Segment profit (loss). Adjusted EBITDA per share is calculated by dividing Adjusted EBITDA by the weighted average shares assuming the exchange of the issued and outstanding preferred shares into common shares. 2023 Pro Forma Adjusted EBITDA is used to provide 2024 guidance and only includes a pro forma adjustment related to Certarus for the period of January 1, 2023 to the date of the acquisition on May 31, 2023.

Superior changed the definition of Adjusted EBITDA from its historical definition to exclude the realized gains (losses) on foreign currency forward contracts and include unrealized gains (losses) related to equity derivatives. The foreign currency forward contracts were used to provide a hedge on the translation of U.S. denominated Adjusted EBITDA to Canadian dollars. As a result of the change in presentation currency, management is no longer hedging U.S. denominated Adjusted EBITDA and is excluding these realized gains (losses) from Adjusted EBITDA as there is no longer an offsetting gain (loss) on the translation of U.S. denominated Adjusted EBITDA. Management is currently not entering into similar instruments related to the translation of Canadian denominated Adjusted EBITDA. This change has been made retrospectively. In addition to the change in presentation currency, effective January 1, 2024, Superior implemented hedge accounting for Superior’s long-term incentive plan and related equity derivatives, and now includes these unrealized gains/losses as part of Adjusted EBITDA. The intention of this change in accounting policy is to reduce some of the volatility related to changes in Superior’s share price on the long-term incentive costs.

Adjusted EBTDA is calculated as Adjusted EBITDA less cash interest expense. Cash interest expense is the sum of interest on borrowings and interest on lease liability which are found in Note 15 Supplemental Disclosure of Consolidated Statements of Net Earnings (Loss) in the interim consolidated financial statements for the three months ended September 30, 2024. Cash interest expense for the three and nine months ended September 30, 2024 and three and nine months ended September 30, 2023 was $26.1 million, $76.9 million, $25.4 million and $63.8 million, respectively. Adjusted EBTDA per share is calculated by dividing Adjusted EBTDA by the weighted average shares assuming the exchange of the issued and outstanding preferred shares into common shares.

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 nine months ended September 30, 2024 Adjusted EBITDA ($296.3 million) and the 2023 annual Adjusted EBITDA ($414.7 million) and subtracting the nine months ended September 30, 2023 Adjusted EBITDA ($252.4 million). Net Debt is calculated as the sum of borrowings before deferred financing fees ($1,668.0 million) and lease liabilities ($169.2 million) reduced by cash and cash equivalents ($17.2 million) as at September 30, 2024.

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