Superior Plus (SPB) Q3 2024 earnings summary

Executive summary

• Announced a major transformation strategy, Superior Delivers, targeting at least $50 million incremental EBITDA by 2027 through 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 investments and buybacks.

• 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 $62.0 million, an $18.3 million improvement over the prior year, driven by higher income tax recovery and lower restructuring costs.

• Certarus segment continues to show strong growth, with Q3 Adjusted EBITDA up 15% year-over-year to $30.3 million and delivered volumes up 24%, 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 per share was $0.06, down from $0.07 in Q3 2023.

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

• U.S. Propane Adjusted EBITDA was negative $7.9 million, Canadian Propane $1.0 million, and Wholesale Propane $1.8 million for Q3 2024.

• Divested certain non-strategic assets for $11.4 million in Q3 2024.

Outlook and guidance

• 2024 Adjusted EBITDA growth guidance revised from ~5% to flat versus 2023 pro forma, reflecting year-to-date performance and market conditions.

• 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 $230 million to $190 million, reflecting improved capital efficiency and cautious Certarus investment.

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

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