(Source: Canada Newswire)
TSX: SPB
CALGARY, May 6 /CNW/ -
HIGHLIGHTS
- Revenue for the first quarter of 2009 was $603.5 million compared to
the prior year quarter of $681.4 million, a decrease of 11% primarily
due to the lower selling price of propane and lower sales volumes in
all divisions as a result of the impact from the global economic
recession.
- Gross profit increased by 11% to $188.3 million in the first quarter
of 2009 from $169.9 million in the first quarter of 2008 as increased
margins more than offset decreased sales volumes.
- First quarter 2009 EBITDA from operations increased by 13% to
$80.0 million from the prior year quarter of $70.7 million reflecting
stronger performance at Superior Propane and ERCO, which was
partially offset by weaker performance at Winroc and SEM.
- Adjusted operating cash flow per share for the first quarter ending
March 31, 2009 was $0.69, an increase of 10% from the prior year
quarter.
- The Port Edwards expansion project continues to be on-budget and is
expected to be placed into service during the third quarter of 2009.
- Four quarter trailing EBITDA was $251.9 million resulting in Senior
Debt to EBITDA ratio of 2.2x and Total Debt to EBITDA ratio of 3.2x
as at March 31, 2009.
- As of May 6, 2009, Superior had received $570 million of credit
commitments relating to the extension of its $595 million syndicated
credit facility from June 28, 2010 to June 28, 2011.
FINANCIAL SUMMARY
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Three months ended
March 31
(millions of dollars except per share amounts) 2009 2008
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Revenue 603.5 681.4
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Gross profit 188.3 169.9
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EBITDA from operations(1) 80.0 70.7
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Interest (10.3) (9.8)
Cash taxes (5.0) (1.7)
Corporate costs (3.4) (3.5)
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Adjusted operating cash flow(1) 61.3 55.7
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Adjusted operating cash flow per share,
basic (1),(2) and diluted(1),(3) $ 0.69 $ 0.63
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Dividends/Distributions paid per share/unit $ 0.405 $ 0.395
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SEGMENTED INFORMATION
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Three months ended
March 31
(millions of dollars) 2009(1) 2008(1)
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EBITDA from operations:
Propane Distribution 44.9 37.9
Specialty Chemicals 32.1 26.0
Construction Products Distribution 1.5 4.8
Fixed-Price Energy Services 1.5 2.0
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80.0 70.7
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(1) EBITDA from operations and adjusted operating cash flow are key
performance measures used by management and investors to evaluate the
performance of Superior. These measures are defined under Non- GAAP
Financial Measures in Management's Discussion and Analysis of 2009
First Quarter Results.
(2) The weighted average number of shares outstanding for the three
months ended March 31, 2009 is 88.4 million (2008 - 88.1 million)
(3) For the three months ended March 31, 2009, there were no dilutive
instruments.
Propane Distribution
- EBITDA from operations was $44.9 million in the first quarter of
2009, an increase of $7.0 million compared to the prior year quarter
primarily due to a 10% increase in total gross profit.
- Total gross profit per litre for the first quarter of 2009 was
23.4 cents, an increase of 3.9 cents per litre compared to the prior
year quarter.
- Retail propane and delivery gross profit of $79.6 million decreased
by $1.1 million in the first quarter of 2009 compared to the prior
year quarter as an increase in average retail and delivery margin was
more than offset by a reduction in sales volume due to the impact of
the economic recession in Canada. Superior refocused its sales and
marketing program in late 2008 producing positive initial results in
the first quarter with the addition of over 30 million litres of
annualized new customer volumes.
- Wholesale and related gross profits were $15.4 million in the first
quarter of 2009, an increase of $9.7 million compared to the prior
year quarter substantially due to improved wholesale gross profits
resulting from the high level of volatility in supply and prices for
propane experienced during the winter heating season.
- In response to the severe economic recession and continuing efforts
to improve the business, Superior commenced implementation of its new
routing and scheduling system which is expected to improve employee
productivity. Superior also reduced fleet and employment levels to
adjust to reduced volumes created by the economic recession. The 2009
outlook includes $2.4 million to implement these changes and will
have a positive impact on reducing cost structure in the future.
- EBITDA from operations is expected to be $95 - $105 million for 2009
consistent with the previous outlook provided in the fourth quarter
2008 Financial Discussion. The benefits of sales marketing
initiatives and projected efficiency improvements in cost structure
are expected to partially offset the impact of reduced economic
activity.
Specialty Chemicals
- EBITDA from operations was $32.1 million in the first quarter of
2009, a $6.1 million increase over the prior year quarter driven by
higher sales prices more than offsetting lower chemical sales
volumes.
- Gross profit increased by $9.0 million to $62.7 million from
$53.7 million due to strong pricing and the positive impact of
foreign exchanges rates on chloralkali/potassium and sodium chlorate
products partially offset by lower chemical sales volumes compared to
the prior year quarter.
- Chemical sales volumes of 155,000 (MTs) were 36,000 (MTs) lower than
the prior year quarter primarily due to reduced demand for specialty
chemical products as a result of the impact of the global economic
recession. In response to the reduced demand for sodium chlorate, the
Valdosta facility has been temporarily idled reducing capacity by
8,000 MT per month while cell line upgrades are completed to improve
the efficiency and cost structure. The facility is expected to
restart as demand for sodium chlorate improves in the future.
- The Port Edwards Wisconsin chloralkali facility expansion project
remains on budget and is expected to be placed into service during
the third quarter of 2009. The conversion project will require a
temporary closure of the facility for approximately 4-6 weeks
resulting in reduced sales and production which has been reflected in
the revised financial outlook. When production restarts, it is
expected to provide an annual incremental US$20 - $30 million of
positive EBITDA contribution at full capacity.
- EBITDA from operations is expected to be $100 - $110 million for
2009, a decrease of $5 million from the previous outlook provided in
the fourth quarter 2008 Financial Discussion reflecting the impact of
the down time at Port Edwards for the plant expansion and lower
chloralkali pricing.
Construction Products Distribution
- EBITDA from operations was $1.5 million in the first quarter of 2009,
a $3.3 million decrease from the prior year quarter.
- Gross profit in the first quarter of 2009 was $24.4 million, a
$4.2 million decrease from the prior year quarter primarily due to a
21% decline in drywall sales volumes marginally offset by improved
sales volumes relating to the Ontario GSD acquisition completed on
May 9, 2008. Sales volumes declined as a result of the residential
housing slowdown in Canada and the US and were exacerbated by more
severe than normal weather conditions compared to the prior year.
- Sales margins were consistent or modestly higher in most operating
areas in the first quarter of 2009 compared to the prior year quarter
due to a continued focus on margin management initiatives and the
impact of purchasing programs.
- Significant restructuring and cost reduction initiatives have and
continue to be made to adjust to the changes in the market. These
include closure or consolidation of locations, fleet and
personnel reductions. The 2009 outlook includes $0.7 million to
implement identified changes and will have a positive impact on
reducing cost structure in the future.
- The fragmented nature of the specialty buildings products industry,
combined with the market downturn, provide for additional
consolidation and product expansion opportunities for Winroc.
- EBITDA from operations is expected to be $20 - $27 million for 2009,
a decrease of $8 million from the previous outlook provided in the
fourth quarter 2008 Financial Discussion as a result of the severe
demand reduction which is not expected to improve until the second
half of 2009.
Fixed-Price Energy Services
- EBITDA from operations was $1.5 million in the first quarter of 2009,
a $0.5 million decrease over the prior year quarter.
- Gross profit was $7.0 million in the first quarter of 2009, a
$0.2 million increase over the prior year quarter as improvement in
natural gas margin and increase electricity volumes more than offset
a decrease in natural gas sales volumes.
- SEM continues to focus on developing and implementing alternative
sales channel models and products to enhance its competitive position
in energy retail markets. In response to the difficult Ontario
residential markets, SEM has refocused its sales channels towards
acquiring and retaining Ontario commercial natural gas and
electricity customers, Quebec commercial natural gas customers and
British Columbia natural gas residential and commercial customers.
- Currently, SEM's portfolio of customers is approximately 70%
commercial and 30% residential by volume.
- EBITDA from operations is expected to be $9 - $12 million for 2009,
consistent with the previous outlook provided in the fourth quarter
2008 Financial Discussion.
Key Quarterly Corporate Items
- Total interest expense of $10.3 million in the first quarter
increased by $0.5 million compared to the prior year quarter
primarily due to higher average debt levels and the impact of the
appreciation of the US dollar on US denominated interests costs
partially offset by lower average interest rates.
- Superior had a $595 million syndicated credit facility with undrawn
credit capacity of approximately $339 million (excluding its
securitization program) as at March 31, 2009. As of May 6, 2009,
Superior had received $570 million of credit commitments relating to
the extension of its $595 million syndicated credit facility from
June 28, 2010 to June 28, 2011. Closing of the syndicated credit
facility is expected to occur in May 2009 and is subject to standard
review of the documentation
- As at March 31, 2009, Superior had utilized $125 million of its
existing securitization program. Effective April 30, 2009, Superior
extended its securitization receivable program to June 29, 2010.
Capital Expenditures
Consolidated Capital Expenditure Summary
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Three months ended
March 31
(millions of dollars) 2009 2008
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Efficiency, process improvement and growth related 7.8 3.8
Other capital 1.5 1.6
Port Edwards expansion project 26.6 5.2
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35.9 10.6
Earn-out payment on prior acquisition 0.6 -
Proceeds on disposition of capital (1.8) (0.2)
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Total net capital expenditures 34.7 10.4
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In the first quarter of 2009, Superior continued to improve its cost structure by investing $7.8 million of capital in efficiency projects primarily in the propane distribution and specialty chemicals divisions. The Port Edwards conversion project made good progress in the first quarter of 2009 with capital spending of $26.6 million (US$21.2 million). The project is on budget and scheduled for conversion during the third quarter of 2009. Superior has incurred $77.6 million (US$66.0 million) of the estimated US$130 million costs to complete the Port Edwards project.
Financial Outlook
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2009(1) 2009(2)
(millions of dollars, except per share amounts) Prior Current
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EBITDA from operations
Propane Distribution 95-105 95-105
Specialty Chemicals 105-115 100-110
Construction Products Distribution 28-35 20-27
Fixed-Price Energy Services 9-12 9-12
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Adjusted operating cash flow per share $2.00-$2.20 $2.00- $2.15(4)
Dividends paid per share $1.62 $1.62
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Senior Debt/EBITDA Ratio(3) 2.0 1.9
Total Debt/EBITDA Ratio(3) 3.0 2.9
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(1) As provided in Superior's fourth quarter 2008 Financial Discussion.
(2) The assumptions, definitions, and risk factors relating to the
Financial Outlook are discussed in Management's Discussion and
Analysis of the 2009 First Quarter Results.
(3) Superior's debt ratios take into account the impact of the
off-balance sheet receivable sales program amounts, the efficiency
and growth projects and excludes Port Edwards project debt of
$150 million (US$130 million) as well as project EBITDA contribution.
Including the Port Edwards project debt with no corresponding EBITDA
would result in a year end Senior Debt to EBITDA ratio of 2.4 and
Total Debt to EBITDA ratio of 3.4.
(4) The Port Edwards expansion project is now estimated to be placed into
service during the third quarter of 2009. This will result in
approximately US$ cash tax savings of $8-$10 million in 2009.
Consolidated Financial Outlook
Superior's adjusted operating cash flow increased by 10% to $0.69 per share in the first quarter of 2009 compared to the prior year quarter. The diversification of the businesses continued to support strong consolidated performance despite the extremely difficult economic environment and poor credit conditions experienced in the first quarter of 2009. Superior has narrowed its annual expectations for adjusted operating cash flow to $2.00- $2.15 per share from $2.00-$2.20 per share in 2009 based upon first quarter results and its outlook for the remainder of the year. Superior expects economic environment to improve in the latter half of 2009 continuing with a modest recovery in 2010.
The Port Edwards expansion project continues to remain on time and is scheduled to be converted in the third quarter of 2009. As such, Superior has included approximately $8 - 10 million in US cash tax savings in the revised 2009 adjusted operating cash flow outlook of $2.00 - $2.15 per share. The Port Edwards expansion project will require the closure of the facility for approximately 4-6 weeks and this reduced production is included in the 2009 financial outlook. Superior's financial outlook for 2010 is unchanged from its previous outlook of adjusted operating cash flow per share of $2.20 - $2.40.
The projected Senior Debt to EBITDA and Total Debt to EBITDA ratios of 2.4x and 3.4x for 2009 reflect the $150 million (US$130 million) investment in the Port Edwards conversion with no incremental cash flow from the project occurring until 2010. The projected Senior Debt to EBITDA and Total Debt to EBITDA ratios for 2009 excluding Port Edwards project debt are 1.9x and 2.9x, respectively. Upon closing of the extension of Superior's syndicated credit facility, the corporation will not have any significant credit maturities until June 2011.
Superior believes its diversified portfolio of stable businesses, strong balance sheet, and prudent allocation of capital will result in stability of dividends and long-term growth for its securityholders.
2009 First Quarter Results
Superior's 2009 First Quarter Results is attached and available on Superior's website at: www.superiorplus.com under the investor information section and at www.sedar.com.
Conference Call
Superior Plus will be conducting a conference call and webcast for investors, analysts, brokers and media representatives to discuss the 2009 First Quarter Results at 7:30 a.m. MST (9:30 a.m. EST) on Thursday, May 7, 2009. To participate in the call, dial: 1- 800-732-9303. An archived recording of the call will be available for replay until midnight, June 8, 2009. To access the recording, dial: 1-877-289-8525 and enter pass code 21301182 followed by the pound key. Internet users can listen to the call live, or as an archived call, on Superior's website at: www.superiorplus.com under the Investor section.
Forward Looking Information
Certain information included herein is forward-looking, within the meaning of applicable Canadian securities laws. Forward looking information can be identified by looking for words such as "believe", "expects", "expected", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words. Forward- looking information in this press release, including the attached Management's Discussion and Analysis of 2009 First Quarter Results, includes but is not limited to, consolidated and business segment outlooks, expected EBITDA from operations, expected adjusted operating cash flow, expected adjusted operating cash flow per share, future capital expenditures, business strategy and objectives, dividend strategy, expected senior debt and total debt to EBITDA ratios, future cash flows, anticipated taxes and statements regarding the future financial position of Superior and Superior LP. Superior and Superior LP believe the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Forward-looking information is based on various assumptions.
