Superior Plus announces a US $125 million acquisition expanding its US
Refined Fuels business, preliminary unaudited 2009 year end results and an
updated 2010 outlook
/NOT FOR DISTRIBUTION TO
TSX: SPB
For the 12 months ended
The Company has 27 branch locations, 26 bulk storage facilities and 3 storage terminals, providing 20 million gallons of storage capacity. It has a well-maintained fleet of approximately 400 delivery and service vehicles and employs approximately 500 non-union employees. The Company's business is complementary to Superior's other operations in New York state.
The Company has an experienced management team which has demonstrated an ability to profitably grow the business both organically and through acquisitions, successfully completing 17 acquisitions since 2000. Superior intends to integrate the Company's management team with Superior's refined fuels business management team.
The heating oil and propane distribution business is highly fragmented throughout the north-eastern
The transaction is expected to be accretive to Adjusted Operating Cash Flow per share ("AOCF") adding approximately
Preliminary Unaudited 2009 Results
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Superior's preliminary unaudited consolidated adjusted operating cash flow for the fourth quarter and fiscal year ended
EBITDA from operations for Superior's businesses for the year ended 2009 is anticipated to be as follows:
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(millions of dollars) Unaudited Actual 2009 2009 Guidance
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Superior Energy Services 97.6 104 - 117
Specialty Chemicals 93.0 95 - 105
Construction Products Distribution 22.8 20 - 25
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Superior's consolidated outlook for 2009 as provided in the third quarter
2009 Management's Discussion Analysis estimated consolidated AOCF per share
for 2009 to be between $1.90 and $2.05 per share. The primary factors
impacting reduced 2009 results were:
- Continued impact of the recession on our customers, however
improvements are evident;
- The Port Edwards conversion and expansion project did not reach full
capacity until near the end of December resulting in no net
contribution in the quarter. The facility is now operating above pre-
expansion levels;
- Propane distribution and heating oil volumes were down due to warm
fall weather and continued reduced economic activity; and
- Propane margins were lower as a result of contract delays in passing
through December rapid wholesale price increases to our customers and
competitive market pressures.
2010 Financial Outlook Update
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Superior expects AOCF per share for 2010 to be between
EBITDA from operations for Superior's businesses for the year ended 2010 is anticipated to be as follows:
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(millions of dollars) 2010 Guidance
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Superior Energy Services 140 - 150
Specialty Chemicals 105 - 115
Construction Products Distribution 40 - 50
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Superior Energy Services 2010 EBITDA from operations is expected to increase to
Specialty Chemicals 2010 EBITDA from operations is expected to be
Construction Products Distribution 2010 EBITDA from operations is expected to be
Superior's 2010 fixed average interest rate and fixed rate debt are expected to increase due to the full year impact of the closing of Superior's 7.5% convertible debentures and 8.25% senior unsecured debentures in the third quarter and fourth quarter of 2009, respectively, compared to 2009.
See "2010 Financial Outlook Assumptions" for a detailed list of Superior's assumptions related to its 2010 Financial Outlook.
Conference Call
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A conference call and webcast for investors, analysts, brokers and media representatives to discuss the acquisition of the Company is scheduled for
Corporate Presentation
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A corporate presentation discussing the acquisition of the Company is expected to be posted on Superior's website at www.superiorplus.com under the presentation section.
About the Corporation
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Superior is a diversified corporation. Superior holds 100% of Superior Plus LP, a limited partnership formed between Superior General Partner Inc., as general partner and Superior as limited partner. Superior is focused on stability of dividends with value growth. Superior Plus LP consists of three primary operating businesses: Energy Services includes the distribution of propane and distillates and related fixed-price energy services; Specialty Chemicals includes the manufacture and sale of specialty chemicals; and Construction Products Distribution includes the distribution of specialty construction products.
Superior's shares and convertible debentures trade on the TSX as follows:
Trading Symbol Security Issued and Outstanding
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SPB Common Shares 100.0 million
SPB.db.b 5.75% Debentures, Series 1 $174.9 million principal
amount
SPB.db.c 5.85% Debentures, Series 1 $ 75.0 million principal
amount
SPB.db.d 7.5% Debentures $ 69.0 million principal
amount
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Forward Looking Information
Certain information included in this Press Release is forward-looking, within the meaning of applicable Canadian securities laws. Much of this information can be identified by looking for words such as "believe", "expects", "expected", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words. In particular, this press release includes forward-looking information related to Superior's consolidated and business segment outlooks, Superior's business strategy including future plans to expand and integrate the Company; the perceived benefits of the acquisition of the Company, future adjusted operating cash flows, future dividends and future interest rate and debt levels. Superior believes 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 current information and expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, risks relating to the economic recovery, risks associated with the uncertainty associated with accessing capital markets and the operational risks related to the Company which are similar to the risks of Superior's propane and heating oil business and operation risks related to Superior's other businesses including those identified in Superior's 2008 Annual Information Form under the heading "Risk Factors". Reference should be made to this additional information prior to making any investment decision. Forward looking information contained in this press release is made as of the date hereof and is subject to change. The company assumes no obligation to revise or update forward looking information to reflect new circumstances, except as required by law.
Forward-looking information is based on various assumptions. Those assumptions are based on information currently available to Superior, including information obtained from third party industry analysts and other third party sources and include, the historic performance of Superior's businesses, current business and economic trends, availability and utilization of tax basis, currency, exchange and interest rates, trading data, cost estimates in addition to the 2010 Financial Outlook Assumptions listed below. Readers are cautioned that the following list of assumptions is not exhaustive.
2010 Financial Outlook Assumptions
Corporate
- The economic conditions in Canada and the United States are expected
to improve in 2010 compared to 2009;
- Superior continues to attract capital and obtain financing on
acceptable terms;
- The foreign currency exchange rate is expected to average 1.05 in
2010 on all unhedged foreign currency transactions;
- Financial and physical counterparties continue to fulfill their
obligations to Superior;
- Regulatory authorities do not impose any new regulations impacting
Superior;
- The 2010 average floating interest rate and floating debt is expected
to increase modestly compared to 2009; and
- US cash taxes for 2010 are expected to be minimal in 2010 as a result
of the tax basis associated with the completion of the Port Edwards
project.
Energy Services
- Average temperatures across Canada and the north-eastern United
States are expected to be consistent with the most recent five-year
average;
- Total propane and refined fuel sales volumes compared to 2009 are
anticipated to increase due to increased economic activity and
resulting demand;
- Wholesale propane and refined fuel prices will not significantly
impact demand for propane and refined fuels and related services; and
- Wholesale trading and fixed-price services gross profits will be
consistent with 2009 assuming normal volatility in the wholesale
markets.
Specialty Chemicals
- Supply and demand fundamentals for sodium chlorate will be stronger
than in 2009, resulting in increased sales volumes for 2010;
- Chloralkali/potassium revenue will be higher than 2009 due to the
completion of the expansion of the Port Edwards project in late 2009
and increased economic activity resulting in increased sales volumes
for 2010; and
- ERCO's average plant utilization for 2010 is expected to be
approximately 85-90%.
Construction Products Distribution
- Sales volumes in 2010 compared to 2009 are expected to modestly
improve due to positive leading indicators in new home residential
activity in both Canada and the United States; and
- Sales volumes for industrial insulation products in 2010 will be
consistent with the prior year while commercial volumes in 2010 will
be lower due to reduced commercial economic activity compared to the
prior year.
Non-GAAP Financial Measures
Adjusted Operating Cash Flow
Adjusted operating cash flow is equal to cash flow from operating activities as defined by Canadian generally accepted accounting principles ("GAAP"), adjusted for changes in non-cash working capital and customer acquisition costs. Superior may deduct or include additional items to its calculation of adjusted operating cash flow; these items would generally, but not necessarily, be items of a non-recurring nature. Adjusted operating cash flow is the main performance measure used by management and investors to evaluate the performance of Superior. Readers are cautioned that adjusted operating cash flow is not a defined performance measure under Canadian GAAP and that adjusted operating cash flow cannot be assured. Superior's calculation of adjusted operating cash flow may differ from similar calculations used by comparable entities. Adjusted operating cash flow 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 adjusted operating cash flow. Adjustments recorded by Superior as part of its calculation of adjusted operating cash flow include, but are not limited to, the impact of the seasonality of Superior's businesses, principally Superior Propane, 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 expense, which can differ significantly from quarter to quarter. Adjustments are also made to reclassify the cash flows related to natural gas and electricity customer contract related costs in a manner consistent with the income statement recognition of these costs.
EBITDA
EBITDA represents earnings before interest, taxes, depreciation, amortization and other non-cash expenses, and is used by Superior to assess its consolidated results and the results of its operating divisions. EBITDA is not a defined performance measure under GAAP. Superior's calculation of EBITDA may differ from similar calculations used by comparable entities. EBITDA of Superior's operating businesses may be referred to as EBITDA from operations.
For further information: about Superior, please visit our website at: www.superiorplus.com or contact: Wayne Bingham, Executive Vice-President and Chief Financial Officer, Tel: (403) 218-2951, Fax: (403) 218-2973, E-mail: [email protected] or Jay Bachman, Vice-President, Investor Relations and Planning, Tel: (403) 218-2957, Fax: (403) 218-2973, E-mail: [email protected], Toll Free: 1-866-490-PLUS (7587)
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