Q1 2022 Superior Plus Corp Earnings Call
Speaker 1: Within the target range and towards gllot.
Speaker 1: As Li mentioned, we're increasing our 2022 adjusted EBITDA guidance range to 402, 25 million to to 465 million, with a point of 445 million. For the remainder of 2022, we anticipate average weather to be consistent with the five -year average for the U? X in Canada and wholesale propane fundamentals to be consistent with 2021. with that, I'd like to turn the call over for Q a.
Speaker 2: Thank youas a remind, er to ask a question, you'll need to press start one on your telephone to withdraw your question. Please, P a pounkey, Please stand by. Will we Compel the tna roster?
Speaker 2: Our first question comes from Ben isaac, son with Scotia Bank. Your line is open.
Speaker 3: Thank you very much and good morning everyone. I was just looking back at your Investor Day, I guess about a year ago.
Speaker 3: And you showed a goal of 10 perto 11% EBITDA care, getting to 700 to 700, 50 million of EBITDA by 2026. when we look at the midpoint of your guidance of 445 million and if we use that care, we get closer to 6, 50 to 75 by 2026. So I was just hoping you could bridge that gap for us.
Speaker 4: okyes. I mean I think it's a huge yes mean. If I mean to, I'll kick it off by saying we're still confident. Our expectation would be that will achieve that 70.750000005 billion 2020. sixand if you look at what drives that, I mean there's a few pieces to it. one is themmina, which we still are going forward, and going forward we'll continue to emate across remainder of the year. We are head in the acquisitions where we thought we would be. If you're thinking of this year's 445 million, it doesn't include a full year run rate of camps or the synergies. It also doesn't include the full run rate of quarrel or the synergies associated with those acquisition. If you look at that from a trailing 12 months.
Speaker 1: For the completed transaction, S it would be somewhere closer to roughly 400, sevenventy two million. In addition to that, as you look at, if you look at achieving that 70.75 thousand, there also organic growth in the base business that will continue to drive throughout the period. There are continuance improvement targets that we have in place which will also drive back towards that 70.75 thousand. So we, as any more acquisitions, there would still be growth through that period to get close as get closer without le. I'm not sure if there's anything else you wanted to flight on that, maybe the fact that we're think we're around the 40% of the that number. If we think there ll to deals that are not showing the result right now, what will a thir year unfold things here? So we're marching on to the phase that how the, that's good as that, the or more, but we may be very recruent. We're not doing yal for a vie. We see the pressure on price, So valuation to be selling down somewhat.
Speaker 5: And we're that we're fifthe Cole prison to do the deal that are really in. There is own makes Sen get the 25% improvement we saw we have to the plate book to get to that 25% of the fire line and it works all the time. It will work in go two deals. So arching on very positively, probably even had a the game. And I guess to jump in that there was one category that I ve put off to also mention which isn't to filt into that, where you wouldn't fully see it in in the 2020 two guidance would be around the COVID-19 recovery in the Canadian business we're seeing recovery. We would still expect not having full recovery throughout the end of 2020 two and we're certainly not there yet and you know continuue to recover to Q4. So that's another area where you know, as you're looking at, is going forward. We went to paint some increase as well.
Speaker 3: That's very helpful. And just a follow up to that question and, forgive me, you may have set this in the past but do you anticipate needing any equity to meet those objectives or do you think facilities plus cash flow generation will be sufficient to fund that growth? So that's seven to seven and 50 range. Yes, based on modeling as we go forward, the level of the MA that would be required, going forward with our target of that three and a half to four time, we're comfortable that we can do that. The M a comes in on an even pay throughout the period to get to that 7, seven and 50.
Speaker 3: Great Thanks so much.
Speaker 2: Thank you. Our next question comes from cheapy. With are to and your line is open.
Speaker 6: Good morning, you look in that com back in the quarter. My first question will be on the commercial recovery. I know you touch on this before, but are you not expecting a more expedient recovery versus the previously expected Q4 of this year and where you see and commercial training right now?
Speaker 4: S a very good question because what's a quite of big volume and we don't. We didn't get effect in the stes. We're residential but intended to go residential commercial, industrial and the industrial commercial asso down quite a lot of coin and we see a returning on that. It's he us this quarter, in the rest of the year fromout the then icipate the oil field to start producing more. And when you do that in Western int of the commercial business and those neighborhoods except volume to. So we're seen the commercial business and had are coming back. So what's soon er than we have origably forecast.
Speaker 4: And thank that they explain we Don T see fully returning this year, but we certain D when this year will be all fully coming backthank you. So my next question would be about emana integration. So can you share some of your clients regarding the integration for cents and qual for summer and the piece of synergy realization that you expect overcoming?
Speaker 7: Yes sure. So from an integration perspective, we be approaching canps and correals and similar ways to other businesses where, because of the time of the year when they're closing, we'will be able to very quickly jump start the integration process. As you vie where, once we hit the winter months with be eating low, we try not to do too many additional integration integration activities just because they stresses the business and really delivering at that point in time is where we want to have our focus. So there should be a jump start which actually helps, when you close this time of year, to actually have those synergies you know rolling in over 18 months as opposed to 24 months which, if you're closing the transaction, more So in the winter, sometimes it can take it two sumers to get there year. Thank you back that. My last one will be regarding the margin. So we was gr str this quarter. You share the expectation for margin, both Canada and rest for the restofthe year.
Speaker 1: Sure So. From the U's margin, where we were sittingat Q1 at roughly that 43.5 cents, that entire last year was sitting at roughly 41.8 cents. Primary driver of that is the increase in margin, a little bit of attraction around mix.
Speaker 1: As we look at 2022, we would view overall the average is going to be consistent with 2021, So we wouldn' expect to be somewhat similar, which was 32.5 U's? U's dollars. So, And if you look at that margin, I mean part of the margin is higher as a result of our response to facing some inflation presictres around cost and operating the business, where the margin is a little higher there to ensure that our overall EBITDA levels and profitability is maintained.
Speaker 4: Maybe a connect and that we're very confident. And so what's like we to get an industry that their basic product, as you know, the pass through. But also we TI up this year by a gme planned on our capital investment or P there by lineing and all the business review we do Mon they address all the inflation by lineing. So and there is we're still hundred percent confident that we know the M inflation in grflation that the world doing it to everybody around the world is think, But in the business that we will tpture and we reddoce our margin to inflation for imparentflation. So those other, the business we RE in and we RE can that customers and we would here and all, all the ters of a Canadian margin now. So from a Canada margin perspective for the quarter, roughly 19.2 cent.
Speaker 8: But a little higher than last year or higher than last year of our 18.4 percents. The primary driver of that are the basically more robust on a year-over-year basis, the market fundamentals, wholesale market fundamentals. As we look at Canada for the remainder of the year, we would expect it to be slightly lower than 2021. 2021 had an average of 18.1 percents. So the high end of our 14 per to 18 cents- and part of that expectation would be, as we look to mix for the remainder of the year- is, you see that COVID-19 recovery? Yes, some of the larger customers that have lower marges now mixing in to the overall volumme's helpful and give up us ction.
Speaker 2: Thank you. Our next question comes from Matthew weeks with I capital markets airline is opengood morning. Thanks for taking my questions. I was just wind out kind of a maacro question and just looking at where propane prices are right now and storage levels relatively low, are you seeing any sort of above average amount of customer attrition? Or I was just wondering if you could comment on the sort of supply demand of fundamentals in the market right now.
Speaker 4: There is a question. The states we don't see us that but very going to be attrition more that mons to come. We what attrition come for their summer. Usually torically you can say that now you have more trition and you gain more customers because your attrition is everybody's price of pro ing way up where every competitor. So it's kind of a balancing act that regardbut we periretically we feel that the will't be that muchatch more this year because the whole world, thatinflation you look at, or that the pum for everybody with they go to up their car. It's nots like. We have customers that oh my God, would happened to superiir their charging you way more, that they see it the and every think of their purchasing that inflation is there. We see a big time of diesel and or with truks and car So it's more known in there. World increase versus other is way left.
Speaker 4: Think of these thesesome. So we expect her orcast too much more attrition and if there's some attrition that are more than you average TOR vers of the past years, we probably we're going to G some customer that are from other comared to call up to see what we can do for them. So probably then that certainly we drillve down big signs as we one to make sure we did. Those customer normally would have been a bit more attrition with those days. Right now probably not so large because it's CI whole world in every pri let in the world. ok thanks, that's. That's helpful and I know you probablydon't want to talk about the wether tens at this point, but it looks like pretty cool. Start to to Q2 and then one a lot of the geographies and kind of a low start to sbrpring here is that sort of what you're seeing at this point.
Speaker 4: So I could I could say that the you know second quarter of one goes up. We got held from kind of whether but they knew because we conferred to as they of last year. Always said to whether one if the business were RE in one year and one corarter will gain it than the endunder. Their year will get loose than on whether. But over up to three years you always average from back to far normal and we didn't again. We gain in the states on the business and across their business has been good than the what does not help us much in the state that March the last two weeks of the center of very warm and did down the be in January and March was warm. So net not big gain on whether it's more to gain on the business and then can of do would have commercial gain overall and and as you said earlier.
Speaker 4: The contept margin in keep this the same and the fight of inflation. So we're, we'.re, we don't like whether we don't have on it. We just what per business? The forecast we give you, norice of the year, is 't expect better or whether or we're average. So we're going to get to get more than one front and we yes, whether a go quarter 1, anything else, this do that. yeah, I think all I would add is, as you're looking to Q2, sort of the same thing with Q2 in Q3 or shoulder quarters. So even when you tend to have a cold Q2, positive impact from colder weather in Q2 is much more muted obviously, than a Q1 and a Q4. Think part of the challenge when you're using pro pane predominantly exceedating load, even a cold Q2, often we't get you to a stage where you're actually using heating load. ok, that makes that. Thanks for the commentary. All' turn it back.
Speaker 2: Thank you as a reminder to ask a question that Star one our next question comes from Robert cattaler with cib C, capital markets. Your line is open. Rob ctellum IB C. I just wondered if you could talk about the sharbona opportunity. I'm looking for some color on the. The size of this opportunity in the risk allocation specifically, is superior to take any price risk on the molecule, or is this cost post type arrangement and what do you expect in terms of the rollout of low carbon products and other region? I mean here But right to build the and we rangement expect plan we, we all the customers.
Speaker 4: And we take a troud their plan and we deliver the new logistic to get to the end user with our home safety and our trucks, drivers and our petition- we're equipped to do that. We will make a same similar margin that we make on coing.
Speaker 4: So there's no for ussince that we know. T then building the assets.
Speaker 4: We take it from the door and we charge to the customer. We going to build a customer whether propriperate margin that we do in pro, pane. So it's a good business. The proposition overall yeah, and in all of them I'll just address part of some of the other parts of your question. From a risk structuring perspective it is. It functions like cost lessus, similar to our propane distribution business, and we don't have any investment. A capackital or existing fleet can transport the green hydrogen. And as far as size for this year, really it's going to in theory kick off or start from our actual distribution perspective, likely in Q3. So as far as this year's even it goes, you know, maybe 1, two and a half million, we would be likely what you would see it this year and just to totally permit, every time I've seen that in, like the RE.
Speaker 4: Project or a plan getting build there's year or doing a deal. Actually it's particularly cle we the delay or 2, three months that nobody a plan for. So I would be cautious this year to to think that don't be operating the same thing that they plan to see. But we have seen the well goes around and big production of plan like that or project, given our acquisition deal always take of the tober. So I without would take more quarter for the same with qual. We know we're working with large than getting this done in quarter three But when we should, according to the er surprises, end other quarter three
Speaker 9: Yes I appreciate sharbon is an opportunity for the long term, but is there any exclusivity in that agreement? I know you're going to want to be a good partner for arbon, but is there anything in the agreement that restrict your ability to strike similar agreements with other operators where they don't overlap the sharbon, or are you pretty much exclusive with them?
Speaker 4: No we don't have we can have we can do deal with other people that they didn't plan and where to think about the superior with our articate to the distribute mobile liquid. So we really kind of do have our time thinking. wellse can do that to get to do last mile. So our arrangement are not to City. We want to limit from the producer but we don't want to give a speate to somebody else that ignore them. The plan we want to be able to dosue yes we do just for clarification. We do have a roader career first recute the F yes.
Speaker 9: Okay it's great. And then last question for me, a bit of a detail, butit just' closed. In terms of closing the corals's acquisition, and whether it's Q2 or Q3, just given the seasonality, I'm not sure really matters that much financially. But where are the gating items is?
Speaker 9: Would cause up a slope maybe from the end of Q2 into Q3. Yes, So it's daring remark. I think the main things are just normal commercial conditions. At this point we've obviously filed our HSR application, waiting for clear there and then it's a normal commercial conditions in the agreement that would take time to complete.
Speaker 10: It's an asset deal, So there's a number of consent to assignment of things like that that you have to obtain. So those, I think, is really all we're thinking. Both mightke pushed out, but my expectation is likely Q2, but I think- which's just point out- it could Slide Q3.
Speaker 9: All right, So it's just a sort of normal acquisition mechanics from here. Okay, thank everyone.
Speaker 2: Thank you, and I am currently showing no further questions at this time. I'd like to turn the call back over to mr Luke. These are an for any closing remarks.
Speaker 11: Well I thank you ID that wr on this call I. I would like to thank your management in emploe. I'm very proud of all the accomplishments. Today 2022, we're in solid positioned to deliver on our 2020 to adjusted in our guidance, Su or way.
Speaker 4: cended before we, the good industry and which always helps the letter of the management, ific ant about industry. You're going to have lot of win in your face and this is a capacity to pass through. Inflation is a big thing for us this year and we pro and we can do that deals are working towards- are going to have four times that good shape there overall. I know we had the.
Speaker 4: Certainly are very concomffort and going forward, that this is looking very good and we're very pleased with everything we're doing. I think the most important to me when you think of execut, ion- the 25% we're doing, that the number of shown and we had a five business, what we bought and what the after 18 months, what the results are. The machine is working extremely well, a good talent going and very proud of everything we do, including at that thing and justing with situation comes to us hovidbit 19. we're couple of the facts on how to do is deal with it. We lost on business and adjusted So we were more guidance last year and the for the about here. So just one they you RE all with our overall feeling of the business and entrepreneur and management is really really high. So thank you're all where you done, Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker 2: Everyone have a wonderful day.
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