Superior Plus ((TSE:SPB)) has held its Q4 earnings call. Read on for the main highlights of the call.
Superior Plus Earnings Call: Strategic Initiatives Amidst Weather Challenges
The recent earnings call from Superior Plus painted a picture of strategic optimism tempered by current challenges. The company expressed a positive outlook for 2025, emphasizing growth in the propane segment and strategic share repurchases. However, the call also highlighted difficulties posed by warm weather and decreased performance in segments such as Canadian and wholesale propane. Despite these headwinds, Superior Plus remains optimistic about its transformative initiatives and future growth, suggesting a balanced view of its current position.
Superior Delivers Initiative
Superior Plus announced the ‘Superior Delivers’ initiative, which aims to achieve a $40 million improvement in EBITDA run rate by the end of 2025. This target represents 80% of the original goal, showcasing the company’s commitment to enhancing its financial performance through strategic initiatives.
Certarus Growth
Certarus, a segment of Superior Plus, reported a robust quarter with a 13% year-over-year increase in adjusted EBITDA. This growth was driven by a 15% increase in MSUs, highlighting the segment’s strong performance and contribution to the company’s overall success.
Share Repurchases
In a strategic move to enhance shareholder value, Superior Plus invested CAD$86 million to repurchase more than 5% of its outstanding shares. The company plans to continue this strategy, aiming to buy back nearly 10% of the company by 2025.
Weather Impact on Propane
The earnings call highlighted the negative impact of warm weather on the propane segment, with Q4 adjusted EBITDA declining by approximately $3 million compared to the previous year. This challenge underscores the sensitivity of the propane business to weather conditions.
Canadian Propane Decline
The Canadian propane segment experienced a 20% year-over-year decline in adjusted EBITDA for Q4. This decrease was attributed to the timing of carbon credit sales and impacts from divestitures, reflecting challenges in the Canadian market.
Wholesale Propane Challenges
Wholesale propane faced a 13% year-over-year decline in adjusted EBITDA for the fourth quarter. This was driven by weaker market differentials and lower sales volumes, again largely due to warm weather conditions.
Increased Leverage
Superior Plus reported an increase in its leverage ratio from 3.9 times to 4.1 times year-over-year. This change aligns with expectations and reflects the company’s share repurchases and lower adjusted EBITDA due to warmer weather.
2025 Guidance
Looking forward, Superior Plus has issued guidance for 2025, projecting an 8% growth in the propane segment. This growth is supported by a $20 million contribution from the “Superior Delivers” initiative, expected to lead to a $40 million improvement in EBITDA run-rate. The company plans to optimize performance by scaling back capital spending in certain segments and focusing on share repurchases, aiming to double free cash flow and reduce leverage.
In conclusion, Superior Plus’s earnings call reflects a strategic approach to overcoming current challenges while positioning for future growth. The company’s initiatives, particularly in the propane segment, and its commitment to shareholder value through share repurchases, underscore its balanced outlook. While weather-related challenges persist, Superior Plus remains focused on its long-term goals and transformative initiatives.