Mr. Allan MacDonald reports

SUPERIOR PLUS CORP. ANNOUNCES RECORD FIRST QUARTER RESULTS AND INCREASES 2023 ADJUSTED EBITDA GUIDANCE

Superior Plus Corp. today released its first quarter results for the period ended March 31, 2023. Unless otherwise expressed, all financial figures are expressed in Canadian dollars (which is always the case in news releases posted under Canadian ticker symbols on Stockwatch).

• Record first quarter 2023 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $272.1-million, a 9-per-cent increase from the prior year;
• First quarter net earnings of $147.1-million, an increase of $6.1-million from the prior year;
• Superior is increasing its 2023 pro forma adjusted EBITDA guidance range to $620-million to $660-million, with a mid-point of $640-million, which includes the expected full 12 months of Certarus 2023 adjusted EBITDA in the range of $175-million to $185-million. The full economic benefit of Certarus's expected 2023 adjusted EBITDA will be retained in the business;
• Certarus also achieved record first quarter adjusted EBITDA of $62.8-million, a $35.0-million or 126-per-cent increase from the prior-year quarter.

In announcing these results, Allan MacDonald, president and chief executive officer of Superior, said: "I would like to congratulate the Superior and Certarus Ltd. teams on delivering solid results to start 2023. The Superior team delivered a strong first quarter consistent with management expectations, even with significantly warmer weather in most regions compared to the prior year and the five-year average. The first quarter adjusted EBITDA of $272-million was a $22-million increase from 2022, and a record first quarter for Superior. The Certarus business continues to perform well ahead of expectations, delivering record first quarter EBITDA of $63-million."

"We are also increasing the 2023 pro forma adjusted EBITDA guidance range driven by higher expected results for Certarus, which we now expect to deliver 2023 adjusted EBITDA in the range of $175-million to $185-million," continued Mr. MacDonald. "I look forward to working with the Superior organization and welcoming the Certarus team to our organization in 2023."

First quarter highlights

• Net earnings of $147.1-million in the first quarter compared with $141.0-million in the prior-year quarter driven by higher revenue and gross profit, partially offset by higher selling, distribution and administrative expenses (SD&A), a lower gain on derivatives and foreign currency translation of borrowings, and higher income tax expense and finance expense.
• Basic and diluted earnings per share attributable to Superior was 63 cents per share, a decrease of five cents per share from the prior-year quarter due to the impact of the higher amount of weighted average shares outstanding, partially offset by higher net earnings.
• Adjusted EBITDA for the first quarter was $272.1-million, an increase of $21.7-million compared with the prior-year quarter as a result of higher EBITDA from operations, partially offset by higher corporate costs and a realized loss on foreign currency hedges compared with a realized gain in the prior-year quarter. EBITDA from operations increased primarily due to higher adjusted EBITDA in North American wholesale propane distribution and U.S. retail propane distribution, partially offset by modestly lower Canadian retail propane distribution adjusted EBITDA.
• U.S. propane adjusted EBITDA for the first quarter was $175.9-million, an increase of $13.0-million from the prior-year quarter of $162.9-million due to the impact of acquisitions completed in the prior year and, to a lesser extent, higher average margins related to increased prices to offset inflation and the impact of the weaker Canadian dollar on the translation of U.S.-denominated transactions, partially offset by lower volumes related to the significantly warmer weather and higher operating costs related to inflation and labour costs.
• Canadian propane adjusted EBITDA for the first quarter was $65.8-million, a decrease of $3.8-million from the prior-year quarter of $69.6-million as a result of higher operating costs, partially offset by higher gross profit. Operating costs increased due to higher costs associated with inflation and the impact of the Canadian Emergency Wage Subsidy recorded in the prior-year quarter. Gross profit increased driven by higher average margins related to increased sales prices to offset the impact of inflation, partially offset by lower sales volumes related to warmer weather.
• Wholesale propane adjusted EBITDA for the first quarter was $40.2-million, an increase of $21.1-million from the prior-year quarter of $19.1-million primarily due to contribution from the acquisition of Kiva Energy Inc. and strong wholesale market fundamentals related to colder weather and lower propane inventories in the Western United States.
• Corporate costs for the first quarter were $5.7-million compared with $2.7-million in the prior-year quarter due to higher incentive plan costs related to the change in the share price in the prior-year quarter. Superior realized a loss on foreign currency hedging contracts of $4.1-million compared with a gain of $1.5-million in the prior-year quarter due to lower average hedge rates relative to changes in United States dollar/Canadian dollar exchange rates.
• Superior's leverage ratio for the trailing 12 months (TTM) ended March 31, 2023, improved to 3.9 times, which is within Superior's targeted range of 3.5 times to 4.0 times and is expected to remain within Superior's targeted range upon the closing of the Certarus transaction. The improvement from 4.1 times at Dec. 31, 2022, was a result of lower debt levels.

Certarus update

As previously communicated, the waiting period under the Hart-Scott-Rodino Act in the United States, where over 85 per cent of Certarus's revenues are generated, expired on Feb. 13, 2023. Superior and Certarus have now each complied with the supplementary information request from the Canadian Competition Bureau, and the Canadian Competition Bureau continues its review of the transaction. Superior expects the acquisition will close in the second quarter.

In the first quarter of 2023, Certarus achieved record adjusted EBITDA of $62.8-million, which was a $22.4-million improvement compared with the previous record quarter set in the fourth quarter of 2022, and a $35.0-million or 126-per-cent improvement from the prior-year quarter. The growth in adjusted EBITDA was driven by contribution from a new utility support contract, improved pricing, lower product costs, an increase in average mobile storage units (MSUs) for the quarter, increased efficiencies and strong demand for Certarus's low carbon energy offering. Average daily sales volume was 71,723 MMBtu (million British thermal units) per day, a 17-per-cent increase compared with the prior-year quarter. Average MSUs for the first quarter were 646, an 18-per-cent increase compared with the prior-year quarter as a result of MSU purchases made in the past 12 months. As a result of the record quarter and expectations for the remainder of the year, Certarus now expects to achieve 2023 adjusted EBITDA in the range of $175-million to $185-million.

"We are proud of the continued strong execution by the Certarus team to start 2023," said Curtis Philippon, president and chief executive officer of Certarus. "The success of the regional and industry diversification initiatives has driven strong year-over-year organic growth across our compressed natural gas (CNG), renewable natural gas and hydrogen platform. We continue to improve MSU operating efficiencies and utilization, and in the first quarter, we added 10 more MSUs taking our total MSU count to 650 at March 31, 2023. We are excited about joining the Superior Plus team once the transaction closes, and look forward to working together to continue to organically grow the Certarus business."

Certarus continues to be a leader in the distribution of hydrogen in North America and has supported more than 40 hydrogen projects. Recently, through a collaboration with ATCO, Certarus provided a 20-per-cent hydrogen and natural gas blend to the Edmonton Convention Centre that was used to power the Canadian Hydrogen Conference. At the conference, Certarus was also the proud recipient of the Hydrogen Delivery Award.

Capital allocation

Capital expenditures

• Maintenance capital expenditures were $13.4-million in the quarter, compared with $7.3-million in the prior-year quarter related to the timing of expenditures.
• Efficiency, process improvement and growth-related capital expenditures were $16.7-million compared with $7.9-million in the prior-year quarter due to the timing of tank purchases for new customers, integration activity and the impact of the weaker Canadian dollar on U.S.-denominated capital expenditures.
• Investment in leased vehicles and other leased assets was $9.0-million compared with $6.0-million in the prior-year quarter related to the timing of renewing property leases, partially offset by the timing of delivery of leased vehicles.

Tuck-in acquisitions

• On Feb. 1, 2023, Superior acquired all the issued and outstanding shares of ACME Propane Inc., a residential and commercial retail propane distributor in Lincoln, Calif., for an aggregate purchase price of approximately $3.3-million (U.S.) ($4.4-million) before adjustments for working capital.

Quarterly dividend

• Superior is declaring a quarterly common share dividend of 18 cents per share, payable to shareholders of record as of June 30, 2023. The common share dividend will be payable on July 17, 2023.

Normal course issuer bid

• On Oct. 11, 2022, the Toronto Stock Exchange accepted Superior's notice of intention to establish a new normal course issuer bid program (the NCIB). The NCIB permits the purchase of up to 10.1 million shares of Superior's common shares, representing approximately 5 per cent of the issued and outstanding common shares as of Sept. 30, 2022, by way of normal course purchases effected through the facilities of the TSX and/or alternative Canadian trading systems.

MD&A and financial statements

Superior's MD&A (management's discussion and analysis), the unaudited consolidated financial statements and the notes to the unaudited consolidated financial statements as at and for the quarter ended March 31, 2023, provide a detailed explanation of Superior's operating results. These documents are available on-line on Superior's website under the investor relations section and on SEDAR under Superior's profile.

2023 first quarter conference call

Superior will conduct a conference call and webcast for investors, analysts, brokers and media representatives to discuss the 2023 first quarter financial results will be held at 10:30 a.m. ET on Wednesday, May 10, 2023. The webcast will be available for replay on Superior's website under the events section.

Annual general meeting

The company is holding its annual meeting in a virtual-only format so shareholders may attend and participate in the annual meeting via live webcast on Tuesday, May 9, 2023, at 4 p.m. ET. Please see Superior's website for detailed instructions.

About Superior Plus Corp.

Superior is a leading North American distributor and marketer of propane and distillates and related products and services, servicing approximately 936,000 customer locations in the United States and Canada.

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