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TSX: SPF.UN
CALGARY, May 8 /CNW/ -
First Quarter Highlights
- Distributable cash flow per trust unit was $0.73, an increase of
$0.07 (11%) from the prior year quarter.
- Operating distributable cash flow increased to $76.3 million driven
by significantly improved operating cash flow at Superior Propane,
ERCO and SEM more than offsetting JW Aluminum's total contribution of
$9.4 million in the prior year quarter.
- Distributions paid per trust unit remained stable at $0.39 ($1.56
annualized) for the quarter resulting in a payout ratio of 53%.
- Senior Bank Debt decreased $47.4 million from December 31, 2006
levels, representing a Senior Debt to EBITDA ratio of 1.8x and a
Total Debt to EBITDA ratio of 3.2x.
- On April 26, 2007, DBRS confirmed Superior's senior secured notes
rating at BBB (low), the Fund's stability rating at STA-3 (low) and
changed Superior's negative outlook to stable.
Financial Summary
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(millions of dollars, Three Months Ended March 31
except per trust unit amounts) 2007 2006
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Financial
Operating distributable cash flow before
strategic plan costs
Superior Propane 42.3 37.6
ERCO Worldwide("ERCO") 24.8 18.4
Winroc 6.2 7.8
Superior Energy Management ("SEM") 3.0 1.7
Discontinued operations - JW Aluminum ("JWA") - 9.4
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76.3 74.9
Interest (11.1) (14.4)
Corporate costs (2.9) (4.0)
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Distributable cash flow before strategic plan costs 62.3 56.5
Strategic plan costs (1.6) -
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Distributable cash flow 60.7 56.5
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Distributable cash flow per trust unit
(before strategic plan costs), basic $0.73 $0.66
Distributable cash flow per trust unit, basic $0.71 $0.66
Average number of trust units outstanding (millions) 85.7 85.5
Distributions paid per trust unit $0.39 $0.595
Distribution payout ratio (before strategic
plan costs) 53% 90%
Distribution payout ratio (after strategic
plan costs) 55% 90%
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Corporate Strategy Implemented
- Lowered senior debt to EBITDA ratio to less than 2.0x due to the sale
of JW Aluminum on December 7, 2006.
- Reduced targeted payout ratio to the 85 - 90% range.
- Closed ERCO's Bruderheim, Alberta, sodium chlorate facility, removing
80,000 tonnes of capacity from the North American market.
- Renegotiated the Valdosta, Georgia power contract, at competitive
terms.
- Realigned corporate management team with a new focus on strategy
execution, capital allocation, risk management, and succession
planning.
Superior Propane
- Operating distributable cash flow of $42.3 million, a 13% increase
over the prior year quarter, was driven by a 6% increase in propane
volumes and a 51% increase in other services gross profit.
- Superior Propane has increased its focus on customer service while
successfully implementing fees for propane deliveries and other
value-added services.
- Maintenance capital is anticipated to be lower than prior year due to
the implementation of an accelerated fleet renewal and bulk truck
leasing program.
- Margins were 3% lower due to competitive pressures on residential and
commercial volumes coupled with the impact of the CN Rail strike
which resulted in increased costs.
- Operating distributable cash flow guidance for 2007 is $95 -
$100 million, increasing in 2008 to $100 - $105 million.
ERCO
- Operating distributable cash flow increased to $24.8 million
representing an increase of 35% over the prior year quarter primarily
as a result of higher chemical revenues.
- Gross profit increased to $54.8 million from $49.8 million primarily
due to improved pricing received on sodium chlorate, and
chloralkali/potassium products.
- Softwood pulp prices continued to strengthen throughout the quarter
along with the US dollar supporting a more stable sodium chlorate
demand profile.
- The 100,000 tonne production facility located at Valdosta, Georgia
operated at a higher than forecasted utilization of approximately
90%.
- ERCO's low cost Chilean facility commenced production in Q4 2006
contributing to an increase in sodium chlorate volumes over the prior
year quarter.
- Based upon the improved fundamentals for the sector and proactive
risk management of the assets, operating distributable cash flow
guidance was increased by $5 million to $70 - $75 million for 2007
and 2008.
Winroc
- Operating distributable cash flow of $6.2 million, decreased by
$1.6 million from the prior year quarter as stronger performance in
residential markets in Western Canada and commercial activity in all
areas was more than offset by weaker performance in residential
markets in both Ontario and the United States.
- Winroc continues to focus on value-added service offerings
specifically within its commercial and residential markets while
reallocating resources from weaker to stronger markets.
- Superior has forecasted weakness in Central Canada and US residential
sales volumes in 2007 with improvement in these markets in 2008.
- The fragmented nature of the specialty buildings product distribution
industry, combined with the market downturn in the Central Canada and
US residential markets, both provides for excellent consolidation and
greenfield opportunities for Winroc.
- Operating distributable cash flow guidance for 2007 is $30 -
$35 million, increasing to $32 - $37 million in 2008.
SEM
- Operating distributable cash flow of $3.0 million, increased by
$1.3 million (76%) over the prior year quarter.
- SEM's focus continues to be on growth in its high-margin residential
and small customer base.
- SEM has strong growth potential to expand into the Ontario
electricity market along with natural gas in BC and other US
jurisdictions.
- Operating distributable cash flow guidance for 2007 is $12 -
$15 million, increasing to $15 - $18 million in 2008.
Financial Projections
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(millions of dollars, except per
trust unit amounts) 2007(3) 2008(3)
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Operating distributable cash flow
Superior Propane 95-100 100-105
ERCO 70-75 70-75
Winroc 30-35 32-37
SEM 12-15 15-18
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Distributable cash per trust unit 1.75-1.90 1.85-2.05
Payout ratio (target of 85% - 90%) 85%(1) 80%(1)
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Average Senior Debt/EBITDA (target of 1.5 to 2.0x) 1.6x(2) 1.6x(2)
Average Total Debt/EBITDA (target of 2.5 to 3.0x) 3.0x(2) 2.6x(2)
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(1) Based on mid-point of the distributable cash flow per unit range.
(2) Superior's debt ratios take into account the impact of the
off-balance sheet receivable sales program amounts, cash on hand and
the DRIP.
(3) Assumes no material growth capital projects.
Superior expects consolidated distributable cash flow per trust unit for 2007 to be between $1.75 and $1.90, increasing in 2008 to the $1.85 to $2.05 range. This is higher than the outlook provided in the 2006 annual management discussion and analysis reflecting the improved outlook for ERCO. The payout ratios are trending lower for 2007 and 2008 at 85% and 80%, respectively. Surplus distributable cash flow, along with cash on hand, allowed Superior to repay approximately $47.4 million in bank debt from December 31, 2006 levels. The projected Senior Debt to EBITDA and Total Debt to EBITDA ratios of 1.6x and 2.6x for 2008, are trending lower as compared to 2006 and 2007. On April 26, 2007, DBRS confirmed Superior's senior secured notes rating at BBB (low), the Fund's stability rating at STA-3 (low) and changed Superior's negative outlook to stable. We believe our improved financial strength, diversified portfolio of high quality assets, and proactive risk management approach to capital allocation will result in stability of distributions and long-term value for our Unitholders.
First Quarter Results
The funds financial statements for the period ended March 31, 2007, including its Management's Discussion and Analysis, are available on Superior's website at: www.superiorplus.com under 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 2007 First Quarter Results 9:30 a.m. EST (7:30 a.m. MST) on Wednesday, May 9, 2007. To participate in the call, dial: 1-800-733-7571. An archived recording of the call will be available for replay until midnight, June 9, 2007. To access the recording, dial: 1-877-289-8525 and enter pass code 21226852 followed by the No. key. Internet users can listen to the call live, or as an archived call, on Superior's website at: www.superiorplus.com under the Events and Presentations section.
Forward Looking and Non-GAAP Statements
Forward Looking Statements
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Except for the historical and present factual information, certain statements contained herein are forward-looking. Such forward-looking statements are not guarantees of future performance and involve a number of known and unknown risks and uncertainties which may cause the actual results of the Superior Plus Income Fund (the "Fund") or its wholly owned partnership, Superior Plus LP ("Superior") in future periods to differ materially from any projections expressed or implied by such forward-looking statements and therefore should not be unduly relied upon. Any forward-looking statements are made as of the date hereof and neither the Fund nor Superior undertakes any obligation to publicly update or revise such statements to reflect new information, subsequent events or otherwise.
Distributable Cash Flow and Other Non-GAAP Measures
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Distributable cash flow of the Fund available for distribution to Unitholders, is equal to cash generated from operations before natural gas customer acquisition costs and changes in working capital, less amortization of natural gas customer acquisition costs and maintenance capital expenditures. Maintenance capital expenditures are equal to capital expenditures incurred to maintain the capacity of Superior's operations and are deducted from the calculation of distributable cash flow. Acquisitions and other capital expenditures incurred to expand the capacity of Superior's operations or to increase its profitability ("growth capital"), are excluded from the calculation of distributable cash flow. Distributable cash flow is the main performance measure used by management and investors to evaluate the performance of the Fund and its businesses. Readers are cautioned that distributable cash flow is not a defined performance measure under Canadian generally accepted accounting principles ("GAAP"), and that distributable cash flow cannot be assured. The Fund's calculation of distributable cash flow, maintenance capital and growth capital may differ from similar calculations used by comparable entities. Operating distributable cash flow is distributable cash flow before corporate and interest expenses. It is also a non-GAAP measure and is used by management to assess the performance of the operating divisions.
EBITDA represents earnings before interest, taxes, depreciation and amortization calculated on a 12 month trailing basis giving pro forma effect to acquisitions and divestitures and is used by Superior to calculate its debt covenants and other credit information. Superior's calculation of EBITDA may differ from similar calculations used by comparable entities