TD UnhedgedSuperior Plus Corp. (SPB-T) C$13.70
Q1/15 Results Broadly in Line; Guidance Unchanged
Event
Superior Plus Corp. (SPB) reported EBITDA of $110.2mm in Q1/15 versus our estimate of $113.3mm and consensus of $112.1mm. Adjusted operating cash flow (AOCF) per share for the quarter was $0.75 versus our forecast of $0.80. The company reiterated its AOCF guidance of $1.80–$2.10 per share for F2015.
Impact: NEUTRAL
EBITDA excluding corporate costs was in line with our forecast of $117.8mm, while corporate costs were above our estimates owing to higher LTIP costs as well as consulting and severance costs. Our overall outlook remains unchanged following the quarterly results.
We have fine-tuned our estimates for the rest of F2015 and for F2016. We believe that SPB stands to benefit materially in F2016 from a more balanced sodium chlorate market, foreign exchange (SPB’s hedges roll off at year-end and the company believes that this could result in a $15mm–$20mm improvement in EBITDA), and continued improvement at its CPD division. We reiterate our $16.50 target price and BUY recommendation.
TD Investment Conclusion
We believe that SPB remains an attractive turnaround story with an appealing dividend yield, improving balance sheet, opportunities for expansion of margin, and exposure to a strengthening U.S. housing market and economy.