Superior Plus Corp T.SPB

CIBC comments on result

[incomedreamer11]

Q2/24 First Look: Slight Miss At Certarus; Propane Solid

Q2/24 Results:
Superior reported Q2/24 adjusted EBITDA of $43.3MM, slightly missing our estimate of $43.9MM (-1.3%) and consensus of $50.5MM (-14.3%). Earnings per share were lower at ($0.20), vs. our estimate of ($0.11) and consensus of ($0.12). The variance from our estimates was primarily below the EBITDA line. While propane operations were slightly ahead of our estimates, Certarus missed marginally, reporting EBITDA of $27.2MM vs. our $31.0MM estimate, as a result of pricing pressure in West Texas with EBITDA declining $2.6MM Y/Y. Certarus is expected to average 780 MSUs for the year, in keeping with our 779 estimate but lower than the previous estimate of 785, and has added 17 units during Q2/24. MMBtu per average MSU increased by 0.4% Y/Y.

Canadian Propane EBITDA of $10.5MM beat our $6.7MM estimate due to higher average unit margins despite the Northern Ontario asset divestiture.

U.S. Propane EBITDA of $9.8MM missed our $11.6MM estimate (-15.5%) on a decline in volumes from warmer weather and asset divestitures. The company was able to retain some margin despite being in a declining price environment with warmer weather impacting volumes. Wholesale Propane of $2.8MM beat our $2.4MM estimate. U.S. margins per gallon were $1.58 vs. our estimate of $1.50 and $1.45 in Q2/23. Canadian margins per gallon of $0.89 beat our estimate of $0.83 and were in line with last year. Management attributes the unit margin strength to pricing strategies.

The more volatile Wholesale segment unit margins were $0.096 per gallon compared to our $0.115 estimate and $0.113 last year.


2024 Guidance Reaffirmed: The company continues to expect 5% adjusted EBITDA growth from 2023 pro forma adjusted EBITDA of $475.5MM, assuming that weather will stay consistent with the five-year average. Growth is driven by Certarus (15%-20%) and 1%-5% growth for the propane business. Growth contained in guidance is based on pricing optimization and cost control, assuming normal weather.

No Changes On Capital Allocation: The 3.0x leverage target was reiterated, and we still view the long-term leverage target of 3.0x as a journey that will take a few years. Nevertheless, some progress was reported in the quarter, with leverage coming in at 3.8x vs. our estimate of 4.1x. For 2024, the company reiterated a year-end leverage goal of ~3.6x.

Management Change: Natasha Cherednichenko, who has been in the role of COO of Certarus since 2020, will assume the role of President of Certarus. The company has appointed Tommy Manion as SVP and Head of the U.S. Propane segment. Mr. Manion joined SPB in 2019 and has had a 33-year career in the propane industry.

[Apaulson]

They have too much debt to be paying out such a high dividend. Better off paying down debt where their interest rates are.

[newcoin]

Our Investment Thesis Superior continues to lack near-term catalysts, in our view, and we continue to expect that management will continue to defer on the specific targets on its Propane business optimization efforts until a fall investor event that features 2025 targets. That said, we believe Superior's core propane distribution business offers investors a resilient base of recurring free

[Apaulson]

Stifel is way too optimistic.  Trying quoting someone with some relevance.

[bttmfischer]

$12? Are they serious?