Superior Plus Completes Transformative Acquisition of Certarus

• Superior adds an industry leader in high demand, low carbon energy distribution for CNG, RNG and hydrogen
• The combination of Superior and Certarus creates a North American leader in low-carbon energy distribution helping customers achieve sustainability goals
• Transaction is expected to drive double-digit accretion to 2023 Adjusted Operating Cash Flow per share and significant growth in Adjusted Operating Cash Flow per share compared to 2022
• Certarus provides Superior with accelerated organic growth opportunities in the rapidly expanding multibillion-dollar low carbon energy distribution customer base in the U.S. and Canada
• Underscores Superior’s commitment to investing in organic growth by providing existing and new customers with lower carbon energy
• Superior reaffirms its increased 2023 Pro Forma Adjusted EBITDA1 guidance range of $620 million to $660 million, which includes Certarus’ expected 2023 Adjusted EBITDA of $175 million to $185 million

Superior Plus Corp. (“Superior”) (TSX: SPB) today completed its previously announced acquisition of Certarus Ltd. (“Certarus”) (the “Transaction”) adding an industry leader in delivering low carbon energy solutions, including compressed natural gas (“CNG”), renewable natural gas (“RNG”) and hydrogen, to customers safely and cost effectively through their platform of mobile storage units (“MSUs”). A highly complementary business to Superior’s energy distribution platform, Certarus expands Superior’s low carbon energy offering to include CNG, RNG and hydrogen while tapping into an emerging multibillion-dollar addressable customer base. With the ability to effectively go to market together, the combination will accelerate value creation via new organic growth and expansion opportunities.

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“The combination of these two energy distribution platforms creates one of the most resilient and innovative companies in this industry,” said Allan MacDonald, Superior’s President and Chief Executive Officer. “The Certarus acquisition is a highly strategic transaction that adds an established, innovative and profitable player in the rapidly growing low carbon energy distribution industry. Certarus immediately contributes significant free cash flow, which can be used to continue to fund incremental growth opportunities in this attractive segment. We are thrilled to be partnering with Curtis Philippon and the entire Certarus team in maximizing the full potential of this new organization, sharing best practices of both companies.”

“We are excited to be joining the Superior team,” said Curtis Philippon, Certarus’ President. “Certarus will benefit from Superior’s distribution platform and a shared commitment to safety. The joining of our businesses creates a strong foundation upon which we can continue to grow and provide our customers more environmentally friendly and cost-effective energy solutions to help meet their decarbonization goals.”

Transaction Strategic Highlights

• Addition of Established Low Carbon Energy Business: Adds an industry leader in the high growth, low carbon energy distribution industry through CNG, RNG and hydrogen, distributing energy safely and cost effectively to customers
  • Business and core values are complementary to Superior’s existing propane distribution platform, providing expansion and diversification opportunities, while focusing on safety, customer service and reliability of supply
  • Track record of per share value creation through organically deploying invested capital at high returns
• Substantial Organic Growth Opportunities: Provides entry into rapidly expanding, multibillion-dollar low carbon energy distribution industry for CNG, RNG and hydrogen, with opportunity to continue organically deploying capital at high returns
  • Certarus expects significant opportunities to continue their growth trajectory by serving customers seeking to lower their carbon footprint, meet sustainability goals and drive cost savings relative to diesel and other distillates
• Creates Significant Immediate and Future Value: Delivers compelling value creation with attractive financial returns and enhanced flexibility to act on future organic growth opportunities
  • Immediately increases free cash flow
  • Long runway of organic growth opportunities expected to drive value on a per share basis
• Provides Sustainable Alternatives: Additional lower carbon energy alternatives for customers looking to reduce carbon emissions and meet sustainability goals

Transaction Financial Highlights

• Substantially Increases Per Share Growth: Transaction is expected to drive double digit accretion to 2023 Adjusted Operating Cash Flow (“AOCF”) per share and leads to significant growth in AOCF per share compared to 2022
• Increases Free Cash Flow: Addition of Certarus provides strong free cash flow generation today and in the future, enabling both organizations to further de-lever and achieve continued growth going forward
• Maintains Strong Financial Position and Debt Levels: Pro forma leverage2 of 3.8x at closing, within Superior’s stated target range
  • Superior expects to maintain its dividend level at the current annualized rate
• Reaffirms Increased 2023 Guidance Ranges: Reaffirms Superior’s 2023 Pro Forma Adjusted EBITDA guidance range of $620 million to $660 million, which includes Certarus’ expected 2023 Adjusted EBITDA of $175 million to $185 million
  • Based on the midpoint, Superior’s 2023 Pro Forma Adjusted EBITDA guidance represents a ~$190 million increase compared to the 2022 Adjusted EBITDA of $450 million
• Accelerates Achievement of Targets: Superior now expects to achieve the EBITDA from Operations2 target range of $700 million to $750 million by year-end 2024, a full two years ahead of Superior’s previously estimated timing
  • In 2022, Superior’s EBITDA from operations was $478 million

Financing and Reaffirmed 2023 Guidance

The Transaction was financed using a combination of common shares and cash paid to Certarus shareholders for total consideration of approximately $851 million or $12.15 per Certarus share. Approximately 48.6 million Superior common shares were issued directly to Certarus shareholders valued at $498 million and $353 million in cash was paid to Certarus shareholders, which was drawn from Superior’s expanded $1.3 billion senior credit facilities. The long-term credit facilities were expanded with a new $550 million senior secured credit facility with a three-year term, providing increased liquidity to continue to grow the combined company.

With the closing of the Transaction, Superior reaffirms its previously announced 2023 pro forma guidancefor the year, which significantly increases Superior’s Adjusted EBITDA. Superior’s 2023 guidance is as follows:

Regulatory Approval Details

Superior received a no-action letter from the Canadian Competition Bureau after entering into a consent agreement to retain all of Certarus’ assets while agreeing to divest eight retail propane distribution locations and related assets in Northern Ontario. In 2022, the combined volume of these locations was approximately 90 million litres of propane or 2% of Superior’s propane distribution volumes.

Advisors

CIBC Capital Markets acted as exclusive financial advisor and Torys LLP, Blake, Cassels & Graydon LLP and Orrick, Herrington & Sutcliffe LLP acted as legal counsel to Superior.

J.P. Morgan and National Bank Financial Inc. acted as financial advisors to Certarus. TD Securities Inc. acted as strategic advisor and Burnet, Duckworth & Palmer LLP and McCarthy Tétrault LLP acted as legal counsel to Certarus.

Forward-Looking Information

This press release contains information or statements that are or may be “forward-looking statements” within the meaning of applicable Canadian securities laws. When used in this press release, the words “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “forecast”, “project”, “intend”, “target”, “potential”, “continue” or the negative of these terms or terminology of a similar nature as they relate to Superior or an affiliate or subsidiary of Superior are intended to identify forward-looking statements. Forward-looking statements in this press release include, without limitation, information and statements relating to: anticipated future leverage; the attractiveness of the Transaction from a financial perspective and expected accretion in various financial metrics; the other anticipated benefits of the Transaction, including providing customers with the ability to meet their sustainability goals; continued growth in CNG, RNG and hydrogen demand; Superior’s expected Total Net Debt to Adjusted EBITDA Leverage Ratio; Superior’s long-term vision, future growth, results of operations, performance, business, prospects and opportunities; Superior’s business outlook, objectives, development, plans, growth strategies and other strategic priorities; statements with respect to Superior being a leader in the energy transition; and statements relating to Superior’s estimated 2023 pro forma Adjusted EBITDA and expected timing for the achievement of its EBITDA from Operations target range of $700 million to $750 million, Certarus’ estimated 2023 Adjusted EBITDA and certain expected financial ratios and other statements that are not historical facts. Although Superior believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that they will prove to be correct.

Forward-looking statements made by Superior are based on a number of assumptions believed by Superior to be reasonable as at the date of this news release, including assumptions about Superior’s ability to achieve synergies; Superior’s ability to attract and retain key employees in connection with the Transaction; management’s estimates and expectations in relation to future economic and business conditions and other factors in relation to the Transaction and resulting impact on growth and accretion in various financial metrics; the realization of the expected strategic, financial and other benefits of the Transaction in the timeframe anticipated; the accuracy and completeness of public and other disclosure (including financial disclosure) by Certarus; the absence of significant undisclosed costs or liabilities associated with the Transaction; and other assumptions discussed or referred to in the “Financial Outlook” sections of Superior’s management’s discussion and analysis for the three months ended March 31, 2023, which is available under Superior’s profile on SEDAR at www.sedar.com.

Superior cautions that the assumptions used to prepare Certarus’ estimated 2023 Adjusted EBITDA and Superior’s estimated 2023 pro forma Adjusted EBITDA and 2024 EBITDA from Operations could prove to be incorrect or inaccurate. Superior considered numerous economic and market assumptions regarding the foreign exchange rate, competition, and economic performance of each region where Superior and Certarus operate.

Additional key assumptions or risk factors to the forward-looking information include, but are not limited to, the achievement of the Superior Way Forward acquisition target; obtaining the expected synergies from the acquisitions of Kamps Propane, Kiva Energy and the assets of the Quarles Delivered Fuels business completed in 2022 and other acquisitions consistent with historical averages at approximately 25% over the relevant period; no material divestitures; anticipated financial performance; current business and economic trends; and the amount of future dividends paid by Superior.

In particular, key assumptions and expectations underlying Superior’s achievement of the expected Pro Forma Adjusted EBITDA guidance range in 2023 and achievement of the EBITDA from Operations target range by the end of 2024 include the following: Certarus average mobile storage unit count of 668 trailers in 2023 and approximately755trailers in 2024 and average EBITDA per MSU higher than historic results; corporate costs consistent with historical levels;completion of propane tuck-in acquisitions in 2024 at multiples consistent with historic multiples for Superior’s acquisitions; achieved synergies from acquisitions consistent with historical averages and no material divestitures.

Should assumptions described above prove incorrect, Superior’s actual performance and results in future periods may differ materially from any projections of future performance or results expressed or implied by such forward-looking information. We caution readers not to place undue reliance on this information as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking information.

Forward-looking information is not a guarantee of future performance. By its very nature, forward-looking information involves inherent assumptions, risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking information will not be achieved, including risks relating to the operating and financial performance of the Energy Distribution business which are described in Superior’s management’s discussion and analysis for the year ended December 31, 2022 and in Superior’s annual information form for the fiscal year ended December 31, 2022.

Forward-looking information contained in this news release is provided for the purpose of providing information about management’s goals, plans and range of expectations for the future and may not be appropriate for other purposes. Any forward-looking information is made as of the date hereof and, except as required by law, Superior does not undertake any obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.

Non-GAAP Financial Measures

In this press release, Superior has used the following terms (“Non-GAAP Financial Measures”) that are not defined by International Financial Reporting Standards (“IFRS”) but are used by management to evaluate the performance of Superior and its business: EBITDA from operations, Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), and Total Net Debt to Adjusted EBITDA Leverage Ratio. These measures may also be used by investors, financial institutions and credit rating agencies to assess Superior’s performance and ability to service debt. Non-GAAP Financial Measures do not have standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Securities regulations require that Non-GAAP Financial Measures are clearly defined, qualified and reconciled to their most comparable IFRS financial measures. Except as otherwise indicated, these Non-GAAP Financial Measures are calculated and disclosed on a consistent basis from period to period. Specific items may only be relevant in certain periods. See “Non-GAAP Financial Measures” in Superior’s most recent Management’s Discussion and Analysis (“MD&A”) for a discussion of Non-GAAP Financial Measures used by Superior and certain reconciliations to IFRS financial measures.

The intent of Non-GAAP Financial Measures is to provide additional useful information to investors and analysts, and the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate Non-GAAP Financial Measures differently. Investors should be cautioned that Adjusted EBITDA should not be construed as an alternative to net earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of Superior’s performance. Non-GAAP Financial Measures are identified and defined as follows:

EBITDA from Operations

EBITDA from operations represents earnings before interest, taxes, depreciation, amortization, losses (gains) on disposal of assets, finance expense, restructuring costs, transaction and other costs, and unrealized gains (losses) on derivative financial instruments. EBITDA from operations is used by Superior and certain investors to assess its consolidated results and ability to service debt. EBITDA from operations is reconciled to net earnings before income taxes.

This press release also includes Superior’s EBITDA from Operations target range for year-end 2024. The significant differences between this forward-looking estimate of EBITDA from Operations and Superior’s historical EBITDA from Operations for 2022 are the inclusion of the estimated results from the operations of Certarus for the 2023 and 2024 financial years and commercial propane demand recovery, partially offset by the impact of divestiture of eight propane locations in Canada. Readers should also refer to the “Forward-Looking Information” section above which provides further information with respect to the assumptions used to prepare Superior’s estimated 2023 pro forma Adjusted EBITDA and estimated timing to achieve its EBITDA from Operations target range by the end of 2024.

Adjusted EBITDA

Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, losses (gains) on disposal of assets, finance expense, restructuring costs, transaction and other costs, and unrealized gains (losses) on derivative financial instruments, and is adjusted for corporate costs and realized gains or losses on foreign exchange hedging contracts. Adjusted EBITDA is used by Superior and certain investors to assess its consolidated results and ability to service debt. Adjusted EBITDA is reconciled to net earnings before income taxes.

This press release also includes Superior’s pro forma Adjusted EBITDA guidance range for 2023. The significant differences between this forward-looking estimate of 2023 Adjusted EBITDA for Superior and its historical Adjusted EBITDA for 2022 are the inclusion of the estimated results from the operations of Certarus for the 2023 financial year, the estimated full year contribution in 2023 from acquisitions that were completed by Superior late in the first quarter and in the second quarter of 2022 and expected stronger wholesale propane market fundamentals in the Western United States. Readers should also refer to the “Forward-Looking Information” section above and the “Financial Outlook” sections of Superior’s management’s discussion and analysis for the three months ended March 31, 2023 which provide further information with respect to the assumptions used to prepare Superior’s estimated 2023 pro forma Adjusted EBITDA

Total Net Debt to Adjusted EBITDA Leverage Ratio and Pro Forma Adjusted EBITDA

Adjusted EBITDA for the Total Net Debt to Adjusted EBITDA Leverage Ratio is defined as Adjusted EBITDA calculated on a 12-month trailing basis giving pro forma effect to acquisitions and dispositions adjusted to the first day of the calculation period (“Pro Forma Adjusted EBITDA”). Pro Forma Adjusted EBITDA is used by Superior to calculate its Total Net Debt to Adjusted EBITDA Leverage Ratio.

To calculate the Total Net Debt to Adjusted EBITDA Leverage Ratio divide the sum of borrowings before deferred financing fees and lease liabilities by Pro Forma Adjusted EBITDA. Total Net Debt to Adjusted EBITDA Leverage Ratio is used by Superior and certain investors to assess its ability to service debt.

About Superior Plus

Superior is a leading North American distributor of propane, compressed natural gas, renewable energy and related products and services, servicing approximately 936,500 customer locations in the U.S. and Canada. Through its primary businesses, propane distribution and CNG, RNG and hydrogen distribution, Superior safely delivers clean burning fuels to residential, commercial, utility, agricultural and industrial customers not connected to a pipeline. By displacing more carbon intensive fuels, Superior is a leader in the energy transition and helping customers lower operating costs and improve environmental performance.

About Certarus

Certarus is a North American leader in providing on-road low carbon energy solutions through a fully integrated CNG, renewable natural gas and hydrogen platform. Certarus safely delivers clean burning fuels to energy, utility, agricultural and industrial customers not connected to a pipeline. By displacing more carbon intensive fuels, Certarus is a leader in the energy transition by helping customers lower operating costs and improve environmental performance and is positioned to meet the growing demand for low and zero emission energy distribution.

1 Pro Forma Adjusted EBITDA and Adjusted EBITDA are Non-GAAP Financial Measures. See “Non-GAAP Financial Measures” section below.
2 EBITDA from Operations is a Non-GAAP Financial Measure and Pro forma leverage is a Non-GAAP ratio that is calculated using Total Net Debt and Pro Forma Adjusted EBITDA, both of which are Non-GAAP Financial Measures. See “Non-GAAP Financial Measures” section below.

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