Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Superior Plus Corp (SUUIF, Financial) reported a strong start to 2025 with a 10.5% increase in adjusted EBITDA for Q1, driven by robust performance in both propane and compressed natural gas (CNG) segments.
- The company delivered 24 million more gallons of propane in Q1 compared to the previous year, with fewer trucks and more efficient routes, showcasing operational efficiency.
- Superior Delivers, a customer growth initiative, contributed approximately $2.3 million to EBITDA in Q1, with expectations to contribute $20 million to adjusted EBITDA in 2025 and $70 million by 2027.
- The CNG business, Certarus, grew its EBITDA by approximately 7% year-over-year, maintaining strong margins and returns despite pricing pressures.
- Superior Plus Corp (SUUIF) continued its share repurchase program, buying back 6.2 million shares in Q1, which is approximately 2.6% of the outstanding float, reflecting confidence in the company's valuation.
Negative Points
- Despite strong performance, the CNG segment faces pricing pressure due to cautious customer behavior amid broader economic uncertainties, potentially impacting growth towards the lower end of the 5% to 10% range.
- Corporate operating costs increased to $7.3 million in Q1 from $5.5 million a year ago, partly due to higher incentive plan expenses and one-time costs associated with an Investor Day.
- The company anticipates costs associated with achieving Superior Delivers to be in the range of $10 million to $15 million in both 2025 and 2026, which will be excluded from adjusted EBITDA.
- There is concern about potential impacts on Certarus from volatility in the oil and gas sector, particularly in the Permian Basin, which could affect activity levels and pricing.
- The integration of the wholesale business into the US and Canadian propane segments resulted in a slight decrease in wholesale contributions, with Q1 2025 figures lower than the previous year.
Q & A Highlights
Q: Can you discuss the progress and future plans for the Superior Delivers initiatives?
A: Allan MacDonald, President and CEO, explained that the company is balancing speed and effectiveness in rolling out more than 20 initiatives. They are currently in the design and pilot phases, with plans to scale and implement these initiatives over the summer. The majority of the $20 million contribution for 2025 is expected in the fourth quarter.
Q: Are there any plans to apply the Superior Delivers initiatives to the Certarus business?
A: Allan MacDonald noted that while the initiatives are specific to propane, the transformation methodology and performance management landscape being developed will benefit Certarus. The institutional knowledge gained will be applied to improve efficiency and cost management at Certarus.
Q: How is the current economic climate affecting Certarus, particularly in the oil and gas sector?
A: Allan MacDonald acknowledged the volatility in the market and emphasized the focus on cost structure and business development opportunities to maintain profitability. Certarus is working on increasing its sales funnel and expects some recovery in pricing as market stability improves.
Q: Can you provide more details on the early wins from Superior Delivers and any impact on customer attrition?
A: Allan MacDonald highlighted early wins such as addressing unprofitable customers and implementing minimum use charges. These efforts contributed to the $2.3 million cost savings. The company is also cleaning up inactive customer accounts, which may temporarily affect attrition numbers but does not impact the core customer base.
Q: How are you managing the impact of commodity prices on Certarus, and what is the outlook for the rest of 2025?
A: Allan MacDonald stated that while there is concern about the broader economic climate, Certarus is focused on efficiency and cost management. The company is optimistic about its operations and expects to be competitive despite potential pricing pressures.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
