Superior Plus Corp. (SUUIF) Q4 2022 Earnings Call Transcript

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Superior Plus Corp. (OTCPK:SUUIF) Q4 2022 Results Conference Call February 17, 2023 10:30 AM ET

Company Participants

Rob Dorran - Vice President, Capital Markets

Luc Desjardins - President & Chief Executive Officer

Beth Summers - Executive Vice President & Chief Financial Officer

Darren Hribar - Senior VP & Chief Legal Officer

Conference Call Participants

Ben Isaacson - Scotiabank

Gary Ho - Desjardins

Nelson Ng - RBC

Steven Hansen - Raymond James


Good day, and convey you for opinionated by. Welcome to nan Superior Plus 2022 Fourth Quarter and Full Year Results Conference Call. At this time, each participants are successful listen-only mode. After nan speaker's presentation, there’ll beryllium a question-and-answer session. [Operator Instructions]. Please beryllium advised that today's convention is being recorded.

I would now for illustration to nan convention complete to your speaker today, Rob Dorran, Vice President of Capital Markets. Please spell ahead.

Rob Dorran

Thank you, Victor. Good morning, everyone, and invited to Superior Plus convention telephone and webcast to reappraisal our 2022 yearly and 4th fourth results. On nan telephone coming from Superior Plus are Luc Desjardins, President and CEO; Beth Summers, Executive VP and CFO; and Darren Hribar, Senior Vice President and Chief Legal Officer. For this morning's call, Luc and Beth will statesman pinch their prepared remarks, and past we will unfastened up nan telephone for questions.

Listeners are reminded that immoderate of nan comments made coming whitethorn beryllium forward-looking successful quality and are based connected Superior's existent expectations, estimates, judgments, projections and risks. Further, immoderate of nan accusation provided refers to non-GAAP measures. Please mention to Superior's continuous disclosure documents disposable connected SEDAR and Superior's website yesterday for further details.

Dollar amounts discussed connected today's telephone are expressed successful Canadian dollars unless different noted. I'll now move nan telephone complete to Luc.

Luc Desjardins

Well, convey you, Rob, and bully morning, everyone. Thanks for joining nan telephone to talk our 2022 yearly and 4th fourth results. I'm pleased to opportunity we've achieved a grounds 4th quarter, posting adjusted EBITDA of $182.6 million. We besides achieved afloat twelvemonth adjusted EBITDA of $449.8 million, which was $51.4 cardinal summation from nan 2021 and supra nan midpoint of our 2022 adjusted EBITDA guidance range.

I'm truthful proud of nan Superior squad and their expertise to execute these results and unprecedented twelvemonth that saw challenges related to nan continued nationalist wellness restrictions earlier this year, rising ostentation and labour costs and a volatile commodity pricing environment.

Our financial and operational results are a testament of our resilient business exemplary successful nan propane distribution businesses, and our superior measurement guardant strategical initiatives, which saw america closed 8 acquisitions successful 2022 for a full of $519 cardinal and announced a transformative acquisition of Certarus.

The eight-propane acquisition were complete 2022 were geographically diverse, see business successful U.S., Northeast, Southeast, Upper Midwest and successful California, and we besides had 1 mini acquisition successful Ontario, Canada. In March 2022, we closed nan acquisition of Kamps and Kiva, which supply america pinch a level for early maturation successful nan charismatic California, Western U.S. market.

The acquisition completed successful 2022, accrued our customer guidelines successful nan U.S. and Canada, and we expect to make important synergy from these acquisitions accordant pinch our humanities acquisition of improving propane distribution business we acquire. So possibly I'm repeating myself a small spot here, but complete 20 deals, and each of those 20 companies we've acquired person improved nan bottommost statement by 25%.

So, nan Certarus acquisition announced successful December 2022 has nan complementary precocious growth, debased c fuels, Compressed Natural Gas, Renewable Natural Gas and Hydrogen to superior extended distribution platform. To nan usage of mobile retention unit, MSU, Certarus delivers debased costs and debased c strength power replacement to its customer. Certarus MSU are interchangeable betwixt CNG, RNG, Hydrogen giving Certarus elasticity to work its customers crossed North America arsenic they modulation distant from diesel and different distilled.

Certarus provides a virtual pipeline to its customer that do not person infrastructure successful spot aliases required backup to support existing infrastructure. From 2020 to 2022, Certarus has much than doubled its adjusted EBITDA, driven by continued measurement and ratio betterment and nan benefits from diversification to their extremity usage customer segments.

I'm besides happy to stock that Certarus and its champion period successful December 2022, only to beryllium surpassed by different grounds period successful January 2023. The Certarus business is starting nan twelvemonth good and we expect they will execute adjusted EBITDA successful nan scope of $140 cardinal to $150 cardinal during nan twelvemonth 2023. The shareholders of Certarus person voted successful favour of our acquisition of Certarus. So, location is nary fiduciary retired related to nan deal, and we are only awaiting regulatory support successful Canada.

In nan U.S., nan 30 days of waiting play required nether HSR filing has expired. So, we are only waiting for nan regulatory support successful Canada. But much important, while we are awaiting support from nan Canadian regulator, each economical benefits being generated by Certarus business is accruing to us. We are including nan afloat twelvemonth results of nan Certarus business, and our 2023 adjusted EBITDA guidance scope of $585 cardinal to $635 cardinal because nan rate raised successful nan business is ours based connected their position and nan statement agreement.

We're excited to invited nan knowledgeable Certarus guidance squad and to nan Superior family and to proceed to turn nan mixed companies aft close. Certarus is simply a high-growth business. We expect to make charismatic financial return, including double-digit accretion to Superior distributable rate travel per stock successful 2023.

Superior expects to execute $1.9 cardinal acquisition target astatine nan adjacent of nan Certarus acquisition, which is 3 years up of our expectation. Superior besides expect to execute nan Superior measurement guardant EBITDA from cognition target scope $700 cardinal to $750 cardinal by nan extremity of 2024, which is down 2 years up of expectation.

I will now move nan telephone complete to Beth to talk financial results successful much details.

Beth Summers

Thank you, Luc, and bully morning, everyone. As Luc mentioned, Superior's 4th fourth adjusted EBITDA of $182.6 cardinal was a grounds for america successful nan 4th fourth and was an summation of $40.4 cardinal compared to nan anterior twelvemonth quarter, chiefly owed to higher EBITDA from operations, partially offset by higher firm costs and a realized nonaccomplishment connected overseas rate hedging contracts compared to a summation successful nan anterior twelvemonth quarter.

The afloat twelvemonth 2022 adjusted EBITDA was $449.8 million, which was $51.4 cardinal higher than nan 2021, chiefly owed to an summation successful EBITDA from operations, partially offset by higher firm costs and a realized nonaccomplishment connected overseas rate hedging contracts compared to a summation successful nan anterior year.

The 4th fourth net from continuing operations was $63 million, an summation of $49.2 cardinal compared to nan anterior twelvemonth quarter. The superior driver for nan higher net higher gross profit and a summation connected derivatives and overseas rate translator of borrowings compared to a nonaccomplishment successful nan anterior twelvemonth quarter, partially offset by higher SD&A income taxes and finance expense.

Full twelvemonth nett nonaccomplishment from continuing operations of $87.9 cardinal decreased by $105.1 cardinal compared to nan anterior year, chiefly owed to a nonaccomplishment connected derivatives and overseas rate translator of borrowings and higher SG&A, partially offset by higher gross profit, little finance disbursal and little income taxation expense.

Turning now to nan individual business results. U.S. propane adjusted EBITDA for nan 4th fourth was $116.7 million, an summation of $36.8 cardinal compared to nan anterior twelvemonth quarter, chiefly owed to nan effect of acquisitions completed successful nan existent year, and to a lesser extent, accrued prices to offset ostentation and nan effect of nan weaker Canadian dollar connected nan translator of U.S. denominated transactions.

Full twelvemonth adjusted EBITDA successful 2022 for U.S. propane was $284.9 million, an summation of $58.7 cardinal compared to 2021, chiefly owed to nan effect of acquisitions completed successful nan existent and anterior twelvemonth and, to a lesser extent, higher portion margins, nan effect of nan weaker Canadian dollar connected nan translator of U.S.-denominated transactions and nan accrued costs owed to inflation.

Canadian propane adjusted EBITDA was $58.3 million. This was an summation of $4.7 cardinal compared to nan anterior twelvemonth quarter, chiefly owed to higher prices to offset nan effect of inflation. Full twelvemonth adjusted EBITDA successful 2022 for Canadian propane was $144.8 million, a alteration of $15.4 cardinal compared to 2021, chiefly owed to nan effect of nan immense use recorded successful nan anterior year, little income of c offset credits and accrued costs owed to higher commodity prices and inflation, partially offset by higher income volumes and portion margins.

Wholesale propane adjusted EBITDA was $22.7 million, an summation of $13.1 cardinal compared to nan anterior twelvemonth quarter. This was chiefly owed to nan effect of nan Kiva acquisition. Full twelvemonth adjusted EBITDA successful 2022 for wholesale propane was $48.7 million, an summation of $25.2 cardinal compared to 2021. This was chiefly owed to nan effect of nan Kiva acquisition and, to a lesser extent, stronger propane wholesale marketplace fundamentals compared to nan anterior year.

Turning to firm results, nan adjusted EBITDA guidance and leverage. Corporate administrative costs for nan 4th fourth were $11 million, an summation of $6.4 cardinal compared to nan anterior twelvemonth quarter, chiefly owed to higher security costs, master fees, nan effect of ostentation and higher inducement scheme costs.

Superior realized nan nonaccomplishment connected overseas rate hedging contracts of $4.1 cardinal compared to a summation of $3.7 cardinal successful nan anterior twelvemonth 4th owed to little mean hedge rates comparative to changes successful speech rates.

On a afloat twelvemonth basis, firm administrative costs were $25.9 million, an summation of $1.8 cardinal compared to 2021. This was chiefly owed to higher self-insurance, security claims, partially offset by little inducement scheme costs owed to nan diminution successful Superior stock value compared to nan anterior year.

For 2022, Superior realized a nonaccomplishment connected overseas rate hedging contracts of $2.7 million. This compared to a summation of $12.6 cardinal successful nan anterior twelvemonth owed to little mean hedge rates comparative to changes successful speech rates.

Superior's full nett indebtedness to adjusted EBITDA leverage ratio for nan trailing 12 months ended December 31, 2022, was 4.1 time, which is somewhat supra our target scope of 3.5 clip to 4 time. The higher mean leverage ratio was chiefly owed to nan effect of higher U.S. CAD complaint connected U.S.-denominated debt.

Superior is maintaining its targeted leverage ratio astatine 3.5 clip to 4 time, while it continues to attraction connected integrating acquisitions and executing connected Superior Way Forward initiatives, including accomplishment of nan anticipated integrated maturation successful nan Certarus business. Superior expects to beryllium successful nan target scope of 3.5 clip to 4 clip astatine nan adjacent of nan acquisition of Certarus.

As Luc mentioned, we achieved our 2022 adjusted EBITDA guidance scope of $425 cardinal to $465 million, pinch adjusted EBITDA of $449.8 million, coming successful supra nan midpoint of that range. This extends our streak of achieving nan adjusted EBITDA guidance we group each twelvemonth and demonstrates nan resiliency of our business.

For 2023, we're introducing our pro forma adjusted EBITDA guidance scope of $585 cardinal to $635 million. Based connected nan midpoint of nan 2023 pro forma adjusted EBITDA guidance range, this is simply a 36% summation compared to nan afloat twelvemonth 2022 adjusted EBITDA of $449.8 million.

The summation is owed to nan expected publication from nan Certarus acquisition, nan first 4th publication from Kamps, Kiva and Quarles acquisitions completed successful 2022 being partially offset by nan warmer upwind knowledgeable astatine nan commencement of 2023.

The 2023 pro forma adjusted EBITDA guidance scope includes estimated afloat twelvemonth Certarus adjusted EBITDA successful nan scope of $140 cardinal to $150 million. This guidance assumes mean upwind for nan remainder of 2023 to beryllium accordant pinch nan five-year average.

As for our superior allocation priorities successful 2023 and going forward, nan Certarus acquisition presents america pinch a awesome opportunity to put superior successful precocious integrated growth. We will proceed to measure M&A targets successful nan propane space, but maturation CapEx for Certarus is presently our position of nan near-term priority.

We besides person nan expertise to repurchase shares done nan normal people issuer bid we announced successful 2022 if that opportunity generates nan due level of returns. We're focused connected creating semipermanent shareholder worth and we'll only allocate superior to our astir accretive opportunities.

With that, I'll move nan telephone complete to Q&A.

Question-and-Answer Session


[Operator Instructions] Our first mobility will travel from nan statement of Ben Isaacson from Scotiabank. Your statement is open.

Ben Isaacson

Thank you, very much, and bully morning, everyone. Congrats connected nan quarter. Just a mobility connected your guidance. If you portion retired nan Certarus, nan acquisition wherever you've called for $140 cardinal to $150 cardinal of adjusted EBITDA, tin you talk astir nan alteration from '22 to '23 for nan remainder of nan business? How overmuch of that is nan normalization of measurement owed to weather? How overmuch of that is integrated growth? And past really overmuch of that is utilization of synergies from immoderate of nan smaller acquisitions that we made? Thank you.

Luc Desjardins


Ben Isaacson

I'm conscionable going to...

Beth Summers

Yes, I tin -- truthful what I'll do is astatine a precocious level here, conscionable benignant of telephone retired immoderate of nan pieces. So, nan first one, and possibly I'll talk astir it from a section perspective. So, if you deliberation astir nan U.S. Propane division, connected a year-over-year basis, basically, deliberation of it arsenic benignant of a $20 cardinal to $25 cardinal increase. And that's being driven by benignant of nan effect of nan M&A. So, you've sewage nan Kiva and nan Quarles acquisition. So, you're going to person Q1. But location is simply a upwind effect aliases location was headwinds from a upwind position successful January and deliberation of that arsenic benignant of a $10 cardinal to $15 cardinal range.

So, you person a spot of an offset location arsenic well. From a Canadian propane perspective, well, there's going to beryllium benignant of measurement and separator maturation successful that business and a small spot from nan McRobert acquisition. What you are seeing connected a year-over-year ground is we're expecting, you would person seen successful nan disclosure c in installments sales.

So, from a c in installments waste perspective, we would expect immoderate little c in installments income moving into 2023 versus 2022 arsenic good arsenic location will beryllium nary costs subsidy aliases nan utilized use connected a year-over-year basis.

So nett overall, deliberation of that arsenic a antagonistic headwind connected that business successful and astir a scope of, say, astir $5 million. Those are really, I'm going to opportunity benignant of nan cardinal changes that would return you successful nan guidelines business from that 2022 of nan $449 cardinal that you would person seen up successful that scope -- yes, astir flat. The remainder of nan business, you've sewage ups and downs.

Luc Desjardins

Yes. So, connected nan moving complaint pinch normal weather, let's say, successful nan sixth clip would astir apt beryllium $620 to $625 million, wasn't for nan commencement of nan twelvemonth pinch specified lukewarm weather.

Ben Isaacson

Perfect. And past conscionable a follow-up connected that 1 for nan large acquisition that you made successful December. On your descent platform astatine nan time, you talked -- you talked astir nan virtual pipeline providing you pinch optionality. Can you talk astir what that could look like, that optionality? And tin you besides conscionable punctual america what nan synergies are from this acquisition? Thank you.

Luc Desjardins

Yes, I'll commencement pinch nan synergy and we'll talk astir nan mobility connected the. No, location are really not overmuch synergy. This is simply a section pinch ain products trading to industrial, they tin return nan instrumentality and usage CNG aliases RNG. So, there's -- nan flexibilities you could person different liquid that goes into those trailer truthful which is awesome because you tin move them, they're mobile, and you tin usage different products.

Overall, this is simply a business that has a awesome guidance team, very bully assets. It's a beautiful caller manufacture pinch large growth, and we intend to tally it wholly separately. What we for illustration to do is, and past we're doing successful 2023 for sure, and I dream moreover aft me, it's ever nan privilege because I ever said successful my career, astir apt done complete 100 deals. And there's thing much profitable than soul growth.

So, compared to acquisition, we make acquisitions opportunity successful nan seven, 8 -- let's say, successful nan 8 multiple. And aft we've done our Superior Way execution, we get down to six. So, it's worthwhile and it's good, but erstwhile you look astatine soul growth, a amended return than that. Great business, will beryllium tally genuinely separately, aforesaid guidance team, and we're location to thief and support them successful their growth. So not overmuch synergy successful that regard.

Beth Summers

Yes. Just to reply nan optionality information of nan question, are you referring to nan optionality to nan customer and nan expertise to move to little c fuels utilizing nan virtual pipeline wherever chiefly they'd beryllium utilizing disclose now? Are you talking astir it from a superior allocation position successful nan business?

Ben Isaacson

No, nan first one.

Beth Summers

Okay. Yes. So, I mean, fundamentally, we're -- nan virtual pipeline provides a little c options. So, we're -- successful particular, diesels being utilized for generating energy, et cetera. What it does is it allows nan customer to now usage either Renewable Natural Gas successful nan instances wherever that's disposable aliases Natural Gas, which is little c strength than diesel, which is typically what it's replacing. And past connected apical of that, there's besides opportunities from a Hydrogen position arsenic good arsenic we spell forward. If there's thing much circumstantial you want -- happy to answer.

Ben Isaacson

Okay. Thank you, truthful much.

Beth Summers

Okay. Thank you.


[Operator Instructions] And our adjacent mobility comes from nan statement of Gary Ho from Desjardins Capital Markets. Your statement is open.

Gary Ho

Thanks, and bully morning. Maybe much of a high-level mobility connected nan CEO announcement. The wording from nan property merchandise identifies soul growth, operational betterment and executing accretive tuck-in acquisitions. So, it feels for illustration nan larger platform-type deals were not mentioned.

And I cognize you've completed respective larger ones recently, including Certarus. So, americium I reference into that correctly, strategy will beryllium much inward focused, integrated maturation and smaller tuck-ins that makes sense?

Luc Desjardins

I deliberation for nan short term, it makes consciousness because we want to allocate much of nan wide superior to Certarus and past we still intend to do immoderate mini tuck-in. The tuck-in, I've talked earlier astir 8 turns. We bargain nan mini tuck-in astir sex, 7 would beryllium nan precocious number that we would pay. And there's often nan return are much than 25% improvement, nan much successful nan 30%, 35% scope of betterment of nan mini tuck-in.

So, we intend to do mini tech successful 2023 and past Certarus much superior for that soul maturation opportunity. What happens aft that? I deliberation it's a bully measurement to look astatine '23 aliases successful '24, '25, -- it's each a mobility of four-time leverage. We don't want to spell complete that.

So, we'll beryllium capable to -- of course, there's a batch of opportunity successful nan propane -- successful nan states and immoderate successful Canada. And we intend to proceed to do that. But we're ever taking successful information what's our leverage ratio. So, I tin show you much specifically '23, I conscionable did. After that and nan remains to beryllium seen. But yes, we intend and clip to proceed to do propane acquisition very accretive arsenic well.

Gary Ho

Okay. Maybe conscionable travel connected to that to make judge I understand. So extracurricular of nan maturation CapEx perchance slowing down M&A whitethorn that lead to expertise to benignant of salary down indebtedness quicker? Is that an accrued accent perhaps?

Beth Summers

Yes. I mean, I deliberation we'll ever look astatine it and make a determination connected really we want to allocate capital, truthful it drives nan highest shareholder return. And nan reality is location will beryllium times erstwhile it makes consciousness to salary down indebtedness and nett overall. I mean I deliberation wherever Luc's comments coming from connected nan 2023 is erstwhile you look astatine it arsenic we've benignant of talk words towards nan apical extremity of our 3.5 clip to 4 time.

So, successful looking astatine each of nan financial metrics, it's conscionable we person to beryllium much prudent and focused connected wherever we're going to allocate that capital. As you move retired and arsenic nan synergies are delivered successful nan M&A transactions that we've completed, and they commencement rolling through, it frees up much free cash. As nan integrated maturation delivers much free cash, location is much room to look astatine much imaginable acquisitions or, frankly, much imaginable soul inorganic growth.

As I said before, we'll ever look astatine it and allocate nan superior to nan highest returns. But arsenic you commencement moving retired successful nan early twelvemonth arsenic nan business arsenic ever and we've talked about, arsenic those acquisitions are afloat integrated and nan synergies realized, it -- we very quickly delever nan business. So, it provides that opportunity to proceed to turn aliases allocate that superior either to soul growth, to M&A transactions, to perchance stock buybacks aliases frankly reducing debt.

Gary Ho

Okay. Makes sense. And past conscionable 1 much mobility conscionable on. Can you springiness america an update connected nan closing of nan transaction, particularly successful nan Canadian bureau side, possibly a much narrower scope than first half of '23 that you've disclosed? And arsenic a related question, nan lockup of guidance and larger shareholders, person you chatted pinch them their intentions to clasp connected nan banal aft nan lockup, that's been a spot of an overhang for investors developing?

Luc Desjardins

Maybe I'll commencement pinch 1 constituent and inquire you Beth for -- and Darren is here, Chief Legal Officer, to adhd immoderate specifications necessarily. But -- truthful nan U.S. business were good. That's 80% of nan business and much maturation there. So very pleased astir that. Canadian, it's a activity successful progress. And it's difficult to foretell nan time they're asking questions, and we want to beryllium very consecutive to giving them each nan reply they have. So, I'll move to Darren for -- he is pinch Lars I chat connected a regular basis. So, I'll move to him for nan rest.

Darren Hribar

Sure. Thanks, Luc. Yes, I think, arsenic we've said, successful nan U.S., nan waiting period, nether nan HSR Act expired February 13. We've sewage a last order. So, nan only point really -- nan only information near to closing is receipt of support from nan Canadian Competition Bureau. Their reappraisal is still ongoing, and we expect to request immoderate further clip to reason that review, which is why we've extended nan expected timing to nan first half of 2023.

Our position connected that, I think, I guess, we would say, look, nan businesses are highly complementary, not successful nan aforesaid merchandise market. So, we expect we'll beryllium capable to get that regulatory clearance successful nan first half of 2023. But nan logic we pushed it retired is we deliberation nan bureau is going to apt request a small much clip to get there.

Gary Ho

Okay. And immoderate feedback connected nan lockup?

Luc Desjardins

Beth, let's comment.

Beth Summers

Yes. I mean, I'll jump successful connected nan lockup and conscionable benignant of locomotion done astatine nan highest level. So, astatine nan highest level, astir 45% is taxable to lockup. And that's divided by astir -- 36% of that would beryllium aft six months and past astir 9% would beryllium aft 3 months, and past nan remainder of that would beryllium tradable connected time one.


[Operator Instructions] And our adjacent mobility comes from nan statement of Nelson Ng from RBC Capital Markets. Your statement is open.

Nelson Ng

Thanks, and congrats connected a beardown quarter. So conscionable connected superior allocation. I deliberation successful nan MD&A, nan guidance was for $200 cardinal to $240 cardinal for, I guess, attraction CapEx, nonrecurring CapEx and leases. Can you supply a breakdown of that? And also, really overmuch of that $200 cardinal to $240 cardinal is going to Certarus?

Beth Summers


Luc Desjardins


Beth Summers

Okay. So first all, Nelson, possibly nan champion measurement to divided it into nan wide categories first. So, of nan $200 cardinal to $240 million, deliberation of nan maintenance, CapEx successful nan scope of $75 cardinal to $80 million. And truthful that would beryllium divided astir $30 cardinal Canada successful that -- and these are unsmooth ranges, but $25 cardinal successful nan U.S. and past Certarus attraction CapEx would beryllium astir $15 cardinal for 2023.

Then if you look astatine superior leases, deliberation of those successful astir $30 cardinal to $40 cardinal range. And past looking astatine nan maturation successful nonrecurring, that's nan $105 cardinal to benignant of $115 million. So Certarus of that, deliberation of that, and this is for nan 9 months going forward, that benignant of $40 cardinal to $50 million. And past Canada, benignant of successful the

$20 cardinal range, nan U.S. and astir a $40 cardinal range.

Luc Desjardins

Also, afloat year...

Nelson Ng

So conscionable to clarify, truthful nan existent magnitude invested -- truthful that $40 cardinal to $50 cardinal for Certarus, that's for nan 9 months. So, for nan afloat year, it'd evidently beryllium a spot higher than that, right?

Beth Summers

Yes. Think of it for nan afloat twelvemonth successful nan scope of $100 million.

Luc Desjardins


Beth Summers

Yes. That -- It's evidently depending erstwhile that CapEx erstwhile you're reasoning it for nan afloat year. And possibly that's nan champion measurement to deliberation astir it successful nan afloat twelvemonth because it's going to dangle when, successful particular, nan deliveries of nan MSUs occur, right?

Luc Desjardins

But it's, telephone it, $100 cardinal for nan year.

Nelson Ng

Okay. All right. That's fair. So, $100 cardinal conscionable for nan trucks and trailers and earlier leases and -- for illustration earlier attraction CapEx?

Luc Desjardins


Nelson Ng

Okay. That's great. And past nan adjacent mobility is, I think, Luc, you mentioned that Certarus will run connected a stand-alone basis. and there's constricted synergies. But I conjecture longer term, do you spot -- I conjecture you'll beryllium retiring soon, astir apt not, your decision.

But do you spot nan benefits of putting nan 2 together successful position of, I guess, Certarus is headquartered successful Calgary, you've sewage astir of their operations successful nan U.S. and past Superior Plus is headquartered successful Toronto. So, I conjecture from a firm perspective, location should beryllium immoderate synergies there.

Luc Desjardins

No. So what -- we person a section pinch SCL successful Calgary. We person a section pinch nan U.S. business, and we person nan Canadian business located successful Mississauga, Ontario. That business will beryllium located successful Calgary. It's a -- we're a North America business, and we person divisions that allocated aliases dispersed retired betwixt North America.

So, I astir apt forgot 1 point connected synergy. I'm a beardown believer that 80% of their business successful nan authorities is simply a large business company. But those large business institution -- and they're replacing diesel. But those large business institution besides usage propane.

So, I deliberation erstwhile successful clip and wrong nan adjacent twelvemonth arsenic we activity together, we'll look astatine helping each different to waste much product. As you know, Superior Canada, I don't cognize if there's a large business company, we don't do business with. It's astir apt each of them. And what Certarus is replacing is chiefly diesel.

So, tin we return those accounts and those relationships and say, hey, Certarus team, let's present you to those large business customers successful Canada and spot if you tin switch nan diesel pinch your product, 100%. So, location are immoderate synergies. I thought nan mobility was much connected costs synergy. There's not overmuch location if nothing.

But connected nan maturation synergy, absolutely. We're going to touch guidelines pinch each of their customers successful nan states we don't have. They're mediate large industrial. As you know, today, what we do successful nan States is for illustration 90-plus percent residential. And past successful Canada, we're large industrial. We're astatine beautiful overmuch successful Canada connected large business and want to make judge that those interaction relationships create much soul maturation business for some businesses, and that will happen. I'm very convinced.

Nelson Ng

Okay. That's -- truthful it's much connected nan cross-selling broadside wherever you spot nan worth add. And past conscionable past mobility -- conscionable 1 past mobility successful position of for illustration ostentation and unit and costs pressures. I conjecture you've been done nan worst of it by now. But are you still seeing immoderate -- really is nan labour marketplace successful position of uncovering seasonal drivers? And tin you conscionable touch guidelines connected wages?

Luc Desjardins

Yes. Many times, during COVID and during each nan batch of group changing position these days person a batch of vulnerability connected that. And I deliberation we're lucky. I deliberation we're fortunate because we person complete 85% of our labor are responding that we're astatine slightest 85% -- 100% -- happy to activity pinch us, nan measurement we dainty them, nan measurement we communicate, nan measurement we person them participate successful nan business. It's a very high-quality civilization and values that we've built.

And what we've learned from Certarus would beryllium multi-time, we meet and recreation pinch them. It's conscionable a cleanable fresh connected civilization value, very human. And so, we're lucky. And I ever adhd to that from nan motortruck drivers successful our propane business, they're mini motortruck and nan driver goes retired during nan day, does this stain travel backmost home. There's a ton of motortruck drivers that person larger motortruck and larger miles that they do, they spell distant from location which is overmuch harder.

So, I wouldn't opportunity it's easy what nan motortruck driver do, wintertime clip gets very unsmooth astatine galore times successful galore areas. But it's -- we don't person existent trouble of uncovering bully motortruck drivers. And erstwhile they activity for us, they're -- I would telephone a batch of our labor are benignant lifer. They're good treated, they emotion to activity superior, admit our occurrence and our connection style. And it's really very proud and very pleased of nan wide thousands of labor admit moving here, and we want to dainty them very good and they merit it.


[Operator Instructions] Our adjacent mobility comes from nan statement of Steven Hansen from Raymond James. Your statement is open.

Steven Hansen

Good morning, everyone. Just a speedy 1 again going backmost to Certarus. The erstwhile proprietor had been spending rather aggressively connected nan fleet to turn nan apical line, I think, logically. And if I'm not mistaken, that included a ample inflow of caller units successful nan backmost half of past year.

So, you said briefly, Luc, earlier to nan CapEx floor plan going forward. But I conscionable wanted to get a consciousness for what benignant of untapped utilization you person disposable coming pinch nan units that came successful past year, really quickly do you request to replenish aliases adhd caller units? So -- and ultimately, what benignant of integrated maturation do you deliberation is sustainable complete nan adjacent mates of years for nan apical statement for this business aliases possibly from an EBITDA perspective? Thanks.

Luc Desjardins

Yes. And I'm going to beryllium pleased that nan adjacent telephone I astir apt won't beryllium present but I'd beryllium pleased that we could induce Curtis, who's nan President and his squad truthful that they tin reply a batch of those circumstantial questions. So, I deliberation from integrated growth, and correct maine bit. And Darren, if you deliberation nan number is not precisely what we've talked about, but we surely deliberation successful nan astatine slightest 10% maturation a year, soul growth. I dream it could beryllium more.

From your mobility -- first mobility connected CapEx, I deliberation we're continuing to walk arsenic overmuch arsenic they walk successful nan past, if not more, pinch $100 cardinal successful 2023. So, I deliberation we're not slowing down their advancement and their opportunity to create caller business. If much rate travel comes in, I deliberation we hopefully tin push much their way. But for nan moment, from a fund and wherever we guidelines today, it looks much for illustration $100 million. And Beth, thing other you deliberation I miss or...

Beth Summers

Yes. I mean I deliberation what I would adhd is on your mobility of -- for nan caller units that came in, whether they're being utilized and whether they're ramped up, I mean nan beauty of nan business is that there's overmuch much request than for mobile retention units than location is supply. So, for those units, they're very quickly being used, being utilized to proviso customers and frankly, generating that EBITDA.

So, if you look astatine it, I deliberation it's pinch that business, it's really much getting nan MSUs produced, purchased and past successful they tin quickly beryllium generated -- to make EBITDA. And so, from that perspective, they would each beryllium being utilized. And again, from a income perspective, there's much customers than those MSUs.

Steven Hansen

That's great. And possibly conscionable a follow-up, and possibly this is excessively acold into nan weeds for now, but I'll conscionable inquire anyway. So conscionable astir benignant of nan hub-and-spoke strategy arsenic it relates to certarus. Are They successful each nan regions they request to be? Luc, you had referenced immoderate cross-selling earlier I'm conscionable trying to get a consciousness for whether this is simply a density densification strategy astatine this constituent and expertise to reap incremental high-margin return opportunities arsenic opposed to benignant of greenish fielding caller hubs that mightiness beryllium a small spot little separator accretive? Where are they successful that strategy, for illustration group of evolution, I guess, frankincense far?

Luc Desjardins

I'll reply from what we know, and I ever preface that those answers pinch adjacent quarter, nan existent group that knows it very good tin reply much specifically. My knowing is there's specified a maturation successful this manufacture successful those 3 products that we talked astir that they tin proviso that nan number of hubs will proceed to grow, and location will beryllium more. I deliberation nan intent is to person 3 to 4 much hubs each year.

And if you look astatine they've done a large study pinch Mackenzie that shows nan maturation successful those 3 products. And I won't springiness you nan number because, they're wholly nan billions and billions of growths successful those industries. So -- they're successful nan champion position successful North America to beryllium nan 1 that grows pinch their position and their squad that they built and nan instrumentality they've already put successful place.

So, I would opportunity 3 to 4 hub continuously for years to travel and proceed to grow. And I don't spot that -- if there's 1 point and consequence tin thief having a bully year, I deliberation they tin turn much than 10%. We opportunity that because we want to beryllium blimpish and not giving you different number than what we're judge about, but there's maturation location that could beryllium successful nan 15% a twelvemonth for sure.


[Operator Instructions] And I'm not showing immoderate further questions successful nan queue. I'd for illustration to move nan telephone backmost complete to Luc Desjardins, President and CEO for closing remarks.

Luc Desjardins

So, I'll wrap up this call, I would for illustration to return this opportunity to convey each of you for being location and for each nan 12 years you followed this institution and galore of you pursuing america and supporting Superior. It has been a pleasance and a privilege to stock pinch you this unthinkable travel of maturation and nan translator of Superior, which we've gone to complete nan years, galore of you remember, multi-business we have. Now we're focused connected power large clip North America.

I'm proud of each nan labor and what has been accomplished. We person a ace awesome guidance team. I'm assured that I'm leaving this institution successful exceptional position to prosecute its growth. I want to mention my appreciation to everyone and each stakeholder, team, employee, management, Board, everybody that's really worked difficult to make this business hap complete nan years.

And I really person told that to group internally successful nan past four, 5 months and possibly much successful nan past 3 years. With nan Certarus deal, erstwhile you deliberation of our level pinch a number of customers we have, which successful nan 1 cardinal and past you deliberation of Certarus, what they bring arsenic a caller introduction pinch soul growth. I mean, I'm leaving this institution successful amended style than it was moreover arsenic we ended up conscionable being successful propane, it was good, and we built and we amended each business 25%.

Now we're conscionable going to nan adjacent level. And this is nan translator that is happening and very, very proud of everybody. I'm very pleased that I'm leaving pinch this caller crippled and caller opportunity for a ace awesome Canadian company.

So, pinch that, I wish you each nan best. Thank you for your support. And hopefully, nan mobility was, Luc, you're retiring? I don't cognize what retiring is. I will not retire. I'll beryllium moving astir apt not astatine nan aforesaid gait arsenic nan afloat CEO, but doing thing of a standard to support engaged because I emotion business and it's my passion and successful my life. So, I wish you each nan best. Thank you.


This concludes today's convention call. Thank you for participating. You whitethorn now disconnect. Everyone, person a awesome day.

Editor: Naga

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