Superior Plus Earnings Call: Progress Amid Challenges

Superior Plus ((TSE:SPB)) has held its Q3 earnings call. Read on for the main highlights of the call.

Superior Plus’ latest earnings call revealed a mixed sentiment, reflecting both significant progress in transformation efforts and short-term financial challenges. The company has made strides in improving efficiency and leadership, yet these advancements are overshadowed by revised guidance and increased leverage expectations due to recent obstacles.

Superior Delivers Transformation Progress

Superior Plus has made notable advancements in its operational transformation, highlighted by a complete overhaul of its distribution model and a 12% reduction in non-field workforce. These efforts have resulted in a 300-basis-point improvement in sales lead conversion and a 5% enhancement in labor hours per 1,000 gallons delivered.

Certarus Performance Amid Challenges

Despite facing pricing pressures in the CNG segment, Certarus has managed to maintain EBITDA margins above 25% and achieve a 5% reduction in operating costs per MMBtu. The company also reported a 24% increase in industrial revenues and a 42% rise in renewable revenues year-over-year.

Operational Efficiency Improvements

Superior Plus has centralized its functions and integrated advanced AI tools, leading to enhanced routing, delivery efficiency, and pricing strategies. These improvements are part of the company’s broader efforts to streamline operations and boost overall performance.

New Leadership Appointment

In a strategic move to bolster its commercial strategy and growth initiatives, Superior Plus appointed Deena LaMarque Piquion as the new Chief Commercial Officer. With over 20 years of global leadership experience, Piquion is expected to drive the company’s commercial success.

Lowered 2025 EBITDA Guidance

Superior Plus has revised its adjusted EBITDA growth target for 2025 down from 8% to 2%. This adjustment is attributed to pricing pressures in the CNG sector, unexpected costs from new delivery technology implementation, and a supply disruption caused by a refinery fire in California.

Challenges in CNG Business

Certarus experienced a decline in EBITDA due to a challenging pricing environment and subdued business activity in the well site segment. The timing of recovery remains uncertain, adding to the company’s financial challenges.

Impact of Delivery Model Transition

The transition to a new distribution model has led to temporary inefficiencies and costs, such as underutilized capacity and deferred volumes, which negatively impacted Q3 results.

Refinery Fire Impact

An outage at the Martinez Refinery in California adversely affected propane margins, costing Superior Plus approximately $4 million for the year.

Higher Leverage Expectations

Due to revised EBITDA projections and a stronger Canadian dollar, Superior Plus now anticipates ending the year with leverage around 4.0x, higher than the initial target of 3.6x.

Forward-Looking Guidance

During the earnings call, Superior Plus provided guidance indicating a revision of their 2025 expected adjusted EBITDA growth target from 8% to 2%. This change is primarily due to pricing pressures in Certarus’ well site business, onetime implementation costs for new delivery technology, and a supply disruption from a refinery fire. Despite these challenges, the company remains focused on customer growth and long-term transformation, aiming for sustainable shareholder value and resilience amid market fluctuations.

In conclusion, Superior Plus’ earnings call highlighted a dual narrative of significant operational progress and immediate financial challenges. While the company has made strides in transformation and efficiency, short-term obstacles have necessitated a revision in guidance and increased leverage expectations. Investors will be keenly watching how Superior Plus navigates these challenges to achieve its long-term goals.