Superior Plus has good quarter and meets annual guidance
On February19,2015 Superior Plus released it's fourth quarter and annual results.It reports it's results in terms of adjusted operating cash flow (AOCF).Revenue was up 7% for the year but down 7% for the last quarter.But AOCF per share in the quarter was $.68 per share or 21% higher than in 2013.Annual AOCF per share was $1.89 versus $1.69 per share- an increase of about 11%.Still they met the top end of guidance of $1.75 to $1.95 AOCF per share.And guidance has been raised to $1.80 to $2.10 per share for 2015.
Comparable EBITDA
Most companies state their earnings in terms of EBITDA.This is the best way to compare their earnings to other companies and to previous periods.Superior Plus earned $308 million EBITDA for 2014 in comparison to $284 million for 2013.This is equal to $2.56 per share in 2014 compared to $2.36 per share in 2013.Not only that, but Superior Plus (SPB) earned EBITDA per share of $.71 in Q4 compared to an average quarter in 2013 of only about $.40 per share.This improvement is because all of the non-cash items that are subtracted from EBITDA to get AOCF are down.Interest expenses are down because debt is down.Taxes are down;corporate costs are down and mainly restructuring costs are down.It looks like SPB has finshed taking restructuring charge for now and it's debt is down from 2013.Also their corporate costs are down because they are not reorganizing as much now.They have finished trying to sell their Construction Products division which caused additional costs.So annual AOCF per share increased by 11% while EBITDA per share increased by about 9%.Interest expenses which is their biggest non-cash item will be even lower this year as interest rates stay down and debt is reduced further.
Three Divisions
Superior Plus has three divisions- Energy Services,Specialty Chemicals and the Construction Products division. SPB expects EBITDA in 2015 for both Energy and Chemicals to be consistent with that of 2014.EBITDA from Construction Products should be slightly higher this year.But the average EBITDA per quarter in 2014 is higher than in 2013.And the EBITDA for the last quarter of 2014 was higher than for any quarter in 2013.Largely because the profit margin is up and sales are steady. SPB SPB spent $46 million on new facilities at Saskatoon and Port Edwards, Wisconsin but this money was taken from the cash flow not from restructuring.With higher AOCF next year there will be cash flow available for improvements again in 2015;in fact, more than was spent in 2014. Some is already planned for further debt reduction.But a likely candidate for capital expenditures in 2015 will be their Construction Products division.It is still too small to be a significant contributor to overall EBITDA.
Strategy for 2015
Superior Plus has fluctuations both up and down from quarter to quarter but on an annual basis it is more stable and will likely grow 5 to 7 % in 2015.Assuming constant or almost constant profit margins adjusted EBITDA should be around $325 to $330 million in 2015;this would be up from $308 million in 2014.It now has built up cash flow so it will have enough funds to make a substantial capital expenditure.The propane business gives it a base to build on.But SPB must now look for new industrial chemicals perhaps sulphuric acid or other derivatives from natural gas feedstock.This will add to their present stable of specialty chemicals.Also their Construction Products division is too small.They need new products here and maybe a small acquisition.Perhaps pick up a few units from a Canadian company in USA that is winding down.They should have the cash flow to do this also;if not in 2015 at least to start looking now.Superior Plus is a steady performer and heading back to $15 in 2015.
Comparable EBITDA
Most companies state their earnings in terms of EBITDA.This is the best way to compare their earnings to other companies and to previous periods.Superior Plus earned $308 million EBITDA for 2014 in comparison to $284 million for 2013.This is equal to $2.56 per share in 2014 compared to $2.36 per share in 2013.Not only that, but Superior Plus (SPB) earned EBITDA per share of $.71 in Q4 compared to an average quarter in 2013 of only about $.40 per share.This improvement is because all of the non-cash items that are subtracted from EBITDA to get AOCF are down.Interest expenses are down because debt is down.Taxes are down;corporate costs are down and mainly restructuring costs are down.It looks like SPB has finshed taking restructuring charge for now and it's debt is down from 2013.Also their corporate costs are down because they are not reorganizing as much now.They have finished trying to sell their Construction Products division which caused additional costs.So annual AOCF per share increased by 11% while EBITDA per share increased by about 9%.Interest expenses which is their biggest non-cash item will be even lower this year as interest rates stay down and debt is reduced further.
Three Divisions
Superior Plus has three divisions- Energy Services,Specialty Chemicals and the Construction Products division. SPB expects EBITDA in 2015 for both Energy and Chemicals to be consistent with that of 2014.EBITDA from Construction Products should be slightly higher this year.But the average EBITDA per quarter in 2014 is higher than in 2013.And the EBITDA for the last quarter of 2014 was higher than for any quarter in 2013.Largely because the profit margin is up and sales are steady. SPB SPB spent $46 million on new facilities at Saskatoon and Port Edwards, Wisconsin but this money was taken from the cash flow not from restructuring.With higher AOCF next year there will be cash flow available for improvements again in 2015;in fact, more than was spent in 2014. Some is already planned for further debt reduction.But a likely candidate for capital expenditures in 2015 will be their Construction Products division.It is still too small to be a significant contributor to overall EBITDA.
Strategy for 2015
Superior Plus has fluctuations both up and down from quarter to quarter but on an annual basis it is more stable and will likely grow 5 to 7 % in 2015.Assuming constant or almost constant profit margins adjusted EBITDA should be around $325 to $330 million in 2015;this would be up from $308 million in 2014.It now has built up cash flow so it will have enough funds to make a substantial capital expenditure.The propane business gives it a base to build on.But SPB must now look for new industrial chemicals perhaps sulphuric acid or other derivatives from natural gas feedstock.This will add to their present stable of specialty chemicals.Also their Construction Products division is too small.They need new products here and maybe a small acquisition.Perhaps pick up a few units from a Canadian company in USA that is winding down.They should have the cash flow to do this also;if not in 2015 at least to start looking now.Superior Plus is a steady performer and heading back to $15 in 2015.
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