Superior Plus Corp.

Thank you for standing by, and welcome to the Superior Plus 2021 Quarter Results Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touchstone telephone. As a reminder, today's conference call is being recorded. I will now attend the conference with your host, Mr. Robert Doran, Vice President of Investment Relations and Treasurer. Please go ahead.

Robert Doran Thank you, Valerie. Good morning, everyone, and welcome to Superior Plus' conference call and webcast to review our 2021 second quarter results. Our speakers on the call today will be Luc Desjardins, President and CEO, and Beth Summers, Executive VP and CFO. Today's call is being webcast, and we encourage listeners to follow along with the supporting presentation, which is also available on our website. For this morning's call, Luc and Beth will begin with their prepared remarks and then we will open up the call for questions. Before I turn the call to Luke, I'd like to remind you that some of the comments made today may be forward-looking in nature and are based on Superior's current expectations, estimates, judgments, projections, and risks. Further, some of the information provided refers to non-GAAP measures. Please refer to Superior's second quarter MD&A posted on CDAR and Superior's website yesterday for further details on forward-looking information and non-GAAP measures. I would encourage listeners to review the MD&A as it includes more detail on the financial information for the second quarter as we won't be going over each financial metric on today's call. This will allow us to move more quickly into the question and answer period. I'll now turn the call over to Luke.

Thank you, Rob, and good morning, everyone. Thanks for joining the call. We're still dealing with various levels of COVID-19 restriction in our operating regions, primarily in Canada, but also some parts of the U.S., especially commercial business. I'm proud of our team's commitment, safety, reliability, and we continue to provide essential fuel and services to our customer. We'd like to start with some highlights from the second quarter and recent weeks following the end of the quarter. We have been busy in 2021, and we are in a good position to achieve our superior way forward target set out as our investor day. Nothing has changed in our mind from the mid and long term of where we're going to get. In May 2025, we host a virtual investor day where we unveil our next strategic plan, the Superior Way Forward. The Superior Way Forward is focused on growing our business through acquisition as well as through organic growth and continuous improvement initiative. At our investor day, we also set an acquisition target of $1.9 billion and our EBITDA target of $700 to $750 million. Both targets anticipate to be achieved by 2026. We have made great progress in our acquisition initiative in 2021, with approximately $600 million in acquisition announced or completed, including the recent announcement of CAMP, which should be closing during Q3. That is approximately 30% of our acquisition target achieved in the first year. It is a good year because the pipeline is very robust and with the tax potential effect in the States, many entrepreneurs are looking at selling their business. We recently announced Camp Acquisition provides us with a significant operating platform in California, which should enable us to generate a higher level of synergy when we make future token acquisition in California and surrounding states. But don't forget that on the base of every acquisition we make, either it be Camp or Freeman, we do still see line by line how we're going to get a major improvement and a bit of business we acquire. Camp is one of the largest independent propane retailer in California and a well-established business with retail and wholesale operation that should complement our existing business in California. With retail location in California, Nevada, Arizona, Camp is expected to provide us with more opportunity to expand in the western U.S. And then the Kiva Camps wholesale propane business operates across 16 states in the western U.S., which is expected to further expand our reach into new territory and allow us to use our wholesale natural gas liquid expertise on a larger scale. Camps also has a renewable propane offering which is a product we are excited to provide our broader customer base in the future. We expect the camp's acquisition to close in the third quarter, and we are looking forward to welcoming their employees and customers to the Superior. On June 16, we completed the acquisition of Freeman Gas, based in South Carolina. Freeman significantly increased our presence. It's actually doubled our presence in the Southeast U.S. and we expect strong synergy opportunities as several of the Freeman locations are located close to our existing operation in the north and the south of Carolina. Freeman also has an attractive customer base as the business services many suburban neighborhoods in the southeast. Increasing our footprint and utilizing our back office capability of Freeman is expected to increase the synergy opportunities for future acquisition in that region as well. The acquisition of William in July is a great example of increased energy opportunity following the acquisition of Freeman, as Williams also operates in the Southeast. In the second quarter, our results were impacted by warmer weather in the US earlier in the quarter, and to a lesser extent, lower average margin in both US and Canada. However, our strategic growth and operational initiative are still on track with our plan. Our trailing 12-month adjusted EBITDA as of June 30th, including the pro forma EBITDA from acquisition, complete and announced in 2021, is approximately $460 million, and that doesn't include the synergy which we expect on our past acquisition experience to be similar, but that usually takes a good 18 months to unfold. We're seeing some modest improvement in commercial and wholesale volume in Canada, as restrictions related to COVID starts to ease. In the second quarter, EBITDA from operation of $37 million was $11 million lower than the prior year quarter, primarily due to lower EBITDA from operation in the U.S. for paint business and higher corporate costs. We're going to talk a bit later about our long-term incentive, which with the stock value has taken a good $10 million extra cost that we incurred this quarter. In the second quarter, U.S. propane results decreased compared to the prior year quarter, primarily due to warmer weather, and to a lesser extent, higher incremental operating expense related to acquisition and lower average margin due to lower commodity price environment in the prior year. The second quarter is a seasonally lower quarter, accounting for approximately 16% of the sales, but approximately 22% of the operating expense we are unable to completely flex all of our costs. So to give you a relativity of that, we would prefer to make acquisition before the winter starts, but as you do then, you know, in different times of the year, and this one, Freeman, was in the spring, you end up with a lot less volume and margin and volume for the quarter too, but you have the full fixed cost. So it's just a little bit skew when we think quarter two. For that reason, we recently completed also contribute, it contributes less to the second quarter as we pick up more of the expense and less of the sales volume, which comes in quarter four and quarter one of the following year. U.S. propane EBITDA from operation 2021 is anticipated to be higher than 2020, primarily due to the impact of acquisition complete in 20 and then 2021. benefits from the Superior Way Incisional Workforce Optimization Initiative, and realized synergies from acquisition. These factors have been negatively impacted by warmer weather, about $5 million or less due to the weather, which continue into the second quarter, as well as lower average unit margin related to wholesale propane fundamentals, and the impact from the strong Canadian dollar on U.S.-dominated EBITDA. So Canadian propane results for the second quarter were higher in the prior year, quarter primarily due to the benefit from the CAWS and increased sales volume. Partially upset by the decrease in average margin related to the wholesale propane market fundamentals and customer mix. Now, our internal growth sales continue to have good, strong traction. Canadian propane EBITDA from Operation 2021 is anticipated to be lower than 2020, mainly due to the decrease in sales volume and average unit margin, as well as the reduction of CRWS benefits year over year. Partially offset by lower operating expenses, sales volume is expected to decrease due to the impact from COVID-19 and reduced economic activities and Western Canada especially. We are optimistic with our COVID-19 restriction will be lifted in the late part of this year, allowing our commercial customer to operate at higher capacity, which is expected to increase propane demand. Quarter two is a small quarter with only 16% of sales, but all the full fixed costs and their sales and full costs are making your quarter a little bit skew here, which is something to take in consideration. But we're very confident in our game plan, and everything is on track for acquisition and integration and for the mid and long term. So with that, I'll pass the presentation to Beth.