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spk01: Good day, and thank you for standing by. Welcome to the Superior Plus third quarter 2023 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Adam Kernick, Manager of Corporate Finance and Investor Relations. Please go ahead.
spk10: Thank you, Shannon. Good morning, everyone. Welcome to Superior Plus' conference call and webcast to review our 2023 third quarter results. On the call today are Alan McDonald, President and CEO, Greer Coulter, CFO, and Curtis Philippon, President of Sertaris. For this morning's call, Alan and Greer will begin with their prepared remarks, and then we will open up the call for questions. Listeners are reminded 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 continuous disclosure documents available on CDAR Plus and Superior's website for further details. Dollar amounts discussed on today's call are expressed in Canadian dollars unless otherwise noted. I'll now turn the call over to Alan.
spk08: Thanks, Adam. Good morning, everyone. Please bear with me. I got a bit of a cold today. I'm very pleased to be meeting with you here today to discuss our results for Q3, which is traditionally a smaller quarter in financial terms. But a significant one this year is it's our first full quarter, including Soteris, following the close of the acquisition back in May. We're also welcoming some new members of the team this quarter, following our management changes that we announced in September. As we continue to refine our strategy and 2024 operating objectives, we felt it was imperative to ensure that we had the right skills and experiences to lead the transformation of Superior Plus. I'm very happy to have Greer Coulter, our new CFO, Joining me today with all of you. Now many of you know Greer by reputation, but his previous experience will be a huge asset for us as we work together to deliver a plan that will drive incremental growth and shareholder value here at Superior. Greer's initial focus in the role will be to understand our opportunities to improve operating efficiencies and focus on capital allocation across the board. Now there's a lot of work to be done, but we have significant opportunities in both regards. Today we're also welcoming Kirsten Olson, our new Chief Human Resource Officer, who joined in late October. At Superior, we are deliberate and focused when it comes to building a strong team, and Kirsten will make a significant impact in terms of how we continue to attract, retain, and develop world-class talent. As we go into a busy winter season, I'm very pleased with the strength of our management team. Greer and Kirsten are welcome additions to a strong leadership group with especially talented operational leaders at Superior Propane and Soteris. Before I offer a few comments on the quarter and turn things over to Greer, I should reaffirm our priorities as I laid them out on our last call. We are continuing to be committed to driving shareholder value in our existing businesses. Superior has a world-class set of assets, and leadership teams at both operating divisions are committed to delivering incremental organic growth. At Superior Propane, Andy and his team are focused on setting new standards of performance for what is arguably already one of the most successful propane companies in North America. They're continuing to innovate new ideas for building our customer base organically, optimizing our pricing structure, and setting new industry standards for asset utilization and productivity. At Soteris, Curtis and his team are managing to meet the needs of their customers in a very busy period of expansion and growth. As they add new MSUs, they're serving existing markets while also adding new customers, industry verticals, and geographies, all while keeping a watchful eye on financial performance, cost, and profitability. Over the last two months, Greer and I have been meeting with investors and analysts to share our vision for the organization. We believe we have the right assets to become the foremost energy distribution company in North America, and the transformation from a propane company to a multi-solution energy provider is behind us. Today, Superior is firmly established as one of the foremost companies leading the transformation of the energy sector. We are enabling efficient carbon reduction every day while ensuring safety of supply for our customers. In our meetings with investors, we have also been reaffirming our commitment to organic growth, maintaining our dividend, reducing leverage, and effective and efficient capital allocation. Before I turn the call over to Greer for an update on the financial results, I have a few comments of my own on the quarter. Although Q3 is seasonally the smallest quarter for Superior, I'm very pleased with the results. We saw strong performance across each of our operating business units in Canada and the U.S., and improvements over Q3 of last year, especially in the U.S. propane distribution business, where some cost savings initiatives helped improve profitability in the slower summer months. I was also pleased with the improvements that some key measures have identified as priority measures, including EBITDA per share and our leverage ratio. So with that, let me turn the call over to Greer for the third quarter results. Greer?
spk04: Thank you, Alan, and good morning, everyone. I'd like to start by saying that my first couple months here at Superior have confirmed the opportunity that I thought was here to grow this business and create value for our shareholders. We've got work to do. but we are starting with a very strong asset base and a rare organic growth engine in Sir Terrace. As we execute on our operational plans and bring a renewed focus to capital allocation, I'm confident that the Superior story will become clearer to the market and I'm excited to be part of it. Moving into results for the quarter, overall Superior delivered a strong third quarter with adjusted EBITDA of $25.8 million. This represents an increase of $34.6 million compared to the prior year quarter, driven from the contribution from Soteris and higher adjusted EBITDA from the propane distribution businesses, partially offset by higher corporate costs. Our third quarter net loss of $107.8 million compares to a net loss of $206.9 million in the prior year quarter. Similar to our growth in EBITDA year over year, the primary driver for the improvement here was higher gross profit. We also saw a better result on derivatives and foreign currency translation of borrowings compared to prior year, all partially offset by higher SDNA and higher finance expenses. Turning now to the individual business results. Sir Terrace achieved record adjusted EBITDA in the third quarter of $35.5 million, growing at approximately 19% over the prior year comparative. The growth was primarily driven by a larger MSU fleet versus prior year and better utilization of the MSUs. We continue to add MSUs and expect to end the year with over 700 in the fleet, approximately four times that of our nearest competitor. The U.S. propane business produced adjusted EBITDA for the third quarter of negative $5.8 million, which was an increase of $5.1 million compared to the prior year quarter. The business achieved higher average unit margins in the quarter, partially offset by lower sales volumes. The Canadian propane business produced 4.3 million of adjusted EBITDA in the third quarter, modestly higher than the prior year quarter. The increase was primarily due to higher average unit margins, similar to the U.S. business, partially offset by lower sales volumes. And recall that weather variances are less impactful in the third quarter due to lack of heating demand. Wholesale propane generated adjusted EBITDA of $1.5 million in the third quarter, a decrease of $3.6 million compared to the prior year, driven by higher freight, and to a lesser extent, the impact of a weaker Canadian dollar on the translation of U.S. denominated transactions. So overall, we were very pleased with the performance of our businesses in the quarter. Turning to corporate results, leverage, and guidance, corporate administration costs for the second quarter were $10.1 million, an increase of $3.9 million compared to the prior year quarter due to higher insurance costs and higher long-term incentive plan costs related to the change in share price in the prior year quarter. Superior realized a gain on foreign exchange hedging contracts of $0.4 million, modestly higher than the loss in the prior year quarter as Superior's average hedge rates were higher relative to the US dollar rate in the current quarter. Our leverage ratio for the trailing 12 months ended September 30 was 3.7 times, which is significantly lower than 4.3 times in the prior year. And while this number will move around somewhat from quarter to quarter due to the seasonal nature of this business, our objective is to continue to improve this metric over time to ensure the company has the financial flexibility to run the business and take advantage of opportunities from a capital allocation standpoint. We are maintaining our 2023 pro forma adjusted EBITDA guidance range at 630 to 670, which includes Sir Terrace on a full year adjusted EBITDA basis in the range of 185 to 195. You'll notice that we have introduced a new metric in our third quarter results, adjusted EBITDA per share, which is consistent with our goal of providing simpler shareholder metrics Adjusted EBITDA per share for the third quarter was $0.09 compared to negative $0.04 in the prior year quarter. We have also filed our notice of intention to commence an NCIB with the TSX, which will start on November 10th and provide us with another year of optionality to opportunistically execute on accretive share buybacks. And lastly, the board has approved a quarterly dividend of $0.18 per share. And with that, I'd like to turn the call over for Q&A.
spk01: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gary Ho with Dave Jarden. Your line is now open.
spk03: Thanks. Good morning. Maybe just to follow up on your comments here, Greer, just on the NCIB. that was renewed. Just wondering your thought process on the repurchases, how active you'll be just given the dividends that you have in the growth CapEx commitments.
spk04: Yeah. Hi, Gary. It's a good question. I think at this point, what I would say more generally is we see a lot of value in the shares. We see it as a top capital allocation priority. To be fair, we're still fine tuning our capital plan for 2024. And as a result, it's hard for us to give out specific numbers. But as I say, we look at this as a top priority. And if you look at that aside, uh investing in our business organically which is also a top priority and managing our balance sheet and looking at leverage those are also there with it but uh to be fair you know we just haven't done all the work to figure out on the organic capex side um which obviously would have an impact on how much we would be able to buy back so that's what i'd say but it's up there as a top priority is maybe the summary okay and then maybe just follow on on that high level question
spk03: maybe for both Alan and yourself. If you look out to 24, just thoughts on updating the street on any strategy shifts or changes in capital allocation priorities, perhaps an investor event, any glimpse into kind of what you and the board are looking at?
spk08: So, hey, Gary, Alan. Short answer is no. There's not going to be any changes in the strategic shifts, if I understand your question right. We're... We're going to be coming out with a more detailed version of the strategy we've been talking to all of you about in late winter, most likely post-February results. But our vision right now is very consistent with what we've been talking about. It's driving organic growth, looking at operational effectiveness in propane, investing in the capital that we have, getting the balance sheet even more more conservative. So no, you shouldn't expect any abrupt changes. I can tell you categorically, we're not planning any abrupt changes to that. The world could turn, obviously. If it does, we'll respond, but that's where we're at right now. Can you hear me okay, by the way, Gary?
spk03: Yeah, I can, yeah. And then maybe just a last question for Curtis, perhaps, with some line. Maybe give us an outlook on the hub build-outs over the next 12 months. maybe geographically, where you're looking at maybe targeting any certain client segments?
spk11: Sure. Hey, Gary. I won't give specific locations. We've got a couple sites underway under development right now. But strategically, the way we think about it is we target to add add or increase capacity at existing sites about four times in a year. And so we're actively always out there looking at developing a number of different sites and sort of open up new markets. In particular, we're looking at sort of on the east and west coast of the U.S. are sort of the priorities right now. But we've got more to come in a future call on that.
spk03: Okay. Thanks very much. Those are my questions.
spk11: Thanks, guys.
spk01: Thank you. Our next question comes from the line of Aaron McNeil with TD Cowan. Your line is now open.
spk06: Good morning, and thanks for taking my questions. Alan, you sort of referenced it in the prepared remarks, but it looks like there's been some pretty encouraging propane unit margin improvements in the quarter across all the propane segments. I'm just wondering if this is a function of some of the organizational effectiveness and price optimization efforts that you've spoken about in the past. If it is, how far along are you on that initiative? Hey, Aaron.
spk08: Thanks for the question. You know what? I would chalk that up to a two-fold. I think it's a little bit of opportunism. And you always have to think about the margin, too, in the context of the mix between wholesale, consumer, and industrial, because those will create fluctuations. You know, careful, so primarily a little bit of mix and just good fortune. And the other, pricing management, of course. But the other is, it's very early days in terms of driving operational changes. These things take a lot of time because they're really on the back of new capabilities. But some of the earlier signs that you see that you're having an impact is attention and focus on things like cost management and being conservative around retaining high-value customers and being less aggressive in just acquiring volume in low-value customers. So I think you're seeing an increase in discipline, which is having a contribution, but also some normal fluctuations in the business.
spk06: Understood. So I guess, not to put words on your mouth, but more to come on that front. Yes.
spk08: Yeah, and look, I don't want to promise massive volume, massive margin changes. You know, think of it at the highest level in terms of overall growth because there's some volume opportunities, too, that we'd like to pursue. But again, it's early days.
spk06: Makes sense. Curtis, just wanted to get your take on the large order of MSUs since you announced post-Q2. Could you give us a sense of your line of sight in terms of finding work for that equipment? And, you know, maybe also just how that equipment will make its way into the fleet over the next 12 months?
spk11: Sure. So for everybody on the call, we announced that we'd placed a significant order with Hexagon for a new product line that they've launched, effectively their Maximus trailer. So it's what I expect will become the new standard of our fleet. It's a larger volume trailer. We've got a lot of experience working with Hexagon on developing a great product. So we're pretty excited about that. And so we've got... By the end of next year, we'll have roughly 150 of those Maximus units in the Soteris fleet. So it's pretty exciting to see that. We've actually just got the very first ones of that product type arriving into our operations here over the last couple weeks. So we're excited to see that and the impact it will have on our efficiencies in the business. So that's the significance of that. And part of the large scale of this order is talks to the benefits I think for Soteris now being part of Superior that in our past we were probably more apt to place our smaller orders and joining the team here now there's a view let's make sure we lock up a consistent steady supply of MSUs coming into the business and make it a little less chunky and so you'll see that large quarter we placed sort of coming in over next year evenly over the year.
spk06: but presumably you have visibility to work for that equipment as well?
spk11: Absolutely. We're struggling right now in a sold-out situation, trying to keep customers happy and not turn down too many people, but we're definitely in an oversold situation right now. There's just tremendous demand for low-carbon energy solutions across a whole bunch of different verticals, and so we're having to make some tough decisions on where we go deploy equipment equipment to uh to try and uh you know try and satisfy that uh so yeah the team is excited to get their hands on this equipment it is uh is definitely uh ready to go to work makes sense thanks everyone i'll turn it back thank you thank you our next question comes from the line of stephen hansen with raymond james your line is now open oh yeah thanks for the time guys um
spk05: I'm going to piggyback off the last answer and just maybe ask about the pricing dynamics you see in the market right now. Being in a sold-out situation is obviously a positive position to be in, but I know that you're still also looking to gain scale across the landscape. So how do you think about pricing in the current backdrop and perhaps into 2024 as it stands today?
spk11: Yeah, I think it's a good pricing environment for Sir Terrace right now. We see really strong demand, and then we often price against the alternative fuel, typically against diesel pricing. And so both from a strong demand perspective as well as looking forward, I see a real strong diesel price going forward as well. That provides an opportunity for us to offer a significant discount to customers, but still generate a strong margin for Sir Terrace.
spk05: Okay, helpful. Thank you. And just going back to your comments on the leverage ratio, continuing to make improvements there. I mean, have you thought about where you think the optimal level is at this point? You referenced that you'll expect it to continue to improve, bounce around a little bit, but improving is the trend. But again, how do you balance that relative to some of the other priorities you said? Where do you feel like the optimal level needs to be so you can pursue some of the other levers more aggressively? Okay.
spk04: Yeah, hi, it's Greer here. It's a great question. I think, yeah, I would say stay tuned. You know, to be fair, we're working through our 2024 plan, looking at the, what we want to do is make sure that we commit the right amount of capital to the propane business and to the Soteris business, and that is of paramount importance to us. And then, you know, with that, maintain and improve on the strength in our balance sheet and also look at other capital allocation priorities like, share buyback, so nothing prescriptive. The merits of a lower leverage balance sheet are not lost on us, they're very clear, but I think to come out with some type of prescriptive approach on the target and the timeline at this stage would probably be a little bit premature, but just stay tuned on it because I think we'll give you more as time goes on here.
spk08: We have the challenge of having several very compelling capital allocation opportunities. So we're just working through it.
spk05: Okay, I appreciate the time, guys. Thanks.
spk01: Thank you. Our next question comes from the line of Nelson Ng with RBC Capital Markets. Your line is now open.
spk09: Great, thanks, and good morning, everyone. First question is for Curtis. On St. Paris, can you just comment about the seasonality impacts and the utilization of trucks during Q3? I know you mentioned that you guys are sold out and there's a shortage of trucks, but can you just comment on the seasonality? Obviously, Q1 and Q4 is the highest. I think that national grid contract is quite profitable, but can you just provide a bit more color?
spk11: Sure. Thanks, Nelson. Definitely, we have some seasonality in our business, so in Q2 and Q3, UCS do more road construction type work and there's some renewable natural gas opportunities as well that we get a little bit more active on in those Q2 and Q3 months. In Q1 and Q4 we have some great utility work that we do as well as fairly significant heat related opportunities in sort of the northern US and in Canada. You always get this bit of unique dynamic on the tail end of Q3 and the early part of Q4 where you have a bit of a pivot in how the MSUs are deployed. And so you're coming off of some of that road construction type work and going into some of these heat related work and the utility work. And so there's a bit of a transition period through the back end of September or October as you're getting into that. we're starting to see the sort of true winter numbers starting to come at us, which is always our busiest time of year. And you really see that in Q1 for us in that you get sort of a full quarter running at that peak rate.
spk09: Okay, thanks. And then in terms of, maybe it's for Greer, but so growth capex, I think it was about $28 million in Q3. That's up from $15 million last year. I presume most of the increase, if not all, is due to Sataris growth capex. Will Q4 look like Q3?
spk04: I mean, the capex will be, I think, certainly higher for Soteris in Q4. The MSU deliveries in Q3 were pretty low as a result of the ordering schedule and the way they'll be produced. So you could expect the Soteris capex to be quite a lot higher in Q4. It'll represent the majority of the growth capex in Q4.
spk09: Okay, got it. And then just one last question for Curtis. In terms of the MSUs deployed, are you seeing, I guess, in the last year and your expectation next year, are you seeing any specific areas or industries where you're going to be allocating more MSUs going forward? Or do you think that the mix will stay roughly the same?
spk11: I think the mix for us has changed a bit over time. Historically, Sardaris started with almost entirely an oil and gas customer base. And that continues to be a great part of our business that's growing quite strongly. But we made a shift a few years back to say we recognize the real importance of diversifying the business into a number of different verticals and just grow the overall opportunity set out there. And we've been sort of paying our dues, growing these different industry verticals. And to the point now, over the last three years, the majority of the capital that we've deployed has been going into these beyond the well site type applications. And so I think you're seeing some really interesting growth opportunities. Within oil and gas, it's a great business. We're going to still see growth within that, but we're also seeing some really impressive growth in the utility segment. There's just a lot of infrastructure challenges right across North America that utilities are struggling with, and we can help them bridge those gaps We're seeing a tremendous amount of growth on the renewable natural gas side of the business where there's a lot of capital being deployed into renewable natural gas project development. And the bulk of those projects are not pipeline connected. And so they need a way to go actually get that gas to the pipeline. And Soteris offers a great solution to do that. And so we're starting to see more of those projects come online. And that becomes a pretty significant deployment of MSUs for us. And the biggest one, potentially, that I think we're still really early on is we look at remote power generation as being just a tremendous growth lever for us. There's a significant diesel remote power generation market out there today, and I expect over the next few years, as you look at that, that you're going to see a migration of that away from diesel towards natural gas generation that I think it's going to create a tremendous growth. some great projects out of that already today. But I think we're just really early start to that. And so hence the strategy to deploy, keep on growing all segments of this, but we've been consistently sort of putting more than half of our capital in these beyond the well site applications in the last few years.
spk09: Great. Thanks, Curtis. I'll just squeeze one more question in. I might be for Alan or Greer, but The eight propane sites in Northern Ontario, I think the MD&A indicated that you're expecting to divest those assets in Q4 of this year. Can you just provide a quick update as to where you are? Is it just paperwork now, and those sites will get sold?
spk04: Yeah, it's Greer here. So you can expect this to happen in the fourth quarter, and we'll provide a bit more information on it, but yeah, I guess as you say, it's paperwork. It's highly likely that this will happen at the levels that you see in the financials.
spk09: Great. Thanks. I'll leave it there.
spk04: Thanks, Nelson.
spk01: Thank you. Our next question comes from the line of Ben Isaacson with Scotiabank. Your line is now open.
spk02: Thank you very much, and good morning, everyone. Two questions. First one for Alan. Alan, you said that you have been meeting with investors and analysts over the last couple of months. What are the key messages that you've received from the investment community? And in their perception, rightly or wrongly, what's working and what's not working?
spk08: Great question. Hey, Ben. You know, it's interesting. So what we've been hearing is... I would think two things resoundingly, that investors are pleased that they see a company with a strong asset base and a runway or a pathway to a very profitable and and successful future because we've now got the ability to expand into an emerging market with energy transformation on the back of a cash generation engine at Superior, which I think arguably is quite well run in their view, and a growth engine at Soteras. So I think what's working is, well, the bones of this organization are really strong. I think that the the investors, and we see this with our institutional investors. We have a very, very patient investor group, which probably reflects the volume and liquidity that we have, the trading volume on a day-to-day basis. There's a bit of wait and see where this new organization in its current form, you've got a new management team, a history of some strategic surprises. So I think more than anything else, investors saying, hey, can you give us continuity? Can you continue to talk about this strategy? Can you deliver on your promises? Can you give us a level of consistency and transparency? And we're more than happy to come along in the journey with you. And I don't know, Curtis and Greer, and they've been in these meetings too, but I got to tell you, they're very positive. And I'd hate to use the phrase wait and see because I think it's much more positive than that. But I think our investors are looking for some time of continuity and consistency from us.
spk02: That makes a lot of sense. Thank you for that. And then just second question, which is an operational one on Sataris. I'm just looking at page 17 of your MD&A, which is the Sataris results. And I see that your EBITDA went down to about $54,000 per MSU in Q3 versus about $74,000 since acquisition. And when I scroll up, I see that it's really revenue that has declined per MSU. Why is that and how should we think about revenue per MSU going forward or in a steady state type of environment? Thank you so much.
spk11: Sure. I think the one thing to watch when you look at the revenue number is just know that we, by the nature of our contracts, we don't take natural gas commodity risk exposure. And so the revenue number will go up and down at times, depending on what the natural gas price is doing and how much gas price we're flowing through. And so Q3 last year had a significantly higher natural gas price that we're flowing through versus this year. But you'll see that on an actual sort of EBITDA per MMBTU delivered, pretty consistent. So we focus much more on what is the EBITDA generated per MSU in the fleet and per MMBTU delivered is what we focus in on versus the revenue numbers. That one can bounce around with the commodity price. From an EBITDA per MSU perspective for the quarter, Q3 is a quieter quarter for Soteris and so that's There is some seasonality to this, so you'll see the quarterly EBITDA per MSU numbers being stronger in our Q1 in particular and Q4 as well.
spk02: Have you talked about what the run rate should be on EBITDA per MSU over the course of a year?
spk11: We do. We target that in very simple terms, the way we like to think about our business is that Our MSUs have a DOT 15-year life, and we target to pay back our direct MSUs in under three years. And so that's where we look at our business. So the direct MSUs have a payback of under three years. There's some ancillary capital that goes around to be able to support the business. You need the tractors to pull the MSUs. You need the compression stations and the decompression units. And so if you fully load up all that other capital, around that you need to support the MSUs. We target effectively a sub-five-year payback on capital that we deploy, and then give sort of effectively 10 years of free cash flow on those assets when you factor in a 15-year life. And so that's how we look at the business, and so that means you end up with sort of EBITDA generated per MSU. I believe we're in that $270-some thousand range this year, and we sort of Somewhere in the mid-200s, the high 200s is where we've seen the number.
spk02: Great. Thanks so much. Appreciate it.
spk11: Thanks, Matt.
spk01: Thank you. Our next question comes from the line of Robert Cotillier with CIBC Capital Markets. Your line is open.
spk07: Hey, thanks for your comments so far this morning. Most of my questions are answers, so I'm down to nitpicking here. So can you give a little more clarity on to why you dropped the AOCF metric?
spk04: Yeah, maybe I'll take that one, Robert. It's Greer. This really, I mean, this is a very simple calculation. Super straightforward. You basically subtract two numbers. So I think when I was having a look at it and just looking at all the extra disclosure in the press release, but more so in the MD&A, there was a ton of pages really that were there primarily because of this metric, which, as I say, is very easy to calculate. So that was kind of the primary reason for it. It's a non-industry standard metric. If you look at the competitive set, how we wanted to find that, I guess we could debate, but there's no one really that uses this metric. So really those two reasons were the number one. The objective here is for us to be simpler in the way we report, make it easier for everybody to understand what it is that we're doing and what we're focused on. And not hiding by anything. As I said, you can clearly take these numbers off the face of the financials. The adjusted AOCF for this quarter was negative 19.4. If you compare that to the prior year, it was negative 32.9. So, you know, it is an improvement. And as I say, the interest and taxes number, you can pull right off the face of the statement. So, yeah, I mean, it was a long-winded answer. But bottom line is for us to just get more streamlined and simple and make it easier for everyone to understand what it is we're trying to do.
spk07: Okay, and just one more detailed question here. There's commentary in MD&A about some distillate customer attrition. Can you just give a description of what's happening there?
spk08: Well, this is just... Let me offer a comment or two, Rob, and then Greer will point it out. We get the remnants of some small distillate business that is obviously... declining at a faster rate than the propane business and really is non-core to us. And it's really a hangover from a past life, if you will. It's non-core. We're managing it very, very carefully, obviously, but for us it's a business that we'll see an exit to at some point and be opportunistic in terms of the journey from here to there and making sure we don't invest any more in it but also maximize the value. So for us, really, it's a very, very small part of the business, but no great surprise. It's in steady decline.
spk04: I don't know, Greer, if you want to add anything to that. I thought you said it well. Yeah, it's a business that declines faster than... you know, then it declines. And the other, like Soteris obviously is a, is a great growth business. I think the propane business is more of like a, you know, we'll see what we can do with it, but it's a more of a flattish type business. The distillate business is a, is a decline business. And as Alan said, it's a, it's a, it's a small percentage of the business. I mean, it might represent around just, I think around 10% or something like that. It's of the U S business. So it's not, not huge, but, uh, Yeah, that's what it is. It's just a different market dynamic for that business. So obviously not an area of focus for us as we look forward.
spk07: Right. So it's just secular decline in that specific product then.
spk08: That's right. Yeah, exactly. You don't fight it because it's market driven. Sorry. Go ahead. Did you have another question?
spk07: Yeah. Final question for you, Alan. I wonder if you had any updates in terms of – your plans of aligning incentives with your, with your targets. I'm thinking in terms of stock ownership requirements and any other incentives that might help you just align activities with your ultimate goal of bringing more of existing assets.
spk08: Sorry, you're talking about executive compensation.
spk07: Yeah, just, Yeah, just how you're aligning all the incentives across the organization, particularly stock ownership at the executive level.
spk08: Yeah, yeah, okay. Well, a couple of updates there. Kirsten's joining us two weeks ago. We've already kicked off a review of our executive compensation. And not generally speaking in terms of its competitiveness, but its alignment to the aspirations to drive significant shareholder value. via appreciation of the share price, which is not a simple thing when you talk about a high-yield stock like ours that has our kind of liquidity and trading volume. So we're in the middle innings of that review. Additionally, we've also made a decision in the last couple of weeks that Soteris, as a private company, had a history of share ownership that was really deep. And it was a point of pride, but also I think one of the differentiators that made the team at Zotero just so engaged in doing the right thing for the customers and for the company all the time. Bringing that kind of a comp structure in a public company isn't easy. And it requires a lot of adjustments in terms of how we think about comp. But over the last few weeks, we've made the decision and announced it internally that we're actually going to maintain share ownership as part of incentive for the entire team at Sataris that was part of that program, which would be sort of the top two-thirds of the organization, if you will. So we're really committed to making sure that everybody that works at Superior has every opportunity to be a participant in shareholder value creation. It is our number one, and one could argue our only objective, is long-term shareholder value creation. These are the owners of the company, and we need to deliver for them. We want our employees to be part of that community, whether it's through share ownership programs or through share-based incentives. And we want our executive to be remunerated based on the success that they deliver for our shareholders. So we're really committed to this. You're seeing it at the operating level. You'll see it at the executive level, but likely not until the management information is circular next year. Does that answer your question?
spk07: Yeah, it does. Thank you. That's a good answer. Thanks.
spk08: Thanks for the question.
spk01: Thank you. And I'm sure no further questions at this time. I'd like to hand the call back over to Alan McDonald for closing remarks.
spk08: Well, thanks, everyone. Look, it's always a pleasure to talk to you all, whether it be on this quarterly call or in our meetings in the intervening weeks. I can't thank you enough for your interest in the organization, for your questions, and for your feedback. I want you to know that we've got thousands of people here at Superior who are showing up to work every day, really excited about the opportunities in front of us. The team at Sataris and the team at, you know, the Propane Division have been working really well together. We're excited about the future and we're just really, really pleased to be able to tell this story. We think a Q3 is a real turning point and a successful one for us for a whole bunch of reasons, operationally and strategically. And we're looking forward to Q4 and speaking to you all again in February. So thank you very, very much.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect.
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