Superior Plus Corp.

and thank you for standing by. Welcome to the Superior Plus 2025 Fourth Quarter 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Lichtenheld, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Superior Plus's conference call and webcast to review our 2025 fourth quarter and full year results. On the call today, we have Alan McDonald, President and CEO, Greer Coulter, Executive Vice President and Chief Financial Officer, and Dale Winger, President of Sataris. For this morning's call, Alan and Greer will begin with their prepared remarks, and then we'll open the call for questions. Listeners are reminded that some of the comments made today may be forward-looking in nature, and information provided may refer to non-GAAP measures. Please refer to our continuous disclosure documents available on CR Plus and our website. Also note the dollar amounts discussed on today's call are expressed in U.S. dollars, unless otherwise noted.

I'll now turn the call over to Alan. Thanks, Chris. Good morning, everyone, and thanks for joining us today. Well, 2025 was a year of significant transition for Superior Plus. Over the course of the year, we continued to reshape how we operate across North America, advancing our Superior Delivers transformation while maintaining operational continuity in a challenging environment. We made real progress and also learned some hard lessons, particularly as change met a difficult winter. Superior Delivers has a clear purpose, to build a propane business that operates at a lower cost, handles volatility better, and performs consistently, especially in winter. As we integrated teams across the US and Canada, implemented new systems, and aligned leadership around a single operating model, the organization navigated a meaningful amount of change. While the pace and scale of that change created execution pressure at times, It also strengthened our foundation. In CNG, Satara's operated in a difficult macroeconomic environment, driven by a downturn in oil and gas activity. Pricing pressure in WellSite created a $40 million gross margin headwind, which our team was able to largely, but not entirely, offset. Despite that backdrop, we maintained a strong operational discipline and continued to diversify the business. Overall, 2025 was demanding, but it improved our visibility into the business and sharpened our focus as we move into 2026. To be clear, we are staying the course, maintaining our $75 million Superior Delivers target and managing what we can control. Turning to results, we delivered modest organic growth in both the fourth quarter and the full year in line with our Result Realize guidance. As we redesigned how we schedule, route, and deliver propane, we are transitioning to a more efficient delivery model. Now that transition is still in progress, and this winter tested the system under very difficult conditions, including sharp localized demand, icy and snowy road conditions, and a network that hadn't yet reached full optimization, adding complexity during peak period demands. These challenges were not unique to Superior, though. The broader propane industry faced elevated demand alongside supply constraints and extreme weather events across multiple regions. I want to recognize and thank our teams for their extraordinary efforts during this period. We expanded our driver base, increased call center capacity, and applied every available short-term measure to support our customers. While the winter highlighted areas where execution can improve, we are on the right path. and the network we're building is performing more consistently as optimization progresses. As a result of strong winter demand, we expect higher-than-normal deliveries to continue into March and April as customer inventories are replenished. Based on what we've learned, Superior delivers will require more time to fully realize its intended benefits than it originally anticipated. This reflects executional complexity, but not a change in strategy. We were ambitious, and that's a good thing. It's now more likely a three-year journey rather than two, but that's because we want to get this right and take the time to build a truly transformational platform, and we are absolutely staying the course. Superior Delivers contributed to propane growth in 2025 and is expected to contribute more meaningfully in 26. We also acknowledge that early iterations of our delivery tools did not perform as intended, and contributed lower than optimal customer tank levels heading into winter. These issues have been addressed with updated tools and delivery methodologies now in place. We're seeing improved performance and better predictability through peak demand. On the customer side, we continue to make progress. We've developed proprietary capabilities that allow us to precisely target attractive customer segments and allocate sales and marketing resources accordingly. Conversion rates are improving and we are building the organizational capability required to scale this approach over time. Turning to CNG, 2025 was a challenging year for Sataris, especially in the well site business. Early in the third quarter, well site pricing declined materially and has not yet recovered. This pricing pressure overshadowed several positive developments, including two new data center contracts and the opening of a hub in Florida to support industrial growth. Despite lower oil and gas activity, Soteris delivered record volumes, reflecting strong market share retention in WellSight and continued success with our industrial customers. WellSight remains the largest end market for Soteris, and the current pricing environment represents a meaningful change. While pricing will improve over time as the cycle evolves, the timing and the extent of it remain uncertain. As a result, we're resetting our outlook for Soteris to reflect current market conditions guiding to lower EBITDA in 2026 and adjusting our expectations for 2027. And Greer will discuss this in more detail. With that context, we're introducing 2026 guidance that reflects approximately 2% expected EBITDA growth. Increased contribution from propane is offset by lower earnings at Soteris, reflecting a full year of lower CNG pricing. Now, while we remain confident in Superior Delivers and maintain our $75 million target, we are updating our 27 outlook to reflect the CNG market conditions and a slightly longer execution cycle for Superior Deliverance. We believe this provides a realistic and transparent view of our path forward while maintaining confidence in the long-term potential of the business. On capital allocation, we remain confident in the underlying value of Superior. In the near term, we expect to continue repurchasing shares. However, over the medium term, we anticipate shifting toward debt repayment as we prepare for the potential redemption of our $260 million preferred shares in mid-2027, assuming, of course, our share price remains below the conversion price of approximately $12 Canadian. Now, while 2025 presented its challenges, it also strengthened our operating discipline and clarified our priorities. we're executing a more focused plan, building a more resilient platform, staying the course, and managing what we control to position superior to deliver sustainable value over the long term. So with that, thank you. I'll hand things over to Greer.

Thank you, Alan, and good morning. As discussed, 2025 was a year of significant change that brought both successes and some challenges across the business. Propane had a decent year, and grew EBITDA modestly, but did not benefit fully from the cold weather in Q4, given we were in the midst of our transformation and still adjusting to our leaner operating structure and new delivery methods. In CNG, the factors within our control were managed well, but not able to fully offset the pricing pressure in the well site business. I'll start by recapping our consolidated financial results for the full year and for the fourth quarter. Full-year adjusted EBITDA of $463.5 million was up approximately 2% due to modestly higher adjusted EBITDA from U.S. and Canadian propane, which was up about 4%, partially offset by a decline in CNG, which was down about 4%. Q4 adjusted EBITDA of $161.9 million increased 2% versus Q4 2024, driven by higher contributions from superior delivers in propane, offset partly by pricing pressure in CNG. Full-year adjusted EVTDA per share of $1.46 increased by 15% compared to 2024 due to lower average shares outstanding, higher adjusted EBITDA from North American propane, and lower interest costs, partially offset by lower adjusted EBITDA Adjusted net earnings per share of $0.31 increased by 94%, and free cash flow per share of $0.87 nearly doubled for the same reasons, with lower CapEx also contributing to free cash flow growth. For Q4, adjusted EBTA per share of $0.55 increased 12% due to the same factors driving the full-year increase. Adjusted net earnings per share of $0.27 increased 17% from last year due to lower shares outstanding and higher adjusted EBITDA. Free cash flow per share of 37 cents increased 23%, again, driven by lower shares outstanding and higher adjusted EBITDA, in addition to reductions in CapEx and interest expense. Turning now to the businesses. For the full year, adjusted EBITDA in North American propane increased 4%, to $346.7 million driven by benefits from superior delivers as well as favorable weather. Looking into the regions, full year adjusted EBITDA in U.S. propane was $246.3 million, a 5% increase driven by superior delivers and higher volumes due to colder weather. In the fourth quarter, adjusted EBITDA for U.S. propane was $96.7 million, which was up 9% from last year. This increase was primarily due to the positive impact from superior deliverers, which contributed to higher margins and lower costs, partially offset by a temporary reduction in capacity as the business adjusts to the new delivery methodology. Full-year adjusted EBITDA for Canadian propane was $100.4 million, an increase of approximately 2%, primarily due to higher sales volumes and lower operating costs, partially offset by a stronger U.S. dollar and the sale of fewer carbon credits compared with the prior year. In fourth quarter, adjusted EBITDA for Canadian propane was $36.2 million. This was relatively in line with Q4-24, as the benefits from superior delivers and lower operating costs were offset by the sale of fewer carbon credits compared with Q4-2024. In total, our propane transformation Superior Delivers contributed $16.2 million to full-year results and $11.2 million in the fourth quarter. Moving now to C&G, Sir Terrace full-year adjusted EBITDA of $142.5 million was down 4% compared to 2024, primarily because of lower realized prices in the well site business, partly offset by growth in industrial markets and higher volumes across the business. Notwithstanding a more challenging marketplace, Souterras is making significant progress on factors within its control, including a 6% reduction in operating costs per MMDTU in fiscal 2025. Our continued focus on capital discipline drove a 50% or nearly $50 million reduction in CapEx at Souterras, which contributed to a record year for free cash flow. Fourth quarter adjusted EBITDA and CNG was $34.3 million, down 4.9 million or 13% compared to last year. This was mainly a result of pricing pressure in the wall site business. Consolidated capital expenditures for the year were about 140 million or 26% lower compared to 2024, driven mostly by lower spending in CNG. Within the regions, CapEx in Canada increased 11% as the company executed a significant fleet refreshment in order to reduce maintenance costs and optimize asset availability going forward. For the quarter and full year, corporate operating costs were $5.3 million and $25.7 million respectively, which was in line with last year and also with our guidance. Our leverage at the end of 2025 was 4.0 times, down about one-tenth of a turn compared to a year earlier, due to higher adjusted EBITDA, and to a lesser extent, lower net debt balances. We continue to believe that share repurchases are an excellent use of capital. During the year, we repurchased 19.6 million shares, or approximately 8% of our shares outstanding. From November 2024 until today, we have now purchased approximately 32 million shares, or about 13% of our shares outstanding. And this has been a meaningful driver behind our improved per share metrics. As Alan mentioned, we are expecting adjusted EBITDA growth of 2% in 2026. In propane, the growth of 3% to 8% assumes warmer weather in 2026 versus 2025, in line with the five-year average. It also includes a contribution from Superior Deliverers of approximately $50 million, up approximately $16 million from 2025, in 2025, sorry, as the transformation continues to progress. We have also assumed some continued customer attrition as our churn reduction and customer acquisition programs continue to ramp up. It's worth noting in propane we expect the first quarter of 2026 to be modestly lower than Q1 2025 due to warmer weather and delivery capacity constraints. the remaining three-quarters are expected to grow as Superior delivers continues to provide benefit, including the peak shaving dynamic of our delivery methodology. In CNG, we have not seen a material reduction in pricing since Q3 2025 and are assuming relatively stable prices through 2026. However, 2026 adjusted EBITDA at Sorteros is expected to decline between 4% and 9%, based primarily on realizing lower prices over the full year, as well as a reduction in ancillary revenue from utility winter standby services. Notably, the expected decline in full-year EBITDA in CNG is expected to take place entirely in the first quarter. Specifically, we expect Sir Tara's first quarter EBITDA to be relatively flat with Q4 2025, or down about 30% to 35% Q1 2025, with growth expected in the following three quarters. This decline in first quarter EBITDA is due to the aforementioned reduction in ancillary revenue, as well as wall site pricing declines. We expect overall capex, including lease additions, of approximately $160 million in 2026. up from about $140 million in 2025 as we plan to invest in updating our U.S. propane delivery fleet to ensure optimal utilization and maintenance costs. We are also planning to modestly increase our investment in CNG. Regarding share repurchases, we continue to see a significant opportunity in repurchasing our shares at these levels. However, we may spend less on share repurchases during 2026 as we shift some of our capital to additional debt repayment. As a reminder, we have a $260 million convertible preferred share instrument outstanding with a conversion price materially higher than where we are trading. These preferred shares are redeemable at par in mid-2027 if not converted, and therefore we believe it's prudent to increase our financial capacity ahead of this potential redemption to partly offset the incremental leverage associated with taking out the preferred equity. Taking out these preferred shares also eliminates the potential $30 million common share dilution associated with this instrument and is therefore consistent with our capital allocation strategy aimed at reducing our common shares outstanding and improving per share metrics. As Alan mentioned, we are revising our multi-year outlook. We now expect a three-year CAGR on EBITDA of about 2% over the years from 2024 to 2027. which is down from about 8% previously. This reflects lower pricing at Soteris and a more gradual progression of our propane transformation, with 2028 now expected to be the first full year of $75 million in benefits from Superior Delivers. With this extended timeline to execute Superior Delivers, we are also tempering our customer growth expectations, which has contributed to our reduced outlook going into 2027. And with that, I will turn it back for Q&A.

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. Our first question comes from the line of Aaron McNeil from TD Cowan.

Hey, morning, all. Thanks for taking my questions. You said something to the effect of that the original tools didn't perform as expected. And, you know, I can appreciate that Superior Delivers is a work in progress. But how are you thinking about, you know, optimization of the business versus having redundancy and the ability to ensure you're actually able to deliver for your customers? And then, you know, also energy affordability is a bit of a hot button or is becoming a bigger hot button. You've had some negative press in terms of hiking rental fees. Do you see a scenario where you know, public or political pressure could be a potential headwind to sort of enact some of your delivers agenda.

Hey, Aaron. It's Alan. Thanks for joining us. Thanks for the call, for the question. So for the first thing in terms of coverage, I was, I wasn't as taken aback by our coverage capability in terms of what our plans are at Superior Delivers. I think what really was challenging for us was we went in, as you recall from our last quarterly call, we went into Q4 with a slight delay in the rollout of this tool. It doesn't take much in this industry to put you on your back foot. But that delay caused us to not be able to pull tickets forward out of Q4 and Q1 into our sort of a slower season. And that backlog that we went into with slightly lower tank inventories coupled with, you know, really, really challenging weather was what got us. So we've got a couple things that, you know, in terms of redundancy we're planning. One, full realization of the optimization capabilities is going to be a big one. Two, getting our tank inventories levels exactly where we want them to be. going into the winter this year is going to be important. Three, having those once-a-year deliveries that happen in Q4 and Q1 pulled into the slower seasons is going to be really important for us. And then finally, you know, we've learned a lot, but one of the things we learned is that we have a whole contingency of staff propane specialists that work on things like service or tank settings. that are also able to shift over to help us address peaks or demands that happen to be local. And that actually worked well for us through this year and helped us maintain our service to our customers. So the flexibility that we've built into the propane specialist role I think has proved itself to be really, really critical. So I don't think that we're, we're in no way creating an organization that's incapable of handling these peaks. It was, to be honest, a bit of a perfect storm. In terms of the rental and regulation, I mean, never say never. That was less of us introducing anything untoward when it comes to pricing and more of us cleaning up contracts and customer agreements that were put in place that were, frankly, short-sighted, maybe misinformed. So we had customers that had In some cases, no volume over a two- or three-year period, but had assets that we placed on site and that we were responsible to maintain from a regulatory standpoint. Going forward today, if a customer came in and said, hey, we want propane storage on site, but we're not going to be a high-volume customer, we'd be more than happy to accommodate them. But we do it via a rental agreement as opposed to a price-per-liter or price-per-gallon agreement. And what we were doing there was really just addressing some of the customer agreements that we had historically. Now, that's totally understandable when you realize how many acquisitions we did. And, you know, through the course of acquiring hundreds of thousands of customers, you're going to have situations like this. So we don't think the pricing is in any way unreasonable. It's easy when you're talking about a new customer. It's sometimes a bit of a hurdle when you're addressing kind of sins of the past.

I appreciate that. I can appreciate it's a tough question as well, so thanks for the answer. I'm not sure if Dale's on, but – Sitting right next to me. Perfect. Dale, I'm hoping you can speak to the magnitude of the pricing headwinds that you're facing relative to the prior quarter, and then maybe can you speak to the Florida opportunity specifically in terms of the types of volume you might see in a sort of non-oil and gas hub? versus what you typically see in the more traditional business?

Good morning, Aaron. Thanks for the question. We'll talk about the well site pricing dynamic first. So as Greer mentioned, the pricing that we experienced in the fourth quarter was flat to the pricing we experienced in the third quarter. So the big pricing erosion that happened in the middle of the year, which creates some tough comps in the first part of this year. You know, as Alan mentioned, we've had, you know, the overall 2025 impact was $40 million. And you can see, you know, based on our volumes, what the impact of a dollar of price erosion means. And so, you know, overall, like over the last two years, we've seen the price to win in the marketplace decline significantly. by 25%, 15% decline overall 2025 versus 2024. But we are encouraged that pricing has been stable over the last six months. Our guidance incorporates the fact that we're not expecting to recover that in 2026. We're expecting conditions to continue as we've seen over the last six months or so. And then over the Florida opportunity, we do have – we're actually really excited about that. It signals, like, good demand that, you know, we opened that hub and immediately had customers that were interested in being able to provide the service. I think it speaks to the dynamic that we're really seeing right now is access to energy is really important for lots of different types of industrial and utility customers, and whether it's the speed – or the reliability or the cost. Sometimes they can't get those kind of on the timeline or at the cost or the reliability that they want. And so we're excited about the start that we had in Florida. Right now, I mean, in the first quarter, it's going to represent like less than 1% of our volumes. But you can see the, you know, Florida represents our 21st hub So the volume that we generated in 2025, we did that off 20 hubs, and so you can kind of get a sense of the volume per hub. It can be a few thousand MMBTU per day. And of course, you know, new hub development and expansion is a huge part of our accelerate growth strategy going forward. We're excited that we have signed an agreement for a property for a Houston location. And so we're, you know, actively driving forward plans to progress that and have gas flowing there serving customers in the Houston metro area by mid-year.

Great. Thanks, everyone. I'll turn it back.

Thanks, Aaron.

Thank you. One moment for our next question. Our next question comes from the line of Ben Isaacson from Scotiabank.

Thank you very much, and good morning. Just actually this one question on Sotoris. I might not ask this correctly, but I'm trying to understand the cost curve. What is the marginal cost to deliver, and what is your kind of price point? I'm trying to understand how much downside is there in pricing when it comes to looking at some kind of cost curve, if that's even the right way to look at it. Thank you.

Thanks. Hey, Ben, it's Alan. You just cut out on us a little bit there, but you're talking about Saterras, right?

Yeah, sorry. I'm just trying to understand the cost curves of Saterras.

No, it makes sense. Do you want to have a go at that, or do you want me to tell you?

Yeah, well, of course we have disclosures on, you know, our kind of cost per MMD to you, and you can see that we improved that by 6% 2025 over 2024. We have continued plans to continue to advance that. I mean, we are the market leader. And so, of course, in an environment of increased price-based competition, you know, having scale as it relates to driver utilization, the ability to employ internal drivers, Some of the operating experience in terms of loading MMVTU per gas per trailer with compression technology to make sure that we're driving efficiencies on each load delivered. Some new technology that we installed in 2025 called smart trailers. We've equipped 50% of our fleet that gives us real-time visibility into the the trailer levels, regardless of... Sorry, can I just refocus the question?

I guess what I'm trying to drive at is the current pricing environment, are those producers that are lowering prices right now, are they making money? And if they are, how much lower can prices go to the point where they become marginal and they start to exit the industry? I'm just trying to find out how much downside there could be to prices and kind of where do you fit relative to that downside on the cost curve?

Well, Dale's going to have a comment on this, but I'm going to, I can't resist. I've got an opinion. I think you got to think about it in terms of two markets, Ben. In the well site business, especially in West Texas, you've got very dense, you get a very dense customer base with high demand. and a lot of capability both on the vendor and the supplier side. So that's one microcosm, if you will. And then when you factor in what's the complexity of the job, what's the distance that is required to be traveled, what's the volume and in which geography, that's when the economics really change. Because this is like an airline business, and it's not obviously fully saturated the way the convenience store business is where there's one in every corner. So the bigger your fleet and the better your utilization, lower your cost base. And when you're starting with jobs big or small outside of West Texas, that's where we have a pretty strong advantage versus our competition because we've got the ability to handle complexity at a lower cost. We've got scale. we can take on a small job in Florida because we've got other jobs to rationalize the fleet across in the same geography.

So, Dale, I'm trying to go into something here, but maybe you'd like to... The two other just things to think about, Ben, that we observed in 2025, prior to that, 2023 and 2024, many companies were adding trailers to the fleet. And so some of the market pricing is going to be determined by supply of trailers versus demand for trailers, right? And we did not see that trend continue. There were not people adding trailers to the fleet in 2025. And so that's kind of a good sort of early indicator of sort of supply. We're now kind of in a window where demand can kind of catch up to supply. And we have had a couple small cases where people that were supplying mobile CNG exited basins either to shrink their footprint or to pursue other opportunities. And so those are both early indicators that the supply, that we're in a situation where demand can catch up to supply. And some of these mobile power opportunities and getting energy to people you know, in industrial markets are going to further help increase the demand and allow, you know, that to improve the market pricing levels as that equipment, you know, goes to serve that marketplace.

Thank you. And then just quickly, have prices fallen to the point where some high-cost guys have exited the market, or I guess they just don't participate in that particular contract? Is that right?

What we've seen is more local decisions to shrink footprint. So we haven't seen anybody exit the market entirely. What we've seen is maybe they were servicing a geographic area. Now they're servicing fewer or a smaller geographic area.

And then just to flip to the investor day, the dollar to dollar 10 target, is that pushed back or is that now off the table?

And just to be clear, are you talking superior delivers or what specifically?

Yeah, I'm sorry. You had a target of US $1 to $1.10 of free cash flow. I think that was the goal in 27 overall, I think, company-wide. And so the question is, is that free cash flow target kind of set back or do you think that needs to be revisited?

Yeah, certainly setback. I don't think we're going to get that specific about, you know, when exactly that free cash flow target would be set. But, yeah, definitely push back. Like, as we said, you know, there are some differences here with the environment that we're operating in in CNG. And, of course, that's had some impact, you know, that may turn. But our assumptions are that, you know, let's assume that this is the environment that we've got and this is what we're operating in. Fair enough. You know, that has an impact. If that were to change, then it gets you a lot closer to that number, or if not, then, yeah, it's going to take you quite a lot longer on the CNG side. Superior Delivers, I think we've been pretty clear, that's just going to take a year longer, still $75 million, so that's pretty much intact. And then the third big factor is just, you know, like the longer it takes to kind of have the business, the platform or the foundation established, fully intact to go after new customer growth. That's, again, delayed by about a year, and so there's kind of an impact on the overall customer growth. So I'd say, yeah, that's a delay. To give you the exact numbers and when that cash flow target exactly would occur is pretty difficult for me to do, but hopefully that is somewhat helpful.

Yeah, no, that's perfect. Thanks so much, Claire.

Thanks, Ben.

Thank you. One moment for our next question. Our next question comes from the line of Gary Ho from Desjardins.

Hey, good morning. Just wanted to dig into continue with the Satiris discussions a bit. Something that came up from your press release and comments this morning. So, two things. First, I think you noted two new data center contracts. Was there a new one that was just one, and how many MSUs are expected to deploy there and the duration? And then second, I think, Greer, you mentioned the ancillary revenues from a utilities contract in your prepared remarks. Correct me if I'm wrong. I think that's the U.S. Northeast customer. Maybe can you elaborate on that a little bit more? And if I remember correctly, that contract was from late fall into the winter. So will some of that negative impact flow through to 2027 as well?

Yeah, I'll start. Thanks for the question, Gary. Pretty enthused about early inning progress with the data center. Want to give our team a lot of credit for operating 100% safely and 100% reliably for our new customers in those segments as we've mobilized and helped bring them an energy solution that's really valuable for their business. We currently have – the jobs are scaling up, and so there were two new that started in the fourth quarter, and those are approximately 30 to – we'll probably get to close to 40 trailers for those two jobs.

And, yeah, Gary, so on the second part of your question, just the ancillary revenue, yeah, you're right. That's referring to the customer, the Northeast kind of utility – The way that I would think about it is, you know, we had several contracts with this customer. They got a number of sites, and we had a number of sites. And through this winter, we have fewer sites. And so the business actually from that customer right now is not nearly as large as what it was in previous winters. And so, you know, the exposure, I guess we think about it this way, the exposure going forward for the kind of 2026, 2027 winter, if you will, I'd say is not that great because, you know, we have much less exposure to that customer today through this winter. And that's, you know, part of the impact that you're seeing to Mr. Terrace's numbers through Q4 and what we indicated would happen kind of Q1 of 2026. That's reflecting... a big chunk of that business, well over half actually I'd say of the business that's already out and so that's reflected in those numbers. So the future potential. Now look, and Dale can speak more to this, we'll continue to be competitive and participate in ongoing bids to keep business with what's a great customer and a great relationship that we've got. But the exposure certainly is not nearly what it was a year ago.

Yeah, you know what's interesting, Gary? Hey, Gary. What's interesting about that is, and we were talking about this yesterday, the dynamic nature of the contracts at Saterras means your contracts are almost always at market price because they tend to be short-term in nature. When you have utility contracts that are multi-year, they're reflecting, you know, the impact of pricing changes over the course of that contract happen all at once. So, you know, some of that, and of course, if you renew the contract, the pricing implications still happen all at once, but you go into a new contract at a lower price. So part of, you know, what you're seeing in the Northeast is really a moving to more market pricing. The second thing is our... MS user overutilized right now, we we've got every MSU that we own in production right now, along with some rentals. So it's not like this created dead capacity for us. It was really just more normalization of pricing, in my mind. Having said that the customer and we'll continue to work with them with every opportunity.

So I just want to put a final point so that the negative impact from that customer would be fully reflected in your 26 numbers.

Sorry. Yeah, I kind of whispered that, but yes.

Okay.

Great.

And then, Greer, maybe someday revised buyback assumption, US 50 to 100 million, and your 3.5 times leverage target for 2027. Can you maybe walk me through how the Brookfield Prefs gets modeled into those numbers? The lower buyback still wouldn't get you to the full US 260. So are you thinking of repaying the rest of that with incremental debt? Just wanna pick your brain on that.

Yeah, so a few things here. And if I don't answer what you're asking, just ask again. But the numbers we've assumed, so when you look at that 3.8, target and that's assuming that we would shift, that's the lower end of the buyback range. So if you say like we will buy back 50 to 100, if we buy back 50, that's how you get to the 3.8. And then getting out to the 3.5 would assume that you continue to be shifted to debt reduction. You know, there's various refinancing alternatives, but if The thinking is if we could partially refinance this through rediverted share repurchases and ultimately the extra liquidity will come from a likelihood of a public bond and the rates obviously are quite attractive as you know and so that's kind of probably the refinancing plan. A couple things I'll say though. We have been buying back stock this year, and we are going to continue to buy back stock for the foreseeable future. That I just want to make clear. We still think that this is an excellent use of capital. And, you know, really this is an intention to add flexibility to shift to debt reduction and have to, as our leverage is a priority, and we've been, I think, very inconsistent on that. The factors that will kind of dictate what we do, maybe cash flow, EBITDA-based, obviously, and we'll look at the share price and likelihood of reduction. Those will be kind of the considerations. And then lastly, I just want to reiterate the point that while this is obviously important from a debt reduction standpoint, this preferred share instrument, we could keep in. It's got step-ups and coupons and other features. this is an equity, it has an equity component to it, right? And so our view is that, you know, if we're in a position to redeem this, that, you know, you're removing this potential for dilution of 30 million shares, which is like, you know, 12, 13% of the equity. And so while it would be in one way maybe viewed as a shift from buyback to debt reduction, the intention here would be to shift equity to redeem an instrument that has equity in it. And, you know, you could very much view that as share repurchase as well, as well as, you know, making sure that the leverage component is under control. As I said, it's an important piece of this. I just wanted to make sure that's clear.

Okay, understood. Okay, thank you very much.

Thank you, Eric.

Thank you. One moment for our next question. Our next question comes from the line of Daryl Young from Stifel.

Hey, good morning, everyone. I wanted to talk a little bit about the propane business and the guide for 2026. If you strip out the incremental superior delivers contribution, it implies negative organic growth of sort of 3% to 5%. So I just wanted to get a sense of, is that a function of customers that would have left your platform last year? Because I know there's a big lag dynamic there. Or is that a function of customers that you expect to leave because of some of the challenges that have been incurred this winter? Any color there would be great.

Hey, Daryl, it's Alan. To be honest, it's a combination of both, primarily the first. We're not, you know, that bearish on churn going into 2026. But from the outset – We had built Superior Delivers in two stages. The first was getting the operational optimization done and dusted, which is, of course, delivery optimization. It's our wholesale network optimization and things like that. And then the second piece was, frankly, a little more complex, and that's how do you managed churn in the propane space, which is very difficult to see. As you well know, there's big lag times and there's not a lot of predictive indicators. And then customer acquisition has been a challenge for us and a lot of majors because of the history of growth through margin expansion. So the good news is, you know, we're obviously well down the road on the first piece. On the second piece, We're starting to put tools in place, or we've got tools put in place for predictive modeling on managing customer retention. We've developed marketing programs that are having a much higher success rate in customer saves, if you will, when we identify customers that are at risk of churn. And we're making good progress on a higher conversion rate of sales leads. So that's all really encouraging. It's harder for that to make a material impact when you're talking about quarter over quarter or even year over year because you don't get the full run rate benefit, obviously, of a new customer acquired in a given financial period. So we've always been of the mindset that, you know, first get the operational optimization under place and then second start to build that. that commercial capability. So you're really just seeing, I don't wanna use the word delay, but we're still doing that in succession, but the extra work that was required on the first piece just means that the second piece is going to come in a little later. So that's probably the long and the short there, I think. Okay.

So it sounds like then as it relates to the $75 million and upside from Superior Delivers, you still feel confident and you're seeing regional examples of how the customer acquisition model can work, and that's what gives you the confidence to keep the $75 million target?

That's right. Absolutely we are.

Okay. Okay, I'll jump back on the queue. Thanks.

Okay, thanks, Joe.

Thank you. Our next question comes from the line of Nelson Ng from RBC Capital Markets.

Great. Thanks, Anne. Good morning, everyone. So my first question just relates to propane. I wanted to better understand the tank inventory situation. So I think, Alan, you mentioned that you entered into Q4 with lower inventory than you'd hoped for, and then you ended Q4 with I guess, low customer intake inventory. Due to the cold weather in Q1, do you also expect, has inventory continued to decline as you face some, I guess, delivery issues? And I know that you flagged earlier that you expanded your driver base to help with the situation, but can you just talk about the in-tank inventory and when that would normalize? Like are we looking at March or sometime this spring?

Yeah. Hey, Nelson. Sure. Yeah, well, as we said, we went in, you know, with the launcher version one of our delivery optimization tool that caused us to go into Q4 with lower in-tank inventories than we traditionally would. Q4 and Q1 are really interesting because Q4 starts low in terms of demand and ends high. So you're ramping up. Q1 is the opposite. It starts high and you ramp down. So going into Q4 with a bit of a backlog, you've got demand coming. So you get that double whammy. We've managed to obviously sustain our capacity through December and January. And as winter starts to look a little bit more like spring, it gives us the opportunity to recover some of that, well, some or all of the in-tank inventory levels. In other words, to get the customers to the level that we think is optimal. So you've got to remember, too, when we sit here in Toronto, sometimes you forget that we operate in everywhere from southern U.S. to northern parts of Canada. So spring doesn't come in March and April in every part. We're well into it in some parts of the U.S., and that's exactly what we're seeing is we're using that continued capacity that we've had through December and January to get our tank levels to where we want them to be. So it's my expectation that – well, said simply, yeah, we had a tank inventory challenge that complicated the winter. We maintained service. through that, and coming out into the spring, you're going to see tank inventories normalized to where we think they should be.

And Nelson, maybe I'll just tack on a little bit here. It is a bit tricky to estimate exactly when that's going to happen, because you can probably appreciate if you had a really cold January, February, March, pretty tricky to catch up inventory in March. If you had a cold January and a cold February and a warmer March obviously makes it a little bit easier to catch up the inventory levels. And so some of this is a little bit difficult to predict and will be somewhat predicated on what kind of weather you get, if that makes sense.

Yeah. So does that mean we should generally see, like with the cold weather we've seen to date, that volumes in the first half of this year should be looking pretty good as you push inventory back up? And then I just want to – just clarify, given some of the delivery challenges, have you been, is that, if that was a benefit, is a lot of that benefit offset by maybe it's like paying overtime wages and things like that to meet customer demands?

Well, one of the important things to remember is we don't have unlimited capacity. So when you get to a point where it's so cold, that you have opportunities outside your normal customer bank, customer owned, you know, tanks or we'll call customers that deal with multiple companies. You don't have an unlimited supply to be able to capitalize on every opportunity in the market. So, and it said otherwise, no matter how cold it is, we only have a finite delivery capacity and that's dedicated to keeping our current customers fueled. In terms of, sorry, the second part of your question was coming out of the volumes with getting tank inventories back?

Yes. Are you seeing a benefit from moving inventories back up? And have you been paying overtime wages and And are you going to see elevated costs in Q1, which might offset that benefit?

Yeah. So I'm going to ask Greer to comment. The only thing I would say is our – there's two kind of variables, our capacity and the customer's propensity to take deliveries. And the customer's propensity to take deliveries going into warm season is not universally 100%. So we're going to be – you know, we will highlight the capacity. and we're putting incentives in place to make sure that our customers are receptive to refills going into the lower season. But Greer, I'll offer some comments with the cost piece.

Yeah, so, Nelson, what I would say is that when we're running at kind of full capacity and you push on overtime, yeah, the overtime rate's a little bit higher, but you can still make really good economics on – on the delivery. If you draw also from what we would call like service or service staff who might be, you know, whatever, installing tanks, doing like regulatory work. If there are things that are movable, some are movable, some are not. But if some of these things are movable, I would view it as a delay. So if you had service-related revenue where you've moved service people to delivery, You may not get that revenue in that quarter, but it wouldn't be necessarily lost. It would be delayed. I think we talked about at third quarter, we kind of thought there was roughly $5 million, and we kind of thought it would be hard to get that back. The reason for that is we thought going into the fourth quarter, it's pretty difficult to get that back because you're getting busier. So for you to recoup that, it's pretty tricky. The way I would think about the backlog is that, yeah, the inventory levels are a little bit lower. We think we will get that back in 2026. You know, as it sat kind of at end of third quarter last year, wasn't a huge number, call it maybe $5 million. That's a bigger number at the end of the year. If I said it's $10 to $15 million, you're probably in the ballpark. As we ran into January, January, you're right, was cold. Inventory levels, we've certainly not been able to gain ground on that. Leaving the month of January, that number is probably even a little bit larger than that. Do we think we'll get all that back? I think we'll get most of it back. The reason is that even though they're using overtime, as I said, you can still make margin. Maybe not quite as good, but pretty good. The service revenue, it would just maybe come later in the year. Things that are as I say, non-emergency type service things, you do them a bit later. And so that revenue that you might have got from service through those people in that worry, you're using those people to help keep tank levels up and keep customers happy. And those people can then do that service stuff that's non-critical in April, say, or May. And so you get that revenue within the year. It's much easier to see it like when you have a busy season and then going through the shoulder where you can catch up on some of this third quarter, that dynamic wasn't available. And that's why we kind of thought it would be tricky to get that 5 million back after third quarter. I said a lot of stuff there, but hopefully that is somewhat helpful.

Yeah, that's very helpful. And then just moving to Sataris, I had a few questions there. So I think, Dale, you mentioned that pricing kind of bottomed out in Q3 for MSUs, and it's been pretty flat since then. Can you just talk about, and I think that was at the well site, but can you just talk about MSU pricing outside of the well site? Because I presume there's no longer any supply constraints to MSUs, so are the competitors out there reducing pricing on areas outside of the wellhead?

Yeah, it matters the most for us in the well site just because on a volume basis, well site is still 80%. But, you know, the oversupply of, you know, sort of the market sort of growing into the demand for the supply of trailers obviously does impact pricing in other segments. But it's been most severe on the well site, and that's been the big impact kind of in our financials and in our outlook.

Okay. And then – I was just doing some rough math, and are you adding roughly 20 MSUs as far as this year? Is that the plan? And also, like, are you seeing a big decline in the cost of purchasing MSUs?

Certainly. Twenty-three MSUs to be added have been added. As Alan mentioned, our utilization through kind of winter demand, we were 100% utilized and we were renting trailers. And so we decided, you know, the trailers were most valuable to us to go ahead and bring those in. And so those were brought in. And yes, good news. I mean, as part of our overall kind of cost savings initiatives and capital efficiency initiatives, we were able to achieve, you know, meaningful reductions versus last price paid on the acquisition of that equipment.

Got it. And then just one last question for Greer. Just on the preferred shares, I think obviously you have the option to redeem the preferred shares, I think, starting in July of next year. So I guess if your financial forecast doesn't turn out or if there's downside to your numbers, I guess this is an option at the end of the day, right? So you could potentially just delay the redemption. Can you just talk about that optionality? Your base case is probably to redeem the press, but it's You obviously have the optionality to let the coupon increase and redeem it at a later date, right?

Yeah, you're right. There's a few options here. The base thinking is that Yeah, if we got to a scenario, and you're right, it's mid-2027, where if the equity price wasn't high enough such that the holder, the instrument, was going to convert to equity, that we would likely redeem it. The most likely source of that would be a combination of building up some extra cash, as we talked about, from shifting in the capital allocation strategy, but also a high-yield bond, which would have a coupon rate. lower than that. But that's one option. That's kind of the main line of thinking. We don't need to redeem, you're right. And so if the holder of the instrument doesn't convert to equity, there's two things we can do. One is redeem. The other, you're right, we can leave the instrument in place. Currently, the coupon on it's seven and a quarter. There are step-ups. I can't remember exactly how the step-ups work, but seven and a quarter goes to seven and three quarters and this kind of thing. it's not the most favorable coupon, but certainly we do have the option to keep that around at those stepped-up coupons, and we can send you the detail on what those are. I'm not sure if it's public. It might actually be public, but we can easily send you those. And then, of course, there would be, depending on how you're trying to manage your debt and your rating agency equation, there's obviously views that it's equity or part equity or whatever. So that That is definitely an alternative that we have in front of us. Not kind of the baseline thinking, but you're right, that would be something that we have at our disposal.

Okay, great. Thanks. Thanks, everyone. I'll leave it there.

Thanks, Nelson.

Thank you. One moment for our next question. Our next question comes in the line of Patrick Kenney from National Bank.

Thank you. Good morning. Maybe just to continue on with the conversation on the press there. So you mentioned the likely refi with public debt. But just given the time you have between now and then, just wondering if you might be contemplating an asset sale program of similar size just to help shore up the liquidity position ahead of next summer or any other sources of funds that might help mitigate your exposure to the credit markets over the next year or so.

Yeah. Hey, Pat, it's Greer. I think that that's other than, so I would say as part of Superior Delivers, we have been kind of combing through and making sure that we don't have, you know, obviously excess assets. A decent example would be, you know, if you've got two bulk plants that through acquisition we acquired and they're, you know, right next to one another, obviously those have been easy ones. And you see those kind of showing up in the proceeds. But, you know, meaningful... businesses or geographies that that is not high on the list of things for us uh we think there's way more inherent value in keeping these businesses and running them better and driving more value out of them and so uh the base the base thinking is that now that would not be a focus for us other than what we would kind of call extra things like uh extraneous or surplus uh infrastructure that we've got which a lot of that we've been through already so um no that's not the not the base line of thinking. I think obviously there's a price for everything. If there was some asset that attracted a bid that was too hard to refuse, obviously we're always open. But I think we're not out looking to divest assets. We think that this company is probably better if it's bigger. It's better if it has more density. It's better if it's a bigger business. So the baseline, I think, is not to get smaller.

Got it. Thanks for that. And then just maybe to double-click on the buybacks versus debt repayment decision here over the medium term. So you touched on it, but can you just clarify your thought process here in terms of, you know, what the key macro or micro gating items might be over the next couple quarters as you decide, you know, which path to take for 2026?

Yeah, for sure. So... As I said, I think we've been buying back this year. We'll continue to buy back for the foreseeable future. This range we put out there really was to try to talk about what might happen in the second half. That would be the timing. If we were to shift, we really wouldn't get at it at least until halfway through the year. What would be the considerations? It'll be based on the winter cash flow that we're generating, as that becomes clear for us, that will be a factor. And then, of course, the likelihood of redemption. So what happens to the share price will be an input. So those will kind of be what we'll look at. As I say, I think that we view these, as I said earlier, we view these as, you know, if there is a redemption of preferred share, they're like, it is a low delta call option in it right now but it is equity and it has an equity element to it and so um you know even if we were to shift i think it's important that you know we view that as an equity friendly or shareholder friendly shift and it is you know as i say it's like a a synthetic or has similar elements as maybe i would say as a as a buyback but uh anyway that's That's kind of the way we're thinking about it. You know, as I say, it's watching the cash flow, watching the EBITDA, watching the share price, and those really are the inputs. But we're not going to do anything probably until at least halfway through the year.

Thank you. One moment for our next question. Our next question comes from the line of Robert Catelier from CIBC Capital Markets.

Hey, good morning, everyone. I just wanted to see if you could clarify what the key issues are on the reduced delivery capacity in the propane business, and more importantly, just confirm that the solutions and timelines required to resolve these issues have been identified.

Hey, Rob. Yeah, you know what? It's obviously been a challenging winter, but I don't think that it's necessarily the delivery capacity. I think it was a combination of us creating some headwinds for ourselves with in-tank inventories coupled with what was a very, very unusual winter from a weather standpoint. So my confidence level in terms of our being able to meet demand, first of all, is very high going forward. But secondly, you know, coupled with that, we want to drive even, you know, really see those optimization savings coming through so we're able to not only meet the demand of the customers but also do it in a much more efficient way than we've done in the past. So a bit of a perfect storm coming through this winter. Some of it self-inflicted, unfortunately, but I don't see this as a trend. It's not something I'm concerned about repeating.

So you think just the fullness of time and straightening out the inventory levels is going to resolve the challenges you've experienced?

Yeah, 100%. I think were we to handle this, have the same weather pattern next year, our positioning to be able to not only satisfy the requirements of our customers but to do it in a very efficient way I think would be dramatically higher.

Okay. I'm just turning to Centaurus here. I'm wondering if you have a view on what has to happen to see more well-fed activity for Centaurus. In your opinion, is it the oil price level or some other risk factor customers are dealing with, generally speaking?

Well, I mean, well-fed activity, volumes are very good. I mean, we had record volumes in the fourth quarter. Certainly, we're in a lower oil price environment. than where we were a year ago. But that's actually had more of an impact kind of on pricing than it has had on kind of overall activity. Visited with several customers to start the year. I would say, Rob, the median of those conversations, I mean, this is, you know, from all across North America, is, you know, customers have spending plans somewhere between down low single digits to flats. So, you know, the range is larger than that. Some are, you know, planning to have increased spending, some less than down low single digits. But kind of down low single digits to flat is the range with oil prices kind of in this mid-60s price environment. And so, you know, we continue to stay focused on offering the best value proposition to those customers. They care a lot about safety. They care a lot about reliability. And, you know, between, you know, reducing our costs to be efficient and be competitive, we feel good, you know, about our position. And then, you know, I think for sure commodity prices would be the thing that could change the trajectory of those spending plans, you know, as the industry kind of works its way through cycles. And certainly, you know, 2025 was a downward trajectory on that cycle, and for 2026 we haven't. We haven't planned an inflection. We're planning to kind of compete in market conditions as they are. And, you know, certainly we'll be encouraged as the cycle begins to turn.

What's interesting about that too, Dale and Rob, is the growth in our renewables and industrial business means as the biggest player in the market, we're not flooding West Texas with excess capacity. So that shift in strategy and the work that Dale has done has been a godsend because, you know – In some weeks, we're actually taking trailers out of West Texas, which is alleviating some pricing pressure. But certainly, that's caused us to not have to rely on this sort of traditional originating vertical and be contributing to oversupply. So that's one of the reasons we're staying the course and one of the reasons that we're optimistic that a recovery is going to be beneficial because we've got other options that are actually serving us really well. And the work that Dale's done on, you know, the operating leverage means that sort of pricing recovery goes right to the bottom line. So all that to say, you know, yeah, it's going to be activity for sure, but it's worth noting that we're also not contributing to an oversupply in that market right now.

Okay. That's all very helpful. Thank you.

Thanks, Rob. Really appreciate the time.

Thank you. At this time, I would now like to turn the conference back over to Alan McDonald, President and CEO, for closing remarks.

Well, thank you very much for joining, everyone. It's good to talk to you all. We appreciate your questions, and we'll look forward to speaking to you in May. Thanks very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.