Superior Plus Corp · TSX:SPB
Superior Plus — Investor Day (November 2010)
70 slides from Superior Plus's investor day presentation, Nov 18, 2010
Slide 1: Investor Day November 18, 2010
TSX:SPB Investor Day November 18, 2010 www.superiorplus.com
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Certain information included herein is forward-looking, within the meaning of applicable Canadian securities laws. Forward-looking information can be identified by looking for words such as “believe”, “expects”, “expected”, “will”, “intends”, “project
Slide 3: Business Overview
Business Overview Superior Plus – ‘Three Businesses – ONE Investment’ Energy Services Specialty Chemicals Construction Products Distribution Converted to a corporation on December 31, 2008 High-yielding corporation Excellent access to capital Focused on improving efficiency and organ
Slide 4: Financial Profile – SPB
Financial Profile – SPB Enterprise Value (EV) $2.3 billion Share Market Price (1) $10.46 Annual Dividend Rate (per share) (2) $1.62 Dividend Yield 15.5% Number of Shares Outstanding (3) 107.1 million Convertible Debentures Outstanding (4) $489.4 million (1) Closing market price on November 9, 2010 (
Slide 5: Strong Management Capability
Strong Management Capability Position Age Grant Billing Chief Executive Officer 59 Wayne Bingham Chief Financial Officer 54 John Gleason President, Energy Services and Propane 51 Greg McCamus President, U.S. Refined Products and Fixed-Price Products 52 Eric McFadden EVP, Business Development 47 Paul
Slide 6: Superior Plus Market Diversification
Superior Plus Market Diversification Energy Services Specialty Chemicals Construction Products Distribution (1) Based on mid-point of Superior’s 2011 Financial Outlook on an EBITDA from operations basis as provided in Superior’s third quarter MD&A 6
Slide 7: Today's Presenters
Today’s Presenters Superior Plus Superior Plus Grant Billing Wayne Bingham Energy Services Construction Products Specialty Chemicals John Gleason Distribution Paul Timmons Paul Vanderberg 7
Slide 8: Construction Products Distribution
TSX:SPB Construction Products Distribution www.superiorplus.com
Slide 9: Business Overview
Business Overview Leading distributor of Walls and Ceilings Products and Commercial and Industrial insulation in Canada and the U.S. Commercial Residential Industrial Fabrication services Productivity partner with contractors providing value-added services Operational: 115 distribution
Slide 10: End-Use Market Diversification
End-Use Market Diversification ‘The Construction Products Distribution business is diversified across geographic and end-use markets’ Commercial – New Commercial – Renovation Industrial Residential % based on 2010 Estimated Revenue by Segment 10
Slide 11: Branch Locations 'A North American Focus'
Branch Locations ‘A North American Focus’ 11
Slide 12: 2010 Initiatives
2010 Initiatives Cost reduction programs End-use markets have been challenging Extensive focus on operating costs $4.2 million in restructuring expense 9 month ytd 2010 Costs savings are reflected in the 2011 Outlook Integration Cost reduction focus Incremental approach in certain Wa
Slide 13: 2010 Initiatives
2010 Initiatives June 2010 acquisition of Burnaby Insulation C&I entry into Canada Serves Western Canada industrial market Base to build on, particularly related to Oil Sands opportunities Strengthened management team Key hires from industry, internal promotions Restructured procuremen
Slide 14: Market Overview – Residential
Market Overview – Residential Residential Housing Starts (000s units) 3,000 250 2,500 200 2,000 150 1,500 100 1,000 500 50 - - 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011F F = Forecast U.S. Canada Source: Dept. of Commerce, CMHC, Company Forecast 14
Slide 15: Market Overview – Non-Residential
Market Overview – Non- Residential Non-Residential Construction (mmsf) 2,000 120 1,800 1,600 100 1,400 80 1,200 1,000 60 800 600 40 400 20 200 - - 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 F F = Forecast U.S. Canada Source: McGraw Hill, CanaData 15
Slide 16: Market Overview – Industrial
Market Overview – Industrial Industrial Capital Spending ($ billions) 300 100 250 75 200 150 50 2003 2004 2005 2006 2007 2008 2009 2010 F 2011 F F = Forecast U.S. Canada Source: IIR 16
Slide 17: Insulation Fabrication Services
Insulation Fabrication Services Value-added to customers Conversion of raw materials into products of specific sizes and shapes Located strategically near large industrial and commercial markets West North ▼ Fabrication South 17
Slide 18: Energy Efficiency Trends
Energy Efficiency Trends Positive growth from energy efficiency trends Insulation role in energy efficiency and reducing greenhouse gas emissions Insulation in existing commercial buildings saves at least 30% of the total U.S. commercial energy consumption that otherwise would have been consum
Slide 19: Growth Opportunities
Growth Opportunities Product line expansion: Full walls + ceilings product line in 23 architectural centres C+I insulation in walls and ceilings centres Geographic growth and consolidation: Selective acquisitions Greenfield Business positioned for end-use market recovery Significant
Slide 20: Bridge Construction Products Distribution 2010 and 2011 Financial Outlook
2010 and 2011 Financial Outlook Bridge Construction Products Distribution (millions of dollars) Mid-Point of 2010 Outlook ($18 – $25 million) (1) 21.5 Benefit of cost reduction programs, net 1.0 Volume based on increased market share and economic recovery 8.0 Price/margin improvement 2.0 Mid-Point o
Slide 21: Summary
Summary Leading market positions with cost structures aligned with current volumes Energy efficiency trends support increase insulation usage Positioned to grow based on SPI network Significant leverage to economic recovery 21
Slide 22: Questions & Answers
TSX:SPB Questions & Answers www.superiorplus.com
Slide 23: Energy Services
TSX:SPB Energy Services www.superiorplus.com
Slide 24: Energy Services
Energy Services Canadian propane distribution Canada’s largest retail supplier of propane Full service offering U.S. northeast refined fuels Significant heating oil, propane and distillates platform in the northeastern U.S. Full service offering Supply and portfolio management Leadin
Slide 25: Energy Services Diversification
Energy Services Diversification ‘The Energy Services business is well diversified across various geographic and end-use markets’ Canadian Propane Distribution U.S. Refined Fuels Wholesale Supply Management Fixed-Price Energy Services Based on gross profit by business for the nine-month period ended
Slide 26: Canadian Propane Business Overview
Canadian Propane Business Overview Superior Propane is a recognizable Canadian brand – in business since 1951 Canada’s largest supplier of propane, related products and services Annual volumes: 1.3 billion litres 160,000 customers coast-to-coast Canada 125,000 residential customers (150 mi
Slide 27: Canadian Propane Geographic Diversification
Canadian Propane Geographic Diversification Western Canada 54% Eastern Canada 38% Atlantic Canada 7% Volume by region for the twelve-month period ended December 31, 2009. 27
Slide 28: Canadian Propane 2010 Initiatives
Canadian Propane 2010 Initiatives Technology-Based Initiatives Enterprise One (ERP) Upgrade completed in 2nd quarter 2010 Costs savings of approximately $7.0 million anticipated in 2011 On-Board Truck Computers and UPS Roadnet Improved connectivity with front-line staff results in operatio
Slide 29: U.S. Refined Fuels Business Overview
U.S. Refined Fuels Business Overview Three U.S. Refined Fuel acquisitions in 2009/10 for US$308 million Residential and Commercial heating oil, propane, and commercial fuels distribution Sunoco Home Comfort, Griffith Consumers, Griffith Energy Annual volumes – 463 million gallons (1.7 billio
Slide 30: U.S. Refined Fuels Geographic Diversification
U.S. Refined Fuels Geographic Diversification Rochester Albany Syracuse Buffalo Binghamton Scranton New York State College Harrisburg Philadelphia Pittsburgh Location Terminal 30
Slide 31: U.S. Refined Fuels Market Analysis
U.S. Refined Fuels Market Analysis National Oilheat Research Alliance estimates 43% of total heating oil consumption is in mid-Atlantic Region from Virginia to New York New York and Pennsylvania have an estimated 3.5 million homes fueled by heating oil 33% of New York households and 25% of Pen
Slide 32: U.S. Refined Fuels 2010 Initiatives
U.S. Refined Fuels 2010 Initiatives Completed the acquisition of Griffith Energy (January, 2010) Integration of the three businesses substantially complete One-time costs of $3.2 million incurred in 2010 Combined some operations in New York and Pennsylvania Rebranding to Superior Plus Ener
Slide 33: Supply Portfolio Management
Supply Portfolio Management Supply Portfolio Management group provides expertise in wholesale supply, risk management and logistics to Superior’s businesses Third-party marketing accounts for about one-third of all activity with strong growth potential Continued growth of third party business
Slide 34: Wholesale Supply Market Footprint
Wholesale Supply Market Footprint EDMONTON REGINA MARYSVILLE/SARNIA BATH CONWAY Supply Region Wholesale Market Region Transport Flow MOUNT BELVIEU Storage 34
Slide 35: Energy Services Opportunities
Energy Services Opportunities Canadian Propane Customer Growth Initiatives Continued focus on sales and marketing to attract and retain customers Build and execute on a plan to leverage our safety expertise Target existing customers and further penetrate with service offerings Productivity
Slide 36: Energy Services Opportunities
Energy Services Opportunities U.S. Refined Fuels Pursue propane and propane service expansion opportunities across all markets in the Northeastern U.S. Cross-selling opportunities in conjunction with the Fixed- Price Energy Services business (electricity and natural gas) offerings to be introduc
Slide 37: Energy Services Opportunities
Energy Services Opportunities Supply Portfolio Management Leverage and diversify current storage locations and supply relationships to expand market presence Expanded product offering Offer supply and risk management solutions to customers 37
Slide 38: Bridge Energy Services 2010 and 2011 Financial Outlook
2010 and 2011 Financial Outlook Bridge Energy Services (millions of dollars) Mid-Point of 2010 Outlook ($100 – $115 million) (1) 107.5 Weather normalization 10.0 Economic improvements and sales growth 9.0 Absence of integration costs and full-year benefit of cost reductions 3.5 Mid-Point of 2011 Out
Slide 39: Energy Services Summary
Energy Services Summary Strong brand and leading positions in both end-use and geographic markets across Canada Strong focus on customer service Plans in place to grow existing customer base Continued focus on productivity improvements and cost-saving initiatives to generate ongoing efficien
Slide 40: Questions & Answers
TSX:SPB Questions & Answers www.superiorplus.com
Slide 41: Specialty Chemicals
TSX:SPB Specialty Chemicals www.superiorplus.com
Slide 42: Business Overview
Business Overview Manufacturer and supplier of specialty chemicals and provider of technology-related services Second-largest producer of sodium chlorate in North America and worldwide with an estimated production capacity of 26% and 15%, respectively Third largest producer of Potassium Chlora
Slide 43: Product Diversification
Product Diversification ‘Superior has diversified its Specialty Chemical Business’ 2004 EBITDA 2009 EBITDA North American Chlorate International Chlorate Chloralkali Technology 43
Slide 44: Geographic Footprint
Geographic Footprint CANADA Grande Prairie 500 employees Saskatoon Hargrave Thunder Bay Vancouver Buckingham 510,000 MT sodium chlorate capacity Port Edwards Toronto from 7 plants USA 10,500 MT sodium chlorite capacity from Valdosta 2 plants – largest worldwide 39,000 MT chloralkali product
Slide 45: 2010 Capital Initiatives
2010 Capital Initiatives Sodium chlorate – efficiency improvement projects - Electrical energy ±10% reduction - Valdosta, Georgia - Hargrave, Manitoba Hydrogen utilization at the Chilean facility Ownership of electrical generation – Chile Vancouver rectifier and debottlenecking Total capit
Slide 46: Pulp Market Update
Pulp Market Update Pulp inventories are at normalized levels – approximately 35 days of inventory Pulp prices remain high providing support for sodium chlorate markets Many closed mills have re-started Pulp statistics current as at November 10, 2010 46
Slide 47: Chlorate Market Update
Chlorate Market Update Sodium chlorate market tight Producer operations problems – France/USA Pulp mills running at high utilization rates 80,000 tonnes demand has returned to North American market ERCO on order control – price increases announced 47
Slide 48: Chloralkali Market Update
Chloralkali Market Update 2010 industry operating rates continued to increase, currently above 90% Gulf Coast chlorine derivatives exports very high (EDC, vinyl etc) Market conditions should be sustainable due to: USD currency weakness Low natural gas price Chinese industry operating rat
Slide 49: Chloralkali Market Update
Chloralkali Market Update ‘Chloralkali margins are well positioned relative to past economic downturns’ Source: CMAI 49
Slide 50: South American Expansion Opportunities
South American Expansion Opportunities Brazil and Chile are low cost pulp regions Superior will look to leverage its existing relationship with CMPC Chilean facility completed in 2005 CMPC is a low cost pulp producer with a market capitalization of US$10 billion as at July 2010 Opportunity
Slide 51: Specialty Chemicals Opportunities
Specialty Chemicals Opportunities Continue to optimize existing chemical facilities Chlorate industry consolidation opportunities Exploring international expansion opportunities Leverage chlorine dioxide technology Leverage strategic partnerships Use Port Edwards facility expansion to at
Slide 52: Bridge Specialty Chemicals 2010 and 2011 Financial Outlook
2010 and 2011 Financial Outlook Bridge Specialty Chemicals (millions of dollars) Mid-Point of 2010 Outlook ($95 – $105 million) (1) 100.0 Port Edwards volume and margin improvements 7.5 Mid-Point of 2011 Outlook ($100 – $115 million) (1) 107.5 (1) As provided in Superior’s 2010 third-quarter MD&A 52
Slide 53: Summary
Summary Stable cash flows throughout the recession Port Edwards shutdown influenced 2009 results Strong pipeline of opportunities Demonstrated an ability to effectively execute a variety of projects Product and geographic expansion projects are being developed 53
Slide 54: Questions & Answers
TSX:SPB Questions & Answers www.superiorplus.com
Slide 55: Financial Overview
TSX:SPB Financial Overview www.superiorplus.com
Slide 56: 2010 Q3 and YTD Financial Performance
2010 Q3 and YTD Financial Performance Three Months Ended Nine Months Ended September 30, September 30, (millions of dollars, except per share amounts) 2010 2009 2010 2009 EBITDA from operations: Energy Services 4.9 3.1 51.8 57.0 Specialty Chemicals 26.9 22.1 71.8 74.4 Construction Products Distribut
Slide 57: Third-Quarter Highlights
Third-Quarter Highlights Benefits of a slow economic recovery evident throughout the third quarter Increased non-heating volumes within the Energy Services business Continued strength of both sodium chlorate and chloralkali volumes Construction Products Distribution business continues to be ne
Slide 58: 2010 and 2011 Financial Outlook
2010 and 2011 Financial Outlook (millions of dollars except per share amounts) (1)(2) 2010 2011 EBITDA from operations: Energy Services 100-115 120-140 Specialty Chemicals 95-105 100-115 Construction Products Distribution 18-25 25-40 Adjusted Operating Cash Flow per share $1.30-$1.50 $1.75-$2.00 (1)
Slide 59: 2010 and 2011 Financial Outlook Bridge
2010 and 2011 Financial Outlook Bridge (all amounts per share) Mid-Point of 2010 Outlook ($1.30 to $1.50) (1) $1.40 Impact of weather (approximately $0.10 to $0.20) 0.15 Economic improvements and sales growth within Energy Services 0.10 Full year cost saving initiatives at U.S. Refined Fuels and Con
Slide 60: Multiple Sources of Capital
Multiple Sources of Capital ‘Superior successfully accessed the Common Share and Convertible Debenture market during 2010 and currently has a well diversified capital base’ 162.7 82.6 Common Shares Credit Facility 489.4 Senior Unsecured Debentures Convertible Unsecured Debentures 1,592.4 150.0 Accou
Slide 61: Credit Rating Summary
Credit Rating Summary DBRS Senior Secured BBB (low) Negative Senior Unsecured BB (high) Negative S&P Corporate Rating BB Stable Senior Secured BBB(-) Senior Unsecured BB (-) Credit Ratios as at September 30, 2010 Consolidated Secured/EBITDA ratio (1) 2.4X Consolidated Debt/EBITDA ratio (1)(2) 3.0X (
Slide 62: Term Debt Repayment Profile
Term Debt Repayment Profile As at September 30, 2010 320.4 ($ million) 207.9 172.5 150.0 115.6 99.8 105.8 3.0 2010 2011 2012 2013 2014 2015 2016 2017 Syndicated Credit Facility U.S. Notes Convertible Debentures Other Term Debt Securitization Program Senior Unsecured Debentures Syndicated Credit Faci
Slide 63: Tax Horizon
Tax Horizon ‘Superior has significant tax pools available to shelter future Canadian taxable income’ Canada Cash Taxes Taxable at the provincial level in approximately 2020 at approximately 10% Taxable at both the federal and provincial level in approximately 2030 at approximately 25% U.S. Cas
Slide 64: Questions & Answers
TSX:SPB Questions & Answers www.superiorplus.com
Slide 65: Summary
TSX:SPB Summary www.superiorplus.com
Slide 66: 2010 A Year of Repositioning
2010 A Year of Repositioning Focus on integration Expensed $9 million in one-time costs Three heating oil businesses C&I insulation Completion of system upgrade at Superior Propane Spent $11.1 million over 3 years Ramp-up of Port Edwards sales and production Sales and marketing funct
Slide 67: 2011 Reaping the Rewards
2011 Reaping the Rewards Superior Propane ERP upgrade positions for future productivity improvements Heating oil integration provides platform for improved results Construction products platform established for growth as residential & commercial activity improve Full year benefit of Port Edw
Slide 68: Investment Highlights
Investment Highlights High-yield corporation Mature businesses with historically stable cash flows over various economic cycles Low operating capital requirements Leading competitive positions across businesses Businesses are well positioned to participate in economic recovery 68
Slide 69: Questions & Answers
TSX:SPB Questions & Answers www.superiorplus.com
Slide 70: Contact
TSX:SPB Contact: Wayne Bingham Executive Vice-President Suite 1400, 840 – 7 Avenue S.W. and Chief Financial Officer Calgary, Alberta T2P 3G2 Tel: 403-218-2970 Jay Bachman Fax: 403-218-2973 Vice-President, Investor Toll Free: 1-866-490-7587 Relations and Treasurer www.superiorplus.com www.superiorplu