Outlook
Superior expects business conditions in 2013 for its Construction Products Distribution business to be similar to 2012, with conditions improving slightly in the U.S. and lower residential construction in Canada. EBITDA from operations is anticipated to be higher in 2013 than in 2012 due in part to the absence of restructuring costs incurred in 2012 and the benefit from the business initiatives noted below. Superior continues to see difficult market conditions in the residential and commercial segments in both countries although U.S. housing starts are increasing and this will provide support for future sales growth. Superior does not anticipate significant near-term improvements in the end-use markets.
Restructuring
The Construction Products Distribution business continues to review all aspects of operations to optimize its cost structure and improve gross margins. A total of $6.5 million in restructuring costs were recognized in 2012 associated with the closure or reorganization of 15 branches. Restructuring activities were actively managed to minimize costs and the impact on customers.
Initiatives to improve results in the Construction Products Distribution business continued during the fourth quarter. Ongoing business improvement projects for 2013 include: a) assessment of overall logistics and existing branch network, b) review of supply chain management including procurement and transportation, c) review of product pricing, and d) working capital management.
In addition to the Construction Products Distribution segment's significant assumptions detailed above, refer to "Risk Factors to Superior" for a detailed review of the significant business risks affecting Superior's Construction Products Distribution segment.
Consolidated Capital Expenditure Summary---------------------------------------------------------------------------- Three months ended Twelve months ended December 31, December 31,(millions of dollars) 2012 2011 2012 2011----------------------------------------------------------------------------Efficiency, process improvement and growth-related 4.7 5.4 11.4 16.3Other capital 17.4 9.2 32.4 21.9---------------------------------------------------------------------------- 22.1 14.6 43.8 38.2Other acquisitions - 1.1 5.5 14.8Proceeds on disposition of capital (0.4) (1.0) (4.5) (3.2)----------------------------------------------------------------------------Total net capital expenditures 21.7 14.7 44.8 49.8Investment in finance leases 2.8 7.6 8.1 15.7----------------------------------------------------------------------------Total expenditures 24.5 22.3 52.9 65.5--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency, process improvement and growth related expenditures were $4.7 million in the fourth quarter compared to $5.4 million in the prior year quarter. These are primarily related to Energy Services' purchases of rental assets and truck related expenditures. Other capital expenditures were $17.4 million in the fourth quarter compared to $9.2 million in the prior year quarter, consisting primarily of required maintenance and general capital across all of Superior's segments although the increase was primarily related to Specialty Chemicals' bromine removal project and several other smaller projects. Proceeds on the disposal of capital were $0.4 million in the fourth quarter and consisted of Superior's disposition of surplus tanks, cylinders and other assets. During the fourth quarter Superior entered into new leases with capital equivalent value of $2.8 million primarily related to delivery vehicles for the Energy Services and Construction Products Distribution segments.
