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Energy Services
-- Average temperatures across Canada and the Northeast U.S. are expected to be consistent with the recent five-year average for 2013;-- Total propane and U.S. refined fuels-related sales volumes are expected to increase in 2013, due to assumptions that weather will be consistent with the five-year average and that there will be an impact from customer win-back and retention programs;-- Wholesale propane and U.S. refined fuels-related prices are not anticipated to significantly impact demand for propane, refined fuels and related services;-- Supply portfolio management market results in 2013 are expected to increase as compared to 2012 due to supply chain management efforts and higher sales volumes due to a return to normal weather; and-- Fixed-price energy services is expected to be able to access sales channel agents on acceptable contract terms, and gross profits in 2013 will decrease from 2012. The decrease will be primarily related to lower natural gas gross margins due to lower transportation-related gross profits and lower contribution from residential customer renewals and residential customer count. Total new customer aggregation volumes are expected to decline from 2012 as the system price for natural gas remains low. Growth in the fixed-price electricity segment is expected to offset a portion of the decline in natural gas gross profits.
Specialty Chemicals
-- Sodium chlorate sales volumes, pricing and margins in 2013 are expected to be consistent with 2012, as market conditions remain balanced;-- Chloralkali sales volumes, pricing and margins are expected to increase in 2013 due to improved contribution from hydrochloric acid and caustic soda;-- Electrical costs are expected to be consistent with 2012 as overall electrical pricing remains stable; and-- Average plant utilization will approximate 94% in 2013.
Construction Products Distribution
-- GSD sales revenue from Canada is expected to decline in 2013 due to branch closures and lower residential construction activity, offset in part by the successful introduction of new products and price management. GSD sales revenue from the United States is expected to increase in 2013 due to continued expansion of existing product lines into U.S. branches, emphasis on specific product opportunities, pricing initiatives and market improvements in some regions. C&I sales revenue is expected to increase in 2013 due to emphasis on specific product opportunities and pricing initiatives;-- Sales margins for GSD and C&I are expected to increase slightly from 2012 due to price management initiatives, procurement strategy and closure of low-margin branches; and-- Operating costs as a percentage of revenue are expected to decrease due to the branch closures and restructuring completed in 2012.
Debt Management Update
Superior remains committed to reducing its total debt and its total debt leverage ratios. Superior's total debt to EBITDA ratio as at December 31, 2012 of 4.4X was within the Superior's third quarter 2012 MD&A range of 4.2X to 4.4X.
Superior has increased the high end of its forecasted December 31, 2013 total debt to EBITDA range to 4.2X from the prior range of 4.0X provided at the third quarter of 2012 due to higher anticipated working capital levels and the anticipated payment to CRA. Superior's targeted total debt to EBITDA remains unchanged at 3.5X to 4.0X.
Debt Management Summary---------------------------------------------------------------------------- Millions of Per Share dollars----------------------------------------------------------------------------2013 financial outlook adjusted operating cash flow per share - mid- point (1) $1.80 204.2Maintenance capital expenditures, net (0.27) (30.2)Capital lease obligation repayments (0.14) (15.5)----------------------------------------------------------------------------Cash flow available for dividends and debt repayment before growth capital $1.39 158.5Expansion of Port Edward's and Saskatoon facilities (0.25) (28.2)Other growth capital expenditures (0.16) (18.1)Anticipated payment to CRA in relation to tax challenge (2) (0.13) (15.0)Proceeds from dividend reinvestment program 0.12 13.6----------------------------------------------------------------------------Estimated 2013 free cash flow available for dividend and debt repayment $0.97 110.8Dividends (annualized) $(0.60) (68.1)----------------------------------------------------------------------------Total estimated debt repayment (including Q4 2012 actuals) $0.37 42.7Estimated total debt to EBITDA ratio as at December 31, 2013 3.8X - 4.2X 3.8X - 4.2X--------------------------------------------------------------------------------------------------------------------------------------------------------Dividend per share (annualized) $0.60 68.1Calculated payout ratio after all capital expenditures and payment to CRA 61% 61%--------------------------------------------------------------------------------------------------------------------------------------------------------(1) See "Financial Outlook" for additional details including assumptions, definitions and risk factors.(2) See "Update on Review of Conversion Transaction" for additional details.
