Non-IFRS Financial Measures
Adjusted Operating Cash Flow
Adjusted operating cash flow is equal to cash flow from operating activities as defined by IFRS, adjusted for changes in non-cash working capital, other expenses, non-cash interest expense, current income taxes and finance costs. Superior may deduct or include additional items in its calculation of adjusted operating cash flow; these items would generally, but not necessarily, be items of a non-recurring nature. Adjusted operating cash flow is the main performance measure used by management and investors to evaluate Superior's performance. Readers are cautioned that adjusted operating cash flow is not a defined performance measure under IFRS and that adjusted operating cash flow cannot be assured. Superior's calculation of adjusted operating cash flow may differ from similar calculations used by comparable entities. Adjusted operating cash flow represents cash flow generated by Superior that is available for, but not necessarily limited to, changes in working capital requirements, investing activities and financing activities of Superior.
The seasonality of Superior's individual quarterly results must be assessed in the context of annualized adjusted operating cash flow. Adjustments recorded by Superior as part of its calculation of adjusted operating cash flow include, but are not limited to, the impact of the seasonality of Superior's businesses, principally the Energy Services segment, by adjusting for non-cash working capital items, thereby eliminating the impact of the timing between the recognition and collection/payment of Superior's revenues and expenses, which can differ significantly from quarter to quarter. Adjustments are also made to reclassify the cash flow related to natural gas and electricity customer contract-related costs in a manner consistent with the income statement's recognition of these costs. Adjusted operating cash flow is reconciled to net cash flow from operating activities on page 13.
EBITDA
EBITDA represents earnings before taxes, depreciation, amortization, finance expense and certain other non-cash expenses, and is used by Superior to assess its consolidated results and the results of its operating segments. EBITDA is not a defined performance measure under IFRS. Superior's calculation of EBITDA may differ from similar calculations used by comparable entities. The EBITDA of Superior's operating segments may be referred to as EBITDA from operations. Net earnings before income taxes are reconciled to EBITDA from operations on page 35.
Compliance EBITDA
Compliance EBITDA represents earnings before interest, taxes, depreciation, amortization and certain other non-cash expenses calculated on a 12 month trailing basis, giving pro forma effect to acquisitions and divestitures, and is used by Superior to calculate its debt covenants and other credit information. Compliance EBITDA is not a defined performance measure under IFRS. Superior's calculation of compliance EBITDA may differ from similar calculations used by comparable entities. See Note 15 to the unaudited condensed consolidated financial statements for a reconciliation of net earnings (loss) to compliance EBITDA.
Payout Ratio
Payout ratio represents dividends as a percentage of adjusted operating cash flow less other capital expenditures, and is used by Superior to assess its financial results and leverage. Payout ratio is not a defined performance measure under IFRS. Superior's calculation of payout ratio may differ from similar calculations used by comparable entities.
Reconciliation of Net Earnings (Loss) before income taxes to EBITDA fromOperations (1) (2)----------------------------------------------------------------------------For the three months ended Construction December 31, 2012 Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Net Earnings before income taxes 27.7 17.2 6.1Add: Amortization of property, plant and equipment and intangible assets 12.7 1.3 1.4 Amortization included in cost of sales - 11.5 - Losses on disposal of assets 1.0 0.6 0.1 Amortization of customer contract related costs 0.7 - - Customer contract related costs (0.2) - - Impairment of property, plant and equipment 4.7 - - Finance costs 1.2 0.1 0.2 Unrealized gains on derivative financial instruments (1.7) (1.6) -----------------------------------------------------------------------------EBITDA from operations 46.1 29.1 7.8--------------------------------------------------------------------------------------------------------------------------------------------------------For the three months ended Construction December 31, 2011 Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Net Earnings (Loss) before income taxes (297.6) 19.4 5.2Add: Amortization of property, plant and equipment and intangible assets 23.3 3.6 1.6 Amortization included in cost of sales - 11.4 - Losses (gains) on disposal of assets (0.8) - (0.2) Amortization of customer contract-related costs 0.5 - - Customer contract-related costs 0.2 - - Gain on bargain purchase (0.9) - - Impairment of intangible assets and goodwill 300.6 - - Finance costs 1.0 0.1 0.3 Unrealized gains on derivative financial instruments 20.2 - -----------------------------------------------------------------------------EBITDA from operations 46.5 34.5 7.9------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------2012 Construction Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Net Earnings before income taxes 113.0 77.0 13.8Add: Amortization of property, plant and equipment, intangible assets and accretion 53.4 6.3 6.1 Amortization included in cost of sales - 44.9 - Loss on disposal of assets 0.2 0.6 0.2 Amortization of customer contract-related costs 3.3 - - Customer contract-related costs (1.1) - - Impairment of property, plant and equipment 4.7 - - Finance costs 4.5 0.3 0.7 Unrealized gains on derivative financial instruments (43.8) (1.6) -----------------------------------------------------------------------------EBITDA from operations 134.2 127.5 20.8--------------------------------------------------------------------------------------------------------------------------------------------------------2011 Construction Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Net Earnings (Loss) before income taxes (233.9) 56.1 (63.3)Add: Amortization of property, plant and equipment, intangible assets and accretion 71.1 8.5 8.4 Amortization included in cost of sales - 44.9 - Loss (gain) on the disposal of assets 2.4 - (0.1) Amortization of customer contract-related costs 4.2 - - Gain on bargain purchase (0.9) - - Customer contract-related costs (1.6) - - Impairment of property, plant and equipment 3.4 - - Impairment of intangible assets and goodwill 300.6 - 78.0 Finance costs 3.9 0.3 1.2 Unrealized (gains) losses on derivative financial instruments (15.6) 5.4 -----------------------------------------------------------------------------EBITDA from operations 133.6 115.2 24.2--------------------------------------------------------------------------------------------------------------------------------------------------------(1) See the unaudited condensed consolidated financial statements for net earnings (loss) before income taxes, amortization of property, plant and equipment, intangible assets and accretion of convertible debenture issue costs, amortization included in cost of sales, amortization of customer contract costs, customer contract related costs and unrealized (gains) losses on derivative financial instruments.(2) See "Non-IFRS Financial Measures" for additional details.Reconciliation of Segmented Revenue, Cost of Sales and Cash Operating andAdministrative Costs included in this Financial Discussion---------------------------------------------------------------------------- For the three months ended December 31, 2012 Construction Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Revenue per financial statements 602.2 138.6 193.2 Foreign currency gains (losses) related to working capital - 0.5 -----------------------------------------------------------------------------Revenue per the Financial Discussion 602.2 139.1 193.2--------------------------------------------------------------------------------------------------------------------------------------------------------Cost of products sold per financial statements (472.6) (87.6) (145.6) Risk reserve recovery reclassification - - - Non-cash amortization - 11.5 -----------------------------------------------------------------------------Cost of products sold per the Financial Discussion (472.6) (76.1) (145.6)--------------------------------------------------------------------------------------------------------------------------------------------------------Gross profit 129.6 63.0 47.6Cash operating and administrativecosts per financial statements (97.7) (35.3) (41.3) Amortization and depreciation expenses 12.7 1.3 1.4 Losses (gains) on disposal of assets 1.0 0.6 0.1 Amortization of customer contract related costs 0.7 - - Customer contract related costs (0.2) - - Gain on bargain purchase - - - Impairment of property, plant and equipment 4.7 - - Risk reserve recovery reclassification - - - Reclassification of foreign currency (gains) and losses related to working capital - (0.5) -----------------------------------------------------------------------------Cash operating and administrative costs per the Financial Discussion (83.5) (33.9) (39.8)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ For the three months ended December 31, 2011 Construction Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Revenue per financial statements 727.6 137.7 178.1 Foreign currency gains (losses) related to working capital - 0.7 -----------------------------------------------------------------------------Revenue per the Financial Discussion 727.6 138.4 178.1--------------------------------------------------------------------------------------------------------------------------------------------------------Cost of products sold per financial statements (595.6) (82.8) (130.4) Risk reserve recovery reclassification (2.2) - - Non-cash amortization - 11.4 -----------------------------------------------------------------------------Cost of products sold per the Financial Discussion (597.8) (71.4) (130.4)--------------------------------------------------------------------------------------------------------------------------------------------------------Gross profit 129.8 67.0 47.7Cash operating and administrativecosts per financial statements (107.3) (35.4) (42.2) Amortization and depreciation expenses 21.6 3.6 1.6 Losses (gains) on disposal of assets 0.4 - (0.2) Amortization of customer contract related costs 0.9 - - Customer contract related costs (0.2) - - Gain on bargain purchase (0.9) - - Impairment of property, plant and equipment - - - Risk reserve recovery reclassification 2.2 - - Reclassification of foreign currency (gains) and losses related to working capital - (0.7) -----------------------------------------------------------------------------Cash operating and administrative costs per the Financial Discussion (83.3) (32.5) (40.8)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ For the twelve months ended December 31, 2012 Construction Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Revenue per financial statements 2,301.6 543.8 778.9 Foreign currency gains (losses) related to working capital - (1.6) -----------------------------------------------------------------------------Revenue per the Financial Discussion 2,301.6 542.2 778.9--------------------------------------------------------------------------------------------------------------------------------------------------------Cost of products sold per financial statements (1,854.2) (328.8) (595.0) Risk reserve recovery reclassification - - - Non-cash amortization - 44.9 -----------------------------------------------------------------------------Cost of products sold per the Financial Discussion (1,854.2) (283.9) (595.0)--------------------------------------------------------------------------------------------------------------------------------------------------------Gross profit 447.4 258.3 183.9Cash operating and administrative costs per financial statements (369.0) (139.3) (169.4) Amortization and depreciation expenses 53.4 6.3 6.1 (Gains) losses on disposal of assets 0.2 0.6 0.2 Amortization of customer contract related costs 3.3 - - Customer contract related costs (1.1) - - Impairment of property, plant and equipment, intangible assets and goodwill 4.7 - - Gain on bargain purchase - - - Risk reserve recovery reclassification - - - Reclassification of foreign currency (gains) and losses related to working capital - 1.6 -----------------------------------------------------------------------------Cash operating and administrative costs per the Financial Discussion (313.2) (130.8) (163.1)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ For the twelve months ended December 31, 2011 Construction Energy Specialty Products Services Chemicals Distribution----------------------------------------------------------------------------Revenue per financial statements 2,686.1 527.7 711.8 Foreign currency gains (losses) related to working capital - 1.4 -----------------------------------------------------------------------------Revenue per the Financial Discussion 2,686.1 529.1 711.8--------------------------------------------------------------------------------------------------------------------------------------------------------Cost of products sold per financial statements (2,225.7) (335.3) (537.1) Risk reserve recovery reclassification (5.2) - - Non-cash amortization - 44.9 -----------------------------------------------------------------------------Cost of products sold per the Financial Discussion (2,230.9) (290.4) (537.1)--------------------------------------------------------------------------------------------------------------------------------------------------------Gross profit 455.2 238.7 174.7Cash operating and administrative costs per financial statements (405.4) (130.6) (158.8) Amortization and depreciation expenses 71.1 8.5 8.4 (Gains) losses on disposal of assets 2.4 - (0.1) Amortization of customer contract related costs 4.2 - - Customer contract related costs (1.6) - - Impairment of property, plant and equipment, intangible assets and goodwill 3.4 - - Gain on bargain purchase (0.9) - - Risk reserve recovery reclassification 5.2 - - Reclassification of foreign currency (gains) and losses related to working capital - (1.4) -----------------------------------------------------------------------------Cash operating and administrative costs per the Financial Discussion (321.6) (123.5) (150.5)--------------------------------------------------------------------------------------------------------------------------------------------------------
