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Specialty Chemicals
-- Sodium chlorate sales volumes are expected to increase in 2013 as compared to 2012 due to strong demand from all markets. Sodium chlorate pricing is expected to increase due to continued strong market conditions although gross margins are expected to decline as a result of higher electricity pricing;-- Chloralkali sales volumes are expected to increase in 2013 as compared to 2012 due to higher demand for chlorine and potassium products. Pricing is expected to be soft for chlorine in 2013 as compared to 2012 although it will be consistent for other products. Gross profits are expected to be consistent with 2012 as lower margins for chlorine products are offset by higher on caustic and potassium products;-- Electrical costs are expected to increase slightly in 2013 as compared to the prior year;-- No labour disruptions are expected in 2013 although the collective bargaining agreement for the North Vancouver facility has expired and negotiations are ongoing; and-- Average plant utilization will approximate 91% 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 residential 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 increase slightly due to investment in supply chain capability and inflationary increases of wages and other operating costs, offset in part by savings from branch closures and restructuring completed in 2012.
Debt Management Update
Upon successful closing of the equity issue on March 27, 2013, Superior's pro-forma December 31, 2012 total debt to EBITDA ratio would have been 4.0X compared to the actual total debt to EBITDA ratio of 4.5X. As a result of the equity issue, Superior is updating its forecasted December 31, 2013 total debt to EBITDA ratio range to 3.3X to 3.7X from the previously provided range of 3.8X to 4.2X. Superior's forecasted total debt to EBITDA ratio at December 31, 2013 would meet our previously provided short-term goal of 3.5X. Superior will continue to focus on reducing its total debt.
Debt Management Summary
---------------------------------------------------------------------------- Millions of Per Share dollars----------------------------------------------------------------------------2013 financial outlook AOCF per share - mid-point (1) $1.70 209.2Maintenance capital expenditures, net (0.23) (28.0)Capital lease obligation repayments (0.13) (15.8)Payment to CRA in relation to tax reassessment (2) (0.13) (16.5)----------------------------------------------------------------------------Cash flow available for dividends and debt repayment before growth capital $1.21 148.9Expansion of Port Edward's and Saskatoon facilities (0.22) (26.5)Other growth capital expenditures (0.17) (21.2)Proceeds from dividend reinvestment program 0.04 4.9----------------------------------------------------------------------------Estimated 2013 free cash flow available for dividend and debt repayment $0.86 106.1Proceeds from equity issue, net of issue costs 1.12 137.8Dividends (annualized) (0.60) (73.8)----------------------------------------------------------------------------Total estimated debt repayment (including Q1 2013 actuals) $1.38 170.1Estimated total debt to EBITDA ratio as at December 3.3X - 31, 2013 3.7X 3.3X - 3.7X--------------------------------------------------------------------------------------------------------------------------------------------------------Dividend per share (annualized) $0.60 73.8Calculated payout ratio after all capital and payment to CRA 70% 70%--------------------------------------------------------------------------------------------------------------------------------------------------------(1) See "Financial Outlook" for additional details including assumptions, definitions and risk factors.(2) See "Canada Revenue Agency Income Tax Update" for additional details.
