By its very nature, forward-looking information involves numerous assumptions, risks and uncertainties, both general and specific. Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, as many important factors are beyond our control, Superior's or Superior LP's actual performance and financial results may vary materially from those estimates and intentions contemplated, expressed or implied in the forward-looking information. These risks and uncertainties include incorrect assessments of value when making acquisitions, increases in debt service charges, the loss of key personnel, fluctuations in foreign currency and exchange rates, inadequate insurance coverage, liability for cash taxes, counterparty risk, compliance with environmental laws and regulations, operational risks involving our facilities, force majeure, labour relations matters, our ability to access external sources of debt and equity capital, and the risks identified in (i) our MD&A under the heading "Risk Factors" and (ii) Superior's most recent Annual Information Form. The preceding list of assumptions, risks and uncertainties is not exhaustive.
Readers are urged to consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this document are made only as of the date hereof and, except as required by law, neither Superior nor Superior LP undertakes to publicly update or revise such information to reflect new information, future events or otherwise. In light of these risks, uncertainties, and assumptions, the forward-looking events might occur to a different extent or at a different time than we have described, or might not occur. We cannot assure that projected results or events will be achieved.
Management's Discussion and Analysis of 2013 First Quarter Results
May 1, 2013
The following Management Discussion & Analysis (MD&A) is a review of the financial performance and position of Superior Plus Corp. (Superior) as at March 31, 2013 and for the three months ended March 31, 2013 and 2012. The information in this MD&A is current to May 1, 2013. This MD&A should be read in conjunction with Superior's audited consolidated financial statements and notes to those statements as at and for the twelve months ended December 31, 2012 and its December 31, 2012 MD&A. Additional information regarding Superior, including the Annual Information Form, is available on SEDAR at www.sedar.com, and on Superior's website, www.superiorplus.com.
The accompanying unaudited condensed consolidated financial statements of Superior were prepared by and are the responsibility of Superior's management. Superior's unaudited condensed consolidated financial statements were prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). Dollar amounts in this MD&A are expressed in Canadian dollars and millions except where otherwise noted.
Overview of Superior
Superior is a diversified business corporation. Superior holds 99.9% of Superior Plus LP (Superior LP), a limited partnership formed between Superior General Partner Inc. (Superior GP) as general partner and Superior as limited partner. Superior owns 100% of the shares of Superior GP and Superior GP holds 0.1% of Superior LP. The cash flow of Superior is solely dependent on the results of Superior LP and is derived from the allocation of Superior LP's income to Superior by means of partnership allocations. Superior, through its ownership of Superior LP and Superior GP, has three operating segments: the Energy Services segment, which includes a Canadian propane distribution business, a U.S. refined fuels distribution business, a fixed-price energy services business and a supply portfolio management business; the Specialty Chemicals segment; and the Construction Products Distribution segment.
First Quarter ResultsSummary of Adjusted Operating Cash Flow---------------------------------------------------------------------------- Three months ended March 31,(millions of dollars except per share amounts) 2013 2012(4)----------------------------------------------------------------------------EBITDA from operations: (1) Energy Services 67.6 58.1 Specialty Chemicals 32.9 29.1 Construction Products Distribution 5.0 3.3---------------------------------------------------------------------------- 105.5 90.5Interest expense (17.0) (19.7)Cash income tax expense (0.4) (0.2)Corporate costs (6.1) (4.0)----------------------------------------------------------------------------Adjusted operating cash flow (AOCF) (1) 82.0 66.6------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Adjusted operating cash flow per share, basic (2) $0.72 $0.60Adjusted operating cash flow per share, diluted (3) $0.69 $0.60--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted operating cash flow are not IFRS measures. See "Non-IFRS Financial Measures".(2) The weighted average number of shares outstanding for the three months ended March 31, 2013, is 113.7 million (2012 - 111.1 million).(3) For the three months ended March 31, 2013, the dilutive impact of the 7.50%, October 31, 2016 convertible debentures was 6.6 million shares (120.3 million total shares on a dilutive basis) with a resulting impact on AOCF of $1.4 million ($83.4 million total on a dilutive basis). For the three months ended March 31, 2012, there were no dilutive instruments.(4) The prior year quarter has been restated for the impact of adopting IAS 19 Employee Benefits on January 1, 2013. The impact to EBITDA from operations was a decrease to Energy Services of $0.3 million and a decrease to Specialty Chemicals of $0.5 million, see IAS 19 - Employee Benefits, amendments for further details.
