TORONTO–(BUSINESS WIRE)–Aug 25, 2020–
Superior Plus Corp. (“Superior”) (TSX:SPB) is pleased to announce that one of its wholly-owned subsidiaries has entered into an agreement to acquire the assets of a retail propane and heating oil distribution company based in New Hampshire, operating under the tradename, Rymes Propane and Oil (“Rymes”) for an aggregate purchase price of approximately US $159 million (CDN $210 million) before adjustments for working capital (the “Acquisition”). Superior anticipates drawing on its credit facility to fund the amount of the purchase price due on closing.
The Acquisition, which is subject to customary regulatory and commercial closing conditions, is anticipated to close by September 30, 2020.
- Aligned with Superior’s core strategy of investing in established businesses that are in desirable geographies and generate stable free cash flow.
- Expands Superior’s U.S. propane distribution footprint and scale in New Hampshire and New England.
- Leverages Superior’s existing expertise, integrated platform and operational effectiveness into a new customer base.
- High-quality, stable cash flow and earnings profile from a business with loyal customers and consistent gross margin profile.
- Estimated synergies opportunity exceeds synergies achieved with previous acquisitions completed in the past 24 months based on the percentage of the Adjusted EBITDA of the assets acquired.
- Expected to increase Superior’s 2020 Adjusted EBITDA.
- Pro forma the Acquisition, Superior still expects to be within its targeted Total Debt to Adjusted EBITDA guidance range of 3.0x to 3.5x.
Founded in 1969 by James T. Rymes, Sr. and Carol Rymes, Rymes is an established independent family owned and operated retail propane and heating oil distributor servicing approximately 88,000 residential and commercial customers primarily in New Hampshire, Maine, Massachusetts and Vermont. Rymes has 46 operating locations, approximately 3 million gallons of storage capacity, a fleet of 350 vehicles and approximately 370 employees.
New Hampshire is an attractive propane distribution market for Superior to expand its footprint. Based on management estimates and independent third-party research, the New Hampshire retail propane distribution market has approximately 185 million gallons of demand and an opportunity for further industry consolidation as the market is highly fragmented with over 50 independent propane retailers operating in the state.
During the year ended December 31, 2019, Rymes earned approximately US $20 million (CDN $26 million) in Adjusted EBITDA. On a normalized basis, including the achievement of expected synergies and weather consistent with the five-year average, we expect Rymes to generate approximately US $27 million (CDN $36 million) in Adjusted EBITDA on a run-rate basis 18 months following the close of the Acquisition.
“We are very pleased to enter into this transaction which expands our U.S. propane distribution business in the Northeast U.S.,” said Luc Desjardins, Superior’s President and CEO. “Rymes is a solid business and we look forward to welcoming the team to Superior and continuing to provide outstanding customer service to their customers. The acquisition of Rymes is our third acquisition in 2020 and increases the total value of acquisitions in 2020 to approximately $270 million.”
About the Corporation
Superior consists of three primary operating businesses: Canadian Propane Distribution and U.S. Propane Distribution, which include the distribution of propane and distillates, and supply portfolio management; and Specialty Chemicals, which includes the production and sale of specialty chemicals.
For further information about Superior, please visit our website at: www.superiorplus.com or contact: Beth Summers, Executive Vice President and Chief Financial Officer, Tel: (416) 340-6015, or Rob Dorran, Vice President, Investor Relations and Treasurer, Tel: (416) 340-6003, E-mail: [email protected], Toll Free: 1-866-490-PLUS (7587).
Non-GAAP Financial Measures
In this press release, Superior has used the following terms that are not defined by International Financial Reporting Standards (“Non-GAAP Financial Measures”), but are used by management to evaluate the performance of Superior and its business: Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and Total Debt to Adjusted EBITDA leverage ratio. These measures may also be used by investors, financial institutions and credit rating agencies to assess Superior’s performance and ability to service debt. Non-GAAP financial measures do not have standardized meanings prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Securities regulations require that Non-GAAP financial measures are clearly defined, qualified and reconciled to their most comparable GAAP financial measures. Except as otherwise indicated, these Non-GAAP financial measures are calculated and disclosed on a consistent basis from period to period. Specific items may only be relevant in certain periods. See “Non-GAAP Financial Measures” in Superior’s most recent Management Discussion and Analysis (“MD&A”) for a discussion of Non-GAAP financial measures and certain reconciliations to GAAP financial measures.
The intent of Non-GAAP financial measures is to provide additional useful information to investors and analysts, and the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate Non-GAAP financial measures differently. Investors should be cautioned that Adjusted EBITDA should not be construed as an alternative to net earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of Superior’s performance. Non-GAAP financial measures are identified and defined as follows:
Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, losses (gains) on disposal of assets, finance expense, restructuring costs, transaction and other costs, and unrealized gains (losses) on derivative financial instruments. Adjusted EBITDA is used by Superior and investors to assess its consolidated results and ability to service debt. Adjusted EBITDA is reconciled to net earnings before income taxes.
Total Debt to Adjusted EBITDA Leverage Ratio and Pro Forma Adjusted EBITDA
Adjusted EBITDA for the Total Debt to Adjusted EBITDA Leverage Ratio is defined as Adjusted EBITDA calculated on a 12-month trailing basis giving pro forma effect to acquisitions and dispositions adjusted to the first day of the calculation period (“Pro Forma Adjusted EBITDA”). Pro Forma Adjusted EBITDA is used by Superior to calculate its Total Debt to Adjusted EBITDA Leverage Ratio.
To calculate the Total Debt to Adjusted EBITDA Leverage Ratio divide the sum of borrowings before deferred financing fees and lease liabilities by Pro Forma Adjusted EBITDA. Total Debt to Adjusted EBITDA Leverage Ratio is used by Superior and investors to assess its ability to service debt.
Forward Looking Information
This news release contains certain forward-looking information and statements that are based on Superior’s current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In this news release, such forward-looking information and statements can be identified by terminology such as “approximately”, “anticipated”, “will”, and similar expressions.
In particular, this news release contains forward-looking statements with respect to, among other things, the successful completion of the Acquisition and the timing thereof; expected benefits of the acquisition, the expected impact of the Acquisition on 2020 Adjusted EBITDA, estimated run-rate Adjusted EBITDA of the Acquisition, and the expected Total Debt to Adjusted EBITDA leverage ratio following completion of the Acquisition.
Superior believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking information herein is based on various assumptions and expectations that Superior believes are reasonable in the circumstances. No assurance can be given that these assumptions and expectations will prove to be correct. Those assumptions and expectations are based on information currently available to Superior, including information obtained from third party industry analysts and other third party sources, and the historic performance of Superior and Rymes. Such assumptions include anticipated financial performance, weather consistent with the 5 year historical average, the amount of, and timing to achieve, the potential synergies from the Acquisition, satisfaction of conditions to closing of the Acquisition and current business and economic trends, and are subject to the risks and uncertainties set forth below. Readers are cautioned that the preceding list of assumptions is not exhaustive. Forward-looking information is not a guarantee of future performance.
By its very nature, forward-looking information involves inherent assumptions, risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward looking information will not be achieved, including risks relating to satisfaction of the conditions to, and completion of, the Acquisition as well as incorrect assessments of value when making acquisitions, counterparty risk, compliance with environmental laws and regulations, reduced customer demand, operational risks, risks related to the Covid-19 pandemic, force majeure, labour relations matters, and the risks identified under the heading “Risk Factors” in Superior’s current annual information form and management’s discussion and analysis. The preceding list of assumptions, risks and uncertainties is not exhaustive. Should one or more of these risks and uncertainties materialize, or should assumptions described above prove incorrect, actual results in future periods may differ materially from any projections of future performance or results expressed or implied by such forward-looking information. We caution readers not to place undue reliance on this information as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking information. Forward-looking information contained in this news release is provided for the purpose of providing information about management’s goals, plans and range of expectations for the future and may not be appropriate for other purposes. Any forward-looking information is made as of the date hereof and, except as required by law, Superior does not undertake any obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.
View source version on businesswire.com:https://www.businesswire.com/news/home/20200825005509/en/
CONTACT: Beth Summers Executive Vice President and Chief Financial Officer
Phone: (416) 340-6015Rob Dorran Vice President, Investor Relations and Treasurer
Phone: (416) 340-6003
Toll Free: 1-866-490-PLUS (7587)
KEYWORD: NORTH AMERICA CANADA
INDUSTRY KEYWORD: ENERGY OTHER ENERGY OIL/GAS
SOURCE: Superior Plus
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PUB: 08/25/2020 07:15 AM/DISC: 08/25/2020 07:15 AM