Superior Plus Announces a 70% Increase in Second Quarter Distributable Cash Flow per Unit and Increases Annual Guidance for 2008


    CALGARY, Aug. 6 /CNW/ -


    -   2008 distributable cash flow per trust unit annual guidance range has
        been increased to $2.00 - $2.15 from $1.90 - $2.10.
    -   Operating distributable cash for the second quarter and year-to-date
        was $45.8 million and $112.5 million, compared to the prior year
        periods of $35.7 million and $112.0 million.
    -   Operating distributable cash flow for the second quarter increased by
        $10.1 million reflecting stronger performance at ERCO, Superior
        Propane, and Winroc which was marginally offset by slightly weaker
        performance at SEM as compared to the prior year period.
    -   Distributable cash flow per trust unit for the second quarter and
        year-to-date was $0.39 and $0.99, compared to the prior year periods
        of $0.23 and $0.95, an increase of 70% and 4%, respectively.
    -   Distributions paid per trust unit remained stable at $0.135 per month
        ($1.62 annualized) for the quarter.
    -   Total debt outstanding decreased by $35.2 million from December 31,
        2007 levels resulting in Senior Debt to EBITDA ratio of 1.8x and
        Total Debt to EBITDA ratio of 2.8x as at June 30, 2008.
    -   As at August 6, 2008, Superior's US denominated cash flows are 75%
        hedged for the balance of 2008 and 73% hedged for 2009.
    -   The Fund completed two strategic acquisitions in the Propane
        Distribution and Construction Products Distribution sectors totaling
        approximately $24.6 million as previously announced during the

    Financial Summary
                                    Three Months Ended      Six Months Ended
    (millions of dollars, except               June 30               June 30
     per trust unit amounts)           2008       2007       2008       2007
    Operating distributable
     cash flow
      Superior Propane                 12.2        9.2       48.8       51.5
      ERCO Worldwide ("ERCO")          20.3       13.7       43.8       38.5
      Winroc                           10.2        9.5       14.8       15.7
      Superior Energy
       Management ("SEM")               3.1        3.3        5.1        6.3
    Total operating distributable
     cash flow                         45.8       35.7      112.5      112.0

    Interest                           (8.4)     (11.9)     (18.2)     (23.0)
    Corporate costs                    (3.1)      (4.4)      (6.6)      (7.3)
    Distributable cash flow            34.3       19.4       87.7       81.7

    Distributable cash flow per
     trust unit, basic and diluted    $0.39      $0.23      $0.99      $0.95
    Average number of trust units
     outstanding (millions)            88.4       86.2       88.4       85.9
    Distributions paid
     per trust unit                  $0.405      $0.39      $0.80      $0.78

    Corporate Growth Strategy

    -   Superior Plus completed the annual review of its comprehensive five
        year plan in the second quarter resulting in no change to its current
        structure, financial and distribution policies.
    -   All four businesses have excellent growth profiles which are expected
        to offset the impact of increased cash corporate income taxes due to
        the tax legislation in 2011.
    -   Superior Propane completed the reorganization of their business into
        six regional centers supporting their business transformation
        platform to increase gross profit per customer, focusing on value-
        added customer service programs.
    -   ERCO continues to invest in efficiency improvement projects reducing
        its manufacturing costs and expanding facility capacity. After
        substantial completion of process engineering and significant
        completion of detailed engineering, the Port Edwards conversion
        costs are estimated at US $130 million (previously US $95 million).
        The project is scheduled to be completed in the last half of 2009.
        Current and anticipated ECU pricing continues to make this an
        attractive growth investment with an after-tax rate of return in
        excess of 15%.
    -   Winroc continues to evaluate additional growth opportunities as part
        of its North American diversification strategy.
    -   Superior Energy Management continues to reposition and strengthen its
        sales channels and capitalize on the recent volatility of natural gas

    Propane Distribution

    -   Operating distributable cash flow of $12.2 million increased 33%
        representing a $3.0 million increase over the prior year quarter
        primarily due to a 12% increase in total gross profit.
    -   Retail propane and delivery gross profit of $51.6 million increased
        $4.4 million compared to the prior year quarter led by increased
        propane gross profits, transportation and hazmat fees, and tank and
        cylinder rentals.
    -   Sales volumes were consistent with the prior year quarter despite the
        significantly higher cost of propane leading to customer conservation
        and fuel substitution.
    -   Wholesale and related gross profits increased by $2.1 million
        compared to the prior year quarter consistent with the first quarter
    -   Net maintenance capital was $0.4 million higher than the prior year
        quarter as we continue to invest in efficiency projects to improve
        our business.
    -   Operating distributable cash flow guidance continues to be
        $98 - $103 million for 2008, increasing in 2009 to
        $103 - $108 million.

    Specialty Chemicals

    -   Operating distributable cash flow of $20.3 million increased 48%
        representing a $6.6 million increase over the prior year quarter
        driven by higher chemical revenues and lower operating expenditures.
    -   Gross profit increased by $5.3 million to $53.8 million from
        $48.5 million due to strong pricing for sodium chlorate and
        chloralkali/potassium products compared to the prior year quarter.
    -   Pulp prices remained strong throughout the quarter supporting a
        stable sodium chlorate demand profile.
    -   Chemical sales volumes of 188,000 (MTs) were marginally lower than
        the prior year quarter.
    -   Average facility utilization rate for the second quarter was 92%.
    -   Operating distributable cash flow guidance for 2008 has been
        increased to $83 - $88 million reflecting higher than forecasted
        margins primarily due to higher chemical prices. Guidance for 2009
        remains unchanged at $80 - $85 million as lower chloralkali/potassium
        margins are anticipated next year.

    Construction Products Distribution

    -   Operating distributable cash flow of $10.2 million, increased by
        $0.7 million from the prior year quarter, as strong performance in
        Western Canada and the acquisition of the Fackoury business more than
        offset weaker residential markets in Ontario and the United States.
    -   Sales margins were strong in most operating areas due to a continued
        focus on margin management initiatives and the impact of purchasing
    -   Ontario and US residential sales volumes in 2008 continue to remain
        soft with improvement expected in these markets in late 2009.
    -   On May 9, 2008, the acquisition of Fackoury's Building Supply
        (Toronto) Ltd. and Fackoury's Building Supplies Ltd. closed for a
        total net purchase price of approximately $21.2 million strengthening
        Winroc's position in Southern Ontario and the Greater Toronto Area.
    -   The fragmented nature of the specialty buildings products industry,
        combined with the market downturn in a number of regions, provide for
        additional consolidation and greenfield opportunities for Winroc.
    -   Operating distributable cash flow guidance continues to be
        $32 - $37 million for 2008, increasing to $34 - $39 million in 2009.

    Fixed-Price Energy Services

    -   Operating distributable cash flow of $3.1 million for the second
        quarter decreased by $0.2 million over the prior year quarter.
    -   Gross profit per gigajoule (GJ) increased 24% to 106.9 cents over the
        prior year quarter primarily due to lower fuel transportation costs
        and product mix.
    -   SEM continues to focus on developing and implementing alternative
        sales channel models and products to enhance its competitive position
        in energy retail markets. In the second quarter, SEM introduced a new
        green energy product offering in the natural gas market.
    -   Operating distributable cash flow guidance continues to be
        $10 - $13 million for 2008, increasing to $13 - $18 million in 2009.

    Key Quarterly Corporate Items

    -   Total interest expense of $8.4 million in the second quarter
        decreased by $3.5 million compared to the prior year quarter
        primarily due to lower floating interest rates and the early
        repayment of $59.2 million Series II, 8% Debentures.
    -   Superior has total credit facilities of $670 million with
        undrawn credit capacity of $335 million (excluding its securitization
        program) as at June 30, 2008.
    -   Superior extended its securitization receivable program one year
        expiring June 29, 2009. As at June 30, 2008, Superior's
        securitization program had unutilized capacity of $130 million.
    -   DBRS and S&P both confirmed their corporate credit ratings of the
        Fund's operating subsidiary Superior Plus LP during the quarter as
        part of their annual review process at BBB (low) and BBB-,

    Financial Outlook
    (millions of dollars, except        2008            2008            2009
     per trust unit amounts)         Prior(3)      Current(4)   Current(4)(5)
    Operating distributable cash flow
      Superior Propane                98-103          98-103         103-108
      ERCO                             78-83           83-88           80-85
      Winroc                           32-37           32-37           34-39
      SEM                              10-13           10-13           13-18
    Distributable cash per
     trust unit                    $1.90-2.10      $2.00-2.15      $2.05-2.25
    Payout ratio (below 90%)           80%(1)          78%(1)          75%(1)
    Average Senior Debt/EBITDA
     (target of 1.5 to 2.0x)          1.9x(2)         1.9x(2)         2.0x(2)
    Average Total Debt/EBITDA
     (target of 2.5 to 3.0x)          2.9x(2)         2.9x(2)         3.0x(2)
    (1) Based on mid-point of the distributable cash flow per unit range.
    (2) Superior's debt ratios take into account the impact of the
        off-balance sheet receivable sales program amounts, cash on hand, the
        suspension of the DRIP program, and growth projects.
    (3) As provided in the 2008 First Quarter Financial Outlook.
    (4) The assumptions and definitions relating to the Financial Outlook are
        discussed in Management's Discussion and Analysis of the 2008 Second
        Quarter Results.
    (5) The 2009 guidance remains unchanged from the 2008 First Quarter
        Financial Outlook.

    Consolidated Outlook

    Superior's strong second quarter results and outlook for the balance of
the year have resulted in an increase to the 2008 annual guidance range of
distributable cash flow to be between $2.00 and $2.15 per trust unit. The
guidance range for 2009 remains unchanged between $2.05 and $2.25 per trust
unit. The payout ratios are forecasted to be 78% and 75% for 2008 and 2009,
    The Fund continues to grow its distributable cash flow per unit
offsetting the impact of the additional corporate taxes relating to 2011 tax
legislation. If the Fund was a corporation effective January 1, 2009, the pro
forma cash taxes per trust unit are projected at $0.30 for 2009. With the
inclusion of those additional cash taxes, the projected payout ratio based
upon the mid-point of the guidance range and current distribution level would
result in a payout ratio of 88% for 2009.
    The projected Senior Debt to EBITDA and Total Debt to EBITDA ratios of
1.9x and 2.9x for 2008 and 2.0x and 3.0x for 2009 reflect the US $130 million
investment in the Port Edwards conversion and the two strategic acquisitions
completed in the second quarter. The projected Senior Debt to EBITDA and Total
Debt to EBITDA ratios for 2008 and 2009 (excluding Port Edwards investment
costs) are 1.7x and 2.7x, and 1.6x and 2.6x, respectively. The Port Edwards
project is expected to be completed in the last half of 2009 with the first
full year of incremental cash flow occurring in 2010.
    We believe our diversified portfolio of four growth-orientated
businesses, our strong balance sheet, and our prudent allocation of capital
will result in long-term stability of distributions and value growth for our

    Second Quarter Results

    The Fund's financial statements for the period ended June 30, 2008,
including its Management's Discussion and Analysis, are available on
Superior's website at: under investor information section
and at

    Conference Call

    Superior Plus will be conducting a conference call and webcast for
investors, analysts, brokers and media representatives to discuss the 2008
Second Quarter Results at 9:30 a.m. EST (7:30 a.m. MST) on Thursday, August 7,
2008. To participate in the call, dial: 1-800-731-5319. An archived recording
of the call will be available for replay until midnight, September 7, 2008. To
access the recording, dial: 1-877-289-8525 and enter pass code 21277807
followed by the number key. Internet users can listen to the call live, or as
an archived call, on Superior's website at: under the
Events and Presentations section.

    Forward-Looking Information

    Certain information included or incorporated by reference herein is
forward-looking, within the meeting of applicable Canadian securities laws.
Forward-looking information includes, without limitation, statements regarding
the future financial position, business strategy, budgets, litigation,
projected costs, capital expenditures, financial results, distributable cash
flow, taxes and plans and objectives of or involving Superior Plus Income Fund
(the Fund) or Superior Plus LP (Superior LP or the Partnership). Much of this
information can be identified by looking for words such as "believe",
"expects", "expected", "will", "intends", "projects", "anticipates",
"estimates", "continues" or similar words. Forward-looking information in this
Press Release includes but is not limited to, outlooks, capital expenditures,
business strategy and objectives. The Fund and Superior LP believe 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 is not a guarantee of future performance and
involves a number of risks and uncertainties some of which are described
herein. Such forward-looking information necessarily involves known and
unknown risks and uncertainties, which may cause the Fund's or Superior LP's
actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking information. These risks and uncertainties
include but are not limited to the risks identified in the Fund's 2007 Annual
Information Form under the heading "Risk Factors". Any forward-looking
information is made as of the date hereof and, except as required by law,
neither the Fund nor Superior LP undertakes any obligation to publicly update
or revise such information to reflect new information, subsequent or

    Non-GAAP Financial Measures

    Distributable Cash Flow

    Distributable cash flow of the Fund available for distribution to
Unitholders, is equal to cash generated from operations, adjusted for changes
in non-cash working capital and natural gas and electricity customer
acquisition costs, less maintenance capital expenditures. Maintenance capital
expenditures are equal to capital expenditures incurred to maintain the
capacity of Superior's operations and are deducted from the calculation of
distributable cash flow. Acquisitions and other capital expenditures incurred
to expand the capacity of Superior's operations or to increase its
profitability (growth capital), are excluded from the calculation of
distributable cash flow. The Fund may deduct or include additional items to
its calculation of distributable cash flow; these items would generally, but
not necessarily, be items of a non-recurring nature. Distributable cash flow
is the main performance measure used by management and investors to evaluate
the performance of the Fund and its businesses. Readers are cautioned that
distributable cash flow is not a defined performance measure under Canadian
generally accepted accounting principles (GAAP), and that distributable cash
flow cannot be assured. The Fund's calculation of distributable cash flow,
maintenance capital and growth capital may differ from similar calculations
used by comparable entities. Operating distributable cash flow is
distributable cash flow before corporate and interest expenses. It is also a
non-GAAP measure and is used by management to assess the performance of the
operating divisions.

    Standardized Distributable Cash Flow

    During 2007, the CICA published an interpretive release, Standardized
Distributable Cash in Income Trusts and Other Flow-Through Entities: Guidance
on Preparation and Disclosure, in order to provide its recommendations related
to the measurement and disclosure of cash available for distributions. The
guidance was issued in an effort to improve the consistency, comparability,
and transparency of the reporting of the measure commonly referred to as
distributable cash flow. Superior's calculation of standardized distributable
cash flow is, in all material respects, in accordance with the recommendations
provided by the CICA.
    Superior views the CICA recommendations as a positive step in providing
stakeholders with meaningful information, but consistent with the guidance
provided by the CICA, Superior has determined, that due to the nature of
Superior's businesses, certain adjustments to standardized distributable cash
flow are required to better reflect the cash flow available to be distributed
to Unitholders. Superior's adjusted standardized distributable cash flow is
referred to as distributable cash flow, and is unchanged from Superior's
previous definition or measurement of distributable cash flow. Superior's
distribution policy is based on distributable cash flow on an annualized
basis, accordingly, the seasonality of Superior's individual quarterly results
must be assessed in the context of annualized distributable cash flow.
Adjustments recorded by Superior as part of its calculation of distributable
cash flow include, but are not limited to, the impact of the seasonality of
Superior's businesses, principally Superior Propane, 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 expense,
which can from quarter to quarter differ significantly. Superior's calculation
also distinguishes between capital expenditures that are maintenance related
and those that are growth related, in addition to allowing for the proceeds
received on the sale of certain capital items. Adjustments are also made to
reclassify the cash flows related to natural gas and electricity customer
acquisition costs in a manner consistent with the income statement recognition
of these costs.


    EBITDA represents earnings before interest, taxes, depreciation and
amortization 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, and is not a defined performance
measure under GAAP. Superior's calculation of EBITDA may differ from similar
calculations used by comparable entities.

For further information:

For further information: about Superior, visit our website at: or contact: Wayne Bingham, Executive Vice-President and
Chief Financial Officer, E-mail:, Phone: (403)
218-2951, Fax: (403) 218-2973, Toll Free: 1-866-490-PLUS (7587); Scott Daniel,
Vice-President, Treasurer and Investor Relations, E-mail:, Phone: (403) 218-2953, Fax: (403) 218-2973, Toll
Free: 1-866-490-PLUS (7587)

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