Superior Plus Q1 Earnings Call Highlights

Key Points

• Superior Plus reported Q1 2026 adjusted EBITDA of $245.9 million, down about 6% year over year, as strength in Canadian propane was offset by weaker results at Certarus. Free cash flow also fell to $188 million, though per-share earnings improved due to buybacks.
• The company’s biggest growth story is Certarus’s push into data centers, with six contracts signed since last September totaling more than $350 million in revenue. Management said this opportunity could make data center and industrial demand about 60% of Certarus’s CNG business within two years.
• Superior Plus is raising 2026 capital spending to $230 million from $160 million to fund CNG expansion and is shifting capital allocation away from share repurchases. It also lifted its 2027 EBITDA growth outlook to about 5% and expects leverage to be around 4 times by year-end.

Superior Plus TSE: SPB reported first-quarter 2026 adjusted EBITDA of $245.9 million, down about 6% from the same period last year, as weaker results in its Certarus compressed natural gas business more than offset gains in Canadian propane and ongoing operational improvements.

Executive Vice President and Chief Financial Officer Grier Colter said adjusted EBITDA per share rose 2% to $0.91, while adjusted net earnings per share increased 2% to $0.68, supported by the company’s lower share count following an active buyback program. Free cash flow was $188 million, down roughly $32 million from the prior-year quarter, which included a $20 million legal recovery and higher adjusted EBITDA.

President and Chief Executive Officer Allan MacDonald said the company’s first quarter “tracked largely in line” with expectations, with propane improving modestly while Certarus faced lower utility work and weaker well site pricing. He said the quarter also brought a major expansion opportunity in data centers, which is reshaping the outlook for the CNG business.

Propane Business Advances Through Cold Winter

MacDonald said Superior Plus’s propane operations were tested by a second winter of above-average cold weather while the business continued implementing its “Superior Delivers” transformation program. He said the period was “the best way to stress test our operating models,” adding that the company made progress in prioritizing, planning and executing deliveries.

Colter said U.S. propane adjusted EBITDA was $58.7 million, down about 3% from last year, primarily because of lower sales volumes as the company continued adjusting to reduced delivery capacity under Superior Delivers. The decline was partly offset by lower operating costs.

Canadian propane adjusted EBITDA rose 14% to $55.9 million, driven by higher average margins from strong market differentials, procurement improvements and the impact of a stronger Canadian dollar, partly offset by lower sales volumes. Colter said Superior Delivers contributed $12 million in the quarter through positive effects on margins and costs.

MacDonald said the company restored customer tank levels to more normalized ranges as weather warmed in March, which he said should support more predictable routing, reduce emergency deliveries and improve labor productivity. In response to an analyst question, he said the company has also strengthened its customer retention efforts, including proactive outreach, retention incentives and its “no run out” guarantee for customers that experienced service disruptions.

Certarus Weighed Down by Utility and Well Site Pricing

Certarus, the company’s CNG platform, reported first-quarter adjusted EBITDA of $38.4 million, down about 30% from Q1 2025. Colter said the decline was expected and was mainly due to lower ancillary revenue from utility winter standby services and lower well site pricing.

Operating cost per MMBtu rose 2% to $7.58, primarily because of increased use of third-party trucking, partly offset by lower repair and maintenance costs. Despite the decline, MacDonald said Certarus is expected to return to quarterly growth beginning in the second quarter.

Management emphasized that it does not plan to abandon the oil and gas segment, even as industrial and data center demand grows. MacDonald said Superior intends to maintain its foothold in oil and gas, describing the segment as cyclical and saying the company wants to be positioned for a future rebound in completion activity.

Data Center Demand Drives Revised Outlook

The biggest strategic update on the call centered on Certarus’s expansion into data centers. MacDonald said Superior has signed six data center contracts since last September, totaling more than $350 million in revenue, including a newly announced contract tied to a new hub in Salt Lake City, Utah.

MacDonald said demand for behind-the-meter power generation for hyperscale data centers is growing faster than traditional energy infrastructure can expand. He described delivered CNG as an enabling solution that can help data center operators bring facilities online faster.

“The scale of this opportunity is like nothing we’ve seen before,” MacDonald said, adding that data center and industrial verticals could represent approximately 60% of Certarus’s CNG business within the next 24 months.

Dale Winger, President of Certarus, said the Salt Lake City hub will support a new 60-megawatt data center in the area and provide baseload volume to establish a local supply point. He said the hub could also support additional industrial customers in the market.

Management said data center contracts are generally longer than traditional well site work and provide more certainty for capital deployment. Colter said the contracts do not fully eliminate redeployment risk after their initial terms, but they give the company “a huge amount of confidence” in earning adequate returns. MacDonald and Winger said Superior is not taking risks outside its core competency, such as energy price exposure, and is focused on compressing and delivering gas safely and reliably.

Capital Spending Raised, Buybacks Paused

Superior Plus is raising planned 2026 capital expenditures to $230 million, up from its prior estimate of $160 million, to invest in MSUs, tractors and compression equipment for CNG growth. Colter said capital spending is expected to remain elevated at similar levels in 2027 to support further CNG expansion.

The company reaffirmed its expectation for 2026 adjusted EBITDA growth of approximately 2%. For 2027, it raised its expected growth rate to approximately 5% from the previously implied 2%, citing contracted data center revenue already secured.

Superior also signaled a shift in capital allocation. Since prioritizing share repurchases in late 2024, the company has repurchased approximately 34 million shares, or about 14% of shares outstanding, including 4.2 million shares in the first quarter. Colter said the buybacks have been a meaningful driver of improved per-share metrics, but the company is now pivoting away from repurchases and toward high-return CNG growth opportunities and balance sheet flexibility.

Leverage stood at 3.9 times at the end of the first quarter, down slightly from the fourth quarter but up 0.2 turns from a year earlier due to lower trailing adjusted EBITDA. Colter said Superior expects leverage of around 4 times by year-end, with leverage likely to rise into the third quarter as the business builds working capital ahead of heating season before declining toward year-end.

MacDonald said the company remains focused on allocating capital to the most accretive opportunities for shareholders. He said the opportunity in CNG has become “extremely attractive” and that Superior is comfortable with a modest near-term increase in leverage as contracted EBITDA begins flowing through in 2027.

About Superior Plus TSE: SPB

Superior is a leading North American distributor of propane, compressed natural gas, renewable energy and related products and services, servicing approximately 770,000 customer locations in the U.S. and Canada. Through its primary businesses, propane distribution and CNG, RNG and hydrogen distribution, Superior safely delivers clean burning fuels to residential, commercial, utility, agricultural and industrial customers not connected to a pipeline. By displacing more carbon intensive fuels, Superior is a leader in the energy transition and helping customers lower operating costs and improve environmental performance.

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