Superior Plus Corp. - Management Reports 2020

MANAGEMENT’S DISCUSSION AND ANALYSIS OF 2019 ANNUAL AND FOURTH QUARTER RESULTS FEBRUARY 20, 2020

This Management’s Discussion and Analysis (MD&A) contains information about the performance and financial position of Superior Plus Corp. (Superior) as at and for the years ended December 31, 2019 and 2018, as well as forward-looking information about future periods. The information in this MD&A is current to February 20, 2020, and should be read in conjunction with Superior’s audited consolidated financial statements and notes thereto as at and for the years ended December 31, 2019 and 2018.

The accompanying audited consolidated financial statements of Superior were prepared by and are the responsibility of Superior’s management. Superior’s audited consolidated financial statements as at and for the years ended December 31, 2019 and 2018 were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

All financial amounts in this MD&A are expressed in millions of Canadian dollars except where otherwise noted. All tables are for the year ended December 31 of the period indicated, unless otherwise stated. This MD&A includes forward-looking statements and assumptions. See “Forward-Looking Information” for more details.

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: Canadian Propane Distribution, U.S. Propane Distribution and Specialty Chemicals. The Canadian Propane Distribution segment includes the Canadian retail propane distribution business and the wholesale natural gas liquid marketing businesses with operations located in Canada and California. The U.S. Propane Distribution segment distributes propane gas and liquid fuels primarily in the Eastern United States, as well as the Midwest and California. Specialty Chemicals is a leading supplier of sodium chlorate and technology to the pulp and paper industry and a regional supplier of chloralkali products in the U.S. Midwest and Western Canada. Reportable segment information has also been restated to comply with the current presentation.

Non-GAAP Financial Measures

Throughout the MD&A, Superior has used the following terms that are not defined under generally accepted accounting principles (GAAP), but are used by management to evaluate the performance of Superior and its businesses: adjusted operating cash flow (AOCF) before and after transaction and other costs, earnings before interest, taxes, depreciation and amortization (EBITDA) from operations, Adjusted EBITDA, Leverage Ratio, Credit Facility EBITDA, Senior Debt and Adjusted Gross Profit. 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 meaning 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.

The intent of using Non-GAAP financial measures is to provide additional useful information to investors and analysts; the measures do not have 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. See “Non-GAAP Financial Measures” for more information about these measures.

Superior Plus Corp.

2019 Annual Financial Statements

Forward-Looking Information

Certain information included herein is forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking information may include statements regarding the objectives, business strategies to achieve those objectives, expected financial results (including those in the area of risk management), economic or market conditions, and the outlook of or involving Superior, Superior LP and its businesses. Such information is typically identified by words such as “anticipate”, “believe”, “continue”, “estimate”, “expect”, “plan”, “forecast”, “future”, “outlook”, “guidance”, “may”, “project”, “should”, “strategy”, “target”, “will” or similar expressions suggesting future outcomes.

Forward-looking information in this document includes: future financial position, consolidated and business segment outlooks, expected Adjusted EBITDA, expected AOCF and AOCF per share, leverage ratio, business strategy and objectives, development plans and programs, business expansion and cost structure and other improvement projects, expected product margins and sales volumes, market conditions in Canada and the U.S., EBITDA and synergies associated with the NGL Propane, LLC (NGL) acquisition, expected seasonality of demand, future economic conditions, our ability to obtain financing on acceptable terms, expected life of facilities and statements regarding net working capital and capital expenditure requirements of Superior or Superior LP.

Forward-looking information is provided for the purpose of providing information about management’s expectations and plans about the future and may not be appropriate for other purposes. 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’s businesses. Such assumptions include anticipated financial performance, current business and economic trends, the amount of future dividends paid by Superior, business prospects, utilization of tax basis, regulatory developments, currency, exchange and interest rates, future commodity prices relating to the oil and gas industry, future oil rig activity levels, trading data, cost estimates, our ability to obtain financing on acceptable terms, the assumptions set forth under the “Financial Outlook” sections of our MD&A. The forward-looking information is also subject to the risks and uncertainties set forth below.

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 servicing 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, reduced customer demand, operational risks involving Superior’s facilities, force majeure, labour relations matters, Superior’s ability to access external sources of debt and equity capital, risks related to integrating the NGL business, assumption of NGL’s liabilities, counterparty risk relating to obligations of the vendor of NGL and regulatory risks relating to NGL, and the risks identified in (i) this MD&A under “Risk Factors” and (ii) Superior’s most recent Annual Information Form. The preceding list of assumptions, risks and uncertainties is not exhaustive.

When relying on Superior’s forward-looking information to make decisions with respect to Superior, investors and others should carefully consider the preceding factors, other uncertainties and potential events. Any forward-looking information is provided as of the date of this document and, except as required by law, neither Superior nor Superior LP undertakes to update or revise such information to reflect new information, subsequent or otherwise. For the reasons set forth above, investors should not place undue reliance on forward-looking information.

Superior Plus Corp.

2019 Annual Financial Statements

FINANCIAL OVERVIEW

Summary of AOCF

Summary of AOCF
	Year Ended
	December 31
(millions of dollars except per share amounts)	2019	2018
Revenue(1)	2,852.9	2,737.7
Gross profit (1)	1,213.0	948.2
EBITDA from operations(2)	562.1	402.8
Corporate operating and administrative costs	(25.5)	(20.0)
Realizedlosses on foreigncurrencyhedging contracts	(12.1)	(8.5)
Adjusted EBITDA(2)	524.5	374.3
Interest expense	(105.2)	(70.1)
Cash income taxexpense	(13.1)	(1.9)
AOCF before transaction and other costs(2)	406.2	302.3
Transactionand othercosts (3)	(29.9)	(39.5)
AOCF(2)	376.3	262.8
AOCF per share before transaction and other costs(2)(3)(4)	$2.32	$1.91
AOCF per share(2)(3)(4)	$2.15	$1.66
Dividends declaredper share(4)	$0.72	$0.72

(1) Revenue and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income (loss) in the audited consolidated financial statements. For purposes of determining margin per litre, gross profit has been adjusted to include realized gains and losses on commodity derivative instruments. See “Non-GAAP Financial Measures”.

(2) EBITDA from operations, Adjusted EBITDA, AOCF before transaction and other costs, and AOCF are Non-GAAP measures. See “NonGAAP Financial Measures”.

(3) Transaction and other costs for the years ended December 31, 2019 and 2018 are related to acquisition activity, restructuring and the integration of acquisitions. See “Transaction and Other Costs” for further details.

(4) The weighted average number of shares outstanding for the years ended December 31, 2019 and 2018 was 174.9 and 158.1 million shares respectively. There were no dilutive instruments with respect to AOCF and AOCF before transaction and other costs per share for years ended December 31, 2019 and 2018.

Comparable GAAP Financial Information	Year Ended	Year Ended
	December 31
(millions of dollars except per share amounts)	2019	2018
Net earnings (loss) for the year	142.6	(34.0)
Net earnings (loss) per share, basic and diluted	0.82	(0.22)
Cash flows from operating activities	423.2	263.0
Cash flowsfromoperating activities pershare, basic and diluted	$2.42	$1.66

Segmented Information	Year Ended	Year Ended
	December 31
(millions of dollars)	2019	2018
EBITDA from operations(1)
Canadian Propane Distribution	200.8	162.5
U.S. Propane Distribution	209.4	102.7
Specialty Chemicals	151.9	137.6
	562.1	402.8

(1) EBITDA from operations is a Non-GAAP measure. See “Non-GAAP Financial Measures”.

Superior Plus Corp.

2019 Annual Financial Statements

AOCF Reconciled to Cash Flows from Operating Activities[ (1) ]

AOCF Reconciled to Cash Flows from Operating Activities(1)
	Year Ended
	December 31
(millions of dollars)	2019	2018
Cash flows from operating activities	423.2	263.0
Non-cash interest expense, loss on redemption and other	9.1	15.8
Changes in non-cash operating working capital	(43.7)	25.0
Income taxes paid	8.4	0.1
Interest paid	106.7	51.1
Cash income tax expense	(13.1)	(1.9)
Finance expenserecognizedin net earnings	(114.3)	(90.3)
AOCF(1)	376.3	262.8

(1) AOCF is a Non-GAAP measure. See “Non-GAAP Financial Measures”.

2019 ACQUISITIONS

Acquisition of Phelps Sungas, Inc. and BMK Geneva, Inc. (together “Phelps”)

On April 1, 2019, Superior closed the acquisition of the propane distribution assets of Phelps, an independent propane distributor in New York for total consideration of US$18.7 million (CDN $25.2 million). The acquisition was funded by drawing on Superior’s credit facility and deferring US$2.5 million (CDN $3.3 million) in payments over the next five years.

Acquisition of Sheldon Gas Company and Sheldon Oil Company (together “Sheldon”)

On May 2, 2019, Superior closed the acquisition of the shares of Sheldon, an independent propane distributor in Northern California for total consideration of US$15.8 million (CDN $21.2 million). The acquisition was funded by drawing on Superior’s credit facility and deferring US$1.5 million (CDN $2.0 million) in payments over the next three years. Included in the assets acquired was a 51% interest in an entity that Superior acquired the other 49% interest previously as part of the acquisition of United Pacific Energy.

Other Acquisitions

During the year ended December 31, 2019, the Company closed three other business acquisitions for a total consideration of approximately $22.8 million. This consisted of one acquisition in Canada and two acquisitions in the US. The acquisitions were funded by drawing on Superior’s credit facility and deferring US$2.5 million (CDN $3.3 million) in payments over the next five years.

Superior Plus Corp.

2019 Annual Financial Statements

Consolidated Statement of Net Earnings (Loss)

Consolidated Statement of Net Earnings (Loss)
	Year Ended
	December 31
(millions of dollars except per share amounts)	2019	2018
Revenue	2,852.9	2,737.7
Cost ofsales (includes products and services)	(1,639.9)	(1,789.5)
Gross profit	1,213.0	948.2
Expenses
Selling, distribution and administrative costs ("SD&A")	(948.3)	(800.3)
Finance expense	(114.3)	(90.3)
Other income (loss)	17.2	(91.9)
	(1,045.4)	(982.5)
Earnings (loss) before income taxes	167.6	(34.3)
Income tax(expense)recovery	(25.0)	0.3
Net earnings(loss)for theyear	142.6	(34.0)
Net earnings(loss) per share,basic and diluted(1)	0.82	(0.22)

(1) The weighted average number of shares outstanding for the years ended December 31, 2019 and 2018 was 174.9 and 158.1 million shares respectively. There were no dilutive instruments with respect to AOCF and AOCF before transaction and other costs per share for the years ended December 31, 2019 and 2018.

Annual Financial Results Compared to the Prior Year

Adjusted EBITDA for the year ended December 31, 2019 was $524.5 million, an increase of $150.2 million or 40% compared to the prior year Adjusted EBITDA of $374.3 million. The increase is primarily due to higher EBITDA from operations partially offset by increased corporate costs and higher realized losses on foreign currency hedging contracts. EBITDA from operations increased $159.3 million or 40% compared to the prior year primarily due to higher U.S. Propane EBITDA from operations and, to a lesser extent, an increase in Canadian Propane and Specialty Chemicals EBITDA from operations. U.S. Propane EBITDA from operations was $209.4 million, an increase of $106.7 million or 104% primarily due to the contribution from the NGL and tuck-in acquisitions, and realization of approximately $22.0 million in synergies, partially offset by the impact of the sale of certain refined fuel assets in the prior year. Canadian Propane EBITDA from operations was $200.8 million, an increase of $38.3 million or 24% primarily due to improved wholesale market fundamentals, the contribution from the UPE acquisition and, to a lesser extent, realized synergies from Canwest and the impact of adopting IFRS 16, see ‘Change in accounting policy’, partially offset by lower sales volumes in Western Canada and the impact of divestitures in the prior year. Specialty Chemicals EBITDA from operations of $151.9 million, increased $14.3 million or 10% primarily due to the impact of adopting IFRS 16, see ‘Change in accounting policy’, and higher average sodium chlorate selling prices and sales volumes partially offset by lower chlor-alkali sales volumes and average sales prices, and higher selling, distribution and administrative costs compared to the prior year. Superior’s realized losses on foreign currency hedging contracts were $12.1 million compared to a realized loss of $8.5 million in the prior year due to the weaker Canadian dollar than the average hedge rate. Corporate operating and administrative costs were $25.5 million compared to $20.0 million in the prior year. The increase is primarily due to higher incentive plan costs related to share price appreciation.

AOCF before transaction and other costs for the year ended December 31, 2019 was $406.2 million, an increase of $103.9 million or 34% from the prior year AOCF before transaction and other costs of $302.3 million. The increase from the prior year is primarily due to higher Adjusted EBITDA discussed above, partially offset by higher interest expense. Interest expense increased $35.1 million or 50% primarily due to higher debt balances as a result of the NGL and tuck-in acquisitions. AOCF per share before transaction and other costs was $2.32 per share, an increase of $0.41 per share or 21% from the prior year primarily due to the higher AOCF before transaction and other costs discussed above, partially offset by an increase in weighted average shares outstanding.

Superior Plus Corp.

2019 Annual Financial Statements

AOCF for the year ended December 31, 2019 was $376.3 million, an increase of $113.5 million or 43% from the prior year AOCF of $262.8 million due to the increased AOCF before transaction and other costs discussed above and, to a lesser extent, lower transaction and other costs. AOCF per share for year ended December 31, 2019 was $2.15 per share, an increase of $0.49 per share or 30% from the prior year. Transaction and other costs for the year ended December 31, 2019 were $29.9 million, $9.6 million lower than the prior year. The decrease is primarily due to acquisition costs in the prior year related to NGL, UPE and tuck-in acquisitions which were higher compared to the costs incurred for NGL integration, a restructuring provision recorded in Specialty Chemicals and costs related to the Specialty Chemical strategic review and tuck in acquisitions in the current year.

Revenue for the year ended December 31, 2019 was $2,852.9 million, an increase of $115.2 million or 4% from the prior year due to higher revenue in the U.S. Propane Distribution, Canadian Propane Distribution and Specialty Chemicals segments. U.S. Propane Distribution revenue for the year ended December 31, 2019 was $1,024.1 million, an increase of $98.8 million or 11% from the prior year primarily due to the contribution from the NGL and tuck-in acquisitions, and, to a lesser extent, the impact of the weaker Canadian dollar on the translation of U.S. denominated revenues, partially offset by the impact from the sale of certain refined fuel assets in 2018 and lower wholesale propane prices compared to the prior year. Canadian Propane Distribution revenue for the year ended December 31, 2019 was $1,147.5 million, an increase of $11.6 million or 1% from the prior year primarily due to the contribution from UPE and was partially offset by lower sales volumes in Western Canada, the impact of lower wholesale propane prices compared to the prior year and, to a lesser extent, the impact of divestitures in 2018 related to the consent agreement registered by the Competition Bureau related to the Canwest acquisition in 2017 (the “Canwest Divestitures”). Specialty Chemicals revenue for the year ended December 31, 2019 was $681.3 million, an increase of $4.8 million or 1% from the prior year primarily due to higher average sodium chlorate selling prices and sales volumes partially offset by lower caustic soda and hydrochloric acid sales volumes and selling prices. Consolidated gross profit was $1,213.0 million, an increase of $264.8 million or 28% from $948.2 million in the prior year primarily due to higher U.S. Propane gross profit and to a lesser extent Canadian Propane gross profit and Specialty Chemicals gross profit. Gross profit increased primarily due to the NGL and tuck-in acquisitions and improved wholesale market fundamentals within the Canadian supply portfolio management business and higher average chlorate selling prices and sales volume.

SD&A was $948.3 million for the year ended December 31, 2019, an increase of $148.0 million or 18% from the prior year primarily due to an increase in U.S. Propane Distribution SD&A and to a lesser extent the Specialty Chemicals segment, partially offset by a decrease in the Corporate and Canadian Propane segments. U.S. Propane Distribution SD&A costs were $413.9 million, an increase of $147.1 million from $266.8 million in the prior year primarily due to the NGL and tuck-in acquisitions and to a lesser extent the impact of the gain on the sale of certain refined fuel assets in the prior year. Specialty Chemicals costs were $183.4 million for the year ended December 31, 2019, an increase of $34.1 million or 23% from $149.3 million primarily due to an impairment charge and restructuring provision on the Saskatoon chlorate facility and, to a lesser extent, higher depreciation associated with the adoption of IFRS 16 partially offset by lower distribution costs. Canadian Propane Distribution costs of $315.8 million a decrease $26.1 million or 8% from $341.9 million in the prior year primarily due to lower depreciation and to a lesser extent incremental Canwest synergies realized in the current year partially offset by the impact of the UPE acquisition.

Finance expense for the year ended December 31, 2019 was $114.3 million, an increase of $24.0 million or 27% from $90.3 million in the prior year. The increase is primarily due to higher debt balances as a result of the NGL, UPE and tuck-in acquisitions completed in the prior year, higher interest rates in the U.S. and Canada and the impact of adopting IFRS 16, see “Change in accounting policy” partially offset by the $9.8 million early call premium related to the redemption of the 6.5% senior unsecured notes in the prior year.

Superior Plus Corp.

2019 Annual Financial Statements

Other income (loss) consists of unrealized gains (losses) on derivative financial instruments net of realized gains (losses) on derivative financial instruments. Unrealized and realized gains on derivative financial instruments were $17.2 million for the year ended December 31, 2019 compared to a loss of $91.9 million in the prior year. This is mainly related to changes in market prices of commodities, timing of maturities of underlying financial instruments and foreign exchange rates relative to amounts hedged. For additional details, refer to Note 16 of the 2019 audited consolidated financial statements.

Total income tax expense of $25.0 million was $25.3 million higher than the prior year’s recovery of $0.3 million. Current income tax expense was $13.1 million, an increase of $11.2 million from the prior year. Deferred income tax expense was $11.9 million, an increase from the $2.2 million recovery in the prior year primarily due to higher earnings before tax.

The net earnings for the year ended December 31, 2019 was $142.6 million, compared to a net loss of $34.0 million in the prior year. The increase from the prior year is primarily due to unrealized gains on derivative instruments recorded in the current period compared to unrealized losses on derivative instruments in the prior year and the impact of the NGL, UPE and other tuck-in acquisitions. Basic and diluted earnings per share was $0.82, compared to a loss per share of $0.22 in the prior year.

RESULTS OF SUPERIOR’S OPERATING SEGMENTS

Effective January 1, 2019, Superior changed its operating segments and has changed the comparative figures to conform to the current presentation. Superior’s operating segments consists of Canadian Propane which includes its wholesale business, U.S. Propane and Specialty Chemicals.

CANADIAN PROPANE DISTRIBUTION Canadian Propane Distribution’s condensed operating results:

CANADIAN PROPANE DISTRIBUTION Canadian Propane Distribution’s condensed operating results:
	Year Ended
	December 31
(millions of dollars)	2019	2018
Revenue	1,147.5	1,135.9
Cost ofSales	(680.4)	(729.5)
Gross profit	467.1	406.4
Realizedlosses onderivativesrelated to commodityrisk management	(19.9)	(2.5)
Adjusted gross profit(1)	447.2	403.9
Selling, distribution and administrative costs	(315.8)	(341.9)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	71.9	86.2
Transaction, restructuring, and other costs	0.8	10.3
(Gain)loss ondisposalofassets and other	(3.3)	4.0
EBITDA from operations(2)	200.8	162.5
Add back (deduct):
Gain (loss) on disposal of assets and other	3.3	(4.0)
Transaction, restructuring, and other costs	(0.8)	(10.3)
Amortization and depreciation included in selling, distribution and administrative costs	(71.9)	(86.2)
Unrealized gain (losses) on derivative financial instruments	3.2	(14.1)
Finance expense	(4.4)	(2.2)
Earnings before income tax	130.2	45.7

(1) Revenue, cost of sales, and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income (loss) in the audited financial statements. For purposes of determining margin per litre, gross profit has been adjusted to include realized gains and losses on commodity derivative instruments. See “Non-GAAP Financial Measures”.

(2) EBITDA from operations is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Reconciliation of Earnings before Income Taxes to EBITDA from Operations”.

Superior Plus Corp.

2019 Annual Financial Statements

Revenue for 2019 was $1,147.5 million, an increase of $11.6 million from the prior year primarily due to the impact of the acquisition of UPE in 2018 partially offset by lower wholesale propane prices and, to a lesser extent, lower sales volumes in Western Canada. Wholesale propane supply prices were lower primarily due to the increase in propane inventory levels in the U.S., driven by lower exports out of North America and the impact from lower average West Texas Intermediate crude oil prices compared to the prior year.

Canadian Propane Adjusted Gross Profit

	Year Ended	Year Ended
	December 31
(millions of dollars)	2019	2018
Propane distribution	448.6	384.6
Realizedlosses onderivativesrelated to commodityrisk management	(19.9)	(2.5)
Propane distribution adjusted gross profit	428.7	382.1
Otherservices	18.5	21.8
Adjustedgrossprofit	447.2	403.9

Propane distribution adjusted gross profit for the year ended December 31, 2019 was $428.7 million, an increase of $46.6 million, from the prior year primarily due to improved wholesale market fundamentals compared to the prior year and the contribution from UPE, partially offset by lower sales volumes in Western Canada. Total sales volumes were 2,505 million litres, an increase of 290 million litres, primarily due to higher wholesale volumes, partially offset by lower sales volumes in Western Canada. Average weather across Canada for 2019, as measured by degree days was 1% colder than the prior year and 4% colder than the five-year average. Residential sales volumes decreased by 3 million litres or 2% due to the impact of divestitures in 2018 related to the consent agreement registered by the Competition Bureau related to the Canwest acquisition. Commercial sales volumes decreased by 7 million litres or 2% due to the impact of Canwest Competition Bureau divestitures in 2018 and current economic conditions in Western Canada. Oilfield volumes decreased by 47 million litres or 20%, due to less drilling activity in Western Canada. Industrial volumes decreased by 5 million litres or 2% due to a reduction in propane consumption by mining customers. Motor fuels sales volumes decreased by 12 million litres or 7% from the prior year quarter due to competitive pressures, and the impact of current economic conditions in Western Canada. Wholesale propane volumes were 358 million litres or 39% higher compared to the prior year primarily due to the acquisition of UPE and was partially offset by lower wholesale butane sales volumes compared to the prior year.

Average propane sales margins for 2019 were 17.1 cents per litre compared to 17.3 cents per litre in the prior year due to a higher proportion of wholesale volumes partially offset by improved wholesale market fundamentals compared to the prior year.

Other services gross profit primarily includes equipment rental, installation, repair and maintenance and customer minimum use charges. Other services gross profit was $18.5 million, a decrease of $3.3 million or 15% from the prior year primarily due to a reduction in services activity and equipment rentals in Western Canada.

Superior Plus Corp.

2019 Annual Financial Statements

Canadian Propane Distribution Sales Volumes - Volumes by End Use Application[(1) ]

Canadian Propane Distribution Sales Volumes *Volumes by End-Use Application(1)*
	Year Ended
	December 31
(millions of litres)	2019	2018
Residential	180	183
Commercial	338	345
Oilfield	184	231
Industrial	231	236
Motor Fuels	167	179
Wholesale	1,265	907
Other	140	134
Total	2,505	2,215

(1) Comparative figures have been reclassified to reflect the current period presentation.

Volumes by Region[ (1)]

*Volumes by Region (1)*
	Year Ended
	December 31
(millions of litres)	2019	2018
Western Canada	961	1,121
Eastern Canada	535	560
Atlantic Canada	127	120
United States	882	414
Total	2,505	2,215

(1) Regions: Western Canada region consists of British Columbia, Alberta, Saskatchewan, Manitoba, Northwest Ontario, Yukon and Northwest Territories; Eastern Canada region consists of Ontario (except for Northwest Ontario) and Quebec; Atlantic Canada region consists of New Brunswick, Newfoundland & Labrador, Nova Scotia and Prince Edward Island. United States region consists primarily of California, Maine, Idaho, Kansas, Michigan, Washington, Alaska, North Dakota, Pennsylvania, and New York.

Selling, Distribution and Administrative Costs

Selling, distribution and administrative costs were $315.8 million, a decrease of $26.1 million or 8% over the prior year. The decrease in selling, distribution and administrative costs is primarily due to a lower depreciation and amortization and, to a lesser extent, lower transaction, restructuring and other costs, the impact of lower sales volumes and incremental synergies related to Canwest partially offset by increased SD&A related to the acquisition of UPE.

Earnings

Earnings before income tax was $130.2 million, an increase of $84.5 million over the prior year, as a result of increased gross profit, lower SD&A and was partially offset by an unrealized gain on derivative financial instruments compared to an unrealized loss on derivative financial instruments in the prior year.

Financial Outlook

EBITDA from operations in 2020 for Canadian Propane Distribution is anticipated to be lower than 2019. The anticipated decrease in EBITDA is primarily due to an expected decrease in sales volumes in Western Canada and a decrease in average unit margins. Sales volumes in Western Canada are expected to decrease related to competitive pressures, continued headwinds in oil and gas sector and weaker economic activity. Average margins are expected to be modestly lower as wholesale propane and natural gas liquid fundamentals related to basis differentials are not expected to be as strong as they were in 2019.

In addition to the significant assumptions referred to above, refer to “Forward-Looking Information” and “Risk Factors to Superior” for a detailed review of significant business risks affecting the Canadian Propane Distribution business.

Superior Plus Corp.

2019 Annual Financial Statements

U.S. PROPANE DISTRIBUTION

U.S. Propane Distribution’s condensed operating results:

U.S. PROPANEDISTRIBUTION U.S. Propane Distribution’s condensed operating results:
	Year Ended
	December 31
(millions of dollars)	2019	2018
Revenue	1,024.1	925.3
Cost ofSales	(514.7)	(615.5)
Gross profit	509.4	309.8
Realized gains (losses) onderivativesrelated to commodityrisk management	(9.1)	0.9
Adjusted gross profit(1)	500.3	310.7
Selling, distribution and administrative costs	(413.9)	(266.8)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	105.0	58.1
Transaction, restructuring, and other costs	16.7	7.1
Loss (gain) ondisposalofassets and other	1.3	(6.4)
EBITDA from operations(2)	209.4	102.7
Add back (deduct):
(Loss) gain on disposal of assets and other	(1.3)	6.4
Transaction, restructuring, and other costs	(16.7)	(7.1)
Amortization and depreciation included in selling, distribution and administrative costs	(105.0)	(58.1)
Unrealized losses on derivative financial instruments	(2.6)	(13.7)
Finance expense	(4.4)	(2.5)
Earnings before income tax	79.4	27.7

(1) Revenue, cost of sales, and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income in the audited financial statements. For purposes of determining margin per litre gross profit has been adjusted to include realized gains and losses on commodity derivative instruments. See “Non-GAAP Financial Measures”.

(2) EBITDA from operations is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Reconciliation of Earnings before Income Taxes to EBITDA from Operations”.

Revenue for 2019 was $1,024.1 million, an increase of $98.8 million from the prior year primarily due to incremental revenue from NGL and the tuck-in acquisitions partially offset by the impact of the sale of certain refined fuel assets in the prior year and lower wholesale propane prices. Wholesale propane prices decreased primarily due to higher inventory levels in the U.S. driven by lower exports out of North America and the impact of lower average West Texas Intermediate crude oil prices compared to the prior year.

U.S. Propane Adjusted Gross Profit

U.S. Propane Adjusted Gross Profit
	Year Ended
	December 31
(millions of dollars)	2019	2018
Propane distribution	464.2	282.1
Realized gains (losses) onderivativesrelated to commodityrisk management	(9.1)	0.9
Propane distribution adjusted gross profit	455.1	283.0
Otherservices	45.2	27.7
Adjustedgrossprofit	500.3	310.7

Propane distribution adjusted gross profit for 2019 was $455.1 million, an increase of $172.1 million or 61% from the prior year primarily due to a full year impact from the NGL acquisition, including sales and marketing initiatives and margin management in a lower wholesale propane price environment and to a lesser extent higher residential sales volumes and the impact of a weaker Canadian dollar compared to the prior year, partially offset by lower commercial and wholesale sales volumes.

Superior Plus Corp.

2019 Annual Financial Statements

Residential sales volumes increased by 319 million litres or 60% from the prior year due primarily to the NGL acquisition and to a lesser extent the impact of the tuck-in acquisitions. Average weather across markets where U.S. propane operated for a full twelve months was consistent with the prior year and the five-year average. Commercial volumes decreased by 30 million litres compared to the prior year primarily due to lower distillate sales as the business shifts its focus to more profitable customers and the impact from the sale of refined fuel assets in the prior year, partially offset by incremental sales volumes related to the NGL and tuck-in acquisitions. Wholesale volumes decreased by 185 million litres or 80% due to the sale of refined fuel assets and the wholesale distillate business in the second quarter of 2018.

Average U.S. propane sales margins were 37.6 cents per litre an increase of 47% from 25.6 cents per litre in the prior year. Average sales margins improved primarily due to the higher proportion of residential sales volumes as a result of the NGL and other tuck-in acquisitions and sale of refined fuel assets and wholesale distillate business, sales and marketing initiatives, including effective margin management in a declining wholesale propane price environment, and to a lesser extent the impact of the weaker Canadian dollar on the translation of U.S. denominated gross profit.

Other services gross profit primarily includes equipment rental, installation, repair and maintenance, and customer minimum use charges. Other services gross profit was $45.2 million, an increase of 63% over the prior year primarily due to the NGL and tuck-in acquisitions.

U.S. Propane Distribution Sales Volumes End-Use Application [(][1][)]

U.S. Propane Distribution Sales VolumesEnd-Use Application (1)
	Year Ended
	December 31
(millions of litres)	2019	2018
Residential	850	531
Commercial	312	342
Wholesale	47	232
Total	1,209	1,105

(1)Includes heating oil, propane, diesel and gasoline sold in over twenty-two states primarily in the Eastern United States and California. Comparative figures have been reclassified to reflect the current period presentation.

Selling, Distribution and Administrative Costs

SD&A costs were $413.9 million, an increase of $147.1 million or 55% over the prior year. The increase in SD&A costs was primarily due to incremental expense related to the acquisition of NGL completed in 2018 and tuck-in acquisitions and to a lesser extent the impact of the weaker Canadian dollar on the translation of U.S. Denominated SD&A compared to the prior year and higher transaction, restructuring and other costs related to the integration of NGL and the tuck-in acquisitions. This was partially offset by the realization of approximately $22 million in synergies related to the integration of NGL. Depreciation and amortization expense was $105.0 million, an increase of $46.9 million over the prior year primarily due to the impact of the NGL and other tuck-in acquisitions and to a lesser extent the impact of adopting IFRS 16, see ‘Change in accounting policy’.

Earnings

Earnings before tax of $79.4 million, increased by $51.7 million over the prior year primarily due to NGL and tuckin acquisitions and a smaller unrealized loss on derivative financial instruments compared to the prior year, and was partially offset by higher transaction, restructuring and other costs in the current year related primarily to the integration of NGL.

Financial Outlook

EBITDA from operations in 2020 for U.S. Propane is anticipated to be higher than 2019. The anticipated increase in EBITDA is primarily due to contributions from tuck-in acquisitions completed in 2019 and the impact of achieving incremental synergies of US$5.0 or US$24 million in run-rate synergies exiting 2020. Average weather in the Eastern U.S., as measured by degree days, is anticipated to be consistent with the five-year average.

Superior Plus Corp.

2019 Annual Financial Statements

SPECIALTY CHEMICALS

Specialty Chemicals’ condensed operating results:

SPECIALTYCHEMICALS Specialty Chemicals’condensed operating results:
		Year	Ended
		December 31
(millions of dollars except per metric tonne (MT) amounts)	2019		2018
		$ per MT		$ per MT
Revenue	681.3	826	676.5	810
Cost ofSales	(444.8)	(539)	(444.5)	(532)
Gross Profit(1)	236.5	287	232.0	278
Selling, distribution and administrative costs	(183.4)	(222)	(149.3)	(179)
Add back (deduct):
Depreciation included in cost of sales	44.9	54	53.6	64
Loss on disposal of assets and impairment	20.4	25	0.2	–
Restructuring costs	3.1	4	–	–
Amortizationand depreciation includedinselling, distributionand administrative costs	30.4	37	1.1	1
EBITDA from operations(2)	151.9	185	137.6	164
Add back (deduct):
(Loss) on disposal of assets and impairment	(20.4)		(0.2)
Amortization included in selling, distribution and administrative costs	(30.4)		(1.1)
Depreciation included in cost of sales	(44.9)		(53.6)
Restructuring costs	(3.1)		–
Unrealized gain on foreign currency translation of lease liabilities	2.9		–
Finance expense	(8.1)		(2.3)
Earnings before tax	47.9		80.4

(1) Gross Profit per MT after adding back depreciation included in cost of sales for the 2019 was $341/MT and for the 2018 was $342/MT.

(2) EBITDA from operations is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Reconciliation of Earnings before Income Taxes to EBITDA from Operations”.

Sales Volumes by Product

*Sales Volumes by Product*
		Year Ended
	December 31
(thousands of MTs)	2019	2018
Sodium chlorate	480	474
Chlor-alkali	339	353
Chlorite	6	8
Total	825	835

Revenue for 2019 was $681.3 million an increase of $4.8 million or 1% from the prior year. The increase was primarily due to higher sodium chlorate sales volumes and selling prices and to a lesser extent the impact of a weaker Canadian dollar on U.S. denominated revenue partially offset by lower average chlor-alkali selling prices and sales volumes and lower chlorite sales volumes.

Sodium chlorate sales volumes increased over the prior year reflects an increased North American market share.

Chlor-alkali sales volumes decreased by 14 thousand MTs or 4% due to lower hydrochloric acid and caustic soda sales volumes partially offset by higher caustic potash sales volumes and to a lesser extent higher chlorine sales volumes. Hydrochloric acid sales volumes decreased 14% primarily due to lower demand from the U.S. oil and gas sector related to less rig activity. Caustic soda sales volumes decreased 12% primarily due to competitive pressures related to North American market fundamentals. Caustic potash sales volume increased 15% from strong demand in

Superior Plus Corp.

2019 Annual Financial Statements

the agriculture and de-icing sectors and lower supply due to temporary production issues at a competitor’s plant. Chlorite sales volumes were lower than the prior year primarily due to lower demand into the U.S. oil and gas market.

Gross profit was $236.5 million, an increase of $4.5 million or 2% from the prior year due primarily to higher sodium chlorate selling prices and sales volumes, the impact of the weaker Canadian dollar compared to the prior year on U.S. denominated sales partially offset by lower chlor-alkali sales volumes and selling prices.

Selling, distribution and administrative costs were $183.4 million, an increase of $34.1 million over the prior year primarily due to an impairment charge and restructuring provision recorded during the year and higher depreciation compared to the prior year. On May 31, 2019, it was announced to employees and other key stakeholders that the Specialty Chemicals segment will close its sodium chlorate manufacturing facility in Saskatoon, Saskatchewan in 2019. As a result, a $3.1 million restructuring provision related primarily to severance costs and a $17.5 million asset impairment charge on the related plant and equipment was recorded. Depreciation and amortization included in selling, distribution and administrative costs increased primarily due to the impact of IFRS 16, see ‘Change in accounting policy’.

Earnings before tax for 2019 was $47.9 million, a decrease of $32.5 million over the prior year due to the impairment and restructuring provision recorded during the year, higher depreciation costs partially offset by higher gross profit and an unrealized gain on the translation of U.S. denominated lease liabilities.

Financial Outlook

EBITDA from operations for Specialty Chemicals in 2020 is anticipated to be lower than 2019 due to an expected significant decrease in chlor-alkali gross profit, modest decrease in sodium chlorate gross profit and a modest increase in operating expenses. Chlor-alkali gross profit is anticipated to be lower than 2019 due to continued weakness in hydrochloric acid pricing driven by reduced oil and gas demand, a decrease in caustic potash sales volumes and pricing related to customer mix and weakness in caustic soda pricing related to supply and demand fundamentals entering 2020 in North American markets. Sodium chlorate gross profit is anticipated to be modestly lower than 2019 as modest improvements in sales prices are expected to be more than offset by modestly lower sales volumes, increases in electricity mill rates and the impact of a weaker U.S. dollar compared to 2019.

In addition to the significant assumptions detailed above, refer to “Forward-Looking Information” and to “Risk Factors to Superior” for a detailed review of the significant business risks affecting Superior’s Specialty Chemicals segment.

CONSOLIDATED CAPITAL EXPENDITURE SUMMARY

Superior classifies its capital expenditures into three main categories: efficiency, process improvement and growthrelated; maintenance capital; and investment in finance leases.

Efficiency, process improvement and growth-related expenditures include expenditures such as the acquisition of new customer equipment to facilitate growth, system upgrades and initiatives to facilitate improvements in customer service. The capital expenditures are discretionary and non-recurring.

Maintenance capital expenditures include required regulatory spending on tank refurbishments, replacement of chlorine railcars, replacement of plant equipment and any other required expenditures related to maintaining operations.

Superior Plus Corp.

2019 Annual Financial Statements

Superior’s capital expenditures for 2019 and 2018:

Superior’s capital expenditures for 2019 and 2018:
		Year Ended
		December 31
(millions of dollars)	2019	2018
Efficiency, process improvement and growth-related	67.5	28.8
Maintenance capital	68.4	73.4
	135.9	102.2
Proceeds on disposition of capital and intangible assets	(7.1)	(22.7)
Property, plant and equipment acquired throughacquisition	32.5	335.0
Total net capital expenditures	161.3	414.5
Investmentin leased assets	37.2	16.0
Total expenditures including finance leases	198.5	430.5

Efficiency, process improvement and growth-related expenditures were $67.5 million for 2019 compared to $28.8 million in the prior year. The increase over the prior year is primarily due to integration activity, increased capital expenditures due to the NGL and other acquisitions and to a lesser extent costs incurred to expand a chlorate plant located in Quebec and timing of expenditures.

Maintenance capital expenditures were $68.4 million for 2019 compared to $73.4 million in the prior year, consisting primarily of required maintenance and general capital across Superior’s segments. The decrease is primarily due to timing of expenditures.

Property, plant and equipment acquired through acquisition is the allocation of fair value to these assets related to the acquisitions completed during the prior year.

Superior entered into new leases with capital-equivalent value of $37.2 million for 2019, compared to $16.0 million in the prior year. The increase is primarily related to the change in accounting policy which requires leases to be recorded as a right-of-use asset and a lease liability. Leased assets include vehicles for the Energy Distribution segments to support growth and replace aging vehicles, renewing railcar leases in the Specialty Chemicals segment and timing of renewing property leases. Approximately 50% of the additions to leased assets relate to vehicles in the Energy Distribution segments.

Capital expenditures were funded from a combination of operating cash flow, revolving-term bank credit facilities and credit provided through the lease liability.

CORPORATE ADMINISTRATION COSTS

Corporate administration costs are $35.2 for 2019 a decrease of $7.1 million, compared to $42.3 million in the prior year. The decrease from the prior year is primarily due to lower transaction related costs partially offset by higher incentive plan costs due to share price appreciation.

FINANCE EXPENSE

Finance expense was $114.3 million for the year ended 2019 an increase of $24.0 million, compared to $90.3 million in the prior year. The increase is primarily due to higher average debt for the year compared to the prior year primarily due to the financing related to the NGL acquisition and the tuck-in acquisitions completed in 2018 and to a lesser extent the impact of adopting IFRS 16.

Superior Plus Corp.

2019 Annual Financial Statements

TRANSACTION AND OTHER COSTS

Superior’s transaction and other costs have been categorized together and excluded from segmented results. The table below summarizes these costs:

table below summarizes these costs:
		Year Ended
	December 31
(millions of dollars)	2019	2018
Total transaction, restructuring and integration costs	$29.9	$39.5

For 2019, Superior incurred $29.9 million in costs related primarily to the integration of NGL, and to a lesser extent the tuck-in acquisitions. The costs in the prior year related primarily to the acquisition of NGL and tuck-in acquisitions and to a lesser extent the integration of Canwest Propane.

INCOME TAXES

Consistent with prior periods, Superior recognizes a provision for income taxes for its subsidiaries that are subject to current and deferred income taxes, including Canada, U.S., Luxembourg, and Chilean income tax.

Total income tax expense for the year ended December 31, 2019 was $25.0 million, comprised of $13.1 million in cash income tax expense and $11.9 million in deferred income tax expense. This compares to a total income tax recovery of $0.3 million in the prior year, which consisted of a cash income tax expense of $1.9 million and a $2.2 million deferred income tax recovery.

Cash income taxes for the year ended December 31, 2019 was $13.1 million (2018 -$1.9 million), consisting of income taxes in Canada of $3.8 million (2018 – $2.1 million recovery), income taxes in the U.S. of $3.8 million (2018 – $0.5 million), income taxes in Chile of $3.2 million (2018 - $2.2 million), and income taxes in Luxembourg of $2.3 million (2018 – $1.3 million). Deferred income tax expense for 2019 was $11.9 million (2018 – $2.2 million recovery), resulting in a net deferred income tax asset of $12.7 million as at December 31, 2019.

*Canada*	(millions of dollars)
Tax basis	341.1
Non-capital losses	24.4
Canadian scientific research expenditures	214.0
Investment tax credits	84.2
*United States*
Tax basis	1,298.9
Non-capital losses	212.0
*Chile*
Tax basis	19.6

Superior Plus Corp.

2019 Annual Financial Statements

FINANCIAL OUTLOOK

Superior achieved its 2019 Adjusted EBITDA guidance of $524.5 million which was at the top of the guidance range of $490 million to $530 million. Superior is introducing its 2020 Adjusted EBITDA guidance range of $475 million to $515 million, based on the midpoint of the 2020 Adjusted EBITDA guidance range, this is a 6% decrease compared to the full year 2019 Adjusted EBITDA of $524.5 million, and a 3% decrease from the midpoint of the 2019 Adjusted EBITDA guidance range, which assumed normal weather and wholesale market fundamentals. The decrease compared to 2019 is primarily due to lower expected EBITDA from operations for Specialty Chemicals and Canadian Propane, partially offset by an increase in expected EBITDA from operations for U.S. Propane.

Achieving Superior’s Adjusted EBITDA depends on the operating results of its segments. In addition to the operating results of Superior’s segments, significant assumptions underlying the achievement of Superior’s 2020 midpoint guidance are:

Weather is expected to be consistent with the average temperature for the last five years;
Superior is expected to continue to attract capital and obtain financing on acceptable terms;
Superior estimates maintenance and non-recurring capital expenditures net of disposals and including vehicle leases to be in the range of $140 million to $160 million in 2020. Total lease payments are expected to be in the range of $45 million to $55 million;
Superior is substantively hedged for its estimated U.S. dollar exposure for 2020, and due to the hedge position, a change in the Canadian to U.S, dollar exchange rate for 2020 would not have a material impact to Superior.
The foreign currency exchange rate between the Canadian dollar and U.S. dollar is expected to average $0.77 for 2020 on all unhedged foreign currency transactions;
Financial and physical counterparties are expected to continue fulfilling their obligations to Superior;
Regulatory authorities are not expected to impose any new regulations impacting Superior;
Canadian, Chilean and U.S. based cash taxes are expected to be in the range of $10 million to $20 million for 2020 based on existing statutory income tax rates and the ability to use available tax basis.

Canadian Propane Distribution

Wholesale propane and natural gas liquid fundamentals related to basis differentials are not anticipated to be as strong as 2019;
Canadian restrictions on rail movement and rail blockages arising from protests are only expected to be temporary; and
Wholesale propane prices are not anticipated to significantly affect demand for propane and related services;
Operating costs are expected to be consistent with 2019;

U.S. Propane Distribution

Wholesale propane prices are anticipated to be modestly higher than 2019;
Wholesale propane prices are not anticipated to significantly affect demand for propane and related services; and
Continue to realize synergies from the NGL acquisition and tuck-in acquisitions primarily through supply chain efficiencies, margin management improvements and operational expense savings.

Specialty Chemicals

Chlor-Alkali sales prices and volumes for caustic soda, hydrochloric acid and caustic potash are anticipated to be lower than 2019;
Electrical mill rates are expected to be consistent to modestly higher than 2019;
Canadian restrictions on rail movement and rail blockages arising from protests are only expected to be temporary; and
Average plant utilization will approximate 90%-95% in 2020; and

In addition to Superior’s significant assumptions detailed above, refer to “Forward-Looking Information”, and for a detailed review of Superior’s significant business risks, refer to “Risk Factors to Superior.”

LIQUIDITY AND CAPITAL RESOURCES

Debt Management Update

Superior remains focused on managing both its debt and its leverage ratio. Superior’s Total Debt to Adjusted EBITDA leverage ratio for the trailing twelve months was 3.7x as at December 31, 2019, compared to 4.1x at December 31, 2018. The decrease in the leverage ratio from December 31, 2018 was due to the higher Adjusted EBITDA, and the

Superior Plus Corp.

2019 Annual Financial Statements

impact of foreign exchange on Superior’s U.S. denominated debt. The leverage ratio is currently above the long-term target of 3.0x. Superior anticipates the Total Debt to Adjusted EBITDA leverage ratio to be in the range of 3.4x to 3.8x as at December 31, 2020 as cash generated from operations and the expected cash savings related to the Dividend Reinvestment Program, which are anticipated to be consistent with historical participation rates, are used to repay debt.

Leverage ratio, Senior Debt and Credit Facility EBITDA are Non-GAAP measures, see “Non-GAAP Financial Measures”.

Borrowing

Superior’s revolving syndicated bank facility (credit facility), term loans and lease obligations (collectively borrowing) before deferred financing fees was $1,956.1 million as at December 31, 2019, an increase of $69.8 million from $1,886.3 million as at December 31, 2018. The increase is primarily due to the adoption of IFRS 16, see changes in accounting policy and was partially offset by increased EBITDA from operations and to a lesser extent the impact of the stronger Canadian dollar on U.S. denominated debt.

Superior’s total and available sources of credit are detailed below:

		As at December	31, 2019
			Letters of
	Total		Credit	Amount
(millions of dollars)	Amount	Borrowing	Issued	Available
Revolving term bank credit facilities(1)	750.0	469.3	31.3	249.4
Term loans(1)	1,224.7	1,224.7	–	–
Other debt(2)	27.7	27.7	–	–
Leaseliabilities	234.4	234.4	–	–
Total	2,236.8	1,956.1	31.3	249.4

(1) Revolving term bank credit facilities and term loan balances are presented before deferred financing fees.

(2) Accounts receivable factoring and deferred consideration.

On May 8, 2019, the syndicated credit facility was extended to mature on May 8, 2024 with no material changes to the financial covenants.

Net Working Capital

Consolidated net working capital was $49.9 million as at December 31, 2019 a decrease of $47.4 million from $97.3 million as at December 31, 2018. The decrease is primarily due to higher customer deposits related primarily to the NGL acquisition and the impact of the sale of certain refined fuel assets, and lower wholesale propane pricing.

Compliance

In accordance with the credit facility, Superior must maintain certain covenants and ratios that require Non-GAAP financial measures. Superior is in compliance with the lender covenants as at December 31, 2019 and the covenant details are found in the credit facility documents filed in the System for Electronic Document Analysis and Retrieval (“SEDAR”).

Pension Plans

As at December 31, 2019, Superior had an estimated defined benefit going concern surplus of approximately $25.9 million (December 31, 2018 – $7.8 million surplus) and a pension solvency surplus of approximately $11.0 million (December 31, 2018 – $0.7 million deficiency). Funding requirements required by applicable pension legislation are based upon going concern and solvency actuarial assumptions. These assumptions differ from the going concern actuarial assumptions used in Superior’s audited consolidated financial statements.

Superior Plus Corp.

2019 Annual Financial Statements

Contractual Obligations and Other Commitments

			Payments Due	Payments Due	In
(millions ofdollars)	Note (1)	Total	2020	2021-2022	2023-2024	Thereafter
Borrowing	14	1,721.7	10.1	11.6	875.3	824.7
Lease Liabilities	16	234.4	52.4	73.4	45.6	63.0
Operating leases(2)	16	2.5	2.1	0.4	–	–
US$ foreign currency forward sales contracts	16	287.1	125.8	138.3	23.0	–
Natural gas, diesel, WTI, butane, propane, and
heating oil(3)	16	120.4	112.3	8.1	–	–
Total contractual obligations		2,366.1	302.7	231.8	943.9	887.7

(1) Notes to the December 31, 2019 audited consolidated financial statements.

(2) Operating leases comprise Superior’s off-balance-sheet obligations and are contracts that do not meet the definition of a lease under IFRS 16 or are exempt.

(3) Does not include the impact of financial derivatives.

In the normal course of business, Superior is subject to lawsuits and claims. Superior believes the resolution of these matters will not have a material adverse effect, individually or in the aggregate, on Superior’s liquidity, consolidated financial position or results of operations. Superior records costs as they are incurred or when they become determinable.

SHAREHOLDERS’ CAPITAL

As at December 31, 2019, the following common shares were issued and outstanding:

						Issued number of	Share Capital
						common shares
						(Millions)
Balance as at December	31,	2019	and December	31,	2018	174.9	$2,339.9

Dividends Declared to Shareholders

Dividends declared to Superior’s shareholders depend on its cash flow from operating activities with consideration for Superior’s changes in working capital requirements, investing activities and financing activities. See “Summary of AOCF” for 2019, above, and “Summary of Cash Flow” for additional details.

Dividends declared to shareholders for 2019 were $125.9 million or $0.72 per share compared to $114.4 million or $0.72 for 2018. Dividends to shareholders are declared at the discretion of Superior’s Board of Directors.

Superior has a Dividend Reinvestment and Optional Share Purchase Plan (“DRIP”) that was not utilized in 2019. On January 28, 2020 Superior announced that it will reinstate the DRIP commencing with the anticipated February dividend which would be payable on or about March 13, 2020.

Superior Plus Corp.

2019 Annual Financial Statements

SUMMARY OF CASH FLOW

Superior’s primary sources and uses of cash are detailed below:

SUMMARY OFCASHFLOW Superior’s primary sources and uses of cash are detailed below:
		Year Ended
	December 31
(millions of dollars)	2019	2018
Cash flows from operating activities	423.2	263.0
Investing activities:
Purchase of property, plant and equipment and intangible assets	(135.9)	(105.8)
Proceeds on disposal of property, plant and equipment	7.1	22.7
Acquisitions, net of cash acquired and assets sold	(60.1)	(1,259.6)
Proceeds onsale ofassets	–	91.9
Cash flows used in investing activities	(188.9)	(1,250.8)
Financing activities:
Net proceeds (repayment) of revolving term bank credits and other debt	(63.4)	135.0
Redemption of 6.5% convertible debentures	–	(209.8)
Proceeds from 7.0% senior unsecured notes	–	458.5
Proceeds from 5.125% senior unsecured notes	–	362.5
Repayment of finance lease obligation	(41.5)	(17.1)
Proceeds from share issuance, net of costs	–	381.4
Debt issuance costs	(0.6)	(17.9)
Dividends paid to shareholders	(125.9)	(112.5)
Cash flows (used in) from financing activities	(231.4)	980.1
Net increase (decrease) in cash and cash equivalents	2.9	(7.7)
Cash and cash equivalents , beginning of year	23.9	31.8
Effect oftranslationof foreigncurrency-denominated cash	(0.3)	(0.2)
Cash and cash equivalents, end ofyear	26.5	23.9

Cash flows from operating activities for 2019 was $423.2 million, an increase of $160.2 million, from the prior year. The increase is a result of higher EBITDA from operations compared to the prior year, and positive cashflows from changes in non-cash operating working capital compared to a cash-outflow in the prior year partially offset by higher interest paid due to higher average debt levels due to acquisitions.

Cash flow used in investing activities for the 2019 was $188.9 million, a decrease from the prior year primarily due to the NGL acquisition and to a lesser extent the tuck-in acquisitions completed in the prior year.

Cash flow used in financing activities was $231.4 million, a decrease of $1,211.5 million from the prior year, primarily due to the financing to fund the NGL acquisition in the prior year.

FINANCIAL INSTRUMENTS – RISK MANAGEMENT

Derivative and non-financial derivatives are used by Superior to manage its exposure to fluctuations in foreign currency exchange rates, interest rates, share-based compensation and commodity prices. Superior assesses the inherent risks of these instruments by grouping derivative and non-financial derivatives related to the exposures these instruments mitigate. Superior’s policy is not to use derivative or non-financial derivative instruments for speculative purposes. Superior does not formally designate its derivatives as hedges and, as a result, Superior does not apply hedge accounting and is required to designate its derivatives and non-financial derivatives as held for trading.

Superior Plus Corp.

2019 Annual Financial Statements

As at December 31, 2019 Superior has hedged approximately 41% of estimated U.S. dollar exposure for 2020 and approximately 28% for 2021. A summary of Superior’s U.S. dollar forward contracts for 2019 and beyond is provided in the table below.

(US$millions except exchangerates)	2020	2021	2022	2023	2024	Total
Net US$ forward sales	125.8	86.8	51.5	23	–	287.1
Net average external US$/CDN$exchange rate	1.29	1.3	1.30	1.33	–	1.30

For additional details on Superior’s financial instruments, including the amount and classification of gains and losses recorded in Superior’s annual consolidated financial statements, summary of fair values, notional balances, effective rates and terms, and significant assumptions used in the calculation of the fair value of Superior’s financial instruments, see Note 16 to the audited consolidated financial statements for the year ended December 31, 2019.

Sensitivity Analysis

Superior’s estimated cash flow sensitivity in 2019 to various changes is provided below:

			Impact on
	Change	%	AOCF	Per Share
			(millions)
Energy Distribution
Change in Canadian propane sales margin	$0.005/litre	3%	$ 12.5	$ 0.07
Change in Canadian propane sales volume	50 million litres	2%	$ 7.6	$ 0.04
Change in U.S. propane sales margin	$0.005/litre	1%	$ 6.0	$ 0.03
Change in U.S. propane sales volume	50 million litres	4%	$ 15.4	$ 0.09
Specialty Chemicals
Change in sales price	$10.00/MT	1%	$ 8.3	$ 0.05
Change in sales volume	15,000 MT	2%	$ 4.2	$ 0.02
Corporate
Change in CDN$/US$ exchange rate on
US$ denominated debt	$0.01	1%	$ 7.0	$ 0.04
Change in interest rates	0.50%	15%	$ 2.4	$ 0.01

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Disclosure controls and procedures (DC&P) are designed by or under the supervision of Superior’s President and Chief Executive Officer (CEO) and the Executive Vice President and Chief Financial Officer (CFO) in order to provide reasonable assurance that all material information relating to Superior is communicated to them by others in the organization as it becomes known and is appropriately disclosed as required under the continuous U.S. disclosure requirements of securities legislation and regulation. In essence, these types of controls are related to the quality, reliability and transparency of financial and non-financial information that is filed or submitted under securities legislation and regulation. The CEO and CFO are assisted in this responsibility by a Disclosure Committee, which is composed of senior leadership of Superior. The Disclosure Committee has established procedures so that it becomes aware of any material information affecting Superior in order to evaluate and discuss this information and determine the appropriateness and timing of its public release.

Internal Controls over Financial Reporting (ICFR) are also designed by or under the supervision of Superior's CEO and CFO and effected by Superior's Board of Directors, management and other personnel in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Due to inherent limitations in all such systems, no evaluation of controls can provide absolute assurance that all control issues within a company have been detected.

Superior Plus Corp.

2019 Annual Financial Statements

Accordingly, Superior’s disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of the corporation’s disclosure control system are met.

Changes in Internal Controls over Financial Reporting

No changes were made in Superior’s ICFR that have materially affected, or are reasonably likely to materially affect, Superior’s ICFR in the year ended December 31, 2019.

Effectiveness

An evaluation of the effectiveness of Superior’s DC&P and ICFR was conducted as at December 31, 2019 by and under the supervision of Superior’s management, including the CEO and CFO. Based on this evaluation, the CEO and CFO have concluded that Superior’s DC&P and ICFR were effective at December 31, 2019.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Superior’s audited consolidated financial statements were prepared in accordance with IFRS. The significant accounting policies are described in the audited consolidated financial statements for the year ended December 31, 2019. Certain of these accounting policies, as well as estimates made by management in applying such policies, are recognized as critical because they require management to make subjective or complex judgments about matters that are inherently uncertain. Superior’s critical accounting estimates relate to the allowance for doubtful accounts, employee future benefits, deferred income tax assets and liabilities, the valuation of financial and non-financial derivatives, asset impairments, the purchase price allocation for business combinations and the assessment of potential provision for asset retirement obligations.

Recent Accounting Pronouncements

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or International Financial Reporting Interpretations Committee (IFRIC) effective for accounting periods beginning on or after January 1, 2019, or later periods. The standards applicable to Superior are as follows:

Change in accounting policy

On January 13, 2016, the IASB issued IFRS 16 Leases , which requires lessees to recognize assets and liabilities for most leases, as well as corresponding amortization and finance expense. Application of the standard is mandatory for annual reporting periods beginning on or after January 1, 2019, with earlier application permitted. The Company adopted the new standard beginning January 1, 2019.

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company’s operating leases are primarily railcars and to a lesser extent, property and equipment. The Company adopted IFRS 16 Leases on January 1, 2019 using the modified retrospective approach and accordingly the information presented for 2018 has not been restated and remains as previously reported under IAS 17 and related interpretations. In applying IFRS 16 the Company has elected to record right-of-use assets based on the corresponding lease liability.

Right-of-use assets and lease obligations of $178.6 million were recorded as of January 1, 2019, with no net impact on retained earnings. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate for similar collateral and term at January 1, 2019. The discount rate applied ranges from 5.4% to 8.3%.

The adoption of IFRS 16 has no impact on Superior’s underlying business economics, how the segments are operated, future business plans or the cash on hand. There will be an increase in EBITDA as the operating lease expense will now be recorded as interest and depreciation.

Superior Plus Corp.

2019 Annual Financial Statements

The impact on the Company’s financial statements as a result of the adoption of IFRS 16 is as follows:

The balance sheet has been grossed up, as substantially all leases are brought onto the balance sheet, including lease renewals where management is “reasonably certain” of exercising the renewal option,
Negative net earnings and EPS impact earlier in the lease term on an individual lease basis,
No impact on the cumulative net earnings and EPS impact over the term of the lease.

The table below shows the impact on Earnings from implementing IFRS 16.

	Propane Distribution Specialty	Propane Distribution Specialty	Propane Distribution Specialty	Propane Distribution Specialty

For the three months ended December 31, 2019	Canada U.S.		Chemicals Corporate Total
Net earnings reported	64.7 54.3		10.8 (55.2) 74.6
Add back (deduct):
Depreciation of right of use assets	2.7 2.5		6.9 0.2 12.3
Financial expense related to IFRS 16	0.8 0.1		1.9 - 2.8
Lease paymentsrelated to the adoptionof IFRS16	(3.2) (0.5)		(7.3) - (11.0)
Net income before taxes	65.0	56.4	12.3	(55.0) 78.7
Income taxexpense				(1.0) (1.0)
Net income without IFRS 16	65.0	56.4	12.3	(56.0) 77.7

	Propane Distribution Specialty	Propane Distribution Specialty	Propane Distribution Specialty	Propane Distribution Specialty
For the Year Ended December 31, 2019	Canada U.S.		Chemicals Corporate Total
Net earnings reported	130.2 79.4		47.9 (114.9) 142.6
Add back (deduct):
Depreciation of right of use assets	9.1 4.9		22.2 0.3 36.5
Financial expense related to IFRS 16	2.2 1.0		6.9 0.1 10.2
Lease paymentsrelated to the adoptionof IFRS16	(9.3) (3.1)		(26.1) (0.3) (38.8)
Net income before taxes	132.2	82.2	50.9	(114.8) 150.5
Income taxexpense				(2.1) (2.1)
Net income without IFRS 16	132.2	82.2	50.9	(116.9) 148.4



Lease Liability	Canada U.S. Chemicals Corporate Total
Opening IFRS 16 adjustment	34.6 12.5 129.8 1.7 178.6
Reclassification from previously recognized finance lease liabilities	33.9 29.9 - - 63.8
Lease payments	(16.8) (11.6) (26.1) (0.3) (54.8)
Finance expense on lease liabilities	3.8 2.5 6.9 0.1 13.3
Lease liabilities assumed as part of a business combination	0.5 3.1 - - 3.6
Additions	17.2 10.8 9.2 - 37.2
Impact ofchangesin foreignexchange and other	(0.5) (0.9) (5.9) - (7.3)
Lease liability, end of theyear	72.7 46.3 113.9 1.5 234.4

Included in the above lease liability, as at December 31, 2019, are vehicle and other fleet lease obligations of $73.0 million (December 31, 2018 – $63.8 million).

Superior Plus Corp.

2019 Annual Financial Statements

IFRIC Interpretation 23 Uncertainty over Income Tax Treatment

The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:

Whether an entity considers uncertain tax treatments separately
The assumptions an entity makes about the examination of tax treatments by taxation authorities
How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
How an entity considers changes in facts and circumstances

The Company determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.

The Company applies significant judgement in identifying uncertainties over income tax treatments. Since the Company operates in a complex multinational environment, it assessed whether the Interpretation had an impact on its consolidated financial statements.

Upon adoption of the Interpretation, the Company considered whether it has any uncertain tax positions, particularly those relating to transfer pricing. The Company’s and the subsidiaries’ tax filings in different jurisdictions include deductions related to transfer pricing and the taxation authorities may challenge those tax treatments. The Company determined, based on its tax compliance and transfer pricing study that it is probable that its tax treatments (including those for the subsidiaries) will be accepted by the taxation authorities. The Interpretation did not have an impact on the consolidated financial statements of the Company.

New and Revised IFRS Standards Not Yet Effective

IFRS 3 - Business Combinations

In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations to help entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing any missing elements, and add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. New illustrative examples were provided along with the amendments.

Since the amendments apply prospectively to transactions or other events that occur on or after the date of first application, the Company will not be affected by these amendments on the date of transition.

IAS 1 and IAS 8 - Presentation of Financial Statements and Accounting Policies, Changes in Accounting Estimates and Errors

In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The new definition states that, “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity”.

The amendments to the definition of material is not expected to have a significant impact on the Company’s consolidated financial statements.

Superior Plus Corp.

2019 Annual Financial Statements

NON-GAAP FINANCIAL MEASURES

Throughout the MD&A, Superior has used the following terms that are not defined by GAAP, but are used by management to evaluate the performance of Superior and its business. These measures may also be used by investors, financial institutions and credit rating agencies to assess Superior’s performance and ability to service debt. NonGAAP financial measures do not have standardized meaning 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 be 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.

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 AOCF, EBITDA from operations, and Adjusted EBITDA should not be construed as alternatives 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:

AOCF and AOCF per Share

AOCF is equal to cash flow from operating activities as defined by IFRS, adjusted for changes in non-cash working capital, other expenses, non-cash interest expense, current income taxes and finance costs. Interest expense included in AOCF is equal to finance expense as defined by IFRS, adjusted for unwinding of discount on debentures, borrowing and decommissioning liabilities and other non-recurring items. Superior may deduct or include additional items in its calculation of AOCF; these items would generally, but not necessarily, be infrequent in nature and could distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring. AOCF and AOCF per share are presented before and after transaction and other costs.

AOCF per share before transaction and other costs is calculated by dividing AOCF before transaction and other costs by the weighted average number of shares outstanding. AOCF per share is calculated by dividing AOCF by the weighted average number of shares outstanding.

AOCF is the main performance measure used by management and investors to evaluate Superior’s ongoing performance of its businesses and ability to generate cash flow. AOCF represents cash flow generated by Superior that is available for, but not necessarily limited to, changes in working capital requirements, investing activities and financing activities. AOCF is also used as one component in determining short-term incentive compensation for certain management employees.

The seasonality of Superior’s individual quarterly results must be assessed in the context of annualized AOCF. Adjustments recorded by Superior as part of its calculation of AOCF include, but are not limited to, the impact of the seasonality of Superior’s businesses, principally the Propane Distribution segments, by adjusting for non-cash working capital items, thereby eliminating the impact of the timing between the recognition and collection/payment of Superior’s revenue and expenses, which can differ significantly from quarter to quarter.

Adjusted EBITDA

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 earnings before income taxes.

EBITDA from operations

EBITDA from operations is defined as Adjusted EBITDA excluding costs that are not considered representative of Superior’s underlying core operating performance, including gains and losses on foreign currency hedging contracts,

Superior Plus Corp.

2019 Annual Financial Statements

corporate costs and transaction and other costs. Management uses EBITDA from operations to set targets for Superior (including annual guidance and variable compensation targets). EBITDA from operations is reconciled to earnings before income taxes.

Adjusted Gross Profit

Adjusted gross profit represents revenue less cost of sales adjusted for realized gains and losses on commodity derivative instruments related to risk management. Managements uses Adjusted Gross Profit to set margin targets and measure results. Unrealized gains and losses on commodity derivative instruments are excluded because of the accounting mis-match that exists as a result of the customer contract not being included in the determination of the fair value for this risk management activity.

Credit Facility EBITDA, Senior Debt and Leverage Ratio

Credit Facility EBITDA 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, and excludes the impact from the adoption of IFRS 16 and EBITDA from undesignated subsidiaries. Credit Facility EBITDA is used by Superior to calculate its debt covenants and other credit information.

Senior Debt includes total borrowing before deferred financing fees and vehicle lease obligations and excludes the remaining lease obligations. Senior Debt is used by Superior to calculate its debt covenants and other credit information.

To calculate the Leverage Ratio divide Senior Debt by Credit Facility EBITDA. Leverage Ratio is used by Superior and investors to assess its ability to service debt. Credit facility EBITDA and Leverage ratio are calculated as follows:

	Trailing twelve months ended
(millions of Canadian dollars)	December 31, 2019
Adjusted EBITDA	524.5
Deduct the IFRS 16 impact on Adjusted EBITDA	(38.8)
Adjustment for pro-forma acquisition EBITDA, net of EBITDA from
undesignated subsidiaries	4.2
Credit Facility EBITDA	489.9
Senior Debt	1,794.7
Leverage Ratio	3.7x

Superior Plus Corp.

2019 Annual Financial Statements

SELECTED FINANCIAL INFORMATION

SELECTEDFINANCIALINFORMATION
(millions of dollars except pershare amounts)	2019	2018
GAAP measures:
Total assets	$3,638.6	$3,654.0
Revenue(1)	2,852.9	2,737.7
Gross profit(1)	1,213.0	948.2
Net earnings (loss) for the year	142.6	($34.0)
Per share, basic and diluted	$0.82	($0.22)
Cash flows from operating activities	423.2	263.0
Dividends per share	$0.72	$0.72
Current and long-term borrowing(2)	$1,956.1	$1,886.3
Non-GAAP financial measures(3):
AOCF	$ 376.3	$ 262.8
Per share, basic and diluted	2.15	1.66
AOCF before transaction and other costs	406.2	302.3
Per share before transaction and other costs,basic and diluted	$2.32	$1.91

(1) Revenue and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income (loss) in the audited consolidated financial statements. See “Non-GAAP Financial Measures”.

(2) Current and long-term borrowing before deferred financing fees and debentures including lease liability.

(3) See “Non-GAAP Financial Measures” and “Reconciliation of Earnings to Adjusted EBITDA from Operations”.

FOURTH QUARTER RESULTS

Summary of AOCF		Three months	ended	December 31
(millions of dollars, except per share amounts)		2019		2018
Revenue(1)		821.0		889.2
Gross profit (1)		366.0		323.5
EBITDA from operations(2)		187.8		162.3
Corporate operating and administrative costs		(7.5)		(5.3)
Realizedlosses on foreigncurrencyhedging contracts		(3.6)		(4.0)
Adjusted EBITDA(1,2)		176.7		153.0
Interest expense		(25.7)		(23.6)
Cash income tax(expense)recovery		(6.0)		3.3
AOCF before transaction costs(2)		145.0		132.7
Transactionand othercosts(3)		(5.6)		(7.5)
AOCF(1,2)		139.4		125.2

AOCF per share before transaction and other costs, basic and diluted(1,2,3,4)	$	0.83	$	0.76
AOCF per share, basic and diluted(1,2,3,4)	$	0.80	$	0.72
Dividends declared per share(4)	$	0.18	$	0.18

(1) Revenue and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income in the audited consolidated financial statements. For purposes of determining margin per litre gross profit has been adjusted to include realized gains and losses on commodity derivative instruments. See “Non-GAAP Financial Measures”.

(2) EBITDA from operations, Adjusted EBITDA, AOCF before transaction and other costs, AOCF, and AOCF per share are Non-GAAP measures. See “Non-GAAP Financial Measures”.

Superior Plus Corp.

2019 Annual Financial Statements

(3) Transaction and other costs for the three months ended December 31, 2019 are primarily related to the strategic review of Specialty Chemicals and the integration of NGL and other tuck-in acquisitions. For the three months ended December 31, 2018 transaction and other costs are primarily related to the acquisition of NGL and integration of Canwest. See “Transaction and Other Costs” for further details.

(4) The weighted average number of shares outstanding for the three months ended December 31, 2019 and 2018 is 174.9 million. There were no dilutive instruments with respect to AOCF per share for the three months ended December 31, 2019 and 2018.

Comparable GAAP Financial Information

Comparable GAAP Financial Information
		Three		months ended
				December 31
(millions of dollars, except per share amounts)		2019		2018
Net earnings (loss) for the period		74.6		(48.3)
Net earnings (loss) per share for the period, basic and diluted	$	0.43	$	(0.28)
Cash flows from operating activities		108.3		41.6
Cash flows from operating activities per share, basic and diluted	$	0.62	$	0.24

Segmented Information

Segmented Information
	Three	months ended
		December 31
(millions of dollars)	2019	2018
EBITDA from operations(1)
Canadian Propane Distribution	75.6	57.8
U.S Propane Distribution	78.2	71.2
Specialty Chemicals	34.0	33.3
	187.8	162.3

(1) EBITDA from operations is a Non-GAAP measure. See “Non-GAAP Financial Measures.”

Fourth Quarter Results Compared to the Prior Year Quarter

Adjusted EBITDA for the three months ended December 31, 2019 was $176.7 million, an increase of $23.7 million or 15% compared to the prior year quarter Adjusted EBITDA of $153.0 million. The increase is primarily due to higher EBITDA from operations partially offset by increased corporate costs. EBITDA from operations increased $25.5 million or 16% compared to the prior year quarter primarily due to higher Canadian Propane EBITDA from operations and to a lesser extent an increase in U.S. Propane and Specialty Chemicals EBITDA from operations. Canadian Propane EBITDA from operations was $75.6 million, an increase of $17.8 million or 31% primarily due to improved wholesale market fundamentals and the impact of adopting IFRS 16, see ‘Change in accounting policy’, partially offset by lower sales volumes. U.S. Propane EBITDA from operations was $78.2 million, an increase of $7.0 million or 10% primarily due to higher average margins, the impact of tuck-in acquisitions and the realization of approximately $6.0 million in synergies, partially offset by lower sales volumes. Specialty Chemicals EBITDA from operations was $34.0 million, an increase of $0.7 million or 2% primarily due to the impact of adopting IFRS 16, see ‘Change in accounting policy’, higher average chlorate selling prices and sales volumes partially offset by lower chlor-alkali sales volumes and average sales prices, higher electricity costs and higher distribution costs compared to the prior year. Superior realized a loss on foreign currency hedging contracts of $3.6 million compared to a loss of $4.0 million in the prior year due to the weaker Canadian dollar than the average hedge rate. Corporate operating and administrative costs were $7.5 million compared to $5.3 million in the prior year quarter. The increase is primarily due to higher incentive plan costs due to share price appreciation.

AOCF

AOCF before transaction and other costs for the three months ended December 31, 2019 was $145.0 million, an increase of $12.3 million or 9% from the prior year’s fourth quarter AOCF before transaction and other costs of $132.7 million. The increase from the prior year is primarily due to higher Adjusted EBITDA discussed above partially offset by higher taxes and to a lesser extent higher interest expense. The increase in cash taxes is due to a recovery in the prior year quarter versus and expense in the current quarter and is due to income tax true-ups and higher earnings. AOCF per share before transaction and other costs was $0.83 per share an increase of 9% compared to the prior year quarter of AOCF before transaction and other costs per share of $0.76.

Superior Plus Corp.

2019 Annual Financial Statements

AOCF for the three months ended December 31, 2019 was $139.4 million, an increase of $14.2 million or 11% from the prior year’s fourth quarter AOCF of $125.2 million. AOCF per share of $0.80 an increase of 11% compared to the prior year quarter AOCF per share was $0.72. Transaction and other costs for the three months ended December 31, 2019 were $5.6 million, and consisted of transaction costs related primarily to the strategic review of the Specialty Chemical division and the integration of NGL and the other tuck-in acquisitions. See “Transaction and Other Costs” for further details.

RESULTS OF SUPERIOR’S OPERATING SEGMENTS

Effective January 1, 2019, Superior changed its operating segments and has changed the comparative figures to conform to the current presentation. Superior’s operating segments consists of Canadian Propane Distribution which includes its wholesale business, U.S. Propane Distribution and Specialty Chemicals.

CANADIAN PROPANE DISTRIBUTION

Canadian Propane Distribution’s condensed operating results:

	Three Months Ended	Three Months Ended
	December 31
(millions of dollars)	2019	2018
Revenue(1)	364.5	379.7
Cost ofSales(1)	(211.6)	(258.9)
Gross profit (1)	152.9	120.8
Realized gain(loss) onderivativesrelated to commodityrisk management	(11.3)	1.8
Adjusted gross profit(1)	141.6	122.6
Selling, distribution and administrative costs	(84.0)	(102.4)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	19.1	28.2
Transaction, restructuring, and other costs	0.3	0.7
(Gain)loss ondisposalofassets and other	(1.4)	8.7
EBITDA from operations(1)	75.6	57.8
Add back (deduct):
Gain (loss) on disposal of assets and other	1.4	(8.7)
Transaction, restructuring, and other costs	(0.3)	(0.7)
Amortization and depreciation included in selling, distribution and administrative costs	(19.1)	(28.2)
Unrealized gain (losses) on derivative financial instruments	8.1	(10.5)
Finance expense	(1.0)	(0.4)
Earnings before income tax	64.7	9.3

(1) Revenue, cost of sales, and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income (loss) in the audited financial statements. For purposes of determining margin per litre gross profit has been adjusted to include realized gains and losses on commodity derivative instruments. See “Non-GAAP Financial Measures”.

Revenue for fourth quarter of 2019 was $364.5 million, a decrease of $15.2 million from the prior year quarter primarily due to lower wholesale propane prices and to a lesser extent lower sales volumes. Wholesale propane supply prices were lower reflecting an increase in propane inventory levels in the U.S., driven by lower exports out of North America and the impact from lower average West Texas Intermediate crude oil prices compared to the prior year quarter.

Superior Plus Corp.

2019 Annual Financial Statements

Canadian Propane Adjusted Gross Profit

Canadian Propane Adjusted Gross Profit
	Three Months Ended
		December 31
(millions of dollars)	2019		2018
Propane distribution	147.3		114.8
Realized gain(loss) onderivativesrelated to commodityrisk management	(11.3)		1.8
Propane distribution adjusted gross profit	136.0		116.6
Otherservices	5.6		6.0
Adjustedgrossprofit	141.6		122.6

Propane distribution adjusted gross profit for the fourth quarter of 2019 was $136.0 million, an increase of $19.4 million, from the prior year quarter primarily due to improved wholesale market fundamentals compared to the prior year quarter, partially offset by lower sales volumes. Total sales volumes were 753 million litres, a decrease of 12 million litres or 2%, primarily due to lower wholesale volumes. Average weather across Canada for fourth quarter of 2019, as measured by degree days was 2% warmer than the prior year and 2% colder than the five-year average. Residential sales volumes were consistent with the prior year quarter. Commercial sales volumes decreased by 3 million litres or 3% due to warmer weather in Eastern Canada. Oilfield volumes decreased by 4 million litres or 7%, due to less drilling activity in Western Canada. Industrial volumes decreased by 2 million litres or 3% due to warmer weather and a reduction in propane consumption by mining customers. Motor fuels sales volumes decreased by 3 million litres or 7% from the prior year quarter due to competitive pressure and lower customer demand. Wholesale propane volumes were 10 million litres or 3% lower than the prior year primarily due to lower spot sales opportunities.

Average propane sales margins for the fourth quarter of 2019 was 18.1 cents per litre, an 19% increase from 15.2 cents per litre in the prior year quarter. The increase in average propane margins is a result of the improved wholesale market fundamentals compared to the prior year and effective margin management in a declining wholesale propane price environment.

Other services gross profit primarily includes equipment rental, installation, repair and maintenance and customer minimum use charges. Other services gross profit was $5.6 million, relatively consistent with the prior year quarter.

Canadian Propane Distribution Sales Volumes - Volumes by End Use Application[(1) ]

	Three Months Ended	Three Months Ended
	December 31
(millions of litres)	2019	2018
Residential	59	59
Commercial	102	105
Oilfield	55	59
Industrial	58	60
Motor Fuels	41	44
Wholesale	375	385
Other	63	53
Total	753	765

(1) Comparative figures have been reclassified to reflect the current period presentation.

Superior Plus Corp.

2019 Annual Financial Statements

Volumes by Region[ (1)]

*Volumes by Region (1)*
	Three Months Ended
	December 31
(millions of litres)	2019	2018
Western Canada	306	308
Eastern Canada	155	177
Atlantic Canada	37	36
United States	255	244
Total	753	765

(1) Regions: Western Canada region consists of British Columbia, Alberta, Saskatchewan, Manitoba, Northwest Ontario, Yukon, Northwest Territories; Eastern Canada region consists of Ontario (except for Northwest Ontario) and Quebec; Atlantic Canada region consists of New Brunswick, Newfoundland & Labrador, Nova Scotia and Prince Edward Island. United States region consists primarily of California, Maine, Idaho, Kansas, Michigan, Washington, Alaska, North Dakota, Pennsylvania, and New York.

Selling, Distribution and Administrative Costs

Selling, distribution and administrative costs were $84.0 million, a decrease of $18.4 million or 18% over the prior year quarter. The decrease in selling, distribution and administrative costs is primarily due to a lower depreciation and amortization expense, a loss on disposal of assets in the prior year quarter compared to a gain in the current period and to a lesser extent incremental synergies related to Canwest.

Net Earnings

Earnings before income tax of $64.7 million, increased by $55.4 million over the prior year, as a result of increased gross profit, lower SD&A and gain on derivative financial instruments compared to a loss in the prior year quarter.

U.S. PROPANE DISTRIBUTION

U.S. Propane Distribution’s condensed operating results:

U.S. PROPANEDISTRIBUTION U.S. Propane Distribution’s condensed operating results:
	Three Months Ended
	December 31
(millions of dollars)	2019	2018
Revenue	295.3	344.7
Cost ofSales	(137.2)	(202.7)
Gross profit	158.1	142.0
Realized gain(loss) onderivativesrelated to commodityrisk management	(3.4)	3.8
Adjusted gross profit(1)	154.7	145.8
Selling, distribution and administrative costs	(102.9)	(111.5)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	23.4	24.4
Transaction, restructuring, and other costs	2.5	4.0
Loss ondisposalofassets and other	0.5	8.5
EBITDA from operations(1)	78.2	71.2
Add back (deduct):
(Loss) on disposal of assets and other	(0.5)	(8.5)
Transaction, restructuring, and other costs	(2.5)	(4.0)
Amortization and depreciation included in selling, distribution and administrative costs	(23.4)	(24.4)
Unrealized gain (losses) on derivative financial instruments	3.6	(12.9)
Finance expense	(1.1)	(1.6)
Earnings before income tax	54.3	19.8

(1) Revenue, cost of sales, and gross profit has been presented excluding realized gains and losses on commodity derivative instruments and the comparative figures have been restated. These gains and losses are included in other income in the audited financial statements. For purposes of determining margin per litre gross profit has been adjusted to include realized gains and losses on commodity derivative instruments. See “Non-GAAP Financial Measures”.

Superior Plus Corp.

2019 Annual Financial Statements

Revenue for fourth quarter of 2019 was $295.3 million, a decrease of $49.4 million from the prior year quarter primarily due to lower wholesale propane supply prices, and to a lesser extent the impact of lower sales volumes and the stronger Canadian dollar on the translation of U.S. denominated revenues partially offset by incremental revenue from tuck-in acquisitions. Wholesale propane prices decreased reflecting higher inventory levels in the U.S. driven by lower exports out of North America and the impact of lower average West Texas Intermediate crude oil prices compared to the prior year quarter.

U.S. Propane Adjusted Gross Profit

U.S. Propane Adjusted Gross Profit
	Three Months Ended
	December 31
(millions of dollars)	2019	2018
Propane distribution	143.9	129.2
Realized gain(loss) onderivativesrelated to commodityrisk management	(3.4)	3.8
Propane distribution adjusted gross profit	140.5	133.0
Otherservices	14.2	12.8
Adjustedgrossprofit	154.7	145.8

Propane distribution adjusted gross profit for fourth quarter of 2019 was $140.5 million, an increase of $7.5 million or 6% from the prior year quarter primarily due to higher average unit margins related to marketing initiatives, including margin management in a lower wholesale propane price environment and the impact of a stronger Canadian dollar compared to the prior year, partially offset by lower sales volumes.

Residential sales volumes decreased by 15 million litres or 5% from the prior year quarter due primarily to warmer weather partially offset by the impact of the tuck-in acquisitions. Average weather across markets where U.S. propane operates were 3% warmer for the fourth quarter of 2019 compared to the prior year quarter and 7% colder than the five-year average. Commercial volumes decreased by 4 million litres or 4% compared to the prior year quarter primarily to lower distillate sales related to competitive pressures, partially offset by incremental sales volumes related to the tuck-in acquisitions. Wholesale volumes decreased by 11 million litres or 55% due to competitive pressures.

Average U.S. propane distribution sales margins were 38.9 cents per litre an increase of 14% from 34.0 cents per litre in the prior year quarter. Sales margins improved primarily due to sales and marketing initiatives, including effective margin management in a declining wholesale propane price environment and the realization of synergies partially offset by the impact of the stronger Canadian dollar on the translation of U.S. denominated gross profit.

Other services gross profit primarily includes equipment rental, installation, repair and maintenance, and customer minimum use charges. Other service gross profit was $14.2 million, an increase of 11% over the prior year quarter. The increase is primarily due to the impact of tuck-in acquisitions.

U.S. Propane Distribution Sales Volumes End-Use Application [(][1][)]

U.S. Propane Distribution Sales Volumes End-Use Application (1)
	Three Months Ended
	December 31
(millions of litres)	2019	2018
Residential	264	279
Commercial	88	92
Wholesale	9	20
Total	361	391

(1)Includes heating oil, propane, diesel and gasoline sold in over twenty-two states primarily in the Eastern United States and California.

Superior Plus Corp.

2019 Annual Financial Statements

Selling, Distribution and Administrative Costs

SD&A costs were $102.9 million, a decrease of $8.6 million or 8% over the prior year quarter. The decrease in SD&A costs was primarily due to a lower loss on disposal of assets in the current period, lower transaction, restructuring and other costs and to a lesser extent incremental synergies realized as a result of the integration of NGL. This was partially offset by the impact of tuck-in acquisitions.

Earnings

Earnings before tax of $54.3 million, increased by $34.5 million over the prior year quarter primarily due to increased adjusted gross profit, lower SD&A costs, and to a lesser extent the impact of tuck-in acquisitions.

SPECIALTY CHEMICALS

Specialty Chemicals’ condensed operating results for the three months ended December 31, 2019 and 2018:

			Three months ended	Three months ended
				December 31
(millions of dollars, except per metric tonne (MT) amounts)		2019		2018
		$ per MT		$ per MT
Revenue	161.2	810	165.4	818
Cost ofsales	(106.2)	(534)	(110.3)	(546)
Gross Profit	55.0	276	55.1	272
Selling, distribution and administrative costs	(42.9)	(216)	(38.1)	(189)
Add back (deduct):
Depreciation included in cost of sales	11.0	55	15.8	78
Amortization included in selling, distribution and administrative
costs	8.5	43	0.3	1
Loss on disposal of assets and impairment	3.5	18	0.2
Transaction,restructuring and othercosts	(1.1)	(6)	–
EBITDA from operations	34.0	170	33.3	162
Add back (deduct):
Transaction, restructuring and other costs	1.1		–
Depreciation included in cost of sales	(11.0)		(15.8)
Amortization included in selling, distribution and administrative
costs	(8.5)		(0.3)
(Loss) on disposal of assets and impairment	(3.5)		(0.2)
Unrealized gain on foreign currency translation of lease liabilities	1.0		–
FinanceExpense	(2.3)		(1.1)
Earnings before income tax	10.8		15.9

(1) Gross Profit per MT after adding back depreciation included in cost of sales for the 2019 was $331/MT and for the 2018 was $350/MT.

(2) EBITDA from operations is a Non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Reconciliation of Net Earnings to EBITDA from Operations”.

SALES VOLUMES BY PRODUCT

SALESVOLUMES BYPRODUCT
	Three	months ended
		December 31
(thousands of MTs)	2019	2018
Sodium chlorate	120	117
Chlor-alkali	78	84
Chlorite	1	1
Total	199	202

Revenue for the fourth quarter of 2019 of $161.2 million decreased by $4.2 million or 3% from the prior year fourth quarter primarily due to lower average selling prices and sales volumes for caustic soda and hydrochloric acid partially

Superior Plus Corp.

2019 Annual Financial Statements

offset by higher average selling prices and sales volumes for sodium chlorate and to a lesser extent higher sales volumes for caustic potash.

Sodium chlorate sales volumes increased by 3 thousand MTs or 3% compared to the prior year quarter primarily due to lower demand in the prior year quarter in areas impacted by hurricane damage. The average selling price increased by 3% due to price increases, customer mix partially offset by the impact of the stronger Canadian dollar on US denominated sales in the fourth quarter compared to the prior year quarter.

Chlor-alkali sales volumes decreased by 6 thousand MTs or 7% due to lower hydrochloric acid, caustic soda and chlorine sales volumes partially offset by higher caustic potash sales volumes. Hydrochloric acid sales volumes decreased 16% primarily due to lower demand from the U.S. oil and gas sector related to less rig activity. Caustic soda sales volumes were 18% lower compared to the prior year quarter primarily due to competitive pressures related to weaker exports resulting in increased domestic supply. Caustic potash sales volumes increased 21% primarily due to increased demand in the agriculture and de-icing sectors.

Chlorite sales volumes were consistent with the prior year quarter.

Cost of sales for the quarter of $106.2 million was $4.1 million or 4% lower than in the prior year quarter. The decrease is primarily due to lower depreciation compared to the prior year quarter.

Gross profit for the fourth quarter was $55.0 million, consistent with the prior year quarter as lower revenue was offset by lower depreciation expense.

Selling, distribution and administrative costs of $42.9 million were $4.8 million or 13% higher than in the prior year quarter primarily due to impairment recorded in the quarter, foreign exchange losses versus gains in the prior year quarter, higher depreciation expense offset by lower distribution costs than the prior year quarter both resulting from the adoption of IFRS 16.

CONSOLIDATED CAPITAL EXPENDITURE SUMMARY

	Three months ended December 31 (millions of dollars) 2019 2018
	Efficiency, process improvement and growth-related 25.2 11.8 Maintenance capital 26.3 40.5
	51.5 52.3 Proceeds on disposition of capital and intangible assets (1.2) (8.6) Property, plant and equipment acquired throughacquisition 16.9 54.1
	Total net capital expenditures 67.2 97.8 Investmentin leased assets 17.8 10.2
	Total expenditures includingfinance leases 85.0 108.0

Efficiency, process improvement and growth related expenditures were $25.2 million in the fourth quarter of 2019 compared to $11.8 million in the prior year quarter. The increase over the prior year is primarily due to integration activity and costs incurred to expand chlorate plants located in Quebec and Georgia, and timing of expenditures.

Maintenance capital expenditures were $26.3 million in the fourth quarter compared to $40.5 million in the prior year quarter, a decrease of $14.2 million mainly due to timing of expenditures and tank refurbishment costs in the Energy Distribution segments.

Proceeds on disposition were $1.2 million in the fourth quarter of 2019 compared to $8.6 million in the prior year quarter primarily due to the disposal of NGL property as Superior has begun to divest of excess facilities and properties while executing on synergies.

Superior Plus Corp.

2019 Annual Financial Statements

Superior entered into new leases with capital-equivalent value of $17.8 million in the fourth quarter of 2019 compared to $10.2 million in the prior year’s fourth quarter. The increase is primarily related to the change in accounting policy which requires leases to be recorded as a right-of-use asset and a lease liability. Leased assets include vehicles for the Propane Distribution segment to support growth and replace aging vehicles, renewing railcar leases in the Specialty Chemicals segment and timing of renewing property leases. Approximately 50% of the additions to leased assets relate to vehicles in the Energy Distribution segments.

CORPORATE ADMINISTRATION COSTS

Corporate administration costs were $11.6 million in the fourth quarter, compared to $8.1 million in the prior year comparable quarter. The $3.5 million increase was primarily due to the decline in the share price in the prior year quarter and was partially offset by higher corporate transaction costs.

FINANCE EXPENSE

Interest expense on borrowing and finance lease obligations was $27.9 million in the fourth quarter, compared to $26.9 million in the prior year quarter. The increase was mainly due to the higher average debt related to acquisitions, and the impact of adopting IFRS 16.

TRANSACTION AND OTHER COSTS

For the fourth quarter, Superior incurred $5.6 million in transaction and other costs compared to $7.5 million in the prior year quarter. The decrease is primarily related to timing of tuck-in acquisitions and costs related to the strategic review of Specialty Chemicals in the current quarter compared to transaction costs associated with NGL and the tuckin acquisitions in the prior year quarter.

QUARTERLY FINANCIAL AND OPERATING INFORMATION

GAAP Measures

GAAP Measures	GAAP Measures
(millions of dollars, except per share amounts) Q4 2019 Q32019 Q2 2019 Q1 2019 Q4 2018 Q32018 Q2 2018 Q1 2018
Revenue(3) Gross profit(3) Net earnings (loss) Per share, basic Per share, diluted Net workingcapital(deficit) (1)	$821.0 450.1 545.8 1036.0 889.2 486.7 486.1 875.7 $366.0 195.0 223.7 428.3 323.5 174.6 162.7 287.4 $74.6 (59.3) (29.3) (4) 156.6 (48.3) (39.8) (2) 9.1 (2) 45.0 $0.43 (0.34) (0.17) (4) 0.90 (0.28) (0.23) (2) 0.06 (2) 0.32 $0.43 (0.34) (0.17) (4) 0.90 (0.28) (0.23) (2) 0.06 (2) 0.32 $49.9 14.1 48.8 189.1 97.3 (10.6) (5.1) 144.0

(1) Net working capital as at the quarter-end is comprised of trade and other receivables, prepaid expenses and inventories, less trade and other payables, deferred revenue, and dividends and interest payable.

(2) Restated Q1 and Q2 2018 net earnings and per share calculations to reflect the increased amortization partially offset by a reduction in deferred taxes as a result of finalizing the Canwest purchase price allocation.

(3) Revenue and gross profit have been presented in Q1 to Q3 2019, and Q1 to Q4 in 2018, excluding realized gains and losses on commodity derivative instruments. These gains and losses are included in other income in the audited financial statements. See “Non-GAAP Financial Measures”.

(4) Restated Q1 2019 net earnings and per share calculations decreased by $2.1 million to reflect the increased amortization partially offset by a reduction in depreciation as a result of finalizing the NGL purchase price allocation.

Superior Plus Corp.

2019 Annual Financial Statements

Non-GAAP Financial Measures[ (1) ]

(millions of dollars, except
per share amounts)	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
Adjusted EBITDA	$176.7	48.2	59.7	239.9	153.0	25.9	42.8	152.6
AOCF before transaction
and other costs	$145.0	19.2	31.0	211.0	132.7	2.2	29.3	138.1
Per share, basic	$0.83	0.11	0.18	1.21	0.76	0.01	0.21	0.97
Per share, diluted	$0.83	0.11	0.18	1.21	0.76	0.01	0.21	0.97
AOCF	$139.4	13.1	17.8	206.0	125.2	(13.4)	20.3	130.7
Per share, basic	$0.80	0.07	0.10	1.18	0.72	(0.08)	0.14	0.91
Per share,diluted	$0.80	0.07	0.10	1.18	0.72	(0.08)	0.14	0.91

(1) Net AOCF before transaction and other costs, AOCF and the related per share amounts, are Non-GAAP financial measures.

Fluctuations in Superior’s individual quarterly results is subject to seasonality. Sales typically peak in the first quarter when approximately one-third of annual propane and other refined fuels sales volumes and gross profits are generated due to the demand of heating from end-use customers. They then decline through the second and third quarters, rising seasonally again in the fourth quarter with heating demand. In addition, during 2018 Superior acquired NGL, HiGrade, Blue Flame, Porco, UPE and Musco, and sold the refined fuel assets. Each transaction may impact quarterly results. For more information on these acquisitions and divestments see Note 3 in the 2019 audited consolidated financial statements.

Volumes[(1)]

Volumes(1)
	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
Canadian propane sales
volumes (millions of litres)	753	393	437	922	765	340	380	730
U.S. propane sales volumes
(millions of litres)	361	158	201	489	391	161	157	396
Chemical sales volumes
(thousands of MT)	199	210	210	206	202	212	208	213

- Canadian propane sales by end use application are as follows:

(millions of litres)	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
Residential	59	20	26	75	59	20	29	75
Commercial	102	42	57	137	105	45	58	137
Oilfield	55	35	36	58	59	46	47	79
Industrial	58	52	53	68	60	51	55	70
Motor Fuels	41	42	44	40	44	45	47	43
Wholesale	375	190	207	493	385	121	127	274
Other	63	12	14	51	53	12	17	52
Total	753	393	437	922	765	340	380	730

(1) Comparative figures have been reclassified to reflect the current period presentation of end use.

- U.S. propane sales by end use application are as follows:

(millions of litres)	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
Residential	264	88	123	375	279	78	39	135
Commercial	88	63	69	92	92	68	76	106
Wholesale	9	7	9	22	20	15	42	155
Total	361	158	201	489	391	161	157	396

(1) Comparative figures have been reclassified to reflect the current period presentation of end use.

Superior Plus Corp.

2019 Annual Financial Statements

Specialty Chemicals sales volumes by product are as follows:

(thousands of MT)	Q4 2019	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018	Q2 2018	Q1 2018
Sodium chlorate	120	122	120	118	117	121	115	121
Chlor-alkali	78	86	88	87	84	88	91	90
Chlorite	1	2	2	1	1	3	2	2
Total	199	210	210	206	202	212	208	213

RECONCILIATION OF EARNINGS (LOSS) BEFORE INCOME TAXES TO ADJUSTED EBITDA

	(millions of dollars)	Canadian U.S. Propane Specialty
	For the Three Months Ended December 31,	Distribution Distribution Chemicals Corporate Total
	Earnings (loss) before income taxes	64.7 54.3 10.8 (26.3) 103.5
		19.1 23.4 8.5 0.2 51.2
	Add: Depreciation and amortization included in
	selling, distribution and administrative costs
	Depreciation included in cost of sales (Gain) loss on disposal of assets and other Finance expense Unrealized (gains) on derivative financial instruments Transaction,restructuring and othercosts	– – 11.0 – 11.0
		(1.4) 0.5 3.5 – 2.6
		1.0 1.1 2.3 23.5 27.9
		(8.1) (3.6) (1.0) (12.4) (25.1)
		0.3 2.5 (1.1) 3.9 5.6
	Adjusted EBITDA	75.6 78.2 34.0 (11.1) 176.7


	(millions of dollars)	Canadian U.S. Propane Specialty
	FortheThreeMonthsEndedDecember31,2018	Distribution Distribution Chemicals Corporate Total
	Earnings (loss) before income taxes	9.3 19.8 15.9 (92.6) (47.6)
		28.2 24.4 0.3 – 52.9
	Add: Depreciation and amortization included in
	selling, distribution and administrative costs
	Depreciation included in cost of sales Loss on disposal of assets and other Finance expense Realized gain on foreign currency forward contracts related to NGL financing Unrealized losses on derivative financial instruments Transaction,restructuring and othercosts	– – 15.8 – 15.8
		8.7 8.5 0.2 – 17.4
		0.4 1.6 1.1 23.8 26.9
		– – – (4.5) (4.5)
		10.5 12.9 – 61.2 84.6
		0.7 4.0 – 2.8 7.5
	Adjusted EBITDA	57.8 71.2 33.3 (9.3) 153.0

Superior Plus Corp.

2019 Annual Financial Statements

RECONCILIATION OF EARNINGS (LOSS) BEFORE INCOME TAXES TO ADJUSTED EBITDA

(millions of dollars) Canadian Propane U.S. Propane Specialty For the year ended December 31, 2019 Distribution Distribution Chemicals

	Corporat	Total
Earnings (loss) before income taxes 130.2 79.4 47.9	(89.9)	167.6
Add: Depreciation and amortization included in selling, distribution and administrative costs 71.9 105.0 30.4 Depreciation included in cost of sales – – 44.9 (Gain) loss on disposal of assets and other (3.3) 1.3 20.4 Finance expense 4.4 4.4 8.1 Unrealized (gains) losses on derivative financial instruments (3.2) 2.6 (2.9) Transaction,restructuring and othercosts 0.8 16.7 3.1	0.4	207.7
	–	44.9
	–	18.4
	97.4	114.3
	(54.8)	(58.3)
	9.3	29.9
Adjusted EBITDA 200.8 209.4 151.9	(37.6)	524.5

(millions of dollars) Canadian Propane U.S. Propane Specialty Forthe yearendedDecember31,2018 Distribution Distribution Chemicals
	Corporate	Total
Earnings (loss) before income taxes 45.7 27.7 80.4	(188.1)	(34.3)
Add: Depreciation and amortization included in selling, distribution and administrative costs 86.2 58.1 1.1 Depreciation included in cost of sales – – 53.6 (Gain) loss on disposal of assets and other 4.0 (6.4) 0.2 Finance expense 2.2 2.5 2.3 Foreign currency forward contracts related to NGL financing Unrealized losses on derivative financial instruments 14.1 13.7 – Transaction,restructuring and othercosts 10.3 7.1 –	0.2	145.6
	–	53.6
	–	(2.2)
	83.3	90.3
	(4.5)	(4.5)
	58.5	86.3
	22.1	39.5
Adjusted EBITDA 162.5 102.7 137.6	(28.5)	374.3

RISK FACTORS TO SUPERIOR

The risks factors and uncertainties detailed below are a summary of Superior’s assessment of its material risk factors as detailed in Superior’s most recent Annual Information Form (“AIF”) under “Risks associated with our business” which is filed on the Canadian Securities Administrators’ website, www.sedar.com, and on Superior’s website, www.superiorplus.com. The AIF describes some of the most material risks to Superior’s business by type of risk: financial; strategic; operational; and legal.

General risks to Superior are as follows:

Cash Dividends to Shareholders are Dependent on the Performance of Superior LP

Superior depends entirely on the operations and assets of Superior LP. Superior’s ability to make dividend payments to its shareholders depends on Superior LP’s ability to make distributions on its outstanding limited partnership units, as well as on the operations and business of Superior LP.

There is no assurance regarding the amount of cash to be distributed by Superior LP or generated by Superior LP and, therefore, there is no assurance regarding funds available for dividends to shareholders. The amount distributed in respect of the limited partnership units will depend on a variety of factors including, without limitation, the performance of Superior LP’s operating businesses, the effect of acquisitions or dispositions on Superior LP, and other factors that may be beyond the control of Superior LP or Superior. In the event significant sustaining capital expenditures are required by Superior LP or the profitability of Superior LP declines, there would be a decrease in the amount of cash available for dividends to shareholders and such decrease could be material.

Superior Plus Corp.

2019 Annual Financial Statements

Superior’s dividend policy and the distribution policy of Superior LP are subject to change at the discretion of the Board of Directors of Superior or the Board of Directors of Superior General Partner Inc., the general partner of Superior LP, as applicable. Superior’s dividend policy and the distribution policy of Superior LP are also limited by contractual agreements including agreements with lenders to Superior and its affiliates and by restrictions under corporate law.

Additional Shares

In the event the Board of Directors of Superior decides to issue additional common shares, preferred shares or securities convertible into common shares, existing shareholders may suffer significant dilution.

Access to Capital

The credit facilities and U.S. notes of Superior LP contain covenants that require Superior LP to meet certain financial tests and that restrict, among other things, the ability of Superior LP to incur additional debt, dispose of assets or pay dividends/distributions in certain circumstances. These restrictions may preclude Superior LP from returning capital or making distributions on the limited partnership units.

The payout by Superior LP of substantially all of its available cash flow means that capital expenditures to fund growth opportunities can only be made in the event that other sources of financing are available. Lack of access to such additional financing could limit the future growth of the business of Superior LP and, over time, have a material adverse effect on the amount of cash available for dividends to shareholders.

To the extent that external sources of capital, including public and private markets, become limited or unavailable, Superior’s and Superior LP’s ability to make the necessary capital investments to maintain or expand the current business and to make necessary principal payments and debenture redemptions under its term credit facilities may be impaired.

Interest Rates

Superior maintains floating interest rate exposure through a combination of floating interest rate borrowing and uses derivative instruments at times, to mitigate this risk. Demand for a significant portion of Propane Distribution’s sales and substantially all of Specialty Chemicals’ sales are affected by general economic trends. Generally speaking, when the economy is strong, interest rates increase, as does demand from Superior’s customers, thereby increasing Superior’s sales and its ability to pay higher interest costs. The opposite is also true. In this way, there is a common relationship among economic activity levels, interest rates and Superior’s ability to pay higher or lower rates. Increased interest rates will, however, affect Superior’s borrowing costs, which will have an adverse effect.

Foreign Exchange Risk

A portion of Superior’s net cash flow is denominated in U.S. dollars. Accordingly, fluctuations in the Canadian/U.S. dollar exchange rate can impact profitability. Superior attempts to mitigate this risk with derivative financial instruments.

Changes in Legislation and Expected Tax Profile

There can be no assurance that income tax laws in the numerous jurisdictions in which Superior operates will not be changed, interpreted or administered in a manner which adversely affects Superior and its shareholders. In addition, there can be no assurance that the CRA (or a provincial tax agency), the U.S. Internal Revenue Service (or a state or local tax agency), the Chilean Internal Revenue Service or the Luxembourg Tax Authorities (collectively, the “tax agencies”) will agree with how Superior calculates its income for tax purposes or that these various tax agencies referenced herein will not change their administrative practices to the detriment of Superior or its shareholders.

Superior Plus Corp.

2019 Annual Financial Statements

Acquisitions and Divestitures

Superior may not be able to find or buy appropriate acquisition targets on economically acceptable terms. Superior’s acquisition agreements will contain certain representations, warranties and indemnities from the respective vendors subject to certain applicable limitations and thresholds and Superior will conduct due diligence prior to completion of such acquisitions. If, however such representations and warranties are inaccurate or limited in applicability or if any liabilities that are discovered exceed such limits or are not covered by the representations, warranties or indemnities, or the applicable vendors default in their obligations or if certain liabilities are not identified in such agreements, Superior could become liable for any such liabilities which may have an adverse effect on Superior. In addition, there may be liabilities or risks that were not discovered in such due diligence investigations which could have an adverse effect on Superior.

Acquiring complementary businesses is often required to optimally execute Superior’s business strategy. Distribution systems, technologies, key personnel or businesses of companies Superior acquires may not be effectively assimilated into its business, or its alliances may not be successful. There is also no assurance regarding the completion of a planned acquisition as Superior may be unable to obtain shareholder approval for a planned acquisition or Superior may be unable to obtain government and regulatory approvals required for a planned acquisition, or required government and/or regulatory approvals may result in delays. There may be penalties associated with not completing a planned acquisition. Superior may not be able to successfully complete certain divestitures on satisfactory terms, if at all. Divestitures may reduce Superior’s total revenue and net earnings by more than the sales price. The terms and conditions, representations, warranties and indemnities, if any, associated with divestiture activity may hold future risks.

Transportation network disruptions

All three of Superior’s business segments rely on rail as a mode of delivering product across Canada and the US to service customer demand. Due to the integrated nature of North America’s freight transportation infrastructure, Superior’s operations may be negatively affected by service disruptions with their transportation provider or other transportation links such as ports and other railroads which interchange with our transportation provider. A significant prolonged service disruption of one or more of these entities could have an adverse effect on Superior’s ability to service customer demand. Service disruptions can be caused by, but are not limited to, severe weather and natural disasters such as extreme cold or heat, flooding, droughts, fires, hurricanes and earthquakes as well as labour disruptions, political disruptions such as protests and acts of terrorism.

Information Technology and Cyber Security

Superior utilizes a number of information technology systems for the management of its business and the operation of its facilities. The reliability and security of these systems is critical. If the function of these systems is interrupted or fails and cannot be restored quickly, or if the technologies are no longer supported, Superior’s ability to operate its facilities and conduct its business could be compromised. Superior has continued to mature its approach to technology planning. Superior continually assesses and monitors its cyber security risk. In an effort to mitigate such risks, Superior has employed a fully managed third party cyber security service that deploys industry leading technology, conducted comprehensive employee training and utilizes monitoring software to protect its systems.

Although the technology systems Superior utilizes are intended to be secure and Superior has employed various methods to mitigate cyber risks, there is still a risk that an unauthorized third party could access the systems. Such a security breach could lead to a number of adverse consequences, including but not limited to, the unavailability, disruption or loss of key function within Superior’s control systems and the unauthorized disclosure, corruption or loss of sensitive company, customer or personal information. Superior attempts to prevent such breaches through the implementation of various technology security measures, segregation of control systems from its general business network, engaging skilled consultants and employees to manage Superior’s technology applications, conducting periodic audits and adopting policies and procedures as appropriate.

To date, Superior has not been subject to a cyber-security breach that has resulted in a material impact on its business or operations; there is no guarantee, however, that the measures it takes to protect its business systems and operational control systems will be effective in protecting against a breach in the future.

Superior Plus Corp.

2019 Annual Financial Statements

RISKS TO SUPERIOR’S SEGMENTS

Risks associated with the Propane Distribution businesses are set out below.

CANADIAN PROPANE DISTRIBUTION AND U.S. PROPANE DISTRIBUTION

Competition

Propane is sold in competition with other energy sources such as fuel oil, electricity and natural gas, some of which are less costly on an energy-equivalent basis. While propane is usually more cost-effective than electricity, electricity is a major competitor in most areas. Fuel oil is also used as a residential, commercial and industrial source of heat and, in general, is less costly on an equivalent-energy basis, although operating efficiencies, environmental and air quality factors help make propane competitive with fuel oil. Except for certain industrial and commercial applications, propane is generally not competitive with natural gas in areas with natural gas service. Other alternative energy sources such as compressed natural gas, methanol and ethanol are available or could be further developed and could have an impact on the future of the propane industry in general and Canadian propane distribution in particular. The trend towards increased conservation measures and technological advances in energy efficiency may have a detrimental effect on propane demand and Canadian Propane Distribution’s sales. Increases in the cost of propane encourage customers to reduce fuel consumption and to invest in more energy efficient equipment, reducing demand. Propane commodity prices are affected by crude oil and natural gas commodity prices.

Automotive propane demand depends on propane pricing, the market’s acceptance of propane conversion options and the availability of infrastructure. Superior Propane has strategic partnerships with companies focused on after-market conversion technologies. This segment has been impacted by the development of more fuel efficient and complicated engines which increase the cost of converting engines to propane and reduce the savings per kilometre driven.

Competition in the U.S. propane distribution business’ markets generally occurs on a local basis between large, fullservice, national marketers and smaller, independent local marketers. Marketers primarily compete based on price and service and tend to operate in close proximity to customers, typically within a 60 kilometer marketing radius from a central depot, in order to minimize delivery costs and provide prompt service.

Volume Variability, Weather Conditions and Economic Demand

Weather, general economic conditions and the volatility in the cost of propane affect propane market volumes. Weather influences the demand for propane, primarily for home and facility heating uses and also for agricultural applications, such as crop drying.

Harsh weather can create conditions that exacerbate demand for propane, impede the transportation and delivery of propane, or restrict the ability of Superior to obtain propane from its suppliers. Such conditions may also increase Superior’s operating costs and may reduce customers demand for propane, any of which may have an adverse effect on Superior. Conversely, low prices tend to make customers less price sensitive and less focused on their consumption volume.

Spikes in demand caused by weather or other factors can stress the supply chain and hamper Superior’s ability to obtain additional quantities of propane. Transportation providers (railways and trucking companies) have limited ability to provide resources in times of extreme peak demand. Changes in propane supply costs are normally passed through to customers, but timing lags (between when Superior purchases the propane and when the customer purchases the propane) may result in positive or negative gross margin fluctuations.

For U.S. propane distribution, demand from end-use heating applications is predictable. Weather and general economic conditions, however, affect distillates and propane market volumes. Weather influences the immediate demand, primarily for heating, while longer-term demand declines due to economic conditions as customer’s trend towards conservation and supplement heating with alternative sources such as electricity and to a lesser extent wood pellets and solar energy.

Superior Plus Corp.

2019 Annual Financial Statements

Demand, Supply and Pricing

Superior offers its customers various fixed-price propane and heating oil programs. In order to mitigate the price risk from offering these services, Superior uses its physical inventory position, supplemented by forward commodity transactions with various third parties having terms and volumes substantially the same as its customer’s contracts. In periods of high propane price volatility, the fixed-price programs create exposure to over or under-supply positions as the demand from customers may significantly exceed or fall short of supply procured. In addition, if propane prices decline significantly subsequent to customers signing up for a fixed-price program, there is a risk that customers will default on their commitments. Current unit margins may not be sustainable if market conditions change significantly.

Health, Safety and Environment

Superior’s operations are subject to the risks associated with handling, storing and transporting propane in bulk. To mitigate risks, Superior has established a comprehensive environmental, health and safety protection program. It consists of an environmental policy, codes of practice, periodic self-audits, employee training, quarterly and annual reporting and emergency prevention and response.

The U.S. propane distribution business, through a centralized safety and environment management system, ensures that safety practices and regulatory compliance are an important part of its business. The storage and delivery of refined fuels pose the risk of spills which could adversely affect the soil and water of storage facilities and customer properties.

Superior’s fuel distribution businesses are based and operate in Canada and the United States and, as a result, such operations could be affected by changes to laws, rules or policies which could either be more favourable to competing energy sources or increase compliance costs or otherwise negatively affect the operations of Propane Distribution in comparison with such competing energy sources. Any such changes could have an adverse effect on the operations of Propane Distribution.

Employee and Labour Relations

Approximately 18% of Superior’s Canadian propane distribution business employees and 1% of the U.S. propane distribution business employees are unionized. Collective bargaining agreements are renegotiated in the normal course of business. While labour disruptions are not expected, there is always risk associated with the renegotiation process that could have an adverse impact on Superior.

SPECIALTY CHEMICALS

Risks associated with the Specialty Chemicals business are as follows:

Competition

Specialty Chemicals competes with sodium chlorate, chlor-alkali and potassium producers on a worldwide basis. Key competitive factors include price, product quality, logistics capability, reliability of supply, technical capability and service. The end-use markets for products are correlated to the general economic environment and the competitiveness of customers, all of which are outside of the segment’s control, along with market pricing for pulp.

Supply Arrangements

Specialty Chemicals has long-term electricity contracts or electricity contracts that renew automatically with power producers in each of the jurisdictions where its plants are located. There is no assurance that Specialty Chemicals will be able to secure adequate supplies of electricity at reasonable prices or on acceptable terms.

Potassium chloride (KCl) is a major raw material used in the production of potassium hydroxide at the Port Edwards, Wisconsin facility. Substantially all of Specialty Chemicals’ KCl is received from Nutrien Inc. (formerly Potash Corporation of Saskatchewan). Specialty Chemicals has limited ability to source KCl from additional suppliers.

Superior Plus Corp.

2019 Annual Financial Statements

Foreign Currency Exchange

Specialty Chemicals is exposed to fluctuations in the U.S. dollar and the Euro versus the Canadian dollar. Specialty Chemicals manages its exposure to fluctuations between foreign currencies and the Canadian dollar by entering into hedge contracts with external third parties and internally with other Superior businesses.

Health, Safety and Environment

Specialty Chemicals’ operations involve the handling, production, transportation, treatment and disposal of materials that are classified as hazardous and are regulated by environmental, health and safety laws, regulations and requirements. There is potential for the release of highly toxic and lethal substances, including chlorine from a facility or transportation equipment. Equipment failure could result in damage to facilities, death or injury and liabilities to third parties. If at any time the appropriate regulatory authorities deem any of the segment’s facilities unsafe, they may order that such facilities be shut down.

Regulatory

Specialty Chemicals’ operations and activities in various jurisdictions require regulatory approval for the handling, production, transportation and disposal of chemical products and waste substances. The failure to obtain or comply fully with such applicable regulatory approval may materially adversely affect Specialty Chemicals.

Manufacturing and Production

Specialty Chemicals’ production facilities maintain complex process and electrical equipment. The facilities have existed for many years and undergone upgrades and improvements. Routine maintenance is regularly completed to ensure equipment is operated within appropriate engineering and technical requirements. Notwithstanding Specialty Chemicals’ operating standards and history of limited downtime, breakdown of electrical transformer or rectifier equipment would temporarily reduce production at the affected facility. Although the segment has insurance to mitigate substantial loss due to equipment outage, Specialty Chemicals’ reputation and its ability to meet customer requirements could be harmed by a major electrical equipment failure.

Employee and Labour Relations

Approximately 25% of Specialty Chemicals’ employees are unionized. Collective bargaining agreements are renegotiated in the normal course of business. While labour disruptions are not expected, there is always risk associated with the negotiation process that could have an adverse impact on Superior.

Superior Plus Corp.

2019 Annual Financial Statements

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Superior Plus Corp. — Management Reports 2020

42632_rns_2020-02-20_3d3c727d-7e8f-443f-8f93-1eca9ff55f71.pdf

MANAGEMENT’S DISCUSSION AND ANALYSIS OF 2019 ANNUAL AND FOURTH QUARTER RESULTS FEBRUARY 20, 2020

Overview of Superior

Non-GAAP Financial Measures

Forward-Looking Information

FINANCIAL OVERVIEW

Summary of AOCF

AOCF Reconciled to Cash Flows from Operating Activities[ (1) ]

2019 ACQUISITIONS

Acquisition of Phelps Sungas, Inc. and BMK Geneva, Inc. (together “Phelps”)

Acquisition of Sheldon Gas Company and Sheldon Oil Company (together “Sheldon”)

Other Acquisitions

Consolidated Statement of Net Earnings (Loss)

Annual Financial Results Compared to the Prior Year

RESULTS OF SUPERIOR’S OPERATING SEGMENTS

Canadian Propane Adjusted Gross Profit

Canadian Propane Distribution Sales Volumes - Volumes by End Use Application[(1) ]

Volumes by Region[ (1)]

Selling, Distribution and Administrative Costs

Earnings

Financial Outlook

U.S. PROPANE DISTRIBUTION

U.S. Propane Distribution’s condensed operating results:

U.S. Propane Adjusted Gross Profit

Selling, Distribution and Administrative Costs

Earnings

Financial Outlook

SPECIALTY CHEMICALS

Sales Volumes by Product

Financial Outlook

CONSOLIDATED CAPITAL EXPENDITURE SUMMARY

Superior’s capital expenditures for 2019 and 2018:

CORPORATE ADMINISTRATION COSTS

FINANCE EXPENSE

TRANSACTION AND OTHER COSTS

INCOME TAXES

FINANCIAL OUTLOOK

Canadian Propane Distribution

U.S. Propane Distribution

Specialty Chemicals

LIQUIDITY AND CAPITAL RESOURCES

Debt Management Update

Borrowing

Net Working Capital

Compliance

Pension Plans

Contractual Obligations and Other Commitments

SHAREHOLDERS’ CAPITAL

Dividends Declared to Shareholders

SUMMARY OF CASH FLOW

Superior’s primary sources and uses of cash are detailed below:

FINANCIAL INSTRUMENTS – RISK MANAGEMENT

Sensitivity Analysis

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Changes in Internal Controls over Financial Reporting

Effectiveness

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Recent Accounting Pronouncements

Change in accounting policy

IFRIC Interpretation 23 Uncertainty over Income Tax Treatment

New and Revised IFRS Standards Not Yet Effective

IFRS 3 - Business Combinations

IAS 1 and IAS 8 - Presentation of Financial Statements and Accounting Policies, Changes in Accounting Estimates and Errors

NON-GAAP FINANCIAL MEASURES

AOCF and AOCF per Share

Adjusted EBITDA

EBITDA from operations

Adjusted Gross Profit

Credit Facility EBITDA, Senior Debt and Leverage Ratio

SELECTED FINANCIAL INFORMATION

FOURTH QUARTER RESULTS

Comparable GAAP Financial Information

Segmented Information

Fourth Quarter Results Compared to the Prior Year Quarter

AOCF

RESULTS OF SUPERIOR’S OPERATING SEGMENTS

CANADIAN PROPANE DISTRIBUTION

Canadian Propane Adjusted Gross Profit

Superior Plus Corp. Management Reports 2020