Superior Plus Corp. — Management Reports 2021

Feb 19, 2021

MANAGEMENT'S DISCUSSION AND ANALYSIS OF 2020 ANNUAL AND FOURTH QUARTER RESULTS FEBRUARY 18, 2021

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 three and twelve months ended December 31, 2020 and 2019, as well as forward-looking information about future periods. The information in this MD&A is current to February 18, 2021, 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, 2020 and 2019.

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, 2020 and 2019 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: U.S. Propane Distribution, Canadian Propane Distribution and Specialty Chemicals. 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. 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. Specialty Chemicals is a leading supplier of sodium chlorate and technology to the pulp and paper industry and a regional supplier of chlor-alkali products in the U.S. Midwest and Western Canada.

Current Economic Conditions

During the first quarter, the rapid outbreak of the novel strain of the coronavirus, specifically identified as the COVID-19 pandemic, caused governments worldwide to enact emergency measures and restrictions to combat the spread of the virus. These measures and restrictions, which include the implementation of travel bans, mandated and voluntary business closures, self-imposed and mandatory quarantine periods, isolation orders and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. Superior monitors applicable government relief programs to determine if Superior qualifies to participate in them. During the year, Superior applied for the Canadian Emergency Wage Subsidy ("CEWS") program wherein Superior was allowed to recover a portion of eligible employee costs incurred earlier in the year. The Government of Canada continues to make amendments to the CEWS program and Superior may be eligible for and make applications for future claims.

COVID-19 has also resulted in a significant decrease of global demand for crude oil. In addition to the impact of COVID-19, production levels during March and April by OPEC+ countries, contributed to excess global supply and caused the price of oil to be exceptionally volatile. Propane is a derivative of natural gas processing and oil refining, so continued volatility in the price of oil could lead to disruptions in the supply of propane if the production of oil and natural gas is further curtailed. In addition to the risk on the supply of propane, demand for Superior's products from our customers in the oil and gas industry have been impacted as the combined impact of COVID-19 and volatile oil prices has had a significantly negative impact on the energy industry. Despite the impact COVID-19 has had on natural gas processing and oil refining, U.S. propane inventories remain above the three-year average.

The future impact of these events on liquidity, volatility, credit availability and market and financial conditions generally, could change at any time. The duration and ultimate impact on the economy are unknown at this time, and, as a result, it is difficult to estimate the longer-term impact on our operations and the markets for our products. At the current time, we expect an impact to our business as it relates to our customers that operate in industries governments have classified as non-essential and customers required to operate at reduced capacities. During the year ended December 31, 2020, the impact of these events caused a decrease in sales volumes and sales prices for our Specialty Chemicals segment and sales volumes for our Canadian Propane Distribution operating segment and to a lesser extent our U.S. Propane Distribution operating segment. Management took steps to reduce capital and selling, distribution and administrative costs to minimize the impact these events have had on our business. The significant negative impact of COVID-19 on the Canadian Propane Distribution and Specialty Chemicals business was partially offset by the CEWS benefit.

Superior's operating segments provide essential services in all provinces, states and territories in which Superior operates. In response to COVID-19, and in-line with recommendations from local health authorities, enhanced operating procedures and protocols were instituted to protect our employees and customers and to maintain our sites and facilities to even higher levels of cleanliness.

Management is continuing to monitor these situations and may be required to take further actions that may materially alter operations.

Non-IFRS Financial Measures

Throughout the MD&A, Superior has used the following terms that are not defined under International Financial Reporting Standards (IFRS), 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, Operating Costs, Total Debt to Adjusted EBITDA, Leverage Ratio 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-IFRS 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-IFRS financial measures are clearly defined, qualified and reconciled to their most comparable GAAP financial measures. Except as otherwise indicated, these Non-IFRS 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-IFRS 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-IFRS financial measures differently. See "Non-IFRS Financial Measures" for more information about these measures.

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, the duration and anticipated impact of the COVID-19 pandemic and the expected economic recession, estimates of the impact COVID-19 may have on our operations, the markets for our products and our financial results, expected total debt to Adjusted EBITDA ratio, anticipated impact from the weaker Canadian dollar, business strategy and objectives, development plans and programs, organic growth, weather, economic activity in Western Canada, product pricing and sourcing, wholesale propane market fundamentals, exchange rates, expected synergies from acquisitions, expected seasonality of demand, and future economic conditions.

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, expected life of facilities and statements regarding net working capital and capital expenditure requirements of Superior or Superior LP, the assumptions set forth under the "Financial Outlook" sections in this 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 service charges, the loss of key personnel, the anticipated impact of the COVID-19 pandemic and the economic recession, 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 our facilities, force majeure, labour relations matters, our ability to access external sources of debt and equity capital, 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.

FINANCIAL OVERVIEW

Summary of AOCF

		Year Ended
		December 31
(millions of dollars except per share amounts)	2020	2019
Revenue	2,394.3	2,852.9
Gross profit	1,105.7	1,213.0
EBITDA from operations (1)	518.4	562.1
Corporate administrative costs	(20.5)	(25.5)
Realized gains (losses) on foreign currency hedging contracts	(2.0)	(12.1)
Adjusted EBITDA (1)	495.9	524.5
Interest expense	(98.3)	(105.2)
Cash income tax expense	(11.1)	(13.1)
AOCF before transaction and other costs (1)	386.5	406.2
Transaction and other costs (2)	(25.1)	(29.9)
AOCF (1)	361.4	376.3
AOCF per share before transaction and other costs (1)(2)(3)	\$2.04	\$2.32
AOCF per share (1)(2)(3)	\$1.91	\$2.15
Dividends declared per common share	\$0.72	\$0.72

(1) EBITDA from operations, Adjusted EBITDA, AOCF before transaction and other costs, and AOCF are Non-IFRS measures. See "Non-IFRS Financial Measures".

(2) Transaction and other costs for the years ended December 31, 2020 and 2019 are related to acquisition activity, restructuring and the integration of acquisitions. See "Transaction and Other Costs" for further details.

(3) The weighted average number of shares outstanding for the year ended December 31, 2020 was 189.7 million (December 31, 2019 was 174.9 million). The weighted average number of shares assumes the conversion of the preferred shares into common shares. There were no other dilutive instruments with respect to AOCF per share and AOCF before transaction and other costs per share for the years ended December 31, 2020 and 2019.

Comparable GAAP Financial Information

		Year Ended
		December 31
(millions of dollars except per share amounts)	2020	2019
Net earnings	86.8	142.6
Net earnings attributable to common shareholders	75.1	142.6
Net earnings for the year attributable to non-controlling interest	11.7	–
Net earnings per share, attributable common shareholders:
- Basic	\$0.43	\$0.82
- Diluted	\$0.43	\$0.82
Cash flows from operating activities	360.2	423.2
Cash flows from operating activities per share (1)	\$1.90	\$2.42

(1) The weighted average number of shares outstanding for the year ended December 31, 2020 was 189.7 million (December 31, 2019 was 174.9 million). The weighted average number of shares assumes the conversion of the preferred shares into common shares. There were no other dilutive instruments with respect to AOCF and AOCF before transaction and other costs per share for the years ended December 31, 2020 and 2019.

Segmented Information

		Year Ended
	December 31
(millions of dollars)	2020	2019
EBITDA from operations (1)
U.S. Propane Distribution	206.9	209.4
Canadian Propane Distribution	195.0	200.8
Specialty Chemicals	116.5	151.9
Total	518.4	562.1

(1) EBITDA from operations is a Non-IFRS measure. See "Non-IFRS Financial Measures".

AOCF Reconciled to Cash Flows from Operating Activities (1)

	Year Ended
		December 31
(millions of dollars)	2020	2019
Cash flows from operating activities	360.2	423.2
Non-cash interest expense, and other	8.1	9.1
Changes in non-cash operating working capital	0.1	(43.7)
Income taxes paid	11.6	8.4
Interest paid	99.0	106.7
Cash income tax expense	(11.1)	(13.1)
Finance expense recognized in net earnings	(106.5)	(114.3)
AOCF (1)	361.4	376.3

(1) AOCF is a Non-IFRS measure. See "Non-IFRS Financial Measures".

ISSUANCE OF PREFERRED SHARES

On July 13, 2020, Superior issued 260,000 Preferred Shares (the "Preferred Shares") by its wholly owned subsidiary Superior Plus US Holdings for gross proceeds of US\$260 million (CDN \$353.8 million) to an affiliate of Brookfield Asset Management Inc., on a private placement basis. The gross proceeds from the Preferred Shares were recorded as a non-controlling interest within equity and the issuance costs of US\$13.4 million (CDN\$18.1 million) were allocated to Superior's deficit, see Shareholders' Capital for further details.

DIVESTITURE

On February 18, 2021, Superior entered into a definitive agreement to sell its Specialty Chemicals business for total consideration of \$725.0 million (the "Transaction"). Under the terms of the Transaction, Superior will receive \$600 million in cash proceeds and \$125 million in the form of a 6% unsecured note ("Vendor Note"). The principal amount of the Vendor Note and accrued and unpaid interest are due 5 ½ years from the date the Transaction closes. The purchase price is subject to adjustment based on the average EBITDA of the business for the three consecutive twelvemonth periods following the closing date. If the average EBITDA, adjusted to remove the impact of IFRS 16, is higher than \$115M the purchase price will be increased by multiplying the difference by 4.5 and the seller will issue an additional note to Superior, up to a maximum of \$100 million which includes accumulated interest. The note will bear interest at the same rate as the Vendor Note and interest will accrue from the closing date. If the average EBITDA, adjusted to remove the impact of IFRS 16, is lower than \$100M, the purchase price will be decreased by multiplying the difference by 4.5 and a note will be issued to the seller up to a maximum of \$100 million which includes accumulated interest. The note will bear interest at the same rate as the Vendor Note and interest will accrue from the closing date. As at December 31, 2020, the Specialty Chemicals segment did not meet the definition of assets held for sale and discontinued operations. Subsequent to December 31, 2020 and until the transaction closes, the assets and liabilities of the Specialty Chemical segment will be shown as held for sale on the balance sheet and

the segments net earnings (loss), including comparative figures, will be shown as a discontinued operation on the Consolidated Statements of Net Earnings (Loss).

ACQUISITIONS

On January 9, 2020, Superior acquired all the issued and outstanding shares of Western, a Southern California retail propane distribution company for total consideration of US\$22.7 million (C\$29.8 million). The acquisition was funded by drawing on Superior's credit facility and deferring US\$4.0 million (C\$5.2 million) in payments over the next five years.

On August 3, 2020, Superior acquired the assets of a retail propane distribution company, operating under the tradename, Champagne's Energy ("Champagne"), for total consideration of approximately US\$27.2 million (CDN \$36.4 million). The purchase price was paid primarily with cash from Superior's credit facility. Champagne is a retail distributor delivering propane and distillates to residential and commercial customers in Maine.

On September 1, 2020, Superior acquired the assets of a retail propane and heating oil distribution company, operating under the tradename, Rymes Propane and Oil ("Rymes"), for total consideration of approximately US\$150.6 million (CDN \$196.7 million). The purchase price was paid primarily with cash from Superior's credit facility. Rymes is a retail distributor delivering propane and distillates to residential and commercial customers in New Hampshire, Maine, Massachusetts and Vermont.

On October 15, 2020, Superior acquired all of the equity interests of a Southern California propane distribution company, operating under the tradename, Central Coast Propane ("Central Coast"), for total consideration of approximately US\$12.9 million (CDN \$17.1 million). The purchase price was paid primarily with cash from Superior's credit facility.

On October 27, 2020, Superior acquired the assets of a retail propane distribution company, operating under the tradename, Petro SE Propane ("Southern Propane and Mountain Gas"), for total consideration of approximately US\$6.1 million (CDN \$8.0 million). The purchase price was paid primarily with cash from Superior's credit facility. Petro is a retail distributor delivering propane in North Carolina, South Carolina, Georgia and Tennessee.

On January 26, 2021 Superior announced the acquisition of the assets of a retail propane and distillate distribution company, operating in Massachusetts under the tradename Holden Oil ("Holden") for a total consideration of US\$17.8 million.

On February 1, 2021 Superior acquired a 100% equity interest of a retail propane distribution company, operating in Quebec under the tradename Miller Propane ("Miller") for a total consideration of CDN \$7.5 million.

On February 11, 2021, Superior acquired the assets of an Ontario retail propane distribution company, operating under the tradename Highlands Propane ("Highlands") for a total consideration of CDN \$13.9 million.

Consolidated Statement of Net Earnings

		Year Ended
		December 31
(millions of dollars except per share amounts)	2020	2019
Revenue	2,394.3	2,852.9
Cost of sales (includes products and services)	(1,288.6)	(1,639.9)
Gross profit	1,105.7	1,213.0
Expenses
Selling, distribution and administrative costs ("SD&A")	(890.2)	(948.3)
Finance expense	(106.5)	(114.3)
Gains on derivatives and foreign currency
translation of borrowings	49.7	17.2
	(947.0)	(1,045.4)
Earnings before income taxes	158.7	167.6
Income tax expense	(71.9)	(25.0)
Net earnings for the year	86.8	142.6
Net earnings for the year attributable to:
Superior	75.1	142.6
Non-controlling interest	11.7	–
Net earnings per share, attributable to Superior:
Basic	\$0.43	\$0.82
Diluted	\$0.43	\$0.82

(1) See the audited consolidated financial statements and notes thereto as at and for the years ended December 31, 2020 and 2019.

Annual Financial Results Compared to the Prior Year

Adjusted EBITDA for the year ended December 31, 2020 was \$495.9 million, a decrease of \$28.6 million or 5% compared to the prior year Adjusted EBITDA of \$524.5 million. The decrease is primarily due to lower EBITDA from operations and was partially offset by lower corporate costs and lower realized losses on foreign currency hedging contracts. EBITDA from operations decreased \$43.7 million or 8% compared to the prior year primarily due to lower Specialty Chemicals EBITDA from operations and to a lesser extent, lower Canadian Propane and U.S. Propane EBITDA from operations. Specialty Chemicals EBITDA from operations was \$116.5 million, a decrease of \$35.4 million or 23% primarily due to lower sales volumes and lower average hydrochloric acid and caustic soda sales prices compared to the prior year, partially offset by the impact of the CEWS benefit. Canadian Propane EBITDA from operations was \$195.0 million, a decrease of \$5.8 million or 3% primarily due to lower sales volumes partially offset by the impact of the CEWS benefit and higher unit margins. U.S. Propane EBITDA from operations was \$206.9 million, a decrease of \$2.5 million or 1% primarily due to lower sales volumes, and lower other services gross profit, partially offset by higher unit margins, lower realized losses on foreign currency hedging contracts of \$2.0 million and a decrease of \$10.1 million in the prior year due to the higher average hedge rate for notional amounts hedged. Corporate administrative costs were \$20.5 million a decrease of \$5.0 million or 20% primarily due to lower incentive plan costs due to fluctuations in the share price.

AOCF before transaction and other costs for the years ended December 31, 2020 was \$386.5 million, a decrease of \$19.7 million or 5% from the prior year AOCF before transaction and other costs of \$406.2 million. The decrease from the prior year is primarily due to lower Adjusted EBITDA discussed above, partially offset by lower interest expense and cash taxes. Interest expense decreased by \$6.9 million or 7% primarily to due to lower average debt balances and lower variable interest rates. Cash income tax expense decreased by \$2.0 million as a result of changes to US tax legislation in 2020 partially offset by higher provincial taxes incurred to utilize expiring Canadian federal tax credits. AOCF per share before transaction and other costs assuming conversion of preferred shares was \$2.04 per share, a decrease of \$0.28 per share or 12% from the prior year to date results of \$2.32 per share primarily due to the lower AOCF before transaction and other costs discussed above and the increase in weighted average shares outstanding. Weighted average shares outstanding were higher than the prior year primarily due to the issuance of Preferred Shares that are reflected on an as converted basis and to a lesser extent the impact of shares issued under the Dividend Reinvestment and Optional Share Purchase Plan ("DRIP").

AOCF for the year ended December 31, 2020 was \$361.4 million, a decrease of \$14.9 million or 4% from the prior year AOCF of \$376.3 million due to the decreased AOCF before transaction and other costs discussed above. AOCF per share for years ended December 31, 2020 was \$1.91 per share assuming conversion of the preferred shares, a decrease of \$0.24 per share or 11% from the prior year quarter results of \$2.15 per share. Transaction and other costs for the years ended December 31, 2020 were \$25.1 million, \$4.8 million lower than the prior year. Costs incurred in the current year related primarily to acquisitions completed in the current year and integration of prior acquisitions compared to the Specialty Chemicals strategic review, the integration of acquisitions and acquisition related costs incurred in the prior comparable year.

Revenue for the year ended December 31, 2020 was \$2,394.3 million, a decrease of \$458.6 million or 16% due to lower revenue in the Canadian Propane Distribution and U.S. Propane Distribution. Canadian Propane Distribution revenue for the year ended December 31, 2020 was \$925.0 million, a decrease of \$234.9 million or 20% primarily due to the impact of lower sales volumes and lower wholesale propane prices. U.S. Propane Distribution revenue for the years ended December 31, 2020 was \$899.4 million, a decrease of \$124.7 million or 12% primarily due to the impact of lower wholesale propane and distillate prices and lower sales volumes, partially offset by incremental volumes from acquisitions and the impact of the weaker Canadian dollar on U.S. denominated sales. Specialty Chemicals revenue for the years ended December 31, 2020 was \$587.4 million a decrease of \$93.9 million or 14% primarily due to lower sales volumes and lower chlor-alkali average sales prices. Consolidated gross profit was \$1,105.7 million, a decrease of \$107.3 million or 9% from \$1,213.0 million primarily due to lower Canadian Propane and Specialty Chemicals gross profit partially offset by higher U.S. Propane gross profit. Gross profit decreased due to the above reasons and was partially offset by lower costs as a result of recording the CEWS in the Canadian Propane and Specialty Chemicals segments, lower average power costs due to the closure of the high-cost Saskatoon sodium chlorate plant in the prior year quarter, and effective margin management in a low-cost wholesale propane price environment.

SD&A was \$890.2 million for the year ended December 31, 2020, a decrease of \$58.1 million or 6% from the prior year, primarily due to a decrease in Canadian Propane SD&A and Specialty Chemicals SD&A costs and to a lesser extent Corporate SD&A costs, partially offset by an increase in US Propane SD&A. Canadian Propane Distribution SD&A costs were \$279.7 million a decrease \$36.1 million or 11% from \$315.8 million in the prior year due primarily to the impact of the CEWS program recorded in the current period, lower volume related expenses and cost savings initiatives partially offset by higher depreciation expense. Specialty Chemicals costs were \$153.1 million, a decrease of \$30.3 million or 17% from \$183.4 million in the prior year primarily due to an impairment charge and a restructuring provision recorded in the prior year, the impact of the CEWS program in the current year, lower freight costs due to lower sales volumes and a gain on the translation of non-cash working capital compared to a loss in the prior year, partially offset by the impact of the weaker Canadian dollar on U.S. denominated expenses. Corporate SD&A costs were \$29.8 million, a decrease of \$5.4 million or 15% from \$35.2 million in the prior year primarily due to lower incentive plan costs related to share price volatility and lower transaction costs. U.S. Propane Distribution SD&A costs were \$427.8 million, an increase of \$13.9 million or 3% from \$413.9 million in the prior year primarily due to the impact of acquisitions completed in the current and prior year partially offset by lower volume-related expenses, workforce optimization and to a lesser extent the realization of incremental synergies and lower transaction and restructuring costs.

Finance expense for the year ended December 31, 2020 was \$106.5 million, a decrease of \$7.8 million or 7% from \$114.3 million in the prior year. The decrease is primarily due to lower average debt balances and lower variable interest rates, partially offset by the impact of the weaker Canadian dollar on the translation of U.S. denominated finance expense. Average debt balances were lower as the proceeds of the US\$260 million Preferred Share issuance (see Shareholders' Capital) were used to repay debt, partially offset by acquisitions completed in the year.

Gains (losses) on derivative and foreign currency translation of borrowings consists of unrealized gains (losses) on derivative financial instruments and foreign currency translation of borrowings, net of realized gains (losses) on derivative financial instruments. Superior incurred a net gain on derivatives and foreign currency translation of borrowings of \$49.7 million for the years ended December 31, 2020 compared to a net gain of \$17.2 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 17 of the 2020 audited consolidated financial statements.

Total income tax expense of \$71.9 million was \$46.9 million higher than the prior year's expense of \$25.0 million. Current income tax expense was \$11.1 million, a decrease of \$2.0 million from the prior year's expense of \$13.1 million. Deferred income tax expense was \$60.8 million, an increase of \$48.9 million from the prior year expense of \$11.9 million primarily due to the impact of U.S. tax regulations enacted during the year.

The net earnings from operations for the years ended December 31, 2020 was \$86.8 million, compared to \$142.6 million net earnings in the prior year. The decrease from the prior year is primarily due to lower gross profit and higher income tax expense partially offset by higher gains on derivatives and foreign currency translation of borrowings recorded in the current year and lower selling, distribution and administrative costs and finance expenses. Basic earnings per share attributable to Superior was \$0.43 per share a decrease of 48% from \$0.82 per share in the prior year. The decrease is due to the above reasons and a higher weighted average number of shares outstanding. Weighted average shares outstanding were higher than the prior year primarily due to the issuance of Preferred Shares that are reflected on an as converted basis and to a lesser extent the impact of shares issued under the DRIP.

RESULTS OF SUPERIOR'S OPERATING SEGMENTS

Superior's operating segments consists of U.S. Propane, Canadian Propane which includes its wholesale business and Specialty Chemicals.

U.S. PROPANE DISTRIBUTION

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

	Year Ended
		December 31
(millions of dollars)	2020	2019
Revenue	899.4	1,024.1
Cost of Sales	(385.5)	(514.7)
Gross profit	513.9	509.4
Realized losses on derivatives related to commodity risk management	(14.6)	(9.1)
Adjusted gross profit (1)	499.3	500.3
Selling, distribution and administrative costs	(427.8)	(413.9)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	118.5	105.0
Transaction and other costs	14.4	16.7
Loss on disposal of assets and other	2.5	1.3
Operating costs (1)	(292.4)	(290.9)
EBITDA from operations (1)	206.9	209.4
Add back (deduct):
Loss on disposal of assets and other	(2.5)	(1.3)
Transaction and other costs	(14.4)	(16.7)
Amortization and depreciation included in selling, distribution and administrative costs	(118.5)	(105.0)
Unrealized gains (losses) on derivative financial instruments	26.2	(2.6)
Finance expense	(5.2)	(4.4)
Earnings before income tax	92.5	79.4

(1) Adjusted Gross Profit, EBITDA from operations and Operating Costs are Non-IFRS financial measures. See "Non-IFRS Financial Measures" and "Reconciliation of Earnings before Income Taxes to EBITDA from Operations".

Revenue for 2020 was \$899.4 million, a decrease of \$124.7 million or 12% from the prior year primarily due to lower sales volumes and lower wholesale commodity prices. Wholesale supply prices were lower than the prior year, driven by decreased demand as a result of warm weather in the first quarter, reduced demand related to the impact of COVID-19 and the impact from lower average West Texas Intermediate ("WTI") crude oil prices compared to the prior year. WTI crude oil prices decreased significantly at the end of the first quarter and remained lower than the prior year due to continued uncertainty around the impact of COVID-19 on the global economy.

U.S. Propane Adjusted Gross Profit

	Year Ended
		December 31
(millions of dollars)	2020	2019
Propane distribution	494.2	486.1
Realized loss on derivatives related to commodity risk management	(14.6)	(9.1)
Propane distribution adjusted gross profit	479.6	477.0
Other services (1)	19.7	23.3
Adjusted gross profit (2)	499.3	500.3

(1) Other services have been restated to align with Canadian Propane Distribution by excluding fees which form part of propane distribution margins.

(2) Adjusted gross profit from operations is a Non-IFRS financial measure. See "Non-IFRS Financial Measures".

Propane distribution adjusted gross profit for 2020 was \$479.6 million, an increase of \$2.6 million or 1% from the prior year primarily due to the incremental contribution from acquisitions completed in the current and prior year and higher average margins, partially offset by lower sales volumes related to warmer weather and to a lesser extent the impact of COVID-19 on customer demand and the impact of sales and marketing initiatives to focus on higher margin propane customers.

Total sales volumes were 1,153 million litres, a decrease of 56 million litres or 5% from the prior year primarily due to the impact of warmer weather, the impact of COVID-19 on commercial and wholesale customer demand and a decline in low-margin commercial distillate volumes, partially offset by incremental volumes from tuck-in acquisitions. Average weather, as measured by degree days, across markets where U.S. propane operates for 2020 was 8% warmer than the prior year and 5% warmer than the five-year average. Residential sales volumes decreased by 36 million litres or 5% from the prior year primarily due to the impact of warmer weather in the first and fourth quarters, partially offset by the impact of tuck-in acquisitions completed in the current and prior year. Commercial volumes decreased by 2 million litres compared to the prior year primarily due to the impact of COVID-19 on commercial customers and to a lesser extent the impact of sales and marketing initiatives to shift focus away from low-margin customers, partially offset by acquisitions completed in the current and prior years. Wholesale volumes decreased by 18 million litres or 38% due to reduced demand related to the impact of COVID-19 and the impact of sales and marketing initiatives focusing on higher margin propane customers partially offset by acquisitions completed in the current and prior year.

U.S. propane average sales margins were 41.6 cents per litre an increase of 5% from 39.5 cents per litre in the prior year primarily due to customer mix, effective margin management on acquired customers 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 includes equipment rental, installation, repair and maintenance charges. Other services gross profit was \$19.7 million, a decrease of \$3.6 million or 15% over the prior year primarily due to the impact of COVID-19 resulting in delays on non-essential service activity partially offset by the incremental contribution from acquisitions completed.

U.S. Propane Distribution Sales Volumes End-Use Application

		Year Ended
		December 31
(millions of litres)		2020 2019(1)
Residential	637	673
Commercial	487	489
Wholesale	29	47
Total	1,153	1,209

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

U.S. Propane Distribution Sales Volumes

Volumes by Region

		Year Ended
		December 31
(millions of litres)	2020	2019
Northeast	927	991
Southeast	105	111
Midwest	87	101
West	34	6
Total	1,153	1,209

Regions: Northeast region consists of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, New Jersey, Delaware, Maryland, Virginia; Southeast region consists of North Carolina, South Carolina, Georgia, Tennessee, Florida, Alabama; Midwest region consists of Ohio, Michigan, Minnesota; West region consists primarily of California

Operating Costs and Selling, Distribution and Administrative Costs

Operating costs were \$292.4 million, an increase of \$1.5 million or 1% over the prior year. The increase in operating costs is due to the impact of acquisitions completed in the current and prior year and is partially offset by workforce optimization initiatives, the realization of incremental synergies and lower volume-related expenses. SD&A costs were \$427.8 million, an increase of \$13.9 million or 3% over the prior year. SD&A costs increased for the above reasons and due to higher depreciation and amortization expense related primarily to the impact of acquisitions completed and is partially offset by lower transaction and restructuring costs.

Earnings before tax

Earnings before tax was \$92.5 million, an increase of \$13.1 million or 16% over the prior year due to the aforementioned reasons and the impact of an unrealized gain on derivative financial instruments in the current quarter compared to a loss in the prior year.

Financial Outlook

EBITDA from operations in 2021 for U.S. Propane is anticipated to be higher than 2020 primarily due to the full year contribution from tuck-in acquisitions completed in 2020, increased demand related to expectations weather will be consistent with the five-year average, cost saving initiatives, organic growth and to a lesser extent a recovery in commercial demand as the economy recovers from the impact of COVID-19. Average weather as measured by degree days, is anticipated to be consistent with the five-year average.

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 Propane Distribution businesses.

CANADIAN PROPANE DISTRIBUTION

Canadian Propane Distribution's condensed operating results:

		Year Ended
		December 31
(millions of dollars)	2020	2019
Revenue (1)	925.0	1,159.9
Cost of Sales (1)	(525.2)	(692.8)
Gross profit	399.8	467.1
Realized (losses) on derivatives related to commodity risk management	(1.0)	(19.9)
Adjusted gross profit (2)	398.8	447.2
Selling, distribution and administrative costs	(279.5)	(315.8)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	74.2	71.9
Transaction and other costs	0.4	0.8
(Gain) loss on disposal of assets and other	1.1	(3.3)
Operating costs (2)	(203.8)	(246.4)
EBITDA from operations (2)	195.0	200.8
Add back (deduct):
Gain (loss) on disposal of assets and other	(1.1)	3.3
Transaction and other costs	(0.4)	(0.8)
Amortization and depreciation included in selling, distribution and administrative costs	(74.2)	(71.9)
Unrealized gains on derivative financial instruments	8.3	3.2
Finance expense	(4.4)	(4.4)
Earnings before income tax	123.2	130.2

(1) Revenue and cost of sales have been restated to conform with the current period presentation.

(2) EBITDA from operations and operating costs are Non-IFRS financial measures. See "Non-IFRS Financial Measures" and "Reconciliation of Earnings before Income Taxes to EBITDA from Operations".

Revenue for 2020 was \$925.0 million, a decrease of \$234.9 million or 20% from the prior year primarily due to lower sales volumes and lower wholesale propane prices. Wholesale propane supply prices were lower than the prior year, primarily due to high propane inventory levels in the U.S., driven by decreased demand as a result of warm weather in the first quarter, reduced demand related to the impact of COVID-19, and the impact from lower average West Texas Intermediate ("WTI") crude oil prices compared to the prior year. WTI crude oil prices decreased significantly at the end of the first quarter and remained lower than the prior year due to continued uncertainty around the global reaction to COVID-19.

Canadian Propane Adjusted Gross Profit

		Year Ended
		December 31
(millions of dollars)	2020	2019
Propane distribution	383.9	448.6
Realized (losses) on derivatives related to commodity risk management	(1.0)	(19.9)
Propane distribution adjusted gross profit	382.9	428.7
Other services	15.9	18.5
Adjusted gross profit (1)	398.8	447.2

(1) Adjusted gross profit is a Non-IFRS financial measure. See "Non-IFRS Financial Measures".

Propane distribution adjusted gross profit for 2020 was \$382.9 million, a decrease of \$45.8 million or 11% from the prior year primarily due to lower sales volumes and other services gross profit, partially offset by higher average sales margins.

Total sales volumes were 2,038 million litres, a decrease of 467 million litres or 19%, primarily due to lower commercial and wholesale volumes. Average weather across Canada for 2020, as measured by degree days was 5% warmer than the prior year and 1% warmer than the five-year average. Residential sales volumes were 5% lower than prior year primarily due to warmer weather. Commercial sales volumes decreased by 179 million litres or 17% due primarily due to the impact of COVID-19 on customer demand as customers were operating at reduced capacity, the loss of an oilfield customer related to oil and gas industry consolidation and reduced drilling activity related to the decrease in oil prices impacting demand in Western Canada and to a lesser extent warmer weather, partially offset by higher reseller volumes related to recreational propane use. Wholesale propane volumes were 279 million litres or 22% lower compared to the prior year due to lower demand associated with the impact of COVID-19, the impact of low oil prices and warmer weather.

Average propane sales margins were 18.8 cents per litre, an increase of 10% from 17.1 cents per litre in the prior year due primarily to customer mix and effective margin management in a low-cost environment partially offset by weaker wholesale propane market fundamentals in the last nine months.

Other services gross profit primarily includes equipment rental, repairs and maintenance work, installation fees and customer minimum use charges. Other services gross profit was \$15.9 million, a decrease of \$2.6 million or 14% from the prior year primarily due to the impact COVID-19 on service technician activity and the impact of economic conditions on service technician activity and equipment rentals in Western Canada.

Canadian Propane Distribution Sales Volumes

		Year Ended
		December 31
(millions of litres)	2020	2019
Residential	171	180
Commercial	881	1,060
Wholesale	986	1,265
Total	2,038	2,505

(1) Canadian Propane volumes by end user were condensed to be consistent with US Propane Distribution.

Volumes by Region (1)

	Year Ended
	December 31
(millions of litres)	2019 2020
Western Canada	961 718
Eastern Canada	463 535
Atlantic Canada	135 127
United States	722 882
Total	2,505 2,038

(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, Colorado, Delaware, Illinois, Kansas, Maine, Maryland, Michigan, Minnesota, Montana, Nevada, New Hampshire, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Utah and Washington.

Operating Costs and Selling, Distribution and Administrative Costs

Operating costs were \$203.8 million, a decrease of \$42.6 million or 17% as compared to the prior year, while SD&A costs were \$279.5 million, a decrease of \$36.3 million or 11% from the prior year. The decrease in operating costs

was primarily due to the impact of the CEWS benefit, lower volume-related expenses and cost saving initiatives, SD&A costs decreased for these same reasons and were partially offset by a loss on disposal of assets in the current year compared to a gain in the prior year. Canadian Propane recorded a total benefit of \$25.6 million related to the CEWS program in 2020.

Earnings before tax

Earnings before income tax was \$123.2 million, a decrease of \$7.0 million or 5% over the prior year, due to the aforementioned reasons and the impact of an increased unrealized gain on derivative financial instruments in the current year compared to the prior year.

Financial Outlook

EBITDA from operations in 2021 for Canadian Propane Distribution is anticipated to be lower than 2020 as the impact of the CEWS benefit in 2021 is expected to be significantly lower, wholesale propane market fundamentals are expected to be weaker and the impact of COVID-19 on sales volumes and commercial volume trends in Western Canada are expected to be consistent with 2020, partially offset by lower volume-related costs, and cost savings initiatives.

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.

SPECIALTY CHEMICALS

Specialty Chemicals' condensed operating results:

				Year Ended December 31
(millions of dollars except per metric tonne (MT) amounts)	2020		2019
		\$ per MT		\$ per MT
Revenue	587.4	795	681.3	826
Cost of Sales	(395.4)	(535)	(444.8)	(539)
Gross Profit	192.0	260	236.5	287
Depreciation included in cost of sales	42.8	58	44.9	54
Adjusted Gross Profit (1)	234.8	318.0	281.4	341.0
Selling, distribution and administrative
costs (SD&A)	(153.1)	(207)	(183.4)	(222)
Add back (deduct):
Loss on disposal of assets and impairment	2.3	3.0	20.4	25
Restructuring costs	1.5	2	3.1	4
Amortization and depreciation included
in SD&A costs	31.0	42	30.4	37
Operating costs (1)	(118.3)	(160)	(129.5)	(157)
EBITDA from operations (1)	116.5	158	151.9	184
Add back (deduct):
Loss on disposal of assets and impairment	(2.3)		(20.4)
Amortization and depreciation included
in SD&A costs	(31.0)		(30.4)
Depreciation included in cost of sales	(42.8)		(44.9)
Restructuring costs	(1.5)		(3.1)
Unrealized gain on foreign currency
translation of lease liabilities	0.7		2.9
Finance expense	(8.0)		(8.1)
Earnings from discontinued operations, before tax	31.6		47.9

(1) Adjusted Gross Profit, EBITDA from operations, Operating Costs and per metric tonne amounts are Non-IFRS financial measures. See "Non-IFRS Financial Measures" and "Reconciliation of Net Earnings before Income Taxes to EBITDA from Operations".

Sales Volumes by Product

	Year Ended
		December 31
(thousands of MTs)	2020	2019
Sodium chlorate	438	480
Chlor-alkali	295	339
Chlorite	6	6
Total	739	825

Revenue for 2020 was \$587.4 million, a decrease of \$93.9 million or 14% from the prior year primarily due to lower sales volumes and to a lesser extent lower average chlor-alkali selling prices, partially offset by higher sodium chlorate sales prices.

Sodium chlorate sales volumes decreased by 42 MTs or 9% due primarily to the impact of COVID-19 on customer demand. Sodium chlorate sales prices were 1% higher than the prior year due to the impact of customer mix, contract price increases and to a lesser extent the weaker Canadian dollar on U.S. denominated sales.

Chlor-alkali sales volumes decreased by 44 MTs or 13% due to lower sales volumes for all products. COVID-19 has negatively impacted chlor-alkali demand due to broad-based shutdowns and curtailed economic activity. Hydrochloric acid sales volumes decreased 13% primarily due to continued lower demand from the U.S. oil and gas sector related to the impact of COVID-19 on crude oil demand. Caustic soda sales volumes decreased 8% primarily due to North American market fundamentals caused by excess supply and the impact of COVID-19. Chlorine sales volumes decreased 22% due to the termination of a contract at the end of the prior year supplied from external purchases and the impact of COVID-19 and were partially offset by increased demand due to reduced chlor-alkali production in the U.S. Gulf Coast related to Hurricane Laura. Caustic potash sales volumes decreased 11% primarily due to reduced agricultural demand in California and weak de-icing demand. Average hydrochloric acid and caustic soda netbacks decreased by approximately 54% and 18% respectively for the aforementioned reasons partially offset by the impact of the weaker Canadian dollar on U.S. denominated sales. Chlorine netbacks increased 15% due to customer mix and the impact of the weaker Canadian dollar on U.S. denominated sales. Caustic potash netbacks were 3% lower than the prior year due to customer mix partially offset by the impact of the weaker Canadian dollar on U.S. denominated sales.

Chlorite sales volumes and prices were consistent with the prior year.

Gross profit was \$192.0 million, a decrease of \$44.5 million or 19% from the prior year due primarily to lower sales volumes and lower chlor-alkali sales prices partially offset by 10% lower North American sodium chlorate electrical mill rates, the impact of the CEWS benefit and to a lesser extent the impact of the weaker Canadian dollar compared to the prior year on U.S. denominated gross profit. Electricity costs were lower due to low system demand, low natural gas prices and to a lesser extent the impact of reduced production from a higher cost plant in the prior year. An amount of \$4.4 million related to CEWS, was recorded as a reduction to cost of goods sold in 2020.

Operating Costs and Selling, Distribution and Administrative Costs

Operating costs were \$118.3 million, a decrease of \$11.2 million or 9% over the prior year. The decrease in operating costs was primarily due to lower freight costs related to lower sales volumes, and to a lesser extent, the impact of the CEWS benefit. SD&A costs were \$153.1 million, a decrease of \$30.3 million or 17% over the prior year. SD&A costs decreased for the above same reasons, the impact of an impairment charge recorded in the prior year, and to a lesser extent lower restructuring costs in the current year. In 2019, a chlorate manufacturing facility in Saskatoon, Saskatchewan was closed and an impairment of approximately \$18.0 million was recorded along with a \$3.1 million restructuring expense. An amount of \$2.6 million related to CEWS, was recorded as a reduction to SD&A in 2020.

Earnings before tax

Earnings before tax for 2020 was \$31.6 million, a decrease of \$16.3 million or 34% from the prior year due primarily to the aforementioned reasons and to a lesser extent the impact of a lower unrealized gain on the foreign currency translation of lease liabilities compared to the prior year.

Subsequent to December 31, 2020, Superior entered into a definitive agreement to sell Specialty Chemicals, see Divestiture.

CONSOLIDATED CAPITAL EXPENDITURE SUMMARY

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

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. Efficiency, process improvement and growth-related 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.

Investment in leased assets generally includes vehicles for the Energy Distribution segments to support growth and replace aging vehicles, renewing railcar leases in the Specialty Chemicals segment and the wholesale business and timing of renewing property leases across the entire company.

Superior's capital expenditures for 2020 and 2019:

	Year Ended
		December 31
(millions of dollars)	2020	2019
Efficiency, process improvement and growth-related	55.7	67.5
Maintenance capital	60.6	68.4
	116.3	135.9
Proceeds on disposition of assets	(12.5)	(7.1)
Property, plant and equipment acquired through acquisition	134.0	32.5
Total net capital expenditures	237.8	161.3
Investment in leased assets net of proceeds from refinanced vehicles	65.0	37.2
Total expenditures including finance leases	302.8	198.5

Efficiency, process improvement and growth-related expenditures were \$55.7 million for 2020 compared to \$67.5 million in the prior year. The decrease over the prior year is primarily due to deferring expenditures to offset the impact of COVID-19 on cashflows and to a lesser extent timing of integration activity including investments in information technology systems.

Maintenance capital expenditures were \$60.6 million for 2020 compared to \$68.4 million in the prior year. The decrease is primarily due to deferring expenditures to offset the impact of COVID-19 on cashflows and to a lesser extent 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 \$83.6 million and refinanced previously acquired vehicles for gross proceeds of \$18.6 million for 2020. The net investment was \$65.0 million, compared to \$37.2 million in the prior year. The increase is primarily due to timing of renewing property, railcar and vehicles leases.

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

CORPORATE ADMINISTRATION COSTS AND SD&A

Corporate administration costs are \$20.5 million for 2020, a decrease of \$5.0 million compared to \$25.5 million in the prior year. The decrease from the prior year is primarily due to lower long-term incentive plan costs related to fluctuations in the share price, and to a lesser extent the impact of recording \$0.5 million related to CEWS and lower discretionary spending due to the impact of COVID-19. Corporate administration costs included in Adjusted EBITDA exclude depreciation, amortization and transaction and other costs. Corporate SD&A decreased for the above noted reasons and lower transaction and other costs.

FINANCE EXPENSE

Finance expense was \$106.5 million for 2020, a decrease of \$7.8 million, compared to \$114.3 million in the prior year. The decrease is primarily due to lower average debt balances, lower variable interest rates compared to the prior year and lower non-cash financing charges.

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:

		Year Ended
		December 31
(millions of dollars)	2020	2019
Total transaction and other costs	25.1	29.9

For the year ended December 31, 2020, Superior incurred \$25.1 million in costs related primarily to the acquisition and integration of tuck-in acquisitions and other acquisition activity. The costs in the prior year related primarily to the integration of NGL and to a lesser extent the strategic review of Specialty Chemicals and costs related to tuck-in acquisitions.

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, 2020 was \$71.9 million, comprised of \$11.1 million in cash income tax expense and \$60.8 million in deferred income tax expense. This compares to a total income tax expense of \$25.0 million in the prior year, which consisted of a cash income tax expense of \$13.1 million and a \$11.9 million deferred income tax expense.

Cash income taxes for the year ended December 31, 2020 was \$11.1 million (2019 – \$13.1 million), consisting of income taxes in Canada of \$6.6 million (2019 – \$3.8 million), income taxes in the U.S. of \$0.3 million (2019 – \$3.8 million), income taxes in Chile of \$1.8 million (2019 – \$3.2 million), and income taxes in Luxembourg of \$2.4 million (2019 – \$2.3 million). Deferred income tax expense for the year ended December 31, 2020 was \$60.8 million (2019 – \$11.9 million), resulting in a net deferred income tax liability of \$47.0 million as at December 31, 2020.

Canada	(millions of dollars)
Tax basis	349.7
Non-capital losses	44.6
Canadian scientific research expenditures	197.6
Investment tax credits	76.2
United States
Tax basis	1,271.5
Non-capital losses	308.0
Chile
Tax basis	15.5

FINANCIAL OUTLOOK

Superior achieved its 2020 Adjusted EBITDA guidance of \$495.9 which was the mid-point of the guidance range of \$475 million to \$515 million despite the impacts from the COVID-19 pandemic, reduced oil and gas drilling activity in North America, as well as the impact of the significantly warmer weather in the first quarter. Superior is introducing its 2021 Adjusted EBITDA guidance range of \$370 million to \$410 million. This excludes the Specialty Chemical Segment as a result of the announced divestiture on February 18, 2021. This compares to Adjusted EBITDA of \$353.3 million in 2020 excluding the Specialty Chemicals segment and the impact of CEWS or an increase of 10% from \$353.3 million to the midpoint of 2020 Adjusted EBITDA guidance range. The increase is primarily due to higher expected EBITDA from US Propane partially offset by lower expected EBITDA from Canadian Propane reflecting the continuing impact of COVID-19 and to a lesser extent higher corporate costs related to increased incentive plan costs.

Achieving Superior's Adjusted EBITDA depends on the operating results of its Energy Distribution segments. In addition to the operating results of Superior's segments, significant assumptions underlying the achievement of Superior's 2021 guidance are:

• Weather is expected to be consistent with the average temperature for the last five years;
• Economic growth in Canada and the U.S. is expected to begin to stabilize in the fourth quarter of 2021;
• 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 \$120 million to \$140 million in 2021;
• Superior is substantively hedged for its estimated U.S. dollar exposure for 2021, and due to the hedge position, a change in the Canadian to U.S, dollar exchange rate for 2021 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 2021 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 and U.S. based cash taxes are expected to be in the range of \$5 million to \$15 million for 2021 based on existing statutory income tax rates and the ability to use available tax basis. This excludes cash taxes related to the divestiture of Specialty Chemicals.

U.S. Propane Distribution

• Wholesale propane prices are anticipated to be consistent with 2020;
• Tuck-in acquisition opportunities are anticipated to be higher than 2020;
• Wholesale propane prices are not anticipated to significantly affect demand for propane and related services;
• Commercial volumes are anticipated to be impacted by COVID-19 until vaccines are widely distributed. The assumed recovery from COVID-19 is expected in the second half of 2021;
• Continue to realize synergies from acquisitions primarily through supply chain efficiencies, margin management improvements and operational expense savings; and
• Continue to implement cost-saving initiatives related to workforce optimization.

Canadian Propane Distribution

• Wholesale propane and natural gas liquid market fundamentals related to basis differentials are anticipated to be weaker than 2020;
• Wholesale propane prices are not anticipated to significantly affect demand for propane and related services;
• Commercial and wholesale volumes are anticipated to be impacted by COVID-19 until vaccines are widely distributed. The assumed recovery from COVID-19 is expected in the second half of 2021; and
• SD&A expenditures are expected to be higher due to the impact of the CEWS recorded in 2020 and will be partially offset by continuous improvement initiatives and restructuring activities.

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 is focused on managing both its debt and its Total Debt to Adjusted EBITDA Leverage Ratio. Superior's Total Debt to Adjusted EBITDA Leverage Ratio for the trailing twelve months was 3.5x as at December 31, 2020, compared to 3.7x at December 31, 2019. The decrease in the Total Debt to Adjusted EBITDA Leverage Ratio from December 31, 2019 was due to proceeds received from the issuance of 260,000 Preferred Shares (see Shareholders' Capital) partially offset by acquisitions completed in the year, entering new or extending leases and less cash flows from operations. This is consistent with Superior's long-term targeted range of 3.0x to 3.5x.

Total Debt to Adjusted EBITDA Leverage Ratio is a Non-IFRS measure, see "Non-IFRS Financial Measures".

Borrowing

Superior's revolving syndicated bank facility (credit facility), term loans and lease obligations (collectively borrowing) before deferred financing fees was \$1,850.6 million as at December 31, 2020, a decrease of \$105.5 million from \$1,956.1 million as at December 31, 2019. The decrease is primarily due to proceeds from the issuance of Preferred Shares used to pay down borrowing, partially offset by acquisitions completed during the period, to a lesser extent the impact of the weaker Canadian dollar on U.S. denominated debt, and new leases.

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

(millions of dollars)	As at December 31, 2020
	Total Amount		Letters of Credit Issued	Amount Available
Revolving term bank credit facilities (1)	750.0	343.6	40.6	365.8
Term loans (1)	1,215.4	1,215.4	–	–
Other debt (2)	24.8	24.8	–	–
Lease liabilities	266.8	266.8	–	–
Total	2,257.0	1,850.6	40.6	365.8

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

(2) Accounts receivable factoring and deferred consideration.

Net Working Capital

Consolidated net working capital was \$22.3 million as at December 31, 2020, a decrease of \$27.6 million from \$49.9 million as at December 31, 2019. The decrease from the prior year is due to the timing of customer receipts compared to disbursements, partially offset by the impact of recording the CEWS as of December 31, 2020.

Compliance

In accordance with the credit facility, Superior must maintain certain covenants and ratios that represent Non-IFRS financial measures. Superior is in compliance with the lender covenants as at December 31, 2020 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, 2020, Superior had an estimated net defined benefit going concern surplus of approximately \$26.8 million (December 31, 2019 – \$25.9 million surplus) and a net pension solvency surplus of approximately \$3.1 million (December 31, 2019 – \$11.0 million surplus) for all defined benefit pension plans. Funding requirements 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.

		As at December 31, 2020
(millions of dollars)	Note (1)	Total	Current	Years 2-3	Years 4-5	Thereafter
Borrowing	14	1,583.8	7.1	12.9	1,118.4	445.4
Lease Liabilities	2,15	266.8	53.3	91.4	55.9	66.2
Operating leases (2)	15	7.4	3.6	3.7	0.1	–
US\$ foreign currency forward sales contracts	17	346.6	187.1	135.5	24.0	–
US\$/CAD call options (3)	17	42.0	–	6.0	36.0	–
Natural gas, diesel, WTI, butane, propane, and heating oil (4)	17	92.3	73.8	18.5	–	–
Total contractual obligations		2,338.8	324.7	268.0	1,234.4	511.7

Contractual Obligations and Other Commitments

(1) Notes to the December 31, 2020 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) USD/CAD call options expire in December 2023 and 2024 with strikes ranging from 1.40 to 1.47.

(4) 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, 2020, the following shares were issued and outstanding:

	Common shares			Preferred shares
	Issued number (Millions)	Share capital	Issued number (Millions)	Share capital
Balance as at December 31, 2019	174.9	\$2,339.9	–	\$–
Common shares issued under dividend reinvestment plan	1.1	10.4	–	–
Preferred shares issued by a subsidiary	–	–	0.3	353.8
Balance as at December 31, 2020	176.0	\$2,350.3	0.3	\$353.8

Dividends Declared to Common Shareholders

Dividends declared to Superior's common 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 2020, above, and "Summary of Cash Flow" for additional details.

Dividends declared to common shareholders for 2020 were \$126.4 million or \$0.72 per common share compared to \$125.9 million or \$0.72 per common share for the prior year. 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 reinstated the DRIP that commenced with the February dividend which was paid on March 13, 2020. Superior suspended the DRIP after payment of the May dividend on June 15, 2020. Superior's DRIP program will remain in place should Superior elect to reactivate the DRIP, subject to regulatory approval, at a future date.

Preferred Shareholders

On July 13, 2020, Superior issued 260,000 Preferred Shares (the "Preferred Shares") by its wholly owned subsidiary Superior Plus US Holdings for gross proceeds of US\$260 million (CDN \$353.8 million). The initial proceeds were recorded as a non-controlling interest within equity and the issuance costs of US\$13.4 million (CDN \$18.1 million) were allocated to Superior's deficit.

The Preferred Shares entitle the holders to a cumulative dividend of 7.25% per annum through to the end of Superior's second fiscal quarter in 2027. If dividends are paid on the common shares, Superior is required to pay the dividend in cash on the Preferred Shares, otherwise, the Preferred Share dividends can be paid or accrued at Superior's option. In the event that Superior declares a dividend on its common shares in excess of \$0.06 per month, the holders of the Preferred Shares shall be entitled to an equivalent amount. Superior has the option to redeem all, but not less than all, the Preferred Shares at a date that is seven years after the issue date with not less than 30 days prior written notice to the holders of the Preferred Shares. The preferred shares can be redeemed at US\$1,000 per share plus accrued and unpaid dividends. If Superior does not redeem the Preferred Shares, the dividend rate increases by 0.75% per annum for the next four years to a maximum of 10.25%. If the dividends are not paid in cash, the cumulative dividend increases by 1.0% per annum to a maximum of 14.25%.

The Preferred Shares may be exchanged, at the holder's option, into 30 million common shares of Superior ("Common Shares") or at Superior's option, on or after the third anniversary of the issue date if the volume-weighted average price of Superior's common shares during the then preceding 30 consecutive trading day period, converted to U.S. dollars at the applicable exchange rate, must be greater than 145% of the exchange price. On an as-exchanged basis, the investment currently represents approximately 15% of the diluted outstanding Common Shares. The exchange price of the Preferred Shares will be subject to adjustment from time to time in accordance with the terms of the Preferred Shares. These potential adjustments relate primarily to accrued and unpaid dividends, increased or additional dividends to common shareholders, in instances where there is a share split, share consolidation or a reorganization, the participation rate on the dividend reinvestment plan is greater than 35% and if common shares are issued below market value.

Holders of Preferred Shares will be entitled to vote on an as-exchanged basis for all matters on which holders of Common Shares vote, and to the greatest extent possible, will vote with the holders of Common Shares as a single class.

In the event of any liquidation, winding up or dissolution of Superior, the holders of Preferred Shares are entitled to receive prior, and in preference to, any distribution to the holders of common shares, an amount equal to the greater of a liquidation rate per share of US\$1,400 plus accrued and unpaid dividends or the amount receivable had the preferred shares been converted to common shares immediately prior to the liquidation event. In the event that upon liquidation or dissolution, the assets and funds of Superior are insufficient to permit the payment to the holders of Preferred Shares of the full preferential amounts, then the entire assets and funds of Superior legally available for distribution are to be distributed rateably among the holders of Preferred Shares in proportion to the full preferential amount each is otherwise entitled to receive. After the distributions described above have been paid in full, the remaining assets of Superior available for distribution shall be distributed pro-rata to the holder of common shares.

Dividends declared to preferred shareholders for 2020 were US\$8.8 million (CDN \$11.7 million) or US\$72.50 (CDN \$96.35) per preferred share per annum.

SUMMARY OF CASH FLOW

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

	Year Ended
		December 31
(millions of dollars)	2020	2019
Cash flows from operating activities	360.2	423.2
Investing activities:
Purchase of property, plant and equipment and intangible assets	(116.3)	(135.9)
Proceeds on disposal of property, plant and equipment	12.5	7.1
Acquisitions, net of cash acquired	(280.4)	(60.1)
Cash flows used in investing activities	(384.2)	(188.9)
Financing activities: Net repayment of revolving term bank credits and other debt Proceeds received from vehicle refinancing	(154.3) 18.6	(63.4) –
Principal repayment of lease obligations	(51.9)	(41.5)
Proceeds from share issuance, net of costs	335.7	–
Debt issuance costs	–	(0.6)
Dividends paid to shareholders	(125.6)	(125.9)
Cash flows used in financing activities	22.5	(231.4)
Net increase in cash and cash equivalents during the year Cash and cash equivalents, beginning of the year Effect of translation of foreign currency-denominated cash and cash equivalents	(1.5) 26.5 (0.9)	2.9 23.9 (0.3)
Cash and cash equivalents, end of the year	24.1	26.5

Cash flows from operating activities for 2020 was \$360.2 million, a decrease of \$63.0 million from the prior year. The decrease is primarily a result of a lower AOCF compared to the prior year and lower cash-inflows from changes in non-cash operating working capital compared to the prior year due to timing of customer receipts relative to supplier payments.

Cash flow used in investing activities for 2020 was \$384.2 million, an increase of \$195.3 million from the prior year due to acquisitions completed during the current year partially offset by lower capital expenditures compared to the prior year.

Cash flow used in financing activities was \$22.5 million, an increase of \$253.9 million from the prior year, due to the issuance of 260,000 Preferred Shares partially offset by a net repayment of the revolving term bank credit facilities.

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.

As at December 31, 2020 Superior has hedged approximately 56% of estimated U.S. dollar exposure for calendar 2021 and approximately 23% for calendar 2022. A summary of Superior's U.S. dollar forward contracts and options for the rolling twelve months is provided in the table below.

	As at December 31, 2020
(US\$ millions except exchange rates)	Current	2022	2023	2024	2025	Total
Net US\$ forward sales	187.1	76.5	59.0	24.0	–	346.6
USD/CAD Call Options	–	–	6.0	36.0	–	42.0
Net average external US\$/CDN\$ exchange rate	1.33	1.32	1.37	1.34	–	1.33

For additional details on Superior's financial instruments, including the amount and classification of gains and losses recorded in Superior's audited 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 17 to the audited consolidated financial statements for the year ended December 31, 2020.

Sensitivity Analysis

Superior's estimated cash flow sensitivity in 2020 to various changes is provided below:

	Change	% Change	AOCF Impact (millions)	Per Diluted Share
U.S. Propane Distribution
Change in U.S. propane sales margin	\$0.005/litre	1%	\$ 5.8	\$ 0.03
Change in U.S. propane sales volume	50 million litres	4%	\$ 17.9	\$ 0.09
Canadian Propane Distribution
Change in Canadian propane sales margin	\$0.005/litre	3%	\$ 10.2	\$ 0.05
Change in Canadian propane sales volume	50 million litres	3%	\$ 8.4	\$ 0.04
Specialty Chemicals
Change in sales price	\$10.00/MT	1%	\$ 7.4	\$ 0.04
Change in sales volume	15,000 MT	2%	\$ 3.9	\$ 0.02
Corporate
Change in CDN\$/US\$ exchange rate on
US\$ denominated debt	\$0.01	1%	\$ (4.4)	\$ (0.02)
Change in interest rates	0.50%	24%	\$ (1.7)	\$ (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 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. 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, 2020.

Effectiveness

An evaluation of the effectiveness of Superior's DC&P and ICFR was conducted as at December 31, 2020 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, 2020 with the following exception:

Section 3.3(1) of National Instrument 52-109, Certification of Disclosure in Issuers' Annual and Interim Filings, states that a company may limit its design of disclosure controls and procedures and internal controls over financial reporting for a business that it acquired not more than 365 days before the end of the financial period to which the certificate relates. Under this section, Superior's CEO and CFO have limited the scope of the design, and subsequent evaluation, of DC&P and ICFR to exclude controls, policies and procedures of Rymes effective September 1, 2020. Summary financial information pertaining to this acquisition that was included in the audited consolidated financial statements of Superior as at December 31, 2020, is as follows:

(millions of Canadian dollars)	Three Months Ended December 31, 2020	Year Ended December 31, 2020
Sales	43.8	50.3
Net earnings for the period	14.5	14.8
		December 31, 2020
Current assets		4.8
Non-current assets		152.75
Current liabilities		(7.2)
Non-current liabilities		(1.3)

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, 2020 as well as IAS 20, Government Grants ("IAS 20") below. 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.

IAS 20, Government Grants

Government grants are recognized initially at fair value when there is reasonable assurance that it will be received and the Company will comply with the conditions associated with the grant. Government grants related to profit or loss are presented as part of Superior's unaudited condensed consolidated statements of net earnings (loss) and total comprehensive earnings (loss) as a reduction of the related expense.

In response to COVID-19, the Government of Canada implemented the CEWS program. The CEWS program offers qualifying organizations government assistance in the form of a payroll subsidy to offset the cost of employees. The payroll subsidy was recognized as an offset to salary expense as follows:

	Three Months Ended			Year Ended
		December 31		December 31
	2020	2019	2020	2019
Cost of products and services	2.1	–	4.4	–
Selling, distribution and administrative costs	13.6	–	28.9	–
Total	15.7	–	33.3	–

There are no unfulfilled conditions attached to this government assistance. As at December 31, 2020, the amount of \$15.7 million is included in trade and other receivables.

Recent Accounting Pronouncements

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or the International Financial Reporting Interpretations Committee effective for accounting periods beginning on or after January 1, 2020, or latter periods. The changes in accounting policies and disclosures that are applicable to Superior are described in Note 2 (C) of the audited consolidated financial statements.

NON-IFRS 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. Non-IFRS 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-IFRS financial measures be clearly defined, qualified and reconciled to their most comparable GAAP financial measures. Except as otherwise indicated, these Non-IFRS 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-IFRS 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-IFRS 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.

Management has included the impact of CEWS in the determination of its Non-IFRS Financial Measures as management believes this benefit forms part of the net impact of COVID-19 on the financial results of Superior. Non-IFRS 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 a 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.

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.

Adjusted EBITDA is a significant performance measure used by management and investors to evaluate Superior's ongoing performance of its businesses. Adjusted EBITDA 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 Adjusted EBITDA.

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, 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.

Operating Costs

Operating costs include wages and benefits for employees, drivers, service and administrative labour, fleet maintenance and operating costs, freight and distribution expenses excluded from cost of sales, along with the costs associated with owning and maintaining land, buildings and equipment, such as rent, repairs and maintenance, environmental, utilities, insurance and property tax costs. Operating costs exclude gains or losses on disposal of assets, depreciation and amortization and non-recurring expenses, such as transaction, restructuring and integration costs.

Operating costs are defined as SD&A expenses adjusted for amortization and depreciation, gains or losses on disposal of assets and transaction, restructuring and other costs. Below is the chart that shows the operating expenses for the last eight quarters:

(millions of dollars)	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Operating costs
U.S. Propane	\$85.7	64.5	64.3	77.9	76.5	66.7	69.8	77.9
Canadian Propane	\$49.5	39.1	51.4	63.8	66.0	55.0	57.9	67.5
Specialty chemicals	\$29.4	27.9	31.7	29.3	32.0	31.1	34.4	32.0

Total Debt to Adjusted EBITDA Leverage Ratio and Pro Forma Adjusted EBITDA

Adjusted EBITDA for the Total Debt to Adjusted EBITDA Leverage Ratio is defined as Adjusted EBITDA calculated on a 12-month trailing basis giving pro forma effect to acquisitions and dispositions adjusted to the first day of the calculation period ("Pro Forma Adjusted EBITDA"). Pro Forma Adjusted EBITDA is used by Superior to calculate its Total Debt to Adjusted EBITDA Leverage Ratio.

To calculate the Total Debt to Adjusted EBITDA Leverage Ratio divide the sum of borrowings before deferred financing fees and lease liabilities by Pro Forma Adjusted EBITDA. Total Debt to Adjusted EBITDA Leverage Ratio is used by Superior and investors to assess its ability to service debt.

Per metric tonne amounts

The amounts shown on a per metric tonne (MT) basis are calculated by dividing the dollar amount by the total sales volumes for that respective period. This information is provided for amounts included in the Speciality Chemicals condensed operating results. This information assists users of the financial information to determine trends such as pricing or the average cost to manufacture a MT in the current period compared to prior periods.

SELECTED FINANCIAL INFORMATION

(millions of dollars except per share amounts)	2020	2019
GAAP measures:
Total assets	3,826.3	3,638.0
Revenue	\$2,394.3	2,852.9
Gross profit	\$1,105.7	\$1,213.0
Net earnings for the year	\$86.8	\$142.6
Net earnings per share, attributable to Superior (3) - basic - diluted Cash flows from operating activities Dividends per common share(3) Current and long-term borrowing (1)	\$0.43 \$0.43 \$360.2 \$0.72 \$1,850.6	\$0.82 \$0.82 423.2 \$0.72 1,956.1
Non-IFRS financial measures (2):
AOCF	\$361.4	376.3
Per share (3)	\$1.91	\$2.15
AOCF before transaction and other costs	\$386.5	406.2
Per share before transaction and other costs (3)	\$2.04	\$2.32

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

(2) See "Non-IFRS Financial Measures" and "Reconciliation of Earnings to Adjusted EBITDA from Operations".

(3) The weighted average number of shares outstanding for the year ended December 31, 2020 was 189.7 million (December 31, 2019 was 174.9 million). The weighted average number of shares assumes the conversion of the preferred shares into common shares. There were no other dilutive instruments with respect to AOCF per share and AOCF before transaction and other costs per share for the years ended December 31, 2020 and 2019

FOURTH QUARTER RESULTS

Summary of AOCF

		Three Months Ended
		December 31
(millions of dollars, except per share amounts)	2020	2019
Revenue	703.9	818.6
Gross profit	320.4	365.9
EBITDA from operations (1)	171.7	187.8
Corporate operating costs	(5.8)	(7.5)
Realized gain (loss) on foreign currency hedging contracts	3.9	(3.6)
Adjusted EBITDA (1)	169.8	176.7
Interest expense	(24.4)	(25.7)
Cash income tax expense	(0.1)	(6.0)
AOCF before transaction costs (1)	145.3	145.0
Transaction and other costs (2)	(8.5)	(5.6)
AOCF (1)	136.8	139.4
AOCF per share before transaction and other costs (1,2,3)	\$0.71	\$0.83
AOCF per share (1,3)	\$0.66	\$0.80
Dividends declared per common share	\$0.18	\$0.18

(1) EBITDA from operations, Adjusted EBITDA, AOCF before transaction and other costs, AOCF, and AOCF per share are Non-IFRS measures. See "Non-IFRS Financial Measures".

(2) Transaction and other costs for the three months ended December 31, 2020 are primarily related to the acquisition and integration of acquired businesses. Transaction and other costs for the prior year are primarily related to the strategic review of Specialty Chemicals, the integration of NGL and other tuck-in acquisitions.

(3) The weighted average number of shares outstanding for the three months ended December 31, 2020 was 206.0 million (December 31, 2019 was 174.9 million). The weighted average number of shares assumes the conversion of the preferred shares into common shares. There were no other dilutive instruments with respect to AOCF per share and AOCF before transaction and other costs per share for the three months ended December 31, 2020 and 2019.

Comparable GAAP Financial Information

		Three Months Ended
		December 31
(millions of dollars, except per share amounts)	2020	2019
Net earnings for the period	89.3	74.6
Net earnings attributable to common shareholders	83.1	74.6
Net earnings attributable to non-controlling interests	6.2	-
Net earnings per common share for the period, basic and diluted	\$0.43	\$0.43
Cash flows from operating activities	70.6	108.3
Cash flows from operating activities per share (4)	\$0.34	\$0.62

(4) The weighted average number of shares outstanding for the three months ended December 31, 2020 was 206.0 million (December 31, 2019 was 174.9 million). The weighted average number of shares assumes the conversion of the preferred shares into common shares. There were no other dilutive instruments with respect to AOCF per share and AOCF before transaction and other costs per share for the three months ended December 31, 2020 and 2019.

Segmented Information

		Three Months Ended
		December 31
(millions of dollars)	2020	2019
EBITDA from operations (1)
U.S Propane Distribution	80.4	78.2
Canadian Propane Distribution	65.6	75.6
Specialty Chemicals	25.7	34.0
Total	171.7	187.8

(1) EBITDA from operations is a Non-IFRS measure. See "Non-IFRS Financial Measures."

Fourth Quarter Results Compared to the Prior Year Quarter

Adjusted EBITDA for the three months ended December 31, 2020 was \$169.8 million, a decrease of \$6.9 million or 4% compared to the prior year quarter Adjusted EBITDA of \$176.7 million. The decrease is primarily due to lower EBITDA from operations and was partially offset by a realized gain on foreign currency hedging contracts compared to a realized loss in the prior year quarter and to a lesser extent lower corporate operating cost. EBITDA from operations decreased \$16.1 million or 9% compared to the prior year quarter primarily due to lower Canadian Propane and Specialty Chemicals EBITDA from operations partially offset by higher U.S. Propane EBITDA from operations. Canadian Propane EBITDA from operations was \$65.6 million, a decrease of \$10.0 million or 13% compared to the prior year quarter primarily due to lower sales volumes and weaker wholesale propane market fundamentals partially offset by CEWS benefit. Specialty Chemicals EBITDA from operations was \$25.7 million, a decrease of \$8.3 million or 24% primarily due to lower sales volumes and lower average hydrochloric acid and caustic soda sales prices compared to the prior year quarter. U.S. Propane EBITDA from operations was \$80.4 million, an increase of \$2.2 million or 3% compared to the prior year quarter primarily due to the impact of acquisitions partially offset by warmer weather and the impact of COVID-19 on sales volumes. Superior realized a gain on foreign currency hedging contracts of \$3.9 million compared to a loss of \$3.6 million in the prior year quarter due to changes in foreign exchange rates relative to average hedge rates for settled hedges in the quarter. Corporate administrative costs were \$5.8 million, a decrease of \$1.7 million from the prior year quarter of \$7.5 million primarily due to lower long-term incentive plan costs.

AOCF

AOCF before transaction and other costs for the three months ended December 31, 2020 was \$145.3 million, a modest increase from the prior year AOCF before transaction and other costs of \$145.0 million primarily due to lower interest costs, partially offset by lower Adjusted EBITDA discussed above and to a lesser extent higher cash taxes. Interest expense decreased primarily due to the impact of lower average debt balances, and to a lesser extent, the impact of lower interest rates compared to the prior year quarter. AOCF per share before transaction and other costs was \$0.71 per share, a decrease of \$0.12 per share from the prior year quarter results of \$0.83 per share, primarily due to an increase in weighted average shares outstanding and to a lesser extent lower AOCF before transaction and other costs discussed above. Weighted average shares outstanding were higher than the prior year quarter primarily due to the issuance of Preferred Shares that are reflected on an as converted basis and to a lesser extent the impact of shares issued under the Dividend Reinvestment and Optional Share Purchase Plan ("DRIP").

AOCF for the three months ended December 31, 2020 was \$136.8 million, a decrease of \$2.6 million or 2% from the prior year AOCF of \$139.4 million due to the decreased AOCF before transaction and other costs discussed above. AOCF per share for the three months ended December 31, 2020 was \$ 0.66 per share, a decrease of \$0.14 per share from the prior year quarter results of \$0.80 per share. Transaction and other costs for the three months ended December 31, 2020 were \$8.5 million, \$2.9 million more than the \$5.6 million in the prior year quarter.

RESULTS OF SUPERIOR'S OPERATING SEGMENTS

Superior's operating segments consists of U.S. Propane Distribution, Canadian Propane Distribution which includes its wholesale business and Specialty Chemicals.

U.S. PROPANE DISTRIBUTION

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

		Three Months Ended
		December 31
(millions of dollars)	2020	2019
Revenue	294.9	295.3
Cost of Sales	(131.4)	(137.2)
Gross profit	163.5	158.1
Realized gain (loss) on derivatives related to commodity risk management	2.6	(3.4)
Adjusted gross profit (1)	166.1	154.7
Selling, distribution and administrative costs	(124.4)	(102.9)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	33.5	23.4
Transaction, restructuring, and other costs	4.6	2.5
Loss on disposal of assets and other	0.6	0.5
Operating costs (1)	(85.7)	(76.5)
EBITDA from operations (1)	80.4	78.2
Add back (deduct):
Loss on disposal of assets and other	(0.6)	(0.5)
Transaction, restructuring, and other costs	(4.6)	(2.5)
Amortization and depreciation included in selling, distribution and administrative costs	(33.5)	(23.4)
Unrealized gain on derivative financial instruments	14.8	3.6
Finance expense	(1.0)	(1.1)
Earnings before income tax	55.5	54.3

(1) Adjusted Gross Profit, EBITDA from operations and Operating Costs are Non-IFRS financial measures. See "Non-IFRS Financial Measures".

Revenue for the three months ended December 31, 2020 was \$294.9 million, a decrease of \$0.4 million from the prior year quarter primarily due to lower wholesale commodity prices, lower sales volumes and to lesser extent the impact of the stronger Canadian dollar on the translation of US denominated sales, partially offset by the contribution from acquisitions completed since the prior year quarter. Wholesale commodity supply prices were lower than the prior year quarter, driven by decreased demand as a result of warm weather, reduced demand related to the impact of COVID-19 and the impact from lower average West Texas Intermediate ("WTI") crude oil prices compared to the prior year quarter. WTI crude oil prices decreased significantly at the end of the first quarter and remained lower than the prior year quarter due to continued uncertainty around the global reaction to COVID-19.

U.S. Propane Adjusted Gross Profit

	Three Months Ended
		December 31
(millions of dollars)	2020	2019
Propane distribution	156.3	150.4
Realized gain (loss) on derivatives related to commodity risk management	2.6	(3.4)
Propane distribution adjusted gross profit	158.9	147.0
Other services (1)	7.2	7.7
Adjusted gross profit (2)	166.1	154.7

(1) Other services have been restated to align with Canadian Propane Distribution by excluding fees which form part of propane distribution margins.

(2) Adjusted gross profit from operations is a Non-IFRS financial measure. See "Non-IFRS Financial Measures".

Propane distribution adjusted gross profit for the three months ended December 31, 2020 was \$158.9 million, an increase of \$11.9 million or 8% from the prior year quarter primarily due to the incremental contribution from acquisitions completed since the prior year quarter and higher average margins, partially offset by lower sales volumes.

Total sales volumes were 386 million litres, an increase of 25 million litres or 7% from the prior year quarter primarily due to higher commercial and residential sales volumes, partially offset by modestly lower wholesale sales volumes. Average weather, as measured by degree days, across markets where U.S. propane operates for the three months ended December 31, 2020 was 9% warmer than the prior year quarter and 3% warmer than the five-year average. Residential sales volumes increased by 9 million litres or 4% from the prior year quarter primarily due to the contribution from acquisitions completed since the prior year quarter partially offset by the impact of warmer weather. Commercial sales volumes increased by 18 million litres or 13% compared to the prior year quarter primarily due to the contribution from acquisitions completed since the prior year quarter partially offset by the impact of COVID-19 on commercial customers and to a lesser extent the impact of sales and marketing initiatives to shift focus away from low-margin commercial distillate customers. Wholesale volumes decreased by 2 million litres or 22% due to reduced demand related to the impact of COVID-19.

U.S. propane average sales margins were 41.2 cents per litre an increase of 1% from 40.7 cents per litre in the prior year quarter primarily due to the impact of focusing on higher margin propane customers 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 charges. Other services gross profit was \$7.2 million, a decrease of \$0.5 million or 6% from the prior year quarter primarily due to the impact of COVID-19 delaying non-essential service activity partially offset by the impact of acquisitions completed.

U.S. Propane Distribution Sales Volumes End-Use Application

		Three Months Ended
		December 31
(millions of litres)	2020	2019(2)
Residential	224	215
Commercial	155	137
Wholesale	7	9
Total	386	361

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

U.S. Propane Distribution Sales Volumes

Volumes by Region

		Three Months Ended
		December 31
(millions of litres)	2020	2019
Northeast	311	292
Southeast	37	36
Midwest	27	30
West	11	3
Total	386	361

Regions: Northeast region consists of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, NewYork, Pennsylvania, New Jersey, Delaware, Maryland, Virginia; Southeast region consists of North Carolina, South Carolina, Georgia, Tennessee, Florida, Alabama; Midwest region consists of Ohio, Michigan, Minnesota; West region consists primarily of California

Operating Costs and Selling, Distribution and Administrative Costs

Operating costs were \$85.7 million, an increase \$9.2 million or 12% over the prior year quarter, while SD&A costs for the three months ended December 31, 2020 were \$124.4 million, an increase of \$21.5 million or 21% over the prior year quarter. The increase in operating and SD&A costs is primarily due to acquisitions completed during the year partially offset by workforce optimization initiatives and the realization of incremental synergies, and to a lesser extent the stronger Canadian dollar on the translation of U.S. denominated operating costs. SD&A costs increased for the above reasons, higher depreciation and amortization related to a higher asset base due to the acquisitions completed in the year and higher transactions and other costs related to the acquisition and integration of businesses acquired.

Earnings before tax

The earnings before tax of \$55.5 million, increased by \$1.2 million over the prior year quarter due to the aforementioned reasons and the impact of a higher unrealized gain on derivative financial instruments in the current quarter compared to the prior year quarter.

CANADIAN PROPANE DISTRIBUTION

Canadian Propane Distribution's condensed operating results:

		Three Months Ended
		December 31
(millions of dollars)	2020	2019
Revenue (1)	272.8	366.9
Cost of Sales	(158.8)	(214.0)
Gross profit	114.0	152.9
Realized gain (loss) on derivatives related to commodity risk management	1.1	(11.3)
Adjusted gross profit (2)	115.1	141.6
Selling, distribution and administrative costs	(68.1)	(84.0)
Add back (deduct):
Amortization and depreciation included in selling, distribution and administrative costs	18.4	19.1
Transaction, restructuring, and other costs	(0.1)	0.3
Loss (gain) on disposal of assets and other	0.3	(1.4)
Operating costs (2)	(49.5)	(66.0)
EBITDA from operations (2)	65.6	75.6
Add back (deduct):
(Loss) gain on disposal of assets and other	(0.3)	1.4
Transaction, restructuring, and other costs	0.1	(0.3)
Amortization and depreciation included in selling, distribution and administrative costs	(18.4)	(19.1)
Unrealized gains on derivative financial instruments	5.1	8.1
Finance expense	(1.0)	(1.0)
Earnings before income tax	51.1	64.7

(1) Revenue has been adjusted to conform with the current period presentation. See the audited consolidated financial statements and notes thereto as at and for the years ended December 31, 2020 and 2019.

(2) EBITDA from operations and operating costs are Non-IFRS financial measures. See "Non-IFRS Financial Measures" and "Reconciliation of Earnings before Income Taxes to EBITDA from Operations".

Revenue for three months ended December 31, 2020 was \$272.8 million, a decrease of \$94.1 million or 26% primarily due to lower sales volumes and to a lesser extent lower wholesale propane prices. Wholesale propane supply prices were lower than the prior year exiting the quarter, primarily due to continued high propane inventory levels in the U.S., driven by decreased demand as a result of warm weather, reduced demand related to the impact of COVID-19, the impact from lower average West Texas Intermediate ("WTI") crude oil prices compared to the prior year quarter. WTI crude oil prices decreased significantly at the end of the first quarter and remained lower than the prior year due to continued uncertainty around the global reaction to COVID-19.

Canadian Propane Adjusted Gross Profit

		Three Months Ended
		December 31
(millions of dollars)	2020	2019
Propane distribution	108.8	147.3
Realized gain (loss) on derivatives related to commodity risk management	1.1	(11.3)
Propane distribution adjusted gross profit	109.9	136.0
Other services	5.2	5.6
Adjusted gross profit (1)	115.1	141.6

(1) Adjusted gross profit is a Non-IFRS financial measure. See "Non-IFRS Financial Measures".

Propane distribution adjusted gross profit for the three months ended December 31, 2020 was \$109.9 million, a decrease of \$26.1 million or 19% from the prior year quarter primarily due to lower sales volumes compared to the prior year quarter.

Total sales volumes for the fourth quarter were 608 million litres, a decrease of 145 million litres or 19%, primarily due to reduced demand from customers impacted by COVID-19, economic conditions in Western Canada and warmer weather. Average weather across Canada for the fourth quarter of 2020, as measured by degree days was 6% warmer than the prior year and 4% warmer than the five-year average. Residential sales volumes were consistent with the prior year as increased demand related to COVID-19 was offset by the impact of warmer weather. Commercial sales decreased by 65 million litres or 20% due primarily to COVID-19 impacting demand across the country, economic conditions in Western Canada and warmer weather, partially offset by higher reseller volumes related to recreational propane use. Wholesale propane volumes were 79 million litres or 21% lower compared to the prior year quarter due to lower demand associated with the impact of COVID-19, the impact of low oil prices and warmer weather compared to the prior year quarter.

Average propane sales margins were 18.1 cents per litre consistent with the prior year quarter as the impact of weaker wholesale propane market fundamentals was offset by customer mix.

Other services gross profit primarily includes equipment rentals, repairs and maintenance work, installation fees, and customer minimum use charges. Other services gross profit was \$5.2 million, a decrease of \$0.4 million or 7% from the prior year quarter primarily due to the impact of COVID-19 and economic conditions on service technician activity and equipment rentals in Western Canada.

Canadian Propane Distribution Sales Volumes

Volumes by End-Use Application (1)
	Three Months Ended
	December 31
(millions of litres)	2020 2019
Residential	58 59
Commercial	319 254
Wholesale	375 296
Total	608 753

Volumes by Region (1)

	Three Months Ended
	December 31
(millions of litres)	2020 2019
Western Canada	220 306
Eastern Canada	143 155
Atlantic Canada	38 37
United States	255 207
Total	608 753

(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, Colorado, Delaware, Illinois, Kansas, Maine, Maryland, Michigan, Minnesota, Montana, Nevada, New Hampshire, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Utah and Washington.

Operating Costs and Selling, Distribution and Administrative Costs

Operating costs were \$49.5 million, a decrease of \$16.5 million or 25% compared to the prior year quarter, while SD&A costs for the three months ended December 31, 2020 were \$68.1 million, a decrease of \$15.9 million or 19% compared to the prior year quarter. The decrease in operating costs is primarily due to the impact of the CEWS

benefit recorded in the quarter, lower-volume related expenses and cost saving initiatives. SD&A costs decreased for the above noted reasons partially offset by a gain on disposal of assets in the current quarter compared to a loss in the prior year quarter. Canadian Propane recorded a \$12.0 million benefit related to the CEWS in the fourth quarter.

Earnings before tax

Earnings before income tax of \$51.1 million, decreased by \$13.6 million over the prior year quarter, due to the aforementioned reasons partially offset by a lower unrealized gain on derivative financial instruments in the current quarter compared to the prior year quarter.

SPECIALTY CHEMICALS

Specialty Chemicals' condensed operating results:

				Three Months Ended
				December 31
(millions of dollars, except per metric tonne (MT) amounts)		2020		2019
		\$ per MT		\$ per MT
Revenue	142.0	755	161.2	810
Cost of sales	(99.1)	(527)	(106.2)	(534)
Gross Profit	42.9	228	55.0	276
Depreciation included in cost of sales	12.2	65	11.0	55
Adjusted Gross Profit (1)	55.1	293.0	66.0	331.0
Selling, distribution and administrative costs	(40.0)	(213)	(42.9)	(216)
Add back (deduct):
Amortization included in selling, distribution and administrative
costs	8.3	44	8.5	43
Loss on disposal of assets and impairment	2.3	12	3.5	18
Transaction, restructuring and other costs	–	–	(1.1)	(6)
Operating costs (1)	(29.4)	(157.0)	(32.0)	(161.0)
EBITDA from operations (1)	25.7	136.0	34.0	170.0
Add back (deduct):
Transaction, restructuring and other costs	–		1.1
Depreciation included in cost of sales	(12.2)		(11.0)
Amortization included in selling, distribution and administrative
costs	(8.3)		(8.5)
(Loss) on disposal of assets	(2.3)		(3.5)
Unrealized gain on foreign currency translation of lease liabilities	2.1		1.0
Finance Expense	(2.3)		(2.3)
Earnings before income tax	2.7		10.8

(1) EBITDA from operations, operating costs and per metric tonne amounts are Non-IFRS financial measures. See "Non-IFRS Financial Measures" and "Reconciliation of Net Earnings before Income Taxes to EBITDA from Operations".

SALES VOLUMES BY PRODUCT

		Three Months Ended
		December 31
(thousands of MTs)	2020	2019
Sodium chlorate	110	120
Chlor-alkali	76	78
Chlorite	2	1
Total	188	199

Revenue for the three months ended December 31, 2020 was \$142.0 million a decrease of \$19.2 million or 12% from the prior year quarter. This was primarily due to lower sales volumes and to a lesser extent lower average hydrochloric acid, caustic soda and sodium chlorate selling prices.

Sodium chlorate sales volumes decreased by 10 MTs or 8% due primarily to the impact of COVID-19 on customer demand and other customer curtailments. Sodium chlorate sales prices were 1% lower than the prior year quarter due to the impact of the stronger Canadian dollar on U.S. denominated sales and customer mix partially offset by contract price increases.

Chlor-alkali sales volumes decreased by 2 MTs or 3% due to lower chlorine and caustic potash sales volumes, partially offset by higher hydrochloric acid sales volumes. COVID-19 has negatively impacted chlor-alkali demand due to broad-based shutdowns and curtailed economic activity. Hydrochloric acid sales volumes increased 18% due to increased demand from the U.S. oil and gas sector and the impact of unplanned downtime in the prior year quarter on hydrochloric acid and caustic soda sales volumes. Caustic soda sales volumes were consistent with the prior year quarter. Chlorine sales volumes decreased 21% due to the expiration of a contract in the prior year supplied through external purchases and the impact of COVID-19. Caustic potash sales volumes decreased 6% primarily due to reduced agricultural demand and weak de-icing demand related to milder weather. Average hydrochloric acid and caustic soda netbacks decreased by approximately 61% and 17% respectively due to customer mix, the impact of COVID-19 on demand, increased freight costs and the impact of the stronger Canadian dollar on U.S. denominated sales. Chlorine netbacks increased 26% due to customer mix partially offset by the impact of the stronger Canadian dollar on U.S. denominated sales. Caustic potash netbacks were 4% higher than the prior year quarter due to customer mix partially offset by the impact of the stronger Canadian dollar on U.S. denominated sales.

Chlorite sales volumes were lower than the prior year quarter due to the timing of international sales. Sales prices were 3% higher than the prior year quarter due to customer mix partially offset by the impact of the stronger Canadian dollar on US denominated sales.

Adjusted gross profit was \$55.1 million, a decrease of \$10.9 million or 16% from the prior year quarter due primarily to lower volumes and lower sales prices partially offset by the impact of recording the CEWS benefit. An amount of \$2.1 million related to CEWS, was recorded as a reduction to cost of goods sold.

Operating Costs and Selling, Distribution and Administrative Costs

Operating costs were \$29.4 million, a decrease \$2.6 million or 8% over the prior year, while SD&A costs were \$40.0 million, a decrease of \$2.9 million over the prior year quarter primarily due to lower freight costs related to lower sales volumes, the impact of the CEWS benefit, and the impact of the stronger Canadian dollar on U.S. denominated expenses. An amount of \$1.3 million related to CEWS, was recorded as a reduction to SD&A.

Earnings (loss) before tax

Earnings before tax for the three months ended December 31, 2020 was \$2.7 million, a decrease of \$8.1 million over the prior year quarter due primarily to the aforementioned reasons partially offset by a higher unrealized gain on the foreign currency translation of lease liabilities compared to the prior year quarter.

CONSOLIDATED CAPITAL EXPENDITURE SUMMARY

		Three Months Ended
		December 31
(millions of dollars)	2020	2019
Efficiency, process improvement and growth-related	12.0	25.2
Maintenance capital	18.4	26.3
	30.4	51.5
Proceeds on disposition of assets	(4.7)	(1.2)
Property, plant and equipment acquired through acquisition	41.3	16.9
Total net capital expenditures	67.0	67.2
Investment in leased assets net of proceeds from refinanced	24.2	17.8
Total expenditures including finance leases	91.2	85.0

Efficiency, process improvement and growth-related expenditures were \$12.0 million in the fourth quarter of 2020 compared to \$25.2 million in the prior year quarter. The decreased over the prior year quarter is primarily due to deferring expenditures to offset the impact of COVID-19 on cashflows and timing of integration activity.

Maintenance capital expenditures were \$18.4 million in the fourth quarter compared to \$26.3 million in the prior year quarter, a decrease of \$7.9 million primarily due to deferring expenditures to offset the impact of COVID-19 on cashflows and to a lesser extent 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 quarter.

Proceeds on disposition were \$4.7 million in the fourth quarter of 2020 compared to \$1.2 million in the prior year quarter primarily due to the disposal of vehicles and excess tanks. Superior entered into new leases with capitalequivalent value of \$24.7 million and refinanced previously acquired vehicles for gross proceeds of \$0.5 million in the fourth quarter of 2020. The net investment was \$24.2 million compared to \$17.8 million in the prior year's fourth quarter. The increase is primarily due to timing of renewing property, railcar and vehicles leases.

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

CORPORATE ADMINISTRATIVE COSTS AND SD&A

Corporate administrative costs are \$5.8 million for the three months ended December 31, 2020 a decrease of \$1.7 million, compared to \$7.5 million in the prior year quarter. The decrease from the prior year quarter is primarily due to lower long-term incentive plan costs related to the fluctuations in the share price compared to the prior year, partially offset by \$0.3 million related to CEWS and lower discretionary spending due to the impact of COVID-19. Corporate administration costs included in Adjusted EBITDA exclude depreciation, amortization and transaction and other costs. Corporate SD&A costs for the three months ended December 31, 2020 were \$9.7 million a decrease of \$1.7 million from \$11.4 million in the prior year quarter.

FINANCE EXPENSE

Finance expense was \$24.4 million for the three months ended December 31, 2020, a decrease of \$1.3 million, compared to \$25.7 million in the prior year quarter. The decrease is primarily due to lower average debt balances, and lower variable interest rates compared to the prior comparable quarter and lower non-cash financing charges.

TRANSACTION AND OTHER COSTS

For the fourth quarter, Superior incurred \$8.5 million in transaction and other costs compared to \$5.6 million in the prior year quarter. The decrease is primarily related to the timing of tuck-in acquisitions and costs related to the strategic review of Specialty Chemicals in the prior year quarter.

QUARTERLY FINANCIAL AND OPERATING INFORMATION GAAP Measures

(millions of dollars,		Q3	Q2	Q1	Q4	Q3	Q2
except per share amounts)	Q4 2020	2020	2020	2020	2019	2019	2019	Q1 2019
Revenue (2)	703.9	399.4	450.8	840.2	821.0	450.1	545.8	1,036.0
Gross profit (2)	320.4	166.3	219.8	399.2	366.0	195.0	223.7	428.3
Net earnings (loss)	89.3	(21.4)	7.5	11.4	74.6	(59.3)	(29.3)	156.6
Per share, basic	\$0.43	(0.15)	0.04	0.07	0.43	(0.34)	(0.17)	0.90
Per share, diluted	\$0.43	(0.15)	0.04	0.07	0.43	(0.34)	(0.17)	0.90
Net working capital (deficit) (1)	22.3	(14.9)	(0.8)	144.7	49.9	14.1	48.8	189.1

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

(2) Revenue and gross profit have been presented excluding realized gains and losses on commodity derivative instruments. These gains and losses are included in gains (losses) on derivatives and foreign currency translation of borrowings in the unaudited condensed consolidated financial statements. See "Non-IFRS Financial Measures".

Non-IFRS Financial Measures (1)

(millions of dollars, except per share amounts)	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Adjusted EBITDA	169.8	39.1	67.7	219.3	176.7	48.2	59.7	239.9
AOCF before transaction and other costs	145.3	12.5	40.8	187.9	145.0	19.2	31.0	211.0
Per share, basic	\$0.71	0.06	0.23	1.07	0.83	0.11	0.18	1.21
Per share, diluted	\$0.71	0.06	0.23	1.07	0.83	0.11	0.18	1.21
AOCF	136.8	6.3	35.7	182.6	139.4	13.1	17.8	206.0
Per share, basic	\$0.66	0.03	0.20	1.04	0.80	0.07	0.10	1.18
Per share, diluted	\$0.66	0.03	0.20	1.04	0.80	0.07	0.10	1.18

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

(2) For Q4 and Q3 2020 the weighted average number of shares outstanding assumes the conversion of the preferred shares into common shares. There were no other dilutive instruments with respect to AOCF per share and AOCF before transaction and other costs per share for those periods.

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, the impact of the CEWS, acquisitions and divestitures may impact quarterly results. For information on acquisitions see the 2020 audited consolidated financial statements.

Volumes

	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
U.S. propane sales volumes (millions of litres)	386	155	190	422	361	158	201	489
Canadian propane sales volumes (millions of litres)	608	341	360	729	753	393	437	922
Chemical sales volumes (thousands of MT)	188	182	172	197	199	210	210	206

U.S. propane sales by end-use application are as follows (1):

(millions of litres)	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Residential	224	59	97	257	215	61	92	305
Commercial	155	91	88	153	137	90	100	162
Wholesale	7	5	5	12	9	7	9	22
Total	386	155	190	422	361	158	201	489

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

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

(millions of litres)	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Residential	58	20	27	66	59	20	26	75
Commercial	254	150	161	316	319	183	204	354
Wholesale	296	171	172	347	375	190	207	493
Total	608	341	360	729	753	393	437	922

Specialty Chemicals sales volumes by product are as follows:

(thousands of MT)	Q4 2020	Q3 2020	Q2 2020	Q1 2020	Q4 2019	Q3 2019	Q2 2019	Q1 2019
Sodium chlorate	110	103	106	119	120	122	120	118
Chlor-alkali	76	77	65	77	78	86	88	87
Chlorite	2	2	1	1	1	2	2	1
Total	188	182	172	197	199	210	210	206

(millions of dollars) For the Three Months Ended	Canadian
	U.S. Propane	Propane	Specialty
December 31, 2020	Distribution	Distribution		Chemicals Corporate	Total
Earnings before income taxes	55.5	51.1	2.7	14.1	123.4
Add: Depreciation and amortization included in
selling, distribution and administrative costs	33.5	18.4	8.3	–	60.2
Depreciation included in cost of sales	–	–	12.2	–	12.2
Loss on disposal of assets and other	0.6	0.3	2.3	(0.1)	3.1
Finance expense	1.0	1.0	2.3	22.0	26.3
Unrealized (gains) on derivative financial
instruments	(14.8)	(5.1)	(2.1)	(41.9)	(63.9)
Transaction and other costs	4.6	(0.1)	–	4.0	8.5
Adjusted EBITDA	80.4	65.6	25.7	(1.9)	169.8

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

		Canadian
(millions of dollars)	U.S. Propane	Propane	Specialty
For the Three Months Ended December 31, 2019	Distribution	Distribution	Chemicals	Corporate	Total
Earnings (loss) before income taxes	54.3	64.7	10.8	(26.3)	103.5
Add: Depreciation and amortization included in
selling, distribution and administrative costs	23.4	19.1	8.5	0.2	51.2
Depreciation included in cost of sales	–	–	11.0	–	11.0
Loss (gain) on disposal of assets and other	0.5	(1.4)	3.5	–	2.6
Finance expense	1.1	1.0	2.3	23.5	27.9
Unrealized losses on derivative financial
instruments	(3.6)	(8.1)	(1.0)	(12.4)	(25.1)
Transaction and other costs	2.5	0.3	(1.1)	3.9	5.6
Adjusted EBITDA	78.2	75.6	34.0	(11.1)	176.7

(millions of dollars)		Canadian	Specialty
For the Year Ended	U.S. Propane	Propane	Specialty
December 31, 2020	Distribution	Distribution		Chemicals Corporate	Total
Earnings (loss) before income taxes	92.5	123.2	31.6	(88.6)	158.7
Add: Depreciation and amortization included in
selling, distribution and administrative costs	118.5	74.2	31.0	0.6	224.3
Depreciation included in cost of sales	–	–	42.8	–	42.8
Loss on disposal of assets and other	2.5	1.1	2.3	(0.1)	5.8
Finance expense	5.2	4.4	8.0	88.9	106.5
Unrealized (gains) on derivative financial
instruments	(26.2)	(8.3)	(0.7)	(32.1)	(67.3)
Transaction and other costs	14.4	0.4	1.5	8.8	25.1
Adjusted EBITDA	206.9	195.0	116.5	(22.5)	495.9

(millions of dollars)	U.S. Propane	Canadian	Specialty
For the Year Ended December 31, 2019	Distribution	P Distribution	Chemicals	Corporate	Total
Earnings (loss) before income taxes	79.4	130.2	47.9	(89.9)	167.6
Add: Depreciation and amortization included in
selling, distribution and administrative costs	105.0	71.9	30.4	0.4	207.7
Depreciation included in cost of sales	–	–	44.9	–	44.9
(Gain) loss on disposal of assets and other	1.3	(3.3)	20.4	–	18.4
Finance expense	4.4	4.4	8.1	97.4	114.3
Unrealized loss (gains) on derivative financial
instruments	2.6	(3.2)	(2.9)	(54.8)	(58.3)
Transaction and other costs	16.7	0.8	3.1	9.3	29.9
Adjusted EBITDA	209.4	200.8	151.9	(37.6)	524.5

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 follow:

Catastrophic Events, Natural Disasters, Severe Weather and Disease

Superior may be negatively impacted to varying degrees by a number of events which are beyond our control, including cyber-attacks, unauthorized access, energy blackouts, pandemics, terrorist attacks, acts of war, earthquakes, hurricanes, tornados, fires, floods, ice storms or other natural or manmade catastrophes. While we engage in emergency preparedness, including business continuity planning, to mitigate risks, such events can evolve very rapidly and their impacts can be difficult to predict. As such, there can be no assurance that in the event of such a catastrophe that our operations and ability to carry on business will not be disrupted. The occurrence of such events may not release us from performing our obligations to third parties. A catastrophic event, including an outbreak of infectious disease, a pandemic or a similar health threat, such as the evolving 2019 Novel Coronavirus outbreak, or fear of any of the foregoing, could adversely impact us by causing operating or supply chain delays and disruptions, labour shortages, expansion project delays and facility shutdowns which could have a negative impact on our ability to conduct our business and increase our costs. In addition, liquidity and volatility, credit availability and market and financial conditions generally could change at any time as a result. Any of these events in isolation or in combination, could have a material negative impact on our financial condition, operating results and cash flows.

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'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.

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 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.

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.

RISKS TO SUPERIOR'S SEGMENTS

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

U.S. PROPANE DISTRIBUTION AND CANADIAN PROPANE DISTRIBUTION

Competition

Propane is sold in competition with other energy sources such as natural gas, electricity and fuel oil, 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, improved heating efficiency in homes and supplement heating with alternative sources such as electricity and to a lesser extent wood pellets and solar energy.

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 2% of the U.S. propane distribution business employees and 19% of Superior's Canadian 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.

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 24.5% 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.