Superior Plus (TSE:SPB) lowered its 2026 earnings outlook after higher propane customer attrition and spending on winter service capacity outweighed stronger performance at its Certarus compressed natural gas business.
The company now expects adjusted EBITDA to decline approximately 2% for the year, compared with its previous forecast for 2% growth. It maintained its expectation for approximately 5% growth in 2027, though from a lower 2026 base.
For the third quarter, consolidated adjusted EBITDA rose 16% to $8.8 million from $7.6 million a year earlier, as gains at Certarus more than offset weaker propane results. All dollar amounts discussed on the call were in U.S. dollars unless otherwise noted.
Propane Pressure Drives Guidance Cut
President and CEO Allan MacDonald said propane customer attrition was slightly above earlier estimates following delivery challenges last winter. Superior is adding drivers, call center agents, service technicians and trucks ahead of the coming heating season, with the aim of improving reliability and retention.
“We’re going to take that capacity out after the model’s been proven, as opposed to in advance,” MacDonald said. CFO Grier Colter said the additional winter-readiness spending is an operating expense.
U.S. Propane reported a third-quarter adjusted EBITDA loss of $22.2 million, compared with a $14 million loss a year earlier. Colter attributed the decline partly to elevated attrition, higher operating costs and lower service activity. Canadian Propane adjusted EBITDA fell to $2.2 million from $2.5 million.
Superior’s propane transformation program, Superior Delivers, contributed approximately $3 million in incremental adjusted EBITDA during the quarter and $20 million in the first nine months. The company now expects a full-year contribution of about $30 million, down from its prior $50 million expectation. Colter said extra winter capacity was the largest reason for the reduction.
MacDonald said retention efforts in Canada had produced encouraging results, while the company had more work to do in the U.S. Colter said the revised fourth-quarter outlook assumes five-year average weather; warmer or colder conditions would affect results.
Certarus Raises Growth Outlook
Certarus generated third-quarter adjusted EBITDA of $36.5 million, up 42% from $25.7 million a year earlier. Total volumes rose 23% to 8.7 million MMBtu, although operating costs per MMBtu increased 9% as the business relied more heavily on third-party drivers to meet demand.
Wellsite volumes increased 21% to 6.8 million MMBtu, while industrial volumes rose 62%, according to MacDonald. He said industrial and data center applications are expected to account for approximately 60% of the compressed natural gas business within the next 24 months.
Superior now expects Certarus adjusted EBITDA to grow approximately 5% in 2026, compared with its previous forecast for a decline of 4% to 9%. Certarus President Dale Winger said growth was broad-based across data centers, mining, power generation and wellsite operations.
Asked whether the U.S. elections could affect data center development, Winger said it was too early to know the full impact, but that projects already under construction or in motion were continuing. He said potential changes to project costs or timelines could cause delays, while demand for computing power was moving faster than permanent infrastructure could be built.
Certarus also announced a memorandum of understanding with Gazelle Transportation to deploy mobile compressed natural gas fleet fueling at a California facility. Its first such location in Houston is operational and serves approximately 100 Class 8 natural gas trucks, MacDonald said. A new Bakersfield, California, supply hub is expected to begin flowing gas in the first quarter of 2027.
Spending and Leverage
Superior reported negative free cash flow of $100.4 million in the third quarter, compared with negative $70.9 million a year earlier, reflecting higher growth capital spending at Certarus. Consolidated capital expenditures rose to $81.9 million from $33 million and remained on track with the company’s full-year expectation of $230 million.
Colter said spending is expected to remain elevated through the middle of 2027 before declining, with cash flow improving as contracted compressed natural gas projects ramp up. The company expects to provide its 2027 capital budget in February and currently anticipates spending at a level similar to 2026.
Leverage stood at 3.8 times at quarter-end, and Superior expects to end 2026 at approximately 3.9 times. Colter said leverage could remain in the high threes or around four times for the next four to five quarters before falling as earnings and cash flow from the investments increase.
On preferred shares potentially redeemable in mid-2027, Colter said the company had not made a decision. He said retaining the instrument could provide leverage flexibility while the capital spending program continues.
About Superior Plus (TSE:SPB)
Superior is a North American distributor and marketer of propane, compressed natural gas (‘CNG’), hydrogen and related products and services, and transports renewable natural gas (‘RNG’) from production facilities to natural gas distribution networks. The company is headquartered in Toronto, Ontario, and trades on the Toronto Stock Exchange (‘TSX’) under the symbol SPB. Superior has approximately 4,400 employees located in Canada and the United States.
