Luc Desjardins - President and Chief Executive Officer Beth Summers - Senior Vice-President and Chief Financial Officer

Jacob Bout - CIBC Steve Hansen - Raymond James Nelson Ng - RBC Capital Markets Patrick Kenny - National Bank Financial Steve Hansen - Raymond James Raveel Afzaal - Canaccord Genuity Fahad Tariq - BMO Capital Markets

Thank you Irene. Good morning everyone.

And welcome to the Superior Plus conference call and webcast to review our 2016 third quarter results. I am Luc Desjardins, CEO and joining me today is Beth Summers, Senior Vice President and Chief Financial Officer, Darren Hribar, Senior Vice President and Chief Legal Officer and Rob Dorran, Vice President, Investor Relation and Treasurer.

For this morning's call, Beth will start by providing a high level review of our financial results, which we released yesterday after markets closed. Afterwards, I will provide an update on the energy distribution, specialty chemical operation, our strategic initiative and our priorities for the remainder of 2016 and going forward into 2017.

Then we will open it up for Q&A. So now let me turn the call over to Beth.

Thank you Luc and good morning everyone. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Superior's current expectations, estimates, judgments, projections and risks.

Further, some of the information provided refer to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see Superior's various financial reports which are available on our website and SEDAR.

Actual results could different materially from the forward-looking looking statements we may express or imply today. I would also encourage listeners to review the management's discussion and analysis posted on SEDAR and our website yesterday which includes financial information for our third quarter as we won't go over each financial metric on today's call.

This will allow us to more time to talk and move into the question-and-answer period. Overall, we are pleased with the third quarter results.

Consolidated adjusted operating cash flow or AOCF before transition costs for the quarter were $34.8 million, which was consistent with our expectations, given the sale of construction product distribution earlier in the quarter. AOCF per share before transaction costs was $0.09 per share, which was lower than the prior year quarter reflecting the sale of CPD and an increase in weighted share outstanding related to the equity issuance completed in October 2015 and the additional shares issued through our DRIP program.

Now turning to the individual business results. Energy distribution EBITDA from operations for the third quarter was $3.9 million compared to $11.3 million in the prior year quarter, a decrease of $7.4 million due to lower gross profit, partially offset by lower operating expenses.

Gross profit was $102.3 million lower due primarily to the impact of wholesale propane market fundamental, in addition a decrease in volumes in Canadian propane distribution and a decrease in U.S. refined fuels volumes and average margins.

Canadian propane gross profit was negatively impacted by market fundamentals in the supply portfolio management business and weaker basis differentials compared to the prior year quarter. Canadian propane distribution volumes were lower due to reduced demand related to the continued low levels of oilfield activity in Western Canada.

Canadian propane average sales margins were $0.228 cents in the third quarter consistent with the second quarter and a 5% increase compared to the prior year quarter due to ongoing price management and procurement initiatives. U.S.

refined fuel sales volumes were lower than the prior year due primarily to a decrease in wholesale volumes related to increased competition in the segment. U.S.

refined fuels average sales margin were $0.062 cents per liter in the third quarter, down slightly from the prior year quarter due to increased competitive pressures in the commercial and wholesale segments. Cash operating and administrative costs decreased $2.9 million or 4% compared to the prior year quarter and were consistent with the second quarter.

Turning now to specialty chemicals. Specialty chemicals EBITDA from operations for the third quarter was $25.3 million, a decrease of $4.1 million compared to the prior year quarter and an increase of $3 million compared to the second quarter.

Sodium chlorate gross profits were modestly lower than the prior year due to a decrease in sales volumes and average selling prices. Sodium chlorate sales volumes were lower due primarily to a decrease in volumes associated with the Tronox agreement.

Excluding Tronox, sales volumes were 11% higher than the prior year. Chlor-alkali gross profits were higher than the prior year quarter due primarily to a decrease in caustic potash production costs.

Specialty chemicals gross profits were also impacted by the translation of U.S. denominated working capital.

The weakening of the Canadian dollar in the quarter resulted in a realized gain on working capital of approximately $0.4 million in the third quarter compared to a realized gain of $4.7 million in the prior year quarter. Operating expenses of $37 million were $2.6 million lower than the prior year due to the decrease in Tronox related and plant operating expenses.

Turning to CPD. EBITDA from operations for the third quarter was $5.6 million and the CPD division was divested on August 9, 2016.

Turning to corporate and interest costs. Corporate costs for the quarter were $6.1 million compared to $4.2 million in the prior year quarter, a $1.9 million increase due to higher long-term incentive plan costs related to the share price appreciation in the quarter and professional fees.

It should also be noted that corporate costs exclude one-time costs related to the terminated Canexus acquisition and CPD divesture totaling $21.3 million. On the debt management side, at September 30, the total debt to EBITDA leverage ratio before transaction costs was 2.2 times, which is well below our 2016 targeted range of 3.1 to 3.5 times due to the sale of CPD.

The proceeds from the sale of CPD were used to reduce indebtedness under our credit facility and to redeem our $150 million, 6% convertible debentures maturing in 2018. We also suspended the DRIP in September as we are below our three times debt to EBITDA which is our leverage target.

During third quarter, we also uses proceeds from the sale of CPD to settle foreign exchange hedging positions related to the CPD division and other contracts for 2016 and 2017. We reentered new foreign exchange hedging contracts related to our U.S.

dollar exposure for 2016 and 2017 and we are within our corporate guidelines for managing the exposure related to foreign exchange volatility. Turning now to our 2016 guidance.

Superior is confirming the 2016 financial outlook of the $1.40 to $1.60 AOCF per share. Superior is also introducing our 2017 financial outlook of $1.45 to $1.75 AOCF per share which is a 7% increase based on the midpoint of the 2016 and 2017 financial outlook.

Excluding the contribution of CPD in 2016 of $0.16 per share, the midpoint in 2017 financial outlook represents an anticipated 20% increase in AOCF per share. I will now hand it back to Luc.

Well, thank you Beth. Overall, we are pleased with Superior's operational performance for the third quarter considering the headwinds in the third quarter related to the continued weakness in the oilfield activity which impact both our businesses.

The third quarter has historically been Superior's lowest quarter in terms of results due to the contribution from the energy distribution business related to the weather. In the energy distribution business, to improve cost structure, focus on pricing and our procurement and supply initiative continued to provide benefit.

Average unit margin for Canadian propane distribution in the first quarter were consistent with the second quarter at 5% higher than the prior year quarter. Although industrial volumes related to the oilfield have decreased, we are seeing improvement in our other lines of business due to our continued investment in sales and marketing.

We will also continue to focus on the differentiation through our digital offering and our value-added service we provide our customers. Energy distribution EBITDA from operation 2016 is anticipated to be consistent with 2015.

Canadian propane and U.S. refined fuel should continue to benefit from the ongoing operational improvement and improved sales and marketing initiatives.

In addition, we anticipate weather in the fourth quarter will be consistent with the five year average. Weather has a large impact on our U.S.

refinery fuel, more on the U.S. refinery fuel business as there is a higher mix of residential customers.

Energy distribution EBITDA from operation in 2017 anticipated to be consistent but modestly higher than 2016 as gross profit in 2017 are expected to increase due to sales and marketing initiative and a normal weather. We continue to evaluate opportunities for acquisition in our energy distribution platform and both retail distribution, Northeast USA and in Canada and our wholesale business as well.

We are targeting small midsized and add-on acquisition at attractive multiple in Canada and the Northeast USA. The President of USRF Keith Wrisley retired in October 2016 and I would like to thank him for his contribution to Superior Plus in the seven years since we acquired USRF.

Andy Peyton joined USRF as President after an extensive search and he started to work for us October 3 of this year. Andy has a strong operational and business development background and has held very senior position with a large player in the U.S.

propane distribution industry. Over his 16 years carrier at ‎AmeriGas, he was VP Marketing and Sales responsible for all of U.S.

marketing and sales, lead the M&A function recently at the head office and also at the same time run the 20-pound cylinder business across U.S.A. Previously, in his first position at ‎AmeriGas, Andy was running all of the East Coast, North and South for the company in the U.S.A.

turning to a very good candidate for us, very pleased to have him aboard. Turning to specialty chemicals.

The sodium chlorate business continued to perform well with strong operating rates. Sodium chlorate sales volume in the third quarter improved 9% compared to the second quarter of 2016.

Our North Vancouver plant was down for a short period of time than anticipated, so the impact on results was not significant. The mechanic issue has been resolved and we are now fully operational.

The chlor-alkali business improved compared to the prior year quarter in the second quarter. Lower production cost for caustic potash has a positive impact on chlor-alkali gross profit.

Our chlor-alkali business continued to face challenging market conditions in the North American hydrochloric acid market due to reduced oil and gas at hydrochloric fracturing activity. We anticipate specialty chemicals 2016 results will be lower than 2015 consistent with the guidance provided in the second quarter.

Sodium chlorate EBITDA is anticipated to be higher than 2015 due to the positive impact on the last of Tronox related expenses. Chlor-alkali gross profits are anticipated to be weaker than 2015 due to lower netback pricing for all products except chlorine.

EBITDA for specialty chemical 2017 is anticipated to be consistent, but modestly higher than 2016. Sodium chlorate EBITDA is anticipated to be consistent to modestly lower than 2016 as improvement in pricing are expected to be negatively impact by increased electricity mill rates.

Electricity accounts for 70$ to 80% of our input cost for chlorate and we anticipate power price increase in some of our jurisdictions we operate in, especially Western Canada to be up more than inflation. Chlor-alkali EBITDA is anticipated to be consistent to modestly higher than 2015 due to an increase in netback pricing for most of our products.

In terms of electricity price, our Valdosta, George and Hargrave, Manitoba plants are at the very low end of the cost curve in North America chlorate business. It is also anticipated that our large Buckingham plant in Quebec will be at the lowest end of the cost curve in the next two years, due to very low cost increase in energy from the Quebec energy costs.

With the sale of CPD behind us and a strong balance sheet to pursue accretive acquisition, we are well positioned to focus on our Evolution 2020 growth initiative. We will continue to focus on our sales and marketing initiative to achieve 12% growth, more than the market growth in every industry we participate.

Our continuous improvement initiatives are expected to improve our operational efficiencies. We are also looking at strategic acquisition in our retail distribution and wholesale propane businesses that fits well with our core business and growth conditions.

Although it has been three months since the sale of CPD and a significant debt reduction, we have been hard at work looking for opportunities to grow in energy distribution for quite some time. We have identified opportunities to grow in both retail and wholesale in Canada, U.S.A.

and dedicating a significant amount of our time in corporate M&A to ensure we find the right assets to grow and build shareholder value. We have increased our focus and resource at last at the corporate office and in all the divisions to find the strategic opportunity.

We have plans to sustainably increase EBITDA to organic growth by continuous improvement and we have developed a strategy and a quite aggressive platform of growth and disciplined way for M&A as well. With that said I would now like to open up to any question you may have.

Good morning.

Good morning Jacob.

So you talked a bit about energy distribution for your strategic outlook.

Can we bring the line a little bit higher. We have difficulty to understand you, Jacob.

Give us a second.

Can you hear me now?

Yes. It's coming up very good.

Thank you.

Okay. So just my question is on strategic opportunities and your priorities.

You talked a bit about energy distribution. Can you talk about what's your appetite is right now for pulp chemicals?

For what?

For pulp chemicals.

Yes. At this stage, you know that everybody knows our history in a way with Canexus, where after more demand from them to go to court we felt that we were not going to do a good job offering and giving them more for our shareholder.

So we moved on to then we have a good platform in Canada and the Northeast U.S.A. [indiscernible] energy and no doubt we want to grow that and there is good opportunity there because 70% of the market is still open with independents, Canada and U.S., that is.

On the chemical side, we are looking at project that could enhance some of our plants and enlarge them with long-term customer. We are looking at project to [indiscernible].

I think we have talked about that maybe a while ago that we are producing and other marketing and sales operation that was belonging to [indiscernible] who could come in the market. So we have a full more beginning to the end market position in chlorite.

So when looking at avenues like that, but nothing major, nothing big on the chemical side of the business. No large acquisition.

Just doing our operation day-to-day properly and looking at some project, internal growth project with customers backing up such of those projects or adding on some small scale but opportunities here and there.

Okay. Thank you.

That was helpful. And maybe just a follow-on here.

For your 2017 guidance for your energy distribution, how much of the upside is just a reflection of a more normalized winter?

That's probably and Rob will jump in because if I did half. I think it's about $5 million.

Okay.

Yes. And probably yes.

Everybody is telling me yes. So we are good with $5 million.

Okay. Thank you.

That's helpful.

Okay. Thanks.

Hello.

Hi guys. Can you hear me?

Yes.

Yes, sir, very well.

All right. So one quick one.

I was just wondering if you could perhaps speak to your ambitions on the wholesale a little bit more clearly? I know that retail has been your focus in the past, but you raise the wholesale side a couple of times now in past discussions.

And I am just trying to get a better sense for the strategic fit there in the wholesale business and what you would be looking for and how we should think about that by geography and just how that would fit into your current structure?

Well, it's a very good point. A couple of years ago, let's go back five years quickly.

We looked at our supply chain and we said let's organize the supply chain. So we bought from that supplier and come to do a better job of getting some leverage for our size and that has been accomplished and then we look at North U.S.A.

as supplying our propane, of course in Canada and that department, that group, SGL has done a super job of really giving us more secure received supply, giving us more security and getting what we deserve for the volume we buy in propane. Then about a couple years ago, two, three, we said why don't we start looking at, can we spend that and we are at 30% of the Canadian market and we are small in the States with 10% of the Northeast market in propane, why don't we look at expanding our wholesale business.

We have people that distribute propane. They are going to get propane here or there and we have a platform.

We have 25 specialists. We have the North American landscape vision and are moving liquid to East, West, North, South, et cetera.

Why don't we start offering our platform to other potential distributors of propane and we have developed $375 million leader, a quarter of our volume today is wholesale. Very good, well done, low risk and will pass through the liquid, organize the transportation, bring it to the end user.

So I said, well, let's do more of that. And we realized that there is more there.

We have a focus. Not a lot of people in Latin America are focused on logistic, distribution of propane itself, except the big player in the state, the top three of their own backyard supply chain.

And then we are offering ours to the North American market. Having said that, we started to look around and we saw some potential regional distributor with some site of propane, carbon and wagon and all of that.

So we said, okay, what kind of business is that? It's a good core competence we have.

Let's expand on it. So we have given the mandate to that group.

Shawn Vammen is running that business. And you will see him in the November Investor Day.

Hey, if you have opportunity to acquire somebody in the region that does distribution properly for the propane to end user customer, retailer that is, let's look into that. So we are now opening the acquisition platform of our propane that when proven we can do it, we understand it on the North American bases and we are prepared to add-on acquisition in the wholesale as we see that some of those company will become available.

Okay. Great.

That's very helpful. Thanks for the color.

Just a quick follow-up, if I may. If you are evaluating your current options or pipeline of growth, how do you feel about the cadence differential between by someone big and bulky all at once and scaling up quickly versus buying something smaller or a series of smaller tuck-ins that arguably are presumably lower multiples?

I am trying to get a sense for your ambitions to grow quickly and pay a bigger price versus phasing it out?

Well, as you know, with two times leverage and opportunity with our banks and to get equity, if we need to one day, we are not putting aside large acquisition. We got organized how them in my presentation to have more people on the street to go visit those distributor of propane in Canada and in the U.S.A.

and from the phase come from being the largest buyer of propane company of AmeriGas these last five years and now we are serious and we want to do it. We don't have a lot of debt.

We are equipped to gather core competence. We have analyzed our core competence in propane, Canada and U.S., compared to every player and we think we have the core competence that's the best.

We are in there. We didn't know if we could get the best in Canada.

Now we know we have something special. So we are really open and we can talk to few small add-on acquisition everywhere in Canada and the Northeast U.S.A., but absolutely open for larger scale.

We don't promote and talk about it a lot because you never know when large scale comes. But we are open for larger scale player in Canada or in the U.S.A.

to bring us, you look at the return of those business, you look at the solidity, the sustainability of it. Well, now we have a core competence and I have met every player you can think of in the state.

We are good. So let's go big.

Let's go bigger.

Very helpful. Thanks guys.

I appreciate it.

Great. Thanks.

It had a quick question on the energy distribution division. Are you able to provide a bit more color on how much of the EBITDA variance was due to lower contributions from the supply portfolio management side?

I think in Q3 2015 that group generated about like $12.5 million of gross margin. I was just wondering how that compares to this past quarter?

Yes. Nelson, it's Beth.

The best way to think about it is roughly $5 million with changes in the way that the basis differentials that are in the market right now that on a year-over-year, I would say, today or in this year, they were normal, where last year it provided lot of opportunity. It's roughly $5 million.

Okay. Thanks.

And then just on the FX hedges, is it fair to say that settling the FX hedges for $35 million means that the AOCF will increase by that same amount in 2016 and 2017, because it's above the line?

Yes. Nelson, absolutely it will have an impact of AOCF in both 2016 and 2017.

That's correct.

Okay. And do you have to split between 2016 and 2017?

Is it about $20 million in 2017?

Yes. Best way to think about is roughly $20 million in 2017, the other amount in 2016.

Okay. Got it.

And then a quick question on the U.S. Northeast market.

I think in the commentary you mentioned that there was a lot more competition. I was just wondering whether it was on the heating oil or gasoline side?

Or does it also include feed and propane business? So could you just talk a bit about the competitive dynamics in the U.S.

Northeast?

Yes. I will start and Beth can add some color to it.

But when it comes to the oil business, you don't own the tank for 10 years and when the summer comes in commercial, residential, a lot part of it is less demand because it's not cold and you do have every year some lower margin and lower price when the summer comes. So when that's more related to the oil, commercial, residential business.

And when the fall comes back, your margin comes back. That's what we expect.

Beth, if there is anything more that comes to your mind?

Yes. The one other item that I would flag is one of the other primary drivers would be around the commercial business, the commercial distillate and the competition that existed in that business putting pressure on those margins.

So for both the residential and commercial, competition heats up more in the summer, just mainly due to low demand?

Exactly. It is every year like that.

It could be little bit more this year than other years. But in the fall it usually come back to be more normal.

And that's what we expect and our her team in Rochester expect to happen this fall.

Yes. And I think if you want to think about it from a margin pure perspective from a residential perspective, it's relatively consistent where the pressure really existed is around wholesale and the commercial, if you want to think about it on a year-over-year basis of an impact looking at year-over-year.

Got it. Okay.

A quick question on the chemical side. So with the consolidation in the U.S., are you seeing a pricing improvements on the caustic soda side?

I know I think some U.S. peers on the chlor-alkali side has been seeing pricing increases.

I was just wondering whether that's been realized in your facilities?

There is no doubt with those two large plant closing, it certainly brings less supply. There is still too much supply versus demand.

So we think we haven't calculated a big increase in 2017. But what we are hearing more and more recently no doubt is less supply.

Potentially the market demand will go up and we are thinking maybe the second half of 2017, we see caustic price going up right away right now, which is a good sign. But we haven't forecast some big improvement.

We think there is some potential that is coming back to be more balanced and we will gain from that as the year 2017 and 2018 unfolds. It is a good point.

There is no doubt less capacity than there was a year or two ago.

Okay. Great.

Thanks. Just one last question on the chemical side.

You mentioned higher electricity prices would more than offset higher chlorate prices. And could you just comment on how much power prices are going up?

I presume it's in BC?

BC, Alberta, West Coast, Western Canada, you are looking at 4% to 6% energy increase. When it comes to Valdosta and Quebec, you are looking at 0% to 1%.

So they have $150 million leader that's very -- what to produce in the East U.S.A. Valdosta and in our plant in Quebec is over $200 million leader and that cost situation is getting better as the years unfold.

When as our plants in the West and everybody else for that matter, their increase of energy cost going up is affecting our capacity for those volume to get the same price increase from customers because it's more than inflation when you look at 4% or 6% increase. We are discussing with them and telling them that that's a no-no and you shouldn't have an increase of that magnitude.

But we will see where it ends up but for the moment they are increasing and have increased price more than twice as much and more than the inflation. So thank god, we have two large plant in Valdosta and Quebec with big volume that are getting more price competitive as the years unfold.

Yes. Nelson, to put some numbers around your question, from an overall perspective, we would anticipate something between $5 million and $10 million.

Sorry, the increase price?

On the power cost side. I know, not increased price.

I thought your question was around what the increased cost of the electricity would be.

Yes.

So I think it would be in the range of $5 million to $10 million.

Got it. And then the chemical price that you are getting was somewhere a little bit less than that, therefore net net it's negative, right?

Yes. But good in the East but negative in the West.

So net net a tiny little bit you can almost say flat. And from a chlorate position, we only have this Christmas, November, December a lot of renew contract.

We only have 5% of our contract to renew. We are sold out for 2017 in chlorate and overall price is very comparable, let's say, to this year, pretty much, I think.

Okay. Got it.

All right. Thanks everyone.

Those are my questions.

Hi. Good morning guys.

Just maybe first back to your outlook for 2017 relative to 2016. Specifically on propane volumes here, it looks like you are expecting a further decrease in oilfield volumes.

I guess just looking at more recently here there has been a rebound in commodity prices, rig counts and even a bit on the oil production side across North America. So I am just wondering if your outlook is based on your own internal view of the oil and gal world for next year?

Or is this more specifically related to, say, a loss of a major customer within your industrial propane segment?

So it's a bit of a mix. When it comes to the market, the prediction of the growth and the prediction from the banks or industry, our margin what we forecast.

On the customer side, there is no doubt that we are changing our customer base somewhat. We have a large customer that's still buying a lot from us.

But once the price reduction and we are not that intending to do that. So we are developing other customers and making sure that we are priced properly for the business we render.

And so from an EBITDA, we don't see a negative effect from this year to next year, but we are certainly working towards, on the mix side of the oilfield looking towards not selling more customer that pays less but selling more at better margin customer that can pay more and there is a limit how low we are going to go to service customer at breakeven. We know our cost to serve and customer across Canada and when it gets to a point where there is nothing left, we don't mind walking away from that.

And we are in discussion to do that with a particular customer. Not done yet and we are getting good margin now, but not going to go to the position where we do a lot of work, a lot of effort and zero profit.

It's not in our DNA.

Okay. Got it.

Thanks for that Luc. Maybe just shifting back to the M&A strategy here.

Obviously you can't see too much about the Gibson process that's going on, but maybe if you could comment on the expected timing of that process? And then how do you think about synergies on opportunities in Canada versus perhaps establishing a new footprint down in the U.S., whether it be the Midwest or the Southeast?

How do you view those opportunities stacking up against each other?

A very good question. First, we don't mind doing both, but there is no doubt when it comes to Canada, there are always some synergy when we acquire an enterprise.

So we were fortunate enough to make acquisition in Canada, there will be synergies for sure. Anything that comes in the market that's called distribution of propane and on a North American basis we are going to look at it.

But to your question about the South, there is a big market in the Northeast and it's the best market for propane. So we only have 10% market share.

So there is lot of room for us to do in the Northeast and we could go even South as well with some synergy. If we go out of that and we end up in mid-U.S.A.

or California or other place like that, you are right, an acquisition will not as accretive and it will not be adding, there won't be much synergy. So our first and second line of approach is Canada, Northeast U.S.A.

Yes, we could go South from the Philadelphia, maybe to Virginia. After that, it becomes more difficult.

We are going to look at it. We are going to visit as opportunity but if it's not accretive to our shareholder in a short period of time, we are not very excited about doing any deal like that.

So you could think about absolutely, when it's Canada, Northeast U.S.A., we want to find some ways to change our mix and be bigger in propane. And I think we will more than now than in the past.

The MLP are having their tough time. That's all of you read about those top three MLP, that particular approach to running a business, I think is more difficult long-term and we run our business by investing in technology, marketing, sales, segmentation, digitalization, mid long-term bring sustainability solid success and that's how we are gaining in the states with internal growth because we are doing it differently than the big players.

And I think there be opportunity that will come up that we couldn't see two years ago, but now we are seeing they are having difficulty, those big players and we could probably find a door open for us and we take a position, certainly searching for that.

Okay. And just if I can come at the questionable timing on the Gibson process, maybe from another angle.

If that process isn't wrapped up by year-end, do you move on and pursue U.S. acquisition opportunities, maybe a bit more aggressively at that point?

No. Well look, we don't control process from a seller point of view.

That's totally out of our control. So we could do more than one or two acquisition, like we talked about earlier from our debt position and our balance sheet position and our capacity to have a situation to help us if we need some more equity.

So in a good position to look up more than one deal and if the deal happens or doesn't happen in a particular time frame, we don't mind. We just move on to the deal we can do.

And whenever deal comes available and times, if it's called propane, I can guarantee you, we are going to look at it.

Great. Fair enough.

Maybe just for Beth here, a couple of cleanup questions for 2017. Does the debt to EBITDA target, the 1.8 to 2.2 times, does that include any assumption for tuck-in acquisitions?

And maybe you can just give us a sense as what you are assuming for growth on maintenance capital?

Yes. Okay.

So I will deal it with it in different pieces. It does not currently include assumptions for small tuck-in acquisitions.

But to flag and reiterate, those are small from a dollar perspective. So from that perspective, I don't think it would really move the dial if we just a normal number of tuck-in acquisitions.

Your second question being around maintenance capital. Maybe I will cover off a little detail on total capital first.

So if you are looking at our 2016 forecast from a capital perspective, we would be looking at roughly $150 million in total. We have forecast that going to roughly $100 million.

And so from a maintenance perspective, think of it as in the range from about $45 million to $50 million. Basically specialty chemical is approximately half and then Canadian propane roughly in the $20 million impact with USRF at about $5 million.

In addition to that you have capital leases, right.

Right. Okay.

So sorry, just to clarify, the $100 million is the total number?

Total. That's growth and maintenance.

Correct.

Okay. Thanks.

And last but not least here, just back to the FX hedges, any reason why you didn't buy out the 2018 and 2019 hedges as well? And on top of that, it looks like you layered on some hedges in those years, but the rate didn't move up from $1.20.

Just wondering why that is?

Okay. So first off, dealing with the second question around the layering.

In accordance with policy, we are in line with our internal policies. So we haven't been layering in outer year hedges, just as an aside which is why you wouldn't see that rated having moved.

When it comes to hedges, we have looked at 2016 and 2017. Our view was, we wanted to reset our hedges so they reflect what would makes sense and if we had our policies such that we were rolling it in three times where we hedge rates would be 2016 and 2017 were years the most impact and we had a clear line of sight.

In addition to that, CPD hedges that were in place were for 2016 and 2017. So we just made a decision that we were going to look at 2016, 2017 and layer those in which were all also, if you look back the previous rates on the ones were frankly, the most offside for what current rates would be.

Okay. That's great.

Thanks for that color guys. That's all I had.

Thank you.

Hi guys. Just one quick follow-up from me, if I may, on the hydrochloric acid side.

Can you just remind us, there's actually two parts, I been reading through the industry reports lately and admittedly while we are still scraping along the bottom here, there has been some discussion about small increases off the bottom. Just wondering if you have seen any of those as yet?

And as a second part to the question, just remind us how that business is contracted or how much your bookings forward booked under certain contract terms? Thanks.

I am trying to split your question in different pieces. So on the chlor-alkali side, you are asking whether we have seen any increases from a pricing perspective as a base?

On the hydrochloric specifically.

Hydrochloric. Yes, we currently, as much as in the market there is certainly indications from our perspective that we would like to see it moving, we haven't seen any movement in that particular pricing.

From our perspective, I think others have forecasted, maybe seeing some increases early 2017 or in the late 2016. Things from our perspective, we are being conservative and we wouldn't anticipate anything until late 2017.

Okay. And is that a spot business then?

It's sold on a regular monthly basis? Or how are you contracting that business?

Not sure we get your question. Can you help?

How often is the pricing set?

How often do we set price?

Correct.

It's more a market price. It's a bit shorter than chlorate.

Chlorate is a year, 18 months and it varies quarterly from hydrochloric acid.

The price moves. It's not fixed.

Which is a good point because it really takes off, which we haven't seen yet. But we can adjust, the year is not over and we can adjust price.

So if there is demand, supply gets more in line.

No. That's helpful.

I just wanted to make sure you were booked in for the full year and you miss any of the upside that came through.

No. Quarter-by-quarter and we are always happy to increase price when the market permits.

Okay. That's helpful.

Thank you.

Right. Thank you.

Yes. Guys, thank you for hosting the call.

Two questions from me. First of all, I am wondering what is the upper and lower end of the impact of the chlor-alkali cycles on your consolidated EBITDA performance?

At least historically what it's been? And how does that compare to your current run rate?

From historic, we think about from it's peak to where we are today. It's roughly in the range of $20 million to $30 million.

On that we have seen a fluctuation. It started from top to bottom.

Things from our expectation perspective means the reality is when the lever gets to the peak again, it's not clear. We are certainly baking on it.

But there is some, there is certainly an inability, but that really depends on fundamentally driving toward where oil and gas pricing was previously.

Over the next three to five years, you could expect $20 million, $30 million EBITDA for us if the market comes back. If you have prediction that it comes back 50%, 75%, we could go as high as $30 million coming back.

And where are we right now? So this $30 million is the peak.

Where we are right now?

Well, the $30 million more than to-date.

Okay. And then just on the propane side, I wanted to understand how do your contracts look on the residential side?

Do you lock your retail consumers in for close to a year? And as a result when wholesale prices are going down, you realize expanded margins?

And then when the wholesale prices come back, I just want to understand, how quickly can we see an impact on your gross margin, if wholesale prices start to creep higher?

Yes. A very good question.

So for us, we have, if not 24 hours, 48 would be a maximum to increase price if propane price was up. And if it goes down, we might take a break and see how the world unfold.

But when it comes to adjusting price to the market of propane is a pass-through. So up or down, it ends up always been adjust for the customers which in a very short period of time.

Price going down, the price for customer goes down over, let's say, a week. Price goes up, within less than a week, we are increasing price.

There is no risk on our part.

Got it. Thank you.

That's all for me.

Hi. This is Fahad, on for Joel.

Can you hear me?

We can here you now. Yes.

Yes.

Okay. Sorry, third time's a charm.

We made it.

Yes, we made it. Just a question, I think you just touched on this a bit, but why are we still seeing the stickiness in terms of propane retail prices?

Why haven't they fallen down in line with what's happened to wholesale? And I think you just touched on this, but maybe just clarify a bit, why are we still seeing the stickiness?

Well, I am not sure it's stickiness. Well, it is a stickiness to a degree, but what happens is, maybe we haven't done a great job of explaining how go to market by segment .We spend years in work and investment, in digitalization, technology, customer segmentation and what we did find by investing in those technology, we simplify our customer process, we guarantee more delivery on time, we minimize the risk of them running out of gas.

All of the above gives you a chance to be pricing for better service. So this member at a lot of the story here, we said we are decommoditizing propane.

We are not start wholesale propane. You make a penny or two when you sell it in an organized logistic around it.

When you are servicing so many types of segment of customer, bringing in a lot more than know they have propane and all of those touch point service arrangement to minimize their cost of every type of customer, making sure with sensor that they don't run out of gas, all of those additional touch point service brings glue with customer, brings sustainability. And we are getting paid for those additional service because the customer appreciate them and they save more than what the extra cost for them.

Great. That's helpful.

And just a quick question. Can you talk a bit about the margins that you are seeing on upgrading chlorine to hydrochloric acid?

How are those margins looking? The upgrade margins?

They are equivalent.

Okay.

There is no difference in that regard.

Okay. Thank you.

Yes. So thank you.

I want to take this opportunity to remind you all that investors and analysts of Superior 2016 Investor Day will take place on Friday, November 18 at different place to be. We have the Royal York Hotel in Toronto.

We will send additional details, of course, on the web in the next few weeks. So looking forward to seeing you all there and for us, it's really the quarter is as expected and we think will finish the year properly and we got low debt, good balance sheet, acquisition is the gain and we will do some of that and we can almost guarantee you, we will integrate them well and we will get the opportunity and synergy as they unfold.

So on that, wish everyone a good weekend. Thank you for participating.