Hi there,
Superior Plus is considered an energy distributor which is focused on propane and heating oil. According to management, operations are quite resilient despite the pandemic. It seems, SPB's performance is more susceptible to weather patterns than a pandemic. As we entering warmer weather, its ED is entering its low seasonal period. Energy Distribution accounts for approximately 3/4 of earnings.
The specialty chemicals segment accounts for the other quarter actually saw an uptick in demand. According to the company it saw a short-term surge there was an increase in demand for "paper and bleach products, which have boosted demand for sodium chlorate and chlorin".
In the first quarter, it did not pull guidance but advised that EBITDA would be at the low end of guidance. Granted, this is largely a result of warmer weather - it was not all covid-19 related. Management expects a 'modest' impact from covid-19 and has reduced CAPEX and operational expenditures accordingly. All things considered, it is performing well.
As for the dividend - in this environment all bets are off. In the first quarter, it accounted for well over 100% of earnings. However, it only represented 36% of net cash flows and 17% of adjusted operating cash flow. It is well within its debt covenants as well, and as such should have sufficient liquidity to maintain the dividend.
That being said, no dividend is 100% safe in this environment. There have been 73 TSX-listed companies which have cut the dividend since early March - we expect several more over the next couple of months.
Mat