Superior Plus Corp. (SPB) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Superior Plus 2023 Second Quarter Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Rob Dorran, Vice President of Capital Markets. Please go ahead.

Thank you, Katherine. Good afternoon, everyone. And welcome to Superior Plus' conference call and webcast to review our 2023 second quarter results. On the call today are Allan MacDonald, President and CEO; Beth Summers, Executive VP and CFO; Curtis Philippon, President of Certarus; and Darren Hribar, Senior Vice President and Chief Legal Officer. For this morning's call, Allan, Curtis, and Beth will begin with their prepared remarks, and then we will open up the call for questions. Listeners are reminded 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 refers to non-GAAP measures. Please refer to Superior's continuous disclosure documents available on SEDAR and Superior's website yesterday for further details. Dollar amounts discussed on today's call are expressed in Canadian dollars unless otherwise noted. I'll now turn the call over to Allan.

Thanks, Rob. Good morning, everyone, or good afternoon, I guess. And thanks for joining the call to discuss our Q2 results. This is a really important time for us in Superior's history. With the Certarus transaction closing in May, we've created one of the most diverse low-carbon energy distribution companies in North America. And this milestone has been years in the making. The team at Superior has been working tirelessly, creating one of the best propane companies in North America. Divesting of noncore assets like the specialty chemicals business in 2021 and the strategic moves to acquire scale in the propane segment has established superior as a formidable energy distribution and marketing company. And now the partnership between these 2 industry leaders has provided our company with a strong core business and a new engine for long-term organic growth and innovation. Since closing the transaction in May, we've been working very collaboratively with the Certarus team to ensure an effective transition. Our priorities have remained the same since we announced the deal. We're implementing a capital allocation strategy to accelerate growth and maximize shareholder returns on a per share basis, while also continuing our commitment to safety and improving our operational efficiency. We're operating Certarus as a standalone entity, allowing Certarus to aggressively capitalize on the growth opportunities in the CNG distribution business, along with both RNG and hydrogen. We're building a joint go-to-market strategy between Certarus and Superior Propane's distribution group, which will offer our customers a wider set of energy solutions. And we'll continue to foster Certarus' culture of innovation and emerging energy solutions to ensure we may remain a leader in energy distribution across the continent. Now to be successful in executing this vision, we knew we needed to retain the strong leadership talent that made Certarus a success. Today, I can confirm Curtis Philippon, who will remain as President of Certarus and a key member of the Superior Plus executive team. I can also confirm that Natasha Cherednichenko, Certarus' Chief Operating Officer, will remain in her role leading this expanding organization. And finally, Dan Bertram, Certarus' Head of Corporate Development and one of the key architects of the transaction will be promoted to become our new Chief Strategy Officer for Superior Plus. Dan's welcome in addition to the Superior Plus executive team that will make a significant impact to our strategic planning efforts. In 2023, Certarus expects to generate between $185 million and $195 million in EBITDA, representing over 1/4 of Superior's profitability. Their leadership in the CNG distribution sector is unquestioned. Looking to the future, Certarus positions Superior not only as the CNG leader, but as a key innovator in emerging RNG and hydrogen markets across Canada and the United States. As we look to 2024 and beyond, Superior will continue to be a world-class energy distribution company safely serving our customers with pride. We were also now firmly established as a leader in the in CNG and an innovator in the emergency -- emerging energy sector. Now I've invited Curtis to join us today. In a moment, I'll ask him to offer some comments about Certarus and their performance in the quarter. But before I do a few comments on the quarter. Although Q2 is typically a quiet quarter for Superior, I am very pleased with our results. We saw a strong performance across each of our operating business units in Canada and the United States and improvements over 2022. We also saw modest improvements in some key measures we've identified as priority, including AOCF per share and our leverage ratio. Our North American propane distribution team, led by Andy Peyton, our Chief Operating Officer, is to be congratulated on this excellent result. Acquiring a group of disparate businesses, realizing the synergies and building what is now an industry leader in such a short period of time is an incredible feat. We are very proud of Superior Propane, and I believe we have one of the best teams in the business. Without their leadership, none of this would be possible. Now Q2 is my second quarter here at Superior since joining, I have the privilege of meeting many of you. I want to take a moment to thank you for your time and your insights. Like you, I'm optimistic about the future, and I believe Superior is incredibly well positioned. We spent a number of years transforming the company and building a solid foundation. Today, our next transformation, becoming a leading player across the energy distribution sector is well underway. We have a strong asset base, a profitable and stable legacy propane business, leadership in the rapidly expanding CNG segment, and we're at the forefront of the emerging RNG and hydrogen distribution business. So with that, let me introduce you to Curtis Philippon, President of Certarus, who will provide an overview of their business and offer some comments about performance in the quarter. Curtis?

That's great. Thank you, Allan. It's great to join the call today. The Certarus team is excited to now be part of Superior Plus. The onboarding process is done smoothly, and I appreciate that Allan and the rest of the Superior team has made it a clear priority to ensure that Certarus continues to grow its North American market leadership in compressed natural gas, renewable natural gas and hydrogen. Certarus exists and thrives because the market is demanding low carbon fuels and the pipeline infrastructure to deliver those fuels is insufficient and increasingly difficult to build. This inefficiency and pipeline energy infrastructure creates long-term and growing industry for mobile energy providers. One of the keys to Certarus' success is our approach to managing and allocating our Mobile Storage Units or MSUs. MSUs are specialized carbon fiber storage vessels mounted onto trailers that are interchangeable across compressed natural gas, renewable natural gas and hydrogen. Our MSUs transport, low carbon fuels and also active capacity for on-site energy storage. MSUs represents over half of the capital deployed and there's a direct correlation between their deployment and EBITDA generation. Certarus is proud of the fact that we have the largest fleet in the industry. We expect the end of the year with over 700 MSUs in the fleet, which we estimate is 4x larger than our next competitor. Certarus' got to start 10 years ago in Western Canada helping customers display diesel fuel compressed natural gas. Initially, our customers converted fuels to realize the cost savings offered by natural gas, but as the focus on reducing carbon emissions increases, the lower carbon intensity of natural gas versus diesel and fuel oil has become -- has also become a key decision factor. Over the years, we've achieved strong, profitable and organic growth while diversifying into several different industries and expanding across Canada and the United States. We're also adding renewable natural gas and hydrogen service offerings to our core CNG business. We're now looking forward to being able to leverage our propane offering and new Superior scale to our advantage. Talking on the quarter, obviously, we're quite pleased with the quarter and the year-to-date results for Certarus. The demand for low-carbon energy has accelerated, and the Certarus team has done an exceptional job safely executing on these opportunities. Our year-over-year increase in EBITDA is primarily driven by our growth in our MSU fleet and the high grading of opportunities in this very high-demand market. I'll turn it over to Beth to assess the financial results.

Thank you, Curtis, and good afternoon, everyone. Superior delivered a strong second quarter adjusted EBITDA of $69.1 million pro forma to the results from the Certarus acquisition and Superior second quarter adjusted EBITDA, including the results of Certarus from the close of the acquisition, was $40.1 million. This is an increase of $14.5 million compared to the prior year quarter, driven by contribution from Certarus in June and higher adjusted EBITDA from the propane distribution businesses, partially offset by higher corporate costs. Net earnings of $107.3 million for the first 6 months of 2023 compared to the net earnings of $56 million in 2022. This was a $51.3 million increase. The second quarter net loss was $39.8 million compared to a net loss of $85 million in the prior year quarter. The primary driver for the decrease in the net loss with higher gross profit and a gain on derivatives and foreign currency translation of borrowings compared to a loss in the prior year quarter. This was partially offset by higher SG&A and higher finance expenses. Turning now to individual business results. U.S. propane adjusted EBITDA for the second quarter was $18.6 million, an increase of $2.4 million compared to the prior year quarter. Second quarter adjusted EBITDA was positively impacted by higher average margin contribution from the Quarles acquisition completed in June 2022 and to a lesser extent, the impact of the weaker Canadian dollar on the translation of U.S. denominated transactions. Average margins increased primarily due to disciplined margin management and a declining commodity price environment and measures to offset the impact of inflation and rising labor costs. This was partially offset by a realized loss on commodity hedges in the first quarter compared to a realized gain in the prior year quarter. The higher adjusted EBITDA was partially offset by higher operating costs related to the Quarles acquisition and the impact of inflation and increased labor costs. Weather variances has been less than possible in the second and third quarters due to the lot of heating demand. Average weather in our U.S. operating region was modestly colder than the prior year quarter and 4% warmer than the 5-year average. Canadian Propane adjusted EBITDA was $13.6 million, modestly higher than the prior year quarter. The modest increase in EBITDA was primarily due to higher average margins related to margin management initiatives to offset the impact from inflation and higher labor costs. This was offset in part by lower volumes related to warmer weather and higher operating costs related to inflation and labor. Similar to the U.S. business, weather variances are less impactful in the second and third quarters due to lack of heating demand. Average weather in Canada was 16% warmer than the prior year quarter and 15% warmer than the 5-year average. Wholesale propane achieved adjusted EBITDA of $5.4 million in the second quarter, an increase of $3.6 million compared to the prior year quarter. This was driven by higher gross profit related to the wholesale propane market fundamentals in California and to a lesser extent in Canada. The higher gross profit was offset in part by increased freight costs and the impact of the weaker Canadian dollar on the translation of US-denominated operating costs. Certarus achieved pro forma adjusted EBITDA for the second quarter of $41.5 million, an increase of $15.2 million from the prior year quarter of $26.3 million. This was driven by growth in the MSU fleet, price management and utilization of MSUs and lower cost of sales related to natural gas prices. Certarus adjusted EBITDA from the date of close of the acquisition on May 31, 2023, was $12.6 million. Turning to corporate results, the adjusted EBITDA guidance and leverage. Corporate administrative costs for the second quarter were $10.5 million, an increase of $6 million compared to the prior year quarter due to higher insurance costs, CEO transition costs and the impact of inflation and higher long-term incentive plan costs. This is related to the change in the share price in the prior year quarter. Superior realized a gain on foreign currency hedging contracts of $0.4 million, modestly higher than the gain in the prior year quarter as Superior's average head rates were high relative to the average U.S. CAD rate in the current quarter. Superior's total net debt to adjusted EBITDA leverage ratio for the trailing 12 months ended June 30, 2023, was 3.6x, which is at the lower end of our target range of 3.5x to 4x. The leverage ratio declined from 3.9x at March 31, 2023, driven by higher pro forma adjusted EBITDA related to the Certarus acquisition and improved results from the propane distribution businesses. We expect leverage to remain in the target range of 3.5x to 4x for the remainder of 2023. We're increasing our 2023 pro forma adjusted EBITDA guidance range from $620 million to $660 million to a range of $630 million to $670 million, which includes the Certarus' full year adjusted EBITDA in the range of $185 million to $195 million. The increase in the adjusted EBITDA guidance was based on the Certarus strong year-to-date results and expectations for the Certarus and propane distribution businesses for the remainder of 2023. As we look to 2024, we still expect to achieve the Superior Way forward EBITDA from operations target of $700 million to $750 million by the end of 2024, which is 2 years ahead of expectations. With that, I'd like to turn the call over to Q&A.

[Operator Instructions] Our first question comes from Aaron MacNeil with TD Cowen.

Curtis, since it's the first conference call for both of us, maybe I'll start with you. We've seen the U.S. rig count decline by over 100 rigs year-to-date, yet you've increased guidance for the Certarus business. So obviously, this slowdown doesn't seem to be weighing you down. But I'm wondering if you can sort of give us some additional insights into how that reduction has impacted demand, if at all. And so in terms of specific questions, I'm wondering if you can -- if you've seen any reduction to CNG consumption from your energy customers? Or if you just increased your market share. And if you have seen reductions to energy-related demand, what types of end markets have you sort of redeployed those MSUs to?

Sure. Thanks, Aaron. So when you look at the rig count, that that's one marker for our energy side of our business, but it really has a pretty low correlation for our business. So we've seen good growth driven out of the energy sector that we serve all types -- all parts of the energy sector from power applications to drilling and completions operations. So seeing good activity. What we tend to see is the equipment that we provide is the leading edge equipment that's the last equipment to be laid down. So we're quite pleased that in a slowdown situation that we are -- we're the last of equipment to be stopped. And so that provides some great growth even in potentially a slowing energy environment. We're not seeing that. But we're seeing good growth in the energy side. And as you see our results continue to increase. You're seeing the result of our continued diversification strategy. As we've been really focused on growing into a number of different industries and in particular, good growth on the utility side of our business as well as good growth in our renewable natural gas side of our business.

Makes sense. Not sure if this next one is for Allan or Beth, but we saw an uptick in the NCIB post quarter. Just wondering if you could rank your discretionary capital allocation priorities between debt reduction NCIB organically growing the Certarus fleet M&A opportunities in the propane business and anything else I might have missed?

Well, hey, it's Allan here. Thanks. Still growing the business far and away is our first priority. We want to exhaust every opportunity to make sure that we're driving growth in Certarus. It's an incredible story and a great new asset for us to have in the business. So that's our first priority. After that, then you start to become circumstantial because you go look M&A, as we've been saying, is really a secondary focus now. We've gotten great scale in the market. We feel really confident with where we are in terms of our legacy business. Obviously, we still want to be opportunistic or if there's a tuck-in that makes sense, we'll pursue that. And then I would say that in terms of share buybacks and debt reduction, it really depends on the circumstance at the moment. We've been doing some share buybacks in the last month, which we're pleased with. But we're going to continue to look at it. Suffice it to say, though, our first priority is growing the business.

We have a question from Gary Ho with Desjardins Capital Markets.

My first question is for Allan or Curtis. Curtis for your comments. And you mentioned you guys are 4x larger than next competitors. Maybe you can elaborate a little bit on the competitive landscape, are others also growing at the same clip? And then are there M&A opportunities as well, I remember at the onset of the transaction, one of the revenue synergies identified was cross-selling to existing and new customers across the 2 platforms. Has that process started? And what's been the feedback from clients so far?

Yes. Thanks. From an overall industry perspective, Certarus is by far the market leader in this compressed natural gas, renewable natural gas and hydrogen space. And so as I mentioned that our fleet of MSUs is over 700 units, 4x larger than the next competitor. But we are -- we definitely see other players in the market, and we watch that. It's a great market. I think you'll continue to see new entrants come into this space. And one of the things that we've seen over time is that there's a tremendous advantage to having the scale that Certarus has in this business, and it allows us to take on larger projects and also service customers all across North America really well with our infrastructure. And so I think what we'll watch over time is that there might be some interesting tuck-in opportunities with some of the smaller players that realize it's difficult to compete without scale in this business. But in saying that, within our history, Certarus has been an organic growth business and that our most attractive opportunities have always been organically growing the business. We've got a great track record as consistently having great opportunities to deploy into new markets and new regions and do it quite successfully. And so I expect that, that will be, by far, the focus of the business, but we will watch if there might be an interesting tuck-in down the road.

And then on the…

Gary, it's Allan. In terms of sales, we were precluded from having any conversations about customers or sales during the transaction process. So we're kind of -- we're into this partnership and we're measuring it in days in not even weeks. We got 2 teams working together to say, okay, where does it make sense to have a single strategy to go after segments with this new breadth of energy solutions that we have. So the Certarus team and the Superior team are working real close. And getting along nicely I might add. So we're looking for action to come out on that in the very near term.

What's really interesting, Allan, we've enjoyed working. It's still early days of this, but the Superior footprint in the U.S. and the Certarus footprint in the U.S. perfectly complement one another. And so there's real opportunity to leverage off each other's infrastructure and sort of sales reaching pipelines. I think to cross-sell across both, it's fantastic.

Yes. We have high hopes for this initiative.

Okay. That's great color. And then Allan also have you -- maybe an update on the M&B block. I think it remains a bit about black box for investors. I believe they are now a sub 10% owner. Have you spoken with them recently? Any idea kind of where they stand?

Yes. I mean, look, let me start by saying that we can't speak on behalf of another -- an investor and another party. But we speak with -- we're in contact with M&B. We've got some further discussions coming up. And I can tell you at this point, they've not expressed any desire to draw down or to lower their positions. So forgive me, Gary, but that's as far as I'm going to go on M&B. Only out of respect to that, that they really should reserve the right to speak on behalf of their investment.

And our next question will come from Nelson Ng with RBC Capital Markets.

Great. Congrats on another strong quarter. So first of all, in terms of the Certarus guidance increase, I think now it implies that you'll be earning about $284,000 of EBITDA per MSU, can you just give a bit of color in terms of what has changed since you increased the guidance back in May? Like are you seeing higher contract rates for MSUs or are you increasing utilization, but any color would be great in terms of what has changed in the past 3 months?

Sure. Thanks, Nelson. We're continuing to see is a great environment, well, a very high level of demand and also a nice pricing environment. And it started -- we had a strategic shift a little over a year ago to really focus on high grading the mix of projects that we're on and in such a high demand environment to make sure that we are on the best projects to offer the best returns. And so I think what you're seeing is that strategy playing out right now that we specifically targeted projects that offer good returns, good pricing but also good activity right through Q2 and Q3. And as that plays out, you're seeing good results even for the second quarter.

Okay. That's great color. And then just on CapEx. Can you just clarify what the growth and maintenance CapEx spend has been to date at Certarus in terms of the first half and what we should expect in the second half. I'm just wondering whether there's any front-end loading or back-end loaded of CapEx?

Yes. Maybe the best way to answer that one, Nelson is sort of thinking about it for the whole year. So for Certarus, the overall capital expenditure with a good range would be to think about $125 million to $130 million for the year. If you want to look at that and split that between growth and maintenance. From a maintenance perspective, that's sort of in that $5 million range of $5 million to $10 million. And then the remainder of that would be growth CapEx. So I mean there's been some. I think as we look at the receipt of MSUs they'll be more receipts in the back half of the year than we received in the first half. So there will be some more spend. But if you want to think about it in the context of the whole year, that was $25 million to $130 million is a good number to think about.

Okay. And then just one last question. In terms of divesting the Northern Ontario retail propane locations. Can you just give an update on how that's coming along?

Yes. We're in process now -- the lawyers here looking at me, so I got to be careful what I say. We're in process right now. I can say that the interest we received were encouraging. It will be sometime between now and the end of the year that we'll be able to make an announcement. But so far so good, we're quick.

We have a question from Steven Hansen with Raymond James.

A question for Curtis, perhaps. Hey, Curtis, is it possible to frame what inning we might be in here from a penetration standpoint as we think about the TAM for mobile CNG over time? I'm just trying to get a sense for market gyrations relative to just ongoing penetration. Can you grow the fleet at a 15% CAGR for 3 years, 5 years? At what point do we start to worry about saturation in the market as you contemplate all these new opportunities you're looking at?

Sure. It's something that we have looked at constantly over the last 10 years as we've been growing Certarus. And what we've continuously been impressed with is how much the industry continues to grow. As people look for more and more opportunities for low cost, low carbon fuels, more and more applications keep on coming to us. And as technology advances, the scale of some of those opportunities have been really impressive. And so it seems like each year, we go back to this exercise, and we look at it, what is the addressable market, and we're continuously surprised that it continues to grow at a rate faster than we're growing at. A little over a year ago, we went out and did a very detailed market study and then looked at what we thought the addressable market was specifically within the CNG and RNG space, and we came out to an addressable market of about $6 billion to $8 billion that's in front of us in the near term. And so there's a significant amount of running room in that segment alone and then a much larger addressable market in the hydrogen space once the sort of full hydrogen economy comes to us. And so we look at those numbers and that's interesting from a market say perspective, but we see that real time right now in the markets that we play in. We're constantly entering new regions and new industry segments, and it's really impressive to see just the demand that's coming out of each one of those segments. Right now, we're working through a process of really targeting where we send our MSUs into which markets because we're in a situation where we're seeing more demand in each one of these segments that we can satisfy with our fleet, and we're having to make some tough decisions about where we go allocate this fleet. But gets us pretty excited to say there's a lot of running room. And from an innings perspective, we're definitely in the early innings of where can you go and where can we continue to grow? We look at specifically at a segment like renewable natural gas. And I think you can -- you look at that particular segment and the amount of capital that's going into the development of renewable natural gas in North America right now and the number of projects that are being developed. The likelihood is that the majority of those projects will not make sense to be connected to a pipeline, and they're going to need a mobile solution like Certarus to gather that gas and bring it to a pipeline. The scale of that opportunity to renewable natural gas alone is larger than Certarus' today, and we see that over the next few years. So there's just -- that's just one example. There's many industry verticals that we look at like that and say there's a tremendous amount of running room in these verticals. And so we're pretty excited about what the future looks like.

Okay. Great. That's really good color. And just maybe as a related question, as you sort of contemplate some of these growth opportunities, how do you feel about impediments in terms of supply chain access to manufacturing and just, I guess, basically MSU availability over time.

Sure, if you look at Certarus' history over time, we used to talk a lot about the supply chain bottlenecks and getting access to the mobile storage unit. So that was a key challenge for us. Early on, it was really only one manufacturer, and they had some capacity limitations. And we recognized that years ago that was going to become a bottleneck of Certarus' growth and to the point where we really spent a lot of time working with that supplier and help them increase their capacity and also developed another supplier in the segment. To the point now that I don't view the supply chain access to MSU as a limiter in our growth. Not only have we developed the capacity in that supply chain, but we also have supply agreements with the 2 main suppliers to ensure that we have access to the production slots that we need to be able to support our growth. And so that's been key. And actually, as I look forward and what are the bottlenecks to our growth when we continue to accelerate our growth. It's mainly around people. And it just -- there's a pace to how quickly you can develop teams in new markets that will grow. So we spent a tremendous amount of time around that. And when we think about growth, we spend a lot of time with the Superior team talking about growth. One of the biggest things that I'm excited about with the Superior transaction is now Certarus goes from a Canadian private company into a large Canadian public company that there's a real opportunity for us to really accelerate our growth to another level. But we see the demand available and now with the Superior platform, we can accelerate even faster the growth of Certarus in the coming years. And so it's no soon access, and Allan and I spent a lot of time talking about what can we do to keep on developing and using the resources of Superior to continue to accelerate that growth.

That's fantastic. And just one last follow-up, if I may, and it may be a hard question to ask, so I apologize in advance. But Curtis, for you and your team that took a fair bit of Superior stock in as part of the purchase price. Do you have a sense for how much of that stock is going to be held in firm hands versus going back to the market? It's been one of the concerns of investors here for the past couple of months.

So it's difficult for me to speak for all the investors. I think there's naturally -- there are some shares that will trade as part of that, and we're seeing that. But I'd also say that there's a pretty vocal large group of Certarus shareholders that are excited to be part of Superior to be part of this platform. And they also recognize, as we talked about earlier, that we're in the early innings of a growth story at Certarus and combined with the Superior platform. It's a pretty exciting future. And so there's a number of Certarus shareholders that are pretty excited to be able to participate in the next phase of the growth as part of a larger public platform.

I can tell you Steven just to add to that. And by the way, side note, we can debate whether we're in the early innings or I would argue we're just a batting practice and the game hasn't even started yet. But I've been pleasantly, pleasantly surprised with the level of engagement from the Certarus shareholders. They've been very welcoming. They've been keen to meet very curious about our story. And while I make no promise about where their heads are. These were -- they are very optimistic and enthusiastic group of individuals. So I just couldn't be more pleased with the reception they've given us.

And our last question comes from Robert Catellier from CIBC Capital Markets.

Just a couple of questions left from me. The first one for you, Allan. Now that you've had a couple of months in the seat. Do you have any insights as to how are you going to go about increasing returns from the prior propane acquisitions?

Rob, yes, I mean, really, what we're focused on is it's going to sound very boring, and I apologize, but it's operational excellence. We see a lot of opportunity for Andy and his team in terms of really getting under the covers of our pricing management, our churn management, how we're acquiring customers organically. And things like are we taking the right approach when it comes to capitalizing on lifetime value for customers, how we think about our loyalty offerings? So there's a lot of work going on. And I would give this team a lot of credit because they've spent the last number of years on this acquisition path. And when you're -- as I think we've talked about, you're acquiring these companies, it's so much work. You got to bring them in, you got to try and create some semblance of a single culture, retain the customer base, start to give them the capabilities that Superior offers, manage the branding. So that's consumed this organization. And I think now when we step back, we say, okay. Well, with our focus shifting from this time periods where we were generating scale, how do we now take advantage of that and build capabilities that are far beyond what we see at our competitors. So really, I'm optimistic about it. I know the team is hugely engaged. It's early days, but I think we have a lot of runway in the propane business from here on.

Yes. And I think what I might specifically add to that one is when you're asking about synergies associated with acquisitions, we would still be targeting by the end of 2023 from the sort of Quarles transactions to deliver another $6 million to $7 million of run rate synergies by the end of 2023.

Okay. Second question, a little bit more high level here. But as you look to put your mark on the corporate culture, you merged these 2 entities. What are your thoughts on the right level of share ownership for both the Board and the executive?

It's a great question. We want to have an organization, whether you're a board member or one of our drivers that you're really excited to be a shareholder of the company. It works for so many reasons. You want to have people who are concerned when they know that we have to really buckle down and drive results. We want to have people that are proud when we're in the news feeds as a success story. And so we're working really hard to foster that. It's really early days, but I think that we have a lot of opportunity to increase the broad shareholding across the entire organization when it comes to employees. And it's funny to raise that because that's actually one of the priorities we're working on kind of quietly behind the scenes here at the company. Early days, but if you ask where my thoughts are and where we should be? I think, we should be a lot more broadly helped across the organization.

And I'm showing no other questions in the queue. I'd like to turn it back to Allan MacDonald for closing remarks.

Well, listen, thanks everybody. We really, really appreciate the time that you've given us today. The time that you've taken to sort of craft your response to our quarter. And over the last 3 or 4 months, you've been so generous to spend time with Beth and I, and we look at continuing that. And I think over the coming quarters, we'll have lots of time to talk about this whole new journey that we're on here at Superior. So thank you all very, very much for your time.

Thanks everyone.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.