Superior Plus Corp. (OTC:SUUIF) Q4 2015 Earnings Conference Call February 19, 2016 10:30 AM ET
Luc Desjardins - President & CEO
Beth Summers - VP & CFO
Darren Hribar - Chief Legal Officer & General Counsel
Rob Dorran - VP, IR & Treasurer
Nelson Ng - RBC Capital Markets
Joel Jackson - BMO Capital Markets
Steve Hansen - Raymond James
Dirk Lever - Alta Corp Capital
Patrick Kenny - National Bank Financial
Good morning, ladies and gentlemen. Welcome to the Superior Plus Q4 and Year-End Results.
I would like to turn the meeting over to Mr. Luc Desjardins. Please go ahead, Mr. Desjardins.
Well, thank you, and good morning. Welcome to the Superior Plus conference call and webcast to review our 2015 annual and fourth quarter results. I'm Luc Desjardins, President and CEO. Joining me today is Beth Summers, Superior Vice President and Chief Financial Officer; Darren Hribar, Superior Chief Legal Officer and General Counsel; and Rob Dorran, Superior Vice President, Investor Relation, and Treasurer.
For this morning call, Beth will start by providing a high level review of our financial results, which we released yesterday. Afterwards, I will provide an update on each business, and the Canexus acquisition before opening the call to the Q&A session.
Thank you, Luc, and good morning everyone. I'll provide some brief highlights on our financial performance and then turn it back over to Luc.
I'll 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 at superiorplus.com and on 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 news release we released yesterday which includes financial information for our fourth quarter and our 2015 financial year. As I walk over each financial metric on today's call, this will allow us to move more quickly into question-and-answer period.
That said I would like to provide some additional color on the impact of weather on our energy services business during the fourth quarter. Despite the operational improvements achieved towards Destination 2015 initiatives and the Superior Way program, the warmer than normal weather experienced in the fourth quarter has had an impact on our results.
Average weather across Canada, as measured by degree days, for the fourth quarter was 8% warmer than the prior year and 8% warmer than the five-year average. Average weather for the quarter in the Northeast U.S. was 16% warmer than the prior year and 21% warmer than the five-year average. This weather resulted in a decline in volume for Canadian propane distribution and U.S. refined fuel. And an approximately $12 million to $15 million decrease in EBITDA in the fourth quarter from expectation. The weather impact is more significant in the U.S. refined fuels business due to the sales mix.
U.S. refined fuels gross profit is approximately 60% residential heating oil and propane, whereas Canadian propane distribution gross profit is approximately 25% residential.
Weather side, we were pleased with Superior's fourth quarter, as results were consistent with our internal expectations, and we continue to see strong operational performance from our energy services business and solid operational and financial performance from CPD.
Consolidated adjusted operating cash flow or AOCF before restructuring and other costs for the fourth quarter was $73.1 million or $0.54 per share which compares to $85.8 million or $0.68 per share in the prior year quarter. Consolidated AOCF before restructuring and other costs for 2015 was $217.2 million or $1.68 per share which compares to $238.7 million or $1.89 per share in the prior year, a decrease of 9% on AOCF, and 11% on AOCF per share. Our 2015 AOCF per share was within guidance but at the lower end of the range of a $1.65 to $1.85 due principally to the weather experienced in the fourth quarter.
Before I discuss the results by business, I would like to highlight we have reclassified the foreign exchange hedging losses from EBITDA from operations to EBITDA to corporate level to provide enhanced clarity on the performance of the operations excluding the impact of hedging.
The benefit for U.S. operations experienced due to the strengthening of the U.S. dollar were offset by the impacts of the currency hedges in place and reflected at the corporate level. We were substantively hedged at one to one in the fourth quarter or at par in the fourth quarter of 2015 and the actual exchange rate was 1 to $1.30 or 1 to 1.34 USD to Canadian Dollar. Realized losses on foreign exchange hedging contract were $16.3 million compared to $6 million in the prior year quarter due to the weakening of the Canadian Dollar.
Turning now to the individual business results. Energy Services EBITDA from operations for the fourth quarter was $53.7 million compared to $60 million in the prior year quarter, a decrease of 11%. Overall gross profits were $1.8 million lower due principally to reduced volumes related to weather and reduced oilfield activity, offset in part by an increase in the average sales margin. Canadian propane average sales margins were $0.225 in the fourth quarter, a $0.022 increase compared to the prior year quarter due to the benefits from the continued low price environment and ongoing price management initiatives.
U.S. refined fuels average sales margins were $0.109 per litre consistent with the prior year quarter. Supply portfolio management gross profits were $13.7 million in the fourth quarter, a $6.4 million increase from the prior year quarter due to improved procurement and supply contract and favorable market conditions. Cash operating and administrative cost increased $4.5 million in the current year quarter due to the impact of a stronger U.S. dollar on U.S. denominated expenses, offset in part by the benefits of the Superior Way business process initiatives and reduced headcount.
Turning now to Specialty Chemicals. Specialty Chemicals EBITDA from operations for the fourth quarter was $32.5 million compared to $33.2 million in the prior year quarter. This is a decrease of 2%. Revenue was 3% lower and gross profit was consistent with the prior year quarter. Chloralkali revenue in the fourth quarter included insurance proceeds related to a business interruption claim of $4.9 million for the Port Edwards hydrochloric acid burner drop in 2013. Sodium chloride gross profits were modestly higher due to the impact of the stronger U.S. dollar on U.S. denominated sales which more than offset the decrease in sales volume.
Chloralkali gross profit were lower than the prior year quarter due to the decrease in hydrochloric acid pricing offset in part by the impact of the stronger U.S. dollar and increased sales volumes for all product.
Now turning to the construction product distribution. CPD EBITDA from operations for the fourth quarter was $15.9 million compared to $12 million in the prior year quarter, an increase of 33%. Revenues increased 11% and gross profit increased 16% compared to the prior year quarter. Revenues increased principally due to the impact from a stronger U.S. dollar on U.S. denominated sales. We continue to see good growth in this business in the coming years, further enhanced by the initiatives implemented the strength of the leadership team and the new ERP platform.
Corporate costs for the quarter were $2.5 million compared to $2.2 million in the prior year quarter.
On the debt management side at year-end the total debt to EBITDA leverage ratio was 3.2 times before restructuring and other cost. This is within our targeted range of 3 times to 3.5 times. As previously discussed, we anticipate having a total debt to EBITDA leverage ratio of approximately 4.1 times after the acquisition of Canexus and quickly delevering to our target range of 3 times to 3.5 times within 18 to 24 months of the closing.
Turning now to our 2016 guidance. Our guidance remains unchanged at $1.50 to $1.80 AOCF per share and excludes the acquisition of Canexus. However, based on the mild winter weather experienced in January, and early February, and the continued weakness in oil prices, early results are tracking towards the lower end of the range.
I'll now hand it back over to Luc.
Well, thank you, Beth. Overall, we were pleased with Superior operational performance for the fourth quarter. In the energy services business the benefits from improved cost structure and focus on intelligent pricing was able to largely offset the weather impact.
Canadian propane distribution delivered on the Destination 2015 target of operating costs of 66% on operating expense to gross profit ratio, down from 69% in the prior year, and 78% the year before that.
Looking ahead, 2016 energy services EBITDA from operation is anticipated to be consistent with 2015. Canadian propane and U.S. refinery fuel should continue to benefit from ongoing operational improvement and improved sales and marketing initiatives. The Canadian propane business is, however, expected to be negatively impact by lower demand from industrial and commercial customer due to their continued weakness in the oil and other commodity prices.
As we move forward on to Evolution 2020, we will strive to continue to find ways to improve operational efficiency on our energy services business and grow our sales 2% to 3% higher than the market, something we've able to accomplish with Destination 2015. We plan to continue to drive the OPEX to gross profit ratio in our Canadian propane distribution business down further and target add-on acquisition to build on those solid platform. We are targeting completing acquisition at attractive multiple and target operational synergy of 1 to 1.5 times EBITDA soon after the acquisitions are made.
We are targeting growing active propane customer by 2% per annum in the Canadian propane and U.S. refinery fuel business to continuous investment in sales and marketing. We'll use added value customer offering such as fixed price program, digitalization to differentiate ourselves, and improve the customer service experience.
Procurement and leveraging our size to purchasing propane will continue to be a focus, as well as developing a wholesale propane business like West America. I'm excited by the Destination 2015 accomplishment and where the energy service business is going in the mid-long-term.
Turing to construction product distribution. We're very pleased with the 2015 results. The senior management team in Dallas has done a great job to focus on gross profit to intelligent pricing and supply chain and procurement initiative and operational improvement. We continue to see meaningful sales growth on this trend of our U.S. end-used market. In 2016 EBITDA from operation is anticipated to be consistent with the prior year as the one-time cost of finishing our system integration project will offset the EBITDA growth in 2016.
Revenue should continue to grow in GSD and commercial insulation due to growth in the U.S. We expect Canada will have slower growth due to the continued weakness in chloralkali. Intelligent pricing and continued focus on procurement supply chain should increase our gross profit in 2016 and beyond.
Operating expenses are expected to increase relatively to our sales growth. And Mike Farrell and his team will continue to look for operational efficiencies. We have made a significant investment in our ERP platform and fleet, which should benefit the business and provide the tools necessary for EBITDA growth in 2017 and beyond.
As I mentioned earlier, 2016 EBITDA is flat due to over $8 million of one-time system integration cost. So 2017 we expect to see the EBITDA improvement capturing this one-time cost and anticipate a continued EBITDA growth, normal growth in 2017, so double gain for 2017.
Turning to Specialty Chemicals. 2015 was a challenging year due to the impact of continued weakness in the price of oil which led to lower demand for hydrochloric acids and lower pricing. ERCO has worked hard to improve plant efficiency and our plants are operating at rates above industry averages. Specialty chemical EBITDA for 2016 is anticipated to be consistent with the prior year as we're not anticipating any improvement in Chloralkali in 2016; especially for hydrochloric acids due to the ongoing weakness in oilfield activity.
Turning to the acquisition of Canexus. During the fourth quarter the Canexus shareholder voted in favor of the acquisition by Superior. Accordingly the one significant condition that remains obtaining is obtaining regulatory approval from the Canadian and U.S. regulatory agencies. As far as that process goes, Superior and Canexus have complied with the information request from both agencies. The agencies are still in the process of conducting the review of the materials provided. We expect to have further discussion with the agencies regarding the status of this review over the coming weeks. The bottom-line is that we remain confident that we will be able to close the acquisition in the second quarter of 2016.
In addition, we've done more work to evaluate the $35 million in estimated synergies. Superior has hired an external integration expert and a sample of integration team made up of employee from Superior, Canexus, and ERCO, to identifying specific categories of synergy and the plan to achieve them. We are more and more confident in the $35 million in synergies is achievable and we're ready to start day one after the acquisition is closed.
With that said, I would now like to open up to any question that you may have.
Thank you. [Operator Instructions].
The first question is from Nelson Ng from RBC Capital Markets. Please go ahead.
Great, thanks. I will add a quick question on the sodium chloride side, in terms of the volumes expected in 2016, what percentage of the -- or how much of the volumes do have fixed prices for would it be like the vast majority of volumes?
Yes, the contracts for 2016 are pretty well all done and finished and even parts of 2017. So 2015 at this stage we know how much contract we have and at what price for the whole year.
And are you able to quantify the percentage of volumes in 2017 that has been contracted today?
Yes, a little bit less volume. If you recall in 2015, we reduced the products over two years 2014 and 2015. So we have that volume less. We're talking here a small amount; it's in the neighborhood of 20,000 ton less in 2016 versus 2015. But it will not affect the EBITDA profitability.
When we got to a lower number at Tronox, the cost of the Tronox deal and then the EBITDA, it kind of becomes neutral. So there are little bit less volume overall for ERCO in 2016, but no EBITDA effect from that lower volume due to the Tronox situation.
I see, okay. Then just switching over to the energy services side, in terms of the supply portfolio management division that I guess experienced a big improvement in Q4. I think part of it was due to your, like improved terms on your propane supply. Would that improvement be more of a run rate in Q4 or were there some kind of one-time gains that that division delivered in Q4?
Very good question, Nelson, and overall I wish you were right that we would still maintain. 2016 overall profitability of our supply chain as we have business is going to be similar 2015. We do have less volume and due to the oilfield and the commercial customers that are supplying in the oilfield, so but we expect the same EBITDA for that division in 2016 versus 2015.
We're growing that division wholesale to a good rate in America and net-net with a bit less volume due to the oilfield and commercial customer that are supplying the oilfield we see that group and it's tracking well so far to be similar 2016 result than 2015.
But you have quarter-by-quarter it varies, it's been like that since I've been here, four years now and you have some quarter where it shows more and other quarters it shows less. But overall year-to-year it really becomes a -- it's been a good improvement over the last four years and 2016 will be similar to '15 overall year-over-year.
Okay, thanks. One last question on the CPD side like with the oil and gas sector significantly cutting their CapEx budget for 2016, I guess are there any risk to your CPD budget and is there think --
There is --
We're losing about $1 million in that particular parts of our sales but we're gaining it in other place. So when we look at bottom-line CPD a good $8 million EBITDA improvement. We're very confident we will do that.
Now remember I just explained that one-time cost of rebuilding the full process of ERP is taking that away in 2016. That's why I'm seeing a double gain in 2017 in that division.
So the sales and the profitability coming from the oilfield for SPI division of CPD is very small for us. So no big effect overall.
Thank you. The next question is from Joel Jackson from BMO Capital Markets. Please go ahead.
I would like to talk about Canexus. Can you give a little bit more color when were you in Canexus able to submit back your responses to a question. And then may be just give a little more update on, I think you said the coming week or the coming weeks when you get back to hear from them next. And then the last part of that would be do you have a sense now of the regulatory review when you look at assets and concentration in industries if they are thinking about it from a national perspective a transnational or regional and do you think that they are looking at chlorate as well as Chloralkali, thank you.
So how's that, we have Darren Hribar, a lawyer, who is really into weeds a bit hay with that situation. So I think he will do a better job than me to answer that question, so I will pass it to him.
Sure. So I can say that in terms of when we submitted our responses, I can't remember the exact dates but probably the critical part is that the waiting period in Canada would have expired on February 12, so you probably just back up 30 days from there. In terms of the U.S. the waiting period is actually scheduled to expire in mid-April. So the U.S. period has taken a little bit longer for a couple of reasons, one just the extent of the materials that the U.S. is requested and the number of custodians that they require information probably just ends up being a longer process, Joel. So that sort of covers the timeframe between the two of them and when we submitted it.
I think the second question or second part of your question was when do we expect to hear back. So at this date the last that we submitted information to the U.S. FTC was February 12. So they have just recently received all of the materials. Our best guess is we will likely hear something from them over the next two to three weeks about the status of their review. They are continuing to do that and we've been in contact with them throughout the process but we don't have anything further at this point but expect to have something a little more detail in the next two to three weeks.
And I think your last point was about to what extent they've looked at it on a national or regional basis. I don't have any of that detail to provide for you. Just we haven't got into that level of discussion with them. So I don't have anything for you on that point.
Okay. And so if I understand what you said that the Canadian regulator has basically their rating period expired, so they have not suggested any remedies or they basically approved it there is no remedies or asset carve outs that Canada is requiring, it's not just the U.S.; is that correct?
No, that's not correct. They're still in the process of their review. I think what you can take from the fact that their statutory waiting period expired. They know for well that it doesn't in the U.S. which prevents us from being able to close the transaction till that period expires. So I think on the Canadian side we're in the same process. They've communicated that they're well advanced in the review. But we'll hear from them likely in the next two to three weeks as to the status of that review as well.
As far as the arrangement agreement goes, in terms of a condition, it would also require -- one of the conditions we have is it also requires us to receive a no-action letter from the goods and not just the expiry of the waiting period. Obviously, we haven't received anything like that at this stage.
I guess -- overall, I would say we remain on schedule to complete the transaction in the second quarter. And the review has gone pretty much as expected with the exception of the U.S. being a fairly extensive process and perhaps, took a week or two longer than we expected.
Okay. So my last follow-up on that would be so can one reasonably imply here that the American regulators are really leading the regulator review effort here, is that reasonable?
No, I certainly wouldn't read that into it. What you might read a bit into it is that from a practical standpoint they -- there may be some coordination at some point between the two of them. There hasn't been anything at least as far as we're aware at this point, but I think that might be more something to read into it. They both have their own particular items that they are going to want to look at. So I think that's how I would deal with rather than dealing it that the U.S. is taking a lead.
Thank you. The next question is from Steve Hansen from Raymond James. Please go ahead.
Just a follow-up on this and I hate to deep the details of the debt, but I just want to make sure that I understand it correctly on the transaction. So if you're to hear back from the Canadian regulators in the next two to three weeks let's say is that -- what exactly are you expecting to hear from them? And is that just the basis for negotiations to begin on any potential remedies or I'm just trying to understand the next sort of key steps from your perspective once the regulator come back?
Sure. I mean obviously can't speak for what the regulators are going to say. But I guess if we have to anticipate it would be they would talk to us through their review where they stand on that review and where they think the next steps are from there. That could vary from a number of things. So pretty hard to speculate at this point what they're going to so. But you're right; it could end up in further discussions about that. And I think we envision that that's likely the process.
Okay. That's very helpful actually. And then if I'm just thinking about the closure date by the end of second quarter, I mean it doesn't seem to give a ton of cushion I'm thinking just offhand. But I mean once the remedies or non-remedies or lack of remedies have been decided, is there typically a window of timeframe that it takes to close from that point, is it just rough timing from probably all the standpoint?
Yes. I think there is couple of things that you'd have to focus on there. But you're likely working with them throughout the process. So you have a little bit of a heads up on timing for closing and that kind of thing. And then in terms of completing the transaction, yes I think you -- you're going to get a little bit of a heads up before that. Once you're actually I think at the point where you've gotten approval, the closing would be relatively short after that.
Okay. Thanks. That's helpful. And then just one actual operation question. I'm really sorry. Just on the CPD expenses into next year on the ERP closures, is there some clarity on that $8 million, Luc, in terms of it being the final thumb? And I'm just always nervous that ERP stuff can linger at last and bridge into the '17 as well?
You're so right. That's the way the most of the world goes around. But I can assure you we've done the ad majorly, major rebuild and process in Canada. In my carrier, I pay to admit probably my 15/1. We're doing one parallel; in U.S. our ad was going extremely well, it's easier, because it's all about inventory.
I am extremely confident, I know that Mike and Mary and finance person in the team and now it's been organized it's really clicking extremely well on-time, on budget, be finishing by September. We'll issue, we drag a month may be, no more. Really looking well, on-time, on cost. Take it for grant. I know it's -- we're asking you to have faith. And we are executing extremely well on everything. We approach an operation business system. This will be the same. I can assure you the $35 million of synergy will the same. That part -- if you a lot to look at the enterprise and different business you're looking at, that part if I can give you my words you can sleep well on it and don't worry about it.
Okay. Good to hear that. Thanks guys. I'll hope we have some cold weather months. Thanks. Bye.
Yes. We could use that.
Thank you. [Operator Instructions].
And the next question is from Dirk Lever from Alta Corp Capital. Please go ahead.
Thanks very much. Good morning to you. Just wondering when you're looking at your chemicals division results and we look at Canexus, would there be any revisions in your mind to what we see on the Canexus side? I'm assuming that you get it at the half year point?
I -- that result, no. We're working with them on what we can work with them on the synergies and those area of marketing, sales margin customer, we don't even look at. I haven't look at one area as a whole.
Yes. Luc, I was thinking more on the operational -- just on their margins et cetera?
Yes. No, I -- our expectation from them which really is what we listen to like you on the result and that's coming probably in the weeks to come. I think its tracking as they told us for 2016 -- 2015. Where on their side I don't know what I'm not asked to talk about each line of their results, we're not going to reach to that level from the bottom-line of Canexus, so I think you -- it's probably reasonably good and it was last quarter, so no reason why it shouldn't be.
I think in both company -- I know for us, I'll talk for us because I -- we had a tough time in 2015. The tough time came from HCL where there were so much decline facts in the oil field for fracking and we used a lot of liquid for that, similar to a thousand ton and that segment disappeared. I think we were taken a bit by surprise, we didn't think it'd be that much that fast. And it did affect our results in 2015.
But we see now is -- like -- the last quarter and what we're seeing for 2016, we kind of reach the bottom. Chlorate, like I said earlier, we know where we're at because of all the contracts and the price. So it's pretty well done.
And then on the rest of the liquid that we sell chlorine is doing good. And overall, net we see a stability in ERCO which is long time 2015 was a rough ride for us. Now, we're stable. We're tracking properly and expecting to stay at that level in 2016. And then it will be about -- after that it will be about -- looking at the two enterprise, reorganizing the work, the operation where we can improve efficiency and plans putting the two company together and getting the synergy as fast if possible, which is working out well for us, because I think a bit more time rather we do could have happened three months ago, I won't deny that.
But having a bit more time we're doing something let's call a pre-integration plan, which doesn't happen in too many enterprise. And if you look at our execution history, Mike Farrell, in the last four years here were really, really are drilling down on different areas. And the $35 million is more solid than it's -- than what we -- we feel more comfortable about that for sure and we have the two enterprise together makes it, from an efficiency productivity such a good success story and we really believe every cent of the two department will come will happen.
Thank you very much.
Thank you. I'll probably give you more than you expect but I'm going to tell cannot passion [ph] either about getting this one going and the Canexus and ourselves together is great upside coming.
Thank you. The next question is from Patrick Kenny from National Bank Financial. Please go ahead.
I'm just wondering if there is been any change in your thinking around fully funding the Canexus transaction just in the context of where the high yield markets are today. And I guess specifically any thoughts around re-launching a sales force as for CPD at some point in 2016?
Well, I will talk first about CPD and then Beth; can structure the overall situation in finance. So on CPD at the Annual Meeting I said we are in the midst of we moved at office -- first of all 75% of our sales are USD and mostly comp as they are growing 10% in the states in construction. So we really are more and more U.S. company that's why we organize our head office in Dallas and it's been running extremely well, everybody is in place. Mike Farrell is leading that extremely well and as you probably some of you know he has worked for me on the construction product business in Dallas and it was a huge turnaround and a huge success and that's happening now at CPD.
So for us the best time to look at time because we said we're in three businesses and we would like to have such a bigger platform in chemical that's what the Canexus deal, we have a great strong platform in energy, we want to continue to build on that. So how much money do you have for the three business and are you the best parent and we said well, we like the CPD, well Carl and management team that worked with before we have a good story. So the overall objective was, let's continue to organize our work and we needed the top ERP system that's what helps you to get tens or millions in the distribution logistic world.
So we are building that and we are actually quite advanced. We're going to finish it before quarter four this year. Let's get the team in place and the leadership to march on, on sales pricing intelligence which we've done in energy and we've proven that in every business we've been involving. Then let's look at operational supply chain which is so big and aside the construction we buy a lot from tons of suppliers, we're reducing the number of suppliers getting better discounts.
So I guess what I'm saying is from a timing point of view it's better to put all of that behind us in '16 and I refer to a 747 plane that's going to be in air in 2017, so I would see it in the air before we consider selling it. Now, having said that, Patrick if I get a call tomorrow and somebody say we know what you're going to be in '17, '18 and we would like to give you that kind of money tomorrow, we're going to listen. But until then if that movie doesn't turn out, we're marching on to finishing all the work and it's happening all this year. So we're done after this year. Then in '17, '18 we have great position and a great growth market in the States to consider selling it.
Okay. Now, this is Beth, I'll take the second piece of that question around plans from a financing perspective. So it's quite clear obviously the market has been choppy and since the New Year. So as we communicated, our intention is to look at basically I'm going to say half and half of our need, half being high yield, half the convertible market would be the plan almost on a like for like basis. We did just from a flexibility perspective upsize the credit facility in the fall. So at close it will increase to $775 million from the $540 million it's currently sitting at.
So that provide us some liquidity for the business and I also like to refer to it as a little bit of a security blanket where the company has the foresight to put in place bridge facility. So we do have that flexibility, if required. So our intention is still look at the moment when it makes sense but we aren't back into a corner and we have some flexibility to make sure that we do it on an opportunistic basis when it makes sense.
And Patrick, we will be 4.1% leverage after the deal and deleveraging within 18, 24 months very quickly, very rapidly after that. Back to the --
Okay. Thank you for the color.
And then just lastly, can you remind us or clarify the wording around the close the transaction being subject to the satisfaction of certain other commercial conditions? Just wondering if you can remind us what sort of commercial conditions are being referenced there?
I'm sure Darren will answer that.
Sure. And I don't think there is anything that we're thinking of in particular. There just may be conditions in the arrangement agreement to provide certificates and things like that. I wouldn't think of anything material there at all.
Thank you. There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Desjardins.
Okay. Well, thank you everyone. May be as a conclusion, we're asking a little bit our investors to have an active faith. And I think you can see from the history we're proven, we can execute project extremely well. I would call it best of class.
And when you look at our enterprise in 2016 being somewhat similar to '15, everybody would like and including all of us, of course there will a better upside, but you got to take in consideration the couple of things.
First of all, we had a lot of win in our faith with foreign exchange position, which will improve our result year-to-year in the future and just a question of time. And the Canexus acquisition will bring us very strong operational platform to do well in North America through the synergies of the operational efficiency and giving us some growth in the Brazil market where they do, the place of the world where we're going to probably double the overall volume in the next seven years, because that's where everything gets done there from growing tress in seven years versus 20 plus in North America. So we have now that coming soon that platform to help us looking at growth, as well as operational cost of $35 million or so.
Nonetheless, I like to believe that the normal weather will come back and the history shows it does. And it's been there almost $15 million negative that we don't like to take weather as an excuse. But when the energy will and when people needs less energy, when we have 21% less warmer than normal in the Northeast USA where we're 60% residential you get affected, hard to catch up such a reduction in volume.
CPD as you could see is tracking extremely well. I promise you all the GRP will be on-time, on cost. We're finishing all the heavy lifting this year and expecting a really great 2017.
So I guess what I'm saying is when I think of our stock and our value and our company I know there is lot of stuff going on, it's complicated. There is a lot of noise, lot of plus and minus but none when you look at the central price and the business fundamentals and the position we have, the platform we have it's a great enterprise. We're going to have one more year of doing all of the above, that we talked about. And it can only be a great enterprise going forward even if the markets are bit choppy and difficult out there.
So we're confident, we know we have to continue to do heavy lifting and our work in 2016. And I can almost tell you all that we're with very high level of confidence. This is a great enterprise and we'll probably surprise the world a lot there in '17, '18.
So, on that note, thank you all for following our enterprise.
Thank you. The conference has now ended. Please disconnect your lines at this time. And thank you for your participation.
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