PKI Parkland Corporation

Record third quarter and year-to-date Adjusted EBITDA of $585 million and $1,450 million, respectively
Record third quarter and year-to-date Net earnings per share of $1.31 and $2.19, respectively
Leverage Ratio of 2.9 times is within target range

CALGARY, AB, Nov. 1, 2023 /PRNewswire/ - Parkland Corporation ("Parkland", "we", the "Company", or "our") (TSX: PKI), today announced its financial and operating results for the three and nine months ended September 30, 2023.

Q3 2023 Highlights

• Adjusted EBITDA attributable to Parkland ("Adjusted EBITDA"¹) of $585 million, up 78 percent from the third quarter of 2022.
• Net earnings attributable to Parkland ("Net earnings") of $230 million ($1.31 per share, basic) more than double the Net earnings from the third quarter of 2022, and Adjusted earnings attributable to Parkland ("Adjusted earnings"²) of $231 million ($1.31 per share, basic) nearly five times the Adjusted earnings from the third quarter of 2022.
• Cash generated from (used in) operating activities of $528 million ($3.00 per share, basic³), up 31 percent from the third quarter of 2022.
• Reduced borrowing under credit facility by $162 million, liquidity available³ of $1.8 billion, and lowered Leverage Ratio⁴ to 2.9 times (3.3 times in Q2 2023), within Parkland's target range of 2 to 3 times.
• Record Composite utilization⁵ at the Burnaby Refinery of 102.9 percent including record co-processing volumes of 2,600 barrels per day and consistent operational execution.
• Parkland has electric vehicle ("EV") charging operational at 33 sites, including 63 chargers, and is on track to meet our plan for 50 charging sites by early 2024.
• Parkland now expects to exceed its Revised 2023 Adjusted EBITDA Guidance range of $1.8 to $1.85 billion, driven by strong utilization, optimization at the refinery, and favourable refinery margins, as well as the strength of the International business in the third quarter of 2023. 

"I want to congratulate the Parkland team for delivering an exceptional quarter," said Bob Espey, President and Chief Executive Officer. "Our consistent performance demonstrates the quality of the business we have built and has enabled us to increase our 2023 Adjusted EBITDA Guidance, accelerate our 2024 Adjusted EBITDA Guidance of $2 billion, and lower our Leverage Ratio to 2.9 times. I have conviction in our strategy and confidence in our team's ability to meet and beat the ambitious targets we have set for ourselves. We look forward to sharing more about our plan to deliver value to shareholders at our upcoming investor day."

Q3 2023 Segment Highlights

• Canada delivered Adjusted EBITDA of $206 million, up 47 percent from Q3 2022 ($140 million). Fuel unit margins were higher than the comparable period as a result of continued optimization of our supply and integrated logistic capabilities and favourable market conditions. Company Volume Same Store Sales Growth ("SSSG"²) was 4.2 percent and Food and Company C-Store SSSG (excluding cigarettes)² was 3.6 percent, driven by organic growth initiatives in our loyalty and C-store programs. Canada delivered Food and Company C-store revenue of $81 million, up 17 percent from Q3 2022 ($69 million), primarily due to organic growth.
• International delivered Adjusted EBITDA of $170 million, up 63 percent, from Q3 2022 ($104 million). Performance was driven by organic growth that resulted in higher volumes in the wholesale business, strong fuel unit margins driven by favourable market conditions and pricing strategies, and the consolidation of Sol.
• USA delivered Adjusted EBITDA of $52 million, up $70 million from Q3 2022 (Adjusted EBITDA loss of $18 million). Results for Q3 2022 include spot wholesale inventory and risk management losses of $65 million. Excluding these losses, Adjusted EBITDA in the third quarter of 2022 was $47 million, and Q3 2023 Adjusted EBITDA was up 11 percent. Performance was underpinned by effective cost management initiatives and strong fuel unit margins in the Commercial line of business, partially offset by weakness in Retail fuel volumes and unit margins.
• Refining delivered Adjusted EBITDA of $188 million, up more than 39 percent, from Q3 2022 ($135 million). Performance was underpinned by robust crack spreads, record composite utilization of 102.9 percent, including record co-processing volumes of 2,600 barrels per day, and optimization of the production mix.
• Parkland's total recordable injury frequency rate⁵ on a trailing-twelve-months basis was 0.95, a decrease of 16 percent compared to 1.13 in the third quarter of 2022.

Consolidated Financial Overview

Q3 2023 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Thursday, November 2, 2023 at 6:30 am MDT (8:30 am EDT) to discuss the results. To listen to the live webcast and watch the presentation, please use the following link: https://app.webinar.net/39A5XB5PMgZ

Analysts and investors interested in participating in the question and answer session of the conference call may do so by calling 1-888-390-0546 (toll-free) (Conference ID: 19474746). International participants may call 1-800-389-0704 (toll-free) (Conference ID: 19474746).

Please connect and log in approximately 10 minutes before the beginning of the call. The webcast will be available for replay two hours after the conference call ends at the link above. It will remain available for one year and will also be posted to www.parkland.ca.

MD&A and Interim Consolidated Financial Statements

The Management's Discussion and Analysis for the three and nine months ended September 30, 2023 (the "Q3 2023 MD&A") and consolidated financial statements for the three and nine months ended September 30, 2023 (the "Q3 2023 Interim Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the three and nine months ended September 30, 2023. An English version of these documents will be available online at www.parkland.ca and the System for Electronic Data Analysis and Retrieval + ("SEDAR+") after the results are released by newswire under Parkland's profile at www.sedarplus.ca. The French versions of the Q3 2023 MD&A and the Q3 2023 Interim Consolidated Financial Statements will be posted to www.parkland.ca and SEDAR+ as soon as they become available.

2023 Investor Day Registration

Parkland will host its 2023 Investor Day presentation on November 14, 2023 at 9:00 am EST (7:00 am MST) to provide details on the continued execution of our strategy, capital allocation framework, and the Company's financial outlook. The event will be held at the Fairmont Royal York in Toronto, Ontario and simultaneously webcast with video for those unable to attend in person. Analysts and investors who wish to attend the event, either in person or remotely, are invited to register using the following link:

https://humancontact.formstack.com/forms/pkl_2023_investor_day_form

About Parkland Corporation

Parkland is an international fuel distributor, marketer, and convenience retailer with operations in 25 countries across the Americas. We serve over one million customers each day. Our vast retail network meets the fuel and convenience needs of everyday consumers. Our commercial operations provides businesses with industrial fuels so that they can better serve their customers.

With approximately 4,000 retail and commercial locations across Canada, the United States and the Caribbean region, we have developed supply, distribution and trading capabilities to accelerate growth and business performance. In addition to meeting our customers' needs for essential fuels, we provide a range of choices to help them lower their environmental impact. These include carbon and renewables trading, solar power, renewables manufacturing and ultra-fast EV charging.

Parkland's proven business model is centered around organic growth, our supply advantage, and is driven by scale, our integrated refinery and supply infrastructure, and focus on acquiring prudently and integrating successfully. Our strategy is focused on developing our existing business in resilient markets, growing our food, convenience and renewable energy businesses and helping customers to decarbonize. Our business is underpinned by our people, our values of safety, integrity, community and respect, which are deeply embedded across our organization.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information and statements (collectively, "forward-looking statements"). When used in this news release the words "expect", "will", "could", "would", "believe", "continue", "pursue" and similar expressions are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things: business objectives, strategies and model; Parkland's strategy to deliver synergies, cost efficiencies, and organic growth and the progress thereof; Parkland's Revised 2023 Adjusted EBITDA Guidance, its expectation to exceed its Revised 2023 Adjusted EBITDA Guidance range of $1.8 to $1.85 billion, and acceleration of the 2024 Adjusted EBITDA Guidance of approximately $2 billion; and Parkland's plan to have 50 electric vehicle charging stations by early 2024.

These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These forward-looking statements speak only as of the date of this news release. Parkland does not undertake any obligations to publicly update or revise any forward-looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks, assumptions and uncertainties including, but not limited to: general economic, market and business conditions; micro and macroeconomic trends and conditions, including increases in interest rates, inflation and commodity prices; Parkland's ability to execute its business objectives, projects and strategies, including the completion, financing and timing thereof, realizing the benefits therefrom and meeting our targets and commitments relating thereto; Parkland's management systems and programs and risk management strategy; the competitive environment of our industry; retail pricing, margins and refinery margins; availability and pricing of petroleum product supply; volatility of crude oil and refined product prices; ability of suppliers to meet commitments; actions by governmental authorities and other regulators including but not limited to increases in taxes or restricted access to markets; environmental impact; changes in environmental and regulatory laws, including the ability to obtain or maintain required permits; and other factors, many of which are beyond the control of Parkland. In addition, the Revised 2023 Adjusted EBITDA Guidance range reflects the full year contribution of 2022 acquisitions, integration and synergy capture, and organic growth initiatives, and the key material assumptions include: an increase in Retail and Commercial Fuel and petroleum product adjusted gross margin of approximately 10 percent and Food, convenience and other adjusted gross margin of approximately 15 percent as compared to the year ended December 31, 2022; and Refining adjusted gross margin of approximately $45 per barrel and average Burnaby Refinery utilization of approximately 80 percent based on the Burnaby Refinery's crude processing capacity of 55,000 barrels per day. Confidence in Parkland's ability to exceed the Revised 2023 Adjusted EBITDA Guidance range is driven by the favourable refinery margins environment and the strength of the International wholesale business in the third quarter of 2023. 2024 Adjusted EBITDA Guidance reflects continued integration and synergy capture, and organic growth initiatives, and the key material assumptions include: an increase in Retail and Commercial Fuel and petroleum product adjusted gross margin and Food, convenience and other adjusted gross margin of approximately 5 percent as compared to the year ending December 31, 2023; the realization of $100 million of MG&A cost efficiencies by 2024; and Refining adjusted gross margin of approximately $40 per barrel and average Burnaby Refinery utilization of 90 percent to 95 percent based on the Burnaby Refinery's crude processing capacity of 55,000 barrels per day. See also the risks and uncertainties described in "Cautionary Statement Regarding Forward-Looking Information" and "Risk Factors" included in Parkland's most recent Annual Information Form, and in "Forward-Looking Information" and "Risk Factors" included in the Q3 2023 MD&A, each filed on SEDAR+ and available on the Parkland website at www.parkland.ca. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Non-Financial Measures

Parkland uses a number of non-financial measures, including composite utilization and total recordable injury frequency rate, in measuring the success of our strategic objectives and to set variable compensation targets for employees. These non-financial measures are not accounting measures, do not have comparable International Financial Reporting Standards ("IFRS") measures, and may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for further details on the non-financial measures used by Parkland.

Specified Financial Measures

This news release contains total of segments measures, non-GAAP financial measures and non-GAAP financial ratios, supplementary financial measures and capital management measures (collectively, "specified financial measures"). Parkland's management uses certain specified financial measures to analyze the operating and financial performance, leverage, and liquidity of the business. These specified financial measures do not have any standardized meaning under IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. The specified financial measures should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for further details regarding specified financial measures used by Parkland.

Non-GAAP Financial Measures and Ratios

Adjusted earnings (loss) is a non-GAAP financial measure and Adjusted earnings (loss) per share is a non-GAAP financial ratio, each representing the underlying core operating performance of business activities of Parkland at a consolidated level.

Adjusted earnings (loss) and Adjusted earnings (loss) per share represent how well Parkland's operational business is performing, while considering depreciation and amortization, interest on leases and long-term debt, accretion and other finance costs, and income taxes. The Company uses these measures because it believes that Adjusted earnings (loss) and Adjusted earnings (loss) per share are useful for management and investors in assessing the Company's overall performance as they exclude certain significant items that are not reflective of the Company's underlying business operations.

See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for the detailed definition of Adjusted earnings (loss).

Please see below for the reconciliation of Adjusted earnings (loss) to net earnings (loss) and calculation of Adjusted earnings (loss) per share.

Food and Company C-Store SSSG is a non-GAAP financial ratio and refers to the period-over-period sales growth generated by retail food and convenience stores at the same company sites. The effects of opening and closing stores, temporary closures (including closures for ON the RUN / Marché Express conversions), expansions of stores, renovations of stores, and stores with changes in food service models in the period are excluded to derive a comparable same-store metric. Same-store sales growth is a metric commonly used in the retail industry that provides meaningful information to investors in assessing the health and strength of Parkland's brands and retail network, which ultimately impacts financial performance. Food and Company C-Store SSSG does not have any standardized meaning prescribed under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Please see below for a reconciliation of convenience store revenue (Food and C-Store revenue) of the Canada segment with the Food and Company C-Store same store sales ("SSS") and calculation of the Food and Company C-Store SSSG.

The non-GAAP financial measures and ratios should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Except as otherwise indicated, these non-GAAP measures and ratios are calculated and disclosed on a consistent basis from period to period. See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for further details regarding Parkland's non-GAAP financial measures and ratios.

Supplementary Financial Measures

Parkland uses a number of supplementary financial measures, including cash generated from (used in) operating activities per share, and liquidity available to evaluate the success of our strategic objectives and to set variable compensation targets for employees. These measures may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for further details regarding supplementary financial measures used by Parkland.

Capital Management Measures

Parkland's primary capital management measure is the Leverage Ratio, which is used internally by key management personnel to monitor Parkland's overall financial strength, capital structure flexibility, and ability to service debt and meet current and future commitments. The Leverage Ratio is calculated as a ratio of Leverage Debt to Leverage EBITDA (each as defined in the Q3 2023 Interim Consolidated Financial Statements) and does not have any standardized meaning prescribed under IFRS. It is therefore unlikely to be comparable to similar measures presented by other companies. See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for further details regarding capital management measures used by Parkland.

Total of Segments Measures

Adjusted EBITDA is a total of segments measure used by the chief operating decision maker to make decisions about resource allocation to the segment and to assess its performance. In accordance with IFRS, adjustments and eliminations made in preparing an entity's financial statements and allocations of revenue, expenses, and gains or losses shall be included in determining reported segment profit or loss only if they are included in the measure of the segment's profit or loss that is used by the chief operating decision maker. As such, Parkland's Adjusted EBITDA is unlikely to be comparable to similarly named measures presented by other issuers, who may calculate these measures differently. Parkland views Adjusted EBITDA as the key measure for the underlying core operating performance of business segment activities at an operational level. Adjusted EBITDA is used by management to set targets for Parkland (including annual guidance and variable compensation targets) and is used to determine Parkland's ability to service debt, finance capital expenditures and provide for dividend payments to shareholders. See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for further details regarding total of segments measures used by Parkland. Refer to the table below for the reconciliation of Adjusted EBITDA to net earnings (loss) for the three and nine months ended September 30, 2023 and September 30, 2022.

Parkland uses Adjusted gross margin as a measure of segment profit (loss) to analyze the performance of sale and purchase transactions and performance on margin.

See Section 16 of the Q3 2023 MD&A, which is incorporated by reference into this news release, for the detailed definition of Adjusted gross margin.

Refer to the table below for a detailed calculation of Adjusted gross margin for the three months ended September 30, 2023 and September 30, 2022

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SOURCE Parkland Corporation