Parkland Announces 2022 Third Quarter Results

Completed previously announced acquisitions Focused on balance sheet strength and shareholder distributions On track with 2022 Adjusted EBITDA[1] guidance range of $1.6 to $1.7 billion

Calgary, Alberta, November 2, 2022 / CNW / - 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, 2022.

Q3 2022 Highlights

• Adjusted EBITDA attributable to Parkland ("Adjusted EBITDA"

  [1]

  ) of $328 million, down approximately 10 percent from Q3 2021. Excluding previously disclosed spot wholesale inventory and risk management losses in our USA segment of $65 million, Adjusted EBITDA was $393 million, up 8 percent from Q3 2021.

• Net earnings attributable to Parkland of $105 million ($0.67 per share, basic), down from $110 million ($0.72 per share, basic) from Q3 2021, and Adjusted earnings attributable to Parkland

  [1]

   

  of $49 million ($0.31 per share, basic), down from $129 million ($0.85 per share, basic) from Q3 2021.

• Trailing twelve months ("TTM") distributable cash flow

  [1]

   

  of $726 million ($4.68 per share) and Q3 2022

   

  cash generated from operating activities of $402 million, up $14 million and $202 million, respectively, from the comparable prior year periods.

• Leverage ratio

  [1]

   

  of 3.5x, up from 3.2x in the prior quarter. Long-term debt primarily increased due to the completion of previously announced acquisitions and foreign exchange impacts.

• Fuel volumes of approximately 7 billion litres, up over 13 percent from Q3 2021, reflecting the strength of our marketing business and the impact of acquisitions.

• Completed the previously announced acquisitions of select Husky branded retail locations and the Jamaican business of GB Group. Subsequent to the quarter, we completed the consolidation of our International segment.

• Parkland is suspending its enhanced Dividend Reinvestment Plan for its common shares until further notice. As a result, shareholders will only receive future dividends in cash.

“Record year to date Adjusted EBITDA puts us on track to deliver our 2022 guidance,” said Bob Espey, President and Chief Executive Officer. “We have completed all previously announced acquisitions and remain focused on integrating the acquired businesses and capturing synergies. We have demonstrated disciplined capital allocation and will strike a balance between reducing our leverage ratio, enhancing shareholder distributions and growth. We anticipate a strong 2023 and remain confident in achieving our $2 billion Adjusted EBITDA ambition by 2025.”

Q3 2022 Segment Highlights

• Canada

   

  delivered Adjusted EBITDA

  [1]

   

  of $140 million, up approximately 4 percent from Q3 2021 ($134 million). Performance was underpinned by strong fuel unit and c-store margins and acquisitions.

• International

   

  delivered

   

  Adjusted EBITDA of $104 million, up 25 percent, from Q3 2021 ($83 million). Performance was underpinned by our consolidation of our International segment and volume growth driven by ongoing tourism recovery.

• USA

   

  delivered an Adjusted EBITDA loss of $18 million, down from Adjusted EBITDA of $43 million in Q3 2021. Excluding the impact of previously disclosed spot wholesale inventory and risk management losses, Adjusted EBITDA from our retail and commercial businesses was $47 million, an increase of 9 percent from Q3 2021, driven by acquisitions, strong fuel unit margins and marine contract wins.

• Refining

   

  delivered Adjusted EBITDA

  [1]

   

  of $135 million, up 7 percent, from Q3 2021 ($126 million). Performance was underpinned by strong refining crack margins, consistent operations, and composite utilization

  [2]

   

  of 94 percent (101 percent in Q3 2021), partially offset by higher operating costs.

Sustainability Leadership

Sustainability is deeply embedded across our business. Accomplishments from the third quarter, and year-to-date are included in the Q3 2022 MD&A. Third quarter highlights include:

• Continued reduction in year-over-year TTM lost time and total recordable injury frequency rates

  [2]

  .

• Co-processed over 32 million litres of bio-feedstocks; equivalent to removing over 30,000 cars off the road.

• Generated $16 million of Total Renewable Adjusted EBITDA

  [1]

  .

• Published our 2021 sustainability report, available

   

  here

  .

Consolidated Financial Overview

⁽¹⁾   Certain amounts within sales and operating revenue, cost of purchases, and Marketing, general and administrative were restated and reclassified to conform to the presentation used in the current period. Refer to the Basis of presentation section of the Q3 2022 MD&A. ⁽²⁾ Certain amounts were restated for the impact of hyperinflation on the respective prior periods in 2021. ⁽³⁾ Total of segments measure. See "Specified Financial Measures" section of this news release. ⁽⁴⁾  Non-GAAP financial measure. See "Non-GAAP Financial Measures and Ratios" section of this news release.

Q3 2022 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Thursday, November 3, 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/APvXEkv1p2a

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: 73952116). International participants may call 1-800-389-0704 (toll-free) (Conference ID: 73952116).

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 Consolidated Financial Statements

The management's discussion and analysis for the three and nine months ended September 30, 2022 (the "Q3 2022 MD&A") and consolidated financial statements for the three and nine months ended September 30, 2022 (the "Q3 2022 Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the three and nine months ended September 30, 2022. An English version of these documents will be available online at www.parkland.ca and SEDAR after the results are released by newswire under Parkland's profile at www.sedar.com. The French versions of the Q3 2022 MD&A and the Q3 2022 Consolidated Financial Statements will be posted to www.parkland.ca and SEDAR as soon as they become available.

About Parkland Corporation

Parkland is an international fuel distributor and retailer with operations in 25 countries. Our purpose is to Power Journeys and Energize Communities, and every day, we provide over one million customers with the essential fuels, convenience items and quality foods on which they depend.

With over 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 ultrafast Electric Vehicle charging.  

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

For Further Information

Investor Inquiries                                                                         Media Inquiries Valerie Roberts                                                                            Simon Scott Director, Investor Relations                                                         Director, Corporate Communications 403-956-9282                                                                             403-956-9272 [email protected]                                                      [email protected]

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 and strategies; Parkland's expectation of meeting its 2022 Adjusted EBITDA guidance; Parkland's expectation of a strong 2023 and being on track to achieve its ambition for $2 billion of Adjusted EBITDA by 2025; the payment of future dividends, if any; integrating acquisitions and capturing synergies; and Parkland’s expected capital allocation, including balancing reducing Parkland’s leverage ratio, enhancing shareholder distributions and growth.

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, including the duration and impact of the COVID-19 pandemic and the Russia-Ukraine conflict; Parkland's ability to execute its business strategies, including without limitation, Parkland's ability to successfully integrate acquisitions, capture synergies, reduce its leverage ratio, successfully implement organic growth initiatives and to finance such acquisitions and initiatives on reasonable terms; Parkland’s ability to complete transactions and projects; competitive action by other companies; refining and marketing margins; the 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; changes and developments in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. See also the risks and uncertainties described in "Forward-Looking Information" and "Risk Factors" included in Parkland's Revised Annual Information Form dated March 17, 2022, and "Forward-Looking Information" and "Risk Factors" included in the Q3 2022 MD&A dated November 2, 2022, 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, TTM lost time injury frequency rate and TTM 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 14 of the Q3 2022 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 ratios and 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 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 14 of the Q3 2022 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 is a non-GAAP financial measure and Adjusted earnings per share is a non-GAAP financial ratio included in this news release to assist management, investors and analysts with the analysis of the core operating performance of business activities of Parkland on a consolidated level. This non-GAAP financial measure and ratio do not have any standardized meaning under IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. 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 14 of the Q3 2022 MD&A, which is incorporated by reference into this news release, for further details regarding Parkland's non-GAAP financial measures and ratios. See below for the reconciliation of Adjusted earnings (loss) to net earnings (loss) and calculation of Adjusted earnings (loss) per share for the three months ended September 30, 2022 and September 30, 2021.

⁽¹⁾   Other (gains) and losses for the three months ended September 30, 2022 include the following: (i) $59 million non-cash valuation gain (2021 - $40 million loss) due to the change in redemption value of Sol Put Option; (ii) $37 million non-cash valuation gain (2021 - $38 million gain) due to the change in fair value of redemption options; and (iii) $8 million loss (2021 - $8 million loss) in Other items. For additional information on the Sol Put Option, see the Q3 2022 MD&A. ⁽²⁾ Other Adjusting Items for the three months ended September 30, 2022 mainly include the share of depreciation and income taxes for Isla joint venture of $2 million (2021 - $3 million). ⁽³⁾ The tax normalization adjustment was applied to net earnings (loss) adjusting items that were considered temporary differences, such as gains and losses on asset disposals, acquisition, integration and other costs, unrealized foreign exchange gains and losses, gains and losses on risk management and other, changes in fair value of redemption options, changes in estimates of environmental provisions, loss on inventory write-downs for which there are offsetting associated risk management derivatives with unrealized gains, and debt modifications. The tax impact was estimated using the effective tax rates applicable to jurisdictions where the related items occur. For additional information on the Isla Joint Venture, see the Q3 2022 MD&A. ⁽⁴⁾ Weighted average number of common shares are calculated in accordance with Parkland's accounting policy contained in Note 2 of the Annual Consolidated Financial Statements.  

TTM distributable cash flow is a non-GAAP financial measure and TTM distributable cash flow per share is a non-GAAP ratio. TTM distributable cash flow is a cash metric that adjusts for the impact of seasonality in Parkland's business by removing non-cash working capital items and excludes the effect of items that are not considered representative of Parkland's ability to generate cash flows. Such items include: (i) acquisition, integration, and other costs; (ii) turnaround maintenance capital expenditures, and; (iii) interest on leases and long-term debt, and principal payments on leases attributable to non-controlling interests. Distributable cash flow does not have any standardized meaning under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Parkland uses this non-GAAP financial measure to monitor normalized cash flows of the business by eliminating the impact of Parkland's working capital fluctuations and expenditures used in acquisition, integration and other activities, which can vary significantly from quarter-to-quarter.

⁽¹⁾ Except for the annual reporting period, cash generated from (used in) operating activities for the trailing twelve months is a supplementary financial measure. Refer to Section 14C of the Q3 2022 MD&A.

 ⁽¹⁾ For comparative purposes, information for previous periods was restated due to a change in presentation of cash flows from (used in) operating and financing activities. Interest paid on long-term debt and leases, formerly included in "Cash generated from (used in) operating activities", is now included in "Cash generated from (used in) financing activities", reflecting a more relevant presentation of finance costs payments. ⁽²⁾ Except for the annual reporting period, cash generated from (used in) operating activities for the trailing twelve months is a supplementary financial measure. Refer to Section 14C of the Q3 2022 MD&A. ⁽³⁾  For comparative purposes, information for the quarter ended September 30, 2021 was restated due to a change in presentation for certain emission credits and allowances held for trading, which were formerly included in "Risk management and other" and are now included in "Inventories". ⁽⁴⁾ Prior to March 31, 2021, distributable cash flow was referred to as adjusted distributable cash flow. The previous measure was consolidated to a single primary measure representing Parkland's ability to generate cash flows.

Supplementary Financial Measures

Parkland uses a number of supplementary financial measures, including dividends per share, TTM dividends and TTM cash generated from (used in) operating activities, 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 14 of the Q3 2022 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 2022 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 14 of the Q3 2022 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. Adjusted EBITDA for the Canada and Refining segments and Total Renewable Adjusted EBITDA (being a summation of Canada and Refining segment renewable subsegments) are also total of segments measures. 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 14 of the Q3 2022 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 months ended September 30, 2022 and September 30, 2021.

⁽¹⁾ Fuel and petroleum product volume for renewable activities only includes fuel trading volumes and does not include volumes of low-carbon-intensity feedstocks used for co-processing and blending. ⁽²⁾ Represents elimination of transactions between Renewable and Conventional sub-segments within Canada and Refining. ⁽³⁾ Includes inter-segment sales and cost of purchases. See Note 13 of the Interim Condensed Consolidated Financial Statements. ⁽⁴⁾ Total of Conventional sub-segment is not a financial measure used by Parkland to evaluate performance and is not a Total of segment measure under NI 52-112. It is included in the table above for reconciliation purposes only.

[1]  Specified Financial Measure. See “Specified Financial Measures” section of this news release.

[2] Non-Financial Measure. See “Non-Financial Measures” section of this news release.