PARKLAND INCREASES GUIDANCE BY $50 MILLION TO 650 MILLION ±5%
CALGARY, Alberta, May 02, 2018 (GLOBE NEWSWIRE) -- Parkland Fuel Corporation (“Parkland”) (TSX:PKI) Canada's largest and one of North America's fastest growing independent marketers of fuel and petroleum products and a leading convenience store operator, announced today the financial and operating results for the three months ended March 31, 2018. All financial figures are expressed in Canadian dollars.
“The Parkland team delivered exceptional results in the first quarter,” said Bob Espey, President and Chief Executive Officer. “These results were due to strong base business growth and supply improvement and optimization activities that yielded a one-time benefit of approximately $30 million.”
Parkland is revising its 2018 Adjusted EBITDA guidance from $600 million ±5% to $650 million ±5%. This increase is driven by a one-time Adjusted EBITDA benefit, of approximately $30 million, related to supply initiatives, earlier than anticipated realization of synergies related to the integration of our Acquisitions(5) as well as our forecast for continued strength in crack spreads at the Burnaby Refinery during the second quarter of 2018.
KEY COMPONENTS OF PARKLAND'S STRATEGY – Q1 2018 HIGHLIGHTS
Achieved record first quarter Adjusted EBITDA of $153 million, a 119% increase over the comparable period in 2017.
Grew pre-Acquisitions business ("Base Business”) Adjusted EBITDA by 19%, well ahead of Parkland's strategic organic growth target of 3-5%.
Realized 53% growth in fuel and petroleum product volumes, delivering 4,211 million litres in the first quarter of 2018 compared to 2,756 million litres for the same period in 2017.
Experienced 16% growth in Commercial Base Business propane volumes mainly attributable to large customer wins and favourable weather conditions for propane demand in Ontario.
Achieved strong Retail Company C-Store same-store sales growth ("Company C-Store SSSG") of 4.1% across Canada in the first quarter of 2018. This marks the 9th consecutive quarter of positive Company C-Store SSSG at Parkland.
The strong Company C-Store SSSG was driven by ongoing marketing programs including implementation of our new On the Run / Marché Express store concepts, the rollout of our proprietary private label brand "59th Street Food Co.", improved merchandising and higher forecourt to backcourt conversion rates. Parkland also saw growth in sustainable higher-margin categories such as beverages, snacks and confectionery.
Completed a major maintenance event at the Burnaby Refinery, which began in early February and was completed in the first week of April 2018.
Executed supply improvement and optimization initiatives that generated an incremental one-time benefit to Supply Adjusted EBITDA of approximately $30 million.
Grew Supply Adjusted EBITDA by 209% in the first quarter of 2018 compared to the same period in 2017. The growth was driven by contributions from the Chevron Acquisition, profitable supply sourcing initiatives, improved supply economics in the Base Business, and lower Base Business operating costs.
Parkland exited the Ultramar Acquisition
transitional services agreement ("TSA") in April 2018, and is well under way to exit the Chevron Acquisition
TSA in late 2018.
As at March 31, 2018, Parkland has completed initiatives that are expected to result in Annual Synergies
on the Acquisitions of approximately $44 million for fiscal year 2018. Parkland expects that the Annual Synergies
on the Acquisitions will reach approximately $80 million by the end of 2020.
QUARTERLY FINANCIAL DATA
($ millions, unless otherwise noted)
For the three months ended
Sales and operating revenue
Adjusted gross profit
Net earnings (loss)
Per share – basic
Per share – diluted
Distributable cash flow
Adjusted distributable cash flow
Dividends declared per share outstanding
Dividend payout ratio
Adjusted dividend payout ratio
Shares outstanding (million shares)
Weighted average number of common shares (million shares)
Fuel and petroleum product volume (million litres)
Fuel and petroleum product adjusted gross profit
Parkland USA (cpl)
Marketing, general and administrative (cpl)
(1) Measure of segment profit. See Section 12 of the MD&A. (2) Non-GAAP financial measure. See Section 12 of the MD&A. (3) Calculated using the weighted average number of common shares. (4) Operating costs (cpl) were restated to conform to current period's presentation in the consolidated statements of income. Specifically, customer finance income, which was formerly presented separately, is now included in operating costs. (5) On June 28, 2017, Parkland acquired the majority of the Canadian business and assets of CST Brands, Inc. (the "Ultramar Acquisition") and on October 1, 2017, Parkland acquired all outstanding shares of Chevron Canada R & M ULC (the "Chevron Acquisition"), (collectively, “the Acquisitions”). (6) Annual Synergies is an annualized measure and is considered to be forward-looking information. See Section 12 and Section 14 of the MD&A.
MD&A AND FINANCIAL STATEMENTS
The Q1 2018 Management’s Discussion and Analysis (“MD&A”) and the interim condensed consolidated financial statements provide a detailed explanation of Parkland’s operating results for the three months ended March 31, 2018. An English version of these documents will be available online at www.parkland.ca and SEDAR immediately after the results are released by newswire under Parkland’s profile at www.sedar.com. French Financial Statements and MD&A will be posted to www.parkland.ca and SEDAR as soon as they become available.
CONFERENCE CALL AND WEBCAST INFORMATION
Parkland will host a webcast and conference call at 6:30 a.m. MDT (8:30 a.m. EDT) on Thursday, May 3, 2018, to discuss the results for the three months ended March 31, 2018.
To access the conference call by telephone, dial toll-free 1-844-889-7784 [Conference ID: 1080827]. The webcast slide presentation can be accessed at https://edge.media-server.com/m6/p/3mj5y7qp. 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. It will remain available at the link above for one year and will also be posted to www.parkland.ca.
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES
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, signs of growth, business objectives and growth strategies; the strength of Parkland’s operations and financial condition; sources of growth; anticipated synergies; matters related to TSAs; forecasted crack spreads; supply improvement and optimization and plans and objectives of or involving Parkland.
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 and uncertainties including, but not limited to, general economic, market and business conditions; industry capacity; 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 Statements” and “Risk Factors” included in Parkland’s Annual Information Form dated March 9, 2018 and in “Forward-Looking Statements” and “Risk Factors” in the Q1 2018 MD&A, each as filed on SEDAR and available on the Parkland website at www.parkland.ca.
This news release refers to certain Non-GAAP financial measures that are not determined in accordance with International Financial Reporting Standards (“IFRS”). Distributable Cash Flow, Distributable Cash Flow per Share, Adjusted Distributable Cash Flow, Adjusted Distributable Cash Flow per Share, Dividend Payout Ratio, Adjusted Dividend Payout Ratio and Adjusted Marketing, General and Administrative expenses are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Management considers these to be important supplemental measures of Parkland’s performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industries. See Section 12 of the Q1 2018 MD&A for a discussion of non-GAAP measures and their reconciliations to the nearest applicable IFRS measure.
Adjusted EBITDA and Adjusted Gross Profit are measures of segment profit, and Annual Synergies is an annualized measure and is considered to be forward-looking information. See Section 12 of the Q1 2018 MD&A and Note 14 of the Interim Condensed Consolidated Financial Statements for a reconciliation of these measures of segment profit. Investors are encouraged to evaluate each adjustment and the reasons Parkland considers it appropriate for supplemental analysis.
Investors are cautioned, however, that these measures should not be construed as an alternative to net earnings determined in accordance with IFRS as an indication of Parkland’s performance. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
ABOUT PARKLAND FUEL CORPORATION
Parkland is Canada's largest and one of North America's fastest growing independent suppliers and marketers of fuel and petroleum products and a leading convenience store operator. Parkland services customers through three channels: Retail, Commercial and Wholesale. Parkland optimizes its fuel supply across these three channels by operating the Parkland Burnaby Refinery, and leveraging a growing portfolio of supply relationships and storage infrastructure. Parkland provides trusted and locally relevant fuel brands and convenience store offerings, including its On the Run/Marché Express banners, in the communities it serves.
Parkland creates value for shareholders by focusing on its proven strategy of growing organically, realizing a supply advantage and acquiring prudently and integrating successfully. At the core of our strategy are our people, as well as our values of safety, integrity, community and respect, which are embraced across our organization.
FOR FURTHER INFORMATION
Investor Inquiries Dean Morrison Director, Investor Relations 587-887-8339 Dean.Morrison@parkland.ca
Media Inquiries Annie Cuerrier Director, Corporate Communications 403-567-2579 Annie.Cuerrier@parkland.ca