CaribPR Wire, CALGARY, Alberta, Nov. 04, 2019: Parkland Fuel Corporation (”Parkland”, “we”, the “Company”, or “our”) (TSX:PKI) announced today the financial and operating results for the three and nine months ended September 30, 2019. The Company’s results were underpinned by operational excellence, continued synergy capture, and strong performance across the portfolio. All financial figures are expressed in Canadian dollars unless otherwise noted. Highlights from the third quarter include:
“We delivered strong financial and operating performance across all segments and continue to demonstrate our ability to operate efficiently at scale,” said Bob Espey, President and Chief Executive Officer. “Our resilient business and diverse portfolio has generated consistent results through 2019 and we expect to deliver an increased full-year 2019 Adjusted EBITDA Guidance Range of $1.24 Billion +/- 5 percent. We are well positioned for continued growth and value creation.
“In Canada, we began the national rollout of our JOURNIE™ Rewards customer loyalty program with CIBC as a strategic banking partner. The International segment continues to track ahead of plan and our acquisition of Tropic Oil in October contributed to our ongoing US growth strategy. We also achieved high utilization rates at our Burnaby Refinery. I would like to thank the Parkland team for their continued focus on advancing our strategy and setting ourselves up for continued success in 2020.”
Third Quarter Segment Highlights
Canada Retail: Continuing to enhance our customer value proposition
Canada Commercial: Business optimization and positioning for growth
USA: Acquisitions, organic growth, synergy capture and leveraging our supply advantage
International: Volume growth, synergy capture and cost control
Supply: High refinery utilization and reliability, strong logistics performance
Corporate: Disciplined cost control and efficiency
The Corporate segment includes centralized administrative services and expenses incurred to support operations.
Consolidated Financial Overview
On January 1, 2019, Parkland adopted IFRS 16 – Leases (”IFRS 16″). The adoption of IFRS 16 increases Adjusted EBITDA by reducing operating costs and increasing depreciation, amortization, and finance and other costs. IFRS 16 also increases Parkland’s assets and liabilities and has no overall impact to cash flow. For further information, refer to the unaudited Q3 2019 Interim Condensed Consolidated Financial Statements (”Q3 2019 FS”) and Q3 2019 Management’s Discussion and Analysis (”Q3 2019 MD&A”) for the three and nine months ended September 30, 2019.
(1) Measure of segment profit. See Section 12 of the Q3 2019 MD&A.(2) Non-GAAP financial measure. See Section 12 of the Q3 2019 MD&A.(3) Calculated using the weighted average number of common shares.(4) Fuel and petroleum product volume represents external volumes only. Intersegment volumes, including volumes produced by the Burnaby Refinery and transferred to the Canada Retail and Canada Commercial segments, are excluded from this reported volume.(5) “cpl” stands for cents-per-litre and is a key performance indicator. See Section 12 of the Q3 2019 MD&A.(6) Key performance indicator. See Sections 3 and 12 of the Q3 2019 MD&A.
The following table outlines the impact of IFRS 16 on Adjusted EBITDA as reported for the three and nine months ended September 30, 2019:
(1) Pre-IFRS 16 amounts are comparable to the reported information for the respective prior periods, which were calculated under IAS 17.
Updated 2019 Outlook & Guidance Range
Parkland is focused on its key strategies of organic growth, building a strong supply advantage, acquiring prudently and enabling our teams to succeed. Driven by strong performance year to date and high confidence in our fourth quarter projections, our 2019 Adjusted EBITDA Guidance Range (attributable to Parkland), which includes the impact of IFRS 16, is increased by $75 million to $1,240 million with an anticipated variance of up to 5 percent (the “2019 Guidance Range”).
In addition, the Company continues to expect approximately $200 million of maintenance capital expenditures for 2019. As indicated last quarter, we have identified additional opportunities within the Sol business which are now expected to increase 2019 growth capital expenditures by approximately $20 million, to $220 million.
The 2019 Guidance Range includes some other key assumptions highlighted below:
In addition, the factors and assumptions which contribute to Parkland’s assessment of the 2019 Guidance Range are consistent with existing Parkland disclosure and such guidance range is subject to risks and uncertainties inherent in Parkland’s business. Readers are directed to the “Risk Factors” section in the Q3 2019 MD&A and the Annual Information Form for a description of such factors, assumptions, risks and uncertainties.
Conference Call and Webcast Details
Parkland will host a webcast and conference call on Tuesday, November 5, 2019 at 6:30am MT (8:30am ET) to discuss the results.
To listen to the live webcast and watch the presentation, please use the following link:
Analysts and institutional investors interested in participating in the question and answer session of the conference call may do so by calling 1-888-390-0605 (toll-free) (Conference ID: 47536039). International participants can call 1-587-880-2175 (toll) (Conference ID: 47536039).
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 Q3 2019 MD&A and Q3 2019 FS provide a detailed explanation of Parkland’s operating results for the three and nine months ended September 30, 2019. 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. French Financial Statements and MD&A will be posted to www.parkland.ca and SEDAR as soon as they become available.
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, cash flow growth, run-rate synergies, private label program expansion, fuel volume growth, new business objectives, organic growth initiatives, growth of supply and trading business in the U.S. and Caribbean, Adjusted EBITDA Guidance, capital and maintenance expenditure forecasts, contribution of the Sol business and other previous acquisitions, strategic marketing and operational efforts to increase fuel volume, expected launch of JOURNIE™ Rewards loyalty program, U.S. growth opportunities, and 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 Information” and “Risk Factors” included in Parkland’s Annual Information Form dated March 27, 2019 and in “Forward-Looking Information” and “Risk Factors” in the Q3 2019 MD&A and annual MD&A dated February 28, 2019, each as 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-GAAP Financial Measures
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, total funded debt to credit facility EBITDA ratio, dividend payout ratio and adjusted dividend payout ratio 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 our industry. See Section 12 of the Q3 2019 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. See Section 12 of the Q3 2019 MD&A and Note 20 of the Q3 2019 FS for a reconciliation of these measures of segment profit. Annual synergies is a forecasted annualized measure and is considered to be forward-looking information. See Section 12 of the Q3 2019 MD&A. Investors are encouraged to evaluate each measure and the reasons Parkland considers it appropriate for supplemental analysis.
In addition to non-GAAP financial measures, Parkland uses a number of operational KPIs to measure the success of our strategic objectives and to set variable compensation targets for employees. These KPIs are not accounting measures, do not have comparable IFRS measures, and may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Sections 3 and 12 of the Q3 2019 MD&A for further details.
Investors are cautioned 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.
Effective January 1, 2019, Parkland adopted the new accounting standard, IFRS 16 – Leases (”IFRS 16″). The adoption of IFRS 16 has a significant effect on Parkland’s reported results. Due to Parkland’s selected transition method, it has not restated its prior year comparatives. Certain financial statement measures are presented excluding the impact of IFRS 16 (”Pre-IFRS 16 measures”). Refer to the Q3 2019 FS and Q3 2019 MD&A for reconciliations of Pre-IFRS 16 measures.
About Parkland Fuel Corporation
Parkland is an independent supplier and marketer of fuel and petroleum products and a leading convenience store operator. Parkland services customers across Canada, the United States, the Caribbean region and the Americas through three channels: Retail, Commercial and Wholesale. Parkland optimizes its fuel supply across these three channels by operating and leveraging a growing portfolio of supply relationships and storage infrastructure. Parkland provides trusted and locally relevant fuel brands and convenience store offerings 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.