Parkland Reports 2024 Third Quarter Results
Operational performance highlights the strength of our business, brands and customer proposition
Financial results primarily impacted by lower global refining margins
Demonstrating progress toward 2028 ambitions
CALGARY, AB, Oct. 30, 2024 /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, 2024.
"The Parkland Team remains focused on executing our strategic plan and achieving strong operational metrics across the business relative to industry. Although our third quarter 2024 financial results fell short of expectations, this was primarily driven by a challenging refining margin environment," said Bob Espey, President and Chief Executive Officer. "Our business continues to show strength through increased market share in a soft economic environment. Adjusted EBITDA from our Retail and Commercial lines of business grew by two percent over the last twelve months, demonstrating progress on the organic growth initiatives required to deliver on our 2028 ambitions."
Q3 2024 Highlights
Adjusted EBITDA1 of $431 million, a decrease of 26 percent as compared to Q3 2023, largely due to lower refinery margins in the third quarter of 2024, despite strong operational execution.
Net earnings of $91 million ($0.52 per share, basic), a decrease of 60 percent as compared to Q3 2023, and Adjusted earnings2 of $106 million ($0.61 per share, basic2), a decrease of 54 percent from Q3 2023, largely due to lower refinery margins in the third quarter of 2024.
Trailing-twelve-month ("TTM") Available cash flow2 of $627 million ($3.58 per share2), a decrease of 16 percent from the same period in 2023, and TTM Cash generated from (used in) operating activities3 of $1,490 million ($8.51 per share3), a decrease of 25 percent from the same period in 2023, largely due to the unplanned shutdown of the Burnaby Refinery in the first quarter of 2024 and lower refining margins in the third quarter of 2024.
TTM Adjusted EBITDA from our Retail and Commercial lines of business4 of $1,568 million, an increase of two percent from the same period in 2023, reflecting organic growth, synergy capture and cost reductions.
Purchased and cancelled approximately 382,000 Parkland common shares for $14 million, in line with our disciplined capital allocation.
Liquidity available3 increased to $2 billion ($1,246 million in Q2 2024), reflecting the senior unsecured note issuance used to repay drawings under the Company's credit facilities during the quarter, and Leverage Ratio5 increased to 3.4 times (3.1 times in Q2 2024), reflecting debt repayments being more than offset by lower TTM Adjusted EBITDA.
Return on invested capital2 ("ROIC") decreased to 7.8 percent from 9.5 percent for the trailing twelve months ended September 30, 2024, as compared to the same period in 2023.
Announced intention to divest our Florida-based retail and commercial businesses, reflecting our commitment to disciplined capital allocation and redirecting capital towards our highest return opportunities that maximize shareholder value.
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1
Total of segments measure. See "Measures of Segment Profit and Total of Segments Measures" section of this news release.
2
Non-GAAP financial measure or non-GAAP financial ratio. See "Non-GAAP Financial Measures and Ratios" section of this news release.
3
Supplementary financial measure. See "Supplementary Financial Measures" section of this news release.
4
Line of business Adjusted EBITDA. Please refer to note 14 of the Q3 2024 Interim Condensed Consolidated Financial Statements (as defined in this news release) for further information. TTM measure is a summation of Q4 2023 through Q3 2024 line of business Adjusted EBITDA.
5
Capital management measure. See "Capital Management Measures" section of this news release.
Q3 2024 Segment Highlights
Canada delivered Adjusted EBITDA of $200 million, in line with Q3 2023 ($206 million). Performance was underpinned by strong fuel unit margins from continued price and supply optimization despite lower consumer demand. Company same-store volume growth ("Company SSVG")6 was 1.4 percent, compared to 4.2 percent in Q3 2023. Food and Company C-Store SSSG (excluding cigarettes)2 was (1.1) percent, compared to 3.6 percent, in Q3 2023. These decreases were primarily driven by economic conditions that have reduced discretionary spending for consumers. Canada delivered Food and Company C-store revenue of $82 million, consistent with Q3 2023 ($81 million).
International delivered Adjusted EBITDA of $152 million, down 11 percent from Q3 2023 ($170 million). The decrease was primarily driven by lower wholesale volumes, partially offset by continued growth in our retail, commercial and aviation base businesses.
USA delivered Adjusted EBITDA of $54 million, in line with Q3 2023 ($52 million). Performance was underpinned by improved supply optimization despite lower consumer demand.
Refining delivered Adjusted EBITDA of $49 million, compared to $188 million in Q3 2023. This decrease was primarily driven by lower refining margins. Strong composite utilization6 at the Burnaby Refinery of 102 percent, compared to 103 percent in Q3 2023.
Parkland's total recordable injury frequency rate6 on a TTM basis was 1.04, compared to 0.95 at September 30, 2023.
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6
Non-financial measure. See "Non-Financial Measures" section of this news release.
2024 Guidance
As a result of the unplanned shutdown at the Burnaby Refinery in the first quarter of 2024, and unfavorable market conditions experienced for the first nine months of 2024, primarily due to lower refining margins in the third quarter of 2024, which are expected to persist for the remainder of the year, Parkland has further revised its 2024 Adjusted EBITDA Guidance3 to $1,700 million - $1,750 million(the "Updated 2024 Adjusted EBITDA Guidance Range"). This represents a $200 million - $250 million decrease in guidance range from our previous guidance range of $1,900 million - $2,000 million.
Furthermore, Parkland has revised its 2024 Available cash flow per share Guidance and 2024 ROIC Guidance, as a result of the factors outlined above, as follows:
2024 ROIC Guidance2 is revised to approximately 8 percent, from more than 11 percent (the "Revised 2024 ROIC Guidance");
2024 Available cash flow per share Guidance2 is revised to approximately $3.75 per share, from $5.00 per share (the "Revised 2024 Available cash flow per share Guidance").
Consolidated Financial Overview
($ millions, unless otherwise noted)
Three months ended September 30,
Financial Summary
2024
2023
Sales and operating revenue
7,126
8,731
Adjusted EBITDA(1)
431
585
Canada(2)
200
206
International(2)
152
170
USA(2)
54
52
Refining(2)
49
188
Corporate(2)
(24)
(31)
Net earnings (loss)
91
230
Net earnings (loss) per share, basic ($ per share)
0.52
1.31
Net earnings (loss) per share, diluted ($ per share)
0.52
1.28
Trailing-twelve-month ("TTM") Cash generated from (used in) operating activities(3)
1,490
1,992
TTM Cash generated from (used in) operating activities per share(3)
8.51
11.39
TTM Available cash flow(4)
627
749
TTM Available cash flow per share(4)
3.58
4.28
TTM Return on invested capital(4)
7.8 %
9.5 %
1
Total of segments measure. See "Measures of Segment Profit and Total of Segments Measures" section of this news release.
2
Measure of segment profit (loss). See "Measures of Segment Profit and Total of Segments Measures" section of this news release.
3
Supplementary financial measure. See "Supplementary Financial Measures" section of this news release.
4
Non-GAAP financial measure or non-GAAP financial ratio. See "Non-GAAP Financial Measures and Ratios" section of this news release.
Q3 2024 Conference Call and Webcast Details
Parkland will host a webcast and conference call on Thursday, October 31, 2024 at 6:30 am MT (8:30 am ET) to discuss the results. To listen to the live webcast and watch the presentation, please use the following link: https://app.webinar.net/01ap5P1mzRe
Analysts and investors interested in participating in the question and answer session of the conference call may do so by calling 1-888-510-2154 (toll-free) (Conference ID: 03367). International participants may call 1-437-900-0527 (toll-free) (Conference ID: 03367).
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 at www.parkland.ca.
MD&A and Interim Condensed Consolidated Financial Statements
The Management's Discussion and Analysis for the three and nine months ended September 30, 2024 (the "Q3 2024 MD&A") and Interim Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024 (the "Q3 2024 Interim Condensed Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the three and nine months ended September 30, 2024. 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 2024 MD&A and the Q3 2024 Interim Condensed 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, marketer, and convenience retailer with operations in 26 countries across the Americas. We serve over one million customers each day. Our retail network meets the fuel and convenience needs of everyday consumers. Our commercial operations provide businesses with industrial fuels so that they can better serve their customers. 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 renewable fuels sourcing, manufacturing and blending, carbon and renewables trading, solar power, and ultra-fast EV charging. 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.
Our strategy is focused on two pillars: our Customer Advantage and our Supply Advantage. Through our Customer Advantage, we aim to be the first choice of our customers, cultivating their loyalty through proprietary brands, differentiated offers, our extensive network, competitive pricing, reliable service, and our compelling loyalty program. Our Supply Advantage is based on achieving the lowest cost to serve among independent fuel marketers and distributors in the hard-to-serve markets in which we operate, through our well-positioned assets, significant scale, and deep supply and logistics capabilities. Our business is underpinned by our people and our values of safety, integrity, community and respect, which are deeply embedded across our organization.
Forward-Looking Statements
Certain statements contained herein 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 strategies, objectives and initiatives; Parkland's focus on executing its strategic plan and achieving strong operational performance metrics; Parkland's organic growth initiatives and the progress and 2028 ambitions relating thereto; disciplined capital allocation; Parkland's plan to divest its Florida-based retail and commercial business and the completion thereof; Parkland's commitment to disciplined capital allocation and redirecting capital to highest return opportunities and expectations relating thereto; lower refining margins expected for the rest of the year; and Parkland's Updated 2024 Adjusted EBITDA Guidance, Revised 2024 ROIC Guidance and Revised 2024 Available cash flow per share Guidance.
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 obligation 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, many of which are beyond the control of Parkland, including, but not limited to: general economic, market and business conditions; Parkland's ability to execute its business strategies, objectives, and initiatives, including the completion, financing and timing thereof, realizing the benefits therefrom, and meeting our targets and commitments relating thereto; Parkland's ability to identify buyers and complete divestments on terms reasonable to Parkland and in a timely manner; and the assumptions and risks described under "Cautionary Statement Regarding Forward-Looking Information" and "Risk Factors" in Parkland's most recent Annual Information Form, and under "Forward-Looking Information" and "Risk Factors" in the Q3 2024 MD&A, which are incorporated by reference herein, each as filed on SEDAR+ and available on the Parkland website at www.parkland.ca. In addition, the Revised 2024 Adjusted EBITDA Guidance reflects continued integration of acquired businesses, 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 1 percent and Food, convenience and other adjusted gross margin of approximately 5 percent as compared to the year ended December 31, 2023; the realization of $100 million of run-rate marketing, general and administrative expense cost efficiencies by the end of 2024; Refining adjusted gross margin of approximately $30 to $31 per barrel and average Burnaby Refinery composite utilization of 75 percent to 80 percent (factoring in the unplanned outage) based on the Burnaby Refinery's crude processing capacity of 55,000 barrels per day; enhancements to operations, utilization and optimization of supply at the Burnaby Refinery during 2024; and implementation of ongoing cost reductions across the business. The Revised 2024 Available cash flow per share Guidance and the Revised 2024 ROIC Guidance reflect the lower Revised 2024 Adjusted EBITDA Guidance. In addition, the Revised 2024 Available cash flow per share Guidance assumes a lower number of outstanding common shares compared to 2023 as a result of share repurchases completed during 2024, and the revised 2024 ROIC Guidance assumes invested capital grows at a slower pace than Net operating profit after tax ("NOPAT") through the remainder of 2024. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
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 International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") 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 the IFRS Accounting Standards. See Section 16 of the Q3 2024 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. The most directly comparable financial measure to Adjusted earnings (loss) and Adjusted earnings (loss) per share is Net earnings (loss).
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 2024 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition of Adjusted earnings (loss) and Adjusted earnings (loss) per share.
Please see below for the reconciliation of Adjusted earnings (loss) to net earnings (loss) and calculation of Adjusted earnings (loss) per share.
Three months ended September 30,
($ millions, unless otherwise stated)
2024
2023
Net earnings (loss)
91
230
Add:
Acquisition, integration and other costs
61
38
(Gain) loss on foreign exchange, unrealized
1
1
(Gain) loss on risk management and other, unrealized
(48)
(19)
Other (gains) and losses
(1)
(37)
Other adjusting items(1)
7
20
Tax normalization(2)
(5)
(2)
Adjusted earnings (loss)
106
231
Weighted average number of common shares (million shares)(3)
174
176
Weighted average number of common shares adjusted for the effects of dilution (million shares)(3)
176
180
Adjusted earnings (loss) per share ($ per share)
Basic
0.61
1.31
Diluted
0.60
1.28
1
Other adjusting items for the three months ended September 30, 2024, include (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $4 million (2023 - $5 million); (ii) other income of $3 million (2023 - $15 million); (iii) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of nil (2023 - $1 million gain); and (iv) adjustment to foreign exchange losses related to cash pooling arrangements of nil (2023 - $1 million). Other adjusting items for the first nine months of 2024, include (i) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of $12 million ...
