Parkland Reports 2024 First Quarter Results

First quarter Adjusted EBITDA of $327 million Safely restarted the Burnaby Refinery and returned to normal operations Progressing $500 million of non-core asset dispositions

Calgary, Alberta, May 1, 2024 / CNW / - Parkland Corporation ("Parkland", "we", the "Company", or "our") (TSX:PKI), today announced its financial and operating results for the three months ended March 31, 2024.

"The team continues to deliver on our strategy and optimize our portfolio," said Bob Espey, President and Chief Executive Officer. "We have identified more than $400 million of non-core assets for disposition, many of which have been sold or are in the advanced stages of negotiation. This represents more than 80 percent of our $500 million target by the end of 2025."

"I have full confidence in our team's ability to execute our operational plan that leverages our customer advantage and unique supply benefits, despite headwinds in some of the markets where we operate," added Espey. "We expect to deliver our 2024 Adjusted EBITDA Guidance range of $1.95 to $2.05 billion and see a clear pathway to achieving a Leverage Ratio at the low end of our 2 to 3 times target range by the end of 2025."

Q1 2024 Highlights

• Adjusted EBITDA of $327 million, a decrease of 17 percent as compared to the first quarter of 2023, driven by an unplanned shutdown of the Burnaby Refinery, which began as a result of extreme cold weather and was extended by technical issues during the subsequent start-up. The Burnaby Refinery safely returned to normal operations on March 29, 2024.

• Net loss of $5 million ($0.03 per share, basic), a decrease of $82 million as compared to the first quarter of 2023, and Adjusted earnings¹ of $43 million ($0.25 per share, basic), a decrease of $71 million from the first quarter of 2023.

• TTM Available cash flow² of $770 million, an increase of 23 percent from 2023, and TTM Cash generated from (used in) operating activities² of $1,683 million, consistent with 2023.

• TTM Available cash flow per share² of $4.38, an increase of 16 percent from 2023, and TTM Cash generated from (used in) operating activities per share³of $9.56, a decrease of 7 percent from 2023.

Q1 2024 Segment Highlights

• Canada delivered Adjusted EBITDA of $191 million, up 14 percent from Q1 2023 ($167 million). This increase was primarily driven by stronger fuel unit margins, partially offset by lower commercial volumes due to unseasonably warm weather. Company same-store volume growth ("Company SSVG"¹ ) was 5.9 percent, demonstrating the improved productivity of our company-owned network.

• International delivered Adjusted EBITDA of $149 million, down 19 percent from Q1 2023 ($183 million). The decrease was primarily driven by lower fuel unit margins and wholesale volumes as compared to Q1 2023, partially offset by successful cost controls.

• USA delivered Adjusted EBITDA of $33 million, up 57 percent from Q1 2023 ($21 million). Performance reflects ongoing integration efforts, including C-store improvements and ON the RUN rebrands. Lower fuel unit margins and volumes reflect broader industry trends.

• Refining reported an Adjusted EBITDA loss of $32 million, compared to Adjusted EBITDA of $38 million in Q1 2023. Composite utilization⁵ at the Burnaby Refinery was 20 percent, reflecting the unplanned shutdown, compared to 34 percent in Q1 2023, reflecting a scheduled turnaround. During the quarter, we accelerated maintenance and refining optimization work previously scheduled for the third quarter of 2024. As a result, we expect to enhance the Burnaby Refinery’s utilization and profitability for the remainder of the year.

• Parkland's total recordable injury frequency rate⁵ on a trailing-twelve-months basis was 1.07, compared to 0.97 at March 31, 2023.

^{( 1 ) Total of segments measure. See "Total of Segments Measures" section of this news release. ( 2 ) Measure of segment profit (loss). See "Total of Segments Measures" section of this news release. ( 3 ) Supplementary financial measure. See "Supplementary Financial Measures" section of this news release. ( 4 ) Capital management measure. See "Capital Management Measures" section of this news release. ( 5 ) Non-financial measure. See “Non-Financial Measures” section of this news release.}

Consolidated Financial Overview

^{( 1 ) Total of segments measure. See "Total of Segments Measures" section of this news release. ( 2 ) Measure of segment profit (loss). See "Total of Segments Measures" section of this news release. ( 3 ) Supplementary financial measure. See "Supplementary Financial Measures" section of this news release. ( 4 ) Capital management measure. See "Capital Management Measures" section of this news release. ( 5 ) Non-financial measure. See “Non-Financial Measures” section of this news release.}

Q1 2024 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Thursday, May 2, 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/xr4dJn89YLk

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: 10413873). International participants may call 1-800-389-0704 (toll-free) (Conference ID: 10413873).

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 Annual Interim Condensed Consolidated Financial Statements

The Management's Discussion and Analysis for the three months ended March 31, 2024 (the "Q1 2024 MD&A") and Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2024 (the "2024 Interim Condensed Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the three months ended March 31, 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 Q1 2024 MD&A and the Q1 2024 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 2024 Adjusted EBITDA Guidance range and goal of achieving a Leverage Ratio at the low end of our 2-3x target range by the end of 2025; Parkland's expectation to enhance the Burnaby Refinery's utilization and profitability for the remainder of 2024; Parkland's expectations regarding future dividend amounts, and timing and frequency of payments; Parkland's portfolio optimization strategy and target of completing $500 million of non-core asset dispositions, and the timing in respect thereof; and Parkland's plans to implement ongoing operating and MG&A cost reductions.

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 pay future dividends and complete share repurchases, if any, using its NCIB program; realization of the expected impact of the maintenance and refining optimization work completed on the Burnaby Refinery's utilization and profitability; Parkland's ability to execute on its asset disposition target, including with respect to identifying buyers, and completing such dispositions, if any, 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 Q1 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 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 5 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 MG&A cost efficiencies by the end of 2024; Refining adjusted gross margin of approximately $45 to $46 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 operating and MG&A cost reductions across the business. 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 ("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 Q1 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 Q1 2024 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition 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.

^{( 1 ) Other adjusting items for the three months ended March 31, 2024 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $4 million (2023 - $3 million); (ii) other income of $2 million (2023 - $3 million); (iii) realized risk management loss related to underlying physical sales activity in another period of $3 million (2023 - $1 million loss); (iv) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $2 million (2023 - $1 million); (v) adjustment to realized risk management gains of $1 million related to interest rate swaps as these gains do not relate to commodity sale and purchase transactions (2023 - nil); and (vi) the effect of market-based performance conditions for equity-settled share-based award settlements of nil (2023 - $13 million). ( 2 ) tax normalization adjustment was applied to net earnings (loss) adjusting items that were considered temporary differences, such as acquisition, integration and other costs, unrealized foreign exchange gains and losses, unrealized gains and losses on risk management and other, gains and losses on asset disposals, 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, impairments of non-current assets and debt modifications. The tax impact was estimated using the effective tax rates applicable to jurisdictions where the related items occur. ( 3 ) 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.}

Available cash flow is a non-GAAP financial measure and Available cash flow per share is a non-GAAP financial ratio. The most directly comparable financial measure for Available cash flow and Available cash flow per share is cash generated from (used in) operating activities. Parkland uses these measures to monitor its ability to generate cash flow for capital allocation, including distributions to shareholders, investment in the growth of the business, and deleveraging. Available cash flow is calculated as cash generated from (used in) operating activities adjusted for items such as (i) net change in (a) non-cash working capital and (b) other assets and other liabilities, (ii) maintenance capital expenditures, (iii) dividends received from investments in associates and joint ventures, (iv) interest on leases and long-term debt, and (v) payments on principal amounts on leases. Available cash flow per share is calculated as Available cash flow divided by the weighted average number of outstanding common shares. See following table for a calculation of historical Available cash flow and Available cash flow per share and a reconciliation to cash generated from (used in) operating activities.

^{( 1 ) For comparative purposes, certain amounts within net change in non-cash working capital for the three months ended June 30, 2023 were revised to conform to the current period presentation. ( 2 ) For the three months ended June 30, 2022, and September 30, 2022, and for the trailing twelve months ended March 31, 2023, represents the amounts attributable to Parkland. ( 3 ) Weighted average number of common shares is calculated in accordance with Parkland's accounting policy contained in Note 2 of the Annual Consolidated Financial Statements.}

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 Q1 2024 MD&A, which is incorporated by reference into this news release, for further details regarding Parkland's non-GAAP financial measures and ratios.

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. In order to manage its financing requirements, Parkland may adjust capital spending or dividends paid to shareholders, or issue new shares or new debt. The Leverage Ratio is calculated as a ratio of Leverage Debt to Leverage EBITDA and does not have any standardized meaning prescribed under IFRS Accounting Standards. It is therefore unlikely to be comparable to similar measures presented by other companies. The detailed calculation of Leverage Ratio is as follows:

^{( 1 ) Represents Non-recourse debt and Non-recourse cash balances related to project financing. ( 2 ) Includes the impact of operating leases prior to the adoption of IFRS 16, previously recognized under operating costs, which aligns with management's view of the impact to earnings. ( 3 ) Includes adjustments to normalize Adjusted EBITDA for non-recurring events including the completion of turnarounds, the unplanned shutdown resulting from an extreme cold weather event, a third-party power outage and the EBITDA attributable to EV charging operations financed through non-recourse project financing.}

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 Q1 2024 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 March 31, 2024 and March 31, 2023.

^{( 1 ) Other (gains) and losses for the three months ended March 31, 2024 include the following: (i) $13 million non-cash valuation loss (2023 -$9 million gain) due to the change in fair value redemption options: (ii) $5 million loss (2023 - $23 million loss) in Others, (iii) $4 million non-cash valuation gain (2023 - $4 million loss) due to the change in estimates of environmental provision; (iv) $2 million gain (2023 - $6 million loss) on disposal of assets; and (v) $2 million (2023- $3 million) in Other income. Refer to Note 12 of the Interim Condensed Consolidated Financial Statements. ( 2 ) Other adjusting items for the three months ended March 31, 2024 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $4 million (2023 - $3 million); (ii) other income of $2 million (2023 - $3 million); (iii) realized risk management loss related to underlying physical sales activity in another period of $3 million (2023 - $1 million loss); (iv) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $2 million (2023 - $1 million); (v) adjustment to realized risk management gains of $1 million related to interest rate swaps as these gains do not relate to commodity sale and purchase transactions (2023 - nil); and (vi) the effect of market-based performance conditions for equity-settled share-based award settlements of nil (2023 - $13 million).}

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. The most directly comparable financial measure is sales and operating revenue. See Section 16 of the Q1 2024 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 and three months ended March 31, 2024 and March 31, 2023.

^{( 1 ) Includes realized risk management loss related to underlying physical sales activity in another period of $3 million (2023 - $1 million), adjustment to foreign exchange gains and losses related to cash pooling arrangements of $2 million (2023 -$1 million), and adjustment to realized risk management gains of $1 million (2023 - nil) related to interest rate swaps as these gains do not relate to the commodity sale and purchase transactions.}

Supplementary Financial Measures

Parkland uses a number of supplementary financial measures, including Adjusted EBITDA Guidance, Leverage Ratio Guidance, TTM Cash generated from (used in) operating activities, and TTM Cash generated from (used in) operating activities per share, and these measures may not be comparable to similar measures presented by other issuers, as other issuers may calculate these measures differently. See Section 16 of the Q1 2024 MD&A, which is incorporated by reference into this news release, for further details regarding supplementary financial measures used by Parkland, including the composition of such measures.

Non-Financial Measures

Parkland uses a number of non-financial measures, including Company SSVG, 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 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 Q1 2024 MD&A, which is incorporated by reference into this news release, for further details on the non-financial measures used by Parkland.

For Further Information

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