CALGARY, Alberta, March 05, 2020 (GLOBE NEWSWIRE) — Parkland Fuel Corporation (“Parkland”, “we”, the “Company”, or “our”) (TSX:PKI) announced today its fourth quarter and full-year 2019 financial and operating results and provided its 2020 Guidance. Fourth quarter and full-year highlights include:
- Fourth quarter Adjusted EBITDA attributable to Parkland (“Adjusted EBITDA”) of $302 million and net earnings (attributable to Parkland) of $176 million ($1.19 per share, basic), up 6 percent and 129 percent respectively from the fourth quarter of 2018
- Full-year 2019 Adjusted EBITDA of $1,265 million, up 43 percent from 2018
- Full-year 2019 net earnings (attributable to Parkland) of $382 million ($2.60 per share, basic), up 85 percent from 2018
- Full-year 2019 fuel and petroleum product volume of 22.4 billion litres, up 32 percent from 2018
- Full-year 2019 Adjusted distributable cash flow of $561 million ($3.82 per share) and adjusted dividend payout ratio of 32 percent
- Delivered $180 million run-rate synergies from the 2017 Ultramar and Chevron acquisitions; one year ahead of schedule
- Demonstrated continued balance sheet strength and financial flexibility with a Total Funded Debt to Credit Facility EBITDA ratio of 2.8 times as of December 31, 2019
- 2020 Adjusted EBITDA Guidance of $1,130 million +/- 5 percent and 2020 Total Capital Expenditures of $575 million +/- 5 percent
“I am proud of the team’s accomplishments in 2019,” said Bob Espey, President and Chief Executive Officer. “In addition to celebrating our 50th year as a publicly traded company, we continued to deliver across all our strategic pillars. We advanced our organic growth initiatives, acquired and integrated four businesses, captured synergies and accelerated our low carbon fuel capability. We achieved an outstanding first year of International operations, our 16th straight quarter of positive C-store SSSG in Canada, and saw our US organic growth strategy bear fruit.”
“Underpinned by our integrated business model, diverse geographic platform, extensive product offering and balance sheet strength, we funded our 2019 growth capital and US M&A program within cash flow,” added Espey. “Parkland has a proven history of growth and value creation and the opportunities in front of us have never been greater. Thank you to the Parkland team for another great year and for continuing our focus on safe and reliable operations.”
Parkland’s annualized common share dividend will increase two cents per share, from $1.194 to $1.214, effective with the monthly dividend payable on April 15, 2020 to shareholders of record at the close of business on March 20, 2020.
The Supply segment delivered strong performance through full-year 2019, driven by safe and reliable operations at the Burnaby refinery, strong refining margins and consistent execution from our integrated logistics operations. We continued to successfully co-process biofeeds at the Burnaby refinery, reinforcing our leadership in low-carbon fuel refining while supporting British Columbia’s low carbon fuel aspirations. Fourth quarter and full-year highlights include:
- Fourth quarter Adjusted EBITDA of $152 million (Pre-IFRS 16: $142 million), a decrease of $57 million relative to 2018 (excluding the impact of IFRS 16). The fourth quarter of 2018 experienced exceptionally wide Western Canadian crude differentials which drove higher than normal refining margins in that period
- Fourth quarter Burnaby refinery utilization of 91.6 percent was slightly lower than expected due to a third party electrical outage which interrupted throughput for 6 days
- Produced approximately 1,200 bbl per day of biofuels throughout 2019; enough to supply around 10,000 vehicles with renewable gasoline for a year
We continued to advance our retail initiatives, including the national roll out of JOURNIE™ Rewards with CIBC as our strategic banking partner. We are highly focused on network development, growing our On the Run / Marché Express brand and developing innovative store concepts to enhance our customer value proposition and drive traffic. In 2019 we held our market share position in a competitive fuel margin environment and continued to grow the snacks, beverages and carwash categories. Fourth quarter and full-year highlights for Canada Retail include:
- Fourth quarter Adjusted EBITDA of $56 million (Pre-IFRS 16: $48 million), a decrease of $30 million relative to 2018 (excluding the impact of IFRS 16) driven by lower retail fuel margins and $3 million of additional Marketing, General and Administrative costs attributed to the development of JOURNIETM
- Fourth quarter Company C-Store same-store-sales growth (“SSSG”) of 0.9 percent, our 16th straight quarter of positive C-store SSSG. Excluding the impact of cigarette sales, C-Store SSSG would have been 7.1 percent. For the full year 2019, Company C-Store SSSG was 2.5 percent, or 5.5 percent excluding the impact of cigarettes
- Fourth quarter Company volume SSSG was (3.1) percent. For full-year 2019, we maintained our market share and Company volume SSSG was essentially flat
- Added 27 New to Industry (“NTI”) sites and converted 65 sites to On the Run / Marché Express in 2019
- After a year of piloting the JOURNIE™ Rewards program, soft launch in Q4 2019 and full launch beginning in January 2020, we are seeing strong program metrics across Canada. Mobile membership engagement and members opting for mobile communication are both over 50 percent. We are seeing higher average fill rates and C-store basket size for program members, which indicates the program design is resonating for customers. We are halfway through our national launch and target approximately 1,000 participating sites by March 31, 2020. We encourage readers to sign up for the program using the mobile app available for anyone to download on iOS and Android platforms. For more information on JOURNIE™ and how to become a registered member please visit www.journie.ca
- On February 24, 2020, we announced a multi-year agreement with Triple O’s restaurants to strengthen our range of freshly prepared, high quality meal options across Canada
The Canada Commercial segment continues to position for growth, advancing our Regional Operating Center (“ROC”) model transition and National Fueling Network (“NFN”) platform. We continue to improve our operating efficiency through the ROC transition, cost management initiatives and strategic focus on higher margin business. NFN is a unifying national commercial brand which we expect to launch in the second half of 2020. We continue to feel the impact of weaker forestry and upstream energy sectors but have benefited from our diverse product and geographic offering within Canada. Fourth quarter highlights for Canada Commercial include:
- Adjusted EBITDA of $33 million (Pre-IFRS 16: $31 million), up $4 million relative to 2018 (excluding the impact of IFRS 16)
- Fuel and petroleum product volume of 804 million litres, relatively flat to 2018
The International segment delivered strong performance in 2019, exceeding our investment case in the first year. Supported by operational execution, we delivered on our organic growth initiatives with strong volume growth in wholesale, LPG, aviation, and bunkering, managed costs and improved shipping optimization. We are on track to meet our synergy targets by the end of 2021. Fourth quarter highlights include:
- Adjusted EBITDA of $73 million (Pre-IFRS 16: $58 million)
- Fuel and petroleum product volume of 1,581 million litres, consisting of 460 million litres sold through retail channels and 1,121 million litres sold through commercial and wholesale channels
We continued to progress our organic growth and acquisition strategy in the US, adding three businesses in 2019 and another subsequent to year-end. The Tropic Oil acquisition, based in Florida, added a third ROC which will be the operating platform that drives organic growth and enables further acquisitions across the region, while also leveraging our International operations. We are starting to realize the benefits of local scale, delivering strong organic fuel volume growth, improved lubricant supply economics and C-store merchandising savings. Fourth quarter highlights include:
- Adjusted EBITDA of $15 million (Pre-IFRS 16: $15 million), up $4 million relative to 2018
- Fuel and petroleum product volume was 621 million litres, up 93 percent relative to 2018
The Corporate segment includes centralized administrative services and expenses incurred to support operations. Fourth quarter highlights include:
- Total costs of $27 million (Pre-IFRS 16: $28 million)
- As a percentage of total adjusted gross profit, marketing, general and administrative expenses favorably decreased to 3.8 percent (down from 5.5 percent in 2018)
Consolidated Financial Overview
On January 1, 2019, Parkland adopted IFRS 16 – Leases (“IFRS 16”). The adoption of IFRS 16 increases Adjusted EBITDA by reducing operating costs and increasing depreciation, amortization, and finance costs. IFRS 16 also increases Parkland’s assets and liabilities and has no overall impact to cash flow. For further information, refer to the Q4 2019 Annual Consolidated Financial Statements (“Q4 2019 FS”) and Q4 2019 Management’s Discussion and Analysis (“Q4 2019 MD&A”) for the year ended December 31, 2019.
|($ millions, unless otherwise noted)||Three months ended December 31,||Year ended December 31,|
|Fuel and petroleum product volume (million litres)||5,925||4,354||4,432||22,408||16,978||13,333|
|Adjusted gross profit(1)||728||587||469||2,832||1,995||1,094|
|Adjusted EBITDA including non-controlling interest (“NCI”)||327||285||198||1,358||887||418|
|Adjusted EBITDA attributable to Parkland (“Adjusted EBITDA”)(1)||302||285||198||1,265||887||418|
|Net earnings attributable to Parkland||176||77||49||382||206||82|
|Net earnings per share ($ per share)|
|Per share – basic||1.19||0.58||0.37||2.60||1.56||0.70|
|Per share – diluted||1.17||0.57||0.37||2.55||1.53||0.69|
|Distributable cash flow(2)||149||151||45||564||416||151|
|Adjusted distributable cash flow(2)||142||175||102||561||568||251|
|Dividends declared per share outstanding||0.2985||0.2934||0.2886||1.1906||1.1704||1.1510|
|Dividend payout ratio(2)||30||%||27||%||89||%||31||%||38||%||91||%|
|Adjusted dividend payout ratio(2)||31||%||23||%||38||%||32||%||28||%||55||%|
|Shares outstanding (millions)||148||134||131||148||134||131|
|Weighted average number of common shares (million shares)||148||133||131||147||132||117|
|Total Funded Debt to Credit Facility EBITDA ratio(2)||2.79||2.47||2.62||2.79||2.47||2.62|
|Interest coverage ratio(2)||5.32||6.52||7.65||5.32||6.52||7.65|
|Growth capital expenditures attributable to Parkland||69||57||15||221||109||35|
|Maintenance capital expenditures attributable to Parkland||91||52||50||232||187||75|
(1) Measure of segment profit. See Section 13 of the MD&A.
(2) Non-GAAP financial measure. See Section 13 of the MD&A.
(3) Calculated using the weighted average number of common shares.
(4) 2019 results reflect the adoption of IFRS 16 as of January 1, 2019. 2018 and 2017 comparative figures reflect the accounting standards in effect for those years. Specifically, they are not restated to reflect the impact of IFRS 16, which is allowed under the modified retrospective approach for the adoption of IFRS 16.
The following table outlines the impact of IFRS 16 on Adjusted EBITDA as reported for the year ended December 31, 2019:
|Three months ended December 31,||Year ended December 31,|
|Adjusted EBITDA as reported||IFRS 16 Impact||Pre-IFRS 16 Amount(1)||Adjusted EBITDA as reported||Adjusted EBITDA as reported||IFRS 16 Impact||Pre-IFRS 16 Amount(1)||Adjusted EBITDA as reported|
(1) Pre-IFRS 16 amounts are comparable to the reported information for the respective prior periods, which were calculated under IAS 17.
Formalization of Environmental, Social & Governance (“ESG”) Committee
In 2019, Parkland’s Board appointed an Environmental, Social & Governance (“ESG”) committee to carry out its governance and oversight responsibilities in relation to these matters. We also initiated a Sustainability Task Force which is comprised of cross-functional leaders that represent each of our business streams. The Sustainability Task Force is responsible for helping develop our sustainability strategy, policy and disclosure. As part of this process, we will look for innovative sustainable business opportunities to continue providing value to our customers, shareholders and communities.
2020 Adjusted EBITDA and Capital Program Guidance
Our 2020 plan targets cash flow in excess of capital expenditures. Details of our 2020 plans are below:
|Guidance Metric ($ millions)|
|Adjusted EBITDA (1)||1,130||+/- 5%|
|2020 Refinery Turnaround Maintenance||60|
|Total Capital Expenditures (2)||575||+/- 5%|
|Approximate Capital Breakdown||Total Capital Expenditures (2)|
(1) the “2020 Adjusted EBITDA Guidance Range” (2) the “2020 Capital Program”
Our 2020 Capital Program supports our 3-5 percent organic growth target on marketing related volumes and is focused on network development, expanding digital capabilities, improving customer value proposition, enhancing our supply & logistics capability and investing in our low carbon advantage. 2020 Refinery Turnaround Maintenance capital expenditures exclude an additional $25 million of operating expenses related to the turnaround.
The 2020 Adjusted EBITDA Guidance Range and 2020 Capital Program include some other key assumptions highlighted below:
- An 8-week turnaround at the Burnaby refinery, currently underway and expected to last until the beginning of April 2020
- Refining, fuel and non-fuel margin forecasts based on our view of future market conditions which are consistent with rolling three year averages
- Includes the portion of International operations that is attributable to Parkland (75 percent)
- The low end of our 2020 Guidance Range accounts for potential adverse market conditions or interruptions to our operations, as well as the potential for lower margins than currently observable, while the high end of our 2020 Guidance Range accounts for greater than expected contributions from acquisition synergies, organic growth and higher margins than currently observable
In addition, the factors and assumptions which contribute to Parkland’s assessment of the 2020 Adjusted EBITDA Guidance Range and 2020 Capital Program are consistent with existing Parkland disclosure and such guidance is subject to risks and uncertainties inherent in Parkland’s business. Readers are directed to the “Risk Factors” section in the Q4 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 Friday, March 6 at 6:30am MST (8:30am EST) 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 1-888-390-0546 (toll-free) (Conference ID: 95848696). International participants can call 1-587-880-2171 (toll) (Conference ID: 95848696).
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 Q4 2019 MD&A and Q4 2019 FS provide a detailed explanation of Parkland’s operating results for the year ended December 31, 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, fuel volume growth, business objectives, the 2020 Adjusted EBITDA Guidance Range and the 2020 Capital Program, the expected launch of the National Fueling Network, contribution of the Sol business and other previous acquisitions, strategic marketing and operational efforts to increase fuel volume, the ongoing launch of the 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 the Q4 2019 MD&A dated March 5, 2020, 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 13 of the Q4 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 13 of the Q4 2019 MD&A and Note 27 of the Q4 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 13 of the Q4 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 13 of the Q4 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 Q4 2019 FS and Q4 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.
For Further Information Investor Inquiries Brad Monaco Director, Capital Markets 587-997-1447 Media Inquiries Leroy McKinnon Senior Specialist, Corporate Communications 403-567-2573