Parkland delivers strong second quarter financial and operating results with Adjusted EBITDA of $322 million

CaribPR Wire, CALGARY, Alberta, Aug. 05, 2021: Parkland Corporation (”Parkland”, “we”, the “Company”, or “our”) (TSX:PKI) today announced its financial and operating results for the three months ended June 30, 2021 (”Q2 2021″), raised its full-year 2021 Adjusted EBITDA Guidance to $1.25 billion +/- 5 percent, and lowered its 2021 Capital Expenditure Guidance range by $50 million to between $350 – $500 million. Highlights include¹:

• Adjusted EBITDA attributable to Parkland (”Adjusted EBITDA”) of $322 million, up 69 percent year-over-year, underpinned by continued strong marketing performance and organic growth, high utilization at the Burnaby refinery, acquisitions, and volume recovery.
• Adjusted earnings attributable to Parkland (”Adjusted earnings”) of $96 million, or $0.64 per share, basic, up $106 million year-over-year. Net loss attributable to Parkland was $57 million, or $0.38 per share, basic. The variance between Adjusted Earnings and Net loss attributable to Parkland was mainly due to a non-cash charge related to the valuation of the Sol Put Option and one-time costs associated with the early redemption of senior notes. See section 14 of the Q2 2021 MD&A for a reconciliation of Adjusted Earnings to net earnings (loss).
• Cash generated from operating activities of $322 million, compared to $629 million in the prior year. The comparable quarter in 2020 included a $425 million working capital inflow due to COVID-19 related impacts, including payment extensions for certain government duties and taxes, and lower product demand and prices.
• Total Funded Debt to Credit Facility EBITDA ratio of 3.0 times as of June 30, 2021.
• Completed private offering of US$800 million 4.50% Senior Notes due in 2029, with proceeds used to redeem notes due in 2025 and 2026.
• Completed private offering of $600 million 3.875% senior unsecured notes due 2026, our lowest interest rate achieved to date, with proceeds used to repay certain outstanding amounts under existing revolving credit facilities.
• We are on track with our 2021 target for 100 million litres of bio-feedstock co-processing at the Burnaby refinery, which has the equivalent effect of taking over 80,000 passenger vehicles off the road.
• 2021 Adjusted EBITDA Guidance increased by $50 million to $1.25 billion +/- 5 percent, and total 2021 Capital expenditures reduced by $50 million to between $350 – $500 million.

¹ Adjusted EBITDA, Adjusted earnings and Total Funded Debt to Credit Facility EBITDA ratio are Non-GAAP financial measures and may not be comparable to similar measures of other issuers. See Section 14 of the MD&A

“I am proud of the Parkland team, who once again delivered excellent financial and operating results,” said Bob Espey, President and Chief Executive Officer. “We continue to advance our proven strategy through consistent operational execution, organic growth, financial discipline and accretive acquisitions. In parallel, our announcement of British Columbia’s largest network of electric vehicle ultra-fast chargers is a natural extension of our energy transition activities.”

“Our strong base business, ongoing economic recovery and contribution from acquisitions gives us confidence to raise our full year Adjusted EBITDA guidance,” added Espey. “Each segment of our business has a pipeline of attractive growth opportunities that underpin our ambition for $2 billion run-rate Adjusted EBITDA by the end of 2025. We are excited about the future and remain focused on maintaining our financial strength and delivering sustainable, long-term distributable cash flow growth on a per share basis.”

Q2 2021 Segment Highlights

• Our Canada segment delivered Adjusted EBITDA of $101 million, up 9 percent relative to Q2 2020. This performance was driven by strong per unit fuel margins, recovering volumes, and growth in non-fuel gross profit. Company C-store same-store sales growth (”SSSG”) was 8.6 percent excluding cigarettes, driven by growth in high margin categories including beverages, car wash and Triple O’s. Company C-Store SSSG was (3.2) percent including cigarettes, due to temporary COVID-19 related closures of competing sales channels in Q2 2020.
• Our International segment delivered Adjusted EBITDA of $66 million, up 22 percent relative to Q2 2020. Results were driven by strong base business and per unit margins, robust wholesale volumes, and continued benefits from sustainable cost control initiatives.
• Our USA segment delivered Adjusted EBITDA of $31 million, up 15 percent relative to Q2 2020. We benefited from acquisitions and organic growth, recovering volumes, strong operational performance and continued to successfully manage an inflationary environment.
• Our Supply segment delivered Adjusted EBITDA of $154 million, up 340 percent relative to Q2 2020 which included a scheduled turnaround at the Burnaby refinery. We operated safely, maintained record co-processing volumes, delivered composite refinery utilization of 97 percent (65 percent in Q2 2020) and strong performance in our integrated logistics business.
• Corporate Adjusted EBITDA expense of $30 million, up $12 million relative to Q2 2020, reflecting variable costs connected to volume recovery and reduced benefit from COVID-19 related wage assistance programs.

A Track-Record of Disciplined and Accretive Acquisitions

From November 2020 through August 5, 2021, and following a purposeful pause in the early stages of COVID-19, we have announced approximately $800 million of acquisitions. In aggregate, these transactions are expected to be immediately accretive to distributable cash flow per share, and approximately 8 percent accretive post-synergies.

Highlights from Q2 2021 include:

• Completed the acquisition of Conrad & Bischoff Inc. and its related companies, adding a high-quality retail network to our U.S. portfolio, strengthening our supply advantage, and establishing a fourth U.S. Regional Operating Center in the Pacific Northwest. The acquisition closed on April 7.
• Announced three transactions in our International segment through our 75 percent ownership in Sol Investments SEZC (“Sol”), which strengthen our network and extend our portfolio of growth opportunities. We purchased an aviation business and associated infrastructure with operations in Puerto Rico which improves our regional aviation portfolio (closed June 14). Through the contribution of our on-shore Dominican Republic (”DR”) assets and a follow-on investment, the second transaction includes Sol becoming a 50 percent indirect partner in Isla Dominicana de Petroleo Corp., creating the largest retail network in the DR (closed July 1). The third transaction positions us as the leading fuel marketer in St. Maarten (closed July 17).

Subsequent to Q2 2021, we have continued to advance our acquisition strategy. Details as follows:

• On July 6, 2021, we announced the acquisition of Montreal-based Pétroles Crevier Inc. Expected to close in Q1 2022, this acquisition will extend our existing retail network in Quebec and expand our presence in key markets.
• On July 27, 2021, we signed an agreement to acquire Colorado-based Master Petroleum. Expected to close in Q3 2021, this acquisition will expand our commercial business in our Rockies Regional Operating Center.
• On July 30, 2021, we signed an agreement to acquire North Dakota-based Red Carpet Carwash. Expected to close in Q3 2021, this acquisition adds 12 quality retail sites with large format convenience stores and a premium car wash business in our Northern Tier Regional Operating Center.

Our Sustainability Journey

As we advance our sustainability journey, we are committed to providing regular updates on our environmental, social and governance efforts as part of our normal disclosure process. Q2 2021 highlights include:

• As a natural extension to our energy transition activities, we announced plans to launch the largest network (by site count) of electric vehicle ultra-fast chargers in British Columbia. Strategically located on major highways and in key cities and towns across our extensive retail portfolio, this network of approximately 25 high-quality sites will stretch from Vancouver Island to Calgary and is expected to open to customers in 2022.
• Maintained our previous quarter’s record volumes at the Burnaby refinery by co-processing approximately 25 million litres of Canadian bio-feedstocks. We are on track with our 2021 target of 100 million litres, which has the equivalent effect of taking over 80,000 passenger vehicles off the road.
• We continue to celebrate and embed Diversity and Inclusion (”D&I”) across the business. In 2021, our Senior Leadership Team has completed 88 hours of D&I training, and our employees have completed over 1,000 hours. Through the quarter, we hosted Pride Month events attended by over 900 employees and our Women’s network ran employee events focused on balancing work and life.
• Effective August 5, 2021, and consistent with our commitment to Board renewal, we appointed Angela John and Richard Hookway to our Board of Directors. They bring extensive global experience in supply, low carbon technologies and in creating value across the entire downstream value chain. We expect the Board, and our shareholders will benefit greatly from their contributions.

Updated 2021 Guidance

We are focused on advancing our strategy through consistent operational execution and organic growth, strengthening our supply advantage, and making disciplined, accretive acquisitions. While we remain vigilant to potential ongoing impacts of COVID-19, the combination of strong year-to-date performance, volume recovery, pace of capital spend, and confidence in our trajectory through the second half of 2021 supports the following updates to our 2021 Guidance:

• Adjusted EBITDA (attributable to Parkland) increased by $50 million, to $1.25 billion +/- 5 percent.
• Growth capital expenditures (attributable to Parkland) reduced by $25 million (now $150 – $250 million) and Maintenance capital expenditures (attributable to Parkland) reduced by $25 million (now $200 – $250 million), reflecting changes to timing and COVID-19 related delays.

The factors and assumptions which contribute to Parkland’s assessment of the 2021 Guidance are consistent with existing Parkland disclosures and such Guidance is subject to risks and uncertainties inherent in Parkland’s business. Readers are directed to the “Risk Factors” section in the Q2 2021 MD&A and the Annual Information Form for a description of such factors, assumptions, risks and uncertainties. All other elements of Parkland’s original 2021 guidance remain unchanged.

Consolidated Financial Overview

⁽¹⁾ Certain amounts within sales and operating revenue and fuel and petroleum product volumes were restated and reclassified to conform to the presentation used in the current period.
⁽²⁾ Measure of segment profit. See Section 14 of the MD&A.
⁽³⁾ Non-GAAP financial measure. See Section 14 of the MD&A.
⁽⁴⁾ For comparative purposes, information for the year ended December 31, 2019 was restated due to a change in segment presentation. Canada Retail and Canada Commercial, formerly presented separately as individual segments, and the Canadian distribution business, formerly presented in Supply, are now included in Canada, reflecting a change in organizational structure in 2020.
⁽⁵⁾ For comparative purposes, information for previous periods was restated due to a change in segment presentation. The supply and trading business in the United States, formerly presented in the Supply segment, is now included in the USA segment, reflecting a change in organizational structure in the first six months of 2021.
⁽⁶⁾ Amounts presented on a trailing-twelve-month basis.

Investor Day: November 16, 2021

As a reminder, Parkland will host an investor day the morning of November 16, 2021. The event will be held in Toronto, Ontario and simultaneously webcast with video. Registration details will follow closer to the date.

Q2 2021 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Friday, August 6, at 6:30am MDT (8:30am EDT) to discuss the results. To listen to the live webcast and watch the presentation, please use the following link:

https://produceredition.webcasts.com/starthere.jsp?ei=1481382&tp_key=85182819cb

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: 18980971). International participants can call 1-587-880-2171 (toll) (Conference ID: 18980971).

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 Q2 2021 MD&A and Q2 2021 Financial Statements provide a detailed explanation of Parkland’s operating results for the three and six months ended June 30, 2021. 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. The Q2 2021 French MD&A and Q2 2021 French Financial Statements will be posted to www.parkland.ca and SEDAR as soon as they become available.

Forward-Looking Statements

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, business objectives and strategies, Parkland’s ambition to generate run-rate Adjusted EBITDA of $2 billion by 2025 and the key strategic pillars underpinning such ambition, Parkland’s 2021 Adjusted EBITDA and maintenance and capital expenditures guidance, expected benefits and synergies to be derived from acquisitions, potential future acquisition opportunities, expected closing dates of announced transactions, expected transaction multiples based on annual run-rate Adjusted EBITDA, expected post-synergy accretion rates, expected timing of the opening of Parkland’s electric vehicle ultra-fast charging network in British Columbia, and Parkland’s ability to advance its growth agenda. Expected accretion to distributable cash flow per share also reflects Adjusted EBITDA expectations plus anticipated tax expense, maintenance capital expenditures, additional interest expense and other adjusting items. This is calculated relative to weighted average shares outstanding in the trailing twelve-month period ended June 30, 2021, plus pending equity issuance as part of the Crevier transaction consideration. Expected accretion metrics are based on assumptions regarding business performance and synergies which are not guaranteed to occur.

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, assumptions and uncertainties including, but not limited to, general economic, market and business conditions, including the duration and impact of the COVID-19 pandemic; Parkland’s ability to execute its business strategies, including without limitation, Parkland’s ability to consistently identify accretive acquisition targets and successfully integrate them, successfully implement organic growth initiatives and to finance such acquisitions and initiatives on reasonable terms; Parkland’s ability to grow its supply advantage by leveraging its scale and infrastructure; 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 5, 2021, and “Forward-Looking Information” and “Risk Factors” included in the Q2 2021 MD&A dated August 5, 2021 and the Q4 2020 MD&A dated March 4, 2021, each 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”). Adjusted EBITDA, Adjusted gross profit, total funded debt to credit facility EBITDA ratio, Adjusted earnings, distributable cash flow, distributable cash flow per share, and growth and maintenance capital expenditures attributable to Parkland 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 14 of the Q2 2021 MD&A for a discussion of non-GAAP measures, and the reasons Parkland considers it appropriate for supplemental analysis and their reconciliations to the nearest applicable IFRS measure.

In addition to non-GAAP financial measures, Parkland uses a number of operational KPIs, such as Company C-Store SSSG, refinery utilization and composite refinery utilization, 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 Section 14 of the Q2 2021 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.

About Parkland 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.