RED DEER, AB--(Marketwired - August 04, 2016) - Parkland Fuel Corporation ("Parkland") (TSX: PKI), Canada's largest independent marketer of fuel and petroleum products, announced today the financial and operating results for the three months ended June 30, 2016. All financial figures are expressed in Canadian dollars.
"Our 66% Adjusted EBITDA growth compared to the second quarter 2015 was driven by Retail Fuels, which includes a full quarter of Pioneer Energy. Supply and Wholesale also performed extremely well this quarter. Our strong performance helped offset the softness in economic activity in Western Canada and in the Bakken region in the U.S. This further demonstrates the resiliency of our cash flow and strength of our diversified business model," said Bob Espey, President and Chief Executive Officer of Parkland. "Based on this strong performance and our ongoing efforts to win new business and realize synergies, we are well positioned to deliver our 2016 guidance of $235 to $265 million in Adjusted EBITDA."
KEY COMPONENTS OF PARKLAND'S STRATEGY - Q2 2016 HIGHLIGHTS
GROW
- Parkland's Commercial team has begun to deliver on the expected volume of over 100 million litres of annual propane volume that was awarded to Parkland in Q1 2016. Approximately 1,450 tanks have been installed and new sites have been constructed in Bonnyville and Lloydminster, Alberta in Q2 2016 in order to deliver on this increase in propane volume. The revenue associated with this propane supply will be realized by Parkland in the upcoming quarters.
- Parkland achieved 25% volume growth in delivered fuel compared to Q2 2015. Parkland's delivery of 2.5 billion litres of fuel and petroleum products has been driven mainly by the outstanding performance in our Retail Fuels segment which has doubled its Adjusted EBITDA over Q2 2015. The continued success of Pioneer Energy's integration in Ontario and Manitoba has contributed significantly to this increase.
- The Retail Fuels segment demonstrated strong organic growth in convenience stores with same store sales growth of 3% nationally and 11% in the East. The remarkable same store sales growth in the East is largely attributed to growth at Pioneer Energy retail sites, which demonstrates our ability to integrate a business quickly and effectively. Synergies from the Pioneer Energy acquisition are exceeding expectations due in part to exceptional execution of our marketing and merchandising programs.
SUPPLY
- In the second quarter of 2016, our Supply and Wholesale team made significant progress in driving our supply advantage with a 70% improvement in segment Adjusted EBITDA and a 6% increase in fuel volume compared to Q2 2015. The Supply team has excelled in developing improved overall economics with continuous review of our supply operations, logistics and arbitrage opportunities, which contributed to the success of the segment in the quarter and is expected to position Parkland well for the future. In addition, Elbow River Marketing strategically executed on arbitrage opportunities particularly in its Crude, Asphalt and Fuel Oil portfolio.
ACQUIRE
- The acquisition of Girard Bulk Service Ltd., which closed in May 2016, expands our propane offering into southeastern Saskatchewan. We are serving our new customers under the Bluewave Energy banner and have expanded our product offering to include diesel and lubricants.
- On August 3, 2016 Parkland signed an agreement to purchase the propane business and related assets of Stony Propane Ltd. for approximately $4 million, which operates an established residential and commercial propane business in Edmonton and surrounding area. Parkland will be servicing new customers under the Bluewave Energy banner. The transaction is anticipated to close on or prior to September 2, 2016.
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| CONSOLIDATED FINANCIAL OVERVIEW |
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| Financial Summary |
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| (in millions of Canadian dollars and shares, except per share amounts) |
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Three months ended
June 30, |
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Six months ended
June 30, |
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| 2016 |
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2015 |
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2016 |
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2015 |
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| Sales and operating revenue |
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1,569.8 |
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1,389.9 |
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2,887.9 |
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2,781.5 |
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| Adjusted gross profit(1) |
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166.6 |
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123.0 |
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339.4 |
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278.2 |
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| Adjusted EBITDA(1) |
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56.4 |
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34.1 |
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116.1 |
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91.2 |
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| Net earnings (loss) |
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4.6 |
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(10.5 |
) |
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29.5 |
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9.3 |
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Per share - basic |
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0.05 |
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(0.13 |
) |
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0.31 |
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0.11 |
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Per share - diluted |
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0.05 |
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(0.13 |
) |
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0.31 |
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0.11 |
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| Distributable cash flow(2) |
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28.3 |
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9.1 |
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63.1 |
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45.4 |
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Per share(2)(3) |
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0.30 |
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0.11 |
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0.67 |
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0.55 |
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| Dividends |
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27.2 |
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23.3 |
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53.9 |
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46.8 |
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Per share outstanding |
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0.29 |
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0.26 |
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0.57 |
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0.52 |
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| Dividend payout ratio(2) |
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96 |
% |
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257 |
% |
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85 |
% |
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103 |
% |
| Adjusted dividend payout ratio(2) |
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74 |
% |
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106 |
% |
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71 |
% |
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77 |
% |
| Total assets |
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1,834.1 |
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1,819.6 |
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1,834.1 |
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1,819.6 |
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| Total long-term liabilities |
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582.6 |
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590.7 |
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582.6 |
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590.7 |
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| Shares outstanding |
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95.4 |
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89.9 |
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95.4 |
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89.9 |
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| Weighted average number of common shares |
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95.1 |
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83.9 |
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94.7 |
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83.2 |
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| (1) |
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Non-GAAP financial measure. See the "Non-GAAP financial measures, reconciliations and advisories" section of the June 30, 2016 MD&A. |
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Non-GAAP financial measure. See the "Dividends, distributable cash flow and dividend payout ratio" section of the June 30, 2016 MD&A for reconciliation and calculation. |
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Calculated by using the weighted average number of common shares. |
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| Operating Summary |
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Three months ended
June 30, |
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Six months ended
June 30, |
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2016 |
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2015 |
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2016 |
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2015 |
| Fuel volume (millions of litres) |
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2,536 |
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2,031 |
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4,973 |
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4,269 |
| Fuel and petroleum product adjusted gross profit(1) (cpl): |
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Retail Fuels |
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5.64 |
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5.09 |
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5.42 |
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4.99 |
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Commercial Fuels |
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10.47 |
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10.46 |
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11.97 |
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12.34 |
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Parkland USA |
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3.17 |
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3.33 |
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3.50 |
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3.37 |
| Operating costs (cpl) |
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2.94 |
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2.97 |
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3.09 |
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2.97 |
| Adjusted marketing, general and administrative(1) (cpl) |
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1.42 |
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1.44 |
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1.42 |
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1.44 |
| (1) |
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Non-GAAP financial measure. See the "Non-GAAP financial measures, reconciliations and advisories" section of the June 30, 2016 MD&A. |
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MD&A AND FINANCIAL STATEMENTS
The 2016 Q2 Management's Discussion and Analysis, the Interim Condensed Consolidated Financial Statements, and the Notes to the Consolidated Financial Statements (and notes thereto) provide a detailed explanation of Parkland's operating results for the three months ended June 30, 2016. These documents are available online at www.parkland.ca and SEDAR immediately after the results are released by newswire under Parkland's profile at www.sedar.com.
CONFERENCE CALL AND WEBCAST INFORMATION
Parkland Fuel Corporation will host a webcast and conference call at 6:30 a.m. MST (8:30 a.m. EST) on Friday, August 5, 2016, to discuss the results for the three months ended June 30, 2016.
http://www.gowebcasting.com/7760
To access the conference call by telephone, dial toll-free 1-866-225-2055. Callers from the Toronto area should use 416-340-8018. Please connect approximately 10 minutes before the beginning of the call. The webcast will be available for replay two hours after the conference call ends. It will remain available at the link above for one year and will also be posted to www.parkland.ca.
A link to the live webcast will be available on the Investors section of Parkland's website. http://www.parkland.ca/investors/.
If you are unable to participate in the call, a replay will be available by dialing 1-800-408-3053, passcode 3184473 (Canada and USA toll-free). For international callers, please click here to find your dial-in number and use passcode 3184473. A transcript of the broadcast will be posted on the website once it becomes available.
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES
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", "well positioned", "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 growth strategies; the strength of Parkland's balance sheet and financial condition; sources of growth; capital expenditures; the anticipated benefits and accretive effects of acquisitions; and plans and objectives of or involving Parkland.
These forward-looking 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 increases in taxes; 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 Statements" and "Risk Factors" included in Parkland's Annual Information Form dated March 30, 2016, as filed on SEDAR and available on Parkland's website at www.parkland.ca.
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, Distributable cash flow, Distributable cash flow per share, Dividend payout ratio, Adjusted dividend payout ratio, Fuel and petroleum product adjusted gross profit, and Adjusted marketing, general and administrative 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 its industries. See "Adjusted EBITDA" in Parkland's June 30, 2016 MD&A for a reconciliation of Adjusted EBITDA to net earnings, the IFRS measure most directly comparable to Adjusted EBITDA. Distributable cash flow is used to assess the level of cash flow generated from ongoing operations and to evaluate the adequacy of internally generated cash flow to fund dividends. See "Distributable Cash Flow" in Parkland's June 30, 2016 MD&A for a reconciliation of distributable cash flow to cash flow from operating activities, the IFRS measure most directly comparable to distributable cash flow. See the "Non-GAAP financial measures, reconciliations, and advisories" section of the June 30, 2016 MD&A. Investors are encouraged to evaluate each adjustment and the reasons Parkland considers it appropriate for supplemental analysis. Investors are cautioned, however, 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. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
ABOUT PARKLAND FUEL CORPORATION
Parkland Fuel Corporation is one of North America's fastest growing independent marketers of fuel and petroleum products. We deliver gasoline, diesel, propane, lubricants, heating oil and other high-quality petroleum products to motorists, businesses, households and wholesale customers in Canada and the United States. Our mission is to be the partner of choice for our customers and suppliers, and we do this by building lasting relationships through outstanding service, reliability, safety and professionalism.
We are unique in our ability to provide customers with dependable access to fuel and petroleum products, utilizing a portfolio of supply relationships, storage infrastructure, and third-party rail and highway carriers to rapidly respond to supply disruptions in order to protect our customers.
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