Record fourth quarter and full year Adjusted EBITDA of $455 million and $1.620 billion
Not proceeding with stand-alone renewable diesel complex; committed to co-processing expansion
Annualized dividend increasing to $1.36 per share
CALGARY, AB, March 2, 2023 /PRNewswire-HISPANIC PR WIRE/ — Parkland Corporation (“Parkland”, “we”, the “Company”, or “our”) (TSX: PKI), today announced its financial and operating results for the three months and year ended December 31, 2022.
Q4 2022 Highlights
- Record Adjusted EBITDA attributable to Parkland (“Adjusted EBITDA”1) of $455 million, up 75 percent from the fourth quarter of 2021, with each segment increasing compared to the prior year.
- Cash generated from operating activities of $629 million ($3.65 per share, basic2) up 433 percent from 2021.
- Net earnings attributable to Parkland (“net earnings”) of $69 million ($0.39 per share, basic) up 214 percent from the fourth quarter of 2021, and Adjusted earnings attributable to Parkland (“Adjusted earnings”3) of $117 million ($0.67 per share, basic) up 113 percent from the fourth quarter of 2021.
- Repurchased $40 million of Parkland common shares for cancellation.
- Consolidated 100 percent ownership of our International segment effective October 18, 2022.
2022 Highlights
- Parkland delivered its best safety performance in 2022, with a total recordable injury frequency rate4 of 1.05, an 8 percent improvement from the prior year.
- Record Adjusted EBITDA of $1.620 billion, up 29 percent from 2021.
- Cash generated from operating activities of $1.326 billion ($8.29 per share, basic2) up 47 percent from 2021.
- Net earnings of $310 million ($1.94 per share, basic) up 220 percent from 2021 and Adjusted earnings of $468 million ($2.93 per share, basic) up 26 percent from 2021.
- Leverage ratio5 of 3.4x and liquidity available2 of $1.5 billion.
- Fuel volumes of 27 billion litres, up over 13 percent from 2021.
- Continued to expand our ON the RUN convenience brand to more than 650 locations and grew our JOURNIE™ rewards loyalty program to 4.1 million members.
“I would like to thank the Parkland team for delivering an excellent year and commend them for their ongoing focus on safely serving our customers,” said Bob Espey, President and Chief Executive Officer. “We advanced our strategy, strengthened our supply advantage, delivered record Adjusted EBITDA, and enhanced shareholder distributions. Our accomplishments demonstrate the strength of our integrated business model and highlight our focus on creating long-term shareholder value. We expect record Adjusted EBITDA in 2023 and are raising our annual dividend for the eleventh consecutive year.”
“Having accelerated acquisitions, we are focused on integration, capturing synergies, deleveraging and enhancing shareholder returns,” added Espey. “While we are not proceeding with the planned renewable diesel complex at our Burnaby Refinery, we will continue to expand our co-processing volumes. We are grateful for the support our renewable diesel project has had from all levels of government, particularly the Province of B.C.”
Q4 2022 Segment Highlights
- Canada delivered Adjusted EBITDA1 of $197 million, up 29 percent from Q4 2021 ($153 million). Performance was underpinned by strong fuel unit and c-store margins and acquisitions. Food and Company C-Store Same Store Sales Growth (excluding cigarettes)3 was 6 percent (4.7 percent in Q4 2021).
- International delivered Adjusted EBITDA of $110 million, up 41 percent, from Q4 2021 ($78 million). Performance was underpinned by the consolidation of our International segment and wholesale, aviation and retail volume growth which was driven by tourism recovery.
- USA delivered Adjusted EBITDA of $46 million, up 15 percent from Q4 2021 ($40 million). Performance was underpinned by incremental contribution from acquisitions and growth in our base business.
- Refining delivered Adjusted EBITDA1 of $128 million, up 700 percent, from Q4 2021 ($16 million). Performance was underpinned by composite utilization4 of 97.7 percent, safe and consistent operations, and robust margins while the fourth quarter of 2021 was impacted by the shutdown of a major pipeline and turnaround activities at Parkland’s refinery in Burnaby, British Columbia (the “Burnaby Refinery”).
Renewable Diesel Complex Update
After careful consideration, and consistent with Parkland’s commitment to capital discipline, the Company will not proceed with its plans to build a stand-alone renewable diesel complex at the Burnaby Refinery at this time. Several factors have impacted the competitiveness of the renewable diesel complex, including rising project costs, a lack of market certainty around emerging renewable fuels and the U.S. Inflation Reduction Act of 2022, which advantages U.S. producers.
Parkland remains committed to its low carbon journey and will continue to extend its low carbon fuel innovation and leadership by expanding co-processing at the Burnaby Refinery to 5,500 barrels per day. Co-processing forms part of Parkland’s commercial decarbonization strategy to provide its customers with a portfolio of low carbon products and services to help them meet their low carbon goals.
Enhancing Shareholder Distributions
- Parkland’s quarterly dividend will increase from $0.325 to $0.340 per common share, effective with the quarterly dividend payable on April 14, 2023 to shareholders of record at the close of business on March 22, 2023. Dividends are expected to be declared and paid on a quarterly basis.
- To augment the ongoing return of capital to shareholders through dividends, Parkland purchased for cancellation 1.45 million Parkland shares for $40 million under its normal course issuer bid (“NCIB”) program in the fourth quarter. Operating within its disciplined capital allocation framework which prioritizes deleveraging, followed by enhancing shareholder distributions and growth, the Company expects to continue to opportunistically utilize its NCIB program.
Sustainability
Sustainability is deeply embedded across Parkland’s business. Sustainability accomplishments in 2022 are described in the Q4 2022 MD&A. Highlights include:
- Co-processed over 111 million litres of bio-feedstocks at the Burnaby Refinery in 2022, which has the equivalent impact of taking over 113,000 cars off the road.
- Awarded the Emerging Clean Technologies Award at the 2022 Global Energy Show in recognition of the Company’s co-processing success at the Burnaby Refinery.
- Launched one of western Canada’s largest ultra-fast electric vehicle charging networks, with 26 sites currently operational. Parkland received $6.8 million in funding support from National Resources Canada and the Government of British Columbia.
- Parkland maintains an AA ESG rating from Morgan Stanley Capital International (MSCI), representing the top 22 percent of the index constituents.
| _____________________________ |
| 1 Total of segments measure. See “Total of Segments Measures” section of this news release. |
| 2 Supplementary financial measure. See “Supplementary Financial Measures” section of this news release. |
| 3 Non-GAAP financial measure or non-GAAP financial ratio. See “Non-GAAP Financial Measures and Ratios” section of this news release. |
| 4 Non-financial measure. See “Non-Financial Measures” section of this news release. |
| 5 Capital management measure. See “Capital Management Measures” section of this news release. |
Consolidated Financial Overview
| ($ millions, unless otherwise noted) | Three months ended December 31, | Year ended December 31, | ||
| Financial Summary | 2022 | 2021(1) | 2022 | 2021 |
| Fuel and petroleum product volume (million litres) | 6,637 | 6,397 | 27,036 | 23,900 |
| Sales and operating revenue | 8,719 | 6,286 | 35,462 | 21,468 |
| Adjusted EBITDA(2) | 455 | 260 | 1,620 | 1,260 |
| Canada(1)(2)(4) | 197 | 153 | 702 | 562 |
| International | 110 | 78 | 383 | 294 |
| USA(1) | 46 | 40 | 126 | 132 |
| Refining(1)(2)(4) | 128 | 16 | 516 | 362 |
| Corporate(1) | (26) | (27) | (107) | (90) |
| Net earnings attributable to Parkland | 69 | 22 | 310 | 97 |
| Net earnings per share – basic ($ per share) | 0.39 | 0.15 | 1.94 | 0.64 |
| Net earnings per share – diluted ($ per share) | 0.39 | 0.15 | 1.92 | 0.64 |
| Adjusted earnings(3) | 117 | 55 | 468 | 372 |
| Adjusted earnings per share – basic ($ per share)(3) | 0.67 | 0.36 | 2.93 | 2.46 |
| Adjusted earnings per share – diluted ($ per share)(3) | 0.67 | 0.36 | 2.91 | 2.45 |
| TTM Distributable cash flow(3) | 818 | 660 | 818 | 660 |
| TTM Distributable cash flow per share(3) | 5.11 | 4.34 | 5.11 | 4.34 |
| Cash generated from operating activities | 629 | 118 | 1,326 | 904 |
| (1) Certain amounts in the comparative periods were restated and reclassified to conform to the presentation used in the current period with respect to the allocation of Corporate costs |
| (2) Total of segments measure. See “Total of Segments Measures” section of this news release. |
| (3) Non-GAAP financial measure or non-GAAP financial ratio. See “Non-GAAP Financial Measures and Ratios” section of this news release. |
| (4) For comparative purposes, information for the comparative periods were restated due to a change in segment presentation. Refer to the Basis of presentation section of the Q4 2022 MD&A. |
Q4 2022 Conference Call and Webcast Details
Parkland will host a webcast and conference call on Friday, March 3, 2023 at 6:30 am MST (8:30 am EST) to discuss the results. To listen to the live webcast and watch the presentation, please use the following link: https://app.webinar.net/91L3lBVlvgx
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: 58680945). International participants may call 1-800-389-0704 (toll-free) (Conference ID: 58680945).
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 Annual Consolidated Financial Statements
The management’s discussion and analysis for the three months and year ended December 31, 2022 (the “Q4 2022 MD&A”) and Annual Consolidated Financial Statements for the year ended December 31, 2022 (the “2022 Annual Consolidated Financial Statements”) provide a detailed explanation of Parkland’s operating results for the three months and year ended December 31, 2022. 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 French versions of the Q4 2022 MD&A and the 2022 Annual 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 and retailer with operations in 25 countries. Our purpose is to Power Journeys and Energize Communities, and every day, we provide over one million customers with the essential fuels, convenience items and quality foods on which they depend.
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. 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 carbon and renewables trading, solar power, renewables manufacturing and ultra-fast electric vehicle charging.
Our proven business model is centered around organic growth and our supply advantage, and is driven by scale, our integrated refinery and supply infrastructure, and focus on acquiring prudently, and integrating successfully. Our strategy is focused on developing the existing business in resilient markets, growing our food, convenience, and renewable energy businesses, and helping customers to decarbonize. 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 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: Parkland’s business model, objectives and strategies, including its focus on developing the existing business in resilient markets, growing our food, convenience and renewable energy businesses, and helping customers to decarbonize; creating long-term shareholder value; integrating acquired businesses and capturing synergies relating thereto; Parkland’s disciplined capital allocation framework, including prioritizing deleveraging, followed by enhancing shareholder distributions and growth; Parkland’s commitment to its low carbon journey and continuing to extend its low carbon fuel innovation and leadership by expanding co-processing at the Burnaby Refinery to 5,500 barrels per day; future share repurchases under the NCIB program, if any; expectation of delivering record Adjusted EBITDA in 2023; future dividends, if any, including the amount, timing and payment thereof; and building one of western Canada’s largest ultra-fast electric vehicle networks, including the size, completion and funding thereof.
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 and the Russia-Ukraine conflict; micro and macroeconomic trends and conditions, including increases in interest rates, inflation and commodity prices; Parkland’s ability to execute its business objectives, projects and strategies, including the completion, financing and timing thereof, realizing the benefits therefrom and meeting our targets and commitments relating thereto; Parkland’s management systems and programs and risk management strategy; competitive environment of our industry; retail pricing, margins and refining crack spreads; availability and pricing of petroleum product supply; volatility of crude oil and refined product prices; 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; environmental impact; changes in environmental and regulatory laws, including the ability to obtain or maintain required permits; and other factors, many of which are beyond the control of Parkland. See also the risks and uncertainties described in “Cautionary Statements Regarding Forward-Looking Information” and “Risk Factors” included in Parkland’s most recent Annual Information Form, and in “Forward-Looking Information” and “Risk Factors” included in the Q4 2022 MD&A, 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-Financial Measures
Parkland uses a number of non-financial measures, including 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 International Financial Reporting Standards (“IFRS”) measures, and may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 15 of the Q4 2022 MD&A, which is incorporated by reference into this news release, for further details on the non-financial measures used by Parkland.
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 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 15 of the Q4 2022 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 is a non-GAAP financial measure and Adjusted earnings per share is a non-GAAP financial ratio included in this news release to assist management, investors and analysts with the analysis of the core operating performance of business activities of Parkland on a consolidated level. This non-GAAP financial measure and ratio do not have any standardized meaning under IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. 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 15 of the Q4 2022 MD&A, which is incorporated by reference into this news release, for further details regarding Parkland’s non-GAAP financial measures and ratios. See below for the reconciliation of Adjusted earnings (loss) to net earnings (loss) and calculation of Adjusted earnings (loss) per share for the three months and year ended December 31, 2022 and December 31, 2021.
| Three months ended December 31, | Year ended December 31, | |||
| ($ millions, unless otherwise stated) | 2022 | 2021 | 2022 | 2021 |
| Net earnings (loss) attributable to Parkland | 69 | 22 | 310 | 97 |
| Add: Net earnings (loss) attributable to NCI | — | 5 | 36 | 29 |
| Net earnings (loss) | 69 | 27 | 346 | 126 |
| Add: | ||||
| Acquisition, integration and other costs | 41 | 24 | 117 | 52 |
| Loss on modification of long-term debt | — | 18 | 2 | 77 |
| (Gain) loss on foreign exchange – unrealized | 8 | 6 | (8) | (7) |
| (Gain) loss on risk management and other – unrealized | 9 | (11) | 39 | 10 |
| Other (gains) and losses(1) | (21) | 15 | 23 | 190 |
| Other adjusting items(2) | 21 | 4 | 26 | 12 |
| Tax normalization(3) | (10) | (13) | (46) | (42) |
| Adjusted earnings (loss) including NCI | 117 | 70 | 499 | 418 |
| Less: Adjusted earnings (loss) attributable to NCI | — | 15 | 31 | 46 |
| Adjusted earnings (loss) | 117 | 55 | 468 | 372 |
| Weighted average number of common shares (million shares)(4) | 173 | 153 | 160 | 151 |
| Weighted average number of common shares adjusted for the effects of dilution (million shares)(4) | 174 | 153 | 161 | 152 |
| Adjusted earnings (loss) per share ($ per share) | ||||
| Basic | 0.67 | 0.36 | 2.93 | 2.46 |
| Diluted | 0.67 | 0.36 | 2.91 | 2.45 |
| (1) Other (gains) and losses for the three months ended December 31, 2022 include the following: (i) $19 million non-cash valuation gain (2021 – $25 million gain) due to the change in redemption value of Sol Put Option; (ii) $2 million non-cash valuation loss (2021 – $34 million loss) due to the change in fair value of Redemption Options; and (iii) $4 million gain (2021 – $6 million loss) in Other items. Other (gains) and losses for the year ended December 31, 2022 include the following: (i) $30 million non-cash valuation gain (2021 – $87 million loss) due to change in redemption value of Sol Put Option; (ii) $67 million non-cash valuation loss (2021 – $86 million loss) due to change in fair value of redemption options; (iii) $14 million gain (2021 – $17 million loss) in Other items. Refer to Note 23 of the Annual Consolidated Financial Statements. |
| (2) Other Adjusting Items for the three months ended December 31, 2022 and for the year ended December 31, 2022 mainly include: (i) the share of depreciation and income taxes for Isla joint venture of $3 million (2021 – $4 million) and $11 million (2021 – $7 million) respectively. |
| (3) The tax normalization adjustment was applied to net earnings (loss) adjusting items that were considered temporary differences, such as gains and losses on asset disposals, acquisition, integration and other costs, unrealized foreign exchange gains and losses, gains and losses on risk management and other, 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, and debt modifications. The tax impact was estimated using the effective tax rates applicable to jurisdictions where the related items occur. |
| (4) 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. |
TTM distributable cash flow is a non-GAAP financial measure and TTM distributable cash flow per share is a non-GAAP ratio. TTM distributable cash flow is a cash metric that adjusts for the impact of seasonality in Parkland’s business by removing non-cash working capital items and excludes the effect of items that are not considered representative of Parkland’s ability to generate cash flows. Such items include: (i) acquisition, integration, and other costs; (ii) turnaround maintenance capital expenditures, and; (iii) interest on leases and long-term debt, and principal payments on leases attributable to non-controlling interests. Distributable cash flow does not have any standardized meaning under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Parkland uses this non-GAAP financial measure to monitor normalized cash flows of the business by eliminating the impact of Parkland’s working capital fluctuations and expenditures used in acquisition, integration and other activities, which can vary significantly from quarter-to-quarter. See below for a reconciliation of distributable cash flow and TTM distributable cash flow to cash generated from operating activities and TTM cash generated from operating activities.
| Three months ended | Trailing twelve months endedDecember 31, 2022 | ||||
| ($ millions, unless otherwise noted) | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | |
| Cash generated from (used in) operating activities(1) | (48) | 343 | 402 | 629 | 1,326 |
| Exclude: Adjusted EBITDA attributable to NCI, net of tax | (26) | (27) | (11) | — | (64) |
| (74) | 316 | 391 | 629 | 1,262 | |
| Reverse: Change in other liabilities and other assets | (2) | (1) | 23 | (23) | (3) |
| Reverse: Net change in non-cash working capital | 436 | 36 | (112) | (221) | 139 |
| Include: Maintenance capital expenditures attributable to Parkland | (29) | (44) | (62) | (118) | (253) |
| Exclude: Turnaround maintenance capital expenditures | — | — | 4 | 3 | 7 |
| Include: Proceeds on asset disposals | 1 | 2 | 1 | 4 | 8 |
| Reverse: Acquisition, integration and other costs | 13 | 18 | 45 | 41 | 117 |
| Include: Interest on leases and long-term debt | (64) | (71) | (74) | (86) | (295) |
| Exclude: Interest on leases and long-term debt attributable to NCI | 1 | 1 | — | — | 2 |
| Include: Payments on principal amount on leases | (37) | (38) | (50) | (52) | (177) |
| Exclude: Payments on principal amount on leases attributable to NCI | 5 | 4 | 2 | — | 11 |
| Distributable cash flow | 250 | 223 | 168 | 177 | 818 |
| Weighted average number of common shares (million shares) | 160 | ||||
| Distributable cash flow per share | 5.11 |
| (3) Supplementary financial measure except for annual reporting periods, See “Supplementary Financial Measures” section of this news release. |
| Three months ended | Trailing twelve months ended December 31, 2021 | ||||
| ($ millions, unless otherwise noted) | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | |
| Cash generated from (used in) operating activities(1)(2) | 264 | 322 | 200 | 118 | 904 |
| Exclude: Adjusted EBITDA attributable to NCI, net of tax | (23) | (21) | (26) | (22) | (92) |
| 241 | 301 | 174 | 96 | 812 | |
| Reverse: Change in other liabilities and other assets | (14) | (9) | 4 | 8 | (11) |
| Reverse: Net change in non-cash working capital(3) | 53 | 22 | 119 | 148 | 342 |
| Include: Maintenance capital expenditures attributable to Parkland | (20) | (45) | (40) | (112) | (217) |
| Exclude: Turnaround maintenance capital expenditures | — | — | 3 | 8 | 11 |
| Include: Proceeds on asset disposals | 5 | 1 | 4 | 4 | 14 |
| Reverse: Acquisition, integration and other costs | 5 | 11 | 12 | 24 | 52 |
| Include: Interest on leases and long-term debt | (54) | (54) | (56) | (59) | (223) |
| Exclude: Interest on leases and long-term debt attributable to NCI | 1 | 1 | 1 | 1 | 4 |
| Include: Payments on principal amount on leases | (35) | (33) | (36) | (38) | (142) |
| Exclude: Payments on principal amount on leases attributable to NCI | 4 | 4 | 5 | 5 | 18 |
| Distributable cash flow(4) | 186 | 199 | 190 | 85 | 660 |
| Weighted average number of common shares (million shares) | 152 | ||||
| Distributable cash flow per share | 4.34 |
| (1) For comparative purposes, information for certain comparative periods was restated due to a change in presentation of cash flows from (used in) operating and financing activities. Interest paid on long-term debt and leases, formerly included in “Cash generated from (used in) operating activities”, is now included in “Cash generated from (used in) financing activities”, reflecting a more relevant presentation of finance costs payments. |
| (2) Supplementary financial measure except for annual reporting periods, See “Supplementary Financial Measures” section of this news release. |
| (3) For comparative purposes, information for the quarter ended September 30, 2021 was restated due to a change in presentation for certain emission credits and allowances held for trading, which were formerly included in “Risk management and other” and are now included in “Inventories”. |
Food and Company C-Store Same Store Sales Growth (“SSSG”) is a non-GAAP financial ratio and refers to the period-over-period sales growth generated by retail food and convenience stores at the same company sites. The effects of opening and closing stores, temporary closures (including closures for ON the RUN / Marché Express conversions), expansions of stores, renovations of stores, and stores with changes in food service models in the period are excluded to derive a comparable same-store metric. Same-store sales growth is a metric commonly used in the retail industry that provides meaningful information to investors in assessing the health and strength of Parkland’s brands and retail network, which ultimately impacts financial performance. Food and Company SSSG does not have any standardized meaning under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. The change in label of this metric from Company C-Store SSSG to Food and Company C-Store SSSG reflects the addition of the frozen food retail business acquired as part of the M&M Acquisition. Please see below for a reconciliation of convenience store revenue (Food and C-Store revenue) of the Canada segment with the Food and Company C-Store same store sales (“SSS”) and calculation of the Food and Company C-Store SSSG.
| Three months ended December 31, | Twelve months ended December 31, | |||||
| ($ millions) | 2022 | 2021 | %(1) | 2022 | 2021 | %(1) |
| Food and Company C-Store revenue | 88 | 93 | 359 | 390 | ||
| Add: | ||||||
| Point-of-sale (“POS”) value of goods and services sold at Food and Company C-Store operated by retailers and franchisees(2) | 306 | 141 | 1,029 | 590 | ||
| Less: | ||||||
| Rental and royalty income from retailers, franchisees and others(3) | (43) | (26) | (144) | (105) | ||
| Same Store revenue adjustments(4)(5) (excluding cigarettes) | (164) | (15) | (460) | (44) | ||
| Food and Company C-Store same-store sales | 187 | 193 | (3.5) % | 784 | 831 | (5.7) % |
| Less: | ||||||
| Same Store revenue adjustments(4) (cigarettes) | (87) | (99) | (375) | (434) | ||
| Food and Company C-Store same-store sales (excluding cigarettes) | 100 | 94 | 6.0 % | 409 | 397 | 3.1 % |
| Three months ended December 31, | Twelve months ended December 31, | |||||
| ($ millions) | 2021 | 2020 | %(1) | 2021 | 2020 | %(1) |
| Food and Company C-Store revenue | 93 | 95 | 390 | 406 | ||
| Add: | ||||||
| Point-of-sale (“POS”) value of goods and services sold at Food and Company C-Store operated by retailers(2) | 141 | 143 | 590 | 582 | ||
| Less: | ||||||
| Rental income from retailers and others(3) | (26) | (23) | (105) | (99) | ||
| Same Store revenue adjustments(4)(5) (excluding cigarettes) | (9) | (9) | (30) | (28) | ||
| Food and Company C-Store same-store sales | 199 | 206 | (3.2) % | 845 | 861 | (1.8) % |
| Less: | ||||||
| Same Store revenue adjustments(4)(5) (cigarettes) | (102) | (114) | (441) | (479) | ||
| Food and Company C-Store same-store sales (excluding cigarettes) | 97 | 92 | 4.7 % | 404 | 382 | 5.8 % |
| (1) Percentages are calculated based on actual amounts and are impacted by rounding. |
| (2) POS values used to calculate Food and Company C-Store SSSG are not a Parkland financial measure and do not form part of Parkland’s consolidated financial statements. |
| (3) Includes rental income from retailers in the form of a percentage rent on Food and Company C-Store sales, royalty, franchisee fees and excludes revenues from automated teller machine, POS system licensing fees, and others. |
| (4) This adjustment excludes the effects of acquisitions, opening and closing stores, temporary closures (including closures for ON the RUN / Marché Express conversions), expansions of stores, renovations of stores, and stores with changes in food service models, to derive a comparable same-store metric. |
| (5) Excludes sales from the 2022 Acquisitions as these will not impact the metric until after the completion of one year of the acquisitions in 2023 as the sales or volume generated in 2022 establish the baseline for these metrics. |
Supplementary Financial Measures
Parkland uses a number of supplementary financial measures, including cash generated from (used in) operating activities, other than annual periods, cash generated from (used in) operating activities per share, and liquidity available to evaluate the success of our strategic objectives and to set variable compensation targets for employees. These measures may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 15 of the Q4 2022 MD&A, which is incorporated by reference into this news release, for further details regarding supplementary financial measures used by Parkland.
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. The Leverage Ratio is calculated as a ratio of Leverage Debt to Leverage EBITDA (each as defined in the 2022 Annual Consolidated Financial Statements) and does not have any standardized meaning prescribed under IFRS. It is therefore unlikely to be comparable to similar measures presented by other companies. See Section 15 of the Q4 2022 MD&A, which is incorporated by reference into this news release, for further details regarding capital management measures used by Parkland.
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. Adjusted EBITDA for the Canada and Refining segments and Total Renewable Adjusted EBITDA (being a summation of Canada and Refining segment renewable subsegments) are also total of segments measures. 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 15 of the Q4 2022 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 and year ended December 31, 2022 and December 31, 2021.
| Reporting segments | Canada | Refining | International | USA | Corporate | Intersegment Eliminations(4) | Consolidated | |||||||||||||||||||
| Sub-segments | Renewable | Conventional | Total | Renewable | Conventional | Total | Total RenewableSub-segment | Total ConventionalSub-segment(5) | ||||||||||||||||||
| For the three months ended December 31, | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Fuel and petroleum product volume (million litres)(1) | 129 | 142 | 3,412 | 3,307 | 3,541 | 3,449 | — | — | 1,054 | 731 | 1,054 | 731 | 129 | 142 | 4,466 | 4,038 | 1,762 | 1,541 | 1,129 | 1,394 | — | — | (849) | (718) | 6,637 | 6,397 |
| Sales and operating revenue | 179 | 146 | 4,364 | 3,297 | 4,543 | 3,443 | 122 | 70 | 1,145 | 660 | 1,267 | 730 | 301 | 216 | 5,509 | 3,957 | 2,324 | 1,541 | 1,872 | 1,413 | 1 | — | (1,046) | (638) | 8,961 | 6,489 |
| Sub-segment eliminations(2) | (179) | (146) | (63) | (57) | (242) | (203) | ||||||||||||||||||||
| Sales and operating revenue – after eliminations | 4,364 | 3,297 | 1,204 | 673 | 2,324 | 1,541 | 1,872 | 1,413 | 1 | — | (1,046) | (638) | 8,719 | 6,286 | ||||||||||||
| Cost of purchases | 173 | 138 | 3,938 | 2,979 | 4,111 | 3,117 | 121 | 47 | 933 | 588 | 1,054 | 635 | 294 | 185 | 4,871 | 3,567 | 2,129 | 1,367 | 1,675 | 1,279 | — | — | (1,045) | (638) | 7,924 | 5,760 |
| Sub-segment eliminations(2) | (179) | (146) | (63) | (57) | (242) | (203) | ||||||||||||||||||||
| Cost of purchases – after eliminations | 3,932 | 2,971 | 991 | 578 | 2,129 | 1,367 | 1,675 | 1,279 | — | — | (1,045) | (638) | 7,682 | 5,557 | ||||||||||||
| Fuel and petroleum product adjusted gross margin, before the following: | 6 | 8 | 323 | 266 | 329 | 274 | 1 | 23 | 209 | 66 | 210 | 89 | 7 | 31 | 532 | 332 | 162 | 151 | 148 | 87 | — | — | — | — | 849 | 601 |
| Gain (loss) on risk management and other – realized | 2 | 2 | (2) | (1) | — | 1 | 1 | — | (21) | (6) | (20) | (6) | 3 | 2 | (23) | (7) | (8) | (17) | (28) | (6) | — | — | — | — | (56) | (28) |
| Gain (loss) on foreign exchange – realized | — | — | — | — | — | — | — | — | 4 | 1 | 4 | 1 | — | — | 4 | 1 | (6) | 1 | — | — | 1 | — | — | — | (1) | 2 |
| Other adjusting items to adjusted gross margin(3) | — | — | (2) | — | (2) | — | — | — | 4 | — | 4 | — | — | — | 2 | — | 4 | (3) | 10 | — | (1) | — | — | — | 15 | (3) |
| Fuel and petroleum product adjusted gross margin | 8 | 10 | 319 | 265 | 327 | 275 | 2 | 23 | 196 | 61 | 198 | 84 | 10 | 33 | 515 | 326 | 152 | 132 | 130 | 81 | — | — | — | — | 807 | 572 |
| Food, convenience and other adjusted gross margin | — | — | 103 | 52 | 103 | 52 | — | — | 3 | 6 | 3 | 6 | — | — | 106 | 58 | 33 | 23 | 49 | 47 | 1 | — | (1) | — | 188 | 128 |
| Total adjusted gross margin | 8 | 10 | 422 | 317 | 430 | 327 | 2 | 23 | 199 | 67 | 201 | 90 | 10 | 33 | 621 | 384 | 185 | 155 | 179 | 128 | 1 | — | (1) | — | 995 | 700 |
| Operating costs | 1 | 1 | 169 | 133 | 170 | 134 | 2 | — | 67 | 70 | 69 | 70 | 3 | 1 | 236 | 203 | 57 | 40 | 112 | 64 | (1) | — | — | — | 407 | 308 |
| Marketing, general and administrative | 2 | — | 62 | 40 | 64 | 40 | 1 | — | 3 | 4 | 4 | 4 | 3 | — | 65 | 44 | 28 | 24 | 20 | 24 | 29 | 27 | (1) | — | 144 | 119 |
| Share in (earnings) loss of associates and joint ventures | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (5) | (5) | — | — | — | — | — | — | (5) | (5) |
| Other adjusting items to Adjusted EBITDA | — | — | (1) | — | (1) | — | — | — | — | — | — | — | — | — | (1) | — | (5) | (7) | 1 | — | (1) | — | — | — | (6) | (7) |
| Adjusted EBITDA (loss) including NCI | 5 | 9 | 192 | 144 | 197 | 153 | (1) | 23 | 129 | (7) | 128 | 16 | 4 | 32 | 321 | 137 | 110 | 103 | 46 | 40 | (26) | (27) | — | — | 455 | 285 |
| Attributable to NCI | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 25 | — | — | — | — | — | — | — | 25 |
| Adjusted EBITDA (loss) attributable to Parkland (“Adjusted EBITDA (loss)”) | 5 | 9 | 192 | 144 | 197 | 153 | (1) | 23 | 129 | (7) | 128 | 16 | 4 | 32 | 321 | 137 | 110 | 78 | 46 | 40 | (26) | (27) | — | — | 455 | 260 |
| Add: Adjusted EBITDA attributable to NCI | — | 25 | ||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Acquisition, integration and other costs | 41 | 24 | ||||||||||||||||||||||||
| Depreciation and amortization | 212 | 156 | ||||||||||||||||||||||||
| Finance costs | 94 | 86 | ||||||||||||||||||||||||
| (Gain) loss on foreign exchange – unrealized | 8 | 6 | ||||||||||||||||||||||||
| (Gain) loss on risk management and other – unrealized | 9 | (11) | ||||||||||||||||||||||||
| Other (gains) and losses | (21) | 15 | ||||||||||||||||||||||||
| Other adjusting items | 21 | 4 | ||||||||||||||||||||||||
| Income tax expense (recovery) | 22 | (22) | ||||||||||||||||||||||||
| Net earnings (loss) | 69 | 27 | ||||||||||||||||||||||||
| Less: Net earnings (loss) attributable to NCI | — | 5 | ||||||||||||||||||||||||
| Net earnings (loss) attributable to Parkland | 69 | 22 |
| (1) Fuel and petroleum product volume for renewable activities only includes fuel trading volumes and does not include volumes of low-carbon-intensity feedstocks used for co-processing and blending. |
| (2) Represents elimination of transactions between Renewable and Conventional sub-segments within Canada and Refining. |
| (3) Other adjusting items to adjusted gross margin mainly include $10 million (2021 – nil) of unrealized risk management gain related to underlying physical sales activity in the current period. |
| (4) Includes inter-segment sales and cost of purchases. See Note 26 of the Annual Consolidated Financial Statements. |
| (5) Total of Conventional sub-segment is not a financial measure used by Parkland to evaluate performance and is not a Total of segment measure under NI 52-112. It is included in the table above for reconciliation purposes only. |
| Reporting segments | Canada | Refining | International | USA | Corporate | Intersegment Eliminations(5) | Consolidated | |||||||||||||||||||
| Sub-segments | Renewable | Conventional | Total | Renewable | Conventional | Total | Total RenewableSub-segment | Total ConventionalSub-segment(6) | ||||||||||||||||||
| For the year ended December 31, | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Fuel and petroleum product volume (million litres)(1) | 586 | 528 | 12,928 | 12,485 | 13,514 | 13,013 | — | — | 4,065 | 3,343 | 4,065 | 3,343 | 586 | 528 | 16,993 | 15,828 | 6,567 | 5,296 | 6,147 | 5,151 | — | — | (3,257) | (2,903) | 27,036 | 23,900 |
| Sales and operating revenue | 871 | 568 | 17,252 | 11,515 | 18,123 | 12,083 | 418 | 303 | 4,700 | 2,680 | 5,118 | 2,983 | 1,289 | 871 | 21,952 | 14,195 | 8,708 | 4,870 | 8,760 | 4,811 | 1 | — | (4,149) | (2,472) | 36,561 | 22,275 |
| Sub-segment eliminations(2) | (871) | (568) | (228) | (239) | (1,099) | (807) | ||||||||||||||||||||
| Sales and operating revenue – after eliminations | 17,252 | 11,515 | 4,890 | 2,744 | 8,708 | 4,870 | 8,760 | 4,811 | 1 | — | (4,149) | (2,472) | 35,462 | 21,468 | ||||||||||||
| Cost of purchases | 841 | 542 | 15,746 | 10,328 | 16,587 | 10,870 | 373 | 219 | 3,810 | 2,134 | 4,183 | 2,353 | 1,214 | 761 | 19,556 | 12,462 | 7,867 | 4,201 | 8,051 | 4,367 | — | — | (4,148) | (2,472) | 32,540 | 19,319 |
| Sub-segment eliminations(2) | (871) | (568) | (228) | (239) | (1,099) | (807) | ||||||||||||||||||||
| Cost of purchases – after eliminations | 15,716 | 10,302 | 3,955 | 2,114 | 7,867 | 4,201 | 8,051 | 4,367 | — | — | (4,148) | (2,472) | 31,441 | 18,512 | ||||||||||||
| Fuel and petroleum product adjusted gross margin, before the following: | 30 | 26 | 1,179 | 983 | 1,209 | 1,009 | 45 | 84 | 880 | 537 | 925 | 621 | 75 | 110 | 2,059 | 1,520 | 735 | 583 | 489 | 275 | — | — | — | — | 3,358 | 2,488 |
| Gain (loss) on risk management and other – realized | 7 | 10 | 3 | (8) | 10 | 2 | — | — | (123) | (22) | (123) | (22) | 7 | 10 | (120) | (30) | (138) | (73) | (85) | (21) | — | — | — | — | (336) | (114) |
| Gain (loss) on foreign exchange – realized | 1 | — | — | (1) | 1 | (1) | — | — | (12) | 2 | (12) | 2 | 1 | — | (12) | 1 | (7) | (1) | — | — | 2 | 3 | — | — | (16) | 3 |
| Other adjusting items to adjusted gross margin(3) | — | — | — | — | — | — | — | — | 4 | — | 4 | — | — | — | 4 | — | 1 | (3) | — | — | 2 | 1 | — | — | 7 | (2) |
| Fuel and petroleum product adjusted gross margin | 38 | 36 | 1,182 | 974 | 1,220 | 1,010 | 45 | 84 | 749 | 517 | 794 | 601 | 83 | 120 | 1,931 | 1,491 | 591 | 506 | 404 | 254 | 4 | 4 | — | — | 3,013 | 2,375 |
| Food, convenience and other adjusted gross margin | — | — | 327 | 204 | 327 | 204 | — | — | 10 | 9 | 10 | 9 | — | — | 337 | 213 | 106 | 86 | 220 | 169 | 1 | — | (1) | — | 663 | 468 |
| Total adjusted gross margin | 38 | 36 | 1,509 | 1,178 | 1,547 | 1,214 | 45 | 84 | 759 | 526 | 804 | 610 | 83 | 120 | 2,268 | 1,704 | 697 | 592 | 624 | 423 | 5 | 4 | (1) | — | 3,676 | 2,843 |
| Operating costs | 6 | 4 | 620 | 503 | 626 | 507 | 9 | 6 | 262 | 227 | 271 | 233 | 15 | 10 | 882 | 730 | 186 | 146 | 393 | 223 | — | — | — | — | 1,476 | 1,109 |
| Marketing, general and administrative | 4 | 1 | 217 | 145 | 221 | 146 | 1 | — | 16 | 15 | 17 | 15 | 5 | 1 | 233 | 160 | 98 | 83 | 105 | 68 | 113 | 94 | (1) | — | 553 | 406 |
| Share in (earnings) loss of associates and joint ventures | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (21) | (16) | — | — | — | — | — | — | (21) | (16) |
| Other adjusting items to Adjusted EBITDA(4) | — | — | (2) | (1) | (2) | (1) | — | — | — | — | — | — | — | — | (2) | (1) | (16) | (13) | — | — | (1) | — | — | — | (19) | (14) |
| Adjusted EBITDA including NCI | 28 | 31 | 674 | 531 | 702 | 562 | 35 | 78 | 481 | 284 | 516 | 362 | 63 | 109 | 1,155 | 815 | 450 | 392 | 126 | 132 | (107) | (90) | — | — | 1,687 | 1,358 |
| Attributable to NCI | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 67 | 98 | — | — | — | — | — | — | 67 | 98 |
| Adjusted EBITDA attributable to Parkland (“Adjusted EBITDA”) | 28 | 31 | 674 | 531 | 702 | 562 | 35 | 78 | 481 | 284 | 516 | 362 | 63 | 109 | 1,155 | 815 | 383 | 294 | 126 | 132 | (107) | (90) | — | — | 1,620 | 1,260 |
| Add: Adjusted EBITDA attributable to NCI | 67 | 98 | ||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Acquisition, integration and other costs | 117 | 52 | ||||||||||||||||||||||||
| Depreciation and amortization | 743 | 616 | ||||||||||||||||||||||||
| Finance costs | 331 | 323 | ||||||||||||||||||||||||
| (Gain) loss on foreign exchange – unrealized | (8) | (7) | ||||||||||||||||||||||||
| (Gain) loss on risk management and other – unrealized | 39 | 10 | ||||||||||||||||||||||||
| Other (gains) and losses | 23 | 190 | ||||||||||||||||||||||||
| Other adjusting items | 26 | 12 | ||||||||||||||||||||||||
| Income tax expense (recovery) | 70 | 36 | ||||||||||||||||||||||||
| Net earnings (loss) | 346 | 126 | ||||||||||||||||||||||||
| Less: Net earnings (loss) attributable to NCI | 36 | 29 | ||||||||||||||||||||||||
| Net earnings (loss) attributable to Parkland | 310 | 97 |
| (1) Fuel and petroleum product volume for renewable activities only includes fuel trading volumes and does not include volumes of low-carbon-intensity feedstocks used for co-processing and blending. |
| (2) Represents elimination of transactions between Renewable and Conventional sub-segments within Canada and Refining. |
| (3) Other adjusting items to adjusted gross margin mainly include $4 million (2021 – nil) of realized risk management loss related to underlying physical sales activity in another period. |
| (4) Other adjusting items to Adjusted EBITDA mainly include the share of depreciation and income taxes for the Isla joint venture of $11 million (2021 – $7 million). See Note 11 of the Annual Consolidated Financial Statements for further details. |
| (5) Includes inter-segment sales and cost of purchases. See Note 26 of the Annual Consolidated Financial Statements. |
| (6) Total of Conventional sub-segment is not a financial measure used by Parkland to evaluate performance and is not a Total of segment measure under NI 52-112. It is included in the table above for reconciliation purposes only. |
