CALGARY, AB, Oct. 30, 2024 /PRNewswire-HISPANIC PR WIRE/ — Parkland Corporation (”Parkland”, “we”, the “Company”, or “our”) (TSX: PKI), today announced its financial and operating results for the three and nine months ended September 30, 2024.
“The Parkland Team remains focused on executing our strategic plan and achieving strong operational metrics across the business relative to industry. Although our third quarter 2024 financial results fell short of expectations, this was primarily driven by a challenging refining margin environment,” said Bob Espey, President and Chief Executive Officer. “Our business continues to show strength through increased market share in a soft economic environment. Adjusted EBITDA from our Retail and Commercial lines of business grew by two percent over the last twelve months, demonstrating progress on the organic growth initiatives required to deliver on our 2028 ambitions.”
Q3 2024 Highlights
- Adjusted EBITDA1 of $431 million, a decrease of 26 percent as compared to Q3 2023, largely due to lower refinery margins in the third quarter of 2024, despite strong operational execution.
- Net earnings of $91 million ($0.52 per share, basic), a decrease of 60 percent as compared to Q3 2023, and Adjusted earnings2 of $106 million ($0.61 per share, basic2), a decrease of 54 percent from Q3 2023, largely due to lower refinery margins in the third quarter of 2024.
- Trailing-twelve-month (”TTM”) Available cash flow2 of $627 million ($3.58 per share2), a decrease of 16 percent from the same period in 2023, and TTM Cash generated from (used in) operating activities3 of $1,490 million ($8.51 per share3), a decrease of 25 percent from the same period in 2023, largely due to the unplanned shutdown of the Burnaby Refinery in the first quarter of 2024 and lower refining margins in the third quarter of 2024.
- TTM Adjusted EBITDA from our Retail and Commercial lines of business4 of $1,568 million, an increase of two percent from the same period in 2023, reflecting organic growth, synergy capture and cost reductions.
- Purchased and cancelled approximately 382,000 Parkland common shares for $14 million, in line with our disciplined capital allocation.
- Liquidity available3 increased to $2 billion ($1,246 million in Q2 2024), reflecting the senior unsecured note issuance used to repay drawings under the Company’s credit facilities during the quarter, and Leverage Ratio5 increased to 3.4 times (3.1 times in Q2 2024), reflecting debt repayments being more than offset by lower TTM Adjusted EBITDA.
- Return on invested capital2 (”ROIC”) decreased to 7.8 percent from 9.5 percent for the trailing twelve months ended September 30, 2024, as compared to the same period in 2023.
- Announced intention to divest our Florida-based retail and commercial businesses, reflecting our commitment to disciplined capital allocation and redirecting capital towards our highest return opportunities that maximize shareholder value.
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| 1 | Total of segments measure. See “Measures of Segment Profit and Total of Segments Measures” section of this news release. |
| 2 | Non-GAAP financial measure or non-GAAP financial ratio. See “Non-GAAP Financial Measures and Ratios” section of this news release. |
| 3 | Supplementary financial measure. See “Supplementary Financial Measures” section of this news release. |
| 4 | Line of business Adjusted EBITDA. Please refer to note 14 of the Q3 2024 Interim Condensed Consolidated Financial Statements (as defined in this news release) for further information. TTM measure is a summation of Q4 2023 through Q3 2024 line of business Adjusted EBITDA. |
| 5 | Capital management measure. See “Capital Management Measures” section of this news release. |
Q3 2024 Segment Highlights
- Canada delivered Adjusted EBITDA of $200 million, in line with Q3 2023 ($206 million). Performance was underpinned by strong fuel unit margins from continued price and supply optimization despite lower consumer demand. Company same-store volume growth (”Company SSVG”)6 was 1.4 percent, compared to 4.2 percent in Q3 2023. Food and Company C-Store SSSG (excluding cigarettes)2 was (1.1) percent, compared to 3.6 percent, in Q3 2023. These decreases were primarily driven by economic conditions that have reduced discretionary spending for consumers. Canada delivered Food and Company C-store revenue of $82 million, consistent with Q3 2023 ($81 million).
- International delivered Adjusted EBITDA of $152 million, down 11 percent from Q3 2023 ($170 million). The decrease was primarily driven by lower wholesale volumes, partially offset by continued growth in our retail, commercial and aviation base businesses.
- USA delivered Adjusted EBITDA of $54 million, in line with Q3 2023 ($52 million). Performance was underpinned by improved supply optimization despite lower consumer demand.
- Refining delivered Adjusted EBITDA of $49 million, compared to $188 million in Q3 2023. This decrease was primarily driven by lower refining margins. Strong composite utilization6 at the Burnaby Refinery of 102 percent, compared to 103 percent in Q3 2023.
- Parkland’s total recordable injury frequency rate6 on a TTM basis was 1.04, compared to 0.95 at September 30, 2023.
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| 6 | Non-financial measure. See “Non-Financial Measures” section of this news release. |
2024 Guidance
As a result of the unplanned shutdown at the Burnaby Refinery in the first quarter of 2024, and unfavorable market conditions experienced for the first nine months of 2024, primarily due to lower refining margins in the third quarter of 2024, which are expected to persist for the remainder of the year, Parkland has further revised its 2024 Adjusted EBITDA Guidance3 to $1,700 million – $1,750 million(the “Updated 2024 Adjusted EBITDA Guidance Range”). This represents a $200 million – $250 million decrease in guidance range from our previous guidance range of $1,900 million – $2,000 million.
Furthermore, Parkland has revised its 2024 Available cash flow per share Guidance and 2024 ROIC Guidance, as a result of the factors outlined above, as follows:
- 2024 ROIC Guidance2 is revised to approximately 8 percent, from more than 11 percent (the “Revised 2024 ROIC Guidance”);
- 2024 Available cash flow per share Guidance2 is revised to approximately $3.75 per share, from $5.00 per share (the “Revised 2024 Available cash flow per share Guidance”).
Consolidated Financial Overview
| ($ millions, unless otherwise noted) | Three months ended September 30, | |
Financial Summary | 2024 | 2023 |
| Sales and operating revenue | 7,126 | 8,731 |
| Adjusted EBITDA(1) | 431 | 585 |
| Canada(2) | 200 | 206 |
| International(2) | 152 | 170 |
| USA(2) | 54 | 52 |
| Refining(2) | 49 | 188 |
| Corporate(2) | (24) | (31) |
| Net earnings (loss) | 91 | 230 |
| Net earnings (loss) per share – basic ($ per share) | 0.52 | 1.31 |
| Net earnings (loss) per share – diluted ($ per share) | 0.52 | 1.28 |
| Trailing-twelve-month (”TTM”) Cash generated from (used in) operating activities(3) | 1,490 | 1,992 |
| TTM Cash generated from (used in) operating activities per share(3) | 8.51 | 11.39 |
| TTM Available cash flow(4) | 627 | 749 |
| TTM Available cash flow per share(4) | 3.58 | 4.28 |
| TTM Return on invested capital(4) | 7.8 % | 9.5 % |
1 | Total of segments measure. See “Measures of Segment Profit and Total of Segments Measures” section of this news release. |
2 | Measure of segment profit (loss). See “Measures of Segment Profit and Total of Segments Measures” section of this news release. |
3 | Supplementary financial measure. See “Supplementary Financial Measures” section of this news release. |
4 | Non-GAAP financial measure or non-GAAP financial ratio. See “Non-GAAP Financial Measures and Ratios” section of this news release. |
Q3 2024
Conference Call and Webcast Details
Parkland will host a webcast and conference call on Thursday, October 31, 2024 at 6:30 am MT (8:30 am ET) to discuss the results. To listen to the live webcast and watch the presentation, please use the following link: https://app.webinar.net/01ap5P1mzRe
Analysts and investors interested in participating in the question and answer session of the conference call may do so by calling 1-888-510-2154 (toll-free) (Conference ID: 03367). International participants may call 1-437-900-0527 (toll-free) (Conference ID: 03367).
Please connect and log in approximately 10 minutes before the beginning of the call. The webcast will be available for replay two hours after the conference call ends at the link above. It will remain available for one year and will also be posted at www.parkland.ca.
MD&A and Interim Condensed Consolidated Financial Statements
The Management’s Discussion and Analysis for the three and nine months ended September 30, 2024 (the “Q3 2024 MD&A”) and Interim Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024 (the “Q3 2024 Interim Condensed Consolidated Financial Statements”) provide a detailed explanation of Parkland’s operating results for the three and nine months ended September 30, 2024. An English version of these documents will be available online at www.parkland.ca and the System for Electronic Data Analysis and Retrieval + (”SEDAR+”) after the results are released by newswire under Parkland’s profile at www.sedarplus.ca. The French versions of the Q3 2024 MD&A and the Q3 2024 Interim Condensed Consolidated Financial Statements will be posted to www.parkland.ca and SEDAR+ as soon as they become available.
About Parkland Corporation
Parkland is an international fuel distributor, marketer, and convenience retailer with operations in 26 countries across the Americas. We serve over one million customers each day. Our retail network meets the fuel and convenience needs of everyday consumers. Our commercial operations provide businesses with industrial fuels so that they can better serve their customers. In addition to meeting our customers’ needs for essential fuels, we provide a range of choices to help them lower their environmental impact. These include renewable fuels sourcing, manufacturing and blending, carbon and renewables trading, solar power, and ultra-fast EV charging. With approximately 4,000 retail and commercial locations across Canada, the United States and the Caribbean region, we have developed supply, distribution and trading capabilities to accelerate growth and business performance.
Our strategy is focused on two pillars: our Customer Advantage and our Supply Advantage. Through our Customer Advantage, we aim to be the first choice of our customers, cultivating their loyalty through proprietary brands, differentiated offers, our extensive network, competitive pricing, reliable service, and our compelling loyalty program. Our Supply Advantage is based on achieving the lowest cost to serve among independent fuel marketers and distributors in the hard-to-serve markets in which we operate, through our well-positioned assets, significant scale, and deep supply and logistics capabilities. Our business is underpinned by our people and our values of safety, integrity, community and respect, which are deeply embedded across our organization.
Forward-Looking Statements
Certain statements contained herein constitute forward-looking information and statements (collectively, “forward-looking statements”). When used in this news release, the words “expect”, “will”, “could”, “would”, “believe”, “continue”, “pursue” and similar expressions are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things: business strategies, objectives and initiatives; Parkland’s focus on executing its strategic plan and achieving strong operational performance metrics; Parkland’s organic growth initiatives and the progress and 2028 ambitions relating thereto; disciplined capital allocation; Parkland’s plan to divest its Florida-based retail and commercial business and the completion thereof; Parkland’s commitment to disciplined capital allocation and redirecting capital to highest return opportunities and expectations relating thereto; lower refining margins expected for the rest of the year; and Parkland’s Updated 2024 Adjusted EBITDA Guidance, Revised 2024 ROIC Guidance and Revised 2024 Available cash flow per share Guidance.
These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These forward-looking statements speak only as of the date of this news release. Parkland does not undertake any obligation to publicly update or revise any forward-looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties, many of which are beyond the control of Parkland, including, but not limited to: general economic, market and business conditions; Parkland’s ability to execute its business strategies, objectives, and initiatives, including the completion, financing and timing thereof, realizing the benefits therefrom, and meeting our targets and commitments relating thereto; Parkland’s ability to identify buyers and complete divestments on terms reasonable to Parkland and in a timely manner; and the assumptions and risks described under “Cautionary Statement Regarding Forward-Looking Information” and “Risk Factors” in Parkland’s most recent Annual Information Form, and under “Forward-Looking Information” and “Risk Factors” in the Q3 2024 MD&A, which are incorporated by reference herein, each as filed on SEDAR+ and available on the Parkland website at www.parkland.ca. In addition, the Revised 2024 Adjusted EBITDA Guidance reflects continued integration of acquired businesses, synergy capture, and organic growth initiatives, and the key material assumptions include: an increase in Retail and Commercial Fuel and petroleum product adjusted gross margin of approximately 1 percent and Food, convenience and other adjusted gross margin of approximately 5 percent as compared to the year ended December 31, 2023; the realization of $100 million of run-rate marketing, general and administrative expense cost efficiencies by the end of 2024; Refining adjusted gross margin of approximately $30 to $31 per barrel and average Burnaby Refinery composite utilization of 75 percent to 80 percent (factoring in the unplanned outage) based on the Burnaby Refinery’s crude processing capacity of 55,000 barrels per day; enhancements to operations, utilization and optimization of supply at the Burnaby Refinery during 2024; and implementation of ongoing cost reductions across the business. The Revised 2024 Available cash flow per share Guidance and the Revised 2024 ROIC Guidance reflect the lower Revised 2024 Adjusted EBITDA Guidance. In addition, the Revised 2024 Available cash flow per share Guidance assumes a lower number of outstanding common shares compared to 2023 as a result of share repurchases completed during 2024, and the revised 2024 ROIC Guidance assumes invested capital grows at a slower pace than Net operating profit after tax (”NOPAT”) through the remainder of 2024. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Specified Financial Measures
This news release contains total of segments measures, non-GAAP financial measures and non-GAAP financial ratios, supplementary financial measures and capital management measures (collectively, “specified financial measures”). Parkland’s management uses certain specified financial measures to analyze the operating and financial performance, leverage, and liquidity of the business. These specified financial measures do not have any standardized meaning under International Financial Reporting Standards as issued by the International Accounting Standards Board (”IFRS Accounting Standards”) 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 the IFRS Accounting Standards. See Section 16 of the Q3 2024 MD&A, which is incorporated by reference into this news release, for further details regarding specified financial measures used by Parkland.
Non-GAAP Financial Measures and Ratios
Adjusted earnings (loss) is a non-GAAP financial measure and Adjusted earnings (loss) per share is a non-GAAP financial ratio, each representing the underlying core operating performance of business activities of Parkland at a consolidated level. The most directly comparable financial measure to Adjusted earnings (loss) and Adjusted earnings (loss) per share is Net earnings (loss).
Adjusted earnings (loss) and Adjusted earnings (loss) per share represent how well Parkland’s operational business is performing, while considering depreciation and amortization, interest on leases and long-term debt, accretion and other finance costs, and income taxes. The Company uses these measures because it believes that Adjusted earnings (loss) and Adjusted earnings (loss) per share are useful for management and investors in assessing the Company’s overall performance, as they exclude certain significant items that are not reflective of the Company’s underlying business operations.
See Section 16 of the Q3 2024 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition of Adjusted earnings (loss) and Adjusted earnings (loss) per share.
Please see below for the reconciliation of Adjusted earnings (loss) to net earnings (loss) and calculation of Adjusted earnings (loss) per share.
Three months ended September 30, | ||
| ($ millions, unless otherwise stated) | 2024 | 2023 |
| Net earnings (loss) | 91 | 230 |
| Add: | ||
| Acquisition, integration and other costs | 61 | 38 |
| (Gain) loss on foreign exchange – unrealized | 1 | 1 |
| (Gain) loss on risk management and other – unrealized | (48) | (19) |
| Other (gains) and losses | (1) | (37) |
| Other adjusting items(1) | 7 | 20 |
| Tax normalization(2) | (5) | (2) |
| Adjusted earnings (loss) | 106 | 231 |
| Weighted average number of common shares (million shares)(3) | 174 | 176 |
| Weighted average number of common shares adjusted for the effects of dilution (million shares)(3) | 176 | 180 |
| Adjusted earnings (loss) per share ($ per share) | ||
| Basic | 0.61 | 1.31 |
| Diluted | 0.60 | 1.28 |
1 | Other adjusting items for the three months ended September 30, 2024, include (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $4 million (2023 – $5 million); (ii) other income of $3 million (2023 – $15 million); (iii) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of nil (2023 – $1 million gain); and (iv) adjustment to foreign exchange losses related to cash pooling arrangements of nil (2023 – $1 million). Other adjusting items for the first nine months of 2024, include (i) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of $12 million loss (2023 – $4 million gain); (ii) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $11 million (2023 – $11 million); (iii) other income of $8 million (2023 – $21 million); (iv) adjustment to foreign exchange losses related to cash pooling arrangements of $4 million (2023 – $1 million); (v) adjustment to realized risk management gains related to interest rate swaps as these gains do not relate to commodity sale and purchase transactions of $2 million (2023 – nil); and (vi) the effect of market-based performance conditions for equity-settled share-based award settlements of nil (2023 – $13 million). |
2 | The tax normalization adjustment was applied to net earnings (loss) adjusting items that were considered temporary differences, such as acquisition, integration and other costs, unrealized foreign exchange gains and losses, unrealized gains and losses on risk management and other, gains and losses on asset disposals, changes in fair value of redemption options, changes in estimates of environmental provisions, loss on inventory write-downs for which there are offsetting associated risk management derivatives with unrealized gains, impairments of non-current assets. The tax impact was estimated using the effective tax rates applicable to jurisdictions where the related items occur. |
3 | Weighted average number of common shares is calculated in accordance with Parkland’s accounting policy contained in Note 2 of the Annual Consolidated Financial Statements. |
Available cash flow is a non-GAAP financial measure and Available cash flow per share is a non-GAAP financial ratio. The most directly comparable financial measure for Available cash flow and Available cash flow per share is cash generated from (used in) operating activities. Parkland uses these measures to monitor its ability to generate cash flow for capital allocation, including distributions to shareholders, investment in the growth of the business, and deleveraging. Available cash flow is calculated as cash generated from (used in) operating activities adjusted for items such as (i) net change in (a) non-cash working capital and (b) other assets and other liabilities, (ii) maintenance capital expenditures, (iii) dividends received from investments in associates and joint ventures, (iv) interest on leases and long-term debt, and (v) payments on principal amounts on leases. Available cash flow per share is calculated as Available cash flow divided by the weighted average number of outstanding common shares. Available cash flow per share Guidance is a non-GAAP financial ratio, which represents the forward-looking metric of Available cash flow per share. Available cash flow per share Guidance is calculated based on historical cash flow performance and the assumptions made on the future performance of Parkland. See following table for a calculation of historical Available cash flow and Available cash flow per share and a reconciliation to cash generated from (used in) operating activities.
| Three months ended | Trailing twelve months ended September 30,2024 | ||||
| ($ millions, unless otherwise noted) | December 31, 2023 | March 31, 2024 (1) | June 30, 2024 | September 30, 2024 | |
| Cash generated from (used in) operating activities | 417 | 217 | 450 | 406 | 1,490 |
| Reverse: Change in other assets and other liabilities | (4) | 28 | 3 | (68) | (41) |
| Reverse: Net change in non-cash working capital related to operating activities(1) | 17 | 55 | (34) | 21 | 59 |
| Include: Maintenance capital expenditures | (93) | (59) | (53) | (71) | (276) |
| Include: Dividends received from investments in associates and joint ventures | 3 | 2 | 8 | 3 | 16 |
| Include: Interest on leases and long-term debt | (88) | (85) | (88) | (85) | (346) |
| Include: Payments of principal amount on leases | (71) | (71) | (64) | (69) | (275) |
| Available cash flow | 181 | 87 | 222 | 137 | 627 |
| Weighted average number of common shares (millions)(2) | 175 | ||||
| TTM Available cash flow per share | 3.58 | ||||
| Three months ended | Trailing twelve months ended September 30, 2023 | ||||
| ($ millions, unless otherwise noted) | December 31, 2022 | March 31, 2023 | June 30, 2023(1) | September 30, 2023 | |
| Cash generated from (used in) operating activities | 629 | 314 | 521 | 528 | 1,992 |
| Reverse: Change in other assets and other liabilities | (23) | 11 | (11) | 7 | (16) |
| Reverse: Net change in non-cash working capital related to operating activities(1) | (232) | 18 | (145) | (14) | (373) |
| Include: Maintenance capital expenditures | (118) | (79) | (61) | (52) | (310) |
| Include: Dividends received from investments in associates and joint ventures | — | 16 | 2 | 4 | 22 |
| Include: Interest on leases and long-term debt | (86) | (92) | (89) | (83) | (350) |
| Include: Payments on principal amount on leases | (52) | (51) | (56) | (57) | (216) |
| Available cash flow | 118 | 137 | 161 | 333 | 749 |
| Weighted average number of common shares (millions)(2) | 175 | ||||
| TTM Available cash flow per share | 4.28 | ||||
1 | For comparative purposes, certain amounts within net change in non-cash working capital related to operating activities for the three months ended March 31, 2024, and the three months ended June 30, 2023 were revised to conform to the current period presentation. |
2 | Weighted average number of common shares is calculated in accordance with Parkland’s accounting policy contained in Note 2 of the Annual Consolidated Financial Statements. |
ROIC is a non-GAAP financial ratio. The measure is calculated as a ratio of NOPAT divided by average invested capital. NOPAT describes the profitability of Parkland’s base operations, excluding the impact of leverage and certain other items of income and expenditure that are not considered representative of Parkland’s underlying core operating performance. NOPAT is based on Adjusted EBITDA, defined in the “Measures of Segment Profit and Total of Segments Measures” section of this news release, less depreciation expense and the estimated tax expense using the expected average tax rate estimated using statutory tax rates in each jurisdiction where Parkland operates. Average invested capital is the amount of capital deployed by Parkland that represents the average of opening and closing debt and shareholder’s equity, including equity reserves, net of cash and cash equivalents. We use this non-GAAP financial ratio to assess Parkland’s efficiency in investing capital. ROIC Guidance is a non-GAAP financial ratio, which represents the forward-looking metric of ROIC. ROIC Guidance is calculated based on the historic ROIC performance and the assumptions made on the future performance of Parkland.
| ($ millions, unless otherwise noted) | Three months ended | Trailing twelve months ended September 30, 2024 | |||
| ROIC | December 31, 2023 | March 31, 2024 | June 30, 2024 | September 30, 2024 | |
| Net earnings (loss) | 86 | (5) | 70 | 91 | 242 |
| Add/(less): | |||||
| Income tax expense (recovery) | (15) | (29) | 20 | 17 | (7) |
| Acquisition, integration and other costs | 42 | 30 | 46 | 61 | 179 |
| Depreciation and amortization | 222 | 206 | 202 | 207 | 837 |
| Finance cost | 89 | 91 | 99 | 96 | 375 |
| (Gain) loss on foreign exchange – unrealized | — | 3 | 4 | 1 | 8 |
| (Gain) loss on risk management and other – unrealized | 28 | 3 | 56 | (48) | 39 |
| Other (gains) and losses | 5 | 10 | (1) | (1) | 13 |
| Other adjusting items | 6 | 18 | 8 | 7 | 39 |
| Adjusted EBITDA | 463 | 327 | 504 | 431 | 1,725 |
| Less: Depreciation | (222) | (206) | (202) | (207) | (837) |
| Adjusted EBIT | 241 | 121 | 302 | 224 | 888 |
| Average effective tax rate | 19.0 % | ||||
| Less: Taxes | (169) | ||||
| Net operating profit after tax | 719 | ||||
| Opening invested capital | 9,238 | ||||
| Closing invested capital | 9,125 | ||||
| Average invested capital | 9,182 | ||||
| Return on invested capital | 7.8 % | ||||
| ($ millions, unless otherwise noted) | September 30, 2024 | September 30, 2023 |
| Invested capital | ||
| Long-term debt – current portion | 220 | 180 |
| Long-term debt | 6,104 | 6,227 |
| Shareholders’ equity | 3,164 | 3,259 |
| Exclude: Cash and cash equivalents | (363) | (428) |
| Total | 9,125 | 9,238 |
| ($ millions, unless otherwise noted) | Three months ended | Trailing twelve months ended September 30, 2023 | |||
| ROIC | December 31, 2022 | March 31, 2023 | June 30, 2023 | September 30, 2023 | |
| Net earnings | 69 | 77 | 78 | 230 | 454 |
| Add/(less): | |||||
| Income tax expense (recovery) | 22 | (20) | 18 | 54 | 74 |
| Acquisition, integration and other costs | 41 | 27 | 39 | 38 | 145 |
| Depreciation and amortization | 212 | 190 | 206 | 205 | 813 |
| Finance cost | 94 | 104 | 98 | 93 | 389 |
| (Gain) loss on foreign exchange – unrealized | 8 | 7 | 27 | 1 | 43 |
| (Gain) loss on risk management and other – unrealized | 9 | (32) | (11) | (19) | (53) |
| Other (gains) and losses | (21) | 21 | 14 | (37) | (23) |
| Other adjusting items | 21 | 21 | 1 | 20 | 63 |
| Adjusted EBITDA | 455 | 395 | 470 | 585 | 1,905 |
| Less: Depreciation | (212) | (190) | (206) | (205) | (813) |
| Adjusted EBIT | 243 | 205 | 264 | 380 | 1,092 |
| Average effective tax rate | 18.3 % | ||||
| Less: Taxes | (200) | ||||
| Net operating profit after tax | 892 | ||||
| Opening invested capital | 9,521 | ||||
| Closing invested capital | 9,238 | ||||
| Average invested capital | 9,380 | ||||
| Return on invested capital | 9.5 % | ||||
| ($ millions, unless otherwise noted) | September 30, 2023 | September 30, 2022 |
| Invested capital | ||
| Long-term debt – current portion | 180 | 151 |
| Long-term debt | 6,227 | 6,617 |
| Shareholders’ equity | 3,259 | 2,485 |
| Sol Put Option | — | 629 |
| Exclude: Cash and cash equivalents | (428) | (361) |
| Total | 9,238 | 9,521 |
Food and Company C-Store 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. The most directly comparable financial measure to Food and Company C-Store SSSG is food and convenience store revenue within sales and operating revenue.
Below is a reconciliation of convenience store revenue (Food and C-Store revenue) for the Canada segment with the Food and Company C-Store same store sales (”SSS”), and the calculation of the Food and Company C-Store SSSG.
Three months ended September 30, | |||
| ($ millions, unless otherwise noted) | 2024 | 2023 | %(1) |
| Food and Company C-Store revenue | 82 | 81 | |
| Add: | |||
| Point-of-sale (”POS”) value of goods and services sold at Food and Company C-Store operated by retailers and franchisees(2) | 314 | 331 | |
| Less: | |||
| Rental and royalty income from retailers, franchisees and other(3) | (61) | (67) | |
| Same Store revenue adjustments(4) (excluding cigarettes) | (15) | (13) | |
| Food and Company C-Store same-store sales (including cigarettes) | 320 | 332 | (3.8) % |
| Less: | |||
| Same Store revenue adjustments(4) (cigarettes) | (109) | (118) | |
| Food and Company C-Store same-store sales (excluding cigarettes) | 211 | 214 | (1.1) % |
| Three months ended September 30, | |||
| ($ millions, unless otherwise noted) | 2023 | 2022 | %(1) |
| Food and Company C-Store revenue | 81 | 69 | |
| Add: | |||
| Point-of-sale (”POS”) value of goods and services sold at Food and Company C-Store operated by retailers(2) | 329 | 302 | |
| Less: | |||
| Rental income from retailers and other(3) | (64) | (54) | |
| Same Store revenue adjustments(4)(5) (excluding cigarettes) | (37) | (17) | |
| Food and Company C-Store same-store sales (including cigarettes) | 309 | 300 | 3.0 % |
| Less: | |||
| Same Store revenue adjustments(4)(5) (cigarettes) | (108) | (105) | |
| Food and Company C-Store same-store sales (excluding cigarettes) | 201 | 195 | 3.6 % |
(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 as Parkland earns rental income from retailers in the form of a percentage rent on convenience store sales. POS values are calculated based on the information obtained from Parkland’s POS systems at retail sites, including transactional data, such as sales, costs and volumes, which are subject to internal controls over financial reporting. We also use this data to calculate rental income from retailers in the form of a percentage rent on convenience store sales, which is recorded as revenue in our consolidated financial statements. |
(3) | Includes rental income from retailers in the form of a percentage rent on Food and Company C-Store sales, royalty, and franchisee fees and excludes revenues from automated teller machines, POS system licensing fees, and other. |
(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 acquisitions completed within the year as these will not impact the metric until after the completion of one year of the acquisitions when the sales or volume generated establishes the baseline for these metrics. |
These 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 Accounting Standards. Except as otherwise indicated, these non-GAAP financial measures and ratios are calculated and disclosed on a consistent basis from period to period. See Section 16 of the Q3 2024 MD&A, which is incorporated by reference into this news release, for further details regarding Parkland’s non-GAAP financial measures and ratios.
Capital Management Measures
Parkland’s primary capital management measure is the Leverage Ratio, which is used internally by key management personnel to monitor Parkland’s overall financial strength, capital structure flexibility, and ability to service debt and meet current and future commitments. In order to manage its financing requirements, Parkland may adjust capital spending or dividends paid to shareholders, or issue new shares or new debt. The Leverage Ratio is calculated as a ratio of Leverage Debt to Leverage EBITDA and does not have any standardized meaning prescribed under IFRS Accounting Standards. It is therefore unlikely to be comparable to similar measures presented by other companies. The detailed calculation of Leverage Ratio is as follows:
| ($ millions, unless otherwise noted) | September 30, 2024 | June 30, 2024 | December 31, 2023 |
| Leverage Debt | 5,091 | 5,193 | 4,976 |
| Leverage EBITDA | 1,509 | 1,674 | 1,780 |
| Leverage Ratio | 3.4 | 3.1 | 2.8 |
| ($ millions, unless otherwise noted) | September 30, 2024 | June 30, 2024 | December 31, 2023 |
| Long-term debt | 6,324 | 6,488 | 6,358 |
| Less: | |||
| Lease obligations | (968) | (1,062) | (1,048) |
| Cash and cash equivalents | (363) | (316) | (387) |
| Cash and cash equivalents classified as held for sale | (23) | (20) | — |
| Non-recourse debt(1) | — | — | |
| Add: | |||
| Risk management liability(1) | 9 | — | |
| Non-recourse cash(2) | 17 | 15 | — |
| Letters of credit and other | 95 | 88 | 53 |
| Leverage Debt | 5,091 | 5,193 | 4,976 |
(1) | Represents the risk management asset/liability associated with the spot element of the cross currency swap designated in a cash flow hedge relationship to hedge the variability of principal cash flows of the 2024 Senior Notes resulting from changes in the spot exchange rates. |
(2) | Represents Non-recourse debt and Cash and cash equivalents balances attributable to project financing. |
| Three months ended | Trailing twelve months endedSeptember 30, 2024 | ||||
| ($ millions, unless otherwise noted) | December 31, 2023 | March 31, 2024 | June 30, 2024 | September 30, 2024 | |
| Adjusted EBITDA | 463 | 327 | 504 | 431 | 1,725 |
| Share incentive compensation | 11 | 6 | 8 | 6 | 31 |
| Reverse: IFRS 16 impact(1) | (82) | (83) | (80) | (84) | (329) |
| 392 | 250 | 432 | 353 | 1,427 | |
| Other adjustments(2) | 82 | ||||
| Leverage EBITDA | 1,509 | ||||
| (1) | Includes the impact of operating leases prior to the adoption of IFRS 16, previously recognized under operating costs, which aligns with management’s view of the impact of earnings. |
| (2) | Includes adjustments to normalize Adjusted EBITDA for non-recurring events relating to unplanned shutdown resulting from extreme cold weather event, third-party power outage and the EBITDA attributable to EV charging operations financed through non-recourse project financing. |
| Three months ended | Trailing twelve months ended June 30, 2024 | ||||
| ($ millions, unless otherwise noted) | September 30, 2023 | December 31, 2023 | March 31, 2024 | June 30, 2024 | |
| Adjusted EBITDA | 585 | 463 | 327 | 504 | 1,879 |
| Share incentive compensation | 5 | 11 | 6 | 8 | 30 |
| Reverse: IFRS 16 impact(1) | (71) | (82) | (83) | (80) | (316) |
| 519 | 392 | 250 | 432 | 1,593 | |
| Other adjustments(2) | 81 | ||||
| Leverage EBITDA | 1,674 | ||||
| (1) | Includes the impact of operating leases prior to the adoption of IFRS 16, previously recognized under operating costs, which aligns with management’s view of the impact of earnings. |
| (2) | Includes adjustments to normalize Adjusted EBITDA for non-recurring events relating to unplanned shutdown resulting from extreme cold weather event, third-party power outage and the EBITDA attributable to EV charging operations financed through non-recourse project financing. |
| Three months ended | Trailing twelve months ended December 31, 2023 | ||||
| ($ millions, unless otherwise noted) | March 31, 2023 | June 30, 2023 | September 30, 2023 | December 31, 2023 | |
| Adjusted EBITDA | 395 | 470 | 585 | 463 | 1,913 |
| Share incentive compensation | 8 | 6 | 5 | 11 | 30 |
| Reverse: IFRS 16 impact(1) | (61) | (68) | (71) | (82) | (282) |
| 342 | 408 | 519 | 392 | 1,661 | |
| Other adjustments(2) | 119 | ||||
| Leverage EBITDA | 1,780 | ||||
| (1) | Includes the impact of operating leases prior to the adoption of IFRS 16, previously recognized under operating costs, which aligns with management’s view of the impact of earnings. |
| (2) | Includes adjustments to normalize Adjusted EBITDA for non-recurring events relating to the completion of turnarounds and third-party power outage. |
Measures of Segment Profit and Total of Segments Measures
Adjusted earnings (loss) before interest, taxes, depreciation and amortization (”Adjusted EBITDA”) is a measure of segment profit and its aggregate is a total of segments measure used by the chief operating decision maker to make decisions about resource allocation to the segment and to assess its performance. In accordance with IFRS Accounting Standards, adjustments and eliminations made in preparing an entity’s financial statements and allocations of revenue, expenses, and gains or losses shall be included in determining reported segment profit or loss only if they are included in the measure of the segment’s profit or loss that is used by the chief operating decision maker. As such, Parkland’s Adjusted EBITDA is unlikely to be comparable to similarly named measures presented by other issuers, who may calculate these measures differently. Parkland views Adjusted EBITDA as the key measure for the underlying core operating performance of business segment activities at an operational level. Adjusted EBITDA is used by management to set targets for Parkland (including annual guidance and variable compensation targets) and is used to determine Parkland’s ability to service debt, finance capital expenditures and provide for dividend payments to shareholders. See Section 16 of the Q3 2024 MD&A, which is incorporated by reference into this news release, for further details regarding total of segments measures used by Parkland. Refer to the table below for the reconciliation of Adjusted EBITDA to net earnings (loss) for the three and nine months ended September 30, 2024 and September 30, 2023.
Three months ended September 30, | ||
| ($ millions) | 2024 | 2023 |
| Adjusted EBITDA | 431 | 585 |
| Less/(add): | ||
| Acquisition, integration and other costs | 61 | 38 |
| Depreciation and amortization | 207 | 205 |
| Finance costs | 96 | 93 |
| (Gain) loss on foreign exchange – unrealized | 1 | 1 |
| (Gain) loss on risk management and other – unrealized | (48) | (19) |
| Other (gains) and losses(1) | (1) | (37) |
| Other adjusting items(2) | 7 | 20 |
| Income tax expense (recovery) | 17 | 54 |
| Net earnings (loss) | 91 | 230 |
1 | Other (gains) and losses for the three months ended September 30, 2024, include (i) $26 million non-cash valuation loss (2023 – $3 million) due to impairment and write-offs; (ii) $25 million non-cash valuation gain (2023 – $13 million gain) due to the change in fair value redemption options; (iii) $5 million non-cash valuation loss (2023 – $7 million gain) due to the change in estimates of environmental provision; (iv) $3 million (2023- $15 million) in Other income; (v) $2 million gain (2023 – $6 million gain) on disposal of assets; and (vi) $2 million gain (2023 – $1 million loss) in Others. Other (gains) and losses for the first nine months of 2024, include (i) $37 million non-cash valuation loss (2023 – $31 million) due to impairment and write-offs; (ii) $11 million non-cash valuation gain (2023 – $3 million loss) due to the change in estimates of environmental provision; (iii) $8 million (2023 – $21 million) in Other income; (iv) $5 million gain (2023 – $1 million loss) on disposal of assets; (v) $4 million gain (2023 – $1 million loss) in Others; and (vi) $1 million non-cash valuation gain (2023 – $17 million) due to the change in fair value of redemption options; Refer to Note 12 of the Interim Condensed Consolidated Financial Statements. |
2 | Other adjusting items for the three months ended September 30, 2024, include (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $4 million (2023 – $5 million); (ii) other income of $3 million (2023 – $15 million); (iii) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of nil (2023 – $1 million gain); and (iv) adjustment to foreign exchange losses related to cash pooling arrangements of nil (2023 – $1 million). Other adjusting items for the first nine months of 2024, include (i) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of $12 million loss (2023 – $4 million gain); (ii) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $11 million (2023 – $11 million); (iii) other income of $8 million (2023 – $21 million); (iv) adjustment to foreign exchange losses related to cash pooling arrangements of $4 million (2023 – $1 million); (v) adjustment to realized risk management gains related to interest rate swaps as these gains do not relate to commodity sale and purchase transactions of $2 million (2023 – nil); and (vi) the effect of market-based performance conditions for equity-settled share-based award settlements of nil (2023 – $13 million). |
Supplementary Financial Measures
Parkland uses a number of supplementary financial measures, including Adjusted EBITDA Guidance, Liquidity available, TTM Cash generated from (used in) operating activities, and TTM Cash generated from (used in) operating activities per share, and these measures may not be comparable to similar measures presented by other issuers, as other issuers may calculate these measures differently. See Section 16 of the Q3 2024 MD&A, which is incorporated by reference into this news release, for further details regarding supplementary financial measures used by Parkland, including the composition of such measures.
Non-Financial Measures
Parkland uses a number of non-financial measures, including Company SSVG, composite utilization and total recordable injury frequency rate, in measuring the success of our strategic objectives and to set variable compensation targets for employees. These non-financial measures are not accounting measures, do not have comparable IFRS Accounting Standards measures, and may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 16 of the Q3 2024 MD&A, which is incorporated by reference into this news release, for further details on the non-financial measures used by Parkland.
