Parkland delivers record quarterly results and increases 2022 guidance; announced share exchange for the remaining 25 percent of Sol

Q2 2022 Adjusted EBITDA1 of $450 million
Q2 2022 Net Earnings of $81 million, or $0.52 per share
Q2 2022 Adjusted Earnings1 of $166 million, or $1.07 per share
Increases 2022 Adjusted EBITDA Guidance1 to between $1.6 and $1.7 billion
Announced agreement to issue 20 million Parkland common shares to consolidate our 100 percent ownership of Sol, our International Segment

CALGARY, AB, Aug. 4, 2022 /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 six months ended June 30, 2022.

Q2 2022 Highlights

Adjusted EBITDA attributable to Parkland (”Adjusted EBITDA”)1 of $450 million, up approximately 40 percent from Q2 2021, underpinned by acquisitions, consistent operating performance and organic growth.
Net earnings attributable to Parkland of $81 million, ($0.52 per share, basic), up approximately $145 million ($0.94 per share, basic) from Q2 2021, and Adjusted earnings attributable to Parkland1 of $166 million, ($1.07 per share, basic), up $70 million ($0.43 per share) from Q2 2021.
Trailing twelve months (”TTM”) distributable cash flow1 of $748 million ($4.86 per share) and Q2 2022 cash generated from operating activities of $341 million, both broadly in line with Q2 2021.
Reduced leverage ratio1 by 0.3x from 3.5x in Q1 2022 to 3.2x.
Fuel volumes of approximately 6.4 billion litres, up over 12 percent from Q2 2021, reflecting the strength of our marketing business and the impact of acquisitions.
Completed the previously disclosed acquisition of four Eastern Canadian product terminals, extending our supply advantage and positioning us to accelerate our decarbonization strategy.
Continued to expand our JOURNIE™ Rewards loyalty program, attracting approximately 300,000 new members for a total of 3.5 million members.

“Our record results demonstrate the resilience of our integrated business model and our ability to grow throughout economic cycles,” said Bob Espey, President and Chief Executive Officer. “The Parkland team continues to serve the needs of our customers, while simultaneously mitigating inflation, driving organic growth and strengthening our financial flexibility.”

“Consistent with our strategy, we continue to thoughtfully integrate acquisitions, capture synergies and reduce our leverage ratio,” added Espey. “Our operational performance year-to-date gives us confidence to increase our 2022 Adjusted EBITDA guidance. We are firmly on track with our ambition for $2 billion run-rate of Adjusted EBITDA by mid-decade.”

Q2 2022 Segment Highlights

Canada delivered Adjusted EBITDA1 of $174 million, up 38 percent, from Q2 2021 ($126 million). Performance was underpinned by robust margins and increased fuel volumes as a result of ongoing COVID recovery, the M&M and Crevier acquisitions, and organic growth. Our previously announced acquisition of select Husky branded retail locations is expected to close later this year.
International delivered Adjusted EBITDA of $87 million, up 32 percent, from Q2 2021 ($66 million). Performance was underpinned by increased fuel volumes driven by continued recovery in tourism, aviation, and wholesale, acquisitions and synergy capture. Subsequent to the quarter, we completed our previously disclosed acquisition of the Jamaican business of GB Group and announced a share exchange for the remaining 25 percent of Sol Investments SEZC (”Sol”), to consolidate our 100 percent ownership of our International Segment.
USA delivered Adjusted EBITDA of $51 million, up 70 percent, from Q2 2021 ($30 million). Performance was underpinned by the impact of prior year acquisitions, synergy capture, organic growth in our commercial and wholesale business and robust margins.
Refining delivered Adjusted EBITDA1 of $164 million, up 33 percent, from Q2 2021 ($123 million). Performance was underpinned by strong refining margins, partially offset by a power outage caused by a third party. Composite utilization2 was 88.4 percent (97.4 percent in Q2 2021).

Updated 2022 Guidance

Adjusted EBITDA (attributable to Parkland) increased to $1.6 – $1.7 billion (up from previous guidance of $1.5 billion +/- 5 percent).
Capital expenditures (attributable to Parkland) are on track for the low-end of our previously guided range of between $425 million and $525 million.

The factors and assumptions which contribute to Parkland’s assessment of the increased 2022 Adjusted EBITDA Guidance are consistent with existing Parkland disclosures and such guidance is subject to risks and uncertainties inherent in Parkland’s business. Readers are directed to the “Risk Factors” section in the Q2 2022 MD&A and Parkland’s Revised Annual Information Form dated March 17, 2022 for a description of such factors, assumptions, risks and uncertainties. All other elements of Parkland’s previous guidance remain unchanged.

Sustainability Leadership

Sustainability is deeply embedded across our business. Notable accomplishments from the second quarter, and year-to-date, include:

Reflecting our focus on safety, we more than halved our TTM lost time injury frequency rate2 to 0.12 (Q2 2021: 0.26) and lowered our TTM total recordable injury frequency rate2 to 1.06 (Q2 2021: 1.19).
Co-processed over 30 million litres of bio-feedstocks during Q2 2022, and 50 million litres year-to-date. This has the equivalent environmental impact of taking over 24,000 and 40,000 cars off the road, respectively.
Announced we are advancing our renewable fuel project, to be over 40 percent funded by the Government of British Columbia (”BC”), to expand our co-processing activity and build BC’s largest renewable diesel complex at our Burnaby Refinery. A Final Investment Decision is expected in the second half of 2023. Should this project advance, the renewable fuels produced will equate to the permanent removal of 700,000, or 25 percent of the passenger vehicles on BC’s roads.
Generated $18 million of Total Renewable Adjusted EBITDA1 in Q2 2022.
Subsequent to the quarter (July 12, 2022), we published our 2021 Sustainability Report. In addition to highlighting our accomplishments, the timing of this report sets a new annual cadence for publishing future sustainability reports which more closely aligns with our annual reporting calendar. To read the 2021 Sustainability Report, please visit: https://www.parkland.ca/en/sustainability/overview

Consolidated Financial Overview

Q2 2022 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Friday, August 5, at 6:30 am MDT (8:30 am EDT) to discuss the results. To listen to the live webcast and watch the presentation, please use the following link:

https://app.webinar.net/8OZXrAXJQa5

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: 77903406). International participants may call 1-800-389-0704 (toll free) (Conference ID: 77903406).

Please connect and log in approximately 10 minutes before the beginning of the call. The webcast will be available for replay two hours after the conference call ends at the link above. It will remain available for one year and will also be posted to www.parkland.ca.

MD&A and Consolidated Financial Statements

The management’s discussion and analysis for the three and six months ended June 30, 2022 (the “Q2 2022 MD&A”) and consolidated financial statements for the three and six months ended June 30, 2022 (the “Q2 2022 Consolidated Financial Statements”) provide a detailed explanation of Parkland’s operating results for the three and six months ended June 30, 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 Q2 2022 MD&A and Consolidated Financial Statements will be posted to www.parkland.ca and SEDAR as soon as they become available.

About Parkland Corporation

Parkland’s purpose is to Power Journeys and Energize Communities. We serve essential needs in our communities, providing our customers with the essential fuels they depend on to get around, quality foods and convenience items, while helping them achieve their goals of lowering their environmental impact. Through our portfolio of trusted and locally relevant brands, we serve well over one million customers per day across Canada, the United States, the Caribbean region and Central and South America.

In addition to leveraging our supply and storage capabilities to provide the essential fuels our diverse customers depend on; we are leading our customers through the energy transition. From electric vehicle charging, renewable fuels, solar energy and compliance and carbon offset trading, we are leaders in helping our customers lower their environmental impact.

Parkland’s proven strategy is centered around organic growth, our supply advantage, acquiring prudently, and integrating successfully. We are focused on developing our existing business in resilient markets, growing, and diversifying our retail business into food, convenience, and renewable energy solutions and helping our commercial customers decarbonize their operations. Our strategy is underpinned by our people, as well as 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: business objectives and strategies, the 2022 Adjusted EBITDA Guidance and the 2022 capital expenditure guidance and expectations relating thereto; consolidating 100 percent ownership of Sol and the completion thereof; being on track to achieve its ambition for $2 billion of Adjusted EBITDA by mid-decade; completing the acquisition of select Husky branded retail locations; integrating acquisitions, capturing synergies and reducing leverage ratio; continuing to meet customers’ needs; its ‘Drive to Zero’ strategy and goals with respect thereto; supporting the governments’ goals of achieving net-zero emissions by 2050; expanding its co-processing activity and building BC’s largest renewable diesel complex at the Burnaby Refinery, the completion, funding and timing thereof and the expected benefits relating thereto; future sustainability reports and the timing thereof; and its energy transition strategy and its goals and projects relating thereto.

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; Parkland’s ability to execute its business strategies, including without limitation; Parkland’s ability to successfully integrate acquisitions, capture synergies, reduce its leverage ratio, successfully implement organic growth initiatives and to finance such acquisitions and initiatives on reasonable terms; Parkland’s ability to achieve its goals and targets relating to its “Drive to Zero” strategy; Parkland’s ability to complete transactions and projects, including consolidating 100 percent ownership of Sol, the acquisition of select Husky brand retail locations and expanding its co-processing activity and building BC’s largest renewable diesel complex at the Burnaby Refinery; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities and other regulators including but not limited to increases in taxes or restricted access to markets; changes and developments in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. See also the risks and uncertainties described in “Forward-Looking Information” and “Risk Factors” included in Parkland’s Revised Annual Information Form dated March 17, 2022, and “Forward-Looking Information” and “Risk Factors” included in the Q2 2022 MD&A dated August 4, 2022, 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, TTM lost time injury frequency rate and TTM 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 14 of the Q2 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 ratios and 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 14 of the Q2 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 14 of the Q2 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 ended June 30, 2022 and June 30, 2021.

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.

Supplementary Financial Measures

Parkland uses a number of supplementary financial measures, including dividends per share, TTM dividends and TTM cash generated from (used in) operating activities, 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 14 of the Q2 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 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 14 of the Q2 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 14 of the Q2 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 ended June 30, 2022 and June 30, 2021.