Parkland Reports 2024 Second Quarter Results

Second quarter Adjusted EBITDA¹ of $504 million
Performance demonstrates success of ongoing initiatives and run rate of the business
Board elects Michael Jennings as the Chair of the Board
Published Annual Sustainability Report

CALGARY, AB, July 31, 2024 /CNW/ - 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, 2024.

"I would like to thank the Parkland team for delivering record second quarter results," said Bob Espey President and Chief Executive Officer. "Our focus remains steadfast on improving returns by investing in our customer and supply advantages, and strengthening our robust platform for future growth to deliver shareholder value. I have confidence in the rest of the year and our longer term ambitions."

Q2 2024 Highlights

• Adjusted EBITDA of $504 million, an increase of 7 percent as compared to Q2 2023.
• Net earnings of $70 million ($0.40 per share, basic), a decrease of 10 percent as compared to Q2 2023, and Adjusted earnings² of $156 million ($0.89 per share, basic), an increase of 20 percent from Q2 2023.
• TTM Available cash flow² of $831 million ($4.75 per share), an increase of 60 percent from the same period in 2023, and TTM Cash generated from (used in) operating activities³ of $1,612 million ($9.21 per share), a decrease of 13 percent from the same period in 2023, due to favourable non-cash working capital movements in the prior period.
• Purchased for cancellation approximately 700,000 Parkland common shares for $29 million and maintained Leverage Ratio⁴ of 3.1 times (3.1 times in Q1 2024).
• Return on invested capital² ("ROIC") increased to 9 percent from 7.7 percent for the trailing twelve months ended June 30, 2024, as compared to the same period in 2023.

Q2 2024 Segment Highlights

• Canada delivered Adjusted EBITDA of $172 million, up 15 percent from Q2 2023 ($150 million). This increase was primarily driven by stronger fuel unit margins and the benefits of our supply advantage, partially offset by the impact of softening industry demand in our retail business. Company same-store volume growth ("Company SSVG)⁵ was (1.0) percent , compared to 9.3 percent in Q2 2023. Food and Company C-Store SSSG (excluding cigarettes)² was (0.7) percent, for the second quarter of 2024, compared to 3.1 percent, in Q2 2023. These 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 Q2 2023 ($79 million).
• International delivered Adjusted EBITDA of $182 million, up 8 percent from Q2 2023 ($168 million). The increase was primarily driven by improved unit fuel margins in the wholesale business, partially offset by lower volumes, and continued strength in the base retail business and the addition of new sites.
• USA delivered Adjusted EBITDA of $49 million, down 34 percent from Q2 2023 ($74 million). Results reflect lower diesel and gasoline market demand and lower unit fuel margins due to unfavorable commodity price movements.
• Refining delivered Adjusted EBITDA of $121 million, compared to $109 million in Q2 2023. Composite utilization⁵ at the Burnaby Refinery was 98 percent, including record co-processing volumes of 3,000 barrels per day, compared to 91 percent in Q2 2023.
• Consolidated Operating costs and Marketing, general and administrative expenses decreased $5 million compared to Q2 2023, reflecting ongoing cost-reduction initiatives that have successfully offset the impact of inflationary pressures across the business.
• Parkland's total recordable injury frequency rate⁵ on a trailing-twelve-months basis was 1.21, compared to 0.87 at June 30, 2023.

____________________________________

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   Capital management measure. See "Capital Management Measures" section of this news release.

5  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 in the first six months of 2024 that may persist for the rest of the year, Parkland has revised its 2024 Adjusted EBITDA Guidance to $1,900 million to $2,000 million.

Governance Update

Parkland's Board of Directors has elected Michael Jennings as the Chair of the Board effective July 31, 2024, replacing Steven Richardson who is retiring. Mr. Jennings joined Parkland's Board in February 2024 and is a highly experienced executive and board member with over three decades of international integrated energy experience.

"It has been a privilege to serve on Parkland's Board for the past seven years, including my tenure as Chair," said Mr. Richardson. "During this time, we have significantly grown the Company and implemented a strategic board renewal process, recruiting highly experienced and qualified directors, including bringing in Mike as a successor. I would like to thank the Board, management and the broader Parkland team for their support; it has been a pleasure working with such a committed and talented group."

"I am honoured to be elected as Chair of the Board and I look forward to building on the strong foundation that has been established," said Mr. Jennings. "I would like to thank Steve for his leadership and contributions to Parkland's Board. I have the utmost confidence in the Parkland business strategy and the management team, led by Bob Espey. Together, we will work in the interest of all shareholders to deliver sustainable long-term value."

2023 Sustainability Report

Today, Parkland published its fifth Sustainability Report, which outlines our refreshed strategy to better reflect the strong connection between environment, social and governance ("ESG") considerations and our corporate strategy. The report highlights the sustainability initiatives underway and our ESG performance for 2023. Among these initiatives are efforts on co-processing low-carbon fuels made from renewable feedstocks, including our plans to grow co-processing to 7,500 barrels per day by 2028; building safer, more diverse, and inclusive work environments; and projects to improve energy efficiency within Parkland's marketing operations.

Parkland's 2023 Sustainability Report can be viewed here : https://www.parkland.ca/sustainability/sustainability-reporting 

Consolidated Financial Overview

($ millions, unless otherwise noted)	Three months ended June 30,
Financial Summary	2024	2023
Sales and operating revenue	7,504	7,819
Adjusted EBITDA(1)	504	470
Canada(2)	172	150
International(2)	182	168
USA(2)	49	74
Refining(2)	121	109
Corporate(2)	(20)	(31)
Net earnings (loss)	70	78
Net earnings (loss) per share – basic ($ per share)	0.40	0.44
Net earnings (loss) per share – diluted ($ per share)	0.39	0.43
Trailing-twelve-month ("TTM") Cash generated from (used in) operating activities(3)	1,612	1,868
TTM Cash generated from (used in) operating activities per share(3)	9.21	10.99
TTM Available cash flow(4)	831	519
TTM Available cash flow per share(4)	4.75	3.05
TTM Return on invested capital(4)	9.0 %	7.7 %

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.

Q2 2024 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Thursday, August 1, 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/gaV9np4n75j

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: 41672249). International participants may call 1-800-389-0704 (toll-free) (Conference ID: 41672249).

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 six months ended June 30, 2024 (the "Q2 2024 MD&A") and Interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2024 (the "Q2 2024 Interim Condensed Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the three and six months ended June 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 Q2 2024 MD&A and the Q2 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 revised 2024 Adjusted EBITDA guidance; Parkland's sustainability initiatives, including plans to expand the co-processing capacity of the Burnaby Refinery to 7,500 barrels per day by 2028; and confidence in the rest of the year and our long-term ambitions.

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; realization of the expected impact of the maintenance and refining optimization work completed on the Burnaby Refinery's utilization and profitability; 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 Q2 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 5 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 $40 to $41 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 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 Q2 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 Q2 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 June 30,
($ millions, unless otherwise stated)	2024	2023
Net earnings (loss)	70	78
Add:
Acquisition, integration and other costs	46	39
(Gain) loss on foreign exchange – unrealized	4	27
(Gain) loss on risk management and other – unrealized	56	(11)
Other (gains) and losses	(1)	14
Other adjusting items(1)	8	1
Tax normalization(2)	(27)	(18)
Adjusted earnings (loss)	156	130
Weighted average number of common shares (million shares)(3)	175	176
Weighted average number of common shares adjusted for the effects of dilution (million shares)(3)	177	178
Adjusted earnings (loss) per share ($ per share)
Basic	0.89	0.74
Diluted	0.88	0.73

1 Other adjusting items for the three months ended June 30, 2024 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $3 million (2023 - $3 million); (ii) other income of $3 million (2023 - $3 million); (iii) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $2 million (2023 - $1 million); (iv) realized risk management loss related to underlying physical sales activity in another period of $1 million (2023 - $4 million gain); and (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 $1 million (2023 - nil). Other adjusting Items for the first six months of 2024 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $7 million (2023 - $6 million); (ii) other income of $5 million (2023 - $6 million); (iii) realized risk management loss related to underlying physical sales activity in another period of $4 million (2023 - $3 million gain); (iv) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $4 million (2023 - nil); (v) adjustment to realized risk management gains of 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 and debt modifications. 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. 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 June 30,2024
($ millions, unless otherwise noted)	September 30, 2023	December 31, 2023	March 31, 2024	June 30, 2024
Cash generated from (used in) operating activities	528	417	217	450	1,612
Reverse: Change in other assets and other liabilities	7	(4)	28	3	34
Reverse: Net change in non-cash working capital related to operating activities	(14)	17	63	(34)	32
Include: Maintenance capital expenditures	(52)	(93)	(59)	(53)	(257)
Include: Dividends received from investments in associates and joint ventures	4	3	2	8	17
Include: Interest on leases and long-term debt	(83)	(88)	(85)	(88)	(344)
Include: Payments of principal amount on leases	(57)	(71)	(71)	(64)	(255)
Available cash flow	333	181	95	222	831
Weighted average number of common shares (millions)(3)					175
TTM Available cash flow per share					4.75

 

	Three months ended				Trailing twelve months ended June 30, 2023
($ millions, unless otherwise noted)	September 30, 2022	December 31, 2022	March 31, 2023	June 30, 2023(1)
Cash generated from (used in) operating activities	404	629	314	521	1,868
Exclude: Adjusted EBITDA attributable to NCI, net of tax	(11)	—	—	—	(11)
	393	629	314	521	1,857
Reverse: Change in other assets and other liabilities	23	(23)	11	(11)	—
Reverse: Net change in non-cash working capital related to operating activities(1)	(132)	(232)	18	(145)	(491)
Include: Maintenance capital expenditures(2)	(62)	(118)	(79)	(61)	(320)
Include: Dividends received from investments in associates and joint ventures	5	—	16	2	23
Include: Interest on leases and long-term debt	(76)	(86)	(92)	(89)	(343)
Include: Payments on principal amount on leases	(50)	(52)	(51)	(56)	(209)
Exclude: Payments on principal amount on leases attributable to NCI	2	—	—	—	2
Available cash flow	103	118	137	161	519
Weighted average number of common shares (millions)(3)					170
TTM Available cash flow per share					3.05

1	For comparative purposes, certain amounts within net change in non-cash working capital related to operating activities for the three months ended June 30, 2023 were revised to conform to the current period presentation.
2	For the three months ended September 30, 2022, and for the trailing twelve months ended June 30, 2023, represents the amounts attributable to Parkland.
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.

Return on invested capital ("ROIC") is a non-GAAP financial ratio. The measure is calculated as a ratio of Net operating profit after tax ("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 Section 16 of the Q2 2024 MD&A, 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 measure to assess Parkland's efficiency in investing capital.

($ millions, unless otherwise noted)	Three months ended				Trailing twelve months ended June 30, 2024
ROIC	September 30, 2023	December 31, 2023	March 31, 2024	June 30, 2024
Net earnings (loss)	230	86	(5)	70	381
Add/(less):
Income tax expense (recovery)	54	(15)	(29)	20	30
Acquisition, integration and other costs	38	42	30	46	156
Depreciation and amortization	205	222	206	202	835
Finance cost	93	89	91	99	372
(Gain) loss on foreign exchange - unrealized	1	—	3	4	8
(Gain) loss on risk management and other - unrealized	(19)	28	11	56	76
Other (gains) and losses	(37)	5	10	(1)	(23)
Other adjusting items	20	6	10	8	44
Adjusted EBITDA	585	463	327	504	1,879
Less: Depreciation	(205)	(222)	(206)	(202)	(835)
Adjusted EBIT	380	241	121	302	1,044
Average effective tax rate(1)					19.9 %
Less: Taxes					(208)
Net operating profit after tax					836
Opening invested capital					9,191
Closing invested capital					9,310
Average invested capital					9,251
Return on invested capital					9.0 %

(1)	Includes the impact of Pillar Two rules substantively enacted in Canada on June 20, 2024.

 

($ millions, unless otherwise noted)	June 30, 2024	June 30, 2023
Invested capital
Long-term debt - current portion	213	178
Long-term debt	6,275	6,278
Shareholders' equity	3,138	3,080
Exclude: Cash and cash equivalents	(316)	(345)
Total	9,310	9,191

 

($ millions, unless otherwise noted)	Three months ended				Trailing twelve months ended June 30, 2023
ROIC	September 30, 2022	December 31, 2022	March 31, 2023	June 30, 2023
Net earnings	118	69	77	78	342
Add/(less):
Income tax expense (recovery)	(2)	22	(20)	18	18
Acquisition, integration and other costs	45	41	27	39	152
Depreciation and amortization	202	212	190	206	810
Finance cost	87	94	104	98	383
(Gain) loss on foreign exchange - unrealized	(16)	8	7	27	26
(Gain) loss on risk management and other - unrealized	(1)	9	(32)	(11)	(35)
Other (gains) and losses	(88)	(21)	21	14	(74)
Other adjusting items	(5)	21	21	1	38
Adjusted EBITDA(1)	340	455	395	470	1,660
Less: Depreciation	(202)	(212)	(190)	(206)	(810)
Adjusted EBIT	138	243	205	264	850
Average effective tax rate					17.0 %
Less: Taxes					(145)
Net operating profit after tax					705
Opening invested capital					9,065
Closing invested capital					9,191
Average invested capital					9,128
Return on invested capital					7.7 %

(1)	For the three months ended September 30, 2022 and for the trailing twelve months ended June 30, 2023, represents the amounts including NCI.

 

($ millions, unless otherwise noted)	June 30, 2023	June 30, 2022
Invested capital
Long-term debt - current portion	178	143
Long-term debt	6,278	6,494
Shareholders' equity	3,080	2,445
Sol Put Option	—	646
Exclude: Cash and cash equivalents	(345)	(663)
Total	9,191	9,065

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 June 30,
($ millions, unless otherwise noted)	2024	2023	%(1)
Food and Company C-Store revenue	82	79
Add:
Point-of-sale ("POS") value of goods and services sold at Food and Company C-Store operated by retailers and franchisees(2)	305	316
Less:
Rental and royalty income from retailers, franchisees and other(3)	(63)	(64)
Same Store revenue adjustments(4) (excluding cigarettes)	(16)	(15)
Food and Company C-Store same-store sales (including cigarettes)	308	316	(3.0) %
Less:
Same Store revenue adjustments(4) (cigarettes)	(105)	(114)
Food and Company C-Store same-store sales (excluding cigarettes)	203	202	(0.7) %

 

	Three months ended June 30,
($ millions, unless otherwise noted)	2023	2022	%(1)
Food and Company C-Store revenue	79	102
Add:
Point-of-sale ("POS") value of goods and services sold at Food and Company C-Store operated by retailers(2)	316	256
Less:
Rental income from retailers and other(3)	(64)	(52)
Same Store revenue adjustments(4)(5) (excluding cigarettes)	(34)	(16)
Food and Company C-Store same-store sales (including cigarettes)	297	290	2.5 %
Less:
Same Store revenue adjustments(4)(5) (cigarettes)	(104)	(103)
Food and Company C-Store same-store sales (excluding cigarettes)	193	187	3.1 %

(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, franchisee fees and excludes revenues from automated teller machine, 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 establish the baseline for these metrics.

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 Accounting Standards. Except as otherwise indicated, these non-GAAP measures and ratios are calculated and disclosed on a consistent basis from period to period. See Section 16 of the Q2 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)	December 31, 2023	March 31, 2024	June 30, 2024
Leverage Debt	4,976	5,208	5,193
Leverage EBITDA	1,780	1,657	1,674
Leverage Ratio	2.8	3.1	3.1

 

($ millions, unless otherwise noted)	December 31, 2023	March 31, 2024	June 30, 2024
Long-term debt	6,358	6,630	6,488
Less:
Lease obligations	(1,048)	(1,084)	(1,062)
Cash and cash equivalents	(387)	(393)	(316)
Cash and cash equivalents classified as held for sale	—	—	(20)
Non-recourse debt(1)	—	(3)	—
Add:
Non-recourse cash(1)	—	5	15
Letters of credit and other	53	53	88
Leverage Debt	4,976	5,208	5,193

 

(1)	Represents Non-recourse debt and Cash and cash equivalents balances attributable to 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 March 31, 2024
($ millions, unless otherwise noted)	June 30, 2023	September 30, 2023	December 31, 2023	March 31, 2024
Adjusted EBITDA	470	585	463	327	1,845
Share incentive compensation	6	5	11	6	28
Reverse: IFRS 16 impact(1)	(68)	(71)	(82)	(83)	(304)
	408	519	392	250	1,569
Other adjustments(2)					88
Leverage EBITDA					1,657

(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, 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 Q2 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 six months ended June 30, 2024 and June 30, 2023.

	Three months ended June 30,
($ millions)	2024	2023
Adjusted EBITDA	504	470
Less/(add):
Acquisition, integration and other costs	46	39
Depreciation and amortization	202	206
Finance costs	99	98
(Gain) loss on foreign exchange – unrealized	4	27
(Gain) loss on risk management and other – unrealized	56	(11)
Other (gains) and losses(1)	(1)	14
Other adjusting items(2)	8	1
Income tax expense (recovery)	20	18
Net earnings (loss)	70	78

1	Other (gains) and losses for the three months ended June 30, 2024 include the following: (i) $12 million non-cash valuation gain (2023 - $6 million loss) due to the change in estimates of environmental provision; (ii) $11 million non-cash valuation loss (2023 - $5 million loss) due to the change in fair value redemption options; (iii) $4 million loss (2023 - $5 million loss) in Others; (iv) $3 million (2023- $3 million) in Other income; and $1 million gain (2023 - $1 million loss) on disposal of assets. Other (gains) and losses for the first six months of 2024 include the following: (i) $24 million non-cash valuation loss (2023 - $4 million gain) due to the change in fair value of redemption options; (ii) $16 million non-cash valuation gain (2023 - $10 million loss) due to the change in estimates of environmental provision; (iii) $9 million loss (2023 - $28 million loss) in Others; (iv) $5 million (2023 - $6 million) in Other income; and (v) $3 million gain (2023 - $7 million loss) on disposal of assets.  Refer to Note 12 of the Interim Condensed Consolidated Financial Statements.
2	Other adjusting items for the three months ended June 30, 2024 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $3 million (2023 - $3 million); (ii) other income of $3 million (2023 - $3 million); (iii) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $2 million (2023 - $1 million); (iv) realized risk management loss related  underlying physical sales activity in another period of $1 million (2023 - $4 million gain); and (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 $1 million (2023 - nil). Other adjusting Items for the first six months of 2024 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $7 million (2023 - $6 million); (ii) other income of $5 million (2023 - $6 million); (iii) realized risk management loss related to underlying physical sales activity in another period of $4 million (2023 - $3 million gain); (iv) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $4 million (2023 - nil); (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, 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 Q2 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 same-store volume growth ("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 Q2 2024 MD&A, which is incorporated by reference into this news release, for further details on the non-financial measures used by Parkland.

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SOURCE Parkland Corporation

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