Parkland Reports Strong 2023 Fourth Quarter and Record Year-End Results; Increases Dividend for the Twelfth Consecutive Year

Fourth quarter Adjusted EBITDA¹ of $463 million and full year Adjusted EBITDA of $1,913 million

Fourth quarter and full year Net earnings per share of $0.49 and $2.68, respectively

Annualized dividend increasing $0.04 per share (3 percent) to $1.40 per share

CALGARY, AB, Feb. 27, 2024 /CNW/ - Parkland Corporation ("Parkland", "we", the "Company", or "our") (TSX: PKI), today announced its financial and operating results for the three months and year ended December 31, 2023.

"I want to congratulate the Parkland team on an excellent year," said Bob Espey, President and Chief Executive Officer. "We delivered approximately $300 million of incremental Adjusted EBITDA in 2023 compared to 2022, and have accelerated our $2 billion of Adjusted EBITDA Guidance² to 2024, with significantly less invested capital than expected. We are firmly on track with our ambitious plan to deliver long-term value to our shareholders, which we outlined at our Investor Day."

"Parkland continues to progress its Board renewal process," added Espey. "I would like to welcome Michael Jennings and James Neate to the Parkland Board of Directors and am pleased with the recent nomination of Mariame McIntosh Robinson. Each brings substantial expertise across many areas to Parkland, and their knowledge and insights will be invaluable."

Q4 2023 Highlights

• Adjusted EBITDA attributable to Parkland ("Adjusted EBITDA") of $463 million, consistent with the fourth quarter of 2022.
• Net earnings attributable to Parkland of $86 million ($0.49 per share, basic), an increase of 25 percent from the fourth quarter of 2022, and Adjusted earnings attributable to Parkland ("Adjusted earnings"²) of $151 million ($0.86 per share, basic) up 29 percent from the fourth quarter of 2022.
• Available cash flow² of $181 million, up 53 percent from the fourth quarter of 2022, and Cash generated from operating activities of $417 million, down 34 percent from the fourth quarter of 2022, due to favourable non-cash working capital movements in the prior period.
• Repaid $106 million of our credit facility with liquidity available³ of $1.3 billion at December 31, 2023.
• Grew JOURNIE^TM Rewards to 5.8 million members, reflecting expansion into select International markets and the launch of our partnership with Aeroplan.

2023 Highlights

• Record Adjusted EBITDA of $1,913 million, up 18 percent from 2022.
• Net earnings attributable to Parkland of $471 million ($2.68 per share, basic), an increase of 52 percent from 2022, and Adjusted earnings of $626 million ($3.56 per share, basic) up 34 percent from 2022.
• Available cash flow of $812 million ($4.61 per share, basic), up 15 percent from 2022, and Cash generated from (used in) operating activities of $1,780 million, up 34 percent from 2022.
• Repaid $747 million of our credit facility and lowered our Leverage Ratio⁴ to 2.8 times (3.4 times at Q4 2022), demonstrating Parkland's ongoing commitment to deleveraging.

Q4 2023 Segment Highlights

• Canada delivered Adjusted EBITDA of $190 million, consistent with Q4 2022 ($197 million). Company Volume Same Store Sales Growth ("Company Volume SSSG"⁵) was 6.9 percent and Food and Company C-Store SSSG (excluding cigarettes)² was 1.2 percent. Canada delivered Food and Company C-store revenue of $92 million, consistent with Q4 2022 ($88 million).
• International delivered Adjusted EBITDA of $157 million, up 43 percent, from Q4 2022 ($110 million). Performance was primarily driven by additional volumes in our commercial business and strong fuel unit margins, due to organic growth and synergy capture.
• USA delivered Adjusted EBITDA of $39 million, down 15 percent from Q4 2022 ($46 million). The decrease was primarily driven by lower fuel unit margins in our commercial business, partially offset by strong C-Store margins and reduced Operating costs.
• Refining delivered Adjusted EBITDA of $106 million, down 17 percent, from Q4 2022 ($128 million). Composite utilization⁵ was 90 percent in Q4 2023, compared to 98 percent in Q4 2022. The decrease was primarily driven by a third-party power outage.
• Parkland's total recordable injury frequency rate⁵ on a trailing-twelve-months basis was 1.07, compared to 1.05 at December 31, 2022.

Enhancing Shareholder Distributions

• Parkland's quarterly dividend will increase from $0.34 to $0.35 per common share, effective with the quarterly dividend payable on April 15, 2024 to shareholders of record at the close of business on March 22, 2024. Dividends are expected to be declared and paid on a quarterly basis.
• Parkland purchased and cancelled approximately 583,000 Parkland common shares for $26 million under its normal course issuer bid ("NCIB") program in Q4 2023. Additionally, Parkland repurchased approximately 700,000 common shares for $31 million in January 2024 under its automatic share purchase plan. Parkland's disciplined capital allocation framework balances deleveraging, organic growth, and enhancing shareholder returns and the Company expects to continue to opportunistically utilize its NCIB program.

___________________________________
1	Total of segments measure. See "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.

Refinery Update

Following an initial shut down due to extreme cold weather in mid-January, a technical issue with a processing unit led to an unplanned outage beginning January 21, 2024. We have completed inspection and repair work, including maintenance activities previously scheduled for February 2024. We expect to resume normal operations in early March 2024, with the total refinery outage to be approximately eight weeks during the first quarter of 2024.

We have developed a robust recovery plan and expect to meet our 2024 Adjusted EBITDA Guidance range of $1.95 to $2.05 billion. Plans include enhanced refinery operations and optimized refinery supply, as well as ongoing operating and MG&A cost reductions across the business.

Consolidated Financial Overview

($ millions, unless otherwise noted)	Three months ended December 31,		Year ended December 31,
Financial Summary	2023	2022	2023	2022
Sales and operating revenue	7,746	8,719	32,452	35,462
Adjusted EBITDA attributable to Parkland ("Adjusted EBITDA")(1)	463	455	1,913	1,620
Canada	190	197	713	702
International	157	110	678	383
USA	39	46	186	126
Refining	106	128	441	516
Corporate	(29)	(26)	(105)	(107)
Net earnings (loss) attributable to Parkland	86	69	471	310
Net earnings (loss) per share – basic ($ per share)	0.49	0.39	2.68	1.94
Net earnings (loss) per share – diluted ($ per share)	0.48	0.39	2.63	1.92
Trailing-twelve-month ("TTM") Cash generated from (used in) operating activities(2)	1,780	1,326	1,780	1,326
TTM Cash generated from (used in) operating activities per share(2)	10.13	8.29	10.13	8.29
TTM available cash flow(3)	812	708	812	708
TTM available cash flow per share(3)	4.61	4.43	4.61	4.43
TTM Return on invested capital(3)	9.8 %	8.4 %	9.8 %	8.4 %

(1) Total of segments measure. See "Total of Segments Measures" section of this news release.

(2) Supplementary financial measure. See "Supplementary Financial Measures" section of this news release.

(3)  Non-GAAP financial measure or non-GAAP financial ratio. See Section 17 of the Q4 2023 MD&A.

Q4 2023 Conference Call and Webcast Details

Parkland will host a webcast and conference call on Wednesday, February 28, 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/VAjLrA2Y10R

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: 97733547). International participants may call 1-800-389-0704 (toll-free) (Conference ID: 97733547).

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 http://www.parkland.ca.

Annual General Meeting of Shareholders

Parkland will host its 2024 Annual General Meeting of Shareholders on Thursday, March 28, 2024, at 9:00 am MT (11:00 am ET). The meeting will be held at The Westin Calgary hotel in Calgary, Alberta.

Parkland's Management Information Circular is available at www.parkland.ca and under Parkland's profile at www.sedarplus.ca.

MD&A and Annual Consolidated Financial Statements

The Management's Discussion and Analysis for the year ended December 31, 2023 (the "Q4 2023 MD&A") and Annual Consolidated Financial Statements for the year ended December 31, 2023 (the "2023 Annual Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the year ended December 31, 2023. 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 Q4 2023 MD&A and the 2023 Annual Consolidated Financial Statements will be posted to www.parkland.ca and SEDAR+ as soon as they become available.

About Parkland Corporation

Parkland is an international fuel distributor, 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 2024 Adjusted EBITDA Guidance; Parkland's expectations regarding the Burnaby Refinery outage and resuming operations at the Burnaby Refinery, including the timing in respect thereof; Parkland's plans to enhance operations and optimize supply at the Burnaby Refinery; Parkland's expectations regarding future dividend amounts, and timing and frequency of payments, and with respect to completing additional share repurchases, if any, using its NCIB program; and Parkland's plans to implement ongoing operating and MG&A cost reductions.

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 commence restart procedures and resume normal operations at the Burnaby Refinery successfully and within the expected timeframe; Parkland's ability to pay future dividends and complete share repurchases; and the assumptions and risks described under "Cautionary Statement Regarding Forward-Looking Information" and "Risk Factors" in Parkland's Annual Information Form for the year ended December 31, 2023, and under "Forward-Looking Information" and "Risk Factors" in the Q4 2023 MD&A, which are incorporated by reference herein, each as filed on SEDAR+ and available on the Parkland website at http://www.parkland.ca. In addition, the 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 MG&A cost efficiencies by the end of 2024; Refining adjusted gross margin of approximately $41 to $43 per barrel and average Burnaby Refinery composite utilization of 80 percent to 85 percent based on the Burnaby Refinery's crude processing capacity of 55,000 barrels per day; the impact of the unplanned outage at the Burnaby Refinery and resumption of normal operations during the first quarter of 2024; enhancements to operations and optimization of supply at the Burnaby Refinery during 2024; and implementation of ongoing operating and MG&A 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 ("IFRS") 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 17 of the Q4 2023 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 17 of the Q4 2023 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition of Adjusted earnings (loss).

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 December 31,		Year ended December 31,
($ millions, unless otherwise stated)	2023	2022	2023	2022
Net earnings (loss) attributable to Parkland	86	69	471	310
Add: Net earnings (loss) attributable to NCI	—	—	—	36
Net earnings (loss)	86	69	471	346
Add:
Acquisition, integration and other costs	42	41	146	117
Loss on modification of long-term debt	—	—	—	2
(Gain) loss on foreign exchange – unrealized	—	8	35	(8)
(Gain) loss on risk management and other – unrealized	28	9	(34)	39
Other (gains) and losses	5	(21)	3	23
Other adjusting items(1)	6	21	48	26
Tax normalization(2)	(16)	(10)	(43)	(46)
Adjusted earnings (loss) including NCI	151	117	626	499
Less: Adjusted earnings (loss) attributable to NCI	—	—	—	31
Adjusted earnings (loss) attributable to Parkland ("Adjusted earnings (loss)")	151	117	626	468
Weighted average number of common shares (million shares)(3)	176	173	176	160
Weighted average number of common shares adjusted for the effects of dilution (million shares)(3)	180	174	179	161
Adjusted earnings (loss) per share ($ per share)
Basic	0.86	0.67	3.56	2.93
Diluted	0.84	0.67	3.50	2.91

(1)	Other adjusting items for the three months ended December 31, 2023 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $9 million (2022 - $2 million); (ii) other income of $2 million (2022 - $4 million); (iii) realized risk management gain related to underlying physical sales activity in another period of $2 million (2022 - $7 million loss); (iv) impact of hyperinflation accounting of $2 million loss (2022 - $1 million gain); (v) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $1 million (2022 - $1 million); (vi) unrealized risk management gain related to underlying physical sales activity in current period of nil (2022 - $10 million); and (vii) loss on inventory write-downs for which there are offsetting associated risk management derivatives with unrealized gains of nil (2022 - $2 million). Other adjusting items for the year ended December 31, 2023 include: (i) other income of $23 million (2022 - $8 million); (ii) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $20 million (2022 - $11 million); (iii) the effect of market-based performance conditions for equity-settled share-based award settlements of $13 million (2022 - nil); (iv) realized risk management gain related to underlying physical sales activity in another period of $6 million (2022 - $4 million loss); (v) impact of hyperinflation accounting of $2 million loss (2022 - $1 million gain); and (vi) adjustment to foreign exchange gains and losses related to cash pooling arrangements of nil (2022 - $2 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 are calculated in accordance with Parkland's accounting policy contained in Note 2 of the Annual Consolidated Financial Statements.

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. Food and Company C-Store SSSG does not have any standardized meaning prescribed under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Please see below for a reconciliation of convenience store revenue (Food and C-Store revenue) of the Canada segment with the Food and Company C-Store same store sales ("SSS") and calculation of the Food and Company C-Store SSSG.

	Three months ended December 31,
($ millions)	2023	2022	%(1)
Food and Company C-Store revenue	92	88
Add:
Point-of-sale ("POS") value of goods and services sold at Food and Company C-Store operated by retailers and franchisees(2)(3)	324	323
Less:
Rental and royalty income from retailers, franchisees and other(3)(4)	(67)	(67)
Same Store revenue adjustments(5) (excluding cigarettes)	(20)	(19)
Food and Company C-Store same-store sales (including cigarettes)	329	325	1.1 %
Less:
Same Store revenue adjustments(5) (cigarettes)	(102)	(100)
Food and Company C-Store same-store sales (excluding cigarettes)	227	225	1.2 %

 

	Three months ended December 31,
($ millions)	2022	2021	%(1)
Food and Company C-Store revenue	88	93
Add:
Point-of-sale ("POS") value of goods and services sold at Food and Company C-Store operated by retailers(2)	306	141
Less:
Rental income from retailers and other(4)	(43)	(26)
Same Store revenue adjustments(4)(5)(6) (excluding cigarettes)	(164)	(15)
Food and Company C-Store same-store sales (including cigarettes)	187	193	(3.5) %
Less:
Same Store revenue adjustments(5)(6) (cigarettes)	(87)	(99)
Food and Company C-Store same-store sales (excluding cigarettes)	100	94	6.0 %

(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 the impacts of acquisitions when the relevant information becomes available after the completion of the related system integration activities.
(4)	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.
(5)	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.
(6)	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.

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 December 31, 2023(4)
($ millions, unless otherwise noted)	March 31, 2023	June 30, 2023(1)	September 30, 2023	December 31, 2023
Cash generated from (used in) operating activities	314	521	528	417	1,780
Reverse: Change in other assets and other liabilities	11	(11)	7	(4)	3
Reverse: Net change in non-cash working capital(2)	18	(145)	(14)	17	(124)
Include: Maintenance capital expenditures attributable to Parkland(4)	(79)	(61)	(52)	(93)	(285)
Include: Dividends received from investments in associates and joint ventures	16	2	4	3	25
Include: Interest on leases and long-term debt	(92)	(89)	(83)	(88)	(352)
Include: Payments of principal amount on leases	(51)	(56)	(57)	(71)	(235)
Available cash flow	137	161	333	181	812
Weighted average number of common shares (millions)(3)					176
Available cash flow per share					4.61

 

	Three months ended				Trailing twelve  months ended December 31, 2022(4)
($ millions, unless otherwise noted)	March 31, 2022	June 30, 2022	September 30, 2022	December 31, 2022
Cash generated from (used in) operating activities	(48)	341	404	629	1,326
Exclude: Adjusted EBITDA attributable to NCI, net of tax	(26)	(27)	(11)	—	(64)
	(74)	314	393	629	1,262
Reverse: Change in other assets and other liabilities	(2)	(1)	23	(23)	(3)
Reverse: Net change in non-cash working capital	420	88	(132)	(232)	144
Include: Maintenance capital expenditures attributable to Parkland(4)	(29)	(44)	(62)	(118)	(253)
Include: Dividends received from investments in associates and joint ventures	—	12	5	—	17
Include: Interest on leases and long-term debt	(64)	(69)	(76)	(86)	(295)
Exclude: Interest on leases and long-term debt attributable to NCI	1	1	—	—	2
Include: Payments on principal amount on leases	(37)	(38)	(50)	(52)	(177)
Exclude: Payments on principal amount on leases attributable to NCI	5	4	2	—	11
Available cash flow	220	267	103	118	708
Weighted average number of common shares (millions)(3)					160
Available cash flow per share					4.43

(1)	For comparative purposes, certain amounts within net change in non-cash working capital for the three months ended June 30, 2023 were revised to conform to the current period presentation.
(2)	Starting in the fourth quarter of 2023, "Changes in risk management and other" are included within net changes in non-cash working capital. For comparative purposes, certain amounts within net change in non-cash working capital were revised to conform to the current period presentation.
(3)	Weighted average number of common shares disclosed is consistent with the Note 3 of the Annual Consolidated Financial Statements.
(4)	Supplementary financial measure. See Section 17 of the Q4 2023 MD&A.

Return on Invested Capital ("ROIC") is a non-GAAP ratio and is composed 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 including NCI, 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. ROIC is used by management to assess the Company's efficiency in investing capital. The most directly comparable financial measure to ROIC is net earnings. See following table for a calculation of historical ROIC for 2022 and 2023, the calculation of NOPAT and the reconciliation to net earnings and the calculation of invested capital.

	Trailing twelve months ended December 31,
ROIC	2023	2022
Net earnings (loss)	471	346
Add/(less):
Income tax expense (recovery)	37	70
Acquisition, integration and other costs	146	117
Depreciation and amortization	823	743
Finance cost	384	331
Unrealized foreign exchange (gain) loss	35	(8)
Unrealized loss (gain) on risk management and other	(34)	39
Other (gains) and losses	3	23
Other adjusting items	48	26
Adjusted EBITDA including NCI	1,913	1,687
Less: Depreciation	(823)	(743)
Adjusted EBIT	1,090	944
Average effective tax rate	16.7 %	22.5 %
Less: Taxes	(182)	(212)
Net operating profit after tax	908	732
Opening invested capital	9,293	8,151
Closing invested capital	9,152	9,293
Average invested capital	9,223	8,722
Return on invested capital	9.8 %	8.4 %

 

Invested capital	December 31,
($ millions, unless otherwise noted)	2023	2022	2021
Long-term debt - current portion	191	173	124
Long-term debt	6,167	6,799	5,432
Shareholders' equity	3,181	3,037	2,332
Sol Put Option	—	—	589
Exclude: Cash and cash equivalents	(387)	(716)	(326)
Total	9,152	9,293	8,151

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 17 of the Q4 2023 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. The Leverage Ratio is calculated as a ratio of Leverage Debt to Leverage EBITDA (each as defined in the 2023 Annual Consolidated Financial Statements) and does not have any standardized meaning prescribed under IFRS. It is therefore unlikely to be comparable to similar measures presented by other companies. See Section 17 of the Q4 2023 MD&A, which is incorporated by reference into this news release, for further details regarding capital management measures used by Parkland.

	December 31, 2023	December 31, 2022
Leverage Debt	4,976	5,480
Leverage EBITDA	1,780	1,602
Leverage Ratio	2.8	3.4

 

	December 31, 2023	December 31, 2022
Long-term debt	6,358	6,972
Less:
Lease obligations	(1,048)	(828)
Cash and cash equivalents	(387)	(716)
Add:
Letters of credit	53	52
Leverage Debt	4,976	5,480

 

	Three months ended				Trailing twelve months ended December 31, 2023
	March 31, 2023	June 30, 2023	September 30, 2023	December 31, 2023
Adjusted EBITDA including NCI	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 to earnings.
(2)	Adjustments to normalize EBITDA in relation to non-recurring events including the completion of turnarounds and third-party power outages.

 

	Three months ended				Trailing twelve months ended December 31, 2022
	March 31, 2022	June 30, 2022	September 30, 2022	December 31, 2022
Adjusted EBITDA including NCI	414	478	340	455	1,687
Share incentive compensation	9	5	7	9	30
Reverse: IFRS 16 impact(1)	(44)	(46)	(49)	(58)	(197)
	379	437	298	406	1,520
Acquisition pro-forma adjustment(2)					51
Other adjustments(3)					31
Leverage EBITDA					1,602

(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 to earnings.
(2)	Amounts for the trailing twelve months ended December 31, 2022 include the impact of pro-forma pre-acquisition EBITDA estimates based on anticipated benefits, costs and synergies from acquisitions.
(3)	Adjustments to normalize EBITDA in relation to non-recurring events including the completion of turnarounds, mechanical break-downs, and third-party power outages.

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. 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 17 of the Q4 2023 MD&A, which is incorporated by reference into this news release, for further details regarding total of segments measures used by Parkland. Refer to the table below for the reconciliation of Adjusted EBITDA to net earnings (loss) for the three months and year ended December 31, 2023 and December 31, 2022.

	Three months ended December 31,		Year ended December 31,
($ millions)	2023	2022	2023	2022
Adjusted EBITDA attributable to Parkland ("Adjusted EBITDA")	463	455	1,913	1,620
Add: Attributable to NCI	—	—	—	67
Adjusted EBITDA including NCI	463	455	1,913	1,687
Less/(add):
Acquisition, integration and other costs	42	41	146	117
Depreciation and amortization	222	212	823	743
Finance costs	89	94	384	331
(Gain) loss on foreign exchange – unrealized	—	8	35	(8)
(Gain) loss on risk management and other – unrealized	28	9	(34)	39
Other (gains) and losses(1)	5	(21)	3	23
Other adjusting items(2)	6	21	48	26
Income tax expense (recovery)	(15)	22	37	70
Net earnings (loss)	86	69	471	346
Net earnings (loss) attributable to Parkland	86	69	471	310
Net earnings (loss) attributable to NCI	—	—	—	36

(1)

Other (gains) and losses for the three months ended December 31, 2023 include the following: (i) $25 million loss (2022 - $13 million gain) in Others, including nil (2022 - $19 million gain) in relation to changes in redemption value of the Sol Put Option, which was de-recognized on Parkland's acquisition of the remaining 25% of the issued and outstanding shares in Sol in the Share Exchange on October 18, 2022; (ii) $11 million non-cash valuation loss (2022 - $6 million gain) due to the change in estimates of environmental provision; (iii) $14 million non-cash valuation gain (2022 - $2 million loss) due to the change in fair value of redemption options; (iv) $15 million gain (2022 - $2 million gain) on disposal of assets; and (v) $2 million gain (2022 - $2 million) in Other income. Other (gains) and losses for the year ended December 31, 2023 include the following: (i) $57 million loss (2022 - $23 million gain) in Others, including $27 million associated with the write-off of certain assets related to the renewable diesel complex, and nil (2022 - $30 million gain) in relation to changes in redemption value of the Sol Put Option, which was de-recognized on Parkland's acquisition of the remaining 25% of the issued and outstanding shares in Sol on October 18, 2022; (ii) $14 million loss (2022 - $17 million gain) due to the change in estimates of environmental provision; (iii) $31 million non-cash valuation gain (2022 - $67 million loss) due to the change in fair value of redemption options; (iv) $23 million gain (2022 - $7 million gain) in Other income; and (v) $14 million gain (2022 - $3 million loss) on disposal of assets. Refer to Note 23 of the Annual Consolidated Financial Statements.

(2)

Other adjusting items for the three months ended December 31, 2023 include: (i) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $9 million (2022 - $2 million); (ii) other income of $2 million (2022 - $4 million); (iii) realized risk management gain related to underlying physical sales activity in another period of $2 million (2022 - $7 million loss); (iv) impact of hyperinflation accounting of $2 million loss (2022 - $1 million gain); (v) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $1 million (2022 - $1 million); (vi) unrealized risk management gain related to underlying physical sales activity in current period of nil (2022 - $10 million); and (vii) loss on inventory write-downs for which there are offsetting associated risk management derivatives with unrealized gains of nil (2022 - $2 million). Other adjusting items for the year ended December 31, 2023 include: (i) other income of $23 million (2022 - $8 million); (ii) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $20 million (2022 - $11 million); (iii) the effect of market-based performance conditions for equity-settled share-based award settlements of $13 million (2022 - nil); (iv) realized risk management gain related to underlying physical sales activity in another period of $6 million (2022 - $4 million loss); (v) impact of hyperinflation accounting of $2 million loss (2022 - $1 million gain); and (vi) adjustment to foreign exchange gains and losses related to cash pooling arrangements of nil (2022 - $2 million).

Parkland uses Adjusted gross margin as a measure of segment profit (loss) to analyze the performance of sale and purchase transactions and performance on margin. The most directly comparable financial measure is sales and operating revenue. See Section 17 of the Q4 2023 MD&A, which is incorporated by reference into this news release, for the detailed definition of Adjusted gross margin.

Refer to the table below for a detailed calculation of Adjusted gross margin for the three months and year ended December 31, 2023 and December 31, 2022.

	Three months ended December 31,		Year ended December 31,
($ millions)	2023	2022	2023	2022
Sales and operating revenue	7,746	8,719	32,452	35,462
Cost of purchases	(6,850)	(7,682)	(28,484)	(31,441)
Gain (loss) on risk management and other -- realized	122	(56)	51	(336)
Gain (loss) on foreign exchange -- realized	2	(1)	(7)	(16)
Other adjusting items to Adjusted gross margin(1)	(8)	15	(11)	7
Adjusted gross margin	1,012	995	4,001	3,676
Fuel and petroleum product adjusted gross margin	814	807	3,254	3,013
Food, convenience and other adjusted gross margin	198	188	747	663
Adjusted gross margin	1,012	995	4,001	3,676

(1)

Other adjusting items to Adjusted gross margin for the three months ended December 31, 2023 include (i) impact of hyperinflation accounting of $5 million loss (2022 - $1 million gain); (ii) realized risk management gain related to underlying physical sales activity in another period of $2 million (2022 - $7 million loss); (iii) adjustment to foreign exchange gains and losses related to cash pooling arrangements of $1 million (2022 - $1 million); (iv) unrealized risk management gain related to underlying physical sales activity in current period of nil (2022 - $10 million); and (v) loss on inventory write-downs for which there are offsetting associated risk management derivatives with unrealized gains of nil (2022 - $2 million). Other adjusting items to Adjusted gross margin for the year ended December 31, 2023 include (i) realized risk management gain related to underlying physical sales activity in another period of $6 million (2022 - $4 million loss); (ii) impact of hyperinflation accounting of $5 million loss (2022 - $1 million gain); and (iii) adjustment to foreign exchange gains and losses related to cash pooling arrangements of nil (2022 - $2 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 17 of the Q4 2023 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 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 measures, and may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 17 of the Q4 2023 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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