Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Parkland Fuel Corporation Reports Second Quarter 2013 Results


Parkland Fuel Corporation Reports Second Quarter 2013 Results

- Positive Results from Elbow River and Other Initiatives Offset Weaker External Environment -

RED DEER, ALBERTA -- (Marketwired) -- 08/07/13 -- Parkland Fuel Corporation ("Parkland" or the "Corporation") (TSX:PKI), Canada's largest independent supplier and reseller of fuels and petroleum products, today announced the financial and operating results for the three and six months ended June 30, 2013.

Parkland delivered Adjusted EBITDA of $58.2 million in the second quarter of 2013, a 7% improvement over the same period in 2012, due to the positive results from Elbow River and Parkland's supply initiatives partially offset by lower contribution in the Commercial and Retail divisions with less business activity in the oil and gas sector and a return to seasonally historic retail margins.


 
2013 Q2 Operational Highlights:                                             
                                                                            
                                                                           -
                               For the three months      For the six months 
                                     ended June 30,          ended June 30, 
                                                  %                       % 
                               2013    2012  Change    2013    2012  Change 
----------------------------------------------------------------------------
                                                                            
(in millions of litres)                                                     
Total fuel volume             1,580   1,003      57   2,980   2,088      43 
Retail fuel volume              438     458      (4)    838     873      (4)
Commercial fuel volume(i)       312     315      (1)    745     777      (4)
                                                                            
(in millions of Canadian                                                    
 dollars)                                                                   
Net earnings                   20.3    25.9     (22)   50.8    43.5      17 
Adjusted EBITDA (1)            58.2    54.2       7   119.6    97.3      23 
Distributable cash flow (2)    42.3    38.6      10    87.5    64.6      35 
Dividend to distributable                                                   
 cash flow payoutratio           43%     44%             41%     52%        
----------------------------------------------------------------------------
(1) Please see Adjusted EBITDA in the Non-GAAP Measures section in the MD&A 
    and the reconciliation later in this press release.                     
(2) Please see Distributable Cash Flow reconciliation table and definition  
    in Non-GAAP Measures, both of which can be found in the MD&A.           

Grow


 
--  Volumes increased 58% or 577 million litres year over year primarily due
    to the acquisition of Elbow River Marketing, TransMontaigne, and
    Sparlings Propane; 
--  Branded retail marketer agreement signed with Chevron in British
    Columbia. This is expected to drive volume growth through Chevron's
    brand strength and access to a major refiner brand in regions of British
    Columbia previously lacking this offering; 
--  Ready to Roll in-fleet fueling program growth exceeds expectations.
    Offering being expanded to other regions and additional capacity being
    added in the Toronto marketplace; and 
--  Base volumes (volumes prior to acquisitions) decreased by 44 million
    litres or 4% year over year due to planned retail site closures, lower
    Commercial volumes, partially offset by increased wholesale. 

Supply


 
--  Supply initiatives continue to bolster Supply and Wholesale profits; and
--  Refiners' margins weaker in second quarter of 2013 compared to 2012. 

Operate


 
--  Excluding operating costs (Opex) and marketing, general and
    administrative (MGA) expenses of acquired companies and one time
    acquisition costs, Opex and MGA in Parkland's base business were flat
    compared with the same period last year and on plan. 

"Growing through acquisition while maintaining control on costs is essential to Parkland`s growth strategy, and in the second quarter we continued to demonstrate that we are following this discipline," said Bob Espey, President and Chief Executive Officer of Parkland. "In addition, the fact that our supply and wholesale division is up year-over-year, despite weaker refiners' margins, demonstrates the strong progress we've made on our supply initiatives."

"While we continue to experience some softness in our core commercial markets, new product offerings such as Ready to Roll, Parkland's in-fleet fueling offer, have gained more traction in the market than expected. In addition, our new agreement with Chevron is expected to support new dealer growth in British Columbia. We believe both of these areas could be a source of additional organic growth going forward." added Mr. Espey.


 
                                                                            
CONSOLIDATED HIGHLIGHTS                                                     
----------------------------------------------------------------------------
                     Three months ended June 30,  Six months ended June 30, 
----------------------------------------------------------------------------
(in millions of                                                             
 Canadian dollars,                                                          
 except volume and                                                          
 per Share amounts)      2013     2012  % Change     2013     2012 % Change 
----------------------------------------------------------------------------
                                                                            
Income Statement                                                            
 Summary:                                                                   
Sales and operating                                                         
 revenues             1,342.7  1,011.3        33  2,555.5  2,075.7       23 
Gross profit            128.2    109.6        17    255.8    220.6       16 
----------------------------------------------------------------------------
Operating costs          41.5     35.5       (17)    83.7     79.9       (5)
Marketing, general                                                          
 and administrative      27.0     19.7       (37)    52.0     39.4      (32)
Depreciation and                                                            
 amortization expense    15.1     13.0       (16)    28.3     26.5       (7)
----------------------------------------------------------------------------
                         44.5     41.4         7     91.8     74.8       23 
----------------------------------------------------------------------------
                                                                            
Customer finance                                                            
 income                  (0.7)    (1.1)      (36)    (1.2)    (1.7)     (29)
Finance costs             4.3      5.9        27      9.6     11.5       17 
Loss on disposal of                                                         
 property, plant and                                                        
 equipment                0.1      0.1         -      0.4      0.7       43 
Loss on risk                                                                
 management                                                                 
 activities              11.3      1.4      (707)    14.0      5.6     (150)
----------------------------------------------------------------------------
Earnings before                                                             
 income taxes            29.5     35.1       (16)    69.0     58.7       18 
Income tax expense        9.2      9.2         -     18.2     15.3      (19)
----------------------------------------------------------------------------
Net earnings             20.3     25.9       (22)    50.8     43.5       17 
                                                                            
Net earnings per                                                            
 share                                                                      
- Basic                  0.29     0.39       (26)    0.73     0.66       11 
- Diluted (1)            0.28     0.37       (24)    0.72     0.62       16 
                                                                            
Non-GAAP Financial                                                          
 Measures:                                                                  
Adjusted EBITDA                                                             
 (2)(3)                  58.2     54.2         7    119.6     97.3       23 
Distributable cash                                                          
 flow (2)(4)             42.3     38.6        10     87.5     64.6       35 
Distributable cash                                                          
 flow per share                                                             
 (2)(4)                  0.60     0.58         3     1.25     0.97       28 
Dividends                18.2     16.8         8     35.9     33.4        7 
Dividend to                                                                 
 distributable cash                                                         
 flow payout ratio                                                          
 (2)(4)                    43%      44%                41%      52%         
                                                                            
Key Metrics:                                                                
Fuel volume (millions                                                       
 of litres)           1,580.0  1,003.0        58  2,980.0  2,088.0       43 
Return on capital                                                           
 employed                                                                   
 (ROCE)(2)(5)            26.3%    20.1%                                     
Employees               1,313    1,177        12                            
                                                                            
Fuel Key Metrics -                                                          
 Cents per litre:                                                           
Average Retail fuel                                                         
 adjusted gross                                                             
 profit (6)              4.73     5.46       (13)    4.63     4.98       (7)
Average Commercial                                                          
 fuel adjusted gross                                                        
 profit (6)              9.33     8.19        14    10.70    10.00        7 
Operating costs          2.63     3.54        26     2.81     3.83       27 
Marketing, general                                                          
 and administrative      1.71     1.96        13     1.74     1.89        8 
Depreciation and                                                            
 amortization expense    0.96     1.30        26     0.95     1.27       25 
                                                                            
Liquidity and bank                                                          
 ratios:                                                                    
Net debt:adjusted                                                           
 EBITDA (2)(7)           1.13     1.34                                      
Senior debt:adjusted                                                        
 EBITDA (2)(7)           0.54     0.55                                      
Interest coverage                                                           
 (2)(6)                  9.26     5.91                                      
----------------------------------------------------------------------------
(1) Diluted earnings (loss) per share can be impacted by an anti-dilutive   
    impact of conversion of the debentures. Quarterly diluted earnings      
    (loss) per share may therefore not accumulate to the same per share     
    value as the year-to-date calculation.                                  
(2) Please refer to the Non-GAAP Measures section in the MD&A for           
    definitions.                                                            
(3) Please see Adjusted EBITDA discussion in the MD&A.                      
(4) Please see Distributable Cash Flow reconciliation table in the MD&A.    
(5) Please see ROCE discussion in the MD&A.                                 
(6) Please see Segmented Results discussion in the MD&A                     
(7) Please refer to the Non-GAAP Measures section in the MD&A for           
    reconciliations.                                                        

Parkland Penny Plan Update

The Parkland Penny Plan, announced on May 15, 2012, is targeting:


 
--  Growth to seven billion litres in fuel volumes by 2016 through organic
    growth and acquisitions; and 
--  1 cent per litre in additional EBITDA margin by 2016 through economies
    of scale, better supply options, and efficiencies. 

Penny Plan Scorecard Summary:


 
Area    Commitment      Analysis                2016       Q2 2013  2012    
                                                Target                      
----------------------------------------------------------------------------
Grow    Organic growth  Lower Consumption in    0.5        (56.7)   (29.7)  
                        Oil and Gas Sector      billion    YTD      YTD     
                        Base volumes, excluding litres     million  million 
                        Elbow River Marketing,             litres   litres  
                        continue to be down due                             
                        to softness across                                  
                        several commercial                                  
                        sectors partially                                   
                        offset by strong sales                              
                        efforts.                                            
        --------------------------------------------------------------------
        Major           $27 million in Adjusted 2.5        620      -       
        acquisitions    EBITDA Added            billion    million          
                        The acquisition of      litres     litres           
                        Elbow River Marketing,                              
                        Sparling's Propane, and 
                            
                        TransMontaigne will                                 
                        contribute towards the                              
                        $55 million in Adjusted                             
                        EBITDA Parkland is                                  
                        targeting by 2016. The                              
                        mergers and                                         
                        acquisitions                                        
                        environment remains                                 
                        very active. The year                               
                        to date results exclude                             
                        824 million litres of                               
                        fuel and propane volume                             
                        from Elbow River                                    
                        Marketing.                                          
----------------------------------------------------------------------------
Supply  Supply Margins  On Track                100%       On Track On Track
                        Parkland continues to   Normalized                  
                        extend its progress on  profit                      
                        replacing the average   plus 1/3                    
                        normalized profit+ of   cent                        
                        its refiners' margin                                
                        contract through the                                
                        negotiation of supply                               
                        contracts, supply                                   
                        management, terminals,                              
                        and the addition of                                 
                        Elbow River Marketing.                              
                        No problems are                                     
                        foreseen in replacing                               
                        the volume.                                         
----------------------------------------------------------------------------
Operate Operating costs Progress Continues      3.60 cpl   3.57 cpl 3.61 cpl
                        Elbow River Marketing's            TTM      TTM     
                        volumes and operating                               
                        costs have been                                     
                        excluded. Commercial                                
                        and Retail continued to                             
                        maintain low costs on a                             
                        cpl basis.                                          
        --------------------------------------------------------------------
        Marketing,      MGA Decreases on Base   1.59 cpl   1.83 cpl 1.87 cpl
        General and     Business                           TTM      TTM     
        Administration  Elbow River Marketing's                             
        costs           volumes and MG&A costs                              
                        have been excluded.                                 
                        Acquisition costs of                                
                        approximately $3.3                                  
                        million in the first                                
                        half of 2013 have also                              
                        been excluded to                                    
                        present a fair                                      
                        portrayal of the                                    
                        ongoing MGA costs in                                
                        Parkland's base                                     
                        business.                                           
        --------------------------------------------------------------------
        Total           Safety remains a focus  Less than  2.55 TTM 2.33 TTM
        Recordable      TTM Lost Time Injury    2                           
        Injury          Frequency increased to                              
        Frequency       0.96 in Q2 2013 from                                
                        0.55 in Q1. TTM Total                               
                        Recordable Injury                                   
                        Frequency was similar                               
                        in Q2 2013 compared to                              
                        2.53 in Q1 2013.                                    
----------------------------------------------------------------------------
(i) Normalized for Cango and one-time costs; +The average annualized benefit
under this contract excluding performance from outlier years                
Note: 2016 cost targets will be updated in the event of a significant change
to Parkland's business mix.                                                 
Abbreviations:          CPL = Cents per litre                               
                        YTD = Year-to-date                                  
                        TTM = Trailing twelve                               
                        months                                              
----------------------------------------------------------------------------

This five year strategic plan aims to double 2011 normalized EBITDA of $125 million by the end of 2016. (Normalized EBITDA ignores one-time costs and irregular profits). $70 million is expected to be derived through a one cent increase in EBITDA margin, $55 million is expected to be derived through acquisitions.

A more detailed explanation of the Parkland Penny Plan and the full scorecard can be found in this quarter's Management's Discussion and Analysis.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Due to the acquisition of Elbow River Marketing and ongoing mergers and acquisition activities Parkland will utilize "Adjusted EBITDA". Adjusted EBITDA represents earnings before finance costs (accretion on refinery remediation, accretion on asset retirement obligation, interest on long-term debt, interest and accretion on convertible debentures and loss on interest rate swaps), income tax expense (recovery), depreciation and amortization, unrealized loss (gain) on commodities forward contracts and US dollar forward exchange contracts, acquisition related costs and gain on disposal of property, plant and equipment. Adjusted EBITDA differs from the previously disclosed EBITDA due to the exclusion of acquisition related costs in the calculation. See the Adjusted EBITDA discussion of the MD&A for a reconciliation of Adjusted EBITDA.


 
                                      Three Months Ended    Six Months Ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
(in thousands of Canadian dollars)                                          
                                          2013      2012      2013      2012
----------------------------------------------------------------------------
                                                                            
Net earnings                            20,334    25,946    50,859    43,451
Finance costs (1)                        4,308     5,942     9,584    11,460
Loss/(gain) on disposal of property,                                        
 plant and equipment                       125       120       400       680
Income tax expen
se                       9,211     9,190    18,195    15,258
Unrealized (gain) loss from the                                             
 change in fair value of risk                                              -
 and US dollar forward exchange                                             
  contracts                              7,323         -     8,860         -
Acquisition related costs                1,795        24     3,320        24
Amortization and depreciation           15,123    12,971    28,334    26,452
----------------------------------------------------------------------------
Adjusted EBITDA (2)(3)                  58,219    54,193   119,552    97,325
----------------------------------------------------------------------------
(1) Includes realized and unrealized (gain) loss on the interest rate       
(2) Includes the realized and unrealized (gain) loss on put options         
(3) Please refer to the Non-GAAP Measures section in the MD&A for           
    definitions.                                                            

Increased Distributable Cash Flow Driven by Acquisitions

Q2 2013 vs. Q2 2012

Distributable cash flow exceeded dividends in the second quarter by $24.1 million compared with $21.7 million in the second quarter of 2012. The dividend payout ratio for the second quarter of 2013 was 43% compared with 44% in the second quarter of 2012. Distributable cash flow increased $3.7 million to $42.3 million in the second quarter of 2013 compared with $38.6 million in the second quarter of 2012. The increase in distributable cash flow and decrease in the dividend payout ratio is primarily due to the $4.0 million increase in Adjusted EBITDA.

YTD 2013 vs. 2012

Distributable cash flow for the six months ended June 30, 2013 exceeded dividends by $51.6 million compared with $31.2 million for the six months ended June 30, 2012. The dividend payout ratio for the six months ended June 30, 2013 was 41% compared with 52% for the six months ended June 30, 2012. The increase in distributable cash flow and decrease in the dividend payout ratio are primarily due to a $22.2 million year over year increase in Adjusted EBITDA, a $1.7 million increase in share incentive compensation and a $2.6 million decrease in maintenance capital, partially offset by $3.5 million decrease in proceeds on disposals.

Commercial Team Partially Offsets Headwinds in Oil and Gas through New Offerings

Q2 2013 vs. Q2 2012

For the three months ended June 30, 2013, Parkland Commercial Fuels' volumes decreased to 312 million litres compared with 315 million litres in 2012 principally as a result of lower year over year industrial activity in key sectors including oil and gas and the discontinuation of low margin marketer agreements in Northern Alberta.

Strong sales activities with a focus on diversifying Parkland's customer mix helped to offset the impact of the foregoing challenges in the quarter.

For the three months ended June 30, 2013, the Canadian Association of Oilwell Drilling Contractors (CAODC) reported an average monthly drilling rig count of 151 per month, a 15 percent decrease compared with 178 per month for the same period in 2012. This drop continues to be attributed to the impact of decreased commodity pricing in the Western Canadian Sedimentary Basin.

Fuel volumes from Parkland Commercial Fuels for the three months ended June 30, 2013 accounted for 20% of the Corporation's total volumes compared with 31% for the same period in 2012. Commercial fuel revenue decreased by 4% to $279.8 million in the second quarter of 2013 compared with $290.8 million in 2012.

Average net fuel adjusted gross profit on a cents per litre basis for the second quarter of 2013 was 9.33 cpl, an increase of 14% or 1.14 cpl compared with 8.19 cpl in the second quarter of 2012 due to the discontinuation of low margin marketer agreements in Northern Alberta.

YTD 2013 vs. 2012

For the six months ended June 30, 2013, Parkland Commercial Fuels' volumes decreased 4% to 745 million litres compared with 777 million litres for the same period in 2012 due to the pullback in key industries as outlined in the second quarter review.

Average net fuel adjusted gross profit on a cents per litre basis for the six months ended June 30, 2013 was 10.70 cpl, an increase of 7% or 0.70 cpl compared with 10.00 cpl in 2012. The year to year increase is due to the same reasons described for the quarter.

Divisional Outlook

Given lower activity within the oil and gas sector, Parkland has made appropriate adjustments to its variable cost structure to reflect current economic conditions.

Parkland's commercial operations team continue to simplify and standardize the business, which is expected to drive savings, better customer service and better performance going forward. These changes include the consolidation of branches, changes in branded distribution agreements, the roll out of Parkland's multi-product commercial offering at additional branches and the simplification and standardization of procedures and process.

The launch of Ready to Roll, Parkland's in-fleet fueling offering, has been very successful in the Southern Ontario test market. Ready to Roll delivers fuel to commercial vehicles during off peak hours, allowing customers to save time by fueling up outside of operating hours and to better manage their fuel consumption on a vehicle-by-vehicle basis through the Ready to Roll online portal. It also allows Parkland to increase the utilization of the existing delivery truck fleet. Demand in the test market has quickly outstripped capacity and Parkland is adding the drivers and technology necessary to meet the needs of new customers. Given the market opportunity, Parkland is actively looking at other urban markets across Canada in which to launch the Ready to Roll offering.

Parkland's Commercial Fuel division is Shell's largest branded distributor of fuels and lubricants to Canada's commercial segment. The relationship with Shell provides access to innovative products like Shell Diesel Extra, which can provide customers with an increase in fuel economy of between 3 - 8%, while also reducing engine wear and thereby extending engine life. Shell Diesel Extra will be added to Parkland's product portfolio in Western Canada in the coming months and is expected to be a source of product differentiation compared to competitive fuel products.

Retail Margins Return to Normal

Q2 2013 vs. Q2 2012

For the three months ended June 30, 2013, Parkland Retail Fuels' volumes decreased 4% to 438 million litres compared with 458 million litres for the same period in 2012. The decrease was primarily the result of a 9 million litre reduction in volume contribution from the Cango network due to site rationalization, combined with temporary closures for the purpose of upgrades, competitive pressures in certain markets, partially offset by network growth in Parkland's company owned and dealer network.

Fuel volumes from Parkland Retail Fuels for the three months ended June 30, 2013 accounted for 28% of the Corporation's total volume compared with 46% for the same period of 2012. Retail fuel revenue decreased 3% to $422.2 million in the second quarter of 2013 compared with $435.2 million in the second quarter of 2012.

The second quarter of 2013 financial results for Parkland Retail Fuels continued to benefit from lower costs that helped offset the contraction in volumes described above. Disciplined management of repair, maintenance, travel, advertising and other costs, reductions in staffing and a refined approach to commission and dealer agreements continued to drive significant savings in operating and marketing, general and administrative costs in the quarter.

Average adjusted gross profit on a cents per litre basis decreased by 13% to 4.73 cpl in the second quarter of 2013 compared with 5.46 cpl in the second quarter of 2012. As can be seen in the sequential graph, margins in the second quarter of 2012 were unusually strong, th e drop in margin reflects the market returning to normal conditions.

YTD 2013 vs. 2012

For the six months ended June 30, 2013, Parkland Retail Fuels' volumes decreased 4% to 838 million litres compared with 873 million litres in 2012. The decrease is mainly due to an 18 million litre reduction in volumes from the Cango network due to site rationalization.

Retail Fuels' adjusted gross profit decreased by 7% to 4.63 cpl for the six months ended June 30, 2013 compared with 4.98 cpl in 2012 which reflects the unusually high retailer operated margins experienced in the first two quarters of 2012.

Divisional Outlook

Rising crude prices impact margins by increasing the wholesale prices of petroleum products, which in turn creates increased pressure on the wholesale to retail marketing margin as increases in the "street" pr ice for fuel products often lag increases in the wholesale price of petroleum products. Crude prices rose significantly in July, which could potentially put downward pressure on margins.

Parkland recently signed an agreement with Chevron to be a branded distributor of the Chevron retail service station brand in the British Columbia marketplace. Given the strength of the Chevron brand, and that the agreement provides Parkland with access to a major refining brand in certain British Columbia markets that it had previously lacked, Parkland expects that this will drive significant growth through new dealer signings.

Refiners' Margins Weaker in the Second Quarter of 2013

Parkland Wholesale, Supply and Distribution is responsible for managing Parkland's fuel supply and inventory, which includes the purchase of fuel from refiners, distributing fuel via third party long-haul carriers and railcars, and serving wholesale and reseller customers.

Q2 2013 vs. Q2 2012

For the three months ended June 30, 2013 Parkland Wholesale, Supply and Distribution fuel volumes (after eliminating intersegment sales) increased 261% to 830 million litres compared with 230 million litres for the same period in 2012 primarily due to 497 million litres added from the acquisition of Elbow River Marketing, 99 million litres from the acquisition of TransMontaigne and increased sales.

Fuel adjusted gross profits for the three months ended June 30, 2013 increased 42% to $52.5 million compared with $36.9 million for the same period in 2012 primarily due to $14.7 million in adjusted gross profits from the acquisition of Elbow River Marketing, profits from Parkland's ongoing supply initiatives, partially offset by marginally lower refiners' margins.

In the second quarter of 2013, Parkland recorded a $0.4 million gain related to put option contracts in place to hedge and secure a portion of the future economic benefit that Parkland receives on its refiners' margins based contract. Refiners' margins refer to the profit made between the cost of the crude oil required to produce fuel and the wholesale price received by refiners for the fuel they sell.

The Wholesale Division continues the process of optimizing the entire wholesale portfolio to achieve an optimal mix between volume, margin and capital employed. By managing trade terms on accounts Parkland targets improved return on capital employed.

YTD 2013 vs. 2012

For the six months ended June 30, 2013 Parkland Wholesale, Supply and Distribution fuel volumes (after eliminating intersegment sales) increased 219% to 1.4 billion litres compared with 438 million litres in 2012 primarily due to 824 million litres from Elbow River Marketing and 99 million litres from the acquisition of TransMontaigne and volume growth due to the division's sales activities.

Fuel adjusted gross profits from Parkland Wholesale, Supply and Distribution for the six month period ended 2013 increased 56% to $90.3 million compared with $57.8 million in 2012 primarily due $24.7 million from Elbow River Marketing.

Divisional Outlook

Planned shut downs are coming this year to a number of refinery operators in Canada. While it is expected that these refiners have the ability to cover product demand during their shut down, Parkland has contingencies in place to provide supply options during these periods. In addition, Parkland is working closely with refinery operators to ensure that they have access to additional terminal and distribution options such as the Bowden terminal. Fuel supplies are therefore expected to be sufficient in all Canadian markets for 2013.

For the first half of 2013, weak Canadian crude prices relative to Brent crude prices drove record high refiners' margins. Refiners' margins contracted significantly in July and remain closer to historic norms at present. In the second quarter of 2013, refiners' margins for gasoline were lower than the levels seen during the same period in 2012.

Simplification and Standardization Continue to Improve Costs

Q2 2013 vs. Q2 2012

Operating and direct costs increased by 17% to $41.5 million (2.6 cpl) for the three months ended June 30, 2013, compared with $35.5 million (3.5 cpl) in the three months ended June 30, 2012, primarily due to the acquisition of Elbow River Marketing, TransMontaigne and Sparling's Propane, partially offset by business simplification and standardization in Parkland's Retail Fuels Division, reduced volumes and cost reduction initiatives within the Commercial Fuels Division.

However, costs continue to be on target on a cents per litre basis, even when normalized to look at the base business without Elbow River's large volumes.

YTD 2013 vs.2012

Operating and direct costs increased by 5% to $83.7 million (2.8 cpl) in the six months ended June 30, 2013, compared with $79.9 million (3.8 cpl) in 2012 due to the same reasons as describe in the quarter.

Marketing, General and Administrative Costs per Litre Hold the Line Despite Acquisitions

Q2 2013 vs. Q2 2012

Marketing, general and administrative expenses ("MGA") increased 37% to $27.0 million (1.7 cpl) in the second quarter of 2013 compared with $19.7 million (2.0 cpl) in the second quarter of 2012. Marketing, general and administrative costs in the second quarter of 2013 increased $4.9 million as a result of the acquisition of Elbow River Marketing, $0.6 million from the acquisition of Sparling's Propane and $1.8 million of acquisition related costs.

MGA costs are also on target on a cents per litre basis, even when normalized to look at the base business without Elbow River's large volumes.

YTD 2013 vs. 2012

Marketing, general and administrative expenses increased 32% to $52.0 million (1.4 cpl) in the six months ended June 30, 2013, compared with $39.4 million (2.0 cpl) for the six months ended June 30, 2012. Marketing, general and administrative costs in the first six months of 2013 increased $8.5 million as a result of the acquisition of Elbow River Marketing, $0.6 million from the acquisition of Sparling's Propane and $3.3 million of acquisition related costs.

EBITDA Rises by 7 Percent on Acquisitions

Q2 2013 vs. Q2 2012

Adjusted EBITDA for the second quarter of 2013 increased by 7% to $58.2 million compared with $54.2 million in the second quarter of 2012. The increase in Adjusted EBITDA is the result of the acquisition of Elbow River Marketing with Adjusted EBITDA of $7.6 million, partially offset by lower adjusted EBITDA in Commercial and Retail.

YTD 2013 vs. 2012

Adjusted EBITDA for the six months ended June 30, 2013 was $119.6 million, an increase of 23% compared with $97.3 million for the six months ended June 30, 2012, mainly due to the acquisition of Elbow River Marketing with Adjusted EBITDA of $12.9 million and higher refiners' margins, partially offset by lower adjusted EBITDA in Commercial.

Net Earnings Decrease Due to Unrealized Losses on Risk Management Tools

Q2 2013 vs. Q2 2012

Parkland's net earnings in the second quarter of 2013 were $20.3 million, a decrease of $5.6 million compared with net earnings of $25.9 million in the second quarter of 2012. The decrease in net earnings in the second quart er of 2013 compared with the prior year was due to an increase of $7.3 million in unrealized loss from the change in fair value of commodity forward contracts and US dollar forward exchange contracts, a $2.1 million increase in depreciation and amortization expense and a $1.8 million increase in acquisition related costs, partially offset by a $4.0 million increase in Adjusted EBITDA and a $1.6 million decrease in finance costs.

YTD 2013 vs. 2012

Net earnings for the six months ended June 30, 2013 were $50.9 million, an increase of $7.4 million compared with $43.5 million in 2012. The increase in net earnings was primarily due to $22.2 million in increased Adjusted EBITDA and $1.9 million in decreased finance costs, partially offset by $1.9 million in higher depreciation and amortization, a $2.9 million increase in income taxes, a $3.3 million increase in acquisition related costs and an increase of $8.9 million in unrealized loss from the change in fair value of commodity forward contracts and US dollar forward exchange contracts.

MD&A and Financial Statements

Management's Discussion and Analysis, the audited Consolidated Financial Statements, and the Notes to the Consolidated Financial Statements for the three and six months ended June 30, 2013 are available online at www.parkland.ca.

Conference Call Information

Parkland Fuel Corporation will host a webcast and conference call at 3:00 p.m. MT (5:00 p.m. ET) on Thursday, August 8th, 2013 to discuss the results for the three and six months ended June 30, 2013.

President and CEO Bob Espey and Senior Vice President and CFO Mike Lambert will discuss Parkland's financial results for the quarter and then take questions from securities analysts, brokers and investors.

Please log into the webcast slide presentation 10 minutes before the start time at:

http://www.snwebcastcenter.com/webcast/parkland/2013/q2/index.php

To access the conference call by telephone from within Canada dial toll free 1-888-241-0394. International callers or callers from the Toronto area should use (647) 427-3413. Please connect approximately 10 minutes prior to the beginning of the call and quote the conference ID: 2385 0408.

The webcast will be available for replay within 24 hours of the end of the conference call.

Forward Looking Information

Certain information included herein is forward-looking. Forward-looking statements include, without limitation, statements regarding Parkland's future financial position, business and growth strategies, including the manner in which such strategies will be implemented, budgets, projected costs, sources of growth, capital expenditures, financial results, taxes, future acquisitions and the efficiencies to be derived therefrom, effectiveness of internal controls, sources of funding for growth capital expenditures, anticipated dividends and the amount thereof, if any, to be declared by Parkland Fuel Corporation, and plans and objectives of or involving Parkland. Many of these statements can be identified by looking for words such as "believe", "expects", "expected", "will", "i ntends", "projects", "projected", "anticipates", "estimates", "continues", or similar words and include, but ar e not limited to, statements regarding the accretive effects of acquisitions and the anticipated benefits of acquisitions. Parkland believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties some of which are described in Parkland's annual information form and other continuous disclosure documents. Such forward-looking statements necessarily involve known and unknown risks and uncertainties and other factors, which may cause Parkland's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general economic, market and business conditions; industry capacity; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities including increases in taxes; changes in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. Any forward-looking statements are made as of the date hereof and Parkland does not undertake any obligation, except as required under applicable law, to publicly update or revise such statements to reflect new information, subsequent or otherwise.

About Parkland Fuel Corporation

Parkland Fuel Corporation is Canada's largest independent supplier and reseller of petroleum products, managing a nationwide network of sales channels. We are Canada's local fuel company, delivering gasoline, diesel, propane, lubricants, heating oil and other products to businesses, consumers and wholesale customers through community based operators who care. Contacts: Parkland Fuel Corporation Tom McMillan Director of Corporate Communications 1-800- 662-7177 ext. 2533 http://bit.ly/PKIContact

Parkland Fuel Corporation http://bit.ly/PKI-Info www.parkland.ca

Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement