Parkland Fuel Corporation Enters the United States With Acquisition of 1.1
Billion Litre (300 Million Gallon) Fuel Distribution Business,
and Provides Updated 2014 Guidance
SPF Energy Inc.'s Operations are Contiguous with Parkland's Western
Canadian Presence, Shares the Same Supply Orbit and Business Mix as
Parkland's Core Operations
RED DEER, ALBERTA -- (Marketwired) -- 11/08/13 -- Parkland Fuel
Corporation ("Parkland" or the "Corporation") (TSX:PKI), Canada's
largest independent supplier and reseller of fuels and petroleum
products, today announced that it has entered into a definitive
agreement to acquire all outstanding shares of North Dakota's SPF
Energy Inc. ("the Acquisition" or "SPF"), the parent company of
Farstad Oil Inc. and Superpumper Inc.
All financial figures have been converted to Canadian dollars.
Subject to satisfaction of closing conditions, the outstanding shares
of SPF will be purchased for approximately $110 million consisting of
approximately $89 million cash and approximately $21 million in
common shares of Parkland. Parkland intends to leverage its strong
balance sheet position to fund the majority of the transaction.
SPF's Adjusted EBITDA for the four quarters ending June 30, 2013 was
approximately $20 million.
"Our strategy is to grow in areas with strong future prospects where
we can immediately add value through our strong supply capability.
Extending our operations into the Northwest United States, an area
experiencing strong economic growth, fits both these parameters,"
said Bob Espey, President and Chief Executive Officer of Parkland.
"Parkland's acquisition plan has progressed faster than originally
anticipated due to a strong acquisition pipeline that continues to
present us with a number of very attractive opportunities. Investors
should expect us to continue to acquire companies and adhere to our
disciplined approach while we continue our pursuit of accretive
Inclusive of the Acquisition, in the first year and a half of its
five year strategic plan, Parkland will have successfully added
approximately 1.7 billion litres in fuel volumes and $47 million in
annualized Adjusted EBITDA through acquisitions. Parkland's
acquisitions over the past year have been completed at an average
multiple of less than five times
Adjusted EBITDA. Parkland has also
identified approximately $8 million in synergies across its
acquisitions this year and identified savings of $11 million with its
Give me five! initiative for a total of $66 million in annualized
progress towards Parkland's goal of adding an additional $125 million
in Adjusted EBITDA by 2016.
-- Assets are located in markets experiencing the strongest GDP growth in
-- Scalable growth platform in the Northwest United States; and
-- Accretive to Parkland shareholders at an estimated $0.13/share in net
earnings and $0.12/share in distributable cash flow on an annualized
-- Export opportunity for excess refined product in Western Canada; and
-- Enhanced supply capability leveraging Elbow River Marketing's rail
-- Similar business mix to Parkland; and
-- High quality personnel with strong customer relationships.
SPF supplies and distributes 1.1 billion litres (300 million gallons)
of refined petroleum products throughout North Dakota, Montana,
Minnesota, South Dakota and Wyoming. Their primary products include
gasoline, distillates and lubricating oils. The company services more
than 200 independent gasoline stations, 60 of which carry a major's
brand. SPF also has rail trans-loading facilities and 40,000 barrels
of bulk storage in Minot, North Dakota.
SPF has established a proud legacy of service since 1938, growing
from a family-operated bulk fuels business into the largest
distributor in North Dakota. Parkland is committed to ensuring that
SPF continues to be locally operated by the same great leaders and
employees that customers have come to know and trust over the years.
"As I retire, it is comforting to know that our employees are joining
a family that cares about customer service, cares about their
employees, and has the integrity to always do the right thing," said
Jeff Farstad, Chief Executive Officer of SPF. "Having met Parkland's
management team, I am confident that our employees will have great
opportunities to grow with Parkland, and that they will be treated
The acquisition is subject to the receipt of all necessary third
party and regulatory consents and approvals, including the approval
of Toronto Stock Exchange, which are expected in the coming weeks
with closing expected to be effective January 1, 2014.
2014-2016 Adjusted EBITDA Guidance Update:
The Parkland Penny Plan is part of a five year strategic plan that
aims to double 2011 normalized Adjusted EBITDA of $125 million by the
end of 2016 (normalized Adjusted EBITDA excludes one-time costs and
irregular profits). The plan is expected to derive $70 million
through a one cent per litre increase in profitability, plus $55
million through new acquisitions.
As a result of the acquisition of SPF, part of which was risk
weighted in the original forecast, Parkland is increasing its 2014
expected case by $10 million per year to $200 million, and raised
both the low and high case to $185 million and $209 million
respectively. Similar adjustments have also been made to the
long-term forecast for 2015 and 2016 respectively.
The assumptions that support these forecasts have not changed from
what was outlined in previous guidance. Parkland today also
announced, in a separate news release, its financial results for the
third quarter of 2013.
Conference Call Information
Parkland Fuel Corporation will host a webcast and conference call at
7:00 a.m. MT (9:00 a.m. ET) on November 8th, 2013 to discuss the
acquisition of SPF and Parkland's third quarter 2013 results.
President and CEO Bob Espey, Senior Vice President and CFO Mike
Lambert, and Vice President of Strategy and Corporate Development
Irfhan Rawji will be available to take questions from securities
analysts, brokers and investors following their formal comments.
Please log into the webcast slide presentation 10 minutes before the
start time at:
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: 7439 0265.
The webcast will be available for replay within 24 hours of the end
of the conference call.
Certain information included herein is forward-looking.
Forward-looking statements include, without limitation, statements
regarding the value of the common shares to be issued and cash to be
paid in consideration for the Acquisition, the successful completion
of the Acquisition and the timing thereof, the anticipated benefits,
including, without limitation, the opportunities, capabilities and
synergies, that may result as a consequence of the Acquisition, the
sources of funding for the Acquisition, the accretive impact of the
Acquisition, the operations of SPF and Parkland following the
completion of the Acquisition, the satisfaction of all conditions to
the completion of the Acquisition, including, without limitation,
l necessary third party and regulatory consents and
approvals, Parkland's expectation of its 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, future acquisitions
and the efficiencies to be derived therefrom 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", "intends", "projects", "projected", "anticipates",
"estimates", "continues", or similar words and include, but are 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: failure to
complete the Acquisition, failure to obtain the necessary regulatory
or other third party approvals, failure to achieve the anticipated
benefits of the Acquisition, failure to meet financial, operational
and strategic objectives and plans, 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 an independent supplier and reseller of
petroleum products, empowered by a continent-wide logistics, supply
and trading platform. We provide motorists, businesses, consumers and
wholesale customers with a safe and dependable source of gasoline,
diesel, propane, lubricants, heating oil and other products through a
network of locations across North America that are run by community
based operators who care.
To sign up for Parkland's investor information services, please go to
http://bit.ly/PKI-Info or visit www.parkland.ca.
Parkland Fuel Corporation
Manager Investor Relations
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