PI Financial - Vancouver & Victoria
Non-Deal Road Show
June 1 - 2, 2016
FORWARD LOOKING STATEMENT DISCLAIMER
& NOTE ON NON GAAP MEASURES
Certain information included herein and during this presentation and associated
discussion are forward-looking. Many of these forward looking statements can be
identified by words such as “believe”, “expects”, “expected”, “will”, “intends”, “projects”,
“projected”, “anticipates”, “estimates”, “continues”, “objective” or similar words and
include, but are not limited to, statements regarding Parkland’s expectation of its future
financial position, business and growth strategies and objectives, sources of growth,
capital expenditures, financial results, future acquisitions and the efficiencies to be
derived therefrom, and the contribution to Adjusted EBITDA from the acquisitions
identified herein. 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. The forward-looking statements contained herein and during this presentation are
based upon certain assumptions and factors including, without limitation: historical
trends, current and future economic and financial conditions, and expected future
developments. Parkland believes such assumptions and factors are reasonably accurate
at the time of preparing this presentation. However, 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 forwardlooking statements. Such factors include, but are not limited to, risks associated with:
failure to obtain necessary regulatory or other third party consents and approvals; the
failure to achieve the anticipated benefits of acquisitions, including the Pioneer
Acquisition; failure to meet financial, operational and strategic objectives and plans;
general economic, market and business conditions; industry capacity; the operations of
Parkland’s assets; the operation of the Pioneer Commercial Assets by Pioneer
in accordance with the Commercial Assets Agreement; the impact of the consent
agreement negotiated with the Commissioner in respect of the applications under the
Competition Act; failure to achieve economic benefits from the indirect economic interest
in the Pioneer Commercial Assets and their operation and/or disposition; failure to
resolve the Commissioner’s concerns in respect of the Pioneer Acquisition or to achieve
a final outcome to the application under the Competition Act on terms and conditions
acceptable to Parkland; competitive action by other companies; refining and marketing
margins; the ability of suppliers to meet commitments; actions by governmental
authorities and other regulators including increases in taxes; changes and
developments in environmental and other regulations; and other factors, many of which
are beyond the control of Parkland.
Readers are directed to, and are encouraged to read, Parkland’s management
discussion and analysis for the three months ended March 31, 2016 (the “Q1 MD&A”),
including the disclosure contained under the heading “Risk Factors” therein. The Q1
MD&A is available by accessing Parkland’s profile on SEDAR at www.sedar.com and
such information is incorporated by reference herein. 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. The forward looking statements contained
in this presentation are expressly qualified by this cautionary statement. Additionally,
readers are directed to, and encouraged to read, the Adjusted EBITDA section of the
Parkland’s press release dated May 3rd, 2016 and the 2016 Adjusted EBITDA Guidance
Range section of the Parkland’s press release dated October 5th, 2015, March 2nd, 2016,
and May 3rd, 2016.
This presentation refers to certain financial measures that are not determined in
accordance with International Financial Reporting Standards (“IFRS”). Adjusted
EBITDA, Adjusted gross profit, Distributable cash flow, Distributable cash flow per
share, Dividend payout ratio, Adjusted Dividend Payout Ratio, and Net Debt/Credit
Facility EBITDA are not measures recognized under IFRS and do not have
standardized meanings prescribed by IFRS. Management considers these to be
important supplemental measures of Parkland’s performance and believes these
measures are frequently used by securities analysts, investors and other interested
parties in the evaluation of companies in its industries. See ‘‘Adjusted EBITDA” in
Parkland’s Q1 MD&A for a reconciliation of Adjusted EBITDA to net earnings, the
IFRS measure most directly comparable to Adjusted EBITDA. Distributable cash
flow is used to assess the level of cash flow generated from ongoing operations
and to evaluate the adequacy of internally generated cash flow to fund dividends.
See ‘‘Distributable Cash Flow” in Parkland’s Q4 MD&A for a reconciliation of
distributable cash flow to cash flow from operating activities, the IFRS measure most
directly comparable to distributable cash flow. See “Non-GAAP financial measures,
reconciliations and advisories” section of the Q1 MD&A. Investors are encouraged to
evaluate each adjustment and the reasons Parkland considers it appropriate for
supplemental analysis. Investors are cautioned, however, that these measures should
not be construed as an alternative to net income determined in accordance with IFRS
as an indication of Parkland’s performance. The financial measures that are not
determined in accordance with IFRS in this presentation are expressly qualified by this
cautionary statement.
PARKLAND CONSISTENTLY DELIVERS SHAREHOLDER VALUE
PROVEN
TRACK RECORD
3
SUBSTANTIAL
OPPORTUNITY TO
BUILD
SHAREHOLDER
VALUE
RESILIENT
CASH FLOW
UNIQUE
STRONG
SUPPLY CAPABILITY
FINANCIAL POSITION
See forward looking statements and information in Parkland’s most recent MD&A as well as risk factors in Parkland’s most recent Annual Information Form.
PARKLAND IS CANADA’S LARGEST INDEPENDENT FUEL
MARKETER
$2.2
billion market cap1
$2.6
Enterprise Value1
10.6BL
Annual Run Rate Volume2
$1.134
(~5%) Dividend Annually1
BB/BBCorporate Credit Rating3
4
1. As of market close on May 24, 2016.
2. 2015 Full Year Proforma Run Rate includes annualized volume attributed to Pioneer Energy.
3. Based on most recent DBRS and S&P rating. See Risk Factors – Credit Ratings of Parkland’s most recent Annual Information Form.
PARKLAND GOES TO MARKET THROUGH THREE CHANNELS:
COMMERCIAL, RETAIL AND WHOLESALE
BUY
MOVE
SELL
COMMERCIAL CHANNEL
INDUSTRIAL
HOME
HEAT
IMPORTERS
RETAIL CHANNEL
CORPORATE
STORAGE
DEALER
REFINERIES
SUPPLY AND WHOLESALE
CHANNEL
RESELLER
5
PRODUCERS
PARKLAND REPORTS ITS CORE BUSINESS PERFORMANCE
THROUGH FOUR BUSINESS UNITS
Vol. 3,215 ML1; Proforma 3,680ML2
Adj. EBITDA $115 MM 1; Proforma $124 MM 2
~1,100 stations
RETAIL
FUELS
Vol. 1,338 ML1
Adj. EBITDA $52MM1
110 branches & 72 cardlocks
COMMERCIAL
FUELS
Vol. 1,008 ML1
Adj. EBITDA $19MM1
Vol. 4,251 ML1
Adj. EBITDA $75MM1
SUPPLY &
WHOLESALE
6
PARKLAND
USA
1. Q1 2016 TTM volumes and TTM Adjusted EBITDA. Non-GAAP financial measure. See the Non-GAAP Financial Measures, Reconciliations, and Advisories Section
of Parkland’s most recent MD&A for reconciliation.
2. Actuals include one quarters of Pioneer results; proforma includes annualized run rate with FY Pioneer Energy Adjusted EBITDA (see most recent MD&A).
PARKLAND’S STRATEGY
GROW ORGANICALLY
SUPPLY ADVANTAGE
3 – 5% growth p.a.
Benefit outpaces volume
growth
ACQUIRE
PRUDENTLY
7
Achieve synergies
FUELING ORGANIC GROWTH POSITIONS PARKLAND TO EXCEED
INDUSTRY GROWTH
3–5%
PARKLAND ANNUAL GROWTH TARGET
8
Organic Growth
PARKLAND’S SUPPLY ADVANTAGE OUTPACES VOLUME GROWTH
Supply Advantage
DATA INDEXED
TO 2010
Supply Improvement1
Supply Volume1
Create
Advantaged
Supply
+51%
Exploit
Market
Inefficiencies
Storage
Rail
Partner of
Choice to
Refiners
Demand Balance Balanced
Planning Sheet
Barrel
Volume
Growth
2010
9
2011
2012
1. Supply Price Improvement is based on pricing discounts, internal transfer prices and certain other factors and assumptions for the periods in question. Data excludes
Elbow River Marketing, Ltd. as it is a trading business and therefore does not generally buy directly from refiners. It also excludes Parkland USA because it does not
generally participate in Parkland’s broader Canadian purchasing.
2013
2014
2015
A TRACK RECORD OF ACCRETIVE AND STRATEGICALLY
ATTRACTIVE ACQUISITIONS
+21%
130
OVERVIEW OF SIGNIFICANT ACQUISITIONS SINCE 2013 – C$ MM
Acquire Acquire
108
Mar 2016
Jun 2015
2016
Apr 2015
2015
Apr 2014
Jan 2014
2014
Apr 2013
Feb 2013
2013
20
Chevron (12)
Chevron (11)
3
12 Chevron sites
Sparlings
22
Elbow River
3
SPF Energy
Pioneer
Parkland USA
55
11 Chevron sites
10
Acquired
EBITDA1
Run Rate 2
1. Non-GAAP financial measure. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland’s most recent MD&A for reconciliation.
2. Run Rate: Management’s estimate of the annual Adjusted EBITDA these businesses will achieve on a go-forward basis assuming such acquisitions maintain historical
performance and Parkland is able to implement certain synergies and achieve expected organic growth within the acquired assets.
3. On the Run is expected to close in the third quarter of 2016. As it has not closed, it’s information has not been included in the acquired EBITDA and run rate information. As
Propane Nord-Ouest was closed on April 5, 2016, its information has not been included in the acquired EBITDA and run rate information.
EXECUTING THE GROWTH STRATEGY
PARKLAND ADJUSTED EBITDA1
C$ MM
Synergies
Potential
Acquisitions4
+15-17% p.a.
300
2653
303
250
199
207
200
215
183
151
150
103
235
100
50
0
20102
11
20112
20122
20132
2014
2015
2016E
1. Non-GAAP financial measure. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland’s most recent MD&A for reconciliation.
2. The Adjusted EBITDA shown includes contribution from the Refiner’s Margin contract. That contract concluded at the end of 2013.
3. See the 2016 Adjusted EBITDA Guidance Range section of the Parkland press release dated October 5th, 2015, March 2nd, 2016 and May 3rd, 2016.
4. Subject to certain risk factors. See Acquisition Strategy – Risk Factors – Credit Ratings of Parkland’s most recent Annual Information Form.
3-5% CAGR Organic
FUELING ORGANIC GROWTH POSITIONS PARKLAND TO EXCEED
INDUSTRY GROWTH
5 YEAR GOALS
Distributable CFPS1
Payout Ratio2
Total Leverage3
3.5x
>$ 2.00
Adjusted
$ 1.47
89%
Low 70%’s
~$ 1.55
50% range
2.0x
Adjusted
71%
$1.17
2015
Actual
12
With
Organic
Growth
With Acquisition
Growth4
2015
Actual
With
Organic
Growth
With Acquisition
Growth4
Range
1. Distributable cash flow per share outstanding is calculated as distributable cash flow divided by the number of shares outstanding as at December 31, 2015, and
adjusted distributable cash flow per share outstanding is calculated as adjusted distributable cash flow divided by the number of shares outstanding as at December 31,
2015. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland’s Q4 2015 MD&A for reconciliation.
2. Defined as annual dividend per share divided by Distributable Cash Flow per share. The adjusted dividend payout ratio is calculated as dividends divided by adjusted
distributable cash flow. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland’s Q4 2015 MD&A for reconciliation.
3. Based on Senior Debt and Senior Unsecured Debt divided by Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure. See the Non-GAAP Financial
Measures, Reconciliations, and Advisories section of Parkland’s Q4 2015 MD&A for reconciliation.
4. Potential acquisitions are subject to certain risk factors. See Acquisition Strategy – Risk Factors – Credit Ratings of Parkland’s most recent Annual Information Form.
COME GROW WITH US
PARKLAND TOTAL SHAREHOLDER RETURN1 %
PKI
TSX
$350
183%
$300
$250
$200
$150
19%
$100
$50
$0
-$50
Dec. 31, 2011
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
Dec. 31, 2015
PKI
20%
91%
97%
145%
174%
TSX
(9%)
(2%)
11%
23%
12%
13 1. Total Shareholder Return calculation assumes that dividends are reinvested. Cumulative calculation is from Jan. 1, 2011 to May 5, 2016 and is based on an initial
investment of one hundred dollars. Source: Capital IQ
WELL POSITIONED TO DELIVER SUSTAINED SHAREHOLDER VALUE
PROVEN
UNIQUE
RESILIENT
STRONG
TRACK RECORD
SUPPLY
CAPABILITY
CASH FLOW
FINANCIAL
POSITION
• Organic Growth
• Accretive
Acquisitions
• Demonstrated
Integration
Capabilities
14
• Low Cost of
Supply
• Diversified by
Product Line
• Strong Balance
Sheet
• Supply
Reliability
• Diversified by
Geography
• Significant
Capacity
• A Refiner
Partner of
Choice
• Effective
Commodity
Risk
Management
• Disciplined
Capital
Allocation
See forward looking statements and information in Parkland’s most recent MD&A as well as risk factors in Parkland’s most recent Annual Information Form.
=
SUBSTANTIAL
OPPORTUNITY
TO BUILD
SHAREHOLDER
VALUE
COME GROW WITH US
Investor Relations
Patricia van de Sande
Vice President Investor & Government Relations &
Compliance
[email protected]
403.567.2519
parkland.ca