INVESTOR AND ANALYST DAY APRIL 2013 Bob Espey, President & CEO and Mike Lambert, Sr. VP and CFO

Transcription

1 INVESTOR AND ANALYST DAY APRIL 2013 Bob Espey, President & CEO and Mike Lambert, Sr. VP and CFO Investor Relations ext. 6722

2 Forward Looking Statements Certain information included herein is forward-looking. Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving Parkland Fuel Corporation ( Parkland or the Corporation ). Many of these statements can be identified by looking for words such as believe, expects, expected, will, intends, projects, anticipates, estimates, continues, or similar words. 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. Forwardlooking statements are not guarantees of future performance and involve a number of risks and uncertainties some of which are described in the Corporation s interim reports, 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 the Corporation 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. 2

3 Canada s largest independent fuel distributor and marketer Offering investors yield and growth A defensive investment with a sustainable dividend 3

4 Parkland s Fuel Marketing Value Chain Refiners Margins Terminals and Storage Transportation Wholesale Margins Commercial Margins Retail Margins Marketing Channel Fuel Volume (TTM) Commercial Fuels 1.5 billion litres Retail Fuels 1.8 billion litres Wholesale, Supply and Distribution 0.9 billion litres Multiple Supply Contracts 40 Bulk plants & Bowden terminal 1,240* Railcars and third party trucking 100 Wholesale customers 119 Commercial Locations 718 Retail Stations Total Sales: 4.2 billion litres PARKLAND CUSTOMERS THIRD PARTIES * includes 1200 cars from ERM includes 6 Lube Distribution Centres 4

5 Investor Event Overview» Review Parkland Penny Plan» Penny Plan Update: 1. Grow 2. Supply 3. Operate New Acquisitions Review of organic growth Innovation Progress on the three levers Acquired capabilities Strategic infrastructure Business simplification Safety Give me five!» forecast 5

6 Parkland Penny Plan 6

7 5 Year Growth Strategy 1.Grow ⅓ of 1 cent through economies of scale 2.Supply ⅓ of 1 cent through supply advantage 3.Operate ⅓ of 1 cent through efficient operations The Penny Plan was introduced in May 2012 at Parkland s Analyst Day 7

8 Target: Double EBITDA $300 EBITDA millions of dollars $200 $151M 2011 Actual $100 $ Actual 2011 Normalized 2016» From a normalized EBITDA base of $125 million» EBITDA normalized for 2014 conditions by removing the impacts of one-time costs, and removing contribution of unusual refiners margins 8

9 Target: Double EBITDA $300 EBITDA millions of dollars $200 $151M $125M 2011 Normalized $ Actual $ Actual 2011 Normalized 2016» From a normalized EBITDA base of $125 million» EBITDA normalized for 2014 conditions by removing the impacts of one-time costs, and removing contribution of unusual refiners margins 9

10 Target: Double EBITDA $300 EBITDA millions of dollars $250M $200 $55 Acquisitions $100 $151M $125M $70 Penny Plan 2011 Normalized 2011 Actual $ Actual 2011 Normalized 2016» From a normalized EBITDA base of $125 million» EBITDA normalized for 2014 conditions by removing the impacts of one-time costs, and removing contribution of unusual refiners margins 10

11 Operate Supply Grow Parkland Penny Plan Scorecard Commitment Acquisitions 2016 Target Since Launch 2011 Score 2,500 ML 620 ML 425 ML $55 M $27 M $4 M Organic 500 ML (29.7 ML) 224 ML x Supply Margins 100% of Normalized profit plus 1/3 cent On track - Strategic Product Storage 140 ML 5 ML Operating Costs 3.60 cpl 3.61 cpl 3.93 cpl* Administration Costs 1.59 cpl 1.87 cpl 1.92 cpl* x Total Recordable Injury Frequency < * Normalized for Cango and one-time costs 11

12 Parkland Penny Plan Grow 12

13 Acquire 2.5 Billion Litres by 2016 Organic Acquisitions Independents Major Oil Assets Volume Volume EBITDA Target 100 ML / year Target 500 ML / year $11 M / year Progress (30 ML) Progress 620 ML $27 M More than 7 billion litres in play over the next five years 13

14 Acquisitions Acquisition: Date EBITDA ($ millions) Contribution Area Elbow River Marketing Feb Supply Sparling s Propane Apr Grow TransMontaigne May 2* 1.5 Grow/ Supply Total 27 * Expected close 14

15 Sparling s Propane 7 % Annual growth rate of propane consumption in Ontario 15

16 Sparling s Propane 120 Million Litres Opportunity to scale propane business across a national growth platform Employees: 131 Commercial Locations: Million Litres EBITDA: $5.5 million Employees: 1,177 Commercial Locations:

17 Heating Fuel Opportunities A tale of two regions Maritimes Product CAGR Propane (1%) Heating Oil 2% Ontario Product CAGR Propane 7% Heating Oil (7%) 3,000 2,500 2,000 1,500 1, ,000 2,500 2,000 1,500 1, Propane - Maritimes Heating Oil - Maritimes Propane - Ontario Heating Oil - Ontario Source: Statistics Canada - CANSIM table and CANSIM table

18 Financial Capacity For Growth Net Debt : EBITDA (Refer to Non-GAAP Measures in MD&A) Debt* : Equity (* Includes convertible debentures) Pay-out Ratio (Refer to Non-GAAP Measures in MD&A) % % Parkland will not overpay for assets 18

19 Fas Gas Plus Store Refresh Program Before: After: Refresh program drives growth in same store sales 19

20 Liquid Natural Gas ( LNG ) Opportunity (Threat) Response» Possible substitute for diesel in commercial applications» LNG offers both economic and environmental benefits» Agreement with Shell to distribute LNG for stationary applications to commercial and industrial customers in Alberta & Northeast British Columbia beginning in

21 In-Fleet Refueling» Direct delivery to equipment» Technology to allow:» Online access to fuel reports» Billing information to individual pieces of equipment 21

22 Parkland Penny Plan Supply 22

23 Suncor Contract» Source of refiners margins» History of volatility» Expires December 31, Gasoline Margins cents per litre J F M A M J J A S O N D yr max 5 yr min Diesel Margins cents per litre J F M A M J J A S O N D yr max 5 yr min Volume exists in Western Canada to replace the contract 23

24 Improving Supply Costs Driving Sustainable Profits for Supply Cost Improvements for 2014* millions of dollars Reference Year E 2014E *Improvements in supply costs impact EBITDA in multiple business units 24

25 Elbow River Marketing 30 Years Commodity by rail experience Rail and logistics capability 25

26 Elbow River Marketing Elbow River s skills and assets compliment Parkland s capabilities TTM Q EBITDA $20 M Employees: 34 Railcars 1,200 Terminal Storage (ML) EBITDA $199 M Employees: 1,179 Railcars 40 Terminal Storage (ML) 35» 1,200 rail car fleet and logistics expertise» Leveraging storage positions» Ethanol, Biofuel & propane» Canada - US export capacity Propane / Butane Storage 26

27 Elbow River Business Model Diversification» Portfolio of commodities» Counterparty mix» Rail fleet flexibility» Rail car lease ladder Product Mix by Percent of Sales 4% Crude Oil 32% 7% 6% Butane 30% Natural Gasoline 16% 5% Butane Natural Gasoline Refined Products Propane Fuel Oil Asphalt Crude Oil Marketing and logistics model is risk managed:» Conservative risk management practices» Conservative approach to fleet expansion Buy Secure supply from producer Marketing Model Risk Mitigation Margin risk managed Sell Secure sale contract with customer 27

28 TransMontaigne Wholesale Volumes Added in Quebec and Ontario Wholesale Volumes: >500 ML EBITDA: Access to storage in Quebec City & Montreal $1.5 MM 28

29 TransMontaigne Wholesale Volumes Added in Quebec and Ontario >500 Million Litres New supply agreement provides growth platform for Quebec 930 Million Litres Access to Eastern Canada terminal assets Expected to close May 2,

30 Strategic Supply Infrastructure Time line: Q Q Q2 Description Parkland s initial supply infrastructure including:» Bulk plants in Whitehorse, Fort Nelson, and Grande Prairie» Limited rail infrastructure Transportation & Storage Infrastructure Fuel Products Storage Propane / Butane Storage Storage Capacity (millions of litres) 140 ML 30

31 Strategic Supply Infrastructure Time line: Q Q Q2 Description Bowden becomes operational:» First major terminal» 30 ML of static storage capacity» 300 ML annual throughput capacity Transportation & Storage Infrastructure Fuel Products Storage Propane / Butane Storage Storage Capacity (millions of litres) 140 ML 31

32 Strategic Supply Infrastructure Time line: Q Q Q2 Description Elbow River Acquisition:» Rail & Logistics for North America» 60 ML of storage capacity Transportation & Storage Infrastructure Fuel Products Storage Propane / Butane Storage Storage Capacity (millions of litres) 140 ML 32

33 Strategic Supply Infrastructure Time line: Q Q Q2 Description Acquisition of TransMontaigne:» Storage capacity in Montreal and Quebec City Transportation & Storage Infrastructure Fuel Products Storage Propane / Butane Storage Storage Capacity (millions of litres) 140 ML 33

34 Supply/Demand Views Drive Supply Strategy Western Canada Gasoline becoming long as FCL production comes fully on-line Domestic Demand Outlook Domestic Supply Ontario and Quebec Gasoline short ~ 60 KB/D in the foreseeable future Domestic Demand Outlook Domestic Supply Actual Forecast Actual Forecast Diesel balanced to slightly long through 2015 Diesel essentially balanced Domestic Demand Outlook Domestic Supply Domestic Demand Outlook Domestic Supply Actual Forecast Actual Forecast Source: Statistics Canada , (2012 prorated as of October), kbpd 34

35 Parkland Penny Plan Operate 35

36 Simplifying the Business Commercial» 13 branches consolidated» Non-core assets divested» Extension of ERP» Full truck technology launch» Drives efficiency & service Retail» E-loyalty launched» 85,000 swipes in first week» Retailer model continues to show benefit 36

37 Focus on Safety Total Recordable Injury Frequency: (per 100 full time equivalent employees per year) Lost Time Injury Frequency: (per 100 full time equivalent employees per year) ( TRIF ) ( LTIF ) TRIF LTIF 0.00 Q1 Q2 Q3 Q4 Q

38 Give me five! 5%» 5% cost reduction ($10 M) targeted» $11 million budgeted Phase Objective Complete 1 Opportunity ID Q E-procurement Q Full Savings Budgeted for 2013 Q

39 Grow Supply Operate When it all comes together Acquisitions: Parkland Elbow River Sparling s Brand Propane Volume Transportation & Propane Storage Infrastructure 151 ML Total Volume: 151 ML 39

40 Grow Supply Operate When it all comes together Acquisitions: Parkland Elbow River Sparling s Brand Propane Volume 151 ML Transportation & Propane Storage Infrastructure Propane / Butane 200 ML Total Volume: 351 ML 40

41 Grow Supply Operate When it all comes together Acquisitions: Parkland Elbow River Sparling s Brand Propane Volume 151 ML Transportation & Propane Storage Infrastructure Propane / Butane 200 ML 117 ML Total Volume: 468 ML 41

42 The Forecast 42

43 EBITDA Progress What we have accomplished in one year $300 EBITDA Growth Forecast millions of dollars $200 $125 Goal $100 $125 $125 Base $

44 EBITDA Progress What we have accomplished in one year $300 EBITDA Growth Forecast millions of dollars $200 $80 Goal Since last year $45 Achieved $100 $125 $125 Base $

45 EBITDA Progress Acquisitions:» Elbow River Marketing $20 MM» TransMontaigne $1.5MM» Sparling s Propane $5.5MM $27 MM Synergies:» Elbow River Marketing $3 MM» TransMontaigne $2 MM» Sparling s Propane $2 MM $7 MM Identified Efficiencies» Give me five! $11 MM $11 MM 45

46 Our progress so far Base Business Today Acquisitions: $27M

47 Low Case Low Case Stress: ($20M) EBITDA Acquisitions: Slow down

48 Forecast Expected Stress: ($10M) EBITDA Acquisitions: $12M/yr

49 High Case High Case Stress: None Acquisitions: $15M/yr

50 Key Model Assumptions Growth Cap Ex* $35 $35 $35 Maintenance Cap Ex $27 $30 $34 Total Cap Ex $62 $65 $69 Net Total Debt as % of Capital Employed Organic Growth Rate Financing Dividends Mix 38% 40% 41% 2 4 % including small tuck-ins Primarily debt Modest increases over period Remains the same as current base business *Does not include acquisitions 50

51 Key Model Output Metrics EBITDA per share Distributable cash flow per share Dividend to distributable cash flow payout ratio 69% 66% 63% ROCE 15% 15.75% 16.5% Net Debt:EBITDA

52 5 Year Growth Strategy 1.Grow ⅓ of 1 cent through economies of scale 2.Supply ⅓ of 1 cent through supply advantage 3.Operate ⅓ of 1 cent through efficient operations The Penny Plan was introduced in May 2012 at Parkland s Analyst Day 52

53 Great progress on the Parkland Penny Plan to date Secure future with stable dividends Strong prospects in the pipe 53

54 Investor Information Services Parkland provides a number of services for investors including:» news alerts» Monthly Business Driver newsletter (A monthly publication that aggregates publicly available data about what drives our results.) To subscribe to investor services: Investor dashboard: For investor inquiries please contact Tom McMillan, Director of Corporate Communications at tom.mcmillan@parkland.ca or ext