INVESTOR AND ANALYST DAY APRIL 2013 Bob Espey, President & CEO and Mike Lambert, Sr. VP and CFO Investor Relations tom.mcmillan@parkland.ca 800-662-7177 ext. 6722
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
Canada s largest independent fuel distributor and marketer Offering investors yield and growth A defensive investment with a sustainable dividend 3
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
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!» 2014 2016 forecast 5
Parkland Penny Plan 6
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
Target: Double EBITDA $300 EBITDA millions of dollars $200 $151M 2011 Actual $100 $0 2011 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
Target: Double EBITDA $300 EBITDA millions of dollars $200 $151M $125M 2011 Normalized $100 2011 Actual $0 2011 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
Target: Double EBITDA $300 EBITDA millions of dollars $250M $200 $55 Acquisitions $100 $151M $125M $70 Penny Plan 2011 Normalized 2011 Actual $0 2011 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
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 < 2 2.33 2.70 * Normalized for Cango and one-time costs 11
Parkland Penny Plan Grow 12
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 $27 M More than 7 billion litres in play over the next five years 13
Acquisitions Acquisition: Date EBITDA ($ millions) Contribution Area Elbow River Marketing Feb. 15 20 Supply Sparling s Propane Apr. 2 5.5 Grow TransMontaigne May 2* 1.5 Grow/ Supply Total 27 * Expected close 14
Sparling s Propane 7 % Annual growth rate of propane consumption in Ontario 15
Sparling s Propane 120 Million Litres Opportunity to scale propane business across a national growth platform Employees: 131 Commercial Locations: 6 151 Million Litres EBITDA: $5.5 million Employees: 1,177 Commercial Locations: 113 16
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 1,000 500 3,000 2,500 2,000 1,500 1,000 500-2005 2006 2007 2008 2009 2010 2011-2005 2006 2007 2008 2009 2010 2011 Propane - Maritimes Heating Oil - Maritimes Propane - Ontario Heating Oil - Ontario Source: Statistics Canada - CANSIM table 128-0012 and CANSIM table 134-0004 17
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) 2012 1.39 2012 0.82 2012 52% 2011 2.26 2011 1.27 2011 48% Parkland will not overpay for assets 18
Fas Gas Plus Store Refresh Program Before: After: Refresh program drives growth in same store sales 19
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 2014 20
In-Fleet Refueling» Direct delivery to equipment» Technology to allow:» Online access to fuel reports» Billing information to individual pieces of equipment 21
Parkland Penny Plan Supply 22
Suncor Contract» Source of refiners margins» History of volatility» Expires December 31, 2013 35 30 25 20 15 10 5 0 Gasoline Margins cents per litre J F M A M J J A S O N D 2011 2012 2013 5 yr max 5 yr min 45 40 35 30 25 20 15 10 5 0 Diesel Margins cents per litre J F M A M J J A S O N D 2011 2012 2013 5 yr max 5 yr min Volume exists in Western Canada to replace the contract 23
Improving Supply Costs Driving Sustainable Profits for 2014 40 35 Supply Cost Improvements for 2014* millions of dollars 35 30 27 25 20 15 10 5 0 Reference Year 6 13 14 2009 2010 2011 2012 2013E 2014E *Improvements in supply costs impact EBITDA in multiple business units 24
Elbow River Marketing 30 Years Commodity by rail experience Rail and logistics capability 25
Elbow River Marketing Elbow River s skills and assets compliment Parkland s capabilities TTM Q3 2012 EBITDA $20 M Employees: 34 Railcars 1,200 Terminal Storage (ML) 60 2012 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
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
TransMontaigne Wholesale Volumes Added in Quebec and Ontario Wholesale Volumes: >500 ML EBITDA: Access to storage in Quebec City & Montreal $1.5 MM 28
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, 2013 29
Strategic Supply Infrastructure Time line: 2011 2012 Q3 2013 Q1 2013 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
Strategic Supply Infrastructure Time line: 2011 2012 Q3 2013 Q1 2013 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
Strategic Supply Infrastructure Time line: 2011 2012 Q3 2013 Q1 2013 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
Strategic Supply Infrastructure Time line: 2011 2012 Q3 2013 Q1 2013 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
Supply/Demand Views Drive Supply Strategy 325 300 275 Western Canada Gasoline becoming long as FCL production comes fully on-line Domestic Demand Outlook Domestic Supply 500 480 460 440 Ontario and Quebec Gasoline short ~ 60 KB/D in the foreseeable future Domestic Demand Outlook Domestic Supply 250 420 400 225 Actual Forecast 2010 2015 2020 380 Actual Forecast 2010 2015 2020 Diesel balanced to slightly long through 2015 Diesel essentially balanced 320 300 Domestic Demand Outlook Domestic Supply 330 310 Domestic Demand Outlook Domestic Supply 280 260 240 290 270 220 250 200 Actual Forecast 2010 2015 2020 230 Actual Forecast 2010 2015 2020 Source: Statistics Canada 2010-2011, (2012 prorated as of October), kbpd 34
Parkland Penny Plan Operate 35
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
Focus on Safety Total Recordable Injury Frequency: (per 100 full time equivalent employees per year) 2012 2011 Lost Time Injury Frequency: (per 100 full time equivalent employees per year) 2012 2011 ( TRIF ) 2.33 2.70 ( LTIF ) 0.50 1.80 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 TRIF LTIF 0.00 Q1 Q2 Q3 Q4 Q1 2012 37
Give me five! 5%» 5% cost reduction ($10 M) targeted» $11 million budgeted Phase Objective Complete 1 Opportunity ID Q1 2012 2 E-procurement Q2 2012 3 Full Savings Budgeted for 2013 Q4 2012 38
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
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
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
The Forecast 42
EBITDA Progress What we have accomplished in one year $300 EBITDA Growth Forecast millions of dollars $200 $125 Goal $100 $125 $125 Base $0 2011 2016 43
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 $0 2011 2016 44
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
Our progress so far 260 240 220 200 189 200 Base Business Today Acquisitions: $27M 180 175 160 140 2014 2015 2016 46
2014 2016 Low Case 260 240 220 200 200 218 Low Case Stress: ($20M) EBITDA Acquisitions: Slow down 180 160 175 140 2014 2015 2016 47
2014 2016 Forecast 260 240 242 Expected Stress: ($10M) EBITDA Acquisitions: $12M/yr 220 200 180 190 216 200 218 175 160 140 2014 2015 2016 48
2014 2016 High Case 260 259 High Case Stress: None Acquisitions: $15M/yr 240 229 242 220 200 180 199 190 216 200 218 175 160 140 2014 2015 2016 49
Key Model Assumptions 2014 2015 2016 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
Key Model Output Metrics 2014 2015 2016 EBITDA per share 2.42 2.69 2.96 Distributable cash flow per share 1.57 1.69 1.85 Dividend to distributable cash flow payout ratio 69% 66% 63% ROCE 15% 15.75% 16.5% Net Debt:EBITDA 1.65 1.62 1.60 51
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
Great progress on the Parkland Penny Plan to date Secure future with stable dividends Strong prospects in the pipe 53
Investor Information Services Parkland provides a number of services for investors including:» e-mail news alerts» Monthly Business Driver newsletter (A monthly publication that aggregates publicly available data about what drives our results.) To subscribe to investor services: http://bit.ly/pki-info Investor dashboard: http://bit.ly/pki-ir For investor inquiries please contact Tom McMillan, Director of Corporate Communications at tom.mcmillan@parkland.ca or 1-800-662-7177 ext. 2533. 54