CIBC Annual Whistler Institutional Investor Conference January 25-28, 2017 Whistler, BC parkland.ca
FORWARD LOOKING STATEMENT DISCLAIMER & NOTE ON NON-GAAP MEASURES 2 Certain information included herein is 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, Adjusted EBITDA run-rate, the pro forma site counts and volumes expected to be derived from the CST Acquisition (as defined herein), pro-forma long term debt, proforma shareholder equity, pro-forma credit metrics, capital expenditures, financial results, future acquisitions and the efficiencies to be derived therefrom. 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 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 forwardlooking 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, risks associated with: the failure to achieve the anticipated benefits of acquisitions, including the acquisition of the majority of the Canadian assets of CST Brands, Inc. ("CST") from Alimentation Couche-Tard Inc. (the "CST Acquisition"); failure to obtain the necessary regulatory or other third party consents and approvals required to complete the CST Acquisition; failure to complete the CST 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; 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 most recent management discussion and analysis (the "MD&A"), including the disclosure contained under the heading "Risk Factors" therein. The MD&A is available by accessing Parkland's profile on SEDAR at www.sedar.com and such information is incorporated by reference herein. Unless otherwise noted, financial figures, volumes and site counts stated herein are current as of Parkland s most financial statements and MD&A. Additionally, readers are directed to, and encouraged to read, the 2016 Adjusted EBITDA Guidance Range section of Parkland s press release dated October 5, 2016 and material factors and assumptions contained therein. This presentation refers to certain financial measures that are not determined in accordance with International Financial Reporting Standards ( IFRS ). Distributable Cash Flow, Distributable Cash Flow Per Share, Dividend Payout Ratio, Earnings Per Share, Senior Funded Debt, Credit Facility EBITDA, Total Adjusted Long Term Debt, and Total Funded Debt to 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 Non-GAAP financial measures, reconciliations and advisories section of the Q3 MD&A. Adjusted EBITDA and Adjusted Gross Profit are measures of segmented profit. See Note 17 Segment Information of the Parkland s Q3 Interim Condensed Consolidated Financial Statements. 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. 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.
PARKLAND CONSISTENTLY DELIVERS SHAREHOLDER VALUE PROVEN TRACK RECORD SUBSTANTIAL OPPORTUNITY TO BUILD SHAREHOLDER VALUE RESILIENT CASH FLOW UNIQUE SUPPLY CAPABILITY STRONG FINANCIAL POSITION 3 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 Market Summary Operating Summary ~$2.6Bn Market Cap (1) $1.134 (~4%) Dividend Annually (1) $235 - $265MM 2016E Adjusted EBITDA (2) 1,065 Retail Stations ~$3.4Bn Enterprise Value (1) 10.2BL TTM Volume (3) Debt Summary $770MM Total Long Term Debt 1.9x Total Leverage (4) BB/BB- Corporate Credit Rating (5) 4 1. As of market close on January 4, 2017. Source Capital IQ. 2. See the 2016 Adjusted EBITDA Guidance Range section of the Parkland press releases dated October 5th, 2015, March 2nd, 2016, May 3rd, 2016 and August 4th, 2016. 3. Q3 2016 TTM volumes. See Parkland s most recent MD&A for reconciliation. 4. Equal to Total Funded Debt to Credit Facility EBITDA ratio. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland s most recent MD&A for reconciliation. 5. Based on most recent DBRS and S&P ratings. See Risk Factors Credit Ratings of Parkland s most recent Annual Information Form.
PARKLAND GOES TO MARKET THROUGH THREE CHANNELS: RETAIL, WHOLESALE AND COMMERCIAL BUY MOVE SELL RETAIL CHANNEL CORPORATE REFINERIES DEALER WHOLESALE CHANNEL STORAGE RESELLER IMPORTERS COMMERCIAL CHANNEL INDUSTRIAL HOME HEAT 5 PRODUCERS
PARKLAND REPORTS ITS CORE BUSINESS PERFORMANCE THROUGH FOUR BUSINESS UNITS Vol. 3,692 ML 1 Adj. EBITDA $135 MM 1 1,065 stations Vol. 1,337 ML 1 Adj. EBITDA $48MM 1 ~87 branches & 85 cardlocks RETAIL FUELS COMMERCIAL FUELS Vol. 4,284 ML 1 Adj. EBITDA $91MM 1 Rail and storage capability Vol. 931 ML 1 Adj. EBITDA $15MM 1 SUPPLY & WHOLESALE PARKLAND USA 6 1. Trailing-twelve-month volume and trailing-twelve-month Adjusted EBITDA as at September 30, 2016. Adjusted EBITDA is a measure of segmented profit. See Note 17 Segment Information of the Parkland Q3 Interim Condensed Consolidated Financial Statements.
PARKLAND S CANADIAN RETAIL OPERATIONS GO TO MARKET WITH MULTIPLE OPERATING MODELS AND A NATIONAL C-STORE OFFERING Retail Operating Model Parkland (1) CST Acquisition (2) Pro-forma Total Company owned, retailer operated (Full margin sales direct to customer) 311 % of 309 sites 311 + % of 309 sites Dealer owned, dealer operated or dealer consigned (Buy/Sell relationships) 754 498 1,252 Retail site count 1,065 498 + % of 309 sites 1,563 + % of 309 sites Potential for On The Run to become Parkland s national convenience store brand. 2017 will start Parkland s expansion of the On The Run offer to a number of its company locations. Franchise offer to independent dealers 7 1. See Parkland s most recent MD&A 2. Subject to close of CST acquisition, the actual number of company retail sites acquired will be determined following the Competition Bureau of Canada s review of the CST acquisition. See CST Brand Inc. most recent MD&A for site counts
PARKLAND S FIVE YEAR STRATEGY GROW ORGANICALLY 3 5% growth p.a. SUPPLY ADVANTAGE Benefit outpaces volume growth 8 ACQUIRE PRUDENTLY Achieve synergies
FUELING ORGANIC GROWTH POSITIONS PARKLAND TO EXCEED INDUSTRY GROWTH 3 5% PARKLAND ANNUAL EBITDA GROWTH TARGET Organic Growth Focus on fore-court to back-court conversion Improve merchandising and customer experience Expand into white space and broadening product offer Investment in trucking and routing optimization technologies Continue to build refiner relationships Increase the number of storage and distribution locations RETAIL COMMERCIAL SUPPLY & WHOLESALE 9
PARKLAND S SUPPLY ADVANTAGE IS A KEY DIFFERENTIATOR Supply Advantage Create Advantaged Supply Capture Market Inefficiencies Partner of Choice to Refiners Storage Rail Demand Planning Balance Sheet Balanced Barrel Volume Growth 10
A TRACK RECORD OF STRATEGICALLY ATTRACTIVE ACQUISITIONS OVERVIEW OF SIGNIFICANT ACQUISITIONS SINCE 2013 C$ MM 2013 2014 2015 2016 2017 Acquire Feb 2013 Apr 2013 Jan 2014 Apr 2014 Apr 2015 Jun 2015 Apr 2016 May 2016 Jul 2016 Sep 2016 Oct 2016 Stony Propane Dec 2016 Q1 2017 3 121 +20% 145 Girard Bulk Services The Propane Guys Other 19 12 Chevron sites 3 Retail Stations In Wyoming, US Sparlings 5 ERM 20 Parkland USA 22 Parkland USA 17 Esso sites Pioneer 55 11 11 Chevron sites Acquired Adjusted EBITDA 1 1. Adjusted EBITDA is a measure of segmented profit. See the Non-GAAP Financial Measures, Reconciliations and Advisories section of Parkland s most recent MD&A. 2. Anticipated 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 synergies consistent with it s past performance. 3. The CST Acquisition is anticipated to close in Q1, 2017. Anticipated Run Rate 2
PIONEER INTEGRATION YEAR ONE SYNERGIES TRACKED SIGNIFICANTLY AHEAD OF BUSINESS CASE OVERALL SYNERGY TARGETS BEING MATERIALLY ACHIEVED WITHIN YEAR ONE Acquire Supply 1 +68% Operations +8% Back Office +12% 12 1. Synergy performance versus year one business case (Year one defined as July 2015 to June 2016)
CST ACQUISITION WILL ADD MEANINGFUL SCALE AND EXPANDS PARKLAND S RETAIL BUSINESS INTO QUEBEC AND ATLANTIC CANADA Acquired Asset Overview Subject to regulatory approval. The acquisition is expected to add: 3BL of annual fuel volume 1 Between $105M and $115M in estimated annual Adjusted EBITDA before synergies 2 Purchase price of ~$965M 490 Dealer and Commissioned Agent retail sites High quality company-operated retail sites; for a minimum of 45% of Adjusted EBITDA 3 72 Commercial Cardlock sites 27 Commercial and Home Heat sites A corporate presence in Montreal with a French-language support structure Acquire This Acquisition Will Provide Critical Mass in Quebec and Atlantic Canada Current Parkland Canada Retail Presence Retail Presence of Acquired Assets Parkland Retail Presence After Close 13 1. Fuel volume is an estimate. Actual fuel volume will depend on final site allocation. 2. Adjusted EBITDA contribution is a management estimate based on information and financial statements related to the acquired assets and depend on final site allocation. 3. Number of acquired company-operated retail sites to be determined following the Competition Bureau of Canada s review of the CST Acquisition.
CST ACQUISITION SYNERGY OPPORTUNITIES THROUGH INCREASED SCALE AND JOINT CAPABILITIES Acquire ATTRACTIVE SYNERGY OPPORTUNITIES 20% 1 + of Acquired Adj. EBITDA 2 Leveraging the best non-fuel capabilities of both businesses Improved non-fuel purchasing due to increased scale Optimizing the pro forma network and operating model Synergies Outside the 20% 1 + Acquired Adj. EBITDA 2 C-store revenue (private label, fresh food offering) Potential supply synergies Expand product offering 14 1. Synergies: Management s estimate of the annual Adjusted EBITDA these businesses will achieve on a go-forward basis assuming such acquisitions maintain historical performance and Parkland is able to implement certain synergies and achieve expected organic growth with the acquired assets. 2. Adjusted EBITDA is a measure of segmented profit. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland s most recent MD&A for reconciliation.
EXECUTING THE GROWTH STRATEGY PARKLAND ADJUSTED EBITDA 1 C$ MM Synergies +15-17% p.a. Anticipated Future Acquisitions 4 300 265 3 3-5% CAGR Organic 250 200 150 100 103 151 199 207 183 215 30 3 235 50 0 2010 2 2011 2 2012 2 2013 2 2014 2015 2016E 15 1. Adjusted EBITDA is a measure of segmented profit. 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 5, 2015, March 2, 2016, May 3, 2016 and August 4, 2016. 4. Subject to certain risk factors. See Acquisition Strategy Risk Factors Credit Ratings of Parkland s most recent Annual Information Form.
PARKLAND S KEY FINANCIAL METRICS 5 YEAR GOALS Distributable CFPS 1 Dividend Payout Ratio 1 Total Leverage 2 >$ 2.00 89% 3.5x Adjusted $ 1.47 ~$ 1.55 Low 70% s Adjusted 71% 50% range 2.0x $1.17 2015 Actual With Organic Growth With Acquisition Growth 3 2015 Actual With Organic Growth With Acquisition Growth 3 Range 16 1. See the Dividends, distributable cash flow and dividend payout ratio section of Parkland s Q4 2015 MD&A for reconciliation. 2. Based on the calculation used to determine Total Funded Debt to Credit Facility EBITDA ratio. See the Non-GAAP Financial Measures, Reconciliations, and Advisories section of Parkland s most recent MD&A. 3. Parkland s growth strategy will depend, in part, on acquiring other fuel distributors or complimentary businesses which it may not be able to achieve. The success of this strategy is dependent on a number factors as set out in greater detail in Parkland s most recent Annual Information Form (See Risk Factors Acquisition Strategy).
PRO-FORMA LEVERAGE POST CST WILL BE AT THE TOP END OF PKI S GUIDANCE, WITH A FOCUS ON DELEVERAGING POST CLOSE PRO FORMA CAPITALIZATION TABLE AS OF SEPTEMBER 30, 2016 (1) (in C$ millions) Adjusted Actuals as of 9/30/16 CST Acquisition Adjustment (2) Pro-Forma Debt Outstanding Secured Revolving Credit Facility $66 ~$514 ~$580 5.50% Senior Notes, due 2021 $200 $200 6.00% Senior Notes, due 2022 $200 $200 5.75% Senior Notes, due 2024 (3) - $300 $300 Other $4 $4 Total Adjusted Long Term Debt $470 $814 $1,284 Total Shareholders' Equity $813 $231 $1,044 Total Capitalization $1,283 $1,045 $2,328 Credit Metrics Credit Facility EBITDA $243 ~$110 ~$353 Total Funded Debt to Credit Facility EBITDA Ratio 1.9x ~3.6x Committed Revolving Credit Facility (4) ~$360 ~$340 ~$700 Unused Credit Facilities $280 ~$120 17 1. Contains a number of non-gaap financial measures derived from Parkland s most recent MD&A and Interim Condensed Consolidated Financial Statements (Unaudited) as of September 30, 2016 2. See Parkland s press releases dated August 22, 2016 and September 7, 2016. Mid-point of EBITDA range of $105 million and $115 million used for Credit Facility EBITDA Adjustment 3. Effect of $300 million 5.75% Senior Unsecured Notes due September 16, 2024 removed to show Parkland on a standalone basis. See Parkland s press release dated September 16, 2016. 4. Revolving Extendible Credit Facility of CAD $320 million and USD $30 million. See Parkland s most recent MD&A. Based on New Secured Revolving Credit Facility. See Parkland s press released dated August 22, 2016 and investor presentation located at: http://www.parkland.ca/files/3714/7184/7052/parkland_investor_presentation_august_22_2016.pdf
PARKLAND DELIVERED 247% IN CUMULATIVE TOTAL SHAREHOLDER RETURN, SIGNIFICANTLY OUTPERFORMING THE TSX SINCE 2011 PARKLAND TOTAL SHAREHOLDER RETURN 1 % Parkland $400 TSX $375 $350 $325 $300 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 1 Jan 2011 1 Jan 2012 1 Jan 2013 1 Jan 2014 1 Jan 2015 1 Jan 2016 1 Jan 2017 PKI 20% 91% 97% 145% 174% 247% TSX (9%) (2%) 11% 23% 12% 36% 18 1. Total Shareholder Return calculation assumes that dividends are reinvested. Cumulative calculation is from Jan. 1, 2011 to Dec. 30, 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 Leverage Market Inefficiencies Superior Logistics A Refiner Partner of Choice Diversified by Product Line Diversified by Geography Effective Commodity Risk Management Strong Balance Sheet Significant Capacity Disciplined Capital Allocation = SUBSTANTIAL OPPORTUNITY TO BUILD SHAREHOLDER VALUE 19 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.
COME GROW WITH US Investor Relations Ben Brooks Vice President Treasury & Investor Relations Ben.Brooks@parkland.ca 403.567.2534 parkland.ca