Parkland Fuel Reports In-Line 1Q; Higher Retail Margins Offset By Commercial Volumes

On Tuesday, after market closed, Parkland Fuel Corporation (PKI:CN). delivered adj. EBITDA of $57 million versus our estimates of $61 million and consensus estimates of $58 million. This compares to last year’s EBITDA of $61 million and the previous quarter’s EBITDA of $51 million.

“Parkland experienced another strong quarter which demonstrated our ability to acquire, grow our supply advantage, and operate efficiently. Our announced acquisitions of 16 retail sites in British Columbia and North Dakota as well as our strong margin performance in the retail and commercial segments illustrated these strengths,” said Bob Espey, President and Chief Executive Officer of Parkland. “The first quarter demonstrated the benefits of diversification in terms of geography, customer, and business line. The strength in our eastern Canadian business helped offset the headwinds experienced in our western Canadian business.”

  • Announced the acquisition of five retail sites in North Dakota for US$13.7 million or 5.0x annualized EBITDA1 through Parkland’s subsidiary SPF Energy, Inc., adding approximately $2.7 million of EBITDA1 and 25 million litres of fuel annually; and
    Announced the acquisition of 11 Chevron-branded service stations in British Columbia for $17.1 million, adding approximately $3 million of annualized EBITDA1.
  • Demonstrated Elbow River Marketing Ltd.’s capability to take advantage of supply and demand imbalances in western Canada which increased volume sold in Parkland’s wholesale, supply, and trading segment by 52 million litres; and
    Added volume to Parkland’s western Canadian supply portfolio with 11 new Chevron stations.
  • Increased non-fuel gross profit in Parkland’s retail and SPF Energy, Inc. segments on a year-over-year basis due to increased convenience store and lubricant sales; and
    Remained committed to safety by operating with zero Lost Time Incidents in Canada since February 19, 2014 (440 days).
    To the view the figure titled “Adjusted EBITDA by Segment”: http://media3.marketwire.com/docs/AdjustedEBITDA.jpg
  • Parkland achieved $57.1 million in Adjusted EBITDA in the first quarter of 2015, compared to $61.2 million in the first quarter of 2014. The decrease in Adjusted EBITDA is primarily attributable to lower propane gross profit in Wholesale, Supply and Distribution, partially offset by stronger operating results in Retail Fuels and Commercial Fuels. Exceptional propane market conditions in the first quarter of 2014 were not repeated this year.
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Terry Benhoff, MS in Financial Analysis, is equity analyst and focuses Consumer Goods, Financial & REIT and Healthcare sectors. Prior joining Equities Mogul, Terry Benhoff worked with Telsey Research. If you have a great story idea for Terry Benhoff, you can write at [terry.benhoff@equitiesmogul.com ].

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