Q3 2023 Parkland Corp Earnings Call
Speaker 1: Good morning, my name is Jenny and I will be your conference operator today.
Good morning.
It's Jamie.
And I will be your conference operator today.
Speaker 1: At this time, I would like to welcome everyone to the Parkland Third Quarter Analyst Conference call.
At this time.
I'd like to welcome everyone to.
The parkland third quarter Analyst conference call.
Speaker 1: All lines have been placed on mute to prevent any background noise.
All lines have been placed on mute to prevent any background noise.
Speaker 1: After the speaker remarks, there will be a question and answer session.
After the Speakers' remarks, there will be a question and answer session.
Speaker 1: If you would like to ask a question during this time, simply press star, then the number one on your telephone.
If you would like to ask the question Joanne just time.
Please press Star then the number one on your telephone keypad.
Speaker 1: If you would like to withdraw your question, please press the star followed by the 2.
If you would like to withdraw your question.
Please press the star followed by the two.
Speaker 1: I would now like to turn the conference over to Valerie Roberts, Director Investor Relations for Parkland. Please go ahead.
I would now like to turn the conference over to Valerie Roberts Director Investor Relations for parkland.
Please go ahead.
Speaker 2: Thank you operator. With me today on the call are Bob Espy, President and CEO , Marcel Tunisad, Chief Financial Officer, and Donna Sanker, President, Parkland USA.
Thank you operator with me today on the call are Bob Espey, President and CEO, Marcel Tunis, and Chief Financial Officer, and Donuts anchor President Parkland USA.
Speaker 2: This call is webcast and I encourage listeners to follow along with the supporting slides. We will go through our prepared remarks and then open it up for questions from the investment community. Please limit yourself to one question and a follow-up if necessary, and if you have other questions re-enter the queue. We would ask analysts to follow up directly with the investor relations team afterwards for any detailed modeling questions.
This call is webcast and I encourage listeners to follow along with the supporting slides. We will go through our prepared remarks, and then open it up for questions from the investment community.
Please limit yourself to one question and a follow up if necessary and if you have other questions reenter the queue.
We would ask analysts to follow up directly with the Investor Relations team afterwards for any detailed modeling questions.
Speaker 2: During our call today, we may make forward-looking statements related to expected future performance. These statements are based on current views and assumptions and are subject to uncertainties which are difficult to predict. These uncertainties include but are not limited to expected operating results and industry conditions among other facts.
During our call today, we may make forward looking statements related to expected future performance. These statements are based on current views and assumptions and are subject to uncertainties, which are difficult to predict. These uncertainties include but are not limited to expected operating results and industry conditions among other factors.
Speaker 2: Risk factors applicable to our business are set out in our annual information form and management discussion in analysis.
Risk factors applicable to our business are set out in our annual information form and management's discussion and analysis.
Speaker 2: We will also be discussing non-GAP and other financial measures, which do not have any standardized meanings prescribed by IFRS. These measures are identified and defined in Parkland's continuous disclosure documents, which are available on our website or on CEDA.
We will also be discussing non-GAAP and other financial measures, but should not have any standardized meanings prescribed by EIOPA arrest. These measures are identified and defined in parkland continuous disclosure documents, which are available on our website or on SEDAR.
Speaker 2: Please refer to these documents as they identify factors which may cause actual results to differ materially from any forward looking statement.
Please refer to these documents as they identify factors, which may cause actual results to differ materially from any forward looking statements.
Speaker 2: Dollar amounts discussed in today's call are expressing Canadian dollars unless otherwise noted. I will now turn the call over to Bob.
Dollar amounts discussed in today's call are expressed in Canadian dollars, unless otherwise noted I will now turn the call over to Bob.
Speaker 3: Thank you, Val, and good morning, everyone. We appreciate you joining us today.
Thank you Bill and good morning, everyone. We appreciate you joining us today.
Speaker 3: I want to start off by thanking the parkland team for another excellent
I want to start off by thanking the parkland team for another excellent quarter delivering record results well ahead of plan. These include record adjusted EBITDA, both in the quarter and year to date.
Speaker 3: Delivering record results well ahead of plan. These include, record adjusted EBITDA, both in the quarter and year to date. Record earnings.
Record earnings and earnings per share and.
Speaker 3: and record refinery utilization and co-processing bowling.
And record refinery utilization and co processing volumes.
Speaker 3: Collectively, they demonstrate the quality of the business we have created. Our ability to draw...
Collectively they demonstrate the quality of the business we have created.
Our ability to drive shareholder value.
Speaker 3: We are doing exactly what we said we would do. Advancing our strategy, serving our customers, and executing consistently on organic growth and synergy.
We are doing exactly what we said we would do advancing our strategy, serving our customers and executing consistently on organic growth and synergies.
Speaker 3: Each part of our business has contributed to our record performance.
Each part of our business has contributed to our record performance. This gives me unwavering confidence that we will continue to deliver the ambitious targets, we set for ourselves with that let's move to slide three we are building tremendous operational momentum by executing on the strategy we outlined at our.
Speaker 3: This gives me unwavering confidence that we will continue to deliver the ambitious targets we sent for ourselves. We're going to be able to get the first step.
Speaker 3: We are building tremendous operational momentum by executing on the strategy we outlined at our 2021 Investored.
<unk> 2021 investor day.
Speaker 3: This included doubling our business by growing adjusted depita from one to two billion dollars by 2025.
This included doubling our business by growing adjusted EBITDA from $1 billion to $2 billion by 2025.
Speaker 3: One of the highlights of my role is visiting our front line customer facing teams. Without exception, they are focused on safely servicing our customers and on growing our business.
One of the highlights of my role is visiting our frontline customer facing teams without exception. They are focused on safely servicing our customers and on growing our businesses.
Speaker 3: I continue to be impressed by the team's ability to drive organic growth, capture synergies, and deliver the cost.
I continue to be impressed by the team's ability to drive organic growth capture synergies and deliver the cost efficiencies their accomplishments have enabled us to increase 2023, adjusted EBITDA guidance, while at the same time lowering capital expenditures.
Speaker 3: Their accomplishments have enabled us to increase 2023 adjusted deep at the guidance while at the same time lowering capital expense.
Speaker 3: We believe we will exceed our revised adjust steepet of guidance this year. We've also accelerated our $2 billion ambition by a full year from 2025 to 2020.
We believe we will exceed our revised adjusted EBITDA guidance. This year. We have also accelerated our 2 billion dollar ambition by a full year from 'twenty to 'twenty five to 'twenty 'twenty four.
Speaker 3: For some time, we have been laying the foundation to deliver 2 billion of adjusted depita in 2020.
For some time, we've been laying the foundation to deliver $2 billion of adjusted EBITDA in 2020 for the outstanding work of our team gave us confidence to share this target with our shareholders.
Speaker 3: The outstanding work of our team gave us confidence to share this target with our shareholders.
Speaker 3: Lastly, we have over delivered on our 2023 D leveraging commitment three months ahead.
Lastly, we have over delivered on our 2023 deleveraging commitment three months ahead of schedule, our Leverages now within our target range and we will continue to drive this lower let.
Speaker 3: Our leverage is now within our target range, and we will continue to drive this lower. Let's turn to slide four. You'll recall that we entered the year with three priorities.
Let's turn to slide four you'll recall that we entered the year with three priorities first to capture synergies and cost efficiencies second to drive organic growth and third to optimize our portfolio by divesting noncore assets.
Speaker 3: Second to drive organic growth. And third to optimize our portfolio by divesting non-core assets.
Speaker 3: I'd like to take a couple of minutes to outlining samples of what we achieved last quarter.
I'd like to take a couple of minutes to Atlanta examples of what we achieved last quarter.
Speaker 3: We continue to make progress on our synergy capture and efficiencies. A great example is the terminals we acquired from Volta.
We continue to make progress on our synergy capture and efficiencies a great example is the terminals we acquired from volt pack as you know we have a strong retail and commercial market presence in eastern Canada, where we acquired these terminals. These.
Speaker 3: As you know, we have a strong retail and commercial market presence in Eastern Canada, where we acquired these terms.
Speaker 3: These assets provide us with significant optionality to source and receive local supply.
These assets provide us with significant optionality to source and received local supply.
As well as imports supply.
Speaker 3: This flexibility positions us to secure the lowest cost.
This flexibility positions us to secure the lowest cost product.
Speaker 3: which we can reliably provide to our retail and commercial customers.
Which we can reliably provide to our retail and commercial customers.
Speaker 3: You see the impact of owning these terminals and others like them in our March.
We see the impact of owning these terminals and others like them in our margins.
Speaker 3: Chifting to the middle column, where you see a picture of our recently open stand-alone site in Montreal.
Shifting to the middle column, where you see a picture of a recently opened standalone site in Montreal.
Speaker 3: This is a great example of bringing together our brands and marketing programs to continue to deliver strong and consistent organics.
This is a great example of bringing together our brands and marketing programs to continue to deliver strong and consistent organic growth.
Speaker 3: This site unites our on-the-run brand, M&M Frozen Food Offer, and is home to the launch of our Bites on the Run by M&M.
This site unites are on the run brand Eminem frozen food offer and is home to the launch of our bites on the run by Amazon Fresh food offer we are eager to see how this new food offer performs in our pilot sites and I'm excited to see how sales evolve.
Speaker 3: We are eager to see how this new food offer performs in our pilot sites, and I'm excited to see how sales evil.
Speaker 3: Lastly, let me touch on the vestments. In the last column, we will recycle proceeds from this and other non-core assets. We are selling into a creative organic growth.
Lastly, let me touch on divestments and the last column, we will recycle proceeds from this and other noncore assets, we are selling into accretive organic growth opportunities.
Speaker 3: I'll remind you of our broader target to generate up to $500 million of disposition proceeds by the end of 2025. These sales will not compromise our just debat of growth targets. With that, I'll pass.
I'll remind you of our broader target to generate up to $500 million of disposition proceeds by the end of 2025.
These sales will not compromise our adjusted EBITDA growth targets with that I'll pass to Marcel and move to slide five.
Thank you Bob and good morning, everyone.
Speaker 4: Parkland delivered an incredible quarter and set several new performance records.
Barkman delivered an incredible quarter and set several new performance records.
Speaker 4: We delivered an adjusted EBITDA of $585 million, which is up $257 million from last year. During the first nine months of this year, we delivered $1.45 billion of adjusted EBITDA.
We delivered an adjusted EBITDA of $585 million, which is up $257 million from last year. During the first nine months of this year, we delivered $1.45 billion of adjusted EBITDA.
Speaker 4: This is up $285 million from last year, despite an approximate $100 million impact from the refinery turnaround in the first quarter.
This is up $285 million from last year, Despite an approximate 100 million dollar impact from the refinery turnaround in the first quarter.
Speaker 4: Canada delivered third quarter adjusted EBDA of $206 million, which is 47% higher than last year.
Canada delivered third quarter, adjusted EBITDA of $206 million, which is 47% higher than last year.
Speaker 4: This increase reflects higher fuel unit margins, which were driven by our supply and integrated logistics capability and favorable market conditions. We also saw the benefit of our Husky and Kravya Acquisitions completed in 2022. Our KPIs highlight the impact of our consistent execution and organic growth investments.
This increase reflects higher fuel unit margins, which were driven by our supply an integrated logistics capability and favorable market conditions. We also saw the benefit of our husky and <unk> acquisitions completed in 2022, our kpis highlight the impact of our consistent execution.
And organic growth investments.
Speaker 4: We grew company owned same stores few volumes by 4.2% in the court.
We grew company owned same store fuel volumes by four 2% in the quarter.
Speaker 4: Our journey reward program continues to drive customers to the forecourt and into our convenience.
Our journey rewards program continues to drive customers to the full court and into our convenience stores food and company same store sales growth, excluding cigarettes was 3.5% and we delivered gross margins of over 34%. Our C store performance was driven by sales of packaged.
Speaker 4: Food and company same store sales growth, excluding cigarettes, was 3.5%. And we delivered gross margins of over 34%.
Speaker 4: Our C-store performance was driven by sales of packaged beverages and central store products such as candy and salty snacks which grew at over 10 p-
Beverages, and central store products, such as Candy and salty snacks, which grew at over 10% as noted in Q2 cigarette sales have normalized a while they are lower margin product. They remain an important traffic driver for our stores.
Speaker 4: As noted in Q2, cigarette spills have normalized. While they are lower margin products, they remain an important traffic driver for us.
Speaker 4: Our international segment delivered a just a debuda of $170 million in Q3. This is up 63% from last year.
Our international segment delivered adjusted EBITDA of $117 billion in Q3. This is up 63% from last year.
Speaker 4: We delivered organic growth with higher volumes in our wholesale business, strong fuel unit margins driven by our supply advantage, and the consolidation of the remaining 25% of soil. We see continued activity in the tourism sector, which we benefit from.
We delivered organic growth with higher volumes in our wholesale business strong fewer unit margins driven by our supply advantage and the consolidation of the remaining 25% of soul.
We see continued activity in the tourism sector, which we benefit from.
Speaker 4: Industrial activity in Guyana and Serenam continues to ramp up with the significant offshore oil discovery.
Industrial activity in Guyana, and Suriname continues to ramp up with the significant offshore oil discoveries. These also drive further economic growth and energy use we are positioned to win in these fast growing markets.
Speaker 4: These also drive further economic growth and energy use. We are positioned to win in these fast growing markets.
Speaker 4: Our UFA segment has rebounded from a challenging Q3 last year.
Our USA segment has rebounded from a challenging Q3 last year.
Speaker 4: The team delivered an adjusted EBIDAR of $52 million in the quarter. This is up $70 million year over year.
The team delivered an adjusted EBITDA of $52 million in the quarter.
This is up $70 million year over year.
Speaker 4: We delivered cross-savings and benefited from strong commercial few marks.
We delivered cost savings and benefited from strong commercial fuel margins across the U S and in our markets industry retail fuel volumes were down however, we successfully outperformed industry benchmarks.
Speaker 4: across the US and in our markets, industry retail few volumes were down. However, we successfully outperformed industry benchmarked. We have confidence in the future of our...
We have confidence in the future of our USA segment.
Speaker 4: A refining business generated an adjusted EBIDA of $188 million, which is up nearly 40% from last year.
Our refining business generated an adjusted EBITDA of $188 million, which is up nearly 40% from last year.
Speaker 4: The Burnaby team operates and optimizes this asset exceptionally well. We deliver the composite utilization of 103% reflecting record co-processing volumes of 2600 barrels per day.
The Burnaby team operates and Optimizes this asset exceptionally well, we delivered a composite utilization of 103% reflecting record co processing volumes of 2600 barrels per day.
Speaker 4: This enabled us to take advantage of a very strong crack environment during the quarter, which added approximately $50 million of incremental adjusted EBIDA in the quarter.
This enabled us to take advantage of a very strong crack environment during the quarter, which added approximately $50 million of incremental adjusted EBITDA in the quarter.
Speaker 4: We feel confident in our Q4 results. However, I will highlight that cracks pool back in early October and we assume normalized margins going forward.
We feel confident in our Q4 results. However, I will highlight that cracks pool back in early October and we assume normalized margins going forward.
Speaker 4: And as always, we have come off a season high driving period and expect that to be reflected in our Q4 retail risk.
And as always we have come off a seasonally high driving periods and expect that to be reflected in our Q4 retail results. During the third quarter, we delivered $230 million of net earnings resulting in a record earnings per share for parkland.
Speaker 4: During the third quarter, we delivered 230 million dollars of net earnings, resulting in a record earnings per share for part.
Speaker 4: Casual from operations was $528 million in the third quarter and almost 1.4 billion year-to-date.
Cash flow from operations was $528 million into third quarter, and almost one 4 billion year to date.
Speaker 4: Once again, this fully funded our capital program, including $57 million of growth, cup acts, as well as other financial obligations.
Once again this fully funded our capital program, including $57 million of growth Capex as well as our financial obligations. As a reminder, Barclays has increased dividends consistently for 11 years and our payout ratio was 32% over the past 12 months during.
Speaker 4: As a reminder, Parkland has increased dividends consistently for 11 years, and our payout ratio was 32% over the past 12 months.
Speaker 4: During the quarter, we also repaid $160 million of debt on our credit facility, and we load our leverage ratio to 2.9 times. This is a big milestone, as we have now achieved our 2023 leverage ratio target a quarter earlier than expected.
The quarter, we also repaid $160 million of debt on our credit facility and we lowered our leverage ratio to two nine times. This is a big milestone as we have now achieved our 2023 leverage ratio targets a quarter earlier than expected.
Speaker 4: I will continue to reduce this to the low ends of our 2-3 times range by the end of 2025.
We will continue to reduce this to the low end of our two to three times range by the end of 2025.
Speaker 4: Our trailing 12 months adjusted EBIDA is now at $1.9 billion, which includes the benefits of favorable refinery markets.
Our trailing 12 months adjusted EBITDA is now at $1 $9 billion, which includes the benefits of favorable refinery margins, we're well positioned to achieve our 2024 guidance of $2 billion without further acquisitions.
Speaker 4: We will position to achieve our 2024 guidance of $2 billion without further acquisition.
Speaker 4: Growth will come from organic investments we have already made, synergies from acquisitions we have already done, and cross-savings from organization changes implemented last quarter.
Growth will come from organic investments, we've already made synergies from acquisitions, we've already done and cost savings from organization changes implemented last quarter, we have assumed normalized refinery margins into our financial forecast.
Speaker 4: We have assumed normalized refinery margins into our financial fork.
Speaker 4: A significant part of our 2024 growth will come from our USA segment where we have already made great improvements. And with that, I would like to move to slide six and pass the call to Donna to discuss our USA.
A significant part of our 'twenty 'twenty four growth will come from our USA segment, where we have already made great improvements and with that I would like to move to slide six and pass the call to Donna to discuss our USA business. Thanks, Marcel and good morning, everyone. It's a pleasure to be here with you today.
Speaker 5: Thanks Marcel and good morning everyone. It's a pleasure to be here with you today. The map on slide six shows the current footprint of our US business.
The map on slide six shows the current footprint of our U S business. We selected these markets purposefully they have great demographics, but steady population growth or demand resilient and have inherent supply inefficiencies simply put in these markets field demand exceeds local supply and <unk>.
Speaker 5: We selected these markets purposefully. They have great demographics, but steady population growth are demand resilient and have inherent supply inefficient.
Speaker 5: Simply put, in these markets, field demand exceeds local supply and field needs to be imported from other regions.
<unk> needs to be imported from other regions. These dynamics play to Parklands core strengths and create great opportunity for us.
Speaker 5: These dynamics play to parkland's core strengths and create opportunity for us.
Speaker 5: Our US footprint is located in the Pacific Northwest, Rockies, and Upper Midwest region.
Our U S footprint is located in the Pacific Northwest Rockies and upper Midwest regions. This is a natural and adjacent extension of our Canadian supply and logistics capabilities. In these regions diesel imports come from Canada via rail or truck and we have considerable expertise in both gasoline.
Speaker 5: This is a natural and adjacent extension of our Canadian supply and logistics capability.
Speaker 5: In these regions, diesel imports come from Canada, via rail or truck, and we have considerable expertise in both. Gasoline is typically imported from the South using the same distribution infrastructure as our diesel imports. There are tremendous synergies in serving both Canada and the US and our skills and capabilities position us.
It's typically imported from the south using the same distribution infrastructure as our diesel imports there are tremendous synergies in serving both Canada and the U S and our skills and capabilities position us to win.
Speaker 5: In the past five years, we have invested approximately $1.7 billion to buy 20 companies. These were primarily in the Pacific Northwest and Rocky's markets. However, we also seized an opportunity to build a position in the highly populated, rapidly growing Florida market. This plays to supply and logistics strengths we have fine-tuned in our neighboring international.
In the past five years, we have invested approximately $1 $7 billion to buy 20 companies. These were primarily in the Pacific Northwest and Rockies markets. However, we also seized an opportunity to build a position in the highly populated rapidly growing Florida market this place to supply and logistics strength.
We have fine tuned and our neighboring international business.
Speaker 5: The result is a US business comprising over 650 retail and 45 commercial card lock sites as well as several terminals and books.
The result is a U S business comprising over 650 retail and 45 commercial card lock sites as well as several terminals and BOP plants together, they enable us to serve customers with the fuels lubricants and convenience products on which they depend similar to our Canadian and international segments.
Speaker 5: Together, they enable us to serve customers with the fuels, lubricants, and convenience products on which they depend.
Speaker 5: Similar to our Canadian and international segments, our US businesses underpinned by our supply advantage. This includes strategic infrastructure assets, such as trucks, rail cars, storage terminals, and pipelines, as well as supply and trading capabilities. These give us a powerful competitive advantage in the markets.
Our U S business is underpinned by our supply advantage. This includes strategic infrastructure assets, such as trucks railcars storage terminals and pipelines as well as supply and trading capabilities. These give us a powerful competitive advantage in the markets we serve.
Speaker 5: By executing a thoughtful strategy, we have developed a compelling growth platform in the US. Let's move to slide 7.
By executing a thoughtful strategy, we have developed a compelling growth platform in the U S. Let's move to slide seven I'd.
Speaker 5: I became president of our US business in January of this year. Upon my arrival, I saw tremendous opportunity to create a focused, fit for purpose organization that can drive full value from the platform we have created.
I became president of our U S business in January of this year. Upon my arrival I saw tremendous opportunity to create a focused fit for purpose organization that can drive full value from the platform. We have created I started with the leadership team, bringing in proven parkman operational leaders as well as some external.
Speaker 5: I started with the leadership team, bringing in proven Parkland operational leaders as well as some external talents.
Speaker 5: We streamlined our organization and restructured it around our retail and commercial lines of business.
<unk>, we streamlined our organization and restructured it around our retail and commercial lines of business. This provides clear accountabilities and Naples greater focus on our customers and has resulted in a lower cost structure. We have also been focused on completing the integration of the 20 companies we acquired including the.
Speaker 5: This provides clear accountability, enables greater focus on our customers and has resulted in a lower cost.
Speaker 5: We have also been focused on completing the integration of the 20 companies we acquired, including the rollout of best practices, process, and tools throughout.
Our rollout of best practices processes tools throughout the business.
Speaker 5: In our retail business, we are building out our category management and merging diesim capabilities. And we are beginning to see the impact of this through positive same-store sales growth and higher markets.
In our retail business, we are building out our category management and merchandising capabilities and we are beginning to see the impact of this through positive same store sales growth and higher margins. We have also rebranded approximately 35 backwards to under run results from these conversions have some 17% lift in store sale.
Speaker 5: We have also rebranded approximately 35 back courts to on the run. Results from these conversions have shown a 17% lift in store sales and a 23% increase in store margin year to day.
<unk> and a 23% increase in store margin year to date recent.
Speaker 5: Recent consumer research in the Florida market highlighted that are on the run convenience store brand is clearly resonating with customers as it scored among the most preferred.
Our recent consumer research in the Florida market highlighted that are on the run convenience store brand is clearly resonating with customers as it scored among the most preferred.
Speaker 5: We serve a diverse group of commercial customers, spanning the construction, automotive, mining, agriculture, industrial, and marine industry.
We serve a diverse group of commercial customers spanning the construction automotive mining agriculture, industrial and Marine industries. During peak season, we serve seven cruise ships a day out of the Port of Miami alone. In addition to supplying gasoline and diesel to our commercial customers we have.
Speaker 5: During peak season, we served seven cruise ships a day out of the port of Miami alone. In addition to supplying gasoline and diesel to our commercial customers, we have seen significant growth in our lubricants business and believe there are future opportunities to grow this six.
Significant growth in our lubricants business and believe there are future opportunities to grow this segment.
Speaker 5: As I mentioned earlier, our retail and commercial business are underpinned by our supply advantage. We will continue to optimize this advantage to achieve the lowest cost of product, reliably serve our customers and enhance March.
As I mentioned earlier, our retail and commercial business are underpinned by our supply advantage. We will continue to optimize this advantage to achieve the lowest cost of product reliably serve our customers and enhance margins.
Speaker 5: 2023 has been a year of transformation. We are hitting our stride operationally and are beginning to see the impact of the steps we've taken with adjusted EBITDA approaching the levels we expect. Looking forward, we have ambitious growth plans and targets for our US.
2023 has been a year of transformation, we are hitting our stride operationally and are beginning to see the impact of the steps we've taken with adjusted EBITDA approaching the levels. We expect looking forward, we have ambitious growth plans and targets for our U S business, we expect to grow 2024 adjusted EBITDA.
Speaker 5: We expect to grow 2024 adjusted EBITDA by approximately 25% to between 230 to 250 million Canadian dollars. And I believe there's more potential in 2025 and beyond.
By approximately 25% to between 230 to 250 million Canadian dollars and I believe there's more potential in 2025 and beyond.
Speaker 5: These targets are supported by detailed plans and proven strategies that we're taking from other parts of the Parkland Boots.
These targets are supported by detailed plans and proven strategies that were taking from other parts of the Parkman business. These include strategic pricing tools and capabilities that leverage technology to drive better margins.
Speaker 5: These include strategic pricing tools and capabilities that leverage technology to drive better margins.
Speaker 5: Fleet optimization and delivery efficiency measures that ensure we effectively utilize our logistics asset.
<unk> optimization and delivery efficiency measures that ensure we effectively utilize our logistics assets high grading our portfolio through divestment of a series of noncore retail assets.
Speaker 5: Highgrading our portfolio through divestment of a series of non-core retail assets.
Speaker 5: Taking a rigorous approach to retail site labor using site-specific sales data and transactions to determine staffing levels, discipline cost management, a relentless focus on growing our retail and commercial customer bases, and strengthening our retail brands loyalty and food off.
Taking a rigorous approach to retail site labor using site specific sales data and transactions to determine staffing levels disciplined cost management, our relentless focus on growing our retail and commercial customer bases and strengthening our retail brands loyalty and food offerings as you can tell.
Speaker 5: As you can tell, I'm very excited and optimistic about the trajectory of our U.S. segment. With that, I will pass back to Bob for his final...
I'm very excited and optimistic about the trajectory of our U S segment with that I will pass back to Bob for his final comments.
Speaker 3: Thank you, Donna, and congratulations to you and the team. We've built a tremendous business and platform for growth in the youth.
Thank you Donna.
And congratulations to you and the team we have built a tremendous business and platform for growth in the U S. We entered this year determined to prove the strength of our strategy, our business and our execution capabilities by.
Speaker 3: We entered this year determined to prove the strength of our strategy, our business and our execution capability.
Speaker 3: By staying disciplined, I believe we have demonstrated the power of our plants.
By staying disciplined I believe we've demonstrated the power of our platform our record performance to date demonstrates our team's continued focus on organic growth and synergies I'm comps, but and we will continue to build momentum in the final few months of the year to finish 2023 strong.
Speaker 3: Our record performance to date demonstrates our team's continued focus on organic growth and soon.
Speaker 3: I'm confident we will continue to build momentum in the final few months of the year to finish 2023.
Speaker 3: Parkland is a remarkable business. Over the past five years, the company has been transformed.
Parkland is a remarkable business over the past five years. The company has been transformed we have developed industry, leading brands capabilities and customer relationships across our retail and commercial lines of business and we have advanced our supply and logistics expertise to maximize our margins.
Speaker 3: We've developed industry leading brands, capabilities, and customer relationships across our retail and commercial lines of this.
Speaker 3: And we have advanced our supply and logistics expertise to maximize our money.
Speaker 3: We are resilient business operating in diverse markets. We have a long runway of growth opportunities in our conventional-
We are a resilient business operating in diverse markets, we have a long runway of growth opportunities in our conventional business and as consumer demand for renewable energy increases we are positioned to play a leading role having accelerated delivery of our key targets. The question. Many of you have been asking US what's next for park.
Speaker 3: and a consumer demand for renewable energy.
Speaker 3: We are positioned to play a leading role. Having accelerated delivery of our key targets, the question many of you have been asking, is what's next for parts?
And we will answer that during our Investor day on November 14th specifically, we will provide details on the continued execution of our strategy, we will share our new targets. We have set for ourselves we will discuss our go forward capital allocation framework, and we will outline our plan to deliver enduring growth.
Speaker 3: We will answer that during our investor day on November 14, specifically. We will provide details on the continued execution of our strategy. We will share our new targets we have set for ourselves. We will discuss our go-forward capital allocation framework. And we will outline our plan to deliver enduring growth and value. With that, we'll turn it back to the operator.
<unk> and value with that I will turn it back to the operator for questions.
Speaker 1: Thank you. Ladies and gentlemen, we will now begin the questioning answer session. Should you have a question? Please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your...
Thank you ladies and gentlemen, we will now begin the question and answer session.
Did you have a question. Please press the star followed by the one on you touched on filings.
You will hear retreat on prompt acknowledging your request.
Questions will be taken in the order received.
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Should you wish to cancel your request. Please press the star followed by the tail.
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If youre using a speakerphone please lift the handset before pressing editors.
Speaker 1: your first question is from Ben Isaacson from Scotia Bank. Please ask your question.
Your first question is from Ben Isaacson from Scotiabank. Please ask your question.
Speaker 6: Thank you very much and good morning and congrats on the great quarter. Bob, we've seen GM and Ford pulling back on their EV ambitions. Exxon and Chevron have both just doubled down on oil with the acquisitions of Pioneer and Huss. In North America, unsolved EV in Ben Porri's at an all time high.
Thank you very much and good morning, and congrats on a great quarter.
Bob we've seen.
GM and Ford pulling back on their E. B ambitions Exxon and Chevron are both just doubled down on oil with the acquisitions of pioneer in HUS in North America unsold EV inventories had an all time high.
Speaker 6: What do you think about that? And does that lead you to rethink the pace of your investment into the EV transition?
What do you think about that and does that lead you to rethink the pace of your investment into the EV transition. Thanks.
Speaker 3: Yeah, well, good morning, Ben, and thanks for the question.
Yeah, Good morning, Ben and thanks for the question.
Speaker 3: You know, it's interesting. I'm as Parkland, we're focused on what are on the needs of our customers.
It's interesting.
We're seeing them as parkland, we're focused on what arc on the needs of our customers.
Speaker 3: And we recognize that we need to provide cheap and reliable energy independent of what the customer wants. That being said, we continue to invest in our base business and make sure that our customers have the cheap energy that they're used to getting from us.
And we recognize that.
We need to provide cheap reliable energy independent of what the customer wants.
That being said, we continue to invest in our base business and make sure that our.
Our customers have the cheap energy that they are used to getting from us.
Speaker 3: You know, it was respect to the EV, our EV plans. I mean, look, they're...
With respect to the E. R E D plans I mean look there.
Speaker 3: You know, we do see these continuing to penetrate markets. As we've said, it happens at different paces and different markets, depending on the level of, depending on the regulatory environment and the degree of subsidies.
We do see these continuing to penetrate markets as we've said it happens at different paces in different markets, depending on the level of.
Depending on the regulatory environment and the degree of subsidies.
Speaker 3: We are continuing to roll out our BC pilot. We're close to having that completed.
We are continuing to rollout our RBC pilots, we're close to having that completed and the value of that is the information that we gain on how the consumer interacts not only with the charger, but with our sites and how we can continue to grow our our basket size with the customers. So.
Speaker 3: And you know, the value of that is the information that we gain on how the consumer interacts not only with the charger but with our site.
Speaker 3: and how we can continue to grow our basket size with that customer. So, you know, it doesn't change our plans. Again, we're committed to the pilot.
No it doesn't change our plans again, we're committed to the pilot.
Speaker 3: And by the same time, we'll continue to invest in our face business to make sure that we can continue to service our customers.
But at the same time, we'll continue to invest in our base business to make sure that we can continue to service our customers.
Speaker 6: That makes sense. And just a quick follow up in Canada, you guys called out softness in the food business, tied to inflationary pressure. Same sort of sales growth was so positive, but it was just lower than it was a year ago. Can you just give us a little bit more color into the categories or maybe the regions that you're seeing that pressure? And now we're a month into Q4. Are you still seeing that same level or are things getting worse or perhaps getting a little bit better? Thank you.
That makes sense and just a quick follow up in Canada, you guys called out softness in the food business tied to inflationary pressure same.
Same store sales growth was still positive, but it was just lower than it was a year ago can you just give us a little bit more color into the categories or maybe the regions.
That youre seeing that pressure and it's and now we're a month into Q4 or are you still seeing that same level or are things getting worse or perhaps getting a little bit better. Thank you.
Yeah.
Speaker 3: You know, we, one of the things we really like about the convenience business is resilience through economic cycles. And we continue to see the segment perform strong relative to other food channels.
We are we one of the things, we really like about the convenience business its resilience through economic cycles, and we continue to see the segment performed strong relative to other.
Food channels.
Speaker 3: I would say specifically the reference to food is M&Ms and the frozen food category, which we've seen although we were up year over year. It wasn't quite as robust as our convenience business.
Say, specifically the reference to food is eminems and the frozen food category, which we've seen.
Although we were up year over year, it wasn't quite as robust as our convenience business.
Speaker 3: But that being said, the business continues to perform well in terms of what we're seeing. I mean, look, I think we're seeing the consumer be a bit more cautious than they've been. Again, that the communion segment has proven resilient through various economic cycles.
But that being said the business continues to perform well in terms of what we're seeing I mean look I think we're seeing the consumer be a bit more cautious than they've been.
Again, you know that the convenience segment has proven resilient through various economic cycles.
Speaker 6: But we see like say cautious consumer, you know, a little more measured on gasoline, volume, we'll see them come fill up less but more often. But generally the business is holding in and you see it in the overall metrics. And the fact that we've been able to deliver industry leading same-store sales growth.
But we see like I say cautious consumer.
A little more measured on gasoline volume, we'll see them come.
Fill up less but more often.
But generally the business is holding in and you see it in the overall metrics and the fact that we've been able to deliver industry, leading same store sales growth.
Thank you I appreciate your time.
Speaker 1: Thank you. Your next question is from Steve Hansen from Raymond James. Please ask a question.
Thank you.
Next question is from Steve Hansen from Raymond James Please ask your question.
Speaker 7: Oh yes, it's the morning one. Thanks for the time. Two grads on heating your leverage targets earlier than planned. It does raise some obvious questions about.
Oh, yes. Good morning, Thanks for the time and congrats on hitting your leverage targets earlier than planned it does raise some obvious questions about future capital allocation priorities.
Speaker 7: priorities and I'm not trying to still any Center for the investor day, but to the degree you can, you know, how do you feel about the prospects of additional tools? Being executed here, I'm thinking by vaccine particular. I know as reference that you'll look to get to the lower end of the range next year. I'm just trying to understand if any other policies or priorities might come into the mix going forward.
I'm not trying to steal any thunder for the Investor day, but to the degree you can you know how do you feel about the prospects of additional tools.
Being executed here I'm thinking buybacks in particular I know it was referenced that you'll look to get to the lower end of the range for next year I'm just trying to understand if any other policies are priorities might come into the mix going forward.
Speaker 4: Good morning, Steve. Thank you for the question. It's more special here. Look, if we look at the interest rate environment, they continue to be elevated. And so if we look at overall and our balance sheet,
Good morning, Steve and thank you for the question we're still here.
If you look at the interest rate environment to continue to be elevated right and so if we could overall and our balance sheet.
Speaker 4: We are aiming for that lower end of the range by the end of 2025 and having more conservative balance sheet going forward so that continues to be priority for us.
Are you aiming for that lower end of the range by the end of 2025 and have a more conservative balance sheet going forward. So that continues to be priority for us, but given that we know within the range.
Speaker 4: But given that we now within the range, we'll obviously also look at additional means to kind of deploy capital within our business. And we'll talk more about that in two weeks that our investor did.
We also look at additional one additional means to them to kind of deploy capital within our business and we'll talk more about it in two weeks at our Investor day.
Speaker 7: I appreciate the comments, thanks. And it is one good follow up. There's been some pretty extensive press in the last couple of weeks on all the offshore success that you can place in Ganon. You reference that in your marks. I'm just curious on how much visibility you think you have into growing that offshore business down there. Specifically on Ganon CERNM over the next three to five years. Do you plan on expanding existing services? Just continue to support what we're doing today, just any color around the growth plan. There you have it!
I appreciate the comments, thanks, and just one quick follow up there's been some pretty extensive press in the last couple of weeks.
On all the offshore success, taking place in Guyana, and you referenced that in your marks I'm just curious on how much visibility you think you have into growing.
That debt off of our business down there specifically on Guyana and Suriname over the next three to five years do you plan on expanding existing services.
Just continue to support what we're doing today, just any any color around the growth plans there would be helpful. Thanks.
Speaker 3: Yes. Good morning, Steve. It's Bob SB. You know, look, we're fortunate to be in that market. The team has done a remarkable job in meeting demands and demand to grow.
Yes.
Good morning, Steve It's Bob Espey.
Look we're fortunate to be in that market. The team has done a remarkable job in meeting demand and demand growth.
Speaker 3: We facilitated that through some investment in the market in storage capacity.
We facilitated that through some investment in the market in storage capacity. So you know as we've talked about in the past one of our strategic pillars is our supply and our ability to supply difficult markets and.
Speaker 3: As we've talked about in the past, one of our strategic pillars is our supply.
Speaker 3: and our ability to supply difficult markets and
Speaker 3: You know, the additional supply along with our shipping capability in that market has allowed us to continue to meet demands and meet the pace of growth.
The additional supply along with our shipping capability in that market has allowed us to continue to meet demand and meet the pace of growth, we expect that to continue.
Speaker 3: We expect that to continue. And currently, I believe production is about 350,000 barrels a day out of Guyana.
Currently I believe production is about 350000 barrels a day out of Guyana Tar.
Speaker 3: targeting up to one and a half million barrels a day and There'll be a lot of energy required to bring that to market and we do have the leading position in the markets and We'll continue to leverage that to grow in that in that market quite nicely. So expect a nice tailwind from that business
Targeting up to one and a half.
<unk> barrels a day.
And there'll be a lot of energy required to bring that to market and we do have the leading position in the markets and we'll continue to leverage that to grow in that in that market quite nicely. So we expect a nice tailwind from that business.
I appreciate it thanks.
Speaker 1: your next question is from Luke Hennt from Canacode Genuity. Please ask your question.
Thank you.
Your next question is from Luke Hannan from Canaccord Genuity. Please ask your question.
Speaker 6: Yeah, thanks, good morning and congratulations on the results. I wanted to dig into the US business if we can. It was mentioned that that market was a little bit more competitive and that resulted in in slightly lower volume. So Bob, just curious to know if you can talk about what exactly you're seeing there from a competitive perspective and what your strategic reaction has been to try and recapture that share of the market.
Yes, thanks, good morning, and congratulations on the results I wanted to dig into the U S business. If we can if it was mentioned that that market was a little bit more competitive and that resulted in.
Slightly lower volume so Bob just curious to know if you can talk about what exactly you're seeing there from a competitive perspective and what your strategic reaction has been to try and recapture that share of the market.
Speaker 3: sure, you know, we're really fortunate to have Donna here with us today and I'll have Donna answer that question. Good morning, late. This is.
Sure, we're really fortunate to have gone out here with us today and I'll have Don answer that question.
Good morning late this is Donna and so yeah, we saw the industry softened a bit and particularly the fuel margins.
Speaker 5: So yeah, we saw the industry soften a bit, particularly the fuel margins. When we look back at the prior year quarter three, the situation was very volatile. And so, you know, we saw some record margins last year. And so this year things have tamped down a bit. And also when during periods of increased commodity prices, you know, we tend to see our margins get squeezed a bit.
When we look back at the prior year quarter three is the situation.
<unk> was very volatile and so we saw some record margins last year and so this year things have tamped down a bit and also win during periods of increased commodity prices. You know we tend to see our margins get squeezed a bit from a volume perspective, while we were slightly negative on a same store sales volume perspective.
Speaker 5: From a volume perspective, while we were slightly negative on the same store, sales volume perspective, we actually outperformed at industry benchmarks for the quarter, and we did see some seastore margin improvement as well. And so we're even bullish on our position in the retail business. We have converted, as noted in the commentary, a number of sites start back court to on the run, and we're seeing some really good lift from that as well.
We actually outperformed industry benchmarks for the quarter and we did see some C store margin improvement as well and so we're bullish on our position in the retail business. We have converted as noted in the in the commentary and number of sites are back court too on the run and we're seeing some really good lift from that as well.
Speaker 7: Okay, thanks. And maybe this one is for you as well, Donna, but I think you did mention in your preparator marks that the lubricant's business is something that UCS as it could be a key driver of USA growth over the course of the near term here. Can you just share what exactly is specific about that line of business that gives you the optimism to, I guess, these further growth in the US going forward?
Okay. Thanks, and maybe this one is for you as well got it but I think you did mention in your prepared remarks that the lubricants business as something that ECS.
It could be a key driver of USA growths over the course of the near term here can you just share what exactly was it specific about that line of business that gives you the optimism to two I guess he's further growth in the U S going forward.
Speaker 5: Yep, so the customers that we provide our lubricants to, you know, they're very selective about the lubricants, they're critical to their operations, the machinery and the equipment that they run, it's critical to the uptime of their operations. And so we find that they combine.
Yeah, so the customers that we provide our lubricants too.
They are very selective about the lubricant state they're critical to their operations the machinery and the equipment that they run it critical to the uptime of their operations that we find that the combined.
Speaker 5: business of lubricants and fuel it improves the stickiness of our relationships with them. And, you know, we really see that as potential outside for future growth.
Business of lubricant and fuel it improves the stickiness of our relationships with them and we really see that.
And so upside for future growth.
That's great. Thank you very much.
Yes.
Speaker 1: Thank you. Your next question is from Ava and Princess Giles from PD Securities. Please ask her.
Thank you. Your next question is from Ivano Francesco <unk> from TD Securities. Please ask your question.
Speaker 8: Good morning. So first question, just on the international business.
Good morning.
So first question just on on the international business.
Speaker 8: non-fuel revenues and gross profit is roughly flat year over year. Can you talk a bit about what's preventing...
The non fuel.
Revenues and gross profit was roughly flat year over year.
Talk a bit about whats preventing.
Growth in that.
Yeah.
Speaker 3: Good morning and thanks for the question. Look, we're really delighted with the growth that we've seen in the international business. So when you step back and look at the performance.
Good morning, and thanks for the question look we're really delighted with the growth that we've seen in the international business. When you step back and look at the performance and to your point. It has been largely fuel driven as that team continues to find new opportunities to grow our market share and underpin the.
Speaker 3: And to your point, it has been largely fuel driven as that team continues to find new opportunities to grow our market share and underpin the recent success.
Recent success with more new business. So we're quite bullish on the business going forward here with respect to the the non fuel the structure of that market is somewhat different to the Canadian and U S markets, where in a lot of markets.
Speaker 3: with more new business. So we're quite bullish on the business going forward here. With respect to the non-fuel, the structure of that market is somewhat different to the Canadian and US markets, where in a lot of markets...
Speaker 3: We're not parkland as a
We're not parkland is as.
Speaker 3: as a supplier is not allowed to participate in the back court margin. So our...
As a supplier is not allowed to participate in the back court margin. So.
Speaker 3: are non-fuel margin in that business is smaller on a percentage basis than our Canadian and US business and hence, you know, the
R.
Our non fuel margin in that business is smaller on a percentage basis than our Canadian and U S business and hence.
The.
Speaker 3: The team there has done a great job in terms of executing, but it is more difficult to grow that given that the structure of the market.
The team there has done a great job in terms of executing but it's it is more difficult to grow that given that the structure of the market.
Speaker 8: Great, thanks. And just the final question.
Yeah.
Great Thanks and.
The final question.
Speaker 8: on the corporate segment, if I look at the MGNA expense, it is.
On the corporate segment, if I, if I look at the M G&A expense.
It seems to be.
Speaker 8: quite a bit higher than what you recorded in Q2. Could you maybe explain the sequential swing in that number?
Quite a bit higher than what you recorded in Q2.
Could you maybe explain the sequential swing.
Swing in that number.
Yes pardon me.
Sorry, I'll ask Marcel to comment on the MD&A, Yes, no what you see quarter over quarter in the corporate segment is some timing of expenditure and some provisioning as we kind of go from here to the towards the end of the year. So that's there there's nothing happening in there.
Speaker 4: Sorry, I'll ask myself the comment on the MGNA. Yeah, no, what you see quarter of the quarter in the corporate segment is some timing of expenditure and some provisioning as we've kind of going here to the, you know, towards the end of the year. So that's there. There's nothing happening in there. As you may recall, in Q2 or just at the end of Q2, we did reorgive.
As you may recall in Q2.
At the end of Q2, we did reorder.
Speaker 4: We did reorganize and cut a number of roles out of it, for which we took some provisioning. And so as we go into Q3, we're looking to normalize those costs and take some additional one off.
We did reorganize and cut a number of rules out of it for which we are which we took some provisioning and so as we go into Q3.
We're looking to kind of normalize those costs and take some additional laterals.
So is it is the Q3 level kind of a good indicator of.
Speaker 8: So is the Q3 level kind of a good indicator of what it should be going forward?
What it should be going forward.
Speaker 4: Yeah, I think if you take only a year to day basis and where we are, that's probably a good run rate and it will come down a bit as we, as I said, we take some cost out.
Yes, I think on that I think if you take only year to date basis, and where we are that's probably a good run rate then it will come down a bit as we as I said, we take some cost out.
Yeah.
Okay. Thank you very much.
Speaker 1: Once you're once again, please press star 1 to do this to ask your question.
Once again, please press star one should you wish to ask a question.
Speaker 1: If there are no further questions at this time, please proceed.
And there are no further questions at this time. Please proceed.
Speaker 3: Great. Well, thank you for joining us. We look forward to seeing you at our up and coming investor day.
Great well. Thank you for joining us we look forward to seeing you at our upcoming Investor day.
Okay.
Speaker 1: Thank you. Ladies and gentlemen, your conference call has now ended. Thank you all for joining. You may all disconnect.
Thank you ladies and gentlemen, your conference call has now ended thank you all for joining you may all disconnect.