Q1 2024 Parkland Corp Earnings Call
Operator: Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Parkland Q1 Analyst Conference Call. All lines have been placed on mute to prevent any background noise.
Good morning, My name is and I will be your conference operator today.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you. I would now like to turn the conference over to Valerie Roberts, Director of Investor Relations for Parkland. Please go ahead.
Speaker Change: At this time I would like to welcome everyone to the Park led Q1 Analyst Conference call. All lines have been placed on mute to prevent any background noise.
Speaker Change: After the Speakers' remarks, there will be question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press Star then the number two.
Speaker Change: I would now like to turn the conference over to bother with you Robert <unk> Director Investor Relations for Beckman. Please go ahead.
Valerie Roberts: Thank you, Operator. With me today on the call are Bob Espey, President and CEO, Marcel Teunissen, Chief Financial Officer, and Ian White, President of Canada. 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, as necessary, and if you have other questions, re-enter the queue.
Robert: Thank you operator with me today on the call are Bob Espey, President and CEO, Michelle Tunis, and Chief Financial Officer, and Ian White, President, Canada. This call's webcast and I encourage listeners to follow along with the supporting slides.
Valerie Roberts: We would ask analysts to follow up directly with the investor relations team afterwards for any detailed modeling questions. During our call today, we may make forward-looking statements related to expected future performance. These statements are based on current views and assumptions that 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. Risk factors applicable to our business are set out in our annual information form and management's discussion and analysis.
Speaker Change: We will go through our prepared remarks, and then open it up for questions with the investment community.
Speaker Change: He's limit yourself to one question and a follow up as necessary and if you have other questions reenter the queue.
Speaker Change: We would ask analysts to follow up directly with your Investor Relations team afterwards for any detailed modeling questions.
Speaker Change: During our call today, we may make forward looking statements related to expected future performance. These statements are based on current views and assumptions that 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 Change: Factored applicable to our business are set out in our annual information form and management's discussion and analysis.
Valerie Roberts: We will also be discussing non-GAAP 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 CDAR. Please refer to these documents as they identify factors which may cause actual results to differ materially from any forward-looking statement. All 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 Change: We will also be discussing non-GAAP and other financial measures, but should not have any standardized meanings prescribed by EIOPA Rs. These.
Speaker Change: These measures are identified and defined in <unk> continuous disclosure documents, which are available on our website or on SEDAR.
Speaker Change: Please refer to these documents identify factors, which may cause actual results to differ materially from any forward looking statements.
Speaker Change: Dollar amounts discussed in today's call are expressed in Canadian dollars, unless otherwise noted I will now turn the call over to Bob.
Robert Berthold Espey: Thank you, Val, and good morning, everyone. We appreciate you joining us today. 2024 did not begin as we expected. The combination of extreme cold weather in British Columbia and a curtailment of natural gas supply led to the unplanned shutdown of the Burnaby refinery.
Robert Berthold Espey: Thank you Valerie and good morning, everyone. We appreciate you joining us today.
Robert Berthold Espey: 2024 did not begin as we expected the combination of extreme cold weather in British Columbia, and a curtailment of natural gas supply led to the unplanned shutdown at the Burnaby refinery.
Robert Berthold Espey: Such circumstances test the capabilities and resolve of a team, and I am proud of the way Parkland rallied together to safely return the facility to normal operations by the end of March while continuing to serve our customers. The strength of our supply-centric business model ensured that customers continued to receive the essential fuels on which they depend. In addition, our refinery team has implemented a detailed plan to make up the shortfall during the remainder of the year, which relies on our unique supply advantage and capability.
Robert Berthold Espey: Such circumstances test the capabilities and resolve of our team and I am proud of the way parkland rally together to safely return the facility to normal operations by the end of March while continuing to serve our customers the.
Robert Berthold Espey: The strength of our supply centric business model ensured customers continue to receive the essential fuels on which they depend in addition, our refinery team has implemented a detailed plan to make up the shortfall during the remainder of the year, which relies on our unique supply advantage and capabilities.
Robert Berthold Espey: I believe that the true test of an organization is its ability to overcome setbacks and remain focused on its long-term goals. In this regard, I have unwavering confidence in the execution capabilities of the Parkland team and the detailed plan we have put in place. On today's call, we will provide insight into the steps we are taking to ensure we meet our 2024 guidance en route to our ambitious 2028. With that, let's turn to slide three.
Robert Berthold Espey: I believe that the true test of an organization is its ability to overcome setbacks and remain focused on its long term goals. In this regard I have unwavering confidence in the execution capabilities of the parkland team and the detailed plan we've put in place on today's call we will provide insight.
Robert Berthold Espey: Into the steps we are taking to ensure we meet our 2024 guidance on route to our ambitious 2028 targets.
Robert Berthold Espey: With that let's turn to slide three.
Robert Berthold Espey: The Parkland strategy is built upon our differentiated customer and supply advantage. These two pillars complement and reinforce each other. As we continuously strengthen our proposition, attract more customers, and increase our market share, we further strengthen our supply advantage through higher volumes and increased scale. This, in turn, improves our purchasing power and attract even more customers with compelling offers and great value. This cycle underpins our success and growth strategy. Our diversified business model provides a stable platform to execute this strategy.
Robert Berthold Espey: Heartland strategy is built upon our differentiated customer and supply advantages. These two pillars complement and reinforce each other.
Robert Berthold Espey: As we continuously strengthen our proposition attract more customers and increase our market share. We further strengthen our supply advantage through higher volumes and increased scale.
Robert Berthold Espey: In turn we improve our purchasing power and attract even more customers with compelling offers and great value. This cycle underpins our success and growth strategy.
Robert Berthold Espey: Our diversified business model provides a stable platform to execute the strategy.
Robert Berthold Espey: We provide customers in 26 countries with a variety of essential products ranging from gasoline and diesel to food and beverage. These are essential staples, and we continue to see organic, and, in the right circumstances, inorganic growth opportunities in all parts of our business. At our November Investor Day, we shared our ambitions for 2028, which is to double our available cash flow per share to $8.50. This will generate $6 billion of available cash, which we will allocate in accordance with our discipline plan that is shown on the slide.
Robert Berthold Espey: We provide customers in 26 countries with a variety of essential products ranging from gasoline and diesel to food and beverages. These are essential staples and we continued to see organic and in the right circumstances inorganic growth opportunities in all parts of our business.
Robert Berthold Espey: At our November Investor Day, we shared our ambitions for 2028, which is to double our available cash flow per share to $8 50.
Robert Berthold Espey: This will generate $6 billion of available cash, which we will allocate in accordance with our disciplined plan that is shown on the slide.
Robert Berthold Espey: Recall, we launched the current strategy in early 2023, and driven by consistent execution, we delivered an approximate 50% total shareholder return over that timeframe. We are confident in our strategy and the capability of our team to deliver. With that, I will hand it over to Marcel to discuss our Q1 highlights on slides.
Robert Berthold Espey: Recall, we launched the current strategy in early 2023, and driven by consistent execution, we delivered an approximate 50% total shareholder return over that timeframe. We are confident in our strategy and the capability of our team to deliver.
Robert Berthold Espey: With that I will hand, it over to Marcel to discuss our Q1 highlights on slide four.
Marcel Teunissen: Thank you, Bob, and good morning everyone. Parkland delivered adjusted EBITDA of $327 million, which was 17% lower than the prior year. Canada delivered adjusted EBITDA of $191 million, which was up 14% from the prior year. Our operational KPIs show the benefit of consistent execution and ongoing organic growth investment. Company-owned Same Store Fuel Volumes grew nearly 6% in the quarter, well ahead of the market. Food and convenience same-store sales growth, excluding cigarettes, was 3.1%, and we delivered gross margins of 35%.
Marcel: Thank you Bob and good morning, everyone.
Marcel: <unk> delivered adjusted EBITDA of $327 million ritual, 17% lower than the prior year.
Marcel: Canada delivered adjusted EBITDA of $191 million, which was up 14% from the prior year.
Marcel: Our operational Kpis showed the benefit of consistent execution and ongoing organic growth investments.
Marcel: Company owned same store fuel volumes grew nearly 6% in the quarter well ahead of market.
Marcel: Food and convenience same store sales growth excluding cigarettes.
Marcel: Three 1% and we delivered gross margins of 35%.
Marcel Teunissen: Strong performance in our beverage category, along with the full implementation of the M&M Express program at over 500 on-the-run locations, is helping to drive sales and shift our product mix, which is resulting in improved growth margins. Across Canada, industry retail fuel volume demand was flat compared to 2023.
Marcel: Strong performance in our beverage category, along with the full implementation of the Eminem Express program at over 500 on the run locations is helping to drive sales and shift our product mix. This is resulting in improved gross margins.
Marcel Teunissen: However, strong same-store growth led to increased market share. This was driven by our rebranding of Husky locations and continued growth in our Journey Rewards program. Fuel unit margins were higher due to improved efficiency and supply capabilities, as well as improved productivity of our company-owned network. However, these positive drivers were partially offset by reduced demand in our commercial business due to unseasonably warm weather in Cuba. Our international segment delivered adjusted EBITDA of $149 million in Q1.
Marcel: Across Canada industry retail fuel volume demand was flat compared to 2023. However, our strong same store growth led to increased market share. This was driven by a rebrand of husky locations and continued growth in our journey rewards program.
Marcel: Fuel unit margins were higher due to improved efficiency and supply capabilities as well as improved productivity of our company owned network.
Marcel: These positive drivers were partially offset by reduced demand in our commercial business due to unseasonably warm weather in Q1.
Marcel: Our international segment delivered adjusted EBITDA of $149 million in Q1.
Marcel Teunissen: This is 90% lower than last year. Fuel unit margins and volumes were lower in our commercial business due to market dynamics and the planned maintenance at the site of a large customer in Guyana. The customer maintenance work is now complete, and volumes have returned to normal. We saw strong performance in our retail and aviation businesses, and we have successfully implemented cost control initiatives that reduced operating expenses. Our USA segment delivered a dividend of $33 million in the quarter.
Marcel: This is 90% lower than last year.
Marcel: Fewer unit margins and volumes were lower in our commercial business due to market dynamics and the planned maintenance at the side of a large customer in Guyana.
Marcel: Customer maintenance work is now complete and volumes have returned to normal.
Marcel: <unk> strong performance in our retail and aviation businesses, and we have successfully implemented cost control initiatives, which reduced operating expenses. Our USA segment delivered adjusted EBITDA of $33 million in the quarter. This is up 57% from the prior year quarter.
Marcel Teunissen: This is up 57% from the prior year quarter. However, this is behind where we want to be due to both external and internal factors. Across the U.S. market, we continue to see declines in retail and commercial fuel volumes, which we believe are driven by higher fuel prices, weather, changes in consumer behavior, and some indications of an economic slowdown. Unit margins were under pressure due to rising fuel prices, as is normal in the U.S. fuel market.
Marcel: This is behind where we want to be due to both external and internal factors.
Marcel: Across the U S market, we continued to see declines in retail and commercial fuel volumes, which we believe are driven by higher fuel prices, whether changes in consumer behavior, and some indications of economic slowdown.
Marcel: Unit margins were under pressure due to rising fuel prices as is normal in the U S fuel market.
Marcel Teunissen: We continue to focus on executing our improvement plans across the U.S. business. While we expect weakness in the market to be temporary, economic headwinds could present some risks to our 2024 adjusted EBITDA guidance for the U.S. sector. However, we will make up for that potential shortfall in our auto business. Our refining segment reported an adjusted EBITDA loss of $32 million, which is $70 million lower than last year. Composite utilization was 20% during the quarter. All this was due to the unplanned shutdown of the refinery.
Marcel: We continue to focus on executing our improvement plans across the U S business, while we expect weakness in the market to be temporary economic headwinds could present, some risk to our 2024 adjusted EBITDA guidance for the U S segment, we will make up for that potential shortfall in our auto businesses.
Marcel: Our refining segment reported an adjusted EBITDA loss of $32 million, which is $17 million lower than last year.
Marcel: Compensate utilization was 20% during the quarter all this due to the unplanned shutdown of the refinery.
Marcel Teunissen: As previously reported, the refinery was temporarily shut down in early January due to a combination of extreme cold weather and natural gas curtailment. In the subsequent restart, we encountered some technical issues which resulted in an extended shutdown period.
Marcel: As previously reported the refinery was temporarily shut down early January due to a combination of extreme cold weather and natural gas curtailments.
Marcel: And the subsequent restart we encountered some technical issues, which resulted in an extended shutdown period.
Marcel Teunissen: The refinery is now operating at normal levels, and the crack spread environment remains constructed. Our leverage ratio has edged above three times this quarter because of the unplanned refinery outage. This is temporary, and we see a clear pathway to reducing it to the low two times by the end of 2025, as set out in our five-year plan. In the quarter, Parkland delivered available cash flow of $770 million on a trailing 12-month basis, up more than 20% from Q1 2023, or $4.38 per share, up 16%.
Marcel: <unk> is now operating at normal levels, and the crack spread environment remains constructive.
Marcel: Our leverage ratio has edged above three times this quarter because of the unplanned refinery outage. This is temporary and we see a clear pathway to reducing it to the low two times by the end of 2025 as set out in our five year plan.
Marcel: In the quarter parkland delivered available cash flow of $770 million on a trailing 12 month basis up more than 20% from Q1, 2023 or $4 38 per share up 16%.
Marcel Teunissen: We have used these funds to invest in organic growth initiatives, pay our increased dividend, reduce our debt, and buy back 2.4 million shares over the last 12 months. Now, let's turn to slide five to discuss our outlook for the rest of the year. We are maintaining our adjusted EBITDA guidance of 1.95 to 2.05 billion dollars for 2024. After the first quarter, we are approximately $140 million behind plan, but we have full confidence that our detailed recovery plans will make up for the shortfall. During the unplanned refinery shutdown, we were able to complete repairs and pull forward maintenance activities initially planned for the fall.
Marcel: We use these funds to invest in organic growth initiatives. They are increased dividend reduce our debt and buy back $2 4 million shares over the last 12 months.
Marcel: Let's turn to slide five to discuss our outlook for the rest of the year.
Marcel: We are maintaining our adjusted EBITDA guidance of $1 $95 billion to $2.05 billion for 2024.
Marcel: After the first quarter, we are approximately $140 million behind plan, but we have full confidence that our detailed recovery plans will make up for the shortfall.
Marcel: During the unplanned refinery shutdown, we were able to complete repairs and pull forward maintenance activities initially planned for the fall.
Marcel Teunissen: This will allow us to run the refinery at high utilization and catch up during the rest of the year and, in fact, well into 2025. We are pursuing opportunities to improve our capture of refinery cracks with lower-cost crude supply, co-processing different feedstocks, and pipeline cost optimization. In addition, we're monetizing environmental credits in a favorable market. In Q1 at the refinery, we have already made up a substantial portion of the lost margin due to the unplanned shutdown. And we expect that by the end of the year, the refinery will achieve its planned adjusted EBITDA target.
Marcel: This will allow us to run the refinery at high utilization and catch up during the rest of the year and in fact well into 2025.
Marcel: We are pursuing opportunities to improve our capture of refinery cracks with lower cost crude supply co processing different feedstock and pipeline cost optimization.
Marcel: In addition, we're monetizing environmental credits in a favorable markets.
Marcel: In Q1 at the refinery, but you've already made up a substantial portion of the lost margin due to the unplanned shutdown.
Marcel: And we expect that by the end of the year to refinery will achieve its planned adjusted EBITDA target.
Marcel Teunissen: Across our businesses, we have identified several new supply optimization initiatives. These include leveraging our new storage position in the Caribbean, importing renewable diesel into the Canadian market, and blending opportunities in various locations. All these initiatives are worth several million dollars each, and they show the optionality that we have created by our strong supply advantage at Parkland. In our retail business, we will continue to build on the momentum we have created in driving productivity through the strength of our customer offer and loyalty program.
Marcel: Across our businesses, we have identified several new supply optimization initiatives. This includes leveraging our new storage position into Caribbean importing renewable diesel into the Canadian market and blending opportunities in various locations.
Marcel: All these initiatives are worth several million dollars each and it shows the optionality that we've created by our strong supply advantage at Barclays.
Marcel: In our retail business, we will continue to build on the momentum we have created and driving productivity through the strength of our customer offer and loyalty programs.
Marcel Teunissen: Cost management and pricing strategies are key levers in our retail business. We also continue to drive the integration benefits of our U.S. operations and see further opportunities to reduce our cost structure. In our commercial business, we will leverage our supply advantage to compete for new business in all our markets, Canada, the U.S., and internationally. We will simplify our commercial business in select markets to drive further operational efficiency. And in addition to these customer and supply improvements, we continue to implement organizational efficiencies that will improve costs across the organization. We are confident that these improvement initiatives, many of which are already in flight, will bring our refinery and marketing results back to our adjusted EBITDA target range for the year. With that, I will hand it over to Ian and move to slide six. Thanks.
Marcel: Cost management and pricing strategies or key levers in our retail business. We also continued to drive the integration benefits of our U S operations and see further opportunities to reduce our cost structure there.
Marcel: In our commercial business, we will leverage our supply advantage to compete for new business in all our markets, Canada. The U S and international we will simplify our commercial business in select markets to drive further operational efficiencies.
Marcel: And in addition to these customer and supply improvements, we continue to implement organizational efficiencies that will improve cost across the organization.
Marcel: We are confident that these improvement initiatives many of which are already in flight will bring our refinery and marketing results back to our adjusted EBITDA target range for the year.
Marcel: And with that I will hand, it over to Ian and move to slide six.
Ian White: Thanks, Marcel, and good morning, everyone. It's great to be here this morning.
Ian White: Thanks, Marcel and good morning, everyone. It's great to be here this morning.
Ian White: Operational teams across Parkland live and breathe customers and are intensely focused on meeting and exceeding their expectations. Over the next few minutes, I'll share some insights into the customer trends we are seeing across Parkland. With operations spanning 26 countries, the trends we are seeing are not linear because each market is different. However, there are some commonalities, both in terms of consumer behavior as well as how the unique attributes and capabilities of Parkland are positioning us to win as customer needs change.
Ian White: Operational teams across Parkman live and breathe customers at our tensely focused on meeting and exceeding their evolving needs.
Ian White: Over the next few minutes I will share some insights into the customer trends, we are seeing across parkland.
Ian White: With operations spanning 26 countries. The trends, we're seeing are not linear because each market is different.
Ian White: However, there are some commonalities both in terms of consumer behavior.
Ian White: As well as how the unique attributes and capabilities of parkland are positioning us to win as customer needs change.
Ian White: Our retail business continues to grow and is up 13% year over year, despite some margin and volume pressures in the economy. However, if we take a step back and look at the retail customer, the inflationary environment is creating cautious consumers who are closely managing their spending.
Ian White: Our retail business continues to grow and is up 13% year over year, Despite some margin and volume pressures in the U S.
Ian White: If we take a step back and look at the retail customer the <unk>.
Ian White: <unk> environment is creating cautious consumers who are closely managing their spend.
Ian White: As a result, they are seeking value in So how is this showing up on our forecourts, where you're seeing customers put less fuel in their tank but come more often? Average fuel size is down approximately 6% while frequency has increased by 10%. Higher frequency visits create more opportunities for customers to visit our on-the-run convenience, leading to improved sales mix and market share. Our teams are proactively delivering targeted promotions and bundles that reward convenience purchase with a fuel discount and vice versa.
Ian White: As a result, they are seeking value and convenience.
Ian White: Is this showing up on our Forecourts were seeing customers put less fuel in their tank, but come more often.
Ian White: Average deal size is down approximately 6% while frequency has increased by 10%.
Ian White: Higher frequency visits create more opportunities for customers to visit our on the run convenience stores, leading to improved sales mix and market share.
Ian White: Our teams are proactively delivering targeted promotions and bundles of reward convenience purchases with a fuel discount and vice versa.
Ian White: This connection between the fuel and convenience offer is a competitive advantage for Parkland. It is an advantage we will continue to bolster and leverage. Our Journey Rewards loyalty program is the backbone of our retail value proposition. It harnesses the complementary benefits of our fuel and convenience offerings, which support each other and enable us to make targeted, personalized offers and provide customers with the choice and value they are seeking. We have grown Journey Rewards tremendously and continue to see the positive impact of our partnerships with other leading brands.
Ian White: This connection between the fuel and convenience offer is a competitive advantage for parkland.
Ian White: It is an advantage, we will continue to bolster and leverage.
Ian White: Our journey rewards loyalty program.
Ian White: As the backbone of our retail value proposition.
Ian White: It harnesses, the complimentary benefits of our fuel and convenience offerings, which support each other and enable us to make targeted personalized offers and provide customers with the choice and value they're seeking.
Ian White: We have grown journey rewards tremendously and continue to see the positive impact of our partnerships with other leading brands.
Ian White: For example, the recent launch of our Aeroplan partnership has introduced many new customers to Parkland's retail offer. We have already seen a 20% improvement in share of wallet with Aeroplan cardholders, who on average purchase 10-12% more than a typical Journey rewards member. These are customers that have shifted their fuel and convenience spend and, in turn, are driving improved site productivity and same-store growth. And, given the success we've had in Canada, we recently expanded it into Puerto Rico.
Ian White: For example, the recent launch of our Aeroplan partnership has introduced many new customers to <unk> retail offer.
Ian White: We have already seen a 20% improvement in share of wallet with Aeroplan card holders, who on average purchase 10% to 12% more than a typical journey rewards member.
Ian White: These are customers that have shifted their fuel and convenience spend and in turn are driving improved site productivity and same store growth.
Ian White: And our business scale matters.
Ian White: And journey is a highly scalable loyalty platform.
Ian White: Given the success, we've had in Canada, we recently expanded into Puerto Rico.
Ian White: The initial response has been positive, and targeted promotions that offer value are bringing customers into our. In our commercial business, we continue to provide value to our customers by leveraging our proprietary infrastructure to deliver products safely and on time and at competitive prices. And we continually adapt to our customers' evolving energy needs by providing environmental products like renewable diesel and carbon offsetting. Our unique supply advantage gives us greater control over pricing, logistics, and costs, which allows us to maximize margins on every liter we sell.
Ian White: The initial response has been positive and targeted promotions that offer value are bringing customers into our locations.
Ian White: In our commercial business, we continue to provide value to our customers by leveraging our proprietary infrastructure to deliver products safely and on time and at competitive prices.
Ian White: And we continually adapt to our customers' evolving energy needs by providing environmental products like renewable diesel and carbon offset credits.
Ian White: Our unique supply advantage gives us greater control over pricing logistics and costs, which allows us to maximize margins on every leader we sell.
Ian White: These are just some of the ways we are driving continuous improvements to areas of our business that we can control, and the team is laser focused on X. With that, I will pass this on to Bob.
Ian White: These are just some of the ways, we are driving continuous improvements to areas of our business that we can control.
Ian White: And the team is laser focused on execution.
Ian White: With that I will pass it back to Bob.
Robert Berthold Espey: Thanks Ian.
Robert Berthold Espey: Ian, turning to page 7, let me leave you with my thoughts on our business. In November last year, we shared our strategy and plans for the next five years with the market. I believe that this strategy will maximize value for our shareholders. I have spoken with many of our investors and taken to heart their comments. We weigh all perspectives to try and find the right balance between investing in our business for growth, repaying debt, paying dividends, and repurchasing shares.
Robert Berthold Espey: Turning to page seven.
Robert Berthold Espey: Let me leave you with my thoughts on our business.
Robert Berthold Espey: In November last year, we shared our strategy and plans for the next five years with the market.
Robert Berthold Espey: I believe that this strategy will maximize value for our shareholders.
Ian White: I've spoken with many of our investors and taken to heart their comments.
Ian White: Anyway, all perspectives to try and find the right balance between investing in our business for growth repaying debt paying.
Ian White: Paying dividends and repurchasing shares we are committed to acting in the best interest of all our shareholders and do not believe there is a shortcut to long term value creation, our previously announced portfolio optimization plan targets total divestments of $500 million by 2025.
Robert Berthold Espey: We are committed to acting in the best interests of all our shareholders and do not believe there is a shortcut to long-term value creation. Our previously announced Portfolio Optimization Plan targets total divestments of $500 million by 2021. To date, we have sold and identified more than $400 million of non-core assets for disposition, with a substantial portion in advanced stages of negotiation.
Ian White: To date, we have sold and identified more than $400 million of noncore assets for disposition with a substantial portion in advanced stages of negotiation. We have set an ambitious 2 billion adjusted EBITDA target for 2024, which is a year earlier than our original ambition and while we have faced some headwinds in.
Operator: We have set an ambitious $2 billion adjusted EBITDA target for 2024, which is a year earlier than our original ambition. And while we have faced some headwinds in Q1, I have full confidence in our ability to deliver this well within the target range. In fact, it proves the strength and resilience of our diversified business model. This, coupled with our unique supply advantage, will allow us to extract more short-term value for our customers and for our shareholders.
Ian White: Q1, I have full confidence in our ability to deliver this well within the target range.
Ian White: Fact, it proves the strength and resilience of our diversified business model.
Ian White: This coupled with our unique supply advantage will allow us to extract more short term value for our customers and for our shareholders.
Operator: I have led Parkland for over a decade and have immense pride in the way the Parkland team has maneuvered through temporary setbacks and delivered results consistent with the. I believe our team is the best in the industry with incredible depth, ambition, and insight. Together, we operate with the best interests of our customers, employees, and shareholders in mind. I have full confidence in our strategy, our ability to execute, and the detailed plan we have put in place to deliver our 2024 and 2028 ambitions. Parkland is positioned to win. With that, I'll turn it back to the operator.
Ian White: Led parkland for over a decade and have immense pride in the way the parkland team has maneuvered through temporary setbacks and delivered results consistently I believe our team is the best in the industry with incredible depth ambition and insights together, we operate with the best interest of our customers employees and shareholders in mind.
Ian White: Full confidence in our strategy.
Ian White: Our ability to execute and the detailed plan, we have put in place to deliver our 2024 and 2020 ambitions.
Speaker Change: <unk> is positioned to win with that I will turn it back to the operator for questions.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel a request, please press star followed by the 2. If you are using a speakerphone, please leave the handset before pressing any key.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Do you have a question. Please press star followed by the one on your telephone keypad.
Speaker Change: Don from technology request questions will be taken into or do we see should you wish to cancel your request. Please press star followed by the two.
Speaker Change: If youre using a speakerphone please lift the handset before pressing Inc.
Operator: One moment, please for your first question. Your first question comes from the line of Kevin Chiang from CIBC. Please go ahead.
Speaker Change: One moment. Please for your first question.
Speaker Change: Your first question comes from the line of Kevin Chiang from CIBC. Please go ahead.
Kevin Chiang: Hi, good morning, and thanks for the opportunity to ask my question. This is Kevin Kim calling in for Kevin Chiang. My first question is, what drove the difference between your reported refinery results and what you pre-released?
Speaker Change: Hi.
Speaker Change: Thanks, Good morning, and thanks for the opportunity to ask a question does it Kevin Kim calling in for Kevin Chiang.
Kevin Chiang: My first question is what drove the difference between your reported refinery results and what you pre released.
Robert Berthold Espey: Hi Kevin, it's Bob Espey. You know, look. Our preliminary estimates were released prior to the completion of the quarter in our formal review process. I would say we did better than anticipated on imports into the market to replace the shortfall in the refinery. And also, we were able to recognize the benefits of some of our carbon credits during the quarter as well. So those two things helped us succeed where we had previously failed on the refinery.
Kevin Chiang: Hi, Kevin It's Bob Espey.
Kevin Chiang: Yes.
Kevin Chiang: Our preliminary estimates were released prior to the completion of the <unk>.
Robert Berthold Espey: And our formal review process I would say, we did better than anticipated on imports into the market.
Robert Berthold Espey: To replace the shortfall in the refinery and also able to recognize the benefits of.
Robert Berthold Espey: Some of our carbon credits during the quarter as well so those two things helped us exceed where we had previously guided.
Robert Berthold Espey: Binary.
Robert Berthold Espey: I got it. Thank you, Bob. My second and last question will be, can you provide some color on the 9.8% negative same store volume growth in the US? And how do you feel about hitting the $240 million U.S. EDITA this year?
Robert Berthold Espey: Got it thank you Bob.
Speaker Change: My second and last question would be can you provide some color on the nine 8% negative same store volume growth in the U S.
Speaker Change: And how do you feel about hitting the 2000 240 million U S a bit this year.
Robert Berthold Espey: Yeah, on the US business. Now look, there is a lot of really good traction in the US when we look at the new team there and what they're delivering. And you know, before we go into the volume, I'll highlight some of the growth that they've had, particularly in their non-fuel side of the business, where we saw positive same store sales comp. As well, our gross margin is up by over 2% as our various pricing initiatives come into effect, and our gross profit in that part of the business is up $10 million. So, good indicators that we're getting good traction on our recovery in that business. Unknown Speaker The same store was off.
Speaker Change: Yes on the.
Speaker Change: The U S business.
Speaker Change: Look there are a lot of really good.
Speaker Change: Traction in the U S. When we look at the.
Speaker Change: The new team there and what they are delivering.
Speaker Change: Before we go into the volume I'll highlight some of that.
Speaker Change: Growth that they've had particularly in their non fuel side of the business, where we saw positive same store sales comps.
Speaker Change: As well our gross margin is up by over 2% as our various pricing initiatives come.
Speaker Change: Come into effect and our gross profit in that part of the business is up $10 million. So all good indicators that we're getting good traction on our.
Speaker Change: Recovery in that business.
Speaker Change: Same store was off.
Robert Berthold Espey: You know, when we look at that business, we sort of see two markets; we have our northern business, which is the Rocky Mountain area, and the area just, just south of Canada. And that business did very well. It did.
Speaker Change: We look at that business, we sort of see two markets, we have our northern business, which is <unk>.
Speaker Change: The Rocky Mountain area and the area just.
Speaker Change: Yes.
Speaker Change: Canada and.
Speaker Change: And that business did very well it did.
Speaker Change: In line with industry.
Robert Berthold Espey: It was in line with industry and our business in Florida on the fuel side, so our southern business was off because, you know, as we'd indicated earlier in the year, we had some operational issues which we've since fixed and will allow us to track to or above industry. I would say the other thing is the environment in the U.S. right now. We've seen our competitors announce top quarters both on the volume and margin side. And so we're in line with where the industry is overall in the business.
Speaker Change: Our business in Florida on the fuel side, so our southern business was off.
Speaker Change: Because as we indicated.
Speaker Change: Earlier in the year, we had some operational issues, which we fixed and will allow us to track two or above industry I would say the other thing is.
Speaker Change: The environment in the U S right now is.
Speaker Change: We've seen our competitors announced tough quarters.
Speaker Change: Both on the volume and margin side.
Speaker Change: And.
Speaker Change: And so we're at we're in line with where the industry is overall in.
Speaker Change: The business.
Robert Berthold Espey: Thank you very much for your answer, Bob.
Speaker Change: Thank you very much for your answer Bob.
Speaker Change: Thank you you answered all my questions.
Operator: Thank you, and your next question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.
Speaker Change: Thank you and your next question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.
Benjamin Isaacson: Thank you very much and good morning everyone, and congratulations on getting through a tough Q1. Bob, my first question is on your comment about strategy. A couple of weeks ago, the board chose not to pursue a strategic review. What is the process to determine that? What factors are considered, and what's different now than when you conducted a strategic review in Q1 of last year?
Benjamin Isaacson: Thank you very much and good morning, everyone and congrats on.
Benjamin Isaacson: On getting to a tough Q1.
Benjamin Isaacson: Bob My first question is on your comment on strategy a couple of weeks ago. The board chose not to pursue a strategic review what is the process to determine that what factors are considered in what's different now than when you conducted a strategic review and Q1 of last year.
Benjamin Isaacson: Yes.
Robert Berthold Espey: Um, you know, first of all, there's really, uh, no, no updates on the situation with either Engine or the Simpsons, and we've concluded that a strategic review isn't in the best interest of shareholders at this time. So we believe that remaining focused on our core strategy and continuing to execute maximizes value for all of our shareholders.
Benjamin Isaacson: First of all there is really.
Benjamin Isaacson: No no updates on the situation with either engine or the Simpsons and.
Benjamin Isaacson: And we've concluded that a strategic review isn't in the best interest of shareholders at this time.
Benjamin Isaacson: So we believe that remaining focused on our core strategy and continuing to execute maximizes value for all of our shareholders.
Benjamin Isaacson: Okay. And just my second question is on sea storm margins. Sea storm margins continue to creep up in both Canada and the US, which is great to see. I think we're at about 35% in Canada and 34 in the US. What are we playing for? What's the end target or what's the goal of these four margins?
Benjamin Isaacson: Okay.
Benjamin Isaacson: And just my second question is on C store margins.
Benjamin Isaacson: Continued to creep up in both Canada, and the U S, which is great to see I think we're at about 35% in Canada 34 in the U S.
Benjamin Isaacson: What are we playing forward.
Benjamin Isaacson: What's the end target for what's the goal.
Benjamin Isaacson: Export margins.
Ian White: Yeah, Ben, we'll let Ian White, who's our head of the Canadian business, talk about all the great work we're doing on the margin side. Yeah, thanks, Bob.
Benjamin Isaacson: Yes, Ben will let Ian White Who's our head of the Canadian business talk about all the great work, we're doing on the margin side, yes. Thanks, Bob Good morning, Ben.
Ian White: Yeah, thanks, Bob. Good morning, Ben. What you're seeing is the next shift and around and our assortment starting to to change in a way that's starting to drive right positive momentum around around margins so you know less reliant on tobacco lottery lower margin categories and you're seeing other categories like food, center of store, confection play a bigger role around around target I think we've still got a basis point or two improvement and through the windshield here I think we can go after but what you're seeing is momentum with the with the programs we've put in place with the category management we're doing across the business to start to drive a positive momentum in mix and ultimately you're seeing it show up in margin we're also very mindful of the promo mix and you know I mentioned in my prepared remarks that consumers are seeking value so we're also ensuring that we've got the right value for them and so you'll see that You'll see the margin bounce around a little bit as we seek the right, you know, volume margin trade off to ensure that we've got the right offer.
Ian White: What youre seeing is the mix shift.
Ian White: Alright, and our assortment starting two to change in a way that's starting to drive positive momentum around around March so less reliant on tobacco lottery lower margin categories Youre seeing other categories like food center of store confection play a bigger role around.
Benjamin Isaacson: Our target I think we still got a basis point or two improvement.
Benjamin Isaacson: <unk>.
Benjamin Isaacson: Through the windshield here I think we can go after but what youre seeing is momentum with the with the programs. We put in place with the category management, we're doing across the business to start to drive positive momentum and mixing ultimately youre seeing it show up in margin.
Benjamin Isaacson: We're also very mindful of the promo mix I mentioned in my prepared remarks that consumers are seeking value. So we're also ensuring that we've got the right value for them and so youll see that.
Benjamin Isaacson: Youll see the margin bounce around a little bit as we seek the right.
Benjamin Isaacson: Volume margin trade off to ensure that we've got the right offer for consumers.
Robert Berthold Espey: That makes sense. Thank you so much. One of the other things I'd like to highlight, Ben...
Speaker Change: That makes sense. Thank you so much.
Robert Berthold Espey: One of the other things I'd like to highlight, Ben, and we did mention it in the script, but I think it's worth reiterating, is that our Canadian business on the fuel side gained half a percentage point of market share year-over-year in the quarter. And that's across the Canadian market. I would say that that speaks to the marketing programs and also our ability to execute effectively at street level. So, I'm really pleased with the Canadian business and how it's been trending here.
Benjamin Isaacson: One of the other things I would like to highlight and we did mention it in the script, but I think it's worth reiterating is that our Canadian business on the fuel side gain half a percentage point of market share year over year quarter.
Benjamin Isaacson: That's across the Canadian market I would say that that speaks to the.
Benjamin Isaacson: Marketing programs and also our ability to execute effectively at street level. So really pleased with the Canadian business and how it's been trending here.
Speaker Change: Great. Thanks, so much again.
Neil Singhvi Mehta: Thank you. And your next question comes from the line of Neil Mehta from Goldman Sachs. Please go ahead.
Speaker Change: Thank you and your next question comes from the line of Neil Mehta from Goldman Sachs. Please go ahead.
Robert Berthold Espey: Yeah, good morning, Bob, Marcel, and team. The first question is just on non-core assets. You identified more than $400 million worth of assets for disposition. And just can you give us a sense of how you're approaching this program and how that $500 million target seems to be coming along. If you can find any perspective on that, that would be great.
Neil Singhvi Mehta: Good morning, Bob Marcel team.
Neil Singhvi Mehta: First question is just on noncore assets, you identified more than $400 million worth of assets for disposition.
Robert Berthold Espey: And just can you give us a sense of how you approach in this program.
Robert Berthold Espey: And that $500 million target seems to be coming.
Neil Singhvi Mehta: Any.
Perspective on that would be great.
Marcel Teunissen: Hey, good morning, Neil. Marcel here.
Hey, good morning, Neil and Mark.
Well here. So yes, if you look at the two if you look at the 400 million that we currently have.
Marcel Teunissen: So, yes, if you look at the $400 million that we currently have, quite a bit of that has already been executed. So, we've collected the cash. You know, a portion of that is in, as we said, the advanced stages of negotiation. We're almost to putting the pen to paper to finalize that. So, that will take a couple of weeks more, and we've done that.
Quite a bit of that has already been executed so we collected the cash.
Neil Singhvi Mehta: A portion of that as.
Marcel Teunissen: As we said it's in the final stages of negotiation, we almost two putting depends on paper to finalize steps that will take a couple of weeks more and we've done that because there's about half way.
Marcel Teunissen: It brings us about halfway to that $400 million. Then the remaining part, a lot of that is going to be driven by the 157 retail sites that we actually have put on the market. We announced it earlier in the quarter. It's actually quite interesting.
Marcel Teunissen: Okay.
Marcel Teunissen: And then the remaining part a lot of that is going to be driven by the 157 retail sites that we actually equity market, we announced earlier in the quarter, it's actually quite interesting we've executed more than 2000 of Nba's. All those sites. So there is a lot of it.
Marcel Teunissen: We've executed more than 2,000 NDAs on those sites. So, there's a lot of interest from individuals that want to buy a site to become a dealer as well as from buyers that want, potentially, to have multiple sites and buy that. So, you know, we're in the process, and we're going through that.
Marcel Teunissen: Trusts and from individuals that want to buy a site to become a dealer as well as so far you said potentially to have multiple sites and bite it so.
Marcel Teunissen: Yes.
Marcel Teunissen: Yes.
Marcel Teunissen: In terms of identifying dose side, so we have.
Marcel Teunissen: In terms of identifying those sites, we do network planning, and we do that continuously within our retail business, and we identify those sites. For example, we have identified sites where we believe that the value of real estate is actually greater than the value it has for us to run those sites. So, that's where we try to monetize the upside and then reinvest that money into businesses or locations that actually bring better returns for us.
Marcel Teunissen: We do network planning and we do that continuously within.
Marcel Teunissen: Within our retail business and we identified those sites.
Marcel Teunissen: One if I.
Marcel Teunissen: Identify science.
Marcel Teunissen: The value of real estate is actually bigger than the value. It has for us to bundle side. So that's where we've tried to monetize upside and then reinvest that money into businesses work locations that actually bring better returns for us and then in terms of that 150 sites.
Marcel Teunissen: Then, in terms of those 150 sites, a lot of those sites are actually sites that we are not necessarily the rightful owner of. They are in the wrong location. We already have some overlap there from other parts of the network, or they're simply not to the scale that we need to kind of invest our own capital in them, and it's often better if it's the capital of somebody else. So, that's on the retail network.
Marcel Teunissen: <unk> are actually sites that we are not necessarily the right owner the wrong location.
Marcel Teunissen: You already have some overlap there from other parts of the network or they're simply not to the scale that we need to kind of invest our own capital those and often better.
Marcel Teunissen: The capital somebody else. So thats one of the retail network and then in terms of non core business as we've talked previously about parts of our commercial business within Canada, where at one point in time that was strategic for US as we were a smaller company, but since then we have concluded that slots as strategic for us and probably better.
Marcel Teunissen: And then in terms of non-core businesses, we've talked previously about parts of our commercial business within Canada where, you know, at one point in time, it was kind of strategic for us as we were a smaller company. But since then, we have concluded that it's not strategic for us, and we probably would have been better, you know, that business, first of all, is better off in the hands of somebody that is more strategic for which it's more strategic.
Marcel Teunissen: That business physical was better off in the hands of somebody that.
Marcel Teunissen: That is more strategic for which is more strategic.
Marcel Teunissen: And otherwise, you know, we would like to take that money and then reinvest it in areas where we get better returns. There's a little bit more to go to get to the 500, and I'm very confident that we have a pipeline of other kinds of non-core assets that we can put up and monitor.
Marcel Teunissen: And otherwise.
Marcel Teunissen: I'd like to take that money and then reinvested in areas, where we can better returns.
Marcel Teunissen: More to go to get to the 500 and I'm very confident that we have a pipe.
Marcel Teunissen: All of our non core assets that we've done that.
Marcel Teunissen: And monetize.
Marcel Teunissen: Thanks, Marcel. Great color, too. And follow-up, as you're making good progress on driving down that leverage ratio to two to three times, and so just a little bit of your perspective as you get towards that inflection. How do share buybacks fit into your capital allocation priority, and do you think it makes sense for that to be prioritized even over a dividend as you think about the different ways you can allocate your Yeah, we will continue to.
Speaker Change: Okay. Thanks, Marcel great color and a follow up if youre, making good progress on driving down.
Marcel Teunissen: Debt leverage ratio to the 2% to three times.
Marcel Teunissen: And so I would just love your perspective as you get towards that inflection how do you how do you share buybacks fit into.
Marcel Teunissen: Your capital allocation priority and do you think it makes sense for that to be prioritized even over a dividend as you think about the different ways you can allocate your capital.
Marcel Teunissen: Yeah, we continue to allocate in line with what we've shared with the market, right. So out of our total expected cash flow here over the next five years, six billion, we say, hey, a quarter is for dividends, and we put a quarter back into our business as organic growth. And when we have half left, for what we said initially, we prioritize bringing the leverage down to that lower end of the range you have stated, and then the remainder, you know, kind of buybacks compete with M&A, or M&A competes with buybacks, how you want to look at that.
Marcel Teunissen: Yes, we continue to allocate in line with what we've shared with the market right. So out of our total expected cash flow year over the next five year 6 billion, we say hey quarters dividends.
Marcel Teunissen: Core to back in our businesses organic growth I wouldn't agree.
Marcel Teunissen: Yes.
Marcel Teunissen: For what we said initially we prioritize bringing the leverage down to that lower end of the range, which we have stated and then the remainder.
Marcel Teunissen: Kind of buybacks compete with M&A or M&A competes with buybacks are you want to look at that so that's that's how we look overall at the framework leverage run up a bit in Q1, obviously, because the refinery you didnt reduce the cash that we expected, but kind of as we go into the next few quarters, we will just continue.
Marcel Teunissen: So that's, that's how we look overall at the framework, leverage went up a bit in Q1, obviously, because the refinery didn't produce the cash that we expected. But kind of as we go into the next few quarters, we'll just continue this, you know, that downward trend on the leverage. And we continue to kind of work on that, and we have done quite substantial share buybacks here over the last five months, including in Q1.
Marcel Teunissen: The downward trend.
Marcel Teunissen: On the leverage and we'll continue to kind of work.
Marcel Teunissen: Quite substantial share buybacks here over the last five months, including in Q1.
Marcel Teunissen: So we've done that but it is a balance of proud of getting all of those things down so getting the leverage to where we've set the target will be buying back the shares if we actually.
Marcel Teunissen: And, you know, we've done it, but it's a balance of kind of getting all of those things down. So getting the leverage to where we've set the target will be buying back the shares if we actually, you know, when they're attractively priced, and they are at the moment, but balancing that so that we can hit all those targets, the dividends, you know, our dividend track record, we've increased that for 12 years in a row. And that dividend is a core part of our value proposition to shareholders.
Marcel Teunissen: When they are attractively priced and they are still at the moment, but balancing that sort of you're going to hit all those targets the dividends.
Marcel Teunissen: Chuck Frankfurt, we've increased that for 12 years in a row and that.
Marcel Teunissen: Dividends are a core part of our value proposition to shareholders.
Speaker Change: Next question.
Michael Van Aelst: Thank you. And your next question comes from the line of Michael Dan Aelst from TD Securities. Please go ahead.
Marcel Teunissen: Thank you and your next question comes from the line of Michael Van <unk> from TD Securities. Please go ahead.
Robert Berthold Espey: Hi guys, it's Evan in for Mike. So starting off just on the US, so on a run rate basis, that business is running well below your 2024 guidance. How much of the profit shortfall in Q1 would you say is related to unfavorable fuel margins in the short term that may have already normalized, as opposed to broader economic weakness that is putting pressure on commercial and retail volume?
Michael Van Aelst: Hi, guys its Evan in for Mike.
Robert Berthold Espey: Starting off just on the U S. So on a run rate basis that business is running well below your 2024 guidance how much of that of the profit shortfall in Q1 would you say is related to.
Robert Berthold Espey: Unfavorable.
Robert Berthold Espey: Fuel margins.
Robert Berthold Espey: In the short term they may have already normalized as opposed to broader economic weakness.
Robert Berthold Espey: It's putting pressure on.
Robert Berthold Espey: On commercial and retail volumes.
Robert Berthold Espey: Um, you know, look, it's it's a combination of both the margin environment was tough in the quarter as shown by others that have recently released, and you know look generally in the U.S. in a rising environment of the underlying products we did see crude prices drift up as well as product pricing we tend pricing tends to lag or margin tends to lag in that environment so the flip side is as it goes down we tend to capture more so so again look you know I would say through the year we expect that margins will normalize and we'll make you know we'll get this business on to the run rate that we've indicated it should run at.
Speaker Change: Look it's a combination of both the margin environment was tough in the quarter as shown by others.
Robert Berthold Espey: Recently released.
Robert Berthold Espey: And.
Robert Berthold Espey: Generally in the U S in a rising environment.
Robert Berthold Espey: The underlying products. So we did see crude prices drift up as well as product pricing.
Robert Berthold Espey: We 10 pricing tends to lag.
Robert Berthold Espey: Our margin tends to lag in that environment.
Robert Berthold Espey: It is as it goes down we tend to capture more so so again, what I would say.
Robert Berthold Espey: Through the year, we expect that margins will.
Robert Berthold Espey: Normalize and we will make.
Robert Berthold Espey: And we will get this business onto the run rate that we've indicated it should run at.
Robert Berthold Espey: Maybe, and maybe some color on the volumes. Let me give you some color on the volumes as well.
Speaker Change: Maybe and maybe some color on the let me give some.
Robert Berthold Espey: Coupled with the volumes as well so I think it's interesting.
Marcel Teunissen: So I think it's interesting that we see in the US some of the diesel volume is weaker. You know, and that typically indicates that economic activity is slowing down. And I think that's kind of one of those leading indicators.
Robert Berthold Espey: In the U S. Some of the diesel volume is weaker.
Marcel Teunissen: And that typically indicates that economic activity is slowing down.
Marcel Teunissen: I think thats one of those leading indicators that we have to see but it's just temporarily or where do we see some more trends coming into the year and then on the gasoline side I think already highlighted that the gasoline volumes.
Marcel Teunissen: So we have to see whether it's just temporarily or whether we see some more trends coming into the year. And then on the gasoline side, I think Bob already highlighted that gasoline volumes, you know, so on the retail network in the northern business around the Rockies, it's actually in line with the market, but the market was down. And the market in the Florida business, the Florida market, was down as well. But we did a bit worse than the market on some operational issues, which we have, which we have fixed.
Marcel Teunissen: So on our retail network in the Norton business around the Rockies, it's actually in line with market, but the market was down and the.
Marcel Teunissen: Marketing to Florida business, the Florida market goes down as well.
Marcel Teunissen: But we did a bit worse than the market.
Marcel Teunissen: Racial issues, which were fixed.
Marcel Teunissen: Fixed and we don't have an exact breakdown of which part is external and internal.
Marcel Teunissen: We don't have an exact breakdown of which part is external and which is internal. But you know, I think there were definitely some headwinds in the markets that, you know, we kind of closely monitor and focus on in the next couple of quarters and on the things that we control.
Marcel Teunissen: Pat brings to the market.
Marcel Teunissen: We closely monitor in the next couple of quarters of folks Olympics that we control and look but I would say on the things that we can control we're seeing really good traction. So we talked earlier about.
Ian White: Recontrol. 2% and also our same store was trending positively, and overall, our gross profit was up significantly quarter over quarter. So the team continues to execute very well, and we're really pleased with where the business is heading, and you know that in the right environment, you know that business will perform as expected.
Ian White: The performance in our non fuel business, where our margin is up.
Ian White: 2% and also our same store was trending positively and overall gross profit was up significantly quarter over quarter. So team continues to execute very well and we're really pleased with where the business is heading.
Ian White: In the rates.
Ian White: Environments.
Ian White: That business will perform as expected.
Ian White: Okay, great. Thanks, Ian.
Speaker Change: Okay, great. Thanks.
Operator: So on your 2024 guidance, you've reiterated that. Though it seems like some of the... offsetting factors that are offsetting that the refinery aren't necessarily something that we can count on to being around long term, like federal markets for carbon credit monetization and things like that. So with that in mind, you know, to what degree does this make the 2025 consensus EBITDA of just over $2 billion look like a stretch to you?
Ian White: So on your 2024 guidance you've reiterated that.
Operator: So it seems like some of the.
Operator: Offsetting factors that are offsetting that.
Operator: Our refinery.
Operator: Aren't necessarily something that we can count.
Operator: Alright to being around long term like.
Operator: Favorable markets for carbon credit monetization and things like that.
Operator: So with that in mind.
Operator: To what degree does this make.
Operator: The 2025 consensus EBITDA just over $2 billion.
Operator: Looked like a stretch to you.
Robert Berthold Espey: Yeah, look, I mean, we're on track to hitting our guidance for the year. I'd say we're comfortably on track for 24. And if we look at what's driving that, there are really four key items. So one thing is our utilization on the refinery will run at the upper end of where we've guided. And, you know, that's because we were able to pull forward some of the maintenance that we'd had planned later in the year. And it allows our utilization to come up. So that's one factor.
Speaker Change: Yes look I mean, we're on track to hitting our.
Robert Berthold Espey: Our guidance for the year I would say, we're comfortably on track for 24 and <unk>.
Robert Berthold Espey: If we look at what's driven that really four key items. So one is our utilization on the refinery will run at the upper end of where we guided.
Robert Berthold Espey: And that's because we were able to pull forward some of the maintenance that we had planned later in the year and it allows our utilization come up so thats one factor.
Robert Berthold Espey: Now, the second thing is optimization, and the team has done optimization on the crude side. And these are benefits that we expect to continue into the following year. And then on the credit environment, we're in a situation where we are generating a lot of credit. And we're benefiting from that, and we do expect to benefit from a portion of that going into 2025. The overall result between these two is that our capture rate on the refinery is going up.
Robert Berthold Espey: Second thing is on optimization and the team has.
Robert Berthold Espey: Done optimization on the crude side and these are benefits that we expect to.
Robert Berthold Espey: Continue into the following year and then on the credit environment. We're in.
Robert Berthold Espey: We are generating a lot of credits.
Robert Berthold Espey: And we're benefiting from that and we do expect to benefit from a portion of that going into 2025. The overall results.
Robert Berthold Espey: Between is that our capture rate on the refinery is going up so we've tended to.
Robert Berthold Espey: So we've tended to plan you know in the high 30s and we're probably hitting the mid 40s you know as our as our capture rate is comfortably in the mid 60s so so you know we're not relying on a higher crack environment I would say on top of that the crack environment is constructive right now so when you look at the refinery we're actually in a good spot just operationally optimization and then we have a bit of a tailwind from the crack spread now the other factors that are contributing are in our marketing businesses you know we continue to make improvements across the board and those are structural and be long-term and we'll see those feed in through the balance of the year you know as those as those initiatives are implemented so you know feeling confident around 24 when we go to 25 you know we'll certainly be on track with the growth that we predicted in our investor day you know which takes us to that eight dollars and fifty cents of available cash flow per share by 2028 so again the business on track to deliver the organic growth that we projected one other item is our supply and you know we've we've also been able to make up some of the shortfall in the year with our supply initiatives and again those were all in flight but I would say the team the supply team has been able to find opportunities that they hadn't anticipated last year which are again incremental to to our performance year-over-year will help us deliver 24 and are certainly you know a good starting point for 25 so all you know I would say again refinery supply and the marketing businesses and again the refinery both on utilization and getting the capture rate up so again you know look I would point back to the hard work of the team and their ability to to pivot quickly and and deliver results that are sustainable over the long term
Robert Berthold Espey: Plan.
Robert Berthold Espey: And the high thirties, and we're probably hitting the mid forty's.
Robert Berthold Espey: As our capture rate is comfortably in the mid sixties.
Robert Berthold Espey: So we're not relying on a higher crack environment I would say on top of that the crack environment is constructive right now so when you look at the refinery.
Robert Berthold Espey: Actually in a good spot just operationally optimization and then we have a bit of a tailwind.
Robert Berthold Espey: From the crack spread.
Robert Berthold Espey: Other factors.
Robert Berthold Espey: That are contributing are in our marketing businesses, we continue to make improvements across the board.
Robert Berthold Espey: And so just staying on the initiative. You mentioned that you took some steps to improve Marketing Profitability, and I think you mentioned a couple of them earlier.
Speaker Change: And those are.
Robert Berthold Espey: Structural and long term and we will see those deed in through the balance of the year.
Robert Berthold Espey: <unk>.
Robert Berthold Espey: As those initiatives are implemented so feeling confident around 24, when we go to 25, we will certainly be on track with the growth that we predicted in our Investor day, which takes us to that $8.50 of available cash flow per share.
Robert Berthold Espey: By 2020 so.
Robert Berthold Espey: The business on track to deliver the organic growth that we projected.
Robert Berthold Espey: One other item is our supply.
Robert Berthold Espey: Yes.
Robert Berthold Espey: We've also been able to make up some of the shortfall in the year with our supply initiatives and again those were all in flight.
Speaker Change: I would say the team.
Speaker Change: The supply team.
Robert Berthold Espey: <unk> has been able to find opportunities that they hadn't been anticipated.
Robert Berthold Espey: Last year, which are again incremental too.
Robert Berthold Espey: Two our performance year over year will help us deliver 24 and are certainly.
Robert Berthold Espey: Good starting point for 25, so I would say again refinery.
Robert Berthold Espey: Supply.
Robert Berthold Espey: And the marketing businesses and again the refinery both on utilization and getting the capture rate up. So again look I would point back to the hard work of the team and their ability to.
Robert Berthold Espey: Two.
Speaker Change: Pivot quickly and.
Robert Berthold Espey: And deliver results that are sustainable over the long term.
Anna: Thanks Anna.
Speaker Change: Just staying on.
Speaker Change: On the initiatives you mentioned that you took some steps to improve.
Robert Berthold Espey: Organization wide marketing profitability and I think you mentioned a couple of them earlier.
Robert Berthold Espey: Leveraging your storage position in the Caribbean and importing diesel into the Canadian market.
Speaker Change: Could you provide a bit more detail on what you mean by leveraging your storage position.
Robert Berthold Espey: In the Caribbean.
Robert Berthold Espey: And if theres any other.
Speaker Change: Other initiatives that would fall into your outlook.
Robert Berthold Espey: So leveraging your storage position in the Caribbean and importing diesel, provide a bit more detail on what you mean by leveraging your storage position in the Caribbean and, if there's any other, Yeah, look, you know, you know, again, our supply system is quite dynamic, and we're always looking for opportunities to improve. And that manifests itself in the short term, just by managing what's available. So a great example of that is with the refinery going down, we're able to import quite well into the Canadian market. And that leverages assets that we currently have in the marketplace. In the Caribbean, we were actually able to add storage. Maybe, Marcel, you can talk about how that...
Robert Berthold Espey: Again, our supply systems quite dynamic and we're always looking.
Robert Berthold Espey: Looking for opportunities to improve.
Robert Berthold Espey: And that manifests itself in the short term just by managing available. So Great example of that is with the refinery going down.
Marcel Teunissen: We're able to import quite well into the Canadian market and Thats that leverages assets that we currently have in the marketplace.
Robert Berthold Espey: In the Caribbean, we were actually able to add storage, maybe Marcel and you can talk to help that so basically our supply system in the Caribbean. The way. It works, we bring big ships and what goes into bigger tanks and then we have smaller ships that go to the individual markets. So that intermediate storage that we have.
Marcel Teunissen: Yeah, so basically, our supply system in the Caribbean, the way it works, we bring big ships and we put those into bigger tanks, and then we have smaller ships that go to the individual market, so that intermediate storage that we have, you know, that is quite critical. We've added to that storage by taking a position, a long-term lease within the region, and that brings kind of more quantities of product closer to our markets, which means, you know, we bring a big ship, which is cheaper, closer to markets so that, you know, we can subsequently supply our customers cheaper.
Marcel Teunissen: That is quite critical.
Marcel Teunissen: Added to that storage by taking a position to.
Marcel Teunissen: Some of these within the region and it brings kind of more quantities of product closer to our markets, which means we bring a big shift which is cheaper closer to market. So.
Marcel Teunissen: Subsequently supply our customers cheaper I think also what the industrial can you talk about optionality right to predict all that in multiple locations and the market moves in a favorable position and you can actually monetize some of those so that optionality.
Marcel Teunissen: I think also what that does, we often talk about optionality, right? If you have a product in multiple locations and the market moves into a favorable position, then you can actually monetize some of those. So that optionality, you know, that usually comes with having storage in a different location. In that case, that is driving some value as well. And so it's having those positions and then having the team and the people that are capable so when those, you know, those markets, you know, the kind of circumstances present themselves, they can actually monetize that.
Marcel Teunissen: It usually comes with having storage in a different location. So in that case that is driving some value as well and so it is having those positions and then having the team.
Marcel Teunissen: The people that are capable that windows.
Marcel Teunissen: Those markets.
Marcel Teunissen: And our kind of circumstance presented itself that can actually monetize.
Marcel Teunissen: One of the things we have yet.
Marcel Teunissen: So that's just one of the things we have. The other piece, which we talked about, is renewable diesel imports. We have seen renewable diesel prices to be quite favorable, and by importing renewable diesel into Canada and then clipping the carbon credit of that renewable diesel and monetizing that, you know, that's been valuable here over a period. And we can do that on a forward basis. So we can sell some of those things on a forward basis.
Marcel Teunissen: Richard talked about as renewable diesel imports and we have seen renewable diesel prices to be quite favorable.
Marcel Teunissen: And by importing renewable diesel into Canada, and then clipping.
Marcel Teunissen: The carbon credit, albeit renewable diesel by monetizing that.
Marcel Teunissen: That's the valuable Euro group periods that we can do that on a forward basis.
Marcel Teunissen: All of those things and look forward basis.
Marcel Teunissen: Those circumstances won't always be there these markets tend to kind of open and then they close these opportunities.
Marcel Teunissen: But those circumstances won't always be there, right? These markets tend to kind of open, and then they close on opportunities. But then, if they close, then something else will present itself, right? And it's all about having the right positions in the right locations and then the capability to act when those things present themselves. Yeah, it's really great.
Marcel Teunissen: And then if they close that something else will present itself.
Marcel Teunissen: It's all about having the right positions in the right locations and then the capability to act windows when those things present themselves.
Robert Berthold Espey: Yeah, it's really bringing the three parts of our supply strategy together. It's the assets, the distribution capability, and then ultimately the commercial intensity of the team.
Marcel Teunissen: Yes, it's really bringing the three parts of our supply strategy together.
Robert Berthold Espey: The distribution capability and then ultimately the commercial intensity of the team.
Robert Berthold Espey: Okay, great. And one last one. So on your MG&A savings target of 100 million run rate by the end of this year, I think you had planned to exit 2023 with about 35 million in run rate savings. Did you get there? And for 2024? What's going to allow you to get to the hundred million? And when should we start to see results?
Speaker Change: Okay, Great and one last one so on your.
Robert Berthold Espey: G&A savings target of $100 million run rate by the end of this year.
Robert Berthold Espey: I think you had plan to exit 2023 with about $35 million.
Robert Berthold Espey: In run rate savings.
Robert Berthold Espey: Did you get there.
Robert Berthold Espey: And for 2020 for what's going to allow you to get to the $100 million and when should we start to see.
Robert Berthold Espey: The.
Robert Berthold Espey: Thanks.
Marcel Teunissen: Yeah, so back to your question. So yes, we did hit that run rate last year, as we got in. As you recall, somewhere in the middle of last year, we reduced the number of positions across Parkland by about 250. And so we did that. And we see some of the benefits, you know, that, of course, now that we have been going on for a full year. So we get that benefit in 2024 for those actions for a full year.
Speaker Change: Yes, so Mike to your question. So yes, we did hit that run rate last year is regarded as you'll recall somewhere in the middle of last year, we reduced the number of positions across sparkling by about 250, and so we did that so we see some of the benefits.
Marcel Teunissen: But of course now lapping a full year, so we get that benefit as penetrated or for those actions for a full year.
Marcel Teunissen: Second we really looking at ways to simplify our business and I already mentioned simplify our commercial business all of that is through the divestment activities that we've talked about before.
Marcel Teunissen: The second, we're really looking at ways to simplify our business, and I already mentioned simplifying our commercial business. Some of that is through the divestment activities that we talked about, and that will contribute to that. And then when you look a little bit longer term, and we talked about it at our investor day, further standardizing and harmonizing of our processes, which includes some of our systems implementations, which are currently ongoing, that sets us up for kind of longer-term efficiency gains across the organization.
Marcel Teunissen: And then when you look a little bit longer term I, we talked about at our Investor day.
Marcel Teunissen: Further standardizing harmonizing processes, which include some of our systems implementations, which are currently ongoing.
Marcel Teunissen: Sets us up for kind of longer term efficiency gains across the organization.
Marcel Teunissen: Another big benefit, you know, bringing together all the purchases, all our third-party purchases that we do across Parkland. We've grown the company quite a bit, and we actually find that when we lean into our procurement of those third-party services, their savings are simply on the scale. And that is kind of contract by contract, as we kind of go through that, and there's more opportunity there. So we continue to lean into that. Yes, so last year, we got the benefits of the first steps, and we'll continue to pursue that, confident that that will build up not only in 2024 but also in our 2028.
Marcel Teunissen: A big benefit.
Marcel Teunissen: Bringing together all the per cases or third party purchases that we do.
Marcel Teunissen: Cross Parkman.
Marcel Teunissen: We've grown the company quite a bit.
Marcel Teunissen: We actually find it when we meet into our procurement of third party services that savings or simply pulled the scale.
Marcel Teunissen: Kind of contract that contact us we kind of go through that.
Marcel Teunissen: And there's more opportunity there so we continue to lean into that.
Marcel Teunissen: Yes, so last year, we got.
Marcel Teunissen: The benefits of the first steps and we will continue to pursue that.
Marcel Teunissen: And confident that that will bode well going into 2024, but also to our 2028.
Marcel Teunissen: Kind of overall ambition.
Operator: Okay, great. Thank you so much.
Speaker Change: Okay, great. Thank you so much.
Steven P. Hansen: Thank you. And your next question comes from Steve Hansen from Raymond James. Please go ahead.
Operator: Thank you and your next question comes from the line of Steve Hansen from Raymond James. Please go ahead.
Robert Berthold Espey: Yes, good morning, guys. Thanks for the time.
Steven P. Hansen: Yes, good morning, guys. Thanks for the time.
Steven P. Hansen: On the international business I apologize if I missed it in your prepared remarks, but just hoping you could speak to the volume outlook. After a softer period I recognize the comp was obviously really steep and it sounds like the market dynamics are at play, but curious if you're still planning on full year volume growth in the.
Steven P. Hansen: The south and defer some puts and takes might be through the balance of the year. Thanks.
Robert Berthold Espey: Just a question on international business. I apologize if I missed it in your prepared remarks, but I was just hoping you could speak to the volume outlook after a softer period. I recognize that the comp was obviously really steep, and it sounds like some market dynamics were at play. But you know, curious if you're still planning on full year volume growth in the South and just sort of what some of the puts and takes might be for the balance of the year.
Robert Berthold Espey: Yes, Steve it's Bob Espey and thanks for the question.
Robert Berthold Espey: Our international business had strong performance in the aviation and retail sectors.
Robert Berthold Espey: Yeah, Steve, it's Bob Espey. And thanks for the question. Look, our international business had strong performance in the aviation and retail sectors. We saw two headwinds on our volumes, in commercial, particularly in Guyana, where our large customer there, Exxon, was down for maintenance, and as a result, we were supplying less fuel into the market. That sense, excuse me, that sense picked up again. And then, you know, we are in the wholesale market there.
Robert Berthold Espey: We sought to headwinds on our volumes.
Robert Berthold Espey: In commercial, particularly in Guyana, where.
Robert Berthold Espey: Our large customer there Exxon was down for maintenance and as a result, we were supplying less fuel.
Robert Berthold Espey: That since excuse me that since picked up again and then we.
Robert Berthold Espey: In the wholesale market there and we.
Robert Berthold Espey: And, you know, we will, you know, be in and out of various customers depending on price, and we've just seen some margins tighten, and we just chose not to pursue that because it didn't make economic sense. Overall, the business is performing exceptionally well, and we continue to see it track well into Q2.
Robert Berthold Espey: We will.
Robert Berthold Espey: In and out of various customers depending on on price and we've just seen some margins tightened and we just chose not to pursue that.
Robert Berthold Espey: Economic sense.
Robert Berthold Espey: Overall, the business is performing exceptionally well and we continue to see a track well into Q2.
Robert Berthold Espey: Okay, very helpful. And just to follow up on the non-court dispositions, given that you're tracking so well, or at least they had a plan, you know, if you thought about looking back at the portfolio to see if there's an additional slice of assets that you could go after, do you think $500 million is still the ultimate goal? Yeah, for now, that is.
Speaker Change: Okay very helpful and just a follow up on the non core dispositions given that you are tracking so well or at least ahead of plan.
Robert Berthold Espey: Have you thought about looking back at the portfolio to see if there is an additional slides that you can go after do you think the $500 million is still the ultimate goal.
Marcel Teunissen: Yeah, for now, that is the ultimate goal. We continuously review, of course, our network, whether we have the right network, and we continue to do that as we go forward. So it's an ongoing activity. But at this point, 500 billion is kind of the right number for us.
Robert Berthold Espey: Yes for now that is the ultimate goal and we continuously review of course, all of our network. What do we have the right network and we continue to do that.
Marcel Teunissen: As we go forward as I said ongoing activity, but at this point the $500 million is kind of the right one for us and we'll we'll look beyond that.
Marcel Teunissen: Completed that program.
Marcel Teunissen: And we'll, we'll look beyond that after we've completed it. Okay, thanks. Appreciate the time. Thank you, and your next question comes from the line of Carla.
Speaker Change: Okay. Thanks appreciate it there.
Carla Casalia: Thank you. And your next question comes from the line of Carla Casalia from J.P. Morgan. Please go ahead.
Marcel Teunissen: Thank you and your next question comes from the line of Carla Casella from Jpmorgan. Please go ahead.
Carla Casalia: Hi, Thank you for taking the question.
Carla Casalia: Wondering if you could give us the magnitude of the steel credits that you got in the quarter and maybe the opportunity.
Carla Casalia: The on the magnitude side for the remainder of the year.
Robert Berthold Espey: Yeah, so I believe you're referring to the carbon credits that we generate. [inaudible] I would say we're active in four different areas.
Carla Casalia: So.
Carla Casalia: I believe you're referring to the carbon credits that we generate.
Robert Berthold Espey: Yes.
Robert Berthold Espey: So the first is in our refinery when we get BC credits, and then also Canadian credit, and because of the co-processing that we do, we're actually generating excess credit. I've compared it to our compliance requirements, and that has given us, [inaudible] sources, our uses of capital. When we look at the payback on the investments we've made and the capability that we've built there, it's been tremendous. And we expect to see, you know, a portion of that going forward. Those credits are subject to market pricing, and we'll bump around a bit. You know, the other thing Marcel alluded to is that we did have a constructive environment for importing renewable diesel into various Canadian markets over the quarter. You know, that's something that's, you know, we'll come and go.
Carla Casalia: I would say were more active in four different areas. So the first is in our refinery when we can get EC credits and then also Canadian credits.
Robert Berthold Espey: <unk>.
Robert Berthold Espey: And our facility there is.
Robert Berthold Espey: Co pro sensing that we do we're actually generating excess credits.
Robert Berthold Espey: Compared to our compliance requirements and that has given us.
Robert Berthold Espey: Some credits that we can sell into the marketplace and we expect that certainly to continue here for the balance of the year and over the next several years is as we continue to rent increase our co processing capability, So look and I would I would highlight that.
Robert Berthold Espey: <unk> program and the team at the refinery that's been able to execute that as one of our most successful.
Robert Berthold Espey: Our uses of capital.
Robert Berthold Espey: When we look at the payback on the investments we've made and the capability that we've built there it's been tremendous and we expect to see.
Robert Berthold Espey: A portion of that going forward those credits do are subject to market pricing and we'll pump bump around a bit.
Robert Berthold Espey: The other thing as Marcel alluded too.
Speaker Change: We did.
Robert Berthold Espey: We did have a constructive environment for importing renewable diesel.
Robert Berthold Espey: Into various Canadian markets.
Robert Berthold Espey: Over the quarter Thats something thats.
Robert Berthold Espey: We will come and go we did have a good environment here through Q1, and we're able to capitalize on that.
Robert Berthold Espey: We did have a good environment here through Q1, and we were able to capitalize on that. And then, you know, we also are, through our trading business, involved in the regulated market where we buy and sell between intermediaries in the market and also in the voluntary market as well. And we continue to see that side of the business perform well.
Robert Berthold Espey: And then we also are through our training business involved in the regulated market, where we buy and sell between intermediaries in the market and also in the voluntary market as well and we continue to see that side of the business performed well.
Robert Berthold Espey: And in terms of quantification, if you look at our financial statements or in the financial documents, it's actually split out what our kind of renewable portion is overall.
Robert Berthold Espey: And in terms of quantification, if you look at our financial statements.
Robert Berthold Espey: Financial documents, it's actually split out what is our kind of renewable portion of overall one that includes those.
Robert Berthold Espey: that includes those questions. It's in the back of the book.
Robert Berthold Espey: It's in the back of the.
Speaker Change: Great. Thank you so much.
Vishal Shreedhar: Thank you. And your last question comes from the line of Vishal Shreedhar from National Bank Financial. Please go ahead.
Robert Berthold Espey: Thank you and your last question comes from the line of Vishal <unk> from National Bank Financial. Please go ahead.
Robert Berthold Espey: Hi, it's Gabriel Alon for Vishal. Thanks for taking our questions. So you mentioned earlier that as a result of the unplanned shutdown, you're going to catch up during the rest of the year and well into 2025. I'm wondering, by that comment, do you mean that it can shorten the turnaround that you have anticipated in 2025 that you mentioned previously? Is there any maintenance or other work that you're able to pull ahead that could shorten that 2025 deadline?
Speaker Change: Hi, Gabriel on for Vishal, Thanks for taking our questions.
Robert Berthold Espey: So you had mentioned earlier that.
Robert Berthold Espey: As a result, the unplanned shutdowns.
Robert Berthold Espey: Catch up during the rest of the year and wellness quantify I'm wondering by that comment.
Robert Berthold Espey: <unk>.
Robert Berthold Espey: That could shorten the turnaround that you have anticipated and quantify if I forget to mention.
Robert Berthold Espey: Previously like is there any maintenance or other work that we were able to pull forward that could shorten.
Robert Berthold Espey: That clinical and five star.
Robert Berthold Espey: Yeah, look, our maintenance group and our reliability group are looking at that tar, and that's something that we've planned certainly well in advance. And I think, based on some of the work that we've done, and the performance of the refinery, they're able to evaluate what the best duration and timing of that is. And certainly, if that changes, we'll keep the market appraised of that. Again, I would go back to whether we're tracking well to our 2028 ambition. And we certainly are projecting that 25 on a run rate basis will be well on the path towards achieving that.
Speaker Change: Yes look our maintenance groups and our reliability groups are looking at.
Robert Berthold Espey: That tar and that's something that we planned.
Robert Berthold Espey: Okay, I got it. And then I just wanted to go back to the non-core disposition.
Robert Berthold Espey: Certainly well in advance.
Robert Berthold Espey: And I think.
Robert Berthold Espey: Some of the work that we've done performance of the refinery theyre able to evaluate what the best duration and timing of that is and certainly if that changes we will.
Robert Berthold Espey: We will keep the market appraised of that.
Robert Berthold Espey: Again, I would go back to we're tracking well to our 2028 ambition.
Robert Berthold Espey: We.
Robert Berthold Espey: We certainly are projecting that 25 on a run rate basis, we'll be well on the path towards achieving that.
Vishal Shreedhar: You mentioned there's a number in cash and a number in advanced stages of negotiation. I wonder if you're able to provide a number for 2024 as to the timing of how much and what kind of quarters we can sort of expect those dispositions to manifest. I won't have the exact numbers.
Speaker Change: Okay got it and then I just wanted to call back of the non core dispositions Stuart mentioned.
Vishal Shreedhar: <unk>.
Vishal Shreedhar: There's a number of cash number in advanced stages of negotiation I'm wondering if you're able to provide a number for 2024 assets timing off on like how much.
Vishal Shreedhar: Quarters, we can sort of expect.
Vishal Shreedhar: The specifics to manifest.
Marcel Teunissen: I won't have the exact quarters, it wouldn't be wise to kind of time all of this precisely given that some of these are still subject to negotiations, right? So but I think for this year, as I said before, we have about 200 million. Some of this is already completed. The rest will be the 200 will be completed shortly. So definitely this year. And then the remaining 200, a lot of them are those retail sites we talked about before, and they will come and go, and that will stretch out to the remainder of this year, maybe even into next year.
Speaker Change: Yes, we wont have the exact caucus that wouldn't be wise to kind of tie all of these precise given that some of these are still subject to negotiations right. So but I think for this year as I said before we have about $200 million. Some of it's already completed the rest will be the 200 will be completed shortly so definitely in this year.
Marcel Teunissen: And then the remaining 200, a little bit are those those retail sites, which we talked about before and they will come and go and that will stretch out through the remainder of this year, maybe even into next year and so we expect a portion of that decline this year.
Marcel Teunissen: And so I expect a portion of that to fall in this year. And then, as we go, you know, kind of get prepared for some of the remainder of that $500 million target, we'll put that in. I expect that to kind of run into 2025 by the time we get to that. So but everything that's currently identified, and all our and all our balance sheets are held for sale, we expect it to complete in the next 12 Thank you.
Marcel Teunissen: And as we go.
Marcel Teunissen: Kind of get prepared for some of the remainder of the $500 billion target.
Marcel Teunissen: I expect that to kind of run into 2025 by the time, we get to that so.
Marcel Teunissen: So, but everything Thats currently identified and all our balance sheet as held for sale, we expect to complete in the next 12 months.
Speaker Change: Got it thank you I appreciate it.
Operator: Thank you. That concludes our question and answer session, ladies and gentlemen. That concludes our conference today. Thank you for participating. You may all disconnect.
Speaker Change: Thank you that concludes our question and answer session, ladies and gentlemen.
Speaker Change: That concludes our conference today. Thank you for participating you may all disconnect.
Operator: [music].