Parkland Reports Third Quarter Financial Results

« Back to News Releases

Share Email this page  |  Print page  |  Share Share this page
Third Quarter 2008 Performance Highlights:

    -   Record fuel sales volume of 608 million litres, up 11% from
        549 million litres the prior year.
    -   Record Q3 2008 sales of $734 million, up 52% from $483 million the
        prior year.
    -   EBITDA of $19.9 million, down 23% from $25.8 million in 2007 but up
        from $19 million in Q2.
    -   Distribution payout ratio 78% for the quarter and 91% year to date.
    -   Board authorization to initiate Normal Course Issuer Bid.
    -   Third major growth step in 2008 - acquisition of new Esso retail
        branded distributorship accounts in Alberta and Ontario.RED DEER, AB, Oct. 28 /CNW/ - Parkland Income Fund (TSX:PKI.UN) today
announced its business performance for the third quarter of 2008 and the nine
months ended September 30, 2008. Volume and revenue achieved record levels for
the quarter, while earnings before interest, taxes, depreciation and
amortization (EBITDA) was lower for Q3 2008 compared to the same period a year
    Parkland also announced that its Board of Directors has authorized an
application for a Normal Course Issuer Bid (NCIB) to buy back units of the
Fund for cancellation. The NCIB will be established in accordance with rules
of the TSX and is subject to approval by the TSX. The Fund expects to provide
further detail on the NCIB in November.
    President and CEO Mike Chorlton said, "Margins in the third quarter
improved relative to the first half of 2008 due to prevailing North American
and local supply and demand conditions pushing up refiners' margins. Despite
record sales volume and strong margins, EBITDA declined in the third quarter
of 2008 compared with a year earlier primarily due to losses in FIFO inventory
value rising from declining petroleum product prices. During this period of
extreme volatility in the capital markets, Parkland is focused on reducing
discretionary expenditures and driving operational efficiency to conserve cash
and maximize our flexibility."
    Distributable cash exceeded cash distributions in the third quarter and
for the nine month period ended September 30, 2008. Accordingly, we have
maintained our monthly distribution rate of $0.105 per unit.


    Four weeks into the fourth quarter of 2008, retail fuel sales volumes
remain similar to the prior year and retail margins remain strong compared to
the prior year in spite of entering the cold weather season when demand for
gasoline is typically weaker.
    Diesel demand is strong and refinery production problems have caused
shortages of supply, which in turn have kept margins higher than previous
    Refiners' margins for gasoline have declined from September levels but
remain stronger than they were in the first half of 2008.
    Subsequent to the end of the third quarter we entered into agreements to
increase the number of accounts in our Esso retail branded distributorship
business. We are adding 40 dealers in Ontario and Alberta with an anticipated
annual volume of 200 million litres of gasoline and diesel.

    Fuel Volumes

    Gasoline, diesel and propane volumes were strong with total sales of
608 million litres in the quarter ended September 30, 2008, an increase of 11%
from 549 million litres for the same period in 2007. The increase resulted
from the acquisitions completed over the past year. At the retail level,
same-store fuel sales volumes increased approximately three percent over the
prior year in our company operated and controlled sites but decreased
approximately three percent in the independent dealer network.


    In addition to the retail margins for gasoline and diesel, we participate
in the refiners' margins for a significant portion of our supply volumes. In
the third quarter this participation yielded earnings slightly below the
comparative period in 2007 but greater than the first half of 2008.
    Under the FIFO cost method of valuing inventories, we recorded a
reduction in fuel margins of $6.3 million ($0.8 million in 2007) in the third
quarter compared to the LIFO method used prior to 2007. For the nine months to
September 30, 2008 we have recorded a gain of $3.1 million ($3.8 million in
    Our operating and direct costs were $21.4 million in the third quarter
compared to $17.6 million for the same period in 2007. The increase reflects
the full year effect of our acquired businesses as well as higher store
operating costs such as labor, credit card costs and loyalty program costs.
Competitive promotional activity has caused us to respond with higher
expenditures in this area as well.
    Our marketing, general and administrative expenses were $10.3 million in
the third quarter compared to $10.9 million for the same period in 2007.
Higher labor costs were offset by reclassification of some expense categories
into operating and direct costs.
    A comparison of EBITDA for the third quarter of 2008 with the third
quarter of 2007, as well as graphs of historic refiners' margins are available
online at

    Termination of Beaver Hills Project

    Over the course of the past year we participated in a feasibility study
to assess the viability of building a condensate-based refinery in Edmonton.
In the fourth quarter a decision was reached by the partners in the study to
terminate the project. In the fourth quarter we expect to write off
approximately $1.3 million which we had advanced in 2007 for our share of the

    For the three months ended September 30, 2008

    Thousands of
    Canadian dollars,
    except per Unit
    amounts and fuel
                  Q3 2008    Nine       Q3 2007    Nine       Q3      Nine
                            months                months   % Change  months
                                                                    % Change
    Revenue       734,090  1,823,595    482,895  1,241,529       52       47
     earnings(1)   13,050     34,288     31,451     70,515      (58)     (51)
     per Unit(1)     0.26       0.68       0.63       1.42      (59)     (52)
     number of
     Units         50,356                48,456
    EBITDA(2)      19,927     56,137     25,765     97,133      (23)     (43)
     cash flow
     per Unit        0.41       1.04       0.63       1.68      (35)     (38)
     per Unit        0.31       0.94       0.28       0.78       11       21
    Fuel sales
     (millions of
     litres)          608      1,689        549      1,447       11       17

    (1) Certain year-earlier numbers have been restated as a result of
    Parkland's early adoption of the new CICA standards on inventories to
    record the cost of inventory using the First In, First Out method.

    (2) EBITDA, which is not a financial measure under Generally Accepted
    Accounting Principles (GAAP), refers to Earnings Before Interest on Long-
    Term Debt, Income Tax Expense, Amortization of Capital Assets, Refinery
    Remediation Accrual and Loss on Disposal of Capital Assets. It can be
    calculated from the GAAP amounts included in the Fund's financial
    statements and a table reconciling net income in accordance with GAAP to
    EBITDA is included in the Management's Discussion and Analysis (MD&A).
    Management believes that EBITDA is a relevant measure to users of its
    financial information as it provides an indication of pre-tax earnings
    available to distribute to debt and equity holders in the Fund. The
    Fund's definition of EBITDA may not be consistent with other providers of
    financial information and therefore may not be comparable.The MD&A as well as the complete unaudited interim Consolidated Financial
Statements and notes for the third quarter of 2008 are available online at Description
    ----------------Parkland Income Fund currently operates retail and wholesale fuels and
convenience store businesses under its Fas Gas Plus, Fas Gas, Race Trac Fuels
and Short Stop Food Stores brands and through independent branded dealers, and
transports fuel and other products through its Distribution division. With
approximately 585 locations, Parkland has developed a strong market niche in
Canadian non-urban markets focused in the West and Ontario. The Fund supplies
propane, bulk fuel, heating oil, lubricants, industrial fluids, agricultural
inputs and associated services to commercial and industrial customers in
Alberta, British Columbia and the Yukon Territory under the Neufeld, Joy,
United Petroleum and Great Northern Oil brands. Additionally, Parkland
operates the Bowden refinery near Red Deer, Alberta as a storage and
contract-processing site.
    Parkland is focused on creating and delivering value for its unitholders
through the continuous refinement of its site portfolio, increasing revenue
diversification through growth in non-fuel revenues and active supply chain
    The Fund's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit

    Certain information included herein is forward-looking. Forward-looking
statements include, without limitation, statements regarding the future
financial position, business strategy, budgets, projected costs, capital
expenditures, financial results, taxes and plans and objectives of or
involving Parkland. Many of these statements can be identified by looking for
words such as "believe", "expects", "expected", "will", "intends", "projects",
"projected", "anticipates", "estimates", "continues", or similar words and
include but are not limited to, statements regarding the accretive effects of
the acquisition and the anticipated benefits of the acquisition. Parkland
believes the expectations reflected in such forward-looking statements are
reasonable but no assurance can be given that these expectations will prove to
be correct and such forward-looking statements should not be unduly relied
upon. Forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties some of which are described in the
Fund's annual report, annual information form and other continuous disclosure
documents. Such forward-looking statements necessarily involve known and
unknown risks and uncertainties and other factors, which may cause the Fund's
actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or
implied by such forward-looking statements. Such factors include, but are not
limited to: general economic, market and business conditions; industry
capacity; competitive action by other companies; refining and marketing
margins; the ability of suppliers to meet commitments; actions by governmental
authorities including increases in taxes; changes in environmental and other
regulations; and other factors, many of which are beyond the control of
Parkland. Any forward-looking statements are made as of the date hereof and
the Fund does not undertake any obligation, except as required under
applicable law, to publicly update or revise such statements to reflect new
information, subsequent or otherwise.Conference Call

    Parkland will hold a conference call for Analysts, Brokers and Investors
to discuss third quarter results as follows:

      Wednesday, October 29, 2008, 9:00 a.m. (11:00 a.m. Eastern Time)
      Direct: 416-644-3425
      Toll-free: 800-731-5319
      Passcode: 21285998 followed by the pound sign

      The replay will be available as follows:

      From Wednesday, October 29, 2008, 9:00 a.m. (11:00 a.m. Eastern Time)
      To Wednesday, November 12, 2008 at 9:59 p.m. (11:59 p.m. Eastern Time)
      Direct: 416-640-1917
      Toll-free: 877-289-8525
      Passcode: 21285998 followed by the pound sign
      Webcast you prefer to receive Company news releases via e-mail, please request

For further information: Red Deer: Mike W. Chorlton, President and CEO,
(403) 357-6400; John G. Schroeder, Vice President and CFO, (403) 357-6400