Parkland Reports Second Quarter Financial Results

« Back to News Releases

Share Email this page  |  Print page  |  Share Share this page
 
Second Quarter 2009 Performance Highlights:

    -   Record Q2 fuel sales volumes of 628 million litres, up 20% from
        525 million litres the prior year, driven by strategic acquisitions.
    -   Q2 EBITDA of $23.4 million, up 23% from $19.0 million in 2008.
    -   Q2 2009 net earnings of $14.3 million, up 29% from $11.0 million in
        2008.
    -   Acquisition of the fuel distribution business of Columbia Fuels on
        Vancouver Island.
    -   Completed a new banking facility with increased credit lines.
    -   Distribution payout ratio of 73% for Q2 2009 compared to 104%
        in 2008.RED DEER, AB, July 31 /CNW/ - Parkland Income Fund (TSX: PKI.UN) today
announced its business performance for the second quarter of 2009. Fuel
volumes achieved record levels for the quarter and earnings before interest,
taxes, depreciation and amortization (EBITDA) for Q2 2009 was higher than the
same period a year earlier.
    President and CEO Mike Chorlton commented "In the second quarter of 2009,
retail marketing continued to be strongly profitable including the
contribution from branded distributorship volumes acquired in late 2008. Our
share of refiners' margins declined from the first quarter of 2009 but was
well ahead of the second quarter of 2008. The contribution from commercial
fuel sales in northern Alberta was weaker than the prior year reflecting
reduced economic activity as the oil and gas drilling industry continued to
lag prior years."
    "With the acquisition of Columbia Fuels we have been able to demonstrate
a continued ability to grow our marketing business in a profitable manner in
challenging economic times. Furthermore, we have been able to source
additional bank credit lines even though credit markets have contracted," said
Mr. Chorlton.
    Distributable cash exceeded cash distributions in the second quarter. The
distribution payout ratio was 73% compared to 104% in 2008. We have maintained
our monthly distribution rate of $0.105 per unit.
    On June 15, 2009 we completed the acquisition of the fuel distribution
business of Columbia Fuels, headquartered in Victoria BC. The purchase price
was $34.5 million plus closing adjustments, financed by a combination of
equity, debt and existing cash balances.
    In July 2009 Parkland acquired the fuel marketing business of Anmart
Fuels. Anmart serves southern Alberta with two cardlock locations, lubricants
and bulk deliveries of fuel and related products. The purchase price was $4.7
million financed by existing cash balances.

    Outlook

    Retail fuel volumes in our market area continue to show same-store sales
growth despite the overall weakness in the economy. Commercial fuel sales
volumes have reflected the weakness in the diesel and propane markets which
have been impaired by the decline in the forestry, trucking and oil and gas
drilling industries.
    Refiners' margins for gasoline declined after reaching a peak in February
but recovered in May and June and remain positive. Refiners' margins for
diesel declined from their very strong level at the beginning of the year and
are below historical values as reduced commercial business activity has left
the market with excess supply.

    Fuel Volumes

    Fuel volumes were strong with total sales of 628 million litres in the
quarter ended June 30, 2009, an increase of 20% from 525 million litres for
the same period in 2008. The increase resulted primarily from the acquisitions
completed over the past year with the greatest growth in the branded
distributorship area. The propane portion of these volumes was down 13% but
unit margins were higher, resulting in gross profit similar to the prior year.
    Retail fuel volumes in company-operated stations were 9% higher than the
prior year. We attribute this to our strong marketing programs and
predominantly non-urban locations where sales volumes have held up well.

    Gross Profit

    Sales revenues were lower than the prior year as underlying crude oil
prices were lower. Cost of sales declined more than sales leaving higher
profit margins on a per litre basis. 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 second quarter this participation
yielded earnings approximately $5.2 million higher than the comparative period
in 2008.
    Although the commercial business segment had expected exceptionally
strong spring fertilizer sales, the late cool spring weather restrained sales
volumes to more average levels. In 2009 fertilizer gross margins have declined
from their exceptionally high levels realized in 2008.
    Our inventory of fuel volumes is subject to revaluation as underlying
crude oil prices rise and fall. In the second quarter of 2009 it resulted in
an increase in earnings of $2.3 million ($6.9 million for six months) compared
to a gain of $5.9 million ($9.9 million for six months) in 2008.
    Our operating and direct costs were $24.9 million in the second quarter
compared to $20.3 million for the same period in 2008. The increase is
primarily a result of additional business operations acquired over the course
of 2008.
    Our marketing, general and administrative expenses were $11.8 million in
the second quarter compared to $12.2 million for the same period in 2008.
    A comparison of EBITDA for the second quarter of 2009 with the second
quarter of 2008 is available online at
http://files.newswire.ca/714/WaterfallChartQ22009.pdf.

    Capital Resources

    We completed arrangement of our new banking syndicate and increased our
senior secured credit facility, including operating line, letters of credit
and capital facility, to $265 million from $169 million. This is expected to
provide sufficient funding for our 2009 growth capital program and allow for
potential acquisitions.Consolidated Highlights

    -------------------------------------------------------------------------
    (in millions of Canadian        Three months  Three months
     dollars except volume                 ended         ended
     and per Unit amounts)               June 30,      June 30,
                                            2009          2008        Change
    -------------------------------------------------------------------------

    Fuel volume (millions of litres)         628           525            20%
    Net sales and operating revenues       479.5         606.6           -21%
    Gross profit                            60.1          51.4            17%
    Gross margin                              13%            9%
    Operating and direct costs              24.9          20.3            23%
    Marketing, general & administrative     11.8          12.2            -4%
    -------------------------------------------------------------------------
    Income before income taxes              14.3          10.3            38%
    Income tax expense (recovery)            0.0          (0.7)
    -------------------------------------------------------------------------
    Net earnings                            14.3          11.0            29%
    EBITDA(1)                               23.4          19.0            23%
    Earnings per Unit - basic              $0.28         $0.22
    Earnings per Unit - diluted            $0.28         $0.22

    Distributable cash flow(2)              21.6          15.3            42%
    Distributions                           15.7          15.8
    Distribution payout ratio                 73%          104%
    -------------------------------------------------------------------------
    (1) Please refer to the EBITDA section for a definition of this non-GAAP
        measure
    (2) Please see Distributable Cash Flow reconciliation tableThe MD&A as well as the unaudited Consolidated Financial Statements and
Notes to Consolidated Financial Statements for the second quarter ended June
30, 2009 are available online at
http://files.newswire.ca/714/PARKLAND_IF_Q209.pdf.

    Fund 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 619 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, 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
management.
    The Fund's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit www.parkland.ca.

    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 second quarter results as follows:

    Tuesday, August 4, 2009, 9:00 a.m. (11:00 a.m. Eastern Time)
    Direct:      416-644-3414
    Toll-free:   800-733-7571
    Passcode:    21310836 followed by the pound sign

    The replay will be available as follows:

    From Tuesday, August 4, 2009, 9:00 a.m. (11:00 a.m. Eastern Time)
    To Tuesday, August 18, 2009 at 9:59 p.m. (11:59 p.m. Eastern Time)
    Direct:      416-640-1917
    Toll-free:   877-289-8525
    Passcode:    21310836 followed by the pound sign

    Webcast
    -------

    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2734380
For further information: Red Deer: Mike W. Chorlton, President and CEO,
(403) 357-6400; Ken J. Grondin, Vice President and CFO, (403) 357-6400; If you
prefer to receive Company news releases via e-mail, please request at
corpinfo@parkland.ca