Parkland (PKI) Q4 2024 earnings summary

Executive summary

• Initiated a board-led strategic review to maximize value, considering options like mergers, divestitures, acquisitions, or a sale, led by a Special Committee of independent directors and with advisors Goldman Sachs Canada and BofA Securities.

• Strategic review aims to address share underperformance and includes an open invitation for Simpson Oil to participate.

• 2024 performance showed resilience in retail and commercial businesses, but refining and USA segments underperformed due to unfavorable market conditions and an unplanned refinery shutdown.

• Management changes include promotion of Marcel Teunissen to President of North America and Brad Monaco as Interim CFO.

• Annualized dividend increased by 3% to $1.44 per share, with a quarterly dividend of $0.36 per share effective April 2025.

Financial highlights

• Q4 2024 Adjusted EBITDA was $428M (down from $463M in Q4 2023); full-year Adjusted EBITDA was $1,690M (down from $1,913M in 2023).

• Q4 net loss of $29M ($0.17/share) vs. net earnings of $86M ($0.49/share) in Q4 2023; full-year net earnings of $127M ($0.73/share) vs. $471M ($2.68/share) in 2023.

• Available cash flow for 2024 was $556M ($3.19/share), fully funding organic growth and dividends, but down from $812M ($4.61/share) in 2023.

• Year-end 2024 liquidity increased to $2,045M from $1,339M at year-end 2023, aided by a senior unsecured note issuance.

• Repurchased and cancelled 2.9M shares for $125M under the normal course issuer bid in 2024.

Outlook and guidance

• Q1 2025 results are tracking to plan and expected to significantly exceed prior year.

• 2025 refinery utilization guidance is 90%-95%, with planned maintenance completed in Q1.

• Management expressed confidence in 2025 guidance, citing operational excellence and higher expected utilization at the Burnaby Refinery.

• Committed to maintaining leverage within 2-3x, with plans to reach the middle of the range in 2025 and potentially the low end with divestments.

• 3% dividend increase announced for 2025, marking the 13th consecutive annual increase.