Parkland Corporation

Good day ladies and gentlemen and welcome to Parkland's fourth quarter 2022 results conference call. Currently all participants are in a listen only mode. We will conduct a question and answer session later and instructions will follow at that time. If anyone should require operator assistance, please press star then zero on your touchtone telephone. As a reminder, this call may be recorded. I would like to introduce your host for today's conference, Val Roberts. Director of Investor Relations, you may begin.

Thank you, Operator. With me today on the call are Bob Espy, President and CEO, and Marcel Tunison, Chief Financial Officer. 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 is necessary. And if you have other questions, re-enter the queue. We would ask analysts to follow up directly with the investor relations team afterwards for any detailed modeling questions. During our call today, we may make forward-looking statements related to expected future performance. These statements are based on current views and assumptions and are subject to uncertainties which are difficult to predict. These uncertainties include, but are not limited to, expected operating results and industry conditions, among other factors. Risk factors applicable to our business are set in our revised annual information form and management's discussion and analysis. 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 statements. Dollar amounts discussed in today's call are expressed in Canadian dollars unless otherwise noted. I will now turn the call over to Bob.

Thank you Val and good morning everyone. We appreciate you joining us today. On the cover slide you will see one of 162 recently rebranded retail sites in Puerto Rico. Under the previous four-court banner, we were obliged to purchase fuel from a third party. We now supply ourselves and benefit from our integrated supply margin. I would like to thank the Parkland team for effectively and efficiently doing this rebrand during the fourth quarter. Parkland's unique integrated business model provides a competitive advantage. We buy, move, and store refined product and supply our retail and commercial networks, which allows to capture incremental margin. Puerto Rico is a great example of how we leverage our supply advantage at Parkland. Across Canada, we calculate that our supply advantage delivers an incremental one to one and a half cents per liter over and above the sales margin. In addition, our Burnaby Refinery benefits from being fully integrated with our BC retail and commercial network. You will have read in our news release that after careful consideration and analysis, we have decided not to proceed with the plans to build a standalone renewable diesel complex at our Burnaby Refinery. Following the announcement of the renewable diesel project last year, several factors have impacted its competitiveness. This includes rising project costs, lack of market certainty around emerging fuels, and the US Inflation Reduction Act. As we continue to exercise strict capital discipline and focus on returns, there's currently too much risk and uncertainty with this project to proceed. Burnaby Refinery remains a key strategic and integrated asset for Parkland. We remain committed to extending our low carbon fuel leadership by more than doubling our coprocessing volumes 5,500 barrels per day. With that, let's move to slide three. 2022 was an excellent year. We had several records that demonstrate the strength of our diversified business model and the Parkland team's commitment to operational excellence. These include our best safety performance to date, record fourth quarter, and record full year adjusted EBITDA. and record distributable cash flow per share in cash generated from operating activities. Throughout the year, we continue to execute our strategy and grow organically. This includes expanding our on-the-run convenience stores to more than 650 locations across Canada, the United States, and our international business, increasing coprocessing volumes at the Burnaby refinery, and utilizing new terminals and tanks to further strengthen our supply advantage. We completed all previously announced acquisitions. These included M&M Food Market, Crevier, Husky, Bopac Storage Terminals in Canada, and a retail and commercial business in Jamaica. We also consolidated our ownership of Sol and have benefited from its 100% contribution in the fourth quarter. During the year, we delivered on the commitments that we made to our shareholders, including Growing adjusted EBITDA by almost 30% and meeting our increased guidance. Enhancing shareholder returns with $40 million of shares repurchased. Increasing coprocessing volumes at our Burnaby refinery by approximately 30% and delivering over $60 million of renewable EBITDA. I'm very proud of the Parkland team and I'd like to congratulate and thank them for delivering these excellent results while safely supplying our customers with their energy, food, and convenience needs. Turning to slide four. This slide shows Parkland's results by business line, which is a simple way to view and value the company. It highlights our diverse business, which when coupled with our geographic footprint, adds to our overall resilience. The pie chart on the left shows the 2022 adjusted debit contribution of our three business lines. retail, commercial, and refining, each of which includes the benefits of our supply advantage. As you can see, retail makes up almost half our adjusted EBITDA, with the remaining half split almost equally between our commercial and refining businesses. The refinery delivered a record year and built on its track record of safe and reliable operating performance. We expect growth in our retail and commercial lines of business will outpace growth from the refinery, meaning the refining's relative contribution to parkland will continue to decline. Our retail business provides fuel, food, and convenience. Looking to the middle chart, we've grown the retail adjusted fuel gross margin by 30% year over year. This was driven by strategic acquisitions and organic growth initiatives, including expansion of the on-the-run throughout Canada and into the U.S. Collecting our strategy to grow food and convenience, this part of the business has increased by 53% year-over-year and now encompasses 25% of total adjusted gross margin. This is comparable to peers in the retail industry. Our commercial business grew nearly 30% year-over-year by successfully integrating strategic acquisitions, including leveraging our supply advantage to Jamaica and winning national accounts. Our commercial customers span a variety of industries, including aviation, agriculture, construction, utilities, trucking, and natural resources. We supply them with gasoline, diesel, jet fuel, and propane. We continue to grow our renewables business by providing our customers with low-carbon fuels and carbon offsets to help them meet their environmental goals. With that, I will hand it over to Marcel to discuss our segmented results in more detail on slide five.