Parkland Corporation

Good morning, my name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to the Parkland Q2 Analyst Conference Call. All lines have been placed on mute to prevent any background noise. 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 1 on your telephone keypad. And if you would like to withdraw your question, please press star 2. Thank you. And I would like to turn the conference over to Valerie Roberts, Director, Investor Relations for Parkland.

Please go ahead. Thank you, Operator. With me today on the call are Bob Espy, President and CEO, Marcel Tunison, Chief Financial Officer, and Pierre Magnin, President, Parkland International. 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 any 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 out in our annual information form in 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. I would like to start by congratulating the Parkland team on a record quarter for both adjusted EBITDA and safety. This discipline, focus on customer service, and consistent execution have been incredible. You can see the impact of their hard work and dedication in our Q2 results. We have significantly advanced every part of our strategy, and I am delighted with our progress. The team's accomplishments are building tremendous momentum across the business. We will touch on some examples. I also want to recognize the contribution of Jim Panalytis, who at the end of last week announced his retirement from our board and his chair. Jim guided the company through tremendous growth and oversaw the evolution from a small regional player to an international organization. I would personally like to thank Jim for his mentorship, guidance, and support during my tenure as CEO. I want to congratulate and welcome Steven Richardson to his new role as chair, as well as welcome Nora Duke to the board. As you will see in our results, we are starting to see momentum in our U.S. business. Following the reset of the team, they delivered a strong Q2. The fundamentals of our USA business are excellent, and I have confidence we will continue to capture synergies and deliver consistent results. It is clear to me that Parkland has hit its stride. This gives me great confidence that we can achieve our goals and aspirations. As followers of Parkland, you have watched our company grow over many years. You know that we have expanded into new geographies and markets, grown our brands and capabilities, and now serve more customers and communities. Parkland and our team play an essential role in our customers' lives. Reflecting this, we have refreshed the Parkland brand, which you will see throughout today's presentation. With that, let's move to slide three. This slide highlights the priorities we set out at the start of the year. These include capturing synergies and cost efficiencies, driving organic growth and optimizing our portfolio. We are making progress across each, and on today's call, I want to show you what we've achieved. Teams across Parkland are capturing synergies. In Canada, we are harnessing our supply advantage and generating attractive margins from our eastern Canadian terminals. We've also rebranded more than 60 Husky retail sites and have seen an over 30% volume uplift in our Ontario and BC locations. In the USA, our team delivered a great quarter and continues to integrate the businesses we have acquired. We are confident that the team will realize our planned investment case and deliver the synergies our investors are accustomed to. We have now simplified the structure and right-sized the team in each of our operating segments and corporate functions. When combined with natural attrition, approximately 250 positions have been eliminated. In addition, we are capturing further cost efficiencies by optimizing third-party spend and enhancing our internal processes and systems. We expect to save $35 million of MG&A this year and are on track to achieving a run rate savings of around $100 million. Our goal is to harness the benefits of scale and capture even greater value from our continued growth. Shifting gears, we expect to deliver 3% to 5% organic growth per year in our retail and commercial lines of business by generating growth capital returns in the mid-teens. For example, our international business continues to drive organic growth by leveraging the strength of our supply advantage. This helped increase Q2 volumes by more than 20% compared to the prior year. Under parkland ownership, we have added tremendous value to our international segment, with over 90% of our growth coming from synergies and organic growth. Pierre will talk more about this. You've heard us say before that to win in the convenience space, you must have a strong food offer. This underpinned our purchase of M&M Food Market. Using M&M's expertise and following extensive customer research, we have deployed a proprietary food brand called Bites on the Run. Comprised of 30 menu items, this restaurant quality offer made its debut in our new standalone on-the-run location in Montreal. It's early days for this concept, and over the next six months, we will learn a great deal about the customer experience. If you visit Montreal, I encourage you to stop in and enjoy some of this delicious food. Lastly, we are making significant progress optimizing our portfolio by divesting non-core assets. I want to highlight three important numbers. First, we expect to generate up to $500 million of proceeds without compromising our $2 billion adjusted EBIT ambition. Second, we are actively marketing more than $300 million of assets that are held for sale on the balance sheet. This is up $44 million from the prior quarter. Third, we have sold or reached agreements to sell assets totaling around $100 million with minimal impact to our EBITDA. As I said in my opening remarks, Parkland has hit its stride and the team is delivering on their commitments to create value. With that, I'll pass it over to Marcel and move to slide four.