Parkland Corporation

Good morning. My name is Sylvie and I will be your conference operator today. I would like to welcome everyone to the Parkland Q4 and year-end analyst conference call. Note that 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. And if you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw from the question queue, simply press star then number two. Thank you. I would now like to turn the conference over to Adam McKnight, Director, Investor Relations for Parkland. Please go ahead, sir.

Thank you, and good morning. With me today on the call are Bob Espy, President and CEO, and Brad Monaco, Interim Chief Financial Officer. This call is webcast, so I encourage listeners to follow along with the supporting slides. We'll 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 as necessary. And if you have additional questions, please re-enter the queue. Analysts are encouraged to follow up with the investor relations team for any detailed modeling questions that you might have. During today's call, 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 that 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 and management's discussion and analysis. We will also discuss non-GAAP and other financial measures which do not have any standardized meanings prescribed by IFRS accounting standards. These measures are identified and defined in Parkland's continued disclosure documents which are available on our website and 3R+. Please refer to these documents as they identify factors that may cause actual results to differ materially from any forward-looking statements. Dollar amounts discussed today are in Canadian dollars unless otherwise noted. I will now turn the call over to Bob.

Good morning, everyone, and thank you for joining us today. Before we get into our financial results, I'd like to briefly discuss the strategic review that was announced with our earnings last night. The review is a board-led initiative overseen by a special committee of independent directors. We acknowledge that Parkland shares have underperformed and do not currently reflect the intrinsic value of the company. Initiating a review is appropriate at this time. Its primary intention is to explore opportunities to maximize value creation, while also offering a potential path to seek resolution with Simpson Oil. It is unfortunate the Simpsons remain unwilling to engage in constructive dialogue with Parkland's Board of Directors. Our offer to join our board remains open, and we would welcome them to participate in the strategic review process. The process will explore a variety of strategic alternatives as laid out in our press release. The review will evaluate the existing business strategy and current portfolio of assets, and will also consider catalysts, including mergers, divestitures, acquisitions, and the sale of the company. We will continue to actively engage with shareholders throughout the process and provide periodic updates. Turning now to the US tariffs, which are naturally top of mind for all of us. More broadly, political instability will have negative implications for both Canadian and US businesses, as well as consumers on both sides of the border. This could lead to volatile results over the next few months as details get sorted. We have established an internal task force that is closely monitoring the situation to understand and act on any impacts to Parkland's operations. Given our focus on locally sourced and sold fuels and convenience items, we believe the overall impact will be largely neutral, with puts and takes across the business. One potential tailwind would come through lower refinery input costs if Canadian crude is further discounted. While tariffs and trade restrictions are not beneficial to either economy, our resilient business model, diverse geographic footprint, and supply advantage enable us to navigate economic and political uncertainties effectively. Moving to our financial results, I'd like to recognize the Parkland team for their dedication and strong execution during a challenging 2024. The team successfully navigated a macroeconomic environment that saw weak fuel demand and soft consumer discretionary spending and delivered adjusted EBITDA from our combined retail and commercial business that was consistent with expectations. This is a testament to the success of our organic initiatives that strengthen our customer and supply advantages. We also made great progress executing our strategy and building a platform for growth. During the year, the team increased journey reward membership to more than 6 million members through strategic partnerships and targeted promotions, leading to impressive market share gains in 2024, completing the restructuring of our U.S. business, consolidated our supply team, and enhanced our supply advantage with the expansion of strategic terminals in the Caribbean, simplified our business processes by progressing the implementation of our enterprise-wide ERP system, evidenced by the successful launch in St. Lucia, and reduced operating and MG&A costs by $50 million compared to 2023, more than offsetting inflationary pressures. In addition, we've identified approximately 1,500 position reductions through divestments and ongoing synergy and cost initiatives within the next 24 months. This lays the foundation for additional savings in 2025 and beyond. Unfortunately, the refinery and the U.S. segment results did not meet expectations in 2024. Refinery utilization was impacted by an unplanned outage in Q1 due to record low temperatures. Margins ran below mid-cycle in the second half of the year due to unfavorable North American crack spreads. Adjusting for typical refinery utilization and mid-cycle margins would have resulted in 2024 being near the low end of our original 2024 guidance. Our U.S. business also faced unfavorable market conditions. Industry volumes declined year over year, primarily due to lower demand, while at the same time, lengthened PAT-4 put pressure on supply margins. Similarly, tough market conditions were experienced by our public and private peers, as evidenced by their recent results. I have full confidence in our U.S. team's execution capabilities. In 2024, we continued to invest in organic growth initiatives that delivered significant improvements. This included backcourt conversions, standardization of offer and pricing, and labor and fleet optimization. With these foundational changes in place, the business is positioned to capture increased volumes and margins as market conditions improve. Despite the challenges faced in 2024, Parkland's diversified business model proved to be resilient as we maintained focus on our growth initiatives. Progress we made in 2024 provides us with a strong foundation heading into 2025. Our Q1 results are tracking the plan and are expected to significantly exceed prior year. As part of our commitment to strong leadership and succession planning, we recently announced some management changes. Marcel Tunison has been promoted to President North America, overseeing the retail and commercial businesses. His deep industry experience and strategic leadership will drive the anticipated longer-term growth. Brad Monaco has stepped in as Interim Chief Financial Officer. Many of you know Brad from his time in capital markets and most recently was VP of Finance for our Canadian business, Parkland's largest business segment. Brad's diverse experience and capabilities ensure strong continuity in the finance function while we proceed with our global search for a permanent CFO. Welcome, Brad. I'll turn it over to you to walk through our fourth quarter and year-end financial results in more detail.