Parkland Corporation Unveils Strategic Guidance for 2025 and Beyond

On November 29, 2024, Parkland Corporation, a renowned player in the fuel distribution and convenience retail sector, disclosed its guidance for the fiscal year 2025 and reiterated its ambitious objectives for 2028. This announcement reflects the company's ongoing commitment to its strategic plans and business model amidst changing market dynamics.

Emphasis on Growth and Profitability

Bob Espey, the President and CEO of Parkland, conveyed his optimism concerning the company's trajectory as they enter 2025. He noted that despite expecting lower refining margins, the adjusted EBITDA from retail and commercial operations is projected to increase by approximately five percent, aligning with the organization's growth commitments. This optimistic outlook is supported by a planned capital expenditure ranging between $475 million and $525 million, demonstrating Parkland's resolve to expand its operational capacity.

Future Financial Expectations

Parkland's guidance for 2025 estimates an adjusted EBITDA between $1.8 billion and $2.1 billion, with a specific focus on refining EBITDA of around $300 million. The anticipated utilization of refinery throughput is set between 90 and 95 percent, and the gross refining margin is projected to lie between $32 and $33 per barrel.

In a strategic shift, a significant restructuring plan initially slated for 2025 has now been postponed to 2026, following the completion of maintenance activities in 2024. This decision emphasizes careful planning as Parkland maneuvers through the challenges presented by current industry dynamics.

Reaffirming Long-Term Objectives

Looking further ahead, Parkland aims for an adjusted EBITDA of $2.5 billion by 2028, driven by organic growth, supply chain optimization, cost efficiency enhancements, and improved refining margins. Additionally, the company expects an available cash flow of $8.50 per share, and a return on invested capital (ROIC) exceeding 12 percent.

To support these ambitious targets, Parkland forecasts generating approximately $5 billion in cumulative available cash flow from 2025 to 2028, showcasing its capacity to foster sustainable growth while simultaneously enhancing shareholder returns and reinforcing its financial position. The company's disciplined capital allocation framework continues to be pivotal, with 25 percent of cash flow allocated to dividends, another 25 percent towards organic growth initiatives, and the remaining 50 percent directed towards opportunities that offer substantial returns, including share buybacks and inorganic growth strategies.

Capital Expenditure and Strategic Investments

In terms of capital expenditures for growth from 2025 to 2028, Parkland plans to allocate around $1.3 billion, focusing on several key areas:

1. Retail Customer Advantage (50%): Enhancing market share and customer loyalty through brand recognition initiatives and expansion of service locations. This includes adding over 100 new industry sites and refurbishing existing locations with unique food offerings.
2. Commercial Customer Advantage (20%): Boosting volume by expanding supply points and offering customized solutions to meet client needs effectively.
3. Supply Advantage (30%): Strengthening supply chains through strategic improvements in infrastructure and increasing co-processing capacity to 7,500 barrels per day by 2028.

About Parkland Corporation

As a leading international fuel distributor and convenience retailer, Parkland Corporation operates across 26 countries, catering to over a million customers daily. The company’s vast retail network meets everyday fuel and convenience needs while also providing industrial fuel to enhance business operations. In alignment with environmentally conscious objectives, Parkland offers multiple solutions that minimize clients' ecological impact, encompassing renewable fuels and ultra-fast electric vehicle charging services.

Parkland's operational strategy is built upon customer advantage and supply advantage pillars. These strategic foundations aim to ensure Parkland is the preferred choice for customers while simultaneously optimizing its supply chain to maintain competitive operational costs.

Conclusion

As Parkland Corporation gears up for the coming years, its detailed guidance and reaffirmed objectives underscore a robust commitment to growth and profitability. With a clear focus on capital deployment, strategic expansions, and commitment to stakeholder value, Parkland is positioned to navigate the evolving energy landscape successfully. For more detailed insights, please refer to the investor presentation available at Parkland's website.