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Business Wire
7 days ago
- Business
- Business Wire
Engine Capital Sends Letter to Parkland's Board of Directors Regarding its Intention to Vote Against the Sunoco Transaction
NEW YORK--(BUSINESS WIRE)--Engine Capital LP today announced that it has sent the following letter to Parkland Corporation's (TSX: PKI) Board of Directors. *** Dear Members of the Board of Directors (the 'Board'): Engine Capital LP (together with its affiliates, 'Engine' or 'we') is a long-term shareholder of Parkland Corporation ('Parkland' or the 'Company'), currently owning approximately 2.5% of the Company's outstanding shares. This makes us one of Parkland's largest owners. We are writing to inform you that Engine intends to vote against the proposed transaction with Sunoco LP (NYSE: SUN) ('Sunoco') for the following reasons: The sale process conducted by the Board was expedited and flawed. The proposed transaction materially undervalues Parkland. We believe there are superior alternatives that would deliver greater value to shareholders. To be clear, our opposition to this transaction is directed at its terms – not at Sunoco or its management team. We have great respect for both and would welcome the opportunity to become long-term investors in Sunoco if the transaction terms more accurately reflected Parkland's intrinsic value. Unless shareholders act collectively to vote down this transaction, the Company will be sold in an inadequate deal that was hastily negotiated by a conflicted and lame duck Board. The Sale Process Conducted by the Board Was Expedited and Flawed The Company's circular reveals that Parkland was sold in a matter of days, without a competitive process, by a Board that was set to be replaced by a shareholder-nominated slate of directors. 1 On April 18, 2025, Sunoco sent a proposal to the Board valuing Parkland at an implied $41.50 per share. On April 23, 2025, a confidentiality and standstill agreement was signed. By April 26, 2025, the Special Committee determined it was prepared to engage with Sunoco at an implied price of $44 per share and on April 29, 2025, Sunoco submitted a revised proposal at an implied price of $44 per share. The final agreement was signed on May 4, 2025. It is staggering that a large and complex company like Parkland (which operates in many segments of the industry value chain and in multiple geographies) could be sold on such a rushed timeline without any competitive tension. There were only six days between when the parties signed a confidentiality agreement and when an agreement was reached on price. Rather than running a comprehensive and competitive process to maximize value, the Board engaged in a single offer and counteroffer round. Key questions remain: Why didn't the Board initiate a more fulsome sale process to establish Parkland's value – especially its international division, which may have attracted a premium valuation? Why did Parkland counter with a proposal that was only 6% above the initial $41.50 per share proposal and cap the negotiation, instead of asking for a best and final proposal which could then have been further negotiated? Why was outgoing CEO Bob Espey involved in the negotiations when he was on the verge of being removed from the Board? Mr. Espey was highly incentivized to transact at any price to avoid this embarrassment and receive a $12.3 million change-of-control severance payment (instead of his regular severance of $5.2 million). Sunoco was clearly aware of this dynamic, given that it submitted its initial bid just two days after Parkland announced Mr. Espey would step down. How did the Board and its advisors adequately evaluate a complex business like Sunoco in six days? Why is now the right time to sell the Company, considering it's in the midst of business underperformance and market volatility caused by tariff uncertainty? 2 Rather than allowing a new board to oversee a fair and transparent strategic review, the incumbent Board hastily executed a sale in the final days of its tenure – without pursuing alternatives or maximizing value. The decision to rush through an undervalued transaction two days before the AGM is just the latest in a pattern of actions that reflect the Board's focus on retaining control rather than delivering shareholder-focused outcomes, as outlined last month by independent proxy advisory firm Glass, Lewis & Co.: 3 ' [T]he board has repeatedly taken governance actions that appear more reactive than proactive, and more focused on retaining control than facilitating transparent, shareholder-focused outcomes. ' It is worth noting that the plan of arrangement also includes a provision whereby Sunoco can switch to a takeover bid of the Company, which would require approval from a simple majority of Parkland's outstanding shares by way of a tender instead of the higher threshold of two-thirds of the votes required for a plan of arrangement. This unusual provision appears to be specifically included to dilute the influence of Simpson Oil Limited and allow Sunoco to take control of Parkland without the blessing of a 20% shareholder. The fact that the Board would allow this unusual clause to be included highlights that both Parkland and Sunoco knew at the time of signing that this transaction could face significant shareholder opposition. The Proposed Transaction Materially Undervalues Parkland The $44 per share headline number significantly undervalues the business. It is important to note that at the current Sunoco trading price and the current US to Canadian currency exchange rate, and under the assumption that SUNCorp, LLC ('SUNCorp') trades in line with Sunoco, the proposed transaction represents an implied price of only $41.60 per share, a 5.5% discount to the headline price. 4 It is also worth noting that the stock closed yesterday at $38.73 per share, only 6.7% above the closing price before the deal was announced, implying there is limited downside if shareholders vote down this transaction. Given the different assets owned by Parkland, we believe a sum of the parts methodology is most appropriate to value the Company. Several sell-side analysts use this methodology. If we average their sum of the parts valuation, we get a valuation of $52.50 per share. A control premium should then be applied to this number. For reference, at $44 per share, the Board is selling the Company for a multiple of ~8.8x normalized available cash flow per share and ~5.2x 2028 available cash flow per share, numbers that are too low for a growing business. The transaction also values Parkland at ~7x normalized EBITDA. This multiple pales in comparison to recent transaction multiples in the space post-COVID, including Aramco's acquisition of Esmax Distribución SpA in March 2024 at a double-digit multiple, Murphy USA's acquisition of QuickChek for 13.2x EBITDA in January 2021 and 7-Eleven's acquisition of Speedway for 13.7x EBITDA in May 2021. While we acknowledge that Parkland is not worth those multiples in the aggregate, some of its retail assets as well as its international division are certainly worth double-digit multiples and are not being properly valued in this transaction. It is also worth noting that the proposed transaction is highly accretive to Sunoco, which further highlights how attractive the proposed terms are to Sunoco. During its May 5, 2025, conference call, Sunoco discussed the strong industrial logic of the transaction and indicated the deal would be immediately accretive in year one and more than 10% accretive to distributable cash flow per common unit in year three. Based on our analysis and review of comparable transactions, we believe this transaction will be considerably more than 15% accretive in year three – which is also the figure cited in a research note from Raymond James. 5 Parkland's management has privately indicated to us that they also believe the $250 million synergy figure is significantly understated. To add to the problematic nature of this transaction, 55% of the consideration is a newly issued security that has no trading history and it is not clear to us whether SUNCorp will trade at a premium or a discount to the Sunoco units, yet Parkland's management seems to have taken Sunoco's word that SUNCorp will not trade at a discount based on one other situation which we don't believe is analogous. The situation between Plains GP Holdings, L.P. and Plains All American Pipeline, L.P., which Parkland's management is using as a comparable example, is meaningfully different because investors expect both entities to pay the same distribution over the long term, while SUNCorp has only guaranteed it will pay the same distribution as Sunoco for the next two years. This is critically important since these entities typically trade on a dividend yield basis. Liquidity may also be a factor hurting SUNCorp. If SUNCorp were to trade at a 10% discount to the Sunoco units, the current consideration would be reduced to $39.40 per share, barely a premium to the standalone value of Parkland before the deal. Unfortunately, the management information circular does not provide additional details on the tax implications of the SUNCorp structure. How are shareholders supposed to value SUNCorp – and therefore, assess this transaction – if we don't understand the future tax liabilities of this structure and the sustainability of SUNCorp's dividend? This uncertainty underscores the rushed nature of the deal and raises questions about how fairness opinions could have even been properly issued without this critical information. Shareholders deserve to know this information before voting, as it will directly impact the value of their equity in SUNCorp. Finally, we are deeply disappointed that Parkland's Board failed to disclose the financial analysis underlying its three fairness opinions. If the deal is as sound as the Board claims, why not be transparent and allow shareholders to understand the underlying assumptions? With so many concerns surrounding this transaction, full disclosure is not just appropriate – it is essential. We call on the Board to immediately release the financial analysis underlying the fairness opinions to enable shareholders to make a more informed decision. We Believe There Are Superior Alternatives That Would Deliver Greater Value to Shareholders Rather than rushing into a sale at an undervalued price, we believe there are other options Parkland could explore to maximize value and create deal tension as part of a comprehensive strategic review. Given the complexity of Parkland's business, it is likely that value would be maximized by marketing assets separately to realize the sum of the parts valuation outlined above. The international segment, in particular, would be coveted by multiple potential acquirers who did not even get an opportunity to take a look at the asset under the current 'process.' We believe this segment alone could account for a material portion of Parkland's enterprise value. For instance, if Parkland sold the international segment for 10x EBITDA and the remaining (mostly Canadian) business continued to trade for ~7x EBITDA, we believe the stock would be ~$53 per share – a material premium to the current offer. There are multiple ways to maximize value if the Board gives itself the time to create deal tension. We would expect Sunoco to be an active participant in such an auction given that it has been interested in buying Parkland for at least the last two years and this deal is incredibly accretive for it – even at a significantly higher price. Shareholders should not be worried about rejecting the proposed transaction. Parkland is a healthy business that will grow EBITDA over time and will be worth more under new leadership. The stock barely trades at a premium to the pre-announcement price, implying very limited downside if the deal is voted down, especially since new leadership would run a comprehensive strategic process. Assuming shareholders reject the current proposal, another path would be to try to salvage the Sunoco transaction. Engine would be delighted to become a long-term investor in Sunoco under a revised structure that adequately compensates Parkland shareholders for the intrinsic value of the Company, the significant synergies between the two organizations and the risk of owning a new security that may trade at a discount to the Sunoco units. In the spirit of putting forth a constructive proposal, we would suggest revisiting Sunoco's 2023 proposal, when it offered to buy Parkland for $18 per share and 0.443 Sunoco units. We believe the 2023 Sunoco proposal – while still undervaluing Parkland – would better reflect the intrinsic value of the Company and the respective contribution of both entities. Today, this package would imply a valuation of $50.70 per Parkland share. If Sunoco was willing to incur that level of dilution two years ago, then we don't see a reason why it should be unacceptable now. We would also suggest amending the terms of the transaction to give Parkland shareholders the choice of receiving Sunoco units or SUNCorp shares so that Parkland shareholders with different tax constraints can make the optimal choice. If this is not possible, then at the very least, the newly issued SUNCorp securities should be one-way exchangeable into Sunoco units. This would ensure that SUNCorp does not trade at a discount to the Sunoco units. Alternatively, Sunoco could guarantee that both entities will always receive the same distributions, and that Sunoco would cover any tax liability at the SUNCorp level. We believe this would maximize the likelihood that SUNCorp trades well – which would be in everyone's interest. In conclusion, we believe the Board ran an expedited and flawed process at the wrong time, is providing insufficient information for shareholders to vote on the transaction and has accepted a price that undervalues the Company. We intend to vote against the transaction as currently structured and hope others do the same. If the transaction fails and the sitting directors step down as promised, we would be delighted to have a more shareholder-friendly Board run an appropriate sale process and maximize value for shareholders. We request a meeting with the Board at its earliest convenience to discuss the matters summarized in this letter. Very truly yours, *** The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable law. Engine is not requesting that Company shareholders give, withhold or revoke a proxy. Notwithstanding the foregoing, Engine has voluntarily filed a disclosure document (the 'Document') as a precautionary measure and solely to the extent necessary to rely on the public broadcast solicitation exemption under National Instrument 51-102 – Continuous Disclosure Obligations and Blanket Order 51-520 issued by the Alberta Securities Commission. The Document is hereby incorporated by reference into this press release and is available under the Company's profile on SEDAR+ at The registered office of the Company is 240 4th Avenue SW, Suite 1800, Calgary, Alberta T2P 4H4. In accordance with subsection 148(4) of the Business Corporations Act (Alberta), proxies for the annual and special meeting of the Company scheduled to be held on June 24, 2025 (the 'Meeting') may be revoked: (a) by attending the Meeting in person and registering with the Company's registrar and transfer agent, Computershare Trust Company of Canada, as a registered shareholder personally present who wishes to vote in person; (b) by delivering a notice of revocation, executed in writing by the registered shareholder or by the registered shareholder's authorized attorney: (i) by mail to Computershare Trust Company of Canada, Proxy Department, 135 West Beaver Creek, P.O. Box 300, Richmond Hill, Ontario L4B 4R5, by hand delivery to Computershare Trust Company of Canada, 8th Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1 or by facsimile to Computershare Trust Company of Canada at 1-416-263-9524 or 1-866-249-7775, in each case at any time up to and including the last business day preceding the day of the Meeting, or any adjournment or postponement of the Meeting; (ii) by mail or hand delivery to the Company's registered office at 1800, 240 4th Avenue SW, Calgary, Alberta T2P 4H4 at any time up to and including the last business day preceding the day of the Meeting, or any adjournment or postponement of the Meeting; or (iii) by hand delivery to the chair of the Meeting prior to the Meeting's commencement on the day of the Meeting, or any adjournment or postponement of the Meeting; or (c) in any other manner permitted by law. The procedure for revoking proxies for the Meeting, including revocation by a non-registered holder of Company shares, is more particularly described in the management information circular dated May 26, 2025 issued by the Company, which can be found under the Company's profile on SEDAR+ at The costs incurred in connection with any proxy solicitation by Engine will be borne directly and indirectly by Engine. Any solicitation made by Engine is, or will be, as applicable, made by Engine, and not by or on behalf of the management of the Company. Should Engine solicit proxies, proxies may be solicited by proxy circular, mail, telephone, email or other electronic means, as well as by newspaper or other media advertising and in person by partners, managers, directors, officers and employees of Engine who will not be specifically remunerated therefor. In addition, Engine may solicit proxies by way of public broadcast, including press release, speech or publication and any other manner permitted under applicable Canadian laws, and may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on their behalf. Neither Engine nor any of its associates or affiliates has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting other than the election of directors or the appointment of auditors. About Engine Capital Engine Capital LP is a value-oriented special situations fund that invests both actively and passively in companies undergoing change. 1 Simpson Oil Limited press release titled 'Simpson Oil Announces Overwhelming Support for Majority Board Refresh at Parkland AGM' (May 2, 2025). The day before the Annual General Meeting (the 'AGM') was scheduled to be held, Parkland cancelled and rescheduled it for June 24, 2025, the same day as the Special Meeting to vote on the Sunoco transaction. 2 On April 16, 2025, Parkland announced disappointing Q1 2025 preliminary results amidst macroeconomic and regulatory volatility and updated 2025 guidance to be towards the lower end of its previously communicated range. 3 Permission to quote Glass, Lewis & Co. was neither sought nor obtained. 4 Based on Sunoco's closing price of $53.93 per unit on June 5, 2025. 5 Raymond James sales commentary on May 11, 2025: 'A look at consensus / RJ standalone estimates at PKI/SUN suggests Sunoco is low-balling deal accretion and will likely realize mid-teens (ex-synergies) / low 20% accretion (including synergies).'
Yahoo
09-05-2025
- Business
- Yahoo
Sunoco to terminate Parkland's executive officers once deal closes
This story was originally published on C-Store Dive. To receive daily news and insights, subscribe to our free daily C-Store Dive newsletter. Sunoco is expected to terminate each of Parkland Corp.'s executive officers who remain with the company once its proposed acquisition of the Canadian c-store retailer closes, Sunoco said in an SEC filing on May 6. Parkland President and CEO Bob Espey has already announced he would resign by the end of 2025 or once Parkland closes its strategic review. However, other executives such as Marcel Teunissen, president of North America; Donna Sanker, president of international; CFO Brand Monaco and several others remain. Sunoco has offered few details on how it plans to run SUNCorp, the publicly traded company it intends to form once the $9.1 billion deal closes. Although plans can change at any moment, Sunoco appears intent on running SUNCorp with its own people. The removal of Parkland's leaders will also include its board of directors, as only one of its current members — whom Sunoco has not yet named — is expected to join SUNCorp's newly formed board for 12 months once the deal closes, according to the SEC filing. Representatives from both Parkland and Sunoco did not respond by press time when asked to clarify why Parkland's executives are set to be terminated, as well as if a top leader for SUNCorp has been chosen. Espey announced his resignation in mid-April about a week after Parkland's largest shareholder, Simpson Oil, launched a takeover attempt of the retailer's board in a bid to restructure the business. He will leave Parkland after leading the retailer and oil company since 2011. On Monday, he called the proposed sale to Sunoco a 'significant milestone.' If Parkland's shareholders approve the deal next month, SUNCorp will become the largest independent fuel distributor in the Americas, with an enterprise value of about $25.5 billion, the companies said this week. It remains unclear how the deal will impact Parkland's convenience retail network which, as of March, included 645 convenience retail sites in the U.S., about 200 of which Parkland directly operates. The retailer also has over 2,300 sites in Canada, and operates nearly 800 of them. Recommended Reading Sunoco to acquire Parkland for $9.1B Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-05-2025
- Business
- Yahoo
Sunoco to acquire Parkland in $9.1bn deal
Sunoco has announced a definitive agreement to acquire all outstanding shares of Parkland Corporation in a transaction valued at approximately $9.1bn (C$12.57bn), including assumed debt. This acquisition is expected to be immediately accretive, with more than 10% accretion to distributable cash flow per common unit and $250m in run-rate synergies by the third year. Under the terms of the agreement, Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 for each Parkland share. Parkland shareholders may also choose to receive C$44 per Parkland share in cash or 0.536 SUNCorp units per Parkland share, subject to proration. For two years following the transaction's close, Sunoco will ensure that SUNCorp unitholders receive the same dividend equivalent as Sunoco unitholders. The transaction will be implemented as part of a plan of arrangement under the Business Corporations Act (Alberta) and will require approval by 66 2/3% of the votes cast by Parkland shareholders. Parkland's directors and senior officers, holding 0.7% of the shares, have committed to vote in favour of the transaction. Parkland executive chairman Michael Jennings said: 'This strategic combination is a compelling outcome for Parkland shareholders. The Board unanimously recommends the proposed transaction, recognising Sunoco's commitment to safeguarding Canadian jobs, retaining the Calgary head office and further investing in Canada. 'This partnership creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas.' The deal includes compelling financial benefits, industry-leading scale and stability, and accelerated accretive growth, according to Parkland. Sunoco expects to return to four-times its long-term leverage target within 12–18 months after closing the acquisition. The combined company will benefit from complementary assets, enabling an advantaged fuel supply and further diversifying Sunoco's portfolio and geographic footprint. Parkland president and CEO Bob Espey said: 'This transaction delivers immediate value for shareholders, including an attractive 25% premium. 'Sunoco shares our commitment to growth, customer service, operational excellence and ongoing investment in Canada, making our combined business stronger and better positioned for sustained success.' Sunoco plans to continue to invest in the Burnaby Refinery, known for producing low-carbon fuels, which will continue to operate and supply fuel within the Lower Mainland.
Cision Canada
05-05-2025
- Business
- Cision Canada
Parkland Reports 2025 First Quarter Results
CALGARY, AB, May 5, 2025 /CNW/ - Parkland Corporation ("Parkland", "we", the "Company", or "our") (TSX: PKI), today announced its full financial and operating results for the three months ended March 31, 2025. "Our first quarter of 2025 saw a recovery from 2024 as the refinery offset a slow start to the year and a one-time $53 million impact due to a decision to exit the California compliance market," said Bob Espey, President and Chief Executive Officer. "It is still early in the year, and as we assess performance across our business, we are encouraged by several positive developments. Our International segment continues to deliver strong growth, refining margins have been stronger than anticipated, and we expect a robust driving season in Canada. While the macroeconomic and regulatory environment remains volatile, these tailwinds highlight the resilience of our portfolio and reinforce my confidence in the foundation we have built at Parkland." Q1 2025 Highlights Achieved Adjusted EBITDA 1 of $375 million, an increase of $48 million as compared to Q1 2024, primarily driven by the 11-week unplanned shutdown of the Burnaby Refinery in the comparative period and strong performance in the International business. These were partially offset by the commercial decision to wind down our California compliance market positions, resulting in realized losses of $53 million within the Canadian segment 2, and weaker performance in the USA. Net earnings of $64 million ($0.37 per share, basic), as compared to net loss of $5 million ($0.03 per share, basic) in Q1 2024, and Adjusted earnings 3 of $65 million ($0.37 per share, basic 3), as compared to $43 million ($0.25 per share, basic) in Q1 2024. Trailing twelve months ("TTM") Available cash flow 3 of $586 million ($3.37 per share 3), as compared to $762 million ($4.34 per share) as of March 31, 2024. TTM Cash generated from (used in) operating activities 4 of $1,604 million ($9.21 per share 4), as compared to $1,683 million ($9.56 per share) as of March 31, 2024. These decreases were largely due to a significantly lower refining margin environment during the second half of 2024, realized losses due to the wind down of our California compliance market positions in the first quarter of 2025, and higher acquisition, integration and other costs during the last nine months of 2024 primarily associated with restructuring activities and implementing enterprise-wide systems. Return on invested capital 3 ("ROIC") was 7.6 percent for the trailing twelve months ended March 31, 2025 as compared to 8.9 percent, for the same period in 2024. Maintained Leverage Ratio 5 of 3.6 times (3.6 times in Q4 2024) and liquidity available 4 of $2 billion. Q1 2025 Segment Highlights Canada delivered Adjusted EBITDA of $110 million, as compared to $186 million in Q1 2024. The decrease was primarily driven by the commercial decision to wind down our California compliance market positions, resulting in realized losses of $53 million, and the sale of the commercial propane business in Q4 2024. International delivered Adjusted EBITDA of $181 million, as compared to $147 million in Q1 2024. The increase was driven by higher volume and margins in the commercial and wholesale businesses from strategic and recurring customers and strength in our South American region. USA delivered Adjusted EBITDA of $16 million, as compared to $31 million in Q1 2024. The decrease was driven by macroeconomic pressures continuing to impact fuel and convenience demand in line with broader industry trends, as well as regulatory developments that also impacted Parkland's ability to capture supply optimization opportunities associated with moving refined product between Canada and the U.S. Refining delivered Adjusted EBITDA of $79 million, as compared to an Adjusted EBITDA loss of $33 million in Q1 2024. The increase relative to Q1 2024 was primarily driven by an 11-week unplanned shutdown in the comparative period. Composite utilization 6 at the Burnaby Refinery was approximately 76 percent in Q1 2025, as compared to approximately 20 percent in Q1 2024. The Burnaby Refinery successfully completed a three-week planned maintenance in the quarter and performed safely and reliably which allowed us to benefit from favourable market conditions. Parkland's total recordable injury frequency rate 6 on a TTM basis was 1.13, compared to 1.07 at Q1 2024. Consolidated Financial Overview ($ millions, unless otherwise noted) Three months ended March 31, Financial Summary 2025 2024 Sales and operating revenue 6,813 6,939 Adjusted EBITDA (1) 375 327 Canada (2)(5) 110 186 International (2)(5) 181 147 USA (2)(5) 16 31 Refining (2)(5) 79 (33) Corporate (2)(5) (11) (4) Net earnings (loss) 64 (5) Net earnings (loss) per share – basic ($ per share) 0.37 (0.03) Net earnings (loss) per share – diluted ($ per share) 0.36 (0.03) Trailing twelve months ("TTM") Cash generated from (used in) operating activities (3) 1,604 1,683 TTM Cash generated from (used in) operating activities per share (3) 9.21 9.56 TTM Available cash flow (4)(6) 586 762 TTM Available cash flow per share (4)(6) 3.37 4.34 TTM ROIC (4) 7.6 % 8.9 % Q1 2025 Conference Call and Webcast Details Following the announcement of Parkland's definitive agreement to be acquired by Sunoco LP and associated conference call held earlier today, our planned webcast and conference call on Thursday, May 6, 2025, at 6:30 am MT (8:30 am ET) has been cancelled. MD&A and Annual Consolidated Financial Statements The Management's Discussion and Analysis for the three months ended March 31, 2025 (the "Q1 2025 MD&A") and Interim Condensed Consolidated Financial Statements for the three months ended March 31, 2025 (the "Q1 2025 Condensed Consolidated Financial Statements") provide a detailed explanation of Parkland's operating results for the three months ended March 31, 2025. An English version of these documents will be available online at and the System for Electronic Data Analysis and Retrieval+ ("SEDAR+") after the results are released by newswire under Parkland's profile at The French versions of the Q1 2025 MD&A and the Q1 2025 Condensed Consolidated Financial Statements will be posted to and SEDAR+ as soon as they become available. About Parkland Corporation Parkland is a leading international fuel distributor, marketer, and convenience retailer with safe and reliable operations in 26 countries across the Americas. Our retail network meets the fuel and convenience needs of everyday consumers. Our commercial operations provide businesses with fuel to operate, complete projects and better serve their customers. In addition to meeting our customers' needs for essential fuels, Parkland provides a range of choices to help them lower their environmental impact, including manufacturing and blending renewable fuels, ultra-fast EV charging, a variety of solutions for carbon credits and renewables, and solar power. With approximately 4,000 retail and commercial locations across Canada, the United States and the Caribbean region, we have developed supply, distribution and trading capabilities to accelerate growth and business performance. Our strategy is focused on two interconnected pillars: our Customer Advantage and our Supply Advantage. Through our Customer Advantage, we aim to be the first choice of our customers through our proprietary brands, differentiated offers, extensive network, competitive pricing, reliable service, and compelling loyalty program. Our Supply Advantage is based on achieving the lowest cost to serve among independent fuel marketers and distributors in the hard-to-serve markets in which we operate, through our well-positioned assets, significant scale, and deep supply and logistics capabilities. Our business is underpinned by our people and our values of safety, integrity, community and respect, which are embedded across our organization. Forward-Looking Statements Certain statements contained herein constitute forward-looking information and statements (collectively, "forward-looking statements"). When used the words "expect", "will", "could", "would", "believe", "continue", "pursue" and similar expressions are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things: business strategies, objectives and initiatives; ; International's continued strong growth; an expected robust driving season in Canada; portfolio resilience; and confidence in Parkland's foundation. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These forward-looking statements speak only as of the date of this news release. Parkland does not undertake any obligation to publicly update or revise any forward-looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to: the strategic review that Parkland initiated on March 5, 2025 (the "Strategic Review"), the process and the timing thereof, whether the strategic review will result in Parkland undertaking a transaction, and if so, the terms and timing relating thereto, the completion thereof and realizing benefits resulting therefrom; general economic, market and business conditions; micro and macroeconomic trends and conditions, including increases in interest rates, inflation, imposition of tariffs and fluctuating commodity prices; Parkland's ability to execute its business objectives, projects and strategies, including the completion, financing and timing thereof, realizing the benefits therefrom, meeting our targets, outlook and commitments relating thereto, and the impact of the Strategic Review thereon; and other factors, many of which are beyond the control of Parkland and the assumptions and risks described in "Cautionary Statement Regarding Forward-Looking Information" and "Risk Factors" included in Parkland's most recently filed Annual Information Form, and in "Forward-Looking Information" and "Risk Factors" in the Q4 2024 MD&A, each as filed on SEDAR+ and available on the Parkland website at The forward-looking statements contained in this news release as expressly qualified by these cautionary statements. Specified Financial Measures This news release contains total of segments measures, non-GAAP financial measures and non-GAAP financial ratios, supplementary financial measures and capital management measures (collectively, "specified financial measures"). Parkland's management uses certain specified financial measures to analyze the operating and financial performance, leverage, and liquidity of the business. These specified financial measures do not have any standardized meaning under International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and are therefore unlikely to be comparable to similar measures presented by other companies. The specified financial measures should not be considered in isolation or used in substitute for measures of performance prepared in accordance with the IFRS Accounting Standards. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for further details regarding specified financial measures used by Parkland. Non-GAAP Financial Measures and Ratios Adjusted earnings (loss) is a non-GAAP financial measure and Adjusted earnings (loss) per share is a non-GAAP financial ratio, each representing the underlying core operating performance of business activities of Parkland at a consolidated level. The most directly comparable financial measure to Adjusted earnings (loss) and Adjusted earnings (loss) per share is Net earnings (loss). Adjusted earnings (loss) and Adjusted earnings (loss) per share represent how well Parkland's operational business is performing, while considering depreciation and amortization, interest on leases and long-term debt, accretion and other finance costs, and income taxes. The Company uses these measures because it believes that Adjusted earnings (loss) and Adjusted earnings (loss) per share are useful for management and investors in assessing the Company's overall performance, as they exclude certain items that are not reflective of the Company's underlying business operations. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition of Adjusted earnings (loss) and Adjusted earnings (loss) per share. Please see below for the reconciliation of Adjusted earnings (loss) to net earnings (loss) and the calculation of Adjusted earnings (loss) per share. (1) Other adjusting items for the three months ended March 31, 2025 include: (i) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of $13 million gain (2024 - $11 million loss); (ii) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $5 million (2024 - $4 million); (iii) other income of $2 million (2024 - $2 million); (iv) adjustment to foreign exchange losses related to cash pooling arrangements of nil (2024 - $2 million loss); and (v) adjustment to realized risk management gains related to interest rate swaps, as these gains do not relate to commodity sale and purchase transactions, of nil (2024 - $1 million). (2) The tax normalization adjustment was applied to net earnings (loss) adjusting items that were considered temporary differences, such as acquisition, integration and other costs, unrealized foreign exchange gains and losses, unrealized gains and losses on risk management and other, gains and losses on asset disposals, changes in fair value of redemption options, changes in estimates of environmental provisions, loss on inventory write-downs for which there are offsetting associated risk management derivatives with unrealized gains, and impairments of non-current assets. The tax impact was estimated using the effective tax rates applicable to jurisdictions where the related items occur. (3) Weighted average number of common shares are calculated in accordance with Parkland's accounting policy contained in Note 2 of the Annual Consolidated Financial Statements. (4) For comparative purposes, certain amounts were reclassified between realized and unrealized gain/(loss) on risk management with no changes to Adjusted earnings (loss) to conform to the presentation used in the current period. Available cash flow is a non-GAAP financial measure and Available cash flow per share is a non-GAAP financial ratio. The most directly comparable financial measure for Available cash flow and Available cash flow per share is cash generated from (used in) operating activities. Parkland uses these measures to set targets (including annual guidance and variable compensation target) and monitor its ability to generate cash flow for capital allocation, including distributions to shareholders, investment in the growth of the business, and deleveraging. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition of Available cash flow and Available cash flow per share. See the following table for a calculation of historical Available cash flow and Available cash flow per share and a reconciliation to cash generated from (used in) operating activities. Three months ended Trailing twelve months ended March 31, 2024 ($ millions, unless otherwise noted) June 30, 2023 (1) September 30, 2023 December 31, 2023 March 31, 2024 (1) Cash generated from (used in) operating activities 521 528 417 217 1,683 Reverse: Change in other assets and other liabilities (11) 7 (4) 28 20 Reverse: Net change in non-cash working capital related to operating activities (1) (145) (14) 17 55 (87) Include: Maintenance capital expenditures (61) (52) (93) (59) (265) Include: Dividends received from investments in associates and joint ventures 2 4 3 2 11 Include: Interest on leases and long-term debt (89) (83) (88) (85) (345) Include: Payments on principal amount on leases (56) (57) (71) (71) (255) Available cash flow 161 333 181 87 762 Weighted average number of common shares (millions) (2) 176 TTM Available cash flow per share 4.34 (1) For comparative purposes, certain amounts within the net change in non-cash working capital related to operating activities for the three months ended March 31, 2024, and the three months ended June 30, 2023, were revised to conform to the current period presentation. (2) Weighted average number of common shares is calculated in accordance with Parkland's accounting policy contained in Note 2 of the Annual Consolidated Financial Statements. ROIC is a non-GAAP financial ratio. The measure is calculated as a ratio of Net operating profit after tax ("NOPAT") divided by average invested capital. NOPAT describes the profitability of Parkland's base operations, excluding the impact of leverage and certain other items of income and expenditure that are not considered representative of Parkland's underlying core operating performance. NOPAT is based on Adjusted EBITDA, defined in the "Measures of Segment Profit (Loss) and Total of Segments Measures" section of this news release, less depreciation and amortization expense, including pro-forma depreciation on assets classified as held for sale, and the estimated tax expense using the expected average tax rate estimated using statutory tax rates in each jurisdiction where Parkland operates. Average invested capital is the amount of capital deployed by Parkland that represents the average of opening and closing debt, including debt liabilities classified as held for sale, as well as shareholder's equity, including equity reserves, net of cash and cash equivalents. We use this non-GAAP measure to assess Parkland's efficiency in investing capital. ($ millions, unless otherwise noted) Three months ended ROIC June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 Trailing twelve months ended March 31, 2025 Net earnings (loss) 70 91 (29) 64 196 Add/(less): Income tax expense (recovery) 20 17 (8) 8 37 Acquisition, integration and other costs 46 61 81 29 217 Depreciation and amortization 202 207 210 202 821 Finance cost 99 96 92 99 386 (Gain) loss on foreign exchange - unrealized 4 1 (2) (5) (2) (Gain) loss on risk management and other - unrealized 56 (48) 34 3 45 Other (gains) and losses (1) (1) 30 (19) 9 Other adjusting items 8 7 20 (6) 29 Adjusted EBITDA 504 431 428 375 1,738 Less: Depreciation and amortization (202) (207) (210) (202) (821) Less: Pro-forma depreciation and amortization on assets classified as held for sale — — (7) (7) (14) Adjusted EBIT 302 224 211 166 903 Average effective tax rate 20.1 % Less: Taxes (182) Net operating profit after tax 721 Opening invested capital 9,421 Closing invested capital 9,535 Average invested capital 9,478 Return on invested capital 7.6 % Invested Capital March 31, ($ millions, unless otherwise noted) 2025 2024 Long-term debt - current portion 244 218 Long-term debt 6,362 6,412 Long-term debt in liabilities classified as held for sale (1) 132 30 Shareholders' equity 3,159 3,154 Exclude: Cash and cash equivalents (362) (393) Total 9,535 9,421 ($ millions, unless otherwise noted) Three months ended ROIC June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Trailing twelve months ended March 31, 2024 Net earnings (loss) 78 230 86 (5) 389 Add/(less): Income tax expense (recovery) 18 54 (15) (29) 28 Acquisition, integration and other costs 39 38 42 30 149 Depreciation and amortization 206 205 222 206 839 Finance cost 98 93 89 91 371 (Gain) loss on foreign exchange - unrealized 27 1 — 3 31 (Gain) loss on risk management and other - unrealized (2) (11) (19) 28 3 1 Other (gains) and losses 14 (37) 5 10 (8) Other adjusting items (2) 1 20 6 18 45 Adjusted EBITDA 470 585 463 327 1,845 Less: Depreciation and amortization (206) (205) (222) (206) (839) Less: Pro-forma depreciation and amortization on assets classified as held for sale — — — — — Adjusted EBIT 264 380 241 121 1,006 Average effective tax rate 17.3 % Less: Taxes (174) Net operating profit after tax 832 Opening invested capital 9,347 Closing invested capital 9,421 Average invested capital 9,384 Return on invested capital 8.9 % Invested Capital March 31, ($ millions, unless otherwise noted) 2024 2023 Long-term debt - current portion 218 184 Long-term debt 6,412 6,599 Long-term debt in liabilities classified as held for sale (1) 30 — Shareholders' equity 3,154 3,062 Exclude: Cash and cash equivalents (393) (498) Total 9,421 9,347 (1) For comparative purposes, long-term debt in liabilities classified as held for sale were included as part of invested capital as at March 31, 2024, to conform to the current period presentation. (2) For comparative purposes, certain amounts were reclassified between realized and unrealized gain/(loss) on risk management for the three months ended March 31, 2024, with no changes to Adjusted EBITDA. These non-GAAP financial measures and ratios should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS Accounting Standards. Except as otherwise indicated, these non-GAAP financial measures and ratios are calculated and disclosed on a consistent basis from period to period. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for further details regarding Parkland's non-GAAP financial measures and ratios. Capital Management Measures Parkland's primary capital management measure is the Leverage Ratio, which is used internally by key management personnel to monitor Parkland's overall financial strength, capital structure flexibility, and ability to service debt and meet current and future commitments. In order to manage its financing requirements, Parkland may adjust capital spending or dividends paid to shareholders or issue new shares or new debt. The Leverage Ratio is calculated as a ratio of Leverage Debt to Leverage EBITDA and does not have any standardized meaning prescribed under IFRS Accounting Standards. It is, therefore, unlikely to be comparable to similar measures presented by other companies. The detailed calculation of the Leverage Ratio is as follows: ($ millions, unless otherwise noted) March 31, 2025 December 31, 2024 Leverage Debt 5,257 5,268 Leverage EBITDA 1,476 1,481 Leverage Ratio 3.6 3.6 ($ millions, unless otherwise noted) March 31, 2025 December 31, 2024 Long-term debt 6,606 6,641 Less: Lease obligations (1,028) (1,054) Cash and cash equivalents (362) (385) Non-recourse debt (1) (31) (30) Risk management asset (2) (29) (30) Add: Non-recourse cash (1) 14 31 Letters of credit and other 87 95 Leverage Debt 5,257 5,268 (1) Represents non-recourse debt and non-recourse cash balance related to project financing. (2) Represents the risk management asset/liability associated with the spot element of the cross-currency swap designated in a cash flow hedge relationship to hedge the variability of principal cash flows of the 2024 Senior Notes resulting from changes in the spot exchange rates. Three months ended Trailing twelve months ended March 31, 2025 ($ millions, unless otherwise noted) June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 Adjusted EBITDA 504 431 428 375 1,738 Share incentive compensation 8 6 11 8 33 Reverse: IFRS 16 impact (1) (80) (84) (91) (93) (348) 432 353 348 290 1,423 Acquisition pro-forma adjustment (2) 7 Other adjustments (3) 46 Leverage EBITDA 1,476 (1) Includes the impact of operating leases prior to the adoption of IFRS 16, previously recognized under operating costs, which aligns with management's view of the impact of earnings. (2) Includes the impact of pro-forma pre-acquisition EBITDA estimates based on anticipated benefits, costs and synergies from acquisitions. (3) Includes adjustments to normalize Adjusted EBITDA for non-recurring events relating to the unplanned shutdown at the Burnaby Refinery, completion of turnarounds and the EBITDA attributable to EV charging operations financed through non-recourse project financing. Three months ended Trailing twelve months ended December 31, 2024 ($ millions, unless otherwise noted) March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 Adjusted EBITDA 327 504 431 428 1,690 Share incentive compensation 6 8 6 11 31 Reverse: IFRS 16 impact (1) (83) (80) (84) (91) (338) 250 432 353 348 1,383 Acquisition pro-forma adjustment (2) 11 Other adjustments (3) 87 Leverage EBITDA 1,481 (1) Includes the impact of operating leases prior to the adoption of IFRS 16, previously recognized under operating costs, which aligns with management's view of the impact of earnings. (2) Includes the impact of pro-forma pre-acquisition EBITDA estimates based on anticipated benefits, costs and synergies from acquisitions. (3) Includes adjustments to normalize Adjusted EBITDA for non-recurring events relating to the completion of turnarounds, unplanned shutdown resulting from extreme cold weather event, third-party power outage and the EBITDA attributable to EV charging operations financed through non recourse project financing. Measures of Segment Profit (Loss) and Total of Segments Measures Adjusted earnings (loss) before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a measure of segment profit (loss) and its aggregate is a total of segments measure used by the chief operating decision maker to make decisions about resource allocation to the segment and to assess its performance. In accordance with IFRS Accounting Standards, adjustments and eliminations made in preparing an entity's financial statements and allocations of revenue, expenses, and gains or losses shall be included in determining reported segment profit (loss) only if they are included in the measure of the segment's profit (loss) that is used by the chief operating decision maker. As such, Parkland's Adjusted EBITDA is unlikely to be comparable to measures of segment profit (loss) presented by other issuers, who may calculate these measures differently. Parkland views Adjusted EBITDA as the key measure for the underlying core operating performance of business segment activities at an operational level. Adjusted EBITDA is used by management to set targets for Parkland (including annual guidance and variable compensation targets) and is used to determine Parkland's ability to service debt, finance capital expenditures and provide for dividend payments to shareholders. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for the detailed definition and composition of Adjusted EBITDA. Refer to the table below for the reconciliation of Adjusted EBITDA to net earnings (loss), which is the most directly comparable financial measure, for the three months ended March 31, 2025 and March 31, 2024. (1) Total of segments measure. See Section 15 of the Q1 MD&A. (2) Other (gains) and losses for the three months ended March 31, 2025, include: (i) $21 million non-cash valuation gain (2024 - $13 million loss) due to change in fair value of redemption options; (ii) $4 million non-cash valuation loss (2024 - $4 million gain) due to the change in estimates of environmental provisions; (iii) $4 million (2024 - $2 million) in other income; and (iv) $1 million loss (2024 - $5 million loss) in others; and (v) $1 million loss (2024 - $2 million gain) on disposal of assets; (3) Other adjusting items for the three months ended March 31, 2025, include: (i) realized gains and losses on risk management and other assets and liabilities related to underlying physical sales activity in another period of $13 million gain (2024 - $11 million loss); (ii) the share of depreciation, income taxes and other adjustments for investments in joint ventures and associates of $5 million (2024 - $4 million); (iii) other income of $2 million (2024 - $2 million); (iv) adjustment to foreign exchange losses related to cash pooling arrangements of nil (2024 - $2 million loss); and (v) realized risk management gains related to interest rate swaps, as these gains do not relate to commodity sale and purchase transactions, of nil (2024 -$1 million). (4) For comparative purposes, certain amounts were reclassified between realized and unrealized gain/(loss) on risk management for the three months ended March 31, 2024, with no changes to Net earnings (loss) of segments measure. See Section 15 of the Q1 MD&A. Supplementary Financial Measures Parkland uses a number of supplementary financial measures, including TTM Cash generated from (used in) operating activities, TTM Cash generated from (used in) operating activities per share and liquidity available, to evaluate the success of our strategic objectives. These measures may not be comparable to similar measures presented by other issuers, as other issuers may calculate these measures differently. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for further details regarding supplementary financial measures used by Parkland, including the composition of such measures. Non-Financial Measures Parkland uses a number of non-financial measures, including composite utilization and total recordable injury frequency rate, to measure the success of our strategic objectives and to set variable compensation targets for employees, where applicable. These non-financial measures are not accounting measures, do not have comparable IFRS Accounting Standards measures, and may not be comparable to similar measures presented by other issuers, as other issuers may calculate these metrics differently. See Section 15 of the Q1 2025 MD&A, which is incorporated by reference into this news release, for further details on the non-financial measures used by Parkland.
CBC
05-05-2025
- Business
- CBC
Dissident to fight board vote delay in court after Parkland, Sunoco ink $9.1B US deal
Parkland Corp.'s biggest shareholder is going to court after the Calgary company announced a $9.1-billion US takeover by Sunoco LP and delayed a meeting where it was to face down investors pushing for a boardroom overhaul. A showdown had been set to take place in Calgary on Tuesday, with shareholders voting on competing director nominee slates put forward by Parkland's management and by Simpson Oil, which owns just under 20 per cent of the Canadian fuel retailer and refiner's shares. Parkland and Cayman Islands-based Simpson have been at odds over the fuel refiner and retailer's performance and governance for about a year. Parkland's meeting has been rescheduled to June 24, when Parkland shareholders are to vote on a cash-and-stock deal with Dallas-based Sunoco that would create the largest independent fuel distributor in the Americas. Simpson says it has applied to the Alberta Court of King's Bench to hold the annual meeting as planned, calling the delay a "deplorable tactic" and a bid to "cling to control" by the existing board. Simpson says no action should have been taken under a new board of directors supported by shareholders was in place. "Delaying the meeting and pushing forward with any transaction ahead of board transition represents a clear breach of fiduciary duty — an obvious attempt to cling to power and sidestep shareholder will," Simpson said in a statement Monday. Simpson is calling on all 11 incumbent Parkland directors to resign immediately, including executive chair Mike Jennings. The cash-and-stock deal between Parkland and Sunoco announced Monday requires shareholder and regulatory approval and also has to be cleared under the Investment Canada Act. The U.S. company has committed to maintain a Canadian headquarters in Calgary, significant employment in Canada and investment in Parkland's refinery in Burnaby, B.C. "This combination with Sunoco provides Parkland's shareholders with the highest value and the greatest proceeds, while also affirming Sunoco's and Parkland commitment to Canada, a country that has played a vital role in our combined history," said outgoing Parkland chief executive Bob Espey. "Sunoco is a strong organization and clearly the right choice for Parkland." Espey, who had been at the helm for 17 years, announced earlier this month that he would step down before year-end. Under shareholder pressure, Parkland said in March it would review options to boost its share price, including a sale of the entire company, an action it had earlier said was unnecessary. As part of the deal, Sunoco intends to form a new publicly traded company named SUNCorp LLC that will hold limited partnership units of Sunoco that are economically equivalent to Sunoco's publicly traded common units. Parkland shareholders will receive 0.295 SUNCorp units and $19.80 Cdn for each Parkland share. Parkland shareholders may also elect to receive $44 Cdn per Parkland share in cash or 0.536 SUNCorp units for each Parkland share, subject to limits. The cash-and-stock deal also includes Parkland's assumed debt.
