BCUC I NQUIRY INTO G ASOLINE AND D IESEL P RICES IN BC E XHIBIT C5-8 PRESENTATION TO THE BRITISH COLUMBIA UTILITIES COMMISSION July 17, 2019
FORWARD LOOKING STATEMENT DISCLAIMER & NOTE ON NON-GAAP MEASURES 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 presentation may contain forward-looking statements with respect to, among other things, cash flow growth, run-rate synergies, CORO Conversions, private label program expansion, fuel volume growth, new business objectives, organic growth initiatives, growth of supply and trading business in the U.S. and Caribbean, Adjusted EBITDA Guidance, capital and maintenance expenditure forecasts, contribution of the Sol business and 2018 U.S. acquisitions, strategic marketing and operational efforts to increase fuel volume, expected launch of marketing and loyalty programs, forecast crack spreads and refining margins, U.S. growth opportunities, seasonal EBITDA and volume projections, and supply improvement and optimization and plans and objectives of or involving Parkland. 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 presentation should not be unduly relied upon. These forward-looking statements speak only as of the date of this presentation. Parkland does not undertake any obligations 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, general economic, market and business conditions; industry capacity; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities and other regulators including but not limited to increases in taxes or restricted access to markets; changes and developments in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. See also the risks and uncertainties described in "Forward- Looking Information" and "Risk Factors" included in Parkland's Annual Information Form dated March 27, 2019 and in "Forward-Looking Information" and "Risk Factors" in the Q1 2019 Management’s Discussion and Analysis (“MD&A”), each as filed on SEDAR and available on the Parkland website at www.parkland.ca. Financial Measures This presentation may refer to certain non-GAAP financial measures that are not determined in accordance with International Financial Reporting Standards ("IFRS"). Distributable cash flow per share, dividend payout ratio and adjusted dividend payout ratio are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Management considers these to be important supplemental measures of Parkland's performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industries. See Section 13 of the Q1 2019 MD&A for a discussion of non-GAAP measures and their reconciliations to the nearest applicable IFRS measure. Adjusted EBITDA and adjusted gross profit are measures of segment profit. See Section 13 of the Q1 2019 MD&A and Note 20 of the Q1 2019 Interim Condensed Consolidated Financial Statements (“Q1 2019 FS”) for a reconciliation of these measures of segment profit. Annual Synergies is an annualized measure and is considered to be forward-looking information. See Section 13 of the Q1 2019 MD&A. Investors are encouraged to evaluate each measure and the reasons Parkland considers it appropriate for supplemental analysis. Effective January 1, 2019, Parkland adopted the new accounting standard, IFRS 16 - Leases ("IFRS 16"). The adoption of IFRS 16 has a significant effect on Parkland's reported results. Due to Parkland's selected transition method, it has not restated its prior year comparatives. Certain financial statement measures are presented excluding the impact of IFRS 16 ("Pre- IFRS 16 measures"). Refer to the Q1 2019 FS and Q1 2019 MD&A for reconciliations of Pre-IFRS 16 measures. Investors are cautioned, however, that these measures should not be construed as an alternative to net earnings determined in accordance with IFRS as an indication of Parkland's performance. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. Market data and other statistical information used throughout this presentation are based on internal company research, independent industry publications, government publications, reports by market research firms or other published independent sources including Fitch, the IMF World Economic Outlook and Wood Mackenzie. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although Parkland believes such information is accurate and reliable, Parkland has not independently verified any of the data from third-party sources cited or used for management's industry estimates, nor has Parkland ascertained the underlying economic assumptions relied upon therein. While Parkland believes internal company estimates are reliable, such estimates have not been verified by any independent sources, and Parkland does not make any representations as to the accuracy of such estimates. Statements as to our position relative to our competitors or as to market share refer to the most recent available data. 2
TWO-THIRDS OF THE RETAIL PRICE IS TAX AND CRUDE In percentage terms Average Retail Price Percentage Breakdown for Regular Gasoline in British Columbia Q1 2019 Source: Kent Petroleum Price Data, Kent Group Ltd., available at https://charting.kentgroupltd.com/ 3 Figure 11 from Dr. Kahwaty’s Report
DEFINING “COMPETITIVE”……PRICING YOUR CORE PRODUCT ON A LARGE PYLON SIGN TO THE 1/10 TH OF A CENT BCUC Follow Up Question 4E. 4
THE MARKET IS COMPETITIVE - RETAIL There are over 1300 stations in BC – here is a sample 5 BCUC Follow Up Question 4E.
THE MARKET IS COMPETITIVE- WHOLESALE / MARKETERS There are numerous marketers in active in BC BCUC Follow Up Question 4E. 6
REFINING / RETAIL MARGIN IS NOT SYNONYMOUS WITH PROFITABILITY Refining margin must cover the costs and profits of parties in steps 2 to 5 Gasoline and Diesel Supply Chain Kahwaty Report, p.11. 7
TRANS MOUNTAIN PIPELINE IS CONSTRAINED Constraints increase our refining costs (and our competitors’ costs of delivery) 8 BCUC Follow Up Questions 1A, 3B; Source NEB, Figure 17 to Dr. Kahwaty’s Report
BC’S UNIQUE FUEL CONTENT AND LOW CARBON STANDARDS DRIVE COSTS These policy choices, however reasonable, run counter to lower prices • Renewable fuel content requirements o Require blending in of higher cost renewable fuels o Diminish our operating flexibility • Low Carbon Fuel Standards (LCFS) o BC is also the only province to have them o It costs refineries more to sell product for BC market than for other markets 9 BCUC Follow Up Question 2L
THE MARKET IS COMPETITIVE – WHOLESALE / REFINERIES It isn’t just BC and Alberta – the wholesale market is continent wide 10 Source: Deetken Phase 1 Report, p.12
COME GROW WITH US
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