Parkland reports fourth quarter and fiscal year end financial results



    
    Fourth Quarter 2008 Performance Highlights:

    -   Record quarterly fuel sales volume of 664 million litres, up 29% from
        516 million litres the prior year.
    -   Record quarterly sales of $525 million, up 15% from $456 million the
        prior year.
    -   Record Q4 EBITDA of $25.1 million, up 40% from $17.9 million in 2007
        and a record for any Q4.
    -   Distribution payout ratio 90% for the quarter and 91% for all of
        2008.
    -   Q4 2008 EBITDA includes $5.0 million non-recurring contract
        cancellation fee.
    -   Strong contribution from retail fuel sales.
    

    RED DEER, AB, Feb. 27 /CNW/ - Parkland Income Fund (TSX:PKI.UN) today
announced its business performance for the fourth quarter of 2008 and the year
ended December 31, 2008. Fourth quarter volume achieved record levels for any
quarter. Revenue and earnings before interest, taxes, depreciation and
amortization (EBITDA) for Q4 2008 was higher than the same period a year
earlier and the highest Q4 on record.
    President and CEO Mike Chorlton said,"We believe the current level of
distributions is sustainable and there are no plans under current conditions
to reduce monthly distributions."
    "Profitability in the fourth quarter were much higher than the first half
of 2008 with record sales volume and strong margins. The EBITDA gain occurred
despite a $15 million negative FIFO adjustment in fuel inventory from
declining petroleum product prices. During this period of extreme volatility
in the capital markets, Parkland is focused on maintaining monthly
distributions, driving operational efficiency and continuing to build our
business as opportunities arise."
    Distributable cash exceeded cash distributions in the fourth quarter and
for the year ended December 31, 2008. The annual distribution payout ratio for
2008 was 91% compared to 90% in 2007. Accordingly, we have maintained our
monthly distribution rate of $0.105 per unit.

    Outlook

    Two months into the first quarter of 2009, retail fuel sales volumes
remain similar to the prior year and retail margins remain strong in spite of
the cold weather season when demand for gasoline is typically weaker.
Commercial fuel sales volumes have been softer in northern Alberta as upstream
oil and gas customers have curtailed drilling programs.
    Diesel supply has increased from shortages experienced in 2008 causing
margins to trend downward although they remain strong by historic standards.
    Refiners' margins for gasoline have increased to the degree that they are
stronger than any mid-winter period in the past 10 years. As of the current
date they have declined somewhat from their peek in mid-February.
    Subsequent to the end of the fourth quarter, 40 dealers in Ontario and
Alberta came on-line as a result of agreements we entered into that increased
the number of accounts in our Esso retail branded distributorship business.
These dealers, with an anticipated annual volume of 200 million litres of
gasoline and diesel are expected to contribute to Parkland's growth in 2009.
    While early profitability for 2009 is positive we recognize that we
operate in uncertain economic times. Demand for Parkland's products fluctuates
to a certain extent with economic conditions and may deteriorate over time.
Profit margins also vary from time to time in response to changes in demand
and economic conditions in general. These factors represent a risk for our
profitability going forward.

    Fuel Volumes

    Gasoline, diesel and propane volumes were strong with total sales of 664
million litres in the quarter ended December 31, 2008, an increase of 29% from
516 million litres for the same period in 2007. The increase resulted from the
acquisitions completed over the past year. At the retail level, same-store
fuel sales volumes increased approximately three percent over the prior year
in our company operated and controlled sites but decreased approximately three
percent in the independent dealer network.

    Gross Profit

    In addition to the retail margins for gasoline and diesel, we participate
in the refiners' margins for a significant portion of our supply volumes. In
the fourth quarter this participation yielded earnings approximately $3
million higher than the comparative period in 2007.
    The contribution from this margin category has been highly variable over
the past two years as it produced record results in 2007, then declined to
minimal amounts in the first half of 2008 and recovered substantially in the
past two quarters.
    During the fourth quarter we received a one-time payment of $5.0 million
as a fee to cancel the chemical processing arrangement which utilized part of
our Bowden refinery. This is included in our profit margin and is a
non-recurring item. We continue to use the Bowden site as a fuel terminal for
internal and third party use and further development is under study.
    Our operating and direct costs were $26.9 million in the fourth quarter
compared to $32.4 million for the same period in 2007. Some of this decrease
is driven by the decreased sales volume in the Commercial segment during the
fourth quarter compared to 2007. In the fourth quarter of 2007 we reclassified
as operating and direct costs approximately $7 million of local truck delivery
expenses which had been recorded as cost of sales in the first three quarters.
    Our marketing, general and administrative expenses were $13.4 million in
the fourth quarter compared to $11.5 million for the same period in 2007.
Included in this expense category are the operating costs related to our ERP
implementation which is expected to be complete in 2009. Also included in this
expense category is the $1.0 million write-off of the Beaver Hills refinery
feasibility study, as a result of the previously disclosed termination of the
project.
    A comparison of EBITDA for the fourth quarter of 2008 with the fourth
quarter of 2007, as well as full year 2008 compared to the prior year are
available online at http://files.newswire.ca/714/EBITDA.pdf.

    Termination of Beaver Hills Project

    In 2008 we participated in a feasibility study to assess the viability of
building a condensate-based refinery in Edmonton. In the fourth quarter a
decision was reached by the partners in the study to terminate the project and
we wrote off $1.0 million which we had advanced in 2007 for our share of the
study.

    
    CONSOLIDATED HIGHLIGHTS
    Financial Results
                                              Three         Three
                                             months        months
    (in millions of Canadian                  ended         ended
     dollars except volume and per      December 31,  December 31,
     Unit amounts)                             2008          2007     Change
    -------------------------------------------------------------------------

    Fuel volume (millions of litres)            664           516        29%
    Net sales and operating revenues          524.5         456.1        15%
    Gross profit                               65.4          61.8         6%
    Gross margin                              12.5%         13.6%
    Operating and direct costs                 26.9          32.5       -17%
    Marketing, general and administrative      13.4          11.5        17%
    -------------------------------------------------------------------------
    Income before income taxes                 13.8          11.5        21%
    Income tax (recovery) expense               3.7           1.3
    -------------------------------------------------------------------------
    Net earnings                               10.1          10.2        -2%
    EBITDA(1)                                  24.7          17.9        38%
    Earnings per Unit - basic                $ 0.20        $ 0.24
    Earnings per Unit - diluted              $ 0.20        $ 0.23

    Distributable cash flow(2)                 17.7          16.2         9%
    Distributions(3)                           15.9          52.0       -70%
    Distribution payout ratio - regular         90%           89%
    Distribution payout ratio - including
    year-end special                                         320%
    -------------------------------------------------------------------------


                                         Year ended    Year ended
                                        December 31,  December 31,
                                               2008          2007     Change
    -------------------------------------------------------------------------

    Fuel volume (millions of litres)          2,353         1,963        20%
    Net sales and operating revenues        2,348.1       1,697.7        38%
    Gross profit                              221.4         232.5        -5%
    Gross margin                               9.4%         13.7%
    Operating and direct costs                 92.0          77.7        18%
    Marketing, general and administrative      48.2          39.8        21%
    -------------------------------------------------------------------------
    Income before income taxes                 45.2          88.7       -49%
    Income tax (recovery) expense               0.8           8.0
    -------------------------------------------------------------------------
    Net earnings                               44.4          80.7       -45%
    EBITDA(1)                                  81.2          97.2       -16%
    Earnings per Unit - basic                $ 0.88        $ 1.66
    Earnings per Unit - diluted              $ 0.88        $ 1.64

    Distributable cash flow(2)                 69.9         100.6       -31%
    Distributions(3)                           63.4          90.5       -30%
    Distribution payout ratio                   91%           90%
    -------------------------------------------------------------------------
    (1) EBITDA, which is not a financial measure under Generally Accepted
        Accounting Principles (GAAP), refers to Earnings Before Interest on
        Long-Term Debt, Income Tax Expense, Amortization, Accretion Expense,
        Refinery Remediation Accrual and Loss on Disposal of Capital Assets.
        It can be calculated from the GAAP amounts included in Parkland's
        financial statements and a table reconciling net income in accordance
        with GAAP to EBITDA is included in the Management's Discussion and
        Analysis (MD&A). Parkland believes that EBITDA is a relevant
        measure to users of its financial information as it provides an
        indication of pre-tax earnings available to distribute to debt and
        equity holders in the Fund. Parkland's definition of EBITDA may not
        be consistent with other providers of financial information and
        therefore may not be comparable.
    (2) Please see Distributable Cash Flow reconciliation table in the MD&A
    (3) 2007 includes year-end special distribution of $37.5 million

    The MD&A as well as the complete audited Consolidated Financial Statements
and Notes to Consolidated Financial Statements for the year ended December 31,
2008 are available online at
http://files.newswire.ca/714/Parkland_FS_and_MDA.pdf.

    Fund Description
    ----------------
    
    Parkland Income Fund currently operates retail and wholesale fuels and
convenience store businesses under its Fas Gas Plus, Fas Gas, Race Trac Fuels
and Short Stop Food Stores brands and through independent branded dealers, and
transports fuel and other products through its Distribution division. With
approximately 630 locations, Parkland has developed a strong market niche in
Canadian non-urban markets focused in the West and Ontario. The Fund supplies
propane, bulk fuel, heating oil, lubricants, industrial fluids, agricultural
inputs and associated services to commercial and industrial customers in
Alberta, British Columbia and the Yukon Territory under the Neufeld, Joy,
United Petroleum and Great Northern Oil brands. Additionally, Parkland
operates the Bowden refinery near Red Deer, Alberta as a storage and
contract-processing site.
    Parkland is focused on creating and delivering value for its unitholders
through the continuous refinement of its site portfolio, increasing revenue
diversification through growth in non-fuel revenues and active supply chain
management.
    Parkland's units trade on the Toronto Stock Exchange (TSX) under the
symbol PKI.UN. For more information, visit www.parkland.ca.

    Certain information included herein is forward-looking. Forward-looking
statements include, without limitation, statements regarding the future
financial position, business strategy, budgets, projected costs, capital
expenditures, financial results, taxes and plans and objectives of or
involving Parkland. Many of these statements can be identified by looking for
words such as "believe", "expects", "expected", "will", "intends", "projects",
"projected", "anticipates", "estimates", "continues", or similar words and
include but are not limited to, statements regarding the accretive effects of
the acquisition and the anticipated benefits of the acquisition. Parkland
believes the expectations reflected in such forward-looking statements are
reasonable but no assurance can be given that these expectations will prove to
be correct and such forward-looking statements should not be unduly relied
upon. Forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties some of which are described in
Parkland's annual report, annual information form and other continuous
disclosure documents. Such forward-looking statements necessarily involve
known and unknown risks and uncertainties and other factors, which may cause
Parkland's actual performance and financial results in future periods to
differ materially from any projections of future performance or results
expressed or implied by such forward-looking statements. Such factors include,
but are 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 including increases in taxes; changes in
environmental and other regulations; and other factors, many of which are
beyond the control of Parkland. Any forward-looking statements are made as of
the date hereof and Parkland does not undertake any obligation, except as
required under applicable law, to publicly update or revise such statements to
reflect new information, subsequent or otherwise.

    
    Conference Call
    ---------------

    Parkland will hold a conference call for Analysts, Brokers and Investors
to discuss fourth quarter and year end results as follows:

        Monday, March 2, 2009, 9:00 a.m. (11:00 a.m. Eastern Time)
        Direct: 416-644-3415
        Toll-free: 800-733-7560
        Passcode: 21296913 followed by the pound sign

        The replay will be available as follows:

           From Monday, March 2, 2009, 9:00 a.m. (11:00 a.m. Eastern Time)
           To Monday, March 16, 2009 at 9:59 p.m. (11:59 p.m. Eastern Time)
           Direct: 416-640-1917
           Toll-free: 877-289-8525
           Passcode: 21296913 followed by the pound sign

    Webcast
    -------

    www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2542540
    





For further information:

For further information: Red Deer: Mike W. Chorlton, President and CEO,
(403) 357-6400; John G. Schroeder, Vice President and CFO, (403) 357-6400; If
you prefer to receive Company news releases via e-mail, please request at
corpinfo@parkland.ca

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Parkland Fuel Corporation

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