Parkland (PKI.TO) shares hit a new 52-week high on Tuesday, as the gas station giant's CEO says a recession will not stand in the way of newly increased profit and cash flow targets for next year.
Toronto-listed shares climbed to $44.49, their highest level in the past year, as the stock gained as much as 1.8 per cent in Tuesday's trade.
The Calgary-based company behind thousands of On the Go, Pioneer and Ultramar locations in Canada, the U.S., and Caribbean, as well as frozen food retailer M&M Food Market, held its annual investor day in Toronto on Tuesday.
Executives laid out a plan to earn $2 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024, a year ahead of previous guidance, rising to $2.5 billion in 2028.
Parkland says it now expects $6 billion in cumulative available cash flow from 2024 to 2028, half of which will go towards paying down debt, with the remaining quarters split between shareholder returns and growth plans.
Tuesday’s update from Parkland addressed some of the issues raised by activist investor Engine Capital LP last March, including a longer-term free cash flow forecast, and more details on capital allocation. However, Parkland’s executive pay policies, one of Engine’s primary critiques, was not addressed.
New York-based Engine did not immediately respond to a request for comment on Tuesday.
From selling egg sandwiches to hungry commuters to fuelling airplanes, Espey describes a wide range of contact points with consumers and industries. Asked if Parkland's latest profit targets factor in a potential recession, he says he's confident the company’s goals can be met “independent of the macro environment.”
“In the market that we're in, people need to drive to live,” Espey said in a presentation on Tuesday. “What we’ve demonstrated time and time again, through various economic cycles, is that the convenience format wins.”
Parkland reported third-quarter financial results earlier this month, doubling its earnings from a year ago, while announcing it's on track to exceed previously announced 2023 guidance.
Epsey on Tuesday credited Canada’s growing population for helping to stoke demand for fuel. He says Parkland continues to invest in “demand-resilient markets” without high EV penetration, like the middle of Canada and the U.S., as well as Florida and the Caribbean. At the same time, Darren Smart, Parkland’s senior vice-president of energy transition and corporate development, touts the success of the company’s electric vehicle charger network in British Columbia.
“We’ve seen really great trends in utilization,” Smart said. “There’s continued demand in the province of B.C., but we’re also seeing lots of demand in Quebec, and emerging in Ontario as well.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.