Currently have a $50.00 target. GLTA
PARKLAND CORPORATION
Long-term Financial Targets Released
Key Takeaway: PKI released its long-term financial targets ahead of its
investor day today. Broadly speaking, the targets and messaging are in line
with our expectations. We believe this highlights the company's organic
growth opportunities, shift to running a more conservative balance sheet, and
ability to internally fund inorganic growth opportunities or accelerate its
buyback program.
2024 Guidance: PKI provided more granularity around its 2024 guidance
including adj. EBITDA of $2B +/- $50MM (we are at $2.01B and consensus is
$1.99B), capex of $475MM-$525MM (we are at $525MM and consensus is
$413MM), available CFPS of $5 (we are at $4.50) and ROIC of >11%.
2028 Ambitions: PKI released the following 2028 ambitions. It is targeting
adj. EBITDA of $2.5B, driven by organic growth, synergy capture and cost
efficiencies. The company sees the potential to generate up to $3B of adj.
EBITDA in 2028, reflecting inorganic growth opportunities. We had expected
the company to guide to $3B of EBITDA by 2029 inclusive of inorganic
growth opportunities.
Capital Allocation Framework: PKI provided its capital allocation frame as
it expects to generate $6B in cumulative available cash flow from 2024 to
2028. The company's capital allocation program will consist of $1.5B (25%)
to dividends and share buybacks and $1.5B (25%) to organic growth
initiatives. With the remaining $3B (50%) of anticipated capital, PKI will
prioritize reducing its leverage ratio to the low end of its 2x-3x target range by
the end of 2025. Beyond that and looking forward through 2028, PKI expects
capital will be allocated opportunistically including additional share buybacks
and inorganic growth opportunities.