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Press release from CNW Group

Parkland Fuel Corporation Unveils Five Year Strategic Plan

Tuesday, May 15, 2012

Parkland Fuel Corporation Unveils Five Year Strategic Plan08:00 EDT Tuesday, May 15, 2012- Parkland Penny Plan Seeks $70 Million in Aspirational Benefits -RED DEER, AB, May 15, 2012 /CNW/ - Parkland Fuel Corporation ("Parkland" or the "Corporation") (TSX: PKI), Canada's largest independent distributor and marketer of fuels and lubricants, today released the details of the Parkland Penny Plan, a five year strategic plan to increase earnings by growing annual fuel volumes to seven billion litres and achieving efficiencies within the organization equivalent to a penny per litre."We have the ability to grow earnings through two distinct opportunities at Parkland," said Bob Espey, President and Chief Executive Officer of Parkland.  "The first opportunity is to grow our earnings by increasing our fuel volumes through organic growth and accretive acquisitions.  The second and larger opportunity is to create value through savings, efficiencies and economies of scale. Our goal is to be able to realize a penny per litre in savings as we grow to 7 billion litres through synergies and cost savings.  When we are successful this will result in $70 million of incremental earnings before interest, taxes, depreciation and amortization ("EBITDA") when compared to 2011, above any EBITDA that we acquire."Doubling 2011 Normalized EBITDA Through The Penny PlanTo provide investors with a baseline to review Parkland's strategic plan, Parkland's 2011 results were normalized for one-time costs and for economic conditions anticipated in 2014, leading to a normalized 2011 EBITDA of $125 million.Through the three pillars of its strategy, Parkland will endeavour to double normalized 2011 EBITDA by the end of 2016.  $70 million will be derived from savings, efficiencies and economies of scale.  $55 million will be derived from top line growth, primarily through accretive acquisitions.Grow - 1/3 of a centParkland has apsirations to grow from 4.2 billion litres in annual fuel sales to 7 billion litres or 10% of the Canadian fuel market by 2016 through a combination of organic growth and acquisitions.  Based on Parkland's current business mix, this growth in volumes equates to approximately $55 million in additional EBITDA through top line growth.Based on average industry rates, organic growth is expected to deliver fuel volume increases of 100 million litres annually for a total of 0.5 billion litres by 2016.While accretive acquisitions are expected to deliver approximately 2.5 billion litres in fuel volume growth over the course of the five year plan, this growth is contingent on reasonable pricing and Parkland will not over-pay. It is anticipated that roughly 7 billion litres in fuel marketing business will change hands before the end of 2016. Parkland's acquisiton pipeline remains robust.A third of the savings within the Parkland Penny Plan relies on economies of scale achieved with this growth.Supply - 1/3 of a centAt the end of 2013, a supply contract that allows Parkland to economically benefit when refiners' margins are strong, and which has made a significant contribution to the corporation's earnings, comes to an end.  Parkland has been actively executing a plan to replace the volume and the average annual net economic benefit of this contract.In addition to this, Parkland believes an additional third of a cent per litre in improved supply and distribution costs is achievable through effective management of the supply and wholesale portfolio.Operate - 1/3 of a centThe final third of a penny per litre will be found in greater operational efficiencies and savings through programs like Give Me Five!  Give Me Five! is a strategic cost initiative that trains employees on how to identify savings opportunities, and provides them with the resources and tools to extract value from those opportunities.  This employee led initiative has already identified $11 million in savings."We measure our success in fractions of a penny per litre," added Bob Espey, President and CEO.  "Consider that at 7 billion litres of fuel volume, if we are able to save a penny for every litre sold, the EBITDA gain is larger than from acquisitions alone.  This is our opportunity over the next five years as we strive to grow not only through fuel volume growth, but by becoming an even better fuel marketer.  When I look at how far we have come in the past year, and the results from Parkland's first quarter of 2012, I am confident that we can continue the progress that we have already begun to demonstrate."Analyst Day Webcast InformationPresident and CEO Bob Espey, Senior Vice President and CFO Mike Lambert, and members of Parkland's Senior Leadership Team are hosting an analyst and investor meeting beginning at 9:00 a.m. Eastern Standard Time ("EST") (7:00 a.m. Mountain Standard Time) to discuss the Parkland Penny Plan and then take questions from securities analysts and investors.Interested investors are encouraged to join us via webcast:http://event.on24.com/r.htm?e=459684&s=1&k=BDCDEBA7A2B9F3249E5D531CA91AEBAFThe webcast will be available for replay two hours after the conference call ends.  It will remain available at the link above for 90 days.Forward Looking InformationCertain 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, effectiveness of internal controls, sources of funding of growth capital expenditures 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. 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 the Corporation'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 the Corporation'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 the Corporation 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.About Parkland Fuel CorporationParkland Fuel Corporation is Canada's largest independent marketer and distributor of fuels and lubricants, managing a nationwide network of sales channels. We are Canada's local fuel company, delivering gasoline, diesel fuel, lubricants, heating oil and other products to businesses, consumers and wholesale customers by community based operators who care.For further information: Tom McMillan, Director of Corporate Communications at tom.mcmillan@parkland.ca or 1-800-662-7177 extension 2533