Parkland Corporation

Ben Brooks - VP, Treasury and IR Bob Espey - President and CEO Mike McMillan - CFO

Kevin Chiang - CIBC Michael Van Aelst - TD Securities Derek Dley - Canaccord Genuity Sabahat Khan - RBC Capital Markets Trevor Johnson - National Bank

Good morning and welcome everyone to Parkland Fuel Corporation’s Quarter Four and Full Year 2016 Results Conference Call. My name is Ben Brooks and I’m the Vice President of Treasury and Investor Relations for Parkland.

With me this morning are Bob Espey, President and Chief Executive Officer; and Mike McMillan, Chief Financial Officer. Pointing you to slide two of our presentation, during the call today, Parkland may make forward-looking statements related to expected future performance.

Such statements are based on current views and assumptions and are subject to uncertainties which are difficult to predict, including expected operating results, industry conditions, et cetera. Certain financial measures which do not have any standardized meaning, described by GAAP, will be referred to during this presentation.

These measures are identified and defined in Parkland’s continuous disclosure documents, which are available on our website or SEDAR. Please refer to our continuous disclosure documents as they identify factors which may cause actual results to differ materially from any forward-looking statements.

Our plan for the call today is that Bob will share an overview of the quarterly and full year results, Mike will then dive a little deeper and provide some further insight into both of those quarter and full year numbers before Bob closes with an update on our guidance for 2017 and the CST acquisition. At that point, we’ll take your questions.

I’ll now turn the call over to Bob to give an overview on our results.

Thanks, Ben, and welcome everybody to our fourth quarter 2016 results call. It’s been a great year of Parkland.

In fact it’s been another record quarter and another record year. As results for Q4 and FY 2016 show, we have continued to successfully deliver against our strategic plan to grow organically, deliver a supply advantage and acquire prudently.

We achieved a record fourth quarter adjusted EBITDA of $77.1 million, delivering growth of 19% compared to 2015. And I am pleased to report that fourth quarter has driven -- was driven by positive growth in all of Parkland’s operating segments, including 21% growth in Supply and Wholesale, 15% growth in Retail Fuels and 5% growth in Commercial Fuels.

We also achieved a record annual adjusted EBITDA of $253.5 million, delivering growth of 18% compared to 2015. This was led by Retail Fuels and Supply and Wholesale and enabled us to deliver annual adjusted EBITDA at higher end of our guidance.

On the volume side, we delivered a record 10.4 billion liters of fuel and petroleum products, representing 8% growth compared to 9.6 billion liters in 2015. The volume increase was primarily driven by growth in Retail Fuels as a result of organic growth and a full year of Pioneer.

The growth in the fourth quarter of 2016 has been driven predominantly by our Supply and Wholesale and Commercial Fuels divisions, both saw 11% growth in volume in the quarter. In the fourth quarter of 2016, Commercial Fuels delivered 50% more propane than Q4 2015, due to strong organic growth, as well as several propane related acquisitions and comparatively colder weather.

At this point, I’d like to ask Mike McMillan to walk through fourth quarter financial highlights.

Great. Thanks, Bob, and welcome, everyone.

Thanks for joining us on the call this morning. Overall, the business performed well in Q4, as Bob mentioned, achieving a record $77.1 million in adjusted EBITDA, driven by solid performance across all of our divisions.

Our adjusted EBITDA waterfall chart gives you a side-by-side comparison for each of our operating divisions, and I’m very happy to report year-over-year improvements in every division in Q4. In other words, it’s all green.

As you can see, Parkland Supply and Wholesale team continued to drive and support further growth, maintaining a commitment to their ongoing improvements to our cost of supply as demonstrated by the 21% improvement in segment adjusted EBITDA. On the Retail side, the strong growth was driven by fuel volume and margin growth including retail same-store fuel volume in Eastern Canada up 5.5%, which was above Parkland’s organic growth target of 3% to 5%.

We also saw strong company C-Store same-store sales growth of 1.9% nationally, led again by Eastern Canada at about 6.4%. Commercial also saw a year-over-year growth in Q4, primarily as a result of strong propane results.

Moving to slide five, you will see some more details on our segment results. Overall, we’ve experienced strong adjusted EBITDA performance across each segment.

Diving a little deeper into each of them and starting with Retail Fuels. Retail had another strong quarter.

Fuel volume increased primarily due to strong same-store volume growth in Eastern Canada, driven by stronger demand which contributed about 30 million liters of additional volume. This was partially offset by softening of volume in Western Canada reflective of slowdown in the economic activity that we’ve experienced throughout 2016.

Adjusted gross profit increased in the fourth quarter of 2016, primarily due to increased fuel volumes, strong fuel margins and C-Store sales performance in Eastern Canada, as noted. Retail Fuel adjusted EBITDA for the fourth quarter of 2016 grew 15% to $33.4 million as compared to $29.1 million for the fourth quarter of 2016.

Over in Supply and Wholesale, we also saw positive results across the key metrics. Fuel volume increased primarily due to a 196 million liter increase in LPG volumes, resulting from expanding propane sales and strong U.S.

transloading operation. The increase was partially offset by lower gas and diesel sales in Ontario and Quebec, driven by increased competition and decline in condensate due to lower demand.

Adjusted gross profit increased primarily due to increased fuel and petroleum volume, stronger propane sales and higher supply margin as result of meaningful improvements made in our strategy to build upon our supply advantage. Supply and Wholesale adjusted EBITDA for the fourth quarter of 2016, improved to $33.9 million compared to $28 million in the fourth quarter of 2015.

The increase is attributable to significant progress in improving our supply economics, reducing operating costs and strong LPG margins, which were partially offset by lower wholesale gas and diesel margins and an increase in variable MG&A expense. On the Commercial side of the business, overall Q4 fuel volume grow 11%, led by 50% growth in propane volumes while gas and diesel volumes grew steadily at about 1%.

Adjusted gross profit increased primarily due to higher propane sales across the division, partially offset by lower cartage and lubricant revenue. Commercial fuel’s adjusted EBITDA was $15.7 million in the fourth quarter as compared to $15 million in the fourth quarter of 2015.

The 5% growth was primarily related again to propane volumes driven by the ramp up activities of recent business wins, slightly colder temperatures and a 6% reduction in the division’s operating costs through effective cost management initiatives. The decrease in Parkland USA’s fuel volume is primarily attributable to decreased wholesale volume as a result of reduced economic activity in the Bakken oil region, most notably West and North Dakota.

This decline was partially offset by retail volume resulting from the acquisition of the two sites we acquired in late-2015 and the three sites more recently in late-2016. Adjusted gross profit decreased due to the decline in wholesale gas and diesel volume and related margin as a result of decreased activity in the Bakken oil region.

Parkland USA’s adjusted EBITDA was $4.2 million in the fourth quarter of 2016, as compared to $4.1 million in the fourth quarter of 2015. The increase was primarily driven by ongoing cost management efforts.

On our year-to-date waterfall chart, this shows that our diversified business model continues to drive growth. As we mentioned throughout the presentation this morning, our Retail, Supply and Wholesale teams continued to achieve great year-over-year results.

And while our Commercial division has faced the challenges brought on by low economic activity in the West and the headwind of lower temperatures in 2016 across our regions, which were approximately 6.6% on average in 2015, Q4 demonstrated that we are seeing our organic growth execution and effective cost management initiatives yield some very positive results in this business. I’ll now turn over to Bob to discuss some of our operational KPI.

Thanks, Mike. As we’ve highlighted previously, the key performance indicator metrics for each division are in place to help provide insights into our business and are cascaded throughout our organization to ensure all of our team members are aligned with these performance measures.

Our Retail division performed well again in Q4, and the results reflect that for 2016. Net unit operating costs were higher in the trailing 12 months ended December 31, 2016, as compared to the same period of 2015, primarily due to the higher cost structure of the Pioneer Energy business acquired in June 2015 due to a higher concentration of company sites.

Volume same-store sales growth improved to 2.5% in the fourth quarter of 2016 due to strengthened Eastern Canada market while Western Canada led the growth. We’ve seen some regions in the west showing month-over-month improvements as well as year-over-year same-store volume growth in Q4, specifically BC.

We continued to see C-Store same-store sales growth with close to 2% in Q4 compared to Q4 2015. This was led by sales in Eastern Canada as a result of ongoing refresh programs and other improvement initiatives.

On the commercial side, volume in gas and diesel and propane saw positive growth in Q4. The base business grew by 29.3 million liters, driven by ramp up activities of recent business wins and a colder winter while the acquisition of PNO and PNE contributed an additional 5.7 million liters of propane volumes.

Gas and diesel volumes were also up in Q4. Performance compared to Q4 2015 was steady at 1%.

While the organic growth continues to be a challenge by the economic slowdown in Western Canada, we are seeing some early positive signs at the tail end of 2016 as some external rig count data is starting to compare favorably to 2016 and 2015, both in terms of absolute rig count comparisons and the percentage of rigs exit. If this activity does occur, it will be a tailwind for commercial business in 2017.

While operating costs on a cent per liter basis and absolute basis were reduced in Q4 as cost management initiatives drove cost downwards, overall operating ratio on a TTM basis increased, primarily due to lower adjusted gross profit and increased operating expenses, as part of our investments to grow our propane business. Our commercial team remains focused winning new business and gaining market share while managing cost effectively.

This past year, the team closed five propane acquisitions across the country and their integrations are well underway. We’ve seen over 4,500 propane tanks being installed in 2016 help drive organic growth in the propane.

And efforts to optimize fleet efficiency have been paying off with successful truck routing technology pilots taking place across the country. On the Parkland USA side, we continued to see decrease in wholesale in Q4 as a result of reduced economic activity, but this decline was offset by increased retail volume in part, as a result of the acquisitions of two retail sites in late 2015 and three retail sites in late 2016.

The trailing 12 operating ratio increased as a result of the lower adjusted gross profit due to decreased activity in the Bakken oil region and the addition of higher cost retail sites. Rig counts in North Dakota have increased slowly but consistently throughout second half of 2016, which we hope to see translate through into growth in the region.

I’ll now pass back to Mike, who will discuss the results of the number of our corporate KPIs.

Thanks, Bob. On the corporate side of our business, our back office team continues to work hard and focus on managing costs and driving synergies.

Our corporate adjusted MG&A, as a percentage of consolidated adjusted gross profit was 5%, a meaningful 1.3% improvement on the same period in 2015. Overall, corporate MG&A expenses increased by $5.5 million, primarily due to a $7.1 million increase in acquisition, integration and other costs; excluding these costs, MG&A costs decreased, mainly due to lower professional fees in variable compensation.

The dividend payout ratio and adjusted dividend payout ratios which exclude the acquisition and integration costs were 94% and 64% respectively. Distributable cash flow decreased by $6.1 million compared to Q4 2015, which was primarily attributable to the increased cash expenditures on acquisition, integration and other costs and planned increased maintenance capital expenditures on various IT and system upgrade projects.

Our safety metric LTIF continues to demonstrate our commitment to ensuring the safe working environment that protects our employees, customers, and the environment. Parkland has seen significant reductions in LTIF over the last several years, in line with our commitment to health and the safety of our employees.

I’ll now hand the call back over to Bob to give a final overview on 2016 performance, provide an update on our guidance for 2017, as well as on our CST acquisition.

Great. Thanks, Mike.

Overall, our performance in 2016 showed that we can deliver on Parkland’s three strategic pillars, grow organically; deliver a supply advantage; and acquire prudently. Our diversified strategy has been effective in delivering strong results, while our acquisition strategy has allowed us to build scale and synergies.

On the organic growth side, Parkland demonstrated our ability [ph] to grow organically through strong Company C-Store sales growth of 3.8% overall. We continued to expand our retail network with 48 new or upgraded retail sites in 2016.

Propane volumes increased by 285 million liters in 2016 across our business compared to 2015, primarily by strong organic growth in both our Commercial and Wholesale divisions. Supply advantage: Our Supply and Wholesale team had incredible results this year, delivering 25% improvement in adjusted EBITDA compared to 2015.

Other highlights on the supply side include the completion of an expansion of transload facility in Hamilton, Ontario. Acquire prudently: We continue to demonstrate that we can acquire effectively and integrate effectively.

On the acquisition side, 2016 was a big year for Parkland as we invested $89 million in acquisitions of businesses the complement our existing lines of business across our operating portfolio. Overall, I am extremely pleased with the results that the Parkland team has delivered over past year.

We had a strong Q4 to finish the year and delivered in the higher end of our 2016 EBITDA guidance, which will set us up well for what we’d like to achieve in 2017. As a result, I’m happy to report, we set our adjusted EBITDA guidance for 2017 at $255 million to $285 million.

Before we take questions, I’d like to give a quick update on the Competition Bureau proceedings in regard to our CST Canadian asset’s acquisition announced in August of 2016. We are continuing to work diligently through the process with the Bureau and are progressing well.

As a result of the second information request in connection with the U.S. FTC, ongoing review of Couche-Tard’s acquisition of CST Brands, we do now anticipate the CST acquisition to close in the second quarter and look forward to this happening and welcoming the CST team into Parkland.

Again, I would like to thank the Parkland team for a very successful year and the continued hard work and dedication to delivering our strategy effectively.

Thanks, Bob and Mike. At this point, I’d like to ask the operator to open the line up for any questions.

Hey. Thanks for taking my question and on strong end to the year with Q4 results there.

Maybe I’ll just touch on the CST acquisition. And I’m just -- maybe I’m reading too much into this.

But, in your prepared remarks and in your MD&A, you note that the delay related to increase or secondary request from the U.S. FTC.

Should I think of that as inferring that the competition -- the Canadian Competition Bureau component of the review is maybe a little bit further along and to the extent the U.S. gives an okay to this deal that the deal should close pretty closely after that or maybe I’m reading too much into it?

Yes, I would say -- hey, Kevin, it’s Bob Espey. I would say that our understanding and we’re -- it’s Couche-Tard that’s driving the process in the U.S., we are not involved, because we are buying the assets of Couche-Tard.

Our understanding is that they are working with the FTC quite productively and don’t expect any unforeseen in delays in that. And on the Canadian side, both parties continue to work productively with the Competition Bureau and as stated in the press release, we are anticipating that close sometime in Q2.

Okay. That’s helpful.

And just turning to the quarter, maybe the past year, you got a bit of a working capital drag or relatively sizable working capital drag through the back half of 2016. Just wondering, how I should think about working capital moving forward, especially as you’ve layered on Pioneer, and maybe as you think about layering on CST.

Has your working capital seasonality changed dramatically or should we think of it as having changed dramatically here?

Yes. Hi, Kevin; it’s Mike McMillan here.

So, I think a couple of factors there, and it really is all current working capital. So, what we’ve seen is a little bit in response to the increasing commodity prices.

Naturally, you see a little higher inventory value in AR offset by the accounts payable component. We are -- with the LPG products and stuff like that and so forth, we did see a little more working capital used in our Elbow business.

But, it’s just part of our plan around understanding in that area, and some of the activity that we mentioned in the U.S. and so forth.

So, nothing to be concerned there; I think it’s all planned working capital. And our turnover ratios and so forth are effective, and our DSO is essentially down outside of Elbow River…

Okay.

So, quite happy how that’s going. On the CST side, you make a good point.

I think it does have a large component like it’s mainly a retail business. And so, as we look at that that can be working capital beneficial.

So, we don’t see a dramatic shift in our working capital. We also think the seasonality will also balance a little bit more because of the business in Eastern Canada is a little bit more ratable.

Right?

Right. That’s helpful.

And maybe just on the Elbow River side, I mean you’ve seen strong profitability improvement in your Supply and Wholesale, if I just look at it simplistically like EBITDA and cents per liter basis over the past three quarters have been dramatically higher than the previous comparable quarter. Is that a good run rate to think about it or is Elbow River maybe outperforming a little bit here and some evolution of the run rating that level of profitability?

Just trying to get a sense of how much of this may be Elbow River, which...

You’re accurate; there is two components to it. There is our supply component in the Parkland and then our wholesale business within Elbow River.

I would say both had a robust year. Going forward, certainly on the wholesale side, I would temper some of that margin expectation.

We did have a good Q4, particularly on the LPG side where first of cold weather and opening up some new wholesale customers did help that margin quite considerably.

That’s helpful. And last one for me, you bumped the dividend again by $0.02, you seem to be on the path of kind of growing that pretty marginally over the year.

But when I take a step back, it looks like the pipeline of acquisitions is pretty robust, you’ve had a lot of larger deals come through and you’ve participated in a couple of them. Philosophically, why not hold back the cash, even though it’s only $0.02, but why not hold back the cash for that deal pipeline?

And to the extent that there is equity on the back of some of these deals, it does seem like you would increase your fixed cash costs organization. Just wondering how you think about the dividend relative to your M&A pipeline.

It’s a fair question. As Parkland has grown over the years, we’ve had a very stable base of investors that have appreciated the yield.

And this is really just keeping them whole from an inflationary basis. Our intent, as we stated previously is to continue to drive our payout ratio well below 50%, before there are any sort of material increases in the dividends.

Hi, guys, and congratulations on the strong quarter.

Hi, Michael. If you can move a bit closer to your speaker, we’re having a hard time.

Yes. I’m sorry.

So first of all on the retail side. You gave us some color on the East on the same-store sales and same-store volume trends.

I didn’t quite catch all the Western Canada trends. Can you just clarify, I guess what those numbers were in the quarter and then how you saw it exiting the quarter and the trends there?

Yes. So, I think, what you’d see their Michael, we’re talking nationally, basically.

And as we’ve seen throughout the course for the year, we are seeing the softness in Western Canada and then blending up nationally. So, roughly speaking -- it’s going to pull some numbers here.

But for example on a full year basis, if we look at the Western Canada volume same-store sales growth, we would see -- and maybe we’ll think about like an Ontario for example we’re certainly seeing some robust growth year-over-year. Alberta and BC -- BC, also we’re seeing some strong sales growth and so forth, both on the C-Store and the fuel side.

Where we are seeing some softness would be more in the Alberta market and Saskatchewan, Manitoba. So, on a volume basis, like in the quarter, certainly what we are seeing on a year-to-date basis little higher, somewhere around 9% down, but on a quarter basis, for example in Alberta, it’s more -- it’s below 2%.

So, we are seeing that tail-off. And so, we are starting to see that blended number balance out little bit.

Same thing on the C-Store side, we are seeing some great numbers coming out of the Eastern Canada, close to 11%; and in the West earlier in the year it was higher around 7% down, but in Q4 we are seeing the down around 4% range. So, we are starting to see that tail-off as well.

That’s where we see the overall blended number, for example, I think we closed at 3.8. So, gives you a bit of a sense of the balance between the two markets?

And then, on the wholesale side, you’ve talked about some growth -- you had some pretty strong growth, but you talked about volumes into Mexico. And I don’t recall you talking about Mexico in the past.

Can you just give us a sense as to what you’re doing there and how sustainable that business is?

So, we do sell on a wholesale basis some LPG into Mexico. That’s product that we are lifting and moving into Mexico.

It’s a new market for us. I would say, it’s proving to be a good opportunity, but certainly not material on the overall P&L.

So, it’s really a small component of that business at this point.

So, the big volume growth in wholesale in the quarter, what was the main driver, main…?

The main driver there is propane, and that’s propane on three [ph] sites. One is on the Parkland site, again where we continue to grow organically and also through acquisition.

And then on the wholesale site, our LPG team did well. We’ve also seen some year-over-year growth on our team that focuses on heavier products, so that’s crude and asphalt where we did see some year-over-year growth.

The area in that business that’s been static year-over-year is on the refined product site. So, we haven’t quite seen the growth that we expected in that.

And that’s primarily due to, again, softness in the last year where we have typically or traditionally moved product from Alberta down into the Dakotas. And that business has been a bit soft year-over-year.

Okay. And then, finally on the guidance within the range, first of all, is there any acquisitions built into the upper end of the range?

No, not at this point; and we will reset guidance once CST closes, so, just so that people can vector in on that.

Okay. And the bottom end of the range, what are conditions that you feel need to happen to get -- to hit that bottom end.

I mean, I think you mentioned you need -- you’d need adverse conditions in the western and the northern U.S. But, is that conditions that where we see oil prices get worse and activity kind of take a turn for the worse from what you’re seeing right now?

Yes. I would say, I mean, again, there is volatility in our business; it’s driven primarily by -- if you look at commercial business, it’s weather and activity.

So, again that just allows us some waggle [ph] room on the weather side. And if we do see activity fall of year-over-year, indications are that we’re seeing a bit of tailwind in the west.

And again, I think the spirit of that would be cautious optimism. We’ll have to see how that trends here into the spring to really see as the tailwind at this point.

And then on the retail side, volumes tend to be quite steady. We do see fluctuations in margins.

And that’s out of our control. So, the reason for the range is to allow some variability in our forecast.

And then on Supply and Wholesale side, we do tend to see some volatility in our margins, particularly on the LPG side.

And would you consider the LPG margins in 2016 above average?

I would say certainly in Q4, they were above average.

Hi, guys. Just a question on the Supply and Wholesale.

You guys mentioned you made some meaningful improvements to your supply advantage strategy. Can you just give us a little bit more color on some of the initiatives here that help drive the strong margin performance?

Yes. So, Derek, it’s Bob.

As I would say, there is two components to that one is the refined products. And again, as we folded Pioneer into the business, we have seen some benefit to that from a scale that we’ve been able to provide.

When we do talk about integrating businesses, there is two sort of steps to that. One is putting that business onto our current supply platform.

And I’m pleased to say that we did see a benefit there. And second, as we renegotiate contracts, we’re able to look for value in bringing both -- in bringing the combined volume together.

And then on the wholesale and supply side, again we had particularly strong years on the LPG side in propane and butane, and also on our crude and asphalt book has done very well as well.

Okay. So, with the addition of CST and now a retail presence in Eastern Canada, Quebec, is this something that you’d expect to get a little leverage into your Supply and Wholesale division as well?

Again, as we telegraphed in the past, we’re inheriting a large contract there with Valero and at this point, we haven’t built any benefit from that into our synergy expectations. So, once we close the deal and get an opportunity to look at that on a more fulsome basis, we’ll be able to report more firmly around that.

Okay. And just then on the commercial side, real quick.

I mean, it sounds like, just based on your commentary, things are improving in the west in the commercial side. Would it be fair to say that you guys are anticipating growth in that business in 2017?

I would say our expectation is that we will see some growth, again though just cautiously optimistic at this point, because although we have seen activity start to comeback, it does take a while for things to spill over and impact local economic activity. So, we’ll certainly keep you apprised once we announce our Q1 results.

And you’ll be able to get some better insights into that both in the magnitude of…

Yes. I think the other thing to think about there too Derek is the on the LPG side, we’ve noted through the year that we had some significant wins there, and I think you’ll see the full year impact on the volume side there.

So, we’ve seen a pretty decent contribution in Q4, still see a little bit more in the full year basis as we get into 2017 as well, so some market share development there.

Hi. Thank you.

Just looking to the retail side of the business, you called out the site refreshes have helped during the quarter. I just want to understand, is there still more of those to do and if you can maybe talk about on the run rollout, if that’s going to happen this year and what the primes there are?

Yes, both good questions. So of the sites that we talked of -- we added or upgraded 48 sites.

So, we’ve added six new company sites and 31 new dealer sites, and also we’ve done 11 company rebuilds, upgrades, four in the west and seven in the east. That was this year.

I would expect that on the upgrade side, we will continue to see, not at quite that pace, probably -- we’ll probably do under 10 this year, somewhere between 5 and 10. We tend to prioritize -- when we prioritize our CapEx, we tend to the new sites, because when we do get approvals to go, we tend to go pretty aggressively on those and then prioritize upgrades and rebuilds around those, depending on our -- the availability of resources.

But I would expect that we’ll add a similar mix this year in terms of new sites and upgrades.

Okay. And then, just a question on the CST close, I know you provided some detail, which is helpful, but is there any kind of outlook on whether we are thinking maybe earlier in Q2 closing versus later or is it just with the regulators for now?

It will be sometime in Q2. We don’t want to speculate on timing at this point.

And then, one last one from me, just in terms of management’s view on acquisitions. As look out in terms of acquisition rollup strategy, would you look at opportunities in the U.S.

or are you largely focused on Canada front from your point of view?

Well, in Q4, we did do a smaller tuck-in in the U.S. I would say our opportunity pipeline hasn’t changed.

So, there is a lots out there and we continue to look at multiple opportunities.

Yes. It’s Mike here, Sabahat.

I think the way we look at opportunities too is on an individual investment basis and what return expectation is. And so, certainly interested in our white spaces and developing our networks based on the opportunity value and what we think the return will be.

So, if it’s competitive, we would look at it.

I know it’s early stage, but just seeing if there has been any impact or kind of early puts and takes with respect to carbon taxes in any of your verticals or any behavior changes like as on the back of that implementation?

So, we did see the carbon tax have an impact certainly on price for the consumer in Alberta and Ontario. Now, I would say, at this point, we haven’t seen a material impact on consumption.

I would say, the bigger impact, we have seen the price -- the underlying costs based on the increase in crude, go up. It’s hard to say at this point whether that will impact demand.

The increase due to carbon tax was relatively small, compared to the total price of gasoline. And I wouldn’t expect it to really materially impact demand.

And then, looking at the propane business in Q4, just wondered if you can give a bit more granularity along the sizeable increase, the 50% bump. How much of that would be maybe whether related versus just the other initiatives you highlighted in your MD&A?

I would say the -- it’s primarily the organic growth of a couple of new prospects we picked up in Western Canada. The exact breakdown on the weather, I’m not sure if we have that.

Mike, do you?

Yes. We looked at -- and really, it was late in the quarter.

So, when I think of November, December predominately, it was really immaterial, like it was certainly a tailwind we’d see, but it was probably 1 million or less in terms of contribution.

And you still see relatively decent appetite for kind of some of the select tuck-in investments here in that commercial segment, the last 12, 24 months?

Yes. Again, I mean, we see opportunities across the areas that we operate.

So, it’s difficult to anticipate what segment they will hit and when they will come.

Okay. And last one for me, just do you mind reminding us -- can we use kind of your legacy retail business as a proxy for the quarter-to-quarter seasonality for CST, just kind of big picture?

I think, one thing to consider is just the market that we’re in. So, I think broadly yes.

But, I would say as it’s weighted more towards Eastern market and more dense populated areas, you’re going to see probably more ratability, so a little flatter seasonality in that market and more of that type of activity or commercial activity in that region as well.

Thank you everybody. Thanks for participating in this Q4 call.

And once again, I’d like to thank the Parkland team for very successful quarter and year.

Thank you very much.