Parkland Corp

TSX:PKI

Good morning. My name is Sylvie, and I will be your conference operator today. I would like to welcome everyone to the Parkland Q4 and Year-End Analyst Conference Call. [Operator Instructions]. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Adam McKnight, Director, Investor Relations. Go ahead.

Thank you. Good morning. Joining me on the call [indiscernible] President and CEO; and Brad Monaco, Interim Chief Financial Officer.

This call is webcast, so I encourage listeners to follow along with the supporting slides. We will go through our prepared remarks and then open it up for questions from the investment community. Please limit yourself to one question and a follow-up as necessary. And if you have additional questions, please reenter the queue. Analysts are encouraged to follow up with the Investor Relations team for any detailed modeling questions that you might have.

During today's call, we may make forward-looking statements related to expected future performance. These statements are based on current views and assumptions and are subject to uncertainties that are [ dealt to ] predict. These uncertainties include, but are not limited to, expected operating results and industry conditions, among other factors.

Risk factors applicable to our business are set out in our annual information form and management's discussion and analysis. We will also discuss non-GAAP and other financial measures, which do not have any standardized meanings prescribed by IFRS accounting standards. These measures are identified and defined in Parkland's continued disclosure documents, which are available on our website and SEDAR+.

Please refer to these documents as they identify factors that may cause actual results to differ materially from any forward-looking statements. Dollar amounts discussed today are in Canadian dollars, unless otherwise noted. I will now turn the call over to Bob.

Good morning, everyone, and thank you for joining us today. Before we get into our financial results, I'd like to briefly discuss the strategic review that was announced with our earnings last night. The review is a Board-led initiative overseen by a Special Committee of Independent Directors.

We acknowledge that Parkland shares have underperformed and do not currently reflect the intrinsic value of the company. Initiating a review is appropriate at this time. Its primary intention is to explore opportunities to maximize value creation. While also offering a potential path to seek resolution with Simpson Oil, it's unfortunate that Simpson's remain unwilling to engage in constructive dialogue with Parkland's Board of Directors.

Our offer to join our Board remains open and we would welcome them to participate in the strategic review process. The process will explore a variety of strategic alternatives as laid out in our press release. The review will evaluate the existing business strategy and current portfolio of assets, and we'll also consider catalysts, including mergers, divestitures, acquisitions and the sale of the company. We will continue to actively engage with shareholders throughout the process and provide periodic updates.

Turning now to the U.S. tariffs, which are naturally top of mind for all of us. More broadly, political instability will have negative implications for both Canadian and U.S. businesses as well as consumers on both sides of the border. This could lead to volatile results over the next few months as details get sorted. We have established an internal task force that is closely monitoring the situation to understand and act on any impact to Parkland's operations.

Given our focus on locally sourced and sold fuels and convenience items, we believe the overall impact will be largely neutral with puts and takes across the business. One potential tailwind would come through lower refinery input costs of Canadian crude is further discounted. While tariffs and trade restrictions are not beneficial to either economy, our resilient business model, diverse geographic footprint and supply advantage enable us to navigate economic and political uncertainties effectively.

Moving to our financial results. I'd like to recognize the Parkland team for their dedication and strong execution during a challenging 2024. The team successfully navigated a macroeconomic environment that saw weak fuel demand and soft consumer discretionary spending and delivered adjusted EBITDA from our combined retail and commercial business that was [indiscernible] with expectations.

This is a testament to the success of our organic initiatives that strengthen our customer and supply advantages. We also made great progress executing our strategy and building a platform for growth. During the year, the team increased JOURNIE Rewards membership to more than 6 million members through strategic partnerships and targeted promotions, leading to impressive market share gains in 2024.

[ Coming ] with the restructuring of our U.S. business, consolidated our supply team and enhanced our supply advantage with the expansion of strategic terminals in the Caribbean. Simplified our business processes by progressing the implementation of our enterprise-wide ERP system, evidenced by the successful launch in St. Lucia and reduced operating and MG&A cost by $50 million compared to 2023, more than offsetting inflationary pressures. In addition, we've identified approximately 1,500 position reductions through divestments in ongoing synergy and cost initiatives [indiscernible] 24 months.

This lays the foundation for additional savings in 2025 and beyond. Unfortunately, the refinery and the U.S. segment results did not meet expectations in 2024. Refinery utilization was impacted by an unplanned outage in Q1 due to record low temperatures. Margins ran below mid-cycle in the second half of the year due to unfavorable North American crack spreads.

Adjusting for typical refinery utilization and mid-cycle margins would have resulted in 2024 being near the low end of original 2024 guidance. Our U.S. business also faced unfavorable market conditions. Industry volumes declined year-over-year primarily due to lower demand, while at the same time, length in [ PADD IV ] put pressure on supply margins.

Similarly, tough market conditions were experienced by our public and private peers as evidenced by their recent results. I have full confidence in U.S. team's execution capabilities. In 2024, we continue to invest in organic growth initiatives that delivered significant improvements. This included backlog conversion, standardization of offer and pricing and labor and fleet optimization.

With these foundational changes in place, the business is positioned to capture increased volumes and margins as market conditions improve. Despite the challenges faced in 2024, Parkland's diversified business model proved to be resilient as we maintained focus on our initiatives. Progress we made in 2024 provides us with a strong foundation heading into 2025.

Our Q1 results are tracking to plan and are expected to significantly exceed prior year. [indiscernible] our commitment to strong leadership and succession planning, we recently announced some management changes. [ Marcel Tennison ] has been promoted to President, North America, overseeing the retail and commercial businesses. His deep industry experience and strategic leadership will drive the anticipated long-term growth.

Brad Monaco has stepped in as Interim Chief Financial Officer. Many of you know Brad from his time in capital markets and most recently was VP of Finance for our Canadian business, Parkland's largest business segment. Brad's diverse experience and capabilities ensure strong continuity in the finance function while we proceed with our global search for a permanent CFO. Welcome, Brad. I'll turn it over to you to walk through our fourth quarter and year-end financial results in more detail.

Thank you, Bob, and good morning, everyone. In the fourth quarter, Parkland delivered adjusted EBITDA of $428 million, which puts us just under our revised full year guidance.

Starting with Canada. Adjusted EBITDA of $190 million was consistent with last year. We are proud to hold the business flat in Q4 through continued supply and margin optimization, along with disciplined cost control. This offset weather-related commercial volume impacts, the divestment of our propane business and slightly softer gasoline volumes.

Same-store sales growth was negative for the quarter, primarily driven by reduced [indiscernible] at M&M Food market. This was tied to a more budget-focused consumer and the impact of the Canada Post strike for a large part of our key sales season.

Excluding M&M and the impact of declining cigarette sales, [ c-store ] same-store sales were up approximately 3% in Q4. We continue to solidify our position as a top fuel and convenience retailer in Canada, advancing many of our core retail initiatives in 2024. We have helped fuel market share through challenging macroeconomic conditions, growing convenience market share in core categories such as snacks and packaged beverages and rapidly expanded our alcohol sales in Ontario after regulatory changes allowed the sale of beer and wine in convenience stores.

We now offer alcohol at over 135 sites in Ontario and will expand to another 30 sites through 2025. Our International segment delivered adjusted EBITDA of $171 million, up 9% year-over-year. This was primarily driven by strong volume and margin growth in our retail business in Guyana and Suriname and a reduction in total costs.

We also saw high volumes and unit margins in our Marine business, particularly in Barbados. We're excited about the visible and sustained growth potential in this region. We continue to see increasing tourism and strong economic growth within the larger countries like Jamaica and the Dominican Republic. Guyana and Suriname economies also continue to expand, underpinned by offshore development and associated infrastructure requirements.

In 2024, Guyana's GDP grew by over 40%, led by rising energy demand across the transportation and industrial sectors. We are well positioned to service this demand with strategic infrastructure in region and exposure to the follow-on consumer is.

Although these markets currently represent approximately 10% of the diversified Caribbean business, it demonstrates the inherent upside we have throughout the region, and we expect it to contribute significantly to the growth and strength of our national operations over time.

In the U.S., we delivered $32 million in adjusted EBITDA, down $7 million from prior year. While the team continued to focus on delivering committed synergies in our acquired businesses, as Bob mentioned, market headwinds persisted.

Overall, we view much of our shortfall linked to macro pressures being felt by many industry participants, namely compressed retail fuel margins, a weaker consumer and the impact of hurricanes, which hit our Southeastern rock. That said, we did lose some market share due to an oversupply situation in the Northern Rockies rock which increased competition in that area.

Overall, it was a tough quarter and year for Parkland USA. However, the improvements that Bob highlighted position us well for the long term as market conditions improve.

Our Refining segment reported adjusted EBITDA of $60 million, down from $106 million last year. The decrease was entirely driven by lower refining margins which remained below mid-cycle in the fourth quarter and $10 per barrel lower than Q4 2023.

Composite utilization was in line with last year at 89%. The refining margin environment has been constructive in 2025, which we believe reflects some announced closures and seasonal planned maintenance across the industry.

In the first quarter of 2025, the Burnaby Refinery underwent scheduled maintenance for approximately 3 weeks and returned to full operation on February 25. This planned maintenance was included in our 2025 utilization guidance of 90% to 95%.

In 2024, Parkland generated available cash flow of $556 million or $3.19 per share. This fully funded our organic growth and dividends, but is down from 2023, primarily due to the lower refining segment results. Through 2024, our combined retail and commercial businesses performed in line with the prior year despite a challenging demand and consumer environment and generated a significant amount of cash flow. Looking ahead, we are well positioned to navigate ongoing economic and political uncertainty.

Turning to Slide 5 now. We remain disciplined in our capital allocation. Our top priorities are maintaining our asset integrity investment in the long-term growth and success of our core business and modest growth of our annual dividend.

Together with our previously announced maintenance and growth capital guidance for 2025, we have announced a 3% dividend increase. This marks our 13th consecutive annual increase and reinforces our commitment to returning capital to shareholders through sustainable and compounding dividend growth.

Exiting 2024, our leverage ratio increased to 3.6x based on our trailing 12-month EBITDA. This was mainly driven by lower refining margins as compared to '23, which negatively impact our leverage ratio by approximately half a turn. The weaker Canadian dollar also increased our leverage ratio through the translation of USD-denominated debt balances at year-end.

In 2025, we are committed to strengthening the balance sheet. We have good line of sight to returning to leverage within the target range of 2 to 3x through the normalization of our EBITDA in year and anticipated debt reduction through positive cash flow generation. Once within our range, we will evaluate further deleveraging versus share buybacks or accelerated growth in ensuring we allocate capital to where it delivers the greatest long-term value for our stakeholders. I'll turn it back over to Bob.

Thanks, Brad. It is clear to me that Parkland's business model positions us well for a potentially uncertain and volatile year. While there will be bumps along the way, our diversified portfolio of products and geographies is well proven. And the team has demonstrated their ability to navigate a volatile environment successfully.

I'm confident we can achieve 2025 guidance through the improvements made in our cost structure, continued investment in organic growth and operational execution, including higher utilization at the refinery.

In the long term, our resilient business model, strong execution and customer and supply advantages position us to provide value for our shareholders. I'm confident in the team's ability to deliver our near-term priorities and our 2028 ambitions. Thank you. And with that, we'll turn it over to the operator for questions from our analysts.

[Operator Instructions]. Your first question will be from Kevin Chiang at CIBC.

Maybe just on the strategic view that you're initiating. Just wondering how that might impact some of your maybe your near-term priorities like the asset sales or some of the capital allocation items you had listed at your updated investor presentation late last year. And maybe how this process may differ whether or not the Simpsons decided joined the fold. I'm not sure if that impacts how you might pursue your strategic review here.

Kevin, it's Bob Espey. Thanks for the question. With regard to running the business, our intent is not to change the way that we're running business, including the amount of growth capital that we've identified in our long-term plan and certainly forecast for the upcoming year.

So we're confident on our 2028 goals and a large part of that is continuing to invest in our organic growth initiatives. I think the next question was around the ...

If the Simpson -- like I know you've extended an invitation for them to rejoin your Board. Does the strategic review into the process differ or change whether or not they accept that offer?

Yes. Look, we continue to have dialogue with the Simpsons. Our view and our hope is the best way to do a strategic review is to include them in that so that we can get the best outcome for all of our shareholders.

Okay. Just maybe just --

I'll build on that a little bit. It's Brad here. I think regardless, like the process will be robust. We're going to look at all options. We've got world-class advisers that are supporting it. And whether they participate or not, we'll look out for all shareholders, including that.

Okay. That's helpful. Just maybe a question on your inventory within your C stores. Obviously, there's a bit of a buy Canada movement. Is that changing how you have to inventory some of your locations just given -- or maybe it's not having a material impact at all. I'm not sure, but just wondering if you have to adjust your inventory management just given some of the Canada movement we're seeing across the headlines?

Yes. Our business tends to be very local. And I would say on C-store, I think from the fuel that we sell for the bulk of the C-store items are sourced locally or within Canada. Not a lot of that travels across borders.

Next question will be from Ben Isaacson at Scotia Bank.

I have 2 questions. The first question is in regards to Page 4 of the Q4 slide deck. So given the strategic review that was announced, I imagine there's going to be a lot of people working on some of the parts. And on your 2025 guidance for $1.95 billion, can you give some kind of broad strokes -- on Page 4 of the deck, you have line of business contribution, roughly 10% for the refinery, 50% for retail [indiscernible] for commercial. How could we think about that $1.95 billion fitting into those buckets?

Right. We're scrambling around here to find.

Just trying to understand the guidance by line of business.

Sorry, we've got everything scripted except this [indiscernible]. I'm sorry, ask that question again Ben, please?

So it's basically on Page 4 of the Q4 deck or on Page 6 of the March 2025 deck, you've got a line of business contribution, which says 11% refining, 51% for retail and then 38% for commercial. And as investors are looking to start some of the parts work in conjunction with this strategic review. My question is how to parse out your -- the midpoint of your guidance into those 3 buckets, even just broad strokes?

Why don't I handle that one, Ben? Broad strokes, the main change from this 2024 number to looking forward on a next 12-month basis will be the change in refining, right? We've got year-over-year quite a decrease due to the normalization of the utilization. The rest should be fairly consistent and growing and with how we have, and I'll leave it up to you to determine the sum of the parts valuation.

Great. And then my second question is when I talk to the buy side or my peers on the sell side, I keep getting told that the Burnaby refinery is special and warrants a premium multiple. I mean I'm not an energy guy, so I don't know what that means.

And so my question is, what makes the Burnaby refinery unique? And are there measurable ways that we can support that, either through better margins or lower volatility, higher capture rates, market share. Can you talk about that?

Yes. So again, the scope of the strategic review is to look at all of our assets. When it comes to the refinery, the reason why the Burnaby refinery has been exceptionally exceptional for us from a cash flow perspective. It really comes down to 2 things.

So one is, it is an integrated asset in a market that really has no opportunity to bring products in -- and as -- and everybody in the markets through branded channels. So and on the other side is we're buying a crude and certainly, we've seen this improve here recently with some of the tariff announcements crude at below market.

So those 2 factors results in a high capture rate, as you said. We've been able to increase that capture rate by moving volume back to the refinery and reducing exports. That would have typically been done out of that facility. So as a result, in Parkland's hands, we've been able to optimize it in a way that have led to some very good returns in that asset.

Next question will be from John Royall at JPMorgan.

So the strategic review, I would imagine, is largely going to be focused around corporate actions and M&A. But thinking more internally, what do you think are the controllable things that management can do that will help the company realize its best valuation? You've put up as a credible plan to grow the business and return capital back to shareholders.

But hasn't exactly gotten the valuation to where we think it could be. Do you view it as a matter of just executing on that plan and investors are viewing that as a [indiscernible] or are there other moves that you could be making internally?

Yes. Thanks, John. A couple of things. Look, the base plan is the one that we reviewed with the sell side in November of last year. And certainly, again, we'll look at various scenarios in terms of the growth that we have and making sure that we can, in fact, achieve that. And then the second one is again, looking at our portfolio and does it make sense to architect the business differently going forward.

Great. And then my follow-up is just on the U.S. business. Can you elaborate a little on the market share loss in the Rockies that you discussed how that played out? I think you mentioned something about oversupply. And is there near-term visibility to getting some of that back? And is $60 million per quarter still the run rate we should be thinking about for '25?

Yes. Look, it's a good question. The -- I would say the team has done a tremendous job in restructuring that business over the last couple of years. In terms of -- that team now has a very focused retail commercial. We've got all the marketing and category management support in place.

And look, we have seen some benefits of that. I would say we're -- so we've taken a lot of cost out in the last 24 months, but also focus the team quite dramatically. When it comes to Q4, we did see some good recovery in our Florida business, but the Northern business lagged.

And I would say the 2 things that can really help that business. So one is volume. So part of the markets that we're in have seen volume off year-over-year. And we're able to see that through industry data, but also some of our peers, both in the public and private area, have shown that volume. It was a tough quarter for volume. The other -- so we expect to see volumes start to come back.

The other thing is margins have been impacted. And there was a big drop in margins year-over-year, particularly on the supply side, where we tend to move volume from Canada down into the U.S., particularly on the diesel side. That trade was closed through Q4, so we weren't able to benefit from that. Actually for most of the year, it was closed.

And then we also saw in some other markets, the supply margin is tighter. And as a result, as robust as you would have seen 24 months ago. So that goes back to again, the business is in a good position to capture both volume and margin increases here as they come back here over the next year.

Okay. Sorry, I didn't hear [indiscernible] before. I wanted to continue on the U.S. side because it seems to be primary source of weakness aside from the refinery, but the refinery is more identifiable, the challenges there. But on the U.S. side, can you help us understand the source of the competitive pressures that you're seeing there, both on the fuel side. I think you point out, particularly on the commercial side of the business seems to be weak and then as well as on the C-store side where the same-store sales seem to be lagging the industry.

Yes. So on the volume side, again, we've got our data would show that in Q4. We were a little lighter than markets. We did -- and this would affect our merch sales as well. We did have a number of sites that were down for upgrades. So part of our initiative has been to upgrade our imaging and also bring the sites up to a more modern standard. So that does affect same-store in the quarter. To what extent, I'm not sure we can potentially look at that and follow up.

And look, our data shows that our volume is pretty much in line with where industry was and merch is a little lower. On the competitive side, we spent a lot of effort last year on the Southern business, and we've talked about the fact that our supply was out, we rectified that in Q3. We start to see the benefit of that in Q4. On our Northern business, we have seen some of our competitors open new sites close to ours. And in any market, those will have an impact, but that's a small part of it.

Okay. How about on the commercial side though, when it comes to the competition in the U.S? Is there a new [indiscernible] in there?

We've held well there. And quite frankly, I think that's more driven economically at a very local level. We've seen, particularly in markets that were energy sensitive, we saw hesitation of companies to invest and the amount of drilling was down. So there's just markets that we were selling into. We certainly haven't been losing customers or losing market share in those markets.

So again, I would say the other factor that I talked about previously is the margins have been light throughout the market, both on the gasoline and diesel side. And look, margins are cyclical. This is all about. I think the business is well positioned to grab an increase in margin, and we'll certainly see the sensitivity to that improved from where the business was before because of the lower cost base.

And just a quick one on the balance sheet. You said on Slide 5 that you want to maintain leverage within the target range of 2 to 3. I'm not sure if anywhere on here, it also says that you want it to be in the lower end by the end of the year still. Is that still your plan? Or would you consider starting up or ramping up the NCIB once you get below 3x?

[ Mike], I'll take that my comments in the script, I think, alluded to when we get into the range, we'll evaluate buybacks versus additional growth and additional deleveraging. I think on our plan for 2025, should see us get to around the middle of the range. divestments would bring us to the low end of the range.

And as we enter the review and look at divestments, I think we'll determine the next steps for that and how hard we push on mainly the bigger divestments going forward or if that falls into the scope of the review.

Next question will be from Vishal Shreedhar at National Bank.

With respect to the strategic review, do you have an idea of how -- of when it might conclude? And will we get at the very least an update on their thinking before the AGM?

We're committed to providing periodic updates as we get information and as we reach critical milestones in terms of duration, our commitment is to work through this as quickly as we can. But these things take time, and it's hard to put a finite duration on it.

Okay. With respect to the crack spread environment for Burnaby there, it seems to be much stronger than contemplated in your guidance. And obviously, early days. But if these trends do continue or at least somewhere in this neighborhood, at what point would you feel comfortable of updating your guidance to reflect the stronger environment? And I ask in the context of what is a very volatile backdrop across many frames be it political or operational?

Yes. Look, I think your last point about volatile environment is very accurate. Look, so far, our business is tracking well out of the gate early in the year. However, with the trade -- basically the trade war that's going on, we expect that, that will drive volatility into the economy.

And look, our business is very reliable through the ups and downs of the economic environment. I mean we've seen that repeatedly through various economic trends over the last couple of decades at Parkland.

But that being said, I think our biggest concern would be the economy -- the impact on the economy and just lower demand. That could potentially be offset by some outsized contribution from the refinery, but difficult to predict right now. And look, as the situation unfolds, we'll adjust accordingly. I would say, our first assessment is we're kind of neutral in the scenarios that we've run. But again, it's early to tell, and we'll update our shareholders accordingly and if our guidance is impacted.

Next question will be from Adam Wijaya at Goldman Sachs.

Bob, would love to get your view on the pulse of the state of the consumer across operating regions. Are you starting to see any material changes in behavior? And then as we think about the evolving macro backdrop here, can you tell us about how you see this playing out maybe over the next 6, 12 months?

Yes. I would say the start of '25 has actually been quite positive across all of our operating regions. The consumer -- we did see the consumer spending more. So that's very positive for us. In terms of the go forward, again, it's difficult to predict at this point. The situation seems to be changing daily, if not hourly, in terms of are there tariffs are not in the expense and how that will impact our business.

I would say we're not a big cross-border shipper. We deliver into the market between 600,000 and 650,000 barrels a day, around 10,000 barrels that crosses process between Canada and the U.S. and our system, right? So we're very local in terms of our supply. And then also our demand is very local.

I would point back to we have a large diversified platform. We're in many markets with multiple product lines, and that typically has been very good for us in volatile situations because we're not dependent on one market or any one consumer. The other thing is volatility from our supply and trading side tends to be quite constructive.

So -- so again, as we step back, we're kind of neutral at this point. There are some areas where we would expect to see some headwinds, but others where we would see tailwinds. And right now, we're not in a position where we'd be adjusting our guidance.

Great. And then my second question is just on the International segment. So this came in stronger than expected versus Street numbers, and it looks like Guyana and Suriname were key drivers here. And we've seen more of a ratable earnings profile over recent quarters. I know we've talked about that over the past year or so from this segment.

So as we think about the path forward, how should we be thinking about potential upside, downside earnings from this segment? And then just talk to us about some potential growth opportunities there.

Yes. No, good. I mean, look, I think the thing to look at in international is the trend over the last 5 years where we've doubled that business. And -- and look, we did see a good quarter. Our quarters can bump around a bit because of our participation in the wholesale market and also supply margins at times can bump around.

But overall, the trend there is quite positive. You've highlighted Guyana and Suriname as a tailwind. We've just been through a remarkable growth in Guyana driven by the oil discoveries offshore and we're about to witness that in Suriname. So those 2 markets combined will be a significant growth driver in the business, and it takes place in 2 forms.

I mean the first is the initial exploration where we're supplying a lot of diesel into the exploration platforms than both markets continues to grow, and we'll expect to see that. And then the second part is just the economic growth that we see. A great example is in Guyana. We'll be putting in 4 or 5 new sites into that market this year as the country builds new roads as population grows and as a middle class starts to form and people are investing in mobility.

So -- so you kind of get 2 waves of growth to get the initial exploration growth and then the follow-on economic growth, which, again, is quite exciting for us and quite positive. Across that region, we continue to see -- we can see tourism holding in very nicely. And certainly, in other markets, we're seeing the impacts of natural resources drive growth. So again, quite optimistic about that region as we go into there.

Next question will be from Luke Hannan at Canaccord Genuity.

First, just a housekeeping question for me. On the AGM, specifically the timing, is the intent to still hold it during early May?

That is correct. I don't think we've released the date yet.

Okay. Great. And then my second question, Bob, is on the strategic review specifically on the refinery. If I remember correctly, it was around maybe 2 years ago that you did the strategic review for the refinery and ultimately concluded that it made more sense to hold it within the business rather than pursue something like a spin out.

And I think part of that reason was the integrated nature of that asset, which was also brought up earlier today as well. So I guess my question is, is it in your view, is that logic does it make sense more sense now versus back then to have that asset be separated or [indiscernible] separated compared to the rest of the business?

In other words, from an economic perspective, from a business case perspective for a potential buyer, does it still make sense to only have the refinery? Or do they need some of the other, we'll call it, more downstream assets associated with that as well?

Look, it's a good question. And certainly, we don't want any asset to be affected by the recency recent performance, right? We need to look at these assets as long-term assets that will perform over the next decade. With that in mind, I think what the strategic review allows us to do is just put a fresh set of eyes on it. there and look at every -- look at the entire portfolio, including the refinery.

Again, I'll go back to -- it's been a great asset. It's a -- it's delivered far better than we ever anticipated in the original investment case. But that also needs to be considered in light of some of the parts and where the business trades.

[Operator Instructions]. Next will be John Gibson at BMO Capital Markets.

First on the refinery. I know we talked about the crack spread environment being a bit stronger to start here. I'm just wondering if you've seen any changes in the renewable diesel credit environment? And when you take into account the guidance of $300 million for the refinery this year, what does that sort of imply for the credit environment?

Yes. Very good question. I would say One of the things we're seeing on the spreads is, in fact, the differential between WTI and [ Syncrude ] widening, which typically trades above WTI. It's now trading at a discount and also the light sweet spread has widened out. So that's constructed for the refinery.

On the carbon markets, you're accurate the carbon market did come in, in the latter half. We've been working with a number of players with antigovernment to look at what makes sense for that market and are confident that it will restore here over the year.

Maybe to build on that, we have seen a bit of an oversupply in R&D, which results in lower carbon credit pricing. Do you think it's a little bit temporary and in the long term that governments are motivated to grow investments in local projects?

Got it. Great. And last one for me. Just wondering if you could provide an update on the divestiture process, obviously, understanding [indiscernible] not able to provide specifics on timing, but I guess are you closer now to a final sales process or versus Q4? Or are there still a lot of moving parts here?

Yes. Look, we're over halfway there in terms of all the little bits that we sold here over the last couple of years, [indiscernible] to hitting the target here by year-end. Look, that now needs to be -- that now needs to be weighed against the broader strategic review and looking at some trying to run multiple work streams here.

So right now, the intent is to finalize, but that may change as we go through the review process.

Next is a follow-up from Michael Van Aelst at TD Cowen.

Probably just 2 short ones here. First of all, the 3 weeks of the refinery is down in Q1 for scheduled maintenance, was it off-line fully? Or was there a partial production?

No, it was what we call a pit stop. So we were down for 3 weeks. But back up and running. No issues, no [indiscernible]. Team did a great job.

And then just with respect to the buyback, is that something that you're able to do while you're actively negotiating or looking for a sale of the business? Or do you have you put in an automatic plan? So that you could keep buying [indiscernible] show you that you could buy back stock?

We do have an automatic plan in place, but it's not active at the moment.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. Thank you very much for attending and taking the time to join us. At this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.