CALGARY, Alberta — Parkland Corp. bounced back after a volatile third quarter to finish the year with success on multiple front. The company's 2022 achievements included a record fourth quarter, expansion of its On the Run convenience store brand to 650-plus sites, completion of multiple acquisitions and more.
"Throughout the year, we continue to execute our strategy and grow organically," said President and CEO Bob Espey during the company's fourth quarter and year-end earnings call. He also noted that "during the year, we delivered on the commitments that we made to our shareholders, including growing adjusted EBITDA by almost 30 percent."
For the fourth quarter of 2022, adjusted EBITDA was $455 million, up 75 percent from the same quarter in 2021 with each segment increasing compared to the prior year. Adjusted EBITDA for the full year was $1.62 billion, up 29 percent from 2021.
Net earnings were $69 million for the quarter, up 214 percent from the same time period one year ago, while net earnings for the year were $310 million, up 220 percent from 2021.
PLANS FOR GROWTH
Parkland leaned into its strategy to grow food and convenience sales by expanding its On the Run banner in 2022. The company is well on its way to its target of 1,000 c-stores and has increased this part of the business by 53 percent year over year, according to Espey. Parkland completed 27 On the Run integrations during the year and is focused on fully capturing synergies from the businesses it acquired, which including frozen food market M&M Food Market; oil and gas company Pétroles Crevier; Husky-branded retail locations; Vopak Terminals of Canada Inc.; and a retail and commercial business in Jamaica.
Parkland's JOURNIE Rewards program also continued to accelerate the company's digital connection to customers and now has more than 4 million members.
"M&M also had a great year and contributed to driving our food and convenience gross margin to more than 36 percent in the quarter. Our loyalty program is also driving growth as JOURNIE members buy more fuel and more convenience items," said Chief Financial Officer Marcel Teunissen. "For context, in the fourth quarter, they spent 60 percent more on fuel and 20 percent more in the c-store purchases compared to nonmembers."
Parkland also announced that it is opting not to proceed with plans to build a standalone renewable diesel complex at its Burnaby Refinery in British Columbia based on factors such as rising project costs, a lack of market certainty around emerging fuels and the U.S. Inflation Reduction Act.
"As we continue to exercise strict capital discipline and focus on returns there's currently too much risk and uncertainty with this project to proceed," Espey said. "The Burnaby Refinery remains a key strategic and integrated asset for Parkland. We remain committed to extending our low-carbon fuel leadership by more than doubling our co-processing volumes to 5,500 barrels per day."
Q4 2022 HIGHLIGHTS
For the fourth quarter of the year, Parkland's results by segment were:
United States: Adjusted EBITDA was $46 million, up 15 percent from $40 million during the fourth quarter of 2021. The company's performance was underpinned by incremental contribution from acquisitions and growth in its base business.
Canada: Adjusted EBITDA was $197 million, up 29 percent from $153 million in Q4 2021. Performance was underpinned by strong fuel unit and c-store margins and acquisitions. Same-store sales growth was 6 percent, excluding cigarettes.
International: Adjusted EBITDA was $110 million, up 41 percent from $78 million in Q4 2021. Performance was underpinned by the consolidation of Parkland's international segment and wholesale, aviation and retail volume growth, which was driven by tourism recovery.
Refining: Adjusted EBITDA was $128 million, up 700 percent from $16 million in Q4 2021. Performance was underpinned by composite utilization of 97.7 percent, safe and consistent operations, and robust margins, while the fourth quarter of 2021 was impacted by the shutdown of a major pipeline and turnaround activities at the Burnaby refinery.
"I would like to thank the Parkland team for delivering an excellent year and commend them for their ongoing focus on safely serving our customers," Espey said. "We advanced our strategy, strengthened our supply advantage, delivered record adjusted EBITDA, and enhanced shareholder distributions. Our accomplishments demonstrate the strength of our integrated business model and highlight our focus on creating long-term shareholder value. We expect record adjusted EBITDA in 2023 and are raising our annual dividend for the eleventh consecutive year."
Calgary-based Parkland Corp. is an independent supplier and marketer of fuel and petroleum products and a convenience store operator. Parkland currently services customers across Canada, the United States, the Caribbean region and the Americas through three channels: retail, commercial and wholesale.