CALGARY, Alberta — Unprecedented volatility in commodity prices that was amplified in some markets, creating significant local imbalances, led to a tumultuous quarter for Parkland Corp., president and CEO Bob Espey reported during the company's third quarter earnings call.
"Parkland is not alone in experiencing these market dynamics. This impacted our USA segment, where volatility led to losses," Espey said. "Excluding these, Parkland USA performed in line with expectations. We have taken definitive steps to ensure this is not repeated. We have curtailed our USA business and have contained the impact to the third quarter."
Adjusted EBITDA was $328 million during the third quarter of 2022, down approximately 10 percent from the same period in 2021. Excluding previously disclosed spot wholesale inventory and risk management losses in Parkland's U.S. segment of $65 million, adjusted EBITDA was $393 million, up 8 percent from the year prior.
Company officials expect the U.S. segment to return to a normal run rate in the fourth quarter.
Parkland completed its previously announced acquisitions of 163 select Husky branded retail locations in Canada and the Jamaican business of GB Group during the third quarter. The company plans to leverage its controlled fuel brands of Chevron, Pioneer and Ultramar as well as its On the Run convenience store brand as part of the integration process. Parkland will also enhance the foodservice offerings and introduce the JOURNIE rewards program at these stores.
As the chief executive noted on the call, the company was previously focused on growth, but with the completion of these acquisitions behind it, Parkland will focus on deleveraging and enhancing shareholder distributions as it seeks to achieve its mid-decade growth target.
"Record year-to-date adjusted EBITDA puts us on track to deliver our 2022 guidance," Espey said. "We have completed all previously announced acquisitions and remain focused on integrating the acquired businesses and capturing synergies.
"We have demonstrated disciplined capital allocation and will strike a balance between reducing our leverage ratio, enhancing shareholder distributions and growth," he continued. "We anticipate a strong 2023 and remain confident in achieving our $2 billion adjusted EBITDA ambition by 2025."
Q3 2022 Highlights
For the third quarter of the year, Parkland's results by segment were:
United States: Adjusted EBITDA was a loss of $18 million, down from $43 million during the third quarter of 2021. Excluding the impact of previously disclosed spot wholesale inventory and risk management losses, adjusted EBITDA from the company's retail and commercial businesses was $47 million, up 9 percent from Q3 2021, driven by acquisitions, strong fuel unit margins and marine contract wins.
Canada: Adjusted EBITDA was $140 million, up 4 percent from $134 million one year ago. Strong fuel unit and c-store margins and acquisitions underpinned performance.
International: Adjusted EBITDA was $104 million, up 25 percent from $83 million during Q3 2021. Performance was underpinned by consolidation of the international segment and volume growth driven by ongoing tourism recovery.
Refining: Adjusted EBITDA was $135 million, up 7 percent from $126 million one year ago. Strong refining crack margins, consistent operations and composite utilization of 94 percent were partially offset by higher operating costs.
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.