Parkland Grows Market Share Despite Challenging Q1 2024
CALGARY, Alberta — Unexpected events in Canada during the first quarter of 2024 had a negative effect on Parkland Corp.'s financial results. Despite the setbacks, the company increased its retail market share while implementing plans to hit certain refinery targets, executive leadership shared.
"2024 did not begin as we expected," President and CEO Bob Espey said during Parkland's recent earnings call, citing the combination of extreme cold weather in British Columbia and the curtailment of natural gas supply that led to an unplanned shutdown at Parkland's refinery in Burnaby, B.C. "Such circumstances test the capabilities and resolve of the team, and I am proud of the way Parkland rallied together to safely return the facility to normal operations by the end of March, while continuing to serve our customers."
Parkland's refinery team has since launched a detailed plan to make up the shortfall, he added.
Espey touted Parkland's diversified business model as a means of providing a stable platform to execute its strategy. Its Canadian retail segment saw more success in Q1 2024 with same-store growth leading to increased market share, driven by the company's rebranding of Husky convenience stores and continued growth of its JOURNIE Rewards program.
"Our operational KPIs showed the benefit of consistent execution and ongoing organic growth investments," said Chief Financial Officer Marcel Teunissen. "Company-owned same-store fuel volumes grew nearly 6% in the quarter, well ahead of market."
Teunissen noted that Parkland's strong beverage performance and the full implementation of the M&M Express program at 500-plus On the Run c-stores helped to drive sales and shift its product mix.
In the United States, Parkland continued to see declines in retail and commercial fuel volumes, which Teunissen attributed to higher fuel prices, weather, changes in consumer behavior and some indications of economic slowdown.
"In our retail business, we will continue to build on the momentum we have created in driving productivity through the strength of our customer offer and loyalty programs," he said. "Cost management and pricing strategies are key levers in our retail business. We also continue to drive the integration benefits of our U.S. operations and see further opportunities to reduce our cost structure there."
Company leadership did touch on the recent push for a strategic review by investors Simpson Oil Ltd. and Engine Capital LP, with Espey reiterating they have concluded that a strategic review is not in the best interest of shareholders at this time.
Adjusted EBITDA for Q1 2024 was $327 million, down 17% from Q1 2023, which Parkland attributed primarily to the unplanned refinery shutdown. The company saw a net loss of $5 million, a decrease of $82 million compared to the same quarter last year, and adjusted earnings were $43 million, down $72 million.
Q1 2024 HIGHLIGHTS
United States: Adjusted EBITDA was $33 million, up 57% from $21 million during the first quarter of 2023, due to ongoing integration efforts, such as c-store improvements and On the Run rebrands. Lower fuel unit margins and volumes reflect broader industry trends, according to Parkland.
Canada: Adjusted EBITDA was $191 million, up 14% from $167 million during the same quarter last year. This was primarily driven by stronger fuel unit margins, partially offset by lower commercial volumes due to unseasonably warm weather. Company same-store volume growth was 5.9%.
International: Adjusted EBITDA was $149 million, down 19% from $183 million in Q1 2023. This was primarily driven by lower fuel unit margins and wholesale volumes, partially offset by successful cost controls.
Refining: Adjusted EBITDA was a loss of $32 million vs. adjusted EBITDA of $38 million during the same quarter one year ago.
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.
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