CALGARY, Alberta — Parkland Corp.'s strategic plan paid off during the third quarter of 2023 with record highs in adjusted EBITDA — both for the quarter and the year to date — as well as earnings, earnings per share, refinery utilization and coprocessing volumes.
"We are doing exactly what we said we would do, advancing our strategy, serving our customers and executing consistently on organic growth and synergies," said President and CEO Bob Espey during Parkland's most recent earnings call. "Each part of our business has contributed to our record performance. This gives me unwavering confidence that we will continue to deliver the ambitious targets we set for ourselves."
Espey pointed to Parkland's in-store employees as key drivers of the company's success during the quarter.
"One of the highlights of my role is visiting our frontline customer-facing teams. Without exception, they are focused on safely servicing our customers and on growing our businesses," he said. "I continue to be impressed by the team's ability to drive organic growth, capture synergies and deliver the cost efficiencies."
Their efforts have enabled Parkland to increase its 2023 adjusted EBITDA guidance while lowering capital expenditures, he added, predicting that Parkland will exceed its revised adjusted EBITDA guidance this year.
On the retail front, Parkland leadership views the recently opened standalone On the Run c-store in Montreal as an important test that will determine the company's future steps, particularly in foodservice.
"This is a great example of bringing together our brands and marketing programs to continue to deliver strong and consistent organic growth. This site unites our On the Run brand, M&M frozen food offer and is home to the launch of our Bites On the Run by M&M fresh food offer. We are eager to see how this new food offer performs in our pilot sites and I'm excited to see how sales evolve," Espey said.
Parkland's JOURNIE Rewards program continues to drive customers from the forecourt into c-stores, contributing to 3.5 percent growth in food and company same-store sales. Overall c-store performance during the quarter was driven by sales of packaged beverages and center-store products like candy and salty snacks, which grew more than 10 percent.
Q3 2023 HIGHLIGHTS
United States: Adjusted EBITDA was $52 million, up $70 million from an adjusted EBITDA loss of $18 million in Q3 2022. Results for the quarter included spot wholesale inventory and risk management losses of $65 million. Excluding these losses, adjusted EBITDA was $47 million and Q3 2023 adjusted EBITDA was up 11 percent. Parkland's performance was underpinned by effective cost management initiatives and strong fuel unit margins in the commercial line of business, partially offset by weakness in retail fuel volumes and unit margins, the company said.
Canada: Adjusted EBITDA was $206 million, up 47 percent from $140 million during Q3 2022. Fuel unit margins were higher than one year ago due to continued optimization of supply and integrated logistic capabilities as well as favorable market conditions. Company volume same-store sales growth was 4.2 percent and food and company c-store same-store sales growth was 3.6 percent, driven by organic growth initiatives in Parkland's loyalty and c-store programs.
International: Adjusted EBITDA rose 63 percent to $170 million, up from $104 million the previous-year quarter. Performance was driven by organic growth that resulted in higher volumes in the wholesale business, strong fuel unit margins driven by favorable market conditions and pricing strategies, and the consolidation of Sol.
Refining: Adjusted EBITDA was $188 million, up more than 39 percent from $135 million in the previous-year quarter. Performance was underpinned by robust crack spreads, record composite utilization of 102.9 percent, including record co-processing volumes of 2,600 barrels per day, and optimization of the production mix.
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.