Parkland USA delivered an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $24 million in first-quarter 2024, up 57% from first-quarter 2023. Still, the results were behind where the fuel distributor, marketer and convenience retailer wanted to be, due to both external and internal factors, Parkland Corp.’s CFO Marcel Teunissen said on the company’s first-quarter 2024 earnings call Thursday.
“Across the U.S. market, we continue to see declines in retail and commercial fuel volumes, which we believe are driven by higher fuel prices, weather, changes in consumer behavior and some indications of economic slowdown,” Teunissen said. “Unit margins were under pressure due to rising fuel prices, as is normal in the U.S. fuel market. We continue to focus on executing our improvement plans across the U.S. business.”
While the weakness in the market is expected to be temporary, headwinds could present some risk to Parkland’s adjusted EBITDA guidance for the U.S. segment, he said.
- Parkland Corp is No. 38 on CSP’s 2024 Top 40 Updateto the 2023 Top 202ranking of U.S. c-store chains by store count. Watch for the full 2024 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.
President and CEO Bob Espey noted that fuel volumes were down more than the rest of the market in its Southern stores, particularly Florida, due to some “operational issues,” which have since been fixed. There is a lot of “good traction” in the United States, though, Espey said. On the non-fuel side of the business there were positive same-store sales comps, he said, and gross margin was up by more than 2%.
“I would say the other thing is the environment in the U.S. right now is, we've seen our competitors announce tough quarters, both on the volume and margin side,” Espey said. “And so we're in line with where the industry is overall in the business.”
Investor Relations
Espey also mentioned Parkland’s ongoing portfolio divestments and said he has spoken to many of Parkland’s investors and “taken to heart their comments.” One of Parkland’s investors Engine Capital LP had asked in March 2023 for the company to consider selling off non-core assets.
“We weigh all perspectives to try and find the right balance between investing in our business for growth, repaying debt, paying dividends and repurchasing shares,” Espey said. “We are committed to acting in the best interest of all our shareholders and do not believe there is a shortcut to long-term value creation.”
Espey later responded to a question about why Parkland’s Board of Directors chose not to pursue a strategic review of the company. His response: “First of all, there's really no updates on the situation with either Engine or the Simpson's. And at the time, we've concluded that a strategic review isn't in the best interest of shareholders at this time. So we believe that remaining focused on our core strategy and continuing to execute, maximizes value for all of our shareholders.”
In April, two of Parkland’s shareholders—Engine Capital and Parkland's largest shareholder, Simpson Oil Ltd.—called for a strategic review of the company.
Parkland Corp., Calgary, Alberta, operates Parkland USA. The c-store chain has about 211 stores in the United States under brands like On the Run, Rhinehart Oil, Urbieta Oil and more.
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