Parkland plans to build on loyalty

JOURNIE Rewards program members were major drivers of same-store sales growth during Q1 2023.

Parkland Corp. is focusing on the power of loyalty in 2023 as it continues to see positive returns from its JOURNIE Rewards program.

During the three years since its launch, the number of JOURNIE cardholders has grown to more than 4.5 million, President and CEO Bob Espey reported during the company's first quarter earnings call earlier this month.

As a result, JOURNIE, which is launching a partnership with Air Canada's Aeroplan loyalty program, is fulfilling Parkland's goal of driving organic growth by incentivizing loyalty.

"The past few years have proven that JOURNIE members are loyal higher spending customers, and they are now responsible for a quarter of our retail fuel transactions," Espey said.

On average, JOURNIE members pump 20% more gasoline during each fill and spend 7% more in stores, according to Espey. During the first quarter, members contributed more than 20% of the same-store sales volume growth at the company's On the Run convenience stores.

Although Parkland did not share detailed plans for its partnership with Aeroplan, Parkland expects to expand its reach with more than 10 million combined members and accelerate momentum in its organic growth strategies.           

"We continue to explore additional partnerships for our JOURNIE program to offer more to our customers and extract greater value," Espey said.

[Read more: "Parkland's earnings up 40% in Q1 2023"]

Looking ahead, Espey called Parkland "a growth company" that, having completed notable acquisitions, is now focused on integrating the acquired companies, capturing synergies and driving organic growth. This contributed to an "excellent" first quarter during which Parkland delivered an adjusted EBITDA of $395 million, up $12 million from the first quarter of 2022.

"This is a tremendous result, reflecting the resilience of our business model, contributions from acquisitions and organic growth," said Chief Financial Officer Marcel Teunissen. "We are firmly on track to achieve our 2023 guidance."

While fuel unit margins were lower due to declining commodity prices, they are trending above historical averages, Teunissen said.

Parkland's retail business experienced a 7.3% lift in same-store sales volumes during the quarter, largely driven by JOURNIE members, and saw a positive impact from Parkland's previous Crevier and Husky acquisitions. The company also opened its first standalone On the Run location in Canada's British Columbia and is on track to meet its goal of 1,000 stores by the end of 2025.

"Our same-store sales growth in both fuel volumes and convenience speaks loudly to the value of the On the Run brand and how we generate attractive returns. On the commercial side, scale has allowed us to become the trusted supplier of industrial fuels in the regions we serve," Espey said. "The growth of our international business has been a few years in the making and was hidden by the impacts of the pandemic. We are now starting to see the benefits of the improvements the team has been making."

Espey also praised the work of Parkland USA President Donna Sanker, who took on the role in December 2022 after leading Parkland Canada for three years.

[Read more: "Parkland's forecourt makeovers"]

"She has simplified its structure, recruited external talent and placed proven Parkland leaders into our U.S. organization," Espey said. "I am confident the changes we have made over the past several months, sets the U.S. on course to deliver the consistent and improved performance we expect."

Q1 2023 Highlights

For the first quarter of the year, Parkland's results by segment were:

United States: Adjusted EBITDA was $21 million, down 55% from $47 million during the first quarter of 2022 due to negative impacts from compliance obligations accounted for in the current period of $17 million, commodity price fluctuations in 2022 and severe winter weather across certain markets.

Canada: Adjusted EBITDA was $167 million, down 13% from $191 million during the same quarter last year. Parkland cited unseasonably warm weather that lowered commercial volumes as a factor, partially offset by 2022 acquisitions and organic growth. Fuel margins declined year-over-year due to favorable retail market conditions in Q1 2022, but food and same-store sales growth in company c-stores was 6.8%, up from 1.7% during Q1 2022.

International: Adjusted EBITDA was $183 million, up 123% from $82 million during the first quarter of 2022. Performance was largely driven by the consolidation of the remaining 25% of Sol and additional volumes captured largely in the contracted commercial and retail business, organic growth initiatives and synergies.

Refining: Adjusted EBITDA was $38 million, down 57% from $89 million during Q1 2022, reflecting the scheduled 2023 turnaround, and composite utilization was 33.9%. Increased sales of imported product and efficient management of pipeline capacity partially offset these impacts.

"The company's disciplined focus on delivering shareholder value continues to guide us and we are on track for a successful year. Our performance this quarter demonstrates our ability to execute on our strategy, capture synergies and deliver organic growth throughout our retail and commercial businesses," Espey said. "I am confident Parkland will deliver its $2 billion adjusted EBITDA ambition by 2025 without additional acquisitions, while reducing leverage and improving shareholder returns."

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.

This article originally appeared at Convenience Store News

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