Parkland reports strong 2023 Q4 and record year-end results
Parkland Corporation announced its financial and operating results for the three months and year ended December 31, 2023.
“I want to congratulate the Parkland team on an excellent year,” said Bob Espey, president and chief executive officer in a statement upon the announcement of the results. “We delivered approximately $300 million of incremental Adjusted EBITDA in 2023 compared to 2022 and have accelerated our $2 billion of Adjusted EBITDA Guidance1 to 2024, with significantly less invested capital than expected. We are firmly on track with our ambitious plan to deliver long-term value to our shareholders, which we outlined at our Investor Day."
Adjusted EBITDA attributable to Parkland of $463 million, consistent with the fourth quarter of 2022. Net earnings attributable to Parkland of $86 million, an increase of 25% from the fourth quarter of 2022, and adjusted earnings attributable of $151 million up 29% from the fourth quarter of 2022.
READ: Parkland adds three new EV charging locations in Ontario
During an investor and financial journalist media briefing Espey pointed to the significant role that the Journie Rewards and its partnership with Aeroplan, as well as the ongoing strength of the company’s On the Run brand.
“We expanded our On the Run brand to more than 700 stores, grew our Journie Reward loyalty program to nearly 6 million members and have seen significant organic growth in our international and Canada segments. Operationally, we have streamlined processes that have resulted in increased efficiency and cost savings,” Espey said during his remarks.
Parkland in Canada delivered Adjusted EBITDA of $190 million, consistent with Q4 2022 ($197 million). The company volume Same Store Sales Growth (SSG) was 6.9% and food and c-store SSSG (excluding cigarettes) was 1.2%. Canada delivered food and c-store revenue of $92 million, consistent with Q4 2022 ($88 million). Internationally, Parkland delivered and Adjusted EBITDA of $157 million, up 43%, from Q4 2022 ($110 million), primarily driven by additional volumes in commercial business and strong fuel unit margins, due to organic growth and synergy capture. And it is United States operations, Parkland announced an Adjusted EBITDA of $39 million, down 15% from Q4 2022 ($46 million). The decrease was primarily driven by lower fuel unit margins in the company’s commercial business, partially offset by strong c-store margins and reduced operating costs.
Marcel Teunissen, chief financial officer with Parkland reinterred the strong results, but did point to some softening in certain segments due to ongoing concerns amongst consumers about pocketbook issues, inflation and worries about the overall health of the economy. “Convenience alone was up 4% reflecting the impact of strong c-store and packaged beverage sales, [but] we did see some weakness in our M&M food market channel reflecting customers being cautious with discretionary spend.”
Espey added that while M&M was “off is the frozen food segment” – and Parkland has been adjusting it M&M volume margins accordingly to consider that changing customer spend - he did not see that dip as unique to Parkland. Frozen foods as a category were down amongst other food retailers, he said. “I would add that in our fresh food offerings, we continue to make good progress, and we are continuing to roll out frozen within our convenience store network.”
“Parkland is a much larger company today we have significantly increased our scale through strategic investments made in our customer offerings and supply network,” Espey added. “Parkland’s strategy aims to continue building upon our customer advantage and leverage our supply advantage. Our customer advantage is built on the value we provide to our retail and commercial customers. We gain their loyalty through our proprietary brands, differentiated offerings, extensive network with competitive pricing, reliable service, and loyalty programs. These programs have been our consistent focus for years and we're starting to see the benefit of them.”
Espey also took a few moments to comment on the recent announcement by Parkland of its intent to sell 157 convenience stores with fuel operations in six Canadian provinces, those being Alberta, British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan. He said that this sale is consistent with the plans announced by Parkland’s executives last May that the company to divest some $500M in non-core assets within two years to streamline business operations and reduce debt.
“This is consistent with the priorities we laid out in our divestiture program,” he said. “These are sites that don’t quite fit where we are pushing our brands, but are still quite good fit sites, and in most cases, these will be sold to partners that will own the businesses and will continue to sell branded products through them. We are just changing the operating model of those businesses, allowing us to pull some of the capital out. It is all part of our $500 million divesture program that we are committed to for the end of 2025.”
