Parkland Corp. will be selling up to $368.5 million (U.S.) of non-core assets, President and CEO Bob Espey said Thursday during the company’s first-quarter 2023 earnings call. This announcement follows Engine Capital’s request that the Calgary, Alberta-based fuel and convenience-store company consider selling or spinning off non-core assets.
“We have a clear strategy for identifying assets that no longer align with our core business objectives,” Espey said. “We regularly review our portfolio to identify underperforming assets and assess the potential impact of disposition on our financial performance.”
At the end of the first quarter, Parkland had more than $147.4 million (U.S.) of assets held for sale, which includes about $73.7 million (U.S.) of high-value real estate, of which 85% are in advanced negotiations, he said. All are in Canada. The sites are primarily in urban areas with high real estate value. Other non-core Canadian assets and parts of Parkland’s commercial business will be in the market in the next few months, Espey said.
- Parkland USA is No. 37 on the 2023 Top 40 update of CSP’s 2022 Top 202 list ranking of U.S. convenience-store chains by store count.
“We carefully considered the market conditions and timing of asset disposals to ensure that we can maximize the value of the assets we sell this involves assessing market demand identifying potential buyers and negotiating favorable terms for the sale,” Espey said. “The cash generated by these disposals will be considered in our capital allocation framework and used to reduce that and increase shareholder returns.”
Espey also highlighted the company’s plans to slow acquisitions, which have been a big part of Parkland’s growth.
“We are now focused on integrating the companies we purchased, capturing synergies and driving organic growth,” he said. “We are exercising strict capital discipline by prioritizing lowering leverage followed by enhancing shareholder distributions and organic growth.”
Parkland USA’s adjusted EBITDA was $15.4 million (U.S.) in first-quarter 2023, down 55% from first-quarter 2022. Compliance obligations accounted for in the current period, commodity price fluctuations in 2022 and severe winter weather across certain markets negatively affected the results , the company said in its 2023 first-quarter results, released Wednesday.
Espey said Parkland continues to work on the reset of its U.S business. Donna Sanker, who took over as president of Parkland’s U.S. division in December following Doug Haugh’s exit from the company, has simplified the structure, recruited external talent and placed proven Parkland leaders into its U.S. organization, he 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,” Espey said.
Engine Capital, which holds 2% of Parkland’s outstanding shares, in March urged Parkland to become a more focused fuel and convenience retailer. It also said it would withhold support on all incumbent board directors at an upcoming meeting of shareholders. At Parkland’s annual and special meetings of shareholders on Thursday, all 10 nominees, including board Chairman Jim Pantelidis, were approved.
Parkland Corp., Calgary, Alberta, is the parent company of Parkland USA, Charleston, South Carolina, which has c-stores under several brands, including On the Run.