Parkland USA has rebounded from a challenging third quarter in 2022, Parkland Corp. CFO Marcel Teunissen said on the company’s third-quarter 2023 earnings call.
The team delivered an adjusted EBITDA of $37.5 million in the third quarter, up $50.5 million year-over-year, he said.
“We delivered cross-savings and benefited from strong commercial fuel margins,” Teunissen said during the Nov. 2 earnings call. “Across the U.S. and in our markets, industry retail fuel volumes were down; however, we successfully outperformed industry benchmarks. We have confidence in the future of our USA segment.”
A significant part of Parkland Corp.’s, Calgary, Alberta, 2024 growth will come from Parkland USA, where the team has already made significant improvements, he said.
- Parkland USA is No. 37 on CSP’s 2023 Top 202 ranking of U.S. convenience-store chains by company-owned store count.
Donna Sanker, Parkland USA’s president who took over in January, showed a map during the presentation of the current U.S. footprint in Montana, Idaho, Wyoming, Utah, Colorado, North Dakota, South Dakota and Florida.
“We selected these markets purposefully,” she said. “They have great demographics, a steady population growth, are demand resilient and have inherent supply inefficiencies. Simply put, in these markets fuel demand exceeds local supply, and fuel needs to be imported from other regions. These dynamics play to Parkland’s core strengths and create opportunity for us.”
Parkland USA has invested about $1.24 billion to buy 20 companies, primarily in the Pacific Northwest and Rockies markets, but also in the rapidly growing Florida market, Sanker said. In 2021, Parkland acquired all the assets of Urbieta Oil Co., including 94 retail location, in Florida.
Sanker said in addition to restructuring the Parkland USA team, the company has also been focused on completing integration of the 20 companies it acquired, including the rollout of best practices, process and tools throughout the business.
“In our retail business, we are building out our category management and merchandising capabilities, and we are beginning to see the impact of this through positive same-store sales growth and higher margins,” Sanker said. “We have also rebranded approximately 35 back courts to On the Run. Results from these conversions have shown a 17% lift in store sales and a 23% increase in store margin year-to-date.”
While 2023 has been a year of transformation, Parkland USA is hitting its stride operationally, Sanker said.
“We expect to grow 2024 adjusted EBITDA by approximately 25% to between [$167.1–$181.6 million USD]. And I believe there’s more potential in 2025 and beyond,” Sanker said. “These targets are supported by detailed plans and proven strategies that we’re taking from other parts of the Parkland business.”
Sanker said these include:
- Strategic pricing tools and capabilities that leverage technology to deliver better margins.
- Fleet optimization and delivery efficiency measures that ensure Parkland USA effectively utilizes its logistic assets.
- High grading its portfolio through divestment of a series of non-core retail assets.
- Taking a rigorous approach to retail site labor using site-specific sales data and transactions to determine staffing levels.
- Disciplined cost-management.
- A relentless focus on growing its retail and commercial customer bases and strengthening its retail brands, loyalty and food offerings.