Dive Brief:
- Parkland Corporation is feeling “cautiously optimistic” about its struggling U.S. business heading into 2025, President and CEO Bob Espey said during the convenience retailer’s third-quarter earnings call on Thursday.
- Parkland, which has 210 company-operated convenience stores and 450 dealer sites across eight states, delivered $54 million in adjusted EBITDA in the U.S. during the quarter.
- Espey’s optimism is a promising turn for Parkland, whose U.S. business has struggled since early last year as it faces declines in retail and commercial fuel volumes and undergoes hundreds of staff cuts.
Dive Insight:
Parkland’s U.S. troubles reached a climax nearly two months ago when the company announced it was looking to sell its business in Florida, where it operates about 100 convenience stores, nine cardlock sites and four bulk storage plants and warehouses. Leadership said at the time that this segment “hadn’t reached its full potential” and that Parkland was aiming to sell it within the next 12 to 15 months.
Although leadership reiterated this message on Thursday, it shared that Parkland has “seen a really good recovery” for its Florida business. Espey added that the company is gaining market share across the U.S., and in retail is “on track on the fuel side” and “above industry” on same-store sales averages.
“We are seeing the positive effects of renegotiated supply contracts in Florida, as well as tactical improvements aimed at increasing margins, reducing costs and boosting in-store sales,” Chief Financial Officer Marcel Teunissen said during the call.
Despite the gains in Florida, Espey said that Parkland has seen slower growth in the Northwest U.S., where it operates in the Dakotas, Montana, Idaho, Wyoming, Utah and Colorado.
“I think that's driven by the election, which has translated into some weaker consumer demand in those markets,” he added.
Espey and Teunissen said they foresee Parkland’s U.S. business hitting an adjusted EBITDA quarterly run rate of $60 million by the end of the year.
When asked by an analyst how it plans to get there, Espey referred to cost-cutting initiatives Parkland has implemented since last year, including the termination of at least 300 team members since January 2023.
“We’ll have taken out a lot of the cost that we'd anticipated, so we should start to see a good run rate in that business in Q4 built on top of some good supply fundamentals,” Espey said. “We're getting cautiously optimistic here that we'll see that business track where it needs to be going into next year.”
