Less than 12 months after an activist investor critiqued its performance, fuel retailer Parkland Corp. PKI-T has doubled its third quarter profit and announced it will exceed its previously announced earnings guidance for 2023.
On a conference call with analysts Thursday, CEO Bob Espey hailed the Calgary-based company’s third-quarter financial results, which saw Parkland report net earnings of $230-million, up from $105-million in the same period of 2022.
On an adjusted basis, Parkland earned $231-million, nearly five times its third-quarter 2022 adjusted earnings.
Espey attributed the results to favourable market conditions and the company’s ongoing efforts to optimize its assets and operations.
“Collectively (these results) demonstrate the quality of the business we created,” he said.
“We’re doing exactly what we said we would do.”
Parkland has made a number of changes to its business since last March, when U.S.-based activist investor Engine Capital LP publicly urged the company to get rid of what it called “non-core assets” and become a pure play fuel and convenience retailer.
Engine called on Parkland to sell or spin off its Burnaby, B.C. refinery, a recommendation the company rejected following a strategic review.
That refinery saw record utilization and co-processing volumes in the third quarter, delivering adjusted earnings of $188-million, up more than 39 per cent from the prior year’s quarter.
While Parkland has declined to divest its refinery, the company did make other changes throughout the year, including putting a number of other assets, such as certain retail locations, up for sale and making changes to its board of directors.
The company is also targeting $500-million in asset divestitures by the end of 2025.
It also says it now expects to exceed its previously announced 2023 adjusted earnings guidance range of $1.8 to $1.85-billion, thanks to favourable refinery margins and strong utilization, as well as strength in its international business.
In a research note to clients, RBC analyst Luke Davis said Parkland is “firing on all cylinders.”
“In our view, Parkland is well positioned heading into the back half of the year with debt reduction and synergy capture remaining the key focus,” Davis said.
Parkland will hold an investor day on Nov. 14 and is expected to provide a more detailed strategy update and longer-term outlook then.