Dive Brief:
- Parkland Corp.’s adjusted EBITDA in the U.S. during Q2 fell by about 45% compared to the same period last year, continuing a difficult past few quarters in the states for the Canadian retailer, according to the company’s earnings report released on Tuesday.
- Parkland’s U.S. segment delivered an adjusted EBITDA of $26 million during the second quarter compared to the $47 million it garnered in Q2 2024, according to the report. Parkland said that the decrease was “primarily due to ongoing macroeconomic pressures.”
- The losses come as Parkland — which has 660 c-stores in the U.S. and operates 190 of them directly — nears the estimated Q4 closing of its $9.1 billion sale to oil company Sunoco.
Dive Insight:
Although Parkland’s EBITDA in Canada grew by about $22 million compared to this time last year, it’s no surprise that the company’s U.S. operating profit continues to plummet given its years of underperformance in the states.
Since early 2023, Parkland has made hundreds of staff cuts to its U.S. segment and even explored a sale of its Florida business as operations struggled prior to the Sunoco agreement. The company’s full-year revenue in the U.S. fell from $186 million in 2023 to $168 million in 2024, which leadership pinned on unfavorable market conditions causing declines in retail and commercial fuel volumes.
Parkland’s latest decline marks the third straight quarter in which its adjusted EBITDA in the U.S. has dropped. In Tuesday’s report, Parkland said its struggles in the U.S. were “driven by macroeconomic pressures continuing to impact fuel and convenience demand in line with broader industry trends,” as well as regulatory developments that hindered its ability to optimize its supply opportunities.
Despite the struggles, Texas-based Sunoco is “even more confident” in Parkland’s business now than in May when it agreed to acquire the Canadian retailer, President and CEO Joseph Kim said during Sunoco’s earnings call on Wednesday.
Kim said that Sunoco is “working diligently” on getting final approvals to close the deal.
“Combining the two companies will be a win for equity holders, debt holders, employees, as well as the countries we operate in,” Kim said. “As the process plays out, we’ll provide more specific details, but for now, we can tell you that we’re highly confident that we will deliver double digit accretion while maintaining a strong balance sheet.”
Given fuel was the main driver of the acquisition, Sunoco has offered few details on what it intends to do with Parkland’s convenience store network once the deal closes. When asked during the call what Sunoco’s M&A priorities will be when that happens, Kim again offered few details but added that Sunoco will prioritize integrating Parkland’s assets into its network.
“After that, we’ll assess the market and see what the market opportunities are,” Kim said.
