Parkland Posts Upbeat Q2 Earnings Results, Revises Guidance

Parkland Corporation (TSE: PKI) has posted impressive results for the second quarter of 2022 and provided encouraging guidance for the full-year 2022. The upbeat earnings results should provide some boost to the company’s shares, which were down 3.7% on August 4.

With a market cap of C$4.35 billion, operations in 25 countries and a workforce of around 6,000 employees, Parkland Corporation distributes and markets fuel, lubricants, and other related products. It is also a leading convenience store business and supplier, which caters to over a million customers per day across Canada, the United States, the Caribbean region, and Central and South America.

Highlights of Parkland’s Q2 Earnings

The company’s adjusted earnings rose to $1.07 per share in the second quarter from 43 cents per share in the year-ago period. The metric also surpassed analysts’ estimates of $1.03 per share.

Parkland’s sales and operating revenues for the reported quarter came in at $9.72 billion, up from $4.97 billion in the year-ago quarter. The figure outpaced the Street’s estimate of $7.15 billion.

Notably, the company’s adjusted EBITDA came in at $450 million in the reported quarter, up around 40% from the year-ago period. Synergies from acquisitions, strong operating performance, and solid momentum in organic growth have supported the upside.

Segment-wise, adjusted EBITDA of the Canada business grew 38% year-over-year to $174 million on the back of solid margins and rising fuel volumes in the second quarter of 2022. The segment received support from impressive organic growth, the acquisitions of M&M and Crevier, and the easing of COVID-19 restrictions.

Adjusted EBITDA of the International segment jumped 32% over the previous year to $87 million in the reported quarter. Rising fuel volumes, due to persistent improvement in areas like tourism, aviation, and wholesale, along with robust inorganic growth, supported the growth.

Along with the earnings, the company announced that it has consolidated its 100% ownership in the International Segment by entering into a share exchange agreement with Simpson Oil Limited.

The company’s USA business witnessed adjusted EBITDA of $51 million, up 70% from the year-ago period. The upside can be attributed to impressive organic growth in the commercial and wholesale business, strong margins, and robust inorganic growth.

In Refining, the company’s adjusted EBITDA came in at $164 million in the second quarter of 2022, up 33% year-over-year. Composite utilization was recorded at 88.4% during the quarter, down from 97.4% in the year-ago quarter.

Adjusted EBITDA for the Total Renewable segment came in at $18 million in the second quarter of 2022.

Driven by the strong performance of the company’s marketing business and robust inorganic growth, fuel volumes jumped over 12% year-over-year to nearly 6.4 billion liters in the June quarter.

Parkland’s 2022 Outlook Looks Encouraging

Parkland has revised the adjusted EBITDA for the full-year 2022 to $1.6-$1.7 billion. The revised guidance compares favorably with the previously issued outlook of $1.5 billion (up or down by 5%).

Encouragingly, the company expects the 2022 capital expenditures to coincide with the low end of its previously guided $425-$525 million range.

Is Parkland a Good Stock?

As of now, stakeholders have mixed feelings about the stock. While analysts on TipRanks are cautiously optimistic about the stock, financial bloggers are 100% Bullish on PKI. On TipRanks, PKI carries a Moderate Buy rating, which is based on three Buys and two Holds.

On the contrary, retail investors are very negative about the stock. as the number of portfolios having investments in PKI has declined 3% in the last 30 days.

Concluding Thoughts

Parkland has been consistently witnessing solid organic and inorganic growth. The upwardly revised outlook for the full-year 2022 buoys optimism for the stock. Solid operating efficiency and strong margins should keep on supporting the company’s finances. The resilience of the company’s business to economic cycles and the stock’s 31.9% upside potential increase Parkland’s investment appeal.

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