Fuel sale volumes in excess of a billion litres helped drive Parkland Fuel Corp. (TSX: PKI) to nearly $26 million in earnings during the second quarter of 2012.
The Red Deer-based company, which is Canada’s largest independent distributor and marketer of fuels and lubricants, reported on Thursday that its net earnings for the three months ended June 30 were $25.9 million, or 37 cents per diluted share. That marked a sharp turnaround from the same quarter in 2011, when Parkland recorded a net loss of $4.2 million, or nine cents a share.
“Our diversified business model paid off again this quarter,” said Bob Espey, Parkland’s president and chief executive officer, in a release.
“With the commercial division impacted by adverse weather in the first half of 2012, our retail division was firing on all cylinders with increased volumes, higher margins and lower costs.”
Specifically, Parkland’s retail fuel volumes for the second quarter jumped 22 per cent, to 458 million litres from 374 million.
The company pointed to its acquisition last June of Cango Inc. — which operates a network of more than 150 fuel retailers and dealers in Ontario — and growth within Parkland’s own dealer network, as reasons for the increase.
The improved retail fuel volumes more than offset a decline in commercial fuel volumes, which dipped 16 per cent to 315 million litres from 377 million litres.
Parkland said the decrease reflected a reallocation of 48 million litres to its wholesale, supply and distribution division. It added that wet conditions and low natural gas prices also resulted in reduced sales to oilpatch customers.
The total fuel volumes of just over one billion litres in the quarter represented a nine per cent increase over the 923 million litres a year earlier.
That helped to more than double Parkland’s earnings before interest, taxes, depreciation and amortization (EBITDA).
Meanwhile, operating and direct costs were down 13 per cent to $35.4 million from $40.6 million, and the refiners’ margins that Parkland shares in were higher.
In May, Parkland announced a five-year strategic plan called the Parkland Penny Plan, under which it hopes to double its annual EBITDA — to $250 million — through acquisitions and increased efficiencies.
“It’s great to follow up the launch of our Parkland Penny Plan in May with the outstanding results this quarter,” said Espey.
“Our success not only reflects a strong contribution from refiners’ margins but, more importantly, demonstrates traction on our cost-saving initiatives and the success of our fuel-marketing businesses.”