SUSSER HOLDINGS CORPORATION CORPUS CHRISTI, Texas, Aug. 8, 2014 /PRNewswire/ -- Susser Holdings Corporation (NYSE: SUSS) today reported financial and operating results for the second quarter ended June 29, 2014. Results detailed below include the results of Susser Petroleum Partners LP (NYSE: SUSP) unless otherwise noted.
Same-store merchandise sales increased 4.0 percent in the second quarter of 2014, which included the Easter holiday, versus growth of 2.2 percent in the second quarter of 2013. Last year Easter fell in the first quarter. Average retail gallons sold per store increased 2.0 percent, excluding the results of the recently acquired Sac-N-Pac(TM) stores, compared with growth of 5.5 percent a year earlier. Including the Sac-N-Pac(TM) stores, average retail gallons per store declined 0.4 percent, due to Sac-N-Pac's smaller average store size and lower fuel volumes. Retail net merchandise margin was 33.8 percent, versus 34.3 percent in the second quarter of 2013.
Retail fuel margin before credit card expense averaged 18.7 cents per gallon, versus 18.2 cents last year. That compares to an average second quarter retail fuel margin of 22.0 cents per gallon over the previous five years, calculated as if the 3-cent-per-gallon mark-up charged by Susser Petroleum Partners had been in place for the entire period.
Net income attributable to Susser Holdings was $12.3 million, or $0.56 per diluted share for the second quarter, versus a reported net loss of $4.3 million, or $0.20 per diluted share in the second quarter of 2013. 2014 results include the impact of $3.1 million of pre-tax charges related to the proposed merger with a subsidiary of Energy Transfer Partners, L.P. ("ETP"), and 2013 included the impact of a $26.2 million debt refinancing charge. Excluding these charges, adjusted net income for the second quarter of 2014 was $14.3 million, or $0.66 per diluted share, compared to $12.5 million, or $0.59 per diluted share in 2013.
Adjusted EBITDA((1)) was $50.0 million, or $53.1 million excluding the ETP merger charges that are included in reported general and administrative expense, compared to $50.5 million a year ago. Consolidated gross profit totaled $192.7 million, a 14.7 percent increase versus last year, due to merchandise and fuel sales growth.
Second quarter consolidated revenues were $1.9 billion, up 19.7 percent from the second quarter of 2013. This increase reflects a 15.8 percent increase in merchandise sales, a 15.0 percent increase in retail fuel sales and a 30.5 percent increase in wholesale fuel sales to third parties.
"As expected, same-store merchandise sales growth was strong, in part due to the contribution of the Easter holiday sales activity in the second quarter," said Sam L. Susser, Susser Chairman, President and Chief Executive Officer. "Sales from our propriety Laredo Taco Company(®) restaurant concept continue to be a strong driver of same-store performance.
"Average retail gallons per store performance was softer in the quarter after two years of very strong growth. This was due in part to short-term fuel shortages in certain markets caused by refinery shutdowns and transportation capacity issues that have since improved. Rising fuel costs and additional competitor site openings also impacted fuel volumes and profitability.
"We have a record 17 new Stripes® stores under construction that should be open by year-end, and we are on track to complete our previously announced merger with Dallas-based ETP in the third quarter of this year. We are off to a very strong start in July, giving us excellent momentum as we prepare to merge with ETP." Susser said.
New Convenience Store and Wholesale Business Update
Susser Holdings opened five new large-format Stripes® convenience stores and acquired two existing stores during the second quarter. As of June 29, the Company operated 636 convenience stores, of which 408 included a restaurant, primarily Laredo Taco Company®. Year-to-date, the Company has opened 11 new-build stores and acquired 49 existing stores, including 47 Sac-N-Pac(TM) locations. Four of these stores opened since the end of the second quarter, and 17 new Stripes® stores are currently under construction.
In the wholesale segment, 11 new contracted sites were added in the second quarter and three sites were discontinued for a total of 624 contracted branded sites as of June 29. Year-to-date, the company has added 38 sites and discontinued five, including the 19 dealer sites acquired in connection with the Sac-N-Pac acquisition. Susser expects to add a total of 50 to 65 new wholesale branded dealers and consignment sites for the full year.
Susser Holdings consolidated capital spending was $67.9 million for the second quarter, including $36.7 million at SUSP. We completed sale leaseback transactions with SUSP for six new Stripes locations in the second quarter for a total cost of $31.0 million, and have completed three additional sale leasebacks to date during the third quarter, bringing the year-to-date total to 16 sites for a total of $70.7 million.
Susser Petroleum Partners Declares First IDR Payment
Effective with the second quarter distribution by Susser Petroleum Partners of $0.5197 per unit, Susser Holdings - which owns SUSP's general partner, 50.2 percent of SUSP units and all of its incentive distribution rights (IDRs) - will receive its first IDR payment of approximately $64,000 at the end of August, in addition to its share of distribution to common and subordinated units for the second quarter.
Second Quarter Financial and Operating Highlights
Merchandise - Merchandise sales were $318.2 million, a 15.8 percent increase from a year ago. Approximately $11.0 million of the increase came from stores that have been open a year or longer, the remaining increase came from 75 stores that were opened or acquired during the last four quarters. Same-store merchandise sales rose 4.0 percent, versus 2.2 percent in the second quarter of last year. Sales from food service, beer and packaged drinks were the primary drivers of merchandise sales growth.
Net merchandise margin as a percentage of sales was 33.8 percent, versus 34.3 percent a year earlier. Merchandise gross profit increased 14.4 percent year-over-year to $107.7 million. Gross profit growth was led by an $11.5 million contribution from new stores and a $1.1 million same-store increase from food service.
Retail Fuel - Retail fuel volumes grew 11.8 percent from a year ago to 263.9 million gallons. Average gallons sold per store were approximately 32,400 gallons per week, a decline of 0.4 percent. Excluding the impact from the recently acquired Sac-N-Pac stores, retail fuel sales increased 2.0 percent year-over-year. Retail fuel revenues increased 15.0 percent from a year ago to $926.7 million as a result of increased gallons sold as well as a 2.9 percent - or 10-cent-per-gallon - increase in the average selling price of fuel.
Retail fuel gross margin averaged 18.7 cents per gallon, versus 18.2 cents per gallon a year ago. After deducting credit card expense, net fuel margin was 12.8 cents per gallon, versus 12.7 cents in the prior-year period. Retail fuel gross profit increased 15.1 percent year-over-year to $49.5 million as a result of the higher volumes sold and higher profit margin per gallon.
Wholesale Fuel - Susser's wholesale segment includes all of SUSP's operations along with the consignment sales and transportation businesses that were not contributed to SUSP in the IPO in September 2012. Wholesale fuel volumes sold to third parties - which includes all gallons except those distributed to Susser's retail stores - were up 27.5 percent from a year ago to 199.1 million gallons. Wholesale fuel revenues increased 30.5 percent to $614.7 million versus a year ago. This increase reflects the impact of higher volumes sold as well as a 2.3 percent - or 7-cent-per-gallon - increase in the selling price of fuel compared with the second quarter of last year.
Wholesale fuel gross margin from third parties was 6.5 cents per gallon, up from 6.4 cents a year earlier. Wholesale fuel gross profit, including sales to Stripes and Sac-N-Pac stores, increased 21.2 percent year-over-year to $20.7 million. This increase was mainly the result of increased gallons sold, including the impact of the Gainesville Fuel acquisition completed in September 2013, and a 0.4 percent increase in third-party margin per gallon.
(1) Adjusted EBITDA is a non-GAAP
financial measure of
performance that has
limitations and should not be
considered as a substitute for
net income. Please refer to the
discussion and tables under
"Key Operating Metrics" later
in this news release for a
discussion of our use of
Adjusted EBITDA and Adjusted
EBITDAR, and a reconciliation
to net income (loss)
attributable to Susser Holdings
Corporation for the periods
presented.
Second Quarter Earnings Conference Call
Susser's management team will hold a conference call today at 11:00 a.m. ET (10:00 a.m. CT) to discuss second quarter 2014 results for both Susser Holdings Corporation and Susser Petroleum Partners LP. To participate in the call, dial 719-457-2689 10 minutes early and ask for the Susser conference call. The call will also be accessible live and for later replay via webcast in the Investor Relations section of Susser Holdings' web site at www.susser.com and Susser Petroleum Partners' web site at www.susserpetroleumpartners.com under Events and Presentations. A telephone replay will be available through August 15 by calling 719-457-0820 and using the access code 5051315#.
Susser Holdings Corporation is a third-generation family led business based in Corpus Christi, Texas that operates approximately 640 convenience stores in Texas, New Mexico and Oklahoma under the Stripes® and Sac-N-Pac(TM) banners. Restaurant service is available in approximately 410 of its stores, primarily under the proprietary Laredo Taco Company® brand. Susser Holdings also is majority owner and owns the general partner of Susser Petroleum Partners LP, which distributes approximately 1.7 billion gallons of motor fuel annually to Stripes® stores, independently operated consignment locations, convenience stores and retail fuel outlets operated by independent operators and other commercial customers in Texas, New Mexico, Oklahoma, Kansas and Louisiana.
Forward-Looking Statements
This news release contains "forward-looking statements" which may describe Susser's objectives, expected results of operations, targets, plans, strategies, costs, anticipated capital expenditures, potential acquisitions, new store openings and/or new dealer locations, management's expectations, beliefs or goals regarding the proposed merger with ETP and SUSS and the expected timing of the merger. These statements are based on current plans, expectations and projections and involve a number of risks and uncertainties that could cause actual results and events to vary materially, including but not limited to: competitive pressures from convenience stores, gasoline stations, other non-traditional retailers located in our markets and other wholesale fuel distributors; dangers inherent in storing and transporting motor fuel; pending or future consumer or other litigation or adverse publicity concerning food quality, food safety or other health concerns related to our restaurant facilities; inability to build or acquire and successfully integrate new stores; volatility in crude oil and wholesale petroleum costs; increasing consumer preferences for alternative motor fuels, or improvements in fuel efficiency; general economic, financial and political conditions; our dependence on our subsidiaries for cash flow generation, including SUSP, and our exposure to the business risks of SUSP by virtue of our controlling ownership interest; operational limitations imposed by our contractual arrangements with SUSP; our ability to comply with federal and state regulations including those related to alcohol, tobacco and environmental matters; wholesale cost increases of tobacco products or future legislation or campaigns to discourage smoking; costs associated with employee healthcare requirements; compliance with, or changes in, tax laws-including those impacting the tax treatment of SUSP; dependence on two principal suppliers for merchandise; dependence on suppliers for credit terms; seasonality; dependence on senior management and the ability to attract qualified employees; acts of war and terrorism; dependence on our information technology systems; severe weather; severe or unfavorable weather conditions; cross-border risks associated with the concentration of our stores in markets bordering Mexico; impairment of goodwill or indefinite lived assets; and Susser and ETP's ability to consummate the proposed merger; including the ability to obtain requisite shareholder approvals or to satisfy other conditions precedent to the consummation of the merger.
For a full discussion of these and other risks and uncertainties, refer to the "Risk Factors" section of the Company's most recently filed annual report on Form 10-K and subsequent quarterly filings. These forward-looking statements are based on and include our estimates as of the date hereof. Subsequent events and market developments could cause our estimates to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if new information becomes available, except as may be required by applicable law.
Financial statements follow
Susser Holdings Corporation
Consolidated Statements of Operations and Comprehensive Income
Unaudited
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 29, June 30, June 29,
2013 2014 2013 2014
---- ---- ---- ----
(dollars in thousands, except share and per share amounts)
Revenues:
Merchandise sales $274,727 $318,186 $522,205 $594,561
Motor fuel sales 1,276,929 1,541,342 2,514,502 2,907,919
Other income 13,853 15,146 27,229 29,809
------ ------ ------ ------
Total revenues 1,565,509 1,874,674 3,063,936 3,532,289
Cost of sales:
Merchandise 180,596 210,494 346,241 393,057
Motor fuel 1,216,042 1,470,359 2,400,752 2,784,697
Other 861 1,114 1,895 2,385
--- ----- ----- -----
Total cost of sales 1,397,499 1,681,967 2,748,888 3,180,139
--------- --------- --------- ---------
Gross profit 168,010 192,707 315,048 352,150
Operating expenses:
Personnel 50,655 63,332 101,622 121,598
General and
administrative 11,263 18,375 25,310 35,832
Other operating 44,656 52,649 84,703 98,742
Rent 12,164 11,747 23,904 23,573
Loss on disposal of
assets and impairment
charge 679 898 1,127 1,871
Depreciation,
amortization and
accretion 15,144 18,338 29,326 35,379
------ ------ ------ ------
Total operating expenses 134,561 165,339 265,992 316,995
------- ------- ------- -------
Income from operations 33,449 27,368 49,056 35,155
Other income (expense):
Interest expense, net (32,667) (3,621) (42,772) (6,793)
Other miscellaneous (161) - (239) -
---- --- ---- ---
Total other expense, net (32,828) (3,621) (43,011) (6,793)
------- ------ ------- ------
Income before income
taxes 621 23,747 6,045 28,362
Income tax expense (47) (6,641) (1,595) (8,030)
--- ------
Net income and
comprehensive income 574 17,106 4,450 20,332
Less: Net income and
comprehensive income
attributable to
noncontrolling interest 4,834 4,781 8,942 9,830
----- ----- ----- -----
Net income (loss) and
comprehensive income
(loss) attributable to
Susser Holdings
Corporation $(4,260) $12,325 $(4,492) $10,502
======= ======= ======= =======
Net income (loss) per share
attributable to Susser Holdings
Corporation:
Basic $(0.20) $0.57 $(0.21) $0.49
Diluted $(0.20) $0.56 $(0.21) $0.48
Weighted average shares outstanding:
Basic 21,138,278 21,521,198 21,103,250 21,435,979
Diluted 21,138,278 21,892,850 21,103,250 21,913,534
Susser Holdings Corporation
Consolidated Balance Sheets
December 29, June 29,
2013 2014
---- ----
Unaudited
(in thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents $22,461 $26,767
Accounts receivable, net of
allowance for doubtful
accounts of $480 at
December 29, 2013 and $654
at June 29, 2014 139,146 163,437
Inventories, net 126,521 166,739
Other current assets 7,704 8,271
----- -----
Total current assets 295,832 365,214
Property and equipment, net 736,860 897,523
Other assets:
Marketable securities 25,952 -
Goodwill 254,285 255,273
Intangible assets, net 41,984 44,912
Other noncurrent assets 19,692 22,214
------ ------
Total assets $1,374,605 $1,585,136
========== ==========
Liabilities and
shareholders' equity
Current liabilities:
Accounts payable $189,587 $222,739
Accrued expenses and other
current liabilities 64,571 69,286
Current maturities of long-
term debt 535 540
--- ---
Total current liabilities 254,693 292,565
Revolving lines of credit 345,460 529,860
Long-term debt 29,874 3,986
Deferred tax liability,
long-term portion 77,119 72,620
Other noncurrent liabilities 41,949 40,847
------ ------
Total liabilities 749,095 939,878
------- -------
Commitments and
contingencies:
Shareholders' equity:
Susser Holdings Corporation
shareholders' equity:
Common stock, $.01 par
value; 125,000,000 shares
authorized; 21,634,618
issued and 21,439,944
outstanding at December 29,
2013; 21,702,922 issued and
21,678,700 outstanding as
of June 29, 2014 214 216
Additional paid-in capital 285,376 292,164
Treasury stock, common
shares, at cost; 194,674 as
of December 29, 2013;
24,222 as of June 29, 2014 (5,378) (1,955)
Retained earnings 135,255 145,758
------- -------
Total Susser Holdings
Corporation shareholders'
equity 415,467 436,183
Noncontrolling interest 210,043 209,075
------- -------
Total shareholders' equity 625,510 645,258
------- -------
Total liabilities and
shareholders' equity $1,374,605 $1,585,136
========== ==========
Key Operating Metrics
The following table sets forth,
for the periods indicated,
information concerning key
measures we rely on to gauge our
operating performance:
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 29, June 30, June 29,
2013 2014 2013 2014
---- ---- ---- ----
(dollars and gallons in thousands, except motor fuel pricing and gross profit per gallon)
Revenue:
Merchandise sales $274,727 $318,186 $522,205 $594,561
Motor fuel-retail 805,850 926,686 1,588,829 1,749,610
Motor fuel-wholesale
to third parties (3) 471,079 614,656 925,673 1,158,309
Other 13,853 15,146 27,229 29,809
------ ------ ------ ------
Total revenue (3) $1,565,509 $1,874,674 $3,063,936 $3,532,289
Gross profit:
Merchandise $94,131 $107,692 $175,964 $201,504
Motor fuel-retail 42,987 49,475 79,998 82,019
Motor fuel-wholesale
to third parties (2) 10,066 12,886 18,723 24,211
Motor fuel-wholesale
to Stripes (2) 7,015 7,819 13,523 15,164
Other, including
intercompany
eliminations 13,811 14,835 26,840 29,252
------ ------ ------ ------
Total gross profit $168,010 $192,707 $315,048 $352,150
Adjusted EBITDA (4):
Retail $37,752 $39,975 $59,636 $57,423
Wholesale 15,380 18,199 27,698 34,942
Other (2,601) (8,164) (5,007) (13,349)
------ ------ ------ -------
Total Adjusted EBITDA $50,531 $50,010 $82,327 $79,016
Retail merchandise
margin 34.3% 33.8% 33.7% 33.9%
Merchandise same-store
sales growth (1) 2.2% 4.0% 3.2% 3.0%
Average per retail
store per week:
Merchandise sales $37.5 $38.8 $35.8 $36.8
Motor fuel gallons sold 32.5 32.4 31.8 32.0
Motor fuel gallons
sold:
Retail 236,075 263,904 459,552 514,174
Wholesale - third party 156,165 199,105 302,817 385,202
Average retail price of
motor fuel per gallon $3.41 $3.51 $3.46 $3.40
Motor fuel gross profit
cents per gallon:
Retail 18.2¢ 18.7¢ 17.4¢ 16.0¢
Wholesale -third party
(2) 6.4¢ 6.5¢ 6.2¢ 6.3¢
Retail credit card
expense cents per
gallon 5.5¢ 5.9¢ 5.5¢ 5.7¢
(1) We include a store in the same
store sales base in its
thirteenth full month of our
operation.
(2) The wholesale margin from third
parties excludes sales and gross
profit to the retail segment.
(3) In the fourth quarter of 2013,
the Company revised its
presentation of fuel taxes on
motor fuel sales at its
consignment locations to present
such fuel taxes gross in motor
fuel sales. Prior years' motor
fuel sales have been adjusted to
reflect this revision.
(4) Excluding the ETP Merger-related
charges, Adjusted EBITDA was
$53.1 million and $82.1 million
for the three and six months
ended June 29, 2014,
respectively. This increase in
reported EBITDA would be
reflected in the "Other" line
above.
Reconciliations of Non-GAAP Measures to GAAP
Measures
We define EBITDA as net income (loss) attributable
to Susser Holdings Corporation before net interest
expense, income taxes, net income attributable to
noncontrolling interest and depreciation,
amortization and accretion. Adjusted EBITDA
further adjusts EBITDA by excluding non-cash
stock-based compensation expense and certain other
operating expenses that are reflected in our net
income that we do not believe are indicative of our
ongoing core operations, such as significant non-
recurring transaction expenses and the gain or
loss on disposal of assets and impairment charges.
Adjusted EBITDAR adds back rent to Adjusted EBITDA.
In addition, those expenses that we have excluded
from our presentation of Adjusted EBITDA and
Adjusted EBITDAR are also excluded in measuring our
covenants under our revolving credit facility and
indenture governing our debt agreements and
indentures. EBITDA, Adjusted EBITDA and Adjusted
EBITDAR are not presented in accordance with GAAP.
We believe EBITDA, Adjusted EBITDA and Adjusted
EBITDAR are useful to investors in evaluating our
operating performance because:
securities analysts and other interested parties use
such calculations as a measure of financial
performance and debt service capabilities;
they facilitate management's ability to measure the
operating performance of our business on a
consistent basis by excluding the impact of items
not directly resulting from our retail convenience
stores and wholesale motor fuel distribution
operations;
they are used by our management for internal
planning purposes, including aspects of our
consolidated operating budget, capital
expenditures, as well as for segment and individual
site operating targets; and
they are used by our Board and management for
determining certain management compensation targets
and thresholds.
EBITDA, Adjusted EBITDA and Adjusted EBITDAR are not
recognized terms under GAAP and do not purport to
be alternatives to net income (loss) as measures of
operating performance. EBITDA, Adjusted EBITDA and
Adjusted EBITDAR have limitations as analytical
tools, and you should not consider them in
isolation or as substitutes for analysis of our
results as reported under GAAP. Some of these
limitations include:
they do not reflect our cash expenditures, or future
requirements, for capital expenditures or
contractual commitments;
they do not reflect changes in, or cash requirements
for, working capital;
they do not reflect significant interest expense, or
the cash requirements necessary to service interest
or principal payments on our existing revolving
credit facilities or existing notes;
they do not reflect payments made or future
requirements for income taxes;
although depreciation and amortization are non-cash
charges, the assets being depreciated and amortized
will often have to be replaced in the future, and
EBITDA, Adjusted EBITDA and Adjusted EBITDAR do not
reflect cash requirements for such replacements;
and
because not all companies use identical
calculations, our presentation of EBITDA, Adjusted
EBITDA and Adjusted EBITDAR may not be comparable
to similarly titled measures of other companies.
The following tables present a reconciliation of net
income (loss) attributable to Susser Holdings
Corporation to EBITDA, Adjusted EBITDA and Adjusted
EBITDAR:
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 29, June 30, June 29,
2013 2014 2013 2014
---- ---- ---- ----
(in thousands)
Net income (loss) and
comprehensive income
(loss) attributable to
Susser Holdings
Corporation $(4,260) $12,325 $(4,492) $10,502
Net income and
comprehensive income
attributable to
noncontrolling interest 4,834 4,781 8,942 9,830
Depreciation, amortization
and accretion 15,144 18,338 29,326 35,379
Interest expense, net 32,667 3,621 42,772 6,793
Income tax expense 47 6,641 1,595 8,030
--- ----- ----- -----
EBITDA 48,432 45,706 78,143 70,534
Non-cash stock based
compensation 1,259 3,406 2,818 6,611
Loss on disposal of assets
and impairment charge 679 898 1,127 1,871
Other miscellaneous expense 161 - 239 -
--- --- --- ---
Adjusted EBITDA 50,531 50,010 82,327 79,016
Rent 12,164 11,747 23,904 23,573
------ ------
Adjusted EBITDAR $62,695 $61,757 $106,231 $102,589
======= ======= ======== ========
Supplementary Information - Impact of Unusual Items
(in thousands, except per share amounts)
Three Months Ended
------------------
June 30, 2013 June 29, 2014
------------- -------------
Adjusted EBITDA Net Income Diluted EPS Adjusted EBITDA Net Income Diluted EPS
Attributable to Attributable to
Susser Holdings Susser Holdings
Corporation Corporation
---------------- ----------------
As Reported $50,531 $(4,260) $(0.20) $50,010 $12,325 $0.56
May 2013
refinancing - 16,744 0.79 - - -
ETP merger
expenses - - - 3,114 2,024 0.10
--- --- --- ----- ----- ----
As Adjusted $50,531 $12,484 $0.59 $53,124 $14,349 $0.66
======= ======= ===== ======= ======= =====
Six Months Ended
----------------
June 30, 2013 June 29, 2014
------------- -------------
Adjusted EBITDA Net Income Diluted EPS Adjusted EBITDA Net Income Diluted EPS
Attributable to Attributable to
Susser Holdings Susser Holdings
Corporation Corporation
---------------- ----------------
As Reported $82,327 $(4,492) $(0.21) $79,016 $10,502 $0.48
May 2013
refinancing - 16,744 0.79 - - -
ETP merger
expenses - - - 3,114 2,024 0.09
--- --- --- ----- ----- ----
As Adjusted $82,327 $12,252 $0.58 $82,130 $12,526 $0.57
======= ======= ===== ======= ======= =====
SOURCE Susser Holdings Corporation
