Susser Holdings opened 10 new large-format Stripes convenience stores during the fourth quarter —a new quarterly record.
Same-store merchandise sales increased 5.8% in the fourth quarter, versus growth of 5% in the prior-year period. Average retail gallons sold per store increased 3.1% from a year ago, compared with growth of 7.2% in the fourth quarter of 2011. Retail net merchandise margin was 34.1% in the fourth quarter, versus 33.4% a year earlier.
Retail segment fuel margin before credit card expense averaged 21.1 cents per gallon, compared with 18.6 cents a gallon in the year-earlier period. The retail fuel margin for the fourth quarter has been reduced by a three-cent-per-gallon gross profit mark-up charged by Susser Petroleum Partners LP beginning Sept. 25, 2012, following its initial public offering. The wholesale segment historically made no convenience store profits on motor fuel sales to the retail segment, and will now record a gross profit mark-up on these gallons. Excluding this three-cent per gallon charge, the fourth quarter 2012 retail fuel margin would have been 24.1 cents per gallon, for comparison against the prior-year’s 18.6 cent margin and the previous five years’ fourth-quarter average margin of 15.4 cents.
Adjusted EBITDA was $45.5 million in the fourth quarter, up 43.8% from a year ago, reflecting increases in merchandise sales and retail and wholesale motor fuel volumes sold, as well as the increased merchandise and fuel margins. Consolidated gross profit totaled $156.4 million, up 21.3% from a year ago.
Net income attributable to Susser Holdings in the fourth quarter 2012 was $10.6 million, or 49 cents per diluted share, versus $5.3 million, or 29 cents per diluted share in the fourth quarter of 2011. Net income attributable to holders of the 49.9% noncontrolling interest in Susser Petroleum Partners totaled $4.3 million in the fourth quarter.
Consolidated revenues for the fourth quarter totaled $1.4 billion, an increase of 7.8% year-over-year. This increase was driven by an 8.6% increase in retail fuel revenues, a 4.6% increase in wholesale fuel revenues sold to third parties and a 10% increase in merchandise sales. The higher fuel revenues were driven by increases in both retail and wholesale volumes sold and by higher selling prices for retail motor fuel.
“We achieved outstanding performance both for the fourth quarter and the full year 2012, with a record number of new Stripes convenience store openings, solid year-over-year growth in same store merchandise sales and increased retail and wholesale motor fuel volumes,” said Sam Susser, president and CEO. “Fiscal 2012 was the 24th consecutive year of positive same store sales growth for our company.
Susser Petroleum Partners (SUSP), which now operates the majority of our wholesale fuel distribution business, completed its initial public offering in late September of 2012. SUSP delivered a strong fourth quarter both in terms of gallons sold and cents per gallon margin. As the owner of SUSP’s general partner and majority owner of SUSP’s limited partner interests, Susser Holdings continues to benefit from the strong financial performance of the wholesale fuel business,” Susser said.
New Convenience Store and Wholesale Dealer Update
Susser Holdings opened 10 new large-format Stripes convenience stores during the fourth quarter —a new quarterly record—for a total of 25 new stores opened in 2012. Three smaller retail stores were closed or converted to dealer operations during the fourth quarter, bringing the number of retail stores in operation at year-end to 559. One store has opened to date in 2013 and one has closed. Eleven retail stores are currently under construction. The Company expects to build 29-35 Stripes stores this year and continues to acquire additional land for future store development.
The wholesale segment added 13 new wholesale dealer and consignment sites during the latest quarter and discontinued six for a total of 579 contracted wholesale sites as of Dec. 30. The company expects to add 25-40 new wholesale branded dealers and consignment sites this year.
Fourth Quarter Financial and Operating Highlights
Merchandise – Merchandise sales totaled $240.8 million in the fourth quarter, up $21.8 million, or 10%. from a year earlier. Approximately $12.5 million of the increase came from stores that have been operating a year or longer, with the balance from stores that were opened during the last four quarters. Same-store merchandise sales increased 5.8%, compared with growth of 5% a year ago. Sales of packaged drinks, beer, food service, cigarettes and snacks drove most of the sales growth.
Net merchandise margin as a percentage of sales was 34.1%, compared with 33.4% in the fourth quarter of 2011. Merchandise gross profit was $82.2 million, up 12.4% from a year ago. Gross convenience store profit growth was led primarily by same store dollar increases in packaged drinks and food service.
Retail Fuel – Retail fuel volumes increased 5.6% compared with a year ago to 211.3 million gallons. Average gallons sold per store per week increased 3.1% year-over-year to approximately 29,800 gallons, following a 7.2% year-over-year increase in the fourth quarter of 2011. Retail fuel revenues totaled $718.1 million, up 8.6% versus the prior-year period, reflecting the increased gallons sold, along with a 10-cent-per-gallon increase in the average selling price of motor fuel year-over-year.
Retail fuel gross margin averaged 21.1 cents per gallon, compared with 18.6 cents per gallon a year ago. (The fourth quarter 2012 retail fuel margin is reduced by the three-cent-per-gallon gross profit margin to SUSP that was not deducted from the prior year’s fuel margin.) After deducting credit card expense, the net fuel margin was 15.6 cents per gallon, versus a net 13.3 cents per gallon in the fourth quarter of 2011. Retail fuel gross profit increased 20% from a year ago to $44.6 million, which is due to the strong increase in margin per gallon and the higher volumes sold.
Wholesale Fuel – Susser’s wholesale segment includes all of SUSP operations as well as the consignment sales and transportation business that was not contributed to SUSP. Wholesale fuel volumes to third parties (all gallons except those distributed to Susser’s retail stores) increased 4.3% from a year ago to 149.9 million gallons. Wholesale fuel revenues increased 4.6% from the prior-year quarter to $422.0 million. This revenue increase reflects the increase in volumes sold, as the selling price was flat year-over-year at $2.81 per gallon.
Wholesale fuel gross margin from third parties was 6.3 cents per gallon, compared with 5.1 cents in the fourth quarter of last year. Wholesale fuel gross profit increased by $8.4 million from a year ago to $15.8 million. $6.4 million of this increase reflects the gross profit mark-up charged to the retail segment effective Sept. 25, 2012.
Full Year 2012 Financial and Operating Highlights
Revenues totaled $5.8 billion, up 12% versus 2011, driven by increases in retail and wholesale fuel revenues and in merchandise sales. For the 12 months ended Dec. 30, 2012, Susser’s same-store merchandise sales grew 6.6%. Merchandise sales totaled $976.5 million, up 10.7% from 2011. Merchandise margin was 33.9%, versus 33.7% in fiscal 2011.
Fiscal 2012 retail fuel margin—after deducting the three-cent-per-gallon gross profit mark-up paid to SUSP that began Sept. 25—was 21.8 cents per gallon, co
mpared with 23.2 cents in 2011. Excluding the partial-year impact of the SUSP gross profit mark-up for comparison purposes, retail fuel margin was 22.6 cents per gallon. After deducting credit card expense, net fuel margin was 16.3 cents per gallon in 2012, (or 17 cents before deducting the three cent per gallon gross profit mark up paid to SUSP) compared with 17.7 cents per gallon in 2011. Wholesale fuel margin from third parties was 6.2 cents per gallon, up from 5.9 cents per gallon in 2011.
Adjusted EBITDAfor 2012 was $182.9 million, up 9.5% from 2011. Gross profit was $611.4 million, up 9.8% from fiscal 2011, reflecting higher volumes in both motor fuel and merchandise. Net income attributable to Susser Holdings was $46.7 million, or $2.19 per diluted share, versus $47.5 million, or $2.68 per diluted share for the prior year. Net income attributable to Susser Holdings for 2012 was reduced by a non-cash deferred income tax charge of $3.6 million ( $0.17 per diluted share) recorded during the third quarter, solely related to Susser Holdings’ contribution of net assets to SUSP in connection with SUSP’s initial public offering.
Susser’s management team will hold a conference call today at 10 a.m. ET to discuss fourth quarter results for both Susser Holdings Corp. and Susser Petroleum Partners LP. To participate in the call, dial 480-629-9645 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’ Website. A telephone replay will be available through March 6 by calling 303-590-3030 and using the pass code 4592719#.