Susser posts Q2 net income of US$23.7M, versus net loss of US$1.9M a year ago, as revenues grew 35.1% to US$1.4B, same-store merchandise sales rose 5.8% and average retail gallons/store/week inched 3.6%

CORPUS CHRISTI, Texas , August 10, 2011 (press release) – - Same-store merchandise sales growth of 5.8%

- Merchandise margin of 34%

- Adjusted EBITDA(1) increases 36.1% to $60.9 million

- Average gallons per store up 3.6%

- Net earnings reach $1.36 per share

Susser Holdings Corporation (NASDAQ: SUSS) today reported record financial and operating results for the second quarter ended July 3, 2011. Same-store merchandise sales increased by 5.8 percent, compared with an increase of 3.1 percent in the second quarter of 2010. Retail net merchandise margin was 34.0 percent, up from 33.9 percent in the same quarter last year. Average retail gallons per store per week increased 3.6 percent year-over-year. Retail fuel margins increased to 31.2 cents per gallon, versus 24.8 cents a year ago.

Adjusted EBITDA(1) rose 36.1 percent from the second quarter of last year to $60.9 million. Gross profit was $158.9 million, which was up 18.7 percent from the second quarter of 2010.

Revenues totaled $1.4 billion – a 35.1 percent increase from a year ago – which is the result of a 42.3 percent increase in combined fuel revenues and an 8.7 percent increase in overall merchandise sales.

Net earnings were $23.7 million, or $1.36 per diluted share in the latest quarter, versus a net loss of $1.9 million, or $0.11 per diluted share, in the same quarter last year. The Company completed a debt refinancing in May 2010 for which $15.7 million of non-recurring interest charges, net of tax, were incurred. Excluding these non-recurring charges, the Company would have reported net earnings of $13.8 million, or $0.81 per share, for the second quarter of 2010.

“We achieved record results in the second quarter in total revenues, EBITDA and net earnings, as well as in merchandise revenues and gross profit and in retail fuel gallons sold and fuel gross profit,” said Sam L. Susser, President and Chief Executive Officer. “These strong results were driven in large part by contributions from our new stores, as well as continued strong same-store performance from our merchandise and food service offerings and higher margins in our fuel business.

“Traffic in our stores remains brisk and continues to benefit from population growth and an improving economy in most markets as well as from the completion of our store refurbishing and rebranding from Town & Country to Stripes® and Laredo Taco Company®. In addition, our 14 new retail stores opened in 2010 and the eight stores opened in the first half of 2011 are helping drive strong organic growth.

“Through careful cost management and a marketing mix that emphasizes higher-profit-margin beverages, food service and other items, we are successfully driving merchandise sales growth and profit margins quarter after quarter.

“As a result of our continued strong performance, we are again raising our guidance for 2011 for many of our performance metrics, including same-store sales and fuel margins,” he said.

“In addition, our financial liquidity has never been better, and with the increased investment in our land bank, we are well positioned to ramp up our new store construction program for 2012 and into 2013.”

New Convenience Store/Wholesale Dealer Site Update

Susser opened six large-format Stripes® convenience stores and closed one smaller store during the second quarter, for a total number of retail stores in operation at July 3rd of 532. Three additional stores have been opened so far in the third quarter, for a total of 11 year-to-date, and one store was recently closed, bringing the current retail store count to 534. Six more are currently under construction.

In its wholesale fuel business, Susser added eight new dealer sites and discontinued supplying one site, for a total of 439 dealer locations at the end of the second quarter.

Financing Update

The Company generated total proceeds of $6.2 million from convenience store sale-leaseback transactions during the second quarter, in addition to a $20 million long-term mortgage facility completed in early May with a regional bank.

Susser ended the second quarter of 2011 with trailing 12 months Adjusted EBITDA(1) of $145.4 million and net debt (total debt of $451.2 million less cash of $66.4 million) of $384.8 million, which resulted in a ratio of net debt to Adjusted EBITDA(1) of 2.6 times.

Year-to-date, the Company has invested $62.1 million in net capital expenditures. In addition, the Company spent $1.4 million during the second quarter to repurchase 93,786 shares of Susser common stock at an average price per share of $15.32 as part of a $15 million buyback program announced in early June.

Second Quarter Financial and Operating Highlights

Merchandise – Total merchandise sales increased by 8.7 percent from a year ago to $226.4 million in the latest quarter, with new stores added during 2010 and 2011 contributing an incremental $10.9 million in merchandise sales. Same-store merchandise sales increased 5.8 percent, compared with a 3.1 percent increase in same-store sales in the second quarter of 2010.

Net merchandise margin was 34.0 percent, versus 33.9 percent a year ago. The margin increase was led by contribution from packaged drinks, food service, beer and cigarettes. Merchandise gross profit increased by 9.1% versus a year ago to $77.1 million.

Retail Fuel - Retail fuel volumes increased 5.0 percent from a year ago to 194.5 million gallons for the second quarter. Average gallons sold per store per week were 3.6 percent higher than the second quarter of last year, at 28,600 gallons. Revenues from retail fuel sales totaled $725.0 million – an increase of 41.7 percent year-over-year – which is due to a 97-cent-per-gallon increase in average pump prices, plus the impact of higher gallons sold. Retail fuel gross margin averaged 31.2 cents per gallon in the second quarter compared to 24.8 cents a gallon a year ago. After deducting credit card expense, net fuel margin was 25.3 cents per gallon for the second quarter compared to 20.2 cents per gallon a year ago. Retail fuel gross profit was up 32.4 percent year-over-year to $60.7 million.

Wholesale Fuel - Wholesale fuel volumes sold to Susser’s approximately 440 dealers and other third-party customers declined 0.6 percent from a year ago to 128.1 million gallons. Wholesale fuel revenues were up 43.3 percent from a year ago to $412.1 million, which reflects a 99-cent-per-gallon increase in average selling prices. Wholesale gross margin was 7.0 cents per gallon, versus 5.8 cents per gallon in the second quarter of last year. Wholesale fuel gross profit increased by 20.3 percent to $9.0 million.

First Half 2011 Financial and Operating Highlights

For the six months ended July 3, 2011, Susser reported same-store merchandise sales growth of 5.7 percent. Merchandise sales totaled $429.5 million, up 7.5 percent versus the comparable period last year. Merchandise margin was 34.0 percent, versus 33.3 percent for the first half of 2010. Retail fuel margins were 23.3 cents per gallon for the first half of 2011, compared to 18.0 cents a year ago. After deducting credit card expense, net fuel margin was 17.9 cents per gallon for the first half of 2011 compared to 13.7 cents a year ago. Wholesale fuel margin was 6.1 cents per gallon for the first half of 2011 compared to 5.0 cents per gallon the prior year. Adjusted EBITDA(1) totaled $84.0 million, up 43.3 percent. Gross profit was $274.6 million, an increase of 18.6 percent, reflecting improved margins in both fuel and merchandise. Total revenues were $2.5 billion, up 30.1 percent versus the first half of 2010.

Net income for the first half of 2011 was $23.6 million, or $1.36 per diluted share, versus a net loss of $6.9 million, or $0.41 per diluted share, in the first half of last year. Excluding the charge for early retirement of debt in May 2010, the Company would have reported net income of $8.9 million, or $0.52 per share for the first half of 2010.

2011 Guidance Update

The Company has updated a portion of its guidance for FY 2011 as follows:

 

New FY 2011

Prior FY 2011

6 month

FY 2010

 
 

Guidance

Guidance

2011 Results

Results

 

Merchandise Same-Store Sales Growth

4.0%-6.0%

3.0%-5.5%

5.70%

4.0%

 

Merchandise Margin, Net of Shortages

33.50%-34.25%

33.25%-34.25%

34.0%

33.6%

 

Retail Average Per-Store Gallons Growth

1.0%-4.0%

1.0%-4.0%

3.4%

2.5%

 

Retail Fuel Margin (cents/gallon) (a)

17.0-21.0

14.0-17.0

23.3

18.4

 

Wholesale Fuel Margin (cents/gallon)

4.5-6.25

4.0-6.0

6.1

5.3

 

Rent Expense ($ million) (d)

$45-$47

$45-$47

$23

$43

 

Depreciation, Amortization & Accretion Expense ($ million) (d)

$45-$50

$45-$50

$22

$44

 

Interest Expense ($ million) (d) (e)

$40-$42

$40-$42

$20

$40

 

New Retail Stores (b)

19-21

18-22

8

14

 

New Wholesale Dealer Sites (b)

25-30

20-30

13

59

 

Gross Capital Spending ($ million)

$110-$135

$100-$125

$68

$89

 

Net Capital Spending ($ million) (c) (d)

$95-$125

$80-$120

$62

$48

 
         

 

(a)

We report retail fuel margin before deducting credit card costs, which were approximately 5.5 cents per gallon for the first half of 2011 and 4.4 cents per gallon for the full 2010 fiscal year.  The average retail selling price of fuel was $3.48 per gallon in the first half of 2011 and $2.70 per gallon for fiscal 2010.

 

(b)

Numbers for both years do not reflect existing retail or wholesale store closures, which are typically lower volume locations than new sites.

 

(c)

Net capital spending is gross capital expenditures including acquisitions, less proceeds from sale/leaseback transactions and asset dispositions.  The Company does not provide guidance on potential acquisitions.  Net capital spending is not reduced for debt financing.

 

(d)

Assumes $10 million to $15 million of new store capex is lease financed and $20 million to $40 million is financed with long-term mortgage debt.

 

(e)

2010 interest expense excludes $24.2 million of non-recurring charges related to debt refinancing.

 
   

 
     

(1)

Adjusted EBITDA is a non-GAAP financial measure of performance and liquidity that has limitations and should not be considered as a substitute for net income or cash provided by (used in) operating activities. Please refer to the discussion and tables under “Reconciliations of Non-GAAP Measures” later in this news release for a discussion of our use of Adjusted EBITDA and a reconciliation to net income (loss) attributable to Susser Holdings Corporation and cash provided by operating activities 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 results. To participate in the call, dial 480-629-9771 at least 10 minutes early and ask for the Susser conference call. The call will also be accessible via Susser’s web site at www.susser.com. To listen live, please visit the Investor Relations page. A telephone replay will be available through August 17 by calling 303-590-3030 and using the pass code 4458761#. An archive will be available for 60 days on Susser’s web site.

Corpus Christi, Texas-based Susser Holdings Corporation is a third-generation family led business that operates more than 530 Stripes® convenience stores in Texas, New Mexico and Oklahoma. Restaurant service is available in over 320 of its stores, primarily under the proprietary Laredo Taco Company® brand. The Company also supplies branded motor fuel to more than 435 independent dealers through its wholesale fuel division.

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