Susser Holdings Reports Record Fourth Quarter, Full Year 2007 Results
Fourth quarter same-store merchandise sales up 11.7%, merchandise margin increases 45 basis points to 32.7% CORPUS CHRISTI, Texas, March 12 /PRNewswire-FirstCall/ -- Susser Holdings Corporation (NASDAQ:SUSS) today reported that its total fourth quarter 2007 merchandise sales -- including approximately seven weeks of contribution from Town & Country Food Stores -- increased 54.1 percent to $136.7 million, versus $88.7 million a year earlier for the stand-alone Susser operation.
Total revenues increased 68.6 percent to a record $821.9 million from $487.6 million in the fourth quarter of 2006. Gross profit, including the partial quarter's contribution from Town & Country, increased 61.6 percent to a record $77.7 million, compared with $48.1 million in the year-ago quarter from the stand-alone Susser operation. Adjusted EBITDA(1) increased 189.0 percent to $17.0 million, compared with $5.9 million in the prior year's fourth quarter, reflecting the Town & Country contribution, along with stronger results from the merchandise segment and sharply higher combined retail fuel margins of 14.1 cents per gallon, versus 9.2 cents per gallon realized a year ago.
The Company recorded net income of $7.5 million in the fourth quarter, or $0.44 per diluted share, versus a net loss of $10.9 million, or $0.72 per diluted share, in the year-earlier quarter. The fourth quarter of 2007 included a non-recurring tax benefit of $6.6 million, or $0.39 per diluted share, related to the release of the Company's remaining tax valuation allowance. The fourth quarter of 2006 included a $7.1 million non-recurring charge, or $0.46 per diluted share, related to the redemption of $50 million of senior notes in November 2006. The year-over-year improvement in what is typically a seasonally weak quarter reflects an 11.7 percent same-store merchandise sales increase, higher merchandise margins and significantly stronger fuel margins, as well as the contribution from Town & Country. For the full year 2007 -- including the seven week contribution from Town & Country -- merchandise sales increased 21.6 percent from a year ago to $444.2 million. Total revenues increased 20.0 percent to $2.7 billion, and gross profit increased 18.3 percent to $261.1 million. Adjusted EBITDA(1) increased 28.9 percent to $58.3 million. Net income totaled $16.3 million, or $0.97 per diluted share, versus a net loss of $3.7 million, or $0.35 per diluted share, for the full year 2006. Net results for the full year 2007 were positively impacted by the release of the total $9.8 million, or $0.58 per diluted share, tax valuation allowance established in 2006 when the Company became a taxable corporation concurrent with its initial public offering. Net results for the full year 2006 were negatively impacted by a charge of $0.33 per diluted share related to the redemption of notes in the fourth quarter. To show more comparable results for both years, Susser is also providing pro forma financial results for both years reflecting the Town & Country acquisition as well as the October 2006 IPO. On a pro forma(2) basis, the Company reported earnings of $0.50 per diluted share for the full year 2007 versus earnings of $0.21 per diluted share for the full year 2006, and adjusted EBITDA(1) was $99.9 million for 2007 versus $80.8 million for 2006. "2007 was an outstanding year for Susser Holdings," said Susser President and Chief Executive Officer Sam L. Susser. "We saw very strong gains in our merchandise segment and higher-than-average retail fuel margins for the year. We doubled the size of our pro forma adjusted EBITDA through the acquisition of Town & Country Food Stores, which gave us a leadership position in attractive markets in West Texas and Eastern New Mexico as well as opportunities to realize operating leverage and cost synergies across the combined companies. "Looking at the fourth quarter of 2007," Susser said, "our merchandise segment continued to benefit from the marketing and store operations programs we began in early 2007, which drove customer traffic and transaction size. Same-store sales growth from Stripes stores was the highest we've seen in eight years. Retail fuel sales also benefited from the higher traffic, and retail fuel margins were roughly a nickel a gallon higher than they were a year ago. The contribution of Town & Country for the last seven weeks of the quarter further boosted our financial and operating metrics across the board." New Convenience Store/Wholesale Dealer Site Update During the fourth quarter of 2007, the Company opened nine new retail units, bringing the total number of stores built and acquired in 2007 to 186, including 18 new retail stores plus the 168 acquired Town & Country stores. Also during the fourth quarter, four retail locations were closed, bringing the total retail store count to 504 as of December 30. Three additional stores have been opened since year-end. The Company also opened restaurants in 11 stores in the fourth quarter and closed two, which, combined with the 113 located in the acquired Town & Country stores, brings the total number of stores with restaurant operations to 282, or 56 percent, at year-end. In its wholesale operations, Susser added 13 new dealer sites and discontinued three during the fourth quarter, for a total of 387 dealer sites in operation at the end of 2007. Similar to the retail division, new sites typically outperform sites that are closed or where fuel supply is discontinued. Integration Highlights As reported earlier, the Company has signed new contracts with its major grocery/merchandise and beverage suppliers. It is continuing to negotiate new combined supply agreements with additional merchandise vendors and is actively working to improve its motor fuel supply chain in its new markets. This summer the Company plans to rebrand two to three Town & Country locations in West Texas as Stripes locations as a test program in anticipation of rolling out a rebranding program for all Town & Country locations that is expected to commence in the fourth quarter of 2008. Expected Merger Synergies Susser expects to achieve combined annual cost synergies of $5 million through the integration of the Susser and Town & Country organizations. General and administrative expense synergies of $1 million are expected for 2008 and $2 million annually for 2009. Marketing synergies of $3 million annually are anticipated, with approximately $1 million to be realized in 2008, reaching the full $3 million of savings for 2009. It should be noted that Town & Country's motor fuel margins were several cents higher in 2007 than historical levels. Expected synergies in merchandise and operating expenses could be offset by a return to historical fuel margin levels. Fourth Quarter Financial and Operating Highlights Convenience store merchandise sales, including seven weeks of Town & Country's contribution, totaled $136.7 million during the fourth quarter of 2007, an increase of 54.1 percent overall; approximately two-thirds of this increase in sales volume was attributable to Town & Country locations. On a same-store basis for Stripes stores alone, merchandise sales increased 11.7 percent for the quarter. This unusually strong growth in the retail merchandise segment was led by increases in cigarette, food service, packaged drinks, beer and snack sales. Cigarette sales increased in part due to the impact of a dollar-a-pack increase in the cigarette excise tax in Texas effective January 2007. Total merchandise gross profit for the fourth quarter net of shortages increased 56.3 percent to $44.6 million; nearly two-thirds of this increase in gross profit was attributable to Town & Country stores. Net merchandise margin on a combined store basis was 32.7 percent -- an increase of 45 basis points from a year ago -- with both regions experiencing similar margins. The increase is due to the benefits of marketing and operations programs that began in early 2007, partly offset by the impact of the cigarette margin tax, which increases revenues but decreases margins. Retail store fuel volumes increased 46.9 percent to 139.2 million gallons for the fourth quarter; approximately three-fourths of this increase in volume was attributable to Town & Country locations. Excluding the Town & Country contribution, average gallons sold per Stripes location increased 9.1 percent from the fourth quarter of 2006. The favorable per-store comparison is in part the result of the re-branding of the Company's fuel islands to the Valero brand during the year-earlier quarter -- which impacted our fuel volumes during the conversion process -- and in part due to investments back into our store base. Retail fuel sales increased 98.6 percent to $397.9 million, driven by the additional Stripes and Town & Country volumes and a 35.2 percent increase in the retail price of fuel. Gross margins increased to 14.1 cents per gallon from 9.2 a year ago, which resulted in a 126 percent increase in retail fuel gross profit, to $19.6 million. Wholesale fuel volumes sold to Susser's 387 dealers and other third-party customers increased 5.3 percent to 116.2 million gallons in the fourth quarter. Wholesale fuel revenues increased 45.3 percent to $280.0 million as a result of both the volume increase and a 38 percent increase in average wholesale fuel selling prices. Wholesale fuel gross margin was 5.5 cents per gallon, versus 4.5 cents per gallon a year earlier. Wholesale fuel gross profit increased 28.1 percent to $6.4 million, reflecting higher wholesale fuel selling prices. 2008 Guidance 2007 2007 2006 (a) We include a store in the same-store sales base in its 13th month of
(1) Adjusted EBITDA is a non-GAAP financial measure of performance and
The conference call will also be accessible via Susser's Web site at http://www.susser.com/. To listen to the live call, please visit the Investor Relations page of Susser's Web site at least 10 minutes early to register and download any necessary software. An archive will be available shortly after the call for approximately 60 days.
About Susser Holdings Corporation Corpus Christi, Texas-based Susser Holdings Corporation is a third generation family led business that currently operates more than 505 convenience stores in Texas, New Mexico and Oklahoma under the Stripes and Town & Country banners. Restaurant service is available in more than 280 of its stores, primarily under the proprietary Laredo Taco Company and Country Cookin' brands. The Company also supplies branded motor fuel to more than 385 independent dealers through its wholesale fuel division. Forward-Looking Statements This news release contains "forward-looking statements" describing Susser's objectives, targets, plans, strategies, costs, anticipated capital expenditures, expected cost savings, costs of our store re-branding initiatives, expansion of our food service offerings, potential acquisitions and new store openings and dealer locations. These statements are based on current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially, including but not limited to: competition from other convenience stores, gasoline stations, dollar stores, drug stores, supermarkets, hypermarkets and other wholesale fuel distributors; changes in economic conditions; volatility in energy prices; successful integration and anticipated future financial performance and trends of Town & Country; political conditions in key crude oil producing regions; wholesale cost increases of tobacco products; adverse publicity concerning food quality, food safety or other health concerns related to our restaurant facilities; consumer or other litigation; consumer behavior, travel and tourism trends; devaluation of the Mexican peso or restrictions on access of Mexican citizens to the U.S.; unfavorable weather conditions; changes in state and federal regulations; dependence on one principal supplier for merchandise, two principal suppliers for gasoline and one principal provider for transportation of substantially all of our motor fuel; financial leverage and debt covenants; changes in debt ratings; inability to identify, acquire and integrate new stores; dependence on senior management; acts of war and terrorism; and other unforeseen factors. For a full discussion of these and other risks and uncertainties, refer to the "Risk Factors" section of the Company's annual report on Form 10-K for the year ended December 31, 2006 and subsequent quarterly reports on Form 10-Q, as well as the Company's annual report on Form 10-K for the year ended December 30, 2007, which is being filed on March 14, 2008. 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 Three Months Ended (unaudited) Twelve Months Ended Cost of Sales: Gross Profit 48,099 77,712 220,778 261,143 Operating Expenses: Income (loss) from Other income (expense): Net income (loss) Net income (loss) $(10,919) $7,538 $(3,746) $16,252 Earnings per common share: Weighted average shares SUSSER HOLDINGS CORPORATION December 31, December 30, Property and equipment, net 232,454 410,745 Other assets: Total assets $422,327 $853,692 Liabilities and shareholders' equity Long-term debt 120,000 374,754 Total long-term liabilities 154,978 488,118 Minority interests in consolidated subsidiaries 630 684 Commitments and contingencies Common stock, $.01 par value; 125,000,000 shares Total shareholders' equity 161,170 183,791 Total liabilities and shareholders' equity $422,327 $853,692 Reconciliations of Non-GAAP Measures to GAAP Measures We define EBITDA as net income before net interest expense, income taxes and depreciation, amortization and accretion. Adjusted EBITDA further adjusts EBITDA by excluding cumulative effect of changes in accounting principles, discontinued operations, 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 (along with certain other items) are also excluded in measuring our covenants under our revolving credit facility and the indenture governing our senior notes. We believe that adjusted EBITDA and adjusted EBITDAR are useful to investors in evaluating our operating performance because: -- they are used as a performance and liquidity measure under our
-- they do not reflect our cash expenditures, or future requirements, for The following table presents a reconciliation of net income to EBITDA, adjusted EBITDA and adjusted EBITDAR: Three Months Ended Year Ended (a) Other miscellaneous charges represent income from a non-consolidated The following table presents a reconciliation of net cash provided by operating activities to EBITDA, adjusted EBITDA and adjusted EBITDAR: Year Ended (a) Other miscellaneous charges represent income from a non-consolidated SUSSER HOLDINGS CORPORATION Gross profit 337,461 381,793 Operating expenses: Income from operations 47,043 56,161 Income before income taxes 5,590 15,155 Pro forma net income $3,572 $8,464 Pro forma earnings per common share (d): The pro forma adjustments reflected in 2006 above related to the IPO are as follows: (a) Elimination of $0.2 million amortization of prepaid loan costs related
(f) Elimination of the impact of the write down of inventory to the LIFO The following table presents a reconciliation of pro forma net income to pro forma EBITDA, pro forma adjusted EBITDA and pro forma adjusted EBITDAR: Pro Forma Year Ended (a) Other miscellaneous charges represent income from a non-consolidated
SUSS-IR First Call Analyst:
CONTACT: Mary Sullivan, Chief Financial Officer of Susser Holdings Web site: http://www.susser.com/
2008-03-12 17:23:59 0311310 PRNEWSWIRE
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