February 26, 2010

Susser Holdings Reports Fourth Quarter and Full Year 2009 Results

CORPUS CHRISTI, Texas, Feb 26, 2010 /PRNewswire via COMTEX News Network/ -- Susser Holdings Corporation (Nasdaq: SUSS) today reported that merchandise sales from all stores increased 9.5 percent to $201.4 million in the fourth quarter of 2009. Same-store merchandise sales for the quarter declined by 1.2 percent versus a 6.5 percent increase a year ago. Retail merchandise margin was 32.7 percent, versus 34.6 percent for the same period in 2008.

Adjusted EBITDA(1) for the three months ended January 3 totaled $15.0 million, compared with $30.5 million a year ago. Companywide gross profit declined 9.8 percent year-over-year to $102.6 million. Total revenues for the quarter were $921.2 million, up 15.8 percent from a year ago. These results reflect an additional week versus the prior year, increased fuel prices and gallons sold, and higher merchandise sales driven in part by a cigarette tax increase that went into effect in April 2009, a full year's operation of the 12 new retail stores added in 2008 and the 15 retail stores added during 2009. The Company had a net loss of $5.7 million, or $0.33 per diluted share, versus net income of $6.3 million, or $0.37 per diluted share, for the fourth quarter of last year.

"We finally began to feel the full impact of the nationwide economic downturn across all of our markets during the fourth quarter," said Sam L. Susser, President and Chief Executive Officer. "The Company's business is historically seasonal, producing the bulk of its operating cash flow in the second and third quarters.

"However, the economic slowdown, combined with unfavorable weather comparisons, negatively impacted our year-over-year sales volumes. Cigarette inflation, more aggressive pricing from other retailers and restaurants, as well as our customers trading down to lower-priced options, put additional pressure on margins during the last part of the year. Rising fuel costs also compressed our fuel margins during the fourth quarter as compared to 2008, although full year 2009 retail margins tracked very closely with our five-year average.

"We are seeing signs, however, that the worst may be behind us. In each month from July to December, we experienced sequentially lower comparable merchandise sales, but we have seen stabilization over the past six weeks.

"As we approach the half-way point in our ongoing Town & Country store rebranding program to the Stripes brand, we are very pleased with performance of these rebranded stores, but more importantly, we expect significant longer-term synergies from operating under a single Stripes brand.

"We continue to strengthen and improve our liquidity, but until we see signs of a sustained economic recovery, we will be cautious in our capital spending. We are also reducing our cost structure across our operations to enhance profitability," Susser said.

New Convenience Store/Wholesale Dealer Site Update

The Company added 15 retail stores during 2009 and closed two underperforming, older stores at the end of the fourth quarter, bringing the total number of stores in operation at year-end to 525. The Company recently opened one additional store in South Texas and currently has four more stores under construction, one of which is expected to open by the end of the first quarter.

In its wholesale operations, Susser added nine new dealer sites during the quarter and 34 for the full year, for a total of 390 in operation at the end of the year.

Financing Update

During the fourth quarter, the Company generated $16.8 million in proceeds from sale-leaseback transactions for seven recently constructed stores. For the full year, Susser completed sale-leaseback transactions totaling $24.8 million. The Company has already started its 2010 new store financing program by funding $5.8 million of sale-leaseback transactions and a favorable $10 million long-term mortgage loan transaction.

Fourth Quarter Financial and Operating Highlights

Total Company merchandise sales were $201.4 million, an increase of 9.5 percent from a year ago. Same-store merchandise sales declined by 1.2 percent compared with an increase of 6.5 percent in the fourth quarter of 2008. Merchandise gross profit, net of shortages, totaled $65.9 million, up 3.6 percent from the fourth quarter of 2008. Net merchandise margin was 32.7 percent, compared with 34.6 percent a year ago. The decline in merchandise margin is due in part to the effect of the first quarter 2009 cigarette price increase as well as to increased sales of lower-margin items.

Retail store fuel volumes increased 4.2 percent from a year ago to 187.0 million gallons for the fourth quarter. Average gallons sold per store declined 5.9 percent from a year ago to 337,000, as compared to a 6.2 percent increase in the fourth quarter of 2008. Retail fuel revenues totaled $463.3 million, up 17.8 percent, primarily as a result of a 29-cent-per-gallon increase in motor fuel prices at the pump. Retail fuel gross margins in the fourth quarter were 11.9 cents per gallon, or 8.2 cents after deducting credit card expense, compared with 17.7 cents per gallon a year ago, or 14.2 cents after credit card expense. Retail fuel gross profit was $22.2 million, down 30 percent from the fourth quarter of 2008.

Wholesale fuel volumes sold to Susser's 390 dealers and other third-party customers during the fourth quarter declined 3.5 percent from a year ago to 121.3 million gallons. Wholesale fuel revenues increased by 18.0 percent to $246.4 million as a result of higher fuel prices. Wholesale gross margin was 3.7 cents per gallon, compared with 7.2 cents per gallon a year ago. This reduced wholesale fuel gross profit by 49.8 percent to $4.5 million.

Full Year Results

For the full year ended January 3, 2010, which includes 53 weeks, Susser reported merchandise sales of $784.4 million, up 7.5 percent from the comparable 52-week period last year. Total revenues were $3.3 billion, down 22.0 percent due to lower retail fuel prices during the first nine months of 2009. Excluding the impact of the 53rd week, same-store merchandise sales were up 3.3 percent for the full year. Gross profit was $427.4 million, down 2.3 percent from 2008, reflecting a $34.3 million reduction from the impact of lower fuel margins for the full year in both the retail and wholesale segments, partly offset by higher merchandise profits. Adjusted EBITDA(1) was $92.2 million, down 16.6 percent. Net income totaled $2.1 million, or $0.12 per diluted share, compared with $16.5 million, or $0.97 per diluted share for the same period last year.

2010 Guidance

The Company has provided initial guidance for 2010 as follows:





                                             FY 2010 Guidance  FY 2009 Results
                                             ----------------  ---------------
    Merchandise Same-Store Sales Growth (a)      0.0%-4.0%           3.3%
    ---------------------------------------      ---------           ----
    Merchandise Margin, Net of Shortages        32.0%-33.5%         33.3%
    ------------------------------------        -----------         -----
    Retail Avg. Per-Store Gallons Growth (a)   (3.0%)-3.0%           2.4%
    ----------------------------------------   -----------           ----
    Retail Fuel Margins (cents/gallon) (b)      12.5-15.5            14.6
    --------------------------------------      ---------            ----
    Wholesale Fuel Margins (cents/gallon)        3.5-5.5              4.1
    -------------------------------------        -------              ---
    New Retail Stores (c)                          6-16                15
    ---------------------                          ----                ---
    New Wholesale Dealer Sites (c)                15-30                34
    ------------------------------                -----               ---
    Gross Capital Spending ($ million)           $40-$65            $74.8
    ----------------------------------           -------            -----
    Net Capital Spending (d) ($ million)         $25-$50            $48.2
    -----------------------------------          -------            -----


    (a) 2009 results exclude the impact of a 53rd week occurring in the fourth
        quarter of 2009.

    (b) We report retail fuel margins before deducting credit card costs,
        which were approximately 3.5 cents per gallon for the full 2009 fiscal
        year.  For 2009, the average retail selling price of fuel was $2.23
        per gallon.

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

    (d) Net capital spending is gross capital expenditures including
        acquisitions, less proceeds from sale/leaseback transactions and asset
        dispositions.



    (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 and cash provided by operating activities for the periods
        presented.

Fourth Quarter Earnings Conference Call

Susser's management team will hold a conference call today at 11 a.m. ET (10 a.m. CT) to discuss fourth quarter results. To participate in the call, dial 480-629-9772 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 of Susser's Web site at least 10 minutes early to register. A telephonic replay will be available through March 5 by calling 303-590-3030 and using the pass code 4227102#. 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 525 convenience stores in Texas, New Mexico and Oklahoma primarily under the Stripes and Town & Country banners. Restaurant service is available in more than 300 of its stores, primarily under the proprietary Laredo Taco Company and Country Cookin' brands. The Company also supplies branded motor fuel to approximately 390 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, 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; 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 January 3, 2010, which will be filed on or before March 19, 2010. 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

                                 Three Months Ended
                                    (unaudited)          Twelve Months Ended
                                December    January     December     January
                                   28,         3,          28,          3,
                                  2008        2010        2008         2010
                                  ----        ----        ----         ----
     Revenues:                                 (in thousands)
       Merchandise sales        $183,944    $201,375    $729,857     $784,424
       Motor fuel sales          601,970     709,654   3,474,222    2,481,459
       Other                       9,394      10,205      36,566       41,425
                                   -----      ------      ------       ------
     Total revenues              795,308     921,234   4,240,645    3,307,308
     Cost of Sales:
       Merchandise               120,352     135,510     479,215      523,340
       Motor fuel                561,201     682,900   3,322,732    2,356,231
       Other                         (23)        283       1,288          358
                                     ---         ---       -----          ---
     Total Cost of Sales         681,530     818,693   3,803,235    2,879,929
                                 -------     -------   ---------    ---------
     Gross Profit                113,778     102,541     437,410      427,379
     Operating Expenses:
       Personnel                  33,732      39,619     133,080      149,879
       General & Administrative   10,352       8,467      36,932       34,372
       Other operating            31,402      30,675     126,028      117,375
       Rent                        8,806       9,721      34,620       36,899
       Loss on disposal of
        assets and impairment
        charge                        54       1,360           9        2,402
       Depreciation,
        amortization and
        accretion                  9,933      12,386      40,842       44,382
                                   -----      ------      ------       ------
     Total operating expenses     94,279     102,228     371,511      385,309
                                  ------     -------     -------      -------
     Income from operations       19,499         313      65,899       42,070
     Other income (expense):
       Interest expense, net      (9,949)     (9,570)    (39,256)     (38,103)
       Other miscellaneous            39         (27)        278          (55)
                                      --         ----        ---          ----
     Total other expense, net     (9,910)     (9,597)    (38,978)     (38,158)
                                  -------     -------    --------     --------
     Income before income
      taxes                        9,589      (9,284)     26,921        3,912
     Income tax (expense)
      benefit                     (3,265)      3,625     (10,396)      (1,805)
                                  -------      -----     --------      -------
     Net income                    6,324      (5,659)     16,525        2,107
                                   -----      -------     ------        -----
     Less: Net income
      attributable to
      noncontrolling
      interests                       11          10          48           39
                                      --          --          --           --
     Net income (loss)
      attributable to Susser
      Holdings Corporation        $6,313     $(5,669)    $16,477       $2,068
                                  ======     ========    =======       ======
     Earnings (loss) per
      common share:
       Basic                       $0.37      $(0.33)      $0.98        $0.12
       Diluted                     $0.37      $(0.33)      $0.97        $0.12
     Weighted average shares
      outstanding:
       Basic                  16,894,649  16,954,401  16,883,965   16,936,777
       Diluted                16,968,822  16,954,401  16,976,320   17,022,004




                               SUSSER HOLDINGS CORPORATION
                               CONSOLIDATED BALANCE SHEETS

                                                 December 28,     January 3,
                                                    2008            2010
                                                  -----------     ----------
                                                        (in thousands)
    Assets
    Current assets:
       Cash and cash equivalents                   $8,284           $17,976
       Accounts receivable, net of allowance
        for doubtful accounts $1,070 at
        December 28, 2008 and $903 at
        January 3, 2010                            51,549            65,510
       Inventories, net                            62,878            78,788
       Assets held for sale                             -                70
       Other current assets                         4,703             9,437
                                                    -----             -----
    Total current assets                          127,414           171,781
    Property and equipment, net                   408,733           408,771
    Other assets:
       Goodwill                                   237,953           242,295
       Intangible assets, net                      34,609            33,144
       Other noncurrent assets                     15,647            17,027
                                                   ------            ------
    Total other assets                            288,209           292,466
                                                  -------           -------
    Total assets                                 $824,356          $873,018
                                                 ========          ========
    Liabilities and shareholders' equity
    Current liabilities:
       Accounts payable                           $90,911          $129,425
       Accrued expenses and other current
        liabilities                                34,738            28,632
       Current maturities of long-term debt         9,233            10,545
       Deferred purchase price - TCFS
        acquisition                                10,000             5,180
                                                   ------             -----
    Total current liabilities                     144,882           173,782
    Long-term debt                                395,736           384,574
    Revolving line of credit                        3,630            25,800
    Deferred gain, long-term portion               33,720            33,786
    Deferred tax liability, long-term
     portion                                       28,323            28,846
    Other noncurrent liabilities                   13,087            15,812
                                                   ------            ------
    Total long-term liabilities                   474,496           488,818
    Commitments and contingencies
    Shareholders' equity:
      Susser Holdings Corporation
       shareholders' equity:
      Common stock $.01 par value;
       125,000,000 shares authorized;
       17,048,972 issued and 17,037,648
       outstanding as of December 28, 2008;
       17,158,717 issued and 17,141,393
       outstanding as of January 3, 2010              170               170
        Additional paid-in capital                180,189           183,880
        Retained earnings                          23,888            25,956
        Accumulated other comprehensive loss            -              (358)
                                                        -             -----
        Total Susser Holdings Corporation
         shareholders' equity                     204,247           209,648
        Noncontrolling interest                       731               770
                                                      ---               ---
    Total shareholders' equity                    204,978           210,418
                                                  -------           -------
    Total liabilities and shareholders'
     equity                                      $824,356          $873,018
                                                 ========          ========




                                    KEY OPERATING METRICS

                          Three Months Ended
                             (unaudited)                Year Ended
                            ------------                ----------
                       December    January       December      January
                         28,          3,           28,            3,
                        2008        2010          2008          2010
                       ---------   --------      ---------     --------
                         (dollars and gallons in thousands, except per
                                         gallon data)
    Revenue:
      Merchandise
       sales          $183,944    $201,375       $729,857      $784,424
      Motor fuel -
       retail          393,201     463,266      2,150,727     1,605,534
      Motor fuel -
       wholesale       208,769     246,388      1,323,495       875,925
      Other income (1)   9,394      10,205         36,566        41,425
                         -----      ------         ------        ------
       Total revenue   795,308     921,234      4,240,645     3,307,308
    Gross Profit:
      Merchandise       63,592      65,865        250,642       261,084
      Motor fuel -
       retail           31,732      22,215        120,556       105,021
      Motor fuel -
       wholesale         9,037       4,539         30,934        20,207
      Other (1)          9,417       9,922         35,278        41,067
                         -----       -----         ------        ------
       Total Gross
        Profit         113,778     102,541        437,410       427,379
    Adjusted
     EBITDA (2)
      Retail            24,615      13,033         91,734        78,017
      Wholesale          7,318       2,772         24,849        19,128
      Other             (1,400)       (832)        (5,935)       (4,897)
                        -------       -----        -------       -------
    Total
     Adjusted
     EBITDA             30,533      14,973        110,648        92,248

    Retail
     merchandise
     margin               34.6%       32.7%          34.3%         33.3%
    Merchandise
     same store
     sales growth          6.5%       (1.2)%          6.6%          3.3%
    Average per
     retail
     store:
      Merchandise
       sales              $361        $356         $1,437        $1,488
      Motor fuel
       gallons             358         337          1,355         1,388
    Motor fuel
     gallons
     sold:
      Retail           179,483     187,033        677,308       719,649
      Wholesale        125,759     121,315        486,516       494,822
    Average
     retail price
     of motor
     fuel                $2.19       $2.48          $3.18         $2.23
    Motor fuel
     gross profit
     cents per
     gallon :
      Retail              17.7 cents  11.9 cents     17.8 cents    14.6 cents
      Wholesale            7.2 cents   3.7 cents      6.4 cents     4.1 cents
    Retail credit
     card fees
     cents per
     gallon                3.5 cents   3.7 cents      4.2 cents     3.5 cents


    (1) 2008 results reflect reclassification of sale of rights to operate
        dealer locations in the amount of $0.3 million and $0.8 million for
        the three months and year ended December 28, 2008, respectively.

    (2) See following Reconciliation of Non-GAAP Measures to GAAP Measures.

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 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 subsidiaries' revolving credit facility and the indenture governing our senior notes, including for purposes of determining whether they have satisfied certain financial performance maintenance covenants and our ability to borrow additional indebtedness and pay dividends;
  • securities analysts and other interested parties use them as a measure of financial performance and debt service capabilities;
  • they facilitate management's ability to measure operating performance of our business because they assist us in comparing our operating performance on a consistent basis since they remove 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 of directors 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 an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. EBITDA, adjusted EBITDA and adjusted EBITDAR have limitations as analytical tools, and you should not consider them in isolation or as a substitute 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 revolving credit facility or senior 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 table presents a reconciliation of net income to EBITDA, adjusted EBITDA and adjusted EBITDAR:



                                   Three Months Ended       Year Ended
                                   ------------------       ----------
                                     December  January  December  January
                                       28,        3,       28,       3,
                                      2008      2010      2008      2010
                                      ----      ----      ----      ----
                                                (in thousands)

    Net income (loss) attributable
     to Susser Holdings
     Corporation                     $6,313   $(5,669)   $16,477    $2,068
      Depreciation, amortization and
       accretion                      9,933    12,386     40,842    44,382
      Interest expense, net           9,949     9,570     39,256    38,103
      Income tax expense (benefit)    3,265    (3,625)    10,396     1,805
                                      -----    -------    ------     -----
    EBITDA                           29,460    12,662    106,971    86,358
      Non-cash stock-based
       compensation                   1,058       924      3,946     3,433
      Loss on disposal of assets         54     1,360          9     2,402
      Other miscellaneous (1)           (39)       27       (278)       55
                                        ----       --       -----       --
    Adjusted EBITDA                  30,533    14,973    110,648    92,248
      Rent expense                    8,806     9,721     34,620    36,899
                                      -----     -----     ------    ------
    Adjusted EBITDAR                $39,339   $24,694   $145,268  $129,147
                                    =======   =======   ========  ========

    (1) Other miscellaneous charges represent income from a non-consolidated
        joint venture and other non-operating income.


The following table presents a reconciliation of net cash provided by operating activities to EBITDA, adjusted EBITDA and adjusted EBITDAR:




                                                            Year Ended
                                                            ----------
                                                     December 28,   January 3,
                                                         2008         2010
                                                         ----         ----
                                                          (in thousands)
     Net cash provided by operating activities        $51,129        $49,806
       Changes in operating assets & liabilities        9,779          3,494
       Loss on disposal of assets                          (9)        (2,402)
       Stock based compensation expense                (3,946)        (3,433)
       Noncontrolling interest                            (48)           (39)
       Deferred income tax                               (106)        (1,593)
       Amortization of debt premium                       520            617
       Income taxes                                    10,396          1,805
       Interest expense, net                           39,256         38,103
                                                       ------         ------
     EBITDA                                           106,971         86,358
       Non-cash stock based compensation expense        3,946          3,433
       Loss on disposal of assets                           9          2,402
       Other miscellaneous (1)                           (278)            55
                                                         -----            --
     Adjusted EBITDA                                  110,648         92,248
       Rent expense                                    34,620         36,899
                                                       ------         ------
     Adjusted EBITDAR                                $145,268       $129,147
                                                     ========       ========

    (1) Other miscellaneous charges represent income from a non-consolidated
        joint venture and other non-operating income.


    Contacts:     Susser Holdings Corporation
                  Mary Sullivan, Chief Financial Officer
                  (361) 693-3743, msullivan@susser.com

                  DRG&E
                  Ken Dennard, Managing Partner
                  (713) 529-6600, ksdennard@drg-e.com
                  Anne Pearson, Senior Vice President
                  (210) 408-6321, apearson@drg-e.com



SUSS-IR

SOURCE Susser Holdings Corporation

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