OAKBROOK TERRACE, Ill. -- Has the fuel business been a money-maker or run-around for retailers over the past year? It depends.
A MoneyBeat blog post from The Wall Street Journal last week quoted Tom Kloza, chief oil analyst for Gasbuddy.com and cofounder of the Oil Price Information Service (OPIS), Gaithersburg, Md., saying that many retailers are enjoying the biggest margins in six years. According to OPIS figures that crunched the performance of more than 1,000 gas stations, average gasoline margins were more than 10 cents per gallon (CPG) higher between Sept. 1 and Oct. 22 this year vs. the same time period last year, reaching 24.9 CPG.
“There’s no compelling reason why you have to match each nickel drop in wholesale gasoline with a drop at the pump,” Kloza told the Wall Street Journal. “It’s a good time to be in the retail space.”
However, recent research points to long-term pressures among privately held gas stations. According to an analysis of financial statements by Sageworks, a financial-informationcompany, privately held gas stations saw their net profit margin rise only 0.3 points to reach an average of 1.7%. This trailing 12-month growth rate, calculated after analyzing financial statements dated from October 2013 to October 2014, is much slower compared to that of the average private company tracked by Sageworks.
“To put this into context, the average privately held company in the United States is seeing a more than 8% growth in revenue, year over year, with an average net profit margin of nearly 7%,” said Libby Bierman, an analyst at Sageworks. “Gas stations are drastically underperforming the private company averages on these metrics.”
Sageworks, Raleigh, N.C., oversees a proprietary database of privately held company financial statements aggregated by industry. It collects around 1,000 per day from accounting firms, banks and credit unions through a cooperative data model with its clients.
Sales at these privately held gas stations rose 0.9% during this time period, a veritable stall compared to the 14.4% jump in sales that Sageworks measured for the 12 months ending October 2012. (See table below.)
The low gas prices that have made this past summer highly profitable for many gas stations may or may not move the needle for the privately held operators Sageworks tracks.
“On the one hand, consumers may be inclined to drive more and therefore require more gas; that volume bump could aid revenue growth,” Berman said. “However, even a small bump to revenue may not cause much impact on the bottom line.”
She added that gas-station margins for these privately held operators appear to be consistent from year to year, based on Sageworks’ analysis of financial statements filed over the past decade. This is true even during times of extreme gas price highs or lows, with net profit margins sticking below 2%, or less than 2 CPG of profit per dollar of gas sold.
“The owners of these gas stations should not be confused with ‘big oil,’ ” Berman said. “Rather, this industry is full of small business owners like those we see in other retail operations where volume is important, and even small changes in profitability, whether positive or negative, are significant to the owners.”
Performance of Privately-Held U.S. Gas Stations
| October 2014 | October 2013 | October 2012 | |
| Sales percent change | 0.9% | 3.7% | 14.4% |
| Net profit margin | 1.7% | 1.4% | 1.1% |
Source: Sageworks
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.