Delek US 2Q Earning Rise 266%
But same-store retail fuel gallons sold declined 1.3% due in part to higher prices
BRENTWOOD, Tenn. -- For second-quarter 2011, Delek US Holdings Inc. has reported net income from continuing operations of $54.9 million, or 96 cents per diluted share, versus net income from continuing operations of $15 million, or 28 cents per diluted share, in second-quarter 2010, a 266% increase.
Look for a feature on Delek US Holdings' second-quarter 2011 activities in this issue of CSP Daily News.
Excluding special items, the company reported adjusted net income from continuing operations of $45.7 million, or 80 cents per diluted share, in second-quarter 2011, [image-nocss] versus net income from continuing operations of $12.3 million, or 23 cents per diluted share, in second-quarter 2010.
Second-quarter 2011 adjusted net income excludes a $9.2 million, or 16 cents per diluted share, gain on the company's equity investment in Lion Oil Co. During second-quarter 2011, the company incurred approximately $7.6 million of pre-tax Lion Oil related transaction costs, which impacted results by 9 cents per diluted share.
Lion Oil's financial performance for the period between April 29 and June 30, 2011 is included as part of Delek US' consolidated financial results for second-quarter 2011. For financial reporting purposes, Lion Oil's performance has been included within Delek US' refining segment statement of operations.
Uzi Yemin, president and CEO of Delek US Holdings, said, "Delek US generated more than $130 million in total contribution margin during the second quarter, supported by a strong performance in our refining segment. Elevated Gulf Coast refining margins, access to cost-advantaged crude oils and strong regional demand for light products combined to produce our most profitable quarter in four years."
Yemin continued: "Entering the third quarter, our refining system has continued to benefit from a combination of stronger refined product margins and a further widening in crude price differentials, when compared to the first half of 2011."
Refining segment contribution margin increased to $110.4 million in second-quarter 2011, versus $38.7 million in second-quarter 2010.
Retail segment contribution margin declined to $14.6 million in second-quarter 2011, compared to $18.1 million in second-quarter 2010. Elevated retail fuel prices impacted retail fuel demand during the second quarter, offsetting continued strength in same-store merchandise sales.
Same-store merchandise sales increased 0.6% in second-quarter 2011, compared to a same-store sales increase of 4.6% in second-quarter 2010. Same-store foodservice sales increased 9.7% in second-quarter 2011, as the company increased the concentration of fresh food QSR concepts to approximately 19% of the store base, up from approximately 14% of the store base in the prior-year period.
Same-store sales of private-label products increased more than 70% in second-quarter 2011, when compared to second-quarter 2010, and comprised more than 4% of total merchandise sales in the period. Merchandise margin declined to 30.2% in second-quarter 2011, versus 31.3% in the prior-year period, due in part to lower margins in the cigarette category and ongoing promotional efforts.
Same-store retail fuel gallons sold declined 1.3% in second-quarter 2011, versus an increase of 3.4% during the prior-year period, due in part to higher retail fuel prices. The company's retail fuel margin was 18.6 cents per gallon in second-quarter 2011, flat versus the prior-year period.
At the conclusion of second-quarter 2011, the retail segment operated 390 locations, versus 425 locations in the prior-year period.
Marketing segment contribution margin declined to $5.1 million in second-quarter 2011, versus $6.7 million in second-quarter 2010. Second-quarter results were impacted by a decline in inventory values during the period.
Total sales volumes increased 8.8% to 15,946 barrels per day in second-quarter 2011, versus the prior-year period. Total sales volumes increased on a year-over-year basis for the sixth consecutive quarter during second-quarter 2011, as regional demand trends for distillate products remained strong in the period.
Brentwood, Tenn.-based Delek US Holdings is a diversified downstream energy business focused on petroleum refining, the wholesale distribution of refined products and convenience store retailing. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Ark., with a combined nameplate production capacity of 140,000 bpd. The marketing and supply segment markets refined products through a series of owned and third-party product terminals and pipelines. The retail segment supplies fuels and merchandise through a network of approximately 390 company-operated c-store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food & Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.