FRANKLIN, Tenn. -- Delek US Holdings Inc. has reported record net income for full-year 2006 of $93 million, or $1.94 per diluted share, compared to $64.1 million, or $1.63 per diluted share for full-year 2005. Fourth-quarter net income was $11.6 million, or 22 cents per diluted share, compared to $24.6 million, or 62 cents per diluted share, for fourth-quarter 2005.
Uzi Yemin, president and CEO of Delek US, said, We are very pleased and encouraged by the strong operating performance of all our businesses for the fourth quarter and full-year 2006. We [image-nocss] expanded our businesses and achieved steady operating improvements during 2006 even while volatile energy prices impacted comparable-period results. We achieved these results as we completed and integrated two major acquisitions during the year, established a new wholesale marketing business segment and completed two significant capital projects at our Tyler refinery. These accomplishments, along with our recently announced agreement to expand our base of retail fuel and convenience stores by more than 27%, position us for growth in 2007.
The refining segment contribution margin was $23.7 million for fourth-quarter 2006 compared to $37 million for fourth-quarter 2005. Net sales for the quarter were $349.6 million compared to $342.2 million for the same period last year.
The retail segment reported a contribution margin for fourth-quarter 2006 of $9 million compared to $14.4 million for the same quarter last year. The contribution margin for the quarter was adversely impacted by the unusually low retail fuel margin for the quarter of $0.088 per gallon compared to $0.167 per gallon for the fourth quarter last year. Net sales for the quarter were $330.6 million, an increase of 9.5% compared to the fourth quarter last year.
Merchandise sales for the quarter increased 16.7% to $84.6 million compared to $72.5 million for fourth-quarter 2005. Same-store merchandise sales increased 1.1% for the quarter. The food and fountain service category same-store sales increased 7.7%. The merchandise margin was 30.8% for fourth-quarter 2006, a 160-basis-point increase from the same quarter last year.
The retail segment's total fuel sales for fourth-quarter 2006 increased 7% to $229.6 million from $214.5 million for the same quarter of 2005, primarily due to a 13.7% increase in gallons sold to more than 104.4 million. The increase in gallons sold was driven by the increase in the number of stores in operation from 349 at the end of 2005 to 394 at the end of 2006.
The company said it expects the purchase of 107 Favorite Markets retail fuel and convenience stores from Calfee Co. of Dalton Inc. to close in the second quarter. These stores will solidify Delek's market presence in Chattanooga, Tenn., and north Georgia, and will establish a new core market.
The marketing segment reported a contribution margin for fourth-quarter 2006 of $6.2 million including $3.4 million of inter-company marketing service fees from the refinery segment. The marketing segment contributed $127.2 million to net sales for the quarter on total sales volume of approximately 18,000 barrels per day. This is the first full quarter of operations for the marketing segment. This segment's contribution continues to grow as the business is assimilated.
Delek US operates a refinery with a crude distillation capacity of 60,000 barrels per day, in Tyler, Texas. The marketing and supply segment markets refined products through its terminals in Abilene, Texas and San Angelo, Texas, as well as other third-party terminals. The retail segment markets gasoline, diesel and other refined petroleum products and convenience merchandise through a network of 394 company-operated retail fuel and convenience stores, operated under the MAPCO Express, MAPCO Mart, East Coast and Discount Food Mart brand names.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.