BRENTWOOD, Tenn. -- Even as refining drove the bulk of record first-quarter earnings for Delek US, an 11th consecutive quarter of same-store merchandise sales growth in its MAPCO convenience stores has executives crowing, as well.
"We had another quarter of strong performance from our retail segment as every sales category experienced growth over last year's first quarter and same-store merchandise sales grew 7.6%," CFO Mark Cox reported during an earnings conference call with analysts yesterday. "Our competitively priced fuel offering continues to drive same-store fuel growth even in a period when gasoline prices increased significantly."
Delek's retail segment's contribution margin increased to $7.3 million in first-quarter 2012 vs. $6.5 million in first-quarter 2011. First-quarter 2012 results were positively impacted by same-store merchandise sales growth of 7.6%.
"The first-quarter improvement was driven by higher same-store fuel volumes, merchandise sales growth and lower offering costs," Cox said. "This was MAPCO's 11th consecutive quarter of same-store merchandise sales growth driven by ongoing promotional efforts [and] private-label product sales, as well as continued momentum in our foodservice category, which was up 24% over last year."
Merchandise margin declined to 29.4% in first-quarter 2012 vs. 30.8% in the prior-year period, primarily due to cigarette manufacturers' new retail pricing programs, which began in April of last year, Cox said. But there was other good news on the merchandise-margin front.
"Same-store sales of private-label products in areas other than cigarettes increased 35% in the first quarter of this year compared to the prior year period," Cox reported. "Private-label sales as a percent of total merchandise sales, again excluding cigarettes, was 4.4%. This increase in private-label sales is almost a full percentage point over last year and carries a margin of over 40%."
In Delek's marketing segment, contribution margin totaled $8.1 million in first-quarter 2012 vs. $8.3 million in first-quarter 2011.
Total sales volume in the company's west Texas wholesale operation, excluding the new biodiesel and ethanol programs, increased by 5.8% to 15,383 barrels per day in first-quarter 2012 vs. 14,535 in last year's first quarter. This increase was supported by increased demand for refined products, the company reported.
During first-quarter 2012, the marketing segment began supplying bulk ethanol and biodiesel to its refineries and terminals, adding another growth opportunity to the segment. It supplied 4,210 barrels per day of renewable fuels to those facilities in first-quarter 2012.
"Today, we reported the best first-quarter financial results in the history of the company, supported by significant contributions from the company's refining segment," Uzi Yemin, president and CEO, said. "The location of our refineries, in particular the Tyler refinery, allows us to access substantial volumes of WTI-linked crude oil, including discounted crude sourced from the Midland crude hub. In addition, we sell most of our light products based upon U.S. Gulf Coast prices, which have remained elevated in recent months. Together, the Tyler and El Dorado refineries sold more than 141,000 barrels per day, exceeding our overall crude nameplate capacity, taking advantage of improved refining margins and increased asphalt prices in our markets."
Brentwood, Tenn.-based Delek US Holdings Inc. is an integrated 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 barrels per day. 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 375 company-operated convenience store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food & Fuel, Favorite Markets, Delta Express 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.