"As we look to the year ahead, we remain focused on the expansion of our retail footprint through new store construction," said Delek US president and CEO Uzi Yemin yesterday in an announcement of fourth-quarter earnings. "In addition, we have retained Morgan Keegan to assist MAPCO in locating and evaluating retail acquisition opportunities in both new and existing markets."
During 2011, the company intends to reimage at least 25 [image-nocss] locations and build 10 to 20 sites in both new and existing markets.
For the three months ended Dec. 31, 2010, Delek US reported a net loss from continuing operations of $70.9 million, or -$1.30 per basic share, vs. a net loss from continuing operations of $21.1 million, or -$0.39 per basic share, in the fourth quarter 2009.
Since 2007, Delek US has owned a 34.6 percent minority equity interest in Lion Oil Co. During the fourth quarter 2010, Delek US evaluated the fair value of its investment in Lion Oil. This evaluation resulted in the recognition of a non-cash $60.0 million impairment to the Company's investment, or -$1.16 per basic share.
Excluding non-cash and other special items, the company reported an adjusted net loss from continuing operations of $7.8 million, or -$0.14 per basic share in the fourth quarter 2010, vs. an adjusted net loss from continuing operations of $27.0 million, or -$0.50 per basic share, in the fourth quarter 2009.
For the full-year 2010, the company reported a net loss from continuing operations of $79.9 million, or -$1.47 per basic share, vs. net income from continuing operations of $2.3 million, or $0.04 per diluted share, in 2009. Excluding non-cash and other special items, the company reported an adjusted net loss from continuing operations of $19.4 million, or -$0.36 per basic share, in 2010, vs. an adjusted net loss from continuing operations of $22.4 million, or -$0.41 per basic share, in 2009.
As of Dec. 31, 2010, Delek US had $49.1 million in cash and $295.8 million in debt, resulting in a net debt position of -$246.7 million. During the fourth quarter 2010, the retail segment entered into a five-year, $200 million revolving credit facility that extended and increased an existing revolver, while extinguishing an associated term loan. The primary purpose of the facility is to help finance working capital requirements and the strategic growth of the company's retail segment.
Retail segment contribution margin increased to $8.2 million in the fourth quarter 2010, compared to $0.3 million in the fourth quarter 2009. During the fourth quarter 2009, retail segment contribution margin was negatively impacted by a $7.0 million goodwill impairment charge, whereas no such charge was incurred during the fourth quarter 2010.
Same-store merchandise sales increased on a year-over-year basis for a sixth consecutive quarter, as foodservice and private-label sales initiatives continued to gain momentum. Higher crude oil prices put downward pressure on retail fuel margins during the fourth quarter, while also contributing to higher retail fuel prices, the latter of which contributed to a modest decline in same-store fuel sales (gallons) during the period.
Same-store merchandise sales increased 4.4% in the fourth quarter 2010, compared to a same-store sales increase of 5.0% in the fourth quarter 2009. Same-store foodservice sales increased 14.3% during the fourth quarter 2010, driven by increased penetration of fresh and prepared food concepts throughout the retail network. Same-store private-label sales were approximately 4% of total merchandise sales during the fourth quarter 2010, increasing more than 60% when compared to the prior-year period.
Merchandise margin declined to 29.8% in the fourth quarter 2010, vs. 30.2% in the fourth quarter 2009. The decline was primarily attributable to increased promotional activity surrounding the launch of new private-label products and event-related discounts throughout the holiday season.
Same-store sales of fuel (gallons) declined less than 1% in the fourth quarter 2010, vs. an increase of 4.2% in the prior-year period. The retail segment sold a total of 103.2 million retail gallons during the three months ended Dec. 31, 2010, vs. 108.7 million gallons in the prior year period. At the conclusion of the fourth quarter 2010, the retail segment operated 412 locations, vs. 442 locations in the prior-year period.
The company's retail fuel margin was 13.1 cents per gallon in the fourth quarter 2010, compared to 12.9 cents per gallon in the fourth quarter 2009. During the fourth quarter 2010, the retail segment blended fewer gallons of ethanol due to less-favorable blending economics, when compared to the prior-year period.
As of December 31, 2010, more than 30 percent of the 412 stores in operation were classified as locations that had been either reimaged or recently constructed.
Click hereto read a breakdown of Delek US' refining and marketing segments.
Delek US Holdings Inc. is a diversified energy business focused on petroleum refining, the wholesale distribution of refined products and retail marketing. The retail segment markets gasoline, diesel and other refined petroleum products and convenience merchandise through a network of company-operated retail fuel and convenience stores, operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.
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