Uzi Yemin, president and CEO of Delek US, said, "Although our consolidated results were impacted by downtime at the [Tyler, Texas] refinery, our retail segment continued to perform well during the [image-nocss] third quarter, as it did during the first half of 2010. Same-store fuel [gallons] and merchandise sales grew above year-ago levels, while retail fuel margins remained strong."
Refining contribution margin was a loss of $1.1 million in third-quarter 2010, versus income of $8.4 million in third-quarter 2009.
Retail segment contribution margin was $18.7 million in third-quarter 2010, compared to $17.4 million in third-quarter 2009. The year-over-year improvement in contribution margin was primarily attributable to strong growth in same-store fuel (gallons) and merchandise sales, increased gross profit generation on select merchandise, as well as an increase in the retail fuel margin, when compared to the year-ago period.
On a year-over-year basis, same-store fuel gallons sold increased 5.2% in third-quarter 2010, versus an increase of 1% in third-quarter 2009. The retail segment sold a total of 108.2 million gallons during the three months ended September 30, 2010, versus 108.4 million gallons in the prior-year period. At the conclusion of third-quarter 2010, the retail segment operated 420 locations, versus 452 locations in the prior-year period.
The company's retail fuel margin was 19.6 cents per gallon in third-quarter 2010, compared to 18 cents per gallon in the prior year period. The increase is partially attributable to favorable blending economics associated with the company's ongoing E10 (ethanol) blended fuel program and strategic pricing efforts.
On a year-over-year basis, same-store merchandise sales increased 6.3% in third-quarter 2010, versus an increase of 1.8% in third-quarter 2009. The improvement in same-store merchandise sales is attributable to several key factors, including successful promotional efforts within the dairy, grocery and beer categories, consumer acceptance of recently introduced private-label products, as well as continued growth in fresh food sales.
For the second consecutive quarter, same-store sales of food and fountain increased, when compared to the prior-year period. Same-store sales of food and fountain increased 6.6% in the third quarter 2010, when compared to the third quarter 2009, due primarily to the ongoing success of franchised quick-service restaurant (QSR) concepts at select locations, in addition to improved continued consumer acceptance of the company's ongoing fresh "grab-n-go" food initiative.
Merchandise margin declined to 30.1% in third-quarter 2010, versus 31.3% in the year-ago period. The year-over-year decline was attributable to introductory pricing on select merchandise, as well as promotional pricing.
Marketing segment contribution margin was $5.7 million in third-quarter 2010, compared to $3.9 million in third-quarter 2009.
Total sales volumes increased 18.6% to 14,114 barrels per day in third-quarter 2010, compared to 11,897 barrels per day in third-quarter 2009. Total sales volumes increased on a year-over-year basis for the third consecutive quarter during third-quarter 2010, as regional demand trends for distillate products remained strong in the period, when compared to third-quarter 2009.
Brentwood, Tenn.-based Delek US Holdings is a diversified energy business focused on petroleum refining, the marketing and supply of refined products, the retail marketing of refined products and the sale of general merchandise in its retail locations. The refining segment operates a high conversion, independent refinery, with a design 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 company-operated retail fuel and convenience stores, operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food & Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.
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