CORPUS CHRISTI, Texas -- Susser Holdings Corp. reported that its second quarter 2007 merchandise sales increased 11.8% to $105.9 million vs. $94.7 million a year ago. Adjusted EBITDA increased 15.7% percent to $16.7 million vs. $14.4 million in the prior year's second quarter.
Net income totaled $6.3 million, up 67% vs. $3.8 million in the prior year's second quarter. Diluted earnings per share was $0.37, compared with $0.40 in the second quarter of 2006, reflecting an increase in shares outstanding following the company's October 2006 initial [image-nocss] public offering. Total revenues increased 6.7% to $692.8 million from $649.2 million in the same quarter of 2006. Gross profit increased 8.2% to $64.6 million, compared with $59.7 million in the second quarter of 2006.
"Better-than-expected retail fuel margins and good gains in merchandise sales, both overall and on a same-store basis, drove these strong second quarter results," said Sam L. Susser, president and CEO.
"Performance from our Laredo Taco Company restaurant business continues to be very strong, and we opened six new kitchens during the quarter. We also continue to see great customer response to the re-brandings of our convenience stores to our own Stripes brand and our fuel islands to the Valero brand, which we completed earlier in the year," Susser said.
During the second quarter of 2007, Susser opened five new large-format convenience stores and closed one smaller store, growing the total store count at July 1 to 329. The company recently opened one additional store, for a total of eight new stores to date this year. Seven stores are currently under construction, with three more scheduled to commence during third quarter and one store is under contract to be acquired and remodeled. An estimated 18 to 22 new retail stores are planned for all of 2007, and substantially all are expected to include a Laredo Taco Co. restaurant.
In its wholesale operations, the company added six new dealer sites and discontinued three during the quarter, for a total of 374 dealer sites in operation at the end of the second quarter. Susser has added 12 dealer sites during the first half and expects to add 25 to 35 new dealer sites for all of 2007. Similar to the retail division, new sites typically outperform the sites that are closed or where fuel supply is discontinued.
Merchandise sales from Susser's retail convenience stores totaled $105.9 million during the second quarter of 2007, an increase of 11.8% overall and 6.4% on a same-store basis. This sales growth was led by strong performance from the Laredo Taco Co. restaurants, beer and snacks, and the impact of an increase in the cigarette excise tax in Texas. Total merchandise gross profit increased 8.4% to $34.0 million. Net merchandise margin was 32.1%---down from 33.2% a year ago---primarily reflecting the impact of the $1-per-pack cigarette tax increase.
Retail convenience store fuel volumes increased 5.5% to 106.6 million gallons for the quarter. This increase reflects a 3.2% increase in average gallons sold per site, along with the opening of 12 new retail stores in the second half of 2006 and seven in the first half of 2007. Retail fuel gross margins increased 12.1% to 17.2 cents per gallon vs. 15.4 cents per gallon in the second quarter of 2006, resulting in an 18.2% increase in retail fuel gross profit to $18.4 million.
Wholesale fuel volumes sold to Susser's 374 dealers and other third-party customers increased 0.7% to 118.7 million gallons in the quarter. Wholesale fuel gross margin was 5.3 cents per gallon vs. 5.9 cents per gallon a year ago, and wholesale fuel gross profit decreased 9.3% to $6.3 million. The lower margins partly reflect a mix change resulting from the June 2006 sale of 25 unattended units, which produced higher margins than the average wholesale business, along with lower margins on dealer consignment gallons.
For the first six months of 2007, Susser reported that its merchandise sales increased by 10.4% from the year-earlier first half to $199.3 million. Adjusted EBITDA increased by 16.6% to $24.5 million. Net income totaled $3.9 million, or $0.23 per diluted share, vs. a net loss of $0.2 million, or a loss of $0.02 per diluted share, in the first half of 2006. Total revenues increased by 4.2% from a year ago to $1.22 billion.
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