CORPUS CHRISTI, Texas -- Susser Holdings Corp. reported yesterday that its third-quarter 2007 merchandise sales increased 12.6% to $108.2 million, versus $96.1 million a year ago. Total revenues increased 11.4% to $674 million, from $605.1 million in the same quarter of 2006. Gross profit increased 3.3% to $66.5 million, compared with $64.3 million in the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) declined 8.5% to $16.8 million, compared with $18.3 million in the prior year's third quarter, reflecting [image-nocss] lower retail fuel margin of 15.8 cents per gallon versus the record-high margin of 21 cents per gallon realized a year ago. Net income totaled $4.8 million, down 34.2% versus $7.4 million in third-quarter 2006. Diluted earnings per share was 29 cents, compared with 79 cents in the year-ago quarter, reflecting both the effect of lower retail fuel margins and an increase in shares outstanding following the company's October 2006 initial public offering (IPO).
"We had strong operational and financial performance across every category in the third quarter," said Susser Holdings president and CEO Sam L. Susser. "Although fuel gross profit fell by $3.3 million from the record-high levels we saw in the third quarter a year ago, it was still well above the average margin we've seen over the last five years. And this was substantially offset by strong year-over-year increases in both retail merchandise sales and retail merchandise margins, with continued strong performance by our Laredo Taco Co. restaurant service."
He added, "With our acquisition of Town & Country Food Stores now complete [click here to read yesterday's CSP Daily News report], we look forward to welcoming the Town & Country team to Susser and to beginning the process of integrating the two companies. This is our largest acquisition ever in terms of both dollars and store count, and we believe it has the potential to significantly enhance shareholder value by expanding our footprint, adding geographic diversity and providing additional fill-in growth opportunities."
During third-quarter 2007, Susser opened two new large-format convenience storesboth with Laredo Taco Co. restaurantsincreasing the total store count at Sept. 30, 2007, to 331. The company also added two Laredo Taco kitchens to existing stores, bringing the total number of stores with Laredo Taco Co. to 160. Susser opened two additional stores in October, and nine more are currently under construction or under contract.
The company now expects to add a total of 18 to 20 new stores for all of 2007. Also during October, Town & Country opened one new store, which replaced an older store that was closed, leaving its total current store count at 168 but adding an additional Country Cookin' restaurant. Town & Country now has restaurants in 114 of its stores.
In its wholesale operations, Susser added five new dealer sites and discontinued two during the quarter, for a total of 377 dealer sites in operation at the end of the third quarter. Susser expects to add a total of 25 to 30 new dealer sites for all of 2007. Similar to the retail division, new sites typically outperform sites that are closed or where fuel supply is discontinued.
Merchandise sales from Susser's convenience stores totaled $108.2 million during third-quarter 2007, an increase of 12.6% overall and 7.9% on a same-store basis. This strong growth in the retail merchandise segment was led by healthy performance by the Company's Laredo Taco Co. restaurants, strong sales of packaged drinks and snacks and by the impact of a dollar-a-pack increase in the cigarette excise tax in Texas. Total merchandise gross profit for the quarter increased 16% to $35.9 million. Net merchandise margin was 33.2%an increase of 100 basis points from a year ago. This improvement is primarily the result of favorable mix changes, selected price increases and focused promotional efforts to drive sales and gross profit dollars.
Retail store fuel volumes increased 13.1% to 108.9 million gallons for the latest quarter, reflecting a 10.7% increase in average gallons sold per site versus a year ago, along with the opening of 17 new retail stores over the past four quarters. The favorable per-store comparison is in part the result of the re-branding of the company's fuel islands to the Valero brand during the year-earlier quarter, which slightly reduced fuel volumes during the conversion process and in part due to investments back into the store base. Retail fuel gross margins declined to 15.8 cents per gallon from 21 a year ago, resulting in a 14.7% decrease in retail fuel gross profit to $17.2 million. Although third-quarter 2007 retail fuel margins were lower than the record levels of a year ago, they exceeded the company's five-year average margin of about 13 cents a gallon.
Wholesale fuel volumes sold to Susser's 377 dealers and other third-party customers increased 5.2% to 118.8 million gallons in the third quarter. Wholesale fuel revenues increased 7.2% to $268.3 million as a result of both the volume increase and a 2% increase in average wholesale fuel selling prices. Wholesale fuel gross margin was 6.3 cents per gallon, versus 6.9 cents per gallon a year ago. Wholesale fuel gross profit decreased 4.6% to $7.4 million, reflecting slightly higher wholesale fuel purchasing costs.
For the first nine months of 2007, Susser reported a merchandise sales increase of 11.2% from the comparable period a year ago to $307.5 million. Total revenues increased by 6.6% versus 2006 to $1.9 billion. Gross profit increased by 6.2% to $183.4 million. Adjusted EBITDA increased by 4.9% to $41.3 million year over year. Net income totaled $8.7 million, or 52 cents per diluted share, versus $7.2 million, or 77 cents per diluted share, in the first nine months of 2006.
Corpus Christi, Texas-based Susser Holdings is a third-generation, family led business that operates more than 500 c-stores in Texas, New Mexico and Oklahoma under the Stripes, Town & Country and Village Market banners. Restaurant service is available in more than 270 of its stores, primarily under the proprietary Laredo Taco Co. and Country Cookin' brands. The company also supplies branded motor fuel to more than 375 independent dealers through its wholesale fuel division.
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