CORPUS CHRISTI, Texas -- Susser Holdings Corp. has reported third-quarter 2006 merchandise sales and total revenues of $96.1 million and $605.1 million, compared with merchandise sales and total revenues of $86.7 and $528.1 million in the same quarter of 2005.
Pro forma adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization) for the quarter was $18.3 million versus $14.8 million in the prior year. Pre-tax net income reported under the company's prior LLC structure totaled $7.4 million in the latest quarter, compared with [image-nocss] a pre-tax $6.5 million in third-quarter 2005.
On Oct. 24, 2006, Susser completed an initial public offering (IPO) of common shares. To show a more meaningful comparison of results under its new capital structure, Susser has provided pro forma results to show the impact of the IPO as well as changes Susser made in its capital structure in December 2005. On a pro forma basis, after-tax net income for third-quarter 2006 was $5.8 million, or 34 cents per diluted share, versus an after-tax $2.7 million, or 16 cents per diluted share, for third-quarter 2005. Pro forma revenues for both periods were the same as reported revenues.
Our third-quarter results reflect strong year-over-year increases on the retail side in merchandise sales and margins and continuing traction from our Laredo Taco Co. restaurant business, said Sam L. Susser, CEO of Susser Holdings. We've seen very solid performance from our stores throughout 2006, with a 6% increase in same-store sales for the nine months ended Oct. 1, 2006. We also saw strong growth in average fuel volumes per store from a year ago, and during the third quarter we benefited from favorable fuel purchasing costs, which drove record fuel margins.
He added, We were very pleased with the results of our [IPO] in late October, which raised approximately $113 million in net proceeds, Susser said. This offering will enable us to continue Susser's strong pace of growth, while strengthening our balance sheet and increasing our financial flexibility.
Merchandise sales from Susser's convenience stores increased by 10.9% overall to $96.1 million and by 8% on a same-store basis during third-quarter 2006, driven by growth in Laredo Taco Co. restaurant sales, beer and packaged and fountain beverage sales. Merchandise margin was 32.2%flat versus the third quarter of 2005a result of stronger restaurant and beverage performance offset by a decline in cigarette margins. Total merchandise gross profit increased 10.9% to $31 million.
C-store gasoline volumes increased 8.5% to 96.2 million gallons for the quarter, and average volumes sold per store per week increased 6.9% to 23,200 gallons. Retail gross margin was 21 cents per gallon, up 18.0% from 17.8 cents per gallon a year ago. Retail fuel gross profit increased by 28% to $20.2 million.
Wholesale fuel volumes sold to Susser's more than 350 dealer and other third-party customers increased 1.8% to 112.9 million gallons in the quarter. Wholesale gross margin was 6.9 cents per gallon, versus 6.1 cents per gallon a year ago, and gross profit increased 14.7% to $7.8 million.
Adjusted EBITDA noncash stock-based compensation expense and certain other operating expenses reflected in net income that management does not believe are indicative of ongoing core operations, such as gain or loss or disposal of assets and impairment chargeswas $18.3 million, up 3.2% from third-quarter 2005. On a pro forma basis, adjusted EBITDA for the quarter increased by $3.6 million, or 24.2%, over third-quarter 2005.
Reported net income and adjusted EBITDA(2) for third-quarter 2006 were impacted primarily by higher rent expense of $3.3 million resulting from the December 2005 sale/leaseback of 74 retail store locations, as well as from higher credit card and utility expenses.
For the first nine months of 2006, Susser reported merchandise sales and total revenues of $276.7 million and $1.8 billion, an increase of 11.2% and 28.1% from merchandise sales and total revenues of $248.8 million and $1.4 billion for the same period in 2005.
Adjusted EBITDA for the nine months was $39.3 million, versus $40.6 million for the year-earlier period. Pro forma adjusted EBITDA for the nine months was also $39.3 million, versus $31.6 million, up 24.5% from the comparable 2005 period.
Pre-tax net income totaled $7.2 million, versus a pre-tax $10.5 million for the first nine months of 2005. On a pro forma basis, after-tax net income was $7.7 million, or 46 cents per diluted share, versus an after-tax $2.3 million, or 13 cents per diluted share, for the comparable 2005 period.
Recent Developments:
New Stores. Susser continues to expand and upgrade its store locations. Four new retail locations opened during the quarter, and one small store was closed, bringing the total store count to 323. During October, Susser opened three stores and expects to open five to seven additional stores in the fourth quarter. An estimated 16 to 18 new retail stores should open in 2006, and 18 to 22 are planned for 2007. Substantially all of these stores are expected to include a Laredo Taco Company restaurant. New Fuel Supply Agreement. On July 28, 2006, Susser entered into a new 12-year fuel supply agreement with Valero Marketing & Supply Co. to supply substantially all of its retail stores and certain wholesale locations that were supplied by CITGO. In connection with this new agreement, the Company has begun rebranding its existing retail fuel stations to the Valero or Shamrock brands. The brand transition began in September 2006 and is expected to be completed by the end of first-quarter 2007. As of November 1, 87 retail stores have been rebranded from CITGO to Valero. C-Store Rebranding Initiative. The rebranding of the c-stores from Circle K to Susser's own Stripes brand continues and is expected to be substantially completed by yearend. At the end of the third quarter, 57 new and existing stores were flying the Stripes brand. An additional 39 units were rebranded during October.Corpus Christi, Texas-based Susser Holdings operates more than 320 c- stores in Texas and Oklahoma. It also supplies more than 350 branded dealers through its wholesale fuel division.
[See related story in this issue for more details.]
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.