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Susser Sees Same-Store Sales, Gallons Rise 8%

Company continues to attribute improvement to economic growth in Texas

CORPUS CHRISTI, Texas -- Susser Holdings Corp. has reported strong financial and operating results for the second quarter ended July 1, 2012. Same-store merchandise sales increased by 8%, compared with growth of 5.8% in the prior-year period. Average retail gallons per store also increased 8% year-over-year, versus growth of 3.6% a year earlier.

Retail net merchandise margin was 34.1%, compared with 34% in second-quarter 2011. Retail fuel margins before credit card expense averaged 32.4 cents per gallon, versus 31.2 cents a gallon a year earlier and an average of 21.6 cents per gallon for the previous five years' second quarter.

Total revenues for the second quarter increased 9.5% year-over-year to $1.5 billion. The increase was driven by a 6.8% increase in retail fuel revenues, a 13.3% increase in wholesale fuel revenues and an 11.8% increase in merchandise sales. The higher fuel revenues were driven by increases both in retail and wholesale volumes sold.

"The 8% increase in both same-store sales and average gallons per store demonstrates our team's superior execution and the sustained growth we are seeing in the economy in the markets we serve," said Sam L. Susser, president and CEO.

"On the fuel side, continued strong commercial activity--particularly in markets with strong oil and gas drilling activity--helped drive gallons sold in the second quarter. On the merchandise side, robust same-store growth reflects the continued jobs growth we are seeing in our markets in South and West Texas, as well as the positive customer response to our Stripes stores and our delicious Laredo Taco Co. restaurant offerings," Susser said. "Adjusted EBITDA and net income benefited from strong retail fuel margins, robust merchandise sales growth and solid cost control inside our convenience stores."

The company opened six new large-format Stripes convenience stores and closed one smaller store during the second quarter, for a total of 545 stores in operation as of July 1. Four additional stores have opened during the third quarter, bringing the number of new Stripes stores constructed year-to-date to 11. The company has 13 additional retail stores under construction and plans to build a total of 26 to 29 stores in fiscal 2012. In fiscal 2013, the company expects to build 28 to 35 new Stripes stores, and it is continuing to invest in its land bank for future development.

Merchandise sales totaled $253.1 million in the latest quarter, an increase of $26.7 million, or 11.8% year-over-year. Approximately $17.9 million of the increase came from stores that have been operating a year or longer, and the remainder from new stores that were opened during the last four quarters. Same-store merchandise sales increased 8%, compared with growth of 5.8% a year earlier. Beer, food service, packaged drinks, cigarettes and snacks drove most of this growth.

Net merchandise margin as a percentage of sales was 34.1%, versus 34% in the second quarter of 2011. Merchandise gross profit was $86.4 million, up 12.0% versus a year ago.

Retail fuel volumes increased 10.7% compared with a year ago to 215.3 million gallons. Average gallons sold per store per week increased 8% versus a year ago to approximately 30,800 gallons. Retail fuel revenues totaled $774.1 million, an increase of 6.8% versus the prior-year period, reflecting the increased gallons sold, partly offset by a 13-cents-per-gallon reduction in the average selling price of fuel.

Retail fuel gross margin averaged 32.4 cents per gallon, compared with 31.2 cents per gallon in the second quarter of last year. After deducting credit card expense, net fuel margin was 26.8 cents per gallon, versus a net 25.3 cents per gallon a year earlier. Retail fuel gross profit increased 15% versus a year ago to $69.8 million, reflecting significantly higher volumes and slightly higher margins.

Wholesale fuel volumes sold to 567 independent, contracted dealers and other third-party customers increased 19.9% from a year ago to 153.6 million gallons. Wholesale fuel revenues increased 13.3% year-over-year to $466.7 million. The revenue increase is the result of the sizeable increase in volumes sold, partly offset by an 18-cents-per-gallon reduction in average wholesale fuel selling prices.

Wholesale gross margin was 7.2 cents per gallon, versus 7.0 cents in the second quarter of last year. Wholesale fuel gross profit increased by 22.6% from a year ago to $11.1 million.

For the six months ended July 1, 2012, Susser's same-store merchandise sales grew 7.4%. First half revenues totaled $2.9 billion, up 14.7% versus the first half of 2011, driven by increases in retail and wholesale fuel revenues and in merchandise sales. Merchandise sales totaled $479.2 million year-to-date, up 11.6% versus the prior-year period. Merchandise margin was 33.8%, versus 34.0% a year ago.

Retail fuel margin was 23 cents per gallon year-to-date, compared with 23.3 cents the year before. After deducting credit card expense, net fuel margin was 17.5 cents per gallon, compared with 17.8 cents per gallon in the first half of 2011. Wholesale fuel margin was 6.1 cents per gallon, compared with 6.1 cents per gallon in the prior-year period.

Adjusted EBITDA for the first half totaled $95.8 million, up 14% from the prior year. Gross profit was $302.7 million, an increase of 10.2% over the first six months of 2011, reflecting improved volumes in both fuel and merchandise. First half net income was $29.3 million, or $1.38 per diluted share, versus reported net income of $23.6 million, or $1.36 per diluted share, a year ago.

Corpus Christi, Texas-based Susser Holdings is a third-generation, family led business with approximately 1,100 company-operated or contracted locations. It operates approximately 545 convenience stores in Texas, New Mexico and Oklahoma under the Stripes banner. Restaurant service is available in more than 335 of its stores, primarily under the proprietary Laredo Taco Co. brand. The company also supplies branded motor fuel to approximately 565 independent dealers through Susser Petroleum Co., its wholesale fuel division.

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