ST. PETERSBURG, Fla. -- National retail fuel margins held up in September after reaching record highs in July and August, posting the third-highest average for the month in the past 10 years, according to the latest C-Store Grab-N-Go research note by Raymond James & Associates, which found that margins last month measured 6% above three-year averages.
Third-quarter 2014 margins hit a record average thanks to incredibly strong July margins, beating year-ago levels by 18%, suggesting strong year-over-year growth in gas profits across the publically held convenience store retailers that Raymond James follows. These include Casey's General Stores, The Pantry, Susser Petroleum Partners (since renamed Sunoco LP), Murphy USA, CST Brands and TravelCenters of America.
Retail gasoline margins averaged between 20 and 29 cents per gallon (CPG) from July through September. For fourth-quarter 2014, "we expect fuel margins accelerated given an approximate 70% inverse correlation and decline in spot gasoline prices," Raymond James said.
Margins on diesel for this trailing three-month period were 60% higher on average versus a year ago, or up 12 CPG, and 11% higher sequentially from second-quarter 2014, or up 3.4 CPG.
Across all regions, third-quarter 2014 margins beat year-ago levels, said Raymond James. In the West and Midwest, fuel margins were 20% to 30% higher than year-ago levels. For September, Midwest margins fell 14%, or 3.5 CPG, moderating 1.0 CPG from August to reach 21.7 CPG, which is indicative of margins for Ankeny, Iowa-based Casey's General Stores.
The Northeast, Southeast and Texas regions posted 10% to 20% gains. For the Southeast, home to The Pantry, Cary, N.C., September margins fell 31% or 6.8 CPG year over year, moderating 1.3 CPG sequentially to reach 15.2 CPG from August. And in Texas, where Susser Petroleum Partners and CST Brands are based, September margins fell 15% or 3.4 CPG year over year, moderating 1.3 CPG sequentially to reach 18.6 CPG from August.
St. Petersburg, Fla.-based Raymond James also shared its estimates for future performance:
- The firm increased its fiscal second-quarter 2015 fuel-margin projection for Casey's by 1 CPG to 17.5 CPG and its same-store sale projections 100 basis points for fuel volumes, grocery and other merchandise, and prepared food.
- For CST Brands, Raymond James is bumping up its third-quarter fuel-margin estimate by 1.5 CPG to reach 19.0 CPG, for a 3.0 CPG year-over-year improvement.
- The firm is increasing its retail fuel-margin estimates for Murphy USA by 0.5 CPG to 16.5 CPG, or 1.7 CPG above year-ago levels. It is lowering, however, its per-store average gallon change projection by 50 basis points to 2.0%, and its new-store build projection from 20 stores to 12.
- The Pantry's preliminary fiscal fourth-quarter same-store sales and fuel margins met Raymond James' estimates. Its same-store fuel volume estimates for The Pantry grew by 100 basis points for fiscal fourth-quarter 2014.
- Raymond James is keeping its third-quarter 2014 fuel-margin estimates for TravelCenters of America at 19.5 CPG. While this would represent a record third-quarter margin for the chain and is aggressive compared to historical levels, Raymond James said that year-over-year and sequential improvement in the industry's diesel margins suggest there is more upside.
- And for Susser Petroleum, Raymond James is modeling 20% growth year-over-year in fuel distribution because of the chain's larger site count, its September 2013 acquisition of distributor Gainesville Fuel and a "flattish" rate of growth in average per-store fuel volume for Susser Holdings' company-ops.
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