CST Brands 'In Good Position Coming Out of Spin'
Former Valero retail unit standing successfully on own two feet
SAN ANTONIO -- CST Brands Inc. has reported financial results for the second quarter and six months ended June 30, 2013. For the three-month period ending June 30, 2013, the company reported net income of $43 million. Net income was $108 million for the comparable period in 2012.
Revenues totaled $3.2 billion for second-quarter 2013 compared to $3.3 billion for the same period of 2012. The modest decrease was driven in part by a 17-cents-per-gallon decline in the company's average motor fuel selling price in the U.S. segment, accounting for $48 million of the decline in the U.S. segment motor fuel revenues.
There was an average of 21 fewer retail fuel sites operating in the Canadian segment in the second-quarter 2013, compared to the same period last year, which was the primary reason for the overall decrease of $66 million in the Canadian segment motor fuel revenues.
In the United States, motor fuel gross margin (cents per gallon), after deducting credit card fees, was 17 cents, compared to 30 cents in second-quarter 2012. The company experienced historically high motor fuel gross margins in second-quarter 2012, due primarily to the volatility of crude oil during that period. U.S. merchandise gross margin, net of credit-card fees, remained relatively unchanged when compared to second-quarter 2012.
In Canada, the motor fuel gross margin (cents per gallon), after deducting credit-card fees, was 24 cents compared to 28 in second-quarter 2012. The margin decline was due primarily to the volatility of crude oil in the prior year period, which resulted in higher motor fuel gross margins in second-quarter 2012. Canada merchandise gross margin, net of credit-card fees, remained unchanged when compared to second-quarter 2012. The merchandise gross margin percentage, net of credit-card fees, for the Canada segment declined, when compared to second-quarter 2012, primarily as a result of an increase in cigarette taxes.
Operating income was $81 million for second-quarter 2013 compared to $164 million for second-quarter 2012.
Net income for the six months ending June 30, 2013 was $64 million. For the same period in 2012, net income was $122 million.
For the six-month period ending June 30, 2013, revenues were approximately $6.4 billion compared to $6.6 billion for the six-month period ending June 30, 2012.
Operating income was $110 million for the six months ending June 30, 2013, compared to $183 million for the six months ending June 30, 2012.
"We are extremely proud of our accomplishments since our May 1 spin," said Kim Bowers, CST chairman and CEO. "Our nearly 12,000 dedicated, hardworking employees never missed a beat. Our Corner Store team members continue to provide excellent customer service to our 10 million loyal, weekly customers; and our Service Center team members worked extraordinarily hard to make sure the transition to our new, independent company was a success."
Clay Killinger, CST senior vice president and CFO, said, "We believe that we are in a good position coming out of the spin. Ending the second quarter with $414 million in cash, and the additional liquidity available to us from our credit facilities, helps position us to grow for years to come."
CST opened five new stores in the first six months of the year; four in the United States in second-quarter 2013. It also opened three stores in the United States and one in Canada during July and early August.
"An important growth initiative for CST is to invest in building new stores, which provide us with more square footage to dedicate to our signature food service offerings, and an overall increase in merchandise sales," said Bowers. "In May, we opened our largest store to date, a 10,100-square-foot Corner Store and travel center in Three Rivers, Texas, located in the heart of the Eagle Ford Shale drilling activity. While this store is quite a bit larger than our typical new store format, it has performed tremendously well in a short period of time."
She said, "We are very pleased with the contribution we continue to see with our new stores, which average 3,000 and 5,000 square feet in Canada and the U.S., respectively. Since the beginning of the year, we have now opened eight new stores in the U.S. and one in Canada and are on track to open seven additional stores in the U.S. and six in Canada over the remaining months of 2013.
She added, "As the company heads into 2014, we have momentum and resources that should give us the ability to double our new store builds from this year in the U.S. while also maintaining the current level of new construction in Canada. We are very proud of our new store growth and equally proud of our strong base of legacy stores in neighborhoods across the southwest U.S. and eastern Canada, where our enthusiastic Corner Store team members have greeted and served their customers for years. And our customers can expect the same level of enthusiastic customer service at our newest stores."
CST Brands is one of the largest independent retailers of motor fuels and convenience merchandise in North America. Based in San Antonio, it employs nearly 12,000 people at approximately 1,900 locations throughout the southwestern United States and eastern Canada, offering a broad array of convenience merchandise, beverages, snacks and fresh food. In the United States, CST Corner Stores sell Valero fuels and signature products such as Fresh Choices baked and packaged goods, U Force energy and sport drinks, Cibolo Mountain coffee, FC Soda and Flavors2Go fountain drinks. In Canada, CST is the exclusive provider of Ultramar fuel and its Depanneur du Coin and Corner Stores sell signature Transit Cafe coffee and pastries.