SAN ANTONIO --CST Brands Inc., one of the largest independent retailers of motor fuels and convenience-store merchandise in North America, reported net income of $25 million for the three-month period ended Dec. 31, 2015, compared to $94 million for the same period in 2014. The company attributed the 73% drop to a decline motor fuel sales.
Net income for the year ended Dec. 31, 2015 was $149 million, compared to $200 million for 2014.
CST reported motor fuel revenues of $966 million for the quarter, compared to $1.31 billion for the same period in 2014. It reported motor fuel revenues of $4.46 billion for 2015, compared to $6.06 billion for 2014.
The company reported merchandise and services revenues of $374 million for the quarter, compared to $354 million for the same period in 2014. It reported merchandise and services revenues of $1.51 billion for 2015, compared to $1.40 billion for 2014.
Motor fuel gross profit (per gallon) in the United States for fourth-quarter 2015, after deducting credit-card fees and amounts distributed to CrossAmerica, was 19 cents compared to 32 cents in fourth-quarter 2014, which was primarily caused by a steeper declining crude oil and wholesale gasoline pricing environment in fourth-quarter 2014 compared to 2015.
U.S. merchandise and services gross profit increased 6% compared to the fourth-quarter 2014, primarily driven by an overall increase in merchandise sales driven by the acquisitions of Nice N Easy and Landmark convenience stores and an increase in the number of new-to-industry (NTI) stores.
- For details on how CST is leveraging Nice N Easy's programs to become a foodservice powerhouse, click here.
Operating income was $53 million for fourth-quarter 2015, a 66% decline from the $155 million achieved in fourth-quarter 2014. EBITDA was $101 million for the three-month period, compared to $195 million for the same period in 2014. The decrease in operating income and EBITDA was due primarily to a decrease in U.S. motor fuel gross profit of $70 million.
For the year ended Dec. 31, 2015, the company reported EBITDA of $422 million. Adjusted EBITDA, which includes the sales of the interests in CST Fuel Supply that occurred in January and July 2015, was $602 million. For the year ended Dec. 31, 2014, the company reported EBITDA and adjusted EBITDA of $479 million.
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NTI Expansion
In 2015, CST continued to advance its strategic goals, through its NTI store expansion, along with acquisition opportunities and the completion of dropdown transactions with CrossAmerica.
The company, alongside CrossAmerica, began the year with the joint purchase of 22 Shell-branded c-stores from Landmark Industries located in the San Antonio and Austin markets. Continuing its growth, the company in November announced its largest acquisition to date with the purchase of Flash Foods. The 165 c-stores located in Georgia and Florida allow the company to continue to grow and bridge the geographic gap between its existing retail networks. The transaction closed in early 2016.
Completing its first drop down transaction with CrossAmerica in January, CST sold a 5% limited partner interest in CST Fuel Supply LP in exchange for approximately 1.5 million CrossAmerica limited partner common units. This transaction was followed by dropdown transactions that were completed on July 1. CST sold an additional 12.5% in CST Fuel Supply LP and the real property associated with 29 NTI stores to CrossAmerica for an aggregate consideration of $142 million and 3.6 million common units. CST now owns 18.7% of the outstanding limited partner common units of CrossAmerica.
The company’s focus on organic growth continued in 2015 with the opening of 31 new U.S. stores and 11 in Canada. It expects to open a total of 45 to 50 new U.S. stores and 10 to 15 new stores in Canada during 2016. These new stores provide a much larger footprint that accommodates broader merchandise categories and food offerings, and have more fuel dispensers than the company's legacy stores.
“CST enjoyed strong fuel margins in the fourth quarter of 2015, but fuel margins were even stronger in the fourth quarter 2014, resulting in lower fourth-quarter 2015 results when compared to 2014. CST still delivered strong results in 2015, primarily due to the continued improvement in our merchandise profitability,” said Kim Lubel, chairman and CEO of CST Brands. “We continue to focus on growing our business, organically and through strategic acquisitions. We recently closed on the Flash Foods acquisition and opened 42 new stores during 2015.”
San Antonio-based CST has approximately 1,900 convenience stores in the southwestern United States, New York and eastern Canada offering a broad array of convenience merchandise, beverages, snacks and fresh food. In the United States, CST Corner Stores sell fuel 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 Dépanneur du Coin and Corner Stores sell signature Transit Café coffee and pastries.
CST also owns the general partner of Allentown, Pa.-based CrossAmerica Partners LP, a master limited partnership (MLP) and wholesale distributor of fuels.
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