As reported yesterday in a CSP Daily News Flash, the sale involved 10 stores to one large, regional convenience store chain. CSP Daily News has learned that those stores were purchased by WilcoHess. The remaining stores were sold [image-nocss] to various other parties.
With headquarters in Brentwood, Tenn., Delek US operates more than 450 convenience stores under the MAPCO Express, MAPCO Mart, East Coast, Discount Food Mart, Fast Food & Fuel and Favorite Markets brand names. Stores are located primarily in and around Memphis, Chattanooga and Nashville, Tenn., northern Georgia and northern Alabama.WilcoHess is amajor operator of travel plazas and convenience stores in the southeastern United States, operating more than 400 stores.
Matrix Capital Markets Group announced the successful sale yesterday. Tom Kelso, managing director and head of the energy and multi-site retail team at Richmond, Va.-based Matrix Capital, said, "We are very pleased to have advised MAPCO on this transaction which resulted in the successful sale of most of their Virginia-based retail locations."
Delek US Holdings made the decision late last year to exit retail in the Virginia market. "By exiting the Virginia market, which is geographically distant and smaller than our other divisions, we are positioning ourselves to pursue opportunities, which should be better strategic fit for us over the long term," said vice president and CFO Ed Morgan during a fourth-quarter 2008 earnings call in March.
"As of the end of [2008], we had sold 12 of the 36 properties located in the Virginia market," he added. "In 2008, the proceeds from the 12 sales, net of expenses, were $9.8 million. [As of March], we have also now closed an additional seven properties, bringing the total number of Virginia properties sold to 19."
When asked how that real-estate revenue was being spent, president and CEO Uzi Yemin said, "We paid debt with that." But he didn't rule out the possibility of acquisitions in some of Delek's other retail markets.
"The market condition are very favorable, if you will, to somebody that has [our income]. And some of our peer don't enjoy that balance sheet," he said. "So we do see ourselves looking into opportunities. However, I must be cautious with that. The market is very trendy, as you know. And we want to be careful when we make an acquisition to protect our balance sheet."
Last week, Delek US Holdings announced financial results for first-quarter 2009, ended Mar. 31, 2009. It reported net income from continuing operations of $1.6 million, 3 cents per diluted share, in first-quarter 2009, versus a net loss from continuing operations of $5.2 million, or (10) cents per basic share, in first-quarter 2008. Excluding special items, the company reported an adjusted net loss from continuing operations of $2.5 million, or (5) cents per basic share.
Retail segment contribution margin declined to $7 million in the first quarter 2009, compared to $9.9 million in the first quarter 2008. Retail fuel margins returned to more normalized levels during the first quarter, in-line with the historical seasonal trend of years past.
First-quarter 2009 retail fuel margins were 11.0 cents per gallon, compared to 12.6 cents per gallon in the first quarter 2008. Although same-store retail fuel gallons sold declined by 2.1% in the first quarter 2009, the year-over-year change in the same-store gasoline gallons sold in the first quarter 2009, excluding the impact of leap year, increased approximately 1%.
Delek US reported a 4.5% same-store merchandise sales decline in first-quarter 2009, attributable to lower sales of several food-related categories, including dairy and soft drinks, in addition to a general reduction in discretionary consumer spending. Merchandise margin for the three months ended Mar. 31, 2009, was 31.9%, versus 32.2% in first-quarter 2008.
During second-quarter 2009, the retail segment intends to reimage more than 20 stores. Through Mar. 31, 2009, the retail segment had reimaged approximately 20% of the company's total store base.
During fourth-quarter 2008, the company's Virginia operations were reclassified to discontinued operations and the assets and liabilities associated with remaining stores are reflected as held for sale for all periods.
Refining contribution margin increased to $19.4 million in first-quarter 2009, compared to $7.6 million in first-quarter 2008.
Marketing segment contribution margin was $5 million in first-quarter 2009, compared to $6.4 million in first-quarter 2008. First-quarter marketing segment contribution margin included $3.1 million of intercompany marketing fees paid by the refining segment to the marketing segment.
On Mar. 31, 2009, the company completed the intra-company transfer of certain pipeline and storage assets from the company's refining segment to the company's marketing segment for total cash consideration of $29.7 million. Under the terms of the deal, the marketing segment will assume the operation of two pipelines, in addition to 11 storage tanks with 900,000 barrels of shell storage. The company anticipates this transaction will shift approximately $6 million in contribution margin from refining to marketing on annual basis subject to crude throughput levels, going forward. The strategic intent of this transaction is to move ahead with a long-term plan to consolidate the company's marketing and transportation assets under a single logistics arm.
Click hereto view a complete transcript of Delek US's most recent earnings call, courtesy of SeekingAlpha.com
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