SAN ANTONIO -- Driven by an increase in both the U.S. and Canadian motor fuel and merchandise and services gross profit, CST Brands Inc., for the three-month period ending June 30, has reported net income of $27 million, compared to net income of $25 million for the same period in 2015.
“During the second quarter of 2016, we grew the company with impressive results both inside the stores and at the fuel pumps,” said Kim Lubel, chairman and CEO of CST Brands. “This was led by continuing and substantial improvements in the U.S. with overall gross profits climbing to $233 million on increased sales and a 110-basis-point improvement in merchandise and services margin capture over the second quarter of 2015. Our Canadian stores grew merchandise and services gross profits 10%.”
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U.S. merchandise and services gross profit increased 27% when compared to second-quarter 2015, primarily driven by an overall increase in merchandise sales and gross margins in the company's U.S. core and new-to-industry (NTI) store sales, aided by acquisition and organic growth, including the company’s acquisition of the Flash Foods stores.
In addition to the improvement in nonfuel operations, motor fuel gross profit in the United States for second-quarter 2016 grew to $73 million vs. $59 million in the same quarter of 2015, which resulted from an increase in motor fuel gallons sold related to the company's Flash Foods acquisition, an increase in premium fuel sales and favorable crude oil and wholesale motor fuel price trends.
In Canada, motor fuel gross profit increased 3% and merchandise and services gross profit increased 5% when compared to second-quarter 2015, primarily driven by an increase in volume of motor fuel sold along with an improvement in merchandise and services sales that included grocery and packaged beverages. On a same-store basis, merchandise and services sales per site per day increased 5% when compared to second-quarter 2015.
In July, the company closed on the sale of 79 properties in California and Wyoming to 7-Eleven Inc. for approximately $408 million, “allowing us to bring down our debt and position the company for continued growth,” Lubel said. “The integration of our Flash Foods network is on target, and we have opened two new stores in Georgia and Florida. We have opened a total of 18 new stores in 2016 with 39 additional stores under construction. I am pleased with our continued growth, reach and ability to delight more customers every day."
For the six-month period ending June 30, the company has reported net income of $46 million vs. $39 million for the same period last year.
Year to date, CST has grown its company-operated stores by 19%; however, operating expenses have only increased 16% for the six-month period ending June 30, when compared to the same period in 2015. The increase in company-operated stores was due to the acquisition of Flash Foods and NTI store openings.
CST is one of the largest independent retailers of motor fuels and convenience-store merchandise in North America. Based in San Antonio, it has more than 2,000 locations throughout the southwestern United States, Georgia, Florida, New York and eastern Canada. 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 CrossAmerica Partners LP, a master limited partnership (MLP) and wholesale distributor of fuels, based in Allentown, Pa.
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