"Third quarter results were affected by the ongoing economic softness in our markets and by higher tobacco excise taxes," chairman and CEO Peter Sodini said. "People are being more cautious in how their spending their dollars."
EBITDA (earnings before interest, taxes, depreciation and amortization) was $48.0 million, compared with $66.1 [image-nocss] million a year ago. Net cash provided by operating activities was $41.0 million, compared with $60.0 million in the third quarter fiscal 2008. Results for last year's third quarter included $0.04 per share in losses on gasoline hedging positions.
Merchandise revenues for the quarter were up 0.5% overall and 0.2% on a comparable-store basis from a year ago. The merchandise gross margin was 35.0%, down from 36.5% a year ago, primarily due to increased taxes on cigarettes and other tobacco products. Total merchandise gross profit for the quarter was $151.1 million, down 3.5% from the corresponding period a year ago.
Retail gasoline gallons sold in the quarter were up 0.3% overall and down 0.5% on a comparable-store basis. Excluding diesel gallons, comparable-store gallons sold increased 1.4% from a year ago. Total gasoline revenues fell 41.2%, primarily due to a 40.4% year-over-year decline in the average retail price per gallon, to $2.21. The retail gross margin per gallon was 9.3 cents, compared with 10.7 cents a year ago. Total gasoline gross profit for the quarter was $50.0 million, down 13.0% from a year ago.
Total store operating and general and administrative (G&A) expenses were $153.2 million, up 3.3% from the prior year. Store operating expenses of $125.4 million were down 0.6% from a year ago, while G&A expenses of $27.8 million were up $5.6 million, or 25.2%. Of the $5.6 million year-over-year increase in G&A expenses, $4.6 million was related to real-estate gains and losses, CEO transition costs and the accelerated vesting of stock-based compensation.
"During the quarter, we experienced a weak gas margin due to a sharp rise in wholesale gasoline costs," Sodini said. "While our retail gas margin was below average for the quarter, the year-to-date margin was still strong at 15.3 cents per gallon, and we believe we remain on target for a full-year gas margin well above our long-term average and in line with our previous guidance."
For the first nine months of fiscal 2009, net income was $45.8 million, or $2.06 per share, compared with $8.8 million, or $0.40 per share, in the corresponding period last year. EBITDA for the first nine months of fiscal 2009 was $209.6 million, up 31.2% from $159.8 million for the first nine months of fiscal 2008. Net cash provided by operating activities was $147.9 million, compared with $91.2 million in the first three quarters of fiscal 2008.
During the quarter, the company completed the acquisition from Herndon Oil Corp. of 38 convenience stores, which are primarily located in the Mobile, Alabama market.Click here for more information about that deal.
The company believes its liquidity position remains excellent, with $215.4 million in cash on hand and approximately $143 million in available capacity under its revolving credit facilities. "Our strong cash flow from operations during the first nine months of fiscal 2009 has enabled us to acquire 41 stores for $48 million and to reduce our debt and lease financing obligations by $52 million without a significant change in our cash position," Sodini said.
The company also provided updated guidance ranges for its expected fiscal 2009 performance. The new ranges include the effect of acquired stores, as well as recent increases in state tobacco taxes in Florida and Mississippi: Merchandise revenues$1.65 billion to $1.66 billion Retail gasoline sales2.06 billion to 2.07 billion gallons Merchandise gross margin35.4% to 35.7% Retail gasoline gross margin14.4 cents to 15.4 cents per gallon Store operating and G&A expenses$617 million to $621 million Depreciation & amortization$106 million to $108 million Interest expense$84 million to $85 million Now based in Cary, N.C., The Pantry Inc. is the leading independently operated convenience-store chain in the southeastern United States and one of the largest independently operated convenience-store chains in the country. As of Aug. 3, 2009, the company operated 1,679 stores in 11 states under select banners, including Kangaroo Express, its primary operating banner.Click here to read an exclusive interview with Pete Sodini from the June issue of CSP Magazine.
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