EL PASO, Texas & Tempe, Ariz. -- Third-quarter 2015 was “the most profitable quarter ever for retail,” Jeff Stevens, Western Refining Inc. president and CEO, said during the company’s earnings call, “driven by historically high fuel margins and continued growth in merchandise sales.”
The retail segment had operating income of $16.463 million for the three months ended Sept. 30, 105, versus $10.203 million for the same period in 2014.
Retail fuel sold for third-quarter 2015 was 92.939 million gallons, compared to 80.705 million for third-quarter 2014. Fuel margin was 31 cents per gallon, versus 26 cents per gallon. Merchandise sales were $83.146 million in the 2015 third quarter, with a margin of 29.4%, compared to $70.9 million in the 2014 third quarter, with a margin of 28.7%. Fuel sales were up about 2%, and merchandise sales were up approximately 4% on a same-store basis when compared to 2014.
“Gasoline margins continued to be robust in October, and we expect to continue throughout the fourth quarter,” Stevens said.
Western Refining reported third-quarter 2015 net income of $153.3 million, compared to net income of $186.7 million for third-quarter 2014.
Western Refining is an independent refining and marketing company based in El Paso, Texas. The refining segment operates refineries in El Paso, and Gallup, N.M. The retail segment includes 260 gas stations and convenience stores, as well as unmanned fleet fueling locations, in Arizona, Colorado, New Mexico and Texas. The retail segment includes the Giant, Mustang, Sundial and Howdy's brands.
It also owns the general partner and approximately 66% of the limited partnership interest in Western Refining Logistics LP and the general partner and limited partnership interest in Northern Tier Energy LP.
In late 2013, in a deal mainly intended to expand its refinery presence, but which includes the downstream network, Western Refining acquired ACON Investments' (ACON) and TPG's ownership interests in Northern Tier for $775 million.
Western Refining now owns 100% of the general partner of NTI and owns approximately 38% of the outstanding common units of NTI.
Tempe, Ariz.-based Northern Tier Energy is an independent downstream energy company with refining, retail and logistics operations that serves the PADD II region of the United States. It operates a refinery in St. Paul Park, Minn. And it operates approximately 165 convenience stores and supports approximately 99 franchised convenience stores, primarily in Minnesota and Wisconsin, under the SuperAmerica trademark, and a bakery and commissary under the SuperMom's brand.
Executives on the call said they could not discuss the biggest news involving the two companies. In a deal that would bring the SuperAmerica convenience store chain under its complete control, Western Refining has made a proposal to acquire all of the remaining publicly held shares of Northern Tier for an estimated $2.52 billion.
On the company’s own conference call, Northern Tier CEO Daid Lamp said that it “reported that the Conflicts Committee of our general partners' board of directors received a non-binding offer from Western Refining to acquire the remaining Northern Tier limited partner units not already owned by Western Refining. There is no additional information to be provided that's beyond what has been disclosed last week in the press release and in our filings related to the receipt of the offer. There is also no timeline for the proposed review process. We will provide updates on the Western offered in the future as appropriate.”
Northern Tier Energy reported third quarter 2015 Net Income of $103.5 million, compared to $96.2 million for third quarter 2014.
“Our retail segment also performed well with our network of company-operated and franchise store locations achieving record fuel sale volumes,” said Lamp.
Retail operating income for third-quarter 2015 was $9.4 million, compared to $5.8 million for third-quarter 2014. Fuel margins were cents per gallon for third-quarter 2015 compared to 20 cents per gallon for the prior year period. Adjusted EBITDA for third-quarter 2015 was $11.5 million, compared to $7.6 million in third-quarter 2014.
The aggregate of fuel gallons sold at company-operated retail stores plus fuel gallons sold to franchise stores increased 8.2% for the quarter ended Sept. 30, 2015 compared to third-quarter 2014 and 10.4% compared to third-quarter 2013. This growth was primarily the result of adding 20 SuperAmerica franchise locations. The number of franchise locations totaled 102 as of Sept, 30, 2015, compared to 82 as of Sept. 30, 2014.
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