SAN ANTONIO -- With CST Brands Inc.’s merger with Alimentation Couche-Tard Inc. “on track to close during second-quarter 2017,” chairman and CEO Kim Lubel called 2016 “a year of significant growth and change for CST.”
In a press release, she cited the Flash Foods acquisition in February, the completion of 50 new-to-industry (NTI) stores in the United States and Canada and shareholder approval of the pending merger with Couche-Tard as the agents of that change.
The company did not host an earnings conference call or offer financial guidance. CST and Couche-Tard expect the deal to close during second-quarter 2017, she said.
CST reported fourth-quarter 2016 net income of $18 million, a 28% decline compared to net income of $25 million for the same period in 2015.
Here are details of CST Brands' financial state as its acquisition by Couche-Tard nears …
A 25% decrease in U.S. motor fuel gross profit drove the decline in net income for the quarter, the company said. Motor fuel gross profit in the United States for fourth-quarter 2016 was $66 million, vs. $88 million in the same quarter of 2015.
It attributed the drop in motor fuel gross profit primarily to a 31% decline in motor fuel gross profit on a per-gallon basis (cents per gallon or CPG), decreasing from 19.4 CPG in fourth-quarter 2015 to 13.4 CPG in fourth-quarter 2016. The decline was partially offset by a 10% increase in total motor fuel gallons sold, resulting from the company's expanded core network.
U.S. merchandise and services gross profit increased 19% when compared to fourth-quarter 2015, primarily driven by an overall increase in merchandise and services sales and gross profits in the company's U.S. core and NTI store sales, aided by acquisition and organic growth.
Core same-store merchandise and services sales per store per day declined 3% during fourth-quarter 2016, primarily due to continued softness in parts of southern Texas caused by a decrease in economic activity in the energy sector. Core same-store merchandise and services gross profit dollars were relatively flat when compared to the same period in 2015, as a result of a 60 basis point improvement in gross margin capture during the quarter.
For full-year 2016, the company reported net income of $324 million compared to $149 million for 2015.
For 2016, motor fuel gross profit in the United States was $309 million, vs. $360 million in 2015. The decline in motor fuel gross profit was primarily attributable to a decline in motor fuel gross profit on a CPG basis, which was partially offset by a 12% increase in total motor fuel gallons sold.
U.S. merchandise and services gross profit increased 22% when compared to 2015, primarily driven by an overall increase in merchandise and services sales and gross profits in the company's U.S. core and NTI store sales, aided by acquisition and organic growth.
Core same-store merchandise and services sales per store per day declined 1% during 2016; however, core same-store merchandise and services gross profits grew by 2% in 2016, resulting from a 100 basis point improvement in margin capture.
CST Brands is one of the largest independent retailers of motor fuels and convenience merchandise in North America. Based in San Antonio, it has more than 2,000 locations in the southwestern United States, Georgia, Florida, New York under the Corner Stores, Nice N Easy Grocery Shoppes, and Flash Foods banners and in eastern Canada under the Ultramar fuel and Depanneur du Coin and Corner Stores banners.
CST also owns the general partner of CrossAmerica Partners LP, a master limited partnership (MLP) and wholesale distributor of fuels based in Allentown, Pa.