[LOGO] NEWS RELEASE
Contacts: Susser Holdings Corporation
Mary Sullivan, Chief Financial Officer
(361) 693-3743
FOR IMMEDIATE RELEASE
DRG&E
Ken Dennard, Managing Partner
(713) 529-6600, ksdennard@drg-e.com
Anne Vincent, Senior Vice President
(210) 408-6321, avincent@drg-e.com
Susser Holdings Reports 1st Quarter Results
Merchandise Sales Up 8.8%, Adjusted EBITDA(1) Up 18.8%
Company Reaffirms 2007 Guidance
CORPUS CHRISTI, Texas, May 16, 2007 - Susser Holdings Corporation (NASDAQ: SUSS)
today reported that its first quarter 2007 merchandise sales increased 8.8
percent to $93.4 million, versus $85.8 million a year ago. Adjusted EBITDA(1)
increased 18.8 percent to $7.8 million, versus $6.6 million in the prior year's
first quarter.
Total revenues increased to $528.6 million from $523.3 million in the same
quarter of 2006. Total gross profit increased 7.6 percent to $52.4 million,
compared with $48.7 million in the prior year's first quarter, primarily
reflecting increased merchandise sales and improved retail fuel margins. The
Company reported a net loss in the quarter of $2.4 million, or $0.14 per diluted
share, compared with a net loss of $3.9 million, or $0.43 per diluted share, in
the first quarter of 2006. The improvement in year-over-year net results is due
to higher gross profit and lower interest expense.
"Despite the impact of unusual winter weather patterns that negatively
impacted sales in our key markets, we recorded strong year-over-year growth in
merchandise sales and merchandise gross profit during the first quarter," said
Sam L. Susser, Susser Holdings President and Chief Executive Officer. "We also
benefited from stronger retail fuel margins.
"We continue to be very pleased with the growth of our Laredo Taco Company
restaurant business. We opened six new kitchens in the first quarter, and we
expect to add a total of 25-30 kitchens in our new and existing stores in 2007.
"With the winter behind us and our convenience store and fuel island
re-branding projects now complete, we expect improved retail sales performance
as we move into the seasonally stronger spring and summer quarters," Susser
said.
"Our organic growth program is on track, and we are actively seeking
acquisition opportunities that will be accretive to earnings and offer strong
synergies."
Susser Holdings Corporation 1Q 2007 Earnings - Page 2
New Convenience Store/Wholesale Dealer Site Update
During the first quarter of 2007, Susser opened two new large-format
convenience stores and closed two smaller stores, leaving the total store count
at April 1 at 325. Susser expects to open four additional stores in the second
quarter of 2007. An estimated 18 to 22 new retail stores are planned for all of
2007, and substantially all of these stores are expected to include a Laredo
Taco Company restaurant.
In its wholesale operations, the Company added six new dealer sites and
discontinued two, for a total of 371 dealer sites in operation at the end of the
first quarter. Susser expects to add 25 to 35 new dealer sites for all of 2007.
First Quarter Financial Highlights
Merchandise sales from Susser's retail convenience stores totaled $93.4
million during the first quarter of 2007, an increase of 8.8 percent overall and
4.9 percent on a same-store basis. This growth was led by strong sales
performance from the Laredo Taco Company restaurants and increased sales of
beer, packaged beverages and coffee, and the impact of an increase in the
cigarette excise tax in Texas. Total merchandise gross profit increased 6.5
percent to $30.0 million. Net merchandise margin was 32.1 percent - down
slightly from 32.8 percent a year ago - primarily reflecting the impact of the
cigarette tax increase.
Retail convenience store fuel volumes declined 1.4 percent to 101.8
million gallons for the quarter, reflecting the impact of unusual winter weather
in key markets during January and February, and temporary disruptions relating
to the conversion of the fuel brand. Average volumes sold per store for the
quarter decreased 2.4 percent to 317,443 gallons. Retail fuel gross margins
increased, however, to 11.9 cents per gallon, versus 9.2 cents per gallon in the
first quarter of 2006, producing a 27.6 percent increase in retail fuel gross
profit to $12.1 million.
Wholesale fuel volumes sold to Susser's 371 dealers and other third-party
customers increased 1.6 percent to 111.6 million gallons in the quarter.
Wholesale fuel gross margin was 3.8 cents per gallon, versus 4.8 cents per
gallon a year ago, and wholesale fuel gross profit decreased 18.3 percent to
$4.3 million. The lower margins partly reflect a mix change resulting from the
June 2006 sale of 25 unattended units, which produced higher margins than the
average wholesale business.
Susser Holdings Corporation 1Q 2007 Earnings - Page 3
2007 Guidance Reaffirmed
The Company is reaffirming its existing 2007 guidance range as follows:
Merchandise Same-Store Sales Growth 4-5%
Merchandise Margins 31-33%
Retail Average Per-Store Gallons Growth 2-6%
Retail Fuel Margins 12-15 cents/gallon
Wholesale Fuel Margins 4.0-5.5 cents/gallon
New Retail Stores* 18-22
New Wholesale Dealer Sites* 25-35
* Does not reflect store closures, which are typically much lower volume
locations than new sites.
- ----------
(1) Adjusted EBITDA is a non-GAAP financial measure of performance and liquidity
that has limitations and should not be considered as a substitute for net income
or cash provided by (used in) operating activities. Please refer to the
discussion and tables under "Reconciliations of Non-GAAP Measures" at the end of
this news release for a discussion of our use of adjusted EBITDA and a
reconciliation to net income and cash provided by operating activities for the
periods presented.
Investor Conference Call and Webcast
Susser's management team will hold a conference call on Thursday, May 17,
2007, at 11 a.m. ET (10 a.m. CT) to discuss first quarter results. To
participate in the call, dial (303) 262-2137 at least 10 minutes before the call
begins and ask for the Susser conference call. A replay will be available
approximately two hours after the call ends and will be accessible through May
24. To access the replay, dial (303) 590-3000 and enter the pass code 11088756#.
The conference call will also be accessible via Susser's Web site at
www.susser.com. To listen to the live call, please visit the Investor Relations
page of Susser's Web site at least 10 minutes early to register and download any
necessary software. An archive will be available shortly after the call and will
be accessible for approximately 60 days.
About Susser Holdings Corporation
Corpus Christi, Texas-based Susser Holdings Corporation is a third
generation family led business that operates 325 convenience stores in Texas and
Oklahoma under the Stripes banner and supplies branded motor fuel to over 370
independent dealers through its wholesale fuel division. Susser owns and
operates over 150 Laredo Taco Company restaurants inside the Stripes convenience
stores that feature authentic "made from scratch" Mexican food.
Forward-Looking Statements
This news release contains "forward-looking statements" describing Susser's
objectives, targets, plans, strategies, costs, anticipated capital expenditures,
expected cost savings, costs of our store re-branding initiatives, expansion of
Susser Holdings Corporation 1Q 2007 Earnings - Page 4
our food service offerings, potential acquisitions and new store openings and
dealer locations. These statements are based on current plans and expectations
and involve a number of risks and uncertainties that could cause actual results
and events to vary materially, including but not limited to: competition from
other convenience stores, gasoline stations, supermarkets, hypermarkets and
other wholesale fuel distributors; changes in economic conditions; volatility in
energy prices; political conditions in key crude oil producing regions;
wholesale cost increases of tobacco products; adverse publicity concerning food
quality, food safety or other health concerns related to our restaurant
facilities; consumer behavior, travel and tourism trends; devaluation of the
Mexican peso or restrictions on access of Mexican citizens to the U.S.;
unfavorable weather conditions; changes in state and federal regulations;
dependence on one principal supplier for merchandise, two principal suppliers
for gasoline and one principal provider for transportation of substantially all
of our motor fuel; financial leverage and debt covenants; changes in debt
ratings; inability to identify, acquire and integrate new stores; dependence on
senior management; acts of war and terrorism; and other unforeseen factors. For
a full discussion of these and other risks and uncertainties, refer to the "Risk
Factors" section of the Company's annual report on Form 10-K for the year ended
December 31, 2006. These forward-looking statements are based on and include our
estimates as of the date hereof. Subsequent events and market developments could
cause our estimates to change. While we may elect to update these
forward-looking statements at some point in the future, we specifically disclaim
any obligation to do so, even if new information becomes available, except as
may be required by applicable law.
Financial statements follow
Susser Holdings Corporation 1Q 2007 Earnings - Page 5
Susser Holdings Corporation
Consolidated Statements of Operations
Unaudited
Three Months Ended
-----------------------------------
April 2, April 1,
2006 2007
-----------------------------------
(dollars in thousands,
except per share amounts)
Revenues:
Merchandise sales $ 85,799 $ 93,365
Motor fuel sales 431,576 429,115
Other income 5,936 6,170
-----------------------------------
Total revenues 523,311 528,650
Cost of sales:
Merchandise 57,669 63,405
Motor fuel 416,847 412,726
Other 121 124
-----------------------------------
Total cost of sales 474,637 476,255
-----------------------------------
Gross profit 48,674 52,395
Operating expenses:
Personnel 16,721 18,254
General and administrative 4,488 6,225
Other operating 14,749 14,690
Rent 5,557 6,014
Royalties 880 66
Loss (gain) on disposal of assets and impairment charge (4) 15
Depreciation, amortization, and accretion 5,645 6,502
-----------------------------------
Total operating expenses 48,036 51,766
-----------------------------------
Income from operations 638 629
Other income (expense):
Interest expense (4,747) (2,859)
Other miscellaneous 181 105
-----------------------------------
Total other income (expense) (4,566) (2,754)
Minority interest in income (loss) of consolidated subsidiaries (19) (16)
-----------------------------------
Net income (loss) before income taxes (3,947) (2,141)
Income tax expense -- (260)
-----------------------------------
Net income (loss) $ (3,947) $ (2,401)
===================================
Net income (loss) per share:
Basic $ (0.43) $ (0.14)
Diluted $ (0.43) $ (0.14)
Weighted average shares outstanding:
Basic 9,230,404 16,705,404
Diluted 9,230,404 16,705,404
Susser Holdings Corporation 1Q 2007 Earnings - Page 6
Susser Holdings Corporation
Consolidated Balance Sheets
December 31, April 1,
2006 2007
------------ ------------
audited unaudited
Assets (in thousands)
Current assets:
Cash and cash equivalents $ 32,938 $ 20,018
Accounts receivable, net of allowance for doubtful accounts
of $1,179 at December 31, 2006 and $1,246 at April 1, 2007 44,084 52,688
Inventories, net 37,296 38,954
Assets held for sale 518 518
Other current assets 1,884 3,705
------------ ------------
Total current assets 116,720 115,883
Property and equipment, net 232,454 244,318
Other assets:
Goodwill 44,762 44,762
Intangible assets, net 17,492 16,676
Other noncurrent assets 10,899 11,036
------------ ------------
Total other assets 73,153 72,474
------------ ------------
Total assets $ 422,327 $ 432,675
============ ============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 84,838 $ 96,150
Accrued expenses and other current liabilities 20,711 21,498
------------ ------------
Total current liabilities 105,549 117,648
Long-term debt 120,000 120,000
Deferred gain, long-term portion 27,060 26,684
Other noncurrent liabilities 7,918 8,253
------------ ------------
Total long-term liabilities 154,978 154,937
Minority interests in consolidated subsidiaries 630 645
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value, 125,000,000 shares authorized, 16,824,162
issued and outstanding as of December 31, 2006, 16,831,662 issued and
outstanding as of April 1, 2007 168 168
Additional paid-in capital 166,398 167,073
Retained earnings (deficit) (5,396) (7,796)
------------ ------------
Total shareholders' equity 161,170 159,445
------------ ------------
Total liabilities and shareholders' equity $ 422,327 $ 432,675
============ ============
Susser Holdings Corporation 1Q 2007 Earnings - Page 7
Reconciliations of Non-GAAP Measures to GAAP Measures
We define EBITDA as net income before net interest expense, income taxes
and depreciation, amortization and accretion. Adjusted EBITDA further adjusts
EBITDA by excluding cumulative effect of changes in accounting principles,
discontinued operations, non-cash stock-based compensation expense and certain
other operating expenses that are reflected in our net income that we do not
believe are indicative of our ongoing core operations, such as significant
non-recurring transaction expenses and the gain or loss on disposal of assets
and impairment charges. Adjusted EBITDAR adds back rent to adjusted EBITDA. In
addition, those expenses that we have excluded from our presentation of adjusted
EBITDA and adjusted EBITDAR (along with our royalty expenses, marketing
expenses, management fees and other items) are also excluded in measuring our
covenants under our revolving credit facility and the indenture governing our
senior notes.
We believe that adjusted EBITDA and adjusted EBITDAR are useful to
investors in evaluating our operating performance because:
o they are used as a performance and liquidity measure under our
subsidiaries' revolving credit facility and the indenture governing
our senior notes, including for purposes of determining whether they
have satisfied certain financial performance maintenance covenants
and our ability to borrow additional indebtedness and pay dividends
to us;
o securities analysts and other interested parties use them as a
measure of financial performance and debt service capabilities;
o they facilitate management's ability to measure operating
performance of our business because they assist us in comparing our
operating performance on a consistent basis since they remove the
impact of items not directly resulting from our retail convenience
stores and wholesale motor fuel distribution operations;
o they are used by our management for internal planning purposes,
including aspects of our consolidated operating budget, capital
expenditures, as well as for segment and individual site operating
targets; and
o they are used by our board of directors and management for
determining certain management compensation targets and thresholds.
EBITDA, adjusted EBITDA and adjusted EBITDAR are not recognized terms
under GAAP and do not purport to be an alternative to net income as a measure of
operating performance or to cash flows from operating activities as a measure of
liquidity. EBITDA, adjusted EBITDA and adjusted EBITDAR have limitations as
analytical tools, and you should not consider them in isolation or as a
substitute for analysis of our results as reported under GAAP. Some of these
limitations include:
o they do not reflect our cash expenditures, or future requirements,
for capital expenditures or contractual commitments;
o they do not reflect changes in, or cash requirements for, working
capital;
o they do not reflect significant interest expense, or the cash
requirements necessary to service interest or principal payments on
our revolving credit facility or senior notes;
o they do not reflect payments made or future requirements for income
taxes;
o although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA, adjusted EBITDA and adjusted
EBITDAR do not reflect cash requirements for such replacements; and
o because not all companies use identical calculations, our
presentation of EBITDA, adjusted EBITDA and adjusted EBITDAR may not
be comparable to similarly titled measures of other companies.
Susser Holdings Corporation 1Q 2007 Earnings - Page 8
The following table presents a reconciliation of net income to EBITDA,
adjusted EBITDA and adjusted EBITDAR:
Three Months Ended
-----------------------------
April 2, April 1,
2006 2007
-----------------------------
(in thousands)
Net income $ (3,947) $ (2,401)
Depreciation, amortization, and accretion 5,645 6,502
Interest expense, net 4,747 2,859
Income tax expense -- 260
-----------------------------
EBITDA $ 6,445 $ 7,220
Non-cash stock based compensation 113 675
Management fee 198 --
Loss (gain) on disposal of assets (4) 15
Other miscellaneous (181) (105)
-----------------------------
Adjusted EBITDA $ 6,571 $ 7,805
=============================
Rent expense 5,557 6,014
-----------------------------
Adjusted EBITDAR $ 12,128 $ 13,819
=============================
The following table presents a reconciliation of net cash provided by
operating activities to EBITDA, adjusted EBITDA and adjusted EBITDAR:
Three Months Ended
-----------------------------
April 2, April 1,
2006 2007
-----------------------------
(in thousands)
Net cash provided by operating activities $ 11,521 $ 4,577
Changes in operating assets & liabilities (9,585) 230
Gain on disposal of assets 4 (15)
Non-cash stock based compensation expense (113) (675)
Minority interest (19) (16)
Fair market value in nonqualifying derivatives (110) --
Income taxes -- 260
Interest expense, net 4,747 2,859
-----------------------------
EBITDA $ 6,445 $ 7,220
Non-cash stock based compensation 113 675
Management fee 198 --
Gain on disposal of assets (4) 15
Other miscellaneous (181) (105)
-----------------------------
Adjusted EBITDA $ 6,571 $ 7,805
=============================
Rent expense 5,557 6,014
-----------------------------
Adjusted EBITDAR $ 12,128 $ 13,819
=============================