Contacts: Susser Holdings Corporation
Mary Sullivan, Chief Financial Officer
(361) 693-3743, msullivan@susser.com
DRG&E
Ken Dennard, Managing Partner
(713) 529-6600, ksdennard@drg-e.com
Anne Pearson, Senior Vice President
(210) 408-6321, apearson@drg-e.com
Susser Holdings Reports 2nd Quarter Results
Merchandise Sales Up 11.8%, Adjusted EBITDA1 Up 15.7%, Net income Up 67% Company
Raises 2007 Merchandise Sales Guidance
CORPUS CHRISTI, Texas, Aug. 15, 2007 - Susser Holdings Corporation
(NASDAQ: SUSS) today reported that its second quarter 2007 merchandise sales
increased 11.8 percent to $105.9 million, versus $94.7 million a year ago.
Adjusted EBITDA1 increased 15.7 percent to $16.7 million, versus $14.4 million
in the prior year's second quarter. Net income totaled $6.3 million, up 67
percent versus $3.8 million in the prior year's second quarter. Diluted earnings
per share was $0.37, compared with $0.40 in the second quarter of 2006,
reflecting an increase in shares outstanding following the company's October
2006 IPO. Total revenues increased 6.7 percent to $692.8 million from $649.2
million in the same quarter of 2006. Gross profit increased 8.2 percent to $64.6
million, compared with $59.7 million in the second quarter of 2006.
"Better-than-expected retail fuel margins and good gains in merchandise
sales, both overall and on a same-store basis, drove these strong second quarter
results," said Sam L. Susser, Susser Holdings President and Chief Executive
Officer.
"Performance from our Laredo Taco Company restaurant business continues to
be very strong, and we opened six new kitchens during the quarter. We also
continue to see great customer response to the re-brandings of our convenience
stores to our own Stripes brand and our fuel islands to the Valero brand, which
we completed earlier in the year," Susser said.
New Convenience Store/Wholesale Dealer Site Update
During the second quarter of 2007, Susser opened five new large-format
convenience stores and closed one smaller store, growing the total store count
at July 1 to 329. The Company recently opened one additional store, for a total
of eight new stores to date this year. Seven stores are currently under
construction, with three more scheduled to commence during third quarter and one
store is under contract to be acquired and remodeled. An estimated 18 to 22 new
retail stores are planned for all of 2007, and substantially all are expected to
include a Laredo Taco Company restaurant.
In its wholesale operations, the Company added six new dealer sites and
discontinued three during the quarter, for a total of 374 dealer sites in
operation at the end of the second quarter. Susser has added 12 dealer sites
during the first half and expects to add 25 to 35 new dealer sites for all of
2007. Similar to the retail division, new sites typically outperform the sites
that are closed or where fuel supply is discontinued.
Second Quarter Financial Highlights
Merchandise sales from Susser's retail convenience stores totaled $105.9
million during the second quarter of 2007, an increase of 11.8 percent overall
and 6.4 percent on a same-store basis. This sales growth was led by strong
performance from the Laredo Taco Company restaurants, beer and snacks, and the
impact of an increase in the cigarette excise tax in Texas. Total merchandise
gross profit increased 8.4 percent to $34.0 million. Net merchandise margin was
32.1 percent - down from 33.2 percent a year ago - primarily reflecting the
impact of the $1-per-pack cigarette tax increase.
Susser Holdings Corporation 2Q 2007 Earnings - Page 2
Retail convenience store fuel volumes increased 5.5 percent to 106.6
million gallons for the quarter. This increase reflects a 3.2 percent increase
in average gallons sold per site, along with the opening of 12 new retail stores
in the second half of 2006 and seven in the first half of 2007. Retail fuel
gross margins increased 12.1 percent to 17.2 cents per gallon, versus 15.4 cents
per gallon in the second quarter of 2006, resulting in an 18.2 percent increase
in retail fuel gross profit to $18.4 million.
Wholesale fuel volumes sold to Susser's 374 dealers and other third-party
customers increased 0.7 percent to 118.7 million gallons in the quarter.
Wholesale fuel gross margin was 5.3 cents per gallon, versus 5.9 cents per
gallon a year ago, and wholesale fuel gross profit decreased 9.3 percent to $6.3
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, along with lower margins on dealer consignment gallons.
Year-to-Date Results
For the first six months of 2007, Susser reported that its merchandise
sales increased by 10.4 percent from the year-earlier first half to $199.3
million. Adjusted EBITDA1 increased by 16.6 percent to $24.5 million. Net income
totaled $3.9 million, or $0.23 per diluted share, versus a net loss of $0.2
million, or a loss of $0.02 per diluted share, in the first half of 2006. Total
revenues increased by 4.2 percent from a year ago to $1.22 billion.
2007 Guidance Updated
The Company is raising its merchandise same-store sales guidance and is
reaffirming its other existing 2007 guidance range as follows:
2007 Guidance 2007 First Half
Performance
Merchandise Same-Store Sales 4.5%-6.5% 5.7%
Growth (previously 4%-5%)
Merchandise Margin, net of
shortage 31-33% 32.1%
Retail Average Per-Store
Gallons Growth 2-6% 0.4%
Retail Fuel Margins 12-15 cents/gallon 14.6 cents
Wholesale Fuel Margins 4.0-5.5 cents/gallon 4.6 cents
New Retail Stores* 18-22 7
New Wholesale Dealer Sites* 25-35 12
* 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.
Susser Holdings Corporation 2Q 2007 Earnings - Page 3
Investor Conference Call and Webcast
Susser's management team will hold a conference call on Thursday, August
16, 2007, at 11 a.m. ET (10 a.m. CT) to discuss second quarter results. To
participate in the call, dial (303) 262-2130 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
August 23. To access the replay, dial (303) 590-3000 and enter the pass code
11094426#.
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 for
approximately 60 days.
About Susser Holdings Corporation
Corpus Christi, Texas-based Susser Holdings Corporation is a third
generation family led business that operates 330 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 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.
Susser Holdings Corporation 2Q 2007 Earnings - Page 4
Susser Holdings Corporation
Consolidated Statements of Operations
Unaudited
Three Months Ended Six Months Ended
July 2, July 1, July 2, July 1,
2006 2007 2006 2007
(dollars in thousands, except per share amounts)
Revenues:
Merchandise sales $ 94,713 $ 105,925 $ 180,512 $ 199,290
Motor fuel sales 548,477 580,580 980,053 1,009,695
Other income 5,968 6,290 11,904 12,460
Total revenues 649,158 692,795 1,172,469 1,221,445
Cost of sales:
Merchandise 63,296 71,882 120,965 135,287
Motor fuel 525,969 555,891 942,816 968,617
Other 212 459 333 583
Total cost of sales 589,477 628,232 1,064,114 1,104,487
Gross profit 59,681 64,563 108,355 116,958
Operating expenses:
Personnel 17,637 19,649 34,358 37,903
General and administrative 4,928 6,023 9,416 12,248
Other operating 16,463 16,762 31,212 31,452
Rent 5,527 6,106 11,084 12,120
Royalties 971 -- 1,851 66
Gain on disposal of assets
and impairment charge (273) (207) (277) (192)
Depreciation, amortization,
and accretion 5,913 6,983 11,558 13,485
Total operating expenses 51,166 55,316 99,202 107,082
Income from operations 8,515 9,247 9,153 9,876
Other income (expense):
Interest expense (4,671) (2,927) (9,418) (5,786)
Other miscellaneous (70) 91 111 196
Total other income (expense) (4,741) (2,836) (9,307) (5,590)
Minority interest in income
(loss) of consolidated
subsidiaries (14) (17) (33) (33)
Net income (loss) before
income taxes $ 3,760 $ 6,394 $ (187) $ 4,253
Income tax expense -- (120) -- (380)
Net income (loss) $ 3,760 $ 6,274 $ (187) $ 3,873
Net income (loss) per share:
Basic $ 0.41 $ 0.38 $ (0.02) $ 0.23
Diluted $ 0.40 $ 0.37 $ (0.02) $ 0.23
Weighted average shares
outstanding:
Basic 9,230,404 16,705,404 9,230,404 16,705,404
Diluted 9,293,964 16,766,204 9,230,404 16,769,925
Susser Holdings Corporation 2Q 2007 Earnings - Page 5
Susser Holdings Corporation
Consolidated Balance Sheets
December 31, July 1,
2006 2007
audited unaudited
Assets (in thousands)
Current assets:
Cash and cash equivalents $ 32,938 $ 19,550
Accounts receivable, net of allowance for
doubtful accounts of $1,179 at December 31,
2006 and $1,048 at July 1, 2007 44,084 54,554
Inventories, net 37,296 43,205
Assets held for sale 518 518
Other current assets 1,884 2,383
Total current assets 116,720 120,210
Property and equipment, net 232,454 249,640
Other assets:
Goodwill 44,762 44,762
Intangible assets, net 17,492 16,061
Other noncurrent assets 10,899 11,457
Total other assets 73,153 72,280
Total assets $ 422,327 $ 442,130
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 84,838 $ 98,676
Accrued expenses and other current liabilities 20,711 21,188
Total current liabilities 105,549 119,864
Long-term debt 120,000 120,000
Deferred gain, long-term portion 27,060 26,373
Other noncurrent liabilities 7,918 8,833
Total long-term liabilities 154,978 155,206
Minority interests in consolidated subsidiaries 630 658
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
July 1, 2007 168 168
Additional paid-in capital 166,398 167,757
Retained earnings (deficit) (5,396) (1,523)
Total shareholders' equity 161,170 166,402
Total liabilities and shareholders' equity $ 422,327 $ 442,130
Susser Holdings Corporation 2Q 2007 Earnings - Page 6
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:
-- 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;
-- securities analysts and other interested parties use them as a measure
of financial performance and debt service capabilities;
-- 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;
-- 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
-- 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:
-- they do not reflect our cash expenditures, or future requirements, for
capital expenditures or contractual commitments;
-- they do not reflect changes in, or cash requirements for, working
capital;
-- 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;
-- they do not reflect payments made or future requirements for income
taxes;
-- 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
-- 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 2Q 2007 Earnings - Page 7
The following table presents a reconciliation of net income to EBITDA,
adjusted EBITDA and adjusted EBITDAR:
Three Months Ended Six Months Ended
July 2, July 1, July 2, July 1,
2006 2007 2006 2007
(in thousands)
Net income $ 3,760 $ 6,274 $ (187) $ 3,873
Depreciation, amortization,
and accretion 5,913 6,983 11,558 13,485
Interest expense, net 4,671 2,927 9,418 5,786
Income tax expense -- 120 -- 380
EBITDA $ 14,344 $ 16,304 $ 20,789 $ 23,524
Non-cash stock based
compensation 113 684 226 1,359
Management fee 175 -- 373 --
Gain on disposal of assets (273) (207) (277) (192)
Other miscellaneous 70 (91) (111) (196)
Adjusted EBITDA $ 14,429 $ 16,690 $ 21,000 $ 24,495
Rent expense 5,527 6,106 11,084 12,120
Adjusted EBITDAR $ 19,956 $ 22,796 $ 32,084 $ 36,615
The following table presents a reconciliation of net cash provided by
operating activities to EBITDA, adjusted EBITDA and adjusted EBITDAR:
Six Months Ended
July 2, July 1,
2006 2007
(in thousands)
Net cash provided by operating activities $ 17,372 $ 16,034
Changes in operating assets & liabilities (6,094) 2,519
Gain on disposal of assets 277 192
Non-cash stock based compensation expense (226) (1,359)
Minority interest (26) (28)
Fair market value in nonqualifying derivatives 68 --
Income taxes -- 380
Interest expense, net 9,418 5,786
EBITDA $ 20,789 $ 23,524
Non-cash stock based compensation 226 1,359
Management fee 373 --
Gain on disposal of assets (277) (192)
Other miscellaneous (111) (196)
Adjusted EBITDA $ 21,000 $ 24,495
Rent expense 11,084 12,120
Adjusted EBITDAR $ 32,084 $ 36,615