Susser Holdings Reports Record Fourth Quarter, Full Year 2007 Results
Fourth quarter same-store merchandise sales up 11.7%,
merchandise margin increases 45 basis points to 32.7%
CORPUS CHRISTI, Texas, March 12 /PRNewswire-FirstCall/ -- Susser Holdings
Corporation (Nasdaq: SUSS) today reported that its total fourth quarter 2007
merchandise sales -- including approximately seven weeks of contribution from
Town & Country Food Stores -- increased 54.1 percent to $136.7 million, versus
$88.7 million a year earlier for the stand-alone Susser operation.
Total revenues increased 68.6 percent to a record $821.9 million from
$487.6 million in the fourth quarter of 2006. Gross profit, including the
partial quarter's contribution from Town & Country, increased 61.6 percent to a
record $77.7 million, compared with $48.1 million in the year-ago quarter from
the stand-alone Susser operation.
Adjusted EBITDA(1) increased 189.0 percent to $17.0 million, compared with
$5.9 million in the prior year's fourth quarter, reflecting the Town & Country
contribution, along with stronger results from the merchandise segment and
sharply higher combined retail fuel margins of 14.1 cents per gallon, versus 9.2
cents per gallon realized a year ago.
The Company recorded net income of $7.5 million in the fourth quarter, or
$0.44 per diluted share, versus a net loss of $10.9 million, or $0.72 per
diluted share, in the year-earlier quarter. The fourth quarter of 2007 included
a non-recurring tax benefit of $6.6 million, or $0.39 per diluted share, related
to the release of the Company's remaining tax valuation allowance. The fourth
quarter of 2006 included a $7.1 million non-recurring charge, or $0.46 per
diluted share, related to the redemption of $50 million of senior notes in
November 2006. The year-over-year improvement in what is typically a seasonally
weak quarter reflects an 11.7 percent same-store merchandise sales increase,
higher merchandise margins and significantly stronger fuel margins, as well as
the contribution from Town & Country.
For the full year 2007 -- including the seven week contribution from Town
& Country -- merchandise sales increased 21.6 percent from a year ago to $444.2
million. Total revenues increased 20.0 percent to $2.7 billion, and gross profit
increased 18.3 percent to $261.1 million. Adjusted EBITDA(1) increased 28.9
percent to $58.3 million. Net income totaled $16.3 million, or $0.97 per diluted
share, versus a net loss of $3.7 million, or $0.35 per diluted share, for the
full year 2006. Net results for the full year 2007 were positively impacted by
the release of the total $9.8 million, or $0.58 per diluted share, tax valuation
allowance established in 2006 when the Company became a taxable corporation
concurrent with its initial public offering. Net results for the full year 2006
were negatively impacted by a charge of $0.33 per diluted share related to the
redemption of notes in the fourth quarter.
To show more comparable results for both years, Susser is also providing
pro forma financial results for both years reflecting the Town & Country
acquisition as well as the October 2006 IPO. On a pro forma(2) basis, the
Company reported earnings of $0.50 per diluted share for the full year 2007
versus earnings of $0.21 per diluted share for the full year 2006, and adjusted
EBITDA(1) was $99.9 million for 2007 versus $80.8 million for 2006.
"2007 was an outstanding year for Susser Holdings," said Susser President
and Chief Executive Officer Sam L. Susser. "We saw very strong gains in our
merchandise segment and higher-than-average retail fuel margins for the year. We
doubled the size of our pro forma adjusted EBITDA through the acquisition of
Town & Country Food Stores, which gave us a leadership position in attractive
markets in West Texas and Eastern New Mexico as well as opportunities to realize
operating leverage and cost synergies across the combined companies.
"Looking at the fourth quarter of 2007," Susser said, "our merchandise
segment continued to benefit from the marketing and store operations programs we
began in early 2007, which drove customer traffic and transaction size.
Same-store sales growth from Stripes stores was the highest we've seen in eight
years. Retail fuel sales also benefited from the higher traffic, and retail fuel
margins were roughly a nickel a gallon higher than they were a year ago. The
contribution of Town & Country for the last seven weeks of the quarter further
boosted our financial and operating metrics across the board."
New Convenience Store/Wholesale Dealer Site Update
During the fourth quarter of 2007, the Company opened nine new retail
units, bringing the total number of stores built and acquired in 2007 to 186,
including 18 new retail stores plus the 168 acquired Town & Country stores. Also
during the fourth quarter, four retail locations were closed, bringing the total
retail store count to 504 as of December 30. Three additional stores have been
opened since year-end. The Company also opened restaurants in 11 stores in the
fourth quarter and closed two, which, combined with the 113 located in the
acquired Town & Country stores, brings the total number of stores with
restaurant operations to 282, or 56 percent, at year-end.
In its wholesale operations, Susser added 13 new dealer sites and
discontinued three during the fourth quarter, for a total of 387 dealer sites in
operation at the end of 2007. Similar to the retail division, new sites
typically outperform sites that are closed or where fuel supply is discontinued.
Integration Highlights
As reported earlier, the Company has signed new contracts with its major
grocery/merchandise and beverage suppliers. It is continuing to negotiate new
combined supply agreements with additional merchandise vendors and is actively
working to improve its motor fuel supply chain in its new markets.
This summer the Company plans to rebrand two to three Town & Country
locations in West Texas as Stripes locations as a test program in anticipation
of rolling out a rebranding program for all Town & Country locations that is
expected to commence in the fourth quarter of 2008.
Expected Merger Synergies
Susser expects to achieve combined annual cost synergies of $5 million
through the integration of the Susser and Town & Country organizations. General
and administrative expense synergies of $1 million are expected for 2008 and $2
million annually for 2009. Marketing synergies of $3 million annually are
anticipated, with approximately $1 million to be realized in 2008, reaching the
full $3 million of savings for 2009. It should be noted that Town & Country's
motor fuel margins were several cents higher in 2007 than historical levels.
Expected synergies in merchandise and operating expenses could be offset by a
return to historical fuel margin levels.
Fourth Quarter Financial and Operating Highlights
Convenience store merchandise sales, including seven weeks of Town &
Country's contribution, totaled $136.7 million during the fourth quarter of
2007, an increase of 54.1 percent overall; approximately two-thirds of this
increase in sales volume was attributable to Town & Country locations. On a
same-store basis for Stripes stores alone, merchandise sales increased 11.7
percent for the quarter. This unusually strong growth in the retail merchandise
segment was led by increases in cigarette, food service, packaged drinks, beer
and snack sales. Cigarette sales increased in part due to the impact of a
dollar-a-pack increase in the cigarette excise tax in Texas effective January
2007.
Total merchandise gross profit for the fourth quarter net of shortages
increased 56.3 percent to $44.6 million; nearly two-thirds of this increase in
gross profit was attributable to Town & Country stores. Net merchandise margin
on a combined store basis was 32.7 percent -- an increase of 45 basis points
from a year ago -- with both regions experiencing similar margins. The increase
is due to the benefits of marketing and operations programs that began in early
2007, partly offset by the impact of the cigarette margin tax, which increases
revenues but decreases margins.
Retail store fuel volumes increased 46.9 percent to 139.2 million gallons
for the fourth quarter; approximately three-fourths of this increase in volume
was attributable to Town & Country locations. Excluding the Town & Country
contribution, average gallons sold per Stripes location increased 9.1 percent
from the fourth quarter of 2006. The favorable per-store comparison is in part
the result of the re-branding of the Company's fuel islands to the Valero brand
during the year-earlier quarter -- which impacted our fuel volumes during the
conversion process -- and in part due to investments back into our store base.
Retail fuel sales increased 98.6 percent to $397.9 million, driven by the
additional Stripes and Town & Country volumes and a 35.2 percent increase in the
retail price of fuel. Gross margins increased to 14.1 cents per gallon from 9.2
a year ago, which resulted in a 126 percent increase in retail fuel gross
profit, to $19.6 million.
Wholesale fuel volumes sold to Susser's 387 dealers and other third-party
customers increased 5.3 percent to 116.2 million gallons in the fourth quarter.
Wholesale fuel revenues increased 45.3 percent to $280.0 million as a result of
both the volume increase and a 38 percent increase in average wholesale fuel
selling prices. Wholesale fuel gross margin was 5.5 cents per gallon, versus 4.5
cents per gallon a year earlier. Wholesale fuel gross profit increased 28.1
percent to $6.4 million, reflecting higher wholesale fuel selling prices.
2008 Guidance
The Company has issued the following guidance for 2008:
2008 2007 2007 2006
Actual Pro Pro
Guidance Results Forma (d) Forma (d)
Merchandise Same-
Store Sales
Growth 4.5%-6.0% (a) 7.7% (a) 8.6% 6.6%
Merchandise Margin,
Net of Shortage 32.0%-34.0% 32.5% 32.4% 33.3%
Retail Average
Per-Store Gallons
Growth 2.0%-6.0% 5.9% 3.7% 6.0%
Retail Fuel
Margins(Cents
per Gallon) 12.5-16.0 14.7 16.6 14.6
Wholesale
Fuel Margins
(Cents per Gallon) 4.0-5.5 5.3
New Retail
Stores 16-22 (b) 18 (b)
New Wholesale
Dealer Sites 25-35 (b) 30 (b)
Gross Capital
Spending $80-$110 million $89.8 million (c)
Net Capital
Spending $35-$45 million $42.7 million (c)
(a) We include a store in the same-store sales base in its 13th month of
our operation; therefore, Town & Country stores will be excluded
from our same-store sales base until December 2008.
(b) 2007 retail store actual does not include 168 Town & Country
locations acquired in November 2007. Numbers for both years do not
reflect existing retail or wholesale store closures, which are
typically much lower volume locations than new sites.
(c) Excludes acquisition of Town & Country Food Stores and $51.2 million
of net proceeds from sale/leaseback of Town & Country properties
concurrent with the acquisition.
(d) Pro forma results as if Town & Country had been included in the
Company's operations for all of 2006 and 2007.
Of the new stores to be constructed in 2008, an estimated two-thirds are
planned for the Company's Southern Region, which includes the South Texas/Rio
Grande Valley areas, and one-third is planned in the Western Region, which
includes West Texas/Eastern New Mexico. The Company expects to finance the
majority of the cost of its new store construction program through
sale/leaseback transactions of new locations.
(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.
(2) Pro forma numbers are adjusted to show results as if the November
13, 2007 Town & Country acquisition as well as the October 2006 IPO
had occurred at the beginning of each fiscal year presented. See the
Pro Forma Condensed Consolidated Statements of Operations in this
earnings release. These transactions are also more fully described
in Footnotes 3 and 4 of the Company's Form 10-K for 2007, which will
be filed March 14, 2008 with the U.S. Securities and Exchange
Commission.
Investor Conference Call and Webcast
Susser's management team will hold a conference call on Thursday, March
13, at 11 a.m. EDT (10 a.m. CDT) to discuss fourth quarter and full year
results. To participate in the call, dial (303) 262-2143 at least 10 minutes
early and ask for the Susser conference call. A replay will be available
approximately two hours after the call ends and will be accessible through March
20. To access the replay, dial (303) 590-3000 and enter the pass code 11109685#.
The conference call will also be accessible via Susser's Web site at
http://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 currently operates more than 505 convenience
stores in Texas, New Mexico and Oklahoma under the Stripes and Town & Country
banners. Restaurant service is available in more than 280 of its stores,
primarily under the proprietary Laredo Taco Company and Country Cookin' brands.
The Company also supplies branded motor fuel to more than 385 independent
dealers through its wholesale fuel division.
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, dollar stores,
drug stores, supermarkets, hypermarkets and other wholesale fuel distributors;
changes in economic conditions; volatility in energy prices; successful
integration and anticipated future financial performance and trends of Town &
Country; 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
or other litigation; 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 and subsequent quarterly reports on Form 10-Q, as well as the
Company's annual report on Form 10-K for the year ended December 30, 2007, which
is being filed on March 14, 2008. 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
Consolidated Statements of Operations
Three Months Ended (unaudited) Twelve Months Ended
December 31, December 30, December 31, December 30,
2006 2007 2006 2007
Revenues: (in thousands)
Merchandise sales $ 88,690 $ 136,701 $ 365,343 $ 444,218
Motor fuel sales 393,104 677,860 1,876,641 2,247,220
Other 5,792 7,334 23,175 25,924
Total revenues 487,586 821,895 2,265,159 2,717,362
Cost of Sales:
Merchandise 60,123 92,059 246,251 299,652
Motor fuel 379,414 651,820 1,797,709 2,155,435
Other (50) 304 421 1,132
Total Cost of Sales 439,487 744,183 2,044,381 2,456,219
Gross Profit 48,099 77,712 220,778 261,143
Operating Expenses:
Personnel 17,542 24,723 69,288 82,459
General &
Administrative 4,842 8,413 19,377 27,944
Operating 13,540 20,308 61,953 68,935
Rent 6,043 7,567 22,694 25,822
Royalties 727 -- 3,574 66
Loss (gain) on disposal
of assets and
impairment charge 277 107 -- 190
Depreciation,
amortization and
accretion 5,744 8,472 22,780 29,469
Total operating expenses 48,715 69,590 199,666 234,885
Income (loss) from
operations (616) 8,122 21,112 26,258
Other income (expense):
Interest expense, net (10,476) (6,947) (25,201) (16,152)
Other miscellaneous 235 117 452 435
Total other income
(expense) (10,241) (6,830) (24,749) (15,717)
Minority interest in
income of consolidated
subsidiaries (14) (10) (61) (42)
Net income (loss)
before income taxes (10,871) 1,282 (3,698) 10,499
Income tax (expense)
benefit (48) 6,256 (48) 5,753
Net income (loss) $ (10,919) $ 7,538 $ (3,746) $ 16,252
Earnings per common share:
Basic $ (0.72) $ 0.45 $ (0.35) $ 0.97
Diluted $ (0.72) $ 0.44 $ (0.35) $ 0.97
Weighted average shares
outstanding:
Basic 15,226,833 16,822,071 10,729,511 16,734,571
Diluted 15,226,833 17,017,075 10,729,511 16,817,417
SUSSER HOLDINGS CORPORATION
Consolidated Balance Sheets
December 31, December 30,
2006 2007
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 32,938 $ 7,831
Accounts receivable, net of allowance for
doubtful accounts $1,179 at December 31,
2006 and $1,360 at December 30, 2007 44,084 69,368
Inventories, net 37,296 69,577
Assets held for sale 518 903
Other current assets 1,884 8,209
Total current assets 116,720 155,888
Property and equipment, net 232,454 410,745
Other assets:
Goodwill 44,762 248,809
Intangible assets, net 17,492 25,497
Other noncurrent assets 10,899 12,753
Total other assets 73,153 287,059
Total assets $ 422,327 $ 853,692
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 84,838 $ 127,756
Accrued expenses and other current
liabilities 20,711 39,406
Current maturities of long-term debt -- 3,937
Deferred purchase price - TCFS acquisition,
current -- 10,000
Total current liabilities 105,549 181,099
Long-term debt 120,000 374,754
Revolving line of credit -- 34,640
Deferred gain, long-term portion 27,060 31,511
Deferred tax liability, long-term portion -- 27,145
Other noncurrent liabilities 7,918 20,068
Total long-term liabilities 154,978 488,118
Minority interests in consolidated subsidiaries 630 684
Commitments and contingencies
Common stock, $.01 par value; 125,000,000
shares authorized; 16,824,162 issued and
outstanding as of December 31, 2006;
17,006,662 issued and 16,995,338 outstanding
as of December 30, 2007 168 170
Additional paid-in capital 166,398 172,765
Retained earnings (deficit) (5,396) 10,856
Total shareholders' equity 161,170 183,791
Total liabilities and shareholders' equity $ 422,327 $ 853,692
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 certain 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.
The following table presents a reconciliation of net income to EBITDA,
adjusted EBITDA and adjusted EBITDAR:
Three Months Ended Year Ended
December 31, December 30, December 31, December 30,
2006 2007 2006 2007
(in thousands)
Net income $ (10,919) $ 7,538 $ (3,746) $ 16,252
Depreciation,
amortization and
accretion 5,744 8,472 22,780 29,469
Interest expense, net 10,476 6,947 25,201 16,152
Income tax expense
(benefit) 48 (6,256) 48 (5,753)
EBITDA $ 5,349 $ 16,701 $ 44,283 $ 56,120
Non-cash stock-based
compensation 463 355 803 2,429
Management fee 44 -- 591 --
Loss on disposal of
assets 277 107 -- 190
Other miscellaneous (a) (235) (117) (452) (435)
Adjusted EBITDA $ 5,898 $ 17,046 $ 45,225 $ 58,304
Rent expense 6,043 7,567 22,694 25,822
Adjusted EBITDAR $ 11,941 $ 24,613 $ 67,919 $ 84,126
(a) Other miscellaneous charges represent income from a non-consolidated
joint venture and other non-operating income.
The following table presents a reconciliation of net cash provided by
operating activities to EBITDA, adjusted EBITDA and adjusted EBITDAR:
Year Ended
December 31, December 30,
2006 2007
(in thousands)
Net cash provided by operating activities $ 25,613 $ 27,700
Changes in operating assets & liabilities (6,054) 6,424
Gain on disposal of assets -- (190)
Stock based compensation expense (803) (2,429)
Minority interest (52) (54)
Deferred income tax -- 14,270
Fair market value in nonqualifying derivatives 330 --
Income Taxes 48 (5,753)
Interest expense, net 25,201 16,152
EBITDA $ 44,283 $ 56,120
Non-cash stock based compensation expense 803 2,429
Management fee 591 --
Gain on disposal of assets -- 190
Other miscellaneous (a) (452) (435)
Adjusted EBITDA $ 45,225 $ 58,304
Rent expense 22,694 25,822
Adjusted EBITDAR $ 67,919 $ 84,126
(a) Other miscellaneous charges represent income from a non-consolidated
joint venture and other non-operating income.
SUSSER HOLDINGS CORPORATION
Pro Forma Condensed Consolidated Statements of Operations
(Unaudited)
Pro Forma Year Ended
December 31, December 30,
2006 2007
(In thousands, except per
share amounts)
Revenues:
Merchandise sales $ 576,549 $ 654,427
Motor fuel sales 2,429,045 2,818,379
Other income 29,833 33,374
Total revenues 3,035,427 3,506,180
Cost of sales:
Merchandise (f) 385,144 439,314
Motor fuel (f) 2,312,401 2,683,942
Other 421 1,131
Total cost of sales 2,697,966 3,124,387
Gross profit 337,461 381,793
Operating expenses:
Personnel 104,060 115,038
General and administrative 27,488 36,564
Operating 94,040 101,797
Rent (g) 28,236 30,806
Royalties (e) 3,574 66
Loss on disposal of assets and impairment
charge 3 150
Depreciation, amortization, and
accretion (h) 33,017 41,211
Total operating expenses 290,418 325,632
Income from operations 47,043 56,161
Interest expense (a, b, i) (41,748) (41,398)
Other miscellaneous income (expense) 295 392
Income before income taxes 5,590 15,155
Income taxes (c, j) (2,018) (6,691)
Pro forma net income $ 3,572 $ 8,464
Pro forma earnings per common share (d):
Basic $ 0.21 $ 0.51
Diluted $ 0.21 $ 0.50
Pro forma weighted average shares
outstanding (d):
Basic 16,705,404 16,734,571
Diluted 16,771,155 16,817,417
The pro forma adjustments reflected in 2006 above related to the IPO are
as follows:
(a) Elimination of $0.2 million amortization of prepaid loan costs
related to the redemption of $50.0 million of senior notes with
proceeds from the IPO. Also eliminates $1.8 million write-off of
unamortized loan costs.
(b) Elimination of $5.3 million interest expense related to the
redemption of $50.0 million of senior notes with proceeds from the
IPO. Also eliminates the $5.3 million prepayment penalty.
(c) Recording of an income tax provision at an effective rate of 36%.
(d) Reflecting earnings per share as if the corporate formation and IPO
occurred at the beginning of the fiscal year, and reflecting the pro
forma adjustments noted above. Dilutive shares were calculated using
the treasury stock method and assuming an average stock price from
October 19, 2006 to December 29, 2006 of $18.78.
(e) No adjustment has been made to royalty expense, which terminated
during the first quarter of 2007 as the conversion from Circle K to
Stripes was completed.
The pro forma adjustments reflected in 2006 and 2007 above related to the
acquisition of Town and Country are as follows:
(f) Elimination of the impact of the write down of inventory to the LIFO
basis of $0.3 million in 2006 and $2.6 million in 2007.
(g) Reflecting the additional rent expense related to the sale leaseback
transaction closed as part of the acquisition as if it had occurred
at the beginning of the fiscal year of $4.3 million for 2006 and
$3.7 million for 2007.
(h) Reflecting the increase in depreciation expense from the valuation
of fixed assets to fair market value and the elimination of
depreciation expense for assets sold in the sale leaseback as if the
acquisition had occurred at the beginning of the fiscal year of $0.4
million decrease for 2006 and $0.7 million increase for 2007.
(i) Reflecting the increase in interest expense related to the issuance
of $105.0 million in bank debt and $150.0 million of senior notes
and the amortization of the related prepaid loan costs. Also
eliminates the interest expense related to the payoff of the
existing Town and Country debt of $134.1 million.
(j) Recording of an income tax provision at an effective rate of 36%
plus margin tax of 0.5% of gross profit for 2007.
The following table presents a reconciliation of pro forma net income to
pro forma EBITDA, pro forma adjusted EBITDA and pro forma adjusted EBITDAR:
Pro Forma Year Ended
December 31, December 30,
2006 2007
Pro forma net income $ 3,572 $ 8,464
Depreciation, amortization and accretion 33,017 41,211
Interest expense, net 41,748 41,398
Income tax expense 2,018 6,691
Pro forma EBITDA $ 80,355 $ 97,764
Non-cash stock-based compensation 803 2,429
Loss (gain) on disposal of assets 3 150
Other miscellaneous (a) (356) (435)
Pro forma adjusted EBITDA $ 80,805 $ 99,908
Rent expense 28,236 30,806
Pro forma adjusted EBITDAR $ 109,041 $ 130,714
(a) Other miscellaneous charges represent income from a non-consolidated
joint venture and other non-operating income.
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
SUSS-IR
SOURCE Susser Holdings Corporation