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Susser Holdings (SUSS)

Q4 2012 Earnings Call

February 27, 2013 10:00 am ET


E. V. Bonner - Executive Vice President, General Counsel and Secretary

Sam L. Susser - Founder, Chief Executive Officer, President, Director, Chief Executive Officer of Retail Division and President of Retail Division

Steven C. DeSutter - Executive Vice President, Chief Executive Officer of Retail Operations and President of Retail Operations

Rocky B. Dewbre - Executive Vice President, President of Wholesale and Chief Operating Officer of Wholesale

Mary E. Sullivan - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer


Kelly A. Bania - BofA Merrill Lynch, Research Division

Sharon Lui - Wells Fargo Securities, LLC, Research Division

John R. Lawrence - Stephens Inc., Research Division

Benjamin Brownlow - Raymond James & Associates, Inc., Research Division

Lee J. Giordano - Imperial Capital, LLC, Research Division

Anthony C. Lebiedzinski - Sidoti & Company, LLC

Ethan H. Bellamy - Robert W. Baird & Co. Incorporated, Research Division

Ryan Gilligan

Jeffrey Birnbaum - UBS Investment Bank, Research Division

Jerren Holder - Barclays Capital, Research Division

James Jampel



Ladies and gentlemen, thank you for standing by, and welcome to the Susser Holdings, Susser Petroleum Partners Fourth Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded, February 27, 2013. I would now like to turn the conference over to Chip Bonner, Executive Vice President. Please go ahead.

E. V. Bonner

Thank you, operator. Good morning, everyone, and thank you for joining us. This morning, we released our fourth quarter and full year 2012 earnings for both Susser Holdings Corporation and for Susser Petroleum Partners LP and our news releases were broadcast to our e-mail list. If you'd like to be added to one or both lists, please contact our Investor Relations firm, Dennard-Lascar Associates at (713) 529-6600 or send your request via the IR pages of our websites and we will be glad to add you.

A replay will be available on the web for at least 60 days and via telephone replay until March 6. To access a replay on the web, go to our IR pages either at or You will find all the replay instructions in the earnings release.

A reminder that today's call will contain forward-looking statements. That information is based on management's beliefs, expectation and assumptions and includes the company's objectives, targets, plans, strategies, costs and anticipated capital expenditures. These statements involve risk and uncertainties that could cause actual results to differ materially. These risk and uncertainties are described in the company's reports on file with the SEC, including the perspective for Susser Petroleum Partners IPO filed on December -- on September 21. We will file our 10-K for Susser Holdings Corporation by March 15 and the 10-K for Susser Petroleum Partners will be filed by March 29.

We will discuss certain non-GAAP financial measures that we believe are helpful for full understanding of our financial condition. Please refer to our news release, which includes a reconciliation of each financial measure. Information reported on this call speaks only to the company's views as of today, February 27, 2013, so time-sensitive information may no longer be accurate at the time of any replay.

Also with us today are Sam Susser, our Susser Holdings President and CEO; Steve DeSutter, President of our retail group; Rocky Dewbre, President of our wholesale segment; and Mary Sullivan, our CFO. Other members of our leadership team are also with us, including Kevin Mahaney who heads up merchandising. Now I'll turn the call over to Sam Susser.

Sam L. Susser

Thanks, Chip, and good morning to everyone. First, I'd like to say that we had a solid finish to an outstanding year overall, and I want to express my deepest thanks to the 8,700 team members that delivered results once again for shareholders, setting many new records for our company.

We delivered our 24th consecutive year of same-store merchandise sales growth, with a fourth quarter increase of 5.8% year-over-year and an increase of 6.6% for the full year as compared to 2011. Merchandise margin finished the year at a very strong 34.1% of revenues for the quarter and 33.9% for the year. Total gallons sold increased almost 11%, with strong performance from both our retail stores and third party sales made by our wholesale segment.

Our adjusted EBITDA was up almost 44% in the fourth quarter and up 9.5% for the full year. Susser Petroleum Partners, which we'll refer to as the partnership on the call, completed its first full quarter of operations following its IPO in September. We are extremely pleased with our initial results and with the positive reception we received from both sets of shareholders. We believe that our momentum in new store growth, combined with a robust Texas economy, sets us up with additional opportunities to grow shareholder value in the coming years.

We've provided initial guidance for 2013 for both companies in this morning's news release. Our current expectations assume continued expansion in the Texas economy, which is driving commercial investments, construction activity and continued population growth. There are a couple of unknowns coming out of Washington that could impact our future results. And some of you have already been asking about them. The outcome of the fiscal debate is obviously very important to Susser as it is to each of you. Sequestration could especially reduce consumer confidence in the many markets where we have military bases.

The second challenge out of Washington is health care reform. While the impact is not expected to materially impact our results until 2014, we are actively working on this issue right now. Just like many other companies, we're trying to understand what all the rules are going to be and what options are really available to us. Unfortunately, the requirements are still evolving. We will provide further update later in the year once we are able to describe our benefit changes to our own team members and to then quantify the potential impact to the company.

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