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Susser Petroleum Partners LP (SUSP)

Q4 2012 Earnings Call

February 27, 2013 10:00 am ET

Executives

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

Sam L. Susser – Chairman and Chief Executive Officer

Steve DeSutter – President-Retail Group

Rocky B. Dewbre – President and Chief Operating Officer

Mary E. Sullivan – Executive Vice President, Chief Financial Officer and Treasurer

Analysts

Kelly A. Bania – Bank of America Merrill Lynch

Sharon Lui – Wells Fargo Advisors LLC

John R. Lawrence – Stephens, Inc.

Ben Brownlow – Raymond James & Associates, Inc.

Lee J. Giordano – Imperial Capital LLC

Anthony C. Lebiedzinski – Sidoti & Co. LLC

Ethan H. Bellamy – Robert W. Baird & Co.

Ryan J. Gilligan – BMO Capital Markets

Jeffrey T. Birnbaum – UBS Securities LLC

Jerren Holder – Barclays Capital, Inc.

James M. Jampel – HITE Hedge Asset Management LLC

Presentation

Operator

Ladies and gentlemen thank you for standing by, 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 Jr.

Thank you operator, good morning everyone and thank you for joining us. This morning we released our fourth and full-year 2012 earnings for both Susser Holdings Corporation and for Susser Petroleum Partners LP, and our news releases were broadcast to our email list. If you would 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, via telephone replay until March 6. To access a replay on the web go to our IR pages either at www.susser.com or www.susserpetroleumpartners.com you’ll find all the replay instructions in the earnings release.

A reminder of the today’s call will contain forward-looking statements that information is based on management’s belief, expectation and assumptions, and includes the Company’s objectives targets, plans, strategies, costs, and anticipated capital expenditures. These statements involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in the Company’s reports on file with the SEC including the perspective for Susser Petroleum Partners’ IPO filed 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 a 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 Mahany who heads our 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 where the fourth quarter increase of 5.8% year-over-year in 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 gallon sold increased almost to 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 will refer to as the Partnership on the call completed its first full quarter of operations following its IPO in September. We’re extremely pleased with our initial results and with the positive reception we’ve received from both sets of shareholders.

We believe that our momentum in new store growth combined with the robust Texas economy sets us up with additional opportunities to grow shareholder value in the coming years. We provided initial guidance for 2013 for both companies in this morning’s news release.

Our current expectations assumed 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 to the special reduce consumer confidence in the many markets, where we have military basis.

The second challenge out of Washington is healthcare 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 roles 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 were able to Stripes our benefit changes to our own team members and to then quantify the potential impact of the Company.

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