Susser Holdings Corporation (SUSS)

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Susser Holdings Corporation (SUSS)

Q1 2009 Earnings Call Transcript

May 7, 2009 11:00 am ET

Executives

Chip Bonner – EVP and General Counsel

Sam Susser – President and CEO

Steve DeSutter – President and CEO, Retail

Mary Sullivan – EVP, CFO and Treasurer

Analysts

Bryan Hunt – Wachovia

Ben [ph] – Morgan, Keegan and Company

Anthony Lebiedzinski – Sidoti & Company

Jeff Blaeser – Morgan Joseph

Scott Mushkin – Jefferies & Company

Andrew Berg – Post Advisory Group

Karen Short – FBR Capital Markets

Mike Smith – Kansas City Capital

Ryan Fick [ph] – Aviva Investors [ph]

Presentation

Operator

Welcome to the Susser Holdings Corporation first quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions). This conference is being recorded today, May 7, 2009.

I would now like to turn the conference over the Mr. Bonner, Executive Vice President, please go ahead, sir.

Chip Bonner

Thank you. Good morning everyone. Thank you for joining us. This morning we released our first quarter 2009 earnings and our news release was broadcast to our email list. If you would like to be added to our list, please contact our investor relation firm, DRG&E at 713-529-6600 or send your request via the IR page of our website and we will be glad to add you. A replay will be available both on the web and via telephone replay. To access the replay on the web, go to our IR page at www.susser.com. You will find the phone number and an access code in the earnings release if you would like to listen by phone.

Today's call contains various forward-looking statements and includes information that is based on management's beliefs and assumptions. It includes Susser'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 risks and uncertainties are detailed in our 2008 10-K and our subsequent 10-Q filings.

We will discuss certain non-GAAP financial measures that we believe are helpful to 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 view as of today, May 7, 2009, so time sensitive information may no longer be accurate at the time of any replay.

Now, I will turn the call over to Sam Susser, our President and CEO.

Sam Susser

Thanks Chip and good morning everyone. Also with me on the call are Steve DeSutter, President and CEO of our Retail division; Mary Sullivan, our Chief Financial Officer; and other members of our management team.

We were pleased to report another good quarter this morning and one of our two seasonally weakest periods of the year. Highlights for the quarter include strong same-store sales growth of 6%, a retail merchandized margin of 34.3% which is near the top end of the range over the last 10 year's or so. Growth in average per store fuel volumes for the second quarter in a row and we saw a 16% increase in adjusted EBITDA year-over-year. We saw particular strength in our South Texas markets which continue to buck [ph] the weaker national trend. That said we have seen some softening in West Texas, which isn't surprising since there is less oil and gas exploration activities then there was six months ago. This was most noticeable in our Country Cookin' food service business, which does a very good breakfast and lunch business from the oil field. We are seeing customer's trade down to lower price points in our Country Cookin' restaurants. Fortunately that was more than offset by growth in South Texas markets.

Now looking briefly at the first quarter numbers. Same-store merchandized sales grew by 6% for the quarter. You may remember a year ago, our same-store sales growth was 8.9%, so we are very pleased by our first quarter same-store growth with reflects a two year 15% comp growth.

Fuel gallons grew as fuel prices came back from the unusually high levels reached during 2008. Average gallon sold to retail stores increased 4.6% from a year ago. This increase was achieved despite softness and diesel volume. Average per store diesel volume fell 6% and average gasoline volumes rose 6.4%. Retail fuel margins were inline with typical first quarter margins for our company. Retail margin per gallon was $0.118 versus $0.12 a year ago. Those numbers don't include the effect of credit card expense. If you deduct credit card cost which were a penny gallon lower year-over-year, we realized $0.091 per gallon in fuel margin versus $0.082 per gallon a year ago.

I would point that we were a significant increase in the use of debit cards in our network. Additional credit card use was down slightly. Wholesale volumes were up as well by 7.3% year-over-year, although fuel margins were off by about a $1.5 due to competitive market conditions.

Overall, our business is healthy and we are experiencing positive trends in merchandize and fuel volumes. Although, unemployment in our region has certainly increased this past year, we are grateful to the momentum we have as we move forward in this recession.

Now I will ask Steve DeSutter to cover few more operating highlights for the quarter.

Steve DeSutter

Thank you Sam and good morning everyone. Looking at results in the retail merchandized segment in a little more detail. We are pleased to report that our merchandized growth continues to be broad based. Of our 22 merchandized categories over 70% of these categories representing 90% of our sales were up again in the first quarter.

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