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Susser Holdings (SUSS)

Q1 2013 Earnings Call

May 08, 2013 11:00 am ET

Executives

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

Analysts

Bonnie Herzog - Wells Fargo Securities, LLC, Research Division

John R. Lawrence - Stephens Inc., Research Division

Irene Nattel - RBC Capital Markets, LLC, Research Division

Kelly A. Bania - BofA Merrill Lynch, Research Division

Sharon Lui - Wells Fargo Securities, LLC, Research Division

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

Anthony C. Lebiedzinski - Sidoti & Company, LLC

Ben Wyatt - Stephens Inc., Research Division

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

Ronald Bookbinder - The Benchmark Company, LLC, Research Division

James Jampel

Suzanne Franks

Presentation

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Susser Holdings and Susser Petroleum Partners First Quarter Earnings Call. [Operator Instructions] 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 first quarter 2013 earnings for both Susser Holdings Corporation and for Susser Petroleum Partners, our news release were broadcast to our e-mail list. If you'd like to be added to one or both of those lists, please send your request via the IR pages of our websites, and we will be glad to add you.

A replay of this call will be available on the web for at least 60 days via our telephone replay until May 15. To access the replay on the web, go to our IR pages either at www.susser.com or www.susserpetroleumpartners.com You will find the replay instructions in this morning's earnings release.

A reminder that today's call will contain forward-looking statements. That information is based on management's beliefs, expectations 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 risks and uncertainties are described in the company's Form 10-K report for 2012 on file with the SEC.

During today's call, 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 for reconciliation of each financial measure. Reminder that the information reported on this call speaks only to the company's view as of today, May 8, 2013, so time-sensitive information may no longer be accurate at the time of any replay.

With me on the call today are Sam Susser, Susser Holdings CEO; Steve DeSutter, the President of our retail group; Rocky Dewbre, the President of our wholesale group; and Mary Sullivan, our CFO; and other members of our leadership team.

Now I'll turn the call over to Sam Susser.

Sam L. Susser

Thanks, Chip, and good morning, everyone. We delivered solid first quarter performance with same-store sales up 4.2% year-over-year and up 11% on a 2-year stat comparison basis.

Overall merchandise sales rose 9.5%, compared to a year ago. Fuel volumes were also strong, up nearly 6% for retail and wholesale combined. Average retail gallons sold per store increased 4.1% versus a year ago. Retail fuel margins before credit card expense came in at a very strong $0.166 per gallon after deducting the $0.03 margin Stripes now pays to the partnership. That's almost $0.07 a gallon higher than the average first quarters for the previous 5 years on a comparable basis and $0.033 better than the same period last year. Consolidated gross profit increased about 20% versus the first quarter of 2012 and our adjusted EBITDA was up almost 39% from a year ago.

I should point out that we are going up against an 8% comp in the second quarter of 2012. Also, Easter fell in Q1 this year versus Q2 last year, so the calendar change will have a negative impact on our second quarter sales performance comparison.

We don't spend a lot of time giving the weather report, especially after so many companies have flagged the issue, but like others, so far in 2013, we have had significantly more cold weather days than the prior 2 years, and that's had a measurable effect on our numbers.

The strong economy in our region also is attracting significant numbers of new retail competitors, including expansions by the Dollar stores, drugstores and large box retailers offering fuel. In addition, in certain markets, we have seen an increase in the number of new convenience stores being built by traditional operators.

In the wholesale side of the business, we saw an overall 4.4% growth in total gallons distributed and a 6% sequential increase in distributable cash flow, compared to the previous quarter. We continue to be most pleased with the performance of Susser Petroleum Partners and remain bullish on our ability to drive growth in distributable cash flow in the years ahead. Rocky will provide some highlights for the quarter in a moment.

Our board, yesterday, declared a first quarter distribution of $0.4375 for Susser Petroleum Partners common units, to be paid on May 30 to shareholders of record as of May 20. The payout amounts to unitholders, partners is $9.6 million and distributable cash flow represents coverage of just under 1.1x.

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