New BP ARCO Stations Driving Tesoro's Retail Division
SAN ANTONIO -- Tesoro Corp.'s acquisition of BP's ARCO brand and associated registered trademarks, as well as its master franchisee license for the ampm convenience store brand at 835 locations, is driving strong results at its retail division, President and CEO Greg Goff reported during today’s 2013 third-quarter earnings call.
As CSNews Online reported in June, BP plc sold these Southwest retail assets, as well as a Carson City, Calif., refinery, to Tesoro for $2.4 billion. As of Sept. 30, San Antonio-based Tesoro had 1,648 branded jobber/dealer locations and 573 company-operated sites.
The acquisition boosted retail sales across the board in the latest quarter. Net retail income more than tripled year over year from $18 million to $56 million. Total fuel sales rose to $1 billion vs. $468 million during the year-ago period. Merchandise sales increased by $3 million to $52 million, while merchandise margins improved by 3 percent to 27 percent. In addition, total gross margins at Tesoro's retail division ramped up by $50 million to $154 million.
The only negative on the retail balance sheet was fuel margins, which declined by six cents per gallon to 12 cents.
Goff also announced today that Tesoro completed the sale of Tesoro Hawaii LLC on Sept. 25 to Hawaii Pacific Energy LLC, a wholly owned subsidiary of Par Petroleum Corp. The sale included 31 convenience stores and gas stations in the Aloha State.
"It was a strategic exit in Hawaii," he said. "We received $325 million of working capital in the transaction, which we will put to good use."
Companywide, Tesoro reported third-quarter net income of $99 million vs. $273 million during the same period in 2012. Several one-time items were cited as the cause for a significant portion of the year-over-year net earnings decline.