Northern Tier to Continue SuperAmerica Expansion

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Northern Tier to Continue SuperAmerica Expansion

By Angela Hanson, Convenience Store News - 08/13/2013

RIDGEFIELD, Conn. -- Northern Tier Energy LP will continue to expand its SuperAmerica convenience store division through both the addition of more franchisees and increasing its number of company-operated stores, the company reported today during its 2013 second-quarter earnings call.

This acknowledgment of expansion plans, which echoes statements Northern Tier has made in previous quarters, comes on the heels of a "very solid performance" in the company’s retail segment, said Vice President and Chief Operating Officer Chet Kuchta.

Retail operating income for the quarter was $8 million, up from $4.8 million in the second quarter of 2012. Kuchta attributed this primarily to improved merchandise and fuel margins, along with lower operating costs.

Company-owned SuperAmerica stores sold $86 million in merchandise during the latest quarter -- down slightly from the $90.7 million generated in the year-ago period, but a higher margin of 27 percent vs. 24.9 percent, respectively.

The corporate stores also sold 77 million gallons of fuel during the quarter, with little change from the 77.5 million gallons sold during Q2 2012. Fuel margins were 23 cents per gallon, compared to 22 cents per gallon during the same time period one year ago.

Companywide, Northern Tier’s net income was $63.9 million for the second quarter, down from $245.6 million year over year. Kuchta attributed this to a drop in refinery production due to a planned plant shutdown and turnaround, as well as the effects of severe weather in June and tightened crude oil price differentials.

During today’s call, Northern Tier officials also praised the Environmental Protection Agency's Aug. 7 extension of the time required to meet the Renewable Fuel Standard's renewable fuel goals and likely decrease of the 2014 mandate. The company had planned to purchase enough Renewable Identification Number (RIN) credits to cover between 25 percent and 35 percent of its obligations for 2013, but currently it believes it will come in at the lower end of that estimate.

"We can only accomplish our goals if we continue to reinvest in our business," concluded Chief Financial Officer Dave Bonczek.