Retail Performing Well at Western Refining

EL PASO, Texas — Operating income at Western Refining Inc.'s retail division rose more than 50 percent in its 2014 fiscal third quarter, led by strong fuel margins and increased merchandise sales.

The operator of 230 GIANT, Mustang, Sundial and Howdy's convenience stores in Arizona, Colorado, New Mexico and Texas saw retail operating income rise to $8.5 million in its most recent quarter ended Sept. 30, a $3-million increase compared to the same quarter last year. Net retail sales rose by $3.3 million to $325 million.

Fuel sales were the biggest standout, with fuel margins per gallon rising 4 cents to 26 cents per gallon. Fuel gallons sold increased 1.6 million gallons to 80.7 million gallons.

Merchandise sales also saw a solid uptick of $3.5 million to $70.9 million in Western Refining's latest quarter. Merchandise margins dropped by 0.2 percent to 28.7 percent, however.

During Western Refining's Tuesday earnings call, President and CEO Jeff Stevens noted that the El Paso-based company's retail division "performed well." He did not touch upon the company's c-store division throughout the rest of the call, nor was he questioned about it by analysts.

Overall, Western Refining's earnings rocketed higher in its latest quarter. The company earned $175.3 million, excluding special items, compared to $29.6 million in the same period in 2013.

"The third-quarter was outstanding for Western [Refining]," said Stevens.

The company is so confident about its future that Stevens announced it will pay a special dividend of $2 per share, to be distributed in December. This will be paid in addition to its regular dividend.

Western Refining Inc. owns the general partner and approximately 66 percent of the limited partnership interest of Western Refining Logistics LP, as well as the general partner and approximately 39 percent of the limited partnership interest in Northern Tier Energy LP, parent of SuperAmerica convenience stores.

Stevens said during the call that Western Refining's deal with Northern Tier has been successful and allowed it to achieve $18 million in synergies thus far. 

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