A Solid Third Quarter for Delek US' Retail Side
BRENTWOOD, Tenn. — "Solid" is how Delek US Holdings Inc. Chairman and CEO Uzi Yemin summed up the 2015 fiscal third quarter for the company's retail segment.
Looking at the quarter ended Sept. 30, Delek’s retail division, which consists of 355 convenience stores operating under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names, saw net earnings rise $5.5 million year over year to $21.9 million.
Individual metrics also rose year over year throughout Delek’s retail division. On the fuel side, retail fuel gallons sold increased by 1.8 million gallons to 117.9 million gallons in its most recent quarter. Retail fuel margins improved by 1.7 cents per gallon to 21.7 cents per gallon. On a same-store basis, fuel gallons sold rose by 0.4 percentage points compared to the same quarter in 2014.
When questioned by a Wall Street analyst during the company's earnings call Wednesday morning on why same-store fuel gallons sold increased by a much lower percentage than in prior years, Yemin explained that Delek focused on obtaining higher fuel margins in Q3, as opposed to selling more fuel gallons. “We expect in the fourth quarter that this number will return to historical 3-percent to 4-percent growth,” he relayed.
In-store, Delek’s retail division saw merchandise sales advance by more than $4 million year over year to $111.33 million. Merchandise margin improved by 0.3 percentage points to 28 percent. On a same-store basis, merchandise sales rose by 3.8 percent year over year, which outpaced the growth Delek saw in its previous three fiscal third quarters.
“The retail segment had a solid third quarter, and its trailing 12-month contribution margin reached a record amount,” Yemin reported.
Companywide, Brentwood-based Delek US reported a net income of $18.7 million for its most recent quarter, well shy of the $72.5 million in net income it achieved in 2014’s third quarter. Inventory-related expenses accounted for $32.4 million of the earnings disparity, the company explained.
THE NEAR FUTURE
Delek US still plans to purchase additional shares of Alon USA Energy Inc., Yemin stated Wednesday during the earnings conference call.
Delek currently owns 48 percent of Alon and Yemin has said in the past that the company plans to acquire the remaining 52 percent it does not already own when the timing is right.
“We are not in the business of holding 48 percent of Alon for the rest of our lives,” Yemin said on the call.
He did not provide a timetable regarding when Delek will buy the entire remainder of Alon, but did indicate it will begin purchasing more shares of Alon in the near future.