Speedway's C-stores Ring Up Strong Merchandise Sales in Its 2019 First Quarter
FINDLAY, Ohio — Speedway LLC, the retail arm of Marathon Petroleum Corp. (MPC), has some strong momentum heading into the peak summer sales season.
Speedway's legacy stores experienced strong same-store merchandise sales over the past nine months, and those sales continued into April, Gary Heminger, MPC chairman and CEO, reported during the company's first-quarter 2019 earnings call on May 8.
"We expect this trend to continue as we move into the prime driving season," Heminger added. "As we look to the remainder of 2019, our positive outlook is also supported by solid economic growth and expected contributions from the 700 store conversions."
Seven months after MPC closed on its $23.3-billion merger with Andeavor — creating a coast-to-coast retail powerhouse — store conversions to the Speedway banner continue. Conversions across Minnesota are complete, and the company is now focused on conversions in the Southwest.
The target is 700 cumulative store conversions by the end of 2019. MPC finished its 300th conversion on May 7, according to Heminger.
In addition, MPC sees opportunities to drive value creation through its technology platform, and the company continues to pursue in-store opportunities to enhance customer interaction and drive sales.
"We expect positive dynamics across all three of our business segments to support growing cash flows throughout the remainder of 2019," Heminger said. "One of our core objectives is to grow profitability and create competitive advantages through strategic and disciplined investments."
Q1 2019 Financials
Looking at the financials, MPC reported a first-quarter 2019 loss of $7 million. Income from operations was $669 million and adjusted EBITDA was nearly $1.5 billion for the quarter, according to Timothy Griffith, senior vice president and chief financial officer.
Broken out by segment, MPC reported:
- Refining & Marketing: Segment loss from operations of $334 million;
- Midstream: Segment income from operations of $908 million; and
- Retail: Segment income from operations of $170 million.
In the retail segment, income increased by $75 million vs. the same quarter last year, primarily due to the addition of Andeavor's retail and direct dealer operations, as well as a $24-million increase in MPC legacy Speedway segment earnings, according to Griffith.
Retail fuel margins averaged 17.15 cents per gallon in the first quarter of 2019, up from 15.61 cents per gallon in the same period of 2018.
Same-store merchandise sales increased by 5.4 percent year over year, while same-store gasoline sales volumes decreased by 3.2 percent.
Findlay-based MPC is an integrated, downstream energy company. It operates the nation's largest refining system, with more than 3 million barrels per day of crude oil capacity across 16 refineries. MPC also owns the general partner and majority limited partner interests in two midstream companies, MPLX LP and Andeavor Logistics LP.
MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, a MPC subsidiary, owns and operates retail convenience stores throughout the U.S. under the Speedway banner.
MPC secured the No. 1 spot on the 2019 Convenience Store News Top 20 Growth Chains ranking by adding the most stores between January 2018 and January 2019.