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SuperAmerica Considers Expanding Its Operating Region

RIDGEFIELD, Conn. -- Opportunities abound for the SuperAmerica convenience store chain to grow its business, Mario Rodriguez, CEO of parent company Northern Tier Energy LP, said during the company's third-quarter earnings conference call today.

Rodriguez did not elaborate on this comment, except to say that expansion beyond its main operating region will be considered.

Although Northern Tier Energy is based in Ridgefield, Conn., its SuperAmerica c-stores are primarily located in Wisconsin and Minnesota. SuperAmerica currently operates 166 stores. Another 67 stores are licensed and branded under the SuperAmerica name.

As for its 2012 fiscal third-quarter earnings, the c-store chain achieved a net profit of $1.2 million, compared to a profit of $4.9 million for the same timeframe in 2011. Rodriguez attributed the decline in SuperAmerica's earnings to a 6.2-percent reduction in fuel gallons sold as fuel demand decreased, along with lower fuel margins.

According to Northern Tier Energy, the company compensated for much of the retail profit decline by cost-cutting at the corporate level.

During today's call, the parent company also publicly announced its financial guidance for SuperAmerica's 2012 fiscal fourth quarter. The company expects to sell 79 million gallons of gas at company-owned SuperAmerica stores with a 19-cent margin. In addition, Northern Tier expects SuperAmerica to achieve $90 million in merchandise sales and a 25.5 percent merchandise gross margin in Q4.

If accomplished, those numbers would be significantly better than its fiscal third-quarter results.

Today was only the second public earnings report for Northern Tier Energy, which was founded in 2010 and completed its initial public offering (IPO) on July 31. The company is comprised of SuperAmerica and refining operations.

Although sales at SuperAmerica slumped in its latest quarter compared to the prior year, overall Northern Tier earnings did not. Companywide, Northern Tier earned $66.1 million in net income vs. $2.2 million for its 2011 third quarter. Operating income rose by $33.7 million to $199.4 million.

Rodriguez credited improved results in the refining segment for the company's much stronger overall quarterly results.

Northern Tier operates as a master limited partnership. During today's call, the company said it will pay its first quarterly distribution to unit holders, who will receive $1.48 per unit. The distribution is considered huge by Wall Street standards as it would equate to more than a 20-percent annual dividend yield. But Rodriguez cautioned during the earnings call that its unit holder distribution will fluctuate each quarter based on incoming cash flow.

Thus far, Northern Tier unit holders who bought units at its $14 IPO price have been handsomely rewarded. The company's units traded for $24.75 each this morning.

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