Tesoro Closes on Salt Lake City Acquisition

SAN ANTONIO – Tesoro Corp. closed on its acquisition of 15 convenience stores and gas stations in the Salt Lake City area, President and CEO Greg Goff announced Thursday during the company’s 2014 fiscal second-quarter earnings call. Goff previously stated that the acquisition will help drive further growth at the company’s retail division. 

Even before the Salt Lake acquisition, though, Tesoro’s retail division has been performing extremely well, officials at the San Antonio-based company reported. The retail division earned a net profit of $72 million in its latest quarter ended June 30, nearly triple the $25-million profit it earned in the company’s 2013 second quarter.

“The BP/ARCO acquisition we made in June [2013] was a big boost to our earnings,” Goff stated during Thursday’s call. 

As CSNews Online previously reported, Tesoro purchased BP’s ARCO brand and associated trademarks, as well as its master franchisee license for the ampm convenience store brand at 835 stores, on June 1, 2013. This acquisition has been highly profitable for Tesoro, noted Goff.

During the second-quarter, the bottom line was not the only strong result at Tesoro’s retail division. Nearly every other metric was positive vs. the year-ago period.

Total retail net operating income rose by $46 million to $410 million. Total fuel sales increased nearly $350 million to $1.051 billion. Fuel gross margins increased considerably to $145 million, compared to $89 million in its 2013 fiscal second quarter. Same-store fuel sales improved by 0.5 percent year over year. 

Merchandise margins also rose by $8 million in Tesoro’s most recent quarter to $31 million. Total gross margins increased a stellar $64 million to $176 million.

The company operated 586 c-stores and gas stations as of June 30, as well as 1,682 branded jobber/dealer locations, for a total of 2,268 stores. This marks an increase of 61 stores compared to June 30, 2013.

Companywide, Tesoro earned net income of $227 million in its 2014 fiscal second quarter, vs. $227 million during the same period a year ago. The company showed confidence in its business by increasing its quarterly dividend by 20 percent and announcing a new $1-billion share repurchase program.

“We were pleased with our quarter,” Goff concluded.