Western Refining Reveals Post-Merger Plans

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Western Refining Reveals Post-Merger Plans


EL PASO, Texas — Now that it officially acquired Northern Tier Energy LP on June 23, Western Refining Inc. will look to "greatly expand" its retail division in the company's Upper Midwest and Southwest operating markets, CEO Jeff Stevens stated Tuesday during the company’s 2016 fiscal second-quarter earnings call.

The merger combined 400 convenience stores — 170 of which were operated by Northern Tier in the Midwest primarily under the SuperAmerica brand name, and 230 Giant, Mustang, Sundial and Howdy’s stores operated by Western Refining in the Southwest. Northern Tier also supported 114 franchised locations primarily in Minnesota and Wisconsin under the SuperAmerica LLC trademark.

Stevens said the newly merged company is excited to grow its retail operations on the heels of a tremendous second quarter in the division.

“The retail business continues to show high [fuel] volume growth and perform well,” he said. “Fuel volumes were up 7 percent in the Southwest and 5 percent at SuperAmerica stores due to low gas prices and consumer demand.”

The chief executive further noted that in-store merchandise sales were also strong “across the board” due to hot weather, strategically located stores, and good efforts by the retail team to draw in customers.

Looking closer at the Q2 results, Western Refining broke down its retail earnings under its Southwest assets and Northern Tier assets for its fiscal second quarter ended June 30. At its Southwest segment, retail fuel gallons sold increased by more than 8 million gallons year over year to 98.55 million. Retail fuel margins per gallon did drop 3 cents year over year to 14 cents per gallon, however.

The Northern Tier division sold 78.45 million gallons of fuel in the second quarter, an improvement of nearly 1 million gallons vs. 2015’s second quarter. Retail fuel margins per gallon increased by a penny to 23 cents per gallon.

Inside the stores, Western Refining’s Southwest assets achieved $85 million in merchandise sales, a strong gain of more than $5 million. Merchandise margins dropped slightly to 29.2 percent. Meanwhile at Northern Tier’s SuperAmerica assets, merchandise sales rose nearly $500,000 year over year to $96.24 million. Merchandise margins ticked slightly higher to 26.1 percent.

Companywide, El Paso-based Western Refining reported net income of $65.4 million for the latest quarter, compared to a profit of $133.9 million in 2015’s second quarter.

“This was a milestone quarter as we completed the Northern Tier transaction and began operating our combined assets as one team,” relayed Stevens. “All three refineries ran well during the quarter, retail fuel volumes were strong compared to the second quarter of 2015, and we did a good job managing our expenses."