|
CST Brands, Inc. Reports Third Quarter 2015 Results
-
Third Quarter 2015 Net Income of $85 million or $1.12 per diluted
share, a 35% increase over Third Quarter 2014
-
EBITDA of $174 million, an increase of 25% over Third Quarter 2014
-
Adjusted EBITDA of $294 million and Adjusted Earnings Per Share of
$2.12
-
Same Store Merchandise Sales Increases of 4% in both the U.S. and
Canada
CST Brands, Inc. (NYSE: CST), one of the largest independent retailers
of motor fuels and convenience merchandise in North America, today
reported financial results for the third quarter ended September 30,
2015.
Three Months Results
“While our third quarter 2015 results reflect strong fuel margins across
our system, I’m even more pleased with our 4% increase in same store
merchandise sales in Canada and the U.S., and the terrific 13%
improvement in U.S. merchandise gross profit dollars over third quarter
2014,” said Kim Lubel, Chairman and CEO of CST Brands, Inc. “The
strength of the third quarter reflects the continued success of our
strategic growth planks in both organic, New-to-Industry store growth
and acquisitions, including the Nice N Easy and Landmark stores
purchased in the last twelve months.”
For the three month period ended September 30, 2015, the Company
reported net income of $85 million, or $1.12 per diluted share, driven
by an increase in fuel and merchandise gross profit during the quarter.
Net income was $63 million, or $0.83 per diluted share, for the
comparable period in 2014. Certain asset impairment charges,
acquisition, legal and professional related expenses of $5 million, net
of tax, were included in the three month period ended September 30,
2014. Excluding these items, third quarter 2014 net income would have
been $68 million, or $0.90 per diluted share. There were no such items
in the current period.
Motor fuel gross profit (per gallon) in the U.S. for the third quarter
of 2015, after deducting credit card fees and amounts distributed to
CrossAmerica, was $0.31 compared to $0.25 in the third quarter of 2014,
which was primarily caused by a declining crude oil and wholesale
gasoline pricing environment in the third quarter of 2015. U.S.
merchandise gross profit increased 13% when compared to the third
quarter of 2014, primarily driven by an overall increase in merchandise
sales as well as by the Company’s acquisitions of Nice N Easy and
Landmark stores and an increase in the number of New-to-Industry (“NTI”)
stores.
In Canada, the motor fuel gross profit (per gallon) in U.S. dollars for
the third quarter of 2015, after deducting credit card fees, was $0.24
compared to $0.26 in the third quarter of 2014. Excluding the effects of
foreign exchange, the Company’s motor fuel gross profit in Canada
increased $18 million for the quarter.
Operating income was $137 million for the third quarter 2015, a 32%
improvement over the $104 million achieved in the third quarter 2014.
EBITDA (non-GAAP measures, including EBITDA, as described are reconciled
to the corresponding GAAP measures in the Supplemental Disclosure
section of this release) was $174 million for the three month period
ended September 30, 2015 compared to $139 million for the same period in
2014. The increase in operating income and EBITDA was due primarily to
an increase in U.S. motor fuel gross profit of $33 million and a $14
million increase in U.S. merchandise gross profit, partially offset by
an overall increase in operating expenses of $4 million, when compared
to the same period in 2014. The increase in operating expenses was due
to the acquisitions of Nice N Easy and Landmark stores in the U.S.,
along with the addition of 31 NTI stores when compared to the third
quarter of 2014.
Operating revenues totaled $2.5 billion for the third quarter of 2015
compared to $3.2 billion for the same period of 2014. The Company’s U.S.
merchandise revenues increased $35 million during the third quarter of
2015 when compared to the third quarter of 2014, primarily as a result
of an overall increase in the Company’s merchandise sales as well as the
acquisition of Nice N Easy and the Landmark convenience stores. This was
offset by lower per gallon selling prices for both the U.S. Retail and
Canadian Retail segments. The average daily spot price of gasoline for
the Company’s U.S. segment during the third quarter 2015 was $1.05 per
gallon lower when compared to the price for the same period last year,
or a decline of 40%. Additionally, a decline of $145 million due to the
weakness of the Canadian dollar relative to the U.S. dollar contributed
to the decrease in operating revenues.
Nine Months Results
For the nine month period ended September 30, 2015, the Company reported
EBITDA of $320 million. Adjusted EBITDA, which includes the sale of the
interest of CST Fuel Supply that occurred in January and July 2015 along
with the sale of real property associated with 29 New-to-Industry
stores, was $500 million. For the nine month period ended September 30,
2014, the Company reported EBITDA and Adjusted EBITDA of $284 million.
Adjusted net income, after considering the sales, net of tax, for the
nine month period ended September 30, 2015, was $238 million and diluted
earnings per common share was $3.10. For the nine month period ended
September 30, 2014, adjusted net income was $106 million and diluted
earnings per common share was $1.40. This represents an improvement of
more than 120% compared to the same period last year. (Non-GAAP
measures, including EBITDA, are described and are reconciled to the
corresponding GAAP measures in the Supplemental Disclosure section of
this release).
Liquidity and Capital Resources
For the nine months ended September 30, 2015, cash flow provided by
operating activities totaled $291 million. Cash flow used in investing
activities was $58 million, primarily related to capital expenditures
and acquisitions. Cash flow used in financing activities was $114
million, including payments of long-term debt of $34 million, dividends
of $15 million and the buyback of common stock of $65 million. The
effect of foreign currency exchange rates was a reduction in cash of $30
million. Overall, cash increased by $89 million. Cash, as of
September 30, 2015, was $442 million.
Total capital expenditures, excluding acquisitions, for the nine months
ended September 30, 2015 and 2014 were $203 million and $192 million,
respectively.
CST maintains a revolving credit facility that provides for aggregate
outstanding borrowings of up to $300 million. As of September 30, 2015,
after taking into account letters of credit and the maximum lease
adjusted leverage ratio constraints on borrowing availability,
approximately $296 million was available for future borrowings.
Fourth Quarter 2015 Guidance
The Company is providing the following guidance for its core store
operations for the fourth quarter of 2015:
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Ranges
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Fourth Quarter 2014
Results
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U.S. Retail Segment:
|
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|
|
|
|
|
|
Gallons Per Store Per Day
|
|
|
4,950 to 5,050
|
|
|
4,902
|
|
Merchandise Sales Per Store Per Day
|
|
|
$3,750 to $3,850
|
|
|
$3,490
|
|
Merchandise Gross Margin (%)
|
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|
30.5% to 31.5%
|
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30.5%
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Canadian Retail Segment:
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|
|
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|
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Gallons Per Store Per Day
|
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|
3,150 to 3,250
|
|
|
3,185
|
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Merchandise Sales Per Store Per Day
|
|
|
$2,050 to $2,150
|
|
|
$2,336
|
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Merchandise Gross Margin (%)
|
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|
25.5% to 26.5%
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26.5%
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Review of Strategic Options for California
Network
CST’s management team is announcing today that it is exploring strategic
options for the Company’s California network, comprised of 76 stores, to
enhance shareholder value, including, among others, a potential
tax-efficient like-kind exchange for properties proposed to be acquired
in Georgia and Florida as part of the planned Flash Foods acquisition
announced today. There can be no assurance that the Company’s review of
strategic options for its California network will result in any
transaction being entered into or consummated. CST does not intend to
disclose further developments regarding the exploration of strategic
options until the Board has approved a definitive course of action.
Basis of Presentation
The results provided represent the business operations of CST and its
respective legal subsidiaries before the consolidation of CrossAmerica.
CST purchased 100% of the membership interests of the general partner
and 100% of the outstanding incentive distribution rights of
CrossAmerica effective October 1, 2014 and income associated with these
partnership interests is presented as equity in earnings of CrossAmerica
in the accompanying Statements of Income. The amounts earned from these
partnership interests in the third quarter were $1 million. Consolidated
financial statements that include CrossAmerica are provided in CST
Brands’ 2015 Form 10-Q (September 30, 2015 report).
Conference Call
The Company will host a conference call on November 4, 2015 at 9:00 a.m.
Eastern Time (8:00 a.m. Central Time) to discuss third quarter earnings
results. The conference call numbers are 800-774-6070 or 630-691-2753
and the passcode for both is 5854571#. A live audio webcast of the
conference call and the related earnings materials, including
reconciliations of any non-GAAP financial measures to GAAP financial
measures and any other applicable disclosures, will be available on that
same day on the investor section of the CST Brands website (www.cstbrands.com).
A slide presentation for the conference call will also be available on
the investor section of the Company’s website. To listen to the audio
webcast, go to http://www.cstbrands.com/en-us/investors/eventsandpresentations.
After the live conference call, a replay will be available for a period
of thirty days. The replay numbers are 888-843-7419 or 630-652-3042 and
the passcode for both is 5854571#. An archive of the webcast will be
available on the investor section of the CST Brands website at http://www.cstbrands.com/en-us/investors/eventsandpresentations
within 24 hours after the call for a period of sixty days.
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CST BRANDS, INC.
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CONSOLIDATED STATEMENTS OF INCOME(a)
|
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(Millions of Dollars, Except per Share Amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Operating revenues
|
|
|
$
|
2,506
|
|
|
$
|
3,221
|
|
|
$
|
7,268
|
|
|
$
|
9,483
|
|
|
Cost of sales
|
|
|
|
2,128
|
|
|
|
2,881
|
|
|
|
6,344
|
|
|
|
8,618
|
|
|
Gross profit
|
|
|
|
378
|
|
|
|
340
|
|
|
|
924
|
|
|
|
865
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
176
|
|
|
|
172
|
|
|
|
516
|
|
|
|
502
|
|
|
General and administrative expenses
|
|
|
|
31
|
|
|
|
31
|
|
|
|
101
|
|
|
|
83
|
|
|
Depreciation, amortization and accretion expense
|
|
|
|
34
|
|
|
|
31
|
|
|
|
100
|
|
|
|
92
|
|
|
Asset impairments
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Total operating expenses
|
|
|
|
241
|
|
|
|
236
|
|
|
|
717
|
|
|
|
679
|
|
|
Gain on the sale of assets, net
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
—
|
|
|
Operating income
|
|
|
|
137
|
|
|
|
104
|
|
|
|
214
|
|
|
|
186
|
|
|
Other income, net
|
|
|
|
2
|
|
|
|
2
|
|
|
|
6
|
|
|
|
4
|
|
|
Interest expense
|
|
|
|
(10
|
)
|
|
|
(10
|
)
|
|
|
(30
|
)
|
|
|
(30
|
)
|
|
Equity in earnings of CrossAmerica
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Income before income tax expense
|
|
|
|
130
|
|
|
|
96
|
|
|
|
190
|
|
|
|
160
|
|
|
Income tax expense
|
|
|
|
45
|
|
|
|
33
|
|
|
|
66
|
|
|
|
54
|
|
|
Net income
|
|
|
$
|
85
|
|
|
$
|
63
|
|
|
$
|
124
|
|
|
$
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
|
|
|
|
|
|
|
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Basic earnings per common share
|
|
|
$
|
1.12
|
|
|
$
|
0.83
|
|
|
$
|
1.61
|
|
|
$
|
1.40
|
|
|
Weighted-average common shares outstanding (in thousands)
|
|
|
|
75,565
|
|
|
|
75,442
|
|
|
|
76,384
|
|
|
|
75,421
|
|
|
Earnings per common share - assuming dilution
|
|
|
|
|
|
|
|
|
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Diluted earnings per common share
|
|
|
$
|
1.12
|
|
|
$
|
0.83
|
|
|
$
|
1.61
|
|
|
$
|
1.40
|
|
|
Weighted-average common shares outstanding - assuming dilution (in
thousands)
|
|
|
|
75,903
|
|
|
|
75,631
|
|
|
|
76,724
|
|
|
|
75,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
0.0625
|
|
|
$
|
0.0625
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(a) The CST Brands, Inc. Statements of Income are presented on a
consolidated basis; however, the amounts presented in the table above
account for CST’s investment in CrossAmerica under the equity method of
accounting. CrossAmerica is a consolidated variable interest entity;
however, management reviews the results of operations of CrossAmerica
under the equity method of accounting because of CST’s limited ownership
interest of CrossAmerica’s outstanding units. Net income and earnings
per share attributable to CST are unchanged under the equity method of
accounting from consolidating CrossAmerica. CST’s operating segments on
the following pages are presented before intercompany eliminations with
CrossAmerica and therefore include wholesale fuel sales from
CrossAmerica to certain retail sites in the U.S. Retail segment.
Segment Results
U.S. Retail
The following tables highlight the results of operations and certain
operating metrics of the Company’s U.S. Retail segment (millions of
dollars, except number of convenience stores, per site per day and per
gallon amounts):
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|
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Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
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September 30,
|
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|
|
|
2015
|
|
2014
|
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2015
|
|
2014
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
|
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|
$
|
1,236
|
|
|
$
|
1,622
|
|
|
$
|
3,499
|
|
|
$
|
4,774
|
|
|
Merchandise
|
|
|
|
390
|
|
|
|
355
|
|
|
|
1,095
|
|
|
|
1,001
|
|
|
Other
|
|
|
|
15
|
|
|
|
13
|
|
|
|
47
|
|
|
|
43
|
|
|
Total operating revenues
|
|
|
$
|
1,641
|
|
|
$
|
1,990
|
|
|
$
|
4,641
|
|
|
$
|
5,818
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
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Motor fuel–before amounts attributable to CrossAmerica
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|
$
|
155
|
|
|
$
|
117
|
|
|
$
|
282
|
|
|
$
|
226
|
|
|
Motor fuel–amounts attributable to CrossAmerica
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
—
|
|
|
Motor fuel–after amounts attributable to CrossAmerica
|
|
|
|
150
|
|
|
|
117
|
|
|
|
272
|
|
|
|
226
|
|
|
Merchandise
|
|
|
|
121
|
|
|
|
107
|
|
|
|
330
|
|
|
|
302
|
|
|
Other
|
|
|
|
15
|
|
|
|
13
|
|
|
|
46
|
|
|
|
42
|
|
|
Total gross profit
|
|
|
|
286
|
|
|
|
237
|
|
|
|
648
|
|
|
|
570
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
125
|
|
|
|
111
|
|
|
|
356
|
|
|
|
323
|
|
|
Depreciation, amortization and accretion expense
|
|
|
|
25
|
|
|
|
22
|
|
|
|
72
|
|
|
|
65
|
|
|
Asset impairments
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
Total operating expenses
|
|
|
|
150
|
|
|
|
135
|
|
|
|
428
|
|
|
|
390
|
|
|
Gain on sale of assets, net
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
—
|
|
|
Operating income
|
|
|
$
|
136
|
|
|
$
|
102
|
|
|
$
|
227
|
|
|
$
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core store operating statistics:(a)
|
|
|
|
|
|
|
|
|
|
|
End of period core stores
|
|
|
|
1,027
|
|
|
|
1,046
|
|
|
|
1,027
|
|
|
|
1,046
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
|
5,226
|
|
|
|
4,921
|
|
|
|
5,150
|
|
|
|
4,903
|
|
|
Motor fuel sales (per site per day)
|
|
|
$
|
13,053
|
|
|
$
|
16,865
|
|
|
$
|
12,435
|
|
|
$
|
16,777
|
|
|
Motor fuel gross profit per gallon, net of credit card fees
|
|
|
$
|
0.314
|
|
|
$
|
0.246
|
|
|
$
|
0.195
|
|
|
$
|
0.162
|
|
|
CST Fuel Supply distribution to CrossAmerica(c)
|
|
|
|
(0.009
|
)
|
|
|
—
|
|
|
|
(0.005
|
)
|
|
|
—
|
|
|
Motor fuel gross profit per gallon, net of credit card fees(b),
(c)
|
|
|
$
|
0.305
|
|
|
$
|
0.246
|
|
|
$
|
0.190
|
|
|
$
|
0.162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise sales (per site per day)
|
|
|
$
|
4,129
|
|
|
$
|
3,686
|
|
|
$
|
3,851
|
|
|
$
|
3,516
|
|
|
Merchandise gross profit percentage, net of credit card fees
|
|
|
|
30.8
|
%
|
|
|
30.2
|
%
|
|
|
30.2
|
%
|
|
|
30.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail (continued)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Company-operated retail sites:
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
|
1,025
|
|
|
|
1,044
|
|
|
|
1,021
|
|
|
|
1,036
|
|
|
NTIs
|
|
|
|
3
|
|
|
|
5
|
|
|
|
9
|
|
|
|
15
|
|
|
Acquisitions
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
|
|
—
|
|
|
Closed or divested
|
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(25
|
)
|
|
|
(5
|
)
|
|
End of period
|
|
|
|
1,027
|
|
|
|
1,046
|
|
|
|
1,027
|
|
|
|
1,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core store same store information(a),(d):
|
|
|
|
|
|
|
|
|
|
|
Company-operated retail sites
|
|
|
|
942
|
|
|
|
942
|
|
|
|
934
|
|
|
|
934
|
|
|
NTIs (included in Company-operated retail sites)(g)
|
|
|
|
58
|
|
|
|
58
|
|
|
|
50
|
|
|
|
50
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
|
5,168
|
|
|
|
5,137
|
|
|
|
5,080
|
|
|
|
5,100
|
|
|
Merchandise sales (per site per day)
|
|
|
$
|
3,990
|
|
|
$
|
3,843
|
|
|
$
|
3,778
|
|
|
$
|
3,656
|
|
|
Merchandise gross profit percent, net of credit card fees
|
|
|
|
30.8
|
%
|
|
|
30.2
|
%
|
|
|
30.1
|
%
|
|
|
30.2
|
%
|
|
Merchandise sales, ex. cigarettes (per site per day)
|
|
|
$
|
2,868
|
|
|
$
|
2,759
|
|
|
$
|
2,687
|
|
|
$
|
2,598
|
|
|
Merchandise gross profit percent, net of credit card fees and ex.
cigarettes
|
|
|
|
36.3
|
%
|
|
|
35.7
|
%
|
|
|
35.7
|
%
|
|
|
35.8
|
%
|
|
Merchandise gross profit dollars
|
|
|
$
|
106
|
|
|
$
|
101
|
|
|
$
|
290
|
|
|
$
|
282
|
|
|
Other services operating revenues(e)
|
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
40
|
|
|
$
|
39
|
|
|
NTI information(f):
|
|
|
|
|
|
|
|
|
|
|
Company-operated retail sites at end of period
|
|
|
|
85
|
|
|
|
|
|
85
|
|
|
|
|
Company-operated retail sites (average)
|
|
|
|
83
|
|
|
|
|
|
80
|
|
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
|
9,006
|
|
|
|
|
|
8,812
|
|
|
|
|
Merchandise sales (per site per day)
|
|
|
$
|
6,959
|
|
|
|
|
$
|
6,572
|
|
|
|
|
Merchandise gross profit percent, net of credit card fees
|
|
|
|
32.3
|
%
|
|
|
|
|
31.8
|
%
|
|
|
|
Merchandise sales, ex. cigarettes (per site per day)
|
|
|
$
|
5,591
|
|
|
|
|
$
|
5,249
|
|
|
|
|
Merchandise gross profit percent, net of credit card fees and ex.
cigarettes
|
|
|
|
36.6
|
%
|
|
|
|
|
36.2
|
%
|
|
|
|
|
|
Notes to U.S. Retail Statistical Table
|
|
|
|
|
|
(a)
|
|
Represents the portfolio of core retail sites and excludes
recently acquired retail sites that are being integrated or are
under performance evaluation to determine if: (i) the continued
ownership of the retail site is consistent with the U.S. Retail
core operating strategy; or (ii) the retail site is to be
converted into a wholesale dealer operation managed by
CrossAmerica or divested. All NTIs are core stores and accordingly
are included in the core system operating statistics. Management
has classified the Nice N Easy and Landmark convenience store
operations as core store and accordingly their operations are
included in the core system operating statistics.
|
|
(b)
|
|
Includes $0.05 per gallon of wholesale fuel distribution profit.
|
|
(c)
|
|
Effective July 1, 2015, CrossAmerica owns 17.5% of the U.S. Retail
segment’s wholesale fuel distribution profit.
|
|
(d)
|
|
The same store information consists of aggregated individual store
results for all sites in operation substantially throughout both
periods presented. Stores that were temporarily closed for a brief
period of time during the periods being compared remain in the same
store sales comparison. If a store is replaced, either at the same
location or relocated to a new location, it is removed from the
comparison until the new store has been in operation for
substantially all of the periods being compared. NTIs are included
in the core same store metrics when they meet this criteria.
|
|
(e)
|
|
Other services include revenues from car wash sales and commissions
from lottery, money orders, air/water/vacuum services, video and
game rentals and access to ATMs.
|
|
(f)
|
|
NTIs consist of all new stores opened after January 1, 2008, which
is generally when the Company began operating the larger formatted
stores that accommodate broader merchandise categories and food
offerings and have more fuel dispensers than its legacy stores. This
information is being presented to enable a comparison of the
business metrics of the Company's NTIs to its total core store
operating statistics. As of September 30, 2015, approximately 46% of
the total NTIs were opened in the last two years, which the Company
generally considers to be a development period before the NTIs
achieve their full potential. Prior year information is not
comparable given the increase in the number of NTIs and the timing
of when they were opened, and is therefore not presented.
|
|
(g)
|
|
NTIs are included in the core same store metrics when they meet the
criteria for same store classification described in (d).
|
|
|
|
|
Canadian Retail
The following tables highlight the results of operations and certain
operating metrics of the Canadian Retail segment (millions of U.S.
dollars, except number of retail sites, per site per day and per gallon
amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
|
|
|
$
|
734
|
|
|
$
|
1,067
|
|
|
$
|
2,178
|
|
|
$
|
3,093
|
|
|
Merchandise
|
|
|
|
65
|
|
|
|
72
|
|
|
|
180
|
|
|
|
191
|
|
|
Other
|
|
|
|
66
|
|
|
|
92
|
|
|
|
269
|
|
|
|
381
|
|
|
Total operating revenues
|
|
|
$
|
865
|
|
|
$
|
1,231
|
|
|
$
|
2,627
|
|
|
$
|
3,665
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
|
|
|
$
|
61
|
|
|
$
|
69
|
|
|
$
|
170
|
|
|
$
|
180
|
|
|
Merchandise
|
|
|
|
18
|
|
|
|
19
|
|
|
|
49
|
|
|
|
52
|
|
|
Other
|
|
|
|
13
|
|
|
|
15
|
|
|
|
57
|
|
|
|
63
|
|
|
Total gross profit
|
|
|
|
92
|
|
|
|
103
|
|
|
|
276
|
|
|
|
295
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
51
|
|
|
|
61
|
|
|
|
160
|
|
|
|
179
|
|
|
Depreciation, amortization and accretion expense
|
|
|
|
9
|
|
|
|
9
|
|
|
|
28
|
|
|
|
27
|
|
|
Operating income
|
|
|
$
|
32
|
|
|
$
|
33
|
|
|
$
|
88
|
|
|
$
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail sites (end of period):
|
|
|
|
|
|
|
|
|
|
|
Company-operated (fuel and merchandise)
|
|
|
|
291
|
|
|
|
282
|
|
|
|
291
|
|
|
|
282
|
|
|
Commission agents (fuel only)
|
|
|
|
497
|
|
|
|
501
|
|
|
|
497
|
|
|
|
501
|
|
|
Cardlock (fuel only)
|
|
|
|
72
|
|
|
|
73
|
|
|
|
72
|
|
|
|
73
|
|
|
Total retail sites (end of period)
|
|
|
|
860
|
|
|
|
856
|
|
|
|
860
|
|
|
|
856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average retail sites during the period:
|
|
|
|
|
|
|
|
|
|
|
Company-operated (fuel and merchandise)
|
|
|
|
292
|
|
|
|
281
|
|
|
|
293
|
|
|
|
277
|
|
|
Commission agents (fuel only)
|
|
|
|
496
|
|
|
|
500
|
|
|
|
495
|
|
|
|
499
|
|
|
Cardlock (fuel only)
|
|
|
|
72
|
|
|
|
73
|
|
|
|
72
|
|
|
|
74
|
|
|
Average retail sites during the period
|
|
|
|
860
|
|
|
|
854
|
|
|
|
860
|
|
|
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total system operating statistics:
|
|
|
|
|
|
|
|
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
|
3,270
|
|
|
|
3,370
|
|
|
|
3,188
|
|
|
|
3,244
|
|
|
Motor fuel sales (per site per day)
|
|
|
$
|
9,273
|
|
|
$
|
13,569
|
|
|
$
|
9,279
|
|
|
$
|
13,330
|
|
|
Motor fuel gross profit per gallon, net of credit card fees
|
|
|
$
|
0.237
|
|
|
$
|
0.260
|
|
|
$
|
0.227
|
|
|
$
|
0.239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated retail site statistics:
|
|
|
|
|
|
|
|
|
|
|
Merchandise sales (per site per day)
|
|
|
$
|
2,442
|
|
|
$
|
2,767
|
|
|
$
|
2,262
|
|
|
$
|
2,518
|
|
|
Merchandise gross profit percentage, net of credit card fees
|
|
|
|
27.1
|
%
|
|
|
26.6
|
%
|
|
|
27.0
|
%
|
|
|
27.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian Retail (continued)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
Company-operated statistics(a)
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Retail sites:
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
|
292
|
|
|
|
279
|
|
|
|
293
|
|
|
|
272
|
|
|
NTIs
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
Acquisitions
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Conversions, net(b)
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
3
|
|
|
Closed or divested
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
End of period
|
|
|
|
291
|
|
|
|
282
|
|
|
|
291
|
|
|
|
282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average foreign exchange rate for $1 CAD to USD
|
|
|
|
0.76373
|
|
|
|
0.91065
|
|
|
|
0.79413
|
|
|
|
0.91497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store information ($ amounts in CAD):(c),(d)
|
|
|
|
|
|
|
|
|
|
|
Company-operated retail sites
|
|
|
|
273
|
|
|
|
273
|
|
|
|
265
|
|
|
|
265
|
|
|
NTIs (included in Company-operated retail sites)
|
|
|
|
24
|
|
|
|
24
|
|
|
|
23
|
|
|
|
23
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
|
3,483
|
|
|
|
3,637
|
|
|
|
3,411
|
|
|
|
3,517
|
|
|
Motor fuel gross profit per gallon, net of credit card fees
|
|
|
$
|
0.333
|
|
|
$
|
0.316
|
|
|
$
|
0.333
|
|
|
$
|
0.304
|
|
|
Merchandise sales (per site per day)
|
|
|
$
|
3,188
|
|
|
$
|
3,061
|
|
|
$
|
2,892
|
|
|
$
|
2,780
|
|
|
Merchandise gross profit percent, net of credit card fees
|
|
|
|
27.2
|
%
|
|
|
26.7
|
%
|
|
|
27.1
|
%
|
|
|
27.6
|
%
|
|
Merchandise sales, ex. cigarettes (per site per day)
|
|
|
$
|
1,640
|
|
|
$
|
1,560
|
|
|
$
|
1,479
|
|
|
$
|
1,410
|
|
|
Merchandise gross profit percent, net of credit card fees and ex.
cigarettes
|
|
|
|
36.8
|
%
|
|
|
36.1
|
%
|
|
|
36.4
|
%
|
|
|
36.7
|
%
|
|
Merchandise gross profit dollars
|
|
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
57
|
|
|
$
|
56
|
|
|
Other services operating revenues(e)
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
14
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NTI information ($ amounts in CAD)(c),(f):
|
|
|
|
|
|
|
|
|
|
|
Company-operated retail sites at end of period
|
|
|
|
35
|
|
|
|
|
|
35
|
|
|
|
|
Company-operated retail sites (average)
|
|
|
|
35
|
|
|
|
|
|
35
|
|
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
|
5,080
|
|
|
|
|
|
4,957
|
|
|
|
|
Merchandise sales (per site per day)
|
|
|
$
|
3,592
|
|
|
|
|
$
|
3,134
|
|
|
|
|
Merchandise gross profit percent, net of credit card fees
|
|
|
|
27.4
|
%
|
|
|
|
|
27.2
|
%
|
|
|
|
Merchandise sales, ex. cigarettes (per site per day)
|
|
|
$
|
1,982
|
|
|
|
|
$
|
1,721
|
|
|
|
|
Merchandise gross profit percent, net of credit card fees and ex.
cigarettes
|
|
|
|
33.9
|
%
|
|
|
|
|
35.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian Retail (continued)
|
|
|
|
|
|
|
|
|
Commission agent statistics(a)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Retail Sites:
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
495
|
|
|
498
|
|
|
495
|
|
|
499
|
|
|
New dealers
|
|
|
3
|
|
|
5
|
|
|
6
|
|
|
9
|
|
|
Conversions, net(b)
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
Closed or de-branded
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
End of period
|
|
|
497
|
|
|
501
|
|
|
497
|
|
|
501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store Information(d):
|
|
|
|
|
|
|
|
|
|
|
Retail sites
|
|
|
472
|
|
|
472
|
|
|
465
|
|
|
465
|
|
|
Motor fuel sales (gallons per site per day)
|
|
|
2,871
|
|
|
2,933
|
|
|
2,695
|
|
|
2,739
|
|
|
|
|
Notes to Canadian Retail Statistical Table
|
|
|
|
|
|
(a)
|
|
Company-operated retail sites sell motor fuel and merchandise. The
Company sells only motor fuel at commission agent sites. CST Brands
does not currently distinguish between core and non-core stores in
the Canadian Retail segment. All sites in the Canadian Retail
segment are core stores.
|
|
(b)
|
|
Conversions represent stores that have changed their classification
from commission agents to company owned and operated or vice versa.
Changes in classification result when the Company either takes over
the operations of commission agents or converts an existing company
owned and operated store to commission agents.
|
|
(c)
|
|
All amounts presented are stated in Canadian dollars to remove the
impact of foreign exchange and all fuel information excludes amounts
related to cardlock operations.
|
|
(d)
|
|
The same store information consists of aggregated individual store
results for all sites in operation substantially throughout both
periods presented. Stores that were temporarily closed for a brief
period of time during the periods being compared remain in the same
store sales comparison. If a store is replaced, either at the same
location or relocated to a new location, it is removed from the
comparison until the new store has been in operation for
substantially all of the periods being compared. NTIs are included
in the same store metrics when they meet this criteria.
|
|
(e)
|
|
Other services include revenues from car wash sales and commissions
from lottery, air/water/vacuum services, video and game rentals and
access to ATMs.
|
|
(f)
|
|
NTIs consist of all new stores opened after January 1, 2008, which
is generally when the Company began operating the larger formatted
stores that accommodate broader merchandise categories and food
offerings and have more fuel dispensers than its legacy stores. NTIs
exclude commission agents. This information is being presented to
enable a comparison of the business metrics of the Company's NTIs to
its total core store operating statistics. As of September 30, 2015,
approximately 49% of the total NTIs were opened in the last two
years, which the Company generally considers to be a development
period before the NTIs achieve their full potential. Prior year
information is not comparable given the increase in the number of
NTIs and the timing of when they were opened, and is therefore not
presented.
|
|
|
|
|
Supplemental Disclosure Regarding Non-GAAP Financial Information
EBITDA is a non-U.S. GAAP financial measure that represents net income
before income taxes, interest expense, depreciation, amortization and
accretion expense and asset impairments. EBITDAR is a non-U.S. GAAP
financial measure that further adjusts EBITDA by excluding minimum rent
expense. Adjusted EBITDA is a non-U.S. GAAP financial measure that
adjusts EBITDA by including the fair value of the sale of the equity
interest in CST Fuel Supply to CrossAmerica. Adjusted net income and
diluted earnings per share also include the fair value of the sale of
the equity interest in CST Fuel Supply to CrossAmerica. The Company
believes that EBITDA, EBITDAR and Adjusted EBITDA are useful to
investors and creditors in evaluating its operating performance because
(a) they facilitate management’s ability to measure the operating
performance of the business on a consistent basis by excluding the
impact of items not directly resulting from the retail operations; and
(b) securities analysts and other interested parties use such
calculations as a measure of financial performance and debt service
capabilities. EBITDA, EBITDAR, Adjusted EBITDA, adjusted net income and
adjusted diluted earnings per share do not purport to be alternatives to
net income as a measure of operating performance or to cash flows from
operating activities as a measure of liquidity. EBITDA, EBITDAR,
Adjusted EBITDA, adjusted net income and adjusted diluted earnings per
share have limitations as analytical tools and should not be considered
in isolation or as a substitute for analysis of the results of
operations as reported under U.S. GAAP.
The following table presents a reconciliation of CST’s net income to
EBITDA, EBITDAR, Adjusted EBITDA, adjusted net income and adjusted
diluted earnings for the three and nine months ended September 30, 2015
and 2014 (in millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
CST net income(a)
|
|
|
$
|
85
|
|
$
|
63
|
|
$
|
124
|
|
$
|
106
|
|
Interest expense
|
|
|
|
10
|
|
|
10
|
|
|
30
|
|
|
30
|
|
Income tax expense
|
|
|
|
45
|
|
|
33
|
|
|
66
|
|
|
54
|
|
Depreciation, amortization and accretion
|
|
|
|
34
|
|
|
31
|
|
|
100
|
|
|
92
|
|
Asset impairments
|
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
EBITDA
|
|
|
|
174
|
|
|
139
|
|
|
320
|
|
|
284
|
|
Minimum rent expense
|
|
|
|
11
|
|
|
5
|
|
|
28
|
|
|
13
|
|
EBITDAR
|
|
|
|
185
|
|
|
144
|
|
|
348
|
|
|
297
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
174
|
|
|
139
|
|
|
320
|
|
|
284
|
|
Sale of CST Fuel Supply and NTI Drops(b)
|
|
|
|
120
|
|
|
—
|
|
|
180
|
|
|
—
|
|
Adjusted EBITDA
|
|
|
$
|
294
|
|
$
|
139
|
|
$
|
500
|
|
$
|
284
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
85
|
|
$
|
63
|
|
$
|
124
|
|
$
|
106
|
|
Sale of CST Fuel Supply, net of tax at 36.5%
|
|
|
|
76
|
|
|
—
|
|
|
114
|
|
|
—
|
|
Adjusted net income
|
|
|
$
|
161
|
|
$
|
63
|
|
$
|
238
|
|
$
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
1.12
|
|
$
|
0.83
|
|
$
|
1.61
|
|
$
|
1.40
|
|
Sale of CST Fuel Supply
|
|
|
|
1.00
|
|
|
—
|
|
|
1.49
|
|
|
—
|
|
Diluted earnings per common share - adjusted
|
|
|
$
|
2.12
|
|
$
|
0.83
|
|
$
|
3.10
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - assuming dilution (in
thousands)
|
|
|
|
75,903
|
|
|
75,631
|
|
|
76,724
|
|
|
75,570
|
(a) The CST Brands, Inc. Statements of Income are presented on a
consolidated basis; however, the amounts presented in the table above
account for CST’s investment in CrossAmerica under the equity method of
accounting. CrossAmerica is a consolidated variable interest entity;
however, management reviews the results of operations of CrossAmerica
under the equity method of accounting because of CST’s limited ownership
interest of CrossAmerica’s outstanding units. Net income and earnings
per share attributable to CST are unchanged under the equity method of
accounting from consolidating CrossAmerica. CST’s operating segments on
the previous pages are presented before intercompany eliminations with
CrossAmerica and therefore include wholesale fuel sales from
CrossAmerica to certain retail sites in the U.S. Retail segment.
(b) As discussed in the Company's Form 10-Qs, in January 2015 and July
2015, CST closed on the sales of a 5% and 12.5%, respectively, limited
partner equity interest in CST Fuel Supply to CrossAmerica. In addition
in July 2015, the Company completed the sale of 29 NTIs to CrossAmerica.
Because these transactions were between entities under common control, a
gain on these sales is not reflected in the Company's consolidated
income statement. The Company believes these transactions are indicative
of future transactions with CrossAmerica and should be considered when
evaluating its performance.
About CST Brands, Inc.
CST Brands, Inc. (NYSE: CST), a Fortune 500 Company, is one of the
largest independent retailers of motor fuels and convenience merchandise
in North America. Based in San Antonio, Texas, CST employs over 14,000
Team Members at approximately 1,900 locations throughout the
Southwestern United States, New York and Eastern Canada offering a broad
array of convenience merchandise, beverages, snacks and fresh food. In
the U.S., CST Corner Stores proudly sell fuel and signature products
such as Fresh Choices baked and packaged goods, U Force energy and sport
drinks, Cibolo Mountain coffee, FC Soda and Flavors2Go fountain drinks.
In Canada, CST is the exclusive provider of Ultramar fuel and its
Dépanneur du Coin and Corner Stores sell signature Transit Café coffee
and pastries. CST also owns the general partner of CrossAmerica Partners
LP, a master limited partnership, and wholesale distributor of fuels,
based in Allentown, Pennsylvania. For more information about CST, please
visit www.cstbrands.com.
Safe Harbor Statement
Statements contained in this release that state the Company’s or
management’s expectations or predictions of the future are
forward-looking statements intended to be covered by the safe harbor
provisions of the Securities Act of 1933 and the Securities Exchange Act
of 1934. The words “believe,” “expect,” “should,” “intends,”
“estimates,” and other similar expressions identify forward-looking
statements. It is important to note that actual results could differ
materially from those projected in such forward-looking statements. For
more information concerning factors that could cause actual results to
differ from those expressed or forecasted, see CST Brand’s Form 10-Q or
Form 10-K filed with the Securities and Exchange Commission, and
available on the CST Brand’s website at www.cstbrands.com.
The Company undertakes no obligation to publicly update or revise any
statements in this release, whether as a result of new information,
future events or otherwise.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104005527/en/ Copyright Business Wire 2015
Source: Business Wire
(November 4, 2015 - 6:00 AM EST)
News by QuoteMedia
www.quotemedia.com
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