Western Refining Reports Stronger Q4 C-Store Profits

EL PASO, Texas -- Although Western Refining Inc.'s same-store fuel and merchandise profit margins during its fiscal fourth quarter dipped, the company is expecting a strong 2012 for its convenience store division.

According to CEO Jeff Stevens, the company opened or acquired 59 new stores in 2011, and he is encouraged by their early results.

"We're confident retail we will have a good year in 2012," he said during a conference call this morning. "…We've seen strong margins thus far in 2012."

Overall, Western Refining's Q4 2011 fuel sales rose to $229.8 million, compared to $147.5 million in the same quarter in 2010. For the year, fuel sales increased to $792.5 million in fiscal year 2011 vs. $582.6 million in 2010.

Merchandise sales improved to $56.4 million during Western Refining's 2011 Q4, compared to $46.8 million in the same 2010 period. Entire-year 2011 merchandise sales jumped to $204.9 million vs. $191.3 million in 2010.

However, the company's 2011 Q4 fuel margins slipped slightly to 15 cents per gallon from 17 cents a year ago, and merchandise margins dropped to 27.2 percent from 28.4 percent a year ago. As a whole, the operator of GIANT, Mustang, Sundial and Howdy's convenience stores earned a fourth-quarter profit of $48.6 million, excluding special items. That compares to a loss of $3.5 million, excluding special items, during the same quarter in 2010.

Last year, the Texas-based company made a net profit of $318.2 million vs. a loss of $10.1 million during fiscal year 2010.

"It was an extraordinary year for Western Refining," said Stevens. "We improved our free cash flow dramatically. Improved refining margins were [also] much improved."

In addition to clearly being pleased with Western Refining's increased profit, Stevens noted in the conference call that he was especially proud of the company's debt reduction. "Our net debt went from $1 billion at the beginning of 2011 to just over $400 million by the end of the year," he remarked.

When questioned by stock market analysts during the call, Western Refining would not comment about any future potential acquisitions in the refining market. However, Stevens did say that the company is in a "much better, stronger position than we've been in a long time."

In addition, Western Refining has set forth a $162-million capital expenditure budget for 2012. Western Refining has about 200 convenience stores in Arizona, California, Colorado, Nevada, Texas and Utah.