Hard Hats in Northern Tier's Future
TEMPE, Ariz. -- Northern Tier Energy LP will expand its retail operations through the construction of new SuperAmerica convenience stores, President and CEO Dave Lamp said Tuesday during the company's 2014 fiscal second-quarter earnings call.
"We will continue to work to grow our retail footprint," Lamp said. "We expect to add five or six new stores a year and add 10 to 15 new franchises each year."
The parent of SuperAmerica had 164 company-operated convenience stores and 61 franchised locations as of June 30, primarily in Wisconsin and Minnesota. The number of company-operated stores represents an increase of one location compared to the year-ago period.
Regarding its potential merger of retail assets with Western Refining Inc. (WNR), Lamp said he had no update to offer. WNR purchased 100 percent of the general partner interest and 38 percent of Northern Tier Energy in November. In February, WNR President and CEO Jeff Stevens reported that both companies were looking into a merger.
THE FINANCIALS
Northern Tier's retail side earned a net profit of $5 million in its most recent quarter, a retrenchment of $3 million vs. the prior-year period. Fuel margins declining by 4 cents per gallon to 19 cents per gallon were a main cause for the retail earnings segment decrease.
Merchandise sales were strong, however, rising nearly $4 million to just shy of $90 million in Northern Tier's second quarter. Merchandise margin percentage declined 0.5 percent to 26.5 percent.
Looking to its fiscal third quarter, ending Sept. 30, Northern Tier expects retail merchandise margins to rise to $96 million, carrying a 26.25-percent gross margin percentage. The Tempe-based company also expects to sell 81 million gallons of gasoline at a retail fuel margin of 18 cents per gallon.
Companywide, the master limited partnership reported 2014 second-quarter net income of $57.9 million, compared to $63.9 million for the same period in 2013.
"We had a solid quarter, evidenced by safely achieving our increased throughput," said Lamp.