SuperAmerica Parent Mum on Western Refining Merger

TEMPE, Ariz. — Northern Tier Energy LP acknowledged it received a non-binding offer from Western Refining Inc. to acquire the master limited partnership and parent of SuperAmerica convenience stores for $2.56 billion. However, the company declined to provide any additional information regarding the merger during its 2015 fiscal third-quarter earnings call Tuesday.

Northern Tier CEO Dave Lamp also would not provide any timeline regarding when its review process of Western Refining's offer will be completed. 

If a deal is reached, Western Refining would acquire the remainder of Northern Tier it does not own already. Western Refining currently owns 38 percent of Northern Tier’s common units and 100 percent of the general partnership interest.

RETAIL STRONG

Lamp did discuss the company’s retail division in detail during Tuesday's earnings call. The operator of 165 SuperAmerica locations, as well as 102 franchised c-stores, had a strong third quarter, which ended Sept. 30. Total retail operating income was $9.4 million, compared to $5.8 million in the company’s 2014 third quarter.

Fuel gallons sold declined 1.6 percent year over year at company-operated locations to 78.4 million gallons. According to Lamp, this decline was due to road construction near five SuperAmerica locations, which led to fuel volume declines at these stores.

The CEO did stress that fuel gallons sold at the 102 franchised locations rose by almost 10 million gallons year over year to 29.2 million gallons, “which is actually an overall 8-percent fuel volume increase.” During the same period in 2014, Northern Tier has 82 franchised locations.

Fuel margins per gallon throughout the SuperAmerica LLC retail division were especially strong, increasing 7 cents to 27 cents per gallon.

Merchandise sales also had an excellent quarter, advancing $5 million year over year to $100.7 million. Merchandise margin rose slightly by 0.1 percentage points to 25.8 percent.

“We are pleased with the strength of the SuperAmerica brand,” Lamp stressed.

He noted that Northern Tier will continue to grow its retail division on an organic basis. The company opened one new large-format SuperAmerica store at the end of October, with two more expected to open in the current fourth quarter, and another slated to open in the first quarter of 2016.

Companywide, Tempe-based Northern Tier reported net income of $103.5 million for its fiscal third quarter, compared to $96.2 million in the same quarter in 2014.

“This was an outstanding quarter for Northern Tier,” concluded Lamp.