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BRENTWOOD, Tenn. -- MAPCO Express parent, Delek US Holdings Inc., brought back online nine of the 36 Virginia convenience stores it classified as discontinued operations during the fourth quarter of 2008, the company stated yesterday.
As CSNews Online reported last March, Delek US intended to exit the Virginia market as part of an ongoing strategy to focus investment in core growth markets. During the fourth quarter of 2008, the company reclassified its Virginia operations as "discontinued operations," and the assets and liabilities associated with the remaining stores were reflected as "held for sale." At the end of 2008, Delek had sold 12 of the 36 Virginia stores held for sale, according to a news release issued at the time.
Yesterday, however, Delek US said it had restored nine of the stores to "normal operations."
"We made a strategic management decision to retain select, high-performing retail locations in Virginia," company spokesperson Noel Ryan told CSNews Online.
Delek US' announcement came as part of its release of fourth quarter and full-year 2009 financial results. For the three months ended Dec. 31, 2009, the company reported a net loss from continuing operations of $21.1 million vs. net income of $1.4 million in the fourth quarter 2008. Excluding special items, the company reported an adjusted net loss from continuing operations of $27.0 million in the fourth quarter 2009.
For the full year 2009, the company reported net income from continuing operations of $2.3 million vs. net income of $24.6 million in 2008. Excluding special items, the company reported an adjusted net loss from continuing operations of $22.4 million in 2009.
As previously reported, the company's Tyler refinery was offline between November 2008 and mid-May 2009, due to a fire at the facility. In the company's refining segment, Gulf Coast refining economics remained severely depressed during the fourth quarter, while in the retail segment, positive same-store sales trends continued to signal broad-based stabilization in the company's core Southeastern U.S. markets.
As a result of the fire at the Tyler refinery in November 2008, the company recorded income of $15.7 million related to claims under its property damage insurance policy during the fourth quarter 2009. Fourth quarter property damage expense was $0.1 million. Delek said it anticipates receiving additional insurance proceeds during 2010.
In the retail segment, margin contribution declined to $0.3 million in the fourth quarter 2009, compared to $9.4 million in the fourth quarter 2008. Retail contribution margin in the fourth quarter 2009 and the fourth quarter 2008 included goodwill impairment charges of $7.0 million and $11.2 million, respectively. Strong same-store sales of fuel (gallons) and merchandise were offset by a lower retail fuel margin in the fourth quarter 2009, when compared to the prior-year period, according to the company.
Same-store sales of fuel and merchandise increased during the fourth quarter, continuing a trend of positive same-store comparisons that began in the third quarter 2009. The improvement in fourth quarter same-store comparisons were favorably impacted by strong contributions from the company's "reimaged" MAPCO stores. To date, Delek US said 106 locations within its 442-store base are "reimaged."
Same-store sales of fuel improved 4.2 percent in the fourth quarter 2009, compared to a same-store sales decline of 5.8 percent in the fourth quarter 2008. The retail segment sold a total of 108.7 million retail gallons during the three months ended Dec. 31, 2009, vs. 106.3 million gallons in the prior-year period.
The retail fuel margin was 12.9 cents per gallon in the fourth quarter 2009, compared to 25.5 cents per gallon in the prior-year period. During the third and fourth quarters of 2008, this was favorably impacted by weather-related supply disruptions.
Same-store merchandise sales increased 5.0 percent in the fourth quarter 2009, compared to a same-store sales decline of 8.1 percent in the fourth quarter 2008. Total merchandise sales in the retail segment totaled $93.0 million in the three months ended Dec. 31, 2009, vs. $90.4 million in the prior-year period. Increased revenue in the cigarette and candy categories was partially offset by weakness in the fountain, beer and dairy categories. Fourth quarter 2009 merchandise margin was 30.2 percent vs.30.0 percent in the fourth quarter 2008.
During a conference call yesterday, Uzi Yemin, president and CEO of Delek US, said the company's retail segment has "good momentum that is carrying into the first quarter [of 2010]." He expects the recent growth trend in fuel and in-store sales to continue.
"We're looking at our pricing always. Where there is opportunity to increase margin, we're taking it. But we feel we have good sales momentum right now. We don't want to stop this momentum," Yemin said in response to a question on pricing strategy.
In regards to growth, he said the company is looking at opportunities within its existing markets, as well as in markets outside its current operating area. He acknowledged that the number of stores the chain currently operates is on the low side. "We, as a company, can run more stores," Yemin said during the conference call. "But we want to make sure that when we make an acquisition, it's the right acquisition."
He also noted Delek US is well positioned for when an attractive opportunity comes along. In recent months, the company has renewed or extended maturities on more than $400 million in combined financing for its subsidiaries. In December 2009, its retail subsidiary extended a $108 million revolving credit facility by an additional year to April 2011. Last month, its refining subsidiary entered into a new, four-year, $300 million asset-backed revolving credit facility that includes a $300 million accordion feature, subject to lender commitments. Finally, at the corporate level, the company extended maturities on $45 million of term loan debt from 2009 to 2011.
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