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SAN ANTONIO — Tesoro Corp. has realized benefits of its business improvement plan and now is turning a focus to growing its retail operations footprint, as well as strengthening in-store offerings for its convenience store customers, Chairman and CEO Greg Goff said Thursday during the company’s 2015 fiscal third-quarter earnings call.
Goff did not provide any specifics on what the company will do to advance its retail business, which is housed under Tesoro’s marketing division. He said the company will reveal plans during a December investor conference in New York City. However, he did note that Tesoro will definitely consider marketing-segment acquisitions as one way to achieve growth.
“We’re very confident we can continue to grow our marketing business,” he said. “We see very significant potential to grow that business.”
In the company's third quarter, which ended Sept. 30, Tesoro's retail earnings were so strong that one Wall Street analyst referred to them as “outstanding.” Tesoro’s retail division saw net earnings more than double year over year to a record $379 million.
Higher volumes, driven by growth in customer demand and a favorable market environment, were cited as the main reasons for the massive retail earnings increase.
Same-store fuel sales improved 2.1 percent year over year. An increase in vehicle miles traveled as the job market improved led to more customers filling up at the pump, the company reported.
Branded and unbranded fuel sales reached 2.249 billion gallons in the third quarter vs. 2.155 billion gallons last year. Fuel marginsrose by a robust 8 cents per gallon year over year to 20 cents per gallon.
Gross margins came in at $475 million in Tesoro’s latest quarter, a significant rise compared to the $292 million posted during the same quarter in 2014.
As of Oct. 30, Tesoro had 580 company-operated convenience stores and gas stations, as well as 1,695 jobber/dealer operated locations, for a total of 2,275 sites.
Companywide, San Antonio-based Tesoro reported net earnings of $759 million in the third quarter, nearly double the $396 million earned in its 2014 third quarter.
“We reported very strong results for the third quarter, with an all-time record for EBITDA and earnings per share, driven by a favorable environment and strong performance across all business segments,” concluded Goff.