Western Refining to Grow Its Retail Business

EL PASO, Texas -- Western Refining Inc. has significantly grown its retail division in the past two years and will continue to do so, President and CEO Jeff Stevens stated during today's 2013 second-quarter earnings conference call.

"Our growing wholesale and retail businesses generate RINs [renewable identification numbers], which satisfy a significant portion of our renewable fuel [standard] obligations," Stevens said this morning. "Overall, we continue to invest in high-return capital projects, while maintaining our commitment to return cash to shareholders."

Western Refining’s retail division operates 222 convenience stores and gas stations under the GIANT, Mustang, Sundial and Howdy's banners. This division saw its net sales rise to $316 million in the second quarter ended June 30. However, retail operating income dropped by $2 million to $5.87 million as the average per-gallon fuel cost dropped to $3.51 and fuel margins slipped by 3 cents to 20 cents per gallon compared to 2012's second quarter.

Merchandise sales rose nearly $4 million to $66 million in its latest quarter, but merchandise margins declined by 1.4 percent to 28.9 percent.

Companywide, Western Refining generated a $126.8-million profit in its latest quarter, compared to $205 million during the same quarter last year. Both of these figures exclude special one-time items.

"Western had another strong quarter. We are well on our way to achieving our 2013 goals," Stevens said during today’s conference call.

As CSNews Online reported last week, Western Refining filed a registration statement to spin off Western Refining Logistics LP as a master limited partnership (MLP). If the Form S-1 is approved by the U.S. Securities and Exchange Commission (SEC), the new company would be responsible for owning, operating, developing and acquiring terminals, storage tanks, pipelines and other logistics assets.

The company stressed during today's earnings call that it would not discuss the MLP filing and referred all Wall Street analysts to the S-1 filing because the process is ongoing.

If approved by the SEC, Western Refining Logistics will trade on the New York Stock Exchange under the symbol WNRL.