US c-store operator The Pantry has reported lower third-quarter profits as an impairment charge and lower fuel sales weighed on earnings.
In the three months ended 28 June, earnings dropped to US$14.8m from $19m in the comparable period last year.
Excluding impairment charges as well as loss on extinguishment of debt, the company reported adjusted net income for the third quarter of $15.9m versus $21m a year ago.
EBITDA also dropped, to $74.7m from $84.7m a year ago. Fuel gross profit decreased 16.3% in the quarter.
Sales in the period slid to $2.14bn from $2.26bn last year. Comparable-store merchandise sales, however, increased 3.6% in total and 5.7% excluding cigarettes.
The Pantry Announces Third Quarter Fiscal 2012 Financial Results
CARY, N.C.--(BUSINESS WIRE)--The Pantry, Inc. (NASDAQ: PTRY), the leading independently operated convenience store chain in the southeastern U.S., today announced financial results for its fiscal third quarter and nine months ended June 28, 2012.
Third Quarter Summary:
Net income was $14.8 million or $0.65 per share. This compares to net income of $19.0 million or $0.84 per share in last year's third quarter. Excluding the impact of impairment charges, net income for the third quarter of fiscal 2012 was $15.9 million or $0.70 per share, compared to earnings per share of $0.93 in the prior year (see reconciliation below).
Adjusted EBITDA was $74.7 million, compared to $84.7 million a year ago.
Comparable store merchandise revenue increased 3.6%.
Merchandise gross margin was 33.5%, compared to 34.0% a year ago.
Fuel gross profit was $67.1 million, compared to $80.1 million a year ago.
Cash flow from operations was $80.2 million.
President and Chief Executive Officer Dennis G. Hatchell said, "We generated $75 million of Adjusted EBITDA for our fiscal third quarter, which was at the high end of our expectations. While pleased with these results, we are focused on improving them over time by implementing our strategic initiatives, such as our store remodel, foodservice and lifestyle merchandising programs. Our initiative to improve leverage resulted in a reduction of funded debt during fiscal 2012 of approximately $182 million, including the reductions related to our recent refinancing."
Comparable store merchandise sales in the third quarter increased 3.6% in total and 5.7% excluding cigarettes. Total merchandise gross profit for the quarter was $159.7 million, a decrease of $0.3 million from the third quarter a year ago.
Fuel gross profit decreased 16.3% in the third quarter of fiscal 2012 compared to the same period a year ago, primarily due to a reduction in retail fuel margin per gallon to $0.146 from $0.166 a year ago. Retail fuel gallons sold in the third quarter of fiscal 2012 decreased 5.0% overall and 3.6% on a comparable store basis as compared to last year's third quarter.
Total store operating and general and administrative expenses for the third quarter were $152.1 million, a decrease of $3.3 million from the third quarter last year. This decrease was due to lower store operating expenses driven by reduced insurance costs, as well as the impact of closed retail stores.
The Company had $179.8 million in cash on hand and $126.1 million in available capacity under its revolving credit facilities as of June 28, 2012.
Fiscal 2012 Outlook
The Company's updated guidance ranges for fiscal 2012 reflect the challenges of the current retail fuel environment. Since the beginning of the fourth quarter, wholesale fuel costs have risen sharply and are expected to adversely affect fuel margins.
