CST Brands Q4 Profit, Revenue Drop - Update

(RTTNews) - CST Brands, Inc. (CST), a retailer of transportation fuels and convenience goods, Thursday said fourth-quarter profit declined from the previous year, amid a decrease in revenues.

The company, which includes Corner Store and Dépanneur du Coin, was spun-off from Valero Energy Corp. (VLO) in May 2013 to enter the market as the second-largest publicly-traded fuel and convenience merchandise retailer in North America.

CST's net income fell to $34 million or $0.44 per share from $60 million or $0.78 per share in the prior year. The latest results included asset impairments of $4 million.

Excluding asset impairments, net income would have been $0.48 per share, the company said.

On average, 7 analysts polled by Thomson Reuters expected earnings per share of $0.52 for the quarter. Analysts' estimates typically exclude one-time items.

Quarterly operating revenues slid to $3.06 billion from $3.2 billion in the same period of 2012. Analysts estimated revenues of $3.12 billion.

Motor fuel revenues in the U.S. segment declined $110 million, driven by a 1 percent drop in motor fuel gallons sold and a 6 percent decline in the company's per gallon average motor fuel selling price.

U.S. motor fuel gross margin, after deducting credit card fees, was $0.15 compared to $0.21 in the previous year when the company experienced historically strong margins due primarily to the volatility of wholesale gasoline prices.

U.S. merchandise gross margin, net of credit card fees, increased to 30.5 percent from 28.9 percent due mainly to an increase in food services and packaged beverages.

Motor fuel revenues declined $36 million in the Canada segment, amid weakness of the Canadian dollar relative to the U.S. dollar. Overall revenues in the Canadian segment declined around $71 million due to foreign currency effects.

During the quarter, the company opened two new stores in the U.S. and five in Canada, and expects to build 30 new stores in the U.S. and 8 new stores in Canada during 2014.

CST said it identified around 100 stores that are candidates for sale. Majority of these could potentially be added to the company's wholesale distribution business in the U.S.

The company has engaged an outside consultant, NRC Realty & Capital Advisors, to market these properties and go to market by the middle of April.

CST closed up 1.7 percent on Wednesday at $32.90.