CST Brands, Inc. (NYSE: CST):
- Fourth Quarter Highlights:
- Fourth Quarter 2016 Net Income of $18
million, or $0.23 per diluted share
- U.S. and Canadian Merchandise and
Services Gross Profit increased 19% and 5%, respectively
- Core Same Store Merchandise and
Services Gross Margin Percent in the U.S. increased by 60 basis
points in the Fourth Quarter 2016 when compared to Fourth Quarter
2015
- Opened a total of 21 New-to-Industry
stores in the Fourth Quarter 2016 with 16 in the U.S. and 5 in
Canada
- Full Year Highlights:
- 2016 Net Income of $324 million, or
$4.24 per diluted share; $1.41 excluding certain items, which are
discussed below
- U.S. and Canadian Merchandise and
Services Gross Profit increased 22% and 4%, respectively
- Core Same Store Merchandise and
Services Gross Margin Percent in the U.S. increased by 100 basis
points in 2016 when compared to 2015
- Opened a total of 50 New-to-Industry
stores in 2016 with 38 in the U.S. and 12 in Canada
CST Brands, Inc. (NYSE: CST), one of the largest independent
retailers of motor fuels and convenience merchandise in North
America, today reported financial results for the fourth quarter
and year ended December 31, 2016.
Kim Lubel, Chairman and CEO of CST Brands, said, “2016 was a
year of significant growth and change for CST, beginning with the
Flash Foods acquisition in February, the completion of 50
new-to-industry stores across the U.S. and Canada, and our
shareholder approval of the pending merger with Circle K Stores,
Inc., a wholly-owned subsidiary of Alimentation Couche-Tard Inc.
The merger is on track to close during the second quarter 2017. I
am grateful to the entire CST team for their continued commitment
to the Company and to our mission to Delight More Customers Every
Day.”
Three Months Results
For the three month period ended December 31, 2016, the
Company reported net income of $18 million, or $0.23 per diluted
share compared to net income of $25 million, or $0.34 per diluted
share, for the same period in 2015. Included in net income for the
fourth quarter of 2015 is approximately $16 million, net of tax,
related to asset impairment charges, acquisition expenses, legal
expenses, professional fees and net tax effects on repatriation.
Excluding these items, net income would have been $42 million, or
$0.55 per diluted share, for the three month period ended December
31, 2015. During the fourth quarter of 2016, the Company incurred
acquisition expenses, legal expenses and professional fees.
However, these items were not substantial, were offsetting and did
not affect net income or earnings per share for the period
(Non-GAAP measures, including EBITDA, Adjusted Net Income and
Adjusted Net Income Per Share, are described and are reconciled to
the corresponding GAAP measures in the Supplemental Disclosure
section of this release).
The decline in net income was primarily driven by a 25% decrease
in U.S. motor fuel gross profit, as the Company experienced very
strong fuel margins in the fourth quarter of 2015. Motor fuel gross
profit in the U.S. for the fourth quarter of 2016 was $66 million
versus $88 million in the same quarter of 2015. The decline in
motor fuel gross profit was primarily attributable to a 31% decline
in motor fuel gross profit, on a per gallon basis ("cents per
gallon" or "CPG") decreasing from 19.4 CPG in the fourth quarter of
2015 to 13.4 CPG in the fourth quarter of 2016. The decline in fuel
margins was partially offset by a 10% increase in total motor fuel
gallons sold, resulting from the Company's expanded core network.
This volume increase was achieved despite the divestment of stores
in California and Wyoming that was completed earlier in the
year.
U.S. merchandise and services gross profit increased 19% when
compared to the fourth quarter of 2015, primarily driven by an
overall increase in merchandise and services sales and gross
profits in the Company's U.S. core and New-to-Industry (“NTI”)
store sales, aided by acquisition and organic growth. Core same
store merchandise and services sales per store per day declined 3%
during the fourth quarter of 2016, primarily due to continued
softness in parts of South Texas caused by a decrease in economic
activity in the energy related sector. Core same store merchandise
and services gross profit dollars were relatively flat when
compared to the same period in 2015, as a result of a 60 basis
point improvement in gross margin capture during the quarter.
In Canada, motor fuel gross profit increased 4% and merchandise
and services gross profit increased 5% when compared to the fourth
quarter of 2015, primarily driven by an increase in volume of motor
fuel sold along with an improvement in merchandise and services
sales driven by an increase in the average number of retail sites.
On a same-store basis, merchandise and services sales per site per
day increased 2% in Canada when compared to the fourth quarter of
2015, primarily due to growth in the grocery and packaged beverage
business.
Twelve Months Results
For the year ended December 31, 2016, the Company reported net
income of $324 million, diluted earnings per common share of $4.24
and EBITDA of $717 million. For the year ended December 31, 2015,
the Company reported net income of $149 million, diluted earnings
per common share of $1.95 and EBITDA of $422 million.
Included in 2016 net income are certain special items totaling
approximately $217 million, net of tax, or $2.83 per share,
consisting of a gain from the Company's sale of its California and
Wyoming convenience stores, offset by certain acquisition expenses,
merger-related expenses, legal expenses and professional fees.
Included in 2015 net income are asset impairment charges,
acquisition expenses, legal expenses, professional fees, a gain on
the sale of assets and net tax effects on repatriation totaling
approximately $18 million, net of tax, or $0.24 per share.
Excluding these items, net income would have been $107 million, or
$1.41 per diluted share, and $167 million, or $2.19 per diluted
share, for the year ended December 31, 2016 and 2015,
respectively.
The 70% growth in EBITDA in 2016 over 2015 was driven by a gain
on the sale of the Company's California and Wyoming convenience
stores during the third quarter and by continued improvement in the
Company's merchandise and services gross profits (Non-GAAP
measures, including EBITDA, Adjusted Net Income and Adjusted Net
Income Per Share, are described and are reconciled to the
corresponding GAAP measures in the Supplemental Disclosure section
of this release).
For the full year 2016, motor fuel gross profit in the U.S. was
$309 million versus $360 million in the same period of 2015. The
decline in motor fuel gross profit was primarily attributable to a
decline in motor fuel gross profit on a CPG basis, which was
partially offset by a 12% increase in total motor fuel gallons
sold, due to the Company's expanded core network, despite the
divestment of stores in California and Wyoming that was completed
during the summer.
U.S. merchandise and services gross profit increased 22% when
compared to 2015, primarily driven by an overall increase in
merchandise and services sales and gross profits in the Company's
U.S. core and NTI store sales, aided by acquisition and organic
growth. Core same store merchandise and services sales per store
per day declined 1% during 2016. However, core same store
merchandise and services gross profits grew by 2% in 2016,
resulting from a 100 basis point improvement in margin capture.
In Canada, motor fuel gross profit increased slightly and
merchandise and services gross profit increased 4% when compared to
2015, primarily driven by an increase in volume of motor fuel sold
along with an improvement in merchandise and services sales driven
by an increase in the average number of retail sites. On a
same-store basis, merchandise and services sales per site per day
and merchandise and services gross profits increased 4% in Canada
when compared to 2015, primarily due to growth in the grocery and
packaged beverage business.
Liquidity and Capital
Resources
For the year ended December 31, 2016, cash flow provided by
operating activities totaled $211 million. Cash flow used in
investing activities was $411 million, primarily related to capital
expenditures and the Flash Foods acquisition. Total capital
expenditures, excluding acquisitions, for the year ended
December 31, 2016 and 2015 were $349 million and $341 million,
respectively. Cash flow provided by financing activities was $19
million, including net payments on CST Brands' revolving credit
facility of $90 million, dividends paid of $15 million and payments
of $69 million on CST Brands' term loan. The effect of foreign
currency translation changes was an increase in cash of $4 million.
Overall, cash decreased by $177 million. Cash, as of
December 31, 2016, was $136 million.
As of February 24, 2017, approximately $112 million was
available for future borrowings under CST Brands' revolving credit
facility.
Basis of Presentation
The CST Brands Statements of Income are presented on a
consolidated basis; however, the amounts presented account for
CST’s investment in CrossAmerica under the equity method of
accounting. CrossAmerica is a consolidated variable interest
entity; however, management reviews the results of operations of
CrossAmerica under the equity method of accounting because of CST’s
limited ownership interest of CrossAmerica’s outstanding units. Net
income and earnings per share attributable to CST are unchanged
under the equity method of accounting from consolidating
CrossAmerica. CST’s operating segments on the following pages are
presented before intercompany eliminations with CrossAmerica.
Therefore, the U.S. Retail segment includes in cost of sales the
wholesale fuel costs for sites supplied by CrossAmerica and
operating expenses include rent from sites leased from
CrossAmerica. Consolidated financial statements that include
CrossAmerica are provided in CST Brands’ December 31, 2016 Form
10-K.
Withdrawal of Guidance and Conference
Call
As previously reported, on August 21, 2016, CST Brands entered
into an Agreement and Plan of Merger with Circle K Stores Inc., a
Texas corporation (“Circle K”). Under the terms of the merger
agreement, CST will be merged with a subsidiary of Circle K. Circle
K is a wholly owned subsidiary of Alimentation Couche-Tard Inc. The
closing of the merger is subject to certain conditions, including,
among others, the expiration or termination of applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and receipt of clearance under the Canadian Competition Act.
CST stockholders approved the merger on November 16, 2016. The
merger is expected to close in the second quarter of 2017.
In light of the pending merger, CST will not be issuing
financial guidance regarding the Company’s projected financial
performance and will not be hosting a fourth quarter/year-end
earnings conference call.
CST BRANDS, INC.
CONSOLIDATED STATEMENTS OF
INCOME(a)
(Millions of Dollars, Except per Share Amounts)
(Unaudited) Three Months Ended Year
Ended December 31, December 31, 2016
2015 2016 2015
Operating revenues $ 2,374 $ 2,107 $ 9,392 $ 9,375 Cost of sales
2,069 1,807 8,107
8,151 Gross profit 305 300
1,285 1,224 Operating expenses:
Operating expenses 196 178 795 694 General and administrative
expenses 27 34 133 134 Depreciation, amortization and accretion
expense 43 34 171 135 Asset impairments — 1
— 1 Total operating expenses
266 247 1,099 964
Gain on the sale of assets, net — —
351 7 Operating income 39 53 537
267 Other income, net (2 ) 13 13 19 Interest expense (10 ) (10 )
(44 ) (40 ) Equity in earnings (loss) of CrossAmerica (1 )
— (4 ) — Income before income
tax expense 26 56 502 246 Income tax expense 8
31 178 97 Net income $ 18
$ 25 $ 324 $ 149
Earnings per common
share Basic earnings per common share $ 0.24 $ 0.34 $ 4.26 $
1.95 Weighted-average common shares outstanding (in thousands)
75,698 75,475 75,627 76,155
Earnings per common share - assuming
dilution Diluted earnings per common share $ 0.23 $ 0.34 $ 4.24
$ 1.95 Weighted-average common shares outstanding - assuming
dilution (in thousands) 76,310 75,855 76,137 76,505
Dividends declared per common share $ — $ 0.0625 $ 0.1250 $ 0.2500
(a) The CST Brands, Inc. Statements of Income are presented on a
consolidated basis; however, the amounts presented in the table
above account for CST’s investment in CrossAmerica under the equity
method of accounting. CrossAmerica is a consolidated variable
interest entity; however, management reviews the results of
operations of CrossAmerica under the equity method of accounting
because of CST’s limited ownership interest of CrossAmerica’s
outstanding units. Net income and earnings per share attributable
to CST are unchanged under the equity method of accounting from
consolidating CrossAmerica. CST’s operating segments on the
following pages are presented before intercompany eliminations with
CrossAmerica. Therefore, the U.S. Retail segment includes in cost
of sales the wholesale fuel costs for sites supplied by
CrossAmerica and operating expenses include rent from sites leased
from CrossAmerica.
Segment Results
U.S. Retail
The following tables highlight the results of operations and
certain operating metrics of the Company’s U.S. Retail segment
(millions of dollars, except number of convenience stores, per site
per day and per gallon amounts):
Three Months Ended
Year Ended December 31, December 31,
2016 2015 2016
2015 Operating revenues: Motor fuel $ 1,090 $ 966 $
4,431 $ 4,464 Merchandise and services(a) 436 374 1,797 1,514
Other(b) — — 2 3
Total operating revenues $ 1,526 $ 1,340 $
6,230 $ 5,981
Gross profit:
Motor fuel–before amounts attributable to
CrossAmerica
$ 73 $ 93 $ 331 $ 376
Motor fuel–amounts attributable to
CrossAmerica
(7 ) (5 ) (22 ) (16 )
Motor fuel–after amounts attributable to
CrossAmerica
66 88 309 360 Merchandise and services(a) 146 123 607 497 Other(b)
— — 2 2
Total gross profit 212 211 918
859 Operating expenses: Operating expenses 139
126 578 482 Depreciation, amortization and accretion expense 31 24
129 96 Asset impairments — 1 —
1 Total operating expenses 170
151 707 579 Gain on sale
of assets, net — — 347
7 Operating income $ 42 $ 60 $ 558
$ 287
Core store operating
statistics:(c) End of period core stores 1,167 1,049
1,167 1,049 Motor fuel sales (gallons per store per day) 4,899
4,966 5,093 5,100 Motor fuel sales (per store per day) $ 10,195 $
10,121 $ 10,254 $ 11,844
Motor fuel gross profit per gallon, net of
credit card fees
$ 0.134 $ 0.194 $ 0.150 $ 0.195
CST Fuel Supply wholesale profit
attributable to CrossAmerica(e)
(0.009 ) (0.009 ) (0.009 ) (0.006 )
Motor fuel gross profit per gallon, net of
credit card fees(d),(e)
$ 0.125 $ 0.185 $ 0.141 $ 0.189
Merchandise and services sales (per store per day)(a) $ 4,101 $
3,929 $ 4,161 $ 3,991
Merchandise and services gross profit
percentage, net of credit card fees(a)
33.5 % 32.9 % 33.8 % 32.9 %
U.S. Retail (continued) Three Months Ended
Year Ended December 31, December 31,
2016 2015 2016
2015 Company-operated retail stores: Beginning of
period 1,154 1,027 1,049 1,021 NTIs opened 16 22 38 31 Acquisitions
— — 165 22 Closed or divested (3 ) —
(85 ) (25 ) End of period 1,167 1,049 1,167 1,049 End of
period non-core retail stores — —
— — End of period core retail stores
1,167 1,049 1,167
1,049
Core store same-store
information(c),(f): Company operated retail
sites(g) 939 939 929 929 NTIs included in core same-store
information(f) 88 88 76 76 Motor fuel sales (gallons per store per
day) 4,795 4,873 4,943 4,977 Merchandise and services sales (per
store per day)(a) $ 3,985 $ 4,092 $ 4,141 $ 4,192
Merchandise and services gross profit
percent, net of credit card fees(a)
33.6 % 33.0 % 33.9 % 32.9 % Merchandise and services sales, ex.
cigarettes (per store per day)(a) $ 2,938 $ 3,000 $ 3,059 $ 3,076
Merchandise and services gross profit
percent, net of credit card fees and ex. cigarettes(a)
39.6 % 38.9 % 39.9 % 39.0 % Merchandise and services gross profit
dollars(a) $ 116 $ 117 $ 477 $ 467
Notes to U.S. Retail Segment Results
(a) Includes the results from car wash sales and commissions
from lottery, money orders, air/water/vacuum services, video and
game rentals and ATM fees. (b) Primarily consists of rental income.
(c) Represents the portfolio of core retail stores and excludes
recently acquired retail stores that are being integrated or are
under performance evaluation to determine if they are: (a) to be
fully integrated into the existing core retail operations of CST,
(b) to be converted into a dealer operated site, or (c) other
strategic alternatives, including divestiture or longer term
operation by CrossAmerica. All NTIs are core stores and,
accordingly, are included in the core system operating statistics.
For the period of February 1 to March 31, 2016, Flash Foods stores
were classified as non-core. Effective April 1, 2016, the Flash
Foods stores are included in the U.S. Retail Segment’s core-store
operations. Accordingly, their operations are excluded from the
core system operating statistics for a portion of the year ended
December 31, 2016. (d) Includes $0.05 per gallon of wholesale fuel
distribution profit. (e) CrossAmerica owns a 17.5% limited partner
equity interest in CST Fuel Supply, which is the sole owner of CST
Marketing & Supply, which distributes motor fuel to the
Company's retail operations at a net $0.05 per gallon margin. A
separate entity, Fuel South LLC, distributes motor fuel to the
Flash Foods retail operations. (f) The same-store information
consists of aggregated individual store results for all stores in
operation substantially throughout both periods presented. Stores
that were temporarily closed for a brief period of time during the
periods being compared remain in the same-store sales comparison.
If a store is replaced, either at the same location or relocated to
a new location, it is removed from the comparison until the new
store has been in operation for substantially all of the periods
being compared. NTIs are included in the core same-store metrics
when they meet this criteria. (g) Includes 7 retail sites that do
not sell motor fuel, which were acquired in the Nice N Easy
acquisition.
Canadian Retail
The following tables highlight the results of operations and
certain operating metrics of the Canadian Retail segment (millions
of U.S. dollars, except number of retail sites, per site per day
and per gallon amounts):
Three Months Ended
Year Ended December 31, December 31,
2016 2015 2016
2015 Operating revenues: Motor fuel $ 687 $ 623 $
2,568 $ 2,801 Merchandise and services(a) 65 62 267 255 Other(b)
96 82 327 338
Total operating revenues $ 848 $ 767 $ 3,162
$ 3,394
Gross profit: Motor fuel $ 57 $ 55 $
226 $ 225 Merchandise and services(a) 20 19 83 80 Other(b)
16 15 58 60 Total
gross profit 93 89 367
365 Operating expenses: Operating expenses 57 53 217
212 Depreciation, amortization and accretion expense 12
10 42 39 Total
operating expenses 69 63 259
251 Gain on sale of assets, net —
— 4 — Operating
income $ 24 $ 26 $ 112 $ 114
Total retail sites (end of period): Company-operated (fuel
and merchandise) 314 303 314 303 Commission agents and dealers
(fuel only) 498 494 498 494 Cardlock (fuel only) 72
72 72 72 Total retail
sites (end of period) 884 869
884 869
Average retail sites during
the period: Company-operated (fuel and merchandise) 311 295 307
293 Commission agents and dealers (fuel only) 498 496 496 495
Cardlock (fuel only) 72 72 72
72 Average retail sites during the period
881 863 875 860
Total system operating statistics: Motor fuel
sales (gallons per site per day) 3,224 3,100 3,185 3,166 Motor fuel
sales (per site per day) $ 8,477 $ 7,850 $ 8,020 $ 8,918
Motor fuel gross profit per gallon, net of
credit card fees
$ 0.220 $ 0.224 $ 0.222 $ 0.227
Company-operated retail
site statistics: Merchandise and services sales (per site per
day)(a) $ 2,299 $ 2,275 $ 2,378 $ 2,406
Merchandise and services gross profit
percentage, net credit card fees(a)
30.1 % 29.9 % 31.1 % 30.9 %
Canadian Retail (continued) Three Months Ended
Year Ended December 31, December 31,
Company-operated statistics(c) 2016
2015 2016 2015 Retail
sites: Beginning of period 309 291 303 293 NTIs opened 5 9 12
11 Conversions, net(d) 1 3 2 3 Closed or divested (1 )
— (3 ) (4 ) End of period 314
303 314 303
Average foreign exchange rate for $1 CAD to USD 0.74463
0.74897 0.75423 0.78284
Same store information ($ amounts
in CAD):(e),(f) Company-operated retail sites 290 290
286 286 NTIs included in same store information 36 36 34 34 Motor
fuel sales (gallons per site per day) 3,442 3,385 3,416 3,417
Merchandise and services sales (per site per day)(a) $ 3,099 $
3,031 $ 3,190 $ 3,076
Merchandise and services gross profit
percent, net of credit card fees(a)
30.2 % 30.2 % 31.2 % 31.2 % Merchandise and services sales, ex.
cigarettes (per site per day)(a) $ 1,651 $ 1,598 $ 1,720 $ 1,669
Merchandise and services gross profit percent, net of credit card
fees and ex. cigarettes(a) 42.7 % 42.5 % 43.3 % 43.1 % Merchandise
and services gross profit dollars(a) $ 25 $ 24 $ 104 $ 100
Commission agent and dealer statistics(c) Retail
sites: Beginning of period 498 497 494 495 New dealers 5 7 17
13 Conversions, net(d) (1 ) (3 ) (2 ) (3 ) Closed or de-branded
(4 ) (7 ) (11 ) (11 ) End of period
498 494 498 494
Same Site Information(f):
Commission agent and dealer retail sites 468 468 460 460 Motor fuel
sales (gallons per site per day) 2,681 2,633 2,680 2,698
Notes to Canadian Retail Segment Results
(a) Includes the results from car wash sales, commissions
from lottery and ATM fees. (b) Primarily consists of the business
and home energy operations. (c) Company operated retail sites sell
motor fuel and merchandise. The Company sells only motor fuel at
commission agent and dealer sites. The Company does not currently
distinguish between core and non-core stores in its Canadian Retail
segment. All sites in the Canadian Retail segment are core stores.
(d) Conversions represent stores that have changed their
classification from commission agents to company-owned and operated
or vice versa. Changes in classification result when the Company
either takes over the operations of commission agents or convert an
existing company-owned and operated store to commission agents. (e)
All amounts presented are stated in Canadian dollars to remove the
impact of foreign exchange and all fuel information excludes
amounts related to cardlock operations. (f) The same-store and
same-site information consists of aggregated individual store
results for all sites in operation substantially throughout both
periods presented. Stores that were temporarily closed for a brief
period of time during the periods being compared remain in the
same-store sales comparison. If a store is replaced, either at the
same location or relocated to a new location, it is removed from
the comparison until the new store has been in operation for
substantially all of the periods being compared. NTIs are included
in the same-store metrics when they meet this criteria.
Supplemental Disclosure Regarding Non-GAAP Financial
Information
EBITDA is a non-U.S. GAAP financial measure that represents net
income before income taxes, interest expense and depreciation,
amortization and accretion expense. EBITDAR is a non-U.S. GAAP
financial measure that further adjusts EBITDA by excluding minimum
rent expense. Adjusted net income and adjusted earnings per share
remove certain discrete items from the U.S. GAAP calculation that
did not occur during both periods being compared. The Company
believes that EBITDA, EBITDAR, adjusted net income and adjusted
earnings per share are useful to investors and creditors in
evaluating its operating performance because (a) they facilitate
management’s ability to measure the operating performance of the
Company's business on a consistent basis by excluding the impact of
items not directly resulting from its retail operations and certain
discrete items that did not occur in both periods being compared;
and (b) securities analysts and other interested parties use such
calculations as a measure of financial performance. EBITDA,
EBITDAR, adjusted net income and adjusted diluted earnings per
share do not purport to be alternatives to net income and diluted
earnings per share as a measure of operating performance or to cash
flows from operating activities as a measure of liquidity. EBITDA,
EBITDAR, adjusted net income and adjusted diluted earnings per
share have limitations as analytical tools and should not be
considered in isolation or as a substitute for analysis of the
Company’s results of operations as reported under U.S. GAAP.
The following table presents a reconciliation of CST’s net
income to EBITDA and EBITDAR for the years ended December 31,
2016 and 2015 and adjusted net income and adjusted diluted earnings
per common share for the three months ended December 31, 2016
and 2015 (in millions except per share data or as otherwise
noted):
Three Months Ended December 31,
Year Ended December 31, 2016
2015 2016 2015 EBITDA and
EBITDAR: CST net income(a) $ 18 $ 25 $ 324 $ 149 Interest expense
10 10 44 40 Income tax expense 8 31 178 97 Depreciation,
amortization and accretion 43 34 171 135 Asset impairments —
1 — 1 EBITDA 79 101 717
422 Minimum rent expense(b) 11 15 50
38 EBITDAR $ 90 $ 116 $ 767 $
460 CST net income $ 18 $ 25 $ 324 $ 149 Gain on sale
of assets — — (350 ) (7 ) Merger, acquisition and discrete
professional fees — 2 14 6 Severance — 2 3 6 Net tax effects of
repatriation — 14 — 14 Tax expense (benefit) — (1 )
116 (1 ) Adjusted net income $ 18 $ 42
$ 107 $ 167 Diluted earnings per common share
$ 0.23 $ 0.34 $ 4.24 $ 1.95 Gain on sale of assets — — (4.59 )
(0.09 ) Merger, acquisition and discrete professional fees — 0.01
0.19 0.09 Severance — 0.02 0.04 0.07 Net tax effects of
repatriation — 0.19 — 0.19 Tax expense (benefit) —
(0.01 ) 1.53 (0.02 ) Diluted earnings per
common share - adjusted $ 0.23 $ 0.55 $ 1.41 $ 2.19
Weighted-average common shares outstanding - assuming
dilution (in thousands) 76,310 75,855 76,137 76,505 (a)
The CST Brands, Inc. Statements of Income are presented on a
consolidated basis; however, the amounts presented in the table
above account for CST’s investment in CrossAmerica under the equity
method of accounting. CrossAmerica is a consolidated variable
interest entity; however, management reviews the results of
operations of CrossAmerica under the equity method of accounting
because of CST’s limited ownership interest of CrossAmerica’s
outstanding units. Net income and earnings per share attributable
to CST are unchanged under the equity method of accounting from
consolidating CrossAmerica. CST’s operating segments are presented
before intercompany eliminations with CrossAmerica. Therefore, the
U.S. Retail segment includes in cost of sales the wholesale fuel
costs for sites supplied by CrossAmerica and operating expenses
include rent from sites leased from CrossAmerica. (b) Minimum rent
expense is defined in the CST Credit Facility as rent expense
accrued during the period in accordance with U.S. GAAP, less
contingent rentals.
About CST Brands, Inc.
CST Brands, Inc. (NYSE: CST), a Fortune 500 Company, is one of
the largest independent retailers of motor fuels and convenience
merchandise in North America. Based in San Antonio, Texas, CST
employs over 14,000 Team Members at over 2,000 locations throughout
the Southwestern United States, Georgia, Florida, New York and
Eastern Canada offering a broad array of convenience merchandise,
beverages, snacks and prepared fresh food. In the U.S., Corner
Stores, Nice N Easy Grocery Shoppes, and Flash Foods stores proudly
sell a broad offering of branded and unbranded fuel and proprietary
baked goods and fresh food, packaged private label products, U
Force energy and sport drinks, Freestyle soft drinks and signature
ICEE drinks. In Canada, CST is the exclusive provider of Ultramar
fuel and its Dépanneur du Coin and Corner Stores sell signature
Transit Café coffee, proprietary baked goods and fresh food and
private label packaged goods. CST also owns the general partner of
CrossAmerica Partners LP, a master limited partnership and
wholesale distributor of fuels, based in Allentown, Pennsylvania.
For more information about CST, please visit www.cstbrands.com
CST Brands has filed its Annual Report on Form 10-K for the
fiscal year ended December 31, 2016 with the U.S. Securities and
Exchange Commission (SEC). The filing can be viewed through a link
on the Company's website at www.cstbrands.com or on the SEC's
website at www.sec.gov. The Company's
shareholders may also request a printed copy of the report, which
contains the Company's audited financial statements. Requests
should be submitted at investorrelations@cstbrands.com or by
contacting investor relations at 800-456-3533.
Safe Harbor Statement
Statements made in this press release relating to future plans,
events, or financial condition or performance are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can generally
be identified by the use of words such as "expect," "plan,"
"anticipate," "intend," "outlook," "guidance," "believes,"
"should," "target," "goal," "forecast," "will," "may" or words of
similar meaning. Forward-looking statements are likely to address
matters such as the companies’ respective or combined anticipated
sales, expenses, margins, tax rates, capital expenditures, profits,
cash flows, liquidity and debt levels, as well as their pricing and
merchandising strategies and their anticipated impact and
intentions with respect to the construction of new stores,
including additional quick service restaurants, and the remodeling
and addition of new equipment and products to existing stores.
These forward-looking statements are based on the companies’
current plans and expectations and involve a number of risks and
uncertainties that could cause actual results and events to vary
materially from the results and events anticipated or implied by
such forward-looking statements.
The following factors, among others, could cause actual results
and events to differ materially from those expressed or implied in
the forward-looking statements: (1) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement; (2) the inability to complete
the transactions contemplated by the merger agreement in a timely
manner or at all, including due to the failure to obtain the
required stockholder approval or failure to receive necessary
governmental or regulatory approvals required to complete the
transactions contemplated by the merger agreement; (3) the risk of
not fully realizing expected synergies in the timeframe expected or
at all; (4) the risk that the proposed transactions disrupt current
plans and operations, increase operating costs, result in
management distraction and the potential difficulties in
maintaining relationships with customers, suppliers and other third
parties and employee retention as a result of the announcement and
consummation of such transactions; (5) the outcome of any legal
proceedings instituted against the companies following announcement
of the merger agreement and transactions contemplated therein; and
(6) the possibility that the companies may be adversely affected by
other economic, business, and/or competitive factors.
Any number of other factors could affect actual results and
events, including, without limitation; the ability to enhance
operating performance through in-store initiatives, store remodel
programs and the addition of new equipment and products to existing
stores; fluctuations in domestic and global petroleum and fuel
markets; realizing expected benefits from fuel supply agreements;
changes in the competitive landscape of the convenience store
industry, including fuel stations and other non-traditional
retailers located in the companies’ markets; the effect of national
and regional economic conditions on the convenience store industry
and the companies’ markets; the global financial crisis and
uncertainty in global economic conditions; wholesale cost increases
of, and tax increases on, tobacco products; the effect of regional
weather conditions and climate change on customer traffic and
spending; legal, technological, political and scientific
developments regarding climate change; financial difficulties of
suppliers, including the companies’ principal suppliers of fuel and
merchandise, and their ability to continue to supply their stores;
the companies’ financial leverage and debt covenants; a disruption
of IT systems or a failure to protect sensitive customer, employee
or vendor data; the actual operating results of new or acquired
stores; environmental risks associated with selling petroleum
products; governmental laws and regulations, including those
relating to the environment and the impact of mandated health care
laws; unanticipated legal and other expenses, and other risk
factors described in the company's Definitive Proxy Statement,
filed with the SEC on October 11, 2016, the Company's latest Annual
Report on Form 10-K, the Company's Quarterly Reports on Form 10-Q
and other reports and documents the Company files with the SEC.
While the Company may elect to update these forward-looking
statements at some point in the future, it specifically disclaims
any obligation to do so.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170227006396/en/
CST Brands, Inc.Investors:Randy Palmer,
210-692-2160Executive Director – Investor
RelationsorMedia:Lisa Koenig, 210-692-2659Director of
CommunicationsorThe DeBerry Group,Melissa Ludwig or Trish DeBerry,
210-223-2772
Cst Brands, Inc. (NYSE:CST)
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Cst Brands, Inc. (NYSE:CST)
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