Delek US Holdings Inc., a diversified energy company with assets in the petroleum refining, logistics and retail industries, announced financial results for the second quarter 2013.
Delek operates 370 company-operated convenience store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.
For the three months ended June 30, 2013, Delek US reported net income of $46.6 million, or $0.78 per diluted share, versus net income of $67.8 million, or $1.15 per diluted share in the second quarter 2012.
Lower earnings were primarily due to the refining segment, which faced less favorable market conditions in the second quarter 2013 compared to the prior-year-period, as a decline in the 5-3-2 Gulf Coast crack spread reduced margins. In addition, the differential between WTI Midland and WTI Cushing narrowed on a year-over-year basis.
These market conditions were partially offset by the benefit of higher crude throughput at the Tyler, Texas refinery, which averaged over 64,000 barrels per day for the quarter versus approximately 54,800 in the prior-year-period. Increased amounts of crude supplied by rail to the El Dorado, Arkansas refinery and improved access to Midland crude supplies at both refineries also favorably impacted earnings by providing greater access to cost advantaged crude.
Second quarter 2013 net income included approximately $4.3 million of after tax income, or $0.07 per share, as a majority of claims under litigation brought against a subsidiary of Lion Oil were dismissed.
Delek US also announced that its Board of Directors declared a regular quarterly cash dividend of $0.15 per share. This cash dividend is payable on Sept. 17, 2013 to shareholders of record on Aug.27, 2013.
During the second quarter 2013, three new large-format stores were opened, bringing the total openings to five for the first half. An additional five to seven large-format stores are expected to be opened in the second half of 2013.
The retail segment contribution margin was $16.0 million in the second quarter 2013, which compares to $18.2 million in the second quarter 2012. Higher fuel margins were partially offset by lower merchandising margins reducing results on a year-over-year basis. Fuel margin was 19.6 cents per gallon in the second quarter 2013 compared to 18.2 cents per gallon in the prior-year-period.
Merchandising margin was 28.3% in second quarter 2013, compared to 29.7% in the prior-year-period. Operating expenses increased to $34.1 million in the second quarter 2013 compared to $31.7 million in the second quarter 2012 primarily due to expenses related to new large format stores and advertising expenses related to expansion of the loyalty program.
At the conclusion of the second quarter 2013, the retail segment operated 370 locations, versus 374 locations at the end of the second quarter 2012.