CST Brands Q2 Profit Falls - Update

(RTTNews) - CST Brands, Inc. (CST), a retailer of transportation fuels and convenience goods, Tuesday reported a fall in second-quarter profit, reflecting new costs associated with being an independent, stand-alone, public company. However, operating revenues increased from last year.

The company was spun-off from Valero Energy Corp.'s (VLO) retail business in May 2013.

For the second quarter, the company's net income declined to $32 million or $0.43 per share from $41 million or $0.54 per share in the prior year.

On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.49 per share for the quarter. Analysts' estimates typically exclude special items.

"We experienced a challenging fuel environment during the second quarter, especially in the U.S., as crude oil and wholesale motor fuel prices continued this steady rise," said Kim Bowers, chairman and CEO of CST Brands.

However, operating revenues for the quarter grew to $3.26 billion from $3.21 billion in the year-ago quarter. Wall Street expected revenues of $3.22 billion for the quarter.

The growth in operating revenues was due to an increase in U.S. merchandise sales and rise in per gallon average selling price of motor fuel during the period, the firm said.

In the U.S. segment, total operating revenues increased to $2.03 billion from $2.01 billion in the preceding year. Canada segment reported total operating revenues of $1.23 billion, up from $1.20 billion in the previous year.

Total operating expenses advanced to $223 million from $211 million reported last year.

According to the company, the increase in general and administrative expenses was due to new costs associated with being an independent, stand-alone, public company, including additional corporate personnel and associated benefits and stock-based compensation.

CST Brands noted that until May 1, 2013, it was still a wholly-owned subsidiary of Valero and, as such, the second quarter of 2013 results do not include all of the expenses associated with being a public company.

Year-to-date, the firm opened 12 new stores in the U.S. and two stores in Canada. The company currently expects to build 30 new stores in the U.S. and 8 new stores in Canada during 2014.

CST closed Monday's regular trading at $36.57 on the NYSE.