4/28/15
1
The Association for Convenience & Fuel Retailing
What happened in 2014?
Est. 1961
April 28, 2015
The Association for Convenience & Fuel Retailing
Key Drivers
1. Price of Gas 2. Mergers & AcquisiFons 3. Gallon growth = inside growth
4/28/15
2
The Association for Convenience & Fuel Retailing
The TradiFonal Business Model
Everything Else
Smokes Gas
The Association for Convenience & Fuel Retailing
The Price of Gas
Sources: GasBuddy.com, AAA, NACS Research
4/28/15
3
The Association for Convenience & Fuel Retailing
For the first Fme since 2008, the share of people expressing opFmism exceeded the share expressing pessimism.
The Association for Convenience & Fuel Retailing
Impact of Lower Gas Prices
1. EIA esFmates reg gas to average $2.40/gallon in 2015, vs. $3.36/gallon last year.
2. Winner: Typical American HH will spend $1,817 on gas in 2015, vs. $2,513 last year. – Lowest expenditure on gas since 2004.
3. Winner: Automakers and manufacturing. – Americans may drive more and buy less fuel efficient vehicles….
4. Losers: Oil producing countries AND US oil states. – OPEC revenue ($590)B; 2015 Russian economy assumed $100 oil
5. Unclear: Fuel economy standards…. – Federal standards dictate what automakers must do. Consumers
are free to buy whatever cars they want. If they conFnue to buy larger, less-‐efficient cars, automakers will have problems
Sources: GasBuddy.com, AAA, NACS Research
4/28/15
4
The Association for Convenience & Fuel Retailing
But miles driven have been stagnant.
The Association for Convenience & Fuel Retailing
Since 2007, Americans have been buying more fuel efficient cars…
4/28/15
5
The Association for Convenience & Fuel Retailing
Gas ConsumpFon Has Fallen since 2007
Source: Energy InformaFon Agency
7,500
8,000
8,500
9,000
9,500
10,000
Jan 06, 2006
Jan 06, 2007
Jan 06, 2008
Jan 06, 2009
Jan 06, 2010
Jan 06, 2011
Jan 06, 2012
Jan 06, 2013
Jan 06, 2014
Jan 06, 2015
Barrels p
er day (tho
usan
ds)
Weekly through March 27, 2015
2007 Peak
The Association for Convenience & Fuel Retailing
But stabilized in ’13 and grew last year
Source: Energy InformaFon Agency
7,500
8,000
8,500
9,000
9,500
10,000
Jan 06, 2012
Mar 06, 2012
May 06, 2012
Jul 06, 2012
Sep 06, 2012
Nov 06, 2012
Jan 06, 2013
Mar 06, 2013
May 06, 2013
Jul 06, 2013
Sep 06, 2013
Nov 06, 2013
Jan 06, 2014
Mar 06, 2014
May 06, 2014
Jul 06, 2014
Sep 06, 2014
Nov 06, 2014
Jan 06, 2015
Mar 06, 2015
Barrels p
er day (tho
usan
ds)
Weekly through March 27, 2015
2012 2015 2014 2013
4/28/15
6
The Association for Convenience & Fuel Retailing
US Brick & Mortar Retail YoY Change
Channel 2013 2014 Unit Change
% Change
Convenience Store 151,282 152,794 1,512 1.0% Single Stores 95,056 96,318 1,262 1.3% Category Killer 83,959 85,822 1,863 2.2% Liquor Store 46,266 46,351 85 0.2% Drug 41,378 41,799 421 1.0% Supermarket 50,645 50,839 194 0.4% Dollar 24,853 25,952 1,099 4.4% Cigarette Outlet 10,956 11,270 314 2.9% Mass Merchandiser 7,177 7,113 (64) (0.9%) Warehouse Club 1,286 1,320 34 2.6% Kiosk/Other 22,847 22,303 (544) (2.4%)
Total Retail 440,649 445,563 4,914 1.1%
Source: Nielsen TD Linx
The Association for Convenience & Fuel Retailing
NACS/TDLinx Store Count
59,876
67,612
78,395
76,044
84,770
84,574
89,957
90,683
89,567
90,049
91,815
93,209
93,819
95,056
96,318
59,876
56,904
54,029
54,615
53,435
56,081
55,162
55,611
55,308
54,492
54,526
54,917
55,401
56,226
56,476
(60,000) (40,000) (20,000) -‐ 20,000 40,000 60,000 80,000 100,000 120,000 140,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 Dec, 2014 152,794 stores + 1.0% vs. 2013
Source: Nielsen TD Linx
4/28/15
7
The Association for Convenience & Fuel Retailing
Top 20 Firms By North American Store Count
1. 7-‐Eleven = 8,278 2. Couche Tard + Pantry = 7,250 3. Speedway + Hess = 2,740 4. CST + LGP + Nice N Easy =
1,900 5. ETP + Sunoco + MACs + Susser
+ Aloha = 1,838 6. Casey’s = 1,835 7. Murphy USA = 1,184 8. BP America = 970 9. Kroger = 785 10. Suncor/PetroCanada = 752
11. Chevron = 750 12. Pilot Flying J = 724 13. QuikTrip = 707 14. Wawa = 660 15. Tesoro = 586 16. Cumberland Gulf = 549 17. Sheetz = 502 18. (Tie -‐ Canadian) Shell & Husky
Energy = 500 19. Kwik Trip = 476 20. GPM = 463
Approximate, as of April 2015 Source: CSP & NACS Research
The Association for Convenience & Fuel Retailing
What is an MLP?
A publicly traded partnership that allows for the pass through of income to its unit holders. • Income & Taxes paid by limited partners on their individual
tax returns. • Must meet an IRS 90% qualifying income test. – ExploraFon, producFon, refining, transportaFon or markeFng of hydrocarbons, minerals or natural resources
– Dividend income – Rents from real estate
4/28/15
8
The Association for Convenience & Fuel Retailing
2014: Retail/Restaurant Deals
+ +
+ +
+
+
= $15.3B
= $13.4B
= $9.2B
= $2.7B
=
=
$2.1B
$2.1B
+$8.5B =
Source: PWC US Retail & Consumer Deals Insights, 2014
The Association for Convenience & Fuel Retailing
2014: CPG/Supplier Deals
+ = $27.4B
+ = $7.7B
+ = $5.8B
+ $5.0B
+
+
= = $3.1B
+ = $2.2B, $1.3B
+
Source: PWC US Retail & Consumer Deals Insights, 2014
= $50B+
4/28/15
9
The Association for Convenience & Fuel Retailing
Fueled by Cheap Cost of Capital Ten Year Treasury Constant Maturity Rate, 2006 -‐ 2015
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2006-‐01-‐03 2007-‐01-‐03 2008-‐01-‐03 2009-‐01-‐03 2010-‐01-‐03 2011-‐01-‐03 2012-‐01-‐03 2013-‐01-‐03 2014-‐01-‐03 2015-‐01-‐03
Percen
t
Source: FRED/St. Louis Federal Reserve
2014
The Association for Convenience & Fuel Retailing
Burger IPOs in 2014
Habit Burger 100 locaFons in 4 states (HABT) IPO closed Nov 25, 2014. Raised $92.4m at $18/share. Trading at $31.00, 72.2% increase.
Shake Shack 63 global locaFons
(SHAK) Filed for IPO Dec 29, 2014 Raised $105m at $21/share.
Trading at $49.79, 137.1% increase.
4/28/15
10
The Association for Convenience & Fuel Retailing
Restaurant IPOs in 2014
Zoe’s Kitchen 125 locaFons in 15 states. (ZOES) IPO closed Apr 10, 2014. Raised $87.5m at $15/share. Trading at $34.09, 127.3% increase.
El Pollo Loco 400 restaurants in 5 states.
(LOCO) IPO closed Jul 30, 2014. Raised $112.8m at $15/share.
Trading at $27.63, 84.2% increase.
The Association for Convenience & Fuel Retailing
Pizza Chains to Watch in 2015 Pizza: $39B/yr spend in US
Pizza Studio 24 stores, 18 Franchise $1.2m on $11.5 sales; $6.5m in funding
Pieology 42 stores
Blaze Pizza 45 stores
4/28/15
11
The Association for Convenience & Fuel Retailing
Amazon Drone Delivery
The Association for Convenience & Fuel Retailing
“Wired” Magazine July, 2014
4/28/15
12
The Association for Convenience & Fuel Retailing
Roaming Convenience Trucks
The Association for Convenience & Fuel Retailing
4/28/15
13
The Association for Convenience & Fuel Retailing
From costumes to candy, request your Halloween essenFals with Uber! StarFng today through October 31st, we’re bringing you bags of fun size candy, costume accessories, and pumpkin carving kits on demand. Forgot to pick up candy for trick-‐or-‐treaters? Invited to a Halloween party without a costume handy? Don't have the necessary tools to create the perfect jack-‐o-‐lantern?
Simply toggle over to ESSENTIALS in the Uber app and request to bring the store right to your doorstep.
Seasonal Items…
The Association for Convenience & Fuel Retailing
HOW IT WORKS UberHEALTH is available from 10am -‐ 3pm on Thursday, October 23rd. To request, choose the UberHEALTH opFon in your app. An UberSUV will arrive at your locaFon with your very own flu prevenFon pack. Upon arrival, you'll also have the opFon to request a flu shot from a registered nurse for up to 10 people.
THE DETAILS Cost: FREE All vaccinaFons (appropriate for ages 4 and up) will be administered by a registered nurse from Passport Health. All consent informaFon and paperwork stays between the recipient and them. If you or your friends choose to be vaccinated, please arrange for a suitable indoor environment before your nurse arrives.
…and Healthcare…
4/28/15
14
The Association for Convenience & Fuel Retailing
…and Puppies!
Source: Uber, Jan 28 2015
Cost: $30 Time: 15 minutes Offices only Between 11am and 3pm
The Association for Convenience & Fuel Retailing
Don’t forget Starbucks
Source: Bloomberg, August 28, 2014
Fresh coffee sales as well as Packaged coffees at supermarkets
4/28/15
15
The Association for Convenience & Fuel Retailing
Fashion Truck
The Association for Convenience & Fuel Retailing
Snapshot 2013 2014 % Change
Store Count 151,282 152,794 1.0%
Inside Sales $204.0B $213.5B 4.6%
Fuel Sales $491.5B $482.6B (1.8)%
Total Sales $695.5B $696.1B 0.1%
Pretax Profit $7.1B $10.4B 46.5%
Credit Card Fees $11.2B $11.4B 2.3%
US Gas Consumption (bbl/day) 8.75M 8.84M 1.1%
Employees 2.20M 2.43M 10.6%
Fuel Margin (cpg) 18.7¢ 21.9¢ 17.1%
Net of CC Fees 13.4¢ 16.9¢ 26.4%
Key Industry Metrics
Source: Nielsen TDLinx , NACS State of the Industry Survey of 2014 Data & CSX, LLC & U.S. Energy InformaFon AdministraFon
4/28/15
16
The Association for Convenience & Fuel Retailing
Industry Sales
Source: NACS Research
151.1
163.6
168.5
173.9
182.4
190.4
195.0
199.3
204.0
213.4
344.2 40
5.8
408.9 450.2
328.7 385.2
486.9
501.0
491.5
482.6
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Dollars in Billions
Inside Sales Motor Fuels Sales $696.1 vs. $695.5
Up 0.1%
Inside sales in 2014 = $213.4 Greater than total industry sales in 1998
20. Saudi Arabia, $777.9 21. Switzerland, $679.0
NaFonal GDP
48. Portugal, $220.1
The Association for Convenience & Fuel Retailing
Industry Pretax Profit
Source: NACS Research
($2.0)
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Dollars in Billions
$10.4 vs $7.1 Up 47.3%
4/28/15
17
The Association for Convenience & Fuel Retailing
Profit vs. Card Fees
Source: NACS Research
$3.2
$11.2
$11.4
$4.0
$7.1
$10.4
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
$11.0
$12.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Billion
s of D
ollars
Card Fees Pretax Profit
The Association for Convenience & Fuel Retailing
Sales Same Firms
Per Store/Per Month 2013 2014
Total All Sales $597,069 $596,004 (0.2)%
Fuel Sales $486,314 $477,390 (1.8)%
Fuel Gallons 140,586 143,780 2.3%
Average Selling Price $3.46 $3.32 (4.0)%
In-Store Sales $139,680 $146,049 4.6%
Foodservice Sales $25,675 $28,170 9.7%
Merchandise Sales $114,534 $118,403 3.4%
Mdse – Cigarettes $67,243 $70,936 5.5%
Cigarettes $48,411 $48,479 0.1%
Source: CSX, LLC
4/28/15
18
The Association for Convenience & Fuel Retailing
Gross Profit $ Same Firms
Per Store/Per Month 2013 2014
Total Gross Profit $73,179 $81,833 11.8%
Fuel $26,304 $32,314 22.8%
Pool Margin 18.71 22.47 20.1%
Margin – CC Fees 13.41 17.19 28.2%
In-Store $44,636 $47,382 6.2%
Foodservice $14,472 $15,892 9.8%
Merchandise $30,462 $31,786 4.3%
Mdse - Cigarettes $23,986 $25,514 6.4%
Cigarettes $6,739 $6,562 (2.6)%
Source: CSX, LLC
The Association for Convenience & Fuel Retailing
Regular Unleaded Margins
Source: CSX, LLC
12.8"
14.8"
13.8"14.2"
18.1"
13.1"
16.3"
18.5" 18.4"19.0"
22.3"
12.0"
14.0"
16.0"
18.0"
20.0"
22.0"
24.0"
2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014"
4/28/15
19
The Association for Convenience & Fuel Retailing
Diesel Margins
Source: CSX, LLC
17.4"
14.9"
20.1"19.0"
17.7"
33.3"
24.0"
21.7"
23.9"24.9" 26.1"
35.0"
12.0"
17.0"
22.0"
27.0"
32.0"
37.0"
2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014"
The Association for Convenience & Fuel Retailing
Inside GP$s vs Expenses YoY Change, 2010 – 2014 (ONLY firms w/ 5 consecuFve years of data)
6.9%
1.0%
6.8%
12.8%
6.8%
0.8%
4.9% 5.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2011 2012 2013 2014
Inside GP$s Expenses
GP$ grew 2x over Expenses last year
Source: NACS Research
4/28/15
20
The Association for Convenience & Fuel Retailing
Customer Conversion: Fuel to Inside
69% of gas consumers just pay for fuel and leave
For every 100 fuel customers
64 Pay at the pump 36 Pay inside
21 Purchase items in store
10 Purchase items in store
43 Just pay for the fuel
26 Just pay for the fuel
Source: 2013 VideoMining, C-‐store Shopper Insight (CSI)
The Association for Convenience & Fuel Retailing
Tobacco 35.9%
Pack Bev
15.4% Beer 7.3%
Center 10.6%
Other 11.4%
Sales
Foodservice 19.4% Pack
bev 18.5%
Beer 3.9% Center
store 12.8%
Other 14.0%
GP$
Foodservice 33.5%
In-‐Store ContribuFon
Tobacco 17.3%
8.8% for stores selling beer 14.6% for stores selling beer
Source: CSX, LLC
4/28/15
21
The Association for Convenience & Fuel Retailing
Foodservice Jan-‐Dec 2014
Per Store/Per Month Sales $ Margin $ GM%
Prepared Food $23,011 $13,254 57.60%
Commissary $1,846 $719 38.96%
Hot Dispensed Beverages $4,373 $2,493 57.01%
Cold Dispensed Beverages $4,179 $2,287 54.73%
Frozen Dispensed Beverages $1,055 $588 55.78%
Source: CSX, LLC
The Association for Convenience & Fuel Retailing
Foodservice Sales and Margin Change Jan-‐Dec 2014 vs Jan-‐Dec 2013
Per Store/Per Month Sales % Change
GP % Change
GM% Pt Change
Prepared Food 7.7% 5.7% (1.10)
Commissary 9.8% 13.1% 3.0
Hot Dispensed Beverages 0.8% 2.6% 0.98
Cold Dispensed Beverages 0.8% 1.9% 0.58
Frozen Dispensed Beverages 4.3% 9.5% 2.62
Source: CSX, LLC
4/28/15
22
The Association for Convenience & Fuel Retailing
Top Ten Merchandise Categories Jan-‐Dec 2014
Per Store/Per Month Sales $ Margin $ GM%
Cigarettes $48,479 $6,562 13.54%
Packaged Beverages $22,824 $9,083 39.80%
Beer $15,432 $2,944 19.08%
Other Tobacco Products $7,373 $2,157 29.25%
Salty Snacks $6,499 $2,528 38.89%
Candy $4,792 $2,315 48.31%
Packaged Sweet Snacks $3,108 $1,093 35.18%
General Merchandise $2,257 $910 40.30%
Milk $2,101 $604 28.74%
Ice Cream/Novelties $1,750 $788 45.00%
Source: CSX, LLC
The Association for Convenience & Fuel Retailing
Top Ten Merchandise Categories Jan-‐Dec 2014 vs Jan-‐Dec 2013
Per Store/Per Month Sales % Chg Margin % Chg GM% Pt Chg
Cigarettes 0.1% (2.6)% (0.39)
Packaged Beverages 6.5% 5.9% (0.22)
Beer 3.5% 5.6% 0.38
Other Tobacco Products 4.9% 1.3% (1.05)
Salty Snacks 8.5% 11.2% 0.94
Candy 4.0% 7.1% 1.42
Packaged Sweet Snacks 3.3% 2.3% (0.35)
General Merchandise 16.4% 17.3% 0.31
Milk 3.8% (0.9)% (1.37)
Ice Cream/Novelties 0.2% (1.2)% (0.63)
Source: CSX, LLC
4/28/15
23
The Association for Convenience & Fuel Retailing
2014 Top Quartile
2nd Quartile
3rd Quartile
Bottom Quartile
Fuel Gallons 199,307 115,125 96,652 99,647
Cigarettes $64,118 $40,570 $34,870 $33,100
Packaged Beverages $29,226 $19,935 $14,312 $12,927
Beer $18,691 $12,492 $14,662 $12,792
Other Tobacco Products $8,291 $6,514 $5,923 $7,600
Candy $5,233 $4,348 $3,559 $3,517
Salty Snacks $8,384 $4,621 $4,213 $3,757
Prepared Food $29,176 $19,893 $9,505 $12,121
Hot Dispensed Beverages $8,395 $3,566 $1,951 $2,453
Cold Dispensed Beverages $5,007 $3,945 $3,514 $2,023
Category Sales QuarFles based on Store OperaFng Profit
Source: NACS State of the Industry Survey and CSX LLC
The Association for Convenience & Fuel Retailing
2014 Top Quartile
2nd Quartile
3rd Quartile
Bottom Quartile
Fuel 7.31% 6.47% 5.73% 5.68%
Cigarettes 12.52% 14.99% 14.73% 13.12%
Packaged Beverages 39.45% 40.66% 39.36% 38.09%
Beer 18.97% 19.13% 19.21% 23.49%
Other Tobacco Products 27.63% 31.71% 28.69% 28.23%
Candy 48.75% 49.79% 47.24% 49.03%
Salty Snacks 39.28% 38.45% 36.01% 34.62%
Prepared Food 54.99% 62.23% 54.08% 46.24%
Hot Dispensed Beverages 65.31% 63.25% 48.72% 52.62%
Cold Dispensed Beverages 54.45% 56.08% 50.18% 41.93%
Category Gross Margin % QuarFles based on Store OperaFng Profit
Source: NACS State of the Industry Survey and CSX LLC