CST Brands (CST) Tops Q3 EPS by 11c; Will Acquire Flash Foods

CST Brands (NYSE: CST) reported Q3 EPS of $0.90, $0.11 better than the analyst estimate of $0.79. Revenue for the quarter came in at $2.51 billion versus the consensus estimate of $2.81 billion.

Comps rose 4 percent.

CST also that it has entered into an exclusivity agreement to finalize the terms of the definitive agreement for CST to acquire 100 percent of the outstanding shares of Flash Foods, Inc. and certain related entities in Georgia and Florida from the Jones Company.

The closing of this purchase would represent the largest network acquisition in CST’s history and is anticipated to open up a dynamic new region for growth for the company. The acquisition is expected to include the following:

• 164 Flash Foods convenience stores selling Flash Foods-branded fuel located in Georgia and Florida
• 21 branded Quick Service Restaurants, including three standalone locations
• A land bank of 15 real estate sites to build new-to-industry stores
• A merchandise distribution company operating a 90,000 square foot distribution center in Georgia
• A fuel supply company with access to the Colonial and Plantation Pipelines, leased storage and company-owned transportation fleet, distributing fuel to the 164 sites in addition to 10 million gallons to wholesale accounts.

This purchase would create the opportunity for CST to extensively grow its network both by acquiring the existing stores, which average 3,000 square feet, and also provides a new foothold to build its larger new-to-industry stores, strengthened by the successful Flash Foods network. The purchase would also allow CST and its controlled subsidiary, CrossAmerica Partners LP (NYSE: CAPL), to connect regional networks across the mid-Atlantic and southern regions of the United States.

Flash Foods is known in the industry as an innovative company and a leader in its use of technology.

“With our largest network purchase to date, we are excited to work with the great people at Flash Foods,” said Kim Lubel, Chairman and CEO of CST Brands. “The Jones family, along with their accomplished leadership team, has built a strong company with a customer-focused culture that aligns perfectly with CST’s core values and strategic vision for growth. We are looking forward to entering this new market with such a solid foundation in Flash Foods, headquartered in Waycross, Georgia.”

“We are happy to have selected CST Brands from a formidable group of potential buyers,” said Jimmy Jones, Chairman and CEO of Flash Foods. “We believe the service culture at CST Brands, and its attitude towards both customers and team members makes CST a great fit for the Flash Foods team. We are excited to work together on finalizing this transaction.”

The Jones Company is being advised in the transaction by Fifth Third Securities, a subsidiary of Fifth Third Bank.

While both parties intend to finalize a definitive agreement as soon as practicable, CST and The Jones Company may not be able to reach a definitive agreement or consummate the proposed transaction.

For earnings history and earnings-related data on CST Brands (CST) click here.

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