Boston, MA 08/12/2014 (wallstreetpr) – A chain of retailer of transportation fuels and convenience goods in North America, CST Brands Inc (NYSE:CST) announced a 22% fall in profit for the second quarter hurt by weak gross margin and increased operating costs.
2Q Results
CST Brands Inc (NYSE:CST) reported net income of $32 million, down 22% from $41 million and the earnings slipped 20.1% to 43 cents a share from 54 cents a share in the year-ago quarter. On average, Wall Street analysts’ expected the company to report earnings of 49 cents a share.
CST Brands’ operating revenues rose modestly by 1.6% to $3.26 billion from $3.21 billion in the previous year quarter, which was higher than the Street analysts’ estimation of $3.22 billion.
Other Metrics
CST Brands Inc (NYSE:CST)’s gross profit dipped 3.11% to $280 million from $289 million in the year earlier quarter since it had to spend 2.1% more for the cost of sales to $2.98 billion from $2.92 billion in the prior year quarter. This suggests that the company had faced pressure on pricing front despite increase in cost of sales. In other words, it failed to pass on the increase in costs.
CST Brands has also been unable to control its operating expenses to somewhat compensate the weak gross margin. Its operating profit plunged 27% to $57 million from $78 million in the same quarter last year.
CST Brands Inc (NYSE:CST)’s total operating expenses advanced 5.7% to $223 million from $211 million as general, and administration costs increased to $25 million from $20 million in the year-ago quarter. Operating costs also grew 4.4% to $168 million from $161 million in the previous year quarter. Its income tax expenses were only $16 million compared to $31 million in the prior year quarter.
Share Buyback Program
A few days back, CST Brands had announced that its board had given its nod to buy back shares worth a maximum of $200 million. The company had not disclosed the time limit for exercising the option, but indicated that it can run through till it was exhausted or withdrawn by it.
