CAPL - Earnings call transcript Q3 2017 | CrossAmerica Partners LP

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Operator

Welcome to the CrossAmerica Partners Third Quarter 2017 Earnings Call. My name is Eric and I'll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. call Randy the Investor Director turn Relations. now over Palmer, to of I'll Mr. begin. you Palmer, may

Randy Palmer

initiatives. we’ll are on operator. our overview you, performance the XXXX open-up me These and a Evan CEO; that available third as site. joining results. and CrossAmerica slides brief the will turn Financial slides Chief Team. current are point to discuss webcast CrossAmerica At the quarter President an And call call Officer today over on and Jeremy Evan With provide event. the presentation Smith, the to to we should the call. members then will Thank operational end, the earnings I today's of morning posted Leadership Partners of Good some of financial Web strategic CrossAmerica's thank other we part Bergeron, are update and questions. Executive Jeremy utilize that you will for will during out follow and morning's call this

quarterly actual the and or expectations can begin, like could that affect and and future the statements the management's XX-K Exchange that to results be including expectations. annual that call, include today's may opportunities results. session, discussion on will projections with on of There actual CrossAmerica's assurance for expectations, question-and-answer expected would we and and that a metrics, revenue, organization. future Form regarding I filings Securities factors will operational be remind plans, no everyone Before beliefs of Please Commission the forward-looking achieved not Form our differ see important from reports XX-Q including reports

disclaims obligation Management the the judgment today's intent forward-looking of to or Forward-looking any of statements. and as any statements represent CrossAmerica's date update organization

certain call available that, results Today's a measures period our or the reconcile will to Web be as that earnings Accounting GAAP the CrossAmerica our provide I'll is reported a release. with part and of those measures being days. During a turn not Bergeron. We’ve now U.S. to Accepted on GAAP. webcast conference over with also that on these call And performance do for non-GAAP this Jeremy Principles Generally conform we provided call of may today's XX call, on recording schedules site basis

Jeremy Bergeron

Thank quarter earnings through you, yesterday go our a and will the of few highlights from We Randy. minutes. detail some reported in our I first XXXX third third results But to quarter. Evan review the wanted afternoon

overview the you end Slide of If to turn will the partnership of the at X, third a brief quarter. provide I

the locations billion past of over we the continue to As to look over $XX distribute XX across approximately fuels of X,XXX gross generate rental X and months, U.S we income million. gallons over

per generates $X.XX We network. gallon hold Supply, in fuel interest X.X a on within continue to gallons which billion CST a approximately Fuel legacy distributed CST annually wholesale margin XX.X% the

We XX quarter convenience of have Upper close stores XXX Midwest market some stations. operate operating also owned recap our Slide On to the X, third we currently results. in and

of earned of over volume was tank and X% increasing positively gallon for gallon the per million third last flat compared per location by the for operator dealer margin our XXX when per fuel third to wholesale year our in contracts. per impacted to price margin last gallon As the the gallon at wholesale $X.XXX $X.XXX quarter wagon margins This from of fuel commission quarter, you year. increase improved was at look gallons business with our fuel wholesale relatively quarter

increase gas the and addition, year-over-year increased supplier earned our also in the oil in In prices discount crude terms wholesale period.

with in our our to rental completed that strategy accounts. year our September primarily wholesale an to acquisition dealer State gross profit to company-operated XX%. lessee also along we improving saw due sites This Oil quarter, dealerization convert During segment, in for our of we the last increase was

acquisition gap] on we can and reductions were costs our managing as where [audio we general our making Finally, to related operations focus continuing partner. with we new excluding further integrate

turn review would third slide, some next the highlights to from the like the to I’d of XXXX. you quarter If of

Evan the EBITDA XXXX, reduce leverage the sale paid that XXXX $X.XXXX to and both outline also quarter unit leverage We the should a through able our that growth a in increased note EBITDA month. the of in segments. distribution per this our Partner by along minutes. driven year-over-year During non-core growth period, from at wholesale that X.XXx. second declared our of adjusted with I the Board from our were X% third our ended few in with General will quarter proceeds be from retail attributable We the assets to to of quarter will

grown have now for XX our consecutive We distribution quarters.

during quarter of between owner General former K discussed we the As call, our XX. the second June CST merger the earnings and Brands was on Couche-Tard/Circle completed Partner,

with our create wholesale business, to with business integrating National leading distributorship Wholesale Fuels are national wholesale strong a unparallel a actively K We Circle presence. currently

XX we and a assets well-run set respected of fee transaction a experienced By way for of XX immediate closing respective our expands to noted nearly the X fuel opportunities retail and acquisition strength, Through based that accounts. advantage of to But we’ve our Jet-Pep. as is organization we during XX an waiting be the we the we presence strength million sites Alabama maximizing sites, existing our We the including entire in locations structure K The sites, is assets operational acquiring sites, in third X in as are Jet-Pep placing and coming call, XXXX. as earnings are being quarter delivering great organizations. the not As a relationships. and brand take by look achieving fuel the weeks. commission as Alabama operation The targets c-store terminal our of leveraging are unbranded this are each organization's that the we synergy are operations be are consists commission in with Circle in CrossAmerica transaction reductions acquiring Circle the for lease each operated the jointly fee-simple operated unencumbered other utilized within within simplifying great quarter, initial assets of to well acquiring gallons we wholesale commission we as This M&A are each by sites it a acquisition XXX sold for certain south a investors. with of any will which complete value chain on leverage doing retail fuel that us and of to today. G&A the their supply we This fuel mostly to previously acquisition associated CrossAmerica, on forward the outlined. space and K capital benefit in of at second look both working well operations independent two will businesses.

So, Circle lot in with and work the efforts third that summary, have start. taken our continues great the K integration has in off been place gotten have a the great to of There a today. quarter

success, our I'll these for goal in deliver enhance to details future. to [ph] development build investors. our as plans poised As growth With necessary the to on complete we We the that, partner it evaluations our to and our a Evan. you and to with turn near investors organization past providing with forward on look our analysis, in of strategy providing value general a we support over to on position more look

Evan Smith

Thank you, Jeremy.

The EBITDA a X.XXx please adjusted at turn touch $XX were of of basis. you CrossAmerica. of paid reported distributable flow distributions like on total on the would and XXXX I’d third quarter coverage If in million X, Today, resulting a to of cash third over we $XX $XX results paid Slide million. in to our over overall ratio quarter million

XX a paid on month coverage trailing Our was basis. X.XXx

Jeremy acquisitions, we positive growth term centered noted earlier, As from as our integration the supplier and business our wholesale around benefited impact our performance efforts past discounts. from our in the

in we’ve discounts repurchase. percentage suppliers from the a past, total prompt invoice As terms as we the noted our on of fuel the received paid

supplier we impact a During saw terms the of total million from pricing. dealer-tank the and improved $X discounts nearly quarter, of wagon combination benefit of a

third volatility which impact benefited period, top On in we the XXXX compared oil received average the discount we that crude XXXX, as and increased for this wagon to margins. X% positive terms period both during month of fuel resulting prices increase, saw of the During and our our also crude in quarter on from our pricing fuel a wholesale oil suppliers. three dealer-tank fuel the prices retail same

marks attributable announced our October per a This of we over our the distribution Board our that $X.XX General quarter on XX to attributable quarterly Turning of Slide second $X.XXXX XXXX a declared is the increase. increase of and quarter. distribution third distribution to X, Partner the Directors XXth unit unit consecutive per to of

our of to strong through of to distributable with XXXX, As flow accretive cash combination further the synergies our at a we expect and of K. look driven the business with remainder growth integration associated expense performance reduction continue Circle recognition by we acquisitions, be

$XX As on our available of we approximately had million capacity X, of November revolver.

credit second as at X.XXx X.XXx was XXXX, was of leverage quarter. end at ratio Our our defined facility which XX, a the under from September the decline

some by earlier, in As with non-core with merger. of properties the required Couche-Tard past two connection the did quarter CST sale noted divest assets FTC we Jeremy this the along as

sheet sale debt closing, paying our With will underlying continue the XX the cash grow we In of just now opportunity continue that that, the manage some transactions non-core The expect balance to will it consideration XXXX, proceeds we distributable the of strengthen our towards we did for I and total flow. our on by look take for and as reducing should up to million. you we questions. open with $XX.X the will as was balance we both business to to focus mentioned, leverage sheet properties. down leverage With remainder our

Operator

you. Thank

ahead. And comes now question will Instructions] Inc. our Please session. Ben [Operator the first begin Stephens, go We from Bienvenu question-and-answer from

Ben Bienvenu

Hey, thanks. morning. Good

Jeremy Bergeron

Ben. morning, Good

Ben Bienvenu

I G&A wanted first about ask the reduction XX%. of to

the of the impacted sale the what is XX sale exclude look stores? you the like? If metrics it of materially that by Is sites,

Jeremy Bergeron

we’ve highlighted X. that Slide on think I Ben, Well,

million you release third the reduction deck $X.X in as were costs. in associated expenses we the number the acquisition would in G&A for the 'XX. And with you include You kind than look try in any saw is all Q, the versus what is each into those the G&A highlight do of what was quarter expenses excluding filed year-over-year earnings all to well quarter, I that for 'XX it divestitures. about think of as What saw, or acquisition

that well year million what in achieve guided in I think reduction, our was to we’ve is of mean, we’re opportunity hope months term. achieving an that synergies And G&A achieving I $X think cost on a $X to synergies what think that. of to of terms post-acquisition So annual per target of achieve way we longer we indicative going within first what another and with forward it I the XX million shows

Ben Bienvenu

about have Great. hurricane where there you stores your on to quarter? impact customers into been And during then that impact the the lasted time fourth felt in can period? has residual that any then impact And any your talk the might quarter,

Jeremy Bergeron

Texas, a at Texas at have XX Antonio couple in in mean, -- Yes, some on we and where market. the that our we did I of sites have we we San Florida. if in we map are, ago large concentration I years did site stores acquisition with that in CST We don’t do some have the you the look looking mean, our slide, a have

down we Aside [indiscernible]. have some in operate from with DMS that the Florida that we as source

impacted, we think the market those just I very entire some that seen impact I not of a any we’ve as as the mean, significant I impact market type So, but know areas gasoline and specific is tight you disruption saw were really mean, that network. overall.

I So we seen think it.

we’ve absorbed it. think I

position. or I -- think a good forward we in and moving

equity So, point our I may interested that supply was generated quarter-over-quarter. we and you CST also from from are the to, the interests EBITDA that fuel as -- would see in

from now So that are position well. was But moving an a little as probably a I that in good impact forward. we bit think

Ben Bienvenu

and you details some cash process your you the the about of around of your in entanglements. structure of that with efforts a size opportunity? Can to of some that discussion then, improvements well about delivering timeline little talk as flow And address simplifying K, Circle as integration kind the the Understood. of talked

Jeremy Bergeron

into have opportunity to our embedded we move we this retail say I make say, would of a highlight business put the So partnership we then we done them dealerize, Couche-Tard I and for assets other essentially touched that of the non-core the July in with the where whenever Couche-Tard business. into the more about with along will wholesale what we presentation But upon CST the, move talked and lot sense of on the out Couche-Tard We more call, partnership. really turn of within business the some opportunity assets long-term the I into see some wholesale into to that��s side. we’ve for think -- could what Couche-Tard with would partnership in the transactions Couche-Tard that

it's here in from opportunities that in XXXX by highlighted in in see plan keep them debt, to we We we we details the been So we're time with effort But certainly improvements along, a the sharing as go that I CrossAmerica's we can perspective there the into of to the pretty look will results quarter say detail can think excited announce head -- have about amount move here tremendous that well we more the July also our apprised XXXX. forward investors. say, we the the committed third in further very as the We what are and a place months. we of that earnings for process. we in February, full-year will has coming

Ben Bienvenu

Thanks. great. Nice Okay, quarter.

Evan Smith

Thanks, Ben.

Jeremy Bergeron

Ben. Thanks,

Operator

Wang from Patrick Baird. go our question Please from next And comes ahead.

Patrick Wang

numbers looks Jeremy. all-around. a It like Hi, solid

were we XX Just to there? that looks just agreement flow CST's that it touching Should sold commitment about you CST September, purchase neutral cash your fuel think in sites divestiture, CST to on as those increase net amend impact? a like the able

Evan Smith

greater pay transaction Yes, is about the that's right until essentially a to way This way. flows. or to take right It's That’s Patrick. is simplify untangle larger arrangement Evan, and done think a the cash it. the

Patrick Wang

be and Circle would with initial that right? K, And asset Right. the swap you

Evan Smith

That's correct.

Patrick Wang

Okay, that close through deal? you is us each going really could any perfect. and are remaining transaction just now, before looking if just you walk And with left the still -- that will at simultaneous Jet-Pep K's then, deal the close the your to and expectation with milestones Jet-Pep just other there Circle can

Jeremy Bergeron

at close No, expectation, the Patrick. that’s time. It the same

to still going progress weeks. coming think but are closing the the here process, with through and look in I we date the made very been regulatory We pleased to we're forward that that’s

Patrick Wang

very That’s Thank helpful. you much. Okay. all very

Jeremy Bergeron

Patrick. Thanks,

Evan Smith

Patrick. Thanks,

Operator

go And Please question ahead. from comes Gyure Janney Mike our from next Montgomery.

Mike Gyure

your than something Maybe Yes. would geographies the guess, acquisition Can forward Couche-Tard, you just a have talk with picture looking in maybe different about helpful. or going little different I of strategy changed that's big bit be assets you how that and past? kind around

Jeremy Bergeron

acquire strategy Mike. favorable We se very that remain space. per active hasn't a are Yes, and really Thanks. opportunity We multiple in Sure, partnership our see acquisition in very to of changed. so investors. and lot assets the market the our that to still

I opportunities go where as look see to maybe those on were expanded, potentially into their that with geographic opportunity not We at spread in even opportunity in with think opportunities, the presence. participate have a previous being what now its other the really participate to can markets that maybe they U.S we we transaction we before. an larger all is feel much the over it's Couche-Tard didn’t markets that as well as sometime we them in

think, excited we're have and in us I that we space. look as we that the the strength M&A in Couche-Tard So, that all about all, opportunities forward brings

Mike Gyure

Okay. And the of then facility. on credit maybe your availability

out? You or far you as limiting as size factor does how as that acquisition can potentially look a as play view what to that

Evan Smith

to we we Circle this -- close context liquidity of well. transaction, as And needs work for the need capital we enough -- Jet-Pep we’ve and evaluate working our those the continue to -- unwinding are on highlighted. larger for we We have the and timing K acquisition sufficient will of in and with

months will clear mentioned as more earlier. in the Jeremy coming so And become those

Jeremy Bergeron

after thing on you to acquisition just with a historically is sources estate and Evan the last was Oil that did Yes, strength look at the everywhere saying, -- the State capital add I for we what year. other think I'll we to on possibility we as know real looked close at we’ve look and in market, there the we that

I you divested one third an market it. tapping to -- note I them the third XX the were here sites with [ph] that think opportunity that estate again. in there here saw is of only would in strengthen had supply fuel the of real quarter to associated the the quarter,

acquisitions. that take look on in use So and ways can further to we’ve a we with advantage continue of for our strength take which to we that expansion capital balance it sheet and get these and multiple put --

Mike Gyure

very Great. Thanks much.

Jeremy Bergeron

Thanks.

Operator

at And this questions we time. have further no

Randy Palmer

I guess, does complete today's joining conference each operator. call. Thank you Okay. today. you, We that appreciate us of

free contact follow-up have to please you If Thank us. you. feel questions,

CrossAmerica Partners (CAPL) 8 Nov 172017 Q3 Earnings call transcript