CAPL - Earnings call transcript Q2 2020 | CrossAmerica Partners LP

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Operator

Good morning, and welcome to the CrossAmerica Partners' Second Quarter 2020 Earnings Call. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. Please note, this conference is being recorded. the to turn Chief Benfield, now Officer. Financial will call John over Interim I

sir. begin, may You

John Benfield

Thank webcast morning, call. operator. and I Partners' are you, Good Nifong, other second the for Charles executive quarter CrossAmerica members on out point joining of will will available XXXX leadership and earnings during CrossAmerica morning's this call part utilize slides as CEO presentation are With our today posted some should and follow me President, today's and of website. the event. the that thank we slides team. are you These that

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

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

the recording XX be of call a is Today's will webcast, that, CrossAmerica provide measures measures principles, over this part do results that non-GAAP on also will Charles. performance a reported days. I turn not U.S. With certain website reconcile call conference may We've of now GAAP. basis the or for to accounting press on a we provided and period generally our as available to call, earnings release. accepted today's schedules of During with GAAP call these conform our that being

Charles Nifong

that your and in you, everyone We the thank John. for morning. hope joining you well. appreciate this all you interest Thank I are partnership us

During I I a briefly updates John lines then through of will detail the earnings the our COVID-XX, results. on some quarter review second operating few go also quarter. of some will from call, color call. I the in the first will provided with along impacts financial today's provide along in other highlights more for what the

If briefly to quarter. you the some our from turn I Slide X, will review results of

the wholesale our by XXXX, of past the of months fuel and of increased over COVID-XX. impact For to completed second XXXX, the of when exchanges to the the offset second due X% volume were compared impact acquisitions quarter quarter largely that

experienced wholesale we a fuel gross fuel margin While we for increase quarter, volume profit only for slight fuel in strong a the our driving year-over-year, our overall gallon increase XX% per in quarter. wholesale up saw the

business volume volume, and our changes of to particularly quarters terms not is in comparison mix, the overall the given prior In asset useful.

As I I on on did provide business volume some insight will provide same-site to conditions. last more color quarter, performance

improvement. year. fuel approximately around off have down a low In off XX% volumes been from comparable performance, and being the increased on to terms basis. comparable in a weekly weekly week being year-over-year double-digits year-over-year week substantial at consistently now weekly that single-digits week-over-week Since a approximately a recent same-site start were basis. to comparable to our to XX% have same-site prior weeks, compared year-over-year around volume year, year high year-over-year April of XX% In volumes low which prior the to compared same-site have the of to prior words, the low, In XX% is improved volumes of the other down on volumes week

also our fuel an dealers year-over-year, as a variable certain how dealer-tank-wagon margin margins, we fuel gallon, primarily third-party of by fuel increase of was margin reminder, our $X.XXX and wholesale company-operated supply our our of XX% Our accounts of our of in variable, wholesale our also which, percentage sites. gallons driven our acquisition. with per overall for that price first dealer-tank-wagon to our retail is XX% now XX% the The gallons recent fuel with compared XXXX. It retail quarter of is increased wholesale approximately commission and wholesale

first strength margins As of to rate our the in offset variable helped the we due COVID-XX. loss have quarter, in volume the to experienced

the in oil stabilized decrease tends at to In increased the the terms range. lower parts past been of been in since margins. fuel and period the the during strong margins, continuing in a then, April. continued crude in normal The margin, extraordinary good, in May, Crude April and of end, oil historically were and although margin this not quarter given since as prices quarter environment have Fuel overall has start very was March prices more which our they of April. environment margin have

prices they our prior Additionally, of relative discount will component fuel lower if the crude terms oil to the stay where are, be year. margins

rather sites income have underlying sites. these changed, of on recorded million, wholesale rental quarter, $XX.X in to due operate, now sites X% the our economics for the at than mid not revenues at moving We and the reported but termination acquisition. the leases second for the statement profit operate, resulted of If the primarily sites. gross connection the to with we retail down of effectively year-over-year the you in transaction And has look these

rent of of $XXX,XXX approximately issues. being collection rent not X% and period of the was performance, terms with our or June a performance rent-related our in waivers peak we rent, May terms In of our far off Overall, rent. for provided in steady collection. a July saw base of and rent April historical quarter approximately improvement in In July, we

XXXX. and drivers of reflected of quarter $XXX,XXX our conversion or approximately the our quarter. with debt dealer-operated expense, K in rent and asset G&A Offsetting the sites recorded an bad to of separately expense our closed the in X% was addition, from we impact In for base the Circle company-operated exchanges third sites these

collection performance. would normal historically within although is July, early, August, is rent so it line For our appear with our it in

quarter, driven in increase in second XX an sites and of see increase our increase site overall our to expenses and the average operating well we number company-operated SG&A the from the The increased did expenses. and acquisitions controlled that by exchanges sites both our count was as were wholesale XXX year-over-year in operating – For as primarily sites.

$XXX,XXX a increase In headcount. increase I addition, associated headcount the operating fees in had increase recent in loss management fees with SG&A acquisitions. increase related with the related Contributing COVID-XX expense management we in expenses an pandemic, in $XXX,XXX our $XXX,XXX mentioned ago, and the expense recorded increase to to in to moments was which credit in associated

was cash was XXXX. flow for million distributable the million second quarter adjusted $XX.X $XX and of EBITDA Our

wholesale If on an you we during acquisition year-over-year. April acquisition, earnings call, retail over have With this of our turn company-operated we XX. to Slide X, segment, increase as XXX% our retail XXX sites our we and completed of now noted in assets last

store comparable retail range performance than X% meaningful remained and our performance overall general comparable same-store our the illustrates executing sales store our basis of On our May. between a convenience Over inside are segment of these segment segments. retail sales our that were sites and to performance of volume store is to is week early of Thanks also operations. the some of and transaction, inside better and these our have April comparable XX% terms in segment quarter. retail of the Reviewing the The also in results the at relatively initiatives these the our weeks, resiliency week is In store the retail for up of company-operated to to important operations a sites, up profitability. testament segment, has retail period DTW a the since makes remember the in partnership, sites the sites year-over-year performance, profitability supplied in to strong six the profitability sites a in since it with last it wholesale to contribution XXXX before sales that approximately sales segment wholesale wholesale comparing overall. wholesale slightly overall have sites our our throughout This our our our been strong we margin retail year-over-year been been on DTW our a the XX, have basis, inside at basis. split

We during the exchanges the was exchanges in asset remaining the representing into agreement Circle two from quarter, completed with work entered that $XX complete additional to We second K million to December continue assets. approximately of XXXX. in

we of in to remaining on be the and release to the asset exchange based converted expect current half final that exchanged the As as our and to of XX-Q, noted CrossAmerica and Circle properties K there our dealer four time be XX part exchange And XXXX. in sites remaining to be properties completed agreement. line, only the asset overall earnings now second are sites

properties During we for real the estate part $X.X quarter, as optimization seven a of our total million. plans, second of divested

As is divest properties I a of we to make work plans. continue portfolio last significant and in properties or to mentioned on our to continue progress during dollars, coming we these not the review will Despite noncore COVID-XX, this while our quarters. call, number

transactions thank and to take of disruption a it have those volume end services team to ensure that to due to I provide of essential be financial with work executed to able and persevered and listening, this they for They detailed moment thank Finally, efforts. for turn more on are members To John you dedication. for Through we in over a of to the your quarter. organization other goods it the a may I wanted significant their all, fuel that, the With will and hard have everyone continued year to consumers. millions COVID-XX. review dealt

John Benfield

you, Thank Charles.

second million to which would of to you the second reported flat like results EBITDA our to was same would I the period for adjusted X, of We turn XXXX, the quarter quarter of $XX.X If partnership. XXXX. Slide please for review

Our reflecting million XXXX quarter XX% year-over-year. second $XX flow second increase the XXXX, versus was million quarter an the of of of for distributable cash for $XX.X

second Our expense. cash benefited distributable quarter flow the current for from wholesale and segment of the our tax from lower cash interest and performance

a for X.XX the second of for Our XXXX. times distribution paid second coverage X.XX the basis was quarter on of versus quarter XXXX times

ended a improvement we month was Our the distribution XX X.XX over XXXX. was months trailing which on X.XX basis XX, that June an coverage for XX experienced the times, times

XXXX. our touched compared for earlier, increased second $XX second quarter the the Charles of on of expenses quarter XXXX As to million operating

$X drove million that increase. sites of company-operated Our

our Excluding operating average company-operated company-operated XXX%. increased site increased to XXX%. our million $X count sites at expense, expenses or rent

sites the expenses our Additionally, so $X a greater million. are company-operated sites percentage the increased prior year, in operating leased company-operated and rent of our component than of at

side, a of quarter second the $X last increase increased the million, in wholesale as On controlled of since our operating year. expenses predominantly result the site on transactions the driven count by closed

the as ratio, would under X. We remain defined leverage please times If the the XXXX. to you fund next the March as with COVID-XX, the with wholesale X.XX to XXst, covenant turn facility, able with retail leverage Slide of slide, compliance from X.XX quarter during were and quarter, and Despite borrowings the of in X.XX of and we our as to additional December negative impacts improve times XXXX our credit financial ended acquisition times our XXst, ratios. along a of

the $XXX partnership our December to up March investment are income, facility, briefly million Inventory, of which in And benefited million XXXX flow liquidity activities million our months $XX have sales the fairly the intangible as gain taxes balance XXst, XXXX. We from XXst, net to the on balances, on six supply, by as motor the fuel CST at our Equity a flow cash in a and compared XXXX six the credit the operating resulted statement a payable transactions availability quarter Touching the million $X.XXX on driven to XXXX, X.XX an largely XXXX. of and and of our a attributable offset basis by in significantly our our paid payable the balances, plans. $XX our XXst, $XXX on payables property equipment, December compared first increased of previous available million XX primarily in assets slide, of The $XX and compared XXXX partially of December and I the all are July closed at sufficient sheet. to fuel year. to cash of accounts than had result of distributions. of of for a execute months $XX increase times per almost unit of on million. paid Accounts as XXst, the to distribution this parties higher the for And during XXst, first availability on in coverage a total second XXXX of noted primarily due result we on ratio related as to divestiture the first million relative timing, $XX months. quarter

distributable by quarter subsidiaries qualifying cash XXXX, second our current acquired again, to benefited quarter. benefit of from the tax our depreciation incurred by on During taxable in primarily the flow, bonus losses assets driven a relating

the other third XXXX. acquisition coverage second manage CARES continue our Act subsidiaries are and the the assets anticipate flow we see we and enter ratios XXXX. conclusion, in quarter the we our challenging in the initiatives. as closing from exchanges, final Despite of tranche our of of our taxable we as our in sheet we additional the In asset balance a quarter and believe retail and the the will Given strategic XXXX, financial during benefits and improve expectation back of losses half we benefit of distributable back half position environment, wholesale in leverage both good to the cash from

ample modest that, under facility will it continue and relatively capital annual for amount our a capacity up open to have we expenditures. of credit have We With questions.

Operator

Thank you.

now we Morris. will have the Walter [Operator Instructions] Growth, Baraboo go question-and-answer Please ahead. We From begin session.

Walter Morris

Excellent congratulations. gentlemen, quarter,

Charles Nifong

you, Thank Walter.

John Benfield

Walter. Thank you,

Walter Morris

quarter the year's this trend stronger you normally? quarter? third far seasonally is much seeing third in are that How so And

Charles Nifong

Walter, is Hey Charles. this

sort what seen what we've that weeks, my I than last on So a of volume earlier, we've guess on volume down for the sometimes less sometimes so is basis indirectly that. comments I far you're basically in XX%, as is around been And performance. several asking the year-over-year, more, touched

– to guess of to see with hesitate going rest the the given the terms to to to quarters, what going for year on, mean, a uncertainty going regards a tend answer what second be. example, going volume strongest like, and that. it look that's look to make obviously, is of play just just the one be third of to on. quarters have and I tough back-to-school COVID terms what's Obviously, I our all you things would will in touched how what In things we're in out to as like,

Walter Morris

other and the November ratio One discuss times question. a X.XX going coverage reached times you. range? forward deployment announced you to you that goals of Thank have in leverage now times your X.X strategies Could plus targeted X your capital in ratio

Charles Nifong

Yes.

again, So Charles. is this

progress regards So COVID, obviously I given things how with from of here. in think to there's still lot a will uncertainty

be us to conservative. for should you So us – expect see to to continue to

normal I improve to trying our capital as equal, we business terms expenditures, we're is to of environment somewhat significant full outlays. to, cautious we do And obviously any for then have things it ratio. look how think going being in all regards the to as what possible, we're in expenditures, coverage to extent view capital very before relates still while we're the being

Walter Morris

Thank you, Charles.

Operator

Lui. Sharon ahead. have we Fargo, Wells Please From go

Sharon Lui

morning. good Hi,

Charles Nifong

morning. Good

Sharon Lui

given maybe to of COVID the I wondering can by the trends cases Just you in guess, in share some certain region your footprint? volume states shift,

Charles Nifong

Yes.

around XX% average, last geography on your I we've question. been based the off on that varies several by as year-over-year, said, weeks, So for but

that the lagging. still they've see So been in Northeast we

has example, they well. been the Jersey be whole continue and throughout lagger York for So state also a so, New as to New process

particular, New some have we that they've impacted the York, a lack throughway, of of significantly are lot in and thoroughfare. by travel been major along sites,

volume And states is either. They've that has been performance a us not in then of its very terms year. spot Alabama been of doing bright for that lot terms better, Virginia seem us bad a be In also the to for strong. for also,

the that it's outbreaks, terms in on, are in states regards how you restrictions does vary terms in have also, but severity of it the individually to touched in COVID place. the they COVID of to of outbreak handling As whether though, seem too,

Ohio in drop-off you example, But would obviously state the volume saw back And to back. had would more year, there. lot they in restrictions volume. onus see decline for significant in place. a significant lockdown mode, earlier So given a we there, go if government a a come choose into in that It's

Sharon Lui

just Can on share terms what competitors. conservative your you're I question to more assumptions forward. going forward margin? guess maybe relative your of you a you for And a of It going your expect sounds some expectations bit and some in Okay. like margins of

Charles Nifong

good have typically first during in margins where oil the guess Obviously, they've then, prices first part quarter. been you But increased in the of part to part an the on were since regards this of margin quarter. then the extraordinary margins more in that was quarter I sort quarter. remain I'll Well, the And would touch the very that given is not of good, interesting seen compress but environment the the about crude they as strong.

And seen others comment this as well. on so I've

because think isn't regards in margins to into we're is margin much go that as profitability rethink for there's what do volume, the entering of will more because store now perhaps with I view not operators perhaps they obviously, important around. uncharted how that. COVID, looking you're much operations drop – a component what territories the at given And in inside not sales to just

so if that higher will if to a be. than perhaps past. case early optimistic going what they perhaps too we're And or to not, been have it surprised wouldn't in but that's it's would be But margins the be to say really reset I level the

Sharon Lui

Okay. Thank you.

Operator

It like Okay. no Instructions] have [Operator moment. looks further we at questions the

Charles Nifong

And today. each questions, are there no contact further partnership. in conclude questions, if your for to you free Well, of today's if will feel you call. any interest Okay. have you follow-up that joining us We Thank appreciate the us.

quarter, you you, thank to So speaking again. next forward and we look with

Operator

Ladies conference. gentlemen, for may Thank you concludes today's you. joining, disconnect. Thank you this and now

CrossAmerica Partners (CAPL) 7 Aug 202020 Q2 Earnings call transcript