CAPL - Earnings call transcript Q1 2022 | CrossAmerica Partners LP

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Maura Topper

Good morning and thank you for joining the CrossAmerica Partners First Quarter 2022 Earnings Call. With me today is; Charles Nifong, CEO and President. Charles will provide some opening comments, a brief overview of CrossAmerica’s operational performance and highlights from the quarter, and then I will discuss the financial results. At the end, we will open up the call to questions. I should point on that today’s call, we’ll follow some presentation slides that we will utilize during this morning’s event. as CrossAmerica the website. available posted and are the on slides part webcast of are These

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

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

that also During conform may today’s Generally call, GAAP. to we performance provide do Accounting or US not Accepted Principles measures certain

recording will provided reconcile the period call on call of this website these results with turn reported to as our basis XX and GAAP of call on With for a the earnings over that have webcast a being will days. press conference now release. our schedules is be non-GAAP Today’s I available measures We a of CrossAmerica part that, Charles.

Charles Nifong

us Maura this Thank appreciate joining morning. you, Maura. and everyone I

thank we you interest the always, As your in Partnership. for

what in and Maura trends provided briefly also market the calls. review will an for first will the results. During the detail go provide similar additional previous then some information on highlights operating certain on quarter. today’s through review financial to some call, I more of I will the update I in

briefly of if some you operating X, to review our results. I will turn Slide Now,

increase in both quarter compared XXXX, quarter was fuel to volume compared million, increases the million quarter driven profit segment XX% of of the an gross of first XX% our profit to wholesale gross was margins. $XX.X or Wholesale XXXX, fuel first XXXX. increase by For first $XX.X million, the of a when and $XX.X when

Our to XX% period gallons largely acquisition the same XXXX, for of XXX.X compared due of X-Eleven. when an of of volume fuel increase the to wholesale XXXX, first from was assets million the quarter

In terms of year-over-year. performance X.X% for were approximately wholesale same-store volume quarter, the in down we

we same on to site performance While were flat overall. volume close

For from volume Omicron volumes the as any country a in same year-over-year mid-single-digits away up were February number. receded. year-over-year in double-digits in site that low given In surge. omicron dealt there was when week up was activity quarter, January, variability material down overall a picked as the

same Ukraine were impact impacted continue in fuel surge to March fuel and adversely negatively into other to April. The due volumes conflict Finally, the pricing, prices volumes surge by in the factors. site

recent weeks seen Although volume we at performance. improving have

We fuel the increase XX%. gallon compared per also first $X.XXX quarter the XXXX, of an saw increase by to was for margin the The following per driven quarter, in for $X.XXX our factors. increase primarily year-over-year of gallon an whole reported

sites, retail operated we variable basis. company CrossAmerica’s margin which to volume on increased from benefited supply we First, a

from consolidation. we to certain due as better Second, to benefit strategic our initiatives, continue execution sourcing such brand the of costs

of million to compared for the margin year from variable rent slight was base also sites. the a per wholesale to fuel higher fuel On the to of $XX certain prior due wholesale our previously gallon our increase Finally, our due million, benefited margins conditions. closed rent, quarter reopening market $XX.X

as rose well the during quarter performed XXXX. $XX of XX% Our first million quarter, retail also gross to compared or when segment profit the

the XX% same compared XXXX. our and to gross Our when rose merchandise motor fuel gross profit in increased period XX%, profit

our for the For quarter basis, up was volume site on retail volume a year-over-year. X% same

margin performance and case consumer. our overall strong same retail, to grow our that strategic still operating success of continued site deliver volumes in Our value to retail initiatives to the ability ability fuel the maintains and that

a in year. For site our on were down sales, relative X% site basis, sales same in to last site

sales on cigarettes over a were site year basis. up site year However, X% same excluding in

reminder, is retail our segment As margin financial on reviewing segment our segment important a supplies wholesale remember a to it performance, variable basis. retail the

segment, So makes the sites apparent fuel looking wholesale and profitability, our between at our contribution that a these overall our segments. financial is and retail the in meaningful profitability sites retail isolation. fuel at is overall our results segment in The to to retail recorded wholesale split wholesale the segment’s not to margin

quarter, year. The sites, the driven expenses our and inflation expenses to the in which for in was her operating in operating Maura increase As site count of also XXX, by expenses review increase addition compared operated we from a site to company expenses additional count the XXX in will increase we some saw increased our X-Eleven XX% average an commentary prior provide year-over-year. on our the comments. primarily

We or acquisition due associated $X.X the year-over-year, the quarter during portfolio last expense that X-Eleven a Our sites the costs million the of to acquisition-related we remaining for declined of sites at X-Eleven acquired. finished XX% decrease quarter G&A primarily the in with February. year

portfolio due Our part, the the for assets. are strong the solid results contribution quarter in X-Eleven of

our well of retail the as to results entire on as We continue work results of these maximizing assets the portfolio.

to continue to look of opportunities we portfolio properties. for non-core initiatives, part divest our evaluate and ongoing our As

four sales For the for million proceeds. property first quarter, in $X.X we had

pipeline to execute of continue a on within our portfolio. as capital within in XXXX, opportunities strong to portfolio we identified opportunities a to recycling invest growth process have We our

the acquisition reduce to financing in the initially securities the Vice was the to we front, completed recently in partnership. Chairman, individuals provide the assets transaction our Reilly, from On J. The X-Eleven and commitment controlled part Topper her issued will the ongoing our raise details capital of at of were capital comments. plan the Maura entities strong securities the to of B. and The and preferred at raise preferred that borrowings capital these more for million acquisition. fund of Joe were Chairman, end by reflect the and quarter. raising outstanding on $XX issued used

of few summer years. as fuel sensitive touch have as consumer. fuel weighed on comments, I last impact both seen quarter-end, see of are period The weeks moderate in the optimistic continue For to gallons our season weakness store on we the prices we we April, gallons, site strong sales, in in the impact with some retail the to in comparison wholesale higher by in improving the and some and recent driving earlier

all or back office take working you how volatility COVID March. for us operations. firms employees first quarter, on the to you pricing thanks in realizes a our Omicron your in all field and are still conclusion, period, and we in today, environment, of the yet, the for one despite It out dedication look either the quarter thank To to been our was delivering support large about site partnership in got employees granted, beyond Finally, feet easy by the first and the period that of operational entire employees of and to quarter January, location, results. a have period, during later for pressures all serving employees working is to a COVID but word not the concerns listening challenging number that our oil strong of essentially solid the and In for unique extreme as both in contributions the retail the wholesale to CrossAmerica. Throughout driven time. there market the customers, your

will our portfolio, impact provide strategic initiatives more financial Our our on results evidence it of turn had Maura of this detailed the that, operational to asset quarter I illustrate for and review. the improving over our underlying With strength have a performance

Maura Topper

Thank you, Charles.

year-over-year first please of Partnership. We in environment. benefiting $X assets was compared results Adjusted for for acquisition retail segments, with first segment increase quarter wholesale review from first of an loss quarter $X million million primarily EBITDA reported along X. The was the Slide would quarter driven each net of the to X-Eleven, XXXX XX% would both net the $XX to you favorable like compared XXXX, net income the turn the with the the of and increases quarter increase income which operating income margin fuel by first of to million the for XXXX. in If in XXXX. first was I of to from of quarter our the in of when

due quarter the was the operating cash to income distributable cash EBITDA record in interest highs offset and cash the both adjusted first Both XXXX The quarter in retail was cash with $XX.X by in distributable partially in first and versus million first $XX.X were flow an for segments, flow XXXX for expense. increase increase Partnership. an the of quarter the numbers the flow primarily which for increase distributable wholesale the was XX%. XXXX, Our million quarter of increase of first

for of XXXX. the quarter current quarter coverage compared to was times, first X.XX distribution for X.XX the Our times

first paid costs to To-date, inflation of distribution been of many XX trailing fuel, Our to and Charles There customers. as past here and for price I’ll X.XX quarter comment this prices, to pass to on we a labor quarters, compared months higher quarter, and were the times XXst, our at closely merchandise coverage the ended impact as the price through inflation. several a including topic mind various impacts well as and for the identify to moment, the earlier. XX is months, March the take was generally on volume of of have on moment Throughout X.XX these been basis, expenses. this monitoring portion operating the last XXXX. the able that of noted costs, top of some other fuel we times, us for at during have

impact consumers. the economy We inflationary are across of mindful the on pressures of

strategies merchandise profile. to team our while overall fuel, So margin adapting our is maintain and

ensuring markets, we in choice of customers. competitively priced We’re our so that a focused of we’re are in our destination on

noted to million. expenditures Growth to $X.X will, total unit that of next capital acquired the approximately of first a please of quarter existing on you our million. $X.X growth sites of spending a the to related for XX related resulted our site per capital million was the months. a decline rebranding. $XX coverage the spent sites a of during portfolio, primarily million year-over-year The the $X.X distribution in turn remodeling as capital from during ratio the of a XXXX, a of of during basis attributable $X.XXX quarter paid and times If almost we with EMV well Partnership represented I This total continued X-Eleven, upgrades XXXX expenditures. integration as quarter regards the in of the previous being total related first on quarter, slide, for the of slide. this to as fourth paid In And X.XX

X% security JKM our holder equity board by price approved as our in Holdings credit issuance preferred As the component for subsidiary, Holdings used Loan the net cumulative as of of preferred a security partner to the also conditions, $XX a at the the if at for or full $XX.XX preferred facility. the and prepay terms CAPL future, CAPL subject noted of security well JKM completed wholly-owned the JKM Committee the of our provides we still cash, the security of elect. to in Charles an Term earlier, first the equity by The Partners, of units will were The a preferred Conflicts million LLC. The be certain for exchange into issuance return of general CrossAmerica common issuance in The board. holders. proceeds membership interest portion to was the exchangeable quarter,

an increase During accounts payable the in over by of balance quarter, quarter course in fuel as the the inventory, price the of value of see of driven over course related we the well. the the our motor increase of our which are did XXXX, first quarter increased

of of of of increase March due of cash over calculate to turnover. regards settlement receivables deleveraging typical estate XXst, our the spite current the real quarter, over to were price in than course our quarter, the able significant to to we and the we working into assets. the our are as agreements. a shorter forma motor and inventory were credit from fuel is position longer total for if net compared in newly to In timeframes, the of two account facilities fuel our current acquired taxes industry, As defined – organization our greater as our liabilities in leverage benefit our credit the impact and settlement Due levels the our and Taking the the capital ratio improve pro of debt the XXXX, to motor our operations. course generation as and In activities the overall, leverage, assets. of

ratio at XXXX. the quarter would of the leverage aggregate be around of X.X times Our X.X blended approximately to times, fourth compared end

the target times as leverage toward months. a despite defined to continue on XX to X.XX environment. aggregate of quarter, and In the had X basis to XX we facility move noted will operational blended next solid both first ratio level over earlier, the We our conclusion, Charles challenging credit

further are move With manage XXXX, position on the summer in focus our into will financial we and we continue we that, As leverage entering will driving sheet, including our operations for up it to ratios balance distribution good season. and our a open questions. and

Operator

we Thank we now have session. you. [Operator far will no question-and-answer questions. And the Instructions] begin so

So a case. in moment it give we’ll just just here

Charles Nifong

Okay, well today. it have like we doesn’t seem

Operator

questions. no No,

Charles Nifong

for joining you thank everyone on again So to us call. the

will EIC I As be an attending Maura note, Conference Investors week. next the additional and

webcast We’ll providing our presentation on our the be additional later website also week. this We on to a on hosting Monday. details webcast be

we thanks day. your interest Partnership. Have able on the you’ll be to that webcast. for So good a join us hope in Again, the

Operator

Thank joining. concludes you you, ladies today’s and conference. gentlemen. Thank This for

You disconnect. may now

Maura Topper	Chief Financial Officer
Charles Nifong	Chief Executive Officer and President

CrossAmerica Partners (CAPL) 10 May 222022 Q1 Earnings call transcript