CAPL - Earnings call transcript Q1 2024 | CrossAmerica Partners LP

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners First Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 9 of 2024. I would now like to turn the conference over to Maura Topper, Chief Financial Officer. Please go ahead.

Maura Topper

Thank you, operator. you Call. the thank Quarter Partners and Earnings XXXX morning, for CrossAmerica joining First Good today Charles me With is President. Nifong, CEO and We'll and then with today will discuss and CrossAmerica's the results. some I performance off financial operational quarter, comments of an Charles the for the opening overview start providing call

up call posted questions. Today's available the and are call part will as follow presentation We of the then will the CrossAmerica website. on open are to slides that webcast

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

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

may we During today's GAAP. do accepted measures performance accounting or conform that provide call, also to certain not principles generally U.S.

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

Charles Nifong

we this first all and us joining review results. you, appreciate I morning Maura of Thank our you quarter Maura. as

similar quarter in then I call, updates our also I more will market what financial first results. on our Maura commentary XXXX. highlights During will I review of calls. the prior and done through on operating other the to have will provide some for the today's go detail

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

quarter fuel of margin, $XX.X profit the in fuel of to The decline a gross in For our to by quarter volume overall the the compared XXXX. $XX driven first in XXXX, decrease segment. for lessee of decline segment factor sites income. million the accounted retail and wholesale sites, was A now significant XX% to first declined rental and million in which certain was company-operated commission agent dealer are the conversion

of million decreased quarter to Our first the wholesale quarter the motor in in gross million fuel XXXX. $XX.X from XXXX XX% profit $XX.X first of

for from fuel receiving Our XXXX certain XXXX the first terms per the purchase gallon first average than of the per of the fuel us price lower declined quarter in motor the per first in purchased quarter quarter fuel gallons wholesale was by per in motor our quarter. fuel discounts following margin driven primarily during XXXX. was per gallon factors: we XXXX, gallon margin resulting gallon lower of amount X% first, that our the purchase on our dollar $X.XXX decrease a of average for gallon first to The of of in price in quarter $X.XXX

from benefit in costs. variable a of variable trade. We reduction fuel contributing a in our sourcing our gallon the price steady, lower on wholesale throughout increase comparison our margin to experienced to quarter gallon due to our margins leads in wholesale of reduction conversion and to class sites per Also quarter decline this in its prices XXXX. gradual Second, year-over-year period crude contracts. gradual a to margin the our volume such Historically, was oil a due impact during did first a of priced we wholesale certain prices a margin fuel in per fuel fuel increase retail

the cost reductions just the of factors However, preceding offset was these by I more detailed. than that benefit

the XXX.X compared decline XXXX volume XXXX in XXX compared in gallons to quarter the of volume period sites million when first quarter lessee reflecting primarily The was wholesale same the the of for million Our the was due gallons in decline X%. dealer XXXX, to first to a trade certain to These our of segments XX% of our retail conversion retail in are class for gallons segment sites was now gallons approximately same-site quarter, decline reflected from of X of volume retail of and total volume. The lower volume to the shifting million approximately which resulted wholesale conversion for segment. in results. wholesale the of

us, was to slightly loss volume in The volume demand Wholesale volume chose a national dealer not for many first to Based our the soft on same-store of we cases, year-over-year. X% quarter the available to remaining same-store than the the industry. end, decline data wholesale in down the start in was to Overall, performance contracts, same-store for independent been was national year quarter our quarter, less than the around attributable demand down overall renew. volume segment For year-over-year. X% the is since period which, it better demand. In in has volume

wholesale data, are relative while than quarterly basis same-store volume disappointing. national Our results, better a on

wholesale no are at are decrease of rent dollars while and dealer lost our to sites but lessee in segment our in rent, now dollars, margins the base $XX.X rent, our compared of rent to the to form another sites. These to for million, Regarding was commission locations. the are results these retail conversion due prior quarter of company-operated a effectively our not simply year the reported $XX.X now segment business financial longer results. higher certain million of agent the They in through

The for XXXX, compared primarily gross segment driven first same the good environment, our X% the retail by merchandise the $XX.X was considering segment, increase. quarter our retail million growth. the of to performance for in period generated million a industry XXXX, in $XX.X For profit

the XX% was XXXX. same Our to basis merchandise gross compared increased XX in percentage our period when and gross profit approximately margin merchandise profit up points

declined X%. gross motor Our fuel profit

Retail a On to margin cents gallon of the the margin fuel X% year-over-year in fuel retail gallon decreased basis quarter our per first the fuel fuel the by in of fuel adversely rising in margins gallon $X.XXX retail as which $X.XXX per crude volatility. pushed margin higher quarter, per front, was street quarter XXXX. XXXX pressured oil on impacted this price our were and our quarter first generally turn, fuel during steady the pricing of compared costs

our basis, relative volume volume a our a volume the retail demand for outperformed. quarter same-store On same-store For to on declined X% retail basis data, national year-over-year.

a the quarter volume end, overall with continued has year. fuel results. remained the first have margins same-store experienced absolute since reflects an on basis, and to industry the and period line our at it retail down X% the year-over-year, the be start roughly result in However, have disappointing is we quarter demand that approximately and to soft retail In

up sales sales, same-site first a were excluding categories the driven inside and sales cigarettes, on for basis quarter. was inside beverages of X% For The a our sales basis, packaged performance deli. were on year quarter. the same-store for by Inside last year-over-year slightly up to approximately primarily relative the

primarily from and In On from the due of was margins. improvement driven the fourth the quarter, the the merchandise been year, in ongoing end, up merchandise the last our and environment. store site since operating sites gross quarter merchandise margin efforts increased store same-store our from to look segment, XXXX. period store $XX.X to soft driven are quarter relative Applegreen focus the to prior our company store XX demand merchandise retail In our quarter and on by slightly of conversion the have margin higher sites company-operated year you to relative site flat margin to sales at company-operated lease reflecting retail locations front, count, sales XX% fourth The count gross continued was percentage. The down to if in count up company-operated our our increase our retail improvement we million, profit the the sites. XX our by prior increased

converted XXXX. first previously Applegreen. in we the we XXXX also our XX locations that were locations remaining to during the and of announced April company converted As January locations, in to we operate an press leased sites in signed previously XX release, quarter and XX the XX these lease Of agreement terminate and noted

retail that America today, So are of locations company-operated as all across the locations.

all in these CrossAmerica for everyone to to involved hard locations team thank the are successfully the at executing work this welcome team members We transaction. their and pleased

overall We expect segment this transaction and to results. retail be immediately to accretive our

relative agent have and site count fourth quarter. Based quarter first conversions sites increased to retail those fuel during active strategy can overall. the executing the were our quarter we commission by business extremely see our increased on end to count date increase the margins numbers, the relative by Our exposure of site you retail we with site our to in that to the as on total, today's X XXXX. of retail In XX sites overall of

properties. million in have did end, Subsequent $X.X any the to proceeds. divested we quarter, the During not quarter for X divest properties we

of While start as the we closed the the of and and of it is divestitures pace our transactions expect year-to-date, pipeline the number the to to reflect. remainder been a of have materially busy our volume year. Overall, low transactions results for increase was challenging building first year quarter

this weakest The the quarters. the year prior compared quarter is was quarter a typically first of first our to year first and weak quarter of first quarter

a retail the store while an achieve. still national volume volume sales, basis, there expectations. Despite our our data the basis compared soft relative for in our were results to on business. our below was again expect favorably to below While financial compare volume absolute to were on we data, available our developments nationally positive better numbers what In quarter, sites, also

retail as the of able these expense quarter generate were forward. quarter One of with of XX the sites in or that successes profitability going company-operated increased commissioned Applegreen on we at as retail will had to sites either convert was our fuel our should to her better this as on well. We locations touch other during retail trade, locations. These class volume company-operated Maura management most comments conversion sites to conversions the some and significant locations. also

not quarter, So spring will progress into And it financial months evident it during summer, best turn if I to our of review. that, our the year. With results. and thing peak more quarter the detailed the the in about is first that for financial made was a leads even Maura the over

Maura Topper

Charles. you, Thank

loss first XXXX. primarily loss Slide driven reported and please EBITDA. in to the loss like Applegreen to million you net I of net results compared partnership. X, our first was quarter $X of the XXXX a $XX.X for termination for with lease first We the loss adjusted a quarter $XX.X million million review turn on a the would quarter in a year-over-year of of our by If would This decline to

as lease termination $XX.X million decline an EBITDA paid transaction, all of balance for for substantially adjusted lease Regarding record quarter. a of which expense to excluding for statement price us GAAP sheet the drove termination equipment of the the as first income the inventory purchase, the amounts quarter million for from XXXX, EBITDA requires the of $X.X in Applegreen Adjusted million $XX.X charge was the Applegreen expense and the XXXX. for first transaction, to opposed quarter a of to

Our decreases income environment distributable cash of expenses due the and wholesale flow higher a of operating XXXX. The distributable the of compared for for to count. cash quarter adjusted store million margin as quarter driven $XX.X declines during challenging and were retail our both quarter first result by primarily $XX.X operating XXXX incurred the and in was flow primarily in to the company-operated first million fuel EBITDA our additional segments, the

for for coverage quarter compared quarter XXXX. the of Our was distribution first X.XXx current to the X.XXx

for XX XXXX. XX, compared trailing March to months same for was XXXX, XX, ended X.XXx period the ended distribution the Our March coverage X.Xx

X would Xx. historically being our out quarter in quarters with first coverage XX the history like. is quarter current challenging distribution than of lower That of most our said, having first ratio the below a we the is The partnership's for coverage the year

season. coverage trailing historically, well our the ratio Our above as X.XXx. ratio summer in Xx, material And we remains we at driving coverage see improvement into do XX-month move

top our profit quarter distribution of of discussed XXXX, earlier. unit. and During the performance a per the Charles paid primary of drivers the some line $X.XXX quarter of gross the for partnership first

approximately of comments. have expense was locations for in expenses in an to prior segment by a count increase our operations. had in the the the in XX% offset million portion our decrease was in as $X.X that segment primarily XXXX retail the company-operated to segment. This commission in to or site expenses increased his This retail retail X% increase year operating and our the Charles quarter. million compared wholesale first we expenses locations to Turning the quarter in to due converted Operating $X operating the increased conversions first compared We due segment. referenced to site

locations operated quarter, last more highest During year. XX% than expense approximately per retail our class our segment company had site Company-operated we of locations in the are trade.

count the in increase so site of majority And drove expenses. that increase the year-over-year operating

Additionally, newest company-operated costs retail our personnel have overhead ensure our locations. and added segment that we merchandise can effectively we in selectively to operate

Given classes transitions expenses now that past a site same-store of Applegreen in company-operated following the other the April, our for completion to year. On XXX basis, of company-operated have were approximately up the added from the year-over-year. over operating portfolio sites trade locations X% we

performance performance staffed hours on for Our decrease same-store in resulted right drove efficiently focus costs, materially and ensuring were cost team and strong and in operating the store a in X% hour including hours, maintenance, company-operated at labor quarter. This strong which across labor in maintenance. with our locations the repairs approximately year-over-year in allowed controlling us to our environmental organization, the expense improved increases management inventory offset shrink largest our coupled

G&A expenses year-over-year, for increased for and costs due million the transaction. to legal $X.X primarily Our quarter fees incurred the acquisition-related Applegreen higher

$X.X next of to We Moving capital that capital growth-related the total spent quarter, the expenditures. with $X.X million million total expenditures on of a during first being slide.

company-operated incentives included During targeted accompanied in our from certain investments, suppliers. of growth-related with forecourt often fuel converted the backward are as which our and investments capital this as past spending dispenser well newly quarter, locations

million inventory driver million, As our to XX, during million quarter the locations. was most was for balance of $XX payments credit our was the converted of of facility from that approximately year-end Applegreen March at inclusive $XX a paid balance. XXXX, The total increase first $XXX.X significant XXXX increase which

a and first for Additionally, working year. typically the was quarter is quarter the usage capital again partnership so this

a also asset for was it us. later quarter noted, Charles sale As

spending So revolver contributed on for capital results increase balance. to and the our adjusted our the EBITDA quarter also

X.XXx was facility Our March ratio XX, defined leverage of XXXX. credit as

managing to on at move cash ratio on sites, generation at a into approximately Xx basis. flow the will execution our we and continue As summer our we and remain our focus on months focused facility-defined credit leverage

our fourth balance rate expense Our positive entered the quarters was with year into being higher cash we interest credit the from second savings experienced over year. rate of interest the swaps and during relatively flat offset we by facility last

rate interest environment. credit X.X%, the facility the was approximately attractive effective interest rate is Our which today's quarter capital during very first on given

first segments the a that do end credit facility interest current of with balance rate the Although to interest over swapped optimize from their to on team between have first XXXX transitioned early the Charles our moving rate sites valuable series the from as increasing have existing year of rate partnership executing anticipate as our quarter, remainder past savings meaningfully is of swap fixed in We as approximately the forward. a a beneficial enter We we certainty a focused but during did X.X% in roll-off performance providing we given approximately XX% interest of business today's base in rate of us and swaps XXXX, remain environment. In for the expense conclusion, remainder swaps noted, portfolio the at as that the of of blended. our XXXX challenging XXXX. expired had well our quarter of year the the

it We focus continue sheet our unitholders. With on we up with on durable maintaining will driving to open balance questions. and a strong that, consistent a focus cash and for value generating flows for

Operator

Instructions] [Operator

Charles Nifong

Should morning. good that for please you to us reach It have questions day. them. thank and any we'll be have joining doesn't address appear We to Have us, this out later, we a any happy this morning. questions everyone

Operator

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

CrossAmerica Partners (CAPL) 9 May 242024 Q1 Earnings call transcript