CAPL - Earnings call transcript Q2 2024 | CrossAmerica Partners LP

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Operator

Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Friday, August 9, 2024. I would now like to turn the conference over to Maura Topper, Chief Financial Officer. ahead. go Please

Maura Topper

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

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

Before and session, I like may expectations of that operational revenue, everyone question-and-answer statements we forward-looking future begin, expected the regarding organization. to call, remind include future the opportunities would and including plans, today's metrics

be with expectations, from that Exchange not Securities will for projections assurance beliefs could actual or Form important on filings actual can differ Commission, affect a achieved and annual no on management's discussion XX-Q CrossAmerica's results. factors and the that of see that Form be will XX-K reports quarterly results reports including our and expectations. Please There

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

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

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

Charles Nifong

in you this everyone partnership. Maura. and the for for interest Maura your We thank Thank appreciate joining in today and listening you, us I morning.

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

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

First, of last the between larger we operating to see segment result months our wholesale actions wholesale is segment I relative and segments, the the will compare increase XX over our the that exposure income of can as than the you out, now you point size retail to have if segment our retail retail. taken a strategic

case our to going We execute the we on vision forward continue expect strategic this footprint. retail our to to be as increase

industry in we the this X% certain Considering from operating to prior segment, an primarily income our increase Retail driven and in success industry performance backdrop, second retail. that categories. We environment compared the our for segment with quarter wholesale for a fuel by environment realized despite our store demand year-over-year by decreased year, Merchandise demand sites remains the achievement in our converting quarter weak soft the For driven second the was our managed good, to growth.

XXXX, a The profit in increase. same million in XX% $XX the gross segment to Retail for million period $XX.X compared generated

XX% Our our increased the Fuel when in profit profit period Merchandise gross to gross increased same Motor XXXX. XX% and compared

mid-June of crude lower wholesale pushed XXXX declined which of per fuel generally retail of fuel margins. XXXX cents fuel of on front, gallon. second costs, margin up the of as somewhat quarter a increases and to quarter second the $X.XXX in oil gallon second from was fuel fuel XXXX. in year-over-year On quarter on as the for the Retail XX% margin margin the basis in $X.XXX first margins increased from resulted Retail fuel strongest per per gallon were Retail middle in the gallon fuel X% also second over quarter our quarter retail the the price margin fuel up quarter per our considerably compared margin $X.XX for was

our retail gasoline available a demand quarter. approximately X% X% data was same-store down for the national national on volume volume for For quarter declined basis, the on us, year-over-year. to Based demand

though our So would basis, period on what X% same-store the volume retail since quarter a volume relative X% outperformed lower was down it at retail same-store approximately the to even end, In like. remained year-over-year. than we has

second to the our the in better well. Retail be since the down during quarter to period to have but results. end be relative with has margins demand soft roughly year. fuel performance fuel quarter, line prior slightly National than still in quarter again, So as second continued continued

compared on up sales sales, were approximately for our a inside the X% basis for year sales same-store same-site to inside second basis, a quarter. on excluding year-over-year cigarettes, flat For last Inside were relatively the quarter.

As quarter and second data with for unit this so to numbers weak the far demand, sales count sales both on prior fuel national for to inside the available demand second down the for year. based with quarter, demand been has overall us, store compared and year

So a our for relative segment quarter. the outperformed the sales industry retail again, on basis, inside

store driven our packaged and other by categories For the sales cigarettes of was beverages. primarily than CrossAmerica, tobacco performance salty snacks,

merchandise higher million, On the to merchandise XX% front, margin count. gross from store $XX.X driven store by increased increased the our our sales profit

company-operated you our Applegreen quarter. XX site site quarter locations completion increase company-operated up to to primarily relative look of the company-operated XXXX. we from The sites in our to consumer to April if and down relative driven categories was reflecting as certain first year, been product In our Retail segment, as conversion higher quarter more in sites The year during sales stores, the end, X% soft In retail the sites passed our to store prior the of our due by count, from company-operated the lease value prior merchandise costs margin first XX demand us of count period retail quarter in pricing approximately up we the that are ongoing customers. haven't the the at of same-store since the the on have declined implementing slightly in environment. well

also increase exposure. to We our broader as retail of sites locations operating well as part quarter the certain overall during retail converted strategy other company-operated our the

Our commission relative the XXXX the many existing to sites agent quarter and an to dealer quarter the commission relative and class existing to site cases, increased increased converting of the of second trade in at retaining site by first XX XXXX, location. XX the sites involves of count

fuel changing the the the are own with that simply at the so location. pricing we now We economic and the dealers relationship fuel retail control CrossAmerica,

conversions is be have better mutually a that on productive situation forward. and creating successful us that been have at us a the all commission of with doing off relationship dealer, to now and win-win a We dealer, in these both economically for the manner beneficial agent enables

extremely quarter second to we count our end on overall total, increased site can margins quarter site of the you numbers, XX year. first on quarter the were with retail that and business our conversions retail our executing overall. the active In at increase site sites see our during during count those the by strategy to Based retail fuel of to retail we compared the and this exposure

the Wholesale segment. on Moving to

partially driven declined Wholesale by $XX.X quarter For million XXXX. the decrease second volume, by segment XXXX, was factor per decline accounted agent a in compared company-operated dealer million fuel XX% gross sites, margin $XX.X the certain to lessee offset of volume fuel in quarter the second and to are The sites, now in for profit of overall the commission primary the retail of gallon. The which decline increase segment. the an in our in conversion was

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

receive $X.XXX Our the the primarily fuel from per relative X% the second terms level by crude gallon The XXXX prices on of fuel discounts periods the increase gallon was margin per of to in margin oil in gallon quarter increased quarter gallons. per the certain on of corresponding $X.XXX and our impact XXXX. its driven X within wholesale in second we

from quarter in conditions our fuel reduction gallons. better purchase this benefited sourcing also based on favorable market terms costs certain other We and for a

XXX.X a wholesale XX%. of decline compared the gallons million for in of XXX.X of the second gallons volume XXXX quarter quarter was reflecting XXXX, Our second to million

in retail and lower to of period due XXXX The conversion primarily lessee of the certain in volume when class to the same-site volume. dealer trade our to decline compared same was sites

same-store in year-over-year. the Wholesale segment was quarter, approximately X% down volume our the For

additional X% are The results. was of the volume between the overall of in the retail largely volume, in decline Retail gallons difference the sites segment drop of our segment. sites volume So due conversion these the X% decline converted reflected now our to same-store and XX% to from

national mentioned for X% around quarter. fuel in comments, to demand was my indicated us Retail demand data segment As down the available

than our was wholesale overall the performance for So volume national quarter second better demand. same-store

around end, In same-store the period X% year-over-year. volume down since quarter been the has

results. segment year-over-year, but improving an still to negative similar trend retail our So

to in operating locations, base million $XX.X wholesale quarter. dealer these to due segment in to These which and increase, rent due prior of while the company-operated are at increase retail of results our our no a sites million, quarter rent store through lessee compared retail sites. Regarding margin the certain our was the the inside rent, our for the dollars to our $XX.X to in drive sales decrease year form longer conversion of fuel rent their income now helped for

segment. result, economics our that As are now the reflects lost but represent decline [Indiscernible] economics these a Retail does the business, simply not to in

$X.X million. proceeds, for quarter, the a properties $XX.X During in resulting we divested in of million gain net XX

stated work an this we up provide area. we done a and calls, of quarter pipeline indication results on building of have we initial have prior properties busy As this in been the divestiture the

the a realized of in Overall, active very it on quarter year. pipeline quarter us. have for solid second We opportunities a volume the and to was the divestiture the expect build second of half and

were operating during from current is and expect our to sites sites benefit was retail strategy execution this time we the at to ongoing apparent quarter. converting in over as quarter. we the adding the the get to sites the this level XX we The of expect active first of material grow results, converted second a segment them. the financial We quarter in to The retail, improvement benefit

and a While and indicates the review. With Maura I we remain consumers detailed our that, a more our turn demand for it in offering, financial finding relative environment for are constrained, continues them. to volume preferred performance be value over destination sales to will

Maura Topper

Charles. Thank you,

reported million was the as of composition a $XX.X changes second million of result has Charles $XX.X for from X% with a in quarter for reviewed as second of XXXX, the compared second XXXX If the to net We you I would income in would results like second second quarter income EBITDA our $XX.X $XX.X to quarter for partnership. of of the EBITDA of quarter the of of EBITDA though turn XXXX. initiatives. for our to of adjusted Adjusted of net XXXX, adjusted the quarter million million that please X, review slight Slide increase strategic

second to Our distributable the $XX.X $XX.X for was the million second cash flow million for XXXX. compared of quarter of XXXX quarter

due slightly net declines on expense cash interest in increase trade income well our and capital have sustaining The in higher spending were distributable as to worked changes. of year-over-year primarily we class as an as flow

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

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

XXXX, partnership of of quarter $X.XXX a second the the per unit. distribution paid During

some the for and his primary performance in top the gross drivers of discussed Charles line comments. of profit our quarter

by offset segment. operating by million in retail segment. operating an of increased was our compared in driven sites our XXXX second Turning Both the to quarter comprised the operations. our for our of to our wholesale segment, expense increase conversion from wholesale This were retail million of primarily expenses to portion our changes expenses segment the a quarter. million $X.X decrease $X.X second expenses in $X Operating in

that highest in increase segment to year-over-year up segment operating our in compared year. our per retail total site of site XX% Within average the quarter. site our prior XX% increase cost overall the increase trade. was in the quarter count, average The are site expenses count for company-operated to average during expense locations in was XX% the count compared XX% Company-operated

segment expenses in And the site so operating the majority Retail increase drove and increase both count overall. year-over-year of the that in

realm. we to able date been We the pleased we have are operating to locations company-operated leverage with this as room added further have in for generally with achieve results

same-store a expenses operating were approximately our flat for On locations company-operated basis, year-over-year.

inventory with costs increases store Our X% with investments. This continued X including controlling wage staffing store offset with as management to year-over-year strong across has our and and focus to managing more shrink than allowed employment locations cost environmental our performance over store strong X organization, certain on efficient a years. total of in improvement our coupled maintenance a in strong level largest focus us the down result IT experienced costs a increases and and performance expense labor continued team approximately hours costs, store on in our prior maintenance, the repairs employment drive moderated to

team is to our to and with processes more providing accomplish service focused store activities in effectively Our the operations their employees right time customers. providing and on days their efficiently and technology

Our we the support increased the have due count million year-over-year, the as to organization's segment. retail expenses fees $X.X growth head quarter higher to management G&A for in selectively added primarily

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

are targeted our our which image the accompanied and past from investments additional product suppliers. included this quarter, often company-operated as at as site portfolio sites certain During food [Indiscernible] options fuel in dispenser selected incentives of and site add growth-related investments, to capital with spending well

our million, March which was a million facility As our June XX, XX, of $X $XXX.X XXXX, from XXXX, balance balance. total was decrease credit

strong in in divesting Our during of complete quarterly success the our quarter. coupled noncore business, quarter, performance our with second operational our that the course and to us deleverage reinvest reviewed in allowed distribution the Charles assets

of June leverage facility ratio from decrease was was as which X.XXx XX, credit as a XXXX, XX, of XXXX. Our X.XXx defined March

continue We ratio assets of to divestiture facility-defined focused a flow our generation the from on leverage basis. operations remain our noncore at manage on cash Xx approximately credit and to

in to cash second XXXX. the from of in expense $XX.X $XX.X increased million Our million quarter second of quarter interest XXXX the

swapped the the we the valuable rate entered quarter increased quarters the quarter is of advantaged swaps and our first interest of fourth which of our last current environment. is costs. fixed interest have rate during did which approximately from We to the we blended, end facility XXXX, rate overall from a balance at into year, credit a rate second savings approximately At interest rate time, rate XX% positive the X had of of in X.X% highly of current XXXX very first expire this swaps

quarter XXXX reviewed transaction Our to during which of second year, we Applegreen higher due was primarily that quarter. the credit facility balance also Charles the during second earlier completed prior the and than the

increase Our in credit expense elevated balance also facility the interest contributed our to year-over-year.

as between the In performed fuel Our store as We quarter in have focused the on end total the sales. interest our and of of was CAPL credit over softer year sites Charles base as effective a the transitioned facility optimize team performance spite during in experienced forward. on in environment the well quarter remain conclusion, the executing business for rate segments at X.X%. moving to second of past noted, demand as the second that partnership well the XXXX their

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

Operator

[Operator Instructions] question-and-answer will Ladies session. we the now you. and begin Thank gentlemen,

Charles Nifong

look Thank We for logged is of a for failure yesterday. to were It us apologize was and today. joining also that X like which technical call unable call you systems our have doesn't questions conference provider, our call. when communicate the There we you you why difficulties to we yesterday. on on round the on have were complete any

Have for again today. and a you joining have great thank weekend. So a great us day,

Operator

your ask thank today. concludes lovely this lines. you Ladies sir. We gentlemen, conference a you, your for day. you Have participating and and Thank call disconnect for please

CrossAmerica Partners (CAPL) 9 Aug 242024 Q2 Earnings call transcript