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CrossAmerica Partners LP Reports Second Quarter 2022 Results

·23 min read
CrossAmerica Partners
CrossAmerica Partners

Allentown, PA, Aug. 08, 2022 (GLOBE NEWSWIRE) --

CrossAmerica Partners LP Reports Second Quarter 2022 Results

  • Reported Second Quarter 2022 Operating Income of $21.1 million and Net Income of $14.0 million compared to Operating Income of $8.2 million and Net Income of $4.8 million for the Second Quarter 2021

  • Generated Second Quarter 2022 Adjusted EBITDA of $41.4 million and Distributable Cash Flow of $32.4 million compared to Second Quarter 2021 Adjusted EBITDA of $29.7 million and Distributable Cash Flow of $25.0 million

  • Reported Second Quarter 2022 Gross Profit for the Wholesale Segment of $55.0 million compared to $44.2 million of Gross Profit for the Second Quarter 2021

  • Distributed 342.8 million wholesale fuel gallons during the Second Quarter 2022 at an average wholesale fuel margin per gallon of 11.8 cents compared to 331.6 million wholesale fuel gallons at an average wholesale fuel margin per gallon of 9.2 cents during the Second Quarter 2021, an increase of 3% in gallons distributed and an increase of 28% in margin per gallon

  • Reported Second Quarter 2022 Gross Profit for the Retail Segment of $34.9 million compared to $21.1 million of Gross Profit for the Second Quarter 2021

  • Retail Segment sold 128.8 million retail fuel gallons during the Second Quarter 2022, including 45.1 million same store retail fuel gallons, a 2% increase compared to 44.3 million same store retail fuel gallons sold during the Second Quarter 2021

  • The Distribution Coverage Ratio was 1.63 times for the three months ended June 30, 2022 and 1.48 times for the trailing twelve months ended June 30, 2022

  • The Board of Directors of CrossAmerica’s General Partner declared a quarterly distribution of $0.5250 per limited partner unit attributable to the Second Quarter 2022

Allentown, PA August 8, 2022 – CrossAmerica Partners LP (NYSE: CAPL) (“CrossAmerica” or the “Partnership”), a leading wholesale fuels distributor, convenience store operator, and owner and lessor of real estate used in the retail distribution of motor fuels, today reported financial results for the second quarter ended June 30, 2022.

 

"CrossAmerica had another strong quarter despite a challenging fuel price environment and overall economic conditions,” said Charles Nifong, President and CEO of CrossAmerica. “Our results reflect the robustness of our operations and demonstrate the continued successful execution of our strategic plan as evident in the sustained growth and strength in our operational and financial metrics compared to prior quarters.”

 

Second Quarter Results

 

Consolidated Results

 

Key Operating Metrics

Q2 2022

Q2 2021

Operating Income

$21.1M

$8.2M

Adjusted EBITDA

$41.4M

$29.7M

Distributable Cash Flow

$32.4M

$25.0M

Distribution Coverage Ratio – Current Quarter

1.63x

1.26x

Distribution Coverage Ratio - TTM ended 6/30/22

1.48x

1.22x

CrossAmerica reported Operating Income of $21.1 million and Net Income of $14.0 million or earnings of $0.35 per diluted common unit for the second quarter 2022 compared to Operating Income of $8.2 million and Net Income of $4.8 million or earnings of $0.13 per diluted common unit during the same period of 2021. During the second quarter 2022, Adjusted EBITDA and Distributable Cash Flow increased by 39% and 30%, respectively, as compared to the second quarter 2021. Each metric, as well as the Distribution Coverage Ratio, benefited from the overall performance in both the wholesale and retail segments, as well as the growth of the organization as a result of the acquisition of assets from 7-Eleven during the second half of 2021.

Non-GAAP measures used in this release include EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. These Non-GAAP measures are further described and reconciled to their most directly comparable GAAP measures in the Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release.

Wholesale Segment

 

Key Operating Metrics

Q2 2022

Q2 2021

Wholesale segment gross profit

$55.0M

$44.2M

Wholesale motor fuel gallons distributed

342.8M

331.6M

Average wholesale gross profit per gallon

$

0.118

$

0.092

 

During the second quarter 2022, CrossAmerica’s wholesale segment gross profit increased 24% compared to the second quarter 2021. This was driven by an increase in motor fuel gross profit resulting from a 3% increase in fuel volume distributed and a 28% increase in fuel margin per gallon. The main driver of the volume increase was the acquisition of assets from 7-Eleven. The Partnership’s wholesale fuel margin benefited from its ongoing strategic initiatives, increased volume to CrossAmerica’s company operated retail sites, higher dealer tank wagon (DTW) margins due to greater volatility in the price of crude oil and subsequent increase in fuel price volatility in the second quarter 2022 as compared to the second quarter 2021 and higher terms discounts as a result of higher fuel prices during the quarter as compared to the same period in 2021.

Retail Segment

Key Operating Metrics

Q2 2022

Q2 2021

Retail segment gross profit

$34.9M

$21.1M

Retail motor fuel gallons distributed

128.8M

89.8M

Same store retail motor fuel gallons distributed

45.1M

44.3M

Motor fuel gross profit

$9.3M

$4.9M

Same store merchandise sales excluding cigs.

$28.2M

$28.0M

Merchandise gross profit

$20.2M

$12.0M

Merchandise gross profit percentage

27.3

%

26.5

%

 

For the second quarter 2022, the retail segment generated a 66% increase in gross profit compared to the second quarter 2021 due to increased retail fuel gallons sold, higher fuel margins and higher merchandise gross profit.

 

The retail segment sold 128.8 million of retail fuel gallons during the second quarter 2022, a 43% increase over second quarter 2021. This increased volume resulted from the increase in company operated sites as a result of the acquisition of assets from 7-Eleven, which occurred primarily during the third quarter 2021. Same store fuel volume for the second quarter 2022 increased to 45.1 million gallons from 44.3 million gallons during the second quarter 2021, an increase of 2%. Additionally, the retail segment generated higher fuel margins for the three months ended June 30, 2022, as compared to the same period in 2021 due to the segment having a higher proportion of company operated retail locations as compared to commission agent locations than during the second quarter 2021.

 

CrossAmerica’s merchandise gross profit and other revenue increased due to the increase in company operated sites driven by the acquisition of assets from 7-Eleven, which occurred primarily during the third quarter 2021. Merchandise gross profit percentage increased from 26.5% to 27.3% with same store merchandise sales excluding cigarettes increasing approximately1% for the second quarter 2022 when compared to the second quarter 2021.

Divestment Activity

 

During the three and six months ended June 30, 2022, CrossAmerica sold five and nine properties for $2.3 million and $3.8 million in proceeds, resulting in a net gain of $0.5 million and $0.9 million, respectively.

 

Liquidity and Capital Resources

 

As of June 30, 2022, CrossAmerica had $626.6 million outstanding under its CAPL Credit Facility and $159.0 million outstanding under its JKM Credit Facility. As of August 4, 2022, after taking into consideration debt covenant restrictions, approximately $135.5 million was available for future borrowings under the CAPL Credit Facility. Leverage, as defined in the CAPL Credit Facility, which excludes any pro forma EBITDA from CrossAmerica’s recent acquisition, was 4.5 times as of June 30, 2022, compared to 5.1 times as of December 31, 2021. As of June 30, 2022, CrossAmerica was in compliance with its financial covenants under the credit facilities.

 

Distributions

 

On July 21, 2022, the Board of the Directors of CrossAmerica’s General Partner (“Board”) declared a quarterly distribution of $0.5250 per limited partner unit attributable to the second quarter 2022. As previously announced, the distribution will be paid on August 10, 2022 to all unitholders of record as of August 3, 2022. The amount and timing of any future distributions is subject to the discretion of the Board as provided in CrossAmerica’s Partnership Agreement.

 

 

 

Conference Call

 

The Partnership will host a conference call on August 9, 2022 at 9:00 a.m. Eastern Time to discuss second quarter 2022 earnings results. The conference call numbers are 866-374-5140 or 404-400-0571 and the passcode for both is 77652712#. A live audio webcast of the conference call and the related earnings materials, including reconciliations of non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the CrossAmerica website (www.crossamericapartners.com). A slide presentation for the conference call will also be available on the investor section of the Partnership’s website. To listen to the audio webcast, go to https://caplp.gcs-web.com/webcasts-presentations. After the live conference call, an archive of the webcast will be available on the investor section of the CrossAmerica website at https://caplp.gcs-web.com/webcasts-presentations within 24 hours after the call for a period of sixty days.

 

 

CROSSAMERICA PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars, except unit data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,572

 

 

$

7,648

 

Accounts receivable, net of allowances of $542 and $458, respectively

 

 

48,456

 

 

 

33,331

 

Accounts receivable from related parties

 

 

1,194

 

 

 

1,149

 

Inventory

 

 

56,770

 

 

 

46,100

 

Assets held for sale

 

 

4,649

 

 

 

4,907

 

Other current assets

 

 

20,804

 

 

 

13,180

 

Total current assets

 

 

135,445

 

 

 

106,315

 

Property and equipment, net

 

 

745,594

 

 

 

755,454

 

Right-of-use assets, net

 

 

164,934

 

 

 

169,333

 

Intangible assets, net

 

 

100,232

 

 

 

114,187

 

Goodwill

 

 

99,409

 

 

 

100,464

 

Other assets

 

 

29,794

 

 

 

24,389

 

Total assets

 

$

1,275,408

 

 

$

1,270,142

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of debt and finance lease obligations

 

$

5,575

 

 

$

10,939

 

Current portion of operating lease obligations

 

 

35,212

 

 

 

34,832

 

Accounts payable

 

 

87,730

 

 

 

67,173

 

Accounts payable to related parties

 

 

7,581

 

 

 

7,679

 

Accrued expenses and other current liabilities

 

 

21,121

 

 

 

20,682

 

Motor fuel and sales taxes payable

 

 

21,325

 

 

 

22,585

 

Total current liabilities

 

 

178,544

 

 

 

163,890

 

Debt and finance lease obligations, less current portion

 

 

788,199

 

 

 

810,635

 

Operating lease obligations, less current portion

 

 

135,328

 

 

 

140,149

 

Deferred tax liabilities, net

 

 

9,505

 

 

 

12,341

 

Asset retirement obligations

 

 

46,212

 

 

 

45,366

 

Other long-term liabilities

 

 

46,533

 

 

 

41,203

 

Total liabilities

 

 

1,204,321

 

 

 

1,213,584

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred membership interests

 

 

24,993

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common units—37,912,710 and 37,896,556 units issued and
outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

32,412

 

 

 

53,528

 

Accumulated other comprehensive income

 

 

13,682

 

 

 

3,030

 

Total equity

 

 

46,094

 

 

 

56,558

 

Total liabilities and equity

 

$

1,275,408

 

 

$

1,270,142

 

 

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of Dollars, Except Unit and Per Unit Amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating revenues (a)

 

$

1,475,033

 

 

$

859,334

 

 

$

2,568,244

 

 

$

1,516,618

 

Cost of sales (b)

 

 

1,386,088

 

 

 

794,240

 

 

 

2,400,469

 

 

 

1,396,656

 

Gross profit

 

 

88,945

 

 

 

65,094

 

 

 

167,775

 

 

 

119,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (c)

 

 

42,216

 

 

 

31,070

 

 

 

84,325

 

 

 

60,473

 

General and administrative expenses

 

 

5,680

 

 

 

6,876

 

 

 

12,163

 

 

 

14,526

 

Depreciation, amortization and accretion expense

 

 

19,919

 

 

 

19,583

 

 

 

40,194

 

 

 

37,614

 

Total operating expenses

 

 

67,815

 

 

 

57,529

 

 

 

136,682

 

 

 

112,613

 

(Loss) gain on dispositions and lease terminations, net

 

 

(58

)

 

 

597

 

 

 

(302

)

 

 

(51

)

Operating income

 

 

21,072

 

 

 

8,162

 

 

 

30,791

 

 

 

7,298

 

Other income, net

 

 

102

 

 

 

204

 

 

 

232

 

 

 

292

 

Interest expense

 

 

(7,321

)

 

 

(3,870

)

 

 

(13,982

)

 

 

(7,367

)

Income before income taxes

 

 

13,853

 

 

 

4,496

 

 

 

17,041

 

 

 

223

 

Income tax benefit

 

 

(113

)

 

 

(293

)

 

 

(1,972

)

 

 

(599

)

Net income

 

 

13,966

 

 

 

4,789

 

 

 

19,013

 

 

 

822

 

Accretion of preferred membership interests

 

 

563

 

 

 

 

 

 

563

 

 

 

 

Net income available to limited partners

 

$

13,403

 

 

$

4,789

 

 

$

18,450

 

 

$

822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common unit

 

$

0.35

 

 

$

0.13

 

 

$

0.49

 

 

$

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average limited partner units:

 

 

 

 

 

 

 

 

 

 

 

 

Basic common units

 

 

37,912,710

 

 

 

37,874,868

 

 

 

37,906,463

 

 

 

37,872,079

 

Diluted common units

 

 

37,957,434

 

 

 

37,905,010

 

 

 

37,951,466

 

 

 

37,902,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

(a) includes excise taxes of:

 

$

71,601

 

 

$

50,047

 

 

$

138,460

 

 

$

93,753

 

(a) includes rent income of:

 

 

20,849

 

 

 

20,862

 

 

 

41,476

 

 

 

41,334

 

(b) excludes depreciation, amortization and accretion

 

 

 

 

 

 

 

 

 

 

 

 

(b) includes rent expense of:

 

 

5,945

 

 

 

6,031

 

 

 

11,786

 

 

 

11,944

 

(c) includes rent expense of:

 

 

3,801

 

 

 

3,265

 

 

 

7,509

 

 

 

6,461

 

 

 

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

19,013

 

 

$

822

 

Adjustments to reconcile net income to net cash provided by
operating activities:

 

 

 

 

 

 

Depreciation, amortization and accretion expense

 

 

40,194

 

 

 

37,614

 

Amortization of deferred financing costs

 

 

1,370

 

 

 

521

 

Credit loss expense

 

 

88

 

 

 

32

 

Deferred income tax benefit

 

 

(2,836

)

 

 

(921

)

Equity-based employee and director compensation expense

 

 

954

 

 

 

754

 

Loss on dispositions and lease terminations, net

 

 

302

 

 

 

51

 

Changes in operating assets and liabilities, net of acquisitions

 

 

(4,426

)

 

 

2,141

 

Net cash provided by operating activities

 

 

54,659

 

 

 

41,014

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Principal payments received on notes receivable

 

 

66

 

 

 

85

 

Proceeds from sale of assets

 

 

3,793

 

 

 

5,600

 

Capital expenditures

 

 

(16,403

)

 

 

(21,911

)

Cash paid in connection with acquisitions, net of cash acquired

 

 

(1,885

)

 

 

(4,166

)

Net cash used in investing activities

 

 

(14,429

)

 

 

(20,392

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

57,600

 

 

 

57,000

 

Repayments on revolving credit facilities

 

 

(61,620

)

 

 

(36,399

)

Borrowings under the Term Loan Facility

 

 

1,120

 

 

 

 

Repayments on the Term Loan Facility

 

 

(24,600

)

 

 

 

Net proceeds from issuance of preferred membership interests

 

 

24,430

 

 

 

 

Payments of finance lease obligations

 

 

(1,337

)

 

 

(1,287

)

Payments of deferred financing costs

 

 

(6

)

 

 

 

Distributions paid on distribution equivalent rights

 

 

(93

)

 

 

(63

)

Distributions paid on common units

 

 

(39,800

)

 

 

(39,765

)

Net cash used in financing activities

 

 

(44,306

)

 

 

(20,514

)

Net increase in cash and cash equivalents

 

 

(4,076

)

 

 

108

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

7,648

 

 

 

513

 

Cash and cash equivalents at end of period

 

$

3,572

 

 

$

621

 

 

Segment Results

Wholesale

The following table highlights the results of operations and certain operating metrics of the Wholesale segment (thousands of dollars, except for the number of distribution sites and per gallon amounts):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Motor fuel–third party

 

$

19,034

 

 

$

18,529

 

 

$

35,219

 

 

$

34,052

 

Motor fuel–intersegment and related party

 

 

21,467

 

 

 

11,961

 

 

 

38,086

 

 

 

17,690

 

Motor fuel gross profit

 

 

40,501

 

 

 

30,490

 

 

 

73,305

 

 

 

51,742

 

Rent gross profit

 

 

12,646

 

 

 

12,973

 

 

 

24,985

 

 

 

25,466

 

Other revenues

 

 

1,807

 

 

 

729

 

 

 

3,593

 

 

 

1,863

 

Total gross profit

 

 

54,954

 

 

 

44,192

 

 

 

101,883

 

 

 

79,071

 

Operating expenses

 

 

(10,690

)

 

 

(10,948

)

 

 

(20,762

)

 

 

(20,922

)

Operating income

 

$

44,264

 

 

$

33,244

 

 

$

81,121

 

 

$

58,149

 

Motor fuel distribution sites (end of period): (a)

 

 

 

 

 

 

 

 

 

 

 

 

Motor fuel–third party

 

 

 

 

 

 

 

 

 

 

 

 

Independent dealers (b)

 

 

637

 

 

 

675

 

 

 

637

 

 

 

675

 

Lessee dealers (c)

 

 

645

 

 

 

651

 

 

 

645

 

 

 

651

 

Total motor fuel distribution–third party sites

 

 

1,282

 

 

 

1,326

 

 

 

1,282

 

 

 

1,326

 

Motor fuel–intersegment and related party

 

 

 

 

 

 

 

 

 

 

 

 

Commission agents (Retail segment) (c)

 

 

199

 

 

 

202

 

 

 

199

 

 

 

202

 

Company operated retail sites (Retail segment) (d)

 

 

253

 

 

 

152

 

 

 

253

 

 

 

152

 

Total motor fuel distribution–intersegment and
related party sites

 

 

452

 

 

 

354

 

 

 

452

 

 

 

354

 

Motor fuel distribution sites (average during the period):

 

 

 

 

 

 

 

 

 

 

 

 

Motor fuel-third party distribution

 

 

1,289

 

 

 

1,328

 

 

 

1,295

 

 

 

1,333

 

Motor fuel-intersegment and related party distribution

 

 

454

 

 

 

353

 

 

 

454

 

 

 

355

 

Total motor fuel distribution sites

 

 

1,743

 

 

 

1,681

 

 

 

1,749

 

 

 

1,688

 

Volume of gallons distributed (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Third party

 

 

214,413

 

 

 

242,392

 

 

 

418,328

 

 

 

456,100

 

Intersegment and related party

 

 

128,425

 

 

 

89,233

 

 

 

244,754

 

 

 

167,305

 

Total volume of gallons distributed

 

 

342,838

 

 

 

331,625

 

 

 

663,082

 

 

 

623,405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale margin per gallon

 

$

0.118

 

 

$

0.092

 

 

$

0.111

 

 

$

0.083

 

(a) In addition, as of June 30, 2022 and 2021, respectively, CrossAmerica distributed motor fuel to 15 and 14 sub-wholesalers who distributed to additional sites.

(b) The decrease in the independent dealer site count was primarily attributable to loss of contracts, most of which were lower margin, partially offset by the increase in independent dealer sites as a result of the real estate rationalization effort and the resulting reclassification of the sites from a lessee dealer or commission site to an independent dealer site when CrossAmerica continues to supply the sites after divestiture.

(c) The decreases in the lessee dealer and commission agent site counts were primarily attributable to the real estate rationalization effort.

(d) The increase in the company operated site count was primarily attributable to the 106 company operated sites from the acquisition of assets from 7-Eleven, which occurred primarily during the third quarter 2021.

Retail

The following table highlights the results of operations and certain operating metrics of the Retail segment (in thousands, except for the number of retail sites):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Motor fuel

 

$

9,329

 

 

$

4,937

 

 

$

19,825

 

 

$

10,370

 

Merchandise

 

 

20,165

 

 

 

11,969

 

 

 

36,847

 

 

 

22,333

 

Rent

 

 

2,258

 

 

 

1,858

 

 

 

4,705

 

 

 

3,924

 

Other revenue

 

 

3,194

 

 

 

2,311

 

 

 

6,282

 

 

 

4,170

 

Total gross profit

 

 

34,946

 

 

 

21,075

 

 

 

67,659

 

 

 

40,797

 

Operating expenses

 

 

(31,526

)

 

 

(20,122

)

 

 

(63,563

)

 

 

(39,551

)

Operating income

 

$

3,420

 

 

$

953

 

 

$

4,096

 

 

$

1,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail sites (end of period):

 

 

 

 

 

 

 

 

 

 

 

 

Commission agents (a)

 

 

199

 

 

 

202

 

 

 

199

 

 

 

202

 

Company operated retail sites(b)

 

 

253

 

 

 

152

 

 

 

253

 

 

 

152

 

Total system sites at the end of the period

 

 

452

 

 

 

354

 

 

 

452

 

 

 

354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total system operating statistics:

 

 

 

 

 

 

 

 

 

 

 

 

Average retail fuel sites during the period

 

 

454

 

 

 

353

 

 

 

454

 

 

 

355

 

Volume of gallons sold

 

 

128,815

 

 

 

89,806

 

 

 

244,855

 

 

 

168,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commission agents statistics:

 

 

 

 

 

 

 

 

 

 

 

 

Average retail fuel sites during the period

 

 

200

 

 

 

203

 

 

 

200

 

 

 

204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company operated retail site statistics:

 

 

 

 

 

 

 

 

 

 

 

 

Average retail fuel sites during the period

 

 

254

 

 

 

150

 

 

 

254

 

 

 

151

 

Same store fuel volume (c)

 

 

45,078

 

 

 

44,340

 

 

 

83,721

 

 

 

80,578

 

Same store merchandise sales (c)

 

$

40,744

 

 

$

42,017

 

 

$

74,571

 

 

$

76,877

 

Same store merchandise sales excluding cigarettes (c)

 

$

28,187

 

 

$

27,952

 

 

$

50,622

 

 

$

50,295

 

Merchandise gross profit percentage

 

 

27.3

%

 

 

26.5

%

 

 

27.0

%

 

 

26.9

%

(a) The decrease in the commission site count was primarily attributable to the real estate rationalization effort.

(b) The increase in the company operated site count was primarily attributable to the 106 company operated sites from the acquisition of assets from 7-Eleven.

(c) Same store fuel volume and same store merchandise sales include aggregated individual store results for all stores that had fuel volume or merchandise sales in all months for both periods. Same store merchandise sales includes store and cigarette sales and excludes branded food sales and other revenues such as lottery commissions and car wash sales.

 

Supplemental Disclosure Regarding Non-GAAP Financial Measures

 

CrossAmerica uses the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income before deducting interest expense, income taxes and depreciation, amortization and accretion (which includes certain impairment charges). Adjusted EBITDA represents EBITDA as further adjusted to exclude equity-based compensation expense, gains or losses on dispositions and lease terminations, net and certain discrete acquisition related costs, such as legal and other professional fees, separation benefit costs and certain other discrete non-cash items arising from purchase accounting. Distributable Cash Flow represents Adjusted EBITDA less cash interest expense, sustaining capital expenditures and current income tax expense. The Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by distributions paid.

 

EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are used as supplemental financial measures by management and by external users of our financial statements, such as investors and lenders. EBITDA and Adjusted EBITDA are used to assess CrossAmerica’s financial performance without regard to financing methods, capital structure or income taxes and the ability to incur and service debt and to fund capital expenditures. In addition, Adjusted EBITDA is used to assess the operating performance of the Partnership’s business on a consistent basis by excluding the impact of items which do not result directly from the wholesale distribution of motor fuel, the leasing of real property, or the day to day operations of CrossAmerica’s retail site activities. EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are also used to assess the ability to generate cash sufficient to make distributions to CrossAmerica’s unitholders.

 

CrossAmerica believes the presentation of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio provides useful information to investors in assessing the financial condition and results of operations. EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio should not be considered alternatives to net income or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio have important limitations as analytical tools because they exclude some but not all items that affect net income. Additionally, because EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio may be defined differently by other companies in the industry, CrossAmerica’s definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

 

The following table presents reconciliations of EBITDA, Adjusted EBITDA, and Distributable Cash Flow to net income, the most directly comparable U.S. GAAP financial measure, for each of the periods indicated (in thousands, except for per unit amounts):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (a)

 

$

13,966

 

 

$

4,789

 

 

$

19,013

 

 

$

822

 

Interest expense

 

 

7,321

 

 

 

3,870

 

 

 

13,982

 

 

 

7,367

 

Income tax benefit

 

 

(113

)

 

 

(293

)

 

 

(1,972

)

 

 

(599

)

Depreciation, amortization and accretion expense

 

 

19,919

 

 

 

19,583

 

 

 

40,194

 

 

 

37,614

 

EBITDA

 

 

41,093

 

 

 

27,949

 

 

 

71,217

 

 

 

45,204

 

Equity-based employee and director compensation expense

 

 

222

 

 

 

386

 

 

 

954

 

 

 

754

 

(Gain) loss on dispositions and lease terminations, net

 

 

58

 

 

 

(597

)

 

 

302

 

 

 

51

 

Acquisition-related costs (b)

 

 

10

 

 

 

1,967

 

 

 

878

 

 

 

4,361

 

Adjusted EBITDA

 

 

41,383

 

 

 

29,705

 

 

 

73,351

 

 

 

50,370

 

Cash interest expense

 

 

(6,631

)

 

 

(3,610

)

 

 

(12,612

)

 

 

(6,846

)

Sustaining capital expenditures (c)

 

 

(1,663

)

 

 

(1,040

)

 

 

(3,217

)

 

 

(2,432

)

Current income tax expense

 

 

(678

)

 

 

(50

)

 

 

(863

)

 

 

(334

)

Distributable Cash Flow

 

$

32,411

 

 

$

25,005

 

 

$

56,659

 

 

$

40,758

 

Distributions paid

 

 

19,904

 

 

 

19,884

 

 

 

39,800

 

 

 

39,765

 

Distribution Coverage Ratio (d)

 

1.63x

 

 

1.26x

 

 

1.42x

 

 

1.02x

 

 

(a) Beginning in the second quarter of 2022, CrossAmerica reconciled Adjusted EBITDA to Net Income rather than to Net income available to limited partners. The difference between Net income and Net income available to limited partners is that, beginning in the second quarter of 2022, the accretion of preferred membership interests issued in late March 2022 is a deduction from Net income in computing Net income available to limited partners. Because Adjusted EBITDA is used to assess our financial performance, without regard to capital structure, CrossAmerica believes Adjusted EBITDA should be reconciled with Net Income, so that the calculation isn’t impacted by the accretion of preferred membership interests. This approach is comparable to the reconciliation of Adjusted EBIDTA to Net income available to limited partners in past periods, as the Partnership has not recorded accretion of preferred membership interests in past periods.

(b) Relates to certain discrete acquisition related costs, such as legal and other professional fees, separation benefit costs and certain purchase accounting adjustments associated with recently acquired businesses.

(c) Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain CrossAmerica’s long-term operating income or operating capacity. Examples of sustaining capital expenditures are those made to maintain existing contract volumes, including payments to renew existing distribution contracts, or to maintain the sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.

(d) In 2022, CrossAmerica updated its calculation of its Distribution Coverage Ratio to divide Distributable Cash Flow by distributions paid, whereas in prior periods, the Distribution Coverage Ratio was calculated as Distributable Cash Flow divided by the weighted-average diluted common units and then divided that result by distributions paid per limited partner unit.

About CrossAmerica Partners LP

CrossAmerica Partners LP is a leading wholesale distributor of motor fuels, convenience store operator, and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is indirectly owned and controlled by entities affiliated with Joseph V. Topper, Jr., the founder of CrossAmerica Partners and a member of the board of the general partner since 2012. Formed in 2012, CrossAmerica Partners LP is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to approximately 1,750 locations and owns or leases approximately 1,150 sites. With a geographic footprint covering 34 states, the Partnership has well-established relationships with several major oil brands, including ExxonMobil, BP, Shell, Sunoco, Valero, Gulf, Citgo, Marathon and Phillips 66. CrossAmerica Partners LP ranks as one of ExxonMobil’s largest distributors by fuel volume in the United States and in the top 10 for additional brands. For additional information, please visit www.crossamericapartners.com.

Contact

Investor Relations: Randy Palmer, rpalmer@caplp.com or 210-742-8316

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this release that state the Partnership’s or management’s expectations or predictions of the future are forward-looking statements. The words “believe,” “expect,” “should,” “intends,” “estimates,” “target” and other similar expressions identify forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see CrossAmerica’s Form 10-K or Forms 10-Q filed with the Securities and Exchange Commission, and available on CrossAmerica’s website at www.crossamericapartners.com. The Partnership undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.

Note to Non-United States Investors: This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of CrossAmerica Partners LP’s distributions to non-U.S. investors as attributable to income that is effectively connected with a United States trade or business. Accordingly, CrossAmerica Partners LP’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.