CrossAmerica Partners LP Reports First
Quarter 2023 Results
- Reported First
Quarter 2023 Net Loss of $1.0 million, Adjusted EBITDA of $31.7
million and Distributable Cash Flow of $19.1 million
- Reported First
Quarter 2023 Gross Profit for the Wholesale Segment of $31.2
million compared to $30.3 million of Gross Profit for the First
Quarter 2022 and First Quarter 2023 Gross Profit for the Retail
Segment of $50.8 million compared to $48.5 million of Gross Profit
for the First Quarter 2022
- Leverage, as
defined in the CAPL Credit Facility, was 4.05 times as of March 31,
2023, compared to 4.6 times as of March 31, 2022
- On March 31, 2023,
CrossAmerica Partners LP entered into an amended and restated
five-year Revolving Credit Facility agreement with increased
borrowing capacity of $925 million
- The Distribution
Coverage Ratio for the trailing twelve months ended March 31, 2023
was 1.70 times compared to 1.39 times for the comparable period of
2022
- The Board of
Directors of CrossAmerica's General Partner declared a quarterly
distribution of $0.5250 per limited partner unit attributable to
the First Quarter 2023
Allentown, PA May 8, 2023 – 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 first
quarter ended March 31, 2023.
“We had a solid quarter despite ongoing economic
headwinds. Our retail segment performed particularly well during
the quarter, with same store volumes, store sales and inside sales
margin all higher relative to the prior year while our wholesale
segment generated increased segment gross profit and fuel margin
relative to last year,” said Charles Nifong, President and CEO of
CrossAmerica. “On the capital raising front, we completed the
refinancing of our credit facility during the quarter, increasing
the facility size and extending out its duration for another five
years. This important refinancing simplified our capital structure
and provides us the necessary capital and liquidity to successfully
operate our business going forward.”
Non-GAAP Measures and Same Store
Metrics
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.
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 excludes branded
food sales and other revenues such as lottery commissions and car
wash sales.
First Quarter Results
Consolidated Results
Key Operating Metrics |
Q1 2023 |
Q1 2022 |
Net Income |
($1.0M) |
$5.0M |
Adjusted EBITDA |
$31.7M |
$32.0M |
Distributable Cash Flow |
$19.1M |
$24.2M |
Distribution Coverage Ratio: Current Quarter |
0.96x |
1.22x |
Distribution Coverage Ratio: TTM ended 3/31/23 |
1.70x |
1.39x |
CrossAmerica reported declines in Operating Income, Net Income,
Adjusted EBITDA and Distributable Cash Flow for the first quarter
2023 compared to the first quarter 2022. During the first quarter
2023, the Partnership reported an increase in gross profit of 4%,
which was primarily driven by increases in motor fuel, merchandise
and rent gross profit. This was offset by an increase in operating
expenses in both the wholesale and retail segments, driven by
inflation in several cost categories and increased labor costs in
the retail segment. CrossAmerica also experienced a $5.4 million
increase in interest expense in the first quarter 2023 when
compared to the first quarter 2022, driven by the increase in
interest rates.
Wholesale Segment
Key Operating Metrics |
Q1 2023 |
Q1 2022 |
Wholesale segment gross profit |
$31.2M |
$30.3M |
Wholesale motor fuel gallons distributed |
201.9M |
203.9M |
Average wholesale gross profit per gallon |
$ |
0.083 |
$ |
0.079 |
During the first quarter 2023, CrossAmerica’s wholesale segment
gross profit increased 3% compared to the first quarter 2022. This
was driven by an increase in motor fuel and rent gross profit. The
motor fuel gross profit was driven by a 5% increase in fuel margin
per gallon, partially offset by a 1% decline in wholesale volume
distributed.
Retail Segment
Key Operating Metrics |
Q1 2023 |
Q1 2022 |
Retail segment gross profit |
$50.8M |
$48.5M |
|
|
|
Retail segment motor fuel gallons distributed |
119.1M |
116.0M |
Same store motor fuel gallons distributed |
113.2M |
111.3M |
Retail segment motor fuel gross profit |
$26.8M |
$26.3M |
Retail segment margin per gallon, before deducting credit card fees
and commissions |
$ |
0.318 |
|
$ |
0.319 |
|
|
|
|
Same store merchandise sales excluding cigarettes* |
$41.5M |
$37.8M |
Merchandise gross profit* |
$18.1M |
$16.7M |
Merchandise gross profit percentage* |
|
27.8 |
% |
|
26.8 |
% |
*Includes only company operated retail sites
For the first quarter 2023, the retail segment
generated a 5% increase in gross profit compared to the first
quarter 2022. The increase for the first quarter 2023 was primarily
due to higher motor fuel and merchandise gross profit.
The retail segment sold 119.1 million of retail
fuel gallons during the first quarter 2023, which was an increase
of 3% when compared to the first quarter 2022. Same store retail
segment fuel volume for the first quarter 2023 increased 2% from
111.3 million gallons during the first quarter 2022 to 113.2
million gallons.
For the first quarter 2023, CrossAmerica’s
merchandise gross profit and other revenue increased 9% when
compared to the first quarter 2022. The first quarter increase was
primarily due to an increase in overall store sales due to higher
retail prices and higher unit count sales, as well as improved
product margins. Same store merchandise sales excluding cigarettes
increased 10% for the first quarter 2023 when compared to the first
quarter 2022. Merchandise gross profit percentage increased from
26.8% for the first quarter 2022 to 27.8% for the first quarter
2023, primarily due to improved merchandise margins in the
categories of packaged beverages and snacks.
Divestment Activity
During the three months ended March 31, 2023,
CrossAmerica sold one property for $0.4 million in proceeds,
resulting in a net gain of $0.1 million.
Amended Credit Facility
On March 31, 2023, CrossAmerica Partners LP entered into an
amended and restated five-year Revolving Credit Facility agreement
with a syndicate of lenders led by Citizens Bank, N.A. (the
“Amended Facility”). The Amended Facility provides borrowing
capacity up to $925 million, an increase from the previous
revolving credit facility capacity of $750 million. As part of the
amendment and restatement, proceeds from the Amended Facility were
used to repay all outstanding balances on the $200 million credit
facility entered into by a subsidiary of the Partnership in 2021 to
finance its acquisition of assets from 7-Eleven, Inc. and Speedway
LLC.
The Amended Facility matures on March 31, 2028, and, subject to
certain conditions, may be increased by an additional $350 million.
Borrowings under the Amended Facility will bear interest, at the
Partnership’s option, at a rate equal to the Secured Overnight
Financing Rate (“SOFR”) plus a margin ranging from 1.75% to 2.75%
per annum plus a customary credit spread adjustment or an
alternative base rate plus a margin ranging from 0.75% to 1.75% per
annum, depending on the Partnership’s Consolidated Leverage Ratio.
Until the Partnership delivers a compliance certificate for the
fiscal quarter ending June 30, 2023, the applicable margin for SOFR
and alternative base rate loans will be 2.25% and 1.25%,
respectively, and the commitment fee rate will be 0.35%.
Swaps Activity
In April 2023, CrossAmerica entered into three
new Secured Overnight Financing Rate (“SOFR”) based spot start
interest rate swap contracts with a total notional value of $200
million and a five-year term. These spot start interest rate swaps
have a fixed rate of approximately 3.286%. Additionally in April
2023, CrossAmerica entered into one forward starting interest rate
swap contract beginning April 1, 2024 with a total notional value
of $100 million and a four-year term. The fixed rate on the forward
starting interest rate swap contract is 2.932%. The partnership
expects these cash flow hedges to be highly effective.
Additionally, in April 2023, CrossAmerica also
amended its existing three interest rate swap contracts with a
total notional amount of $300 million to transition the reference
rate from London Interbank Offered Rate (“LIBOR”) to SOFR in
conjunction with amending and restating the CAPL Credit Facility.
As a result, the fixed rate was reduced from 0.495% to 0.4125% for
the one contract and from 0.38% to 0.2975% for the other two
contracts. All other critical terms remain the same and so the
partnership expects these cash flow hedges to continue to be highly
effective.
Liquidity and Capital Resources
As of March 31, 2023, CrossAmerica had $778.0
million outstanding under its CAPL Credit Facility. As of May 4,
2023, after taking into consideration debt covenant restrictions,
approximately $154.0 million was available for future borrowings
under the CAPL Credit Facility. Leverage, as defined in the CAPL
Credit Facility, was 4.05 times as of March 31, 2023, compared to
4.6 times as of March 31, 2022. As of March 31, 2023, CrossAmerica
was in compliance with its financial covenants under the credit
facility.
Distributions
On April 20, 2023, 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 first quarter 2023. As previously announced, the distribution
will be paid on May 10, 2023 to all unitholders of record as of May
3, 2023. 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
May 9, 2023 at 9:00 a.m. Eastern Time to discuss first quarter 2023
earnings results. A live webcast of the call can be accessed by
going to the investor section of the CrossAmerica Partners website
at https://caplp.gcs-web.com/webcasts-presentations. Interested
parties may participate live via telephone by registering at a
conference call link also provided at
https://caplp.gcs-web.com/webcasts-presentations. Please follow
this link and register with a valid email address. A PIN will be
provided to you with dial-in instructions. Also included on the
website on that same day will be related earnings materials,
including reconciliations of any non-GAAP financial measures to
GAAP financial measures and any other applicable disclosures. After
the live conference call, an archive of the webcast will be
available on the investor section of the CrossAmerica site at
https://caplp.gcs-web.com/webcasts-presentations within 24 hours
after the call for a period of sixty days.
CROSSAMERICA PARTNERS
LPCONSOLIDATED BALANCE
SHEETS(Thousands of Dollars, except unit
data)
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,517 |
|
|
$ |
16,054 |
|
Accounts receivable, net of allowances of $723 and $686,
respectively |
|
|
28,568 |
|
|
|
30,825 |
|
Accounts receivable from related parties |
|
|
524 |
|
|
|
743 |
|
Inventory |
|
|
47,911 |
|
|
|
47,307 |
|
Assets held for sale |
|
|
2,012 |
|
|
|
983 |
|
Current portion of interest rate swap contracts |
|
|
13,448 |
|
|
|
13,827 |
|
Other current assets |
|
|
11,512 |
|
|
|
8,667 |
|
Total current assets |
|
|
111,492 |
|
|
|
118,406 |
|
Property and equipment,
net |
|
|
716,918 |
|
|
|
728,379 |
|
Right-of-use assets, net |
|
|
161,161 |
|
|
|
164,942 |
|
Intangible assets, net |
|
|
108,338 |
|
|
|
113,919 |
|
Goodwill |
|
|
99,409 |
|
|
|
99,409 |
|
Interest rate swap contracts,
less current portion |
|
|
968 |
|
|
|
3,401 |
|
Other assets |
|
|
25,453 |
|
|
|
26,142 |
|
Total assets |
|
$ |
1,223,739 |
|
|
$ |
1,254,598 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Current portion of debt and finance lease obligations |
|
$ |
2,937 |
|
|
$ |
11,151 |
|
Current portion of operating lease obligations |
|
|
35,288 |
|
|
|
35,345 |
|
Accounts payable |
|
|
69,605 |
|
|
|
77,048 |
|
Accounts payable to related parties |
|
|
5,641 |
|
|
|
7,798 |
|
Accrued expenses and other current liabilities |
|
|
23,556 |
|
|
|
23,144 |
|
Motor fuel and sales taxes payable |
|
|
20,471 |
|
|
|
20,813 |
|
Total current liabilities |
|
|
157,498 |
|
|
|
175,299 |
|
Debt and finance lease
obligations, less current portion |
|
|
776,979 |
|
|
|
761,638 |
|
Operating lease obligations,
less current portion |
|
|
131,429 |
|
|
|
135,220 |
|
Deferred tax liabilities,
net |
|
|
8,532 |
|
|
|
10,588 |
|
Asset retirement
obligations |
|
|
46,794 |
|
|
|
46,431 |
|
Other long-term
liabilities |
|
|
46,923 |
|
|
|
46,289 |
|
Total liabilities |
|
|
1,168,155 |
|
|
|
1,175,465 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred membership
interests |
|
|
26,757 |
|
|
|
26,156 |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Common units— 37,952,950 and 37,937,604 units issued and
outstanding at March 31, 2023 and December 31, 2022,
respectively |
|
|
15,276 |
|
|
|
36,508 |
|
Accumulated other comprehensive income |
|
|
13,551 |
|
|
|
16,469 |
|
Total equity |
|
|
28,827 |
|
|
|
52,977 |
|
Total liabilities and equity |
|
$ |
1,223,739 |
|
|
$ |
1,254,598 |
|
CROSSAMERICA PARTNERS
LPCONSOLIDATED STATEMENTS OF
OPERATIONS(Thousands of Dollars, Except Unit and
Per Unit Amounts)
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Operating revenues (a) |
|
$ |
1,016,159 |
|
|
$ |
1,093,211 |
|
Costs of sales (b) |
|
|
934,100 |
|
|
|
1,014,381 |
|
Gross profit |
|
|
82,059 |
|
|
|
78,830 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Operating expenses (c) |
|
|
45,623 |
|
|
|
42,109 |
|
General and administrative expenses |
|
|
5,739 |
|
|
|
6,483 |
|
Depreciation, amortization and accretion expense |
|
|
19,820 |
|
|
|
20,275 |
|
Total operating expenses |
|
|
71,182 |
|
|
|
68,867 |
|
Loss on dispositions and lease
terminations, net |
|
|
(1,767 |
) |
|
|
(244 |
) |
Operating income |
|
|
9,110 |
|
|
|
9,719 |
|
Other income, net |
|
|
261 |
|
|
|
130 |
|
Interest expense |
|
|
(12,012 |
) |
|
|
(6,661 |
) |
(Loss) income before income
taxes |
|
|
(2,641 |
) |
|
|
3,188 |
|
Income tax benefit |
|
|
(1,662 |
) |
|
|
(1,859 |
) |
Net (loss) income |
|
|
(979 |
) |
|
|
5,047 |
|
Accretion of preferred
membership interests |
|
|
601 |
|
|
|
— |
|
Net (loss) income available to
limited partners |
|
$ |
(1,580 |
) |
|
$ |
5,047 |
|
|
|
|
|
|
|
|
Basic and diluted
(loss) earnings per common unit |
|
$ |
(0.04 |
) |
|
$ |
0.13 |
|
|
|
|
|
|
|
|
Weighted-average
limited partner units: |
|
|
|
|
|
|
Basic common units |
|
|
37,940,332 |
|
|
|
37,900,146 |
|
Diluted common units |
|
|
37,940,332 |
|
|
|
37,959,441 |
|
|
|
|
|
|
|
|
Supplemental
information: |
|
|
|
|
|
|
(a) includes excise taxes of: |
|
$ |
69,884 |
|
|
$ |
66,858 |
|
(a) includes rent income of: |
|
|
21,320 |
|
|
|
20,627 |
|
(b) excludes depreciation, amortization and accretion |
|
|
|
|
|
|
(b) includes rent expense of: |
|
|
5,554 |
|
|
|
5,841 |
|
(c) includes rent expense of: |
|
|
3,798 |
|
|
|
3,708 |
|
CROSSAMERICA PARTNERS
LPCONSOLIDATED STATEMENTS OF CASH
FLOWS(Thousands of Dollars)
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(979 |
) |
|
$ |
5,047 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation, amortization and accretion expense |
|
|
19,820 |
|
|
|
20,275 |
|
Amortization of deferred financing costs |
|
|
1,848 |
|
|
|
680 |
|
Credit loss expense |
|
|
37 |
|
|
|
45 |
|
Deferred income tax benefit |
|
|
(2,056 |
) |
|
|
(2,045 |
) |
Equity-based employee and director compensation expense |
|
|
561 |
|
|
|
732 |
|
Loss on dispositions and lease terminations, net |
|
|
1,767 |
|
|
|
244 |
|
Changes in operating assets and liabilities, net of
acquisitions |
|
|
(9,460 |
) |
|
|
3,410 |
|
Net cash provided by operating activities |
|
|
11,538 |
|
|
|
28,388 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Principal payments received on notes receivable |
|
|
53 |
|
|
|
33 |
|
Proceeds from sale of assets |
|
|
568 |
|
|
|
1,460 |
|
Capital expenditures |
|
|
(6,001 |
) |
|
|
(8,934 |
) |
Cash paid in connection with acquisitions, net of cash
acquired |
|
|
— |
|
|
|
(1,885 |
) |
Net cash used in investing activities |
|
|
(5,380 |
) |
|
|
(9,326 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Borrowings under revolving credit facilities |
|
|
187,400 |
|
|
|
30,600 |
|
Repayments on revolving credit facilities |
|
|
(15,537 |
) |
|
|
(26,575 |
) |
Borrowings under the Term Loan Facility |
|
|
— |
|
|
|
1,120 |
|
Repayments on the Term Loan Facility |
|
|
(158,980 |
) |
|
|
(24,600 |
) |
Net proceeds from issuance of preferred membership interests |
|
|
— |
|
|
|
24,500 |
|
Payments of finance lease obligations |
|
|
(698 |
) |
|
|
(658 |
) |
Payments of deferred financing costs |
|
|
(6,906 |
) |
|
|
(6 |
) |
Distributions paid on distribution equivalent rights |
|
|
(56 |
) |
|
|
(46 |
) |
Distributions paid on common units |
|
|
(19,918 |
) |
|
|
(19,896 |
) |
Net cash used in financing activities |
|
|
(14,695 |
) |
|
|
(15,561 |
) |
Net (decrease) increase in
cash and cash equivalents |
|
|
(8,537 |
) |
|
|
3,501 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
|
16,054 |
|
|
|
7,648 |
|
Cash and cash
equivalents at end of period |
|
$ |
7,517 |
|
|
$ |
11,149 |
|
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 March 31, |
|
|
|
2023 |
|
|
2022 |
|
Gross
profit: |
|
|
|
|
|
|
Motor fuel gross profit |
|
$ |
16,708 |
|
|
$ |
16,184 |
|
Rent gross profit |
|
|
13,255 |
|
|
|
12,339 |
|
Other revenues |
|
|
1,247 |
|
|
|
1,786 |
|
Total gross profit |
|
|
31,210 |
|
|
|
30,309 |
|
Operating expenses |
|
|
(9,541 |
) |
|
|
(8,716 |
) |
Operating income |
|
$ |
21,669 |
|
|
$ |
21,593 |
|
|
|
|
|
|
|
|
Motor fuel distribution
sites (end of period): (a) |
|
|
|
|
|
|
Independent dealers (b) |
|
|
643 |
|
|
|
656 |
|
Lessee dealers (c) |
|
|
612 |
|
|
|
642 |
|
Total motor fuel distribution sites |
|
|
1,255 |
|
|
|
1,298 |
|
|
|
|
|
|
|
|
Motor fuel distribution
sites (average): |
|
|
1,271 |
|
|
|
1,302 |
|
|
|
|
|
|
|
|
Volume of gallons
distributed |
|
|
201,861 |
|
|
|
203,915 |
|
|
|
|
|
|
|
|
Margin per
gallon |
|
$ |
0.083 |
|
|
$ |
0.079 |
|
(a) In addition, CrossAmerica distributed motor fuel to
sub-wholesalers who distributed to additional sites.(b) The
decrease in the independent dealer site count was primarily
attributable to the loss of contracts, partially offset by the
increase in independent dealer sites as a result of the acquisition
of assets from Community Service Stations, Inc. and the ongoing
real estate rationalization effort.(c) The decrease in the lessee
dealer count was primarily attributable to the real estate
rationalization effort and the conversion of lessee dealer sites to
company operated sites.
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 March 31, |
|
|
|
2023 |
|
|
2022 |
|
Gross
profit: |
|
|
|
|
|
|
Motor fuel |
|
$ |
26,760 |
|
|
$ |
26,304 |
|
Merchandise |
|
|
18,123 |
|
|
|
16,682 |
|
Rent |
|
|
2,511 |
|
|
|
2,447 |
|
Other revenue |
|
|
3,455 |
|
|
|
3,088 |
|
Total gross profit |
|
|
50,849 |
|
|
|
48,521 |
|
Operating expenses |
|
|
(36,082 |
) |
|
|
(33,393 |
) |
Operating income |
|
$ |
14,767 |
|
|
$ |
15,128 |
|
|
|
|
|
|
|
|
Retail sites (end of
period): |
|
|
|
|
|
|
Company operated retail sites (a) |
|
|
268 |
|
|
|
255 |
|
Commission agents (b) |
|
|
194 |
|
|
|
201 |
|
Total system sites at the end of the period |
|
|
462 |
|
|
|
456 |
|
|
|
|
|
|
|
|
Total retail segment
statistics: |
|
|
|
|
|
|
Volume of gallons sold |
|
|
119,085 |
|
|
|
116,040 |
|
Same store total system gallons
sold |
|
|
113,233 |
|
|
|
111,313 |
|
Average retail fuel sites |
|
|
457 |
|
|
|
454 |
|
Margin per gallon, before
deducting credit card fees and commissions |
|
$ |
0.318 |
|
|
$ |
0.319 |
|
|
|
|
|
|
|
|
Company operated site
statistics: |
|
|
|
|
|
|
Average retail fuel sites |
|
|
258 |
|
|
|
254 |
|
Same store fuel volume |
|
|
74,724 |
|
|
|
74,655 |
|
Margin per gallon, before
deducting credit card fees |
|
$ |
0.341 |
|
|
$ |
0.327 |
|
Same store merchandise sales |
|
$ |
61,229 |
|
|
$ |
58,765 |
|
Same store merchandise sales
excluding cigarettes |
|
$ |
41,540 |
|
|
$ |
37,762 |
|
Merchandise gross profit
percentage |
|
|
27.8 |
% |
|
|
26.8 |
% |
|
|
|
|
|
|
|
Commission site
statistics: |
|
|
|
|
|
|
Average retail fuel sites |
|
|
198 |
|
|
|
200 |
|
Margin per gallon, before
deducting credit card fees and commissions |
|
$ |
0.273 |
|
|
$ |
0.303 |
|
(a) The increase in the company operated site count was
primarily attributable to the conversion of lessee dealer and
commission sites to company operated sites, largely in March
2023.(b) The decrease in the commission site count was primarily
attributable to the conversion of commission sites to company
operated sites and the real estate rationalization effort.(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 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 March 31, |
|
|
|
2023 |
|
|
2022 |
|
Net (loss)
income (a) |
|
$ |
(979 |
) |
|
$ |
5,047 |
|
Interest expense |
|
|
12,012 |
|
|
|
6,661 |
|
Income tax benefit |
|
|
(1,662 |
) |
|
|
(1,859 |
) |
Depreciation, amortization and accretion expense |
|
|
19,820 |
|
|
|
20,275 |
|
EBITDA |
|
|
29,191 |
|
|
|
30,124 |
|
Equity-based employee and director compensation expense |
|
|
561 |
|
|
|
732 |
|
Loss on dispositions and lease terminations, net |
|
|
1,767 |
|
|
|
244 |
|
Acquisition-related costs (b) |
|
|
219 |
|
|
|
868 |
|
Adjusted
EBITDA |
|
|
31,738 |
|
|
|
31,968 |
|
Cash interest expense |
|
|
(10,163 |
) |
|
|
(5,981 |
) |
Sustaining capital expenditures (c) |
|
|
(2,049 |
) |
|
|
(1,554 |
) |
Current income tax expense |
|
|
(394 |
) |
|
|
(185 |
) |
Distributable Cash
Flow |
|
$ |
19,132 |
|
|
$ |
24,248 |
|
Distributions paid |
|
|
19,918 |
|
|
|
19,896 |
|
Distribution Coverage
Ratio (a) |
|
0.96x |
|
|
1.22x |
|
(a) Beginning in 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 CrossAmerica’s financial
performance without regard to capital structure, the partnership
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 EBITDA to Net income available to
limited partners in past periods, as CrossAmerica 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.
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 1,700 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
610-625-8000
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.
CrossAmerica Partners (NYSE:CAPL)
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