CrossAmerica Partners LP Reports First Quarter 2024 Results
CrossAmerica Partners LP Reports First
Quarter 2024 Results
- Reported First
Quarter 2024 Net Loss of $17.5 million that includes a $15.9
million loss on lease terminations with Applegreen, Adjusted EBITDA
of $23.6 million and Distributable Cash Flow of $11.7 million
compared to a Net Loss of $1.0 million, Adjusted EBITDA of $31.7
million and Distributable Cash Flow of $19.1 million for the First
Quarter 2023
- Reported First
Quarter 2024 Gross Profit for the Wholesale Segment of $27.0
million compared to $31.2 million of Gross Profit for the First
Quarter 2023 and First Quarter 2024 Gross Profit for the Retail
Segment of $54.4 million compared to $50.8 million of Gross Profit
for the First Quarter 2023
- Leverage, as
defined in the CAPL Credit Facility, was 4.49 times as of March 31,
2024, compared to 4.21 times as of December 31, 2023
- The Distribution
Coverage Ratio for the trailing twelve months ended March 31, 2024
was 1.37 times compared to 1.70 times for the comparable period of
2023
- Began conversions
of Applegreen lessee dealer locations to company operated retail
locations during First Quarter 2024, with all 59 locations
converted to company operated locations early in the Second Quarter
2024
- 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 2024
Allentown, PA May 8, 2024 – 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, 2024.
“The first quarter was a difficult operating
environment, with generally increasing fuel prices that resulted in
lower margins along with industry wide lower overall demand for
both fuel and merchandise. Our financial results for the quarter
compared to the prior year reflect these challenges,” said Charles
Nifong, President and CEO of CrossAmerica. “After the quarter
end, we finished our conversion of the Applegreen lessee dealer
locations to company operated retail locations, which we expect to
be immediately accretive to our financial results. Despite a
challenging quarter, our business fundamentals are strong and we
are well positioned with both our operations and capital structure
for continued success.”
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 within the same segment. Same store merchandise
sales excludes branded food sales and other revenues such as
lottery commissions and car wash sales. Certain merchandise
products have been transitioned from a gross profit model (whereby
CrossAmerica owns the inventory and records sales and cost of
sales) to a scan-based trading model (whereby a third party owns
the inventory and CrossAmerica records a commission in other
revenues). Same store merchandise sales for the three months ended
March 31, 2024 was adjusted to gross it up for the sales that would
have been recorded had CrossAmerica not changed models.
First Quarter Results
Consolidated Results
Key Operating Metrics |
Q1 2024 |
Q1 2023 |
Net Income |
($17.5M) |
($1.0M) |
Operating Expenses |
$52.0M |
$45.6M |
Adjusted EBITDA |
$23.6M |
$31.7M |
Distributable Cash Flow |
$11.7M |
$19.1M |
Distribution Coverage Ratio: Current Quarter |
0.59x |
0.96x |
Distribution Coverage Ratio: Trailing 12 Months |
1.37x |
1.70x |
CrossAmerica reported declines in Net Income, Adjusted EBITDA
and Distributable Cash Flow for the first quarter 2024 compared to
the first quarter 2023. This was primarily driven by an overall
decline in motor fuel gross profit associated with the movements of
crude oil prices within the two periods and an increase in
operating expenses primarily related to the conversion of certain
lessee dealer and commission agent sites to company operated sites.
This was partially offset by an increase in merchandise gross
profit of 18% for the first quarter 2024 when compared to the same
period in 2023. The year-over-year decline in Distributable Cash
Flow and Distribution Coverage was primarily driven by the decline
in Adjusted EBITDA noted above.
Wholesale Segment
Key Operating Metrics |
Q1 2024 |
Q1 2023 |
Wholesale segment gross profit |
$27.0M |
$31.2M |
Wholesale motor fuel gallons distributed |
184.0M |
201.9M |
Average wholesale gross profit per gallon |
$ |
0.079 |
$ |
0.083 |
During the first quarter 2024, CrossAmerica’s wholesale segment
gross profit decreased 14% compared to the first quarter 2023. This
was driven by a decline in motor fuel and rent gross profit
primarily due to the conversion of certain lessee dealer sites to
company operated and commission agent sites and a net loss of
independent dealer contracts. The motor fuel gross profit decline
was driven by a 5% decrease in fuel margin per gallon and a 9%
decline in wholesale volume distributed, with a substantial portion
of the wholesale volume decline attributable to the conversion of
wholesale locations to retail locations and the associated volume
for these locations is now reflected in CrossAmerica’s retail
segment.
Retail Segment
Key Operating Metrics |
Q1 2024 |
Q1 2023 |
Retail segment gross profit |
$54.4M |
$50.8M |
|
|
|
Retail segment motor fuel gallons distributed |
121.7M |
119.1M |
Same store motor fuel gallons distributed |
108.6M |
112.3M |
Retail segment motor fuel gross profit |
$26.0M |
$26.8M |
Retail segment margin per gallon, before deducting credit card fees
and commissions |
$ |
0.308 |
|
$ |
0.318 |
|
|
|
|
Same store merchandise sales excluding cigarettes* |
$42.3M |
$41.3M |
Merchandise gross profit* |
$21.4M |
$18.1M |
Merchandise gross profit percentage* |
|
28.1 |
% |
|
27.8 |
% |
|
|
|
Operating Expenses |
$43.1M |
$36.1M |
Retail Sites (end of period) |
|
546 |
|
|
462 |
|
*Includes only company operated retail sites
For the first quarter 2024, the retail segment
generated a 7% increase in gross profit compared to the first
quarter 2023. The increase for the first quarter 2024 was primarily
due to higher merchandise gross profit, partially offset by a
decline of 3% in motor fuel gross profit.
The retail segment sold 121.7 million of retail
fuel gallons during the first quarter 2024, which was an increase
of 2% when compared to the first quarter 2023. This volume increase
was primarily driven by the conversion of lessee dealer sites to
company operated and commission agent sites over the past year and
during the quarter, offset by a decline in volume for the base
business. Same store retail segment fuel volume for the first
quarter 2024 declined 3% from 112.3 million gallons during the
first quarter 2023 to 108.6 million gallons for the same period in
2024.
For the first quarter 2024, CrossAmerica’s
merchandise gross profit and other revenue increased 21% when
compared to the first quarter 2023. The first quarter increase was
primarily driven by an increase in the average company operated
site count due to the conversion of certain lessee dealer and
commission agent sites to company operated sites. Same store
merchandise sales excluding cigarettes increased 2% for the first
quarter 2024 when compared to the first quarter 2023. Merchandise
gross profit percentage increased from 27.8% for the first quarter
2023 to 28.1% for the first quarter 2024, primarily due to improved
merchandise margins in the categories of packaged beverages and
snacks.
For the first quarter 2024, operating expenses
for the retail segment increased $7 million dollars or 20%
primarily driven by a 22% increase in the average company operated
site count due to the conversion of certain lessee dealer and
commission agent sites to company operated sites.
Acquisition of Assets from
Applegreen
On January 26, 2024, CrossAmerica entered into an agreement to
acquire certain assets from Applegreen Midwest, LLC and Applegreen
Florida, LLC. The assets were acquired via the termination of the
Partnership’s existing lease agreements with the Applegreen
entities at 59 locations, for total consideration of $16.9 million.
The transaction closed on a rolling basis by site beginning during
the first quarter of 2024 and ending in April 2024. The Partnership
also acquired for cash the inventory at the locations. The terms of
the Partnership’s leases with Applegreen Midwest, LLC and
Applegreen Florida, LLC could have been extended to 2049 and 2048,
respectively, including all renewal options. Of the 59 locations,
31 locations were converted during the first quarter of 2024 and
the remaining locations converted in April 2024. This transaction
resulted in the conversion of these lessee dealer sites to company
operated sites.
Liquidity and Capital Resources
As of March 31, 2024, CrossAmerica had $798.3
million outstanding under its CAPL Credit Facility. As of May 3,
2024, after taking into consideration debt covenant restrictions,
approximately $96.0 million was available for future borrowings
under the CAPL Credit Facility. Leverage, as defined in the CAPL
Credit Facility, was 4.49 times as of March 31, 2024, compared to
4.21 times as of December 31, 2023. As of March 31, 2024,
CrossAmerica was in compliance with its financial covenants under
the credit facility.
Distributions
On April 22, 2024, 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 2024. As previously announced, the distribution
will be paid on May 10, 2024 to all unitholders of record as of May
3, 2024. 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, 2024 at 9:00 a.m. Eastern Time to discuss the first quarter
2024 earnings results. The conference call numbers are 800-717-1738
or 646-307-1865 and the passcode for both is 253945. A live audio
webcast of the conference call and the related earnings materials,
including reconciliations of any 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). 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, |
|
|
|
2024 |
|
|
2023 |
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,278 |
|
|
$ |
4,990 |
|
Accounts receivable, net of allowances of $674 and $709,
respectively |
|
|
35,087 |
|
|
|
31,185 |
|
Accounts receivable from related parties |
|
|
1,021 |
|
|
|
437 |
|
Inventory |
|
|
58,037 |
|
|
|
52,344 |
|
Assets held for sale |
|
|
4,641 |
|
|
|
400 |
|
Current portion of interest rate swap contracts |
|
|
7,169 |
|
|
|
9,321 |
|
Other current assets |
|
|
11,068 |
|
|
|
9,845 |
|
Total current assets |
|
|
123,301 |
|
|
|
108,522 |
|
Property and equipment,
net |
|
|
692,728 |
|
|
|
705,217 |
|
Right-of-use assets, net |
|
|
146,170 |
|
|
|
148,317 |
|
Intangible assets, net |
|
|
90,422 |
|
|
|
95,261 |
|
Goodwill |
|
|
99,409 |
|
|
|
99,409 |
|
Deferred tax assets |
|
|
1,425 |
|
|
|
759 |
|
Interest rate swap contracts,
less current portion |
|
|
4,439 |
|
|
|
687 |
|
Other assets |
|
|
21,579 |
|
|
|
23,510 |
|
Total assets |
|
$ |
1,179,473 |
|
|
$ |
1,181,682 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Current portion of debt and finance lease obligations |
|
$ |
3,133 |
|
|
$ |
3,083 |
|
Current portion of operating lease obligations |
|
|
34,973 |
|
|
|
34,787 |
|
Accounts payable |
|
|
71,490 |
|
|
|
68,986 |
|
Accounts payable to related parties |
|
|
6,920 |
|
|
|
10,180 |
|
Accrued expenses and other current liabilities |
|
|
24,570 |
|
|
|
23,674 |
|
Motor fuel and sales taxes payable |
|
|
18,767 |
|
|
|
20,386 |
|
Total current liabilities |
|
|
159,853 |
|
|
|
161,096 |
|
Debt and finance lease
obligations, less current portion |
|
|
795,755 |
|
|
|
753,880 |
|
Operating lease obligations,
less current portion |
|
|
116,351 |
|
|
|
118,723 |
|
Deferred tax liabilities,
net |
|
|
7,652 |
|
|
|
12,919 |
|
Asset retirement
obligations |
|
|
48,329 |
|
|
|
47,844 |
|
Interest rate swap
contracts |
|
|
1,139 |
|
|
|
3,535 |
|
Other long-term
liabilities |
|
|
52,212 |
|
|
|
52,934 |
|
Total liabilities |
|
|
1,181,291 |
|
|
|
1,150,931 |
|
|
|
|
|
|
|
|
Commitments and contingencies
(Note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred membership
interests |
|
|
28,401 |
|
|
|
27,744 |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Common units— 38,027,194 and 37,983,154 units issued and
outstanding at March 31, 2024 and December 31, 2023,
respectively |
|
|
(39,616 |
) |
|
|
(2,392 |
) |
Accumulated other comprehensive income |
|
|
9,397 |
|
|
|
5,399 |
|
Total (deficit) equity |
|
|
(30,219 |
) |
|
|
3,007 |
|
Total liabilities and equity |
|
$ |
1,179,473 |
|
|
$ |
1,181,682 |
|
CROSSAMERICA PARTNERS
LPCONSOLIDATED STATEMENTS OF
OPERATIONS(Thousands of Dollars, Except Unit and
Per Unit Amounts)
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
Operating revenues (a) |
|
$ |
941,548 |
|
|
$ |
1,016,159 |
|
Costs of sales (b) |
|
|
860,200 |
|
|
|
934,100 |
|
Gross profit |
|
|
81,348 |
|
|
|
82,059 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Operating expenses (c) |
|
|
52,028 |
|
|
|
45,623 |
|
General and administrative expenses |
|
|
6,838 |
|
|
|
5,739 |
|
Depreciation, amortization and accretion expense |
|
|
18,721 |
|
|
|
19,820 |
|
Total operating expenses |
|
|
77,587 |
|
|
|
71,182 |
|
Loss on dispositions and lease
terminations, net |
|
|
(16,806 |
) |
|
|
(1,767 |
) |
Operating (loss) income |
|
|
(13,045 |
) |
|
|
9,110 |
|
Other income, net |
|
|
249 |
|
|
|
261 |
|
Interest expense |
|
|
(10,541 |
) |
|
|
(12,012 |
) |
Loss before income taxes |
|
|
(23,337 |
) |
|
|
(2,641 |
) |
Income tax benefit |
|
|
(5,797 |
) |
|
|
(1,662 |
) |
Net loss |
|
|
(17,540 |
) |
|
|
(979 |
) |
Accretion of preferred
membership interests |
|
|
657 |
|
|
|
601 |
|
Net loss available to limited
partners |
|
$ |
(18,197 |
) |
|
$ |
(1,580 |
) |
|
|
|
|
|
|
|
Net loss per common
unit |
|
|
|
|
|
|
Basic |
|
$ |
(0.48 |
) |
|
$ |
(0.04 |
) |
Diluted |
|
$ |
(0.48 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
Weighted-average
common units: |
|
|
|
|
|
|
Basic |
|
|
37,994,285 |
|
|
|
37,940,332 |
|
Diluted |
|
|
37,994,285 |
|
|
|
37,940,332 |
|
|
|
|
|
|
|
|
Supplemental
information: |
|
|
|
|
|
|
(a) includes excise taxes of: |
|
$ |
70,713 |
|
|
$ |
69,884 |
|
(a) includes rent income of: |
|
|
19,166 |
|
|
|
21,320 |
|
(b) excludes depreciation, amortization and accretion |
|
|
|
|
|
|
(b) includes rent expense of: |
|
|
5,419 |
|
|
|
5,554 |
|
(c) includes rent expense of: |
|
|
3,942 |
|
|
|
3,798 |
|
CROSSAMERICA PARTNERS
LPCONSOLIDATED STATEMENTS OF CASH
FLOWS(Thousands of Dollars)
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(17,540 |
) |
|
$ |
(979 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation, amortization and accretion expense |
|
|
18,721 |
|
|
|
19,820 |
|
Amortization of deferred financing costs |
|
|
483 |
|
|
|
1,848 |
|
Credit loss expense |
|
|
— |
|
|
|
37 |
|
Deferred income tax benefit |
|
|
(5,932 |
) |
|
|
(2,056 |
) |
Equity-based employee and director compensation expense |
|
|
205 |
|
|
|
561 |
|
Loss on dispositions and lease terminations, net |
|
|
16,806 |
|
|
|
1,767 |
|
Changes in operating assets and liabilities, net of
acquisitions |
|
|
(6,927 |
) |
|
|
(9,460 |
) |
Net cash provided by operating activities |
|
|
5,816 |
|
|
|
11,538 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Principal payments received on notes receivable |
|
|
45 |
|
|
|
53 |
|
Proceeds from sale of assets |
|
|
— |
|
|
|
568 |
|
Capital expenditures |
|
|
(6,105 |
) |
|
|
(6,001 |
) |
Lease termination payments to Applegreen, including inventory
purchases |
|
|
(19,904 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(25,964 |
) |
|
|
(5,380 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Borrowings under revolving credit facilities |
|
|
49,000 |
|
|
|
187,400 |
|
Repayments on revolving credit facilities |
|
|
(6,740 |
) |
|
|
(15,537 |
) |
Repayments on the Term Loan Facility |
|
|
— |
|
|
|
(158,980 |
) |
Payments of finance lease obligations |
|
|
(744 |
) |
|
|
(698 |
) |
Payments of deferred financing costs |
|
|
(74 |
) |
|
|
(6,906 |
) |
Distributions paid on distribution equivalent rights |
|
|
(65 |
) |
|
|
(56 |
) |
Distributions paid on common units |
|
|
(19,941 |
) |
|
|
(19,918 |
) |
Net cash provided by (used in) financing activities |
|
|
21,436 |
|
|
|
(14,695 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
|
1,288 |
|
|
|
(8,537 |
) |
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
|
4,990 |
|
|
|
16,054 |
|
Cash and cash
equivalents at end of period |
|
$ |
6,278 |
|
|
$ |
7,517 |
|
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, |
|
|
|
2024 |
|
|
2023 |
|
Gross
profit: |
|
|
|
|
|
|
Motor fuel gross profit |
|
$ |
14,603 |
|
|
$ |
16,708 |
|
Rent gross profit |
|
|
11,439 |
|
|
|
13,255 |
|
Other revenues |
|
|
920 |
|
|
|
1,247 |
|
Total gross profit |
|
|
26,962 |
|
|
|
31,210 |
|
Operating expenses |
|
|
(8,897 |
) |
|
|
(9,541 |
) |
Operating income |
|
$ |
18,065 |
|
|
$ |
21,669 |
|
|
|
|
|
|
|
|
Motor fuel distribution
sites (end of period): (a) |
|
|
|
|
|
|
Independent dealers (b) |
|
|
624 |
|
|
|
643 |
|
Lessee dealers (c) |
|
|
511 |
|
|
|
612 |
|
Total motor fuel distribution sites |
|
|
1,135 |
|
|
|
1,255 |
|
|
|
|
|
|
|
|
Average motor fuel
distribution sites |
|
|
1,172 |
|
|
|
1,271 |
|
|
|
|
|
|
|
|
Volume of gallons
distributed |
|
|
184,025 |
|
|
|
201,861 |
|
|
|
|
|
|
|
|
Margin per
gallon |
|
$ |
0.079 |
|
|
$ |
0.083 |
|
(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 net loss of contracts, partially offset by
divestitures of certain lessee dealer sites but with continued fuel
supply.(c) The decrease in the lessee dealer count was primarily
attributable to the conversion of certain lessee dealer sites to
company operated sites, including through the Applegreen
Acquisition, and CrossAmerica's real estate rationalization
effort.
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, |
|
|
|
2024 |
|
|
2023 |
|
Gross
profit: |
|
|
|
|
|
|
Motor fuel |
|
$ |
26,036 |
|
|
$ |
26,760 |
|
Merchandise |
|
|
21,443 |
|
|
|
18,123 |
|
Rent |
|
|
2,308 |
|
|
|
2,511 |
|
Other revenue |
|
|
4,599 |
|
|
|
3,455 |
|
Total gross profit |
|
|
54,386 |
|
|
|
50,849 |
|
Operating expenses |
|
|
(43,131 |
) |
|
|
(36,082 |
) |
Operating income |
|
$ |
11,255 |
|
|
$ |
14,767 |
|
|
|
|
|
|
|
|
Retail sites (end of
period): |
|
|
|
|
|
|
Company operated retail sites (a) |
|
|
343 |
|
|
|
268 |
|
Commission agents (b) |
|
|
203 |
|
|
|
194 |
|
Total system sites at the end of the period |
|
|
546 |
|
|
|
462 |
|
|
|
|
|
|
|
|
Total retail segment
statistics: |
|
|
|
|
|
|
Volume of gallons sold |
|
|
121,717 |
|
|
|
119,085 |
|
Same store total system gallons
sold(c) |
|
|
108,573 |
|
|
|
112,259 |
|
Average retail fuel sites |
|
|
514 |
|
|
|
457 |
|
Margin per gallon, before
deducting credit card fees and commissions |
|
$ |
0.308 |
|
|
$ |
0.318 |
|
|
|
|
|
|
|
|
Company operated site
statistics: |
|
|
|
|
|
|
Average retail fuel sites |
|
|
315 |
|
|
|
258 |
|
Same store fuel volume(c) |
|
|
72,948 |
|
|
|
74,777 |
|
Margin per gallon, before
deducting credit card fees |
|
$ |
0.327 |
|
|
$ |
0.341 |
|
Same store merchandise
sales(c) |
|
$ |
61,522 |
|
|
$ |
61,268 |
|
Same store merchandise sales
excluding cigarettes(c) |
|
$ |
42,267 |
|
|
$ |
41,334 |
|
Merchandise gross profit
percentage |
|
|
28.1 |
% |
|
|
27.8 |
% |
|
|
|
|
|
|
|
Commission site
statistics: |
|
|
|
|
|
|
Average retail fuel sites |
|
|
199 |
|
|
|
198 |
|
Margin per gallon, before
deducting credit card fees and commissions |
|
$ |
0.267 |
|
|
$ |
0.273 |
|
(a) The increase in the company operated site count was
primarily attributable to the conversion of certain lessee dealer
and commission agent sites to company operated sites.(b) The
increase in the commission agent site count was primarily
attributable to the conversion of certain lessee dealer sites to
commission agent sites, partially offset by the conversion of
certain commission agent sites to company operated sites.(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. Certain
merchandise products have been transitioned from a gross profit
model (whereby CrossAmerica owns the inventory and records sales
and cost of sales) to a scan-based trading model (whereby a third
party owns the inventory and CrossAmerica records a commission in
other revenues). Same store merchandise sales for the three months
ended March 31, 2024 was adjusted to gross it up for the sales that
would have been recorded had CrossAmerica not changed models.
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, |
|
|
|
2024 |
|
|
2023 |
|
Net loss |
|
$ |
(17,540 |
) |
|
$ |
(979 |
) |
Interest expense |
|
|
10,541 |
|
|
|
12,012 |
|
Income tax benefit |
|
|
(5,797 |
) |
|
|
(1,662 |
) |
Depreciation, amortization and accretion expense |
|
|
18,721 |
|
|
|
19,820 |
|
EBITDA |
|
|
5,925 |
|
|
|
29,191 |
|
Equity-based employee and director compensation expense |
|
|
205 |
|
|
|
561 |
|
Loss on dispositions and lease terminations, net (a) |
|
|
16,806 |
|
|
|
1,767 |
|
Acquisition-related costs (b) |
|
|
632 |
|
|
|
219 |
|
Adjusted
EBITDA |
|
|
23,568 |
|
|
|
31,738 |
|
Cash interest expense |
|
|
(10,058 |
) |
|
|
(10,163 |
) |
Sustaining capital expenditures (c) |
|
|
(1,642 |
) |
|
|
(2,049 |
) |
Current income tax expense (d) |
|
|
(137 |
) |
|
|
(394 |
) |
Distributable Cash
Flow |
|
$ |
11,731 |
|
|
$ |
19,132 |
|
Distributions paid on common
units |
|
|
19,941 |
|
|
|
19,918 |
|
Distribution Coverage
Ratio (a) |
|
0.59x |
|
|
0.96x |
|
(a) During the three months ended March 31, 2024, CrossAmerica
recorded a $15.9 million loss on lease terminations with
Applegreen, including a $1.4 million non-cash write-off of deferred
rent income.(b) Relates to certain acquisition-related costs, such
as legal and other professional fees, separation benefit costs and
purchase accounting adjustments associated with recent
acquisitions.(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) Excludes income
tax incurred on the sale of sites.
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
1,100 sites. With a geographic footprint covering 34 states, the
Partnership has well-established relationships with several major
oil brands, including ExxonMobil, BP, Shell, Marathon, Valero,
Phillips 66 and other major brands. 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.