CrossAmerica Partners LP Reports Second Quarter 2023 Results
- Reported Second Quarter 2023 Net Income of $14.5 million, Adjusted EBITDA of $42.2 million and Distributable Cash Flow of $30.4 million compared to Second Quarter 2022 Net Income of $14.0 million, Adjusted EBITDA of $41.4 million and Distributable Cash Flow of $32.4 million
- Reported Second Quarter 2023 Gross Profit for the Wholesale Segment of $31.7 million compared to $33.5 million of Gross Profit for the Second Quarter 2022 and Second Quarter 2023 Gross Profit for the Retail Segment of $66.0 million compared to $55.5 million of Gross Profit for the Second Quarter 2022
- Leverage, as defined in the CAPL Credit Facility, was 3.9 times as of June 30, 2023, compared to 4.5 times as of June 30, 2022
- The Distribution Coverage Ratio was 1.53 times for the three months ended June 30, 2023 and 1.68 times for the trailing twelve months ended June 30, 2023
- 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 2023
Allentown, PA August 7, 2023 – CrossAmerica Partners LP (: 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, 2023.
“We had another strong quarter with total fuel volume for the second quarter up over the prior year in both of our operating segments. In particular, our retail segment posted strong results with increases in operating income, store sales and fuel and store margin,” said Charles Nifong, President and CEO of CrossAmerica. “Overall, our business continues to demonstrate strength across many varied economic environments, which is further reflected in our strong balance sheet and in our healthy distribution coverage levels.”
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.
Second Quarter Results
Consolidated Results
| Key Operating Metrics | Q2 2023 | Q2 2022 |
| Net Income | $14.5M | $14.0M |
| Adjusted EBITDA | $42.2M | $41.4M |
| Distributable Cash Flow | $30.4M | $32.4M |
| Distribution Coverage Ratio: Current Quarter | 1.53x | 1.63x |
| Distribution Coverage Ratio: Trailing Twelve Months | 1.68x | 1.48x |
CrossAmerica reported increases in Net Income and Adjusted EBITDA for the second quarter 2023 compared to the second quarter 2022. For the second quarter 2023, the increase in Adjusted EBITDA was primarily driven by increases in motor fuel and merchandise gross profit in the retail segment, offset by an increase in operating expenses in the retail segment, driven by inflation in several cost categories and increased labor costs in the retail segment. CrossAmerica also generated a $6.7 million gain on the sale of assets during the quarter and experienced a $3.4 million increase in interest expense in the second quarter 2023 due to the increase in interest rates when compared to the second quarter 2022. These two additional factors, combined with the increase in Adjusted EBITDA, contributed to the year-over-year increase in Net Income of $0.5 million. The year-over-year decline in Distributable Cash Flow of $2.0 million was primarily driven by the $3.4 million increase in interest expense for the quarter when compared to the second quarter of 2022 offset by the increase in Adjusted EBITDA for the quarter compared to the prior year.
Wholesale Segment
| Key Operating Metrics | Q2 2023 | Q2 2022 | ||
| Wholesale segment gross profit | $31.7M | $33.5M | ||
| Wholesale motor fuel gallons distributed | 218.1M | 214.4M | ||
| Average wholesale gross profit per gallon | $ | 0.082 | $ | 0.089 |
During the second quarter 2023, CrossAmerica’s wholesale segment gross profit declined 5% compared to the second quarter 2022. This was primarily driven by a decrease in motor fuel gross profit, which was driven by an 8% decrease in fuel margin per gallon, partially offset by a 2% increase in wholesale volume distributed. The decrease in fuel margin per gallon was primarily attributable to the lower cost of fuel and a corresponding decline in CrossAmerica's fuel purchase terms discounts on certain gallons during the second quarter of 2023 compared to the prior year. The increase in wholesale fuel volume was driven primarily by the integration of the Community Service Stations, Inc. assets acquired during the fourth quarter 2022, offset by the conversion of certain lessee dealer sites to company operated sites during the quarter.
Retail Segment
| Key Operating Metrics | Q2 2023 | Q2 2022 | ||||
| Retail segment gross profit | $66.0M | $55.5M | ||||
| Retail segment motor fuel gallons distributed | 130.8M | 128.8M | ||||
| Same store motor fuel gallons distributed | 122.3M | 123.7M | ||||
| Retail segment motor fuel gross profit | $35.7M | $29.8M | ||||
| Retail segment margin per gallon, before deducting credit card fees and commissions | $ | 0.370 | $ | 0.340 | ||
| Same store merchandise sales excluding cigarettes* | $50.2M | $46.6M | ||||
| Merchandise gross profit* | $24.2M | $20.2M | ||||
| Merchandise gross profit percentage* | 29.0 | % | 27.3 | % | ||
*Includes only company operated retail sites
For the second quarter 2023, the retail segment generated a 19% increase in gross profit compared to the second quarter 2022. The increase for the second quarter 2023 was primarily due to higher motor fuel and merchandise gross profit.
The retail segment sold 130.8 million retail fuel gallons during the second quarter 2023, which was an increase of 2% when compared to the second quarter 2022. Same store retail segment fuel volume for the second quarter 2023 declined 1% from 123.7 million gallons during the second quarter 2022 to 122.3 million gallons. Retail segment overall fuel gallons increased during the second quarter of 2023 compared to the prior year due to the conversion of certain lessee dealer sites to company operated sites during the quarter.
For the second quarter 2023, CrossAmerica’s merchandise gross profit and other revenue increased 20% when compared to the second quarter 2022, due to increases in overall store sales, merchandise gross profit percentage and 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 8% for the second quarter 2023 when compared to the second quarter 2022. Merchandise gross profit percentage increased to 29.0% for the second quarter 2023 from 27.3% for the second quarter 2022, primarily due to improved merchandise margins and an improving mix of merchandise sales.
Divestment Activity
During the three months ended June 30, 2023, CrossAmerica sold six properties for $7.8 million in proceeds, resulting in a net gain of $6.1 million.
Liquidity and Capital Resources
As of June 30, 2023, CrossAmerica had $761 million outstanding under its CAPL Credit Facility compared to $786 million outstanding under its facilities as of June 30, 2022. As of August 3, 2023, after taking into consideration debt covenant restrictions, approximately $166 million was available for future borrowings under the CAPL Credit Facility. Taking the interest rate swap contracts the Partnership currently has in place into account, CrossAmerica’s effective interest rate on the CAPL Credit Facility at June 30, 2023 was 5.1%. Leverage, as defined in the CAPL Credit Facility, was 3.9 times as of June 30, 2023, compared to 4.5 times as of June 30, 2022. As of June 30, 2023, CrossAmerica was in compliance with its financial covenants under the credit facility.
Distributions
On July 25, 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 second quarter 2023. As previously announced, the distribution will be paid on August 11, 2023 to all unitholders of record as of August 4, 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 August 8, 2023 at 9:00 a.m. Eastern Time to discuss second quarter 2023 earnings results. The conference call numbers are 888-396-8049 or 416-764-8646 and the passcode for both is 70854269. 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). 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 site 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, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 4,491 | $ | 16,054 | ||||
| Accounts receivable, net of allowances of $723 and $686, respectively | 34,734 | 30,825 | ||||||
| Accounts receivable from related parties | 668 | 743 | ||||||
| Inventory | 51,965 | 47,307 | ||||||
| Assets held for sale | 1,001 | 983 | ||||||
| Current portion of interest rate swap contracts | 15,442 | 13,827 | ||||||
| Other current assets | 7,818 | 8,667 | ||||||
| Total current assets | 116,119 | 118,406 | ||||||
| Property and equipment, net | 709,099 | 728,379 | ||||||
| Right-of-use assets, net | 156,897 | 164,942 | ||||||
| Intangible assets, net | 103,450 | 113,919 | ||||||
| Goodwill | 99,409 | 99,409 | ||||||
| Interest rate swap contracts, less current portion | 4,657 | 3,401 | ||||||
| Other assets | 27,944 | 26,142 | ||||||
| Total assets | $ | 1,217,575 | $ | 1,254,598 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt and finance lease obligations | $ | 2,985 | $ | 11,151 | ||||
| Current portion of operating lease obligations | 35,076 | 35,345 | ||||||
| Accounts payable | 76,953 | 77,048 | ||||||
| Accounts payable to related parties | 8,872 | 7,798 | ||||||
| Accrued expenses and other current liabilities | 25,068 | 23,144 | ||||||
| Motor fuel and sales taxes payable | 21,359 | 20,813 | ||||||
| Total current liabilities | 170,313 | 175,299 | ||||||
| Debt and finance lease obligations, less current portion | 760,064 | 761,638 | ||||||
| Operating lease obligations, less current portion | 127,277 | 135,220 | ||||||
| Deferred tax liabilities, net | 11,170 | 10,588 | ||||||
| Asset retirement obligations | 47,083 | 46,431 | ||||||
| Other long-term liabilities | 46,071 | 46,289 | ||||||
| Total liabilities | 1,161,978 | 1,175,465 | ||||||
| Commitments and contingencies | ||||||||
| Preferred membership interests | 27,253 | 26,156 | ||||||
| Equity: | ||||||||
| Common units— 37,952,950 and 37,937,604 units issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 9,217 | 36,508 | ||||||
| Accumulated other comprehensive income | 19,127 | 16,469 | ||||||
| Total equity | 28,344 | 52,977 | ||||||
| Total liabilities and equity | $ | 1,217,575 | $ | 1,254,598 | ||||
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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating revenues (a) | $ | 1,145,396 | $ | 1,475,033 | $ | 2,161,555 | $ | 2,568,244 | ||||||||
| Costs of sales (b) | 1,047,672 | 1,386,088 | 1,981,772 | 2,400,469 | ||||||||||||
| Gross profit | 97,724 | 88,945 | 179,783 | 167,775 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Operating expenses (c) | 49,798 | 42,216 | 95,421 | 84,325 | ||||||||||||
| General and administrative expenses | 7,475 | 5,680 | 13,214 | 12,163 | ||||||||||||
| Depreciation, amortization and accretion expense | 19,298 | 19,919 | 39,118 | 40,194 | ||||||||||||
| Total operating expenses | 76,571 | 67,815 | 147,753 | 136,682 | ||||||||||||
| Gain (loss) on dispositions and lease terminations, net | 6,700 | (58 | ) | 4,933 | (302 | ) | ||||||||||
| Operating income | 27,853 | 21,072 | 36,963 | 30,791 | ||||||||||||
| Other income, net | 163 | 102 | 424 | 232 | ||||||||||||
| Interest expense | (10,683 | ) | (7,321 | ) | (22,695 | ) | (13,982 | ) | ||||||||
| Income before income taxes | 17,333 | 13,853 | 14,692 | 17,041 | ||||||||||||
| Income tax expense (benefit) | 2,797 | (113 | ) | 1,135 | (1,972 | ) | ||||||||||
| Net income | ||||||||||||||||
