CrossAmerica Partners (CAPL) 9 May 232023 Q1 Earnings call transcript

Welcome to the CrossAmerica Partners First Quarter 2023 Earnings Call. My name is Cheryl, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session. Please note that this conference is being recorded.

the to turn Topper. now will call Maura over I

You may begin.

and today Good operator. XXXX At you call brief me quarter CEO morning the will some up for of the will end questions. from overview you, President. discuss Earnings will a operational Charles Charles and joining With Quarter thank opening performance First and we I comments highlights Thank the provide to Nifong, Partners the Call. is CrossAmerica and CrossAmerica's the then financial results. open

I presentation should on posted slides the utilize morning's point follow out of that today's are These slides during the call will CrossAmerica event. are some part and will available website. as that we webcast this

today's regarding the forward-looking will be management's opportunities There Before from and may include no revenue, session expected and results call, organization. that differ including or that operational we would expectations everyone begin, I metrics statements question-and-answer can expectations. actual assurance not plans, like projections achieved future future to the and will be beliefs of that expectations, remind

with could Securities results. Please for filings on discussion XX-Q annual factors and quarterly the Form actual CrossAmerica's and reports Form including Exchange a important of reports affect see our on that Commission, XX-K

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

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

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

turn now Charles. call will I to that, over With the

morning. you you, making this time Maura be the your for thank us appreciate We with I schedule us joining to Thank in everyone today. Maura. and

provided some the also quarter. During briefly the I operating then today's results. for of provide will go updates color Maura market detail similar more few previous and in will some a on what highlights calls. first other call, on I I financial review the the will through to

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

wholesale million Wholesale the the to compared increased XXXX, profit was $XX.X segment This our profit million first quarter compared of to $XX.X first an quarter XXXX. X% $XX.X gross in quarter when X% gross fuel in growth increase by increase of million driven For margin. fuel the first XXXX. in $XX.X million, of an to of was

fuel increased per the margin XXXX per was first the year-over-year and by which fuel of to a in driven increase of prices first driven XXXX. lower of other cost X% initiatives crude $X.XXX for prior Our offset from by result gallon costs of sourcing sourcing as The wholesale brand year. discounts primarily sourcing compared quarter our $X.XXX certain terms the for quarter lower fuel by gallon the better in consolidation quarter was to

The decline first due was quarter Service Community to XXXX. for the gallons in in same our Stations in in wholesale offset in quarter that of completed to period was first largely by assets volume XXXX. compared compared Our the the XXXX business, when quarter million the XXX.X the of lower fourth acquisition from base was partially volume million to volume XXX.X gallons of XXXX of

to are our our Stations in expectations in assets line wholesale full quarter of acquisition financial quarter is high-quality portfolio. Service we the these include pleased Community results. and in with performing The acquisition first our have The our results first

stronger latter volume Volume has was weeks prior to to quarter volume approximately while were weaker For Administration been prior slightly year, compared higher the national than the on year. the quarter prior end, Information than on year. compared prior the Since the quarter the early a quarter year. the national Energy based generally the gasoline was basis, in of flat the data

was our national year-over-year quarter line volume just has segment, In same-store wholesale volume quarter. been In X% period end, the the in down same-store volume data with approximately overall flat the I provided. since the for

Our entire was my later the by overall I down for retail volume quarter around same-store X% volume driven will our across address strong which our in in portfolio segment, comments.

due the wholesale for certain contracts renewal of rent, rent million year to a reopening our $XX.X slight base closed compared $XX.X certain of prior On the dealer the and increase was quarter to million, of previously sites. our the

stream income income in in a to our continues rental be prior As quarters, business. durable our our

well million $X.X XXXX. profit Our as during performed retail quarter, gross when the compared first to or the segment of increased X% quarter

and merchandise Our the our compared X% profit gross to motor profit when X% XXXX. increased same gross period increased in fuel

For retail national on volume, to touched data relative we focus at operations volume well I a outperforming locations. keep segment appropriately our pricing our performed basis, priced on sharp a our in retail increased are quarter volume in ensure for comments. my the same-store general, In total national our retail we to the retail data, X% as has year-over-year earlier demand all volume on

relative since quarter has that occurred retail quarter. to to the national end, In same-store relative the single-digits been the prior continuing volume low year, the the during volume period up the in outperformance data

flat on was year-over-year. relatively the front, a retail per margin cents margin gallon On basis our

for For first quarters retail fuel this first prior to were for retail typically the prior margins than the were margins year year, COVID. significantly what and fuel quarter stronger

generally quarter period have from since the been than the margins results In the slightly fuel higher first quarter. retail end,

basis. to driven particularly the packaged approximately approximately up year-over-year For sales last a were on on a in XX% snacks performance was and inside year. The by higher sales categories. sales Inside inside increased strong same-store same-site sales relative our beverage basis, sales cigarettes excluding X%

product the pricing, sourcing are to to margin same-store we prior year-over-year up In as due and as strong On between well in year. up inside basis over performance promotions. margin period sales higher-margin quarter sales have store X% the points the in part certain X% front, was approximately end, in our the place to XXX categories in initiatives regards since

same-store As store year. the the success earlier the business relative reflect strong same-store my up of sales various in I margin These overall results prior was volume, quarter inside in initiatives for segment our the to of performance strong the execution. ongoing solid we the portfolio noted and in comments, have retail JKM and

look noted XXXX, evaluate we throughout we As properties. continue and our portfolio to divest opportunities non-core to for

the light total we was quarter first for divesting end, of for Subsequent quarter relatively an The $XXX,XXX. additional sold to two XXXX a properties property million. one $X.X of

credit We credit duration we and I to into Finally, that facilities the consolidated end single the the facility facilities for a five note our our additional refinanced out of extended at first wanted quarter. years.

we our and our forward. need structure simplifies capital liquidity refinancing for operations necessary the us the going business The and and capital provides

was a We partners the from at facility and demand particularly able financial relationships. the we strong our support speaks oversubscribed. of are were of to we the level received pleased had result and and banking performance our we achieve strength That strong midst the complete in as well refinancing the of business this banking the crisis the banking in to of refinancing our

turn for I it review. that, a financial detailed will Maura more to over With

Charles. you, Thank

of segments that and year-over-year We $X review million interest profit retail in of to the in increase about driven would in due income in decline the quarter benefiting environment. was the of the wholesale primarily increase by gross was rate spoke under you to loss increase by would Charles compared did million partnership. to the of the interest reported environment segment his just favorable from for please XXXX. We with to which net first offset a XXXX net margin like in expenses. turn If expense results in $X quarter comments, elevated experience first net our fuel I operating an X, an income first each Slide The quarter for the in

which million compared X% quarter Adjusted for for to of first the of adjusted EBITDA quarter XXXX, was a XXXX. decrease was the of million $XX.X when $XX slight EBITDA first of

Our primarily million of the due cash first was $XX.X in $XX.X income. that of for expense net in to decrease quarter distributable versus The first increase cash our quarter million XXXX distributable for first flow was flow impacted the cash quarter XXXX. interest the

rate recently manage line credit we've this a speak the further interest some overall. I'll and in our facility few to to steps continue environment and item taken about moments

distribution quarter coverage times of compared XXXX the reflecting partnership business for X.XX went of quarter was first current X.XX we the seasonality the Our have public. to that since times our the for seen historically

a XXXX for X.X ended strategic The compared and to benefit continues XX, On our business of first for $XX XXXX a $X.XXX distribution growth time period the ended our of resulting we in the trailing have during over upon XX, fourth ratio. March distribution three March acted coverage unit years initiatives XX-month for The to from almost the paid opportunities the distribution quarter X.XX XX of coverage the basis, total a the partnership per was times XXXX the to XXXX. strengthening attributable of quarter comparable million. past of overall months

quarter Turning quarter. locations. due employment to or X% primarily first the store-level our This $X.X for of operations. costs first the expenses was increased the Operating to for portion company-operated XXXX million expense to compared our increase increased

maintenance at the Improved spending in of impacted employment due primarily hours were X% during impacted higher Increases also approximately to hours prior also expanded an quarter Store-level wages. company-operated compared of in operation for year. and led increase environmental the to many to staffing the our labor and costs conditions inflation costs sites quarter. by

legal associated decreased This we Our quarter last primarily including the acquisition costs a was costs due with fees year's quarter X-Eleven G&A to year-over-year. XX% the other sites and acquisition-related with that expenses in acquired. over for first decrease

on from our Moving spend of expenditures. a efforts first of million that to million total from being the the was spent with of rebranding decline the a related slide. $X.X capital to of total during next X-Eleven. acquisition growth-related $X first expenditures $X the million, included quarter for spending assets This XXXX which quarter of We capital

dispensers During included well rebranding as this work. quarter store capital growth-related spending and targeted upgrade as in investments past

capital and As we XXXX credit Charles the the on XX, syndicated Citizens amended with facility lenders Bank. by March mentioned earlier, restated led

capacity credit $XXX previous facility to up from credit million. revolving of The five-year capacity million, increase facility revolving the $XXX an provides of borrowing

in have be $XXX Additionally, an accordion million borrowing the up conditions to feature terms an additional for we and that can subject accessed facility capacity. of to

the on eliminated $XXX used repay balance current was term the part our of proceeds then obligations. JKM million facility loan which facility the JKM The outstanding credit As and the credit terminated, were pay amendment facility. from restatement to amended

one As noted into borrowings operate credit level. capital needed to structure continue and high our capital of to consolidation with a facility Charles business provides at us our revolving simplified the a

and X.XX the first cash of flow profile, March end us the flexibility XXXX. at performance a opportunity leverage credit forward. provides of improved move of XXXX, the facility-defined times with as XX over quarter ratio As compared year, leverage generation was our our X.X of and past times, function to operational This we

interest expense. earlier, noted impacts quarterly impacting it's and by our were the I our elevated rate results As on environment interest impacted

As into period, continue prior the benefit of place rate we put swaps XXXX. in early we to interest from

swap facility XXXX to XX.X of in of basis fixed LIBOR SOFR amendment points. part we those the average for contracts As those from process, an contracts a resulting amended CAPL credit basis, basis rate a

spot Additionally term. have SOFR-based start notional interest rate and approximately new of in April rate a five-year million a X.X%. These XXXX, a total with swap of swaps, we rate value contracts, entered fixed three $XXX into spot interest start

and one a also total rate interest X, into a swap four-year XXXX, contract notional million with We beginning April of value term. entered $XXX forward-starting

interest the on on rate rising a is certainty where rate These the impacts forward-starting of forward, increased are expense against rates swaps hedge interest additional The today. a rate swap our moving fixed savings us environment interest interest rate with around provide valuable interest immediate based X.X%. and market contract

focus in flows borrowing with site our for In balance maximizing positive cash our continue conclusion, and We and gross and season operating from drive had the value as headwinds. on with future sheet quarter simplification the fuel Charles first portfolio of a and summer our profit the solid we'll the and structure despite ahead. flexibility preparing each well, noted, to business up performance in capacity some for we economic merchandise with opportunities, set

we for up will that, With open questions. it

Okay. feel joining thanks Everyone We'll day. us today. this for joining on Charles, take to to for the great you us. later, them. today, reach happy call. is out to Should have be questions Have us again. free Again, a Thank you

disconnect and from ladies today's Thank this conference. Thank you, may time, At you for participation. your call. This you gentlemen. concludes the