CrossAmerica Partners LP Reports Second Quarter 2022 Results

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

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

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

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)

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

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

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

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):

(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):

(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):

(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.