CrossAmerica Partners LP Reports First Quarter 2023 Results
May 8, 2023
Allentown, PA, May 08, 2023 (GLOBE NEWSWIRE) --
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'sGeneral 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-presentationswithin 24 hours after the call for a period of sixty days.
CROSSAMERICA PARTNERS LP
CONSOLIDATED 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
Equity:
Common units- 37,952,950 and 37,937,604 units issued and outstanding at March 31, 2023 and December 31, 2022, respectively
Accumulated other comprehensive income
Total equity
Total liabilities and equity
|
26,757 |
26,156 |
|||
|
15,276 |
36,508 |
|||
|
13,551 |
16,469 |
|||
|
28,827 |
52,977 |
|||
|
$ |
1,223,739 |
$ |
1,254,598 |
CROSSAMERICA PARTNERS LP
CONSOLIDATED 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 LP |
|||||||
|
CONSOLIDATED 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 |
Attachments
Disclaimer
CrossAmerica Partners LP published this content on 08 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2023 21:17:45 UTC.
