8-K
CrossAmerica Partners LP (CAPL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8, 2021
CrossAmerica Partners LP
(Exact name of registrant as specified in its charter)
| Delaware | 001-35711 | 45-4165414 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission File Number) | (IRS Employer<br><br><br>Identification No.) |
| 645 Hamilton Street, Suite 400<br><br><br>Allentown, PA | 18101 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (610) 625-8000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Units | CAPL | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 8, 2021, CrossAmerica Partners LP (“CrossAmerica” or the “Partnership”) issued a press release announcing its financial results for the quarter ended September 30, 2021. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
Furnished herewith as Exhibit 99.2 are slides that senior management of CrossAmerica will utilize in CrossAmerica’s third quarter 2021 earnings call. The slides are available on the Webcasts & Presentations page of CrossAmerica’s website at www.crossamericapartners.com.
The information in Item 2.02, Item 7.01 and Exhibits 99.1 and 99.2 of Item 9.01 of this report, according to general instruction B.2., shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. By furnishing this information, the Partnership makes no admission as to the materiality of such information that the Partnership chooses to disclose solely because of Regulation FD.
Safe Harbor Statement
Statements contained in the exhibits to this report that state the Partnership’s or its management’s expectations or predictions of the future are forward-looking statements. It is important to note that the Partnership’s actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020 and in subsequent filings that the Partnership has filed with the Securities and Exchange Commission (the “SEC”). The Partnership undertakes no duty or obligation to publicly update or revise the information contained in this report, although the Partnership may do so from time to time as management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated November 8, 2021 regarding CrossAmerica’s earnings |
| 99.2 | Investor Presentation Slides of CrossAmerica |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CrossAmerica Partners LP | ||
|---|---|---|
| By: | CrossAmerica GP LLC | |
| its general partner | ||
| By: | /s/ Keenan D. Lynch | |
| Name: | Keenan D. Lynch | |
| Title: | General Counsel and Corporate Secretary |
Dated: November 8, 2021
capl-ex991_7.htm
Exhibit 99.1
CrossAmerica Partners LP Reports Third Quarter 2021 Results
| - | Reported Third Quarter 2021 Operating Income of $12.6 million and Net Income of $8.9 million compared to Operating Income of $23.7 million and Net Income of $21.2 million for the Third Quarter 2020 |
|---|---|
| - | Generated Third Quarter 2021 Adjusted EBITDA of $35.9 million and Distributable Cash Flow of $30.4 million compared to Third Quarter 2020 Adjusted EBITDA of $30.0 million and Distributable Cash Flow of $29.7 million |
| --- | --- |
| - | Reported Third Quarter 2021 Gross Profit for the Wholesale Segment of $48.2 million compared to $42.8 million of Gross Profit for the Third Quarter 2020 |
| --- | --- |
| - | Distributed 354.6 million wholesale fuel gallons during the Third Quarter 2021 at an average wholesale fuel margin per gallon of 9.6 cents compared to 327.4 million wholesale fuel gallons at an average wholesale fuel margin per gallon of 9.4 cents during the Third Quarter 2020, an increase of 8% in gallons distributed and an increase of 2% in margin per gallon |
| --- | --- |
| - | Reported Third Quarter 2021 Gross Profit for the Retail Segment of $27.9 million compared to $19.5 million of Gross Profit for the Third Quarter 2020 |
| --- | --- |
| - | Retail segment sold 110.5 million retail fuel gallons during the Third Quarter 2021, including 49.4 million same store retail fuel gallons, a 14% increase compared to 43.2 million same store retail fuel gallons sold during the Third Quarter 2020 |
| --- | --- |
| - | The Distribution Coverage Ratio was 1.53 times for the three months ended September 30, 2021 and 1.22 times for the trailing twelve months ended September 30, 2021 |
| --- | --- |
| - | The Board of Directors of CrossAmerica’s General Partner declared a quarterly distribution of $0.5250 per limited partner unit attributable to the Third Quarter 2021 |
| --- | --- |
| - | Through September 30, 2021, CrossAmerica had closed on 98 properties related to the previously announced acquisition of 106 convenience store properties from 7-Eleven, Inc. |
| --- | --- |
Allentown, PA November 8, 2021 – 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 third quarter ended September 30, 2021.
“We had another strong quarter despite continuing challenges from COVID and the crude oil price environment. As of today, we have also closed on substantially all of the assets from our 7-Eleven acquisition,” said Charles Nifong, CEO and President of CrossAmerica. “Our results this quarter reflect the benefit of these newly acquired assets as well as the positive impact of our ongoing strategic initiatives on our overall business. We remain highly focused on the successful integration of our new sites and on executing our strategic plan to further drive our profitability.”
Third Quarter Results
Consolidated Results
CrossAmerica reported Operating Income of $12.6 million and Net Income of $8.9 million or earnings of $0.23 per diluted common unit for the third quarter 2021. For the same period in 2020, the Partnership reported Operating Income of $23.7 million and Net Income of $21.2 million or $0.56 per diluted common unit. During the third quarter 2020, Operating and Net Income both benefited from a $12.9 million gain on dispositions, primarily driven by gains related to the properties sold in the asset exchanges with Circle K.
Adjusted EBITDA was $35.9 million for the third quarter 2021 compared to $30.0 million for the same period in 2020, representing an increase of 20% (see Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release).
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 third quarter 2021, CrossAmerica’s Wholesale segment generated $48.2 million in gross profit compared to $42.8 million in gross profit for the third quarter 2020, representing an increase of 13%. The Partnership distributed, on a wholesale basis, 354.6 million gallons of motor fuel at an average wholesale gross profit of $0.096 per gallon, resulting in motor fuel gross profit of $34.1 million. For the three-month period ended September 30, 2020, CrossAmerica distributed, on a wholesale basis, 327.4 million gallons of fuel at an average wholesale gross profit of $0.094 per gallon, resulting in motor fuel gross profit of $30.7 million. The 11% increase in motor fuel gross profit was driven by an 8% increase in fuel volume distributed and a 2% increase in fuel margin per gallon. The main drivers of the volume increase were the continuing recovery from the COVID-19 Pandemic, as well as the acquisition of assets from 7-Eleven. The Partnership’s wholesale fuel margin benefited from higher terms discount as a result of the higher crude prices during the quarter and from increased volume to CrossAmerica’s company operated retail sites.
The prices paid by the Partnership to its motor fuel suppliers for wholesale motor fuel (which affects the cost of sales) are highly correlated to the price of crude oil. The average daily spot price of West Texas Intermediate crude oil during the third quarter 2021 was $70.58 per barrel, a 73% increase, compared to the average daily spot price of $40.89 per barrel during the same period in 2020.
CrossAmerica’s gross profit from rent for the Wholesale segment was $13.3 million for the third quarter 2021 compared to $11.9 million for the third quarter 2020, representing an increase of 12%. The increase in rent was primarily driven by $0.5 million in rent concessions that impacted the third quarter 2020.
Operating expenses increased $0.4 million or 4%, primarily as a result of increases in management fees and insurance expense.
Operating income for the Wholesale segment was $39.5 million for the third quarter 2021 compared to $34.5 million for the same period in 2020, an increase of 14%. As discussed above, the year-over-year increase was primarily driven by the increase in motor fuel gross profit.
Retail Segment
For the third quarter 2021, the Retail segment reported motor fuel gross profit of $7.8 million. For the same period in 2020, CrossAmerica generated motor fuel gross profit of $3.5 million. The $4.3 million or 122% increase in motor fuel gross profit was attributable to increased volume and higher fuel margins for the three months ended September 30, 2021 as compared to the same period in 2020.
The Retail segment sold 110.5 million of retail fuel gallons during the third quarter 2021, a 29% increase over third quarter 2020. This increased volume resulted from the increase in company operated sites as a result of the acquisition of assets from 7-Eleven as well as the continuing recovery from the COVID-19 Pandemic. Same store fuel volume for the third quarter 2021 increased to 49.4 million gallons from 43.2 million during the third quarter 2020, an increase of 14%.
CrossAmerica’s merchandise gross profit and other revenues increased $3.2 million and $0.5 million, respectively, as a result of the increase in company operated sites driven by the acquisition of assets from 7-Eleven. Merchandise gross profit percentage increased from 26.6% to 26.7% with same store merchandise sales flat for the third quarter 2021 when compared to the third quarter 2020. Same store merchandise sales increased 9% for the third quarter 2021 when compared to the third quarter 2019.
Operating expenses increased $6.7 million or 35% primarily due to a $4.4 million increase as a result of the acquisition of assets from 7-Eleven and higher employment costs at the company operated sites acquired in the April 2020 acquisition of retail and wholesale assets.
Operating income for the Retail segment was $2.0 million for the third quarter 2021 compared to $0.3 million for the third quarter 2020, primarily as a result of changes in operations noted above.
Acquisition Activity
As of September 30, 2021, CrossAmerica had closed on 98 sites for total consideration of $262.0 million, including inventory and other working capital, of its previously announced acquisition of 106 convenience store properties from 7-Eleven. As of November 4, 2021, the Partnership had closed on five additional properties for a purchase price of $10.4 million, including inventory and other working capital. CrossAmerica anticipates closing on the final three properties, once it is in receipt of all required operational licenses and permits.
Divestment of Assets
During the three and nine months ended September 30, 2021, CrossAmerica sold 14 and 23 properties for $4.9 million and $8.8 million in proceeds, respectively.
Liquidity and Capital Resources
As of September 30, 2021, CrossAmerica had $636.7 million outstanding under its CAPL Credit Facility and $160.0 million outstanding under its JKM Credit Facility. As of November 4, 2021, after taking into consideration debt covenant restrictions, approximately $84.6 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 5.4 times as of September 30, 2021. As of September 30, 2021, CrossAmerica was in compliance with its financial covenants under the credit facility.
Distributions
On October 21, 2021, 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 third quarter 2021. As previously announced, the distribution will be paid on November 10, 2021 to all unitholders of record as of November 3, 2021. The amount and timing of any future distributions is subject to the discretion of the Board as provided in CrossAmerica’s Partnership Agreement.
Distributable Cash Flow and Distribution Coverage Ratio
Distributable Cash Flow was $30.4 million for the three-month period ended September 30, 2021, compared to $29.7 million for the same period in 2020. The 2% increase in Distributable Cash Flow was primarily due to the overall performance of both the Wholesale and Retail segments, offset by a $3.8 million tax benefit recorded in the third quarter 2020. The Distribution Coverage Ratio for the current quarter was 1.53 times compared to 1.50 times for the third quarter 2020. For the trailing twelve-month periods ended September 30, 2021 and September 30, 2020, the Distribution Coverage Ratio was 1.22 and 1.24 times, respectively (see Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release).
Conference Call
The Partnership will host a conference call on November 9, 2021 at 9:00 a.m. Eastern Time to discuss third quarter 2021 earnings results. The conference call numbers are 800-774-6070 or 630-691-2753 and the passcode for both is 8674133#. 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)
| December 31, | ||||
|---|---|---|---|---|
| 2020 | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | 8,247 | $ | 513 | |
| Accounts receivable, net of allowances of 339 and 429, respectively | 39,169 | 28,519 | ||
| Accounts receivable from related parties | 836 | 931 | ||
| Inventory | 39,552 | 23,253 | ||
| Assets held for sale | 3,901 | 9,898 | ||
| Other current assets | 18,290 | 11,707 | ||
| Total current assets | 109,995 | 74,821 | ||
| Property and equipment, net | 756,642 | 570,856 | ||
| Right-of-use assets, net | 170,939 | 167,860 | ||
| Intangible assets, net | 120,308 | 92,912 | ||
| Goodwill | 100,115 | 88,764 | ||
| Other assets | 22,006 | 19,129 | ||
| Total assets | 1,280,005 | $ | 1,014,342 | |
| LIABILITIES AND EQUITY | ||||
| Current liabilities: | ||||
| Current portion of debt and finance lease obligations | 9,923 | $ | 2,631 | |
| Current portion of operating lease obligations | 34,828 | 31,958 | ||
| Accounts payable | 85,717 | 63,978 | ||
| Accounts payable to related parties | 9,205 | 5,379 | ||
| Accrued expenses and other current liabilities | 24,527 | 23,267 | ||
| Motor fuel and sales taxes payable | 23,233 | 19,735 | ||
| Total current liabilities | 187,433 | 146,948 | ||
| Debt and finance lease obligations, less current portion | 795,626 | 527,299 | ||
| Operating lease obligations, less current portion | 141,979 | 141,380 | ||
| Deferred tax liabilities, net | 13,917 | 15,022 | ||
| Asset retirement obligations | 45,430 | 41,450 | ||
| Other long-term liabilities | 34,071 | 32,575 | ||
| Total liabilities | 1,218,456 | 904,674 | ||
| Commitments and contingencies | ||||
| Equity: | ||||
| Common units—37,891,701 and 37,868,046 units issued and<br> outstanding at September 30, 2021 and December 31, 2020, respectively | 61,396 | 112,124 | ||
| Accumulated other comprehensive income (loss) | 153 | (2,456 | ) | |
| Total equity | 61,549 | 109,668 | ||
| Total liabilities and equity | 1,280,005 | $ | 1,014,342 |
All values are in US Dollars.
CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, Except Unit and Per Unit Amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Operating revenues ^(a)^ | $ | 985,122 | $ | 591,022 | $ | 2,501,740 | $ | 1,381,119 | ||||
| Costs of sales ^(b)^ | 909,391 | 528,750 | 2,306,047 | 1,225,470 | ||||||||
| Gross profit | 75,731 | 62,272 | 195,693 | 155,649 | ||||||||
| Income from CST Fuel Supply equity interests | — | — | — | 3,202 | ||||||||
| Operating expenses: | ||||||||||||
| Operating expenses ^(c)^ | 34,548 | 27,508 | 95,021 | 63,328 | ||||||||
| General and administrative expenses | 9,903 | 5,363 | 24,429 | 15,440 | ||||||||
| Depreciation, amortization and accretion expense | 19,118 | 18,590 | 56,732 | 51,867 | ||||||||
| Total operating expenses | 63,569 | 51,461 | 176,182 | 130,635 | ||||||||
| Gain on dispositions and lease terminations, net | 426 | 12,881 | 375 | 79,237 | ||||||||
| Operating income | 12,588 | 23,692 | 19,886 | 107,453 | ||||||||
| Other income, net | 127 | 143 | 419 | 358 | ||||||||
| Interest expense | (4,928 | ) | (3,522 | ) | (12,295 | ) | (13,183 | ) | ||||
| Income before income taxes | 7,787 | 20,313 | 8,010 | 94,628 | ||||||||
| Income tax benefit | (1,065 | ) | (892 | ) | (1,664 | ) | (3,868 | ) | ||||
| Net income | 8,852 | 21,205 | 9,674 | 98,496 | ||||||||
| IDR distributions | — | — | — | (133 | ) | |||||||
| Net income available to limited partners | $ | 8,852 | $ | 21,205 | $ | 9,674 | $ | 98,363 | ||||
| Basic and diluted earnings per common unit | $ | 0.23 | $ | 0.56 | $ | 0.26 | $ | 2.64 | ||||
| Weighted-average limited partner units: | ||||||||||||
| Basic common units | 37,887,493 | 37,867,647 | 37,877,273 | 37,202,087 | ||||||||
| Diluted common units | 37,906,799 | 37,868,610 | 37,898,036 | 37,202,087 | ||||||||
| Supplemental information: | ||||||||||||
| (a) includes excise taxes of: | $ | 62,427 | $ | 47,222 | $ | 156,180 | $ | 95,929 | ||||
| (a) includes rent income of: | 21,498 | 19,747 | 62,832 | 62,859 | ||||||||
| (b) excludes depreciation, amortization and accretion | ||||||||||||
| (b) includes rent expense of: | 5,968 | 6,036 | 17,912 | 19,088 | ||||||||
| (c) includes rent expense of: | 3,353 | 3,310 | 9,814 | 5,832 |
CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
| Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 9,674 | $ | 98,496 | ||
| Adjustments to reconcile net income to net cash provided by<br><br><br>operating activities: | ||||||
| Depreciation, amortization and accretion expense | 56,732 | 51,867 | ||||
| Amortization of deferred financing costs | 1,182 | 781 | ||||
| Credit loss expense | 70 | 1,014 | ||||
| Deferred income tax benefit | (2,199 | ) | (4,047 | ) | ||
| Equity-based employee and director compensation expense | 1,096 | 83 | ||||
| Gain on dispositions and lease terminations, net | (375 | ) | (87,225 | ) | ||
| Changes in operating assets and liabilities, net of acquisitions | 10,087 | 25,534 | ||||
| Net cash provided by operating activities | 76,267 | 86,503 | ||||
| Cash flows from investing activities: | ||||||
| Principal payments received on notes receivable | 151 | 246 | ||||
| Proceeds from Circle K in connection with CST Fuel Supply Exchange | — | 23,049 | ||||
| Proceeds from sale of assets | 11,012 | 13,757 | ||||
| Capital expenditures | (32,370 | ) | (24,439 | ) | ||
| Cash paid in connection with acquisitions, net of cash acquired | (261,993 | ) | (28,244 | ) | ||
| Net cash used in investing activities | (283,200 | ) | (15,631 | ) | ||
| Cash flows from financing activities: | ||||||
| Borrowings under revolving credit facilities | 167,000 | 159,098 | ||||
| Repayments on revolving credit facilities | (43,452 | ) | (170,580 | ) | ||
| Borrowings under the Term Loan Facility | 159,950 | — | ||||
| Payments of finance lease obligations | (1,944 | ) | (1,830 | ) | ||
| Payments of deferred financing costs | (7,135 | ) | — | |||
| Distributions paid on distribution equivalent rights | (93 | ) | (8 | ) | ||
| Distributions paid to holders of the IDRs | — | (133 | ) | |||
| Distributions paid on common units | (59,659 | ) | (57,871 | ) | ||
| Net cash provided by (used in) financing activities | 214,667 | (71,324 | ) | |||
| Net increase (decrease) in cash and cash equivalents | 7,734 | (452 | ) | |||
| Cash and cash equivalents at beginning of period | 513 | 1,780 | ||||
| Cash and cash equivalents at end of period | $ | 8,247 | $ | 1,328 |
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 September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Gross profit: | ||||||||||||
| Motor fuel–third party | $ | 18,180 | $ | 15,505 | $ | 52,232 | $ | 40,722 | ||||
| Motor fuel–intersegment and related party | 15,943 | 15,181 | 33,633 | 38,023 | ||||||||
| Motor fuel gross profit | 34,123 | 30,686 | 85,865 | 78,745 | ||||||||
| Rent gross profit | 13,264 | 11,853 | 38,730 | 38,244 | ||||||||
| Other revenues | 795 | 290 | 2,658 | 1,705 | ||||||||
| Total gross profit | 48,182 | 42,829 | 127,253 | 118,694 | ||||||||
| Income from CST Fuel Supply equity interests ^(a)^ | — | — | — | 3,202 | ||||||||
| Operating expenses | (8,686 | ) | (8,329 | ) | (29,608 | ) | (26,912 | ) | ||||
| Operating income | $ | 39,496 | $ | 34,500 | $ | 97,645 | $ | 94,984 | ||||
| Motor fuel distribution sites (end of period): ^(b)^ | ||||||||||||
| Motor fuel–third party | ||||||||||||
| Independent dealers ^(c)^ | 676 | 683 | 676 | 683 | ||||||||
| Lessee dealers ^(d)^ | 643 | 672 | 643 | 672 | ||||||||
| Total motor fuel distribution–third party sites | 1,319 | 1,355 | 1,319 | 1,355 | ||||||||
| Motor fuel–intersegment and related party | ||||||||||||
| Commission agents (Retail segment) ^(d)^ | 200 | 211 | 200 | 211 | ||||||||
| Company operated retail sites (Retail segment) ^(e)^ | 248 | 149 | 248 | 149 | ||||||||
| Total motor fuel distribution–intersegment and<br><br><br>related party sites | 448 | 360 | 448 | 360 | ||||||||
| Motor fuel distribution sites (average during the period): | ||||||||||||
| Motor fuel-third party distribution | 1,325 | 1,345 | 1,330 | 1,253 | ||||||||
| Motor fuel-intersegment and related party distribution | 395 | 364 | 368 | 327 | ||||||||
| Total motor fuel distribution sites | 1,720 | 1,709 | 1,698 | 1,580 | ||||||||
| Volume of gallons distributed (in thousands) | ||||||||||||
| Third party | 244,545 | 242,826 | 700,645 | 613,250 | ||||||||
| Intersegment and related party | 110,087 | 84,541 | 277,392 | 195,008 | ||||||||
| Total volume of gallons distributed | 354,632 | 327,367 | 978,037 | 808,258 | ||||||||
| Wholesale margin per gallon | $ | 0.096 | $ | 0.094 | $ | 0.088 | $ | 0.097 | ||||
| (a) | Represents income from CrossAmerica’s equity interest in CST Fuel Supply. The CST Fuel Supply Exchange closed on March 25, 2020. | |||||||||||
| --- | --- | |||||||||||
| (b) | In addition, as of September 30, 2021 and 2020, CrossAmerica distributed motor fuel to 14 sub-wholesalers who distributed to additional sites. | |||||||||||
| --- | --- | |||||||||||
| (c) | 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. | |||||||||||
| --- | --- | |||||||||||
| (d) | The decreases in the lessee dealer and commission agent site counts were primarily attributable to the real estate rationalization effort. | |||||||||||
| --- | --- | |||||||||||
| (e) | The increase in the company operated site count was primarily attributable to the 98 company operated sites from the acquisition of assets from 7-Eleven. | |||||||||||
| --- | --- |
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 September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Gross profit: | ||||||||||||
| Motor fuel | $ | 7,750 | $ | 3,487 | $ | 18,120 | $ | 7,176 | ||||
| Merchandise | 15,543 | 12,305 | 37,876 | 21,689 | ||||||||
| Rent | 2,266 | 1,858 | 6,190 | 5,527 | ||||||||
| Other revenue | 2,310 | 1,825 | 6,480 | 3,046 | ||||||||
| Total gross profit | 27,869 | 19,475 | 68,666 | 37,438 | ||||||||
| Operating expenses | (25,862 | ) | (19,179 | ) | (65,413 | ) | (36,416 | ) | ||||
| Operating income | $ | 2,007 | $ | 296 | $ | 3,253 | $ | 1,022 | ||||
| Retail sites (end of period): | ||||||||||||
| Commission agents ^(a)^ | 200 | 211 | 200 | 211 | ||||||||
| Company operated retail sites ^(b)^ | 248 | 149 | 248 | 149 | ||||||||
| Total system sites at the end of the period | 448 | 360 | 448 | 360 | ||||||||
| Total system operating statistics: | ||||||||||||
| Average retail fuel sites during the period | 395 | 359 | 368 | 289 | ||||||||
| Volume of gallons sold (in thousands) | 110,523 | 85,902 | 278,564 | 177,855 | ||||||||
| Commission agents statistics: | ||||||||||||
| Average retail fuel sites during the period | 201 | 209 | 203 | 196 | ||||||||
| Company operated retail site statistics: | ||||||||||||
| Average retail fuel sites during the period | 194 | 150 | 165 | 93 | ||||||||
| Same store fuel volume ^(c)^ | 49,444 | 43,232 | n/a | n/a | ||||||||
| Same store merchandise sales ^(c)^ | $ | 43,604 | $ | 43,605 | n/a | n/a | ||||||
| Merchandise gross profit percentage | 26.7 | % | 26.6 | % | 26.8 | % | 26.1 | % | ||||
| (a) | The decrease in the commission site count was primarily attributable to the real estate rationalization effort. | |||||||||||
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| (b) | The increase in the company operated site count was primarily attributable to the 98 company operated sites from the acquisition of assets from 7-Eleven. | |||||||||||
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| (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. Since CrossAmerica did not have any company operated sites in 2020, until the acquisition of retail and wholesale assets closed in April 2020, there are no same store metrics to present for the nine months ended September 30, 2021 and 2020. | |||||||||||
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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 available to the Partnership before deducting interest expense, income taxes, depreciation, amortization and accretion (which includes certain impairment charges). Adjusted EBITDA represents EBITDA as further adjusted to exclude equity-based employee and director 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 benefit or expense. The Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by the weighted average diluted common units and then dividing that result by the distributions paid per limited partner unit.
EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are used as supplemental financial measures by management and by external users of the CrossAmerica financial statements, such as investors and lenders. EBITDA and Adjusted EBITDA are used to assess the 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 CrossAmerica 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 the Partnership’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 the Partnership’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, the Partnership’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 September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net income available to limited partners | $ | 8,852 | $ | 21,205 | $ | 9,674 | $ | 98,363 | ||||
| Interest expense | 4,928 | 3,522 | 12,295 | 13,183 | ||||||||
| Income tax benefit | (1,065 | ) | (892 | ) | (1,664 | ) | (3,868 | ) | ||||
| Depreciation, amortization and accretion expense | 19,118 | 18,590 | 56,732 | 51,867 | ||||||||
| EBITDA | 31,833 | 42,425 | 77,037 | 159,545 | ||||||||
| Equity-based employee and director compensation expense | 342 | 35 | 1,096 | 83 | ||||||||
| Gain on dispositions and lease terminations, net ^(a)^ | (426 | ) | (12,881 | ) | (375 | ) | (79,237 | ) | ||||
| Acquisition-related costs ^(b)^ | 4,141 | 385 | 8,502 | 2,578 | ||||||||
| Adjusted EBITDA | 35,890 | 29,964 | 86,260 | 82,969 | ||||||||
| Cash interest expense | (4,267 | ) | (3,261 | ) | (11,113 | ) | (12,401 | ) | ||||
| Sustaining capital expenditures ^(c)^ | (975 | ) | (745 | ) | (3,407 | ) | (1,792 | ) | ||||
| Current income tax (expense) benefit ^(d)^ | (214 | ) | 3,784 | (548 | ) | 7,452 | ||||||
| Distributable Cash Flow | $ | 30,434 | $ | 29,742 | $ | 71,192 | $ | 76,228 | ||||
| Weighted-average diluted common units | 37,907 | 37,869 | 37,898 | 37,202 | ||||||||
| Distributions paid per limited partner unit ^(e)^ | $ | 0.5250 | $ | 0.5250 | $ | 1.5750 | $ | 1.5750 | ||||
| Distribution Coverage Ratio ^(f)^ | 1.53x | 1.50x | 1.19x | 1.30x | ||||||||
| (a) | CrossAmerica recorded gains on the sale of sites in connection with its ongoing real estate rationalization effort of $0.4 million and $1.5 million for the three and nine months ended September 30, 2021, respectively. During the three months ended September 30, 2020, CrossAmerica recorded gains on the sale of CAPL properties in connection with the asset exchange with Circle K of $11.4 million and $19.3 million for the three and nine months ended September 30, 2020, respectively. The Partnership also recorded gains on the sale of sites in connection with its ongoing real estate rationalization effort of $2.2 million and $4.0 million for the three and nine months ended September 30, 2020, respectively. During the nine months ended September 30, 2020, CrossAmerica recorded a $67.6 million gain on the sale of its 17.5% investment in CST Fuel Supply. Also, during the nine months ended September 30, 2020, CrossAmerica recorded a loss on lease terminations, including the non-cash write-off of deferred rent income associated with these leases, of $10.9 million. | |||||||||||
| --- | --- | |||||||||||
| (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 CrossAmerica’s 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) | Consistent with prior divestitures, the current income tax expense (benefit) excludes income tax incurred on the sale of sites. | |||||||||||
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| (e) | On October 21, 2021, the Board approved a quarterly distribution of $0.5250 per unit attributable to the third quarter of 2021. The distribution is payable on November 10, 2021 to all unitholders of record on November 3, 2021. | |||||||||||
| --- | --- | |||||||||||
| (f) | The distribution coverage ratio is computed by dividing Distributable Cash Flow by the weighted-average diluted common units and then dividing that result by the 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 1,800 locations and owns or leases approximately 1,200 sites. With a geographic footprint covering 34 states, the Partnership has well-established relationships with several major oil brands, including ExxonMobil, BP, Shell, Chevron, 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.
11
November 2021 Third Quarter 2021 Earnings Call Exhibit 99.2
Forward Looking Statements Statements contained in this presentation that state the Partnership’s or management’s expectations or predictions of the future are forward-looking statements. The words “believe,” “expect,” “should,” “intends,” “anticipates,” “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 annual reports on Form 10-K, quarterly reports on Form 10-Q and other reports filed with the Securities and Exchange Commission and available on the Partnership’s website at www.crossamericapartners.com. If any of these factors materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you see or hear during this presentation reflects our current views as of the date of this presentation with respect to future events. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise. 2
CrossAmerica Business Overview Charles Nifong, CEO & President 3
Third Quarter Operations Motor Fuel Gross Profit from the Wholesale Segment increased 11% $34.1 million in 3Q21 versus $30.7 million in 3Q20 Driven by both volume and fuel margin increases Overall Gross Profit for the Wholesale Segment increased 13% ($48.2 million for 3Q21 versus $42.8 million for 3Q20) Wholesale fuel volume increased 8% 355 million gallons distributed in 3Q21 versus 327 million gallons in 3Q20 Primary drivers of increase: acquisition of assets from 7-Eleven and continuing recovery from COVID-19 Pandemic Wholesale fuel margin increased 2% 9.6 cents in 3Q21 versus 9.4 cents in 3Q20 Benefited from company operated retail sites, better sourcing costs and higher terms discounts Retail Segment’s Gross Profit increased $8.4 million or 43% year-over-year $27.9 million in 3Q21 versus $19.5 million in 3Q20 Increase driven by motor fuel (+122%) and merchandise (+26%) gross profit Same store fuel volume for the convenience store portfolio increased 14% from 3Q20 to 3Q21 Operating and General and Administrative (G&A) Expenses Operating Expenses increased $7.0 million primarily due to the increase in company operated sites as a result of the 7-Eleven acquisition and an increase in environmental and insurance costs G&A expenses increased $4.5 million in 3Q21 when compared to 3Q20 primarily driven by acquisition related costs incurred with the acquisition of the 7-Eleven assets and an increase in management fees related to the increase in headcount
4
CrossAmerica Financial Overview Maura Topper, Chief Financial Officer 5
Third Quarter Results Summary 6 Note: See the reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to net income and the definitions of EBITDA, Adjusted EBITDA and DCF in the appendix of this presentation.
Capital Strength Maintain Distribution Rate Distributable Cash Flow of $30.4 million for the three-month period ended September 30, 2021 Distribution rate of $0.5250 per unit ($2.10 per unit annualized) attributable to the third quarter of 2021 TTM coverage ratio was 1.22 times for the period ending 09/30/21 and 1.24 times for the period ending 09/30/20 Capital Expenditures $10.5 million during the third quarter of 2021 $9.5 million of growth capital during the quarter Projects focused on rebranding of certain sites, including the sites being acquired from 7-Eleven, EMV upgrades and site improvements A decline of $3.2 million or 24% when compared to third quarter of 2020
7 Note: See the reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to net income and the definitions of EBITDA, Adjusted EBITDA and DCF in the appendix of this presentation.
Credit Facilities and Leverage Two credit facilities: New JKM Credit Facility Existing CAPL Credit Facility Financial leverage going forward 7-Eleven acquired assets
8 Note: Additional details regarding the JKM Credit Facility and Amendment to the CAPL Credit Agreement are provided in the Second and Third Quarter 2021 Form 10-Qs.
Appendix Third Quarter 2021 Earnings Call 9
Non-GAAP Financial Measures 10 We use the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income available to us 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 employee and director compensation expense, gains or losses on dispositions and lease terminations, certain acquisition related costs, such as legal and other professional fees and separation benefit costs, and certain other non-cash items arising from purchase accounting. Distributable Cash Flow represents Adjusted EBITDA less cash interest expense, sustaining capital expenditures and current income tax benefit or expense. The Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by the weighted average diluted common units and then dividing that result by the distributions paid per limited partner unit.
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 our 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 our operating performance of our 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 our retail site activities. EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are also used to assess our ability to generate cash sufficient to make distributions to our unit-holders.
We believe the presentation of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio provides useful information to investors in assessing our 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 our industry, our definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Non-GAAP Reconciliation 11 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): CrossAmerica recorded gains on the sale of sites in connection with its ongoing real estate rationalization effort of $0.4 million and $1.5 million for the three and nine months ended September 30, 2021, respectively. During the three months ended September 30, 2020, CrossAmerica recorded gains on the sale of CAPL properties in connection with the asset exchange with Circle K of $11.4 million and $19.3 million for the three and nine months ended September 30, 2020, respectively. The Partnership also recorded gains on the sale of sites in connection with its ongoing real estate rationalization effort of $2.2 million and $4.0 million for the three and nine months ended September 30, 2020, respectively. During the nine months ended September 30, 2020, CrossAmerica recorded a $67.6 million gain on the sale of its 17.5% investment in CST Fuel Supply. Also, during the nine months ended September 30, 2020, CrossAmerica recorded a loss on lease terminations, including the non-cash write-off of deferred rent income associated with these leases, of $10.9 million. 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. 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 CrossAmerica’s sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business. Consistent with prior divestitures, the current income tax benefit excludes income tax incurred on the sale of sites. On October 21, 2021, the Board approved a quarterly distribution of $0.5250 per unit attributable to the third quarter of 2021. The distribution is payable on November 10, 2021 to all unitholders of record on November 3, 2021. The distribution coverage ratio is computed by dividing Distributable Cash Flow by the weighted-average diluted common units and then dividing that result by the distributions paid per limited partner unit.