CrossAmerica Partners LP Maintains Quarterly Distribution and Provides Further Update to Impact of Adopting New FASB Lease Accounting Guidance
- Quarterly distribution of
$0.5250 per unit attributable to the first quarter of 2019
Impact of Adopting New FASB Lease Accounting Guidance
In
As was noted in our recent 2018 Form 10-K (Annual Report), certain previous sale-leaseback transactions that were accounted for similarly to capital leases were required to be reassessed under the new guidance as part of adopting ASU 2016-02. These leases are accounted for as operating leases under the new guidance, and so the
Since we are not restating prior periods as part of adopting this guidance, the results in 2019 will not be directly comparable to our results for periods before 2019. Specifically, payments on these sale-leaseback obligations were characterized as principal and interest expense in periods prior to 2019. Starting in 2019, these payments will be characterized as rent expense and thus will reduce gross profit from the wholesale segment, operating income, income before income taxes, and net income relative to the results reported for periods prior to 2019.
The adoption of the new lease standard does not affect the Partnership’s covenant calculations with regard to its Credit Agreement, nor has there been any change in the underlying cash flows related to our leases. The adoption of the new lease standard, if it had been adopted
Supplemental Disclosure Regarding Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are used as supplemental financial measures by management and by external users of the Partnership’s 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
Pro Forma EBITDA and Distribution Coverage based on Full Year 2018 Results (in thousands, except for per unit amounts)
As Reported | Adjustments ASU 2016-02 Leases | As Adjusted | |||||||
Net income available to limited partners | $ | 3,672 | $ | (1,709 | ) | $ | 1,963 | ||
Interest expense | 32,872 | (5,518 | ) | 27,354 | |||||
Income tax benefit | (2,733 | ) | (2,733 | ) | |||||
Depreciation, amortization and accretion | 66,549 | 66,549 | |||||||
EBITDA | 100,360 | (7,227 | ) | 93,133 | |||||
Equity funded expenses related to incentive compensation and the Amended Omnibus Agreement | 3,781 | 3,781 | |||||||
Loss (gain) on dispositions and lease terminations, net | 6,297 | 6,297 | |||||||
Acquisition-related costs | 2,914 | 2,914 | |||||||
Adjusted EBITDA | 113,352 | (7,227 | ) | 106,125 | |||||
Cash interest expense | (31,338 | ) | 5,518 | (25,820 | ) | ||||
Sustaining capital expenditures | (2,443 | ) | (2,443 | ) | |||||
Current income tax expense | (1,528 | ) | (1,528 | ) | |||||
Distributable Cash Flow | $ | 78,043 | $ | (1,709 | ) | $ | 76,334 | ||
Weighted average diluted common units | 34,345 | 34,345 | 34,345 | ||||||
Distributions paid per limited partner unit | $ | 2.2025 | $ | 2.2025 | $ | 2.2025 | |||
Distribution Coverage Ratio | 1.03x | -0.02x | 1.01x |
About
Forward Looking Statement
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," "plan" 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
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Source: CrossAmerica Partners