CrossAmerica Partners LP Reports First Quarter 2024 Results
- Reported First Quarter 2024 Net Loss of
$17.5 million that includes a$15.9 million loss on lease terminations with Applegreen, Adjusted EBITDA of$23.6 million and Distributable Cash Flow of$11.7 million compared to a Net Loss of$1.0 million , Adjusted EBITDA of$31.7 million and Distributable Cash Flow of$19.1 million for the First Quarter 2023 - Reported First Quarter 2024 Gross Profit for the Wholesale Segment of
$27.0 million compared to$31.2 million of Gross Profit for the First Quarter 2023 and First Quarter 2024 Gross Profit for the Retail Segment of$54.4 million compared to$50.8 million of Gross Profit for the First Quarter 2023 - Leverage, as defined in the CAPL Credit Facility, was 4.49 times as of
March 31, 2024 , compared to 4.21 times as ofDecember 31, 2023 - The Distribution Coverage Ratio for the trailing twelve months ended
March 31, 2024 was 1.37 times compared to 1.70 times for the comparable period of 2023 - Began conversions of Applegreen lessee dealer locations to company operated retail locations during First Quarter 2024, with all 59 locations converted to company operated locations early in the Second Quarter 2024
- The Board of Directors of
CrossAmerica's General Partner declared a quarterly distribution of$0.5250 per limited partner unit attributable to the First Quarter 2024
“The first quarter was a difficult operating environment, with generally increasing fuel prices that resulted in lower margins along with industry wide lower overall demand for both fuel and merchandise. Our financial results for the quarter compared to the prior year reflect these challenges,” said
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 within the same segment. Same store merchandise sales excludes branded food sales and other revenues such as lottery commissions and car wash sales. Certain merchandise products have been transitioned from a gross profit model (whereby
First Quarter Results
Consolidated Results
| Key Operating Metrics | Q1 2024 | Q1 2023 |
| Net Income | ( |
( |
| Operating Expenses | ||
| Adjusted EBITDA | ||
| Distributable Cash Flow | ||
| Distribution Coverage Ratio: |
0.59x | 0.96x |
| Distribution Coverage Ratio: Trailing 12 Months | 1.37x | 1.70x |
Wholesale Segment
| Key Operating Metrics | Q1 2024 | Q1 2023 | ||
| Wholesale segment gross profit | ||||
| Wholesale motor fuel gallons distributed | 184.0M | 201.9M | ||
| Average wholesale gross profit per gallon | $ | 0.079 | $ | 0.083 |
During the first quarter 2024, CrossAmerica’s wholesale segment gross profit decreased 14% compared to the first quarter 2023. This was driven by a decline in motor fuel and rent gross profit primarily due to the conversion of certain lessee dealer sites to company operated and commission agent sites and a net loss of independent dealer contracts. The motor fuel gross profit decline was driven by a 5% decrease in fuel margin per gallon and a 9% decline in wholesale volume distributed, with a substantial portion of the wholesale volume decline attributable to the conversion of wholesale locations to retail locations and the associated volume for these locations is now reflected in CrossAmerica’s retail segment.
Retail Segment
| Key Operating Metrics | Q1 2024 | Q1 2023 | ||||
| Retail segment gross profit | ||||||
| Retail segment motor fuel gallons distributed | 121.7M | 119.1M | ||||
| Same store motor fuel gallons distributed | 108.6M | 112.3M | ||||
| Retail segment motor fuel gross profit | ||||||
| Retail segment margin per gallon, before deducting credit card fees and commissions | $ | 0.308 | $ | 0.318 | ||
| Same store merchandise sales excluding cigarettes* | ||||||
| Merchandise gross profit* | ||||||
| Merchandise gross profit percentage* | 28.1 | % | 27.8 | % | ||
| Operating Expenses | ||||||
| Retail Sites (end of period) | 546 | 462 | ||||
*Includes only company operated retail sites
For the first quarter 2024, the retail segment generated a 7% increase in gross profit compared to the first quarter 2023. The increase for the first quarter 2024 was primarily due to higher merchandise gross profit, partially offset by a decline of 3% in motor fuel gross profit.
The retail segment sold 121.7 million of retail fuel gallons during the first quarter 2024, which was an increase of 2% when compared to the first quarter 2023. This volume increase was primarily driven by the conversion of lessee dealer sites to company operated and commission agent sites over the past year and during the quarter, offset by a decline in volume for the base business. Same store retail segment fuel volume for the first quarter 2024 declined 3% from 112.3 million gallons during the first quarter 2023 to 108.6 million gallons for the same period in 2024.
For the first quarter 2024, CrossAmerica’s merchandise gross profit and other revenue increased 21% when compared to the first quarter 2023. The first quarter increase was primarily driven by an increase in the average company operated site count due to the conversion of certain lessee dealer and commission agent sites to company operated sites. Same store merchandise sales excluding cigarettes increased 2% for the first quarter 2024 when compared to the first quarter 2023. Merchandise gross profit percentage increased from 27.8% for the first quarter 2023 to 28.1% for the first quarter 2024, primarily due to improved merchandise margins in the categories of packaged beverages and snacks.
For the first quarter 2024, operating expenses for the retail segment increased
Acquisition of Assets from Applegreen
On
Liquidity and Capital Resources
As of
Distributions
On
Conference Call
The Partnership will host a conference call on
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars, except unit data)
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 6,278 | $ | 4,990 | ||||
| Accounts receivable, net of allowances of |
35,087 | 31,185 | ||||||
| Accounts receivable from related parties | 1,021 | 437 | ||||||
| Inventory | 58,037 | 52,344 | ||||||
| Assets held for sale | 4,641 | 400 | ||||||
| Current portion of interest rate swap contracts | 7,169 | 9,321 | ||||||
| Other current assets | 11,068 | 9,845 | ||||||
| Total current assets | 123,301 | 108,522 | ||||||
| Property and equipment, net | 692,728 | 705,217 | ||||||
| Right-of-use assets, net | 146,170 | 148,317 | ||||||
| Intangible assets, net | 90,422 | 95,261 | ||||||
| 99,409 | 99,409 | |||||||
| Deferred tax assets | 1,425 | 759 | ||||||
| Interest rate swap contracts, less current portion | 4,439 | 687 | ||||||
| Other assets | 21,579 | 23,510 | ||||||
| Total assets | $ | 1,179,473 | $ | 1,181,682 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt and finance lease obligations | $ | 3,133 | $ | 3,083 | ||||
| Current portion of operating lease obligations | 34,973 | 34,787 | ||||||
| Accounts payable | 71,490 | 68,986 | ||||||
| Accounts payable to related parties | 6,920 | 10,180 | ||||||
| Accrued expenses and other current liabilities | 24,570 | 23,674 | ||||||
| Motor fuel and sales taxes payable | 18,767 | 20,386 | ||||||
| Total current liabilities | 159,853 | 161,096 | ||||||
| Debt and finance lease obligations, less current portion | 795,755 | 753,880 | ||||||
| Operating lease obligations, less current portion | 116,351 | 118,723 | ||||||
| Deferred tax liabilities, net | 7,652 | 12,919 | ||||||
| Asset retirement obligations | 48,329 | 47,844 | ||||||
| Interest rate swap contracts | 1,139 | 3,535 | ||||||
| Other long-term liabilities | 52,212 | 52,934 | ||||||
| Total liabilities | 1,181,291 | 1,150,931 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Preferred membership interests | 28,401 | 27,744 | ||||||
| Equity: | ||||||||
| Common units— 38,027,194 and 37,983,154 units issued and outstanding at |
(39,616 | ) | (2,392 | ) | ||||
| Accumulated other comprehensive income | 9,397 | 5,399 | ||||||
| Total (deficit) equity | (30,219 | ) | 3,007 | |||||
| Total liabilities and equity | $ | 1,179,473 | $ | 1,181,682 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, Except Unit and Per Unit Amounts)
| Three Months Ended |
||||||||
| 2024 | 2023 | |||||||
| Operating revenues (a) | $ | 941,548 | $ | 1,016,159 | ||||
| Costs of sales (b) | 860,200 | 934,100 | ||||||
| Gross profit | 81,348 | 82,059 | ||||||
| Operating expenses: | ||||||||
| Operating expenses (c) | 52,028 | 45,623 | ||||||
| General and administrative expenses | 6,838 | 5,739 | ||||||
| Depreciation, amortization and accretion expense | 18,721 | 19,820 | ||||||
| Total operating expenses | 77,587 | 71,182 | ||||||
| Loss on dispositions and lease terminations, net | (16,806 | ) | (1,767 | ) | ||||
| Operating (loss) income | (13,045 | ) | 9,110 | |||||
| Other income, net | 249 | 261 | ||||||
| Interest expense | (10,541 | ) | (12,012 | ) | ||||
| Loss before income taxes | (23,337 | ) | (2,641 | ) | ||||
| Income tax benefit | (5,797 | ) | (1,662 | ) | ||||
| Net loss | (17,540 | ) | (979 | ) | ||||
| Accretion of preferred membership interests | 657 | 601 | ||||||
| Net loss available to limited partners | $ | (18,197 | ) | $ | (1,580 | ) | ||
| Net loss per common unit | ||||||||
| Basic | $ | (0.48 | ) | $ | (0.04 | ) | ||
| Diluted | $ | (0.48 | ) | $ | (0.04 | ) | ||
| Weighted-average common units: | ||||||||
| Basic | 37,994,285 | 37,940,332 | ||||||
| Diluted | 37,994,285 | 37,940,332 | ||||||
| Supplemental information: | ||||||||
| (a) includes excise taxes of: | $ | 70,713 | $ | 69,884 | ||||
| (a) includes rent income of: | 19,166 | 21,320 | ||||||
| (b) excludes depreciation, amortization and accretion | ||||||||
| (b) includes rent expense of: | 5,419 | 5,554 | ||||||
| (c) includes rent expense of: | 3,942 | 3,798 | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
| Three Months Ended |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (17,540 | ) | $ | (979 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation, amortization and accretion expense | 18,721 | 19,820 | ||||||
| Amortization of deferred financing costs | 483 | 1,848 | ||||||
| Credit loss expense | — | 37 | ||||||
| Deferred income tax benefit | (5,932 | ) | (2,056 | ) | ||||
| Equity-based employee and director compensation expense | 205 | 561 | ||||||
| Loss on dispositions and lease terminations, net | 16,806 | 1,767 | ||||||
| Changes in operating assets and liabilities, net of acquisitions | (6,927 | ) | (9,460 | ) | ||||
| Net cash provided by operating activities | 5,816 | 11,538 | ||||||
| Cash flows from investing activities: | ||||||||
| Principal payments received on notes receivable | 45 | 53 | ||||||
| Proceeds from sale of assets | — | 568 | ||||||
| Capital expenditures | (6,105 | ) | (6,001 | ) | ||||
| Lease termination payments to Applegreen, including inventory purchases | (19,904 | ) | — | |||||
| Net cash used in investing activities | (25,964 | ) | (5,380 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under revolving credit facilities | 49,000 | 187,400 | ||||||
| Repayments on revolving credit facilities | (6,740 | ) | (15,537 | ) | ||||
| Repayments on the Term Loan Facility | — | (158,980 | ) | |||||
| Payments of finance lease obligations | (744 | ) | (698 | ) | ||||
| Payments of deferred financing costs | (74 | ) | (6,906 | ) | ||||
| Distributions paid on distribution equivalent rights | (65 | ) | (56 | ) | ||||
| Distributions paid on common units | (19,941 | ) | (19,918 | ) | ||||
| Net cash provided by (used in) financing activities | 21,436 | (14,695 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 1,288 | (8,537 | ) | |||||
| Cash and cash equivalents at beginning of period | 4,990 | 16,054 | ||||||
| Cash and cash equivalents at end of period | $ | 6,278 | $ | 7,517 | ||||
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 |
||||||||
| 2024 | 2023 | |||||||
| Gross profit: | ||||||||
| Motor fuel gross profit | $ | 14,603 | $ | 16,708 | ||||
| Rent gross profit | 11,439 | 13,255 | ||||||
| Other revenues | 920 | 1,247 | ||||||
| Total gross profit | 26,962 | 31,210 | ||||||
| Operating expenses | (8,897 | ) | (9,541 | ) | ||||
| Operating income | $ | 18,065 | $ | 21,669 | ||||
| Motor fuel distribution sites (end of period): (a) | ||||||||
| Independent dealers (b) | 624 | 643 | ||||||
| Lessee dealers (c) | 511 | 612 | ||||||
| Total motor fuel distribution sites | 1,135 | 1,255 | ||||||
| Average motor fuel distribution sites | 1,172 | 1,271 | ||||||
| Volume of gallons distributed | 184,025 | 201,861 | ||||||
| Margin per gallon | $ | 0.079 | $ | 0.083 | ||||
(a) In addition,
(b) The decrease in the independent dealer site count was primarily attributable to the net loss of contracts, partially offset by divestitures of certain lessee dealer sites but with continued fuel supply.
(c) The decrease in the lessee dealer count was primarily attributable to the conversion of certain lessee dealer sites to company operated sites, including through the Applegreen Acquisition, and
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 |
||||||||
| 2024 | 2023 | |||||||
| Gross profit: | ||||||||
| Motor fuel | $ | 26,036 | $ | 26,760 | ||||
| Merchandise | 21,443 | 18,123 | ||||||
| Rent | 2,308 | 2,511 | ||||||
| Other revenue | 4,599 | 3,455 | ||||||
| Total gross profit | 54,386 | 50,849 | ||||||
| Operating expenses | (43,131 | ) | (36,082 | ) | ||||
| Operating income | $ | 11,255 | $ | 14,767 | ||||
| Retail sites (end of period): | ||||||||
| Company operated retail sites (a) | 343 | 268 | ||||||
| Commission agents (b) | 203 | 194 | ||||||
| Total system sites at the end of the period | 546 | 462 | ||||||
| Total retail segment statistics: | ||||||||
| Volume of gallons sold | 121,717 | 119,085 | ||||||
| Same store total system gallons sold(c) | 108,573 | 112,259 | ||||||
| Average retail fuel sites | 514 | 457 | ||||||
| Margin per gallon, before deducting credit card fees and commissions | $ | 0.308 | $ | 0.318 | ||||
| Company operated site statistics: | ||||||||
| Average retail fuel sites | 315 | 258 | ||||||
| Same store fuel volume(c) | 72,948 | 74,777 | ||||||
| Margin per gallon, before deducting credit card fees | $ | 0.327 | $ | 0.341 | ||||
| Same store merchandise sales(c) | $ | 61,522 | $ | 61,268 | ||||
| Same store merchandise sales excluding cigarettes(c) | $ | 42,267 | $ | 41,334 | ||||
| Merchandise gross profit percentage | 28.1 | % | 27.8 | % | ||||
| Commission site statistics: | ||||||||
| Average retail fuel sites | 199 | 198 | ||||||
| Margin per gallon, before deducting credit card fees and commissions | $ | 0.267 | $ | 0.273 | ||||
(a) The increase in the company operated site count was primarily attributable to the conversion of certain lessee dealer and commission agent sites to company operated sites.
(b) The increase in the commission agent site count was primarily attributable to the conversion of certain lessee dealer sites to commission agent sites, partially offset by the conversion of certain commission agent sites to company operated sites.
(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 excludes branded food sales and other revenues such as lottery commissions and car wash sales. Certain merchandise products have been transitioned from a gross profit model (whereby
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 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.
The following table presents reconciliations of EBITDA, Adjusted EBITDA, and Distributable Cash Flow to net income, the most directly comparable
| Three Months Ended |
||||||||
| 2024 | 2023 | |||||||
| Net loss | $ | (17,540 | ) | $ | (979 | ) | ||
| Interest expense | 10,541 | 12,012 | ||||||
| Income tax benefit | (5,797 | ) | (1,662 | ) | ||||
| Depreciation, amortization and accretion expense | 18,721 | 19,820 | ||||||
| EBITDA | 5,925 | 29,191 | ||||||
| Equity-based employee and director compensation expense | 205 | 561 | ||||||
| Loss on dispositions and lease terminations, net (a) | 16,806 | 1,767 | ||||||
| Acquisition-related costs (b) | 632 | 219 | ||||||
| Adjusted EBITDA | 23,568 | 31,738 | ||||||
| Cash interest expense | (10,058 | ) | (10,163 | ) | ||||
| Sustaining capital expenditures (c) | (1,642 | ) | (2,049 | ) | ||||
| Current income tax expense (d) | (137 | ) | (394 | ) | ||||
| Distributable Cash Flow | $ | 11,731 | $ | 19,132 | ||||
| Distributions paid on common units | 19,941 | 19,918 | ||||||
| Distribution Coverage Ratio (a) | 0.59x | 0.96x | ||||||
(a) During the three months ended
(b) Relates to certain acquisition-related costs, such as legal and other professional fees, separation benefit costs and purchase accounting adjustments associated with recent acquisitions.
(c) Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain
(d) Excludes income tax incurred on the sale of sites.
About
Contact
Investor Relations:
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
Source: CrossAmerica Partners