CrossAmerica Partners LP Reports Third Quarter 2022 Results
- Reported Third Quarter 2022 Operating Income of
$39.6 million and Net Income of$27.6 million compared to Operating Income of$12.6 million and Net Income of$8.9 million for the Third Quarter 2021 - Generated Third Quarter 2022 Adjusted EBITDA of
$62.2 million and Distributable Cash Flow of$50.9 million compared to Third Quarter 2021 Adjusted EBITDA of$35.9 million and Distributable Cash Flow of$30.4 million - Reported Third Quarter 2022 Gross Profit for the Wholesale Segment of
$56.8 million compared to$48.2 million of Gross Profit for the Third Quarter 2021 and Third Quarter 2022 Gross Profit for the Retail Segment of$56.3 million compared to$27.9 million of Gross Profit for the Third Quarter 2021 - Distributed 338.1 million wholesale fuel gallons during the Third Quarter 2022 at an average wholesale fuel margin per gallon of
12.5 cents compared to 354.6 million wholesale fuel gallons at an average wholesale fuel margin per gallon of9.6 cents during the Third Quarter 2021, a decrease of 5% in gallons distributed and an increase of 30% in margin per gallon - Leverage, as defined in the CAPL Credit Facility, which excludes any pro forma EBITDA from CrossAmerica’s recently announced acquisition of assets from
Community Service Stations, Inc. , was 3.9 times as ofSeptember 30, 2022 , compared to 5.1 times as ofDecember 31, 2021 - The Distribution Coverage Ratio was 2.55 times for the three months ended
September 30, 2022 and 1.74 times for the trailing twelve months endedSeptember 30, 2022 - The Board of Directors of CrossAmerica’s
General Partner declared a quarterly distribution of$0.5250 per limited partner unit attributable to the Third Quarter 2022
“Our financial results for the quarter were exceptionally strong, as reflected in our Adjusted EBITDA and ending leverage for the quarter,” said
Third Quarter Results
Consolidated Results
Key Operating Metrics | Q3 2022 | Q3 2021 |
Operating Income | ||
Adjusted EBITDA | ||
Distributable Cash Flow | ||
Distribution Coverage Ratio – |
2.55x | 1.53x |
Distribution Coverage Ratio - TTM ended |
1.74x | 1.22x |
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
Key Operating Metrics | Q3 2022 | Q3 2021 | ||
Wholesale segment gross profit | ||||
Wholesale motor fuel gallons distributed | 338.1M | 354.6M | ||
Average wholesale gross profit per gallon | $ | 0.125 | $ | 0.096 |
During the third quarter 2022, CrossAmerica’s wholesale segment gross profit increased 18% compared to the third quarter 2021. This was driven by an increase in motor fuel gross profit resulting from a 30% increase in fuel margin per gallon, partially offset by a 5% decline in wholesale volume distributed. The Partnership’s wholesale fuel margin benefited from its ongoing execution of strategic initiatives, increased volume to CrossAmerica’s company operated retail sites and higher variable margins during the quarter. Higher wholesale variable margins were due to greater market volatility in the third quarter 2022 as compared to the third quarter 2021.
Retail Segment
Key Operating Metrics | Q3 2022 | Q3 2021 | ||
Retail segment gross profit | ||||
Retail motor fuel gallons distributed | 126.7M | 110.5M | ||
Same store retail motor fuel gallons distributed* | 45.8M | 49.5M | ||
Motor fuel gross profit | ||||
Same store merchandise sales excluding cigs.* | ||||
Merchandise gross profit | ||||
Merchandise gross profit percentage | 27.1 | % | 26.7 | % |
*Includes only company operated retail sites
For the third quarter 2022, the retail segment generated a 102% increase in gross profit compared to the third quarter 2021 due to increased retail fuel gallons sold, higher fuel margins and higher merchandise gross profit.
The retail segment sold 126.7 million of retail fuel gallons during the third quarter 2022, a 15% increase over the third quarter 2021. This increased volume resulted from the increase in company operated sites as a result of the acquisition of assets from
CrossAmerica’s merchandise gross profit and other revenue increased due to the increase in company operated sites driven by the acquisition of assets from
Acquisition and Divestment Activity
On
The acquisition is subject to customary conditions to closing.
During the three and nine months ended
Liquidity and Capital Resources
As of
Distributions
On
Conference Call
The Partnership will host a conference call on
CONSOLIDATED B
(Thousands of Dollars, except unit data)
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,788 | $ | 7,648 | ||||
Accounts receivable, net of allowances of |
33,561 | 33,331 | ||||||
Accounts receivable from related parties | 863 | 1,149 | ||||||
Inventory | 47,258 | 46,100 | ||||||
Assets held for sale | 7,097 | 4,907 | ||||||
Other current assets | 21,999 | 13,180 | ||||||
Total current assets | 122,566 | 106,315 | ||||||
Property and equipment, net | 738,200 | 755,454 | ||||||
Right-of-use assets, net | 161,196 | 169,333 | ||||||
Intangible assets, net | 95,004 | 114,187 | ||||||
99,409 | 100,464 | |||||||
Other assets | 30,163 | 24,389 | ||||||
Total assets | $ | 1,246,538 | $ | 1,270,142 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of debt and finance lease obligations | $ | 8,376 | $ | 10,939 | ||||
Current portion of operating lease obligations | 35,451 | 34,832 | ||||||
Accounts payable | 80,267 | 67,173 | ||||||
Accounts payable to related parties | 8,464 | 7,679 | ||||||
Accrued expenses and other current liabilities | 22,856 | 20,682 | ||||||
Motor fuel and sales taxes payable | 20,780 | 22,585 | ||||||
Total current liabilities | 176,194 | 163,890 | ||||||
Debt and finance lease obligations, less current portion | 752,193 | 810,635 | ||||||
Operating lease obligations, less current portion | 131,302 | 140,149 | ||||||
Deferred tax liabilities, net | 11,664 | 12,341 | ||||||
Asset retirement obligations | 46,352 | 45,366 | ||||||
Other long-term liabilities | 46,171 | 41,203 | ||||||
Total liabilities | 1,163,876 | 1,213,584 | ||||||
Commitments and contingencies | ||||||||
Preferred membership interests | 25,549 | — | ||||||
Equity: | ||||||||
Common units—37,928,970 and 37,896,556 units issued and outstanding at |
39,811 | 53,528 | ||||||
Accumulated other comprehensive income | 17,302 | 3,030 | ||||||
Total equity | 57,113 | 56,558 | ||||||
Total liabilities and equity | $ | 1,246,538 | $ | 1,270,142 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, Except Unit and Per Unit Amounts)
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Operating revenues (a) | $ | 1,274,407 | $ | 985,122 | $ | 3,842,651 | $ | 2,501,740 | ||||||||
Cost of sales (b) | 1,159,677 | 909,391 | 3,560,146 | 2,306,047 | ||||||||||||
Gross profit | 114,730 | 75,731 | 282,505 | 195,693 | ||||||||||||
Operating expenses: | ||||||||||||||||
Operating expenses (c) | 46,845 | 34,548 | 131,170 | 95,021 | ||||||||||||
General and administrative expenses | 6,599 | 9,903 | 18,762 | 24,429 | ||||||||||||
Depreciation, amortization and accretion expense | 21,329 | 19,118 | 61,523 | 56,732 | ||||||||||||
Total operating expenses | 74,773 | 63,569 | 211,455 | 176,182 | ||||||||||||
(Loss) gain on dispositions and lease terminations, net | (318 | ) | 426 | (620 | ) | 375 | ||||||||||
Operating income | 39,639 | 12,588 | 70,430 | 19,886 | ||||||||||||
Other income, net | 120 | 127 | 352 | 419 | ||||||||||||
Interest expense | (8,351 | ) | (4,928 | ) | (22,333 | ) | (12,295 | ) | ||||||||
Income before income taxes | 31,408 | 7,787 | 48,449 | 8,010 | ||||||||||||
Income tax expense (benefit) | 3,815 | (1,065 | ) | 1,843 | (1,664 | ) | ||||||||||
Net income | 27,593 | 8,852 | 46,606 | 9,674 | ||||||||||||
Accretion of preferred membership interests | 575 | — | 1,138 | — | ||||||||||||
Net income available to limited partners | $ | 27,018 | $ | 8,852 | $ | 45,468 | $ | 9,674 | ||||||||
Earnings per common unit | ||||||||||||||||
Basic | $ | 0.71 | $ | 0.23 | $ | 1.20 | $ | 0.26 | ||||||||
Diluted | $ | 0.71 | $ | 0.23 | $ | 1.20 | $ | 0.26 | ||||||||
Weighted-average limited partner units: | ||||||||||||||||
Basic common units | 37,925,082 | 37,887,493 | 37,912,737 | 37,877,273 | ||||||||||||
Diluted common units | 39,037,660 | 37,906,799 | 37,950,362 | 37,898,036 | ||||||||||||
Supplemental information: | ||||||||||||||||
(a) includes excise taxes of: | $ | 66,129 | $ | 62,427 | $ | 204,588 | $ | 156,180 | ||||||||
(a) includes rent income of: | 21,260 | 21,498 | 62,736 | 62,832 | ||||||||||||
(b) excludes depreciation, amortization and accretion | ||||||||||||||||
(b) includes rent expense of: | 5,906 | 5,968 | 17,692 | 17,912 | ||||||||||||
(c) includes rent expense of: | 4,012 | 3,353 | 11,521 | 9,814 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Nine Months Ended |
||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 46,606 | $ | 9,674 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation, amortization and accretion expense | 61,523 | 56,732 | ||||||
Amortization of deferred financing costs | 2,053 | 1,182 | ||||||
Credit loss expense | 139 | 70 | ||||||
Deferred income tax benefit | (677 | ) | (2,199 | ) | ||||
Equity-based employee and director compensation expense | 1,608 | 1,096 | ||||||
Loss (gain) on dispositions and lease terminations, net | 620 | (375 | ) | |||||
Changes in operating assets and liabilities, net of acquisitions | 14,588 | 10,087 | ||||||
Net cash provided by operating activities | 126,460 | 76,267 | ||||||
Cash flows from investing activities: | ||||||||
Principal payments received on notes receivable | 102 | 151 | ||||||
Proceeds from sale of assets | 4,398 | 11,012 | ||||||
Capital expenditures | (26,784 | ) | (32,370 | ) | ||||
Cash paid in connection with acquisitions, net of cash acquired | (1,885 | ) | (261,993 | ) | ||||
Net cash used in investing activities | (24,169 | ) | (283,200 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under revolving credit facilities | 64,600 | 167,000 | ||||||
Repayments on revolving credit facilities | (101,815 | ) | (43,452 | ) | ||||
Borrowings under the Term Loan Facility | 1,120 | 159,950 | ||||||
Repayments on the Term Loan Facility | (24,600 | ) | — | |||||
Net proceeds from issuance of preferred membership interests | 24,430 | — | ||||||
Payments of finance lease obligations | (2,030 | ) | (1,944 | ) | ||||
Payments of deferred financing costs | (6 | ) | (7,135 | ) | ||||
Distributions paid on distribution equivalent rights | (137 | ) | (93 | ) | ||||
Distributions paid on common units | (59,713 | ) | (59,659 | ) | ||||
Net cash (used in) provided by financing activities | (98,151 | ) | 214,667 | |||||
Net increase in cash and cash equivalents | 4,140 | 7,734 | ||||||
Cash and cash equivalents at beginning of period | 7,648 | 513 | ||||||
Cash and cash equivalents at end of period | $ | 11,788 | $ | 8,247 |
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 |
Nine Months Ended |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Gross profit: | ||||||||||||||||
Motor fuel–third party | $ | 19,500 | $ | 18,180 | $ | 54,719 | $ | 52,232 | ||||||||
Motor fuel–intersegment and related party | 22,710 | 15,943 | 60,796 | 33,633 | ||||||||||||
Motor fuel gross profit | 42,210 | 34,123 | 115,515 | 85,865 | ||||||||||||
Rent gross profit | 12,959 | 13,264 | 37,944 | 38,730 | ||||||||||||
Other revenues | 1,657 | 795 | 5,250 | 2,658 | ||||||||||||
Total gross profit | 56,826 | 48,182 | 158,709 | 127,253 | ||||||||||||
Operating expenses | (11,439 | ) | (8,686 | ) | (32,201 | ) | (29,608 | ) | ||||||||
Operating income | $ | 45,387 | $ | 39,496 | $ | 126,508 | $ | 97,645 | ||||||||
Motor fuel distribution sites (end of period): (a) | ||||||||||||||||
Motor fuel–third party | ||||||||||||||||
Independent dealers (b) | 623 | 676 | 623 | 676 | ||||||||||||
Lessee dealers (c) | 641 | 643 | 641 | 643 | ||||||||||||
Total motor fuel distribution–third party sites | 1,264 | 1,319 | 1,264 | 1,319 | ||||||||||||
Motor fuel–intersegment and related party | ||||||||||||||||
Commission agents (Retail segment) (c) | 198 | 200 | 198 | 200 | ||||||||||||
Company operated retail sites (Retail segment) (d) | 252 | 248 | 252 | 248 | ||||||||||||
Total motor fuel distribution–intersegment and related party sites |
450 | 448 | 450 | 448 | ||||||||||||
Motor fuel distribution sites (average during the period): | ||||||||||||||||
Motor fuel-third party distribution | 1,273 | 1,325 | 1,288 | 1,330 | ||||||||||||
Motor fuel-intersegment and related party distribution | 451 | 395 | 452 | 368 | ||||||||||||
Total motor fuel distribution sites | 1,724 | 1,720 | 1,740 | 1,698 | ||||||||||||
Volume of gallons distributed (in thousands) | ||||||||||||||||
Third party | 212,658 | 244,545 | 630,986 | 700,645 | ||||||||||||
Intersegment and related party | 125,427 | 110,087 | 370,181 | 277,392 | ||||||||||||
Total volume of gallons distributed | 338,085 | 354,632 | 1,001,167 | 978,037 | ||||||||||||
Wholesale margin per gallon | $ | 0.125 | $ | 0.096 | $ | 0.115 | $ | 0.088 |
(a) In addition, as of
(b) The decrease in the independent dealer site count was primarily attributable to loss of contracts, most of which were lower margin, partially offset by the increase in independent dealer sites as a result of the real estate rationalization effort and the resulting reclassification of the sites from a lessee dealer or commission site to an independent dealer site when
(c) The decreases in the lessee dealer and commission agent site counts were primarily attributable to the real estate rationalization effort.
(d) The increase in the company operated site count was primarily attributable to the company operated sites from
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 |
Nine Months Ended |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Gross profit: | ||||||||||||||||
Motor fuel | $ | 30,206 | $ | 7,750 | $ | 50,031 | $ | 18,120 | ||||||||
Merchandise | 20,649 | 15,543 | 57,496 | 37,876 | ||||||||||||
Rent | 2,395 | 2,266 | 7,100 | 6,190 | ||||||||||||
Other revenue | 3,093 | 2,310 | 9,375 | 6,480 | ||||||||||||
Total gross profit | 56,343 | 27,869 | 124,002 | 68,666 | ||||||||||||
Operating expenses | (35,406 | ) | (25,862 | ) | (98,969 | ) | (65,413 | ) | ||||||||
Operating income | $ | 20,937 | $ | 2,007 | $ | 25,033 | $ | 3,253 | ||||||||
Retail sites (end of period): | ||||||||||||||||
Commission agents (a) | 198 | 200 | 198 | 200 | ||||||||||||
Company operated retail sites(b) | 252 | 248 | 252 | 248 | ||||||||||||
Total system sites at the end of the period | 450 | 448 | 450 | 448 | ||||||||||||
Total system operating statistics: | ||||||||||||||||
Average retail fuel sites during the period | 451 | 395 | 452 | 368 | ||||||||||||
Volume of gallons sold | 126,669 | 110,523 | 371,524 | 278,564 | ||||||||||||
Commission agents statistics: | ||||||||||||||||
Average retail fuel sites during the period | 198 | 201 | 199 | 203 | ||||||||||||
Company operated retail site statistics: | ||||||||||||||||
Average retail fuel sites during the period | 253 | 194 | 253 | 165 | ||||||||||||
Same store fuel volume (c) | 45,829 | 49,478 | 128,760 | 128,823 | ||||||||||||
Same store merchandise sales (c) | $ | 42,044 | $ | 42,871 | $ | 115,787 | $ | 118,982 | ||||||||
Same store merchandise sales excluding cigarettes (c) | $ | 29,167 | $ | 28,737 | $ | 79,540 | $ | 78,778 | ||||||||
Merchandise gross profit percentage | 27.1 | % | 26.7 | % | 27.1 | % | 26.8 | % |
(a) The decrease in the commission site count was primarily attributable to the real estate rationalization effort.
(b) The increase in the company operated site count was primarily attributable to the 106 company operated sites from the acquisition of assets from
(c) Same store fuel volume and same store merchandise sales include aggregated individual store results for all stores that had fuel volume or merchandise sales in all months for both periods. Same store merchandise sales includes store and cigarette sales and excludes branded food sales and other revenues such as lottery commissions and car wash sales.
Supplemental Disclosure Regarding Non-GAAP Financial Measures
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 |
Nine Months Ended |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (a) | $ | 27,593 | $ | 8,852 | $ | 46,606 | $ | 9,674 | ||||||||
Interest expense | 8,351 | 4,928 | 22,333 | 12,295 | ||||||||||||
Income tax expense (benefit) | 3,815 | (1,065 | ) | 1,843 | (1,664 | ) | ||||||||||
Depreciation, amortization and accretion expense | 21,329 | 19,118 | 61,523 | 56,732 | ||||||||||||
EBITDA | 61,088 | 31,833 | 132,305 | 77,037 | ||||||||||||
Equity-based employee and director compensation expense | 654 | 342 | 1,608 | 1,096 | ||||||||||||
Loss (gain) on dispositions and lease terminations, net | 318 | (426 | ) | 620 | (375 | ) | ||||||||||
Acquisition-related costs (b) | 107 | 4,141 | 985 | 8,502 | ||||||||||||
Adjusted EBITDA | 62,167 | 35,890 | 135,518 | 86,260 | ||||||||||||
Cash interest expense | (7,668 | ) | (4,267 | ) | (20,280 | ) | (11,113 | ) | ||||||||
Sustaining capital expenditures (c) | (1,974 | ) | (975 | ) | (5,191 | ) | (3,407 | ) | ||||||||
Current income tax expense | (1,656 | ) | (214 | ) | (2,519 | ) | (548 | ) | ||||||||
Distributable Cash Flow | $ | 50,869 | $ | 30,434 | $ | 107,528 | $ | 71,192 | ||||||||
Distributions paid | 19,913 | 19,894 | 59,713 | 59,659 | ||||||||||||
Distribution Coverage Ratio (d) | 2.55x | 1.53x | 1.80x | 1.19x |
(a) Beginning in the second quarter of 2022,
(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
(d) In 2022,
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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
Note to
Source: CrossAmerica Partners