CrossAmerica Partners LP Reports Year-End and Fourth Quarter 2018 Results
- Reported Full Year 2018 Operating Income of
$35.0 million and Net Income of$5.2 million , driven by the performance of both the Wholesale and Retail segments. - Generated Full Year 2018 Adjusted EBITDA of
$113.4 million and Distributable Cash Flow of$78.0 million , respectively. - Reported Fourth Quarter 2018 Operating Income of
$15.5 million and Net Income of$7.7 million - Generated Fourth Quarter 2018 Adjusted EBITDA of
$30.5 million and Distributable Cash Flow of$21.4 million , respectively. - Reported Full Year 2018 Gross Profit for the Wholesale segment of
$133.0 million or an 8% increase when compared to the Full Year 2017 and$35.1 million or a 14% increase for the Fourth Quarter 2018 when compared to the Fourth Quarter 2017. - Distribution Coverage for the Full Year 2018 was 1.03 times compared to 0.97 times for the Full Year 2017 and 1.19 times for the Fourth Quarter 2018 compared to 1.02 times for the Fourth Quarter 2017.
- The Board of Directors of CrossAmerica’s General Partner declared a quarterly distribution of
$0.5250 per limited partner unit attributable to the Fourth Quarter 2018.
“We had a very strong quarter and end of year as both our Wholesale and Retail segments performed well during the fourth quarter of 2018 with a 14% and 10% year-over-year increase in gross profit respectively,” said
Twelve Months Results
Consolidated Results
Operating income was
Wholesale Segment
During the full year 2018, CrossAmerica’s Wholesale segment generated
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 increased approximately 28% to
CrossAmerica’s gross profit from rent and other for the Wholesale segment, which primarily consists of rental income, was
Operating expenses increased
Adjusted EBITDA for the Wholesale segment was
Retail Segment
For the full year 2018, the Partnership sold 208.1 million gallons of motor fuel at an average retail motor fuel gross profit of
During the year, the Partnership generated
The increase in gross profit and Adjusted EBITDA were primarily due to an increase in motor fuel and rent and other gross profit, partially offset by a decrease in merchandise and services gross profit (see Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release).
Distributable Cash Flow and Distribution Coverage Ratio
Distributable Cash Flow was
Fourth Quarter Results
Consolidated Results
For the fourth quarter 2018, the Partnership reported Operating income of
Adjusted EBITDA was
Wholesale Segment
During the fourth quarter 2018, CrossAmerica’s Wholesale segment generated
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 increased approximately 9% to
CrossAmerica’s gross profit from rent and other for the Wholesale segment, which primarily consists of rental income, was
Operating expenses increased
Adjusted EBITDA for the Wholesale segment was
Retail Segment
For the fourth quarter 2018, the Partnership sold 48.7 million gallons of motor fuel at an average retail motor fuel gross profit of
During the quarter, the Partnership generated
The increase in gross profit and Adjusted EBITDA were primarily due to an increase in motor fuel and rent and other gross profit and a reduction in operating expenses, partially offset by a decline in merchandise and services profit (see Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release).
Distributable Cash Flow and Distribution Coverage Ratio
Distributable Cash Flow was
Liquidity and Capital Resources
As of
Distributions
On
Conference Call
The Partnership will host a conference call on
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, Except Unit and Per Unit Amounts)
(Unaudited)
| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Operating revenues(a) | $ | 547,242 | $ | 552,660 | $ | 2,445,917 | $ | 2,094,827 | ||||||||
| Costs of sales(b) | 502,168 | 512,537 | 2,273,122 | 1,934,061 | ||||||||||||
| Gross profit | 45,074 | 40,123 | 172,795 | 160,766 | ||||||||||||
| Income from CST Fuel Supply equity interests | 3,924 | 3,721 | 14,948 | 14,906 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Operating expenses | 14,625 | 14,444 | 61,919 | 61,297 | ||||||||||||
| General and administrative expenses | 4,126 | 4,156 | 17,966 | 27,887 | ||||||||||||
| Depreciation, amortization and accretion expense | 15,124 | 14,795 | 66,549 | 57,470 | ||||||||||||
| Total operating expenses | 33,875 | 33,395 | 146,434 | 146,654 | ||||||||||||
| Gain (loss) on dispositions and lease terminations, net | 381 | 1,388 | (6,297 | ) | 3,401 | |||||||||||
| Operating income | 15,504 | 11,837 | 35,012 | 32,419 | ||||||||||||
| Other income, net | 86 | 73 | 373 | 439 | ||||||||||||
| Interest expense | (8,518 | ) | (7,320 | ) | (32,872 | ) | (27,919 | ) | ||||||||
| Income before income taxes | 7,072 | 4,590 | 2,513 | 4,939 | ||||||||||||
| Income tax benefit | (611 | ) | (16,551 | ) | (2,733 | ) | (18,237 | ) | ||||||||
| Net income | 7,683 | 21,141 | 5,246 | 23,176 | ||||||||||||
| Less: net income (loss) attributable to noncontrolling interests | — | 19 | (5 | ) | 18 | |||||||||||
| Net income attributable to limited partners | 7,683 | 21,122 | 5,251 | 23,158 | ||||||||||||
| IDR distributions | (133 | ) | (1,175 | ) | (1,579 | ) | (4,337 | ) | ||||||||
| Net income available to limited partners | $ | 7,550 | $ | 19,947 | $ | 3,672 | $ | 18,821 | ||||||||
| Basic and diluted earnings per common unit | $ | 0.22 | $ | 0.59 | $ | 0.11 | $ | 0.56 | ||||||||
| Weighted-average common units: | ||||||||||||||||
| Basic common units | 34,444,113 | 34,055,090 | 34,345,298 | 33,844,823 | ||||||||||||
| Diluted common units(c) | 34,449,286 | 34,060,229 | 34,345,298 | 33,855,345 | ||||||||||||
| Distribution paid per common unit | $ | 0.5250 | $ | 0.6275 | $ | 2.2025 | $ | 2.4800 | ||||||||
| Distribution declared (with respect to each respective period) per common unit |
$ | 0.5250 | $ | 0.6275 | $ | 2.1000 | $ | 2.4950 | ||||||||
| Supplemental information: | ||||||||||||||||
| (a) Includes excise taxes of: | $ | 22,945 | $ | 21,586 | $ | 97,929 | $ | 79,937 | ||||||||
| (a) Includes revenues from fuel sales to and rental income from related parties of: |
83,286 | 105,468 | 433,740 | 414,781 | ||||||||||||
| (a) Includes rental income of: | 21,311 | 21,224 | 85,642 | 86,314 | ||||||||||||
| (b) Includes rental expense of: | 4,948 | 4,879 | 19,723 | 19,472 | ||||||||||||
| (c) Diluted common units were not used in the calculation of diluted earnings per common unit for 2018 because to do so would have been antidilutive. |
||||||||||||||||
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 December 31, |
Year Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Gross profit: | ||||||||||||||||
| Motor fuel–third party | $ | 9,896 | $ | 8,815 | $ | 37,323 | $ | 34,474 | ||||||||
| Motor fuel–intersegment and related party | 9,500 | 6,550 | 32,696 | 24,370 | ||||||||||||
| Motor fuel gross profit | 19,396 | 15,365 | 70,019 | 58,844 | ||||||||||||
| Rent and other | 15,665 | 15,457 | 62,989 | 64,197 | ||||||||||||
| Total gross profit | 35,061 | 30,822 | 133,008 | 123,041 | ||||||||||||
| Income from CST Fuel Supply equity interests(a) | 3,924 | 3,721 | 14,948 | 14,906 | ||||||||||||
| Operating expenses | (7,511 | ) | (6,782 | ) | (30,108 | ) | (29,323 | ) | ||||||||
| Adjusted EBITDA(b) | $ | 31,474 | $ | 27,761 | $ | 117,848 | $ | 108,624 | ||||||||
| Motor fuel distribution sites (end of period):(c) | ||||||||||||||||
| Motor fuel–third party | ||||||||||||||||
| Independent dealers(d) | 362 | 384 | 362 | 384 | ||||||||||||
| Lessee dealers(e) | 500 | 438 | 500 | 438 | ||||||||||||
| Total motor fuel distribution–third party sites | 862 | 822 | 862 | 822 | ||||||||||||
| Motor fuel–intersegment and related party | ||||||||||||||||
| DMS (related party)(f) | 86 | 146 | 86 | 146 | ||||||||||||
| Circle K (related party) | 43 | 43 | 43 | 43 | ||||||||||||
| Commission agents (Retail segment)(g) | 170 | 181 | 170 | 181 | ||||||||||||
| Company operated retail sites (Retail segment)(h) | 63 | 70 | 63 | 70 | ||||||||||||
| Total motor fuel distribution–intersegment and related party sites |
362 | 440 | 362 | 440 | ||||||||||||
| Motor fuel distribution sites (average during the period): | ||||||||||||||||
| Motor fuel-third party distribution | 854 | 824 | 834 | 823 | ||||||||||||
| Motor fuel-intersegment and related party distribution | 368 | 375 | 408 | 360 | ||||||||||||
| Total motor fuel distribution sites | 1,222 | 1,199 | 1,242 | 1,183 | ||||||||||||
| Volume of gallons distributed (in thousands) | ||||||||||||||||
| Third party | 166,533 | 164,282 | 653,535 | 655,754 | ||||||||||||
| Intersegment and related party | 88,478 | 96,564 | 393,725 | 376,212 | ||||||||||||
| Total volume of gallons distributed | 255,011 | 260,846 | 1,047,260 | 1,031,966 | ||||||||||||
| Wholesale margin per gallon | $ | 0.076 | $ | 0.059 | $ | 0.067 | $ | 0.057 | ||||||||
(a) Represents income from the Partnership’s equity interest in CST Fuel Supply.
(b) Please see the reconciliation of the segment’s Adjusted EBITDA to consolidated net income under the heading “Supplemental Disclosure Regarding Non-GAAP Financial Measures.”
(c) In addition, as of
(d) The decrease in the independent dealer site count from
(e) The increase in the lessee dealer site count from
(f) The decrease in the DMS site count from
(g) The decrease in the commission site count from
(h) The decrease in the company operated retail site count from
Retail
The following table highlights the results of operations and certain operating metrics of the Retail segment (thousands of dollars, except for the number of retail sites, gallons sold per day and per gallon amounts):
| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Gross profit: | ||||||||||||||||
| Motor fuel | $ | 3,061 | $ | 1,995 | $ | 9,820 | $ | 7,276 | ||||||||
| Merchandise and services | 5,463 | 5,876 | 24,106 | 25,434 | ||||||||||||
| Rent and other | 1,707 | 1,436 | 6,314 | 5,001 | ||||||||||||
| Total gross profit | 10,231 | 9,307 | 40,240 | 37,711 | ||||||||||||
| Operating expenses | (7,114 | ) | (7,662 | ) | (31,811 | ) | (31,974 | ) | ||||||||
| Adjusted EBITDA(a) | $ | 3,117 | $ | 1,645 | $ | 8,429 | $ | 5,737 | ||||||||
| Retail sites (end of period): | ||||||||||||||||
| Commission agents(b) | 170 | 181 | 170 | 181 | ||||||||||||
| Company operated retail sites(c) | 63 | 71 | 63 | 71 | ||||||||||||
| Total system sites at the end of the period | 233 | 252 | 233 | 252 | ||||||||||||
| Total system operating statistics: | ||||||||||||||||
| Average retail fuel sites during the period | 239 | 186 | 245 | 168 | ||||||||||||
| Motor fuel sales (gallons per site per day) | 2,220 | 2,577 | 2,327 | 2,620 | ||||||||||||
| Motor fuel gross profit per gallon, net of credit card fees and commissions |
$ | 0.063 | $ | 0.045 | $ | 0.047 | $ | 0.045 | ||||||||
| Commission agents statistics: | ||||||||||||||||
| Average retail fuel sites during the period | 176 | 117 | 177 | 97 | ||||||||||||
| Motor fuel gross profit per gallon, net of credit card fees and commissions |
$ | 0.013 | $ | 0.009 | $ | 0.015 | $ | 0.011 | ||||||||
| Company operated retail site statistics: | ||||||||||||||||
| Average retail fuel sites during the period | 63 | 69 | 68 | 71 | ||||||||||||
| Motor fuel gross profit per gallon, net of credit card fees | $ | 0.171 | $ | 0.097 | $ | 0.115 | $ | 0.087 | ||||||||
| Merchandise and services gross profit percentage, net of credit card fees |
25.0 | % | 24.2 | % | 24.7 | % | 24.4 | % | ||||||||
(a) Please see the reconciliation of the segment’s Adjusted EBITDA to consolidated net income under the heading “Supplemental Disclosure Regarding Non-GAAP Financial Measures” below.
(b) The decrease in the commission site count from
(c) The decrease in the company operated retail site count from
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
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 December 31, |
Year Ended December 31, |
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| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net income available to limited partners | $ | 7,550 | $ | 19,947 | $ | 3,672 | $ | 18,821 | ||||||||
| Interest expense | 8,518 | 7,320 | 32,872 | 27,919 | ||||||||||||
| Income tax benefit | (611 | ) | (16,551 | ) | (2,733 | ) | (18,237 | ) | ||||||||
| Depreciation, amortization and accretion | 15,124 | 14,795 | 66,549 | 57,470 | ||||||||||||
| EBITDA | 30,581 | 25,511 | 100,360 | 85,973 | ||||||||||||
| Equity funded expenses related to incentive compensation and the Amended Omnibus Agreement(a) |
141 | 3,342 | 3,781 | 15,131 | ||||||||||||
| (Gain) loss on dispositions and lease terminations, net (b) | (381 | ) | (1,388 | ) | 6,297 | (3,401 | ) | |||||||||
| Acquisition-related costs (c) | 205 | 1,095 | 2,914 | 11,374 | ||||||||||||
| Adjusted EBITDA | 30,546 | 28,560 | 113,352 | 109,077 | ||||||||||||
| Cash interest expense | (8,211 | ) | (6,892 | ) | (31,338 | ) | (26,211 | ) | ||||||||
| Sustaining capital expenditures (d) | (370 | ) | (361 | ) | (2,443 | ) | (1,648 | ) | ||||||||
| Current income tax expense | (524 | ) | 403 | (1,528 | ) | 16 | ||||||||||
| Distributable Cash Flow | $ | 21,441 | $ | 21,710 | $ | 78,043 | $ | 81,234 | ||||||||
| Weighted average diluted common units | 34,449 | 34,060 | 34,345 | 33,855 | ||||||||||||
| Distributions paid per limited partner unit (e) | $ | 0.5250 | $ | 0.6275 | $ | 2.2025 | $ | 2.4800 | ||||||||
| Distribution Coverage Ratio (f) | 1.19x | 1.02x | 1.03x | 0.97x | ||||||||||||
(a) As approved by the independent conflicts committee of the Board, the Partnership and Circle K mutually agreed to settle certain amounts due under the terms of the Amended Omnibus Agreement in limited partner units of the Partnership. All charges allocated to
(b) In
(c) Relates to certain acquisition related costs, such as legal and other professional fees, severance expenses and purchase accounting adjustments associated with recently acquired businesses. Acquisition-related costs for 2017 include separation benefit costs and retention bonuses paid to certain EICP participants associated with the Merger as well as a $1.7 million charge related to a court ruling in favor of a former executive’s claim to benefits under the EICP in connection with CST’s acquisition of CrossAmerica’s General Partner.
(d) 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 the sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.
(e) On January 29, 2019, the Board approved a quarterly distribution of $0.5250 per unit attributable to the fourth quarter of 2018. The distribution was paid on February 19, 2019 to all unit-holders of record on February 11, 2019.
(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.
The following table reconciles the segment Adjusted EBITDA to Consolidated Adjusted EBITDA presented in the table above (in thousands):
| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Adjusted EBITDA - Wholesale segment | $ | 31,474 | $ | 27,761 | $ | 117,848 | $ | 108,624 | ||||||||
| Adjusted EBITDA - Retail segment | 3,117 | 1,645 | 8,429 | 5,737 | ||||||||||||
| Adjusted EBITDA - Total segment | $ | 34,591 | $ | 29,406 | $ | 126,277 | $ | 114,361 | ||||||||
| Reconciling items: | ||||||||||||||||
| Elimination of intersegment profit in ending inventory balance |
(218 | ) | (6 | ) | (453 | ) | 14 | |||||||||
| General and administrative expenses | (4,126 | ) | (4,156 | ) | (17,966 | ) | (27,887 | ) | ||||||||
| Other income, net | 86 | 73 | 373 | 439 | ||||||||||||
| Equity funded expenses related to incentive compensation and the Amended Omnibus Agreement |
141 | 3,342 | 3,781 | 15,131 | ||||||||||||
| Acquisition-related costs | 205 | 1,095 | 2,914 | 11,374 | ||||||||||||
| Net income attributable to noncontrolling interests | — | (19 | ) | 5 | (18 | ) | ||||||||||
| IDR distributions | (133 | ) | (1,175 | ) | (1,579 | ) | (4,337 | ) | ||||||||
| Consolidated Adjusted EBITDA | $ | 30,546 | $ | 28,560 | $ | 113,352 | $ | 109,077 | ||||||||
About CrossAmerica Partners LP
CrossAmerica Partners LP is a leading wholesale distributor of motor fuels and owner and lessor of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Alimentation Couche-Tard Inc. Formed in 2012, CrossAmerica is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to over 1,200 locations and owns or leases approximately 900 sites. With a geographic footprint covering 31 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 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, Director – Investor Relations, 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,” “anticipate”, “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 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. 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.
Source: CrossAmerica Partners