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, 2016
CrossAmerica Partners LP
(Exact name of registrant as specified in its charter)
Delaware | 001-35711 | 45-4165414 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
515 Hamilton Street, Suite 200 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:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 7.01 Regulation FD Disclosure
Furnished herewith as Exhibit 99.1 are slides that senior management of CrossAmerica Partners LP, a Delaware limited partnership (the “Partnership”), will be utilizing in presentations to analysts and investors. The slides are available on the Partnership’s website at www.crossamericapartners.com.
The information in this Current Report is being furnished pursuant to Regulation FD. The information in Item 7.01 and Exhibit 99.1 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 Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. By filing this report on Form 8-K and furnishing this information, the Company makes no admission as to the materiality of any information in this report that the Company chooses to disclose solely because of Regulation FD.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits. The information set forth in the attached Exhibit 99.1, is being “furnished” to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.
Exhibit No. | Exhibit Description | |
99.1 | Investor Presentation Slides of CrossAmerica Partners LP | |
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/ Hamlet T. Newsom, Jr. | ||
Name: | Hamlet T. Newsom, Jr. | ||
Title: | Vice President, General Counsel and Corporate Secretary | ||
Dated: November 8, 2016
EXHIBIT INDEX
Exhibit No. | Exhibit Description | |
99.1 | Investor Presentation Slides of CrossAmerica Partners LP | |
Investor
Update
November 2016
Jeremy Bergeron, President
Safe Harbor Statement
2
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,” “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 Forms 10-Q or Form 10-K filed with the Securities and Exchange Commission and available on
CrossAmerica’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.
Important Additional Information
In connection with the proposed transaction, CST has filed a proxy statement and other relevant documents concerning the proposed
transaction with the SEC. The definitive proxy statement has been sent or given to CST stockholders and contains important
information about the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR
ENTIRETY THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS. Investors and security holders are be able to obtain a copy of the proxy statement as well as
other documents filed with the SEC free of charge at the SEC’s website at http://www.sec.gov. In addition, the proxy statement, the
SEC filings that are incorporated by reference in the proxy statement and the other documents filed with the SEC by CST may be
obtained free of charge from CST’s Investor Relations page on its corporate website at http://www.cstbrands.com.
Certain Information Concerning Participants
CST and its directors, executive officers, and certain other members of management and employees may be deemed to be
participants in the solicitation of proxies from CST stockholders in connection with the proposed transaction. Information about the
directors and executive officers of CST is set forth in CST’s Annual Report on Form 10-K for the year ended December 31, 2015 and
the proxy statement on Schedule 14A for CST’s 2016 Annual Meeting of Stockholders, which was filed with the SEC on April 29, 2016.
Additional information regarding participants in the proxy solicitation may be obtained by reading the proxy statement regarding the
proposed transaction when it becomes available.
Partnership Overview
• Leading motor fuel wholesale distributor, convenience store lessor and c-store operator
– Distributes annually over 1 billion gallons
– Annual gross rental income over $85 million
– Operates 78 c-stores(1)
– 17.5% equity interest in CST Brands’
wholesale fuels business, approximately
1.7 billion gallons of annual fuel supply
• Over 1,250 locations(1)
– 642 Lessee Dealers
– 404 Independent Dealers
– 78 Company Operated Sites
– 67 Commission Agents
– 70 Non-fuel Tenant Sites
• Equity market
capitalization of
$848 million and
enterprise value of $1.35 billion(1)
(1) As of September 30, 2016
3
Continuing Accretive Growth
52 Lessee Dealers, 25 Indep.
Dealers, 3 Company Ops*
$41.8 Million Purchase
60 Million Gallons
Chicago Market
Marathon, Citgo, Phillips 66,
Mobil, BP, Shell
Sep 27, 2016 close date
Asset Purchase
Rationale
• 56 valuable fee sites in
Greater Chicago
• Located in proximity of
existing markets
• Expands branding
relationship with several
suppliers
* - Also includes 2 non-fuel locations
154 previous locations
82 acquired State Oil locations
CrossAmerica Upper Midwest Region
Strategy Execution
1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16
144
122 116
97
124
80 78
Company Operated Site Count (end of period)
PMI
Erickson
OneStop
Holiday
Company Operated
Wholesale Fuel Margin
Retail Fuel Margin
Retail Merchandise Margin
− Operating Expenses
− Income Taxes
Lessee Dealer
Wholesale Fuel Margin
Rental Income
5
• Completed accretive acquisition of State Oil assets on September 27
– Converted 3 company operated sites to lessee dealer at closing
• Operating 31 franchised Holiday store locations and 3 non-fuel locations acquired in 1Q
– 34 total sites, over 26 million annual gallons of fuel, valuable real estate, strong inside sales
– Assessing long-term operation plan
• Operating 37 FreedomValu and 7 SuperAmerica locations acquired in 2015
– Converted 20 locations to lessee dealer, remaining sites are larger footprint with stronger inside sales
• Continued focus on managing expenses and execution of our integration strategy
– Applying processes and systems to reduce operating,
general & administrative expenses following acquisitions
– Converted 75 Company Operated sites to Lessee Dealer
accounts in 2016, yielding a more stable, qualifying
income cash flow stream
2010 2011 2012 2013 2014 2015 3Q16
516,200 530,500
605,162 637,845
906,200
1,051,357 1,025,523
Operating Results
(in thousands, except for per gallon and site count)
First 9 Mo
2016
First 9 Mo
2015
%
Change
Total Motor Fuel Sites (period avg.) 1,111 1,060 5%
Total Volume of Gallons Distributed 769,194 795,027 (3%)
Wholesale Fuel Margin per Gallon $0.052 $0.057 (9%)
Rental & Other Gross Profit (Wholesale) $43,162 $32,599 32%
Company Operated Sites (period avg.) 89 137 (35%)
Volume of Company Op Gallons Distributed 65,772 108,463 (39%)
Company Op Fuel Margin per Gallon $0.090 $0.141 (36%)
General, Admin. & Operating Expenses $63,822 $84,284 (24%)
Gallons of Motor Fuel Distributed (in thousands)
2010 2011 2012 2013 2014 2015 3Q16
332 368
511 556 571
691
809
87
116
78
Number of Sites Owned & Leased (end of period)
Generating Rental Income Company Operated
TTM
2010 2011 2012 2013 2014 2015 3Q16
$18,961 $20,425 $21,222
$41,577 $43,258
$59,962
$78,236
Gross Rental Income (in thousands)
TTM
6
Operating Results
Financial Summary
7 (1) See the (i) reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to net income and (ii) the definitions of EBITDA, Adjusted EBITDA and DCF in the
appendix of this presentation.
KEY METRICS
(in thousands, except for per unit amounts)
First 9 Mo
2016
First 9 Mo
2015
% Change
Gross Profit $116,843 $129,867 (10%)
Adjusted EBITDA(1) $76,419 $65,606 17%
Distributable Cash Flow(1) $59,744 $49,534 21%
Weighted Avg. Diluted Units 33,305 27,662 20%
Distribution Paid per LP Unit $1.7925 $1.6525 9%
Distribution Coverage 1.00x 1.08x (8%)
Executing with Measured Growth
• Declared distribution attributable to
third quarter of $0.6075 per unit
– 0.5 cent per unit increase over distribution
attributable to second quarter 2016
– Expect to increase per unit distribution
by 5%-7% for 2016 over 2015
– Continue to target a long-term
distribution coverage ratio of at least 1.1x
• 2016 Distributable Cash Flow(1) growth
– Selective, accretive acquisitions
– Strong business performance
– Expense reduction associated with integration
of recently completed transactions
• Demonstrating financial flexibility to execute growth strategy in any market cycle
– Velocity of growth will be determined based on capital availability
– Well-positioned to take advantage of improving market environment
8
$0.4500
$0.4750
$0.5000
$0.5250
$0.5500
$0.5750
$0.6000
$0.6250
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Distributions per Unit (on declared basis)
(1) See the (i) reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to net income and (ii) the definitions of EBITDA, Adjusted EBITDA and DCF in the
appendix of this presentation.
Transaction Overview
9
Operating
Subsidiaries
55%
Limited Partner
Interest
CrossAmerica
Partners LP
NYSE: CAPL
Public
Unitholders
Joseph Topper
& Affiliates
CST Brands, Inc.
Canadian
Operations* US Operations
CrossAmerica
General Partner
Alimentation
Couche-Tard Inc.
TSX: ATD.A ATD.B
25%
Limited Partner
Interest
100%
Ownership Interest
100% Ownership Interest
20% Limited
Partner Interest
100% IDR
Interest
100%
Ownership Interest
100%
General Partner Interest
* - Couche-Tard entered into an agreement with another party to sell certain Canadian assets of CST after the merger.
• Couche-Tard subsidiary to acquire CST in early 2017
– Includes assets related to CrossAmerica
• Organizational Relationship Upon Closing
– Couche-Tard controls the general partner of CrossAmerica
through its 100% ownership of the general partner interest
– Couche-Tard owns 20% of CrossAmerica limited partner, or
common, units
– Couche-Tard owns 100% of CrossAmerica Incentive
Distribution Rights (IDRs)
– CrossAmerica owns 17.5% interest in CST Fuel Supply
17.5% Interest in
CST Fuel Supply
Note: This organizational chart represents the anticipated post-closing structure and is subject to change.
Strategic Benefit to CAPL
• Provides continuity with a sponsor whose management culture is aligned with
CrossAmerica
– Disciplined operator with best practices in acquisitions and integration
– Strong and consistent financial performance throughout all economic cycles
– Heightened focus on growing free cash flow, with particular expertise in cost management
– Well capitalized with solid balance sheet
– Well positioned to lead further consolidation in fragmented industry
• Scale and global reach provides additional operational benefits
– Further strengthens relationship with many of our key suppliers
– Many turnkey branding and franchise programs that can
complement our dealer offerings
• Supports dealer health, which
impacts fuel volume growth and
additional rental income potential
• Wholesale operations with
complementary geographic reach
10
Combined Wholesale
11
West Coast Region
Couche-Tard
CrossAmerica
CODO
89
0
DODO
233
0
Arizona Region
Couche-Tard
CrossAmerica
CODO
0
0
DODO
0
0
Southwest Region
Couche-Tard
CrossAmerica
CODO
2
22
DODO
88
16
Gulf Region
Couche-Tard
CrossAmerica
CODO
4
44
DODO
47
6
Southeast Region
Couche-Tard
CrossAmerica
CODO
3
50
DODO
15
7
Florida Region
Couche-Tard
CrossAmerica
CODO
14
0
DODO
50
0
South Atlantic Region
Couche-Tard
CrossAmerica
CODO
3
82
DODO
19
136
Great Lakes Region
Couche-Tard
CrossAmerica
CODO
0
422
DODO
0
166
Midwest Region
Couche-Tard
CrossAmerica
CODO
5
35
DODO
62
10
Heartland Region
Couche-Tard
CrossAmerica
CODO
25
84
DODO
37
63
CODO: Company Owned Dealer Operated – Sites for which the real estate is controlled by Company (through ownership or lease agreements) and for which the stores (and/or the service stations) are
operated by an independent operator in exchange for rent and to which Company supplies road transportation fuel through supply contracts. Some of these sites are subject to a franchise
agreement, licensing or other similar agreement. Includes Commission Agent locations at CrossAmerica.
DODO: Dealer Owned Dealer Operated – Sites controlled and operated by independent operators to which Company supplies road transportation fuel through supply contracts. Some of these sites are
subject to a franchise agreement, licensing or other similar agreement.
Creates Leading Wholesale Distributorship in US
CODO
145
739
DODO
551
404
Appendix
12
13
Non-GAAP Financial Measures
14
Non-GAAP Reconciliation