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CrossAmerica Partners LP Reports Second Quarter 2021 Results and Announces Appointment of New Chief Financial Officer
来源: Nasdaq GlobeNewswire / 09 8月 2021 15:15:01 America/Chicago
Allentown, PA, Aug. 09, 2021 (GLOBE NEWSWIRE) --
CrossAmerica Partners LP Reports Second Quarter 2021 Results and Announces Appointment of New Chief Financial Officer
- Reported Second Quarter 2021 Operating Income of $8.2 million and Net Income of $4.8 million compared to Operating Income of $6.3 million and Net Income of $5.2 million for the Second Quarter 2020
- Generated Second Quarter 2021 Adjusted EBITDA of $29.7 million and Distributable Cash Flow of $25.0 million compared to Second Quarter 2020 Adjusted EBITDA of $27.7 million and Distributable Cash Flow of $26.0 million
- Reported Second Quarter 2021 Gross Profit for the Wholesale Segment of $44.2 million compared to $40.7 million of Gross Profit for the Second Quarter 2020
- Distributed 331.6 million wholesale fuel gallons during the Second Quarter 2021 at an average wholesale fuel margin per gallon of 9.2 cents compared to 260.2 million wholesale fuel gallons at an average wholesale fuel margin per gallon of 10.8 cents during the Second Quarter 2020, an increase of 27% in gallons distributed and a decrease of 15% in margin per gallon
- Reported Second Quarter 2021 Gross Profit for the Retail Segment of $21.1 million compared to $15.9 million of Gross Profit for the Second Quarter 2020
- The Distribution Coverage Ratio was 1.22 times for the trailing twelve months ended June 30, 2021 and 1.21 times for the trailing twelve months ended June 30, 2020
- The Board of Directors of CrossAmerica’s General Partner declared a quarterly distribution of $0.5250 per limited partner unit attributable to the Second Quarter 2021
- Began closing on sites in the previously announced $263 million acquisition of 106 convenience store properties from 7-Eleven, Inc.
- Announced appointment of Maura Topper as Chief Financial Officer, effective August 11, 2021
Allentown, PA August 9, 2021 – CrossAmerica Partners LP (NYSE: CAPL) (“CrossAmerica” or the “Partnership”), a leading wholesale fuels distributor, convenience store operator, and owner and lessor of real estate used in the retail distribution of motor fuels, today reported financial results for the second quarter ended June 30, 2021.
“Our solid results this quarter demonstrate the continued strong execution of our strategic plan and the ongoing recovery from the pandemic,” said Charles Nifong, CEO and President of CrossAmerica. “At the end of the quarter, we started closing on the acquisition of assets from 7-Eleven and are continuing to close on sites daily. We are working hard to integrate these excellent assets into our portfolio, and we expect them to be immediately accretive to our financial results.”
Second Quarter Results
Consolidated Results
CrossAmerica reported Operating Income of $8.2 million and Net Income of $4.8 million or earnings of $0.13 per diluted common unit for the second quarter 2021. For the same period in 2020, the Partnership reported Operating Income of $6.3 million and Net Income of $5.2 million or $0.14 per diluted common unit. During the second quarter 2020, Net Income benefited from a $2.9 million income tax benefit that was primarily driven by losses incurred by CrossAmerica’s taxable subsidiaries.
Adjusted EBITDA was $29.7 million for the second quarter 2021 compared to $27.7 million for the same period in 2020, representing an increase of 7% (see Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release).
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
During the second quarter 2021, CrossAmerica’s Wholesale segment generated $44.2 million in gross profit compared to $40.7 million in gross profit for the second quarter 2020, representing an increase of 9%. The Partnership distributed, on a wholesale basis, 331.6 million gallons of motor fuel at an average wholesale gross profit of $0.092 per gallon, resulting in motor fuel gross profit of $30.5 million. For the three-month period ended June 30, 2020, CrossAmerica distributed, on a wholesale basis, 260.2 million gallons of fuel at an average wholesale gross profit of $0.108 per gallon, resulting in motor fuel gross profit of $28.2 million. The 8% increase in motor fuel gross profit was driven by a 27% increase in fuel volume distributed, offset by a 15% decrease in fuel margin per gallon. The main drivers of the volume increase were the asset exchanges with Circle K and the acquisition of retail and wholesale assets as well as the continuing recovery from the COVID-19 Pandemic. In addition, CrossAmerica benefited from higher terms discounts as a result of higher crude prices. These increases were partially offset by a decrease in overall dealer tank wagon (“DTW”) margins due to the movements in crude prices during the second quarter 2021 relative to the second quarter 2020. During the second quarter 2021, the daily spot price of West Texas Intermediate (“WTI”) crude oil rose from $59.19 per barrel on March 31, 2021 to $73.52 per barrel on June 30, 2021, an increase of 24%, which adversely impacted variable priced DTW gallons during the quarter. During the second quarter of 2020, CrossAmerica benefitted from the sharp reduction in wholesale fuel prices particularly at the beginning of the quarter. As such, DTW margins were negatively impacted for the second quarter of 2021 as compared to the second quarter of 2020.
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 during the second quarter 2021 was $66.19 per barrel, a 137% increase, compared to the average daily spot price of $27.96 per barrel during the same period in 2020.
CrossAmerica’s gross profit from rent for the Wholesale segment was $13.0 million for the second quarter 2021 compared to $12.3 million for the second quarter 2020, representing an increase of 6%. The increase in rent was primarily driven by $0.5 million in rent concessions that impacted the second quarter 2020.
Operating expenses increased $1.4 million or 15%, primarily as a result of a $1.2 million increase in environmental costs related to remediation, compliance testing and monitoring. Certain environmental remediation costs will be offset in future periods by increased rebates from fuel supply partners.
Operating income for the Wholesale segment was $33.2 million for the second quarter 2021 compared to $31.2 million for the same period in 2020, an increase of 6%. As discussed above, the year-over-year increase was primarily driven by the increase in motor fuel gross profit.
Retail Segment
For the second quarter 2021, the Retail segment reported motor fuel gross profit of $4.9 million. For the same period in 2020, CrossAmerica generated motor fuel gross profit of $3.3 million. The $1.7 million or 50% increase in motor fuel gross profit was attributable to a 42% increase in volume stemming from the increase in company operated sites as a result of the April 2020 acquisition of retail and wholesale assets as well as the continuing recovery from the COVID-19 Pandemic. CrossAmerica’s Wholesale segment supplies the Retail segment on a DTW, or variable margin basis, and as a result, the overall fuel profitability of the retail sites is divided between the Wholesale and Retail segments.
CrossAmerica’s merchandise gross profit and other revenues increased $2.6 million and $1.1 million, respectively, as a result of the increase in company operated sites driven by the April 2020 acquisition of retail and wholesale assets. Merchandise gross profit percentage, net of credit card fees, increased from 25.4% to 26.5%.
Operating expenses increased $4.5 million or 29% primarily due to the increase in company operated sites as a result of the April 2020 acquisition of retail and wholesale assets.
Operating income for the Retail segment was $0.9 million for the second quarter 2021 compared to $0.3 million for the second quarter 2020, primarily as a result of changes in operations noted above.
Acquisition Activity
As of June 30, 2021, CrossAmerica had closed on two sites for total consideration of $4.2 million of its previously announced $263.0 million acquisition of 106 convenience store properties from 7-Eleven. As of August 5, 2021, the Partnership had closed on a total of 32 sites for total consideration of $106.2 million. The remaining 74 sites of the 106 total sites to be acquired are expected to be completed on a rolling basis over the next eight to ten weeks.
Divestment of Assets
For the six months ended June 30, 2021, CrossAmerica divested a total of nine non-core properties and received $3.9 million in connection with these sales. Through August 5, 2021, CrossAmerica divested an additional eight non-core properties and received $2.1 million in proceeds.
Financing Activity
Joe’s Kwik Marts (“JKM”) Credit Facility
On July 16, 2021, CAPL JKM Partners LLC, an indirect wholly-owned subsidiary of CrossAmerica, entered into a Credit Agreement, as amended on July 29, 2021. The JKM Credit Facility provides for a $200 million senior secured credit facility, consisting of a $185 million delayed draw term loan facility and a $15 million revolving credit facility. The JKM Credit Facility will be used to fund the acquisition of the 106 convenience store properties from 7-Eleven discussed above.
Additional details regarding the credit facility are provided in CrossAmerica’s Second Quarter 2021 Form 10-Q.
Amendment to CAPL Credit Facility
On July 28, 2021, the Partnership entered into an amendment to its Credit Agreement, dated as of April 1, 2019. The Amendment, among other things, amended certain provisions relating to unrestricted subsidiaries, increased the maximum level for the consolidated leverage ratio financial covenant, and modified the applicable margin for borrowings under the CAPL Credit Facility.
Additional details regarding the amendment are provided in CrossAmerica’s Second Quarter 2021 Form 10-Q.
Liquidity and Capital Resources
As of June 30, 2021, CrossAmerica had $533.8 million outstanding under its CAPL Credit Facility with defined leverage of 4.42 times. As of August 5, 2021, after taking into consideration the Amendment and debt covenant restrictions, approximately $159.2 million was available for future borrowings under the CAPL Credit Facility. As of August 5, 2021, CrossAmerica has $64.4 million drawn on the JKM Credit Facility Term Loan Facility, with $134.8 million available for future borrowings under the Term Loan Facility and $15.0 million under the revolver.
Distributions
On July 22, 2021, the Board of the Directors of CrossAmerica’s General Partner (“Board”) declared a quarterly distribution of $0.5250 per limited partner unit attributable to the second quarter 2021. As previously announced, the distribution will be paid on August 10, 2021 to all unitholders of record as of August 3, 2021. The amount and timing of any future distributions is subject to the discretion of the Board as provided in CrossAmerica’s Partnership Agreement.
Distributable Cash Flow and Distribution Coverage Ratio
Distributable Cash Flow was $25.0 million for the three-month period ended June 30, 2021, compared to $26.0 million for the same period in 2020. The 4% decrease in Distributable Cash Flow was primarily due to an increase in sustaining capital expenditures partially offset by a decrease in cash interest. Distributable Cash Flow in the second quarter 2020 also benefited from a current tax benefit related primarily to bonus depreciation on eligible capital expenditures. The Distribution Coverage Ratio for the current quarter was 1.26 times compared to 1.31 times for the second quarter 2020. For the trailing twelve- month periods ended June 30, 2021 and June 30, 2020, the Distribution Coverage Ratio was 1.22 and 1.21 times, respectively (see Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release).
Appointment of Maura Topper as Chief Financial Officer
The Board appointed Ms. Topper as Chief Financial Officer of the partnership effective August 11, 2021.
Ms. Topper was most recently the Chief Financial Officer and Vice President of Investments for Dunne Manning Holdings LLC, the diversified investment organization of the Topper Group. In that role, she led the financing process for the Topper Group’s acquisition of the CrossAmerica general partner in 2019 and the structuring of the recently completed JKM Credit Facility and the amendment to the CAPL Credit Facility to support CrossAmerica’s acquisition of sites from 7-Eleven. She began her career in the Audit practice at Deloitte & Touche LLP. Ms. Topper received a Master of Business Administration degree from Columbia University and a Bachelor of Science degree in Accounting and a Bachelor of Science degree in Business (Finance) from Villanova University.
“In the process of Maura executing the financing of our acquisition, it became obvious that she was undoubtedly the right person for the CFO role,” said Charles Nifong, CEO and President of CrossAmerica. “Maura is already deeply familiar with the organization and will be able to immediately make a positive impact on CrossAmerica.”
Maura Topper commented; “I am looking forward to joining the CrossAmerica team at this exciting and important juncture in the Partnership’s history. As the organization continues to execute on its strategic goals and remain focused on serving its customers across the country, there are many opportunities that I look forward to working with the entire CrossAmerica team to capitalize on for our unitholders.”
Conference Call
The Partnership will host a conference call on August 10, 2021 at 9:00 a.m. Eastern Time to discuss second quarter 2021 earnings results. The conference call numbers are 800-774-6070 or 630-691-2753 and the passcode for both is 8674133#. A live audio webcast of the conference call and the related earnings materials, including reconciliations of non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the CrossAmerica website (www.crossamericapartners.com). A slide presentation for the conference call will also be available on the investor section of the Partnership’s website. To listen to the audio webcast, go to https://caplp.gcs-web.com/webcasts-presentations. After the live conference call, an archive of the webcast will be available on the investor section of the CrossAmerica website at https://caplp.gcs-web.com/webcasts-presentations within 24 hours after the call for a period of sixty days.
CROSSAMERICA PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars, except unit data)June 30, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 621 $ 513 Accounts receivable, net of allowances of $282 and $429, respectively 35,037 28,519 Accounts receivable from related parties 1,147 931 Inventory 24,414 23,253 Assets held for sale 5,553 9,898 Other current assets 14,856 11,707 Total current assets 81,628 74,821 Property and equipment, net 562,849 570,856 Right-of-use assets, net 164,240 167,860 Intangible assets, net 85,570 92,912 Goodwill 88,764 88,764 Other assets 21,500 19,129 Total assets $ 1,004,551 $ 1,014,342 LIABILITIES AND EQUITY Current liabilities: Current portion of debt and finance lease obligations $ 2,679 $ 2,631 Current portion of operating lease obligations 32,557 31,958 Accounts payable 71,230 63,978 Accounts payable to related parties 6,400 5,379 Accrued expenses and other current liabilities 21,649 23,267 Motor fuel and sales taxes payable 22,320 19,735 Total current liabilities 156,835 146,948 Debt and finance lease obligations, less current portion 546,759 527,299 Operating lease obligations, less current portion 137,559 141,380 Deferred tax liabilities, net 15,183 15,022 Asset retirement obligations 41,877 41,450 Other long-term liabilities 34,199 32,575 Total liabilities 932,412 904,674 Commitments and contingencies Equity: Common units—37,874,868 and 37,868,046 units issued and
outstanding at June 30, 2021 and December 31, 2020, respectively72,162 112,124 Accumulated other comprehensive loss (23 ) (2,456 ) Total equity 72,139 109,668 Total liabilities and equity $ 1,004,551 $ 1,014,342 CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, Except Unit and Per Unit Amounts)Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Operating revenues (a) $ 859,334 $ 398,402 $ 1,516,618 $ 790,097 Costs of sales (b) 794,240 340,754 1,396,656 696,720 Gross profit 65,094 57,648 119,962 93,377 Income from CST Fuel Supply equity interests — — — 3,202 Operating expenses: Operating expenses (c) 31,070 25,097 60,473 35,820 General and administrative expenses 6,876 5,597 14,526 10,077 Depreciation, amortization and accretion expense 19,583 16,050 37,614 33,277 Total operating expenses 57,529 46,744 112,613 79,174 Gain (loss) on dispositions and lease terminations, net 597 (4,575 ) (51 ) 66,356 Operating income 8,162 6,329 7,298 83,761 Other income, net 204 78 292 215 Interest expense (3,870 ) (4,121 ) (7,367 ) (9,661 ) Income before income taxes 4,496 2,286 223 74,315 Income tax benefit (293 ) (2,944 ) (599 ) (2,976 ) Net income 4,789 5,230 822 77,291 IDR distributions — — — (133 ) Net income available to limited partners $ 4,789 $ 5,230 $ 822 $ 77,158 Basic and diluted earnings per common unit $ 0.13 $ 0.14 $ 0.02 $ 2.09 Weighted-average limited partner units: Basic common units 37,874,868 37,736,329 37,872,079 36,865,651 Diluted common units 37,905,010 37,738,150 37,902,225 36,867,495 Supplemental information: (a) includes excise taxes of: $ 50,047 $ 33,770 $ 93,753 $ 48,707 (a) includes rent income of: 20,862 20,424 41,334 43,112 (b) excludes depreciation, amortization and accretion (b) includes rent expense of: 6,031 6,132 11,944 13,052 (c) includes rent expense of: 3,265 2,522 6,461 2,522 CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)Six Months Ended June 30, 2021 2020 Cash flows from operating activities: Net income $ 822 $ 77,291 Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation, amortization and accretion expense 37,614 33,277 Amortization of deferred financing costs 521 521 Credit loss expense 32 627 Deferred income tax benefit (921 ) (3,063 ) Equity-based employee and director compensation expense 754 48 Loss (gain) on dispositions and lease terminations, net 51 (74,189 ) Changes in operating assets and liabilities, net of acquisitions 2,141 27,131 Net cash provided by operating activities 41,014 61,643 Cash flows from investing activities: Principal payments received on notes receivable 85 172 Proceeds from Circle K in connection with CST Fuel Supply Exchange — 16,396 Proceeds from sale of assets 5,600 9,954 Capital expenditures (21,911 ) (10,760 ) Cash paid in connection with acquisitions, net of cash acquired (4,166 ) (22,342 ) Net cash used in investing activities (20,392 ) (6,580 ) Cash flows from financing activities: Borrowings under the CAPL Credit Facility 57,000 63,201 Repayments on the CAPL Credit Facility (36,399 ) (78,527 ) Payments of long-term debt and finance lease obligations (1,287 ) (1,207 ) Distributions paid on distribution equivalent rights (63 ) (2 ) Distributions paid to holders of the IDRs — (133 ) Distributions paid on common units (39,765 ) (37,990 ) Net cash used in financing activities (20,514 ) (54,658 ) Net increase in cash and cash equivalents 108 405 Cash and cash equivalents at beginning of period 513 1,780 Cash and cash equivalents at end of period $ 621 $ 2,185 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Gross profit: Motor fuel–third party $ 18,529 $ 12,177 $ 34,052 $ 25,217 Motor fuel–intersegment and related party 11,961 15,989 17,690 22,842 Motor fuel gross profit 30,490 28,166 51,742 48,059 Rent gross profit 12,973 12,262 25,466 26,391 Other revenues 729 300 1,863 1,415 Total gross profit 44,192 40,728 79,071 75,865 Income from CST Fuel Supply equity interests (a) — — — 3,202 Operating expenses (10,948 ) (9,509 ) (20,922 ) (18,583 ) Operating income $ 33,244 $ 31,219 $ 58,149 $ 60,484 Motor fuel distribution sites (end of period): (b) Motor fuel–third party Independent dealers (c) 675 712 675 712 Lessee dealers (d) 651 682 651 682 Total motor fuel distribution–third party sites 1,326 1,394 1,326 1,394 Motor fuel–intersegment and related party Commission agents (Retail segment) (e) 202 212 202 212 Company operated retail sites (Retail segment) 152 150 152 150 Total motor fuel distribution–intersegment and
related party sites354 362 354 362 Motor fuel distribution sites (average during the period): Motor fuel-third party distribution 1,328 1,379 1,333 1,227 Motor fuel-intersegment and related party distribution 353 346 355 289 Total motor fuel distribution sites 1,681 1,725 1,688 1,516 Volume of gallons distributed (in thousands) Third party 242,392 192,927 456,100 370,424 Intersegment and related party 89,233 67,319 167,305 110,467 Total volume of gallons distributed 331,625 260,246 623,405 480,891 Wholesale margin per gallon $ 0.092 $ 0.108 $ 0.083 $ 0.100 (a) Represents income from CrossAmerica’s equity interest in CST Fuel Supply. The CST Fuel Supply Exchange closed on March 25, 2020.
(b) In addition, as of June 30, 2021 and 2020, CrossAmerica distributed motor fuel to 14 and 13 sub-wholesalers who distributed to additional sites, respectively.
(c) 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 CrossAmerica continues to supply the sites after divestiture.
(d) The decrease in the lessee dealer site count was primarily attributable to the real estate rationalization effort, partially offset by the lessee dealer sites acquired in the sixth asset exchange with Circle K.
(e) The decrease in the commission site count was primarily attributable to CrossAmerica’s real estate rationalization effort.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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Gross profit: Motor fuel $ 4,937 $ 3,284 $ 10,370 $ 3,689 Merchandise 11,969 9,384 22,333 9,384 Rent 1,858 2,030 3,924 3,669 Other revenue 2,311 1,221 4,170 1,221 Total gross profit 21,075 15,919 40,797 17,963 Operating expenses (20,122 ) (15,588 ) (39,551 ) (17,237 ) Operating income $ 953 $ 331 $ 1,246 $ 726 Retail sites (end of period): Commission agents (a) 202 212 202 212 Company operated retail sites 152 150 152 150 Total system sites at the end of the period 354 362 354 362 Total system operating statistics: Average retail fuel sites during the period 353 337 355 254 Motor fuel sales (gallons per site per day) 2,793 2,057 2,616 1,993 Motor fuel gross profit per gallon, net of credit card fees and
commissions$ 0.055 $ 0.052 $ 0.062 $ 0.040 Commission agents statistics: Average retail fuel sites during the period 203 210 204 190 Motor fuel gross profit per gallon, net of credit card fees and
commissions$ 0.014 $ 0.016 $ 0.015 $ 0.015 Company operated retail site statistics: Average retail fuel sites during the period 150 128 151 64 Motor fuel gross profit per gallon, net of credit card fees $ 0.093 $ 0.096 $ 0.109 $ 0.096 Merchandise gross profit percentage, net of credit card fees 26.5 % 25.4 % 26.9 % 25.4 % (a) The decrease in the commission site count was primarily attributable to the real estate rationalization effort.
Supplemental Disclosure Regarding Non-GAAP Financial Measures
CrossAmerica uses the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income available to the Partnership before deducting interest expense, income taxes, depreciation, amortization and accretion (which includes certain impairment charges). Adjusted EBITDA represents EBITDA as further adjusted to exclude equity-based employee and director compensation expense, gains or losses on dispositions and lease terminations, net, and certain discrete acquisition related costs, such as legal and other professional fees, separation benefit costs and certain other discrete non-cash items arising from purchase accounting. Distributable Cash Flow represents Adjusted EBITDA less cash interest expense, sustaining capital expenditures and current income tax benefit or expense. 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.
EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are used as supplemental financial measures by management and by external users of the CrossAmerica financial statements, such as investors and lenders. EBITDA and Adjusted EBITDA are used to assess the 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 CrossAmerica 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 the Partnership’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 the Partnership’s unitholders.
CrossAmerica believes the presentation of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio provides useful information to investors in assessing the financial condition and results of operations. EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio should not be considered alternatives to net income or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio have important limitations as analytical tools because they exclude some but not all items that affect net income. Additionally, because EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio may be defined differently by other companies in the industry, the Partnership’s definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income available to limited partners $ 4,789 $ 5,230 $ 822 $ 77,158 Interest expense 3,870 4,121 7,367 9,661 Income tax benefit (293 ) (2,944 ) (599 ) (2,976 ) Depreciation, amortization and accretion expense 19,583 16,050 37,614 33,277 EBITDA 27,949 22,457 45,204 117,120 Equity-based employee and director compensation expense 386 17 754 48 (Gain) loss on dispositions and lease terminations, net (a) (597 ) 4,575 51 (66,356 ) Acquisition-related costs (b) 1,967 672 4,361 2,193 Adjusted EBITDA 29,705 27,721 50,370 53,005 Cash interest expense (3,610 ) (3,861 ) (6,846 ) (9,140 ) Sustaining capital expenditures (c) (1,040 ) (407 ) (2,432 ) (1,047 ) Current income tax (expense) benefit (d) (50 ) 2,594 (334 ) 3,668 Distributable Cash Flow $ 25,005 $ 26,047 $ 40,758 $ 46,486 Weighted-average diluted common units 37,905 37,738 37,902 36,867 Distributions paid per limited partner unit (e) $ 0.5250 $ 0.5250 $ 1.0500 $ 1.0500 Distribution Coverage Ratio (f) 1.26x 1.31x 1.02x 1.20x (a) During the three months ended June 30, 2020, CrossAmerica recorded a loss on lease terminations, including the non-cash write-off of deferred rent income associated with these leases, of $10.9 million. During the six months ended June 30, 2020, CrossAmerica recorded a $67.6 million gain on the sale of its 17.5% investment in CST Fuel Supply. In addition, CrossAmerica recorded gains on the sale of CAPL properties in connection with the asset exchange with Circle K of $6.1 million and $7.9 million for the three and six months ended June 30, 2020, respectively.
(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 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 CrossAmerica’s sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.
(d) Consistent with prior divestitures, the current income tax (expense) benefit excludes income tax incurred on the sale of sites.
(e) On July 22, 2021, the Board approved a quarterly distribution of $0.5250 per unit attributable to the second quarter of 2021. The distribution is payable on August 10, 2021 to all unitholders of record on August 3, 2021.
(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.About CrossAmerica Partners LP
CrossAmerica Partners LP is a leading wholesale distributor of motor fuels, convenience store operator, and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is indirectly owned and controlled by entities affiliated with Joseph V. Topper, Jr., the founder of CrossAmerica Partners and a member of the board of the general partner since 2012. Formed in 2012, CrossAmerica Partners LP is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to approximately 1,700 locations and owns or leases approximately 1,100 sites. With a geographic footprint covering 34 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 Partners LP 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, rpalmer@caplp.com or 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,” “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 Securities and Exchange Commission, and available on CrossAmerica’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.