CrossAmerica Partners(CAPL) - 2019 Q2 - Quarterly Report

Financial Performance - Operating revenues for Q2 2019 were $605.5 million, a decrease of 10.1% from $673.3 million in Q2 2018[22] - Gross profit for Q2 2019 was $41.4 million, down 6.0% from $44.0 million in Q2 2018[22] - Net income attributable to limited partners for Q2 2019 was $6.4 million, compared to a net loss of $6.9 million in Q2 2018[22] - Operating expenses for Q2 2019 were $30.8 million, a decrease of 27.5% from $42.4 million in Q2 2018[22] - Basic and diluted income per limited partner unit for Q2 2019 was $0.18, compared to a loss of $0.21 in Q2 2018[22] - The company reported a loss on dispositions and lease terminations of $0.4 million in Q2 2019, significantly lower than the $6.8 million loss in Q2 2018[22] - Net income for the six months ended June 30, 2019, was $6,653,000, compared to a net loss of $(7,745,000) for the same period in 2018, representing a significant turnaround[27] - Net cash provided by operating activities was $34,170,000 for the six months ended June 30, 2019, down from $37,229,000 in the prior year, indicating a decrease of approximately 5%[27] - Revenues from motor fuel sales to Circle K were $42.307 million for the three months ended June 30, 2019, and $75.622 million for the six months[106] - Revenues from fuel sales to external customers in the Wholesale segment for the three months ended June 30, 2019, were $442.4 million, down from $477.6 million in the same period of 2018, a decrease of about 7.4%[156] Assets and Liabilities - Total current assets increased to $53.4 million as of June 30, 2019, from $50.9 million at the end of 2018[19] - Total assets reached $928.7 million as of June 30, 2019, up from $866.9 million at the end of 2018[19] - Total liabilities increased to $825.1 million as of June 30, 2019, compared to $756.0 million at the end of 2018[19] - The balance of cash and cash equivalents at the end of the period was $2,273,000, down from $2,475,000 at the end of June 2018, representing a decrease of approximately 8%[27] - Total debt and finance lease obligations increased to $534,103 million as of June 30, 2019, from $522,927 million at the end of 2018[78] - The company recorded lease liabilities related to operating leases, including those from sale-leaseback transactions, totaling $135.9 million[42] Cash Flow and Investments - Cash and cash equivalents were $2.3 million as of June 30, 2019, down from $3.2 million at the end of 2018[19] - Capital expenditures increased to $(10,710,000) in the first half of 2019, compared to $(6,250,000) in the same period of 2018, reflecting a rise of approximately 71%[27] - Net cash used in investing activities was $(6,359,000) for the six months ended June 30, 2019, compared to $(5,987,000) in the prior year, showing an increase of about 6%[27] - Cash received from Circle K during Q2 2019 was $2.8 million, primarily for inventory and security deposits[69] Equity and Distributions - Distributions paid to common unit holders totaled $(36,167,000) for the six months ended June 30, 2019, compared to $(39,401,000) in the same period of 2018, indicating a reduction of about 6%[27] - Distributions paid per common unit remained stable at $0.5250 for the three months ended June 30, 2019, consistent with the previous quarter[148] - The partnership agreement does not require the company to pay any distributions, indicating potential variability in future distributions[151] Lease and Environmental Liabilities - The adoption of ASU 2016-02 resulted in the recognition of right-of-use assets totaling $133.3 million and lease liabilities of $135.9 million effective January 1, 2019[42] - Environmental liabilities recorded on the balance sheet totaled $3.5 million as of June 30, 2019, down from $3.6 million at December 31, 2018[130] - Indemnification assets related to environmental liabilities amounted to $3.0 million as of June 30, 2019, compared to $3.2 million at December 31, 2018[130] Operational Changes and Agreements - The company plans to dealerize 46 company-operated sites in the Upper Midwest, transitioning during Q3 2019, with an initial 10-year term lease agreement[162] - The company will supply fuel to LGW for resale to dealers at the 60 stores transferred from Circle K under a Sub-Jobber Agreement[62] - The company has exclusive motor fuel distribution contracts with lessee dealers and independent dealers, contributing to its revenue streams[152] Financial Ratios and Compliance - The company is required to maintain a consolidated leverage ratio of not greater than 5.00 to 1.00 for each quarter ending on or before June 30, 2019, and 4.75 to 1.00 thereafter[87] - As of June 30, 2019, the company was in compliance with financial covenants, including a consolidated interest coverage ratio of at least 2.50 to 1.00[87] Miscellaneous - The company recorded separation benefit costs totaling $0.4 million in Q1 2019, related to the exit from the company-operated business[169] - A one percentage point change in the average interest rate would impact annual interest expense by approximately $5.1 million, based on a weighted-average interest rate of 4.66% as of June 30, 2019[292] - The company recognized impairment charges totaling $7.6 million and $8.9 million during the three and six months ended June 30, 2018, respectively[75]