CrossAmerica Partners(CAPL) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of $27.6 million for Q3 2022, up from $8.9 million in Q3 2021, driven by increases in operating income in both wholesale and retail segments [26] - Adjusted EBITDA increased by 73% to $62.2 million in Q3 2022 compared to $35.9 million in Q3 2021 [26] - Distributable cash flow rose to $50.9 million, a 67% increase from $30.4 million in Q3 2021 [27] - Operating cash flow generated during the quarter was $72 million, an increase of over $36 million compared to Q3 2021 [28] Business Line Data and Key Metrics Changes - Wholesale fuel gross profit increased by 24% to $42.2 million compared to $34.1 million in Q3 2021, driven by an increase in fuel margin [8] - Retail segment gross profit increased by 102% to $28.5 million, with motor fuel gross profit rising by $22.5 million and merchandise gross profit by $5.1 million compared to Q3 2021 [15] - Wholesale fuel volume was 338 million gallons, a decline of 5% year-over-year, while same-store wholesale volume declined approximately 8% [9][10] Market Data and Key Metrics Changes - National gasoline demand was down approximately 6% for the quarter, impacting overall fuel volume [10] - The average weekly retail fuel prices started the quarter approximately 55% above the prior year's levels but ended the quarter 15% to 20% above the previous average [10] - The company experienced a favorable fuel margin environment, with wholesale fuel margin per gallon increasing by 30% to $12.5 per gallon compared to $9.6 per gallon in Q3 2021 [12] Company Strategy and Development Direction - The company announced an asset purchase agreement for $27.5 million to acquire assets from community service stations, expected to be immediately accretive to distributable cash flow [22][23] - The leadership team emphasized a commitment to producing long-term value for unit owners and capitalizing on favorable market conditions [24] Management's Comments on Operating Environment and Future Outlook - Management noted that the declining fuel price environment positively impacted fuel margins, contrasting with earlier rising price conditions [12] - The company is focused on operational performance and cash flow generation to manage leverage ratios effectively [37] - Management expressed confidence in the company's financial position entering 2023, following strong Q3 results [38] Other Important Information - Operating expenses increased by 36% year-over-year, primarily due to the addition of new sites and higher real estate taxes [29] - General and administrative expenses decreased by 33% year-over-year, mainly due to lower acquisition-related costs [31] - The company distributed $52.5 per unit during Q3 2022, with a distribution coverage of 2.55 times [32] Q&A Session Summary - No questions were raised during the Q&A session, and management encouraged participants to reach out later if they had inquiries [39]