CrossAmerica Partners(CAPL) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2021, net income was $12 million, up from $9 million in Q4 2020, driven by increased operating income in both wholesale and retail segments [20] - Adjusted EBITDA for Q4 2021 reached $37 million, a 51% increase compared to Q4 2020 [20] - Distributable cash flow for Q4 2021 was $31 million, an 18% increase from $26.2 million in Q4 2020 [21] - For the full year 2021, adjusted EBITDA was $123.3 million, a 15% increase over 2020 [22] Business Line Data and Key Metrics Changes - Wholesale fuel gross profit for Q4 2021 was $36.3 million, a 51% increase year-over-year, with wholesale segment gross profit at $49.4 million, up 34% [7] - Retail segment gross profit rose to $12.6 million, a 64% increase compared to Q4 2020, with motor fuel gross profit increasing by 76% [9] - For the full year 2021, retail gross profit increased by 77% to $100.8 million, with same-store volume up 15% compared to 2020 [14] Market Data and Key Metrics Changes - Wholesale fuel volume for Q4 2021 was 356.9 million gallons, a 16% increase year-over-year [7] - Same-site volume performance in wholesale was up approximately 6% year-over-year for Q4 2021, and 9% for the full year [8] - Retail same-site sales increased by 5% for the full year 2021 compared to 2020, and 11% compared to 2019 [14] Company Strategy and Development Direction - The company aims to improve customer experience and operational efficiency while positioning its portfolio for future growth [18] - The integration of 7-Eleven sites is a key focus, with efforts to maximize their long-term potential [15] - The company plans to divest non-core properties while maintaining fuel supply to certain locations, expecting to generate similar or higher annual EBITDA from divested properties [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while gasoline demand destruction due to high prices has not yet been observed, it is being closely monitored [29] - There is a belief in a structural shift towards higher margins in the fuel market, attributed to various industry pressures [32] - The company is optimistic about its financial position entering 2022, with plans to reduce leverage over the next 12 to 24 months [26] Other Important Information - The company experienced a drop in retail store sales and volume during the Omicron surge at the end of 2021, but has seen an improving trend since mid-January 2022 [12] - Capital expenditures for Q4 2021 totaled $9.5 million, with $8.7 million being growth-related [24] Q&A Session Summary Question: Thoughts on gasoline demand destruction due to high prices - Management has not observed demand destruction yet but is monitoring the situation closely [29] Question: Key drivers of higher margins and sustainability - Management attributes higher margins to a structural shift in the market and believes this higher margin environment may continue [32]