CrossAmerica Partners(CAPL) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The second quarter of 2021 saw an adjusted EBITDA of $29.7 million, a 7% increase compared to the second quarter of 2020 [22] - Distributable cash flow for the second quarter of 2021 was $25 million, reflecting a 4% decrease year-over-year from $26 million in the second quarter of 2020 [22][23] - The distribution coverage ratio on a paid basis for the trailing 12 months ended June 30, 2021, was 1.22x, slightly improving from 1.21x for the previous period [23] Business Line Data and Key Metrics Changes - Wholesale fuel volume increased by 27% year-over-year, while wholesale fuel gross profit rose by 8% despite a 15% decrease in wholesale fuel margin per gallon [8][11] - Retail operations experienced a 35% increase in same-site comparable week volume year-over-year, although down approximately 4% compared to 2019 [14] - Inside sales for retail were up 11.5% year-over-year and 13.5% compared to 2019 [15] Market Data and Key Metrics Changes - The company reported a decline in wholesale fuel margin per gallon to $0.092, a decrease of $0.016 or 15% from the prior year, primarily due to dealer-tank-wagon margin declines [11] - WTI crude prices increased by 24% during the second quarter, impacting fuel margins negatively [12] Company Strategy and Development Direction - The company is focused on closing the acquisition of 106 convenience store sites from 7-Eleven for $263 million, with 32 sites already closed as of August 5, 2021 [18] - There is an ongoing evaluation of the asset portfolio to divest non-core properties, with 9 properties divested in the first half of 2021 [19] - The company aims to continue executing its strategic plan while managing its balance sheet effectively [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding solid results and positive traffic patterns, noting no significant impact from the delta variant of COVID-19 on operations [20] - The company remains vigilant and prepared to take necessary actions in response to any changes in the operating environment [20] Other Important Information - The company appointed Maura Topper as the new Chief Financial Officer, who has extensive financing experience [6][7] - Operating and G&A expenses increased due to a rise in the average company-operated site count by 17% year-over-year [17] Q&A Session Summary Question: Are there challenges on the labor front, such as labor shortages or wage inflation? - Management acknowledged labor tightness at store levels and mentioned initiatives like hiring incentives and retention bonuses to address this issue [30] Question: Is the labor situation driving an increase in G&A expenses? - Management clarified that while G&A expenses have not increased, there has been an uptick in store-level operating expenses due to higher labor costs [31] Question: What is the update on the divestiture front and the M&A market? - Management indicated that while divestitures have been slower than desired, there is a solid pipeline of transactions expected to proceed [32]