CrossAmerica Partners(US:CAPL)2021-05-11 16:55Financial Data and Key Metrics Changes - For Q1 2021, adjusted EBITDA was $20.7 million, a decline of 18% compared to Q1 2020 [29] - Distributable cash flow for Q1 2021 was $15.8 million, down 23% year-over-year from $20.4 million in Q1 2020 [29] - Distribution coverage on a paid basis for the trailing 12 months ended March 31, 2021, was 1.23 times, an improvement from 1.19 times for the same period in 2020 [30] Business Line Data and Key Metrics Changes - Wholesale fuel volume increased by 32% year-over-year, primarily due to acquisitions and exchanges completed in 2020 [9] - Same-store inside sales were up approximately 13% year-over-year for Q1 2021, and up 15% year-to-date through late April [17][18] - Retail same-store volume was up approximately 3% year-over-year for Q1 2021, and up 16% year-to-date through late April [19] Market Data and Key Metrics Changes - Same-site volume for the last week in March 2021 was up approximately 80% year-over-year, indicating a recovery from COVID-19 impacts [11] - Year-to-date same-site volume performance through late April was up approximately 5% year-over-year [12] - WTI crude prices increased by 28% during Q1 2021, negatively impacting fuel margins per gallon [15] Company Strategy and Development Direction - The company announced an agreement to acquire 106 sites from 7-Eleven for $263 million, which will enhance its asset base in the Mid-Atlantic and Northeast regions [22] - The acquisition will involve rebranding the sites to Joe's Kwik Mart, aligning with the company's strategy to enhance its retail operations [25][26] - The company anticipates the acquisition to be immediately accretive to distributable cash flow and provide long-term value to unit holders [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of mobility and economic activity, which could lead to improved business conditions [27] - The company is well-positioned to capitalize on positive developments despite short-term challenges related to rising crude prices [27] - Management noted that the operating environment is improving, with expectations of returning to pre-pandemic levels [27] Other Important Information - The company experienced an increase in operating and G&A expenses due to the growth in company-operated and commission sites [21] - The leverage ratio at the end of Q1 2021 was 4.54 times, higher than the year-end ratio of 4.06 times, but the company remains in compliance with financial covenants [32] - The company plans to finance the acquisition through undrawn capacity under its revolving credit facility or additional debt financing [24] Q&A Session Summary Question: Can you provide more detail around when the acquisition closes? - Management indicated that the acquisition closing is dependent on the closing of the Marathon 7-Eleven acquisition, expected to occur in a matter of weeks [36][37] Question: How does the rebranding process work for the stores? - The rebranding will occur in groups, with clusters of sites being converted, requiring significant back-office equipment changes [38][39] Question: Does the colonial pipeline shutdown impact operations? - Management noted minimal impact so far, with expectations for normal operations to resume soon, although there could be disruptions if the situation persists [40][42] Question: Is there a floor to where wholesale margins could go with strengthening WTI prices? - Management explained that approximately 70% of wholesale contracts are fixed pricing, meaning variability is mainly from terms discounts, while the remaining 30% is variable price margin [43][44]