CrossAmerica Partners(CAPL) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2020, the wholesale fuel volume increased by 22% compared to Q4 2019, primarily due to acquisitions and exchanges, despite the impact of COVID-19 [9] - The wholesale fuel margin per gallon increased by 15% year-over-year, driving a 39% increase in wholesale fuel gross profit for the quarter [9] - Adjusted EBITDA for Q4 2020 was $24.4 million, a decline of 4% compared to the same period in 2019, while distributable cash flow increased by 40% to $26.2 million [43][44] - For the full year 2020, adjusted EBITDA was $107.4 million, representing a 4% increase, and distributable cash flow increased by 28% to $102.5 million [25][46] Business Line Data and Key Metrics Changes - Rental gross profit for Q4 2020 was $14.2 million, down 14% year-over-year due to lease terminations related to acquisitions [15] - Inside store sales for retail sites were up in the mid- to high single digits year-over-year, despite declines during the COVID-19 mitigation efforts [18] - The average company-operated site count increased to 149 from 0 in Q4 2019, contributing to increased operating expenses [21][46] Market Data and Key Metrics Changes - Same-store volume performance showed a decline in the low double digits year-over-year for Q4 2020, with a sharp drop during Thanksgiving week [10] - The percentage of wholesale fuel gallons from dealer tank wagon (DTW) increased to approximately 29% from 18% in Q4 2019 [13] Company Strategy and Development Direction - The company aims to optimize operations of acquired assets to provide stable cash flows and maximize investment returns [36] - The focus remains on maintaining relationships with major oil companies and exploring acquisition opportunities [37][39] - The company has a disciplined approach to acquisitions, seeking strong sites with long-term prospects at reasonable prices [40] Management's Comments on Operating Environment and Future Outlook - Management noted that the tax benefits realized in 2020 were primarily due to accelerated depreciation from acquisitions, which may not continue in the future [53][54] - The M&A environment remains active, but there is friction between buyers and sellers regarding expectations due to COVID-19 impacts [60] Other Important Information - The company completed several strategic transactions during 2020, including an equity restructuring agreement and multiple asset exchanges [30][31][34] - The company ended Q4 2020 with a leverage ratio of 4.06x, an improvement from 4.7x at the end of 2019 [47] Q&A Session Summary Question: Tax benefits realized in 2020 - Management explained that the main tax benefit was from accelerated depreciation due to acquisitions, and future benefits may decrease if acquisitions slow down [53][54] Question: CapEx spend for the year - Management discussed that CapEx was driven by dispenser upgrades for EMV compliance and brand conversions, with reimbursements expected over time [56][57] Question: Environment for M&A - Management indicated that the M&A environment is active, but there are differing expectations between buyers and sellers regarding the impact of COVID-19 [60]