CrossAmerica Partners(US:CAPL)2020-08-07 17:47Financial Data and Key Metrics Changes - For Q2 2020, adjusted EBITDA was $27.7 million, flat compared to Q2 2019, while distributable cash flow increased by 17% year-over-year to $26 million from $22.3 million [26][32] - Distribution coverage on a paid basis was 1.31 times for Q2 2020, compared to 1.24 times in Q2 2019, and trailing 12-month coverage improved to 1.21 times from 1.06 times [27][32] - Operating expenses increased by $11 million year-over-year, primarily due to an increase in company-operated sites from 55 to 128 [27][28] Business Line Data and Key Metrics Changes - Wholesale fuel volume increased by 1% year-over-year, with a significant increase in wholesale fuel gross profit up 48% due to higher margins [8][11] - Rental gross profit decreased by 6% year-over-year to $14.3 million, mainly due to lease terminations related to acquisitions [14] - Inside store sales at company-operated sites showed strong performance, with same-store sales up 5% to 10% year-over-year since early May [20] Market Data and Key Metrics Changes - Same-site year-over-year volume performance improved from a decline of 50% in early April to a decline of approximately 10% in recent weeks [10] - Regional performance varied, with states like Alabama showing strong volume while New Jersey and New York lagged due to COVID-19 impacts [39] Company Strategy and Development Direction - The company completed the acquisition of retail and wholesale assets, increasing company-operated sites by over 200% year-over-year [19] - Ongoing asset exchanges with Circle K are expected to be completed in the second half of 2020, with only 23 properties remaining [22] - The company plans to continue divesting non-core properties as part of its real estate optimization strategy [23] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding future volume performance due to COVID-19, particularly concerning back-to-school trends [35] - Margins are expected to remain good, with potential for a reset to higher levels due to changes in volume dynamics [42] Other Important Information - The company provided approximately $500,000 in rent waivers and recorded a similar amount in bad debt expense for the quarter [15] - The leverage ratio improved to 2.96 times, down from 4.19 times as of March 31, 2020, indicating better financial health [29] Q&A Session Summary Question: How much seasonally stronger is the third quarter normally? - Management noted that the second and third quarters are typically the strongest volume quarters, but uncertainty remains due to COVID-19 [34][35] Question: Could you discuss your capital deployment strategies going forward? - Management indicated a conservative approach to capital expenditures due to ongoing uncertainty from COVID-19, while aiming to improve coverage ratios [36] Question: Can you share some of the volume trends by region? - Management highlighted that volume performance varies by region, with Alabama performing well and New Jersey lagging due to COVID-19 impacts [38][39] Question: What are your expectations for margins going forward? - Management stated that margins have remained good despite increased crude oil prices, and there is optimism for potential margin resets [41][42]