CrossAmerica Partners(CAPL) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2023, net income was $14.5 million, up from $14 million in Q2 2022, driven by increased adjusted EBITDA despite higher interest expenses [12] - Adjusted EBITDA increased by 2% to $42.2 million compared to $41.4 million in Q2 2022 [37] - Distribution coverage ratio was 1.53 times for Q2 2023, down from 1.63 times in Q2 2022 [37] Business Line Data and Key Metrics Changes - Wholesale fuel gross profit declined by 6% to $17.9 million compared to $19 million in Q2 2022, with a wholesale segment gross profit decrease of 5% to $31.7 million [4][12] - Retail segment gross profit increased by 19% or $10.6 million compared to Q2 2022 [23] - Same-store volume in the wholesale segment improved by approximately 50 basis points year-over-year, following a decline of about 4% in Q1 [6] Market Data and Key Metrics Changes - Wholesale volume was 218.1 million gallons in Q2 2023, a 2% increase from 214.4 million gallons in Q2 2022 [21] - Retail volume on a same-store basis declined by 1% year-over-year, but has since increased approximately 7% year-over-year post-quarter [8][22] Company Strategy and Development Direction - The company is focused on converting lessee dealer sites to company-operated locations to enhance profitability and long-term value [9][25] - Continued expansion of company-operated retail footprint is planned through class of trade conversions [25] Management Comments on Operating Environment and Future Outlook - Management noted that crude oil prices were lower compared to the prior year, impacting fuel margins [20] - The company is optimistic about the driving season and is focused on serving customers to maintain strong performance [31] Other Important Information - G&A expenses increased by $1.8 million year-over-year, primarily due to acquisition-related costs and IT investments [14] - The company divested six properties for $7.8 million to maximize value and reduce leverage [26] Q&A Session Summary Question: What are the expectations for future growth? - Management emphasized the importance of converting locations to company-operated retail, which is expected to enhance long-term EBITDA and value creation [34] Question: How has the interest rate environment affected operations? - The company continues to benefit from interest rate swaps, maintaining an effective interest rate of 5.1% on its credit facility [40]