CrossAmerica Partners(CAPL) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net loss of just under $1 million for Q1 2023 compared to a net income of $5 million in Q1 2022, primarily due to increased interest expenses from the elevated interest rate environment [15][27] - Adjusted EBITDA for Q1 2023 was $31.7 million, a slight decrease of 1% from $32 million in Q1 2022 [27] - Distributable cash flow for Q1 2023 was $19.1 million, down from $24.4 million in Q1 2022, mainly due to increased cash interest expenses [27] Business Line Data and Key Metrics Changes - Wholesale fuel gross profit increased 3% to $16.7 million in Q1 2023 from $16.2 million in Q1 2022, driven by improved fuel margins [23] - Retail segment gross profit increased by 5% or $2.3 million compared to Q1 2022, with merchandise gross profit rising 9% [13][25] - Inside sales on a same-site basis increased approximately 4% year-over-year, with inside sales excluding cigarettes up about 10% [7][25] Market Data and Key Metrics Changes - National gasoline volume was approximately flat compared to the prior year, with a slight increase in volume observed since the quarter end [6] - The company's wholesale volume was 201.9 million gallons in Q1 2023, down from 203.9 million gallons in Q1 2022, largely due to lower base business volume [36] - Same-store volume across the entire portfolio was down around 2% for the quarter, driven by strong retail segment performance [37] Company Strategy and Development Direction - The company continues to evaluate its portfolio for opportunities to divest non-core properties, with one property sold for $400,000 in Q1 2023 and two additional properties sold for $6.6 million post-quarter [14] - The refinancing of credit facilities into a single facility simplifies the capital structure and provides necessary liquidity for future operations [26][45] - The company aims to maximize value and cash flows from each site in its portfolio while preparing for the summer drive season [30] Management's Comments on Operating Environment and Future Outlook - Management noted that the elevated interest rate environment has impacted interest expenses, but the company benefits from interest rate swaps established in early 2020 [11][18] - The company expressed confidence in its operational performance and cash flow generation, which has improved its leverage profile, providing flexibility for future opportunities [48] - Management highlighted the strong performance of the retail segment and ongoing initiatives to enhance pricing and product sourcing [38] Other Important Information - The company’s distribution coverage was 0.96 times for the current quarter compared to 1.22 times in Q1 2022, reflecting the seasonality of the business [46] - Capital expenditures totaled $6 million in Q1 2023, with $4 million allocated to growth-related investments, a decrease from $8.9 million in Q1 2022 [47] Q&A Session Summary Question: What are the expectations for future revenue and operational metrics? - Management provided forward-looking statements regarding expected revenue and operational metrics but noted that there can be no assurance that these expectations will be achieved [21] Question: How has the company managed its interest rate exposure? - The company has entered into new SOFR-based interest rate swap contracts to manage interest rate exposure and provide certainty around interest expenses moving forward [42]