NYSE:CAPL CrossAmerica Partners Q2 2024 Earnings Report $23.06 +0.03 (+0.14%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$23.03 -0.03 (-0.14%) As of 04/17/2025 05:20 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History CrossAmerica Partners EPS ResultsActual EPS$0.16Consensus EPS $0.06Beat/MissBeat by +$0.10One Year Ago EPSN/ACrossAmerica Partners Revenue ResultsActual Revenue$1.13 billionExpected Revenue$1.27 billionBeat/MissMissed by -$139.00 millionYoY Revenue GrowthN/ACrossAmerica Partners Announcement DetailsQuarterQ2 2024Date8/7/2024TimeN/AConference Call DateFriday, August 9, 2024Conference Call Time9:00AM ETUpcoming EarningsCrossAmerica Partners' Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by CrossAmerica Partners Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 9, 2024 ShareLink copied to clipboard.There are 3 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Friday, August 9, 2024. I would now like to turn the conference over to Maura Topper, Chief Financial Officer. Operator00:00:31Please go ahead. Speaker 100:00:35Thank you, operator. Good morning, and thank you for joining the CrossAmerica Partners' 2nd quarter 2024 earnings call. With me today is Charles Nifong, CEO and President. We'll start off the call today with Charles providing some opening comments and an overview of CrossAmerica's operational performance for the quarter, and then I will discuss the financial results. We will then open up the call to questions. Speaker 100:01:02Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica website. Before we begin, I would like to remind everyone that today's call, including the question and answer session, may include forward looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organization. There can be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10 ks and quarterly reports on Form 10 Q for a discussion of important factors that could affect our actual results. Forward looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward looking statements. Speaker 100:02:07During today's call, we may also provide certain performance measures that do not conform to U. S. Generally Accepted Accounting Principles or GAAP. We have provided schedules that reconcile these non GAAP measures with our reported results on a GAAP basis as part of our earnings press release. Today's call is being webcast and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. Speaker 100:02:35With that, I will now turn the call over to Charles. Speaker 200:02:41Thank you, Maura. Maura and I appreciate everyone joining us this morning. We thank you for listening in today and for your interest in the partnership. During today's call, I will go through some of the operating highlights for the Q2 of 2024. I'll also provide commentary on the market and a few other updates as I have done on our prior calls. Speaker 200:03:04Maura will then review in more detail our financial results. Now if you turn to Slide 4, I will briefly review some of our operating results. First, I'll point out if you compare the relative size of the segment operating income between the Retail and Wholesale segments, you can see that our Retail segment is now larger than our Wholesale segment as a result of the strategic actions we have taken over the last 12 months to increase our exposure to retail. We expect this to be the case going forward as we continue to execute on our strategic vision to increase our retail footprint. For our retail segment, we realized a 7% year over year increase in our operating income for the Q2 compared to the prior year, driven by our success in converting sites from the wholesale segment to retail. Speaker 200:03:53We managed this achievement despite an industry environment that remains soft with decreased fuel demand and weak demand in certain store categories. Considering the industry environment backdrop, our performance for the 2nd quarter was good, primarily driven by our merchandise growth. The Retail segment generated $76,600,000 in gross profit compared to $66,000,000 for the same period in 2023, a 16% increase. Our merchandise gross profit increased 23 percent and our motor fuel gross profit increased 10% when compared to the same period in 2023. On the fuel margin front, our retail fuel margin on a $0.01 per gallon basis increased 1% year over year as our fuel margin was $0.373 per gallon in the Q2 of 20 24 compared to $0.37 per gallon in the Q2 of 2023. Speaker 200:04:48Retail fuel margin for the 2nd quarter was also up considerably over 21% from the Q1 of 2024 retail fuel margin of $0.308 per gallon. Retail fuel margins for the 2nd quarter generally strongest in the middle of the quarter and declined somewhat from mid June on as crude oil price increases pushed up wholesale fuel costs, which resulted in lower retail fuel margins. For volume on a same store basis, our retail volume declined 2% for the quarter year over year. Based on national demand data available to us, national gasoline demand was down approximately 4% for the quarter. So on a relative basis, our same store retail volume outperformed even though it was lower than what we would like. Speaker 200:05:35In the period since the quarter end, retail same store volume has remained down at approximately 1% to 2% year over year, so slightly better performance than during the Q2, but again, still down relative to the prior year. National fuel demand has continued to be soft since quarter end as well. Retail fuel margins have continued to be roughly in line with our 2nd quarter results. For inside sales on a same site basis, our inside sales were relatively flat compared to last year for the 2nd quarter. Inside sales excluding cigarettes, were up approximately 2% year over year on a same store basis for the quarter. Speaker 200:06:15As with fuel demand, based on national demand data available to us, demand for inside store sales has been weak so far this year and for the Q2, with both overall sales and unit count numbers for the 2nd quarter down compared to the prior year. So again, on a relative basis, our retail segment inside sales outperformed the industry for the quarter. Across America, our store sales performance was primarily driven by the categories of salty snacks, tobacco other than cigarettes and packaged beverages. On the store merchandise margin front, our merchandise gross profit increased 23% to $29,800,000 driven by increased sales from the higher store count. The store merchandise margin declined slightly due to us implementing more consumer value product pricing in our stores as well as higher costs in certain of our categories that we haven't passed on to customers. Speaker 200:07:10In the period since the quarter end, same store sales have been down approximately 2% from the prior year, reflecting the ongoing soft demand environment. In our Retail segment, if you look at our company operated site count, we are up 80 company operated retail sites from the prior year and up 29 sites relative to the Q1 of 2024. The increase in company operated site count relative to the Q1 was primarily driven by our completion of the conversion of the Apple Green lease locations to company operated retail sites in April during the quarter. We also converted certain other locations as well to company operated retail sites during the quarter as part of our broader overall strategy to increase our retail exposure. Our commission agent site count increased by 27 sites relative to the Q2 of 2023 and increased 14 sites relative to the Q1 of 2024. Speaker 200:08:08In many cases, converting an existing site to the commission class of trade involves retaining the existing dealer at the location. We are simply changing the economic relationship with the dealer so that we, across America, now own the fuel and control the retail fuel pricing at the location. We have been successful at doing these conversions in a manner that is mutually beneficial economically for both us and the dealer, creating a win win situation that enables all of us to be better off and have a productive relationship with the dealer, now commission agent going forward. In total, we increased our overall retail site count by 43 sites during the 2nd quarter compared to our retail site count at the end of the Q1 of this year. Based on those numbers, you can see that we were extremely active during the quarter with site conversions and executing on our strategy to increase our exposure to retail fuel margins and the retail business overall. Speaker 200:09:06Moving on to the Wholesale segment. For the Q2 of 2024, our Wholesale segment gross profit declined 11% to $28,100,000 compared to $31,700,000 in the Q2 of 2023. The decrease was driven by a decline in fuel volume, partially offset by an increase in fuel margin per gallon. The primary factor in the overall volume decline was the conversion of certain lessee dealer sites, the company operated and commission agent sites, which are now accounted for in the retail segment. Our wholesale motor fuel gross profit decreased 7% to $16,600,000 in the Q2 of 20 24 from $17,900,000 in the Q2 of 2023. Speaker 200:09:54Our fuel margin increased 6 percent from $0.082 per gallon in the Q2 of 2023 to $0.087 per gallon in the Q2 of 2024. The increase in our wholesale fuel margin per gallon was primarily driven by the relative level of crude oil prices within the two periods and its corresponding impact on the terms discounts we receive on certain gallons. We also benefited this quarter from a reduction in our fuel sourcing costs based on better purchase terms and favorable market conditions for certain other gallons. Our wholesale volume was 192,100,000 gallons for the Q2 of 2024 compared to 218,100,000 gallons in the second quarter of 2023, reflecting a decline of 12%. The decline in volume when compared to the same period in 2023 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade and lower same site volume. Speaker 200:10:54For the quarter, our same store volume in the wholesale segment was down approximately 3% year over year. So the additional 9% drop in volume, the difference between the overall volume decline of 12% and our same store volume decline of 3% was largely due to the conversion of sites to the retail segment. The gallons from these converted sites are now reflected in our Retail segment results. As mentioned in my Retail segment comments, national demand data available to us indicated fuel demand was down around 4% for the quarter. So our same store wholesale volume performance for the quarter was better than overall national demand. Speaker 200:11:33In the period since the quarter end, same store volume has been down around 1 percent year over year. So it's still negative year over year, but an improving trend similar to our retail segment results. Regarding our wholesale rent, our base rent for the quarter was $11,200,000 compared to the prior year of $13,100,000 a decrease due to the conversion of certain lessee dealer sites to company operated sites. These rent dollars, while no longer in the form of rent, are now in our retail segment results through our fuel and inside store sales margin at these locations, which due to their increase, helped to drive our increase in retail operating income for the quarter. As a result, the rent decline does not represent lots economics to our business, but simply reflects that these economics are now in the retail segment. Speaker 200:12:24During the quarter, we divested 10 properties for $11,900,000 in proceeds, resulting in a net gain of $6,500,000 As we stated on prior calls, we have been busy building up a pipeline of divestiture properties and the results this quarter provide an initial indication of the work we have done in this area. We have a very active pipeline of opportunities and expect to build on the divestiture volume realized in the second quarter and the second half of the year. Overall, it was a solid quarter for us. The 2nd quarter was a material improvement from the Q1. We were active in converting sites to retail, adding 43 sites to the retail segment during the quarter. Speaker 200:13:05The benefits of the ongoing execution of this strategy is apparent in our current financial results and we expect this benefit to grow over time as we get the converted sites operating at the level we expect of them. While the demand environment continues to be constrained, a for a more detailed financial review. Speaker 100:13:35Thank you, Charles. If you would please turn to Slide 6, I would like to review our Q2 results for the partnership. We reported net income of $12,400,000 for the Q2 of 2024 compared to net income of $14,500,000 in the Q2 of 2023. Adjusted EBITDA was $42,600,000 for the Q2 of 2024, a slight increase of 1% from adjusted EBITDA of $42,200,000 for the Q2 of 2023. So as Charles has reviewed, the changes in the composition of that adjusted EBITDA as a result of our strategic initiatives. Speaker 100:14:17Our distributable cash flow for the Q2 of 2024 was $26,100,000 compared to $30,400,000 for the Q2 of 2023. The declines in net income and distributable cash flow year over year were primarily due to an increase in interest expense as well as slightly higher sustaining capital spending as we have worked on our class of trade changes. Our distribution coverage for the current quarter was 1.3 times compared to 1.53 times for the Q2 of 2023. Our distribution coverage for the trailing 12 months ended June 30, 2024 was 1.32 times compared to 1.68 times for the same period ended June 30, 2023. During the Q2 of 2024, the Partnership paid a distribution of $0.525 per unit. Speaker 100:15:18Charles discussed some of the primary drivers of our top line and gross profit performance for the quarter in his comments. Turning to the expense portion of our operations. Operating expenses for the Q2 increased $6,000,000 compared to the 2023 Q2. This was comprised of a $2,700,000 decrease in operating expenses in our Wholesale segment, offset by an $8,800,000 increase in operating expenses in our Retail segment. Both changes were primarily driven by our conversion of sites from our wholesale segment to our retail segment. Speaker 100:15:56The retail segment increase in operating expenses was 22%, compared to our 21% overall increase in average site count in the segment during the quarter compared to the prior year. Within that 21% increase in total average site count, our company operated average site count was up 28% year over year for the quarter. Company operated locations are our highest per site expense class of trade and so that site count increase drove the majority of the year over year increase in operating expenses in both the retail segment and overall. We are generally pleased with the operating leverage we have been able to achieve to date as we have added company operated locations with further room for results in this realm. On a same store basis, operating expenses for our company operated locations were approximately flat year over year. Speaker 100:16:53Our team has continued to drive a strong focus on managing our store labor costs. With total store employment costs down approximately 1% year over year as a result of a strong focus on staffing our locations with efficient hours and more moderated wage increases than experienced over the prior 2 to 3 years. This strong performance in controlling our store employment costs, our largest expense across the organization, coupled with continued improvement performance in shrink and inventory management allowed us to offset cost increases in repairs and maintenance, including environmental maintenance and certain store level IT investments. Our operations team is focused on providing our store employees with the right processes and technology to accomplish their activities effectively and efficiently and providing more time in their days to service customers. Our G and A expenses increased $400,000 for the quarter year over year, primarily due to higher management fees as we have selectively added headcount to support the organization's growth in the retail segment. Speaker 100:18:10Moving to the next slide. We spent a total of $5,300,000 on capital expenditures during the Q2, with $3,400,000 of that total being growth related capital expenditures. During this past quarter, growth related capital spending included investments in the backcourt of our company operated site portfolio to add additional food and product options at selected sites as well as certain targeted site image and dispenser investments, which are often accompanied with incentives from our fuel suppliers. As of June 30, 2024, our total credit facility balance was $789,500,000 which was a $9,000,000 decrease from our March 31, 2024 balance. Our strong operational performance in the 2nd quarter, coupled with our success in divesting non core assets that Charles reviewed, allowed us to reinvest in our business, complete our quarterly distribution and deleverage during the course of the quarter. Speaker 100:19:20Our credit facility defined leverage ratio was 4.39 times as of June 30, 2024, which was a decrease from 4.49 times as of March 31, 2024. We continue to remain focused on our cash flow generation from operations and the divestiture of non core assets to manage our leverage ratio at approximately 4 times on a credit facility defined basis. Our cash interest expense increased from $10,200,000 in the Q2 of 2023 to $13,700,000 in the Q2 of 2024. We had positive rate savings from the interest rate swaps we entered into during the 2nd 4th quarters of last year, but did have 3 highly valuable interest rate swaps from the Q1 of 2020 expire at the end of the Q1 of 2024, which increased our overall interest costs. At this time, approximately 50% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended, which is a very advantaged rate in the current rate environment. Speaker 100:20:34Our credit facility balance during the Q2 of 2024 was also higher than the prior year, primarily due to the Applegreen transaction that Charles reviewed earlier and which we completed during the Q2. Our elevated credit facility balance also contributed to the increase in our interest expense year over year. Our effective interest rate on the total CAFL credit facility at the end of the Q2 was 6.7%. In conclusion, as Charles noted, the partnership performed well during the Q2 of 2024, in spite of the softer demand environment experienced in fuel and store sales. We remain focused as a team on executing in our base business as well as for the sites that have transitioned between segments over the past year to optimize their performance moving forward. Speaker 100:21:27We continue to focus on generating durable and consistent cash flows with a focus on maintaining a strong and flexible balance sheet and driving value for our unitholders. With that, we will open it up for questions. Thank Speaker 200:22:35It doesn't look like we have any questions today. Thank you for joining us on round 2 of our call. We apologize for the technical difficulties. Yesterday, there was a complete systems failure on our conference call provider, which is why we were unable to have the call and also communicate that to you when you were logged on yesterday. So thank you for joining us again today. Speaker 200:22:58Have a great day. Have a great weekend. Operator00:23:02Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask to please disconnect your lines. Have a lovely day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCrossAmerica Partners Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) CrossAmerica Partners Earnings HeadlinesCrossAmerica Partners to Announce First Quarter 2025 Earnings Results on May 7April 17 at 6:45 AM | globenewswire.comOwn The Gas Pump, And Collect 8% YieldsMarch 29, 2025 | seekingalpha.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 18, 2025 | Paradigm Press (Ad)9%-Yielding CrossAmerica Partners LP Hits Another Record HighMarch 18, 2025 | incomeinvestors.comCrossAmerica Partners LPMarch 15, 2025 | cnn.comCrossAmerica Partners Files 2024 Annual Report on Form 10-KFebruary 28, 2025 | globenewswire.comSee More CrossAmerica Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like CrossAmerica Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on CrossAmerica Partners and other key companies, straight to your email. Email Address About CrossAmerica PartnersCrossAmerica Partners (NYSE:CAPL) engages in the wholesale distribution of motor fuels, operation of convenience stores, and ownership and leasing of real estate used in the retail distribution of motor fuels in the United States. It operates in two segments, Wholesale and Retail. The Wholesale segment engages in the wholesale distribution of motor fuels to lessee dealers, independent dealers, commission agents, and company operated retail sites. The Retail segment is involved in the sale of convenience merchandise items; and retail sale of motor fuels at company operated retail sites and retail sites operated by commission agents. CrossAmerica GP LLC operates as the general partner of the company. The company was formerly known as Lehigh Gas Partners LP and changed its name to CrossAmerica Partners LP in October 2014. The company was founded in 1992 and is based in Allentown, Pennsylvania.View CrossAmerica Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 3 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Second Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Friday, August 9, 2024. I would now like to turn the conference over to Maura Topper, Chief Financial Officer. Operator00:00:31Please go ahead. Speaker 100:00:35Thank you, operator. Good morning, and thank you for joining the CrossAmerica Partners' 2nd quarter 2024 earnings call. With me today is Charles Nifong, CEO and President. We'll start off the call today with Charles providing some opening comments and an overview of CrossAmerica's operational performance for the quarter, and then I will discuss the financial results. We will then open up the call to questions. Speaker 100:01:02Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica website. Before we begin, I would like to remind everyone that today's call, including the question and answer session, may include forward looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organization. There can be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10 ks and quarterly reports on Form 10 Q for a discussion of important factors that could affect our actual results. Forward looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward looking statements. Speaker 100:02:07During today's call, we may also provide certain performance measures that do not conform to U. S. Generally Accepted Accounting Principles or GAAP. We have provided schedules that reconcile these non GAAP measures with our reported results on a GAAP basis as part of our earnings press release. Today's call is being webcast and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. Speaker 100:02:35With that, I will now turn the call over to Charles. Speaker 200:02:41Thank you, Maura. Maura and I appreciate everyone joining us this morning. We thank you for listening in today and for your interest in the partnership. During today's call, I will go through some of the operating highlights for the Q2 of 2024. I'll also provide commentary on the market and a few other updates as I have done on our prior calls. Speaker 200:03:04Maura will then review in more detail our financial results. Now if you turn to Slide 4, I will briefly review some of our operating results. First, I'll point out if you compare the relative size of the segment operating income between the Retail and Wholesale segments, you can see that our Retail segment is now larger than our Wholesale segment as a result of the strategic actions we have taken over the last 12 months to increase our exposure to retail. We expect this to be the case going forward as we continue to execute on our strategic vision to increase our retail footprint. For our retail segment, we realized a 7% year over year increase in our operating income for the Q2 compared to the prior year, driven by our success in converting sites from the wholesale segment to retail. Speaker 200:03:53We managed this achievement despite an industry environment that remains soft with decreased fuel demand and weak demand in certain store categories. Considering the industry environment backdrop, our performance for the 2nd quarter was good, primarily driven by our merchandise growth. The Retail segment generated $76,600,000 in gross profit compared to $66,000,000 for the same period in 2023, a 16% increase. Our merchandise gross profit increased 23 percent and our motor fuel gross profit increased 10% when compared to the same period in 2023. On the fuel margin front, our retail fuel margin on a $0.01 per gallon basis increased 1% year over year as our fuel margin was $0.373 per gallon in the Q2 of 20 24 compared to $0.37 per gallon in the Q2 of 2023. Speaker 200:04:48Retail fuel margin for the 2nd quarter was also up considerably over 21% from the Q1 of 2024 retail fuel margin of $0.308 per gallon. Retail fuel margins for the 2nd quarter generally strongest in the middle of the quarter and declined somewhat from mid June on as crude oil price increases pushed up wholesale fuel costs, which resulted in lower retail fuel margins. For volume on a same store basis, our retail volume declined 2% for the quarter year over year. Based on national demand data available to us, national gasoline demand was down approximately 4% for the quarter. So on a relative basis, our same store retail volume outperformed even though it was lower than what we would like. Speaker 200:05:35In the period since the quarter end, retail same store volume has remained down at approximately 1% to 2% year over year, so slightly better performance than during the Q2, but again, still down relative to the prior year. National fuel demand has continued to be soft since quarter end as well. Retail fuel margins have continued to be roughly in line with our 2nd quarter results. For inside sales on a same site basis, our inside sales were relatively flat compared to last year for the 2nd quarter. Inside sales excluding cigarettes, were up approximately 2% year over year on a same store basis for the quarter. Speaker 200:06:15As with fuel demand, based on national demand data available to us, demand for inside store sales has been weak so far this year and for the Q2, with both overall sales and unit count numbers for the 2nd quarter down compared to the prior year. So again, on a relative basis, our retail segment inside sales outperformed the industry for the quarter. Across America, our store sales performance was primarily driven by the categories of salty snacks, tobacco other than cigarettes and packaged beverages. On the store merchandise margin front, our merchandise gross profit increased 23% to $29,800,000 driven by increased sales from the higher store count. The store merchandise margin declined slightly due to us implementing more consumer value product pricing in our stores as well as higher costs in certain of our categories that we haven't passed on to customers. Speaker 200:07:10In the period since the quarter end, same store sales have been down approximately 2% from the prior year, reflecting the ongoing soft demand environment. In our Retail segment, if you look at our company operated site count, we are up 80 company operated retail sites from the prior year and up 29 sites relative to the Q1 of 2024. The increase in company operated site count relative to the Q1 was primarily driven by our completion of the conversion of the Apple Green lease locations to company operated retail sites in April during the quarter. We also converted certain other locations as well to company operated retail sites during the quarter as part of our broader overall strategy to increase our retail exposure. Our commission agent site count increased by 27 sites relative to the Q2 of 2023 and increased 14 sites relative to the Q1 of 2024. Speaker 200:08:08In many cases, converting an existing site to the commission class of trade involves retaining the existing dealer at the location. We are simply changing the economic relationship with the dealer so that we, across America, now own the fuel and control the retail fuel pricing at the location. We have been successful at doing these conversions in a manner that is mutually beneficial economically for both us and the dealer, creating a win win situation that enables all of us to be better off and have a productive relationship with the dealer, now commission agent going forward. In total, we increased our overall retail site count by 43 sites during the 2nd quarter compared to our retail site count at the end of the Q1 of this year. Based on those numbers, you can see that we were extremely active during the quarter with site conversions and executing on our strategy to increase our exposure to retail fuel margins and the retail business overall. Speaker 200:09:06Moving on to the Wholesale segment. For the Q2 of 2024, our Wholesale segment gross profit declined 11% to $28,100,000 compared to $31,700,000 in the Q2 of 2023. The decrease was driven by a decline in fuel volume, partially offset by an increase in fuel margin per gallon. The primary factor in the overall volume decline was the conversion of certain lessee dealer sites, the company operated and commission agent sites, which are now accounted for in the retail segment. Our wholesale motor fuel gross profit decreased 7% to $16,600,000 in the Q2 of 20 24 from $17,900,000 in the Q2 of 2023. Speaker 200:09:54Our fuel margin increased 6 percent from $0.082 per gallon in the Q2 of 2023 to $0.087 per gallon in the Q2 of 2024. The increase in our wholesale fuel margin per gallon was primarily driven by the relative level of crude oil prices within the two periods and its corresponding impact on the terms discounts we receive on certain gallons. We also benefited this quarter from a reduction in our fuel sourcing costs based on better purchase terms and favorable market conditions for certain other gallons. Our wholesale volume was 192,100,000 gallons for the Q2 of 2024 compared to 218,100,000 gallons in the second quarter of 2023, reflecting a decline of 12%. The decline in volume when compared to the same period in 2023 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade and lower same site volume. Speaker 200:10:54For the quarter, our same store volume in the wholesale segment was down approximately 3% year over year. So the additional 9% drop in volume, the difference between the overall volume decline of 12% and our same store volume decline of 3% was largely due to the conversion of sites to the retail segment. The gallons from these converted sites are now reflected in our Retail segment results. As mentioned in my Retail segment comments, national demand data available to us indicated fuel demand was down around 4% for the quarter. So our same store wholesale volume performance for the quarter was better than overall national demand. Speaker 200:11:33In the period since the quarter end, same store volume has been down around 1 percent year over year. So it's still negative year over year, but an improving trend similar to our retail segment results. Regarding our wholesale rent, our base rent for the quarter was $11,200,000 compared to the prior year of $13,100,000 a decrease due to the conversion of certain lessee dealer sites to company operated sites. These rent dollars, while no longer in the form of rent, are now in our retail segment results through our fuel and inside store sales margin at these locations, which due to their increase, helped to drive our increase in retail operating income for the quarter. As a result, the rent decline does not represent lots economics to our business, but simply reflects that these economics are now in the retail segment. Speaker 200:12:24During the quarter, we divested 10 properties for $11,900,000 in proceeds, resulting in a net gain of $6,500,000 As we stated on prior calls, we have been busy building up a pipeline of divestiture properties and the results this quarter provide an initial indication of the work we have done in this area. We have a very active pipeline of opportunities and expect to build on the divestiture volume realized in the second quarter and the second half of the year. Overall, it was a solid quarter for us. The 2nd quarter was a material improvement from the Q1. We were active in converting sites to retail, adding 43 sites to the retail segment during the quarter. Speaker 200:13:05The benefits of the ongoing execution of this strategy is apparent in our current financial results and we expect this benefit to grow over time as we get the converted sites operating at the level we expect of them. While the demand environment continues to be constrained, a for a more detailed financial review. Speaker 100:13:35Thank you, Charles. If you would please turn to Slide 6, I would like to review our Q2 results for the partnership. We reported net income of $12,400,000 for the Q2 of 2024 compared to net income of $14,500,000 in the Q2 of 2023. Adjusted EBITDA was $42,600,000 for the Q2 of 2024, a slight increase of 1% from adjusted EBITDA of $42,200,000 for the Q2 of 2023. So as Charles has reviewed, the changes in the composition of that adjusted EBITDA as a result of our strategic initiatives. Speaker 100:14:17Our distributable cash flow for the Q2 of 2024 was $26,100,000 compared to $30,400,000 for the Q2 of 2023. The declines in net income and distributable cash flow year over year were primarily due to an increase in interest expense as well as slightly higher sustaining capital spending as we have worked on our class of trade changes. Our distribution coverage for the current quarter was 1.3 times compared to 1.53 times for the Q2 of 2023. Our distribution coverage for the trailing 12 months ended June 30, 2024 was 1.32 times compared to 1.68 times for the same period ended June 30, 2023. During the Q2 of 2024, the Partnership paid a distribution of $0.525 per unit. Speaker 100:15:18Charles discussed some of the primary drivers of our top line and gross profit performance for the quarter in his comments. Turning to the expense portion of our operations. Operating expenses for the Q2 increased $6,000,000 compared to the 2023 Q2. This was comprised of a $2,700,000 decrease in operating expenses in our Wholesale segment, offset by an $8,800,000 increase in operating expenses in our Retail segment. Both changes were primarily driven by our conversion of sites from our wholesale segment to our retail segment. Speaker 100:15:56The retail segment increase in operating expenses was 22%, compared to our 21% overall increase in average site count in the segment during the quarter compared to the prior year. Within that 21% increase in total average site count, our company operated average site count was up 28% year over year for the quarter. Company operated locations are our highest per site expense class of trade and so that site count increase drove the majority of the year over year increase in operating expenses in both the retail segment and overall. We are generally pleased with the operating leverage we have been able to achieve to date as we have added company operated locations with further room for results in this realm. On a same store basis, operating expenses for our company operated locations were approximately flat year over year. Speaker 100:16:53Our team has continued to drive a strong focus on managing our store labor costs. With total store employment costs down approximately 1% year over year as a result of a strong focus on staffing our locations with efficient hours and more moderated wage increases than experienced over the prior 2 to 3 years. This strong performance in controlling our store employment costs, our largest expense across the organization, coupled with continued improvement performance in shrink and inventory management allowed us to offset cost increases in repairs and maintenance, including environmental maintenance and certain store level IT investments. Our operations team is focused on providing our store employees with the right processes and technology to accomplish their activities effectively and efficiently and providing more time in their days to service customers. Our G and A expenses increased $400,000 for the quarter year over year, primarily due to higher management fees as we have selectively added headcount to support the organization's growth in the retail segment. Speaker 100:18:10Moving to the next slide. We spent a total of $5,300,000 on capital expenditures during the Q2, with $3,400,000 of that total being growth related capital expenditures. During this past quarter, growth related capital spending included investments in the backcourt of our company operated site portfolio to add additional food and product options at selected sites as well as certain targeted site image and dispenser investments, which are often accompanied with incentives from our fuel suppliers. As of June 30, 2024, our total credit facility balance was $789,500,000 which was a $9,000,000 decrease from our March 31, 2024 balance. Our strong operational performance in the 2nd quarter, coupled with our success in divesting non core assets that Charles reviewed, allowed us to reinvest in our business, complete our quarterly distribution and deleverage during the course of the quarter. Speaker 100:19:20Our credit facility defined leverage ratio was 4.39 times as of June 30, 2024, which was a decrease from 4.49 times as of March 31, 2024. We continue to remain focused on our cash flow generation from operations and the divestiture of non core assets to manage our leverage ratio at approximately 4 times on a credit facility defined basis. Our cash interest expense increased from $10,200,000 in the Q2 of 2023 to $13,700,000 in the Q2 of 2024. We had positive rate savings from the interest rate swaps we entered into during the 2nd 4th quarters of last year, but did have 3 highly valuable interest rate swaps from the Q1 of 2020 expire at the end of the Q1 of 2024, which increased our overall interest costs. At this time, approximately 50% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended, which is a very advantaged rate in the current rate environment. Speaker 100:20:34Our credit facility balance during the Q2 of 2024 was also higher than the prior year, primarily due to the Applegreen transaction that Charles reviewed earlier and which we completed during the Q2. Our elevated credit facility balance also contributed to the increase in our interest expense year over year. Our effective interest rate on the total CAFL credit facility at the end of the Q2 was 6.7%. In conclusion, as Charles noted, the partnership performed well during the Q2 of 2024, in spite of the softer demand environment experienced in fuel and store sales. We remain focused as a team on executing in our base business as well as for the sites that have transitioned between segments over the past year to optimize their performance moving forward. Speaker 100:21:27We continue to focus on generating durable and consistent cash flows with a focus on maintaining a strong and flexible balance sheet and driving value for our unitholders. With that, we will open it up for questions. Thank Speaker 200:22:35It doesn't look like we have any questions today. Thank you for joining us on round 2 of our call. We apologize for the technical difficulties. Yesterday, there was a complete systems failure on our conference call provider, which is why we were unable to have the call and also communicate that to you when you were logged on yesterday. So thank you for joining us again today. Speaker 200:22:58Have a great day. Have a great weekend. Operator00:23:02Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask to please disconnect your lines. Have a lovely day.Read morePowered by