Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CrossAmerica Partners LP | exhibit991capl2q2016earnin.htm |
| 8-K - 8-K - CrossAmerica Partners LP | capl20162qform8-kearningsr.htm |
2Q 2016
Earnings Call
August 2016
Safe Harbor Statement
Statements contained in this presentation that state the Partnership’s or management’s
expectations or predictions of the future are forward-looking statements. The words
“believe,” “expect,” “should,” “intends,” “estimates,” “target” and other similar expressions
identify forward-looking statements. It is important to note that actual results could differ
materially from those projected in such forward-looking statements. For more information
concerning factors that could cause actual results to differ from those expressed or
forecasted, see CrossAmerica’s Forms 10-Q or Form 10-K filed with the Securities and
Exchange Commission and available on CrossAmerica’s website at
www.crossamericapartners.com. If any of these factors materialize, or if our underlying
assumptions prove to be incorrect, actual results may vary significantly from what we
projected. Any forward-looking statement you see or hear during this presentation reflects
our current views as of the date of this presentation with respect to future events. We
assume no obligation to publicly update or revise these forward-looking statements for any
reason, whether as a result of new information, future events, or otherwise.
2
CrossAmerica Business Overview
Jeremy Bergeron, President
3
Partnership Overview
• Leading motor fuel wholesale distributor, convenience store lessor and c-store operator
– Distributes annually over 1 billion gallons
– Annual gross rental income of
approximately $80 million
– Operates 80 c-stores(2)
– 17.5% equity interest in CST Brands’
wholesale fuels business, approximately
1.7 billion gallons(1) of annual fuel supply
• Over 1,180 fueling locations(2)
– 588 Lessee Dealers
– 384 Independent Dealers
– 80 Company Operated
Sites
– 65 Commission Agents
– 50+ Sub-jobbers,
commercial accounts, etc.
• Equity market capitalization
of $817 million and enterprise value
of $1.25 billion(2)
(1) Following CST’s market exits from California and Wyoming in July 2016
(2) As of June 30, 2016
Owned/controlled sites
States with marketing presence
4
Continuing Accretive Growth
5
55 Lessee Dealers, 25 Indep.
Dealers, 3 Company Ops
$45 Million Purchase
60 Million Gallons
Chicago Market
Marathon, Citgo, Phillips 66,
Mobil, BP, Shell
Est. 3Q16 close date
Asset Purchase
Rationale
154 current locations
85 pending locations (State Oil)
CrossAmerica Upper Midwest Region
Owned, Leased or Supplied Locations
• 59 valuable fee sites in
Greater Chicago
• Located in proximity of
existing markets
• Expands branding
relationship with several
suppliers
Strategy Execution
• Announced accretive acquisition of State Oil assets on July 15
• Completed first 3 months of operation of Holiday Stationstores acquired from SSG
– 34 total sites(1), over 26 million annual gallons of fuel, valuable real estate, strong inside sales
• Continued focus on managing expenses, optimizing portfolio and execution of our
integration strategy
– Completed divestment of over 80 million annual gallons associated with certain low margin fuel supply
contracts and other assets included in our 2014 PMI acquisition
– Applying processes and systems to reduce operating,
general & administrative expenses following acquisitions
– Converted 69 Company Operated sites in the first six
months of 2016 to Lessee Dealer accounts, yielding a
more stable, qualifying income cash flow stream
1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16
144
122 116
97
124
80
Company Operated Site Count (end of period)
PMI
Erickson
OneStop
Holiday
(1) 31 fuel and 3 non-fuel locations
Company Operated
Wholesale Fuel Margin
Retail Fuel Margin
Retail Merchandise Margin
− Operating Expenses
− Income Taxes
Lessee Dealer
Wholesale Fuel Margin
Rental Income
6
Operating Results
Operating Results
(in thousands, except for per gallon and site count)
Three Months ended June 30,
2016 2015
%
Change
Total Motor Fuel Sites (period avg.) 1,119 1,054 6%
Total Volume of Gallons Distributed 265,910 277,126 (4%)
Wholesale Fuel Margin per Gallon $0.054 $0.053 2%
Rental & Other Gross Profit (Wholesale) $14,770 $9,476 56%
Company Operated Sites (period avg.) 85 135 (37%)
Volume of Company Op Gallons Distributed 22,076 37,875 (42%)
Company Op Fuel Margin per Gallon $0.091 $0.112 (19%)
General, Admin. & Operating Expenses $21,040 $27,685 (24%)
Gallons of Motor Fuel Distributed (in thousands)
1,261,917
(1) Represents CrossAmerica’s equity interest in the volume distributed through CST Fuel Supply
2010 2011 2012 2013 2014 2015 2Q16
332 368
511 556 571
691 753
87
116 80
Number of Sites Owned & Leased (end of period)
Generating Rental Income Company Operated
2010 2011 2012 2013 2014 2015 2Q16
516,200
530,500 605,162
637,845
906,200
1,051,357 1,041,491
(1) (1)
TTM
2010 2011 2012 2013 2014 2015 2Q16
$18,961 $20,425 $21,222
$41,577 $43,258
$59,962
$70,858
Gross Rental Income (in thousands)
TTM
1,352,933
7
2Q 2016 Results
CrossAmerica Financial Overview
Steven Stellato, Chief Accounting Officer
8
2Q 2016 Results
9 (1) See the earnings press release filed by CrossAmerica Partners LP on August 5, 2016 for (i) a reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to
net income and (ii) the definitions of EBITDA, Adjusted EBITDA and DCF.
KEY METRICS
Three Months ended June 30,
2016 2015 % Change
Gross Profit $40,515 $41,171 (2%)
Adjusted EBITDA(1) $27,118 $19,060 42%
Distributable Cash Flow(1) $21,201 $14,319 48%
Weighted Avg. Diluted Units 33,292 25,155 32%
DCF per LP Unit $0.6368 $0.5692 12%
Distribution Paid per LP Unit $0.5975 $0.5475 9%
Distribution Coverage 1.07x 1.04x 3%
Financial Summary
(in thousands, except for per unit amounts)
2Q15 vs 2Q16 Adjusted EBITDA
(in thousands)
$27,118
$19,060
$7,232 ($1,153) $528
$1,834 ($383)
Acquisitions(2)
Impact of
Supplier
Terms
Discounts
Q2 2015
Adjusted
EBITDA(1)
Q2 2016
Adjusted
EBITDA(1)
Net, Misc.(3)
Net Effect of
Integration
and Base
Business
(1) See the earnings press release filed by CrossAmerica Partners LP on August 5, 2016 for (i) a reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to
net income and (ii) the definitions of EBITDA, Adjusted EBITDA and DCF.
(2) Acquisitions include third party acquisitions and CST asset drops conducted since 1/1/15
(3) Net, Misc. includes increased Incentive Distribution Right distributions and other miscellaneous items
10
2Q 2016 Results
Impact of
Dealer Tank
Wagon
Pricing
Strengthening Balance Sheet
• Renegotiation of Rocky Top Lease Obligation
– In September 2013, CrossAmerica acquired 33 sites for $36.9 million
– As part of financing the transaction, CrossAmerica entered into a master lease,
with a purchase obligation, for 29 sites at an interest rate of 7.7%, resulting in
approximately $2.1 million in annual interest expense
– In June 2016, we renegotiated the terms with the seller to transfer the lease to a 15-year term
operating lease, with four 5-year renewal options for a 6.5% cap rate, with 1.5% annual rent increases
– Results
• Reduces annual rent expense by approximately $300,000
• Elimination of purchase obligation frees up $26 million of borrowing capacity
• Refund of interest in CST Fuel Supply
– In July, as a result of CST’s sale of California and Wyoming retail sites to 7-eleven, CrossAmerica
received a refund of approximately $18.2 million on the approximately $1.67 million of annual cash
flow being generated at the Partnership
– Proceeds were used to pay down revolver
• Improving leverage ratio
– As of June 30, leverage ratio of 4.29x, with $80 million of additional borrowing capacity
– As of August 3, the Partnership has approximately $100 million of additional borrowing capacity
11
Executing with Measured Growth
• Declared distribution attributable to
second quarter of $0.6025 per unit
– 0.5 cent per unit increase over distribution
attributable to first quarter 2016
– Expect to increase per unit distribution
by 5%-7% for 2016 over 2015
– Continue to target a long-term
distribution coverage ratio of at least 1.1x
• 2016 Distributable Cash Flow(1) growth
– Selective, accretive acquisitions
– Strong business performance
– Expense reduction associated with integration
of recently completed transactions
• Demonstrating financial flexibility to execute growth strategy in any market cycle
– Velocity of growth will be determined based on capital availability
12
$0.4500
$0.4750
$0.5000
$0.5250
$0.5500
$0.5750
$0.6000
$0.6250
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Distributions per Unit (on declared basis)
(1) See the earnings press release filed by CrossAmerica Partners LP on August 5, 2016 for (i) a reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to
net income and (ii) the definitions of EBITDA, Adjusted EBITDA and DCF.