Crossamerica partners lp reports first quarter 2016 results
Allentown, pa.--(business wire)--crossamerica partners lp (nyse: capl) (“crossamerica” or the “partnership”), a leading wholesale fuels distributor, convenience store operator, and owner and lessor of real estate used in the retail distribution of motor fuels, today reported financial results for the first quarter ended march 31, 2016. “in the first quarter, we continued to execute on our acquisition and integration strategy, resulting in a 71% increase to distributable cash flow for our unit holders, compared to the first quarter of 2015,” said jeremy bergeron, president of crossamerica partners. “these efforts, and the strength of our base business, position us well to benefit from the seasonally stronger periods of the spring and summer driving season.” three months consolidated results operating income was $5.9 million for the first quarter 2016 compared to a loss of $0.4 million achieved in the first quarter 2015. ebitda was $18.2 million for the three month period ended march 31, 2016, up 66% over the $11.0 million for the same period in 2015 (non-gaap measures, including ebitda, as described are reconciled to the corresponding gaap measures in the supplemental disclosure section of this release). adjusted ebitda was $22.2 for the first quarter 2016 compared to $15.6 million for the same period in 2015, representing an increase of 43%. the increase in ebitda and adjusted ebitda was due primarily to an increase in the gross profit at the partnership's wholesale segment. wholesale segment during the first quarter 2016, crossamerica distributed, on a wholesale basis, 236.2 million gallons of motor fuel at an average wholesale gross margin of $0.050 per gallon, resulting in gross profits of $11.7 million. for the three month period ended march 31, 2015 the partnership distributed, on a wholesale basis, 233.8 million gallons of fuel at an average wholesale gross margin of $0.056 per gallon, resulting in gross profits of $13.1 million. the decrease was primarily due to the decline in the margin the partnership receives from purchase discounts provided to crossamerica by its suppliers. the partnership receives certain discounts from suppliers based on a percentage of the purchase price of fuel and the dollar value of these discounts varies with the price of wholesale motor fuel, which was lower during the first quarter of 2016 than it was during the first quarter of 2015. crossamerica’s gross profit from its other revenues for the wholesale segment, which primarily consist of rental income, was $14.1 million for the first quarter of 2016 compared to $10.5 million for the same period in 2015. the increase in rental income was primarily associated with acquisitions completed in 2015 and the continued dealerization of company-operated stores. the partnership recorded $4.1 million in income from its 17.5% equity investment in cst fuel supply lp in the first quarter of 2016, compared to $1.1 million for the same period in 2015. the increase is a result of the additional 12.5% interest acquired in july 2015. adjusted ebitda for the wholesale segment was $24.0 million for the first quarter of 2016 compared to $17.6 million for the same period in 2015. the $6.4 million increase was primarily driven by an increase in rental income, income from the partnership's equity interest in cst fuel supply and a reduction in overall operating expenses, partially offset by a decrease in fuel margin as discussed above (see supplemental disclosure regarding non-gaap financial information below). retail segment for the first quarter 2016, the partnership sold 40.2 million gallons of motor fuel at an average retail motor fuel gross margin of $0.063 per gallon, net of commissions and credit card fees, resulting in gross profits of $2.5 million. for the same period in 2015, crossamerica sold 46.3 million gallons at an average retail motor fuel gross margin of $0.102 per gallon, net of commissions and credit card fees, resulting in gross profits of $4.7 million. motor fuel gross profit decreased $2.2 million attributable to a 13% decrease in volume driven by the conversion of certain higher volume sites acquired in prior acquisitions to the dealer customer group during 2015. certain of these sites, located in different regions from crossamerica's remaining company-operated sites, generally had a higher motor fuel gross profit mix compared to the remaining company-operated sites. during the quarter, the partnership also generated $7.7 million in gross margin from the sale of food and merchandise versus $8.5 million for the same period in 2015. once again, the decrease in merchandise gross profit is primarily due to the dealerization of company-operated stores. adjusted ebitda for the retail segment was $1.8 million for the first quarter of 2016 compared to $4.8 million for the same period in 2015. the $3.0 million decrease was primarily caused by lower retail fuel margins and the continued dealerization of company-operated stores (see supplemental disclosure regarding non-gaap financial information below). distributable cash flow and distribution coverage ratio distributable cash flow (see supplemental disclosure regarding non-gaap financial information below) was $17.3 million for the three month period ended march 31, 2016 compared to $10.1 million for the same period in 2015. the increase in distributable cash flow was due primarily to an increase in earnings driven by acquisitions in addition to lower operating and general and administrative expenses. distributable cash flow per diluted limited partner unit was $0.5211 for the three months ended march 31, 2016 and the partnership paid a limited partner distribution per unit of $0.5925 during the quarter, resulting in a distribution coverage ratio of 0.88 times for the three months ended march 31, 2016. acquisition of franchise holiday stationstores on march 29, 2016, crossamerica closed on the acquisition of 31 franchise holiday stationstores (“holiday”) and 3 company- operated liquor stores from s/s/g corporation for approximately $52.3 million, including working capital. of the 34 company- operated stores, 31 are located in wisconsin and 3 are located in minnesota. the acquisition was funded by borrowings under the crossamerica revolving credit facility. liquidity and capital resources as of may 4, 2016, approximately $63.3 million was available for future borrowings under the crossamerica revolving credit facility. in connection with future acquisitions, the revolving credit facility requires, among other things, that the partnership has, after giving effect to such acquisition, at least $20.0 million of borrowing availability under the revolving credit facility and unrestricted cash on the balance sheet on the date of such acquisition. distributions on may 5, 2016, the board of the directors of crossamerica’s general partner declared a quarterly distribution of $0.5975 per limited partner unit attributable to the first quarter of 2016. as previously announced, the distribution will be paid on may 31, 2016 to all unitholders of record as of may 19, 2016. the amount and timing of any future distributions is subject to the discretion of the board of directors of crossamerica’s general partner. crossamerica expects to grow per unit distributions in 2016 by 5%-7% over 2015 levels while targeting the long-term goal of maintaining an annual coverage ratio of at least 1.1x. conference call the partnership will host a conference call on may 6, 2016 at 9:30 a.m. eastern time (8:30 a.m. central time) to discuss 2016 first quarter earnings results. the conference call numbers are 888-517-2513 or 847-619-6533 and the passcode for both is 5854572#. a live audio webcast of the conference call and the related earnings materials, including reconciliations of any non-gaap financial measures to gaap financial measures and any other applicable disclosures, will be available on that same day on the investor section of the crossamerica website (www.crossamericapartners.com). a slide presentation for the conference call will also be available on the investor section of the partnership’s website. to listen to the audio webcast, go to http://www.crossamericapartners.com/en-us/investors/eventsandpresentations. after the live conference call, a replay will be available for a period of thirty days. the replay numbers are 888-843-7419 or 630-652-3042 and the passcode for both is 5854572#. an archive of the webcast will be available on the investor section of the crossamerica website at www.crossamericapartners.com/en-us/investors/eventsandpresentations within 24 hours after the call for a period of sixty days. crossamerica partners lp consolidated statements of operations (thousands of dollars, except per share amounts) (unaudited) three months ended distribution declared (with respect to each respective period) per common andsubordinated units (c) diluted common units are not used in the calculation of diluted earnings per common unitfor the three months ended march 31, 2015 because to do so would be antidilutive segment results wholesale the following table highlights the results of operations and certain operating metrics of the wholesale segment (thousands of dollars, except for the number of distribution sites and per gallon amounts): total weighted average motor fuel distributed–intersegmentand related party prior to 2016, crossamerica netted lease executory costs such as real estate taxes, maintenance, and utilities that crossamerica paid and re-billed to customers on its statement of operations. during the first quarter of 2016, crossamerica began accounting for such amounts as rent income and operating expenses and reflected this change in presentation retrospectively. this change resulted in a $2.5 million increase in rent and other income and operating expenses for the three months ended march 31, 2015. retail the following table highlights the results of operations and certain operating metrics of the retail segment (thousands of dollars, except for the number of convenience stores and per gallon amounts): motor fuel gross profit per gallon, net of credit card fees andcommissions motor fuel gross profit per gallon, net of credit card fees andcommissions includes the results from car wash sales and commissions from lottery, money orders, air/water/vacuum services and atm fees. supplemental disclosure regarding non-gaap financial measures crossamerica uses non-gaap financial measures ebitda, adjusted ebitda, and distributable cash flow. ebitda represents net income available to crossamerica limited partners before deducting interest expense, income taxes and depreciation, amortization and accretion. adjusted ebitda represents ebitda as further adjusted to exclude equity funded expenses related to incentive compensation and the amended omnibus agreement, gains or losses on sales of assets, certain discrete acquisition related costs, such as legal and other professional fees and severance expenses associated with recently acquired companies, and certain other discrete non-cash items, such as inventory fair value adjustments arising from purchase accounting. distributable cash flow represents adjusted ebitda less cash interest expense, sustaining capital expenditures and current income tax expense. ebitda, adjusted ebitda, and distributable cash flow are used as supplemental financial measures by management and by external users of crossamerica’s financial statements, such as investors and lenders. ebitda and adjusted ebitda are used to assess the partnership’s financial performance without regard to financing methods, capital structure or income taxes and the ability to incur and service debt and to fund capital expenditures. in addition, adjusted ebitda is used to assess the operating performance of crossamerica’s business on a consistent basis by excluding the impact of items which do not result directly from the wholesale distribution of motor fuel, the leasing of real property, or the day to day operations of the partnership’s retail convenience store activities. ebitda, adjusted ebitda, and distributable cash flow are also used to assess the ability to generate cash sufficient to make distributions to crossamerica’s unit-holders. the partnership believes the presentation of ebitda, adjusted ebitda, and distributable cash flow provides useful information to investors in assessing the financial condition and results of operations. ebitda, adjusted ebitda, and distributable cash flow should not be considered alternatives to net income or any other measure of financial performance or liquidity presented in accordance with u.s. gaap. ebitda, adjusted ebitda, and distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income. additionally, because ebitda, adjusted ebitda, and distributable cash flow may be defined differently by other companies in crossamerica’s industry, the partnership’s definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. the following table presents reconciliations of ebitda, adjusted ebitda, and distributable cash flow to net income, the most directly comparable u.s. gaap financial measure, for each of the periods indicated (in thousands, except for per unit amounts): equity funded expenses related to incentive compensation and the amendedomnibus agreement(a) the following table reconciles segment adjusted ebitda to consolidated adjusted ebitda (in thousands): equity funded expenses related to incentive compensation and the amendedomnibus agreement about crossamerica partners lp crossamerica partners is a leading wholesale distributor of motor fuels and owner and lessee of real estate used in the retail distribution of motor fuels. its general partner, crossamerica gp llc, is a wholly owned subsidiary of cst brands, inc., one of the largest independent retailers of motor fuels and convenience merchandise in north america. formed in 2012, crossamerica partners lp is a distributor of branded and unbranded petroleum for motor vehicles in the united states and distributes fuel to more than 1,180 locations and owns or leases more than 800 sites. with a geographic footprint covering 29 states, the partnership has well-established relationships with several major oil brands, including exxonmobil, bp, shell, chevron, sunoco, valero, gulf, citgo, marathon and phillips 66. crossamerica partners ranks as one of exxonmobil’s largest distributors by fuel volume in the united states and in the top 10 for additional brands. for additional information, please visit www.crossamericapartners.com. safe harbor statement statements contained in this release 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 form 10-k or forms 10-q filed with the securities and exchange commission, and available on the crossamerica’s website at www.crossamericapartners.com. the partnership undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise. note to non-united states investors: this release is intended to be a qualified notice under treasury regulation section 1.1446-4(b). brokers and nominees should treat one hundred percent (100%) of crossamerica partners lp’s distributions to non-u.s. investors as attributable to income that is effectively connected with a united states trade or business. accordingly, crossamerica partners lp’s distributions to non-u.s. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
