Energy

News Alert: CrossAmerica Partners LP (NYSE: CAPL)

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On Wednesday, Shares of CrossAmerica Partners LP (NYSE: CAPL) price closed at $16.91 in the trading session. After opening the first trading session at $16.89, it registered a day’s high of $17.20 and touched a day’s low of $16.78. The last trade was registered at price of $16.89 and volume was 43,606 as compared to it’s an average volume of 74,536.

CrossAmerica Partners LP (NYSE: CAPL) stated financial results for the first quarter ended March 31, 2018.

Operating income was $7.4M for the first quarter 2018 contrast to $5.6M achieved in the first quarter 2017, representing a raise of 33%. EBITDA was $21.8M for the three month period ended March 31, 2018 contrast to $19.1M for the same period in 2017, representing a 15% increase. Adjusted EBITDA was $26.0M for the first quarter 2018 contrast to $23.7M for the same period in 2017, representing a raise of 10%. The increase in EBITDA and Adjusted EBITDA was Because of a raise in operating income driven by increases in both the wholesale and retail sections and a reduction in general and administrative expenses (Non-GAAP measures, including EBITDA, as described are reconciled to the corresponding GAAP measures in the Supplemental Disclosure section of this release).

 

Wholesale Section

 

During the first quarter 2018, CrossAmerica`s wholesale section generated $30.7M in gross profit contrast to $29.3M in gross profit for the first quarter 2017, representing a 5% increase. The Joint Venture distributed, on a wholesale basis, 249.5M gallons of motor fuel at an average wholesale gross profit of $0.057 per gallon, resulting in motor fuel gross profit of $14.3M. For the three month period ended March 31, 2017, CrossAmerica distributed, on a wholesale basis, 238.4M gallons of fuel at an average wholesale gross profit of $0.056 per gallon, resulting in motor fuel gross profit of $13.3M. The 7% increase in motor fuel gross profit was primarily Because of a 5% increase in volume driven primarily by the November 2017 Jet-Pep Assets acquisition. In addition, the Joint Venture realized a higher margin per gallon primarily Because of higher dealer-tank wagon (DTW) margins and increased payment discounts and incentives Because of the increase in motor fuel prices as a result of the increase in crude oil prices.

 

The prices paid by the Joint Venture to its motor fuel suppliers for wholesale motor fuel (which affects the cost of sales) are highly correlated to the price of crude oil. The average daily spot price of West Texas Intermediate crude oil increased about 22% to $62.91 per barrel during the first quarter 2018 as contrast to $51.62 per barrel during the same period in 2017.  Additionally, for the Joint Venture`s newly purchased Jet-Pep Assets in Alabama, CrossAmerica has noted that it is exposed to more price risk as its purchases are based on Platts bulk index-priced contracts with fuel suppliers. During the first quarter 2018, the Joint Venture experienced lower than normal fuel margins Because of some weaker conditions in the region that negatively influenced both its wholesale fuel margin and volumes at these sites. The Joint Venture does not expect this trend to continue over the long term. The Joint Venture is also completing the integration and optimization of the fuel supply chain and fuel programs for the Jet-Pep network that should provide benefits in the coming quarters of 2018.

CrossAmerica`s gross profit from Rent and Other for the wholesale section, which primarily consists of rental income, was $16.4M for the first quarter 2018 contrast to $16.0M for the first quarter 2017, representing a raise of 3%.

Operating expenses increased $1.1M primarily as a result of environmental costs related to increased compliance requirements in certain states as well as remediation costs incurred at individual sites that are not covered by state UST funds, insurance or other indemnifications.

Adjusted EBITDA for the wholesale section was $26.2M for the first quarter 2018 contrast to $25.7M for the same period in 2017. As discussed above, the year-over-year increase was primarily driven by a raise in motor fuel gross profit, which was offset slightly by a raise in operating expenses (see Supplemental Disclosure Regarding Non-GAAP Financial Information below).

Retail Section

For the first quarter 2018, the Joint Venture sold 51.7M gallons of motor fuel at an average retail motor fuel gross profit of $0.042 per gallon, net of commissions and credit card fees, resulting in motor fuel gross profit of $2.2M. For the same period in 2017, CrossAmerica sold 36.8M gallons in its retail section at an average gross profit of $0.032 per gallon, net of commissions and credit card fees, resulting in motor fuel gross profit of $1.2M. The increase in motor fuel gross profit is attributable Because of a raise in margin per gallon as a result of the movements in crude oil prices throughout the two periods and a raise in the average number of retail sites during the first quarter 2018 period Because of the acquisition of the Jet-Pep sites.

During the quarter, the Joint Venture generated $5.7M in gross profit from merchandise and services versus $5.8M for the same period in 2017. Gross profit from Rent and Other for the retail section was $1.5M for the first quarter 2018 contrast to $1.2M for the same period in 2017, reflecting a raise of 21%. Adjusted EBITDA for the retail section was $1.3M for the first quarter 2018 contrast to $0.1M for the first quarter 2017.

Liquidity and Capital Resources

As of May 3, 2018, after taking into consideration debt covenant constraints, about $98.9M was accessible for future borrowings under the Joint Venture`s revolving credit facility. In connection with future acquisitions, the revolving credit facility requires, among other things, that CrossAmerica have, after giving effect to such acquisition, at least, in the aggregate, $20M of borrowing availability under the revolving credit facility and unrestricted cash on the balance sheet on the date of such acquisition.

 

On April 25, 2018, the Joint Venture`s credit facility was amended to:

Extend the maturity date from March 4, 2019 to April 25, 2020;

Increase the capacity from $550M to $650M;

Extend the period during which the permitted total leverage ratio (as defined in the revolving credit facility) is increased from 4.50 : 1.00 to 5.00 : 1.00 after the closing of a material acquisition (as defined in the revolving credit facility) from three quarters to four quarters; and

Decrease the applicable margin and commitment fee (each as defined in the revolving credit facility), which vary based on our leverage ratio, such that the applicable margin ranges from 1.50% to 2.75% for LIBOR rate loans (as defined in the revolving credit facility) and 0.50% to 1.75% for alternate base rate loans (as defined in the revolving credit facility), and the commitment fee ranges from 0.20% to 0.45%. In general, the applicable margin for LIBOR and alternate base rate loans was reduced by 0.5%.

CrossAmerica Partners LP’s (CAPL) stock price showed weak performance of -0.29% in last seven days, switched down -2.03% in last thirty days and it fell -34.25% in last one year.

It has 34.50 million of outstanding shares and its shares float measured at 24.62.

 

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