Q3 2020 Crossamerica Partners LP Earnings Call

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Operator for today's call at this time, all participants are in listen only mode.

Later, we will conduct a question and answer session. Please note that this conference is being recorded national call over the John Benfield, you may begin.

Thank you John.

I appreciate everyone joining us this morning.

As always we thank you for your interest in the partnership and hope that you are well.

Turning today's call I'll briefly go through some of the operating highlights for the third quarter.

I will also provide some color on the continuing impacts from COVID-19, along with a few other updates similar to what I provided in our first and second quarter earnings call.

John will then review it more detailed the financial results.

Before I begin going through the operating highlights I want to note that we have announced the appointment of Eric Java D as our Chief Financial Officer.

Eric has an extensive amount of experience in the energy industry. Most recently with South Cross holdings in Houston.

Before joining South Cross holdings, Eric was a managing director Akane, Anderson Kaplow advisors, and an energy investment banking with several large institutions.

With this announcement John Benfield was interim CFO has been appointed Chief Accounting Officer.

I want to welcome Eric to our team and also say thank you to John for his hard work during this challenging period of time.

We are fortunate to have both of these talented individuals as part of our management team.

Now if you turn to slide for I will briefly review some of our results from the quarter.

Year over year, due primarily to the termination of leases at sites in connection with the retail and wholesale acquisition.

We now retail operate these sites and in place of rental income, we record retail fuel and merchandize revenue along with the associated operating expenses with these revenue streams.

In terms of rent, we saw a decline in recollection issues during the quarter.

August and September recollection was in line to slightly better than our historical performance.

If you turn to slide five we completed our sixth and final asset exchanges circle K on September 15 with.

With this exchange we received 23 properties in several care received the real property for four sites.

We also received a cash payment of $6.7 million in connection with the closing of the final asset exchange.

With the six total asset exchanges Crossamerica received 191 properties and circle K received the real property per 56 use convenience and retail fuel stores, along with 17 company operated convenience sites in the upper Midwest.

During the third quarter as part of our real estate optimization plans, we divested seven properties for a total of $3.8 million.

For the nine months ended September Thirtyth 2020, we sold 20 properties for a total of $13.3 million.

We continue to have an active pipeline of properties to divest and the real estate team has not let code stop their progress on this important initiative.

EPS for the third quarter of 2019, our distribution coverage on a trailing 12 month basis was 1.24 times, which was an approximately 9% improvement over the 1.14 times that we experienced for the 12 months ended September Thirtyth 2019.

As Charles touched on earlier, our operating expenses increased over $14 million for the third quarter of 2020 compared to the third quarter of 2019, driven by the increase in our average company operated site count as a result of the April 2020 acquisition of retail and wholesale assets.

The ratio of 1.24 times on a paid basis for the 12 months.

In regards to our capital spending during the third quarter, we did see an increase in our growth related capital expenditures as a result of dispenser MV upgrades and rebranding of certain sites due to our fuel initiatives.

Much of this spend was effectively funded by our real estate optimization plan the Charles discussed earlier.

Also it is important to note for site brand conversions, we generally are reimbursed by suppliers for a substantial portion and in some cases all of the upfront spend either over a period of time post conversion or after final project completion, we expect this growth spending to continue into the fourth quarter as we invest in our sites.

For the long term.

In conclusion as we enter the final months of 2020, we believe we have positioned ourselves well, we continue to operate in a challenging environment, but we have continued to improve both our coverage and leverage ratios and manage our balance sheet as we see the benefits from the asset exchanges, our acquisition of retail and wholesale assets and our other strategic.

Initiatives with that we will open it up for questions.

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This is Charles good well it looks like everyone's still today.

Or are trying to figure out the election results. So.

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