Q2 2024 CrossAmerica Partners LP Earnings Call
In a listen only mode. Following the presentation, we will conduct a question and answer session.
Speaker Change: If at any time during this call you require immediate assistance. Please press star zero for the operator.
Speaker Change: This call is being recorded on Friday August nine 2024.
Speaker Change: I would now like to turn the conference over to more of a topper Chief Financial Officer. Please go ahead.
Maura Topper: Our distribution coverage for the trailing 12 months ended June 30th 2024 was 1.32 times compared to 1.68 times for the same period ended June 30th. During the second quarter of 2024, the partnership paid a distribution of 52.5 cents per unit. Charles discussed some of the primary drivers of our top line and gross profit performance for the quarter in his comments.
Thank you for watching!
Speaker Change: Thank you operator.
Speaker Change: Good morning, and thank you for joining across America partners second quarter 2024 earnings call with.
Speaker Change: With me today is Charles my phone CEO and president.
Speaker Change: We'll start off the call today are Charles providing some opening comments and an overview of cross Americas operational performance for the quarter and then I will discuss the financial results.
Maura Topper: Charles 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 second quarter increased $6 million compared to the 2023 second quarter. This was comprised of a $2.7 million decrease in operating expenses in our wholesale segment, offset by an $8.8 million 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. The 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.
Speaker Change: We will then open up the call to questions.
Maura Topper: Turning to the expense portion of our operations, operating expenses for the second quarter increased $6 million compared to the 2023 second quarter. This was comprised of a $2.7 million decrease in operating expenses in our wholesale segment, offset by an $8.8 million 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. The 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.
Charles: Today's call will follow the presentation slides that are available as part of the webcast and are posted on the Cross America website.
Speaker Change: Before we begin I would like to remind everyone that todays 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.
Speaker Change: There can be no assurance that management's expectations beliefs, and projections will be achieved or that actual results will not differ from expectations.
Speaker Change: We see Cross America filings with the Securities and Exchange Commission, including annual reports on Form 10-K.
Maura Topper: 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. Our teams have continued to drive a strong focus on managing our store labor costs, the total store employment costs down approximately 1% year-over-year.
Maura Topper: 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.
Speaker Change: Quarterly reports on Form 10-Q.
Speaker Change: For a discussion of important factors that could affect our actual results.
Speaker Change: Forward looking statements represent the judgment of cross American management as of today's date.
Speaker Change: And the organization disclaims any intent or obligation to update any forward looking statements.
Speaker Change: During today's call. We may also provide certain performance measures that do not conform to U S generally accepted accounting principles or GAAP.
Speaker Change: 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.
Maura Topper: On a same-store basis, operating expenses for our company-operated locations were approximately flat year-over-year. Our teams have continued to drive a strong focus on managing our store labor costs, the 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 wages, and increased than experienced over the prior two to three years. This strong performance in controlling our store employment costs are largest expense across the organization.
Speaker Change: Today's call is being webcast and a recording of this conference call will be available on across America website for a period of 60 days.
Speaker Change: With that I will now turn the call over to Charles.
Maura Topper: As a result of a strong focus on staffing our locations with efficient hours and more moderated wages. and increased than experienced over the prior two to three years. This strong performance in controlling our store employment costs are largest expense across the organization. Couples 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.
Speaker Change: Thank you Maura.
Charles: And I appreciate everyone joining us this morning.
Charles: We thank you for listening in today and for your interest in the partnership.
Speaker Change: During today's call I will go through some of the operating highlights for the second quarter 2024.
Charles: I'll also provide commentary on the market and a few other updates as I have done on our prior calls.
Maura Topper: Couples 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&A expenses increased $0.4 million 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 Change: More will then review in more detail our financial results.
Speaker Change: Now if you turn to slide four I will briefly review some of our operating results.
Speaker Change: First I will 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.
Maura Topper: Our G&A expenses increased $0.4 million 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. Moving to the next slide, we spent a total of $5.3 million on capital expenditures during the second quarter, with $3.4 million of that total being growth-related capital expenditures. During this task order, growth-related capital spending included investments in the back court 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.
Speaker Change: We expect this to be the case going forward as we continue to execute on our strategic vision to increase our retail footprint.
Speaker Change: For our retail segment, we realized a 7% year over year increase in our operating income for the second quarter compared to the prior year driven by our success in converting sites from our wholesale segment to retail.
Maura Topper: Moving to the next slide, we send a total of $5.3 million on capital expenditures during the second quarter, with $3.4 million of that total being growth-related capital expenditures. During this task order, growth-related capital spending included investments in the back court 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.
Speaker Change: We manage this achievement despite an industry environment that remains soft with decreased fuel demand and weak demand in certain store categories.
Speaker Change: Considering the industry environment backdrop, our performance for the second quarter was good primarily driven by our merchandise growth.
Speaker Change: The retail segment generated $76 $6 million in gross profit compared to $66 million for the same period in 2023% to 16% increase.
Speaker Change: Our merchandise gross profit increased 23% and our motor fuel gross profit increased 10% when compared to the same period in 2023.
Maura Topper: As it used 30th, 2024, our total credit facility balance was $789.5 million, which was a $9 million decrease from our March 31st, 2024, balance. A strong operational performance in the second 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 de-leverage during the course of the quarter. Our credit facility defined leverage ratio was 4.39 times as of June 30th, 2024. Through the decrease from 4.49 times as of March 31st, 2024, we continue to remain focused on our cashflow generation from operations and the divestiture of non-core assets to manage our leverage ratio at approximately four times on a credit facility defined basis.
Maura Topper: As it used 30th, 2024, our total credit facility balance was $789.5 million, which was a $9 million decrease from our March 31st, 2024 balance. A strong operational performance in the second 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 de-leverage during the course of the quarter. Our credit facility defined leverage ratio was 4.39 times as of June 30th, 2024.
On the fuel margin front, our retail fuel margin on a cents per gallon basis increased 1% year over year as our fuel margin was 37 three per gallon in the second quarter of 2024 compared to 37 cents per gallon for the second quarter of 2023.
Thank you for watching!
Speaker Change: Retail fuel margin for the second quarter was also up considerably over 21% for the first quarter of 2024 retail fuel margin of 38 cents per gallon.
Speaker Change: Retail fuel margins for the second quarter were 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.
Maura Topper: Through the decrease from 4.49 times as of March 31st, 2024, we continue to remain focused on our cashflow generation from operations and the divestiture of non-core assets to manage our leverage ratio at approximately four times on a credit facility defined basis. Our cash interest expense increased from $10.2 million in the second quarter of 2023 to $13.7 million in the second quarter of 2024. We had positive rate savings from the interest rate swaps we entered into during the second and fourth quarters of last year, but did have three highly valuable interest rate swaps from the first quarter of 2020 expire at the end of the first quarter 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 advantage rate in the current rate environment.
Speaker Change: For volume on a same store basis, our retail volume declined 2% for the quarter year over year.
Speaker Change: Based on national demand data available to us national gasoline demand was down approximately 4% for the quarter.
Maura Topper: Our cash interest expense increased from $10.2 million in the second quarter of 2023 to $13.7 million in the second quarter of 2024. We had positive rate savings from the interest rate swaps we entered into during the second and fourth quarters of last year, but did have three highly valuable interest rate swaps from the first quarter of 2020 expire at the end of the first quarter 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 advantageous rate in the current rate environment.
Speaker Change: So on a relative basis, our same store retail volume outperformed even though it was lower than what we would like.
Speaker Change: And 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 second quarter, but again still down relative to the prior year.
Speaker Change: National fuel demand has continued to be soft in the period since quarter end as well.
Speaker Change: Retail fuel margins have continued to be roughly in line with our second quarter results.
Speaker Change: For inside sales on a same site basis, our inside sales were relatively flat compared to last year for the second quarter.
Speaker Change: Inside sales, excluding cigarettes were up approximately 2% year over year on a same store basis for the quarter.
Maura Topper: 7. Our credit facility balance during the second quarter of 2024 was also higher than the prior year, primarily due to the Apple Green transaction that Charles reviewed earlier, and which we completed during the second quarter. Our elevated credit facility balance also contributed to the increase in our interest expense year-over-year. Our effective interest rate on the total capital credit facility at the end of the second quarter was 6.7 percent.
Maura Topper: 7. Our credit facility balance during the second quarter of 2024 was also higher than the prior year, primarily due to the apple green transaction that Charles reviewed earlier, and which we completed during the second quarter. Our elevated credit facility balance also contributed to the increase in our interest expense year-over-year. Our effective interest rate on the total capital credit facility at the end of the second quarter was 6.7 percent.
Speaker Change: As 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 second quarter with overall sales and unit count numbers for the second quarter down compared to the prior year.
Speaker Change: So again on a relative basis, our retail segment inside sales outperformed the industry for the quarter.
For Cross America, our store sales performance was primarily driven by the categories of salty snacks tobacco other than cigarettes and packaged beverages.
Maura Topper: In conclusion, as Charles noted, the partnership performed well during the second quarter 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. We continue to focus on generating durable and consistent cash loads, with a focus on maintaining a strong and flexible balance sheet and driving value for our unit holders.
Maura Topper: In conclusion, as Charles noted, the partnership performed well during the second quarter 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. We continue to focus on generating durable and consistent cash loads, with a focus on maintaining a strong and flexible balance sheet and driving value for our unit holders.
Speaker Change: The store merchandize margin front, our merchandise gross profit increased 23% to $29 8 million driven by our increased sales from the higher store count.
Speaker Change: The store merchandise margin declined slightly due to us implementing more consumer value product pricing in our stores as well as higher cost in certain of our categories that we haven't passed on customers.
Crossamerica Partners, second quarter, 2024.
And the period since the quarter end same store sales have been down approximately 2% from the prior year, reflecting the ongoing soft demand environment.
Maura Topper: With that, we will open it up for questions.
Maura Topper: With that, we will open it up for questions. Thank you.
Maura Topper: Thank you.
Speaker Change: 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 first quarter of 2024.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you restrict the client from the polling process, please press star followed by the number two. If you're using a speaker phone, please lift the handset before pressing any key. Again, should you have a question, please press star followed by the number one on your touch-tone phone. Ladies and gentlemen, just a reminder: should you have a question, please press star followed by the one on your touchstone phone.
Operator: Ladies and gentlemen, we will not begin the question and answer session. Should you have a question, please press star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you restrict the client from the polling process, please press star followed by the number two. If you're using a speaker phone, please lift the handset before pressing any key. Again, should you have a question, please press star followed by the number one on your touchstone phone. Ladies and gentlemen, just a reminder, should you have a question, please press star followed by the one on your touchstone phone. It doesn't look like we have any questions today.
Speaker Change: The increase in company operated site count relative to the first quarter was primarily driven by our completion of the conversion of the Apple Green lease locations. The company operated retail sites in April during the quarter.
Speaker Change: We also converted certain other locations as well the company operated retail sites during the quarter as part of our broader overall strategy to increase our retail operating exposure.
Speaker Change: Our commission agent site count increased by 27 sites relative to the second quarter of 2023 and increased 14 sites relative to the first quarter of 2024.
Speaker Change: And in many cases converting an existing site to the commission classic trade involves retaining the existing dealer at the location.
Maura Topper: It doesn't look like we have any questions today. Thank you for joining us on round two 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 a call and also communicate that to you when you were logged on yesterday. So thank you for joining us again today.
Operator: Thank you for joining us on round two 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 a call and also communicate that to you when you were logged on yesterday. So thank you for joining us again today. Have a great day. Have a great weekend. Thank you, sir.
Speaker Change: We are simply changing the economic relationship with the dealer so that we cross America now on the fuel and control the retail fuel pricing at the location.
Speaker Change: 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 agents going forward.
Maura Topper: Have a great day.
Maura Topper: Have a great weekend.
Maura Topper: Thank you, sir.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask you, please disconnect your line. Have a lovely day.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask you please disconnect your line. Have a lovely day.
Speaker Change: In total we increased our overall retail site count by 43 sites during the second quarter compared to our retail site count at the end of the first quarter of this year.
Speaker Change: Just 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 Change: Moving on to the wholesale segment for the second quarter of 2020 for our wholesale segment gross profit declined 11% to $28 $1 million.
Speaker Change: Compared to $31 7 million in the second quarter of 2023.
Speaker Change: The decrease was driven by a decline in fuel volume.
Speaker Change: Partially offset by an increase in fuel margin per gallon.
Speaker Change: 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.
Speaker Change: Our wholesale motor fuel gross profit decreased 7% to $16 6 million in the second quarter of 2024 from $17 9 million in the second quarter of 2023.
Speaker Change: Our fuel margin increased 6% from eight two cents per gallon in the second quarter of 2023 to $8 seven per gallon in the second quarter of 2024.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Our wholesale volume was $192 1 million gallons for the second quarter of 2024 compared to $218 1 million gallons in the second quarter of 2023.
Speaker Change: Reflecting a decline of 12% the.
Speaker Change: 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.
Speaker Change: And lower same site volume.
Speaker Change: For 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.
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Speaker Change: Gallons from these converted sites are now reflected in our retail segment results.
Speaker Change: As mentioned in my retail segment comments national demand data available to us indicated fuel demand was down around 4% for the quarter.
Speaker Change: So our same store wholesale volume performance for the second quarter was better than overall national demand.
Speaker Change: And the period since the quarter and same store volume has been down around 1% year over year.
Speaker Change: So it's still negative year over year, but an improving trend similar to our retail segment results.
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Speaker Change: Regarding our wholesale rent our base rent for the quarter was $11 2 million compared to the prior year of $13 $1 million.
Speaker Change: A decrease due to the conversion of certain lessee dealer sites to company operated sites.
Speaker Change: 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.
Speaker Change: As a result the rent.
Speaker Change: Decline does not represent loss economics of our business, but simply reflects that these economics are now in the retail segment.
Speaker Change: During the quarter, we divested 10 properties for $11 9 million in proceeds resulting in a net gain of $6 5 million.
Speaker Change: As we stated on prior calls we have been busy building up a pipeline of divestiture properties and our results. This quarter provide an initial indication of the work we have done in this area.
Speaker Change: 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.
Speaker Change: Overall, it was a solid quarter for us in the second quarter was a material improvement from the first quarter. We were active in converting sites to retail, adding 43 sites to the retail segment during the quarter.
Randy, can you hear me?
Unnamed Speaker: Randy, can you hear me? Yes. Yes.
Unnamed Speaker: Yes.
Speaker Change: The 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 expected them.
Unnamed Speaker: Yes.
Unnamed Speaker: ry charles a mara can ar
Unnamed Speaker: Thank you. Bye.
Speaker Change: While the demand environment continues to be constrained our relative volume and sales performance indicates consumers are finding value in our offering and we remain a preferred destination for them.
Unnamed Speaker: Ciao!
Unnamed Speaker: Check, check. Can anyone hear me?
Speaker Change: With that I will turn it over to Laura for a more detailed financial review.
Unnamed Speaker: Check, check. Can anyone hear me?
Laura: Thank you Charles.
Laura: If you would please turn to slide six I would like to review our second quarter results for the partnership.
Laura: We reported net income of $12 4 million for the second quarter of 2024 compared to net income.
Laura: A $14 5 million in the second quarter of 2023.
Laura: Adjusted EBITDA was $42 6 million for the second quarter of 2024, a slight increase of 1% from adjusted EBITDA of $42 $2 million for the second quarter of 2023.
Speaker Change: No as trials has reviewed the changes in the composition of that adjusted EBITDA as a result of our strategic initiatives.
Speaker Change: Our distributable cash flow for the second quarter of 2024 was $26 1 million.
Speaker Change: Compared to $30 4 million for.
Speaker Change: For the second quarter of 2023.
Speaker Change: The declines in net income and distributable cash flow year over year.
Speaker Change: Primarily due to an increase in interest expense as well as slightly higher sustaining capital spending is being worked on our classic trade changes.
Speaker Change: Our distribution coverage for the current quarter was one three times compared to 153 times for the second quarter of 2023.
Speaker Change: Our distribution coverage for the trailing 12 months ended June 32024 was 132 times compared to $1 six to eight times for the same period ended June 32023.
Speaker Change: During the second quarter of 2024, the partnership paid a distribution of <unk> 52, five cents per unit.
Speaker Change: Charles discussed some of the primary drivers of our topline and gross profit performance for the quarter in his comments.
Speaker Change: Turning to the expense portion of our operations opt.
Speaker Change: Operating expenses for the second quarter increased $6 million compared to the 2023 second quarter.
Speaker Change: Ladies and gentlemen, and welcome to the Crossamerica Partners Second Quarter 2024 Earnings Conference Call.
Speaker Change: This was comprised of a $2 $7 million decrease in operating expenses in our wholesale segment.
Speaker Change: At this time, all lines are in a listen-only mode.
Speaker Change: All set by an $8 $8 million increase in operating expenses in our retail segment.
Speaker Change: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Speaker Change: These changes were primarily driven by our conversion of sites of our wholesale segment to our retail segment.
Maura Topper: I would now like to turn the call over to Maura Topper, CFO .
Speaker Change: The retail segment increase in operating expenses was 22%.
Speaker Change: Compared to a 21% overall increase in average site count in this segment during the quarter compared to the prior year.
Speaker Change: Within that 21% increase in total average site count our company operated average site count was up 28% year over year for the quarter.
Speaker Change: Company operated locations, our highest per site expense class of trade and so Thats site count increase drove the majority of the year over year increase in operating expenses in both the retail segment and overall.
Speaker Change: We are generally pleased with the operating leverage we have been able to achieve to date and we have added company operated locations.
Speaker Change: With further room for results in this round.
Speaker Change: On a same store basis operating expenses for our company operated locations were approximately flat year over year.
Speaker Change: Our team has continued to drive a strong focus on managing our store labor costs.
Speaker Change: All store employment costs down approximately 1% year over year as.
Speaker Change: As a result of our strong focus on staffing our locations with efficient hours.
Speaker Change: <unk> moderated wage increases and experienced over the prior two to three years.
Speaker Change: This strong performance and controlling our store employment costs.
Speaker Change: Our largest expense across the organization.
Speaker Change: Coupled with continued improvement performance and shrink and inventory management allowed us to offset cost increases in repairs and maintenance, including environmental maintenance and.
Speaker Change: In certain store level investments.
Speaker Change: Our operations team is focused on providing our store employees with the right processes and technology to accomplish their activity as effectively and efficiently and providing more time in their days to service customers.
Speaker Change: Our G&A expenses increased <unk> $4 million for the quarter year over year.
Speaker Change: Primarily due to higher management fees as we have selectively added head count to support the organization's growth in the retail segment.
Speaker Change: Moving to the next slide.
Speaker Change: We spent a total of $5 3 million on capital expenditures during the second quarter.
With $3 $4 million of that total being growth related capital expenditures.
Speaker Change: 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.
Speaker Change: As well as certain targeted site image and dispenser investments, which are often accompanied with incentives from our fuel suppliers.
Speaker Change: As of June 32024, our total credit facility balance was $789 $5 million.
Speaker Change: Which was a $9 million decrease from our March 31, 2020 for balance.
Our strong operational performance in the second quarter.
Speaker Change: Coupled with our success in divesting noncore assets that Charles reviewed.
Speaker Change: Allowed us to reinvest in our business.
Speaker Change: Our quarterly distribution and deleverage during the course of the corner.
Speaker Change: Our credit facility defined leverage ratio was 439 times as of June 32024.
The decrease from 449 times as of March 31, 2024.
Speaker Change: We continue to remain focused on our cash flow generation from operations and the divestiture of noncore assets to manage our leverage ratio at approximately four times on a credit facility defined basis.
Speaker Change: Our cash interest expense increased from $10 2 million in the second quarter of 2023 to $13 7 million in the second quarter of 2024.
Speaker Change: We had positive rate savings from the interest rate swaps, we entered into during the second and fourth quarters of last year.
Speaker Change: It did have three highly valuable interest rate swaps from the first quarter of 2020 expire at the end of the first quarter of 2024.
Speaker Change: Which increased our overall interest cost.
Speaker Change: At this time approximately 50% of our current credit facility balance is swapped to a fixed rate of approximately three 4% blended.
Speaker Change: Which is a very advantaged rate in the current rate environment.
Speaker Change: Our credit facility balance during the second quarter of 2024.
Speaker Change: Also higher than the prior year, primarily due to the Applegate transaction and Charles reviewed earlier and which we completed during the second quarter.
Speaker Change: Our elevated credit facility balance also contributed to the increase in our interest expense year over year.
Speaker Change: Our effective interest rate on the total capital credit facility at the end of the second quarter was six 7%.
Speaker Change: In conclusion as Charles noted the partnership performed well during the second quarter of 2024 Inspite of the softer demand environment experienced in fuel and store sales.
Speaker Change: We remain focused as a team on executing in our base business as.
Speaker Change: As well as for the sites that have transitioned between segments over the past year to.
Speaker Change: To optimize their performance moving forward.
Speaker Change: We 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 unit holders.
Speaker Change: With that we will open it up for questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Do you have a question. Please press star followed by the one on you touched on falling year over year comp that you hadn't had been Wayne.
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Speaker Change: If youre using a speaker phone please lift the handset before pressing any key.
Speaker Change: Again should you have a question. Please press star followed by the number one on your Touchtone volume.
Speaker Change: Ladies and gentlemen, just a reminder, should you have a question. Please press star followed by the one on your Touchtone phone.
Speaker Change: It does it looks like we have any questions today. Thank you for joining us on round two 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.
Speaker Change: When you were logged on yesterday. So thank you for joining US again today have a great day and have a great weekend.
Speaker Change: Thank you Sir ladies and.
Speaker Change: And gentlemen, this concludes your conference call for today, we thank you for participating and ask you. Please disconnect your lines have a lovely day.