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01/11 08:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed outlook. While there are positive signs like increased retail gross profit, fuel margin, and adjusted EBITDA, there are also concerns such as declining net income and increased operating expenses. The Q&A session highlights challenges like decreased wholesale and retail volumes and higher labor costs. The lack of new strategic initiatives or partnerships further tempers expectations. Thus, the stock is likely to experience a neutral reaction in the market over the next two weeks.
Wholesale Segment Gross Profit Q4 2023 $33 million (up 1% from $32.8 million in Q4 2022); increase driven by higher fuel margin, offset by lower fuel volume and rental income.
Wholesale Order Fuel Gross Profit Q4 2023 $19.3 million (up 3% from $18.7 million in Q4 2022); increase attributed to improved fuel purchasing costs and favorable market conditions.
Wholesale Fuel Margin Q4 2023 $0.094 per gallon (up 8% from $0.087 per gallon in Q4 2022); increase due to better fuel sourcing costs despite a decrease in average spot price of crude oil.
Wholesale Volume Q4 2023 205.3 million gallons (down 4% from 213.5 million gallons in Q4 2022); decline due to conversion of lessee dealer sites and lower same-site volume.
Wholesale Base Rent Q4 2023 $13 million (down from $13.7 million in Q4 2022); decrease due to conversion of certain lessee dealer sites to company-operated sites.
Retail Segment Gross Profit Q4 2023 $69 million (up from previous year); motor fuel gross profit increased 11%, merchandise gross profit increased 18%.
Retail Fuel Margin Q4 2023 $0.415 per gallon (up 8% from $0.383 per gallon in Q4 2022); increase driven by strong market conditions and lower fuel product costs.
Retail Same-Store Volume Q4 2023 Down 3% year-over-year; decline attributed to site-specific issues and overall softer demand.
Inside Sales Same-Site Q4 2023 Increased approximately 3% year-over-year; excluding cigarettes, up approximately 5% driven by packaged beverages and deli categories.
Merchandise Gross Profit Q4 2023 $22.1 million (up 18%); increase driven by higher store count, same-store sales, and improved merchandise gross margin percentage.
Wholesale Segment Gross Profit Full Year 2023 $128.8 million (down 1% from $130.7 million in 2022); decline due to slight decrease in fuel margin.
Retail Segment Gross Profit Full Year 2023 $253.5 million (up 3% from $245 million in 2022); increase driven by higher merchandise gross profit and other revenue.
Motor Fuel Gross Profit Full Year 2023 Declined by $7.8 million or 5% compared to 2022; decline attributed to extraordinary fuel margins in Q3 2022.
Distributable Cash Flow Q4 2023 $35.8 million (up 7% from $33.3 million in Q4 2022); increase due to operating income increases in both wholesale and retail segments.
Net Income Q4 2023 $16.7 million (down from $17.1 million in Q4 2022); slight decline driven by higher interest expense.
Adjusted EBITDA Q4 2023 $47.6 million (up 8% from $44.3 million in Q4 2022); increase due to strong fuel and merchandise margin results.
Distribution Coverage Q4 2023 1.8 times (up from 1.67 times in Q4 2022); reflects improved operational performance.
Operating Expenses Q4 2023 Increased by $5.2 million compared to Q4 2022; primarily due to increased site count in the retail segment.
Net Income Full Year 2023 $42.6 million (down from $63.7 million in 2022); decline primarily driven by decreased motor fuel gross profit.
Adjusted EBITDA Full Year 2023 $165.8 million (down from $179.8 million in 2022); decrease attributed to lower adjusted EBITDA and increased cash interest expense.
Distributable Cash Flow Full Year 2023 $116.7 million (down from $140.9 million in 2022); decrease due to lower adjusted EBITDA.
G&A Expenses Full Year 2023 Increased from $25.6 million in 2022 to $27 million in 2023; increase driven by higher equity compensation and legal fees.
Capital Expenditures Q4 2023 $12.9 million; $10.6 million of that total being growth-related capital expenditures.
Credit Facility Balance Q4 2023 $756 million (down $9 million from 2022 year-end balance); reflects strong cash flow results.
Leverage Ratio Q4 2023 4.2x as of December 31, 2023; focus on managing leverage ratio around 4x.
Effective Interest Rate Q4 2023 4.9%; reflects benefits from interest rate swaps.
Retail Segment Performance: The retail segment generated $69 million in gross profit for Q4 2023, with motor fuel gross profit increasing 11% and merchandise gross profit increasing 18%.
Merchandise Gross Margin: Merchandise gross margin increased 18% to $22.1 million, driven by increased sales and improved margin percentage.
Fuel Margin: Retail fuel margin increased 8% year-over-year to $0.415 per gallon.
Market Positioning: The partnership is converting certain sites from lessee dealer and commission locations to company-operated locations, enhancing control over retail operations.
Site Count Increase: The company increased its company-operated retail sites by 41 from the prior year.
Divestitures: In 2023, the company divested 10 properties for $9.2 million and plans to focus on divesting five core properties.
Operational Efficiency: The company reported a 1.8 times distribution coverage for Q4 2023, up from 1.67 times in Q4 2022.
Cost Management: Same-store retail segment operating expenses were flat year-over-year, indicating effective cost management despite increased site count.
Strategic Shift: The company is focusing on converting leased sites to company-operated locations to enhance operational control and profitability.
Future Focus: The partnership aims to optimize its portfolio and increase focus on divestitures in 2024.
Competitive Pressures: The company faces competitive pressures in both wholesale and retail segments, with a noted decline in same-store volumes and overall softer demand impacting performance.
Regulatory Issues: There are potential regulatory challenges that could affect operational metrics and future plans, as indicated by the need to monitor compliance with SEC filings.
Supply Chain Challenges: The company has experienced fluctuations in fuel volume and rental income, which may be attributed to supply chain challenges and changes in market conditions.
Economic Factors: Economic factors, including winter weather impacting demand and elevated interest rates affecting operating expenses, pose risks to the company's financial performance.
Interest Rate Environment: The elevated interest rate environment has increased interest expenses, impacting net income despite strong operational performance.
Operational Costs: Increased operating expenses, particularly in the retail segment due to site conversions, could affect profitability and cash flow.
Volume Decline: A decline in wholesale volume and same-store sales raises concerns about the company's ability to maintain growth and profitability.
Retail Segment Strategy: CrossAmerica is focusing on converting certain control sites from existing classes of trade to company-operated retail or commission sites to enhance long-term value.
Divestiture Strategy: The company intends to increase focus on divesting core properties, having divested 10 properties for $9.2 million in 2023.
Operational Efficiency: The partnership aims to improve operational efficiencies and realize benefits of scale.
Site Count Growth: The company increased its company-operated retail sites by 41 from the prior year, indicating growth in its operational footprint.
Fuel Sourcing Improvement: The company has successfully improved its fuel sourcing costs, contributing to better margins.
2024 Outlook: CrossAmerica is well positioned to thrive in 2024 and beyond, with a strong balance sheet and positive momentum from 2023.
Distribution Coverage: The distribution coverage ratio for 2023 was 1.46 times, indicating a strong ability to cover distributions.
Capital Expenditures: The company spent $12.9 million on capital expenditures in Q4 2023, with $10.6 million being growth-related.
Leverage Ratio: The credit facility defined leverage ratio was 4.2x as of December 31, 2023, with a focus on managing it around 4x.
Interest Rate Management: 77% of the credit facility balance was swapped to a fixed rate, with an effective interest rate of 4.9% as of December 31, 2023.
Distribution per unit: $0.525 per unit for the fourth quarter of 2023.
Distribution coverage: 1.8 times for the fourth quarter of 2023.
Full year distribution coverage: 1.46 times for the full year of 2023.
Divestiture proceeds: $9.2 million from the divestiture of 10 properties in 2023.
Capital expenditures: $12.9 million in Q4 2023, with $10.6 million being growth-related.
The earnings call reflects mixed financial performance with a net loss of $7.1 million, declining wholesale volumes, and increased operating expenses. Although adjusted EBITDA improved slightly, distributable cash flow decreased, and distribution coverage weakened. The Q&A section highlighted challenges such as subdued demand and weather impacts, with management providing vague responses on tariff impacts. The absence of strong positive catalysts and weak financial health indicators suggest a negative stock price reaction, likely in the range of -2% to -8%.
The earnings call summary shows mixed results with some positive elements like retail segment growth and successful site conversions. However, the increase in operating expenses, decline in net income and distributable cash flow, and decreased distribution coverage indicate financial challenges. The Q&A session did not provide additional insights, and the soft industry environment with increased interest expenses and supply chain challenges further contribute to a negative outlook. Despite some strategic gains, the overall sentiment is negative due to financial pressures and economic factors.
The earnings call presents a mixed outlook. While there are positive signs like increased retail gross profit, fuel margin, and adjusted EBITDA, there are also concerns such as declining net income and increased operating expenses. The Q&A session highlights challenges like decreased wholesale and retail volumes and higher labor costs. The lack of new strategic initiatives or partnerships further tempers expectations. Thus, the stock is likely to experience a neutral reaction in the market over the next two weeks.
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