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CrossAmerica Partners (CAPL 0.50%)
Q1 2019 Earnings Call
May. 07, 2019, 9:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Hello, and welcome to the CrossAmerica Partners first-quarter 2019 earnings call. My name is Rayna, and I will be your operator for today's call. [Operator instructions] Please note that this conference is being recorded. I will now turn the call over to Randy Palmer, executive director of investor relations.

Mr. Palmer, you may begin.

Randy Palmer -- Executive Director of Investor Relations

Thank you, operator. Good morning, and thank you, for joining the CrossAmerica Partners first-quarter 2019 earnings call. With me today are Gerardo Valencia, CEO and president; Evan Smith, chief financial officer; and other members of our executive leadership team. Gerardo will provide some opening comments and a brief overview of CrossAmerica's operational performance and highlights from the quarter.

And then we'll turn the call over to Evan to discuss the financial results. At the end, we will open the call to questions. I should point out that today's call will follow some presentation slides that we will utilize during this morning's event. These slides are available as part of the webcast and are posted on the CrossAmerica website.

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Before we begin, I'd like to remind everyone that today's 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. There can be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q, for a discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of CrossAmerica's management as of today's date and the organization disclaims any intent or obligation to update any forward-looking statements.

During today's call, we may also provide certain performance measures that do not conform to U.S. generally accepted accounting principles, or GAAP. We've provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release. I should also note that in February 2016, the Financial Accounting Standards Board issued ASU 2016-02 Leases or Topic 842, this standard modifies existing guidance for reporting organizations that entered into leases to increase transparency by recognizing lease assets and lease liabilities on the balance sheet, and disclosing key information about leasing arrangements.

This guidance became effective for CrossAmerica on January 1, 2019. We have provided disclosure regarding this new lease guidance in our filings and in the presentation slides that I mentioned earlier. Today's call is being webcast and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. With that, I'll now turn the call over to Gerardo.

Gerardo Valencia -- Chief Executive Officer and President

Thank you, Randy. We reported our first-quarter 2019 earnings results yesterday afternoon, and I will briefly go through some of the highlights and then Evan will go through the financials in more detail in a few minutes. If you turn to Slide 4, I will briefly review some of our operating results from the quarter. Soft industry demand and margins impacted our first-quarter results, but we have solid business fundamentals and strategic programs to support our growth for the balance of 2019, which I will cover shortly.

For the first quarter, we reported operating income of 7.6 million and net income of 200,000, this compares to operating income of 7.4 million and a net loss of 800,000 for the first quarter of 2018. Our adjusted EBITDA was 21.4 million for the first quarter of 2019, a decrease of 18% from 2018. These were largely impacted by the negative effect of the new lease accounting guideline, which was approximately 1.8 million for the quarter. Then about 3.3 million from the decision to sell the Omnibus Agreement in cash rather than in units in the first quarter of 2018.

There was also termination of a low-margin contract, which contributed to about 0.3 million in the first quarter of 2018. We were also impacted by about 0.4 million from asset divestments from the SEC mandate. We offset some of these impacts through our margin optimization efforts, which I will address shortly. Our distributable cash flow for the first quarter was 13.3 million, and on April 25, our board approved a quarterly distribution of 0.5250 per unit attributable to the first quarter of 2019 that will be paid later this month.

For the first quarter, our wholesale fuel margin was 0.064 per gallon, which was a 12% increase over the first quarter of 2018. Our gallons distributed declined 7% for the quarter. The volume decline was mainly associated with our margin optimization efforts together with soft demand across the industry. While we do normally experience some seasonal weakness during the first quarter, these were compounded by some unfavorable weather across several regions along with our rebranding and development programs in the South Alabama and Florida, that produced some downtime at some of our sites.

Regarding industry demand, the EIA's gasoline products supplied in the first two months of the year is down by about 2%. When weighing for the CrossAmerica volume mix across the country, industry demand was also about a 2% decline across our portfolio. Despite a decline in volume, our fuel gross profit still increased 3% for the quarter. To give you some indication of our optimization efforts, in Alabama, while our volume declined by 16% in the region versus 2018, our EBITDA for the first quarter of 2019 more than doubled from the first quarter of 2018.

The decline in our rental and other gross profit during the first quarter was primarily driven by the new lease accounting guidance. We continue to focus on disciplined operations to drive both opex and SG&A cost efficiencies. As mentioned earlier, we have solid business fundamentals and strategic programs to support our growth for the balance of 2019. These should provide momentum in the very near future.

If you would turn to the next slide, I wanted to discuss some of our strategic initiatives. To start, regarding our previously announced asset exchange, we're progressing to obtain returns in the higher end of the range that we communicated to you previously, and we expect to finish ahead of plan. We have completed transitioning the first 60 sites to dealers and we expect that these will be the first tranche of the asset exchange. We are completing our final due diligence and expect to have the first transaction finalized in the coming weeks.

Aside from the first transaction of the balance of sites, we already have 64 signed letters of intent. And of these, we have signed 25 contracts already with dealers for the second tranche of the assets to be exchanged. Currently, with the high likelihood of finishing much faster than the 24 months that we originally announced. We continue to work with our general partner to find additional growth opportunities.

Regarding our second strategic initiative, we have now completed our fuel supply strategic review that entails about 320 million gallons of fuel or roughly one-third of the gallons that we distribute on an annual basis. We are finishing the implementation of the new contract and we expect to have the impact of the slowing in our second quarter. The value of the synergy is in line with what we have previously communicated. As you can see in the charts at the bottom of this page, we have streamlined our portfolio of brands to focus on fewer strategic brands for us into the future.

We could see additional value as we will be refreshing or reimaging a large number of the sites coming out of this review. Moving to the next slide. We are continuing to implement the transformation of our Alabama business. We have changed dispensers in over half of the network.

These have some impact in our volumes as mentioned before. But a very time to disrupt the business, it is during this period of the year. We are seeing very good results from a profitability standpoint. We're progressing with completing our Marathon hard branding, as well as a reimaging of the site and the network, as you can see in the slide.

We expect to complete this work by the third quarter of this year. Regarding our exit of retail company operations, we have signed a letter of intent with a strong operator to run the balance of the company operated network of sites that we have in the Upper Midwest, post asset exchange. As a result, we recorded separation benefit cost, totaling $400,000 in the first quarter of 2019. We are on track to company operations by the end of this year.

Finally, regarding our base business improvement, we continue to progress franchising of sites in our portfolio. We've just signed the first eight, have 44 contracts pending signature and have an aspiration to finish this year with over 75 new franchised sites with the Circle K family of brands. We have now established strategic collaboration with fuel brands after our strategic fuel supply review, and we are working very closely with these brands to ensure we do an excellent job of implementing their programs to the end consumers and capture all the value from these brands. If you would turn to Slide 7, I wanted to review our long-term strategy.

We have now completed our strategic review and we have plans to become the best branded fuel wholesaler in North America. The key points I wanted to share with you today are that we are one of the largest branded fuel wholesalers across North America, and we are likely the one with the largest portfolio of controlled properties. These provide stability for our renewals and also less volatility in our earnings. We also have access to a leading Back Court C-Store offers through the family of Circle K brand.

We will build on our culture and people at the platform. We are a marketing-focused company, not a midstream company, we will win with our customers, our brand and our offer. The five pillars that you see in the slide, disciplined operational efficiency, rigorous operational excellence, strong customer portfolio, compelling value proposition and advantaged asset portfolio will help us to offset the fuel industry decline, capture rent growth and maintain our fuel margins. Then on top of that, there are three areas of growth.

Organic growth, then growth with Circle K and finally, inorganic growth. All of these together would allow us to grow our adjusted EBITDA between 5 to 15% compound annual growth rate in the next few years. We are aiming to get our coverage to at least 1.1 times and get our leverage down to between 4.0 and 4.25 target level. To conclude, we are ahead on our original schedule and better than planned in several of our initiatives, which should contribute to our performance in the next quarters and into the future.

With that, I will turn it over to Evan.

Evan Smith -- Chief Financial Officer

Thank you, Gerardo. If you would please turn to Slide 9, I would like to review our first-quarter results for the partnership. As we look at the first quarter, we reported adjusted EBITDA of $21.4 million in the first quarter of 2019 compared to $26 million in the same period of 2018, reflecting a decline of 18%. Our distributable cash flow for the first quarter of 2019 was $13.3 million versus $16.7 million in 2018.

As Gerardo touched on earlier, both our adjusted EBITDA and distributable cash flow were negatively impacted by the new lease accounting guidance, and I will walk through those specifics in a few minutes. Our distribution coverage on a paid basis for the quarter of 2019 was 0.73 times and was 1.03 times for the trailing 12 months, which was an improvement over the 0.96 times that we experienced for the trailing 12 month ending March 31, 2018. If you would turn to the next slide, Slide 10. We ended the first quarter with the leverage ratio, as defined under our credit facility, at 4.81 times, an increase from 4.53 times for the prior quarter and in compliance with our financial covenant ratios.

As of May 2, we had approximately $21 million available on our credit facility. As I noted during our year-end earnings call, we were in negotiations with our lenders to enter into a new five-year credit facility to replace our existing credit facility. We have now completed it and have a new $750 million credit facility that matures in April 2024. I will not go through all of the points and benefits of this new credit agreement listed on the slide.

However, I would just say that we are pleased to finalize this new agreement with our banking partners as it provides us with financial flexibility and increases our borrowing capacity going forward. The partnership paid a distribution of 52 and a half cents per unit during the first quarter of 2019, attributable to the fourth quarter of 2018 for a total of over $18 million and, as I noted on the previous slide, this resulted in a coverage ratio of 1.03 times on a paid basis for the trailing 12 months. If you turn to Slide 11, I will review the lease accounting guidance that went into effect on January one of this year. Prior accounting guidance effectively resulted in our previous sale-leaseback transactions being accounted for as capital leases with rent payments paid under the leaseback and characterized as principal and interest, neither of which impacted EBITDA.

Under the new guidance, the same rent payments are now characterized as rent expense, which reduces EBIDTA primarily within the wholesale segment. There is a significantly lesser impact on distributable cash flow as the portion of rent payments, previously characterized as interest expense, has always reduced DCF. From a gross profit standpoint, it reduces rent and other approximately $6.7 million for the wholesale segment and $0.5 million for the retail segment, based on our full-year 2018 results, and we expect a similar impact to our 2019 financials. Moving to the next slide.

We demonstrate the impact of the new lease accounting guidance based on our full-year 2018 results. The adoption of the new lease standard, if it had been adopted January 1, 2018, would have been approximately $7.2 million to the adjusted EBITDA line, $1.7 million to the distributable cash flow line and an impact of 0.02 times through our coverage ratio. If you turn to Slide 13, you can also see our reported results for 2019 compared to the first quarter of 2018, as adjusted for the impact of the new accounting guidance. Approximately $1.8 million to the adjusted EBITDA line, 0.4 million to the distributable cash flow line and an impact of 0.02 times to our coverage ratio.

In conclusion, as Gerardo mentioned earlier, we continue to make a great deal of progress on our strategic initiatives, providing us with momentum as we entered the spring and summer driving season. From a financial perspective, you should expect that we will continue to improve our coverage ratio and manage our balance sheet leverage as we go through the remainder of 2019. With that, we will now open up the call for questions.

Questions & Answers:


[Operator instructions] Our first question comes from Ben Brownlow at Raymond James. You may go ahead.

Ben Brownlow -- Raymond James -- Analyst

Hi good morning. On the action of the retail ops, can you give any color around the terms there as you move those retail sites to wholesale?

Gerardo Valencia -- Chief Executive Officer and President

I'm very pleased about it, I guess, we are very pleased about it is that we have secured a very strong operator for those sites. So what we're expecting to be able to do is to get better returns from those sites, so they will be getting better results from these sites, so we should -- we expect to get very good returns, as well ourselves by being able to lease these sites to these operators. So -- and then there will be some costs that we will be avoiding, of course, from a standpoint of overhead that we will not be requiring and -- so that should -- so if you think about -- if you can look at our numbers and you can see the overhead that we have in the retail business or SG&A in retail business and what we have for the rest of the wholesale organizations. So there's definitely benefit that we expect to generate from that.

And -- but we're expecting to see also, as I was discussing before, a very strong contribution from these sites, once we convert them over to an operator, which should be in the same line as what we get from other sites in the network from a wholesale standpoint.


Our next question comes from Walter Morris with Baraboo Growth. Please go ahead.

Walter Morris -- Baraboo Growth -- Analyst

Morning, gentlemen. I have calculated that roughly 80 to 85% of cash flow outside of minor seasonal variation and long-term modest shifts in gas demand trends is essentially fixed. You saw the stability of your cash flow upon which the distribution is based is extremely high quality, and presumably justifies a relatively high valuation, almost certainly justifies some premium to your comps, in light of that, why does your stock trade with a 12.3% yield, significantly higher than Sunoco at 10.9 and 10.3%?

Evan Smith -- Chief Financial Officer

Yes. So thanks for the question, Walter. And I -- I mean I'm very glad that you're doing a lot of your research and you understand our business very well. So I have the same question that have yourself, in your mind.

And -- but I -- in my -- the way that I see this, Walter, is we need to deliver what we said we will. And I'm seeing all of these coming through. So if I reflect in this quarter, as I was -- we were discussing, so there were some decent impact, but we have -- look, we have several strategic initiatives that are coming through and we're just about to start seeing them materializing. So I'm expecting to get -- we're expecting to get a first tranche of the asset exchange announced in the very near future, and so that would help us to start implementing this.

Then there's also the fuel synergies that we've been talking about. We saw a very small amount of that, very, very small amount of that already trickling in the first quarter but that should considerably grow in the second quarter. So that's No. 2.

And then we're going to see a lot of improvement that the thing is doing already in the Alabama business that we discussed in some of the slides. So that will materialize, as well. So what I'm making sure that we are continue to do is to remain focused and making sure that we implement all the growth initiatives that we have in place. But aside from that, Walter, I'm in the same place you are, which is, I have a very strong level of confidence on what we have from a cash flow standpoint of the quality of our income with our strong operators and we will continue to improve on that.

And we'll start to see some of that growing into the future as we implement the strategic initiatives. So that's my perspective, Walter.

Walter Morris -- Baraboo Growth -- Analyst

In light of that, and now that you've established the template for the drops, are you going to significantly increase your investor outreach program to educate the investment community about the quality and consistency of your cash flows and the growth potential of the enterprise going forward? And finally, I just wanted to make sure my math on the first-quarter numbers was right. When I add back the change or adjust  year over year for the difference in lease expense and make the adjustment for equity-funded expenses that were paid in stock last year, and for the most part, paid in cash this year, I show an adjusted EBITDA number that was essentially flat year-to-year, as well as a distributable cash flow number that was essentially flat. Is my math correct?

Gerardo Valencia -- Chief Executive Officer and President

You want to start first with the investors' question.

Evan Smith -- Chief Financial Officer

Yes. Yes, Walter, this is Evan Smith. As we -- after we announced the first tranche and can provide more details of this first transaction and more guidance around the -- more details around the guidance that Gerardo spoke about regarding the multiyear strategy, that will -- included in that will be more investor outreach to focus on the fixed nature and the high quality of the cash flow streams. Regarding the -- your second point.

Regarding the adjusted EBITDA. You're absolutely right. When you add back the 1.8 million and adjust for the 3.3 million of Omnibus charges that were settled in units, we are much more in line year over year on adjusted EBITDA. Just to be clear from a distributable cash flow perspective on the impact of the new lease guidance, it's only a $400,000 reduction as opposed to the full 1.8 million as shown in the investor slides.

So I just want to make sure that's clear.


[Operator instructions] You have a question from Sharon Lui of Wells Fargo. Please go ahead.

Sharon Lui -- Wells Fargo -- Analyst

Good morning, gentlemen. I'm just wondering what your expectations are in terms of coverage with the first tranche? You know, coverage was a bit light this quarter. Do you anticipate it to go back to where levels were in the back half of 2018? And in terms of the timing of the asset exchange, I think previously, you said it was over a 24-month period. When do you expect it to be completed at this time?

Gerardo Valencia -- Chief Executive Officer and President

Yes. So let me start addressing then the pace of the asset exchange, Sharon. So I want to say that, what we announced before was that we were going to complete this in 20 -- in the 24 months after we announced it in December '17, and we also announced that we have plans to complete that first tranche in the first half of this year. So we're -- where we are a -- I'm -- I have very high level of confidence that we'll be able to announce the first tranche in the next few weeks, so that we will be doing this within the first half.

I don't see a lot of risk for that to happen, I do expect this to be the case. So we're very, very close, we're just missing a couple of other due diligence pieces that we're working on. And then with regards to the balance, we have already started the -- signed several letters of intent that we discussed, so we're 60 already. And then we have over 20 contracts, 25 already signed.

So which will be the foundation for the second tranche. So I have a very high degree or high level of confidence that we're going to be able to complete these faster than what we originally announced, Sharon, and considerably faster than what we originally announced. And then in terms of what we're seeing, so we took a little bit of time in this first part of the year to make sure that we have the right operators. And so, George Wilkins and his team, our COO and his team, have been working on being able to get all of the right operators into these locations.

So we're seeing very good results, and now that these sites have been dealerized, so I am very excited to have them as part of the organization now. And financially, we expect these to be in the high end of what we announced before. So bottom line, we expect some strong results from these sites. We expect to finish faster than what we originally said.

So that's in terms of phasing and what we're seeing from the transaction. So in terms of the distributable cash flow or the coverage ratio, so I'm going to say, we did have -- as you guys know, the first quarter is typically a very seasonally low quarter for us. And as we were describing earlier, so this was even further impacted by some seasonal effects of -- I mean, I don't like talking about weather, but weather happens and people don't go out, and they don't shop and they stay home. And so that started to impact us.

As we discussed the EIA volume was down 2% for the first month of the year, so -- and we talked with suppliers and they felt this impact too. So it's something that we see seasonally happening. So we do expect to have -- I mean as we look at our trends in the last few years, you can see that our coverage was considerably lower in the first quarter versus what we saw in the next quarters. So we remain focused on delivering for the long term.

So -- and again, this is something that we know happens with some of our abilities, especially in this first quarter for us. Anything else, Evan?

Evan Smith -- Chief Financial Officer

No. I think that highlighted just the seasonality in the first quarter. The trailing coverage ratio was over 1, like the prior quarter, and we would expect that to maintain through the rest of the year.

Sharon Lui -- Wells Fargo -- Analyst

OK. Great. And then on Slide 7, where you lay out your long-term strategy, there is a EBITDA growth target of 5 to 15% CAGR, can you maybe talk about how you get to that range? Is it just assuming, I guess, the asset exchange, as well as potential third-party acquisitions? Or do you bake in any potential additional drop downs from the GP to get to that guidance range?

Gerardo Valencia -- Chief Executive Officer and President

Yes. Yes. Very good question, Sharon. So what we have been doing -- so we did a lot of work behind us.

So it's a very simple slide, but there's a ton of work that we have done behind the scenes. And George and his team across all the country, all the directors are starting the process of actually embedding this at a very detailed level in each one of the different regions that we have. So all of these directors were -- I'm working with them to be able to understand exactly at each one of the different area, what's our plan to improve our portfolio and do those five additional components that we talked about, and then grow. But then the growth, if you see in that slide, so there's -- in the bottom left, so there's -- those five pillars that are the foundation.

So what that's going to allow us to do is to make sure that we offset the industry -- so if you think about fuel volume, fuel volume in the industry is likely going to be declining in the future because of the efficiencies, as well as some of the mandates that are -- so some of the mandates for fuel efficiency, as well and some of the change of the vehicle fleet over to electric vehicles. So there's a small decline that we're expecting. That's going to help us to offset that. But that's not material growth, we're just making sure that we have a strong foundation.

What's really going to propel the growth that you're seeing there, in the early years, it's going to be things like the fuel synergies that we have been discussing about, that's going to require capital. And then also in the early years, we're going to be doing asset exchanges. That will be -- that's a -- our goal is to do asset exchanges that would align our portfolio and that of Circle K. So we'll be doing some of that in the early years.

But then as we go further into the future, there'll be more and more organic growth, which is, we have a team of people that are growing in the market with our dealers, they are successful, so we're going to be growing with them as we develop that. And then there is third-party acquisitions. But to be fair, what we're seeing right now in the market is very, very high multiples. And I want to make sure that we're very disciplined about growth.

So what you would or should remember that in the fourth quarter last year, there were some very strong retail fuel margins, some of the strongest in history. So we just need to be careful about we assume for future for any acquisitions. And we're seeing some people in the market, and we're just -- want to be careful about just doing the things right. So -- but that's longer term, we know.

My view right now is that the market is very frothy. But like everything else, goes through cycles. So we don't need to go straight into the market to raise capital to get some of these right now. But definitely, there is some of that going into the future.


We have another question from Ethan Bellamy of Baird. Please go ahead.

Ethan Bellamy -- Robert W. Baird and Company -- Analyst

Good morning, guys. With respect to the incentive distribution rights. There's obviously a trend within the space of getting rid of those, I know they're not all that meaningful from a cash flow perspective now, but just curious about the ultimate disposition of those?

Evan Smith -- Chief Financial Officer

Yes, Ethan, this is Evan. It's something we look at and evaluate and discuss with our general partner. But you're right, at this point, the burden is very low because we're in the low splits and it's a fairly small amount. So there's not been any long-term decision made there.


Our next question comes from Ben Brownlow of Raymond James. Please go ahead.

Ben Brownlow -- Raymond James -- Analyst

Hi guys. Thanks for taking the follow up. Just on the strategic review of the fuel supply that is not going to be complete until this quarter. Can you remind us how much of the annual step up in synergies for this year is related to that review? And just your confidence level, it seems like it's kind of laying up to hit the top end of that $14 million target this year?

Gerardo Valencia -- Chief Executive Officer and President

Yes. Yes, Ben, so yes, I think you're spot on. So I think that we -- since July 2017 we have captured close to 10 million of synergies, with both our cost, as well as some of fuel distribution. And what we stated is that we would capture between 11 million and 14 million by the end of this year.

And I'm very confident that we will deliver on that plan, as well as on the things that we talked about for years to come, to bake in the result that we're seeing. So we looked at some of -- so looking at all of the brands and what we worked on, and the contracts that we are working on to implement, so we're seeing strong results from that. And I would say, as I was describing before, it was at the tail end of March, we already started implementing some of it. So we should see a very -- I'm expecting to see a considerable impact flowing into the second quarter, April, May and June already.

Ben Brownlow -- Raymond James -- Analyst

OK. And just to be clear, the sub-job or terms are from the Alabama side, so that $1.1 million benefit that was part of the total kind of fuel strategic review?

Gerardo Valencia -- Chief Executive Officer and President

So the -- No, no. The -- no, what we're focusing on right now, so the strategic review that we're describing now, it is -- it's additional 370-or-so sites. So we started with 385 sites but these were not inclusive of the Alabama one. So this was -- so the strategic review that we're conducting right now is exclusive of that then.

So we're really just talking about now what we're going to be getting from looking at additional sites. So it's nothing to do with the Alabama market in specific.


I show no further questions at this time.

Randy Palmer -- Executive Director of Investor Relations

OK. Thank you, operator. Let me turn it over to Gerardo for some closing comments.

Gerardo Valencia -- Chief Executive Officer and President

Yes. So I just wanted to just say before we leave you guys. So we experienced some seasonal lows, as we discussed, and that were further impacted by softer-than-normal industry demand. However, we have very strong progress in our strategic initiatives.

We have focus -- that's what I want to make sure you understand, that we all have very clear focus. My team does, and we will continue to have it. So we are implementing the largest site acquisition in the history of the partnership, so these 192 sites that we're bringing along. And as we discussed, we are giving for future growth across whole assets of the organization.

Just setting up this organization for growth and knowing how to convert sites and dealers to company operations. We're capturing fuel margins with a strategic fuel supply. We're finishing implementation of Alabama, transitioning the convenience operations to stronger operators, as we discussed. And the strategy is going to be embedded in each one of the territories that -- where we operate, owned by each director to deliver growth from the bottom up.

And just lastly, I'm going to say, we do have a great culture and we have the best team in the industry. So that makes me very proud but also gives me a high degree of confidence that we have the right strategy, the right team and that we have all that it takes to become the best fuel wholesaler in North America. Thanks for the time, and we look forward to seeing some of you guys in the near future.

Randy Palmer -- Executive Director of Investor Relations

OK. Thank you, Gerardo. That does complete today's conference call. We appreciate each of you joining us today.

If you do have follow-up questions, please feel free to contact us. Thanks, and have a good day.


[Operator signoff]

Duration: 40 minutes

Call participants:

Randy Palmer -- Executive Director of Investor Relations

Gerardo Valencia -- Chief Executive Officer and President

Evan Smith -- Chief Financial Officer

Ben Brownlow -- Raymond James -- Analyst

Walter Morris -- Baraboo Growth -- Analyst

Sharon Lui -- Wells Fargo -- Analyst

Ethan Bellamy -- Robert W. Baird and Company -- Analyst

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