Good morning, and welcome to the CrossAmerica Partners First Quarter 2018 Earnings Call. My name is Michelle and I'll be your operator for today's conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. And please note that this conference is being recorded. I'll now turn the call over to Mr. Randy Palmer, Executive Director of Investor Relations. Sir, you may begin.

Thank you, Operator. Good morning and thank you for joining the CrossAmerica Partners first quarter 2018 earnings call. With me today are Jeremy Bergeron, CEO; Gerardo Valencia, President; Evan Smith, Chief Financial Officer and other members of our Executive Leadership Team. Jeremy will provide some opening comments, Gerardo will provide 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-up 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. Before we begin, I would 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 the management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the 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. 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. And with that, I'll now turn the call over to Jeremy Bergeron.

Thank you, Randy. We reported our first quarter 2018 earnings results yesterday afternoon and Gerardo and Evan will go through those details in a few minutes. But first I wanted to review some of the highlights in the quarter. For the first quarter we reported operating income of over $7 million with adjusted EBITDA of $46 million which broke both our wholesale and retail segments. Yesterday our Board approved a quarterly distribution of $0.5250 per unit attributable to the first quarter of 2018 that will be paid by the end of this month. Overall, we were pleased with our performance during the quarter as both our main businesses of wholesale and retail performed well. While we did experience some seasonal weakness with our newly acquired Jet-Pep Assets acquisition which Gerardo will be talking about in more details. We are working with our general partner to improve our overall performance for those sites including evaluating a full supply arrangements. We expect to be in good position for this coming summer driving season and continues to be value for our unitholders. With that I will now turn it over to Gerardo.

Thank you, Jimmy. I am very glad to be here today. I joined CrossAmerica on March 1, after more than 20 years with BP getting product to market customers and consumers. I am very excited about the future of CrossAmerica as me and my management team finish our integration with NWS, the former [indiscernible] National Wholesale Group. As we capture the season for both cost and sublime, as we improve our base business with strategic collaborations with strong retailers, as we grow with our general partner and participating in the industry consolidation. If we turn to Slide 4, I will provide brief overview of the partnership at the end of the first quarter. As we look over the past twelve months, we continue to distribute over 1 billion gallons of fuel and generate gross rental income of over $85 million. We continue to hold a 17.5% interest in CST Fuel Supply, which generates a $0.05 per gallon wholesale fuel margin on approximately 1.7 billion gallons distributed annually within the legacy CST network. Our operation consists of approximately 1,350 locations, including over 600 less in dealer types. We control over 70% of these types, including owning the key rights of over 550. As you can see, we have built a significant real estate portfolio within CrossAmerica. Please turn on Slide 5, here we recap some of our first quarter operating results. For the first quarter we had increased a 5% in gallon distributed primarily driven by our Jet-Pep acquisition. Along with increasing volume, we also grew our wholesale fuel margin from $0.056 in the first quarter of 2017 to $0.057 gallons in 2018. This resulted in a 7% increase in our wholesale motor fuel gross profit for the first quarter. We increased rental another gross profit by 4% during the quarter.…

Thank you, Gerardo. If you would please turn to Slide 9, I would like touch on our first quarter results for the partnership. We reported adjusted EBITDA of $26 million for the first quarter of 2018 compared to $23.7 million in 2017. Our distributable cash flow for the first quarter of 2018 was $16.7 million. The partnership paid a distribution of $0.6075 per unit during the first quarter of 2018 attributable to the fourth quarter of 2017 for a total over $21 million resulting in a coverage ratio of 0.78 times on a paid basis. Our trailing 12 month coverage was 0.96 times on a paid basis. As Gerardo touched on earlier, the growth in both our wholesale and retail businesses coupled with the management of our expenses had a positive impact on our overall performance for the quarter. Finally turning to Slide 10, we ended the first quarter with leverage as defined under our credit facility at 4.21 times which is in line with where we were in first quarter of 2017, and within our target leverage ratio range between 4.0 and 4.25 times. I also wanted to briefly walk through our recent amendment to our credit facility. Last week we amended our credit facility that extends our maturity out to April of 2020 and this amendment did several things for us including increased our total capacity from 550 million to 650 million, extended the period during which the permitted total leverage ratio as defined in the revolving credit facility has increased from 4.5 to 5 times after the closing of the material acquisition from three quarters up to four quarters, and a decrease in applicable margin and commitment fees which vary based on our leverage ratio but overall the applicable margin for LIBOR and alternate base rate loans…

[Operator Instructions] I have one question in the queue from Ben Bienvenu from Stephens, Incorporated. Your line is open, sir.

It's actually Daniel Imbro on for Ben. I want to start on updated synergy targets - synergy capture thus far is an impressive and obviously ahead of schedule. Can you provide some more color on what buckets do you guys are kind of removing those costs from. Is it just best practices being transferred or what are those savings look like on a more operational level?

If you look at the synergies that have been captured to date since the merger with Couche-Tard, that's largely been in overhead D&A related areas. We had some headcount reductions, some resets of pay, salary that sort of thing. That's where most of the synergies have been captured already and a good hard numbers that have been realized. As we think about where the larger opportunities are going forward, those will be largely focused from looking at our relationships with our suppliers and evaluating the supply relationships that we have against the supplier relationships that our general partner has with those same vendors. And relying upon the mid-scale and purchasing power that our general partner has to ultimately - hopefully better our cost.

And Dan just if I just could add - as I just described in the beginning of our call, we have been integrating two organizations, so one is CrossAmerica as you know as well and then the other component is our wholesale operation within Circle K. Now that what enables all us well to capture some of the synergies from the topline perspective. As Evan described, when we look at all the Fuel Supply functions that we have in place, there are a lot of learning that we are applying CrossAmerica by bringing all of the expertise in contract management under important scale that we have within Circle K. So most of the early tradings were related to overhead reductions, and what we will see now mostly going forward is topline growth. By improving the way in which we go to market and the way in which we optimize our supply chain.

If I move to the balance sheet, I think you noted leverage was within your targeted range and given the increased flexibility on your revolver, how does the M&A market look today and how has that changed over the last say 12 months as is in the retail industry get a little bit more challenging?

We are seeing a lot of activity within M&A then what we're seeing is - is more than what we used to see when CrossAmerica was managing independently and the opportunities that now is that - we now can add value in other parts of any network. So as you know in the industry you would hope for an IPO portfolio that have certain price of assets that doesn't going to happen and with CrossAmerica working independently, we can only add values to some portions of any portfolio. But now with our general partner when we look at any portfolio we can add synergies and we can add value to other portfolios. So we are seeing a lot of activity. We have different opportunities in our pipeline that we are progressing and we're continuing to evaluate a broad range to make sure that we're accretive for the partnerships.

And then last one for me, stepping back a little bit more industry-wide, we seem to be entering a more normal environment of higher gasoline prices. Are you seeing any particular pockets of demand geographically, let say weaker or stronger on the demand side or being pretty - a pretty expected response to the higher gasoline prices? Thanks.

We definitely see increases in different pockets of the U.S. So that's more because of population growth and income growth in different regions. I wouldn’t say that this has to do with the differences - those don't have to deal with the fuel price environment. Actually what we're seeing is a strong demand in some of the areas and across our portfolio we're seeing our growth in some areas like Florida, where we're seeing some growth from a demographic standpoint as well, as from the demand standpoint. And there's and anywhere else we're seeing growth in a very - I'm going to say very - is not dependent on fuel price rate more dependent as well on the demand and based on the population and available income.

The next question in the queue comes from Patrick Wang with Baird. Your line is open.

ACT's recent freight cost negotiations, which also included CrossAmerica's transportation contracts. Can you help us understand just the magnitude of the cost savings you expect following those renegotiations? And if there were material, were they fully reflected in the quarter results or do you expect that to be mostly a 2Q benefit?

I can't tell you exactly right now - I cannot disclose exactly here, but in general this material - but what we're expecting to see is, we are working through it and we are expecting to see more benefits coming in the future. So it's not something that we've already seeing captured in the first quarter of the year.

And then just turn back to the Jet-Pep sites, looking at those volumes with - with CrossAmerica historically not hedging its fuel purchases, to what extent is CrossAmerica protected by Circle K's fuel hedging programs specifically on those volumes?

The current structure that we have for those that contract has more seasonality than what we actually think than what we would typically have in the rest of CrossAmerica portfolio. And we - so we know that there's going to be - we are seeing some of the volatility in the first quarter now we expect that to be even for the balance of the year. But what we're seeing right now in some of the impacts of that first quarter volatility which we typically - when you look at that region of the country, we typically see this in the first part of the year. So it's not only related to the volume or demand but it's more related to the margin opportunity which is dictated by supply as well in that specific region. But I guess my point is, we are more exposed to volatility in this region than in any other part of our portfolio of CrossAmerica. We are working through optimization of the supply chain including both sourcing and freight. And we're actually looking at this point in time on identifying what is the best brand for those locations. We want to have brands that appeal to consumers and communicate a different value proposition. So we are in the process of finalizing this and we expect to leverage our purchasing scale and strategic collaboration where our fuel supply is to deliver. There will be some more value best part of where I know we're going to be delivering more value for the Jet-Pep for the quarter.

And as a final check, do you expect those [differ volumes] would they qualify for the terms discount as well?

So those are not bought under a branded supply agreement and we don’t expect that to be contract going forward, which that’s where we receive historically for the majority of our portfolio that’s where we receive terms discount.

So currently it’s not a branded network. So currently we’re not buying so it’s a Jet-Pep brand field. We are actively right now looking at one of the big brands I was saying what is the best brand, which would entail both supply same strength from the supplier, but also brands that command a premium or brands that are well recognized in that area. And we’re in negotiations right now and we will be structuring those deals in the next few weeks. So there is currently no paying in discounts, but we’re working on establishing those contacts just now.

The next question in the queue comes from Robert Balsamo from FBR & Company. Your line is open.

Most of my questions have been answered. I was wondering if you can just elaborate a little bit on the distribution. Looking at past quarter the IDR payments to CST were upwards around 1.2 million a quarter or so by reducing the distribution there – CST is relinquishing almost $5 million a year in IDR. So kind of addition to the reduction improved leverage, improved cost part of that will be drive by the reduction in IDRs by CST.

Robert that is correct. With this reduction there will be a reduction in IDR payments to the general partner as well.

Great, it looks supportive. I mean any view outlook for distribution coverage our target coverage rates moving forward before you think about re-emphasizing distributions are increasing in updated...

In our 1.1 times target over the coming year and into 2019.

The next question in the queue comes from Sharon Lui from Wells Fargo. Your line is open.

Just following up on the question about the distribution that maybe you could just touch on how you arrived at the size of the distribution cut. It sounds like the plan is to maintain this run rate for the balance of the year, but potentially there could be a reduction to get back to your coverage target is that a reasonable assumption.

Sharon this is Evan. Really the thought process when we looked at was we had been issuing the dollar amount an especially where it’s going now with the yield on the units and how dilutive that was. We look back at a run rate basis over the last year and what we essentially paid for these management fees through issuing equity and this dollar amount that we’re reducing the distribution by essentially went off that stack. So that time – that was essentially how the number was derived.

And how should we think about I guess the distribution going forward is the plan to keep the rate flat for at least the balance of this year and this is it and hence where coverage is in 2019.

Our longer term thinking is as we hit our 1.0 and then move towards our 1.1 coverage. As we continue to realize benefits from synergy capture and other opportunities to increase our cash flow we will reevaluate our distribution policy at that time.

And Sharon, just as add a little bit of dollar so besides looking to the future now we’ve combined the strength of both groups. We talked about the synergies and there is a lot opportunities from that standpoint for growth to deliver value. There, there is also a lot of opportunity in terms of how we continued to improve our portfolio our current portfolio of based business. And then of course there is the acquisition that we’re also contemplating whether they are from a third-party and also working together with our general partner but definitely there is a very larger opportunity that we see I see coming to the company and so it’s just about the timing, which – what is going to be capturing those opportunities.

Yes. And I guess on that point maybe if you can give an update on your latest thoughts of the asset exchanges and the timing of dropdowns. I know that previously you talked about referring that after clarity from a tax perspective, but just wondering if an asset exchange is well targeted for this year.

Yes Sharon, so very good question. We are committed to working on getting the first transaction of both parties have continues with discussions to get the transaction in line with our previous communications with you. Now it is more complex than a simple pipeline a large terminal or a large individual asset. So now I have come in I can tell you that I’m very confident that once we establish these blueprints we can expect a much faster pace between continue growing. And we expect to be able to announce a deal on these specific areas relatively soon.

And then I guess on the Jet-Pep acquisition, I know that you guys are working on the sourcing and also freight. In terms of timing when can we start seeing the benefit in the margin and volumes.

So there are decent components here. So I want just briefly as I was describing earlier. Our Jet-Pep supply is currently structured at a flat both index and as you will know this creates some volatility in our results. Now I do expect that a Jet-Pep portfolio will deliver addition EBITDA on a quarterly basis on top of what we saw in the first quarter of 2018. And I - expect that over 50% of that addition of EBITDA will be related to these flat volatility. We are always seeing a considerable change in April versus what we saw in the first quarter which will also support our volume growth. We are improving the supply chain that we inherited from Jet-Pep as I mentioned before and it involves both supply agreements and freight structure and we are optimizing our condition and we will see further growth coming from these – in the very near future. As I was saying we are currently working on the fuel progress and we’re just about to finish the determination of which fuel brand will be the best one for that portfolio we appeal to consumers. And initiate a different volume proposition and as we are finishing this we expect to leverage our purchasing scale reducing a lot of – the synergies that I was mentioning before. So the result so these also comes into place here to be able to leverage that scale and the strategic collaboration with our field suppliers to deliver it.

Of course very helpful. I guess just the last question in terms of the credit facility leverage I guess the timing of when that five times threshold rolls off?

It’s after four quarters, which currently Sharon that would be based on the Jet-Pep acquisition, which is the last acquisition that was material. That would mean we would – that would dropdown at the end of the first quarter of 2019.

Okay great. Thank you.

But if we complete an acquisition of above material acquisition of above $30 million then we would expand – that would go back to that 5.0 leverage.

We do have another question in the queue and that question comes from Mike Gyure with Janney Montgomery. Your line is open.

Can you guys talk a little bit about how would you expect a finance future acquisitions ticking into account the recent refinancing and then the restructuring at the distribution. Does that change, I think at one point you guys we’re talking maybe doing a 50:50 mix of debt to equity is that change in light of the refinancing then distribution.

It’s a good question. And we have additional capacity now the revolver a little more flexibility there and actually a better rate which helps us well. We are conscious and focused on managing flexibility on the balance sheet keeping that leverage in check. And so we’ve looked at - historically we've used various mechanisms to raise capital including sale leasebacks we can do asset exchanges, we think there is value there. So there are different types of in addition to using the revolver. And so we have different methods to finance but we’re going to be focused on doing accretive transactions which don’t stress our balance sheet.

And then maybe one more on the equity funded expenses, is the management fee the only equity funded expenses or there been other things there?

No, it’s the management fee predominance arrangement with the general partner. Yes that’s all it limited to.

We have no further questions in the queue at this time. I would turn the call over to Mr. Palmer for any closing remarks.

Okay, thank you, operator. That does complete today's conference call. We appreciate each of you joining us today. If you do have any follow-up questions please feel free to contact us. Thank you and have a good day.

Ladies and gentlemen, this concludes today's teleconference. Thank you for participating. You may now disconnect.