Welcome to the CrossAmerica Partners Third Quarter 2018 Earnings Call. My name is Hioga [ph] and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I'll now turn the call over to Randy Palmer, Executive Director of Investor Relations. Mr. Palmer, you may begin.

Thank you, operator. Good morning and thank you for joining the CrossAmerica Partners third quarter 2018 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 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 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 US 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. With that, I'll now turn the call over to Gerardo.

Thank you, Randy. We reported our third quarter 2018 earnings result yesterday afternoon, and Evan will go through those details in a few minutes. But first, I wanted to briefly review some of our operating results and highlights on the quarter. For the third quarter, we reported operating income of 13.7 million and net income of 5.3 million, primarily driven by growth in our Wholesale business. Our adjusted EBITDA was 28.6 million for the third quarter and our distributable cash flow for the quarter was 20 million. On October 24, our board approved a quarterly distribution of $0.525 per unit attributable to third quarter of 2018, which will be paid later this month. If you turn to Slide 4, I'll review some of our operating results from the quarter. For the third quarter, we increased the number of average sites to which we distribute fuel by 6% and we reduced the company operated network by 3% in line with our long-term strategy. On a quarter end basis, our company operated sites declined by 11%, driven by the SEC required divestiture of sites in the Upper Midwest related to Circle K's acquisition of Holiday, which took place in September. We grew our volume by 2%, primarily driven by Jet-Pep acquisition. Along with increasing volume, we also saw our Wholesale fuel margin grow 19% from $0.057 in the third quarter of 2017 to $0.068 in 2018. This resulted in a 21% increase in our Wholesale motor fuel growth profit for the third quarter. In regard to our rental and other gross profit that flows through both our Wholesale and Retail segments, we experienced a 2% decline. As we noted during our last quarterly call, this is due to the transitioning of sites in Florida to a third party multi-site operator Applegreen and…

Thank you, Gerardo. If you please turn to Slide 9, I will review our third quarter results for the partnership. We reported adjusted EBITDA of 28.6 million for the third quarter of 2018 compared to 29 million in 2017. Our distributable cash flow for the third quarter of 2018 was $20 million. As Gerardo touched on earlier, both our adjusted EBITDA and distributable cash flow benefited from good results in our Wholesale segment, but were impacted by the increase in cash versus equity funded Omnibus expenses in the quarter and over the last couple of quarters. If you were to turn to the next slide, Slide 10. We ended the third quarter with leverage as defined under our credit facility at 4.61 times, which was in compliance with our financial covenant ratio. As of November 1, we had $49.2 million available on our credit facility. The partnership paid a distribution of $0.525 per unit during the third quarter of 2018 attributable to the second quarter of 2018 for the total of over $18 million resulting in a coverage ratio of 1.10 times on a paid basis. Our trailing 12 months coverage ratio 0.99 times on a paid basis up from 0.97 times in the prior quarter. As I noted during the last quarterly earnings call, as part of the Circle K's acquisition of Holiday, the FTC issued a decree in which nine sites were required to be the best FTC approved third party buyers. Consistent with the forced divestiture of assets forced Circle K agreed to compensate splitting them out representing the difference between the value of the nine Upper Midwest sites and the proceeds of the sale to FTC approved third party buyers, which all amounted to $6.3 million. We anticipate Circle K's payment to us will be made during the fourth quarter of 2018. This payment will be accounted for the transaction between intercedes under common control and thus supported the contribution of partner's capital. In conclusion as Gerardo mentioned earlier we were pleased with the underlying performance of our base business during the quarter as we go through the last quarter of the year, look forward to 2019, we should expect that we will continue to improve our coverage ratio and manage our balance sheet leverage. With that we will now open it up for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And we have a question from Ben Brownlow from Raymond James.

Hey, good morning, guys.

Good morning, Ben

On the fuel synergies specifically with the strategic review on the 385 sites, any more color there on the timing of the completion of that review? I know it's kind of in process right now and how much synergies are anticipated for that initiative?

Yeah. Hi, Ben, thanks for the question. So I'm going to take - we're on track with the plans that we disclosed earlier in the year to leverage the strength and the sale of Circle K. As you guys know we buy over 1 billion gallons and Circle K buys over 10 billion gallons in North America and we have a very professional team that has world class capabilities to be able to analyze and work with different suppliers. So the first, we succeeded with our 100 site network with Jet-Pet and we're applying some of the thing logic to the balance of our portfolio. So we analyzed all of our base and then we identified the 30% of the volume, which is one that we can adjust more rapidly given the commitments that we have with different - with different brands or different suppliers. In terms of the overall of the synergies, so we have already captured between cost and some of trade synergies that we have already implemented about $9 million so far and we intend to get to the numbers that we disclosed earlier in the year. So if you remember by 2019 we said we'll be between 11 million and 14 million, by 2020 we said we'll be between 15 million and 20 million and 2021 we'll be between 20 and 25. So the process that we have right now running should be able to get as well on our way to accomplish those goals.

Great that's helpful. And on the Retail fuel margin being a little bit weaker - down year-over-year and believe the first half was a little bit below what I had modeled and I know you indicated that some of that was the commission agent - hire commission agent's year-over-year. Was there any other mentionable, notable cost on Amex that impacted the third quarter relative to the first half of this year?

No, I'm not - no, there was nothing else very special that I can point out to, Ben. So it's really more of the environment that we saw, the competitive nature the environment in some of these areas where we have a retail presence and the - what we're working on as I was disclosing before is making sure that we can capture more margin across the whole chain between wholesale and retail. So we look at all of it on an integrated basis and when you look at all it together, we have captured a better margin than in previous quarters and that's part of our efforts. So we are focusing to get all of our teams from a sampling to pricing together in one single center of excellence and we're almost there to transition all of these pricing TVT rather than being done in the field centrally and so we're seeing some of that that's why we're experiencing some better fuel margins across the whole chain, but specifically for the retail business is based on the competitive nature of the areas where we operate that's why we saw some of those margins weaker than what we were expecting.

Great and if I could slip one more last on in. On the wholesale rental income with the site transition over to Applegreen, just from a modeling standpoint, can you give us some kind of color of what the anticipated quarterly run rate on wholesale rental income would be going forward?

Yeah, so I think - what you saw in September, so we across the third quarter, we had this transitions and so therefore we saw a reduction there in the - therefore in the rental income. We're then transitioning over to Applegreen and so as we're doing that we're expecting to get to a better place than we showed in the third quarter, so we should be seeing some of that coming through into the future quarters.

Great, thank you

The next question comes from Mike Gyure from Janney Montgomery.

Yeah. Good morning, guys. Can you talk a little bit the thing you did certainly on the fuel supply synergies about the 30% of sort of the fuel? I guess you're envisioning sort of working your way through the rest of the portfolio or I guess kind of what's the strategy there on the fuel supply side?

Yes, Mike. Yeah, thanks for the question. So yes, we're getting through the whole portfolio and the reason why we started with it - with 30% is because when you look at all of our sites there are some that have commitments longer term. The CrossAmerica had established commitments, now, as we leveraging the scale from Circle K, we're looking at friendships of sites that are available for us based on the commitments that we have. And so we're making sure that is the optimal the decision for CrossAmerica. If you think about then the timeline that we have set up in the next few years that's why there's a progressive increase and so we're going to be - possibly we will be looking at options to be able to accelerate that. But what we have right now is based on the commitments that we have with our oil suppliers. There are certain times that it's going to - it's going to take a certain amount of time to be able to transform the whole portfolio, but definitely we're looking at all and that is on the base business. And so something else that we're going to be able to generate is one, we have this portfolio with a better structure aligned with strategic suppliers. This would also enable us for growth in some of those areas because we'll have –we'll have a better cost base and we will be able to then add more value to some other opportunities that we have in those years or be. But getting back to your question it is going to take us time based on the contracts that we have in place.

Great and then maybe if you could touch, Gerardo, the - I guess the strategy for acquisitions going forward. I guess do you vision CrossAmerica still looking at smaller bolt-on's and then I guess again, do you see the focus being more on the wholesale or on the retail side? Thanks.

Yeah. So yeah, definitely - I'm going to start with the last part of your question Mike. So definitely it is a wholesale part where we're going to be focusing more because that's where our strengths lie. So we have a world class wholesale team and we have great capabilities within the organization to make sure that we can win in the marketplace in that space. So definitely that's going to be our focus going forward. Now, in terms of how we would see bolting on some of these acquisitions, so we're working right now, we continue to work on making sure that we get an initial transaction with our general partner for several sites that would allow us then to be able to grow. That's what our focus is in developing that initial transaction to get a blueprint for growth. And so if you think about our growth, so there's things that are going to come from alignment with our general partner. Now, if you've followed the announcements from Circle K and their investor's presentations, there is a commitment for growth from Circle K in North America and because of that we are working collaboratively with Circle K to be able to capture some of that growth. Again we are the wholesale arm for Circle K, so we're the ones that - they will be taking some of those portfolios just like we did with Jet-Pep if you think about it. There's portfolios that have strength for wholesale, some parts of the portfolio that have convenient retail operations and that's were Circle K comes in. So that's alignment with our general partner and then of course we're monitoring the industry and we're looking at potential acquisitions and it need - they need to make sense. When you think about why us, why CrossAmerica? So we have we have a couple of strength there at least, so one is that we have a scale that we were discussing before from a fuel synergy standpoint, so we can now value to acquisitions and then the other one is we have the general partner in Circle K which is a very sophisticated retail operator, world class operator, so they have a strong offer. So what we'll - we can leverage that, their strong site opportunity that we can offer to some of the dealers were appropriate. So going back to your question, so we would continue to look at industry opportunities where we can leverage our strengths, but we're also then looking at making sure that we are align portfolios and continue to grow with our general partner.

Great, well, it certainly sounds like you've got your cost structure in place to do that, so I wish you luck going forward. Thanks, Gerardo.

Thanks Mike. Operator [Operator Instructions] The next question comes from Patrick Wang from Baird.

Hey, good morning Evan.

Good morning Patrick.

Good morning. Going back to center [ph] it looks like you've now held on to that 3.5 million run rate excluding the one offs, how should we think about run rate going forward on the G&A side, with future certainly has now come primarily from the feel side as opposed to G&A?

This is Evan, that's correct, Patrick. I think that's the way to think about it and we've like taken more - captured most of the - most of the overhead and staffing resource opportunities - synergy opportunities, it's going to be coming from just working more efficiently and optimizing with our vendors and leveraging the scale and the size of Circle K.

Okay, that's great to hear. Then more an accounting question now, in regards to the pending analysis around your sales specs, the potential to become operating leases and I know that it looks like this is still under review, but can you comment on if we should expect the potential shift to operating this will impact your reported cost structure going forward just to the nature of the classifications?

Right, so on our cash flow statement you can see the principal payments on the sale leaseback. Going forward next year upon adopting new accounting guidance, those payments will be reflected on the income statement [indiscernible].

Got it, that's helpful. Thank you.

Thank you, Patrick.

The next question comes from Keith Howlett from Desjardins.

Yes, I was just wondering if you could just speak to the process you used to select Applegreen for the 43 sites in Florida.

Yes, Keith. Yeah, so we have been working with Applegreen for quite some time, so this is not something new, so my team - our team here in CrossAmerica has been working with them for at least now more than two and a half years or so. And we started operations with them in the New England area and so they were coming into US and we started with them with over 20 properties and that's how we started and then we have been collaborating with them and we have been able to see their strength in operations and their strength in execution and how they are investing in the sites to be able to make them stronger. So that's - so that's where we started, now, we have been collaborating with them looking at other opportunities and then Florida is one that came across were Florida is an attractive area that fit both of our portfolios, our aspirations, so that's how we ended up with that market as the next place where we have been growing with them and going into the future we are looking at other areas where both of us can collaborate and we are - we're looking at a transaction with our general partner that you guys know about and there are several opportunities for us to further collaborate with Applegreen and other operators once we're able to get more sites. So that's –so we know they're very strong operators, we know their strength in investments and seeing big visionary about how to improve the site performance and we're collaborating in many spaces and that's pretty much - it's not just the one off. It has been a relationship that we've been nurturing and we've been proving for quite some time.

And I'm not sure that - whether you can speak to this or not, but how does their fuel mix look compared to say the Jet-Pep fuel mix?

So I mean I - I mean from a standpoint of fuel, so I think my best way to talk about this is in the slide that we disclosed that there's there is Branded Oil Company and then there is the Jet-Pep fuel brand that we have right now. And I would say that Applegreen's fuel mix is closer to what would see with the major oil brands. That's what they currently have in their forefront here in the US. So they don't have a private label like they do in Europe, so that's where we are collaborating. We have major oil brands with them, so their mix is more closer to that - those numbers and again if you think about them they're very strong operators. Now, on the Jet-Pep front what we currently have ourselves these - we have a brand that is not as well recognized and is not as well recognized at the premium fuel brand, so its playing in a space more value sensitive consumers and therefore our premium ratio has - you could see in the slide that we disclose is much lower than what we're seeing for major oil brands. And that's where we see an opportunity and that's why we are working right now as we speak and then rebranding some of that portfolio over to a brand that would be more conducive for higher premium sales and that would be better recognized in the marketplace.

Okay, thank you

Thank you, Keith.

We have no further questions at this time. I would like to turn the call back to Mr. Palmer for final remarks.

Okay operator, thank you very much. That does complete our conference call for the day. We appreciate each of you joining us today. If you have follow-up questions, please feel free to contact us. Thank you and have a good day.

Thank you. Ladies and gentlemen this concludes today's conference. We thank you for participating. You may now disconnect.