Good morning, and thank you for joining the CrossAmerica Partners Third Quarter 2021 Earnings Call. My name is Darrell and I will be your operator for today’s call. At this time all participants are on listen-only mode. Later we will conduct a question-and-answer session. Please note this conference is being recorded. I will now turn the call over to Maura Topper, Chief Financial Officer. Maura you may begin.

Thank you, operator. Good morning and thank you for joining the CrossAmerica Partners Third Quarter 2021 Earnings Call. With me today is Charles Nifong, CEO and President. Charles will provide some opening comments, a brief overview of CrossAmerica’s operational performance and highlights from the quarter, and then I will 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 U.S. Generally Accepted Accounting Principles or GAAP. 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. 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 will now turn the call over to Charles.

Thank you, Maura. I appreciate everyone joining us this morning. As always, we thank you for your interest in the partnership. I especially welcome Maura today on our first call as CFO since joining us in August. We are glad to have her on our team. During today’s call, I will briefly go through some of the operating highlights for the third quarter 2021. I will also provide some color on trends in the market along with update on our acquisition of convenience stores from 7-Eleven and other updates similar to what I provided during our most recent quarterly calls. Maura will then review in more detail the financial results. Now if you turn to slide 4, I will briefly review some of our results. For the third quarter of 2021, our wholesale fuel gross profit was $34.1 million, an increase of $3.4 million, or 11% when compared to the third quarter of 2020. This was driven by both volume and fuel margin increases during the quarter. Wholesale segment gross profit was $48.2 million, an increase of 13% or $5.4 million when compared to the third quarter of 2020. Our wholesale fuel volume was 355 million gallons for the third quarter of 2021, an increase of 8% when compared to the same period in 2020 largely due to the acquisition of assets from 7-Eleven as well as the continuing recovery from COVID-19. In terms of same store buying performance in wholesale for the quarter we were up approximately 4% year-over-year. For the quarter on a same site basis relative to 2019 we were down slightly more than 3%. We did see some relative weakness in volume from mid August to early September as a Delta variant, or fears of the Delta variant are at their peak. Year-to-date wholesale same site…

Thank you, Charles. If you would please turn to slide 6, I would like to review our third quarter results for the partnership. We reported net income of $8.8 million for the third quarter of 2021 compared to $21.2 million in the third quarter of 2020. During the third quarter of 2020 net income benefited from a $12.9 million gain, primarily driven by gains related to the properties sold in the asset exchanges with Circle K compared to a $0.4 million gain on the sale of properties sold during the third quarter of 2021. Adjusted EBITDA was $35.9 million for the third quarter of 2021 which was an increase of 20% when compared to the third quarter of 2020. Our distributable cash flow for the third quarter of 2021 was $30.4 million versus $29.7 million for the third quarter of 2020, reflecting an increase of 2% year-over-year. Distributable cash flow in the third quarter of 2020 benefited from a current tax benefit of $3.8 million compared to a tax expense of $0.2 million in the third quarter of 2021. The 20% increase in adjusted EBITDA was primarily driven by increases in operating income for both wholesale and retail segments and the addition of our assets acquired from 7-Eleven As Charles covered. Our distribution coverage for the current quarter was 1.53 times compared to 1.50 times for the third quarter of 2020. For the trailing 12 months ended September 30, 2021 our distribution coverage was 1.22 times a slight decline versus 1.24 times for the trailing 12 months ended September 30, 2020. If you will please turn to the next slide, the partnership paid a distribution of $52.5 per unit during the third quarter of 2021 attributable to the second quarter of 2021 for a total of almost $20 million. And…

And thank you. We will now begin the question and answer session. [Operator Instructions] We do have a question that just populated Elvira Scotto from RBC. Your line is now open.

Can you talk a little bit more about what you’re seeing on the labor front and how you see that kind of developing over the next few quarters?

Elvira, good morning. This is Charles. So on the labor front at the retail stores we just like everyone else, it’s certainly been tight in terms of finding folks out there, depending upon the market, we’re seeing shortages. And we’ve had to adjust rates. In some cases we’ve implemented temporary programs and other cases it’s been permanent elevations and base rate. And so in terms of the outlook obviously there was the expectation that in September with the end of some of the enhanced unemployment benefits that things would improve somewhat, and depending upon the market, we may have seen that, but it’s still overall it’s very tight out there. And we expect it to continue for several quarters at least. It’s tough to say how things necessarily get better, but it’s definitely added to expense at the store level. But so far, we’ve been able to manage it fairly well, I think.

And then can you provide a little more detail when you were talking sort of your, I think the wholesale fuel margin the divergence between the margin and how historically that has trended versus changes in crude oil prices. But the pandemic appears to have changed that. Maybe talk a little bit more about that and do you think that trend stays?

Yes. So I think I’ve been saying for a while now that I’ve been a little bit more hesitant to say it’s been a permanent change in how the market is but certainly if you listen to others out there some of our competitors as well, I mean, they know and they make valid points about breakeven margins for operators being higher. And certainly that’s the case. And what we’ve seen is also from operators in the past that I would say, put less emphasis on fuel margin in terms of their business, and it was more of the fuel was a draw to get people inside their store. They seem to have awakened to the fact that fuel margin is also important because of either increase in labor costs, declines in certain parts of their store offering in terms of sales such that there seems to be overall a bias towards higher fuel margins that continued in the market. I mean, certainly, if you look at what has happened this year, with crude oil prices typically our margin would have been in the mid to low single digits and we’ve not been anywhere near that. Whether that will continue once COVID becomes more and more endemic I don’t know. But certainly it has lasted much longer than I think we would have expected initially.

Thank you. Our next question comes from [Indiscernible] from Wells Fargo. Your line is now open.

Thanks for taking the questions. On the last three stores from the 7-Eleven deal could you provide a rough timeline of when you expect to secure all the remaining licenses and permits and complete the transaction?

Yes, so those three stores happened to be in the Philadelphia market and there are some peculiarities associated with Philadelphia in terms of getting those permits. So I don’t have great visibility right now on when those sites will come over. I will say in terms of both their purchase price and contribution to the overall portfolio they’re not material. We’ve substantially as I said in my comments are substantially complete with the transaction with what we’ve acquired to-date and we finished those acquisitions at the start of October. So we’re optimistic we’ll get those three sites over, but whether they come over or not anytime soon it’s certainly not material to the overall impact of the acquisition.

Got it. Thanks for this Charles. And then could you maybe talk about the level of activity in the M&A market just generally? And then maybe your appetite to participate leverage metrics normalizing the next 12 to 24 months?

Yes. So I’ll address the second part of that question first. So as Maura touched on her comments obviously right now, we’re focused on from a capital perspective, bringing down our leverage, and also too from operational perspective, integrating these assets and ensure that the acquisition that we’ve just completed, performs the way that it should. So that’s our primary focus for the time being, as you astutely pointed out I think that means that we’re not going to be all that active in the market until we’ll say, mid to the latter half of that year, next year in terms of looking from the market overall. So our deal notwithstanding, we’ve seen, purchase price expectations from sellers in the market continued to be high. And from our perspective it has to be something special for us to want to do something at those elevated levels. But again, for the time being, while we continue to look and monitor the market, it would have to be something that was really special or strategic for us and in order to do something at this moment while we’re still processing what we’ve just finished from a 7-Eleven sites.

Thank you. [Operator Instructions]

Well, it doesn’t look like there any further questions in the queue. Again, we thank everyone for joining us today on the call and wish you well, thanks.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for your participation. You may now disconnect.