Welcome to the CrossAmerica Partners Fourth Quarter Year-End 2021 Earnings Call. My name is Darrell, and I will be the operator for today's call. 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 will now turn the call over to Maura Topper. You may begin.

Thank you, Operator. Good morning and thank you for joining the CrossAmerica Partners Fourth Quarter and Full Year 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 full year, 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 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 this 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. Maura and I appreciate everyone joining us this morning. As always, we thank you for your interest in the partnership. During today's call, I will briefly go through some of the operating highlights with a fourth-quarter and full-year 2021. I will also provide some color on the trends in the market and a few other updates similar to what I provided on previous 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 operating results. For the fourth quarter of 2021, our wholesale fuel gross profit was $36.3 million, a 51% increase when compared to the fourth quarter of 2020, driven by increases in both volume and fuel margins. Wholesale segment gross profit was $49.4 million, an increase of 34% or $12.6 million when compared to the fourth quarter of 2020. Our wholesale fuel volume was 356.9 million gallons for the fourth quarter of 2021, an increase of 16% 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 site volume performance in wholesale for the quarter we were up approximately 6% year-over-year. For 2021 wholesale same site volume was up approximately 9% relative to last year. We also saw an increase in our wholesale fuel margin per gallon for the quarter, reporting $0.10 per gallon compared to ¢7.8 per gallon for the fourth quarter of 2020, an increase of 31%. A year-over-year increase was primarily driven by the following factors. First, we benefited from increased volume to CrossAmerica's company operated retail sites, which we supply on a variable margin basis. Second, we continue to benefit from better sourcing costs due to the…

Thank you, Charles, if you would please turn to Slide 8, I would like to review our fourth quarter and full year results for the partnership. We reported net income of $12 million for the fourth quarter of 2021 compared to $9 million in the fourth quarter of 2020. The increase in net income was primarily driven by the year over year increases in operating income in both the wholesale and retail segments, with each segment benefiting from a continuing recovery from the COVID-19 pandemic as well as the acquisition of assets from 7-Eleven. Adjusted EBITDA was $37.0 million for the fourth quarter of 2021, which was an increase of 51% when compared to the fourth quarter of 2020. Our distributable cash flow for the fourth quarter of 2021 was $31 million versus $26.2 million for the fourth quarter of 2020. The 18% increase in distributable cash flow was primarily due to the increase in operating income in both the wholesale and retail segments, partially offset by an increase in cash, interest expense and no current income tax benefit for the fourth quarter of 2021 compared to a $6.7 million income tax benefit for the fourth quarter of 2020. For the fourth quarter 2021 adjusted EBITDA and distributable cash flow were record highs for the partnership. The 2020 current income tax benefit for the fourth quarter, and the full year. With the results of taking bonus accelerated depreciation on assets acquired during that year. For the assets acquired from 7-Eleven in 2021, we have elected not to take accelerated bonus depreciation. So we will benefit from relatively lower taxable income over the life of these assets, as opposed to a one-year upfront benefit. Our distribution coverage for the current quarter was 1.56 times, compared to 1.32 times for the fourth…

Thank you. We will now begin the question-and-answer session. [Operator Instructions].

And our first question comes from Elvira Scotto from RBC Capital.

Good morning, everyone. Just a couple of questions from me. I'm interested in your thoughts on -- views on gasoline demand destruction given the high gasoline prices and just even other inflationary pressures. So that's my first question.

Hey, Elvira, good morning. This is Charles. So yes, your question is a timely one, that's something that we think about. I would say, as of now, based on where prices are currently, in our view we haven't seen that yet, although it's tough to disentangle some of the effects of Omicron and then exactly what other things that are happening now. There's a level at which that will start to happen, and in particular we've looked at our premium pricing for fuel to see if that has had an impact yet. And again, as of now, it hasn't, but there is a limit. That's something that we continue to closely monitor. So that's on the fuel side. On inside store sales, again, we haven't seen that. I caveat that with the same thing I said in the volume side, and that given Omicron and some other things that have happened, it's difficult to disentangle that effect. I think up until recently, we were just starting to see things get back to somewhat normal from the Omicron surge that happened at the end of the year, in January. So again, we haven't seen that, but it's something that we closely monitor.

Okay, thanks. That's helpful. And then my second question. So it looks like margin $0.102 was higher than what we were expecting. And just curious on your thoughts on A, the key drivers there, and then B, just how sustainable you think that is.

Well, on a sustainable front, this is something that we've talked about on prior calls and some of our other competitors and other people in the industry have talked about in that with COVID, there appears to be somewhat of a structural shift in the market towards higher margins. And I've been somewhat reluctant to fully embrace that, but given what we've seen over the past year with the overall generally rising crude oil price environment. And also what we've seen here just recently and past periods with that type of crude oil price environment, we would've seen margins materially lower than what they have been. And so we've been in a period now of 12 to 18 months where, you had what would've been historically very challenging fuel margin environment and it's been much better than what historically has been. And there are all sorts of different factors as to what people have ascribe that to, lower volume due to COVID. But I think that you've seen a general shift in overall industry behavior. And as people have said, the retail street price is being set by the marginal competitor, and they have a lot of pressures on them, inflationary pressures, volume pressures such that, that is sustaining an overall higher margin environment, and we certainly been the recipient of that, you see that in our numbers. And again, as that said, I was hesitant to embrace that, but it's been ongoing for such a long time, I think there's merit to that we are in a structurally higher margin environment and will be for some period of time going forward.

Great. Thank you very much.

We have no further questions.

Okay. With no further questions, that completes today's conference call. We appreciate everyone joining us today. If you have any follow-up questions, please feel free to contact us. Thank you, and have a great day.