Randy Palmer - Director of Investor Relations, CST Brands Kim Lubel - Chairman of the Board, President and Chief Executive Officer, CST Brands Joseph Topper - Chief Executive Officer, CrossAmerica Partners Jeremy Bergeron - President, CrossAmerica Partners Clay Killinger - Executive Vice President and Chief Financial Officer, CST Brands Charles Adams - Senior Vice President and Chief Marketing Officer, CST Brands Tony Bartys - Senior Vice President and Chief Operating Officer, CST Brands Steve Motz - Executive Vice President and Chief Strategy Officer, CST Brands.

Benjamin Brownlow - Raymond James & Associates, Inc. Bonnie Herzog - Wells Fargo Securities, LLC Ben Bienvenu - Stephens, Inc. Esteban Gomez - JPMorgan Securities LLC Bernie Colson - Oppenheimer & Co., Inc. Damian Witkowski - Gabelli & Company Jay Dobson - Wunderlich Securities, Inc. David Hartley - Credit Suisse Securities.

Welcome to the CST Brands and CrossAmerica Partners Second Quarter 2015 Earnings Call. My name is Vivian, and I’ll be your 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 Randy Palmer, Director of Investor Relations. Mr. Palmer, you may begin..

Thank you, operator. And good morning and thank you for joining the CST Brands and CrossAmerica second quarter 2015 earnings call.

With me today are Kim Lubel, CST Chairman and CEO; Clay Killinger, Chief Financial Officer; Joe Topper, CEO of CrossAmerica Partners; Jeremy Bergeron, President of CrossAmerica Partners; and other members of our executive leadership team. Kim will provide an overview of the CST’s second quarter operational performance and current initiatives.

Joe and Jeremy will provide an overview of the operational performance for CrossAmerica Partners. And then, we will turn the call over to Clay to discuss the financial results. At the end, we will open up the call to questions for both companies.

I should point out that today’s call will follow some presentation slides that our team will be utilizing during this morning’s event. These slides are available as part of the webcast and are posted on the CST Brands and CrossAmerica websites.

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 company.

There could 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 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 the company’s management as of today’s date and the company 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 provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release.

We should also note that the results provided today by CST represents the business operations of CST on a standalone basis before the consolidation of CrossAmerica Partners LP, but include the income associated with CST owning a percentage of the outstanding units and all the IDRs of CrossAmerica.

Full consolidating information will be included in the second quarter 2015 Form 10-Q, which will enable you to arrive at our completed financial – completed consolidated financial results. Today’s call is being webcast and a recording of this conference call will be available there for a period of 60 days.

And with that, I’ll now turn the call over to Kim Lubel..

Thanks, Randy; and good morning, everyone. And welcome to our second quarter 2015 earnings call. I wanted to begin with a brief look at our second quarter performance and then touch on some of our current initiatives.

If you look at Slide 4 entitled second quarter results summary, this morning CST reported second quarter EBITDA of $80 million and earnings per share of $0.32. In spite of a very wet second quarter, it rained in Texas in May and June, more than double the average amount over the past five years.

We experienced year-over-year increases in both inside sales and fuel volumes. In U.S., we enjoyed an overall 8% increase in inside sales across our core stores and a 3% increase in same-store inside sales, both on a per site per day basis. Overall, U.S.

fuel volumes on a per site per day basis were up 5% for the quarter compared to 2014, and same-store fuel volumes were roughly flat to last year. Fuel margins started off in the second quarter softer than last year, but began to recover and improved in June.

Our Canadian reported results were negatively impacted by the decline of the Canadian dollar versus the U.S. dollar. Excluding the effects of foreign exchange, we enjoyed a 4% increase in same-store merchandise sales in Canada. For CrossAmerica, adjusted EBITDA was $19 million and distributable cash flow per unit was $0.57 per common unit.

If you’ll turn to Slide 5, I wanted to briefly talk about our food program that we will be testing in our San Antonio market in the next few months that will enhance our food offerings in the afternoon and evening day parts. We will be introducing the program to five of our stores before the end of the year.

And going forward, all of our NTIs will be built to support an expanded food program. These five test stores will give us the opportunity to do some menu testing. On Slide 6 you will see some examples of the food items that will be part of our offering.

These are all items that are currently available at our Nice N Easy stores, where food sales make up around one-third of our total inside sales. This effort underscores the added benefit to CST from our acquisition strategy as we begin to bring acquired best practices to scale across our network.

If you move to Slide 7, I also wanted to touch on the expanded grocery offering that we will be implementing across 50 of our stores in the Central Taxes, San Antonio, and Houston markets in the third quarter.

This is a program that we believe will not only enhance our overall product mix within these stores, with the addition of over 300 new items, but it should improve our overall margin capture. As we continue to work through our NTI program, we intent to include the grocery program in nearly all of our future builds.

These new items will help us offer expanded choices to our customers for more produce to bakery items and even fresh meats. We will also be able to offer our customers a greater assortment of easy-to-prepare meals, providing more convenience on-the-go to our customers.

In addition to implementing these concepts in the U.S., we will also be testing both programs in some of our stores in Canada. Due to the slightly smaller store footprint these stores will likely have a more limited offering.

Overall, we feel very good about our business going into the third quarter, which is reflected in our current guidance, including 11% to 14% increase in year-over-year U.S. merchandise sales. Finally, on July 1, we closed on the sale of an additional 12.5% equity interest in CST Fuel Supply to CrossAmerica.

We also completed the sale of real property associated with 29 NTI to CrossAmerica. These transactions were approved by the conflicts committee of the general partner and the company’s executive committee and full board of directors. Clay will go over more specifics of this dropdown transaction in just a few minutes.

As of today, CrossAmerica’s total equity interest in CST Fuel Supply is 17.5% and CST’s total equity interest in CrossAmerica is now 15.9%, in addition to our Incentive Distribution Rights.

We believe these drops further strengthen the growth of CrossAmerica, while providing CST with capital for future NTI builds, as well as unlocking the value of our fuel supply to fund our growing company-operated store network. And with that, I will turn the call over to Joe and Jeremy to review the CrossAmerica second quarter results..

Thank you, Kim. For today’s call, Jeremy and I will provide a brief overview and some initial commentary on our second quarter results, followed by a review over the One Stop acquisition that we announced in June and closed on July 1.

First, looking at our Wholesale segment, which is on Slide 9, our overall gallons sold increased from 223 million in the second quarter of 2014 to 277 million in 2015, reflecting an increase of 24%, primarily as a result of our four acquisitions we have completed over the past year.

Margin for the Wholesale segment was $0.053 compared to $0.067 in the second quarter of 2014. Our margin was impacted by the absolute price of wholesale gasoline, declining by over $1 per gallon relative to the second quarter of 2014. This impacted the terms discount we received from our suppliers and lowered our margin.

You can also see that our wholesale business rental income increased almost $1 million in the second quarter of 2015 compared to 2014. This is primarily a result of our acquisitions of Nice N Easy and Landmark stores, which we leased to CST.

For the remainder of the year, we expect rental income continue to increase due to the rental income from the recently dropped CST NTI store and our integration plan to transition certain PMI locations from company-operated retail stores to lessee dealers.

Over the past five months, we have dealerized over 30 locations, lowering our operating expenses, establishing qualified rental income, while maintaining a strong wholesale fuel margin at these sites. In addition and also noted on Slide 9, our 5% ownership interest in CST Fuel Supply, we generated $1.2 million in distributions in the second quarter.

As Kim mentioned, we completed an immediately accretive purchase of an additional 12.5% interest on July 1 and look forward to these increased distributions contributing to our cash flow in the third quarter.

On the next slide for CrossAmerica retail segment, which includes our commission agent business and our company-operated convenience stores, overall gallons sold increased from $32 million in the second quarter of 2014 to $57 million in 2015, reflecting an increase in the number of company-operated convenience stores primarily from the PMI and Erickson Oil acquisitions.

Margin for the retail segment, net of credit card fees and commission was $0.095 compared to $0.052 in the second quarter of 2014 contributing to the increase of our adjusted EBITDA for our retail segment, but relatively flat compared to last year. I will now turn the call over to Jeremy, who will discuss our most recent third-party acquisition..

Thank you, Joe. If you move to the next slide, Slide 11, I wanted to review our recent acquisition of One Stop that closed on July 1. One Stop is a great operation in the West Virginia market, including 41 company-operated convenience stores, four commission agent sites and nine wholesale dealer locations.

In 2014, they distributed approximately 36 million gallons of fuel and had approximately $41 million in inside sales. This acquisition fits in well with our existing portfolio of former PMI locations in West Virginia and Virginia, where we already operate or sell fuels to over 300 convenience stores today.

With One Stop we have completed over $165 million of third-party acquisitions this year. Behind the strength of these transactions are, increased ownership in CST Fuel Supply, our recent purchase of the real property of 29 NTI stores operated by CST and with our capital structure needs addressed in June through our follow-on equity offering.

We are in tremendous position to significantly grow our business, and increase unitholder returns. With that, I will turn it over to Clay..

Thanks, Jeremy. First, I’ll provide a brief overview of the second quarter results for CST and then cover CrossAmerica. Today, CST reported net income of $25 million or $0.32 per share for the second quarter of 2015. This compares to net income of $32 million or $0.43 per share for the second quarter of 2014.

For the second quarter of 2015, we had a small gain on the sale of assets outlined in our earnings release. The after-tax income effect of this gain was approximately $1 million for the second quarter of 2015. Excluding this gain, our earnings would have been $24 million or $0.31 per share for the second quarter of 2015.

There were no similar one-time items in the comparable quarter of 2014. As I discussed our second quarter CST highlights in more detail, I will be referring to our U.S. and Canadian segment operating results. In regards to CST’s U.S.

segment, if you turn to Slide 13, second quarter 2015 net motor fuel gross profit declined by $6 million or 9% when compared to the second quarter of 2014.

The year-over-year decrease was primarily attributable to a decline in the cents-per-gallon fuel margin net of credit card fees between the periods, decreasing to $0.13 from $0.14 for the second quarter of 2014. The decrease in fuel margin was primarily the result of rising crude oil prices early in the second quarter of 2015.

For our core stores, our U.S. motor fuel gallons sold per site per day increased by approximately 5% quarter-versus-quarter, primarily driven by new-to-industry stores and our Landmark acquisition.

Our gross profit from merchandise sales increased $9 million or 9% in the second quarter of 2015 when compared to the same quarter in 2014, primarily as a result of our acquisitions as well as an overall increase in our merchandise sales.

Merchandise gross profit increases were the result of an improvement in both merchandise sales and merchandise margins. Turning to the next slide, for our Canadian segment, second quarter motor fuel gross profit decreased by $3 million or 5%.

The cents-per-gallon fuel margin net of credit card fees was approximately $0.23 for the second quarter of 2015 compared to $0.25 for the comparable period in 2014. This reduced fuel margin was caused by the Canadian dollar devaluations.

For additional comparative purposes results on this slide are also provided in percentage change in Canadian dollars. Our reported gross profit from merchandise sales and our other category declined $4 million for the second quarter of 2015 compared to 2014. The decline was primarily attributable to foreign currency exchange.

The Canadian dollar continued to devalue relative to the U.S. dollar during the second quarter of 2015 versus the comparable period in 2014. As noted on our earnings release, the exchange rate for the U.S.

dollar relative to the Canadian dollar averaged approximately $0.81 for the second quarter of 2015 versus approximately $0.92 for the comparable period in 2014. This represents a devaluation of the Canadian dollar by approximately 12% between the comparable periods.

Overall, excluding the effects of foreign currency rate changes, our gross profit for our Canadian segment in the second quarter of 2015 would have been up over $5 million when compared to the second quarter of 2014. Turning to Slide 15, I’ll now make a few comments about CST’s financial position.

At the end of the quarter, we had $343 million of cash and approximately $280 million available under our credit facility. At the end of the quarter, we had $239 million of cash in Canada. In regards to our capital spending, capital expenditures for the second quarter of 2015 totaled $66 million.

We have as of the date of this call, utilized approximately $86 million or nearly half of our $200 million share repurchase authorization and have repurchased just over 2 million shares. Slide 16 provides some guidance for the third quarter. I’m not going to walk through each of these items, but I did want to note the following.

We are expecting an increase in our operating expenses, driven by the timing of our remaining NTI completions, but we are also expecting a healthy quarter for our U.S. business. On Slide 17, I want to remind everyone that we are now posting our monthly fuel margins on the CST website and we posted the June margins on the site this morning.

Going forward, you should expect that we will post these margins as they become available around the middle of the month with the exceptions of last month of the quarter, which we will post at the time of our quarterly earnings report.

Now turning to CrossAmerica, Slide 18 presents key performance metrics that we believe are important to our unitholders. Today, we’ve reported adjusted EBITDA of $19.1 million for the second quarter of 2015. This compares to adjusted EBITDA of $17.1 million for the same period of 2014 or a 12% increase.

The increase was primarily driven by recent acquisitions. Distributable cash flow for the second quarter was $14.3 million or $0.57 per diluted unit, compared to $13.5 million or $0.72 per diluted unit for the second quarter of 2014.

For CrossAmerica’s wholesale segment, gross profit increased 1% to $21.5 million from $21.3 million for the second quarter of 2014. The increase in wholesale gross profit was primarily driven by an increase in the motor fuel gallons distributed related to our acquisitions.

For CrossAmerica’s retail segment gross profit for the second quarter 2015 was $16.8 million compared to $5.7 million for the same period in 2014. This increase is attributable to the acquired convenience store operations from the PMI and Erickson Oil acquisitions we made over the past 12 months.

If you turn to the next slide, for the second quarter of 2015, distribution coverage was at 1.04 times, an improvement from the 0.76 times we achieved in the first quarter of 2015 and the 0.93 times for the fourth quarter of 2014. We have achieved our short-term target of coverage, exceeding 1.0 times.

And over the long-term we’re still targeting distribution coverage to be at or above 1.1 times. We continue to anticipate the growth rate of CrossAmerica’s distributable cash flow per unit, attributable to 2015 to be between 7% and 9%.

Our revolver capacity was $140 million at the end of the quarter and subsequent to the July 1 fuel supply and NTI drops, along with the One Stop acquisition, CrossAmerica has close to $100 million available for future borrowings. As such, we have immediate capital available for additional acquisitions, should they arise.

Before I talk about the July 1 asset drop transactions, I’d like you to know that the board of directors of the general partner will be meeting in early September to determine the distribution related to our second quarter results.

Moving to Slide 20, we announced in June and subsequently completed on July 1, our second and largest dropdown transaction to-date between CST and CrossAmerica, with the sale of a 12.5% interest in CST Fuel Supply and the real property associated with 29 NTI stores for a total consideration of $261.5 million at the time of the announcement.

Our final slide highlights several of the benefits for both CST shareholders and CrossAmerica unitholders resulting from this dropdown transaction. CST received $142 million, a considerable sum of money, which will fund almost 65% of our planned construction of NTI stores in the U.S. this year.

CST also received $3.6 million CrossAmerica limited partner units in conjunction with the deal which increased CST’s ownership of CrossAmerica to 15.9% of total units outstanding.

Combined, CST’s ownership interest in CrossAmerica’s Incentive Distribution Rights and limited partner units, now generate nearly $13 million of annualized cash flow at the current distribution rate.

The gain on the sale of these assets was approximately $138 million, and when combined with the $60 million of gain from the first asset-drop completed in January, CST has achieved nearly $200 million of gains in 2015 related to these transactions.

Although these gains are realized, they’re not reflected in CST’s income statement under accounting rules. From a CrossAmerica standpoint, unitholders benefit immediately from the transaction with $22 million of annual recurring cash flows from high-quality rental income and fuel supply equity interests backed by CST.

We estimate the transaction was approximately 7% accretive to distributable cash flow per unit. This transaction also highlights the benefits to CrossAmerica unitholders of being the sponsored MLP and provides visibility to the profitability of potential asset-drop opportunities for the next five years or more years.

These future asset-drop opportunities combined with the strength of CrossAmerica’s successful acquisition track record will help secure and enhance distribution growth for years to come. With that, we will open it up for questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Ben Brownlow from Raymond James. Please go ahead..

Hi, good morning..

Good morning..

Just thinking about alternative financing for CrossAmerica, just given the lower unit price and the increase in cost of equity capital, aside from sponsor financing are there other avenues that would make sense to consider financing whether it’d be convertible debt, deferred equity just to help kind of the accretion in the unitholders? And obviously, the last deal was highly accretive, but just trying to get your thoughts there..

Yes, Ben. This is Clay. We’ve recognized that given the current state of the industry and the MLP market space that the yield has drifted up on CST’s units, which has increased its cost of capital, and we believe there are other alternatives, which we’re evaluating.

We’re not ready to disclose those at this time, but I think we like everybody to know that we are evaluating other sources of capital and other capital structures that have a lower cost of capital that will enable us to continue to do dropdown transactions from CST – so, and be beneficial to both parties.

So nothing that I can kind of give you anything definitive right now, but we’ve recognized that, Ben, and we’re evaluating those..

Can you remind us what the restrictions are on the CST’s ability to take equity with CrossAmerica?.

Yes. And it’s – under the indenture, we are required to take at least 75% in cash. The first two dropdowns that we did are more heavily weighted towards units in terms of the consideration we received.

There was a one-time basket, if you will, that’s what they call it inside the indenture that, for a one-time over the life of the indenture we can accept $75 million of non-cash consideration in lieu of cash, so we’d see kind of again, we used that up first, because we wanted to build up our equity in CrossAmerica, but that basket has already been used up.

It actually is a, what they call a builder basket, so it grew over time as CST has been making money. I think the total amount was $90 million, around $90 million in that basket, but we’ve used that up. And so, now all the future dropdowns will be more aligned with this set at a minimum of 75% cash..

That’s helpful. And just one last one from me. I commend you on the level of transparency in the financials.

But just looking at the third quarter guidance and trying to take it one step further, specifically with the gallons and the merchandise same-store sales, I’m not specifically looking for you to quantify the same-store sales within 100 basis points.

But I’m just trying to get kind of a general color of the outlook on the underlying legacy business regarding same-store sales?.

Yes. Good morning, Ben. This is Hal.

And I would say that if you look at our same-store sales that we’re reporting for this quarter, you can just imagine that they were hit by the wet and cold weather throughout all of Texas, and we’ve remained very enthusiastic on what we’ve seen since it’s warmed up to normal temperatures here in Texas, and that reflects our guidance for the next quarter..

Right. I mean, clearly, we’re guiding the kind of overall sales increase in the 11% to 14% range. So you can assume given that our legacy same-stores are a big piece of our network that those will go up as well. So it’s clearly not just our NTIs driving that number, it’s an overall improvement in sales in our stores across the network..

Great. That’s helpful.

And I’d just add that I’m glad to hear you guys are going to delay the release of the fuel margins for the final month of each quarter, you guys were taking all the fun out of forecasting?.

That was our aim..

Thank you, Ben..

Thanks..

Thank you. And our next question comes from Bonnie Herzog from Wells Fargo. Please go ahead..

Thank you. Good morning, everyone..

Good morning, Bonnie..

Good morning..

My first question I guess is on your acquisition pipeline and the sense of urgency you may or may not feel given, you’ve dropped a fair amount of the fuel gallons already.

So, I guess, part of the concern is that you guys have dropped fuel, then there is a negative impact on your earnings and what will eventually be offset or offset that implies faster growth is acquisitions and/or new build.

So, I guess, I’m trying to get a sense from you of how you are prioritizing these initiatives? And as we look out over the next year, for instance, should we assume there would be more growth in your model to offset the lost fuel margin from the drop?.

Yes. Well, let me take a stab and then I’ll let Clay certainly pile on to that. But we’ve said, we’re looking for third-party acquisitions in that $150 million to $200 million range. We’ve already hit that number for this year at just around $150 million. We continue to have I think a robust pipeline of opportunities in the M&A front.

But we’re also being very careful about making sure it’s accretive to the partnership. And as we look at networks, we want to make sure that there’s a benefit to both CrossAmerica and CST, as we go forward. So, again, the benefit of coming into the sponsored MLP situation is, we can be choosy about things.

We do have a, I think, a long five-year plan from a dropdown standpoint. We’ve only dropped 12.5% of our fuel supply at this point in time..

17.5%..

17.5%. Sorry, 12.5% was this summer 17.5%. So there is still quite a long run way to go there. So it’s a balancing act and whether we have the ability to kind of fill in, in the pipeline if the M&A front is too expensive for our taste, or they are not the right assets that we are looking at to go back to the dropdowns and measure it out that way..

Yes. And, Bonnie, I would sort of as an overall comment, I think the level of the fuel supply drop, which was 17.5% for this year, I think, that’s a little higher than what we had anticipated.

And the reason why it’s the first – that first drop in January of 5%, what we were trying to do is, we wanted to give some – tip our hat or give some indication to the market of what the multiples would be paid on that, because if you took that asset drop, which was the fuel supply in January and then you combine that with the real estate metrics of the 7.5% lease rate for Nice N Easy and Landmark, it basically gave the investor all of the metrics that they really needed to do to calculate the multiples and the accretion for the next asset drop.

So we did – that’s what we are trying to do. And I do – we do recognize that sometimes the computation of the – computations of those accretions and what we are trying to do is a little difficult, as what we are doing is new. But that’s why we did that.

But I would say that, really, the last asset drop is more indicative of what we’re going to do in the future. And more specifically to your question on how we’re going to make up for the loss cash flow, we are using the partnerships capital to fund our NTIs.

And even though we took a disproportionate amount of partnership units in these first two drops, we’re now back to where we’re going to accept 75% cash. We’ve been able to fund like two-thirds of our NTI construction in the U.S. and we haven’t given guidance for 2016. But as you know, we’ve accelerated the construction of the NTIs.

We still have tremendous confidence in them. The historical NTIs after the ramp up period, excuse me, is very positive. It far exceeds our cost of capital and this is just – this is our long-term goal and our long-term strategy. It does take, because it takes a year to three years to ramp up, it takes a little time.

And so I think for the – the long-term investor in CST is going to see those benefits..

That’s really helpful. And I appreciate that color, because as you’d appreciate it, it’s hard to – in the near-term right now, as I mentioned with the negative impact on earnings, but yet you mentioned, Clay, I think you said $260 million of gain, of course, that’s not necessarily reflected in the P&L right now, so....

That’s right. And so that’s correct. And we’ve tried to give some guidance on that on adjusted – in the earnings release on adjusted EBITDA and adjusted earnings and adjusted net income, because when you look at this, typically an analyst would exclude gains on the sales of assets from EBITDA and from earnings, because they’re nonrecurring..

All right..

We give you those statistics because they are recurring here and they will be recurring over a long-term basis of five-plus years, and in the finance world, five years is an eternity. So these things are going to be recurring. We do think they will exceed over five years, and that’s why we’re giving you those metric.

They are non-GAAP and so they are not reflected in the income statement, but it is a tremendous boost to the CST earnings..

Okay, again, helpful. And then I just have one last question just in terms of fuel margins. There’s certainly been a lot of fear surrounding industry fuel margins. Yet your Q2 margins were actually pretty solid and then your Q3 guidance you’ve got continued improvement.

So could you guys talk a little bit about the industry headwinds you are seeing right now, and then maybe what you’ve seen in July so far for your business?.

Well, in a couple of weeks, we’ll be posting our July fuel margins, so we’ll get those out there pretty soon. I mean, certainly, we’re projecting kind of continued strength in our volumes, and I think we’re happy with how the third quarter started off, so….

And, Bonnie, I just can add that crude was right around beginning of July was, well, close to $59, and it’s like at $44 now, so....

Right..

As we said before, volatilities are high and we’ve certainly seen a volatile crude market..

Okay. Thanks, again, everyone..

Thanks, Bonnie..

Thank you. And our next question comes from Ben Bienvenu from Stephens. Please go ahead..

Yes. Thanks. Good morning..

Good morning, Ben..

So just looking at the most recent quarter, expenses were pretty nicely controlled, they are a little bit higher next quarter.

I’d be curious to know sort of where – if your outlook that you set out at the outset of the year is sort of consistent with how you expect operating expenses to grow, and it maybe both of these quarters are aberration and the normality is somewhere in the middle?.

Yes. I mean, we are guiding a little bit higher simply because our NTI builds are kind of our back-end loaded this year. And so we have to ramp up hiring for a lot of the stores that are going to be opening in that – early fourth quarter time period.

It’s really more of the hiring and kind of the expenses associated with opening up a number of new NTIs in the back-half of the year..

Okay. Fair enough. And maybe just circling back to fuel margins, obviously, short-term trends seem to be positive so far in the quarter.

But thinking longer-term, what is an appropriate long-term cents per gallon margin assumption that you guys use in your models internally that we should mirror? Is it in the $0.14 per gallon range? And in light of energy prices being a little bit lower, does that impact that consensus estimate that you would use in your internal models?.

So I think we’ve said many times in the past that we just use historical averages that get us three-year to five-year average that we built into our model. We would love to be able to tell you what the margins are going to be in the fourth quarter and next year, but we just can’t.

And so we know we are no smarter than the rest of the folks, so we really just see use this historical average built into our model. And when we have margins performance that exceeds that, we certainly appreciate that, as I think as do our shareholders..

Okay. Fair enough. And then one last one from me.

On the merchandise side of the business, I would be interested to hear maybe the environment around promotions that you’ve done in-store, how is that trending so far in the year? And how do you expect that to continue?.

Sure. I’ll let Hal to….

Sure, Ben. So I know you’ve heard us talking about our milk, bread, and egg strategy where we’re trying to capture the express lane supermarket customer and gain the knowledge and the advantage of information that we can give when a customer comes in our stores and make the market basket purchase in that regard.

We’ve gained a lot of learnings from that, and we continue to grow momentum by leading that strategy, particularly in Texas.

And so that is why, as Kim mentioned earlier today, that we’re expanding our grocery offering in the stores to include produce and small selection of meats and perishable groceries, because we are finding that that space is fitting well for us to whereas grocery stores get larger.

We fit well into that fast-filling grocery customers’ needs, as well as the fact that we are certainly the place of choice for immediately consumables in the hot Southwest U.S. for cold drinks and quick snacks.

So we are pleased with our customer count beginning to ramp up a bit, and sharing and adding to that increase in same-store sales, whereas maybe a year ago all of our inside sales were coming from the same customer base. Now, we’re getting an increased ring and an increased customer base.

So those strategies that we’ve been executing for the past year are really gaining momentum and paying off and we’re adding to them..

Great, fantastic.

One last one, just to circle back on the cents per gallon, could you – what is the three-year to five-year average if you have that offhand just so I know it?.

$0.13, $0.14 right, in the U.S.?.

Yes. Ben, this is Tony. I mean, I’d tell you the industry averages have been running $0.175 to $0.18 and throughout last year, right, which was somewhere around $0.24. So take that high out and unusual time..

Is that gross?.

That’s gross..

That’s gross..

Net of credit card fees. [Multiple Speakers].

$0.04 net..

Right..

Okay. Great. Thanks so much and best of luck going forward..

And again, Ben, that’s U.S. The Canada has traditionally been about $0.10 a gallon higher..

Sure. Perfect. Thank you so much..

Thanks, Ben..

Thank you. And our next question comes from Matthew Boss from JPMorgan. Please go ahead..

Hey, guys. This is Esteban on for Matt..

Good morning, Esteban..

Good morning. On tobacco, we’ve heard some competitors calling out moderating declines and improved margins here in the last several quarters.

Can you guys speak a little bit to what you’re seeing and as well as some color on some other merchandise categories and how margins have been trending there?.

Yes. So certainly in the cigarette category, I would agree with you that the unit decline had moderated a bit. And if some change in mix maybe a little bit more towards the premium size, but I would say that traditionally our business being where it is in the Southwest U.S.

has been premium focused anyway, and we have been able to take a little bit more on the margin and as costs increase than we have in the past two years. So our margin is eking up in that category. And in terms of other categories, we’re particularly bullish on packaged beverages for two reasons.

Number one, it seems as though the consumer, as you’ve been reading, as the consumer moved away from carbonated drinks, they move into more alternative drinks, still drinks, isotonic, energy drinks. The reason we like the space is for two reasons.

Number one, they bring a higher ring and a higher margin in those items, and we play particularly well in the private label sector of those categories, so we benefit from that as well. So our packaged beverage category is extremely hot right now and has been for the last several months.

I also would say that in the other tobacco category seems to be doing very well and that’s a combination of the fact that people looking for alternative tobacco use, as well as smokeless products. And then, of course, our food business is doing quite well, particularly, our dispensed beverage category where we put a lot of effort.

So those are the categories that are really helping us be positive about the future..

Great.

And then can you guys speak a little bit about your current legacy store fleet? And so, specifically, how comfortable you are with current levels? And on a go-forward basis, should we think about you continuing to maybe call the base a little bit, or do you think that you’re pretty comfortable with where you are now?.

Sure. Well, as last year, we did that kind of the 100 store rounding divestment programs, so that was a little heavier review and a deeper dive in that process. But as we said before, year-in, year-out, we’re always looking at the fleet and looking at who are the low performers, who are the high performers and calling the fleet.

I think you shouldn’t expect us to do quite such a big calling as we did last year, but it is part of our normal process every year, year-in year-out to look at our fleet and make sure we’ve got the top performers in the fleet..

Okay great. Thanks, Kim..

Thank you. And our next question comes from Bernie Colson from Oppenheimer. Please go ahead..

Good morning..

Good morning, Bernie..

Good morning. These are questions – so I cover CrossAmerica, so questions for Joe or Clay, and maybe if we could reference Slide 18 here, I was wondering, as far as I can tell there were about between the end of the second quarter 2014 and the beginning of the second quarter 2015, you’ve got about $240 million, $250 million of acquisitions done.

Is that about the right number?.

In PMI?.

Yes, including that for the full-year, I think that’s about right..

Okay. So the real question is what’s going on in terms of where that EBITDA is going? I mean, if you’re paying $250 million for assets and your quarterly EBITDA contribution is $2 million, there’s something happening there. And so, I’m wondering what that is.

Why isn’t EBITDA growing more than it is?.

Yesh. And I think this is the impact that was discussed in the last quarter, it was actually discussed in the fourth quarter. Price of crude falling from $100-ish a barrel down to half. The partnership makes a large portion of its margin from discounts it gets from suppliers of 1% to 1.25%.

And as the absolute price of crude oil falls, the absolute price of wholesale gasoline falls and that discount, which is that we take on the – on our purchases falls as well. So what’s happened is the absolute value of EBITDA fell just because of the price of crude oil.

Now, the crude oil has now – we’re not – clearly, you can’t – and that’s on an absolute basis. So crude oil will not fall another $50, where they will actually be paying people to take it, so it’s $47 right now.

So we anticipate that, that has tapered off and if anything if you believe we don’t – we’re not pundits to project the price of crude oil where if you believe that the price of crude oil will recover or recover modestly over time that will give us some benefit in the future. I think this also – that’s the reason.

And in spite of that headwind, which we’ve weathered that storm, we see that the distributable cash flow for the second quarter is over one times. And we’re still guiding 1.1 times in the long-term and that shows the power of the acquisitions and the power of the asset drop, because they are accretive.

And for the unitholder, that means that your distributions per unit do expect those to consistently and steadily increase, and we guided a 7% to 9% and we reiterated that. And that is the most, in my mind, as well as we got to keep the distribution coverage above 1, targeting above 1.1 times term, and we need to keep increasing the distributions.

The unit price of the partnership gets lumped in with the MLP space and there’s a lot of MLPs out there that are in the oil patch, that are struggling now from a distributable cash flow basis. Once the hedges run out, can you maintain that distribution? Those attributes are not the same for CrossAmerica.

So from a unitholder standpoint, all of the benefits of a strong, steady, distributable cash flow stream and distributions to the unitholder are still in place and the operating strategies of CrossAmerica have not changed in spite of or even in light of what’s happened in the crude market..

I guess, it’s – and so, if you say – if you made the acquisitions at 10 times EBITDA than maybe $24 million or $25 million of annual EBITDA, I mean, it’s just surprising to me that it’s so sensitive to the level of crude oil prices and so, that....

In our 10-Q we put the metric in there, for every $10 change in the per barrel crude price, it’s about a 5% impact to EBITDA for the partnership..

Okay, okay. That’s helpful. And then, I discussed earlier going forward that more of the consideration will be taken in cash, which means, obviously, there is going to have to be more equity issued at the CrossAmerica level and the yield there now is over 8%.

And so, just wondering if you can kind of comment on, is this a level where you kind of tread forward full speed with your plan, or do we need to kind of choke it back some and wait for the market to get better?.

Well, like I mentioned with Ben Brownlow earlier, we’re evaluating other capital structures, potentially that will help us in this headwind. But the dropdown transaction, I believe this is true, because we did sensitivity as with the current yield, it still would be accretive. And that’s accretive at the 25% IDR split.

So I don’t think it changes our plans. It may – it’s allowing that or it’s really – we would do this as a matter of course of business anywhere. We’re just going to evaluate alternative capital structures and what’s the best way to do this. But the dropdown transaction, they may not be as accretive at 7%.

I am just talking about the dropdown transaction. They may not be as accretive as the 7% that we did the last time. Maybe there’s moderate – they moderate down, but they’re still accretive. And that means, that we will be able to fund the distribution increase, a portion of the distribution increase with the asset drops.

Now combine that with a successful track record of acquisitions, and that’s a little more lumpy when we can get that, but we’ve been very successful in the past. In fact, we’ve guided $150 million to $200 million annually. We already blew that away in the first nine months.

So, we don’t think that that’s going to necessarily be an issue, but we’re not telling you that we’re going to do $250 million to $300 million a year, but we do $150 million to $200 million. I think that’s – those are some of the metrics that we’ve put in place to continue to reiterate our guidance.

At least for 2015, then we’ll update this as we get in 2016, other 7% to 9% distribution increase to the year..

Okay. And then, this is more of a comment than anything else.

But you’re – I guess maybe the only MLP that doesn’t provide the 2Q distribution until well after the conference call and earnings release and I am wondering whether it would make sense to give people a little bit more clarity on the 2Q distribution either ahead of or in line with the release of earnings?.

Well, the board makes the distribution. We make a recommendation to the board, but board turns the distribution amount. We do give guidance 7% to 9% distribution increase year-over-year, you can calculate that. I went to a state university, I calculate that.

So I think you get an indication of where we expect to be and we’re just giving you an indication that we are – we do anticipate having a distribution for the second quarter, the board just hasn’t met yet.

So instead of calling the board meeting and restructuring that, we’re going to do this as a normal course of business and give you more guidance in terms of our distribution increase that has ever been given before at CrossAmerica, and if you compare that to what other people who are doing, I think we’re right in line..

Okay. Thank you..

Thank you. And our next question comes from Damian Witkowski from Gabelli & Company. Please go ahead..

Hi. Good morning. Your NTI stores in the U.S. are doing very well, but the pace of growth, I mean, you only have six stores year-to-date.

Is there an updated guidance in terms of how many you expect to open this year? And then what the number should be going forward? And I know it’s back-half loaded, but is there any particular reason that this year is back half of the year?.

Sure. I’ll take a stab at it, and then I’ll let Steve Motz weigh in after that too. We’ve guided 35 to 40 in the U.S. As I mentioned in my remarks, we had a really wet May and June, and so that impacted some of the construction schedules.

And so what was already kind of weighted more second half of 2015 from a construction standpoint got pushed even a little bit more so. So we are still comfortable in that 35 to 40 range. There are going to be permit issues on specific sites that may get in the way of that, but I think we are comfortable with that range.

So 2015 was more back-half loaded than we would expect 2016 and go forward to be, in part because it takes about a year to get the property in place. And so when we first spun out just two years-ago, our construction pace pre-spin was much slower than it is today.

So that ramp-up really started when we started the spinout just two years ago, so that impact of kind of when the real estate got into our hands and the permitting process starting, et cetera, pushed the 2015 builds to be more second half of the year to begin with and then we had the rain on the top of that.

As we look forward to 2016, we have not yet given our guidance for NTIs for both Canada and the U.S. for 2016, but we will be doing that later this year, after we meet with the board and go through our strategic plan. But one of the things that we are certainly trying to work harder on is to have it be a little bit more ratable across the system.

As you can imagine, it’s not only pressure on our construction team, but on our operations team to hire up and open up that many stores in a short period of time. It’s certainly strength that I think with enough planning in 2016 we’re going to be able to spread it out a little bit more, so we can be more ratable in our opening across 2016.

Steve?.

I think you covered them all..

Okay..

All right. That’s good. Thank you. And then....

Thanks, Damian..

Thanks, Damian..

One more question on share buybacks. You bought some shares back during the quarter which is great to see.

But are there any – is there anything that prohibits you from getting more aggressive especially at these levels? Is it cash strapped in Canada? Is it cash that you don’t want to take – raise the revolver or – and, more importantly, I mean, how do you look at buying back your own shares at these levels versus making acquisitions?.

Well, I’ll again take a stab, I’ll have Clay kind of pile on there as well. We still have got about $120 million left on our program that got approved last fall from the board. The last few weeks has really the stock market has had more of a slide.

We’ve been in our quiet period leading up to our earnings, so we haven’t been able to participate in the last few weeks, as a result of that. But I would anticipate we get back into the program here, particularly at these levels. But we are measuring cash versus our NTI construction schedule on those sorts of things..

But nothing prohibit us from – I mean, we have plenty of capacity of revolver capacity. We have a plenty of cash on our balance sheet. We’re evaluating – we have cash in Canada, evaluating all of our opportunities up in Canada, but I don’t see there to be any, certainly to complete the program to be there any....

Impediments..

Any impediments or any hurdles..

Thanks. And then just last one if I can. Regionally, any discernible differences in the U.S.

especially in terms of Texas versus other regions?.

Well, we certainly had a lot of rain in Texas in the second quarter, and we’ve commented on that. The West Coast has had some supply challenges, but that’s also we’ve got a good presence there already.

So it’s one of those things on the West Coast when you’re – particularly when you’re in a branded supply market, you do better than the folks who don’t have – who are buying on the spot market on the West Coast.

And so I think one of the – you can see through our results in the second quarter and our guidance for the third quarter again reflects the benefit of our geographic diversity. With the Canada devaluation, our reported numbers are impacted there. We have presence across the U.S. and in the Canada.

And so when we have rain in Texas, we may have sunshine in Colorado and that’s the benefit of our geographic diversity..

Okay. Thanks, and congratulations on a nice quarter..

Thank you..

Thank you. And our next question comes from Jay Dobson from Wunderlich Securities. Please go ahead..

Hey, good morning. I was hoping you could go back to the M&A topic and understanding, Clay, you mentioned some alternatives and you obviously look at this holistically from a CST and CrossAmerica perspective.

But just what you’re sort of seeing sort of instantly in the M&A market and have prices moderated? And I guess, specifically where I’m going is, if you used the CrossAmerica cost of equity as it currently stands.

Are you seeing acquisitions that would be accretive assuming you had to issue units?.

Yes. Jay, I think we are. I think that the acquisition pipeline has not necessarily slowed down. We’re acquiring businesses from typically we self call them, mom and pop, even although the size of these things, don’t lend itself to be like mom and pop.

But because they are family run or they’re private businesses, they tend to get – it’s a personal decision, and so the personal decision is going to drag out. So the timing tends to be a little lumpy because they constantly debate internally what the price is, et cetera.

But I still think given even where we’re at with our equity position that I think that there are still – there are accretive transactions out there and I would note that we have about after the equity offering that we did and we needed to do the equity offering to do the asset drop, which was accretive, and a lot of that – a portion of that equity related to getting the debt-to-equity structure correct from the Erickson acquisition that was done earlier.

So I know that has thrown some people off on how they calculated the accretion. So we gave you the actual accretion number that we have. But also disclosed, we have about $100 million available under our revolver now. So we’ve got dry powder that we can act very, very quickly, when I think an acquisition comes around.

We’ll likely first to do that under the revolver, and then when the revolver is used up, we’ll do the same thing, we’ll go onto the equity markets.

So obviously the next acquisition is going to be extremely accretive just if you look at the balance sheet and the income statement because they will probably all be done with debt, so it’s a 100% accretive, but that’s not how we evaluate it.

We evaluate that more on a leverage neutral basis, and I think when we’re looking at evaluating future acquisitions, I think the pipeline is still very good. It’s just the timing of it may stretch out just based on [indiscernible]..

Yes. And Jay, clearly as we’ve said before it’s a very fragmented marketplace. I think that we’ve got a lot of stuff in the pipeline that we’re evaluating. It is a nice position to be in and we got to be careful about what we look at and we get to be juicy about it.

But clearly I would love to have Joe and Jeremy weigh in on this from the CrossAmerica side too..

Yes. This is Jeremy, I can chime in. There definitely are a lot of deals out there to be had. We’re constantly in the marketplace looking. Maybe just a general comment about that the health of the partnership today that kind of ties in back to Bernie’s question earlier.

I mean, we are in tremendous shape, I mean, we talked about the drop in crude oil price and we’ve provided some additional disclosures in the queue today in terms of what that impact is, and Clay mentioned that as well.

But when you drop $40 to $50 per barrel, there was an impact to the overall oil partnership, but because of the way that we manage that, we looked at that and we looked at how that was impacting the business.

You look at the DTW pricing we have, you look at the retail pricing we have, we do benefit from a decline in the price at the time, but when you have these significant drops in the sector in crude oil prices, it does impact the discount. And as we mentioned the $10 per barrel change in crude price does have a $2.5 million impact.

So what we do to respond to that, you do what you expect any business would do is you look at how you’re running your business, you manage your expenses, and you benefit from having a sponsor relationship with CST and you manage the drops accordingly. To ensure that we continue to get the 7% to 9% distribution growth Clay was mentioned earlier.

So I think right now we’ve weathered kind of the storm in that regard and we’re doing extremely well, we’re positioned very, very well. We have our balance sheet in check and we are actively looking at deals and very excited about where we’re going in the future..

No. That’s great and I appreciate the insight. And, Clay, to follow-up on the earlier question.

When might you have some sort of, something to say about the sort of alternatives you’re looking at from a cost of capital perspective?.

Well, some we work on all the time and I’ll tell you that, as soon as it becomes concrete and we know we have to do, we’ll announce it – if there is anything to announce, but we do look at these things absolutely all the time.

And we are not sitting back on the sidelines and we see the same things that you see in terms of the yield creeping up especially this current MLP market. And it does raise the cost of capital. But I did want to reiterate that we are not like – and this was kind of mentioned by Bernie.

Yes, we don’t announce the distribution early like a lot of MLPs, which is like a lot of MLPs. We’re not tied to the oil markets directly or the natural gas liquids market and we don’t have hedging transactions. A lot of our cash flow with the partnership is relatively stable.

And we’re one of the few MLPs out there that are actually guiding fairly robust distribution increases, not decreases and flat, but increases, and so these are things to consider. We get lumped in with a lot of MLPs, but our business strategy in light of agreed EBITDA has – our base EBITDA went down because there is a precipitous drop in crude oil.

I believe we weathered that storm. I believe we’re back above 1.0 coverage, which is fantastic. And that allows us to increase our distributions per unit and that as a unitholder, and I recognize this, that is the primary reason for investing in MLP and that does differentiate ourselves from the rest of the MLPs out there..

Yes. No, definitely appreciate that, and I think that’s a great point. Two other last quick questions. First, on liquidity from CrossAmerica, I didn’t understand why the covenant was added that you have to have at least $20 million of borrowing. I don’t think you would actually run it that tight, but I noticed that was disclosed.

Give me a little insight there?.

Well, the reason was well, at the end of the first quarter, we had $26 million available under the revolver, but if people are asking, well, so you can make another acquisition for $20 million and that’s not really true because we have to keep $20 million for working capital purposes. So, we just added that to kind of clear up that confusion..

Perfect. No, that’s great.

And then lastly, just on fuel sale trends, what you’re seeing sort of, and again, sort of in the instant almost July period, are we seeing in the low gasoline prices at the retail level, increases in fuel sales, and again sort of on a same-store sale, I’m trying to get to a actual consumer activity or reaction point of view?.

Sure. Well, for second quarter, our same-store fuel volumes were flat, which is an improvement I think from....

From the CST..

For CST, right. And then overall, our CST fuel guidance per store per day is up quite a bit versus last year. And just like with our merchandise sales, given the strength of our legacy stores in our network, you can assume that our same-store sales will also be going up from the fuel volume standpoint..

That’s great. Thank you so much..

Operator, we got time for one more question..

And our last question comes from David Hartley from Credit Suisse. Please go ahead..

Hi. Thank you. Good morning. Just a follow-up on the fuel volumes. One of your competitors recently had a 5% lift in their same-store sales or same-store fuel volumes, and I appreciate that yours have improved year-over-year.

But just wondering, with such a drop in the gasoline price out there, why you haven’t seen kind of a better reaction by the consumer at your pumps in buying fuel?.

Well, again, I’ll point the finger at Tony here and let him add on to it. But, when you look at our guidance for the third quarter, we’re already selling a lot of fuel at our stores, so we’re guiding $52.50 on the lower side of gallons per store per day, which is 7% to 9% up from what we did just last year.

So, our stores already have I think higher than industry average fuel volumes per store and clearly our NTIs as we add more of those to the pile, they are about double our average fuels volume at those stores given their size and availability. Tony, I don’t know if you want to add on to that..

Yes. Just to add that we had a very good trend going in the quarter. I thought we were going to be able to show a positive number and we got hit with the weather in May that really hurt us. June was positive, it was up overall and that was very good in trends and I think we’re still on that track right now just going forward.

So, we are seeing a much improved picture going forward and in conjunction with what Kim said, just used those averages on our guidance that might give you some indication of where we’re going. But we think it’s in the right direction..

We like sunny weather and dry weather..

Got it.

Of that 7%, 9% that you referenced there, Kim, how much of that is related to acquisitions in NTIs, if you could break that out?.

We haven’t broken that out..

Yes, we haven’t..

Okay. Just let me ask you about acquisitions. It looks like you’re doing a lot of evaluating of your cash situation and how you want to deploy capital. Is some of the discussion consideration given some other assets are available, particularly I think about the SO assets in Canada.

And could you give us an idea of the timeframe for when those assets are expected to be sold in the auctions?.

Yes. We really can’t speak to any specific acquisitions other than one that we might be – we already announced. But, as I kind of said, and several of us said, we – I like our pipeline of acquisition opportunities both in the U.S. and Canada.

Our team is really focused on finding the right assets that fit with our network and then also benefit the CrossAmerica unitholders really building on the synergies between the two companies. And so, we’re going to continue to look at it.

Timing is, when you are the buyer, you have to be dependent on the seller on their timing, so we’re certainly working and keeping active on top of the opportunities that are out there..

Okay. And final question just with regard to acquisitions in the level of activity you have during any given year. How tight are you to, I guess, cap CrossAmerica’s plans for acquisitions? Are you restricted in any way to kind of want to work with them in the U.S.

on all acquisitions, how do you think about that going forward?.

Yes. In terms of, obviously, we were working on the U.S. acquisitions together and it is certainly in everyone’s best interest both on the CrossAmerica side and the CST side as we look at acquisitions in the U.S. in particular to really work with the financial structure on the CrossAmerica side.

In Canada, there is a little bit different story just in terms of how those fit into an MLP structure, and we have plenty of opportunities in the U.S. already to keep the MLP growing as well. But clearly, we look at particularly U.S. acquisition opportunities with both the lens of CrossAmerica and CST as we evaluate them..

Okay. And then let me sneak in one more actually. Just on the gasoline margins, you talked about $0.13, $0.14 net looking back.

I mean, at the current price of oil, I mean, $0.13, $0.14 may not be appropriate looking forward if that we’re sustained here, would you agree? And do you not think about or reconsider your budgets in light of that potential reality?.

Yes. As I said earlier to the earlier question, we do not put into our models future expectations on fuel margins. We just – they’re so volatile that we are just not smart enough to know what they’re going to be.

And so, from a budgeting standpoint going on historical numbers that are there, obviously, fourth quarter 2014 was a great fourth quarter from a fuel margin standpoint. I don’t think any of us expect that to be recurring. If it happens again, we’ll be thrilled, but we do budget based on our historical averages that are there..

Yes. Then I would also say that, I think, if I heard your question correctly, let’s assume the three to five year average is $0.14 and now that you’re in a, let’s say $50 crude oil market would that also be decreased. And the cents per gallon we received is generally not attributable to the absolute price of gasoline.

If that’s a spread, it’s really the reason why the margin goes up or down as the volatility of crude oil and how it moves in the marketplace. So if the question is, can you make $0.14 a gallon at $50 crude oil? The answer is yes..

Okay. Thanks..

Okay. I was going to turn it over to Kim before we close out, she has some closing comments..

Great. Well, thank you, Randy. And, as we said earlier, we feel very good about our business moving into the third quarter. And the crude and energy markets have cast an increasingly larger shadow over the stock market. And while we do so, a lot of transportation fuel every day, we are really much more than a fuel and commodity business.

In fact, fuel gross profit represented only about 42% of CST’s overall gross profits for the second quarter. And what we and others from the convenience industry sell, quite simply is time and convenience and our customers need to buy time and buy convenience really regardless of whether the energy market is up or the energy market is down.

So we continue to focus our efforts on refining our merchandise offering and our overall customer experience across our network in the U.S. and Canada to meet the needs of our loyal corner store customers every day.

And as reflected in our merchandise sales guidance for the third quarter, we do anticipate continued strength in our non-fuel retail sales in the months to come. I mean, moreover, it’s demonstrated by the recently completed dropdown transactions.

I think there are significant opportunities to continue to build on the partnership between CrossAmerica and CST. And for these reasons and more, I do believe that the recent stock market performance for both companies does not adequately reflect either company’s potential for long-term shareholder and unitholder value.

So, again, we thank everyone for their time and their interest and their questions this morning, and look forward to speaking to you again after the third quarter..

Okay. That completes today’s conference call. We appreciate each of you joining us today..

And thank you ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect..