Sunoco LP (SUN) CEO Joe Kim on Q4 2018 Results - Earnings Call Transcript

Feb. 21, 2019 4:34 PM ETSunoco LP (SUN)2 Comments
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Sunoco LP (NYSE:SUN) Q4 2018 Results Conference Call February 21, 2019 10:30 AM ET

Company Participants

Scott Grischow - VP, IR and Treasury

Joe Kim - President and CEO

Tom Miller - CFO

Karl Fails - COO

Conference Call Participants

Theresa Chen - Barclays

Ben Brownlow - Raymond James

Patrick Wang - Robert W. Baird

Shneur Gershuni - UBS

Jeremy Tonet - JP Morgan

Chris Sighinolfi - Jefferies

Spiro Dounis - Credit Suisse

Dennis Coleman - Bank of America Merrill Lynch

Operator

Greetings and welcome to Sunoco Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Scott Grischow, Vice President of Investor Relations and Treasury. Thank you, Mr. Grischow, you may begin.

Scott Grischow

Thank you.

Before we begin our prepared remarks, I have a few of the usual items to cover. A reminder that today’s call will contain forward-looking statements. These statements are based on management’s beliefs, expectations and assumptions. They may include comments regarding the Company’s objectives, targets, plans, strategies, costs and anticipated capital expenditures. They are subject to the risks and uncertainties that could cause the actual results to differ materially as described more fully in the Company’s filings with the SEC.

During today’s call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. Please refer to this quarter’s news release for a reconciliation of each financial measure. A reminder that information reported on this call speaks only to the Company’s view as of today, February 21, 2019. The time-sensitive information may no longer be accurate at the time of any replay. You will find information on the replay in this quarter’s earnings release.

On the call with me this morning are Joe Kim, Sunoco LP’s President and Chief Executive Officer; Tom Miller, Chief Financial Officer; Karl Fails, Chief Operations Officer and other members of the management team.

I would like to start with a brief review of some of the Partnership’s activities and accomplishments from the fourth quarter.

First, we completed two fuel distribution acquisitions with post synergy multiples in the mid-single digits. On October 16th, we purchased BRENCO Marketing Corporation's fuel distribution business. This business distributes approximately 95 million gallons annually across the wholesale account network in Central and East Texas.

Then, on December 18th, we closed on the acquisition of the fuel distribution business from Schmitt Sales, Inc., which distributes approximately 180 million gallons to a network of dealer and commission agent locations, primarily in the New York and Pennsylvania markets. Importantly, this acquisition complements the Superior Plus acquisition, which we completed earlier this year with the ability to leverage the terminals from that acquisition for incremental gallons of throughput.

In addition to the wholesale fuel distribution acquisitions, we also expanded our midstream business with the acquisition of two product terminals from American Midstream Partners, which closed on December 20th. One of the terminals is located northeast of Dallas Texas and the other is North Little Rock, Arkansas, and both have pipeline access. This acquisition is consistent with our strategy of adding fee-based logistics assets to provide further portfolio diversification and income stability.

More recently, on January 29th, we closed on the acquisition of five locations in New York State from Speedway LLC.

We funded all acquisitions with cash on hand and amounts available on under credit facility. We expect all of the acquisitions to be accretive to our unitholders in the first year. Finally, on January 18th, we announced the execution of a definitive asset purchase agreement with Attis Industries, Inc. for the sale of our ethanol processing plant in Fulton, New York. Total consideration for the divestiture is $20 million, and we will use the proceeds to repay amounts outstanding on our revolving credit facility.

I will now turn the call over to Tom who will cover this quarter's financial and operating results. Tom?

Tom Miller

Thanks, Scott, and good morning, everyone.

We delivered strong financial and operational results again in the fourth quarter. In 2018, we completed the transformation of Sunoco from a retail centric MLP to a partnership focused on fuel distribution and logistics.

For the quarter, the Partnership recorded a net loss of $72 million, which includes a $135 million non-cash inventory adjustment. As a reminder, this adjustment does not affect our adjusted EBITDA, DCF or cents per gallon. Adjusted EBITDA was a $180 million compared to $158 million a year ago, driving our leverage ratio, as defined by our credit agreement, down to 4.16. This was down from last year's fourth quarter result of 5.58.

Distributable cash flow, as adjusted, was $114 million. Our distribution coverage ratio for the quarter was 1.33 and 1.32 for the full year. In 2017, our coverage ratio was 1.15. We are delivering on the financial goals we outlined for you.

On January 25th, we declared an $0.8255 per unit distribution, the same as last quarter. We are confident in our ability to sustain this distribution. Our liquidity remains strong with approximately $800 million available on our revolving credit facility at year-end.

Looking at our operational performance. Total fuel volume in the fourth quarter was approximately 2 billion gallons, a slight increase from the third quarter and up 2.5% from a year ago, driven by the contribution from the 2018 acquisitions and other organic growth.

The fuel margin environment was particularly strong across all channels in the fourth quarter, largely resulting from declining crude prices. This produced a 12.4-cent per gallon margin for the quarter and 11.4 cents for the year. As we discussed, our strategy of managing multiple fuel distribution channels allows us to balance ratable income streams such as the 7-Eleven take-or-pay contract and rental income which channels that generate higher margins in certain environments such as the material and sustained drop in crude prices.

Turning to expenses. We were able to control expenses even with the five acquisitions we completed in 2018. G&A expense was $38 million in the fourth quarter and $141 million for the full year, in line with our $140 million annual guidance. Rent expense totaled $18 million for the quarter and $72 million for the year, just under the $75 million annual guidance.

During the fourth quarter, other operating expense was $93 million and $363 million for the year. When you remove the $25 million of other operating cost we incurred in the first and second quarters to run the West Texas and FTC retail sites prior to the conversion to the commission agent channel of trade, the full number was slightly higher than our 2018 annual run rate guidance. The timing of certain expenses within the operating category will result in quarterly fluctuations.

Moving to capital. We invested a total of $41 million in the fourth quarter, $26 million in growth and $15 million in maintenance CapEx. During 2018, we invested a total of $103 million, $72 million in growth and $31 million in maintenance capital.

In December, we provided guidance for 2019. I want to take a moment to review those items.

We expect total fuel volumes to be between 8 and 8.2 billion gallons with annual margins in the $0.095 to $0.105 per gallon range. As we stated in the past, fuel volume and margin should be evaluated collectively as total gross profit dollars, not individually. 2019 guidance reflects higher gross profit dollars from our fuel distribution business, driven by the impact of completed acquisitions in our profit optimization strategy.

We expect total operating expenses, including any incremental spend from acquisitions already completed to be approximately flat to our 2018 guidance of $540 million. As a reminder, total operating expenses include G&A, rent and other operating expenses. Our 2019 capital program will increase modestly from 2018 levels. We expect to spend $45 million on maintenance capital and $90 million on growth capital. Our total 2019 capital spend could exceed $90 million, if we find additional organic investment opportunities. As a reminder, our growth capital does not include third-party acquisitions.

Finally, we also provided you with an adjusted EBITDA range of $610 million to $650 million for 2019. That range includes all announced acquisitions. The anticipated divestiture of our ethanol plant that Scott discussed earlier does not impact this guidance range. We are confident that this guidance demonstrates our ability over the long-term to remain safely within our target leverage of 4.5 to 4.75 and maintain a coverage ratio of at or above 1.2.

I will now turn the call over to Joe for closing thoughts. Joe?

Joe Kim

Thanks, Tom. Good morning, everyone.

The fourth quarter capped a transformative year for Sunoco. We outlined a plan in late 2017, and we delivered on that plan in 2018. Now, it's time to execute and focus on this year. Our underlying business is strong, and we expect this to continue.

First quarter results are meeting our expectations and reinforce our guidance for 2019. Our growth pipeline remains robust. First, we have positioned ourselves for additional acquisition opportunities, but we will only execute on these opportunities if they meet all our financial criteria. We've also positioned ourselves for increased organic growth. Having a combination of organic and acquisition opportunities, increases our ability to grow in a consistent and balanced manner.

Let me close by stating that we have established a track record of delivering on our target. We remain confident that we will continue to deliver in 2019 and beyond.

Operator, that concludes our prepared remarks. You may open the line for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Theresa Chen with Barclays. Please proceed with your question.

Theresa Chen

Good morning. Thank you for taking my questions. First, just wanted to touch upon the margin optimization efforts you had previously laid out. Can you give us an update on how that's going, what inning we’re in, and what do you see from there going forward?

Karl Fails

Sure. Good morning, Theresa. This is Karl. As we’ve shared, our margin optimization effort really kicked off, I'd say mid last year, and we’ve been focusing on trying to go channel-by-channel and side-by-side. As we’ve shared we’re continuing to make progress, we’re partially through that process and we are pleased with the results that we’ve seen, our Q4 margin was strong and that was one of the factors.

Theresa Chen

Got it. And then, on the acquisition landscape, can you just give us some color on what you're seeing post having done four in 2018, but just what you’re seeing for this year, maybe 2020, maybe touching on the acquisitions by channel or type of assets?

Joe Kim

Sure. Hey, Theresa. It’s Joe. Good morning. I think, probably, the best way to start off is to talk about what our goal is. Our goal is to become a larger, more diversified and more stable income MLP. And the way that we can do that obviously is through M&A activity and organic growth. I think that two sectors that make the most sense for us is obviously the fuel distribution channel. We have incredible scale. And I think as we demonstrated last year, we bring material synergies and we can purchase fuel distribution assets on mid single-digit multiples and make it very accretive for us. But, just as importantly, we want to focus also on the more traditional, fee-based, midstream assets. I think, the two terminals that we acquired in December from American Midstream serves as a really good example. With all that said, I mentioned on our prepared remarks that we have a very robust pipeline. And what that does is puts us in position to capitalize on opportunities. But, we’ll be very selective. We will make sure it meets the criteria of financially fit, it also continues to improve our overall income portfolio. And the way that I would think about this is there is no certain number we’re trying to do in 2019. What we’ve done is we’ve created a pipeline, so we’re positioned to do as much as it makes sense for us to do.

Operator

Our next question comes from the line of Ben Brownlow with Raymond James. Please proceed with your question.

Ben Brownlow

On the Schmitt acquisition, you mentioned a mid-single-digit multiple. Is that -- I assume that’s post synergies. Can you just talk about kind of the ramp in synergies there?

Karl Fails

Sure. This is Karl. Yes, it looks like mid-single-digits, post synergy. And I'd say, this acquisition is similar in synergy ramp-up to most of our acquisitions where we target about half of those synergies by the end of year one and full run rate by the end of year two.

Ben Brownlow

And is that margin -- I know we shouldn’t deem specifically about the margin, but just directionally 180 million gallons, is that wholesale margin similar to the base business?

Karl Fails

Yes. We don’t -- it’s in the range, generally. We don't give specifics. Some of our different geographies and channels might be higher than our average range, some might be lower. What I’d say is our synergies come from two main areas, one of the big ones on fuel margin are being able to renegotiate purchase contracts and reduce the cost of goods sale there and expand the margin. And then there -- depending on the acquisition there are some expense savings that we received as well.

Ben Brownlow

And just one last one if I could. The other OpEx line item, I know you mentioned the timing of expenses, there is some variability around the quarters there, but anything specific that you could pull out that led the jump up quarter-over-quarter?

Tom Miller

The other operating expense, as you did point out is -- we would view it as one-time, and we’re looking at the 2019, guidance remaining where it is. The onetime, which were both tax related, one was the sales and use tax and the other was property tax adjustment.

Joe Kim

I think, the one thing I would add to that is that Tom mentioned in his prepared remarks that we’re -- even with the five acquisitions, we’re -- our guidance -- and we want to reinforce that our guidance that we provided back in December, when it comes -- when you look at OpEx, G&A and rent expenses, we’re keeping that flat with our 2018 guidance that we provided at the beginning of 2018.

Operator

Our next question comes from line of Patrick Wang with Robert W. Baird. Please proceed with your question.

Patrick Wang

Going back to that gross margin optimization program, can you discuss the impact of those gross margin optimization efforts in 4Q? You delivered both, very healthy volumes in what’s the normally seasonality lighter quarter, along with very strong margins. But, would it be fair to say that margins could have been even more robust had you traded the lower volumes or were the commodity dynamics just that strong during the quarter?

Karl Fails

Yes. Hi, Patrick. This is Karl. As you look at our gross profit, and there are a number of factors, the two biggest ones are obviously the margin we take and the volume. As we look at Q4, in general, the contributors to our higher than guidance range margin in that quarter were a few. First, as we've added on these particular acquisitions, they were higher than average, doesn't mean that every acquisition we do is going to be higher than average, some of them will reduce our average, some will add to it, the margin volume optimization that you talked about. But then, obviously, as in Q4, as you guys look at the market, we had the tailwind of falling prices, crude prices fell nearly $30 and RBOB futures fell almost $0.80 a gallon from the beginning of the quarter to the end of the quarter. We stated that in our new strategy, we’re not as exposed to those movements in commodity prices as we were when we were -- we had a large retail presence. But overall, it still was a contributor to our margin.

You look at the three clean quarters that we put up in 2018, Q2 you had upward movements in prices, Q3 was pretty flat now, now Q4 was a large down movement. And you saw us put strong numbers up in all three quarters. But obviously, Q4 was aided by that.

Joe Kim

Patrick, this is Joe. I have one additional comment to what Karl said. I think, a good way -- we get this question quite a bit. I think a good way to think about this is fourth quarter had some -- as Karl noted about RBOB drop and crude drop. That was some tailwind for us. And as Karl noted, second quarter of last year, we saw crude prices and RBOB steadily go up and we still true up a very good quarter in the second quarter. But, when it comes to the price -- volume optimization that we went through, I think a good way for you to think about this is, when we provided guidance in late 2017, as you noted in 2019 guidance, a year later, it went up about a penny. A portion of that, I think way to think about it is, minus any tailwinds or headwinds when it comes to our RBOB, we’re saying that through our price optimization along with acquisitions that we've added where the margins of the acquisition is higher than our base layer in combination has given us a higher CPG on a going forward guidance basis.

Patrick Wang

Got it. That makes a lot of sense. And then, just bigger picture, can you talk about your portfolio management process, as you consolidate the fragmented fuel sector? Do you have a formularized program in place for not only the growth side but also the portfolio improvement side for any assets that you deem maybe better off under another owner?

Karl Fails

This is Karl, again. I’d say, yes, we have a formal process that we’re always going to look at given site that we control, which channel is the best, and that’s an ongoing process. We go through that process, as we acquire things at times we've exited the retail channel but at times we’ve made acquisitions where they had retail properties with them. And then, we switch those over to one of our channels of wholesale business, the Speedway acquisition that we announced as an example of that. But, yes, we go through that process even in our base business on a regular basis.

Patrick Wang

Great. And then, lastly, just to clarify, the 2019 OpEx guidance, that’s inclusive of both announced M&A as well as incremental M&A, your normal cadence or would that -- or would the latter cause the OpEx to go higher?

Karl Fails

So, everything that’s been announced is included in our operating cost estimates. We obviously don't know what would be acquired in the future. So, therefore, that's not included.

Operator

Our next question comes from the line of Shneur Gershuni with UBS. Please proceed with your question.

Shneur Gershuni

I just wanted to go back to the margin optimization discussion that you had with several prior questioners. You sort of made the point about regardless of higher or lower gasoline prices throughout the quarter that overall your trend seems to be up in terms of guidance. How much further can you go on the optimization? Is it [indiscernible] to the entire footprint, is there a net level of optimization that you’re looking at more on volume side versus pricing side? Just kind of wondering if you can expand on it a little bit, how much you’re keeping back in terms of calling it a trend versus your guidance?

Karl Fails

Yes. This is Karl again. I would say that I would not expect a material upward trend going forward. As Joe mentioned, we factored in a lot of our acquisitions and our strategy around gross profit optimization into our guidance for 2019. So, I’d refer back we’re comfortable with both the EBITDA and the margin guidance we gave for 2019. At this point, remember, on the gross profit optimization, overall, that's trended our margin up in our -- and all things being equal, maybe the volume down. But, there is some pockets of our business where the opposite is true where the optimized gross profit, we might take less margin, we might take more volume. But, it’s more about the operational -- making that process consistent over time versus material upward trend on our margin.

Joe Kim

Shneur, the one other area that we do have some opportunities is on our base business, as Karl mentioned. There is -- I think, the team has done a really good job of optimizing and growing our gross profit. Where the opportunity lies for us is, we do an acquisition and we buy a set of assets. That’s where, as part of our synergy, as Karl talked about, renegotiating deals to get better cost of goods. Then, on the revenue side, we have that same opportunity that we applied to Sunoco over last year; we can apply that same profit optimization to our acquired assets.

Shneur Gershuni

And to clarify, are you using data analytics for optimization process.

Karl Fails

That’s correct.

Shneur Gershuni

And maybe just transitioning, you brought up synergies with acquisitions and so forth. I was just wondering if you can expand on the pipeline a little bit of where you see opportunity. And more importantly, where you expect to focus? Do you see more opportunity in smaller bite sized acquisitions, where the economic profit seems to be much -- much larger spread given where you trade versus what you pay versus larger packages where maybe that cost of capital advantage is a little bit smaller?

Joe Kim

Sure. This is Joe. I think, there is a couple of ways to look at it. First of all and I will reiterate what I said earlier. Our goal is to become a larger, more diversified MLP that has increasingly more stable income profile. With that said, whenever you talk about bite-sized acquisition, I think we demonstrated pretty well last year that we did five acquisitions in a post 7-Eleven environment. So, the pipeline is full, the opportunities are good, the financial attractiveness is high. But, we’re also balancing that with our overall goal for us to become a more diversified MLP. So, even though there might be X amount of ample deals on the fuel distribution side, we’re managing the overall portfolio. And I think that's where the American Midstream two terminal acquisition plays into that where it’s not a higher multiple but also helps the income portfolio. As far as larger deal, smaller deals, of the five acquisitions that we did last year, four of them were off market. This is through our relationships and us knocking on doors and establishing relationships. The fifth one, the American Midstream, we were in the process. We hit a limit, we stepped away from it; we saw an opportunity to come back in at the backside at a better value. So, we’ll participate on every public process, but a lot of the stuff that we’re working on is really more of one-on-one relationship type of deal.

Shneur Gershuni

In the knocking on doors approach, is that where you see the most depth in the pipeline right now?

Joe Kim

You broke up. One more time on that, as far as the knocking doors…

Shneur Gershuni

On the knocking on doors approach to acquisition, is that where you see the most depth in your pipeline right now.

Joe Kim

I would probably say so. Yes. There is -- as far as announced auction processes, I guess, over the last year, those have probably slowed down a little bit from our -- as far as the visibility that we had, but most of the pipeline we have are really non-auction process opportunities.

Operator

Our next question comes from the line of Jeremy Tonet with JP Morgan. Please proceed with your question.

Jeremy Tonet

Thanks for fitting me in here. I’ll keep it short. I just want to touch on the ethanol facility, the best share that you guys have done. And just wondering if there's kind of other smaller assets within your portfolio that could be divestiture candidates and could be recycled into businesses, kind of more core to what you’re looking to do?

Joe Kim

Jeremy, it’s Joe. First of all, our path is growth, not contracting. The ethanol plant was a one-off opportunity that we took advantage of. The ethanol plant didn’t meet two very important criteria, growth and stable income. It was by far our most, on the whole, spectrum of stability; that was the worst one we had. So, this is a one-off opportunity. We had an opportunity to divest a non-core asset and we took advantage of it.

Jeremy Tonet

Got you. So, it sounds like there isn’t anything else like that in your portfolio.

Joe Kim

Nothing we see in the foreseeable future.

Operator

Our next question comes from the line of Chris Sighinolfi with Jefferies. Please proceed with your question.

Chris Sighinolfi

Thanks a lot of the added color. Two cleanup questions, if I could. I appreciate the walk you provide from GAAP net income to adjusted EBITDA. I’m just curious, if I want to reflect the income statement as an adjusted income statement, just kind of two nitpicking questions about where someone line items exist. It looks like inventory adjustments you guys see, show up in the motor fuel gross profit. I wanted to confirm that. And then, second, where does the mark to market fluctuation reside, is that in operating cost -- other operating cost?

Scott Grischow

Chris, this is Scott. Yes. The lower cost to market or inventory adjustments do show up in fuel. And the mark to market adjustments, let me take that one offline with you. I need to make sure I’m 100% accurate on that. But, I will follow up with you after this call.

Chris Sighinolfi

Okay. And then, second, and Tom, maybe this is for you. Just curious, you’ve been active on the acquisition front, that's been funded with cash on hand and revolver borrowings, see about $700 million drawn on the 1.5 facility. Just curious, how we should think about how you think about terming that out, both time and nature of it? What are you comfortable sort of carrying drawn on that over time?

Tom Miller

I would think that once you get to halfway and you see that for a long period of time, you start looking for opportunities to take out a good portion of it. I won’t say all of it, but a good portion. So, it’s something we constantly monitor.

Chris Sighinolfi

Obviously, you’re closer to it than I am, but with the improvements you guys made in the business post the retail divestiture with the margin improvement and the margin pickup you getting from the acquisitions, just I guess, how do you think the credit market views on at this point, if you were to term out, let’s say 500 under 10 years, what sort of rate might we expect to see from you, if you did that today?

Tom Miller

So, we issued that ten-year last year at 5.875. And last I checked that bond at nine years now, was trading at 99. So, let’s just put it a little bit over 6%. I would hope that we would be able to be in that range if we chose to go out to a 10-year, we certainly have other holes in our maturity profile.

Operator

[Operator Instructions] Our next question comes from the line of Spiro Dounis with Credit Suisse. Please proceed with your question.

Spiro Dounis

Joe, you mentioned diversification a few times. Just maybe give us a sense of what else would be interesting to you outside of fuels distribution and terminals? I think, in the past it was suggested that maybe you could get into longer haul pipelines. Is that a strategic goal here too?

Joe Kim

I think on the overwriting strategy of more fee-based traditional midstream assets, pipelines obviously fit into that criterion. We just have to make sure it is something that fits into our overall portfolio and it’s not incredible one-off in some region that we have nothing else associated with it.

Spiro Dounis

That’s helpful. And then, maybe two on gasoline. So, I know you’re little more detached now from the retail side. But, could you just give us a sense of how you see overall gasoline demand shaping up so far this year? And I ask in the context of I guess, what we're seeing in weaker refining cracks. And then, second part is, do you see any risk or opportunities related to IMOs that relates to maybe that second derivative impact on gasoline supply later this year?

Karl Fails

Yes. This is Karl, I’ll hit the fuel demand first. If you look at 2018, despite the falling prices in Q4 for the full-year, gasoline retail prices were up about 11% over ‘17, and demand was still flat. If you look at diesel, diesel was -- it looks like it’s going to end the year up nearly 7% over ‘17. So, obviously, those numbers vary by geography and how that translates to various channels, can vary. But, overall, still a supportive environment in the United States.

Talking about IMO, we have diesel business. So, obviously, we care about how the impact of IMO to the diesel markets will follow through. From a market view, there is clearly -- will be increased demand for lower sulfur distillate fuels and less demand for higher sulfur fuel oils, but whether that's been fully priced into the markets or not, it depends on your perspective. The refiners are talking about how there is going to be upward movement on the cracks and then the ship owners and shippers are hoping that it’s already priced in. So, we’re monitoring those and seeing how that impacts. To your point on whether pushing refinery utilization higher and you have in excess of gasoline as a result of that, to the extent that happens, that definitely is supportive of our strategy and is one of the reasons we like our ratable, consistent short in the United States. So where there is excess gasoline, we benefit from that.

Operator

Our next question comes from the line of Dennis Coleman from Bank of America Merrill Lynch. Please proceed with your question.

Dennis Coleman

A lot of good color here on the M&A pipeline. I wonder if we could talk a little bit about CapEx, pretty good percentagewise increment on the growth CapEx budgets of $90 million that you gave. Any color you can give on sort of how that falls across the channels, is it pretty even or does it direct towards one channel or another?

Karl Fails

Yes. This is Karl, again. On the growth side, if you think about our -- the $90 million and what we call our organic growth, we've really spent time and effort -- I think Joe’s talked about in the past how we were focused primarily on pre-7-Eleven divestiture, our capital and a lot of our time on our company operated retail stores. And now over last year, we’ve built up this pipeline of being able to grow our wholesale businesses through the various channels. I don't know that it’s specific to one of our channels over another. So, most of that organic -- that $90 million of growth capital, I would say is focused on signing up new customers or investing in sites that we control or operate and growing that business.

Operator

There are no further questions in queue. I would like to hand the call back to Scott Grischow for closing remarks.

Scott Grischow

Well, thanks everyone for joining us on the call today. Please feel free to reach out to me with any follow-up questions. This concludes today's call.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.

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