Apro LLC

The stable outlook on Apro LLC reflects our expectation that it will generate steady cash flow, maintain adequate liquidity, and sustain S&P Global Ratings-adjusted leverage in the mid-6x area over the next 12 months. We could lower our rating on Apro if: Operating performance weakens, possibly because of heightened competition, sharply higher sustained fuel prices, or significant changes to its fuel consignment agreement. We believe this would likely cause it to sustain S&P Global Ratings-adjusted leverage of more than 7.5x and interest coverage of less than 1.5x. We could raise our rating on Apro if: It diversifies its sales mix to increase the contribution from its inside sales while expanding its operating scale and geographic footprint; and It pursues a

...Apro's (doing business as United Pacific) long-term fuel consignment agreement with Phillips 66 supports steady cash flow generation. We continue to view the company's long-term fuel supply agreement with Phillips 66 as unique for its industry. The agreement covers 80% of Apro's retail gallons sold and limits its exposure to fuel-price volatility, which leads us to apply a positive one-notch comparable rating analysis adjustment to our anchor. In 2020, the company's higher earnings from its renegotiated fuel consignment agreement and relatively strong cents per gallon (CPG) offset the negative effects of its lower fuel volumes sold due to the coronavirus pandemic-related decline in consumer driving habits. The company participates in the highly competitive and fragmented c-store industry and has a significant geographic concentration in Southern California. We believe Apro's product differentiation is limited because it mainly focuses on commoditized products that create low switching costs...

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