• Retail Segment Gross Profit: Increased 24% year-over-year.
• Retail Segment Operating Income: Increased 19% year-over-year.
• Motor Fuel Gross Profit: Increased 26% year-over-year.
• Merchandise Gross Profit: Increased 20% year-over-year to $30.5 million.
• Retail Fuel Margin: Increased 9% year-over-year to $0.406 per gallon.
• Net Income: $10.7 million, down from $12.3 million year-over-year.
• Adjusted EBITDA: $43.9 million, a slight decrease of 1% year-over-year.
• Distributable Cash Flow: $27.1 million, down from $31.4 million year-over-year.
• Distribution Coverage: 1.36 times for the quarter, down from 1.57 times year-over-year.
• Operating Expenses: Increased $10.2 million year-over-year.
• Wholesale Segment Gross Profit: Decreased 16% to $27.6 million.
• Wholesale Motor Fuel Gross Profit: Decreased 10% to $16.9 million.
• Wholesale Volume: 186.9 million gallons, a decline of 14% year-over-year.
• Company Operated Site Count: Increased by 79 sites year-over-year.
• Commission Agent Site Count: Increased by 36 sites year-over-year.
• Total Retail Site Count: Increased by 115 sites year-over-year.
• Capital Expenditures: $7.7 million, with $5.1 million for growth-related expenditures.
• Credit Facility Balance: $772.4 million as of September 30, 2024.
• Cash Interest Expense: Increased from $10.1 million to $13.7 million year-over-year.

• Warning! GuruFocus has detected 6 Warning Sign with CAPL.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CrossAmerica Partners LP (NYSE:CAPL) achieved a 24% increase in gross profit and a 19% increase in operating income for the retail segment compared to the prior year.
• The company reported a 26% increase in motor fuel gross profit and a 20% increase in merchandise gross profit for the quarter.
• Retail fuel margins improved significantly, with a 9% year-over-year increase, reaching $0.406 per gallon.
• The company successfully converted sites from the wholesale segment to the retail segment, enhancing retail fuel margins and overall retail business exposure.
• CAPL's retail segment outperformed the national average in same-store retail volume and inside store sales, despite a challenging industry environment.

Negative Points

• Net income decreased to $10.7 million for the third quarter of 2024, down from $12.3 million in the third quarter of 2023.
• Adjusted EBITDA slightly decreased by 1% compared to the previous year, reflecting challenges in maintaining growth.
• Distributable cash flow declined to $27.1 million from $31.4 million year-over-year, primarily due to increased interest expenses and higher sustaining capital spending.
• Wholesale segment gross profit declined by 16% due to a decrease in fuel volume, despite an increase in margin per gallon.
• Operating expenses increased by $10.2 million, driven by the conversion of sites from the wholesale to the retail segment, leading to higher costs in the retail segment.

Q & A Highlights

Q: Can you provide an overview of CrossAmerica's operational performance for the third quarter of 2024? A: Charles Nifong, CEO, highlighted a 24% increase in gross profit and a 19% increase in operating income for the retail segment, driven by site conversions and strong same-store sales. Despite a soft industry environment, the retail segment benefited from strong fuel margins and outperformed the market in gallons and store sales.

Q: How did the retail fuel margins perform in the third quarter of 2024? A: The retail fuel margin increased by 9% year-over-year, reaching $0.406 per gallon, the highest for the year. This was aided by a declining crude oil price trend, which typically benefits retail fuel margins.

Q: What were the key drivers behind the wholesale segment's performance? A: The wholesale segment saw a 16% decline in gross profit due to a decrease in fuel volume, partially offset by an increase in margin per gallon. The primary factor was the conversion of certain dealer sites to retail operations, impacting the wholesale volume.

Q: Can you elaborate on the financial results for the third quarter of 2024? A: Maura Topper, CFO, reported a net income of $10.7 million, with adjusted EBITDA slightly decreasing by 1% to $43.9 million. Distributable cash flow declined due to increased interest expenses and higher sustaining capital spending.

Q: How did the company manage its expenses and capital expenditures during the quarter? A: Operating expenses increased due to site conversions, with a focus on managing store labor costs, which decreased by 1% year-over-year. Capital expenditures totaled $7.7 million, with investments in site enhancements and food offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.