Core Insights - CrossAmerica Partners LP reported solid growth in same-store retail gallons and sales for Q4 2024, although overall financial performance did not reach the record levels of the previous year [3][4] - The company made significant progress in converting sites to its retail class of trade and divesting select locations to strengthen its long-term financial position [3][4] - Full-year results were impacted by a challenging first quarter and inflationary pressures on core retail customers, but the company remains confident in its business strength and future growth strategy [3][4] Financial Performance - Q4 2024 net income was $16.9 million, slightly up from $16.7 million in Q4 2023; full-year net income decreased to $22.5 million from $42.6 million in 2023 [4][5] - Adjusted EBITDA for Q4 2024 was $35.5 million, down from $47.6 million in Q4 2023; full-year Adjusted EBITDA decreased to $145.5 million from $165.8 million [4][5] - Distributable Cash Flow for Q4 2024 was $21.1 million, compared to $35.8 million in Q4 2023; full-year Distributable Cash Flow fell to $86.0 million from $116.7 million [4][5] Retail Segment Highlights - Retail segment gross profit for Q4 2024 was $75.1 million, a 9% increase from $69.0 million in Q4 2023; full-year gross profit increased to $289.7 million from $253.5 million [8][10] - Retail segment motor fuel gallons distributed in Q4 2024 were 141.4 million, up from 124.5 million in Q4 2023; same-store motor fuel gallons distributed increased by 2% [8][9] - Merchandise gross profit in the retail segment rose by 27% in Q4 2024, driven by an increase in site count and merchandise sales [8][10] Wholesale Segment Highlights - Wholesale segment gross profit for Q4 2024 was $25.9 million, down 22% from $33.0 million in Q4 2023; full-year gross profit decreased to $108.6 million from $128.8 million [13][14] - The decline in wholesale gross profit was attributed to a decrease in motor fuel and rent gross profit due to site conversions and a net loss of independent dealer contracts [13][14] - Total average site count in the wholesale segment declined by 14% year-over-year, with a 24% decrease in lessee dealer locations [13][14] Divestment Activity - In Q4 2024, CrossAmerica sold eleven sites for $17.3 million, resulting in a net gain of $11.6 million; for the full year, thirty properties were sold for $36.3 million, yielding a net gain of $23.3 million [15] Liquidity and Capital Resources - As of December 31, 2024, CrossAmerica had $767.5 million outstanding under its credit facility, with approximately $68.9 million available for future borrowings [16][17] - Leverage was reported at 4.36 times as of December 31, 2024, compared to 4.21 times a year earlier [17] Distributions - The Board declared a quarterly distribution of $0.5250 per limited partner unit for Q4 2024, paid on February 13, 2025 [18]

Company Overview - CrossAmerica Partners LP is a leading wholesale distributor of motor fuels and convenience store operator, formed in 2012 [4] - The company distributes branded and unbranded petroleum for motor vehicles across approximately 1,600 locations and owns or leases around 1,100 sites [4] - CrossAmerica Partners operates in 34 states and has established relationships with major oil brands including ExxonMobil, BP, Shell, Marathon, Valero, and Phillips 66 [4] - It ranks as one of ExxonMobil's largest distributors by fuel volume in the United States and is in the top 10 for additional brands [4] Upcoming Earnings Announcement - CrossAmerica Partners will release its fourth quarter and full year 2024 earnings results after the market closes on February 26, 2025 [1] - A conference call will be hosted by management on February 27, 2025, at 9:00 a.m. Eastern Time [1] - The conference call can be accessed via phone numbers 800-717-1738 or 646-307-1865 with the passcode 43042 [2] Investor Relations - A live audio webcast of the conference call and related earnings materials will be available on the investor section of the CrossAmerica website on the same day [2] - An archive of the webcast will be accessible within 24 hours after the call for a period of sixty days [3]

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Financial Data and Key Metrics Changes - The company reported net income of $10.7 million for Q3 2024, down from $12.3 million in Q3 2023 [30] - Adjusted EBITDA was $43.9 million, a slight decrease of 1% from $44.2 million in Q3 2023 [30] - Distributable cash flow decreased to $27.1 million from $31.4 million year-over-year, primarily due to increased interest expense and higher sustaining capital spending [31] Business Line Data and Key Metrics Changes - Retail segment gross profit increased by 24% and operating income by 19% year-over-year, driven by site conversions and strong same-store performance [7] - Motor fuel gross profit rose 26%, while merchandise gross profit increased by 20% compared to Q3 2023 [9] - Wholesale segment gross profit declined 16% to $27.6 million, primarily due to a decrease in fuel volume [21] Market Data and Key Metrics Changes - National gasoline demand was down approximately 5% for the quarter, but the company's same-store retail volume outperformed this trend, growing by about 2% in company-operated stores [11] - Same-store volume in the wholesale segment was down approximately 2% year-over-year, outperforming the national demand decline [25] Company Strategy and Development Direction - The company is focused on converting sites from wholesale to retail to enhance exposure to retail fuel margins [20] - The strategy includes increasing the number of company-operated retail sites, which rose by 79 from the previous year [17] - The company aims to optimize performance at newly converted stores while managing operational costs effectively [41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a soft industry environment with decreased fuel demand but highlighted strong performance in retail margins [8] - The company remains focused on generating durable cash flows and maintaining a strong balance sheet despite ongoing demand challenges [41] Other Important Information - The company divested 9 properties for $7.2 million, resulting in a net gain of $5.3 million, indicating active management of its asset portfolio [27] - Operating expenses increased by $10.2 million year-over-year, driven by the conversion of sites from wholesale to retail [33] Q&A Session Summary - No questions were raised during the Q&A session, and the company encouraged follow-up inquiries if needed [42]

Retail Segment Performance - Retail segment gross profit increased by 24% to $83587 thousand[4] - Retail segment operating income increased by 19% to $31363 thousand[4] - Motor fuel gross profit in the retail segment increased by 26% to $45759 thousand[4] - Merchandise gross profit in the retail segment increased by 20% to $30494 thousand[4] - Retail margin per gallon increased by 9% to $0406[4] - Volume of gallons sold in the retail segment increased by 12% to 148380 thousand[4] Wholesale Segment Performance - Wholesale segment gross profit decreased by 16% to $27639 thousand[4] - Wholesale segment operating income decreased by 18% to $19097 thousand[4] - Motor fuel gross profit in the wholesale segment decreased by 10% to $16870 thousand[4] - Volume of gallons distributed in the wholesale segment decreased by 14% to 186946 thousand[4] Overall Financial Results - Net income decreased by 13% to $10708 thousand[6] - Adjusted EBITDA decreased by 1% to $43938 thousand[6] - Distributable cash flow decreased by 14% to $27140 thousand[6] - Capital expenditures for the third quarter of 2024 were $77 million[7] - Credit facility balance at 09/30/24 was $7724 million[7]

Financial Performance - Operating revenues for the three months ended September 30, 2024, were $1,079,163, a decrease of 10.8% compared to $1,210,023 for the same period in 2023[14] - Gross profit increased to $111,226 for the three months ended September 30, 2024, compared to $100,440 in the prior year, reflecting a 10.8% increase[14] - Operating income for the nine months ended September 30, 2024, was $42,228, down from $61,108 in the same period of 2023, representing a decline of 30.9%[14] - Net income available to limited partners for the three months ended September 30, 2024, was $10,126, a decrease of 13.2% from $11,663 in the prior year[14] - Basic earnings per common unit for the three months ended September 30, 2024, was $0.27, down from $0.31 in the same period of 2023, a decline of 12.9%[14] - Net income for the three months ended September 30, 2024, was $10,708 million, compared to $12,292 million for the same period in 2023, reflecting a decrease of approximately 12.9%[18] - Comprehensive income for the three months ended September 30, 2024, was $(1,560) million, compared to $14,144 million for the same period in 2023[18] - Revenues from TopStar for the three months ended September 30, 2024, were $10.9 million, down from $13.7 million in the same period of 2023[44] - The wholesale segment generated revenues of $471.2 million from fuel sales to external customers for the three months ended September 30, 2024, compared to $635.3 million in 2023, reflecting a decline of 25.7%[74] - The retail segment reported revenues of $607.9 million for the three months ended September 30, 2024, compared to $574.7 million in 2023, indicating an increase of 5.8%[74] Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2024, was $76,672, compared to $78,989 in the same period of 2023, a decrease of 2.6%[16] - Net cash used in investing activities for the nine months ended September 30, 2024, was $(26,562), an increase in cash outflow compared to $(16,535) in the prior year[16] - Net cash used in financing activities for the nine months ended September 30, 2024, was $(47,335), a decrease from $(72,718) in the same period of 2023, indicating improved cash management[16] - Cash and cash equivalents at the end of the period increased to $7,765 from $5,790 at the end of September 30, 2023, reflecting a positive cash flow trend[16] - The company reported a net change in operating assets and liabilities of $8.734 million for the nine months ended September 30, 2024, compared to a decrease of $5.926 million in the same period of 2023[16] Assets and Liabilities - As of September 30, 2024, total equity was $(59,041) million, a decrease from $(37,252) million as of June 30, 2024[18] - As of September 30, 2024, assets held for sale totaled $11.66 million, a significant increase from $400,000 on December 31, 2023[29] - Inventory increased to $60.97 million as of September 30, 2024, up from $52.34 million on December 31, 2023, primarily due to the Applegreen Acquisition[30] - Property and equipment, net decreased to $665.19 million as of September 30, 2024, from $705.22 million on December 31, 2023[31] - Long-term debt and finance lease obligations totaled $781.19 million as of September 30, 2024, compared to $767.06 million on December 31, 2023[34] - Environmental liabilities recorded on the balance sheet totaled $8.4 million and $7.4 million at September 30, 2024 and December 31, 2023, respectively[56] - Indemnification assets related to third-party escrow funds totaled $6.3 million and $5.3 million at September 30, 2024 and December 31, 2023, respectively[56] Acquisitions and Investments - The company acquired assets from Applegreen for total consideration of $16.9 million, transitioning 59 locations from lessee dealer sites to company-operated sites[27] - The company paid $25.5 million in cash for the Applegreen acquisition, which included lease termination payments and inventory purchases[28] - The company experienced a total loss on lease termination of $15.968 million related to the Applegreen acquisition[28] - The company recorded a non-cash write-off of deferred rent income of $1.5 million related to the Applegreen acquisition[27] Supplier and Operational Risks - For the nine months ended September 30, 2024, approximately 81% of motor fuel was purchased from four suppliers, indicating a concentration risk[25] - Approximately 48% of merchandise was purchased from one supplier for the nine months ended September 30, 2024, highlighting supplier dependency[26] Expenses and Distributions - Expenses under the Omnibus Agreement totaled $32.6 million and $28.6 million for the three months ended September 30, 2024 and 2023, respectively, and $93.5 million and $81.3 million for the nine months ended September 30, 2024 and 2023[45] - Common unit distributions to the Topper Group were $7.7 million for each of the three months ended September 30, 2024 and 2023, and $23.1 million for each of the nine months ended September 30, 2024 and 2023[46] - The company plans to maintain a cash distribution of $0.5250 per unit for the upcoming quarters, subject to Board discretion[67] Interest and Tax Expenses - The effective interest rate on the CAPL Credit Facility was 6.5% as of September 30, 2024[35] - Income tax expense for the three months ended September 30, 2024 and 2023 was $2.4 million and $1.5 million, respectively, and for the nine months was ($1.7) million and $2.6 million[65] Other Financial Metrics - The company incurred charges of $0.3 million and $0.2 million for rent expense for the three months ended September 30, 2024 and 2023, respectively[51] - Maintenance and environmental costs incurred with a related party were $0.7 million for each of the three months ended September 30, 2024 and 2023, and $2.4 million and $2.0 million for the nine months ended September 30, 2024 and 2023, respectively[48] - Merchandise costs for convenience store products amounted to $5.1 million and $5.5 million for the three months ended September 30, 2024 and 2023, and $14.5 million and $15.6 million for the nine months ended September 30, 2024 and 2023, respectively[49] - Accretion on preferred membership interests was $0.6 million for each of the three months ended September 30, 2024 and 2023, and $2.0 million and $1.8 million for the nine months ended September 30, 2024 and 2023, respectively[47]

Financial Performance - CrossAmerica reported Q3 2024 Net Income of $10.7 million, down from $12.3 million in Q3 2023, and Adjusted EBITDA of $43.9 million, slightly down from $44.2 million[1][4]. - Total operating revenues for the three months ended September 30, 2024, were $1,079,163, a decrease of 10.8% compared to $1,210,023 for the same period in 2023[16]. - Net income for the three months ended September 30, 2024, was $10,708, a decrease from $12,292 in the same period last year[16]. - Net income for the nine months ended September 30, 2024, was $5,592,000, a decrease from $25,849,000 in the same period of 2023[17]. - EBITDA for Q3 2024 increased to $48.0 million, up 10% from $43.4 million in Q3 2023[25]. - Distributable Cash Flow for Q3 2024 was $27.1 million, a decline of 13% compared to $31.4 million in Q3 2023[25]. Retail Segment Performance - Retail segment gross profit increased by 24% to $83.6 million in Q3 2024 compared to $67.6 million in Q3 2023, driven by a 26% increase in motor fuel gross profit[5][6]. - The retail segment distributed 148.4 million gallons of motor fuel in Q3 2024, a 12% increase from 132.2 million gallons in Q3 2023[6]. - Same store merchandise sales excluding cigarettes were relatively flat, with merchandise gross profit increasing by 20% to $30.5 million in Q3 2024[7]. - Total gross profit for the retail segment increased to $214,617,000 for the nine months ended September 30, 2024, compared to $184,462,000 in 2023, representing a growth of 16.3%[18]. - Operating income for the retail segment for the nine months ended September 30, 2024, was $70,631,000, up from $67,368,000 in 2023, indicating a year-over-year increase of 3.4%[18]. - The volume of gallons sold in the retail segment for the nine months ended September 30, 2024, was 413,113,000, compared to 382,049,000 in 2023, an increase of 8.1%[19]. - The average margin per gallon in the retail segment increased to $0.366 for the nine months ended September 30, 2024, compared to $0.354 in 2023, a rise of 3.4%[19]. Wholesale Segment Performance - Wholesale segment gross profit decreased by 16% to $27.6 million in Q3 2024, driven by a 14% decrease in wholesale volume distributed[9]. - Total gross profit for the wholesale segment decreased to $82,719,000 for the nine months ended September 30, 2024, down from $95,761,000 in 2023, reflecting a decline of 13.6%[20]. Expenses and Liabilities - Operating expenses for the retail segment increased by 27% to $52.2 million in Q3 2024, primarily due to the conversion of certain sites to company-operated[8]. - Current liabilities increased to $172,799 as of September 30, 2024, compared to $161,096 at December 31, 2023, mainly due to higher accounts payable[15]. - Total liabilities increased to $1,160,812 as of September 30, 2024, from $1,150,931 at December 31, 2023, reflecting higher debt obligations[15]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2024, was $76,672,000, slightly down from $78,989,000 in 2023[17]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $(26,562,000), compared to $(16,535,000) in 2023, indicating increased investment outflows[17]. Distribution and Coverage Ratios - The Board declared a quarterly distribution of $0.5250 per limited partner unit for Q3 2024, payable on November 13, 2024[12]. - Distribution Coverage Ratio for Q3 2024 was 1.36x, down from 1.57x in Q3 2023[25]. - The Distribution Coverage Ratio for the trailing twelve months ended September 30, 2024, was 1.26 times, down from 1.43 times for the comparable period in 2023[1][3]. Company Operations - The company operated 372 retail sites at the end of September 30, 2024, up from 293 sites in the same period of 2023, marking a growth of 27.0%[18]. - The company reported a total of 38,046,688 common units issued and outstanding as of September 30, 2024, compared to 37,983,154 units at December 31, 2023[15]. - CrossAmerica sold nine properties for $7.2 million in proceeds during Q3 2024, resulting in a net gain of $5.3 million[10]. - CrossAmerica recorded a $16.0 million loss on lease terminations during the nine months ended September 30, 2024[26]. - The company incurred $2.3 million in other losses on lease terminations and asset disposals during the nine months ended September 30, 2024[26]. - CrossAmerica's sustaining capital expenditures are aimed at maintaining long-term operating income and capacity[26]. - The company distributed fuel to approximately 1,600 locations and owns or leases around 1,100 sites across 34 states[27]. - CrossAmerica is one of ExxonMobil's largest distributors by fuel volume in the United States[27].

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Core Insights - The article emphasizes the importance of value investing, highlighting the strategy of identifying undervalued companies in the market [2] - CrossAmerica Partners (CAPL) is presented as a strong candidate for value investors, currently holding a Zacks Rank of 2 (Buy) and an A for Value [3][6] Valuation Metrics - CAPL has a Price-to-Sales (P/S) ratio of 0.18, significantly lower than the industry average of 0.51, indicating potential undervaluation [4] - The Price-to-Cash Flow (P/CF) ratio for CAPL is 7.48, which is attractive compared to the industry's average of 8.03; CAPL's P/CF has fluctuated between 5.25 and 8.51 over the past year [5] Investment Outlook - The combination of CAPL's strong earnings outlook and favorable valuation metrics suggests that the stock is likely undervalued at present, making it an impressive value stock [6]

Core Insights - The article emphasizes the importance of value investing as a successful strategy across various market conditions, focusing on key valuation metrics to identify undervalued stocks [2][3] Company Analysis - CrossAmerica Partners (CAPL) is highlighted as a stock to watch, currently holding a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is among the highest-quality value stocks available [3] - CAPL has a Price-to-Sales (P/S) ratio of 0.18, significantly lower than its industry's average P/S of 0.53, suggesting it may be undervalued [4] - The company also has a Price-to-Cash Flow (P/CF) ratio of 7.69, which is attractive compared to the industry's average P/CF of 8.08, indicating a solid cash outlook [5] - Over the past year, CAPL's P/CF has fluctuated between a high of 8.67 and a low of 5.32, with a median of 7.18, further supporting the notion of its current undervaluation [5][6] - Overall, the combination of CAPL's valuation metrics and strong earnings outlook positions it as a compelling value stock at this time [6]