CrossAmerica Partners(CAPL) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Unaudited consolidated financial statements show increased net income from asset dispositions, with total assets decreasing to $1.03 billion Consolidated Financial Statements Consolidated statements show total assets decreased to $1.03 billion, net income reached $18.1 million for six months, driven by asset gains Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 9,717 | 3,381 | | Total current assets | 125,319 | 118,830 | | Property and equipment, net | 586,579 | 656,300 | | Total assets | 1,028,470 | 1,114,725 | | Total current liabilities | 162,131 | 162,846 | | Debt and finance lease obligations, less current portion | 722,694 | 763,932 | | Total liabilities | 1,082,620 | 1,139,508 | | Total equity | (84,488) | (53,776) | Consolidated Statement of Operations Highlights (Unaudited) | Income Statement Item | Three Months Ended June 30, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Operating revenues | 961,925 | 1,133,355 | 1,824,400 | 2,074,903 | | Gross profit | 100,992 | 104,762 | 190,806 | 186,110 | | Operating income | 41,497 | 28,177 | 43,498 | 15,132 | | Net income (loss) | 25,168 | 12,424 | 18,053 | (5,116) | | Basic EPS | $0.64 | $0.31 | $0.44 | $(0.17) | Consolidated Statement of Cash Flows Highlights (Unaudited) | Cash Flow Item | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 37,697 | 34,723 | | Net cash provided by (used in) investing activities | 50,871 | (26,114) | | Net cash used in financing activities | (82,232) | (8,109) | | Net increase in cash and cash equivalents | 6,336 | 500 | Condensed Notes to Consolidated Financial Statements Notes detail business activities, Applegreen Acquisition, real estate portfolio management, debt structure, and segment performance - The Partnership's business consists of wholesale motor fuel distribution, owning/leasing retail sites, retail sale of motor fuels, and operating convenience stores[29] - In early 2024, the company acquired assets from Applegreen by terminating leases at 59 locations for $16.9 million, converting them from lessee dealer sites to company-operated sites, with total cash paid in the first half of 2024 being $25.5 million, including inventory[32][33] - As part of its real estate optimization strategy, the company sold 67 sites for $72.6 million in proceeds during the first six months of 2025, resulting in a net gain of $35.2 million[34] - As of June 30, 2025, the company had $727.0 million outstanding under its Credit Facility and $193.6 million in availability, with an effective interest rate of 6.1%[40][41][43] - The Partnership operates through two reportable segments: Wholesale (distribution to lessee and independent dealers) and Retail (sales at commission agent and company-operated sites)[84][85] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 revenue decrease from lower fuel prices, operating income increase from asset sales, and ongoing portfolio optimization Significant Factors Affecting Profitability Profitability is influenced by volatile fuel prices, seasonality, inflation, and increased interest expenses due to maturing swap contracts - Crude oil price volatility directly impacts revenues and cost of sales, and while the company attempts to pass price changes to retail customers, market conditions can delay this, affecting gross profit[106][108] - Sales volumes are seasonal, historically peaking in the second and third quarters (summer months) and being lowest in the first and fourth quarters (winter months)[110] - Three favorable interest rate swap contracts matured on April 1, 2024, which is expected to increase interest expense going forward[112] Results of Operations Q2 2025 operating revenues decreased 15% to $961.9 million, while operating income increased 47% to $41.5 million, driven by asset gains - Q2 2025 vs. Q2 2024: Operating revenues decreased by $171 million (15%) mainly due to a 13% decrease in the average fuel selling price, while operating income increased by $13 million (47%) primarily due to a $29.7 million net gain on dispositions from the real estate rationalization effort[116][122] - 6M 2025 vs. 6M 2024: Operating revenues decreased by $251 million (12%) due to lower fuel prices, and operating income increased by $28 million, driven by $35.2 million in net gains on dispositions, compared to a net loss on dispositions and lease terminations of $11.2 million in the prior year period[126][132][133] Non-GAAP Financial Measures Reconciliation | Measure ($ thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | 25,168 | 12,424 | 18,053 | (5,116) | | EBITDA | 64,967 | 46,781 | 93,402 | 52,706 | | Adjusted EBITDA | 37,083 | 42,570 | 61,352 | 66,138 | | Distributable Cash Flow | 22,396 | 26,051 | 31,491 | 37,782 | | Distribution Coverage Ratio | 1.12x | 1.30x | 0.79x | 0.95x | Segment Results Q2 2025 Retail segment operating income decreased 10% to $25.3 million, while Wholesale segment operating income fell 15% to $17.7 million Retail Segment Performance | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total gross profit ($ thousands) | 76,127 | 76,644 | 139,287 | 131,031 | | Operating income ($ thousands) | 25,299 | 28,013 | 36,755 | 39,269 | | Total retail sites (end of period) | 597 | 589 | 597 | 589 | | Margin per gallon | $0.370 | $0.373 | $0.355 | $0.343 | Wholesale Segment Performance | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total gross profit ($ thousands) | 24,865 | 28,118 | 51,519 | 55,079 | | Operating income ($ thousands) | 17,744 | 20,924 | 37,228 | 38,988 | | Total distribution sites (end of period) | 1,004 | 1,075 | 1,004 | 1,075 | | Margin per gallon | $0.085 | $0.087 | $0.090 | $0.083 | Liquidity and Capital Resources Liquidity is driven by cash from operations, asset sales, and credit facility, with $37.7 million net cash from operations for six months - For the six months ended June 30, 2025, the company received $73 million in proceeds from asset sales and incurred $22 million in capital expenditures[166] - During the first six months of 2025, the company made net repayments of $41 million on its Credit Facility and paid $40 million in distributions to unitholders[167] - Total capital expenditures for the first six months of 2025 were $22.0 million, including $5.3 million for sustaining capital and $16.7 million for growth projects, primarily investments in company-operated sites[172] - As of August 1, 2025, the company had $200.7 million of availability under its Credit Facility[170] Outlook The company plans continued property portfolio optimization through site conversions and divestitures to reduce debt, while evaluating opportunistic acquisitions - The company will continue to evaluate the 'highest and best use' for its properties, which may lead to site conversions between wholesale and retail segments[176] - Anticipates continuing to divest certain assets, often lower-performing ones, while aiming to maintain long-term fuel supply contracts, with proceeds from these sales expected to be used to pay down debt, reducing interest expense[176] - The company will continue to evaluate acquisitions on an opportunistic basis, dependent on market conditions and financing availability[175] Item 3. Quantitative and Qualitative Disclosures about Market Risk No significant changes to the company's market risk profile have occurred since December 31, 2024 - There have been no significant changes to the company's market risk since December 31, 2024[181] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[182] - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[183] PART II - OTHER INFORMATION Item 1. Legal Proceedings Information on legal proceedings is incorporated by reference from Note 10 of the financial statements in Part I - The company incorporates by reference the disclosures on legal proceedings from Note 10 of the financial statements[184] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K have occurred - No material changes in the risk factors disclosed in the Form 10-K have occurred during the period covered by this report[185] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL documents - The exhibits filed with this report include CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. §1350) and Inline XBRL documents[186]