CrossAmerica Partners(CAPL) - 2025 Q2 - Quarterly Results

CrossAmerica Partners LP Second Quarter 2025 Results The company reported higher net income from asset sales but saw a decline in core operational metrics like Adjusted EBITDA and Distributable Cash Flow Overview of Second Quarter 2025 Results Net income rose due to asset sales, while core operational performance declined, though debt reduction improved the company's leverage ratio Key Operating Metrics | Key Operating Metrics | Q2 2025 | Q2 2024 | | --- | --- | --- | | Net Income | $25.2M | $12.4M | | Adjusted EBITDA | $37.1M | $42.6M | | Distributable Cash Flow | $22.4M | $26.1M | | Distribution Coverage Ratio: Current Quarter | 1.12x | 1.30x | - The increase in Net Income was primarily driven by a $28.4 million net gain from asset sales and lease terminations, compared to a $5.6 million gain in the prior-year period[4][6] - Adjusted EBITDA declined by $5.5 million year-over-year due to lower fuel and rent gross profit and higher operating expenses[6] - The company reduced debt by more than $50 million through asset sales, improving the leverage ratio from 4.36x to 3.65x[3][5] - The Board of Directors declared a quarterly distribution of $0.5250 per limited partner unit, consistent with the previous quarter[5] Segment Performance The Retail segment's performance was stable while the Wholesale segment saw a significant decline in gross profit due to lower volumes and margins Retail Segment Retail gross profit remained stable as merchandise growth nearly offset a slight decline in fuel profit and higher operating expenses Retail Segment Metrics | Retail Segment Metrics | Q2 2025 | Q2 2024 | | --- | --- | --- | | Retail segment gross profit | $76.1M | $76.6M | | Retail segment motor fuel gallons distributed | 141.7M | 143.0M | | Same store merchandise sales excluding cigarettes* | $70.8M | $68.3M | | Merchandise gross profit* | $30.5M | $29.8M | | Operating Expenses | $50.8M | $48.6M | - Motor fuel gross profit declined by $0.5 million (1%) due to a 1% decrease in both volume and margin per gallon[8] - Merchandise gross profit increased by 2%, supported by a 4% rise in same-store merchandise sales (excluding cigarettes)[9] - Operating expenses increased by 5%, primarily due to a 5% increase in the average segment site count resulting from the conversion of lessee dealer sites[10] Wholesale Segment Wholesale gross profit fell 12% due to a significant drop in fuel volume and lower margins, influenced by site conversions to the retail segment Wholesale Segment Metrics | Wholesale Segment Metrics | Q2 2025 | Q2 2024 | | --- | --- | --- | | Wholesale segment gross profit | $24.9M | $28.1M | | Wholesale motor fuel gallons distributed | 179.2M | 192.1M | | Average wholesale gross margin per gallon | $0.085 | $0.087 | - The 12% decrease in segment gross profit was driven by declines in both motor fuel and rent gross profit, primarily due to the conversion of sites between segments[12] - A significant portion of the 7% decrease in wholesale volume is attributed to the conversion of wholesale locations to retail locations, with the associated volume now reported in the retail segment[12] Corporate Activities and Financial Position The company executed significant property sales, using the proceeds to reduce debt and substantially improve its leverage ratio Divestment Activity The company sold 60 properties for $64.0 million, generating a significant gain while retaining fuel supply relationships for most locations - Sold 60 properties for $64.0 million in proceeds during the three months ended June 30, 2025[13] - The sales resulted in a net gain of $29.7 million[13] - CrossAmerica maintained a fuel supply relationship with substantially all of the divested locations post-sale[13] Liquidity, Capital Resources, and Distributions Financial flexibility improved significantly through a $51 million debt reduction and a lower leverage ratio, while maintaining its quarterly distribution - The balance on the CAPL Credit Facility was paid down from $778.0 million to $727.0 million during the quarter[14] - Leverage, as defined in the credit facility, improved to 3.65 times as of June 30, 2025, compared to 4.36 times as of December 31, 2024[14] - A quarterly distribution of $0.5250 per limited partner unit for Q2 2025 was declared on July 23, 2025[15] Financial Statements Financial statements reflect the impact of divestments, showing reduced assets and liabilities, and a significant increase in net income Consolidated Balance Sheets Total assets and liabilities decreased due to property sales and subsequent debt repayment, reflecting a smaller but deleveraged balance sheet Balance Sheet Highlights (in thousands) | Balance Sheet Items | June 30, 2025 | December 31, 2024 | | --- | --- | --- | | Total assets | $1,028,470 | $1,114,725 | | Property and equipment, net | $586,579 | $656,300 | | Total liabilities | $1,082,620 | $1,139,508 | | Debt and finance lease obligations, less current portion | $722,694 | $763,932 | Consolidated Statements of Operations Net income more than doubled year-over-year, driven by a substantial gain on dispositions which offset lower operating revenues Income Statement Highlights (in thousands) | Income Statement Items (Q2) | 2025 | 2024 | | --- | --- | --- | | Operating revenues | $961,925 | $1,133,355 | | Gross profit | $100,992 | $104,762 | | Gain on dispositions, net | $28,365 | $5,578 | | Operating income | $41,497 | $28,177 | | Net income | $25,168 | $12,424 | | Basic Net earnings per common unit | $0.64 | $0.31 | Consolidated Statements of Cash Flows Cash from operations remained stable, while investing activities provided significant cash from asset sales used for debt repayment and distributions Cash Flow Highlights (in thousands) | Cash Flow Items (Six Months Ended June 30) | 2025 | 2024 | | --- | --- | --- | | 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 | Supplemental Information This section provides reconciliations for non-GAAP measures, a corporate overview, and cautionary notes on forward-looking statements Non-GAAP Financial Measures Reconciliations show a decline in Adjusted EBITDA and Distributable Cash Flow, resulting in a lower but still healthy distribution coverage ratio - The company uses non-GAAP measures including EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio to assess financial performance, service debt, and the ability to make distributions[33][34] Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow (in thousands) | Reconciliation (Q2) | 2025 | 2024 | | --- | --- | --- | | Net income (loss) | $25,168 | $12,424 | | EBITDA | $64,967 | $46,781 | | Adjusted EBITDA | $37,083 | $42,570 | | Distributable Cash Flow | $22,396 | $26,051 | | Distribution Coverage Ratio | 1.12x | 1.30x | Company Overview and Forward-Looking Statements CrossAmerica is a major US motor fuel distributor and convenience store operator, and this report contains forward-looking statements - CrossAmerica Partners is a leading wholesale distributor of motor fuels, distributing to approximately 1,600 locations and owning or leasing over 1,000 sites in 34 states[37] - The report includes a cautionary statement advising that forward-looking statements are not guarantees of future performance and actual results could differ materially[38]