CrossAmerica Partners(US:CAPL)2026-02-25 21:42Financial Performance - In 2025, the total gallons of motor fuel distributed amounted to 1,231 million, a decrease from 1,299 million in 2024 and 1,350 million in 2023[23]. - Retail segment revenues from convenience merchandise sales reached $407 million in 2025, up from $390 million in 2024 and $316 million in 2023[23]. - Wholesale segment revenues were $1,568 million in 2025, down from $1,872 million in 2024 and $2,290 million in 2023[27]. - Operating income for the wholesale segment was $73 million in 2025, compared to $77 million in 2024 and $91 million in 2023[27]. - Rental income totaled $62.5 million in 2025, down from $71.2 million in 2024 and $82.3 million in 2023[25]. - In 2025, motor fuel revenues accounted for 87% of total revenues, with motor fuel gross profit representing 55% of total gross profit[68]. - The company’s gross profit is affected by wholesale motor fuel prices, with lower prices negatively impacting gross profit due to prompt payment discounts[208]. - Inflation has increased costs in goods sold and operating expenses, impacting overall financial performance[212]. Operational Metrics - The company operated 352 sites as of December 31, 2025, a decrease from 365 sites in 2024 and an increase from 296 sites in 2023[23]. - As of December 31, 2025, the company owned or leased a total of 973 sites, comprising 549 owned and 424 leased properties[193]. - The company experienced a net divestiture of 112 sites during 2025, reducing the total from 1,080 to 973 sites[195]. - The company operates in 33 states for wholesale and 27 states for retail segments as of December 31, 2025[194]. - Seasonal trends indicate that sales volumes peak in the second and third quarters, while the first and fourth quarters see lower volumes[211]. Supply Chain and Procurement - Approximately 79% of motor fuel was purchased from four suppliers in 2025, with supply agreements having a weighted-average remaining term of 5.6 years[40]. - The company purchased approximately 79% of its motor fuel from four principal suppliers in 2025, and approximately 53% of its merchandise from one principal supplier[107]. - The company relies on four principal suppliers for the majority of its motor fuel, which poses a risk to revenue stability[54]. - The company relies on third-party transportation providers for all motor fuel distribution, and any disruption could adversely affect its financial condition and operations[114]. Financial Strategy and Distributions - The business strategy focuses on increasing cash flows from operations to enhance quarterly cash distributions while maintaining leverage discipline[38]. - The amount of cash available for distribution is primarily dependent on cash flow rather than profitability, which may affect distribution capabilities[59]. - The company intends to distribute a minimum quarterly distribution of $0.4375 per unit, contingent on sufficient cash from operations after expenses[133]. - The cash distribution policy mandates a minimum quarterly distribution of $0.4375 per unit, with the latest declared distribution being $0.5250 per unit, or $2.10 on an annualized basis[203]. - The company may distribute up to $15 million as operating surplus, even if generated from asset sales or non-working capital borrowings[141]. Regulatory and Compliance Risks - The company is subject to extensive government regulations, which can materially impact compliance costs[49]. - The company is subject to extensive federal, state, and local environmental laws, which may require significant expenditures for compliance and remediation[89]. - Compliance with extensive government regulations can have a material adverse effect on operating results and financial condition[84]. - Changes in U.S. trade policy and tariffs may adversely affect the company's business and financial condition[49]. - The company faces risks related to soil and groundwater contamination from its motor fuel operations, which could lead to substantial remediation costs[94]. - Compliance with employment laws and regulations could lead to increased labor costs, adversely affecting the company's financial condition[86]. Market and Economic Conditions - Economic conditions, including inflation and higher energy costs, may adversely affect consumer spending and demand for motor fuel and convenience merchandise[74]. - The company faces risks from volatility in crude oil and wholesale motor fuel costs, impacting financial condition and distributions[53]. - Changes in U.S. trade policy, including potential tariff increases, could adversely impact the company's business and financial condition[97]. - Intense competition in the wholesale motor fuel distribution and retail convenience store industries leads to narrow margins and potential adverse effects on financial performance[71]. - The company is exposed to competition in the convenience store industry, which could reduce gross profits[53]. Management and Governance - The company has 257 management employees and 2,790 store employees as of December 31, 2025[50]. - The company is dependent on its ability to attract and retain a strong management team, which is critical for its business operations[106]. - The Topper Group controls the sole member of the General Partner, which may lead to conflicts of interest that could adversely affect unitholders[132]. - The General Partner can modify or revoke the cash distribution policy at any time, potentially reducing distributions to unitholders[134]. - Unitholders have limited voting rights and cannot elect the Board, which may affect the trading price of common units[146]. Taxation and Financial Liabilities - The anticipated cash available for distribution could be substantially reduced if the company is treated as a corporation for U.S. federal income tax purposes, which is currently at a corporate tax rate of 21%[161]. - The company has subsidiaries treated as corporations for tax purposes, which are subject to corporate-level taxes, further reducing cash available for distribution[164]. - Unitholders are required to pay taxes on their share of income even if no cash distributions are received, potentially leading to tax liabilities without corresponding cash inflows[168][169]. - The IRS may challenge the company's tax treatment methods, potentially affecting the value of common units and tax benefits for unitholders[177]. Cybersecurity and Risk Management - The company has implemented a cybersecurity risk management program guided by the National Institute of Standards and Technology Cybersecurity Framework[188]. - Regular assessments and incident response plans are in place to manage cybersecurity threats and ensure timely responses to incidents[190].