Crossamerica Partners LP ((CAPL)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for CrossAmerica Partners LP painted a picture of mixed performance for the first quarter. While there were notable achievements in retail profit and margin expansion across both retail and wholesale segments, these positive outcomes were tempered by challenges such as declining sales volumes, increased expenses, and higher interest costs. This duality in performance reflects the complex environment the company is navigating.
Increase in Retail Segment Gross Profit
The retail segment of CrossAmerica Partners LP saw a significant boost in gross profit, which rose by 16% to reach $63.2 million. This increase was driven by enhanced performance in both motor fuel and merchandise gross profit, showcasing the company’s ability to capitalize on retail opportunities despite broader market challenges.
Improvement in Retail Fuel Margin
Retail fuel margins experienced a healthy increase of 10% year-over-year. Margins rose from $0.308 per gallon in the first quarter of 2024 to $0.339 per gallon in the same period of 2025, indicating effective pricing strategies and operational efficiencies in the retail segment.
Expansion of Retail Sites
The company expanded its retail operations by increasing its site count by 64 during the first quarter of 2025 compared to the previous year. This strategic growth reflects CrossAmerica’s commitment to strengthening its retail presence and capturing a larger market share.
Wholesale Segment Fuel Margin Increase
In the wholesale segment, CrossAmerica reported an 8% increase in motor fuel gross profit. The wholesale fuel margin also saw a substantial rise of 23%, growing from $0.079 per gallon in Q1 2024 to $0.097 per gallon in Q1 2025, highlighting the segment’s robust performance.
Reduction in Net Loss
CrossAmerica successfully reduced its net loss to $7.1 million in the first quarter of 2025, down from $17.5 million in the same period of 2024. This reduction underscores the company’s efforts to improve its financial health amid challenging conditions.
Decline in Retail Volume
The retail segment faced a 4% decline in same-store fuel volume year-over-year, with an adjusted decline of 3% accounting for the leap year impact. This decline points to challenges in maintaining volume levels despite other areas of growth.
Wholesale Segment Volume Decline
The wholesale segment experienced an 11% drop in volume, falling to 162.9 million gallons in Q1 2025 from 184 million gallons in Q1 2024. This decline was attributed to the conversion of sites to the retail segment, reflecting strategic shifts within the company.
Increased Operating Expenses
Operating expenses in the retail segment rose by approximately 20%, driven by a 17% increase in the segment’s site count year-over-year. This increase in expenses highlights the financial impact of the company’s expansion efforts.
Higher Interest Expenses
Interest expenses climbed from $10.1 million in Q1 2024 to $12.4 million in Q1 2025, primarily due to the expiration of favorable interest rate swaps. This increase in costs presents a challenge for the company’s financial management.
Distributable Cash Flow Decline
The distributable cash flow decreased to $9.1 million from $11.7 million in Q1 2024, mainly due to higher cash interest expenses and sustaining capital expenditures, reflecting the financial pressures faced by the company.
Forward-Looking Guidance
During the earnings call, CrossAmerica Partners provided guidance that highlighted a 16% increase in retail segment gross profit and a 10% rise in retail fuel margin. Despite a 4% decline in overall retail volume, the company emphasized the strength of its retail fuel margins. The wholesale segment saw a 1% decline in gross profit due to site conversions, but the wholesale fuel margin increased by 23%. Same-store inside sales declined by 1.5% but outperformed the market, and the company-operated site count increased by 33 sites year-over-year. Adjusted EBITDA rose by 3% to $24.3 million, despite a net loss of $7.1 million, as the company navigated significant economic and operational challenges.
In summary, the earnings call for CrossAmerica Partners LP revealed a mixed bag of results for the first quarter, with notable achievements in retail profit and margin expansion counterbalanced by challenges such as declining volumes and increased expenses. The company’s strategic growth in retail sites and improvements in fuel margins are positive indicators, but the financial pressures from higher interest and operating expenses remain areas of concern. Overall, CrossAmerica is demonstrating resilience in a challenging market environment.