• Retail Segment Operating Income: Increased 7% year-over-year for Q2 2024.
• Retail Gross Profit: $76.6 million, up 16% from Q2 2023.
• Merchandise Gross Profit: Increased 23% year-over-year.
• Motor Fuel Gross Profit: Increased 10% year-over-year.
• Retail Fuel Margin: $0.373 per gallon, up 1% from Q2 2023.
• Same-Store Retail Volume: Declined 2% year-over-year.
• Inside Sales (Excluding Cigarettes): Up 2% year-over-year on a same-store basis.
• Company-Operated Site Count: Increased by 80 sites year-over-year.
• Wholesale Segment Gross Profit: Declined 11% to $28.1 million.
• Wholesale Motor Fuel Gross Profit: Decreased 7% to $16.6 million.
• Wholesale Fuel Margin: Increased 6% to $0.087 per gallon.
• Wholesale Volume: 192.1 million gallons, down 12% year-over-year.
• Net Income: $12.4 million for Q2 2024, down from $14.5 million in Q2 2023.
• Adjusted EBITDA: $42.6 million, up 1% from Q2 2023.
• Distributable Cash Flow: $26.1 million, down from $30.4 million in Q2 2023.
• Distribution Coverage: 1.3 times for Q2 2024.
• Operating Expenses: Increased $6 million year-over-year.
• Capital Expenditures: $5.3 million, with $3.4 million for growth-related investments.
• Credit Facility Balance: $789.5 million as of June 30, 2024.
• Effective Interest Rate: 6.7% on the total credit facility.

• Warning! GuruFocus has detected 6 Warning Sign with CAPL.

Release Date: August 09, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CrossAmerica Partners LP (NYSE:CAPL) achieved a 7% year-over-year increase in retail segment operating income for the second quarter, driven by successful site conversions from wholesale to retail.
• The retail segment generated a 16% increase in gross profit, with merchandise gross profit up 23% and motor fuel gross profit up 10% compared to the same period in 2023.
• Retail fuel margin increased by 1% year-over-year, with a significant 21% increase from the first quarter of 2024.
• The company successfully increased its overall retail site count by 43 sites during the second quarter, reflecting active execution of its strategy to expand retail operations.
• CAPL reported a slight increase in adjusted EBITDA by 1% year-over-year, demonstrating resilience despite a challenging market environment.

Negative Points

• Net income for the second quarter of 2024 decreased to $12.4 million from $14.5 million in the second quarter of 2023.
• Distributable cash flow declined to $26.1 million from $30.4 million year-over-year, primarily due to increased interest expenses and higher sustaining capital spending.
• Retail same-store volume declined by 2% for the quarter, reflecting ongoing challenges in national fuel demand.
• Operating expenses increased by $6 million compared to the second quarter of 2023, driven by higher costs in the retail segment due to site conversions.
• The wholesale segment experienced an 11% decline in gross profit, attributed to a decrease in fuel volume despite an increase in fuel margin per gallon.

Q & A Highlights

Q: Can you provide an overview of the operational performance for the second quarter of 2024? A: Charles Nifong, CEO and President, highlighted that the retail segment has become larger than the wholesale segment due to strategic actions over the past year. The retail segment saw a 7% year-over-year increase in operating income, driven by converting sites from wholesale to retail. Despite a soft industry environment, the retail segment's gross profit increased by 16%, with merchandise gross profit up 23% and motor fuel gross profit up 10%.

Q: How did the wholesale segment perform in the second quarter of 2024? A: The wholesale segment's gross profit declined by 11% to $28.1 million, primarily due to a decline in fuel volume, partially offset by an increase in fuel margin per gallon. The conversion of certain lessee dealer sites to retail contributed to this decline. Wholesale motor fuel gross profit decreased by 7%, while the fuel margin per gallon increased by 6%.

Q: What were the financial results for the second quarter of 2024? A: Maura Topper, CFO, reported a net income of $12.4 million, down from $14.5 million in the previous year. Adjusted EBITDA was $42.6 million, a slight increase of 1%. Distributable cash flow was $26.1 million, compared to $30.4 million in the second quarter of 2023. The declines were primarily due to increased interest expenses and higher sustaining capital spending.

Q: How did operating expenses change in the second quarter of 2024? A: Operating expenses increased by $6 million compared to the previous year. This included a $2.7 million decrease in wholesale segment expenses and an $8.8 million increase in retail segment expenses, driven by site conversions from wholesale to retail. The increase in retail operating expenses was in line with the 21% increase in average site count.

Q: What is the current status of the company's credit facility and interest expenses? A: As of June 30, 2024, the total credit facility balance was $789.5 million, a $9 million decrease from March 31, 2024. The credit facility-defined leverage ratio was 4.39 times. Cash interest expense increased from $10.2 million in the second quarter of 2023 to $13.7 million in 2024, partly due to the expiration of interest rate swaps and an elevated credit facility balance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.