Crossamerica Partners (CAPL) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $12.4 million, down from $14.5 million in Q2 2023, while Adjusted EBITDA rose 1% year-over-year to $42.6 million.

• Retail segment operating income and gross profit surpassed wholesale, reflecting a strategic shift and site conversions from wholesale, with retail operating income up 7% and gross profit up 16%.

• Distributable cash flow declined to $26.1 million from $30.4 million year-over-year, mainly due to higher interest expense after favorable hedges expired.

• Distribution per unit remained at $0.5250, with coverage ratio for Q2 2024 at 1.30x, down from 1.53x in Q2 2023; trailing twelve months coverage was 1.32x, down from 1.68x.

• The Applegreen Acquisition transitioned 59 sites to company operation, boosting retail results and raising operating expenses.

Financial highlights

• Retail segment gross profit grew 16% to $76.6 million; merchandise gross profit up 23%, motor fuel gross profit up 10%.

• Retail fuel volume rose 9% to 143.0 million gallons; retail fuel margin per gallon increased 1% to $0.373.

• Wholesale segment gross profit fell 11% to $28.1 million, with a 12% drop in fuel volume; margin per gallon up 6% to $0.087.

• Operating expenses rose, primarily from higher company-operated site count, with retail expenses up $8.8 million and wholesale down $2.7 million.

• Q2 2024 operating income was $28.2 million, nearly flat year-over-year.

Outlook and guidance

• Retail segment expected to remain larger than wholesale as the strategic shift continues, with ongoing focus on optimizing converted sites and maintaining strong cash flow.

• Management remains focused on deleveraging, maintaining a leverage ratio near 4x, and executing growth strategies.

• Higher interest expense is expected in 2024 due to the maturity of favorable swaps.