Crossamerica Partners (CAPL) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was $10.7 million, down from $12.3 million in Q3 2023, as retail segment growth and site conversions offset wholesale declines and higher interest expense.

• Retail segment gross profit rose 24% to $83.6 million, with operating income up 19%, driven by site conversions, higher fuel and merchandise gross profit, and increased site count.

• Wholesale segment gross profit declined 16% to $27.6 million, mainly due to site conversions and lower volume, partially offset by higher margin per gallon.

• The Applegreen Acquisition transitioned 59 sites to company-operated, impacting segment performance and cost structure.

• Distribution per unit for Q3 2024 was $0.5250, unchanged from prior quarters.

Financial highlights

• Q3 2024 operating revenues were $1.08 billion, down 11% year-over-year, while gross profit increased 11% to $111.2 million.

• Adjusted EBITDA was $43.9 million, a 1% decrease year-over-year.

• Distributable cash flow for Q3 2024 was $27.1 million, down from $31.4 million in Q3 2023.

• Distribution coverage ratio for Q3 2024 was 1.36x, down from 1.57x a year ago.

• Interest expense increased to $14.2 million, reflecting the expiration of favorable interest rate swaps.

Outlook and guidance

• Management expects continued active property sales and further retail site conversions, with a focus on ramping up performance of converted stores and maintaining durable cash flows.

• Higher interest expense is anticipated in 2024 due to swap maturities.

• Opportunistic acquisitions and real estate rationalization are expected to continue, subject to market and financing conditions.