Crossamerica Partners LP ((CAPL)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for CrossAmerica Partners LP painted a mixed picture of the company’s financial health and strategic direction. While the retail segment showed commendable growth and outperformed national averages in certain areas, the wholesale segment faced significant challenges. Increased operating and interest expenses further complicated the financial landscape. However, strategic site conversions and divestitures were highlighted as positive steps towards achieving long-term objectives.
Retail Segment Gross Profit Increase
The retail segment of CrossAmerica Partners saw a notable increase in gross profit for the fourth quarter of 2024, rising by 5% to $75.1 million from $69 million in the same period of 2023. This growth was driven by a 2% increase in same-store volume, which outperformed the national gasoline demand that declined by approximately 4%.
Same-Store Performance Outperformance
CrossAmerica’s retail same-store volume increased by 2% year over year, showcasing a strong performance compared to the national average, which saw a decline of about 4%. This outperformance highlights the company’s effective strategies in maintaining customer engagement and sales despite broader market challenges.
Merchandise Gross Profit Growth
The merchandise segment also contributed positively, with gross profit increasing by 27% to $28.1 million. This growth was attributed to increased sales from a higher store count, indicating successful expansion efforts in the retail segment.
Increase in Company-Operated Site Count
The company expanded its footprint by increasing the number of company-operated sites by 69 from the previous year. This expansion has contributed to the increased exposure and growth of the retail segment.
Full Year Retail Segment Growth
For the entire year, the retail segment’s gross profit rose by 14% to $289.7 million, compared to $253.5 million in 2023. This sustained growth underscores the segment’s resilience and strategic importance to CrossAmerica’s overall business model.
Wholesale Same-Store Volume Outperformance
In the wholesale segment, same-store volume outperformed national averages, declining only 1% to 2% compared to a 4% drop nationally. This indicates a relatively strong performance in a challenging market environment.
Successful Site Divestitures
Throughout 2024, CrossAmerica divested 30 properties for $36.3 million. The company plans to continue this momentum into 2025, using the proceeds to strengthen its financial position and focus on core operations.
Decrease in Retail Fuel Margin
Despite the positive retail performance, the retail fuel margin on a cents per gallon basis declined by 9% year over year, from 41.5 cents to 37.6 cents. This decline poses a challenge to maintaining profitability in the retail fuel segment.
Wholesale Segment Gross Profit Decline
The wholesale segment faced a significant decline in gross profit, dropping 22% to $25.9 million compared to $33 million in the fourth quarter of 2023. This was largely due to a 12% reduction in fuel volume, impacted by site conversions.
Decrease in Net Income and EBITDA
CrossAmerica reported a decline in net income for the full year, falling to $22.5 million from $42.6 million in 2023. Adjusted EBITDA also decreased to $145.5 million in 2024 from $165.8 million in the previous year, reflecting the financial pressures faced by the company.
Increased Operating Expenses
Operating expenses rose by $10.7 million in the fourth quarter compared to the same period in 2023. This increase was largely due to the higher site count and the transition to more company-operated locations.
Higher Interest Expenses
Interest expenses also increased, rising from $10 million in Q4 2023 to $12.9 million in Q4 2024. This contributed to a lower distributable cash flow, impacting the company’s financial flexibility.
Forward-Looking Guidance
Looking ahead, CrossAmerica Partners provided detailed guidance for the coming year. The company plans to continue its strategic site conversions and divestitures, aiming to improve its financial metrics despite the challenges of declining fuel margins and inflationary pressures. The retail segment is expected to remain a key growth driver, with continued outperformance relative to national data.
In summary, the earnings call for CrossAmerica Partners LP highlighted a mixed financial performance, with strong retail growth offset by challenges in the wholesale segment and increased expenses. The company’s strategic initiatives, including site conversions and divestitures, are aimed at strengthening its long-term position. Investors will be keenly watching how these strategies unfold in the coming quarters.