Q3 2025 CrossAmerica Partners LP Earnings Call
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Good morning, ladies and gentlemen, and welcome to the cross America Partners, third quarter 2025 earnings call at this time, all lines are in a listen-only mode.
Following the presentation, we will conduct a question and answer session. If at any time during this, call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 6th 2025
I would now like to turn the conference over to Maura topper. Chief Financial operator. Please go ahead. Thank you operator.
Good morning, and thank you for joining the cross America, Partners, third quarter, 2025 earnings call.
With me today is Charles Nifong CEO and president.
We'll start off the call today with Charles providing some opening comments and an overview of cross America's operational performance for the third quarter. And then I will discuss the financial results we will then open up the call to questions.
Today's call Will Follow presentation, slides that are available as part of the webcast and are posted on the cross America website.
Before we begin, I would like to remind everyone that today's call including the question and answer session may include forward-looking statements, regarding expected, Revenue, future plans future, operational metrics, and opportunities, and expectations of the organization.
There can be no assurance that Management's expectations beliefs and projections will be achieved or that actual results will not differ from expectations.
Please see cross America's filings with the Securities and Exchange Commission including annual reports on form 10 K and quarterly reports on form 10q for a discussion of important factors that could affect our actual results.
Forward-looking statements represent the Judgment of cross America's management as of today's date.
in the organization, disclaims any intent or obligation to update any forward-looking statements,
During today's call, we will also provide certain performance measures that do not conform to us, generally accepted accounting principles or gaap.
We have provided schedules that reconcile these non-gaap measures. With our reported results on a gap basis. As part of our earnings press release,
Today's call is being webcast and a recording of this conference call will be available on the cross America website for a period of 60 days.
with that, I will now turn the call over to Charles
Thank you, Maura, Maura, and I appreciate everyone joining us this morning and thank you for making the time to be with us today.
During today's call, I will go through some of the operating highlights for the third quarter.
Commentary on the market and a few other updates. As I typically do on our calls,
tomorrow will then review and more detail our financial results.
If you turn to slide 4, I will briefly review in more detail. Some of our operating results for the quarter.
For the third quarter of 2025 our retail segment grows profit, decreased 4% to 80 million compared to 83.6 million and the third quarter of 2024.
The decrease was primarily driven by decline in motor fuel growth profit, due to lower retail fuel margins for the quarter compared to the prior year.
For the quarter, our retail fuel margin on a cents, per gallon basis. Decreased 5% year-over-year, as our fuel margin was 38.4 cents per gallon and a third quarter of 2025 compared to a historically, strong 40.6 cents, per gallon and the third quarter of 2024
In comparison to the prior year crude oil prices were much less volatile during the third quarter of 2025, which resulted in lower Market volatility. And as a result, our retail fuel margins were lower year-over-year.
For volume on the same store basis. Our overall retail Fuel Volume declined 4% for the quarter year-over-year.
Performance for the quarter was bifurcated between our company operated and commission sites.
For our company operated sites, our same store volume for the quarter was down. Slightly less than 3% year-over-year.
For our company operated retail sites overall remained unchanged.
We strive to be competitive at each location for the market. The site is in
For our commission class of trade, our commission, same Source site volume was down approximately 7% for the quarter.
The decline was due in part to our decision at select sites to adjust our pricing strategy.
With many of the sites that we converted throughout last year, we were very aggressive with fuel pricing. Initially, I conversion which generated strong volume growth and provided us with data about the volume potential of the locations.
These sites are now same store locations. And in the third quarter, we sought to balance the volume and margin performance of these locations, which led to lower same sort of volumes in our commission sites in addition to the overall volume decline in the market.
Based on National demand data, available to US. National gasoline demand was down approximately 2.5% for the quarter. So our company operated sites slightly underperformed, the market volume for the quarter. While our commission sites were below National Market volume, primarily due to the deliberate pricing strategy changes. We implemented during a quarter
In the period. Since the quarter in National Retail volume has been down approximately 3.5%
Our overall. Retail same store volume has been down slightly more than that year-over-year as we continue to adjust commission. Pricing strategies relative to the prior year and we compared against what was for us at very strong volume performance last October
In the same period retail fuel margins have been significantly higher than the average third quarter retail fuel margins as all market. Price volatility has generated favorable market conditions for enhanced retail fuel margins.
For inside sales on a same site basis. Our inside sales were up approximately 3%, compared to the prior year for the third quarter.
Inside sales, excluding cigarettes increased 4% year-over-year on the same store basis for the quarter.
Our inside. Sales growth was driven by strong performance and our package, beverage and other tobacco products categories.
Also our food category contributed to our relatively strong 4% growth, and same Source sales for the period.
Overall, National demand for inside store sales, for the quarter was flat slightly positive, indicating our relative outperformance for the quarter.
On the store, merchandise margin front. Our merchandise grows profit, increased by 5% to 32 million driven by an increase in sales and our base business, and an increase in store merchandise margin for percentage.
Our merchandise gross margin. Percentage was up strongly over the prior year approximately 100 basis points.
this was primarily due to strong growth in certain higher margin categories, like other tobacco products and also due to our transition but make commission based model for certain products and the third quarter of last year and to owning and selling these products directly for the current quarter,
In the period. Since the quarter in same store, inside sales have been approximately flat compared to the prior year.
The decrease in company operated sites, reflects the asset sales, we completed during the quarter.
The domestic locations were lower performing sites and markets that we decided were no longer strategic for us.
Our commission agent site count also decreased modestly by 3 sites, during the quarter relative to the second quarter.
Site to visitors this quarter represent our execution on our continued strategy focused on being in retail in the right markets with the right assets and positioning our portfolio for long-term success.
We continue to look for opportunities in our portfolio to increase our retail exposure and our overall retail strategy has not changed.
The retail segment performed. Well for the third quarter on a fuel margin, neutral basis to segment, outperform the prior year on strong inside sales and expense reduction which tomorrow will address in her comments.
Our volume performance at first glance underperformed. But this was due primarily to deliberate decisions we made in our commission class of trade, to adjust our volume and fuel margin. Mix at select sites.
In the period. Since the quarter end, we have benefited from a very strong fuel margin environment throughout the month of October.
Moving on to the wholesale segment for the third quarter of 2025 our wholesale, segment, gross profit declined 10% to 24.8 million compared to 27.6 million in the third quarter of 2024.
The decrease was primarily driven by decline in fuel volume fuel margin and Rental income.
The primary factor for the fuel volume, decline was the conversion of certain Lessing, dealers sites, to cut the operated and commission agent sites, which are now kind of for in the retail segment.
Rental income declined for the same reason and due to the site to vest, we have completed thus far this year.
our wholesale motor fuel gross profit declined 7% to 15.7 million and the third quarter of 2025 from 16.9 million and the third quarter of 2024
Our fuel margin. Decreased 2% from 9 cents per gallon and a third quarter of 2024 to 8.8 cents per gallon and the third quarter of 2025
The decline in our wholesale fuel margin per gallon was, primarily driven by movements and crude oil prices and more prompt pay discounts associated with lower gasoline prices, which reflect the lower crude oil prices during the quarter compared to the prior year, partially offset by better sourcing costs.
Our wholesale volume was 177.7 million gallons for the third quarter of 2025 compared to 186.9 million gallons, and third quarter of 2024 reflecting a decline of 5%.
The decline in volume when compared to the same period in 2024 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade.
The gowns from these converted sites are now reflected in our retail, segment results. For the quarter, our same store volume in the wholesale segment, down approximately 2.5% year-over-year
So the additional approximately 2.5% drop in volume, the difference between the overall volume decline of 5% and our same store alarm decline of 2.5%. For the segment, was largely due to converting sites to the retail segment or the loss of independent dealer volume.
As I mentioned, in my retail segment comments, National demand data available to us, indicated National volume demand was down around 2.5% for the quarter.
So our same store, wholesale volume performance for the third quarter performed in line with overall National volume demand.
And the period sensor quarter and wholesale. Same sort of volume has been down approximately 4.5% so it's slightly worse than National volume demand, which has been down approximately 3.5%?
Regarding our wholesale, rent, our base, rent for the quarter was 8.5 million compared to the prior year of 10.4 million.
A decrease is the conversion of certain messy dealer sites to company operating sites, as well as our real estate rationalization efforts.
As we have previously explained the rent dollars for the convergence sites, while no longer in the form of rent are now effectively in our retail, segment results through our fuel and store sales margins at these locations.
During the quarter, we continue with our real estate. Rationalization efforts realizing approximately 22 million dollars in proceeds from the sale of 29 sites during the quarter that we primarily use to pay down debt
For the most part, we sold sites with continuing fuel supply relationships. So we realized an extremely attractive effective multiple on these steps.
In the future.
Year to date. We have realized approximately 100 million dollars in proceeds from asset sales. Our biggest year ever
To continue to have a strong pipeline of asset sales, for the rest of the year and our building a pipeline of asset sales for 2026.
While we don't expect next year, to be the record volume of sales that we have executed this year. We do expect it to contribute. Meaningful proceeds for us to either put into the balance sheet or to invest into the business.
Overall, the third quarter was a solid quarter for the partnership. While our iPad was below the prior year on a comparable fuel margin basis. Our ebit results, exceeded the prior year despite us realizing approximately 100 million dollars in asset sale proceeds this year.
During the quarter, we continue to make meaningful progress on our strategic goals with another strong quarter of sight to vestures, which strengthened our balance sheet by allowing our debt level to decrease by approximately $22 billion compared to the second quarter and further optimize our operating portfolio for the future.
Since the end of the third quarter, we've had a strong start to the fourth quarter benefiting from a very fair World fuel margin environment.
With that, I'll turn it over to Mara to further discuss our financial results.
Thank you. Charles
You would please turn to slide 6. I would like to review our third quarter results for the partnership,
We reported net income of 13.6 million for the third quarter of 2025 compared to net income of 10.7 million in the third quarter of 2024.
This increase in net income, was driven by a combination of factors including a decline in adjusted ibida. Year-over-year offset by increased gains on the sale of assets that Charles discussed in his commentary and the decline in interest expense.
We recorded a net gain from asset Sales and Lease terminations of 7.4 million during the third quarter of 2025.
Compared to 4.7 million during the third quarter of 2024.
Interest expense declined from $14.1 million during the third quarter of 2024 to $11.8 million during the third quarter of 2025.
A material benefit to our quarter as a result of our strategic activities, which I will discuss further later on in my comments.
Adjusted ibida for the third quarter of 2025 was 41.3 million, a decline of 2.6 million or 6% compared to the prior year period.
This decline was primarily due to a decline in fuel and rent gross profit which was offset by a million dollar decrease in overall expenses during the quarter year-over-year.
For the third quarter of 2025 was 27.8 million. A slight, increase from 27.1 million for the third quarter of 2024.
The increase in distributable. Cash flow was primarily due to lower cash interest expense sustaining Capital expenditures, and current income tax expense offset by our lower adjusted ibida.
The decline in interest expense, we experienced during the quarter was due to a lower average interest rate during the period and a lower average outstanding debt balance on our capl credit facility During the period, as we have materially applied the proceeds of our asset sale activities to pay down our revolver balance.
Our distribution coverage ratio for the third quarter of 2025 was 1.39 times compared to 1.36 times for the same period of 2024.
Our distribution coverage for the trailing 12 months for the period ended. September 30th 2025 was 1 times compared to 1.26% 2024
During the third quarter of 2025, the partnership paid a distribution of $0.525 per unit.
Charles provided information in his comments on our Top Line and gross profit metrics during the quarter and how they impacted our adjusted ibida compared to the prior year.
I will now touch on the expense portion of our operations.
In total across both segments, we reported operating expenses for the third quarter of 2025 of 57.5 million.
3.2 million decrease year-over-year.
DNA expenses for the quarter of 6.5 million, a 0.8 million decrease year-over-year,
In a total expense decrease for the organization of 4 million or 6% over the course of the past year.
As I touched on during our last quarterly earnings call, we have cycled through the first year of operations of many of our locations. In their new classes of trade, which typically results in elevated expenses to onboard and upgrade the converted locations.
As a result, we are experiencing a stabilization of our expense profile in our current class of trade site count.
We will of course continue to experience seasonality of certain types of operating expenses and our stabilized portfolio like increased labor in the summer and increased snow plowing in the winter.
Returning to our operating segments.
Retail segment, operating expenses for the third quarter declined, 1.6 million for 3%.
This was driven primarily by the reduced site count in our retail segment. This quarter.
Specifically the 4% decrease, in average company operated site count year-over-year.
On a same store store level basis operating expenses in our retail segment were down 2% for the third quarter of 2025 compared to the third quarter of 2024.
The decline was primarily driven by reduced repairs and maintenance spending at both, our company operated and commission class of trade locations due to realize ongoing efficiencies in our maintenance operations.
Offset by normal course, increases in store. Labor costs.
Operating expenses and our wholesale segment declined by 1.6 million or 19% for the quarter year-over-year.
Due to declines in sight level operating expenses and management fees as our wholesale segment average site count declined 6% year-over-year.
and specifically our Lessie dealer or controlled site count within this segment declined. 23% year-over-year.
due to asset sales and to a lesser extent, conversions to our retail cost of trade
Our GNA expenses declined, 11% for the quarter year-over-year, primarily driven by lower legal fees and Equity compensation expense.
As noted last quarter, our GNA expense profile this quarter
Excluding event-driven acquisition costs.
And unit price movements impacts to equity compensation.
is more indicative of our ongoing run rate in this area.
We remain focused across the organization on efficient expense management at our locations.
Ensuring that we are investing in customer facing areas that will drive the long-term health and sustainability of our sites and driving operating efficiencies in our above store operations.
Moving to the next slide. We spent a total of 6.7 million on Capital expenditures during the third quarter. With 4.8 million of that, total being growth related Capital expenditures.
And 1.9 million of that being sustaining Capital expenditures. The decline in sustaining Capital expenditures versus the prior year is in line with our expectations.
as we experience a stabilization of our current class of trade site count,
as well as a reduction of our real estate controlled site count.
Moving to our growth Capital spending. During the quarter, our spend remained focused on our company, operated locations and included the completion of various projects, to increase food offerings, both our own, and qsrs, as well as targeted fuel brand and backcourt refresh projects supported by our wholesale fuel supplier partners.
Our food related growth Investments have and will continue to contribute to our merchandise sales and margin results as Charles discussed earlier.
Turning to our balance sheet.
The asset sale activities. During the third quarter, the Charles reviewed in his comments, meaningfully helped us reduce our credit facility, balance by 21 and a half million dollars since the end of the second quarter of 2025,
5.5 million.
Our, year-to-date asset sale activities.
have helped us to reduce our credit facility balance by 62 million year to date,
the decrease in our balance, combined, with the gains on sale generated, from our asset sale activities,
Resulted in a decrease in our credit facility, defined leverage ratio to 3.56 times.
compared to 4.36 times as of December, 31st 2024
This leverage ratio continues to provide additional meaningful. Savings on our credit facility interest expense as we move forward.
Our management team remains focused on the cash flow Generation, profile of our business.
Utilizing our normal course operations and our targeted real estate optimization efforts.
To manage our leverage ratio at approximately 4 times on a credit facility defined basis.
Our assets sale activities during the quarter and reduced credit facility balance. Also helped improve our cash, interest expense during the quarter.
Which decreased from 13.7 million in the third quarter of 2024.
To 11.3 million in the third quarter of 2025.
We also benefited from a lower average interest rate environment during the third quarter of 2025
Our existing interest rate, swap portfolio continues to benefit us as well.
At this time more than 55% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% Blended.
Which remains an advantage rate in the current rate environment.
Our effective interest rate on the total cap Bell credit facility. At the end of the third quarter is 5.8%
In conclusion, as Charles noted, we had a solid third quarter.
We successfully completed several asset sales. Reducing our debt by more than 20 million dollars and strengthening our balance sheets.
These transactions also positioned our operating portfolio for long-term performance.
We remained focused as a team on continuing to execute across the business.
And I'm looking forward to 2026, maintaining a strong balance sheet and generating value for our unit holders.
With that, we will open it up for questions.
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