CrossAmerica Partners LP (CAPL, Financial) released its 8-K filing on November 6, 2024, detailing its financial results for the third quarter ended September 30, 2024. As a prominent player in the wholesale distribution of motor fuel and the ownership and leasing of real estate for retail fuel distribution, CrossAmerica operates through its Wholesale and Retail segments. The company's performance in the third quarter reflects both achievements and challenges within the oil and gas industry.
Financial Performance Overview
CrossAmerica Partners LP reported a net income of $10.7 million for the third quarter of 2024, a decrease from $12.3 million in the same period of 2023. Adjusted EBITDA slightly declined to $43.9 million from $44.2 million, while distributable cash flow fell to $27.1 million from $31.4 million year-over-year. The company's leverage ratio improved to 4.21 times as of September 30, 2024, down from 4.39 times as of June 30, 2024, indicating a stronger balance sheet.
Retail and Wholesale Segment Performance
The Retail segment showed robust growth, with gross profit increasing by 24% to $83.6 million, driven by a 26% rise in motor fuel gross profit and a 20% increase in merchandise gross profit. The segment distributed 148.4 million gallons of motor fuel, marking a 12% increase compared to the previous year. This growth was primarily due to the conversion of lessee dealer sites to company-operated sites.
Conversely, the Wholesale segment experienced a 16% decline in gross profit to $27.6 million, attributed to a 14% decrease in wholesale volume distributed. This decline was largely due to the conversion of wholesale locations to retail locations, impacting the segment's overall performance.
Key Financial Metrics and Achievements
Despite the challenges, CrossAmerica maintained a distribution coverage ratio of 1.36 times for the current quarter, although it decreased from 1.57 times in the third quarter of 2023. The company declared a quarterly distribution of $0.5250 per limited partner unit, reflecting its commitment to returning value to shareholders.
CrossAmerica posted a strong third quarter despite broader softness in fuel and store demand," said Charles Nifong, President and CEO of CrossAmerica. "Our company-operated stores delivered solid results, with a two percent increase in same-store fuel volume and strong same-store merchandise sales."
Balance Sheet and Cash Flow Insights
As of September 30, 2024, CrossAmerica reported total assets of $1.13 billion, with cash and cash equivalents of $7.8 million. The company's debt and finance lease obligations stood at $772.4 million, with $101 million available for future borrowings under the CAPL Credit Facility. The company generated $76.7 million in net cash from operating activities during the first nine months of 2024.
Conclusion and Industry Context
CrossAmerica Partners LP's third-quarter results highlight the company's strategic efforts to enhance its retail operations amidst industry challenges. While the Wholesale segment faced headwinds, the Retail segment's growth underscores the potential for continued expansion and profitability. As the company navigates the evolving landscape of the oil and gas industry, its focus on strategic site conversions and maintaining a strong balance sheet will be crucial for sustaining long-term growth and shareholder value.
Explore the complete 8-K earnings release (here) from CrossAmerica Partners LP for further details.
