Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CrossAmerica Partners LP (CAPL, Financial) achieved a 24% increase in gross profit and a 19% increase in operating income for the retail segment compared to the prior year.
- The company reported a 26% increase in motor fuel gross profit and a 20% increase in merchandise gross profit for the quarter.
- Retail fuel margins improved significantly, with a 9% year-over-year increase, reaching $0.406 per gallon.
- The company successfully converted sites from the wholesale segment to the retail segment, enhancing retail fuel margins and overall retail business exposure.
- CAPL's retail segment outperformed the national average in same-store retail volume and inside store sales, despite a challenging industry environment.
Negative Points
- Net income decreased to $10.7 million for the third quarter of 2024, down from $12.3 million in the third quarter of 2023.
- Adjusted EBITDA slightly decreased by 1% compared to the previous year, reflecting challenges in maintaining growth.
- Distributable cash flow declined to $27.1 million from $31.4 million year-over-year, primarily due to increased interest expenses and higher sustaining capital spending.
- Wholesale segment gross profit declined by 16% due to a decrease in fuel volume, despite an increase in margin per gallon.
- Operating expenses increased by $10.2 million, driven by the conversion of sites from the wholesale to the retail segment, leading to higher costs in the retail segment.
Q & A Highlights
Q: Can you provide an overview of CrossAmerica's operational performance for the third quarter of 2024?
A: Charles Nifong, CEO, highlighted a 24% increase in gross profit and a 19% increase in operating income for the retail segment, driven by site conversions and strong same-store sales. Despite a soft industry environment, the retail segment benefited from strong fuel margins and outperformed the market in gallons and store sales.
Q: How did the retail fuel margins perform in the third quarter of 2024?
A: The retail fuel margin increased by 9% year-over-year, reaching $0.406 per gallon, the highest for the year. This was aided by a declining crude oil price trend, which typically benefits retail fuel margins.
Q: What were the key drivers behind the wholesale segment's performance?
A: The wholesale segment saw a 16% decline in gross profit due to a decrease in fuel volume, partially offset by an increase in margin per gallon. The primary factor was the conversion of certain dealer sites to retail operations, impacting the wholesale volume.
Q: Can you elaborate on the financial results for the third quarter of 2024?
A: Maura Topper, CFO, reported a net income of $10.7 million, with adjusted EBITDA slightly decreasing by 1% to $43.9 million. Distributable cash flow declined due to increased interest expenses and higher sustaining capital spending.
Q: How did the company manage its expenses and capital expenditures during the quarter?
A: Operating expenses increased due to site conversions, with a focus on managing store labor costs, which decreased by 1% year-over-year. Capital expenditures totaled $7.7 million, with investments in site enhancements and food offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
