NYSE:CAPL CrossAmerica Partners Q4 2024 Earnings Report $23.06 +0.03 (+0.14%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$23.03 -0.03 (-0.14%) As of 04/17/2025 05:20 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History CrossAmerica Partners EPS ResultsActual EPS$0.42Consensus EPS $0.04Beat/MissBeat by +$0.38One Year Ago EPSN/ACrossAmerica Partners Revenue ResultsActual Revenue$944.22 millionExpected Revenue$1.21 billionBeat/MissMissed by -$264.45 millionYoY Revenue GrowthN/ACrossAmerica Partners Announcement DetailsQuarterQ4 2024Date2/26/2025TimeAfter Market ClosesConference Call DateThursday, February 27, 2025Conference Call Time9:00AM ETUpcoming EarningsCrossAmerica Partners' Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by CrossAmerica Partners Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 27, 2025 ShareLink copied to clipboard.There are 3 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Fourth Quarter and Full Year twenty twenty four Earnings Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 02/27/2025. I would now like to turn the conference over to Amora Topper, Chief Financial Officer. Operator00:00:26Please go ahead. Speaker 100:00:28Thank you, operator. Good morning, and thank you for joining AcroS Americal Partners' fourth quarter and full year twenty twenty four 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 CrossAmerica's operational performance for the quarter and full year, and then I will discuss the financial results. We will then open up the call to questions. Speaker 100:00:57Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica 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 could be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10 ks and quarterly reports on Form 10 Q for a discussion of important factors that could affect our actual results. Forward looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward looking statements. Speaker 100:02:00During today's call, we may also provide certain performance measures that do not conform to U. S. Generally Accepted Accounting Principles or GAAP. We have provided schedules that reconcile these non GAAP measures with our reported results on a GAAP 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 CrossAmerica website for a period of sixty days. Speaker 100:02:28With that, I will now turn the call over to Charles. Speaker 200:02:35Thank 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 fourth quarter and full year 2024. I will also provide commentary on the market and a few other updates as I have done on our prior calls. Maura will then review in more detail our financial results. Speaker 200:03:02Now, if you turn to Slide four, I will briefly review some of our operating results. For the fourth quarter of twenty twenty four, our retail segment gross profit increased 9% to $75,100,000 compared to $69,000,000 in the fourth quarter of twenty twenty three. The increase was driven by an increase in merchandise margin, partially offset by a slight decrease in motor fuel gross profit. Our fourth quarter retail results were against an overall industry backdrop for the quarter of weak fuel demand and soft inside store sales. In that context, our retail results, particularly our same store volume and same store inside store sales, both of which outperformed the market were solid. Speaker 200:03:47On the fuel margin front, our retail fuel margin on a $0.01 per gallon basis declined 9% year over year as our fuel margin was $0.376 per gallon in the fourth quarter of twenty twenty four compared to a very strong $0.415 per gallon in the fourth quarter of twenty twenty three, part of our record setting fourth quarter results last year. In comparison to the prior year, which saw a sharp drop in crude oil prices during the quarter, crude oil prices were more range bound during the fourth quarter of twenty twenty four. And as a result, our retail fuel margins, while good, were not as strong as the prior year due to this lack of favorable price volatility. For volume on a same store basis, our overall retail volume increased 2% for the quarter year over year. Based on national demand data available to us, national gasoline demand was down approximately 4% for the quarter. Speaker 200:04:46So on a relative basis, our same store retail volume outperformed. Our company operated stores volume performed very well during the quarter again, growing same store volume by approximately 4% for the quarter year over year. Again, some of this was due to unique circumstances within our portfolio compared to the prior year, particularly at our New York three way sites, which benefited from reopened travel plazas at a number of locations compared to the prior year when the locations were open, but the main facilities were under construction. In the period since the quarter end, retail same store volume, both company operated and commission has been down around 4% year to date, consistent with overall national demand, which is also down approximately 4% based on the data available to us. Our portfolio in particular has been impacted by some of the severe winter weather we have experienced so far this year in the Eastern United States, particularly in our Southern markets that don't typically see the extreme cold or wintry precipitation we have had this year. Speaker 200:05:51In the same period, retail fuel margins have been at a slightly lower level than the overall results from the fourth quarter as typically is the case in the early months of the year. For inside sales, on a same site basis, our inside sales were up 1% compared to the prior year for the fourth quarter. Inside sales excluding cigarettes increased 2% year over year on a same store basis for the quarter. As with fuel demand, based on national demand data available to us, national demand for inside store sales was weak for the fourth quarter, down approximately 1% on an overall sales basis year over year. So again, on a relative basis, our retail segment inside sales outperformed the industry for the quarter. Speaker 200:06:39Across America, our store sales performance was primarily led by the categories of packaged beverages and other tobacco as in the prior quarters. On the store merchandise margin front, our merchandise gross profit increased 27% to $28,100,000 driven by our increased sales from the higher store count. The store merchandise margin percentage increased slightly for the quarter compared to the prior year. On the store merchandise margin front, we are conscious of the inflationary pressures our consumers have felt and continue to experience and have sought to expand our value offerings to consumers. And additionally, we are focused on realizing internal efficiencies to drive margins as opposed to simply raising prices on our customers. Speaker 200:07:26In the period since the quarter end, same store inside sales have been slightly down compared to the prior year with adverse winter weather and the continued soft demand environment impacting the results. In our retail segment, if you look at our company operated site count, we are up 69 company operated retail sites from the prior year. The increase in company operated site count was primarily driven by our completion of the conversion of the Apple Green lease locations to company operated retail sites in the spring of the prior year. Our commission agent site count increased by 30 sites relative to the fourth quarter of twenty twenty three and four sites relative to the third quarter of twenty twenty four as we continue to execute on our strategic class of trade conversions to the retail channel. In total, we have increased our overall retail site count by nine to nine sites for the fourth quarter of twenty twenty four compared to our retail site count at the end of the fourth quarter of twenty twenty three. Speaker 200:08:28Based on these numbers, you can see that we were extremely active during the past twelve months with site conversions and executing on our strategy to increase our exposure to retail fuel margins and to the retail business in general. Overall, it was another positive quarter for our retail segment as our same store inside sales, same store fuel volume, merchandise gross profit and store merchandise margin percentage were all up relative to the prior year. Moving on to the wholesale segment. For the fourth quarter of twenty twenty four, our wholesale segment gross profit declined 22% to $25,900,000 compared to $33,000,000 in the fourth quarter of twenty twenty three. The decrease was driven by a decline in both fuel volume and margin per gallon. Speaker 200:09:18The primary factor in regards to the fuel volume decline by a significant degree was the conversion of certain lessee dealer sites to company operated and commission agent sites, which are now accounted for in the retail segment. Our wholesale motor fuel gross profit decreased 23% to $14,800,000 in the fourth quarter of twenty twenty four from $19,300,000 in the fourth quarter of twenty twenty three. Our fuel margin declined 13% from $0.094 per gallon in the fourth quarter of twenty twenty three to $0.082 per gallon in the fourth quarter of twenty twenty four. The decline in our wholesale fuel margin per gallon was primarily driven by the relative level of crude oil prices within the two periods and its corresponding impact on the terms discount we receive on certain gallons. While we have been successful in our efforts to improve our overall cost of product, the impact of these efforts for this quarter was more than offset by the differences in the crude oil market between the two periods and its corresponding impact on our terms discount and other factors that determine our wholesale fuel margins. Speaker 200:10:29Our wholesale volume was 180,500,000 gallons for the fourth quarter of twenty twenty four compared to 205,300,000 gallons in the fourth quarter of twenty twenty three, reflecting a decline of 12%. The decline in volume when compared to the same period in 2023 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade. The gallons from these converted sites are now reflected in our retail segment results. For the quarter, our same store volume in the wholesale segment was down approximately 1% year over year. So the additional approximately 11% drop in volume, the difference between the overall volume decline of 12% and our same store volume decline of 1% for the segment was largely due to converting sites to the retail segment. Speaker 200:11:18As mentioned in my retail segment comments, national demand data available to us indicated national fuel demand was down around 4% for the quarter. So our same store wholesale volume performance for the fourth quarter outperformed overall national demand. In the period since the quarter end, wholesale same store volume has outperformed the national average with wholesale same store volumes down 1% to 2% compared to the national volume data of down around 4%. Regarding our wholesale rent, our base rent for the quarter was $10,300,000 compared to the prior year of $13,000,000 a decrease due to the conversion of certain lessee dealer sites to company operated sites. As we have stated in the past, these rent dollars are no longer the form of rent are now in our retail segment results through our fuel and store sales margins at these locations, which helped to drive our increase in retail segment operating income for the quarter. Speaker 200:12:17If you turn to the next slide, I will briefly review our segment performance for the full year. For the full year of 2024, our retail segment's gross profit increased 14% to $289,700,000 compared to $253,500,000 for the full year of 2023. Merchandise gross profit rose $20,100,000 or 22% while our motor fuel gross profit increased $12,200,000 or 9% and other revenue increased $3,700,000 or 23%. On a same store basis, our fuel volume for the retail segment decreased 1% for the full year 2024 compared to 2023, which again relative to national demand data we have available to us demonstrates the outperformance of our volume relative to national data. Our retail store sales excluding cigarettes on a same store basis declined 1% for the full year 2024, which also compares favorably to national data on industry same store sales. Speaker 200:13:26Our wholesale segment generated gross profit of $108,600,000 for the full year 2024, a 16% decline when compared to the $128,800,000 reported in 2023. The decrease was driven by a 12 decline in fuel volume. The decline in volume when compared to the same period in 2023 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade. We also experienced a slight decline in fuel margin down 1% for the twelve month period. Our fuel margin for the wholesale segment was $0.085 per gallon for the full year of 2024 compared to $0.086 per gallon for the full year of 2023. Speaker 200:14:13Our wholesale volume was 743,500,000 gallons for the twelve month period ending 12/31/2024 compared to 842,600,000 gallons for the same period of 2023. For the full year, our same site wholesale volume was down slightly more than 1%, which based on national data available to us, outperformed the overall national volume demand. We also continue to evaluate our portfolio and look for opportunities to divest non core properties. For the fourth quarter of twenty twenty four, we divested 11 sites for 17,300,000 in proceeds. For the full year of 2024, overall, we divested 30 properties or $36,300,000 in proceeds. Speaker 200:15:02We were quite active with divestitures in 2024, especially in the back half of the year as we had indicated on prior calls would be the case. We expect that momentum to continue to 2025 as this continues to be an area of focus and effort for us. Our volume of transactions in this area is evidence of the execution of our overall business strategy as we seek to exit certain sites to generate capital to deploy elsewhere in our portfolio or into our balance sheet. Overall, 2024 was a mixed year for us. We had a challenging start to the year and then throughout the year, the oil market did not provide the same fuel margin generating possibilities as in the prior year, which in large part drove the overall decline in our EBITDA 2024 compared to the prior year. Speaker 200:15:54In addition, inflationary pressures on consumers and the interest rate environment were further headwinds on our financial results for the year. Despite these challenges, we made significant progress on our long term strategic goals. We converted 107 sites to our retail class for trade, either as company operated sites or commission locations. These conversions position our portfolio to generate more profitability over the long term, although they do generate short term volatility and expense. Despite the challenging market environment, our retail sites had strong volume performance and our company operated sites also generated strong inside sales relative to the overall market, a sign of the successful execution of our retail strategy. Speaker 200:16:40Also, we were successful in divesting locations with the greatest volume by dollar amount of divestitures in our history in 2024. These divestitures allowed us to recycle capital and to strengthen our balance sheet. If we turn to the next slide. For 2025, we will continue to optimize our portfolio, strategically converting sites to retail when it makes sense to do so. In our retail portfolio, we will focus on executing the basics well and providing our customers with a great experience and value to ensure we continue to be their preferred destination. Speaker 200:17:17For our wholesale customers, we will continue to partner with them to ensure that together our businesses thrive and meet our customers' needs in 2025 and beyond. During 2025, we also expect to continue our portfolio divestitures along the lines of what we achieved in 2024, recycling capital to invest in growth opportunities in our business and to strengthen our balance sheet. Our business remains a steady and dependable operation that consistently generates cash flow as demonstrated by our results over the past several years. We have shown resilience in demand through the pandemic and societal shifts such as remote work and telecommunity and the impact of electrification. We successfully navigated record inflation and our balance sheet absorbed the impact of a more than 500 basis point rise in interest rates since early twenty twenty two. Speaker 200:18:11Despite these challenges, we have continued to deliver solid financial performance. As we move into 2025 and beyond, we remain committed to executing our strategy, while adapting to market conditions to ensure we continue to generate strong results for our unitholders. With that, I'll turn it over to Maura for more detailed financial review. Speaker 100:18:35Thank you, Charles. If you would please turn to Slide eight, I would like to review our fourth quarter results for the Partnership. We reported net income of $16,900,000 for the fourth quarter of twenty twenty four compared to net income of $16,700,000 in the fourth quarter of twenty twenty three. The slight increase in net income was primarily driven by a net gain of $11,500,000 associated with our ongoing real estate rationalization effort and a tax benefit of approximately $1,800,000 This was offset by lower adjusted EBITDA during the quarter, which I'll touch on in a moment, as well as a $2,900,000 increase in interest expense year over year. Adjusted EBITDA was $35,500,000 for the fourth quarter of twenty twenty four, down 26% from adjusted EBITDA of $47,600,000 for the fourth quarter of twenty twenty three. Speaker 100:19:35Our distributable cash flow for the fourth quarter of twenty twenty four was $21,100,000 a decline from $35,800,000 for the fourth quarter of twenty twenty three. The decreases in adjusted EBITDA and distributable cash flow were primarily due to the comparison to our record results in the fourth quarter of twenty twenty three, which were benefited by very strong fuel margins per gallon in both our retail and wholesale segments. Our twenty twenty four fourth quarter results were also impacted by the increase in our operating expenses in the retail segment, partially offset by an increase in gross profit in our Retail segment, both primarily due to our class of trade transitions. Additionally, distributable cash flow was impacted by our higher cash interest expense during the quarter. Our distribution coverage for the current quarter was 1.06x compared to 1.8x for the fourth quarter of twenty twenty three. Speaker 100:20:39During the fourth quarter of twenty twenty four, the Partnership paid a distribution of $0.525 per unit. Charles provided information on our volume and merchandise performance during the quarter in his comments, and I will now touch on the expense portion of our operations. Operating expenses for the fourth quarter increased $10,700,000 compared to the fourth quarter of twenty twenty three, comprised of a $12,600,000 increase in our retail segment, offset by a 1,900,000 decrease in our Wholesale segment. The increase in our Retail segment was driven primarily by the increased site count in that segment compared to the prior year, specifically the increase in our company operated locations due to the class of trade conversions that Charles referenced in his comments. Retail segment operating expenses for the fourth quarter of twenty twenty four increased approximately 32% from the prior year, while our average segment site count was up 22%. Speaker 100:21:46Within that 22% increase in retail segment site count, our company operated average site count increased 25%. Our company operated locations are our highest operating expense per site class of trade, so adding an even higher percentage of those locations results in an increase in total segment operating expenses. With regards to our sites that we converted to the retail segment over the past year, we typically experience a more elevated expense profile during the initial ramp up period. After this initial period, the stores then look like from an expense profile, our other company operated sites. Our teams will look to manage this transition to a more typical operating expense profile for these sites as we move into 2025. Speaker 100:22:39On a same store basis, operating expenses in our retail segment were up approximately 8% for the fourth quarter of twenty twenty four compared to the fourth quarter of twenty twenty three. With the increases primarily in the area of store labor and repairs and maintenance. Our labor expense increase during the quarter was higher on a percentage basis than prior quarters, but still a moderate percentage overall and we feel good about our approach and management of labor, our largest single retail segment expense category. The bulk of same store operating expense increase year over year during the fourth quarter was due to increases in repairs and maintenance spending. This was due to two primary factors: spending on certain items such as food equipment items to expand our in store offerings that due to their costs are not capitalized and instead our income statement expense items, as well as an increase in actual maintenance spend during the quarter due to the timing of equipment breakdowns. Speaker 100:23:47We remain focused on prudent and effective expense management at our locations as we move into 2025, ensuring that we are investing in areas of our sites that will drive their long term health and sustainability. Operating expenses in our wholesale segment declined by $1,900,000 or 21% for the quarter year over year due to declines in site level operating expenses and management fees as our wholesale segment site count declined 13% year over year. Our G and A expenses declined 3% for the quarter year over year, primarily due to lower equity compensation expense and legal fees. Turning to the full year of 2024, net income declined to $22,500,000 from $42,600,000 in 2023. The decline was primarily driven by a decline in adjusted EBITDA as well as an increase in interest expense. Speaker 100:24:52We recorded the required GAAP loss on lease termination in connection with the Applegreen acquisition during the year, which was offset by gains recorded on our sales of assets during 2024. Adjusted EBITDA was $145,500,000 for the full year of 2024 compared to $165,800,000 in 2023. For the full year of 2024, distributable cash flow was $86,000,000 compared to $116,700,000 for the full year of 2023. The decrease in distributable cash flow was due to lower adjusted EBITDA earned in 2024 compared to 2023, as well as by our increase in cash interest expense that also impacted our full year 2024 net income. Our distribution coverage for the full year of 2024 was 1.08x compared to 1.46x for the full year of 2023. Speaker 100:26:00Operating expenses for the full year of 2024 increased $33,200,000 or 17% compared to the full year of 2023. As I noted earlier during my fourth quarter discussion, the increase was primarily driven by incremental operating expenses in our retail segment due to the conversion of lessee dealer and commission locations to company operated locations. Retail segment operating expenses increased 25% in 2024 compared to 2023, slightly ahead of the 20% increase in average retail segment site count during the year compared to the prior year. Same store retail segment operating expenses were up approximately 3% in 2024 compared to 2023. During the year, we were able to manage our same store labor expenses to an approximately 2% increase compared to the prior year with our teams focused on effectively and efficiently staffing our company operated stores in particular. Speaker 100:27:07Prepares and maintenance expense was the other primary contributor to our same store operating expense increase in the retail segment during the year. Increased management fees also contributed to the increase in retail segment operating expenses during the year as we selectively added above store headcount to manage our expanded retail footprint. Wholesale segment operating expenses declined $6,200,000 in 2024 compared to 2023, primarily due to our reduced site count in the wholesale segment, which resulted in lower management fees as well as lower site level expenses, including repairs and maintenance. On a full year basis, our G and A expenses increased from $27,000,000 in 2023 to $28,800,000 in 2024, primarily driven by higher management fees and system and information technology costs, partially offset by lower equity compensation expense. Moving to the next slide, we spent a total of $7,200,000 on capital expenditures during the fourth quarter with $5,100,000 of that total being growth related capital expenditures. Speaker 100:28:27During this past quarter, growth related capital spending was focused on our company operated locations and included targeted material renovations as well as projects to increase food offerings, both our own and QSRs. For the full year of 2024, capital expenditures were $26,300,000 with $18,000,000 being growth related CapEx. As of 12/31/2024, our total credit facility balance was $767,500,000 and our credit facility defined leverage ratio was 4.36 times. As we move into 2025, we remain focused on our operational performance and associated cash flow to manage our leverage ratio at approximately four times on a credit facility defined basis. Our cash interest expense increased from $10,000,000 in the fourth quarter of twenty twenty three to $12,900,000 in the fourth quarter of twenty twenty four and from $40,500,000 in calendar twenty twenty three to $50,400,000 in 2024. Speaker 100:29:46We had positive rate savings from the interest rate swaps we entered into during 2023, but we did have three highly valuable interest rate swaps from the first quarter of twenty twenty that expired at the end of the first quarter of twenty twenty four, which increased our overall interest costs for the year and during the fourth quarter. At this time, a little more than 50% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended, which remains an advantaged rate in the current rate environment. Our credit facility balance during the fourth quarter of twenty twenty four was also higher than the prior year, primarily due to the Applegreen transaction that we completed during the second quarter. The higher credit facility balance due to the acquisition also contributed to the increase in our interest expense year over year. Our effective interest rate on the total CapTel credit facility at the end of the fourth quarter is 6.2. Speaker 100:30:50In conclusion, as Charles noted, the Partnership had a mixed year in 2024, facing the headwinds from a challenging first quarter and macroeconomic demand environment. So having completed significant strategic activities to continue to position the portfolio to generate durable and consistent cash flows into the future. We remain focused as a team on continuing to execute in our base business as well as the ongoing efforts to ramp operations of our converted stores to optimize their performance moving forward. We are looking forward to the year ahead maintaining a strong balance sheet and generating value for our unitholders. With that, we will open it up for questions. Operator00:31:36Thank you. We will now begin the question and answer session. Speaker 200:32:21It doesn't appear that we have any questions today. Should you have one later, please feel free to reach out to us. Again, thank you for joining us today and have a great rest of your day. Operator00:32:34Thank you. This concludes today's conference. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCrossAmerica Partners Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) CrossAmerica Partners Earnings HeadlinesCrossAmerica Partners to Announce First Quarter 2025 Earnings Results on May 7April 17 at 6:45 AM | globenewswire.comOwn The Gas Pump, And Collect 8% YieldsMarch 29, 2025 | seekingalpha.comBREAKING: Trump Bans NVIDIA Chips to ChinaOn April 16th, 2025, President Trump banned Nvidia from selling its most advanced semiconductors to China. That brings the U.S. and China closer to war than at any time since the Korean War ended in 1953.April 18, 2025 | Behind the Markets (Ad)9%-Yielding CrossAmerica Partners LP Hits Another Record HighMarch 18, 2025 | incomeinvestors.comCrossAmerica Partners LPMarch 15, 2025 | cnn.comCrossAmerica Partners Files 2024 Annual Report on Form 10-KFebruary 28, 2025 | globenewswire.comSee More CrossAmerica Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like CrossAmerica Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on CrossAmerica Partners and other key companies, straight to your email. Email Address About CrossAmerica PartnersCrossAmerica Partners (NYSE:CAPL) engages in the wholesale distribution of motor fuels, operation of convenience stores, and ownership and leasing of real estate used in the retail distribution of motor fuels in the United States. It operates in two segments, Wholesale and Retail. The Wholesale segment engages in the wholesale distribution of motor fuels to lessee dealers, independent dealers, commission agents, and company operated retail sites. The Retail segment is involved in the sale of convenience merchandise items; and retail sale of motor fuels at company operated retail sites and retail sites operated by commission agents. CrossAmerica GP LLC operates as the general partner of the company. The company was formerly known as Lehigh Gas Partners LP and changed its name to CrossAmerica Partners LP in October 2014. The company was founded in 1992 and is based in Allentown, Pennsylvania.View CrossAmerica Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 3 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Fourth Quarter and Full Year twenty twenty four Earnings Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 02/27/2025. I would now like to turn the conference over to Amora Topper, Chief Financial Officer. Operator00:00:26Please go ahead. Speaker 100:00:28Thank you, operator. Good morning, and thank you for joining AcroS Americal Partners' fourth quarter and full year twenty twenty four 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 CrossAmerica's operational performance for the quarter and full year, and then I will discuss the financial results. We will then open up the call to questions. Speaker 100:00:57Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica 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 could be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10 ks and quarterly reports on Form 10 Q for a discussion of important factors that could affect our actual results. Forward looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward looking statements. Speaker 100:02:00During today's call, we may also provide certain performance measures that do not conform to U. S. Generally Accepted Accounting Principles or GAAP. We have provided schedules that reconcile these non GAAP measures with our reported results on a GAAP 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 CrossAmerica website for a period of sixty days. Speaker 100:02:28With that, I will now turn the call over to Charles. Speaker 200:02:35Thank 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 fourth quarter and full year 2024. I will also provide commentary on the market and a few other updates as I have done on our prior calls. Maura will then review in more detail our financial results. Speaker 200:03:02Now, if you turn to Slide four, I will briefly review some of our operating results. For the fourth quarter of twenty twenty four, our retail segment gross profit increased 9% to $75,100,000 compared to $69,000,000 in the fourth quarter of twenty twenty three. The increase was driven by an increase in merchandise margin, partially offset by a slight decrease in motor fuel gross profit. Our fourth quarter retail results were against an overall industry backdrop for the quarter of weak fuel demand and soft inside store sales. In that context, our retail results, particularly our same store volume and same store inside store sales, both of which outperformed the market were solid. Speaker 200:03:47On the fuel margin front, our retail fuel margin on a $0.01 per gallon basis declined 9% year over year as our fuel margin was $0.376 per gallon in the fourth quarter of twenty twenty four compared to a very strong $0.415 per gallon in the fourth quarter of twenty twenty three, part of our record setting fourth quarter results last year. In comparison to the prior year, which saw a sharp drop in crude oil prices during the quarter, crude oil prices were more range bound during the fourth quarter of twenty twenty four. And as a result, our retail fuel margins, while good, were not as strong as the prior year due to this lack of favorable price volatility. For volume on a same store basis, our overall retail volume increased 2% for the quarter year over year. Based on national demand data available to us, national gasoline demand was down approximately 4% for the quarter. Speaker 200:04:46So on a relative basis, our same store retail volume outperformed. Our company operated stores volume performed very well during the quarter again, growing same store volume by approximately 4% for the quarter year over year. Again, some of this was due to unique circumstances within our portfolio compared to the prior year, particularly at our New York three way sites, which benefited from reopened travel plazas at a number of locations compared to the prior year when the locations were open, but the main facilities were under construction. In the period since the quarter end, retail same store volume, both company operated and commission has been down around 4% year to date, consistent with overall national demand, which is also down approximately 4% based on the data available to us. Our portfolio in particular has been impacted by some of the severe winter weather we have experienced so far this year in the Eastern United States, particularly in our Southern markets that don't typically see the extreme cold or wintry precipitation we have had this year. Speaker 200:05:51In the same period, retail fuel margins have been at a slightly lower level than the overall results from the fourth quarter as typically is the case in the early months of the year. For inside sales, on a same site basis, our inside sales were up 1% compared to the prior year for the fourth quarter. Inside sales excluding cigarettes increased 2% year over year on a same store basis for the quarter. As with fuel demand, based on national demand data available to us, national demand for inside store sales was weak for the fourth quarter, down approximately 1% on an overall sales basis year over year. So again, on a relative basis, our retail segment inside sales outperformed the industry for the quarter. Speaker 200:06:39Across America, our store sales performance was primarily led by the categories of packaged beverages and other tobacco as in the prior quarters. On the store merchandise margin front, our merchandise gross profit increased 27% to $28,100,000 driven by our increased sales from the higher store count. The store merchandise margin percentage increased slightly for the quarter compared to the prior year. On the store merchandise margin front, we are conscious of the inflationary pressures our consumers have felt and continue to experience and have sought to expand our value offerings to consumers. And additionally, we are focused on realizing internal efficiencies to drive margins as opposed to simply raising prices on our customers. Speaker 200:07:26In the period since the quarter end, same store inside sales have been slightly down compared to the prior year with adverse winter weather and the continued soft demand environment impacting the results. In our retail segment, if you look at our company operated site count, we are up 69 company operated retail sites from the prior year. The increase in company operated site count was primarily driven by our completion of the conversion of the Apple Green lease locations to company operated retail sites in the spring of the prior year. Our commission agent site count increased by 30 sites relative to the fourth quarter of twenty twenty three and four sites relative to the third quarter of twenty twenty four as we continue to execute on our strategic class of trade conversions to the retail channel. In total, we have increased our overall retail site count by nine to nine sites for the fourth quarter of twenty twenty four compared to our retail site count at the end of the fourth quarter of twenty twenty three. Speaker 200:08:28Based on these numbers, you can see that we were extremely active during the past twelve months with site conversions and executing on our strategy to increase our exposure to retail fuel margins and to the retail business in general. Overall, it was another positive quarter for our retail segment as our same store inside sales, same store fuel volume, merchandise gross profit and store merchandise margin percentage were all up relative to the prior year. Moving on to the wholesale segment. For the fourth quarter of twenty twenty four, our wholesale segment gross profit declined 22% to $25,900,000 compared to $33,000,000 in the fourth quarter of twenty twenty three. The decrease was driven by a decline in both fuel volume and margin per gallon. Speaker 200:09:18The primary factor in regards to the fuel volume decline by a significant degree was the conversion of certain lessee dealer sites to company operated and commission agent sites, which are now accounted for in the retail segment. Our wholesale motor fuel gross profit decreased 23% to $14,800,000 in the fourth quarter of twenty twenty four from $19,300,000 in the fourth quarter of twenty twenty three. Our fuel margin declined 13% from $0.094 per gallon in the fourth quarter of twenty twenty three to $0.082 per gallon in the fourth quarter of twenty twenty four. The decline in our wholesale fuel margin per gallon was primarily driven by the relative level of crude oil prices within the two periods and its corresponding impact on the terms discount we receive on certain gallons. While we have been successful in our efforts to improve our overall cost of product, the impact of these efforts for this quarter was more than offset by the differences in the crude oil market between the two periods and its corresponding impact on our terms discount and other factors that determine our wholesale fuel margins. Speaker 200:10:29Our wholesale volume was 180,500,000 gallons for the fourth quarter of twenty twenty four compared to 205,300,000 gallons in the fourth quarter of twenty twenty three, reflecting a decline of 12%. The decline in volume when compared to the same period in 2023 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade. The gallons from these converted sites are now reflected in our retail segment results. For the quarter, our same store volume in the wholesale segment was down approximately 1% year over year. So the additional approximately 11% drop in volume, the difference between the overall volume decline of 12% and our same store volume decline of 1% for the segment was largely due to converting sites to the retail segment. Speaker 200:11:18As mentioned in my retail segment comments, national demand data available to us indicated national fuel demand was down around 4% for the quarter. So our same store wholesale volume performance for the fourth quarter outperformed overall national demand. In the period since the quarter end, wholesale same store volume has outperformed the national average with wholesale same store volumes down 1% to 2% compared to the national volume data of down around 4%. Regarding our wholesale rent, our base rent for the quarter was $10,300,000 compared to the prior year of $13,000,000 a decrease due to the conversion of certain lessee dealer sites to company operated sites. As we have stated in the past, these rent dollars are no longer the form of rent are now in our retail segment results through our fuel and store sales margins at these locations, which helped to drive our increase in retail segment operating income for the quarter. Speaker 200:12:17If you turn to the next slide, I will briefly review our segment performance for the full year. For the full year of 2024, our retail segment's gross profit increased 14% to $289,700,000 compared to $253,500,000 for the full year of 2023. Merchandise gross profit rose $20,100,000 or 22% while our motor fuel gross profit increased $12,200,000 or 9% and other revenue increased $3,700,000 or 23%. On a same store basis, our fuel volume for the retail segment decreased 1% for the full year 2024 compared to 2023, which again relative to national demand data we have available to us demonstrates the outperformance of our volume relative to national data. Our retail store sales excluding cigarettes on a same store basis declined 1% for the full year 2024, which also compares favorably to national data on industry same store sales. Speaker 200:13:26Our wholesale segment generated gross profit of $108,600,000 for the full year 2024, a 16% decline when compared to the $128,800,000 reported in 2023. The decrease was driven by a 12 decline in fuel volume. The decline in volume when compared to the same period in 2023 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade. We also experienced a slight decline in fuel margin down 1% for the twelve month period. Our fuel margin for the wholesale segment was $0.085 per gallon for the full year of 2024 compared to $0.086 per gallon for the full year of 2023. Speaker 200:14:13Our wholesale volume was 743,500,000 gallons for the twelve month period ending 12/31/2024 compared to 842,600,000 gallons for the same period of 2023. For the full year, our same site wholesale volume was down slightly more than 1%, which based on national data available to us, outperformed the overall national volume demand. We also continue to evaluate our portfolio and look for opportunities to divest non core properties. For the fourth quarter of twenty twenty four, we divested 11 sites for 17,300,000 in proceeds. For the full year of 2024, overall, we divested 30 properties or $36,300,000 in proceeds. Speaker 200:15:02We were quite active with divestitures in 2024, especially in the back half of the year as we had indicated on prior calls would be the case. We expect that momentum to continue to 2025 as this continues to be an area of focus and effort for us. Our volume of transactions in this area is evidence of the execution of our overall business strategy as we seek to exit certain sites to generate capital to deploy elsewhere in our portfolio or into our balance sheet. Overall, 2024 was a mixed year for us. We had a challenging start to the year and then throughout the year, the oil market did not provide the same fuel margin generating possibilities as in the prior year, which in large part drove the overall decline in our EBITDA 2024 compared to the prior year. Speaker 200:15:54In addition, inflationary pressures on consumers and the interest rate environment were further headwinds on our financial results for the year. Despite these challenges, we made significant progress on our long term strategic goals. We converted 107 sites to our retail class for trade, either as company operated sites or commission locations. These conversions position our portfolio to generate more profitability over the long term, although they do generate short term volatility and expense. Despite the challenging market environment, our retail sites had strong volume performance and our company operated sites also generated strong inside sales relative to the overall market, a sign of the successful execution of our retail strategy. Speaker 200:16:40Also, we were successful in divesting locations with the greatest volume by dollar amount of divestitures in our history in 2024. These divestitures allowed us to recycle capital and to strengthen our balance sheet. If we turn to the next slide. For 2025, we will continue to optimize our portfolio, strategically converting sites to retail when it makes sense to do so. In our retail portfolio, we will focus on executing the basics well and providing our customers with a great experience and value to ensure we continue to be their preferred destination. Speaker 200:17:17For our wholesale customers, we will continue to partner with them to ensure that together our businesses thrive and meet our customers' needs in 2025 and beyond. During 2025, we also expect to continue our portfolio divestitures along the lines of what we achieved in 2024, recycling capital to invest in growth opportunities in our business and to strengthen our balance sheet. Our business remains a steady and dependable operation that consistently generates cash flow as demonstrated by our results over the past several years. We have shown resilience in demand through the pandemic and societal shifts such as remote work and telecommunity and the impact of electrification. We successfully navigated record inflation and our balance sheet absorbed the impact of a more than 500 basis point rise in interest rates since early twenty twenty two. Speaker 200:18:11Despite these challenges, we have continued to deliver solid financial performance. As we move into 2025 and beyond, we remain committed to executing our strategy, while adapting to market conditions to ensure we continue to generate strong results for our unitholders. With that, I'll turn it over to Maura for more detailed financial review. Speaker 100:18:35Thank you, Charles. If you would please turn to Slide eight, I would like to review our fourth quarter results for the Partnership. We reported net income of $16,900,000 for the fourth quarter of twenty twenty four compared to net income of $16,700,000 in the fourth quarter of twenty twenty three. The slight increase in net income was primarily driven by a net gain of $11,500,000 associated with our ongoing real estate rationalization effort and a tax benefit of approximately $1,800,000 This was offset by lower adjusted EBITDA during the quarter, which I'll touch on in a moment, as well as a $2,900,000 increase in interest expense year over year. Adjusted EBITDA was $35,500,000 for the fourth quarter of twenty twenty four, down 26% from adjusted EBITDA of $47,600,000 for the fourth quarter of twenty twenty three. Speaker 100:19:35Our distributable cash flow for the fourth quarter of twenty twenty four was $21,100,000 a decline from $35,800,000 for the fourth quarter of twenty twenty three. The decreases in adjusted EBITDA and distributable cash flow were primarily due to the comparison to our record results in the fourth quarter of twenty twenty three, which were benefited by very strong fuel margins per gallon in both our retail and wholesale segments. Our twenty twenty four fourth quarter results were also impacted by the increase in our operating expenses in the retail segment, partially offset by an increase in gross profit in our Retail segment, both primarily due to our class of trade transitions. Additionally, distributable cash flow was impacted by our higher cash interest expense during the quarter. Our distribution coverage for the current quarter was 1.06x compared to 1.8x for the fourth quarter of twenty twenty three. Speaker 100:20:39During the fourth quarter of twenty twenty four, the Partnership paid a distribution of $0.525 per unit. Charles provided information on our volume and merchandise performance during the quarter in his comments, and I will now touch on the expense portion of our operations. Operating expenses for the fourth quarter increased $10,700,000 compared to the fourth quarter of twenty twenty three, comprised of a $12,600,000 increase in our retail segment, offset by a 1,900,000 decrease in our Wholesale segment. The increase in our Retail segment was driven primarily by the increased site count in that segment compared to the prior year, specifically the increase in our company operated locations due to the class of trade conversions that Charles referenced in his comments. Retail segment operating expenses for the fourth quarter of twenty twenty four increased approximately 32% from the prior year, while our average segment site count was up 22%. Speaker 100:21:46Within that 22% increase in retail segment site count, our company operated average site count increased 25%. Our company operated locations are our highest operating expense per site class of trade, so adding an even higher percentage of those locations results in an increase in total segment operating expenses. With regards to our sites that we converted to the retail segment over the past year, we typically experience a more elevated expense profile during the initial ramp up period. After this initial period, the stores then look like from an expense profile, our other company operated sites. Our teams will look to manage this transition to a more typical operating expense profile for these sites as we move into 2025. Speaker 100:22:39On a same store basis, operating expenses in our retail segment were up approximately 8% for the fourth quarter of twenty twenty four compared to the fourth quarter of twenty twenty three. With the increases primarily in the area of store labor and repairs and maintenance. Our labor expense increase during the quarter was higher on a percentage basis than prior quarters, but still a moderate percentage overall and we feel good about our approach and management of labor, our largest single retail segment expense category. The bulk of same store operating expense increase year over year during the fourth quarter was due to increases in repairs and maintenance spending. This was due to two primary factors: spending on certain items such as food equipment items to expand our in store offerings that due to their costs are not capitalized and instead our income statement expense items, as well as an increase in actual maintenance spend during the quarter due to the timing of equipment breakdowns. Speaker 100:23:47We remain focused on prudent and effective expense management at our locations as we move into 2025, ensuring that we are investing in areas of our sites that will drive their long term health and sustainability. Operating expenses in our wholesale segment declined by $1,900,000 or 21% for the quarter year over year due to declines in site level operating expenses and management fees as our wholesale segment site count declined 13% year over year. Our G and A expenses declined 3% for the quarter year over year, primarily due to lower equity compensation expense and legal fees. Turning to the full year of 2024, net income declined to $22,500,000 from $42,600,000 in 2023. The decline was primarily driven by a decline in adjusted EBITDA as well as an increase in interest expense. Speaker 100:24:52We recorded the required GAAP loss on lease termination in connection with the Applegreen acquisition during the year, which was offset by gains recorded on our sales of assets during 2024. Adjusted EBITDA was $145,500,000 for the full year of 2024 compared to $165,800,000 in 2023. For the full year of 2024, distributable cash flow was $86,000,000 compared to $116,700,000 for the full year of 2023. The decrease in distributable cash flow was due to lower adjusted EBITDA earned in 2024 compared to 2023, as well as by our increase in cash interest expense that also impacted our full year 2024 net income. Our distribution coverage for the full year of 2024 was 1.08x compared to 1.46x for the full year of 2023. Speaker 100:26:00Operating expenses for the full year of 2024 increased $33,200,000 or 17% compared to the full year of 2023. As I noted earlier during my fourth quarter discussion, the increase was primarily driven by incremental operating expenses in our retail segment due to the conversion of lessee dealer and commission locations to company operated locations. Retail segment operating expenses increased 25% in 2024 compared to 2023, slightly ahead of the 20% increase in average retail segment site count during the year compared to the prior year. Same store retail segment operating expenses were up approximately 3% in 2024 compared to 2023. During the year, we were able to manage our same store labor expenses to an approximately 2% increase compared to the prior year with our teams focused on effectively and efficiently staffing our company operated stores in particular. Speaker 100:27:07Prepares and maintenance expense was the other primary contributor to our same store operating expense increase in the retail segment during the year. Increased management fees also contributed to the increase in retail segment operating expenses during the year as we selectively added above store headcount to manage our expanded retail footprint. Wholesale segment operating expenses declined $6,200,000 in 2024 compared to 2023, primarily due to our reduced site count in the wholesale segment, which resulted in lower management fees as well as lower site level expenses, including repairs and maintenance. On a full year basis, our G and A expenses increased from $27,000,000 in 2023 to $28,800,000 in 2024, primarily driven by higher management fees and system and information technology costs, partially offset by lower equity compensation expense. Moving to the next slide, we spent a total of $7,200,000 on capital expenditures during the fourth quarter with $5,100,000 of that total being growth related capital expenditures. Speaker 100:28:27During this past quarter, growth related capital spending was focused on our company operated locations and included targeted material renovations as well as projects to increase food offerings, both our own and QSRs. For the full year of 2024, capital expenditures were $26,300,000 with $18,000,000 being growth related CapEx. As of 12/31/2024, our total credit facility balance was $767,500,000 and our credit facility defined leverage ratio was 4.36 times. As we move into 2025, we remain focused on our operational performance and associated cash flow to manage our leverage ratio at approximately four times on a credit facility defined basis. Our cash interest expense increased from $10,000,000 in the fourth quarter of twenty twenty three to $12,900,000 in the fourth quarter of twenty twenty four and from $40,500,000 in calendar twenty twenty three to $50,400,000 in 2024. Speaker 100:29:46We had positive rate savings from the interest rate swaps we entered into during 2023, but we did have three highly valuable interest rate swaps from the first quarter of twenty twenty that expired at the end of the first quarter of twenty twenty four, which increased our overall interest costs for the year and during the fourth quarter. At this time, a little more than 50% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended, which remains an advantaged rate in the current rate environment. Our credit facility balance during the fourth quarter of twenty twenty four was also higher than the prior year, primarily due to the Applegreen transaction that we completed during the second quarter. The higher credit facility balance due to the acquisition also contributed to the increase in our interest expense year over year. Our effective interest rate on the total CapTel credit facility at the end of the fourth quarter is 6.2. Speaker 100:30:50In conclusion, as Charles noted, the Partnership had a mixed year in 2024, facing the headwinds from a challenging first quarter and macroeconomic demand environment. So having completed significant strategic activities to continue to position the portfolio to generate durable and consistent cash flows into the future. We remain focused as a team on continuing to execute in our base business as well as the ongoing efforts to ramp operations of our converted stores to optimize their performance moving forward. We are looking forward to the year ahead maintaining a strong balance sheet and generating value for our unitholders. With that, we will open it up for questions. Operator00:31:36Thank you. We will now begin the question and answer session. Speaker 200:32:21It doesn't appear that we have any questions today. Should you have one later, please feel free to reach out to us. Again, thank you for joining us today and have a great rest of your day. Operator00:32:34Thank you. This concludes today's conference. Thank you for participating. You may now disconnect.Read morePowered by