CrossAmerica Fuel Volume Gets Boost From Higher Store Count
ALLENTOWN, Pa. — CrossAmerica Partners LP's continued efforts to convert certain sites to company-operated stores is paying off.
Despite broader softness in fuel and store demand, the partnership posted a strong third quarter of 2024 attributable to company-operated stores, which delivered "sold results," President and CEO Charles Nifong reported during CrossAmerica's Q3 2024 earnings call on Nov. 7.
"Our company-operated stores delivered solid results, with a 2% increase in same-store fuel volume and strong same-store merchandise sales. Overall, retail segment fuel gallons, sales, gross profit and segment operating income were all materially higher year over year, driven by our strategic site conversions to the retail channel," he said.
Looking at its retail segment, CrossAmerica reported for the quarter ended Sept. 30 that gross profit increased 24%. This was driven by increases in motor fuel (26%) and merchandise gross profit (20%).
Same-store merchandise sales, excluding cigarettes, was relatively flat for Q3 2024 vs. Q3 2023. Merchandise gross profit increased 20% year over year to $30.5 million. Store merchandise margin declined slightly relative to the prior year due to certain costs associated with the expansion of the partnership's food and beverage offerings, particularly in recently converted retail locations.
CrossAmerica 2024 Earnings
CrossAmerica's retail segment sold 148.4 million gallons during the third quarter of 2024, an increase of 12% when compared to the third quarter of 2023. Same-store retail segment fuel volume for Q3 2024 was relatively flat year over year.
Speaking to unit count, Nifong reported that CrossAmerica is up 79 company-operated retail sites vs. the same quarter last year. At a total of 372 company-operated sites, the count is flat when compared to the second quarter of 2024.
"We gave our team a break on company-operated site conversions for the third quarter and focused our efforts on the operation at our newly converted sites," Nifong explained.
The partnership also increased its number of commission agent sites by 36 when compared to the third quarter of 2023 and by eight sites when compared to the second quarter of 2024.
Overall, CrossAmerica increased its retail site count by 115 locations during the third quarter of 2024 when compared to Q3 2023.
In addition to building upon its network of company-operated sites, CrossAmerica is committed to divesting properties. During the quarter the partnership divested nine properties for $7.2 million in proceeds, resulting in a net gain of $5.3 million.
"Based on these numbers, you can see that we have been extremely active during the past 12 months with site conversions and executing on our strategy to increase our exposure to retail fuel margins and the retail business overall," Nifong said.
Other Financial Results
Looking at additional financials, CrossAmerica reported for the third quarter of 2024:
- Wholesale segment gross profit declined 16% to $27.6 million compared to $32.9 million in the third quarter of 2023.
- Net income of $10.7 million for the third quarter of 2024 compared to $12.3 million for the third quarter of 2023.
- Adjusted EBITDA was $43.9 million, a slight decrease of 1% year over year.
Additionally, expenses for the retail segment increased 27%, primarily driven by a 27% (79 site) increase in the average company-operated site count due to conversion of certain lessee dealer and commission agent sites.
Allentown-based CrossAmerica Partners is a wholesale distributor of motor fuels, convenience store operator, and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is indirectly owned and controlled by entities affiliated with Joseph V. Topper, Jr., the founder of CrossAmerica Partners and a member of the board of the general partner since 2012.
Formed in 2012, CrossAmerica Partners LP is a distributor of branded and unbranded petroleum for motor vehicles in the United States. It distributes fuel to approximately 1,600 locations and owns or leases approximately 1,100 sites. Its geographic footprint covers 34 states.