CrossAmerica Partners Adds to Retail Segment's Store Count
ALLENTOWN, Pa. — CrossAmerica Partners LP has taken steps over the past 12 months to increase its exposure to retail and, as a result, the partnership's retail segment is now larger than the wholesale segment.
"We expect this to be the case going forward as we continue to execute on our strategic vision to increase our retail footprint for our retail segment," President and CEO Charles Nifong reported during the partnership's second quarter 2024 earnings call on Aug. 9.
For the quarter ended June 30, the partnership is up 80 company-operated retail sites from the year-ago period and up 29 sites relative to the first quarter of 2024. The increase in company-operated sites for the second quarter was primarily driven by the conversion of assets from Applegreen Midwest LLC and Applegreen Florida LLC, which was completed in April.
The partnership also increased its number of commission agent sites by 27 when compared to the second quarter of 2023 and by 14 sites when compared to the first quarter of 2024.
Overall, CrossAmerica increased its retail site count by 43 locations during the second quarter of 2024.
In addition to building upon its network of company-operated sites, CrossAmerica is committed to divesting noncore properties. During the quarter the partnership divested 10 properties for $11.9 million in proceeds, resulting in a net gain of $6.5 million.
"We've been busy building up a pipeline of divestiture properties and the results this quarter provide an initial indication of the work we have done in this area," Nifong said. "We have a very active pipeline of opportunities and expect to build on the divestiture volume realized in the second quarter during the second half of the year."
Retail Segment By the Numbers
As the partnership reported, the retail segment generated $76.6 million in gross profit, a 16% increase, compared to $66 million for the second quarter 2023. The surge for the second quarter of 2024 was primarily due to higher motor fuel (10%) and merchandise (23%) gross profits.
Same-store merchandise sales, excluding cigarettes, increased 2% year over year. Merchandise gross profit increased 23% to $29.8 million driven by increased sales from the higher store count, Nifong pointed out.
CrossAmerica's retail segment sold 143 million fuel gallons during the second quarter of 2024, which was an increase of 9% compared to the first quarter of 2024. The volume increase was attributed to the conversion of lessee dealer sites to company-operated and commission agent sites over the past year and during the quarter, offset by a 2% decline in volume for same-store locations.
Other Financial Results
Looking at additional financials, CrossAmerica reported for the second quarter:
- Wholesale segment gross profit decreased 11% to $28.1 million vs. $31.7 million for Q2 2023. The decrease was driven by a decline in fuel volume from the conversion of certain lessee dealer sites.
- Net income of $12.4 million vs. $14.5 million for the year-ago period.
- Adjusted EBITDA was $42.6 million for the second quarter of 2024, a slight increase of 1% over last year.
Additionally, the partnership realized a 7% year-over year increase in operating income for the second quarter compared to the prior year driven by the company's success in converting sites from the wholesale segment to retail.
"We managed this achievement despite an industry environment that remains soft with decreased fuel demand and weak demand in certain store categories," Nifong said. "… Overall, our results demonstrate the stability of our business and that we remain well positioned for future growth."
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 1,700 locations and owns or leases approximately 1,100 sites. Its geographic footprint covers 34 states.
