ALLENTOWN, Pa. — Despite ongoing economic headwinds, CrossAmerica Partners LP's retail segment performed particularly well during the first quarter of 2023, with same-store volumes, store sales and inside sales margin all higher relative to the prior year, President and CEO Charles Nifong reported during the partnership's first-quarter 2023 earnings call this month.
For the period that ended March 31, retail segment gross profit increased 5 percent, or $2.3 million, vs. the first quarter of 2022.
[Read more: CrossAmerica Partners Sees Lift in Retail Segment]
Compared to the same period last year, same-store inside sales increased approximately 4 percent. Merchandise sales, excluding cigarettes, increased 10 percent for the first quarter of 2023. CrossAmerica's merchandise gross profit increased from 26.8 percent in Q1 of 2022 to 27.8 percent in Q1 of 2023. The improved performance was driven particularly by higher sales and improved margins, respectively, in the packaged beverage and snacks categories, Nifong noted.
"On the margin front, our store margin was up approximately 100 basis points year over year due in part to strong sales performance in higher-margin categories, as well as certain initiatives we have in place in regard to pricing, product sourcing and promotions," the executive said. "In the period since the quarter ended, same-store inside sales are up between 3 percent to 5 percent over the prior year."
The retail segment sold 191.1 million retail fuel gallons during the first quarter 2023, which was an increase of 3 percent year over year. Same-store retail segment fuel volume for Q1 2023 increased 2 percent from 111.3 million gallons during the first quarter of 2022 to 113.2 million gallons.
Other Financial Results
Moving to CrossAmerica's wholesale segment, gross profit in the first quarter was $31.2 million, an increase of 3 percent when compared to $30.3 million in the same period in 2022. Motor fuel gross profit was up 3 percent to $16.7 million year over year.
Wholesale volume was 201.9 million gallons in Q1 2023 vs. 203.9 million gallons in Q1 2022. The decline in volume year over year was largely due to lower volume in the partnership's base business, partially offset by the acquisition of assets from Community Service Stations that was completed in the fourth quarter of 2022.
"The first quarter wholesale results include the first full quarter of our Community Service Stations acquisition in our financial results. The acquisition is performing in line with our expectations, and we are pleased to have these high-quality assets in our portfolio," Nifong said.
CrossAmerica Partners also reported other financial results:
- Net loss just under $1 million for Q1 2023 vs. net income of $5 million in Q1 2022.
- Adjusted EBITDA was $31.7 million for the first quarter of 2023, a slight decrease of 1 percent year over year.
- Operating expenses increased 8 percent, or $3.5million, primarily due to increased store-level employment costs for company-operated locations.
- Capital expenditure totaled $6 million, with $4 million of that total being growth-related, and included targeted investments in fuel dispensers, as well as store upgrades and rebranding.
During the quarter, CrossAmerica also completed the refinancing of its credit facility, increasing the facility size and extending out its duration for another five years. This refinancing simplified the partnership's capital structure and provides the company with the necessary capital and liquidity to "successfully operate our business going forward," Nifong told investors.
[Read more: CrossAmerica Acquiring 100-Plus Convenience Stores From 7-Eleven]
As a continued strategy from 2022, CrossAmerica evaluates its portfolio and looks for opportunities to divest noncore properties. For the first quarter of 2023, the partnership divested one property for $400,000. Subsequent to the quarter's end, it sold an additional two properties for a total of $6.6 million.
Allentown-based CrossAmerica Partners LP is a leading 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 and distributes fuel to approximately 1,700 locations and owns or leases approximately 1,150 sites.