ALLENTOWN, Pa. — CrossAmerica Partners LP's acquisition of assets from 7-Eleven Inc. that occurred during the third quarter in 2021 materially contributed to record results in 2022, demonstrating the strategic value of the transaction, President and CEO Charles Nifong reported during the partnership's fourth-quarter and full-year 2022 earnings call.
"As a result of [the acquisition] and the many strategic actions we have taken since 2019, the partnership is well positioned to perform now and in the future," the executive said during the call. "We have a demonstrated track record over the last several years of financial performance across multiple economic environments. And in particular, our 2022 results illustrate our ability to capitalize on a favorable macro environment to generate extraordinary performance."
During Q4 2022, retail segment gross profit increased $10.2 million. For the full year, gross profit had a 61 percent lift when compared to the full year of 2021.
Same-store merchandise sales, excluding cigarettes, increased 6 percent for the fourth quarter of 2022 and 2 percent for the fiscal year 2022. The full-year increase was due to higher retail prices and the increase in company-operated sites as a result of the acquisition of assets from 7-Eleven.
Merchandise gross profit increased from 25.4 percent for Q4 2021 to 27.5 percent for Q4 2022. The increase was primarily due to improved merchandise margins in packaged beverages, snacks and certain tobacco products, including cigarettes. For the full-year 2022, merchandise gross profit increased to 27.2 percent from 26.4 percent for the full year 2021.
The retail segment sold 125.1 million of retail fuel gallons during the fourth quarter 2022, which was relatively flat when compared to the fourth quarter of 2021. Same-store retail segment fuel volume for the fourth quarter 2022 declined 1 percent from 120.2 million gallons during the fourth quarter 2021 to 119.2 million gallons.
Other Financial Results
Moving to CrossAmerica's wholesale segment, fuel gross profit in the fourth quarter of 2022 was up 6 percent year-over-year to $32.8 million. For the fiscal year 2022, wholesale gross profit increased 5 percent from $124.7 million in 2021 to $130.7 million.
Same-store fuel volume for the full year 2022 was 324.8 million gallons compared to 329.3 million gallons for the same period of 2021, representing a slight decline of 1 percent.
CrossAmerica Partners also reported other financial results:
- Net income was $17.1 million for the fourth quarter of 2022 vs. $12 million for year-ago period, and full-year 2022 net income of $63.7 million.
- Adjusted EBITDA was $44.3 million for Q4 2022, a 20 percent increase, vs. the same period one year ago. Full-year 2022 adjusted EBITDA was up 46 percent to $179.8 million.
- Operating expenses in Q4 of 2022 increased $4.5 million, or 11 percent.
- For the full-year 2022, capital expenditures totaled $30.4 million, with $23.2 million of that being growth-related and included continued investment in car wash upgrades, and targeted store upgrades and rebranding.
In November, CrossAmerica closed on the acquisition of Community Service Stations Inc. for a purchase price of $27.5 million, plus working capital. The transaction included wholesale fuel supply contracts to 38 dealer owned locations, 35 subjobber accounts and two commission locations, one fee based and one lease. The deal was financed through borrowings on the CAPL Credit Facility and cash on hand.
In addition to acquiring assets, the partnership continues to evaluate its portfolio and look for opportunities to divest noncore properties. During the 12 months ended Dec. 31, 2022, CrossAmerica sold 27 properties for $12.9 million in proceeds, resulting in a net gain of $3.5 million.
"We have been successful with these types of divestitures over the last three years, although this past year, we were slightly less active on the sales front than we had hoped," Nifong said. "However, we have a good pipeline. We are constantly evaluating our portfolio to look for opportunities to enhance our returns by recycling capital to invest in growth opportunities within our portfolio."
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 1,750 locations and owns or leases approximately 1,150 sites.