CrossAmerica Partners LP (CAPL)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was seasonally weak but showed modest improvement: Adjusted EBITDA rose 3% YoY to $24.3M, while net loss narrowed to $7.1M; distribution coverage fell to 0.46x as higher interest expense and sustaining capex weighed on DCF .
• Versus Wall Street, revenue beat consensus, but EBITDA and Primary EPS missed: revenue $0.789B vs $0.735B consensus (+7%); EBITDA $23.3M vs $31.0M consensus (-25%); Primary EPS -$0.29 vs -$0.06 consensus; CAPL also reported GAAP diluted EPS of -$0.20 per unit (S&P Global data for consensus/Primary EPS/EBITDA)*.
• Fuel margins were a relative highlight: retail margin per gallon increased 10% YoY to $0.339, wholesale margin per gallon rose 23% to $0.097; same-store volumes and inside sales declined amid weak demand and winter weather .
• No formal revenue/earnings guidance; distribution was maintained at $0.525 per unit; management reiterated focus on retail conversions, cost discipline, and asset rationalization into peak driving season .

What Went Well and What Went Wrong

What Went Well

• Retail fuel margin per gallon increased 10% YoY to $0.339, driving a 20% increase in retail motor fuel gross profit; wholesale margin per gallon rose 23% to $0.097, lifting wholesale motor fuel gross profit 8% YoY .
• Management executed on asset rationalization: seven sites sold for $8.6M with $5.6M net gains, supporting reported operating income and overall capital recycling .
• CEO emphasized margin strength and portfolio optimization: “A highlight of the quarter was the relative strength of our fuel margins across both our wholesale and retail segments…we continued to successfully execute our asset rationalization strategy” .

What Went Wrong

• Same-store retail gallons declined 4% YoY (≈3% excluding leap-year impact); same-store merchandise sales excluding cigarettes fell 1%, reflecting subdued demand and winter weather effects .
• Distributable Cash Flow fell to $9.1M and current-quarter distribution coverage dropped to 0.46x, driven by higher cash interest expense and sustaining capex .
• Interest expense increased to $12.8M (effective rate ~6.1%), as favorable legacy swaps expired; leverage remained elevated at 4.27x, limiting near-term coverage .

Financial Results

Note: Revenue shown excludes excise taxes (Operating Revenues less excise) to align with consensus.

Values with * retrieved from S&P Global.

Segment breakdown (Q1 2025 vs Q1 2024):

KPIs and capital:

Guidance Changes

No formal quantitative guidance on revenue, margins, OpEx, OI&E, tax rate, or segment-specific metrics was provided; management highlighted continued execution and balance sheet focus .

Earnings Call Themes & Trends

Management Commentary

• CEO: “Our retail fuel margin was a relative highlight…our fuel margin was $0.339 per gallon…crude oil prices were more volatile…our retail fuel margin results reflect this volatility and are not the result of any changes in our pricing strategy” .
• CEO: “Our wholesale motor fuel gross profit increased 8%…fuel margin…from $0.079 to $0.097 per gallon…improve our overall cost of product” .
• CFO: “Adjusted EBITDA was $24.3 million…DCF was $9.1 million…distribution coverage…0.46x…driven by higher cash interest expense and sustaining capital” .
• CFO: “A little more than 50% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended…effective interest rate…6.1%” .

Q&A Highlights

• No analyst questions were recorded; management reiterated focus on execution, cost discipline, and capital allocation (closing remarks) .

Estimates Context

• Q1 2025 consensus vs actual (S&P Global):
  • Revenue: $0.735B consensus vs $0.789B actual → beat by ~$54M (+7%)*.
  • EBITDA: $31.0M consensus vs $23.3M actual → miss by ~$7.7M (-25%)*.
  • Primary EPS: -$0.06 consensus vs -$0.29 actual → miss by ~$0.23*.

Values with * retrieved from S&P Global. Note: S&P “Primary EPS” and “EBITDA” reflect standardized definitions and may differ from company GAAP diluted EPS and reported EBITDA/Adjusted EBITDA; CAPL reported EBITDA of $28.4M and Adjusted EBITDA of $24.3M .

Implications: Street models likely need lower EBITDA/EPS for Q1 and potentially higher fuel margin assumptions offset by demand/OpEx; revenue trajectory is resilient but composition (excise vs ex excise) and lapping effects matter.

Key Takeaways for Investors

• Revenue resilience with margin strength: retail/wholesale margin per gallon outperformed YoY despite volume softness; expect seasonal uplift into driving season .
• Cash flow pressure near term: higher interest expense and sustaining capex drove DCF/coverage down; hedges mitigate but leverage at 4.27x constrains flexibility .
• Strategy intact: continued conversions to retail and QSR/food expansion should support merchandise mix and long-term margin quality .
• Asset sales are an ongoing lever: real estate rationalization produced gains; management expects continued activity in 2025 .
• Tariff/macro watch: New England tariff episode and broader tariff uncertainty could influence costs and demand; monitor for further regulatory developments .
• Trading setup: Near-term stock reactions likely tied to margin commentary and summer demand prints; a beat on gallons or further margin expansion could catalyze, while weak DCF/coverage remains an overhang .
• Estimate resets: Given the EBITDA/EPS miss vs consensus, models may shift toward higher interest burden and OpEx, while maintaining constructive fuel margin assumptions (S&P Global data)*.