CrossAmerica Partners LP (CAPL)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 was mixed: Net Income rose 27% YoY to $13.6M on higher gains from asset sales and lower interest expense, while Adjusted EBITDA fell 6% YoY to $41.3M; distribution coverage improved to 1.39x and leverage dropped to 3.56x .
• Versus consensus, CAPL delivered a notable beat: EPS $0.34 vs $0.07 estimate, revenue $971.8M vs $780.9M estimate, and EBITDA essentially in line at $41.3M vs $40.8M; estimates sourced from S&P Global. Values retrieved from S&P Global.*
• Retail merchandise performance was strong (gross profit +5% YoY; margin +100 bps to 28.9%), partially offsetting weaker motor fuel margins and volumes; wholesale gross profit fell 10% on lower gallons and rent due to site conversions/divestitures .
• Strategic asset sales continued ($21.9M proceeds; 29 properties), strengthening the balance sheet and reducing credit facility balance by ~$21.5M QoQ; debt outstanding at quarter-end was $705.5M and effective rate 5.8% aided by swaps .
• Near-term catalyst: management noted very favorable October fuel margin environment post-quarter, suggesting a stronger start to Q4 and potential momentum in reported results and DCF coverage .

What Went Well and What Went Wrong

What Went Well

• Strong merchandise performance: merchandise gross profit increased to $32.0M (+5% YoY) and merchandise gross margin rose ~100 bps to 28.9% at company-operated sites, supported by mix shift to higher-margin categories and transition from commission to gross profit model .
• Expense discipline: total operating expenses declined 5% YoY to $57.5M, with retail OpEx down 3% and wholesale OpEx down 19%; G&A fell 11% on lower legal fees and equity comp .
• Balance sheet progress and coverage: leverage fell to 3.56x from 4.36x YE24 and distribution coverage improved to 1.39x; asset sales generated gains ($7.4M) and proceeds used to pay down debt .

Quote: “We generated solid operating results for the third quarter… completed approximately $22 million in [asset-sale] transactions… reduce debt… and enhance the long-term quality and performance of our portfolio.” — CEO Charles Nifong .

What Went Wrong

• Fuel margins/volumes softer: retail motor fuel gross profit fell $5.0M (-11% YoY) on a 5% decline in margin per gallon (38.4¢ vs 40.6¢) and 4% lower gallons; wholesale fuel margin per gallon fell 2% and gallons declined 5% .
• Adjusted EBITDA declined 6% YoY to $41.3M driven by lower fuel and rent gross profit despite expense savings; retail segment gross profit fell 4% and wholesale fell 10% YoY .
• Same-store fuel volumes down: retail -4% (commission sites ~-7% due to deliberate pricing changes); wholesale same-store volume -2.5% in line with national demand softness ~-2.5% .

Financial Results

Consolidated Performance vs Prior Quarters

Year-over-Year (Q3 2025 vs Q3 2024)

Segment Breakdown (Q3 2025 vs Q3 2024)

KPIs and Balance Sheet

Guidance Changes

No formal quantitative revenue/EBITDA guidance ranges were issued; management emphasized balance sheet strength and ongoing asset optimization .

Earnings Call Themes & Trends

Management Commentary

• CEO focus on strategic asset sales and portfolio quality: “We… completed approximately $22 million in transactions… reduce debt… and further advance our strategic objective of enhancing the long-term quality and performance of our portfolio.” — Charles Nifong .
• Retail strategy and pricing: commission-class pricing normalized after aggressive initial conversion pricing; balancing volume and margin at select sites .
• CFO on expenses and leverage: “Operating expenses… $57.5 million, a $3.2 million decrease YoY… leverage ratio… 3.56x… [with] more than 55% of our credit facility balance swapped to a fixed rate of approximately 3.4% blended… effective interest rate… 5.8%.” — Maura Topper .

Q&A Highlights

• No analyst Q&A occurred; management invited follow-up offline .
• Commentary clarified drivers of YoY Net Income increase (asset sale gains, lower interest) and YoY Adj. EBITDA decline (lower fuel/rent gross profit offset by expense reductions) .

Estimates Context

Values retrieved from S&P Global.*

• Q3 beats: EPS and revenue materially exceeded consensus; EBITDA was essentially in line. Expect upward revisions to near-term revenue and EPS models given stronger reported top-line and favorable October margin commentary; watch for normalization adjustments in EPS definitions (primary vs per-unit) given CAPL’s asset sale gains and preferred accretion .

Key Takeaways for Investors

• Asset sales remain a powerful lever to reduce debt and bolster Net Income via gains; $21.9M proceeds in Q3 and ~$100M YTD, with supply relationships largely maintained post-sale .
• Core operations: merchandise strength and expense control are offsetting softer fuel margins/volumes; retail merchandise margin expansion to 28.9% is notable .
• Balance sheet de-risking: leverage down to 3.56x; effective interest rate 5.8% aided by swaps (fixed ~55% at ~3.4% blended), lowering cash interest and supporting DCF .
• Near-term setup: management flagged very favorable October fuel margins, implying potential Q4 strength in retail fuel profitability and DCF coverage .
• Distribution maintained at $0.5250; coverage improved to 1.39x this quarter, indicating improved payout sustainability amid asset optimization .
• Watch mix/pricing in commission sites: deliberate pricing strategy changes prioritize margin over volume; expect SSS gallons softness to persist while margins normalize with market volatility .
• Estimate implications: Street likely revises up revenue and EPS near-term; maintain awareness of EPS comparability due to asset sale gains and primary EPS vs per-unit reporting differences. Values retrieved from S&P Global.*