CrossAmerica Partners LP (CAPL) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. CrossAmerica Partners LP operates in two primary segments: Wholesale (distribution of motor fuel to lessee and independent dealers) and Retail (operation of retail sites selling fuel and convenience merchandise). The company is an accelerated filer with 38,118,027 common units outstanding as of August 1, 2025.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | YTD 2025 (6 Months) | Q2 2024 (3 Months) | YTD 2024 (6 Months) |
|---|---|---|---|---|
| Operating Revenues | $961.9M | $1,824.4M | $1,133.4M | $2,074.9M |
| Gross Profit | $101.0M | $190.8M | $104.8M | $186.1M |
| Operating Income | $41.5M | $43.5M | $28.2M | $15.1M |
| Net Income | $25.2M | $18.1M | $12.4M | $(5.1M) |
| Net Income Available to LPs | $24.5M | $16.7M | $11.8M | $(6.4M) |
| Diluted EPS | $0.64 | $0.44 | $0.31 | $(0.17) |
| Adjusted EBITDA | $37.1M | $61.4M | $42.6M | $66.1M |
| Distributable Cash Flow | $22.4M | $31.5M | $26.1M | $37.8M |
| Distribution Coverage Ratio | 1.12x | 0.79x | 1.30x | 0.95x |
| Total Debt (Gross) | $733.3M | $733.3M | $775.4M | $775.4M |
| Cash & Equivalents | $9.7M | $9.7M | $5.5M | $5.5M |
Material Changes vs. Prior Period
- Revenue Decline: Operating revenues decreased 15% in Q2 and 12% YTD compared to 2024. This was primarily driven by a 13% (Q2) and 10% (YTD) decrease in average fuel selling prices, correlating with a drop in WTI crude oil prices (down 21% in Q2 and 15% YTD). Volume also declined 4% (Q2) and 5% (YTD) due to the net loss of independent dealer contracts.
- Profitability Improvement: Despite lower revenues, Operating Income increased 47% in Q2 and 188% YTD. This was significantly aided by a $28.4M gain on dispositions and lease terminations in Q2 (vs. $5.6M in 2024) and a $33.4M gain YTD (vs. a $11.2M loss in 2024).
- Impairment Charges: Depreciation, amortization, and accretion expenses increased due to higher impairment charges ($6.1M in Q2; $14.9M YTD) related to real estate rationalization.
- Interest Expense: Interest expense decreased 12% in Q2 due to lower SOFR rates and reduced debt balances from site sale proceeds, though it increased 3% YTD due to the maturity of favorable interest rate swaps in April 2024.
Outlook, Risks, and Management Commentary
- Real Estate Rationalization: Management continues to divest lower-performing assets to optimize the class of trade. Proceeds from site sales ($72.8M YTD) are being used to pay down the Credit Facility, reducing interest expense.
- Segment Shifts: The company is converting lessee dealer sites to company-operated or commission agent sites. This increases retail segment gross profit and operating expenses while reducing wholesale segment gross profit.
- Liquidity: As of June 30, 2025, the company had $193.6M of availability under its Credit Facility. The effective interest rate on the facility was 6.1%.
- Risks: Key risks include volatility in crude oil prices, which directly impacts gross margins; the ability to pass fuel cost increases to retail customers; and the impact of interest rate fluctuations following the maturity of low-rate swaps.
- Distributions: The company paid $0.5250 per unit for Q2 2025. The Distribution Coverage Ratio for the six months ended June 30, 2025, was 0.79x, indicating distributions exceeded distributable cash flow for the period.
Investor Verification Checklist
- Gain Sustainability: Verify the extent to which the significant increase in operating income is driven by one-time gains on asset dispositions ($33.4M YTD) versus core operational performance.
- Volume Trends: Monitor the continued decline in fuel volumes (down 5% YTD) and the impact of losing independent dealer contracts on future revenue stability.
- Interest Rate Exposure: Assess the impact of the April 2024 maturity of favorable interest rate swaps on future interest expense, noting the effective rate is now 6.1%.
- Distribution Coverage: Review the 0.79x distribution coverage ratio for the first half of 2025 to evaluate the sustainability of the current $0.5250 quarterly distribution rate.
- Impairment Activity: Track future impairment charges associated with the ongoing real estate rationalization strategy, which increased D&A expenses by $12.5M YTD.