CrossAmerica Partners LP (CAPL) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 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 38,120,481 common units outstanding as of October 31, 2025.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Operating Revenues | $971.8 million | $1,079.2 million | $2,796.2 million | $3,154.1 million |
| Gross Profit | $104.8 million | $111.2 million | $295.6 million | $297.3 million |
| Operating Income | $28.1 million | $27.1 million | $71.6 million | $42.2 million |
| Net Income | $13.6 million | $10.7 million | $31.6 million | $5.6 million |
| Net Income Available to LPs | $12.9 million | $10.1 million | $29.6 million | $3.7 million |
| Diluted EPS | $0.34 | $0.27 | $0.77 | $0.10 |
| Adjusted EBITDA | $41.3 million | $43.9 million | $102.7 million | $110.1 million |
| Distributable Cash Flow | $27.8 million | $27.1 million | $59.3 million | $64.9 million |
| Distribution Coverage Ratio | 1.39x | 1.36x | 0.99x | 1.08x |
| Total Debt (Credit Facility + Leases) | $711.0 million | $775.4 million | $711.0 million | $775.4 million |
| Cash and Equivalents | $5.8 million | $7.8 million | $5.8 million | $7.8 million |
Material Changes vs. Prior Period
- Revenue Decline: Operating revenues decreased 10% in Q3 and 11% YTD compared to 2024. This was driven primarily by a 7-9% decrease in average fuel selling prices (WTI crude oil dropped ~14%) and a 5% decrease in volume due to the net loss of independent dealer contracts and base business volume reductions.
- Profitability Improvement: Despite lower revenues, Operating Income increased 4% in Q3 and 70% YTD. This was significantly aided by a $40.8 million net gain on dispositions and lease terminations YTD 2025, compared to a $6.5 million loss in the same period in 2024 (which included a $16 million loss on the Applegreen lease termination).
- Asset Rationalization: The company sold 96 sites YTD 2025 for $94.5 million in proceeds. This strategy reduced the lessee dealer count in the Wholesale segment and converted some sites to Retail operations.
- Interest Expense: Interest expense decreased 17% in Q3 and 4% YTD due to lower average SOFR rates and a reduced average debt balance from applying site sale proceeds to the Credit Facility.
- Impairment Charges: Depreciation, amortization, and accretion expense increased 20% YTD, primarily due to a $15.5 million increase in impairment charges related to real estate rationalization.
Guidance, Outlook, and Risks
- Outlook: Management anticipates continued impact from volatile crude oil prices. The company plans to continue divesting lower-performing assets to generate gains and reduce debt, while converting lessee dealer sites to company-operated or commission agent sites to optimize gross profit.
- Capital Allocation: Growth capital expenditures increased YTD 2025 to $21.5 million (vs. $13.0 million in 2024), focused on renovations and food offerings at company-operated sites. Proceeds from asset sales are being used to pay down the Credit Facility.
- Liquidity: As of September 30, 2025, availability under the Credit Facility was $215.1 million. The effective interest rate on the facility was 5.8%.
- Risks: Key risks include motor fuel price volatility, competition, environmental liabilities, and the ability to maintain distribution coverage ratios. The filing notes that three favorable interest rate swap contracts matured in April 2024, increasing the effective interest rate.
- Management Changes: Stephen Lattig resigned as Senior Vice President of Retail effective October 31, 2025. A waiver of forfeiture was approved for a portion of his equity awards.
Investor Verification Checklist
- Asset Sales Impact: Verify the sustainability of operating income growth given the significant one-time gains ($40.8M YTD) from asset dispositions versus the decline in core fuel gross profit.
- Volume Trends: Monitor the 5% volume decline in both wholesale and retail segments to assess if the loss of independent dealer contracts is a temporary or structural issue.
- Debt Servicing: Confirm the impact of the maturing low-rate interest swaps on future interest expense and the ability to maintain the 1.0x+ distribution coverage ratio in a higher-rate environment.
- Real Estate Strategy: Review the pipeline of remaining assets held for sale ($6.1 million) and the success of converting lessee dealer sites to higher-margin retail operations.
- Related Party Transactions: Note the significant volume of transactions with the Topper Group (management) and TopStar (affiliated retailer), including $27.3 million in revenue from TopStar YTD 2025.