CrossAmerica Partners LP - Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. CrossAmerica Partners LP (CAPL) operates in two primary segments: wholesale motor fuel distribution and retail motor fuel sales (including convenience merchandise). The company is an accelerated filer with 38,154,331 common units outstanding as of May 1, 2026.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Operating Revenues | $841.8 million | $862.5 million |
| Gross Profit | $97.6 million | $89.8 million |
| Operating Income | $23.8 million | $2.0 million |
| Net Income | $10.7 million | ($7.1 million) loss |
| Net Income per Unit (Diluted) | $0.26 | ($0.20) |
| Adjusted EBITDA | $35.1 million | $24.3 million |
| Distributable Cash Flow | $21.5 million | $9.1 million |
| Distribution Coverage Ratio | 1.07x | 0.46x |
| Total Debt & Finance Leases | $741.8 million | $697.0 million |
| Cash & Equivalents | $7.3 million | $6.7 million |
| Available Credit Facility | $238 million | N/A |
Material Changes vs. Prior Period
- Profitability Surge: Operating income increased by $21.7 million (108%) compared to Q1 2025, driven by a $7.8 million increase in gross profit and a $9.2 million reduction in depreciation, amortization, and accretion expenses.
- Revenue Decline: Operating revenues decreased 2% ($20.6 million) due to a 6% volume decline in fuel sales and a 15% drop in rent income from site divestitures and conversions.
- Impairment Reduction: Depreciation and amortization expenses dropped significantly due to a $7.3 million decrease in impairment charges compared to the prior year.
- Asset Sales: The company sold 16 properties for $12.7 million in proceeds, resulting in a net gain of $6.3 million, up from $5.6 million in gains in Q1 2025.
- Lease Accounting Change: An amendment to the Getty lease in January 2026 triggered a reclassification of 106 sites from operating to finance leases, increasing finance lease obligations by $56.3 million.
Outlook, Risks, and Management Commentary
- Real Estate Rationalization: Management continues to optimize the "class of trade" for its assets, divesting lower-performing properties while often retaining fuel supply contracts. This strategy is expected to reduce gross profit in the wholesale segment but increase it in the retail segment.
- Capital Allocation: Proceeds from site sales are being used to pay down the Credit Facility, which is expected to reduce interest expense. Capital expenditures were $3.4 million in Q1 2026, down from $10.1 million in Q1 2025.
- Distributions: The company paid $0.5250 per unit in distributions for the quarter. The Distribution Coverage Ratio improved to 1.07x, indicating sufficient cash flow to cover distributions.
- Risks: Key risks include volatility in crude oil prices, which directly impacts gross margins; concentration risk with fuel suppliers (81% from four suppliers); and environmental liabilities associated with site operations.
Investor Verification Checklist
- Lease Amendment Impact: Verify the long-term cash flow implications of the Getty lease amendment reclassifying 106 sites to finance leases and the associated $56.3 million liability increase.
- Volume Trends: Monitor the 6% decline in fuel volume and the net loss of independent dealer contracts to assess if this is a temporary seasonal dip or a structural shift.
- Divestiture Pipeline: Review the remaining "Assets Held for Sale" ($7.7 million) and the pace of future sales to gauge the sustainability of the current gain-on-disposition income.
- Debt Covenants: Confirm continued compliance with the Credit Facility covenants, noting the $238 million availability and the effective interest rate of 5.6%.
- Related Party Transactions: Review the $30.2 million in expenses incurred under the Omnibus Agreement with the Topper Group and other related-party dealings for potential conflicts of interest.