10-K: CrossAmerica Partners LP Reports Mixed Results in 2024 10-K Filing

CrossAmerica Partners LP's 2024 10-K filing reveals a decrease in wholesale revenue offset by an increase in retail revenue, impacting overall profitability.

Summary

• CrossAmerica Partners LP's 2024 10-K filing indicates a decrease in operating revenues by 7% to $4.098 billion, compared to $4.386 billion in 2023.
• Operating income also decreased by 20% to $70.56 million in 2024 from $88.07 million in 2023.
• The wholesale segment experienced an 18% revenue decrease, while the retail segment saw a 6% increase.
• The company owns or leases approximately 1,100 sites and distributes motor fuel to approximately 1,600 sites across 34 states.
• The retail segment's merchandise revenues increased by 23% due to the conversion of lessee dealer sites to company-operated sites.
• The company's debt as of December 31, 2024, was $767.5 million, with $68.9 million available under its revolving CAPL Credit Facility.
• The Board declared a distribution of $0.5250 per unit, or $2.10 per unit on an annualized basis.
• The company completed the Applegreen Acquisition, converting 59 lessee dealer sites to company-operated sites for $16.9 million.

Sentiment

Score: 5

Explanation: The document presents a mixed picture, with some positive developments offset by declines in revenue and operating income. The outlook is uncertain, making it difficult to assess the overall sentiment.

Positives

• Retail segment revenues increased by 6% due to higher volumes from site conversions.
• Merchandise revenues in the retail segment increased by 23%.
• The company continues to focus on optimizing the class of trade for its assets.
• The company is in compliance with its financial covenants under the CAPL Credit Facility.

Negatives

• Operating revenues decreased by 7% to $4.098 billion in 2024.
• Operating income decreased by 20% to $70.56 million in 2024.
• Wholesale segment revenues decreased by 18% due to lower volumes and site conversions.
• Interest expense increased by $8.6 million (20%) due to the maturity of interest rate swap contracts and the general increase in interest rates.

Risks

• Volatility in crude oil and wholesale motor fuel costs could affect the company's business, financial condition, and results of operations.
• Intense competition and fragmentation in the wholesale motor fuel distribution and retail motor fuel industries could affect the company's ability to compete.
• Changes in consumer behavior and preferences could adversely affect the company's business.
• The Topper Group controls the company and may have conflicts of interest.
• The company relies on four principal suppliers for the majority of its motor fuel and one principal supplier for its merchandise.

Future Outlook

The company anticipates that 2025 results will be impacted by the conversion of sites, divestitures, and potential acquisitions, as well as fluctuations in motor fuel prices.

Industry Context

The convenience store industry is highly competitive and fragmented, with constant changes in the number and type of retailers. The company competes with other retail site chains, independently owned sites, motor fuel stations, supermarkets, drugstores, discount stores, dollar stores, club stores and hypermarkets.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or comparable companies.
• Without more information, it is difficult to assess the results in the context of global benchmarks.

Related Party Transactions

• Revenues from TopStar, an entity affiliated with the Topper Group, were $43.1 million for 2024.
• The Partnership leases certain motor fuel stations from the Topper Group under operating leases. Rent expense under these agreements was $10.2 million for 2024.
• In 2024, we sold one property to a related party affiliated with the Topper Group for $2.5 million, resulting in a net gain of $1.8 million.
• We incurred charges with this related party of $3.4 million for 2024.
• We purchase certain convenience store products from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of the Board, as approved by the independent conflicts committee of the Board. Merchandise costs amounted to $19.4 million for 2024.
• In connection with the services rendered under the Omnibus Agreement, we lease certain vehicles from an entity affiliated with the Topper Group, as approved by the independent conflicts committee of the Board. Lease expense to this related party was $0.2 million for 2024.
• We lease office space from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of our Board, as approved by the independent conflicts committee of the Board. Rent expense amounted to $1.2 million for 2024.

Stakeholder Impact

• The decrease in operating revenues and income may negatively impact unitholder distributions.
• The company's ability to service its debt will depend on its future financial and operating performance.
• The company's reliance on key suppliers and transportation providers could create risks for stakeholders.

Next Steps

• The company will continue to evaluate the optimal operation of each site.
• The company will continue to divest certain assets.
• The company will evaluate acquisitions on an opportunistic basis.

Key Dates

Keywords

CrossAmerica Partners, Financial Results, Motor Fuel, Retail, Wholesale, Distribution, Acquisition, CAPL, 10-K