Fuel distributor and convenience-store operator CrossAmerica Partners LP reported a strong third quarter despite broader softness in fuel and store demand, the company said Nov. 6 in its earnings report.
Net income for third-quarter 2024 was $10.7 million, compared to net income of $12.3 million in the prior-year quarter.
The retail segment in third-quarter 2024 generated a 24% increase in gross profit compared to third-quarter 2023. This was primarily due to higher motor fuel (+26%) and merchandise (+20%) gross profit, the company said.
“Our company-operated stores delivered solid results, with a 2% increase in same-store fuel volume and strong same-store merchandise sales,” said Charles Nifong, president and CEO of CrossAmerica.
The company reported third-quarter 2024 gross profit for the retail segment of $83.6 million compared to $67.6 million of gross profit for third-quarter 2023.
Overall, retail segment fuel gallons, sales, gross profit and segment operating income were all materially higher year-over-year, driven by the company’s strategic site conversions to the retail channel, Nifong said.
The Allentown, Pennsylvania-based company “progressed on further retail conversions this quarter and finished the quarter with a solid distribution coverage ratio and a strong balance sheet, at a lower overall leverage ratio than the prior two quarters,” Nifong said.
CrossAmerica reported that its retail segment sold 148.4 million of retail fuel gallons during third-quarter 2024, an increase of 12% compared to third-quarter 2023. This volume increase was primarily driven by the conversion of lessee dealer sites to company-operated and commission agent sites over the past year and during the quarter, the company said.
In the retail segment, operating expenses for third-quarter 2024, increased 27% primarily driven by a 79-site increase in the average company-operated site count.
“The increase in company-operated site count was primarily driven by our completion of the conversion of the Applegreen lease locations to company-operated retail sites in April,” Nifong said.
CrossAmerica and its Lehigh Gas Wholesale Services Inc. subsidiary entered into an agreement in late January to acquire 59 convenience stores from Applegreen Midwest and Applegreen Florida for $16.9 million.
CrossAmerica is No. 27 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Applegreen is No. 32.
During the quarter, Nifong said during the earnings call that the company divested nine properties for $7.2 million in proceeds, resulting in a net gain of $5.3 million.
“Our pipeline of transactions is quite active, and we expect the fourth quarter to be another busy quarter for us with property sales,” he said.
CrossAmerica Partners is a distributor of branded and unbranded petroleum for motor vehicles in the United States. It distributes fuel to approximately 1,600 locations and owns or leases approximately 1,100 sites.
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