CrossAmerica Partners (NYSE:CAPL) reported lower third-quarter earnings as elevated fuel prices pressured demand across its retail and wholesale businesses, though stronger merchandise margins and lower operating expenses helped offset the impact.
The partnership reported net income of $8.8 million for the third quarter of 2026, down from $13.6 million a year earlier. Adjusted EBITDA fell 6% to $38.7 million from $41.3 million, while distributable cash flow declined to $21.8 million from $27.8 million.
Despite the quarterly declines, CEO and President Maura Topper said results for the first nine months remained ahead of the prior year. Adjusted EBITDA rose 22% and distributable cash flow increased 30% over that period.
Fuel demand weighs on both segments
Topper said rising prices at the pump pressured fuel demand during the quarter. The national average cost of a gallon of gasoline reached just below $4.50 in late September, she said, while diesel prices also increased materially.
Retail segment gross profit fell 2% to $78 million, with retail fuel gross profit declining $3.2 million, or 8%. Same-store retail fuel volume decreased 7% year over year, including an approximately 5% decline at company-operated locations and a larger decline at commission locations.
Topper said retail volume improved relative to the prior year as the quarter progressed, with September stronger than earlier months. October trends were somewhat softer than September but remained ahead of the third-quarter average, she said.
Retail fuel margin increased to 40.4 cents per gallon from 38.4 cents a year earlier. Topper said volatility in fuel input costs helped offset some of the volume pressure, although margins moderated substantially from the elevated levels seen in the second quarter.
Wholesale segment gross profit declined 7% to $23.1 million. Wholesale fuel gross profit fell 9% to $14.4 million as volume dropped 8%. Same-store wholesale volume declined approximately 7%, with the rest of the decrease attributed to the net loss of independent dealer contracts. Wholesale fuel margin was flat at 8.8 cents per gallon.
Store margins improve as expenses decline
CrossAmerica increased merchandise gross profit by 2% to $32.8 million despite a 7% decline in its average number of company-operated sites. Merchandise margin rose 140 basis points to 30.3%, benefiting from product mix and execution in categories including food, beverages, beer and cigarettes, Topper said.
Overall same-store inside sales fell 1%, while same-store sales excluding cigarettes rose 0.4%. Topper cited growth in other tobacco products and food, including branded and proprietary offerings.
Total operating expenses fell 2% to $56.3 million, marking the fifth consecutive quarter of year-over-year declines. CFO Jon Benfield said retail operating expenses declined by $0.2 million, while wholesale expenses fell by $1.1 million, primarily because of a lower controlled-site count following asset sales and some conversions to the retail segment.
On a same-store, store-level basis, retail operating expenses increased approximately 1%, as higher maintenance and environmental costs were largely offset by lower employment costs, Benfield said.
Cash flow and balance sheet
Benfield said the decline in net income reflected lower adjusted EBITDA and reduced gains from real estate sales. Net gains from those efforts were $2.4 million, compared with $7.4 million a year earlier. Lower impairment charges provided a partial benefit to net income.
Distributable cash flow declined partly because of lower adjusted EBITDA and higher sustaining capital expenditures. The quarterly distribution coverage ratio fell to 1.09 times from 1.39 times a year earlier. CrossAmerica paid a distribution of $0.525 per unit during the quarter.
The partnership spent $7.2 million on capital expenditures, including $5.3 million in sustaining spending. Benfield said the company accelerated some maintenance spending from future periods after its strong results earlier in the year. CrossAmerica also sold 15 properties during the quarter for $10.6 million in proceeds.
The credit facility-defined leverage ratio stood at 3.72 times, compared with 3.56 times a year earlier. Benfield said the credit facility balance increased slightly during the quarter but remained down approximately $18 million year to date, supported by operating results and asset sales.
About CrossAmerica Partners (NYSE:CAPL)
CrossAmerica Partners LP (NYSE: CAPL) is a publicly traded master limited partnership focused on the wholesale distribution of motor fuels and the ownership or leasing of assets used in fuel retailing. The partnership supplies gasoline and diesel to independent dealers, commercial customers, and other retail operators through a network of fuel supply and distribution arrangements.
In addition to fuel distribution, CrossAmerica owns or leases convenience stores, gas stations, and related real estate.
