CrossAmerica Partners NYSE: CAPL reported a stronger first quarter of 2026, with management pointing to higher retail fuel margins, merchandise gains and expense controls as drivers of improved profitability.
On the company’s earnings call, CEO and President Maura Topper, speaking on her first call in the role, said the partnership generated $35 million of adjusted EBITDA, which she described as a record amount for the first quarter and a 45% increase from the prior-year period. Interim Chief Financial Officer Jon Benfield said adjusted EBITDA totaled $35.1 million, compared with $24.3 million in the first quarter of 2025.
The partnership reported net income of $10.7 million for the quarter, compared with a net loss of $7.1 million a year earlier. Benfield said the improvement was primarily due to higher adjusted EBITDA, lower interest expense and lower impairment charges included in depreciation, amortization and accretion expense.
Retail Fuel Margins Drive Earnings Growth
Topper said CrossAmerica’s retail segment gross profit rose 18% to $74.3 million from $63.2 million in the prior-year quarter. The increase was driven by stronger motor fuel gross profit, higher retail fuel margins and growth in merchandise gross profit.
Retail fuel margin was 43.7 cents per gallon in the first quarter, up from 33.9 cents per gallon a year earlier. Topper said the company benefited from a “relatively benign pricing environment” in January and February, aided by better sourcing costs and favorable retail market conditions. She noted that April brought a rising and volatile fuel price environment, but said retailers generally transmitted higher costs to the pump quickly, helping create a practical floor for margins.
Retail fuel volumes were weaker. On a same-store basis, retail segment volume declined 7% year over year, though Topper said retail fuel gross profit still rose by $8.7 million because of the stronger cents-per-gallon performance.
Volume trends differed across CrossAmerica’s retail classes of trade. Same-store volume at company-operated locations declined about 4% in the quarter, while same-store volume at commission locations fell about 14%. Topper said the commission-site decline was partly due to pricing strategy changes at selected sites to better balance volume and margin, as well as broader market volume pressure.
Merchandise Sales and Margins Improve
Inside-store performance also contributed to the quarter. Topper said same-store inside sales increased 2% from the prior year, with growth in packaged beverages, other tobacco products and food, including both branded and proprietary offerings.
The company also reported a merchandise margin gross profit percentage of 29.7%, up 180 basis points from a year earlier. Topper said the result was a “high-water mark” for CrossAmerica and reflected a better merchandise mix and stronger execution in core categories. She cited promotions around breakfast sandwiches and chicken tenders as examples of the company’s efforts to drive growth and provide value to customers.
Merchandise gross profit increased 8% to $27 million for the quarter.
Wholesale Segment Declines as Portfolio Shifts Continue
CrossAmerica’s wholesale segment generated gross profit of $23.3 million, down from $26.7 million in the first quarter of 2025. Topper said the decline was primarily driven by lower fuel volume and rental income, reflecting the company’s class-of-trade conversion activities.
Wholesale motor fuel gross profit fell 8% to $14.5 million from $15.8 million. The decline was driven by a 3% decrease in fuel margin per gallon and a 6% decline in volume. Wholesale fuel margin was 9.4 cents per gallon, which Topper described as generally strong, supported by the company’s fuel sourcing efforts.
Same-store wholesale volume declined approximately 2% year over year. Topper said the remaining volume decline was primarily due to the net loss of independent dealer contracts, and said the company’s same-store wholesale volume performance continued to outperform national benchmarks it reviews.
Expense Control and Cash Flow Improve
Benfield said total operating expenses across both segments were $56.4 million, a $2.4 million decrease from the prior-year quarter and the company’s sixth consecutive quarter of declining operating expenses. Retail segment operating expenses declined $1.7 million, while wholesale segment operating expenses decreased $0.7 million, or 10%.
On a same-store, store-level basis, retail operating expenses were down about 3% from the first quarter of 2025. Benfield attributed the decline primarily to lower store-level employment costs, efficient staffing and reduced repairs and maintenance spending at both company-operated and commission locations.
General and administrative expenses were $6.5 million, down $1.2 million year over year, primarily due to lower legal fees and equity compensation expense.
Distributable cash flow rose to $21.5 million, more than double the $9.1 million reported in the first quarter of 2025. Benfield said the increase reflected higher adjusted EBITDA, lower cash interest expense and lower sustaining capital expenditures. The distribution coverage ratio was 1.07 times for the quarter, compared with 0.46 times a year earlier. For the trailing 12 months, the coverage ratio was 1.25 times, compared with 1.04 times for the trailing period ended March 31, 2025.
Asset Sales Support Debt Reduction
Topper said CrossAmerica continued its real estate rationalization efforts, selling 16 properties during the quarter and generating about $12.7 million in proceeds, which were used primarily to pay down debt. She said the company continues to have a strong pipeline for additional targeted real estate sales in 2026, though at a lower level than in 2025.
Benfield said the asset sales helped reduce the company’s credit facility balance by about $10 million during the quarter. The company’s credit facility-defined leverage ratio declined to 3.35 times from 4.27 times as of March 31, 2025.
Cash interest expense declined to $10.3 million from $12.4 million in the prior-year quarter, helped by lower average debt balances and a lower average interest rate. Benfield said more than 55% of the company’s current credit facility balance is swapped to a fixed rate of approximately 3.4% blended, and its effective interest rate on the total credit facility was 5.6% at the end of the quarter.
The company spent $3.4 million on capital expenditures during the quarter, including $2.1 million for growth projects and $1.3 million for sustaining capital. Benfield said growth spending remains focused on company-operated locations, particularly food-related investments intended to support merchandise sales and margin results.
No analysts asked questions during the call. Topper closed by thanking employees for their work during the quarter and said the partnership remains focused on paying down debt, generating durable cash flow for unitholders and investing in the quality and competitiveness of its network.
About CrossAmerica Partners NYSE: CAPL
CrossAmerica Partners LP NYSE: CAPL is a publicly traded master limited partnership engaged in the wholesale distribution of motor fuels across the United States. The company procures, transports and stores refined petroleum products including gasoline, diesel fuel, kerosene, heating oil and select renewable fuel blends. Through its integrated network of pipelines, terminals and truck fleets, CrossAmerica Partners supplies fuel to a broad base of customers, including convenience stores, supermarket chains, travel centers and independent marketers.
Formed in 2014 as a spin-off of Sunoco's wholesale fuel business, CrossAmerica Partners acquired refined petroleum distribution assets and entered into long-term supply agreements designed to deliver stable, fee-based revenues.
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