CrossAmerica Partners NYSE: CAPL reported second-quarter results marked by higher fuel margins, improved merchandise profitability, lower operating expenses and reduced debt, even as fuel volumes declined amid elevated and volatile gasoline prices.
The partnership generated net income of $20.8 million for the second quarter of 2026, compared with $25.2 million a year earlier. Chief Financial Officer Jon Benfield said the decline primarily reflected lower gains from real estate optimization activities: the prior-year period included $29.7 million in net gains, versus $1.1 million in the latest quarter. Lower interest expense and reduced impairment charges partly offset the impact.
Adjusted EBITDA rose 40% year over year to $51.8 million from $37.1 million. Benfield attributed the increase to stronger motor fuel margins in both the retail and wholesale segments, higher retail merchandise gross profit and lower operating expenses.
Fuel Margins Offset Lower Volumes
CEO and President Maura Topper said the operating environment was volatile during the quarter, as the national average cost of gasoline rose above $4.50 per gallon in late May before moderating in June. While high prices and volatile input costs pressured demand, the conditions also supported higher retail fuel margins.
Retail segment gross profit increased 13% to $85.7 million, driven principally by a $7.7 million increase in fuel gross profit. Retail fuel margin rose to 49.2 cents per gallon, compared with 37 cents per gallon in the second quarter of 2025.
Retail same-store fuel volume declined 11% from a year earlier. Company-operated locations posted an approximately 8% same-store volume decline, while the commissioned class of trade experienced a steeper reduction. Topper said the company faced challenges in select commissioned markets while continuing to balance fuel volume and margin.
“The pattern we experienced closely tracked the broader industry,” Topper said, describing a soft April, more difficult conditions in May as pump prices rose, and some improvement in June. She said volume trends seen in June had generally continued into the beginning of the third quarter.
CrossAmerica said it remains focused on controlling retail fuel pricing where possible to preserve competitive positioning and customer loyalty in changing price environments.
Merchandise Margin Improves Despite Flat Same-Store Sales
Same-store inside sales were relatively flat in the retail business compared with the prior-year quarter. Growth in other tobacco products and branded and proprietary food sales was offset by lower customer traffic in other categories, according to Topper.
Merchandise margin increased 130 basis points to 29.5%. The company cited a more favorable merchandise mix and improved execution in food and beverage, cigarettes and other tobacco products. Retail merchandise gross profit increased 2% to $31 million despite a 9% decline in average company-operated site count from the year-earlier period.
Topper said investments in food operations across the company-operated footprint helped offset softer traffic trends. Benfield said the company’s growth capital remains focused on company-operated sites, particularly food-related investments intended to support merchandise sales and margins.
Wholesale Profit Rises as Margins Expand
Wholesale segment gross profit increased 9% to $27.1 million. Wholesale motor fuel gross profit rose 17% to $17.8 million, supported by a 31% increase in margin per gallon, which was partly offset by an 11% volume decline.
Wholesale fuel margin reached 11.1 cents per gallon during the quarter. Topper said the result benefited from fuel sourcing efforts and higher payment-terms discounts associated with higher fuel costs.
Wholesale same-store volume declined approximately 8%, broadly in line with the company-operated retail result. The remaining volume decline was primarily due to the net loss of independent dealer contracts, according to Topper. Rental income also declined modestly, largely because of the company’s class-of-trade changes.
Expense Control, Cash Flow and Balance Sheet
Total operating expenses across both segments fell $2.9 million year over year to $55 million, representing CrossAmerica’s seventh consecutive quarter of lower operating expenses. Retail operating expenses declined $2.1 million, or 4%, while wholesale operating expenses fell $800,000, or 11%.
On a same-store basis, retail store-level expenses declined approximately 3%, primarily because of lower employment costs and more efficient staffing, Benfield said. General and administrative expense totaled $6.8 million, a slight increase from the prior year due mainly to higher legal fees and equity compensation expense.
Distributable cash flow increased to $33.6 million from $22.4 million in the year-earlier quarter. Distribution coverage improved to 1.68 times from 1.12 times. For the trailing 12 months, coverage was 1.39 times, compared with 1.00 times for the trailing 12 months ended June 30, 2025. The partnership paid a quarterly distribution of $0.525 per unit.
CrossAmerica spent $7.4 million on capital expenditures during the quarter, including $2.5 million for growth initiatives and $4.9 million for sustaining investments. The partnership also sold five properties for approximately $2.7 million in proceeds as part of its real estate optimization strategy.
The company reduced its credit-facility balance by approximately $10 million during the quarter and said debt has declined by $20 million year to date. Its credit-facility-defined leverage ratio stood at 3.57 times at quarter-end, compared with 3.65 times a year earlier.
On July 15, CrossAmerica amended its credit facility, extending its maturity from March 31, 2028, to July 15, 2031, and removing the SOFR credit spread adjustment. About 60% of the credit-facility balance was swapped to a blended fixed rate of approximately 3.4%, while the effective interest rate on the total facility was 5.5% at the end of the quarter.
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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