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CrossAmerica's Q2 2025: Unpacking Contradictions in Retail Performance and Financial Trends
Generated by AI AgentEarnings Decrypt
Sunday, Aug 10, 2025 12:15 pm ET1min read
Aime SummaryRetail segment performance, financial performance trends, retail segment performance and gross profit trends, operational growth strategy are the key contradictions discussed in CrossAmerica's latest 2025Q2 earnings call.
Asset Sales and Financial Position Strengthening:
- Partners completed 60 asset sales for $64 million in proceeds during Q2 2025, reducing debt by over $50 million.
- The sales were completed to strengthen the balance sheet by paying down debt and optimizing the operating portfolio for the future.
Operational Performance Challenges:
- The company's adjusted EBITDA for Q2 2025 was $37.1 million, a decline of $5.5 million from the same period in 2024, primarily due to a decline in fuel and rent gross profit and higher operating expenses.
- Challenges were attributed to lower fuel market volatility, which limited fuel margin opportunities, and consumer spending selectivity, particularly among lower-income consumers.
Retail Segment Performance:
- CrossAmerica's retail segment gross profit decreased by 1% to $76.1 million, driven by a decline in motor fuel gross profit and a 2% year-over-year decrease in same-store retail volume.
- Outperformance in inside sales, particularly in beverage and food categories, was noted.
Wholesale Segment Decline:
- The wholesale segment gross profit declined by 12% to $24.9 million, primarily due to a decline in fuel volume, fuel margin, and rental income.
- The conversion of certain lessee dealer sites to company-operated and commission agent sites accounted for the decline in fuel volume and rental income.
Distribution and Financial Health:
- CrossAmerica reported a coverage ratio for Q2 2025 of 1.12x, compared to 1.30x for Q2 2024, and a distribution coverage for the trailing 12 months of 1x, down from 1.32x in the same period last year.
- The decline in coverage ratios was due to lower adjusted EBITDA and slightly higher sustaining capital expenditures, partially offset by lower interest expenses and current income tax expenses.
Asset Sales and Financial Position Strengthening:
- Partners completed 60 asset sales for $64 million in proceeds during Q2 2025, reducing debt by over $50 million.
- The sales were completed to strengthen the balance sheet by paying down debt and optimizing the operating portfolio for the future.
Operational Performance Challenges:
- The company's adjusted EBITDA for Q2 2025 was $37.1 million, a decline of $5.5 million from the same period in 2024, primarily due to a decline in fuel and rent gross profit and higher operating expenses.
- Challenges were attributed to lower fuel market volatility, which limited fuel margin opportunities, and consumer spending selectivity, particularly among lower-income consumers.
Retail Segment Performance:
- CrossAmerica's retail segment gross profit decreased by 1% to $76.1 million, driven by a decline in motor fuel gross profit and a 2% year-over-year decrease in same-store retail volume.
- Outperformance in inside sales, particularly in beverage and food categories, was noted.
Wholesale Segment Decline:
- The wholesale segment gross profit declined by 12% to $24.9 million, primarily due to a decline in fuel volume, fuel margin, and rental income.
- The conversion of certain lessee dealer sites to company-operated and commission agent sites accounted for the decline in fuel volume and rental income.
Distribution and Financial Health:
- CrossAmerica reported a coverage ratio for Q2 2025 of 1.12x, compared to 1.30x for Q2 2024, and a distribution coverage for the trailing 12 months of 1x, down from 1.32x in the same period last year.
- The decline in coverage ratios was due to lower adjusted EBITDA and slightly higher sustaining capital expenditures, partially offset by lower interest expenses and current income tax expenses.
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