CrossAmerica Partners LP Stock

Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Second Quarter 2026 Earnings Call. [Operator Instructions]

This call is being recorded on Thursday, August 6, 2026.

I would now like to turn the conference over to Randy Palmer, Investor Relations. Please go ahead.

Thank you, operator. Good morning, and thank you for joining the CrossAmerica Partners Second Quarter 2026 Earnings Call.

With me today are Maura Topper, CEO and President; and Jon Benfield, Chief Financial Officer.

We'll start off the call today with Maura providing some opening comments and an overview of CrossAmerica's operational performance for the second quarter, and then Jon will discuss the financial results. We will then open up the call to questions. Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica website.

Before we begin, I would like to remind everyone that today's call, including the question-and-answer session, may include forward-looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organization. There can be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations.

Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward-looking statements.

During today's call, we may also provide certain performance measures that do not conform to U.S. generally accepted accounting principles or GAAP. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release. Today's call is being webcast, and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days.

With that, I will now turn the call over to Maura.

Thank you, Randy. Thank you to everyone joining us this morning. We appreciate you making the time to be with us today.

I wanted to start out by saying that I'm happy to now introduce Jon Benfield as our Chief Financial Officer, no longer with the interim tag. I am excited that he has accepted this role and look forward to continuing to work with him across all of CrossAmerica's strategic priorities. He will be going through the quarterly financials in more detail after my comments as he did last quarter.

Our recently completed second quarter continues to build on many of the key momentum areas we are focusing on at CrossAmerica, active control over retail fuel pricing where possible, improving the image and offerings in our convenience store locations, acting as an effective and efficient wholesale fuel supplier to our customers across the country, and actively preparing the portfolio for sustainable success well into the future.

In spite of a volatile broader operating environment during the quarter, our team remained focused on the aspects of the business that we can control, and I'm proud today for Jon and I to be able to talk about a number of our wins on the merchandise margin, cost management and balance sheet fronts.

Now if you'll turn to Slide 4, I will review some of the operating highlights of our second quarter. Overall, we have continued our strong start to 2026, building on a solid first quarter by generating $51.8 million of adjusted EBITDA during the second quarter, a 40% increase when compared to the second quarter of 2025. We benefited from strong gross profits from both our Retail and Wholesale segments, driven by motor fuel margins, along with a meaningful increase in merchandise margin percentage in our Retail segment and focused expense control across our operations.

For the second quarter of 2026, our Retail segment gross profit increased 13% to $85.7 million compared to $76.1 million in the second quarter of 2025. The increase was primarily driven by an increase in motor fuel gross profit, along with, to a lesser extent, growth in merchandise gross profit and other revenue.

For the quarter, our retail fuel gross profit increased $7.7 million compared to the second quarter of 2025. As we are all aware, the second quarter of 2026 was marked by a generally rising fuel price environment with the average cost of a gallon of gasoline across the country reaching the high of more than $4.50 per gallon in late May. Prices at the pump did moderate in June, though underlying input costs remained volatile throughout the quarter. This combination of elevated prices at the pump and underlying input volatility resulted in a more challenging fuel volume quarter, offset by elevated fuel margins.

On a same-store basis, our retail segment reported an 11% decline in volume year-over-year, with diverging results across the 2 classes of trade within our retail segment. Same-store volume at our company-operated locations was down approximately 8% for the quarter, with our commission same-store volume decline more elevated, resulting in the segment's overall volume performance.

Our company-operated site performance trailed industry volume trends modestly throughout the quarter, though the pattern we experienced closely tracked the broader industry with a soft April, a more challenged May, while prices were rising and hit that elevated level I mentioned earlier in late May and then some improvement in June as prices at the pump also moderated, though remained at elevated levels compared to the prior year.

In our commission class of trade, we are continuing to work to balance fuel volume and margin, though we were impacted by challenges in a select number of markets in the quarter that further challenged our results. June volume trends in both classes of trade have generally persisted during the start of the third quarter.

Turning to our fuel margins in our retail segment. On a cents per gallon basis, we earned $0.492 per gallon in the second quarter of 2026 compared to $0.37 per gallon in the second quarter of last year. As I mentioned earlier, the high level of fuel input cost volatility was the primary driver of elevated fuel margins throughout the quarter.

Retailers generally continue to quickly transmit increased costs to the pump, providing a practical floor to fuel margins during this period, which benefited our results. Fuel margins have generally moderated as we have started the third quarter, though we and the industry continue to experience bouts of input cost volatility with their resulting impact on margins.

With regards to fuel gross profit generally, our team remains focused on ensuring our retail locations are competitively priced to balance long-term customer loyalty with the day-to-day price volatility we are currently experiencing. We continue to believe in our strategic focus of controlling retail fuel pricing wherever possible to ensure our locations remain top of mind for customers in all price environments.

Moving from our retail fuel operations to our store sales. Our second quarter 2026 results continued a series of important positive performance trends in this critical area of our business. On a same-store basis, our overall inside sales were relatively flat for the second quarter compared to the prior year, with growth in the areas of other tobacco products and food, both branded and proprietary, offset by slow customer traffic in other areas.

Fuel demand does typically correlate to merchandise sales, so our ability to offset general customer traffic trends with the important investments we've made in recent years to expand our food operations at locations across our company-operated footprint contributed to our results this quarter.

We also saw a strong increase in the second quarter in our merchandise margin percentage. We reported a merchandise margin gross profit percentage of 29.5%, up 130 basis points from the prior year. We benefited from a better merchandise mix and better execution in some of our core categories, primarily the important food and beverage categories as well as cigarettes and other tobacco products.

The strong sales and margin percentage results contributed to an increase in our merchandise gross profit of 2% year-over-year to $31 million, which we achieved in spite of a 9% decline in average company-operated site count during the quarter compared to the second quarter of 2025. Jon will touch on this more in his comments, but we also had a very positive quarter focusing on expense control in our retail locations.

Our results in this area take a great amount of focus from our operations team as well as technology-assisted improvements that are benefiting our operations.

Moving on to the wholesale segment. For the second quarter of 2026, our wholesale segment generated gross profit of $27.1 million compared to $24.9 million in the second quarter of 2025, a 9% increase. The increase was primarily driven by an increase in fuel margin per gallon, partially offset by a decline in fuel volume and to a small extent, rental income, the latter primarily driven by our class of trade change activities.

Our wholesale motor fuel gross profit increased 17% to $17.8 million in the second quarter of 2026 from $15.2 million in the second quarter of 2025. This was driven by a 31% increase in fuel margin per gallon, offset by an 11% decline in volume for the quarter. Wholesale segment volume during the second quarter was impacted by many of the same challenges due to elevated prices that I discussed in my comments on the retail segment.

Our same-store performance in the wholesale segment was down approximately 8% year-over-year, so in line with our company-operated results, with the remaining wholesale segment volume decline primarily due to the net loss of independent dealer contracts.

Our second quarter fuel margin of $0.111 per gallon was a strong quarter as we continue to benefit from our fuel sourcing efforts and in this quarter, higher payment terms discounts associated with our higher fuel costs in 2026.

We also continued with our real estate optimization work during the second quarter, selling 5 properties and realizing approximately $2.7 million in proceeds. As we discussed in February, 2025 was our biggest year ever in regards to property sales. We are continuing our targeted real estate sales efforts in 2026, and we continue to have a strong pipeline for the balance of the year, though at a lower level than in 2025.

Concluding my comments, the second quarter continued a strong operating start to the year for CrossAmerica. Our priorities remain generating strong and durable cash flows from our operations, maintaining a disciplined approach to our balance sheet and investing in the quality and competitiveness of our network.

Before I turn it over to Jon, I want to be sure to thank our team members around the country for their hard work and dedication this quarter. Managing a business as diverse as ours always requires focus and effort from our team members in our stores and around the country, especially in moments of volatility like we are experiencing in 2026. And our leadership team appreciates all of your hard work.

With that, I will turn it over to Jon for a more detailed financial review.

Thank you, Maura. First of all, I feel deeply honored and blessed to serve as CFO, and I'm excited to work more closely with the broader organization in this expanded role.

Now if you would please turn to Slide 6, I'll go over our second quarter financial results. We reported net income of $20.8 million and adjusted EBITDA of $51.8 million for the second quarter of 2026 compared to net income of $25.2 million and adjusted EBITDA of $37.1 million for the second quarter of 2025.

Adjusted EBITDA increased 40% or $14.7 million year-over-year. The decline in net income was primarily driven by $29.7 million in net gains that occurred during the second quarter of 2025 in connection with our ongoing real estate optimization efforts compared to $1.1 million in net gains in the second quarter of 2026, partially offset by a decline in interest expense from $12.6 million for the second quarter of 2025 to $11.3 million for the second quarter of 2026.

Net income also benefited from lower impairment charges included in depreciation, amortization and accretion expense. As I mentioned, adjusted EBITDA increased significantly compared to the prior year period. As Maura noted in her comments, this increase was driven by a series of positive factors across the business, including an increase in motor fuel margin per gallon in both the retail and wholesale segments, an increase in merchandise gross profit in the retail segment as well as a decline in operating expenses across both segments.

Our distributable cash flow for the second quarter of 2026 was $33.6 million, a solid increase over the $22.4 million for the second quarter of 2025. The increase in distributable cash flow was primarily due to higher adjusted EBITDA, along with lower cash interest expense, partially offset by higher sustaining capital expenditures and current income tax expense. The decline in interest expense we experienced during the quarter was due to a lower average interest rate and a lower average outstanding debt balance on our credit facility due to our strong results combined with our asset sales.

Our distribution coverage ratio for the second quarter of 2026 was 1.68x compared to 1.12x for the same period of 2025. For the trailing 12 months, our distribution coverage ratio was 1.39x compared to 1.00x for the trailing 12 months ended June 30, 2025. During the second quarter of 2026, the partnership paid a distribution of $0.525 per unit.

Turning to the expense portion of our operations. In total across both segments, we reported operating expenses for the second quarter of 2026 of $55 million, a $2.9 million decrease year-over-year and our seventh consecutive quarter of declining operating expenses across the organization.

Retail segment operating expenses for the second quarter declined $2.1 million or 4% and wholesale segment operating expenses declined by $0.8 million or 11%. In our retail segment, our average segment site count was down approximately 7% year-over-year.

On a same-store store level basis, operating expenses in our retail segment were down approximately 3% for the second quarter of 2026 compared to the second quarter of 2025. The decline was primarily driven by reduced store-level employment costs as we remain focused on efficient staffing in our stores.

Returning to our wholesale segment. Operating expenses declined by $0.8 million or 11% for the quarter. This decline was driven primarily by the decline in lessee dealer or controlled site count within the segment year-over-year due to asset sales and to a lesser extent, conversions to our retail class of trade.

We reported G&A expenses for the quarter of $6.8 million, a slight increase year-over-year, primarily driven by higher legal fees and equity compensation expense. We remain focused across the organization on efficient expense management at our locations as well as at the corporate level, ensuring that we are investing in customer-facing areas at our locations that will drive the long-term health and sustainability of our sites and driving operational efficiencies in our above-store operations.

Moving to the next slide. We spent a total of $7.4 million on capital expenditures during the second quarter with $2.5 million of that total being growth-related capital expenditures and $4.9 million of that being sustaining capital expenditures. Given our strong results for the first 6 months of the year, we accelerated some maintenance capital spending this quarter with a continued focus on supporting the resiliency of our sites.

Regarding our growth capital spending, we remain focused on our company-operated locations, especially in food-related investments that will contribute to our merchandise sales and margin results.

One additional item I wanted to touch on is that we entered into an amendment of our credit facility on July 15. The amendment, among other things, extends the maturity date from March 31, 2028, to July 15, 2031, and removes the SOFR credit spread adjustment. You can find additional details regarding this amendment in our Form 8-K filing filed with the SEC on July 16.

Turning to our balance sheet. The underlying performance of our segments, along with asset sale activities that Maura noted in her comments, helped us reduce our credit facility balance by approximately $10 million during the quarter. The decrease in our balance, combined with our strong results here in 2026, resulted in a decrease in our credit facility defined leverage ratio to 3.57x compared to 3.65x as of June 30, 2025.

Our management team remains focused on the cash flow generation profile of our business, utilizing our normal course operations and our targeted real estate optimization efforts to manage our leverage ratio at approximately 4x on a credit facility-defined basis. A lower average interest rate environment also helped improve our interest expense during the second quarter of 2026.

Our cash interest declined from $12.1 million for the second quarter of 2025 to $10.9 million in the second quarter of 2026. Our existing interest rate swap portfolio continues to benefit us as well. At this time, about 60% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended and our effective interest rate on the total credit facility at the end of the second quarter was 5.5%.

In conclusion, the partnership has had a strong first half of 2026 and is positioned for continued success as we move deeper into the year. Our strong results, along with our asset sales, enabled us to reduce our debt by $20 million this year so far, while also positioning our portfolio to generate durable and consistent cash flows into the future. We are looking forward to the back half of the year, maintaining a strong balance sheet and generating value for our unitholders.

With that, we will open it up for questions.

[Operator Instructions]

Seeing that we don't have any questions for the moment. Thank you, everyone, for joining us here this morning. Should you have any follow-up questions, please feel free to reach out. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and please ask that you disconnect your lines. Have a great day.

Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners First Quarter 2026 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Randy Palmer, Investor Relations. Please go ahead.

Thank you, operator. Good morning, and thank you for joining the CrossAmerica Partners First Quarter 2026 Earnings Call. With me today are Maura Topper, CEO and President; and Jon Benfield, Interim Chief Financial Officer. We'll start off the call today with Maura providing some opening comments and an overview of CrossAmerica's operational performance for the first quarter, and then Jon will discuss the financial results. We will then open up the call to questions.

Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica website. Before we begin, I would like to remind everyone that today's call, including the question-and-answer session, may include forward-looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organization. There can be no assurance that the management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward-looking statements.

During today's call, we may also provide certain performance measures that do not conform to U.S. generally accepted accounting principles or GAAP. We have provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release. Today's call is being webcast, and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. With that, I will now turn the call over to Maura.

Thank you, Randy. Thank you to everyone joining us this morning. We appreciate you making the time to be with us today. I would like to lead off by saying that I'm excited and grateful to be with you today in my first call as CEO. Stepping into the CEO role over the past 2 months has been both humbling and energizing. I'm grateful for the opportunity to lead this organization and to keep learning alongside our team every day. I also want to take a moment to thank Charles Nifong for his care and thoughtfulness as our CEO over the past 6 years. We have become a larger and stronger organization under his leadership. I have learned much from him over the years that we have worked together, and I deeply appreciate his mentorship.

I'm also happy to introduce Jon Benfield as our Interim Chief Financial Officer, who will be going through the quarterly financials in more detail. Jon has been with the partnership since 2012 and has worked in various capacities in our accounting and finance team over the years. Jon's deep familiarity with the partnership makes him exceptionally well suited for this role, and I'm glad to have him with us on the call today.

We are working with a strong foundation here at CrossAmerica. Over the past few years, we have been deliberately shaping the partnership, increasing our exposure to retail operations and retail fuel pricing through our class of trade conversion activities and utilizing targeted real estate asset sales to generate capital to reinvest in the business. These portfolio optimization efforts have positioned CrossAmerica to perform well across a range of economic environments as I think our first quarter results demonstrate. Our team remains focused on ensuring the competitiveness of our sites in the markets where we operate with continued investment to drive growth and enhance the durability of our earnings. The result is an organization that is both disciplined and flexible and one that we believe is well positioned to capitalize on the opportunities ahead.

If you turn to Slide 4, I will review some of the operating highlights of our first quarter. Overall, we had a strong first quarter, generating $35 million of adjusted EBITDA, a record amount for the first quarter and a 45% increase when compared to the first quarter of 2025. We benefited from strong gross profits from our retail segment, driven by motor fuel margins and merchandise sales and focused expense control across our operations. For the first quarter of 2026, our retail segment gross profit increased 18% to $74.3 million compared to $63.2 million in the first quarter of 2025. The increase was driven by an increase in motor fuel gross profit due to higher retail fuel margins for the quarter compared to the prior year, along with strong growth in merchandise gross profit. For the quarter, our retail fuel margin on a cents per gallon basis was $0.437 per gallon compared to $0.339 per gallon in the first quarter of last year.

We experienced a strong start to the year on a fuel margin cents per gallon basis during a relatively benign pricing environment in January and February, helped by better sourcing costs and a favorable retail market conditions. As we entered March and continuing into April, we, along with the broader industry, have experienced a generally rising but also very volatile price environment. Historically, that type of rising fuel environment would have resulted in fuel margin compression, though with pockets of volatility providing margin opportunities. During this period of rising prices, however, fuel markets have generally remained rational with retailers quickly transmitting their increased costs to the pump, providing a practical floor to fuel margins during this period, which benefited our results.

The corollary to our fuel margin cents per gallon results is obviously fuel volume. On a same-store basis, our retail segment reported a 7% decline in volume year-over-year, though with fuel gross profit ultimately $8.7 million higher than last year as a result of our strong cents per gallon results. Our team remains focused on ensuring our retail locations are competitively priced to balance long-term customer loyalty with the day-to-day volatility we are currently experiencing. Our volume results differed between the two classes of trade in our retail segment, company-operated locations and commission locations, which I'll spend a few moments talking about. Same-store volume at our company-operated locations was down approximately 4% for the quarter, with January and February experiencing less of a decline and March, a higher decline as we and the industry began to feel the impact of the higher fuel price environment we find ourselves in.

This volume performance is relatively in line with reported industry averages for the first quarter of 2026 from the sources we review. For our commission class of trade, our commission same-store site volume was down approximately 14% for the quarter. As we have noted for the last 2 quarters, the decline was due in part to our decision at select sites to adjust our pricing strategy to better balance volume and margin while ensuring competitiveness within our markets whenever possible. Our commission location volume was also impacted by the overall volume decline in the market. Moving from our retail fuel operations to our store sales. Our first quarter 2026 results continued a series of important positive performance trends in this critical area of our business. On a same-store basis, our overall inside sales were up 2% for the first quarter compared to the prior year, with growth in the areas of packaged beverages, other tobacco products and food, both branded and proprietary.

As we've noted in a number of our recent quarterly calls, during 2024 and 2025, we made important investments to expand our food operations at locations across our company-operated footprint with those investments contributing to both our results and customer traffic at this point in their life cycle. The first quarter of 2026 was also a high watermark for the partnership for our merchandise margin percentage. We reported a merchandise margin gross profit percentage of 29.7%, up 180 basis points from the prior year. We benefited from a better merchandise mix and better execution that improved margins on some of our core categories. This includes such promotions around breakfast sandwiches and chicken tenders that we ran during the quarter.

A good example of our team leaning into growth, a focus on execution and providing value to our customers. The strong sales and margin percentage results contributed to an increase in our merchandise gross profit of 8% to $27 million. Jon will touch on this more in his comments, but we also had a very positive quarter focusing on expense control in our retail locations. Our results in this area [ took ] great amount of focus from our operations team as well as technology-assisted improvements that are benefiting our operations.

Closing out my comments on the retail segment, we finished the quarter with 340 company-operated retail sites, down 12 sites from the fourth quarter of 2025 and 36 sites relative to the first quarter of last year due to our asset sale and class of trade conversion activities. We remain up 85 locations from the end of 2022 when we began our strategic activities to increase our retail operations. While the pace of our class of trade conversions has slowed in recent quarters, we continue to focus on maximizing the value of each site through class of trade conversions while focusing on being in retail in the right markets. In the period since the quarter end, we have benefited from continued strong fuel margins through April in spite of the rising price environment, so with volumes experiencing more pressure than our first quarter results.

Moving on to the Wholesale segment. For the first quarter of 2026, our wholesale segment generated gross profit of $23.3 million compared to $26.7 million in the first quarter of 2025. The decrease was primarily driven by a decline in fuel volume and rental income, primarily driven by our class of trade change activities. As a reminder, our wholesale segment rental income declines when we convert sites to our retail class of trade and when we divest locations. Wholesale segment fuel volumes are also impacted by conversions to the retail segment, though less so by divestitures as we look to maintain a supply relationship with most sites we are divesting.

Our wholesale motor fuel gross profit decreased 8% to $14.5 million in the first quarter of 2026 from $15.8 million in the first quarter of 2025. This was driven by a 3% decline in fuel margin per gallon and a 6% decline in volume for the quarter. Our first quarter fuel margin of $0.094 per gallon was a generally strong quarter as we continue to benefit from our fuel sourcing efforts. With regards to our volume performance, our same-store volume in the wholesale segment was down approximately 2% year-over-year, with the remaining decline primarily due to the net loss of independent dealer contracts. Our same-store volume performance in the first quarter of 2026 continues our outperformance relative to national benchmarks that we have seen for several quarters in a row now for our Wholesale segment.

I'll close out my comments with a few words on the asset sale portion of our portfolio optimization activities during the first quarter. We continued with our real estate rationalization work during the first quarter, selling 16 properties and realizing approximately $12.7 million in proceeds that we primarily used to pay down debt. As we discussed in February, 2025 was the biggest year ever in regards to property sales for the partnership. We are continuing our targeted real estate sales efforts in 2026, and we continue to have a strong pipeline for the balance of the year, though at a lower level than 2025. Jon will touch on this more during his comments, but I did want to mention that we reduced our credit facility balance by approximately $10 million during the quarter and decreased our credit facility defined leverage ratio from the prior year. These both highlight our disciplined approach to our balance sheet in conjunction with our strong first quarter.

The first quarter was a solid quarter for the partnership with a material increase in our EBITDA versus the prior year and solid operational results across the business. Our priorities remain paying down debt, generating strong and durable cash flow for our unitholders and investing in the quality and competitiveness of our network. And I believe our first quarter results reflect exactly that continued focus. Before I turn it over to Jon, I want to be sure to thank our team members around the country for their hard work and dedication this quarter. We navigated the winter months in a volatile fuel price environment together, and our results speak for themselves. Our organization succeeds because of our people, and we thank all of you for your hard work. With that, I will turn it over to Jon for a more detailed financial review.

Thank you, Maura. First of all, I am humbled and grateful for the opportunity to serve as Interim CFO, and I'm excited to work more closely with the broader organization in this expanded role. Now if you would please turn to Slide 6, I'll go over our first quarter financial results. We reported net income of $10.7 million and adjusted EBITDA of $35.1 million for the first quarter of 2026 compared to a net loss of $7.1 million and adjusted EBITDA of $24.3 million for the first quarter of 2025. Adjusted EBITDA increased 45% or $10.8 million year-over-year. Net income increased primarily due to the increase in adjusted EBITDA and a decline in interest expense from $12.8 million for the first quarter of 2025 to $10.8 million for the first quarter of 2026. Net income also benefited from lower impairment charges included in depreciation, amortization and accretion expense.

As I mentioned, adjusted EBITDA increased significantly compared to the prior year period. As Maura noted in her comments, this increase was driven by a series of positive factors across the business, including an increase in motor fuel margin per gallon and an increase in merchandise gross profit in the retail segment as well as a decline in operating expenses. Our distributable cash flow for the first quarter of 2026 was $21.5 million, more than double over the $9.1 million for the first quarter of 2025. The increase in distributable cash flow was primarily due to higher adjusted EBITDA, along with lower cash interest expense and lower sustaining capital expenditures.

The decline in interest expense we experienced during the quarter was due to a lower average interest rate and a lower average outstanding debt balance on our credit facility during the period due to our strong results combined with our asset sales. Our distribution coverage ratio for the first quarter of 2026 was 1.07x compared to 0.46x for the same period of 2025. For the trailing 12 months, our distribution coverage ratio was 1.25x compared to 1.04x for the trailing 12 months ended March 31, 2025. During the first quarter of 2026, the partnership paid a distribution of $0.525 per unit. Turning to the expense portion of our operations. In total across both segments, we reported operating expenses for the first quarter of 2026 of $56.4 million, a $2.4 million decrease year-over-year and our sixth consecutive quarter of declining operating expenses across the organization.

Retail segment operating expenses for the first quarter declined $1.7 million or 3% and wholesale segment operating expenses declined by $0.7 million or 10%. In our Retail segment, our average segment site count was down approximately 4% year-over-year. On a same-store, store-level basis, operating expenses in our retail segment were down approximately 3% for the first quarter of 2026 compared to the first quarter of 2025. The decline was primarily driven by reduced store-level employment costs as we remain focused on efficient staffing in our stores as well as continued reductions in repairs and maintenance spending year-over-year at both our company-operated and commissioned class of trade locations due to realized ongoing efficiencies in our maintenance operations.

As we have touched on during the last few quarterly earnings calls, we have cycled through the first year of operations at many of our locations in their new classes of trade, which typically results in elevated expenses to onboard and upgrade the converted locations. As a result, we are experiencing a stabilization of our expense profile in our current class of trade site count. We will, of course, continue to experience seasonality of certain types of operating expenses in our stabilized portfolio, like increased labor in the summer and increased snowplowing in the winter.

Returning to our Wholesale segment. Operating expenses declined by $0.7 million or 10% for the quarter. This decline was driven primarily by a 23% decline in lessee dealer or controlled site count within the segment year-over-year due to asset sales and to a lesser extent, conversions to our retail class of trade. We reported G&A expenses for the quarter of $6.5 million, a $1.2 million decline year-over-year, primarily driven by lower legal fees and equity compensation expense. We remain focused across the organization on efficient expense management at our locations as well as at the corporate level, ensuring that we are investing in customer-facing areas at our locations that will drive the long-term health and sustainability of our sites and driving operating efficiencies in our above-store operations.

Moving to the next slide. We spent a total of $3.4 million on capital expenditures during the first quarter with $2.1 million of that total being growth-related capital expenditures and $1.3 million of that being sustaining capital expenditures. The decline in sustaining capital expenditures versus the prior year and the 2025 quarters is in line with our expectations as we experienced a stabilization of our current class of trade site count as well as a reduction of our real estate assets controlled site count. Regarding our growth capital spending, we remain focused on our company-operated locations, especially in food-related investments that will contribute to our merchandise sales and margin results.

One additional item I wanted to touch on is that we entered into an amendment of our lease with Getty in January of this year that covers 106 of our leased sites and extends the term by 10 years to April 2037. The amendment triggered a reassessment of our lease accounting, which resulted in us accounting for this lease fully as a finance lease. While the economics overall are not all that different, the change in accounting will result in $3 million of the rent payments under this lease being accounted for as principal and interest, whereas previously, that $3 million was accounted for as rent expense. For the same reason, we will have higher interest expense on lease financing obligations going forward, although the impact to the quarter was negligible. Lastly, our finance lease obligations on the balance sheet increased $56 million from the December 31, 2025, balance.

Turning to our balance sheet. The asset sale activities that Maura noted in her comments helped us reduce our credit facility balance by approximately $10 million during the quarter. The decrease in our balance, along with the gains on sale generated from our asset sales resulted in a decrease in our credit facility defined leverage ratio to 3.35x compared to 4.27x as of March 31, 2025. Our management team remains focused on the cash flow generation profile of our business, utilizing our normal course operations and our targeted real estate optimization efforts to manage our leverage ratio at approximately 4x on a credit facility-defined basis.

Our asset sale activities during the quarter reduced our credit facility balance and the lower average interest rate environment also helped improve our cash interest expense during the first quarter of 2026. Our cash interest declined from $12.4 million in the first quarter of 2025 to $10.3 million in the first quarter of 2026. Our existing interest rate swap portfolio continues to benefit us as well. At this time, more than 55% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended and our effective interest rate on the total credit facility at the end of the first quarter was 5.6%.

In conclusion, the partnership has started the year with a strong first quarter and with the portfolio positioned for continued success as we move deeper into 2026. Our strong results, along with our asset sales, enabled us to reduce our debt by $10 million this quarter while also positioning our portfolio to generate durable and consistent cash flows into the future. We are looking forward to the summer driving season, maintaining a strong balance sheet and generating value for our unitholders. With that, we will open it up for questions.

[Operator Instructions]

As it appears we don't have any questions coming in at the moment. We want to thank everybody for joining us here this morning and for your interest in the partnership. If you do have any follow-up questions, please feel free to contact us, and have a great day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to CrossAmerica Partners Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, February 26, 2026. I would now like to turn the conference over to Maura Topper, Chief Financial Officer. Please go ahead.

Thank you, operator. Good morning, and thank you for joining the CrossAmerica Partners Fourth Quarter and Full Year 2025 Earnings Call. With me today is Charles Nifong, CEO and President. We'll start off the call today with Charles providing some opening comments and an overview of CrossAmerica's operational performance for the fourth quarter and full year, and then I will discuss the financial results.

We will then open up the call to questions.

Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica website. Before we begin, I would like to remind everyone that today's call, including the question-and-answer session, may include forward-looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organization.

There can be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of important factors that could affect our actual results.

Forward-looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward-looking statements. During today's call, we may also provide certain performance measures that do not conform to U.S. generally accepted accounting principles or GAAP. We have provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release.

Today's call is being webcast, and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. With that, I will now turn the call over to Charles.

Thank you, Maura. Maura and I appreciate everyone joining us this morning, and thank you for making the time to be with us today. During today's call, I will go through some of the operating highlights for the fourth quarter and full year 2025. I will also provide commentary on the market and a few other updates as I typically do on our calls.

Maura, will then review in more detail our financial results. If you turn to Slide 4, I will briefly review in more detail some of our operating results for the quarter. Overall, we had a very solid fourth quarter with strong retail and wholesale fuel margins, good results from our retail segment merchandise sales, and we also benefited from our overall expense control. We outperformed the prior year significantly and finished the year with the business performing well across both segments.

Specifically, for the fourth quarter of 2025, our retail segment gross profit increased 10% to $82.9 million compared to $75.1 million in the fourth quarter of 2024. The increase was primarily driven by an increase in motor fuel gross profit due to higher retail fuel margins for the quarter compared to the prior year. For the quarter, our retail fuel margin on a cents per gallon basis increased 19% year-over-year as our fuel margin was $0.449 per gallon in the fourth quarter of 2025 compared to $0.376 per gallon in the fourth quarter of 2024.

In comparison to the prior year, crude oil prices trended down during the quarter and along with better sourcing costs and favorable retail market conditions, our retail fuel margins were higher year-over-year as a result. For volume on a same-store basis, our overall retail fuel volume declined 8% for the quarter year-over-year. For our company-operated sites, retail fuel volume was down approximately 6% relative to the prior year.

I'll note that our fourth quarter of last year was a particularly strong volume quarter with our company-operated stores volume up 3.8% relative to the prior year. With that context, our company-operated sites volume performance this quarter was, to some extent, a reversion to the exceptionally strong results from the prior year, and our volume still remains over the last 2 years, strong relative to national volume trends.

We also continue to focus on pricing competitively for our company-operated sites and our pricing philosophy and its execution for these sites overall has not changed. For our commission class of trade, our commission site same-store volume was down approximately 11% for the quarter. As we noted last quarter, the decline was due in part to our decision at select sites to adjust our pricing strategy.

With many of the sites that we converted throughout last year, we were very aggressive with fuel pricing initially at conversion, which generated strong volume growth and provided us with data about the volume potential of the locations. We are now working to optimize the balance between volume and margin performance of these locations, which led to lower overall same-store volumes in our commission same sites for the quarter in addition to the overall volume decline in the market. Based on national demand data available to us, national gasoline demand was down approximately 5% for the quarter.

So our overall relative results trailed the broader market this quarter, largely due at our company-operated sites to the strong volume growth in the prior year and for our commission sites, due to our continued work to optimize volume and margin at sites we have converted to commission from other classes of trade. In the period since the quarter end, national fuel volume has been down approximately 3.5%. At our company-operated sites, volume for the same period has been in line with national volume demand, while our commission sites volume has been lower as we continue to adjust our commission pricing strategies relative to prior periods for the reasons I just outlined.

Since quarter end, retail fuel margins have been slightly lower than the very strong fourth quarter retail fuel margins, but remain at overall very favorable levels and significantly above what we have experienced in January and early February in the 2 preceding years. For inside sales on a same-site basis, our overall inside sales were slightly up compared to the prior year for the fourth quarter.

Inside sales, excluding cigarettes, increased 1% year-over-year on a same-store basis for the quarter. Our inside sales growth was driven by continued strong performance in our other tobacco products and packaged beverage categories. Also, our food category, both branded and proprietary positively contributed to our growth in same-store sales for the period. Overall, national demand for inside store sales for the quarter was slightly down, indicating our relative outperformance for the quarter.

On the store merchandise margin front, our merchandise gross profit increased by 3% to $28.8 million, driven by an increase in sales in our base business and an increase in store merchandise margin percentage. Our merchandise gross margin percentage was up strongly over the prior year, approximately 70 basis points. This was primarily due to strong growth in certain higher-margin categories like other tobacco products and to our transition from a commission-based model for certain products in the third quarter of last year into owning and selling these products directly for the current quarter and also due to better execution in certain product categories.

In the period since the quarter end, same-store inside sales have been up approximately 2.5% compared to the prior year. In our retail segment, if you look at our total number of retail sites at the end of the quarter, we finished the quarter with 352 company-operated retail sites, down 1 site from the third quarter and 13 sites relative to the fourth quarter of last year.

The decrease in the company-operated sites relative to the prior year reflects the asset sales and class of trade conversions we completed throughout the year as we continue to execute on maximizing the value of each site through class of trade conversions while focusing on being in retail in the right markets. Similarly, in the commission class of trade, we were down 2 sites from the third quarter and up 2 sites relative to the prior year.

Overall, we will continue to look for opportunities in our portfolio to increase our retail exposure while simultaneously seeking to maximize the value of each asset through optimizing its class of trade. The retail segment performed well for the fourth quarter with strong fuel margin, store sales and store margin results. Our volume performance at first glance underperformed the market, but this is in comparison to a particularly strong prior year for us at our company-operated sites and also due to deliberate decisions we made in our commission class of trade to optimize our volume and fuel margin mix at select sites.

Additionally, on the expense side, we are seeing the benefits of the decline in class of trade-related conversion expenses and our disciplined focus on operating expenses, both of which Maura will touch on in her comments. In the period since the quarter end, we have benefited from a continued very strong fuel margin environment through January and into February and overall are off to a much better start to the year than in the previous 2 years.

Moving on to the wholesale segment. For the fourth quarter of 2025, our wholesale segment gross profit declined 7% to $24.2 million compared to $25.9 million in the fourth quarter of 2024. The decrease was primarily driven by a decline in fuel volume and rental income, offset by an increase in fuel margin. A material factor for the fuel volume decline was the conversion of certain lessee dealer sites to company-operated and commission agent sites, which are now accounted for in the retail segment.

Rental income declined for the same reason and due to the site divestitures we have completed this year. Our wholesale motor fuel gross profit increased 6% to $15.7 million in the fourth quarter of 2025 from $14.8 million in the fourth quarter of 2024. Our fuel margin increased 13% from $0.082 per gallon in the fourth quarter of 2024 to $0.093 per gallon in the fourth quarter of 2025. The increase in our wholesale fuel margin per gallon was primarily driven by better sourcing costs and favorable movements in crude oil prices.

Our wholesale volume was 168.9 million gallons for the fourth quarter of 2025 compared to 180.5 million gallons in the fourth quarter of 2024, reflecting a decline of 6%. The decline in volume when compared to the same period in 2024 was in part due to the conversion of certain lessee dealer sites to our retail class of trade. The gallons from these converted sites are now reflected in our retail segment results. For the quarter, our same-store volume in the wholesale segment was down approximately 3.5% year-over-year.

So the additional approximately 3% drop in volume, the difference between the overall volume decline of 6% and our same-store volume decline of 3.5% for the segment was largely due to converting sites to the retail segment or the loss of independent dealer volume. As I mentioned in my retail segment comments, national demand data available to us indicated national volume demand was down around 5% for the quarter.

So our same-store wholesale volume performance for the fourth quarter outperformed overall national volume demand. In the period since the quarter end, wholesale same-store volume has been down approximately 4%, so slightly worse than the national volume demand, which has been down approximately 3.5%. Regarding our wholesale rent, our base rent for the quarter was $8.1 million compared to the prior year of $10.3 million, a decrease due to the conversion of certain lessee dealer sites to company-operated sites as well as our real estate rationalization efforts.

As we have previously explained, the rent dollars for these converted sites, while no longer in the form of rent are now effectively in our retail segment results through our fuel and store sale margins at these locations. If you turn to the next slide, I will briefly review segment performance for the full year. For the full year of 2025, our retail segment gross profit increased 4% to $32.2 million compared to $28.7 million for the full year of 2024.

Merchandise gross profit was $6.3 million or 6% gross profit increased $6.3 million or 4%. On a same-store basis, our total retail segment increased 4% for the full year 2025 relative to 2024, in line with national demand. Our retail store sales, excluding on a same-store basis increased 2% for the full year of 2025, which compares favorably to national data on industry same-store sales.

Our wholesale segment generated gross profit of [ $10.5 ] million for the full year 2025, a 7% decline when compared to the $108.6 million reported in 2024. The decrease was driven by a 7% decline in fuel volume. Our wholesale fuel volume was 688.7 million gallons for the 12-month period ending December 31, 2025, compared to 743.5 million gallons for the same period of 2024.

For the full year, our same-site wholesale volume was down approximately 3%, which based on national data available to us was slightly better than the overall national volume. The remainder of the volume decline was driven by the conversion of certain lessee dealer sites to retail and to a lesser extent, [ indent ] dealer business. We experienced an increase in fuel margin per gallon, up 7% for the 12-month period. Our fuel margin for the wholesale segment was $0.01 per gallon for the full year of 2025 compared to $0.85 per gallon for the full year of 2024, with the improvement driven by better sourcing costs and favorable crude oil price dynamics.

During the fourth quarter, we continued with our real estate rationalization, selling 11 sites and realizing approximately $8.8 million of proceeds that we primarily used to pay down debt. For the most part, we sold sites with continuing fuel supply relationships, so we realized extremely attractive effective multiples on these divestitures, strengthening our financial position today and positioning our portfolio for the future. For the full year, we realized over $100 million in proceeds from asset sales, our biggest year ever, and we continue to have a strong pipeline of asset sales for 2026.

While we don't expect this year to be the record volume of sales we execute in 2025, we do expect it to contribute meaningful proceeds for us to either put into the balance sheet or to invest into the business. The fourth quarter was a solid quarter for the partnership with a material increase in our EBITDA versus the prior year and strong overall operational results.

Since the end of the fourth quarter, we've had a strong start to 2026, continuing the momentum from the fourth quarter results, in particular, benefit from fuel margin environment to start the year and our results year-to-date this year are challenging starts to the prior 2 years. Overall, 2025 was a good year for us and move the business forward during the course of the year.

Operationally, we focused on our retail network, generating increases in our same-store sales and margin while maintaining full volume in line with actual demand and realizing strong fuel margin performance. Our wholesale segment performed well for the year on the strength of higher fuel margins, driven in large part by our success and lower product costs.

Strategically, we made significant progress on our long-term objectives with a record year of asset sales, the largest volume of asset sales in our history. These asset sales not only position the portfolio for long-term success, but they also benefited our balance sheet and increased our financial flexibility for future growth opportunities. We continue to do site class of trade conversions throughout the year, optimizing locations for the class of trade to maximize our long-term value for the partnership.

In short, we finished the year in a strong position with a stronger operating portfolio of assets than at the start of the year and a balance sheet with lower overall leverage and more flexibility for future success. We will turn to the next slide. In terms of our outlook for 2026, we will continue to work to execute well on the fundamental basis of our retail operations to ensure we provide a great experience and value to our retail customers.

For our wholesale customers, we will continue to provide great service and partner with them to ensure our business success in 2026 and beyond. During 2026, we also expect to continue our site divestitures, however, not at the same level that we executed in 2025. Once again, we expect to use the proceeds from the divestitures to invest in our business and strengthen our balance sheet.

We will also continue to do site class of trade conversions with an emphasis on increasing our retail exposure as we seek to maximize the value of each location, we can trade locations operating in the best class of trade for that particular location. We expect the overall level of site conversions in 2026 will be at a lower level in 2025.

In summary, we start 2026 with a business that has a solid core operating portfolio, one that is overall better and higher quality than it was at the start of the prior year and with a team that has demonstrated the ability to produce operational results and execute on strategic plans.

Our balance sheet is stronger than it was at the start of 2025 with enhanced financial flexibility to pursue growth opportunities. Overall, the partnership is well positioned to generate a solid economic return and cash flow for this year and for years to come and to be good stewards of the capital that you, our investors, have entrusted to us. With that, I will turn it over to Maura for a more detailed financial review.

Thank you, Charles. If you would please turn to Slide 8, I would like to review our fourth quarter results for the partnership. We reported net income of $10.2 million and adjusted EBITDA of $43.4 million for the fourth quarter of 2025 compared to net income of $16.9 million and adjusted EBITDA of $35.5 million for the fourth quarter of 2024.

Adjusted EBITDA increased 22% year-over-year. Net income declined primarily due to lower net gains on asset dispositions, offset by a decline in interest expense, both compared to the prior year period. As I mentioned, adjusted EBITDA increased 22% or $7.9 million compared to the prior year period.

As Charles noted in his comments, this increase was driven by a series of positive factors across the business, including an increase in motor fuel margin per gallon in both the retail and wholesale segments, an increase in merchandise gross profit in the retail segment and a decline in operating expenses. Our distributable cash flow for the fourth quarter of 2025 was $28.5 million, a 35% increase from $21.1 million for the fourth quarter of 2024.

The increase in distributable cash flow was primarily due to higher adjusted EBITDA, along with lower cash interest expense and lower sustaining capital expenditures. The decline in interest expense we experienced during the quarter was due to a lower average interest rate and a lower average outstanding debt balance on our CAPL credit facility during the period.

Our distribution coverage ratio for the fourth quarter of 2025 was 1.43x compared to 1.06x for the same period of 2024. During the fourth quarter of 2025, the partnership paid a distribution of $0.525 per unit. Turning to the expense portion of our operations. In total across both segments, we reported operating expenses for the fourth quarter of 2025 of $57.3 million, a $2 million decrease year-over-year and our fifth consecutive quarter of declining operating expenses across the organization.

Retail segment operating expenses for the fourth quarter declined 1% or $0.7 million and wholesale segment operating expenses declined by $1.3 million or 18%. In our Retail segment, our average segment site count was down approximately 2% year-over-year for the quarter. On a same-store store level basis, operating expenses in our retail segment were down approximately 1% for the fourth quarter of 2025 compared to the fourth quarter of 2024.

The decline was primarily driven by reduced store-level employment costs as we remain focused on efficient staffing and operations in our stores as well as continued reductions in repairs and maintenance spending year-over-year at both our company-operated and commission class of trade locations due to realized ongoing efficiencies in our maintenance operations.

As I touched on during our last few quarterly earnings calls, we have cycled through the first year of operations at many of our locations in their new classes of trade, which typically results in elevated expenses to onboard and upgrade the converted locations. As a result, we are experiencing the stabilization of our expense profile in our current class of trade site count.

We will, of course, continue to experience seasonality of certain types of operating expenses in our stabilized portfolio, like increased labor in the summer and increased snowplowing in the winter. Returning to our wholesale segment. Operating expenses declined by $1.3 million or 18% for the quarter year-over-year. This decline was driven primarily by the 23% decline in lessee dealer or controlled site count within the segment year-over-year due to asset sales and to a lesser extent, conversions to our retail class of trade.

We reported G&A expenses for the quarter of $7.2 million, a $0.5 million increase year-over-year, primarily driven by higher management fees and equity compensation expense. We remain focused across the organization on efficient expense management at our locations and at the corporate level, ensuring that we are investing in customer-facing areas at our locations that will drive the long-term health and sustainability of our sites and driving operating efficiencies in our above-store operations.

Turning to the full year of 2025. We reported net income of $41.8 million and adjusted EBITDA of $146 million for the full year of 2025 compared to net income of $22.5 million and adjusted EBITDA of $145.5 million for the full year 2024. With adjusted EBITDA roughly flat year-over-year, the primary driver of the increase in our net income was the gains on sale recognized as part of our real estate optimization efforts that Charles discussed, offset by higher resulting tax expense due to those asset sales as well as a decrease in interest expense due to a lower average interest rate along with a lower average outstanding debt balance.

For the full year of 2025, distributable cash flow was $87.8 million compared to $86 million for the full year of 2024. The increase in distributable cash flow was primarily due to a decrease in cash interest expense that also positively impacted our full year 2025 net income, offset by higher current income tax expense following our very strong fourth quarter results.

Our distribution coverage for the full year of 2025 was 1.10x compared to 1.08x for the full year of 2024. Operating expenses for the full year of 2025 increased $3.7 million or 2% compared to the full year of 2024. Retail segment operating expenses were up $8.5 million or approximately 4% for the year compared to 2024, in line with the approximately 4% increase in average segment site count during the year.

Wholesale segment operating expenses declined $4.7 million in 2025, approximately 15% compared to 2024, primarily due to our reduced site count in the wholesale segment, as I noted earlier in my comments. On a full year basis, our G&A expenses declined from $28.8 million in 2024 to $28 million in 2025, primarily driven by lower acquisition-related costs and legal fees, partially offset by higher management fees.

Moving to the next slide. We spent a total of $7.1 million on capital expenditures during the fourth quarter with $5.7 million of that total being growth-related capital expenditures and $1.4 million of that being sustaining capital expenditures. The decline in sustaining capital expenditures versus the prior year and prior 2025 quarters is in line with our expectations as we experienced a stabilization of our current class of trade site count as well as a reduction of our real estate controlled site count.

Moving to our growth capital spending during the quarter. Our spend remained focused on our company-operated locations and included the completion of various projects to increase food offerings as well as targeted real estate acquisitions from our existing lease portfolio. Our food-related growth investments have and will continue to contribute to our merchandise sales and margin results.

For the full year of 2025, capital expenditures were $35.7 million, with $27.2 million being growth-related CapEx and $8.5 million being sustaining capital expenditures. Turning over to our balance sheet. The asset sale activities during the fourth quarter that Charles reviewed in his comments helped us meaningfully reduce our credit facility balance by approximately $13 million during the quarter.

Our year-to-date asset sale activities helped us to reduce our credit facility balance by $75 million in 2025, leading us to end the year with a balance of $692.3 million. We have materially applied the proceeds of our asset sale activities in 2024 and 2025 to pay down our revolver balance. The decrease in our balance, combined with the gains on sale generated from our asset sale activities resulted in a decrease in our credit facility defined leverage ratio to 3.51x compared to 4.36x as of December 31, 2024.

Our management team remains focused on the cash flow generation profile of our business, utilizing our normal course operations and our targeted real estate optimization efforts to manage our leverage ratio at approximately 4x on a credit facility-defined basis.

Our asset sale activities during the quarter reduced our credit facility balance and the lower average interest rate environment also helped improve our cash interest expense during the fourth quarter and for the full year of 2025. Fourth quarter 2025 cash interest declined from $12.9 million in the fourth quarter of 2024 to $10.5 million in the fourth quarter of 2025. For the full year of 2025, cash interest expense declined from $50.4 million in 2024 to $46.2 million in 2025.

Our existing interest rate swap portfolio continues to benefit us as well. At this time, more than 55% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended and our effective interest rate on the total CAPL credit facility at the end of the fourth quarter is 5.6%.

In conclusion, as Charles noted, the partnership finished 2025 with a strong quarter and with a portfolio positioned for success as we move into 2026. Successfully completing a number of asset sales during the year helped reduce our debt by approximately $75 million and strengthened our balance sheet while also positioning our portfolio to generate durable and consistent cash flows into the future. We are looking forward to the year ahead, maintaining a strong balance sheet and generating value for our unitholders. With that, we will open it up for questions.

Thank you. [Operator Instructions]. It doesn't look we have any questions today. So as always, we thank you for joining us. Should you have a question later, please feel free to reach out. Thank you, and have a good day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the CrossAmerica Partners Third Quarter 2025 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, November 6, 2025. I would now like to turn the conference over to Maura Topper, Chief Financial Officer. Please go ahead.

Thank you, operator. Good morning, and thank you for joining the CrossAmerica Partners Third Quarter 2025 Earnings Call. With me today is Charles Nifong, CEO and President. We'll start off the call today with Charles providing some opening comments and an overview of CrossAmerica's operational performance for the third quarter, and then I will discuss the financial results. We will then open up the call to questions.

Today's call will follow presentation slides that are available as part of the webcast and are posted on the CrossAmerica website. Before we begin, I would like to remind everyone that today's call, including the question-and-answer session, may include forward-looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organization. There can be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations.

Please see CrossAmerica's filings with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of CrossAmerica's management as of today's date, and the organization disclaims any intent or obligation to update any forward-looking statements. During today's call, we may also provide certain performance measures that do not conform to U.S. generally accepted accounting principles or GAAP.

We have provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release. Today's call is being webcast, and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. With that, I will now turn the call over to Charles.

Thank you, Maura. Maura and I appreciate everyone joining us this morning, and thank you for making the time to be with us today. During today's call, I will go through some of the operating highlights for the third quarter. I will also provide commentary on the market and a few other updates as I typically do on our calls. Maura will then review in more detail our financial results. If you turn to Slide 4, I will briefly review in more detail some of our operating results for the quarter.

For the third quarter of 2025, our Retail segment gross profit decreased 4% to $80 million compared to $83.6 million in the third quarter of 2024. The decrease was primarily driven by a decline in motor fuel gross profit due to lower retail fuel margins for the quarter compared to the prior year. For the quarter, our retail fuel margin on a cents per gallon basis decreased 5% year-over-year, as our fuel margin was $0.384 per gallon in the third quarter of 2025 compared to a historically strong $0.406 per gallon in the third quarter of 2024.

In comparison to the prior year, crude oil prices were much less volatile during the third quarter of 2025, which resulted in lower market volatility. And as a result, our retail fuel margins were lower year-over-year. For volume on a same-store basis, our overall retail fuel volume declined 4% for the quarter year-over-year. Our retail volume performance for the quarter was bifurcated between our company-operated and commissioned sites. For our company-operated sites, our same-store volume for the quarter was down slightly less than 3% year-over-year.

Our pricing strategy for our company-operated retail sites overall remained unchanged. We strive to be competitive at each location for the market the site is in. For our commission class of trade, our commission same-store site volume was down approximately 7% for the quarter. The decline was due in part to our decision at select sites to adjust our pricing strategy. With many of the sites that we converted throughout last year, we were very aggressive with fuel pricing initially at conversion, which generated strong volume growth and provided us with data about the volume potential of the locations.

These sites are now same-store locations. And in the third quarter, we sought to balance the volume and margin performance of these locations, which led to lower same-store volumes in our commission sites in addition to the overall volume decline in the market. Based on national demand data available to us, national gasoline demand is down approximately 2.5% for the quarter. So our company-operated sites slightly underperformed the market volume for the quarter, while our commission sites were below national market volume, primarily due to the deliberate pricing strategy changes we implemented during the quarter.

In the period since the quarter end, national retail volume has been down approximately 3.5% and our overall retail same-store volume has been down slightly more than that year-over-year, as we continue to adjust commission pricing strategies relative to the prior year, and we compare against what was for us a very strong volume performance last October. In the same period, retail fuel margins have been significantly higher than the average third quarter retail fuel margins, as oil market price volatility has generated favorable market conditions for enhanced retail fuel margins.

For inside sales -- on a same-site basis, our inside sales were up approximately 3% compared to the prior year for the third quarter. Inside sales, excluding cigarettes, increased 4% year-over-year on a same-store basis for the quarter. Our inside sales growth was driven by strong performance in our packaged beverage and other tobacco products categories. Also, our food category contributed to our relatively strong 4% growth in same-store sales for the period. Overall, national demand for inside store sales for the quarter was flat to slightly positive, indicating our relative outperformance for the quarter.

On the store merchandise margin front, our merchandise gross profit increased by 5% to $32 million, driven by an increase in sales in our base business and an increase in store merchandise margin percentage. Our merchandise gross margin percentage was up strongly over the prior year, approximately 100 basis points. This was primarily due to strong growth in certain higher-margin categories like other tobacco products and also due to our transition from a commission-based model for certain products in the third quarter of last year into owning and selling these products directly for the current quarter.

In the period since the quarter end, same-store inside sales have been approximately flat compared to the prior year. In our retail segment, if you look at our total number of retail sites at the end of the quarter, our company-operated site count decreased by 8 sites this quarter relative to the second quarter of this year. The decrease in company-operated sites reflects the asset sales we completed during the quarter. The divested locations were lower performing sites in markets that we decided were no longer strategic for us. Our commission agent site count also decreased modestly by 3 sites during the quarter relative to the second quarter.

Site divestitures this quarter represent our execution on our continued strategic focus on being in retail, in the right markets, with the right assets and positioning our portfolio for long-term success. We continue to look for opportunities in our portfolio to increase our retail exposure and our overall retail strategy has not changed. The Retail segment performed well for the third quarter. On a fuel margin-neutral basis, the segment outperformed the prior year on strong inside sales and expense reduction, which Maura will address in her comments.

Our volume performance at first glance underperformed, but this was due primarily to deliberate decisions we made in our commission class of trade to adjust our volume and fuel margin mix at select sites. In the period since the quarter end, we have benefited from a very strong fuel margin environment throughout the month of October. Moving on to the Wholesale segment. For the third quarter of 2025, our Wholesale segment gross profit declined 10% to $24.8 million compared to $27.6 million in the third quarter of 2024. The decrease was primarily driven by a decline in fuel volume, fuel margin and rental income.

The primary factor for the fuel volume decline was the conversion of certain lessee dealer sites to company-operated and commission agent sites, which are now accounted for in the retail segment. Rental income declined for the same reason and due to the site divestitures we have completed thus far this year. Our wholesale motor fuel gross profit declined 7% to $15.7 million in the third quarter of 2025 from $16.9 million in the third quarter of 2024. Our fuel margin decreased 2% from $0.09 per gallon in the third quarter of 2024 to $0.088 per gallon in the third quarter of 2025.

The decline in our wholesale fuel margin per gallon was primarily driven by movements in crude oil prices and lower prompt pay discounts associated with lower gasoline prices, which reflected lower crude oil prices during the quarter compared to the prior year, partially offset by better sourcing costs. Our wholesale volume was 177.7 million gallons for the third quarter of 2025 compared to 186.9 million gallons in the third quarter of 2024, reflecting a decline of 5%. The decline in volume when compared to the same period in 2024 was primarily due to the conversion of certain lessee dealer sites to our retail class of trade.

The gallons from these converted sites are now reflected in our retail segment results. For the quarter, our same-store volume in the wholesale segment down approximately 2.5% year-over-year. So the additional approximately 2.5% drop in volume, the difference between the overall volume decline of 5% and our same-store volume decline of 2.5% for this segment was largely due to converting sites to the retail segment or the loss of independent dealer volume.

As I mentioned in my retail segment comments, national demand data available to us indicated national volume demand was down around 2.5% for the quarter. So our same-store wholesale volume performance for the third quarter performed in line with overall national volume demand. In the period since the quarter end, wholesale same-store volume has been down approximately 4.5%, so slightly worse than national volume demand, which has been down approximately 3.5%. Regarding our wholesale rent, our base rent for the quarter was $8.5 million compared to the prior year of $10.4 million, a decrease due to the conversion of certain lessee dealer sites to company-operated sites as well as our real estate rationalization efforts.

As we have previously explained, the rent dollars for the converted sites, while no longer in the form of rent, are now effectively in our retail segment results through our fuel and store sales margins at these locations. During the quarter, we continued with our real estate rationalization efforts, realizing approximately $22 million in proceeds from the sale of 29 sites during the quarter that we primarily used to pay down debt. For the most part, we sold sites with continuing fuel supply relationships, so we realized an extremely attractive effective multiple on these divestitures, strengthening our financial position today and positioning our portfolio for the future.

Year-to-date, we have realized approximately $100 million in proceeds from asset sales, our biggest year ever. We continue to have a strong pipeline of asset sales for the rest of the year and are building a pipeline of asset sales for 2026. While we don't expect next year to be the record volume of sales that we have executed this year, we do expect it to contribute meaningful proceeds for us to either put into the balance sheet or to invest into the business.

Overall, the third quarter was a solid quarter for the partnership. While our EBITDA was below the prior year, on a comparable fuel margin basis, our EBITDA results exceeded the prior year despite us realizing approximately $100 million in asset sale proceeds this year. During the quarter, we continued to make meaningful progress on our strategic goals with another strong quarter of site divestitures, which strengthened our balance sheet by lowering our debt level by approximately $22 million compared to the second quarter and further optimize our operating portfolio for the future.

Since the end of the third quarter, we've had a strong start to the fourth quarter, benefiting from a very favorable fuel margin environment. With that, I'll turn it over to Maura to further discuss our financial results.

Thank you, Charles. If you would please turn to Slide 6, I would like to review our third quarter results for the partnership. We reported net income of $13.6 million for the third quarter of 2025 compared to net income of $10.7 million in the third quarter of 2024. This increase in net income was driven by a combination of factors, including a decline in adjusted EBITDA year-over-year, offset by increased gains on the sale of assets that Charles discussed in his commentary and a decline in interest expense.

We recorded a net gain from asset sales and lease terminations of $7.4 million during the third quarter of 2025 compared to $4.7 million during the third quarter of 2024. Interest expense declined from $14.1 million during the third quarter of 2024 to $11.8 million during the third quarter of 2025, a material benefit to our quarter as a result of our strategic activities, which I will discuss further later on in my comments. Adjusted EBITDA for the third quarter of 2025 was $41.3 million, a decline of $2.6 million or 6% compared to the prior year period.

This decline was primarily due to a decline in fuel and rent gross profit, which was offset by a $4 million decrease in overall expenses during the quarter year-over-year. Our distributable cash flow for the third quarter of 2025 was $27.8 million, a slight increase from $27.1 million for the third quarter of 2024. The increase in distributable cash flow was primarily due to lower cash interest expense, sustaining capital expenditures and current income tax expense, offset by our lower adjusted EBITDA.

The decline in interest expense we experienced during the quarter was due to a lower average interest rate during the period and a lower average outstanding debt balance on our capital credit facility during the period, as we have materially applied the proceeds of our asset sale activities to pay down our revolver balance. Our distribution coverage ratio for the third quarter of 2025 was 1.39x compared to 1.36x for the same period of 2024. Our distribution coverage for the trailing 12 months for the period ended September 30, 2025, was 1x compared to 1.26x for the same 12-month period ended September 30, 2024.

During the third quarter of 2025, the partnership paid a distribution of $0.525 per unit. Charles provided information in his comments on our top line and gross profit metrics during the quarter and how they impacted our adjusted EBITDA compared to the prior year. I will now touch on the expense portion of our operations. In total, across both segments, we reported operating expenses for the third quarter of 2025 of $57.5 million, a $3.2 million decrease year-over-year.

We reported G&A expenses for the quarter of $6.5 million, a $0.8 million decrease year-over-year, resulting in a total expense decrease for the organization of $4 million or 6% over the course of the past year. As I touched on during our last quarterly earnings call, we have cycled through the first year of operations of many of our locations in their new classes of trade, which typically results in elevated expenses to onboard and upgrade the converted locations. As a result, we are experiencing a stabilization of our expense profile in our current class of trade site count.

We will, of course, continue to experience seasonality of certain types of operating expenses in our stabilized portfolio, like increased labor in the summer and increased snowplowing in the winter. Returning to our operating segments. Retail segment operating expenses for the third quarter declined $1.6 million or 3%. This was driven primarily by the reduced site count in our retail segment this quarter, specifically the 4% decrease in average company-operated site count year-over-year.

On a same-store store level basis, operating expenses in our retail segment were down 2% for the third quarter of 2025 compared to the third quarter of 2024. The decline was primarily driven by reduced repairs and maintenance spending at both our company-operated and commission class of trade locations due to realized ongoing efficiencies in our maintenance operations, offset by normal course increases in store labor costs. Operating expenses in our wholesale segment declined by $1.6 million or 19% for the quarter year-over-year due to declines in site level operating expenses and management fees, as our wholesale segment average site count declined 6% year-over-year.

And specifically, our lessee dealer or controlled site count within this segment declined 23% year-over-year due to asset sales and to a lesser extent, conversions to our retail class of trade. Our G&A expenses declined 11% for the quarter year-over-year, primarily driven by lower legal fees and equity compensation expense. As noted last quarter, our G&A expense profile this quarter, excluding event-driven acquisition costs and unit price movements impacts to equity compensation is more indicative of our ongoing run rate in this area.

We remain focused across the organization on efficient expense management at our locations, ensuring that we are investing in customer-facing areas that will drive the long-term health and sustainability of our sites and driving operating efficiencies in our above-store operations. Moving to the next slide. We spent a total of $6.7 million on capital expenditures during the third quarter with $4.8 million of that total being growth-related capital expenditures and $1.9 million of that being sustaining capital expenditures.

The decline in sustaining capital expenditures versus the prior year is in line with our expectations, as we experienced a stabilization of our current class of trade site count as well as a reduction of our real estate controlled site count. Moving to our growth capital spending during the quarter. Our spend remained focused on our company-operated locations and included the completion of various projects to increase food offerings, both our own and QSRs as well as targeted fuel brand and backcourt refresh projects, supported by our wholesale fuel supplier partners.

Our food-related growth investments have and will continue to contribute to our merchandise sales and margin results, as Charles discussed earlier. Turning to our balance sheet. The asset sale activities during the third quarter that Charles reviewed in his comments, meaningfully helped us reduce our credit facility balance by $21.5 million since the end of the second quarter of 2025, ending the quarter at a credit facility balance of $705.5 million. Our year-to-date asset sale activities have helped us to reduce our credit facility balance by $62 million year-to-date.

The decrease in our balance, combined with the gains on sale generated from our asset sale activities, resulted in a decrease in our credit facility-defined leverage ratio to 3.56x compared to 4.36x as of December 31, 2024. This leverage ratio continues to provide additional meaningful savings on our credit facility interest expense, as we move forward. Our management team remains focused on the cash flow generation profile of our business, utilizing our normal course operations and our targeted real estate optimization efforts to manage our leverage ratio at approximately 4x on a credit facility-defined basis.

Our asset sale activities during the quarter and reduced credit facility balance also helped improve our cash interest expense during the quarter, which decreased from $13.7 million in the third quarter of 2024 to $11.3 million in the third quarter of 2025. We also benefited from a lower average interest rate environment during the third quarter of 2025. Our existing interest rate swap portfolio continues to benefit us as well.

At this time, more than 55% of our current credit facility balance is swapped to a fixed rate of approximately 3.4% blended, which remains an advantaged rate in the current rate environment. Our effective interest rate on the total capital credit facility at the end of the third quarter is 5.8%. In conclusion, as Charles noted, we had a solid third quarter. We successfully completed several asset sales, reducing our debt by more than $20 million and strengthening our balance sheet.

These transactions also positioned our operating portfolio for long-term performance. We remain focused as a team on continuing to execute across the business and are looking forward to 2026, maintaining a strong balance sheet and generating value for our unitholders. With that, we will open it up for questions.

[Operator Instructions]

It doesn't appear we have any questions today. Should you have any questions later, please feel free to reach out to us. Again, thank you for joining us. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.