By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
CAPL's Q1 2026 was strong, but reliance on asset sales and margin-for-volume trade may not be sustainable, raising concerns about future growth and potential margin squeeze.
Risk: Reliance on asset sales to fund debt paydown and maintain distributions, which may not be sustainable in the long term.
Opportunity: Potential for margin optimization through class-of-trade conversions and retail focus.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
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Thursday, May 7, 2026 at 9:00 a.m. ET
- Chief Executive Officer and President — Maura Topper
- Interim Chief Financial Officer — Jon Benfield
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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.
Maura Topper: 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.
Jonathan Benfield: 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 r
Four leading AI models discuss this article
"CAPL is sacrificing long-term volume sustainability for short-term margin expansion, creating a fragile earnings profile that relies entirely on consumer price insensitivity."
CrossAmerica (CAPL) is executing a classic margin-over-volume pivot, successfully masking structural volume decay with aggressive retail fuel pricing. A 7% same-store volume decline is alarming, yet the 45% jump in adjusted EBITDA to $35M highlights the efficacy of their 'class of trade' conversions—shifting from low-margin wholesale to higher-margin retail. However, this is a late-cycle play. By prioritizing debt reduction and margin expansion over volume, they are essentially harvesting the business. The 14% volume drop in commission sites suggests they are pricing themselves out of the market to protect the bottom line, which is unsustainable if fuel price volatility shifts from 'rational' to demand-destructive.
The company’s ability to maintain a 29.7% merchandise margin while simultaneously reducing debt suggests a high-quality operational turnaround that could lead to a significant valuation re-rating if they successfully stabilize volumes.
"CAPL's 45% EBITDA surge and debt reduction underscore a resilient retail pivot that's generating durable cash flow even in tough volume conditions."
CAPL delivered a stellar Q1 2026 with record $35.1M adjusted EBITDA (+45% YoY), driven by retail fuel margins jumping to $0.437/gal (+29%) and merchandise gross profit up 8% to $27M at 29.7% margin. Despite 7% same-store retail volume decline (4% company-op, 14% commission), higher margins offset it, yielding $8.7M more fuel GP. Wholesale GP fell 13% to $23.3M from conversions/divestitures, but same-store volumes beat benchmarks. Debt paydown of $10M via $12.7M asset sales strengthens balance sheet (leverage down YoY), doubling distributable cash flow to $21.5M. New CEO emphasizes retail focus in right markets—positioned for volatility.
Volumes plunged 7% same-store amid rising/volatile fuel prices, with commission sites down 14% from deliberate pricing shifts that may not sustain if competition intensifies or demand weakens further. Wholesale erosion from conversions risks over-reliance on retail margins that historically compress in prolonged up-price cycles.
"CAPL is trading operational durability for current margin expansion—a bet that fuel pricing stays rational and retail volumes stabilize, neither of which is guaranteed."
CAPL's Q1 2026 shows genuine operational leverage: adjusted EBITDA +45% YoY to $35.1M, retail fuel margins expanded 10 cents/gallon to $0.437, merchandise margins hit record 29.7%, and distributable cash flow more than doubled to $21.5M. The new CEO is executing a deliberate portfolio shift toward higher-margin retail operations. Debt paydown accelerated ($10M credit facility reduction). However, the headline masks a critical fragility: same-store volume declined 7% retail, 14% at commission sites. Management attributes this to pricing strategy and rising fuel prices, but the math is uncomfortable—they're buying margin with volume. April volumes 'experienced more pressure' than Q1. This works only if margins stay elevated; any normalization combined with volume pressure creates a margin squeeze.
The 45% EBITDA growth is partly accounting sleight-of-hand: lower impairment charges and interest expense drove net income, not just operational performance. If fuel margins compress (historically they do in rising-price environments), and volumes don't recover, the Q1 'record' becomes a peak, not a floor.
"CAPL is showing durable cash-flow generation through retail margin strength and balance-sheet discipline, but sustainability hinges on continued fuel-margin resilience and the longevity of asset-sale driven earnings."
CrossAmerica posts a clearly solid Q1 2026: adjusted EBITDA of $35.1m (up 45% YoY), net income of $10.7m, and distributable cash flow of $21.5m. Retail gross profit rose on stronger motor-fuel margins ($0.437/gal) and merchandise mix, aided by debt paydown and real estate sales that bolster the balance sheet. Volume softness—company-operated down ~4% and commission down ~14%—is being offset by margin power and store-level improvements, plus ongoing asset sales and class-of-trade conversions. If fuel-margin strength and conversion-led cash flow persist, CAPL could sustain earnings power and a favorable multiple; risk remains around fuel volatility, volume declines, and reliance on asset monetization.
The improvements may prove one-off: asset sales inflate EBITDA and reduce asset base, while ongoing volume declines and fuel-cycle volatility could erode cash flow when leverage relief wanes. If fuel margins compress or conversion pace slows, the run-rate metrics may deteriorate.
"CAPL's reliance on asset sales to fund debt reduction is a finite strategy that masks long-term structural decline in volume."
Claude is right to flag the 'margin-for-volume' trap, but everyone is ignoring the underlying structural risk: CAPL’s reliance on asset sales to deleverage. Selling off the 'class of trade' portfolio is a finite game. Once the low-hanging fruit is divested, the firm is left with a shrinking, lower-volume retail base exposed to secular decline in fuel demand. They aren't just harvesting; they are liquidating the future to pay for current distributions. This is a classic yield trap.
"Conversions are accretive portfolio shifts, not liquidation, though dividend sustainability hinges on volume stabilization."
Gemini, your 'liquidating the future' take ignores that class-of-trade conversions boosted retail fuel GP by $8.7M despite volumes, with wholesale same-store outperforming benchmarks (per Grok). This isn't harvesting—it's margin optimization with 50+ sites in pipeline. Bigger omission by all: CAPL's 12% yield (funded by doubled $21.5M DCF) risks cut if April's volume pressure (Claude) heralds demand destruction from high rates.
"Asset monetization masking operational decline is unsustainable once the portfolio shrinks below critical mass."
Grok conflates two separate issues. Yes, same-store wholesale beat benchmarks—but that's a low bar in a declining market. The real problem: CAPL sold $12.7M in assets to fund $10M debt paydown. That's a 79% conversion rate. Grok's '50+ sites in pipeline' assumes conversions continue indefinitely at current margins. But conversion economics deteriorate as you move down-market. April volume pressure isn't just rate-driven; it's the margin-for-volume trade finally breaking.
"CAPL's finite asset-sales deleveraging creates pressure for durable margin growth and volume recovery; otherwise the upside falters when one-off gains fade."
Claude highlights margin durability, which matters. My pushback: CAPL's debt paydown was funded by asset sales, a finite runway that props up EBITDA and DCF but doesn't fix underlying volume decline or wholesale risk. If fuel margins compress or volumes stay weak, the company’s leverage could reaccelerate via higher borrowing costs and need for fresh asset sales, squeezing equity upside once the one-off gains fade.
CAPL's Q1 2026 was strong, but reliance on asset sales and margin-for-volume trade may not be sustainable, raising concerns about future growth and potential margin squeeze.
Potential for margin optimization through class-of-trade conversions and retail focus.
Reliance on asset sales to fund debt paydown and maintain distributions, which may not be sustainable in the long term.