CrossAmerica Partners LP Common units representing limited partner interests 2026 Q2 Earnings Call

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 Jonathan 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 John will discuss the financial results. We'll 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 a 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've 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 am happy to now introduce Jonathan 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 am proud today for John and I to be able to talk about a number of our wins on the merchandise margin, cost management, and balance sheet fronts. If you will turn to slide four, 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 a 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 two classes of trade within our retail segment. Same-store volume at our company-operated locations was down approximately 8% for the quarter, with our commissioned 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. 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. 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's 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 continued 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 impacts 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. 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. John 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.