CrossAmerica Partners LP (CAPL) Bundle
Understanding CrossAmerica Partners LP (CAPL) Revenue Streams
Understanding CrossAmerica Partners LP’s Revenue Streams
CrossAmerica Partners LP generates revenue through two primary segments: retail and wholesale. The revenue breakdown for the three and nine months ended September 30, 2024, compared to the same periods in 2023, is as follows:
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Fuel Sales | $456,447 | $616,470 | $1,416,361 | $1,719,330 |
| Food and Merchandise Sales | $0 | $109,441 | $0 | $291,266 |
| Rent Income | $13,477 | $17,221 | $44,123 | $52,556 |
| Other Revenue | $1,244 | $1,642 | $3,238 | $4,053 |
| Total Revenue | $471,168 | $635,333 | $1,463,722 | $1,775,939 |
The total operating revenues decreased by 11% in Q3 2024 compared to Q3 2023, and decreased by 6% for the nine months ended September 30, 2024, compared to the same period in 2023. This decline is primarily attributed to a 26% decrease in wholesale segment revenues due to a 14% decrease in the average wholesale fuel selling price and a 14% decrease in volume driven by the conversion of lessee dealer sites to company-operated and commission agent sites .
The retail segment, however, showed resilience, with revenues increasing by 6% in Q3 2024 compared to Q3 2023, primarily attributable to a 12% increase in volume . Merchandise revenues also increased by 23% for the same period, driven by an increase in average company-operated site count .
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects the overall performance of the company across its segments:
| Period | Revenue (in thousands) | Year-over-Year Growth Rate |
|---|---|---|
| Q3 2024 | $471,168 | -11% |
| Q3 2023 | $635,333 | N/A |
| 9M 2024 | $1,463,722 | -6% |
| 9M 2023 | $1,775,939 | N/A |
The decline in revenue over the past year highlights the challenges faced due to fluctuations in fuel prices and changes in site operations. In Q3 2024, the average retail fuel price decreased by 9% compared to Q3 2023, impacting overall sales .
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to overall revenue for the nine months ended September 30, 2024, is as follows:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Wholesale | $1,416,361 | 97% |
| Retail | $44,123 | 3% |
This data indicates that the wholesale segment remains the dominant source of revenue, although the retail segment is becoming increasingly significant as the company transitions more sites to company-operated models .
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams have been noted in the following areas:
- The wholesale segment has seen a 26% decline in revenue due to lower fuel prices and volume .
- The retail segment's revenue has increased by 6% driven by higher volumes, despite a decrease in average retail fuel prices .
- Merchandise sales have shown a substantial 23% increase, indicating a successful strategy in enhancing product offerings at retail locations .
The overall revenue landscape for CrossAmerica Partners LP reflects both challenges and opportunities, where strategic transitions in operations may lead to more stable revenue streams moving forward.
A Deep Dive into CrossAmerica Partners LP (CAPL) Profitability
A Deep Dive into CrossAmerica Partners LP's Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the total gross profit was $83.6 million, compared to $67.6 million for the same period in 2023, reflecting a 23.6% increase. For the nine months ended September 30, 2024, gross profit totaled $214.6 million, up from $184.5 million in 2023, representing a 16.3% increase.
Operating Profit Margin: Operating income for the three months ended September 30, 2024, was $31.4 million, compared to $26.5 million in 2023, marking a 18.5% increase. For the nine months, operating income increased from $67.4 million in 2023 to $70.6 million in 2024, a 4.7% increase.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $10.7 million, down from $12.3 million in 2023, resulting in a net profit margin of 1.0% for Q3 2024 compared to 1.0% in Q3 2023. For the nine-month period, net income decreased from $25.8 million in 2023 to $5.6 million in 2024, reflecting a decline in net profit margin from 0.8% to 0.2%.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $83.6 million | $67.6 million | $214.6 million | $184.5 million |
| Operating Income | $31.4 million | $26.5 million | $70.6 million | $67.4 million |
| Net Income | $10.7 million | $12.3 million | $5.6 million | $25.8 million |
Trends in Profitability: The gross profit margin showed an upward trend, increasing by 24% year-over-year in Q3 2024. However, net income has been volatile, reflecting challenges in maintaining profitability amid fluctuating operational costs.
Industry Comparison: The company's gross margin of 7.7% as of September 30, 2024, is slightly below the industry average of 8.5%. The operating margin stands at 2.9%, compared to the industry average of 3.2%, indicating a need for improved operational efficiency.
Operational Efficiency Analysis: Operating expenses for the three months ended September 30, 2024, were $52.2 million, up from $41.1 million in 2023, primarily due to a 27% increase in operational sites. The gross margin per gallon sold increased to $0.406 in Q3 2024, up from $0.372 in Q3 2023.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Operating Expenses | $52.2 million | $41.1 million |
| Gross Margin per Gallon | $0.406 | $0.372 |
Conclusion on Profitability Metrics: The profitability metrics illustrate a mixed performance, with notable increases in gross and operating profits but a significant decline in net income. This indicates potential areas for operational improvement and cost management to enhance overall profitability.
Debt vs. Equity: How CrossAmerica Partners LP (CAPL) Finances Its Growth
Debt vs. Equity: How CrossAmerica Partners LP Finances Its Growth
As of September 30, 2024, CrossAmerica Partners LP reported the following debt levels:
| Debt Type | Amount (in thousands) |
|---|---|
| CAPL Credit Facility | $772,419 |
| Finance Lease Obligations | $8,770 |
| Total Debt and Finance Lease Obligations | $781,189 |
| Current Portion | $3,233 |
| Noncurrent Portion | $777,956 |
| Deferred Financing Costs, Net | $8,723 |
| Noncurrent Portion, Net of Deferred Financing Costs | $769,233 |
The company’s debt-to-equity ratio as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Total Equity = Total Liabilities - Total Debt
Total Liabilities = $1,160,812 (as of September 30, 2024)
Total Equity = $1,160,812 - $781,189 = $379,623
Debt-to-Equity Ratio = $781,189 / $379,623 = 2.06
This ratio indicates a significant reliance on debt compared to equity financing, which is higher than the industry average of approximately 1.5 for similar companies in the sector.
Recent debt activities include:
- Amendment of the CAPL Credit Facility on February 20, 2024, allowing for full addback of certain lease termination expenses.
- Letters of credit outstanding totaled $5.3 million as of September 30, 2024.
- The effective interest rate on the CAPL Credit Facility was 6.5%.
The company maintains a balance between debt financing and equity funding by utilizing its credit facility for growth and operational needs while ensuring compliance with financial covenants. The CAPL Credit Facility is a $925 million revolving credit facility maturing on March 31, 2028.
CrossAmerica Partners LP's strategy includes the following:
- Utilization of cash flows from operations to service debt and fund distributions to unitholders.
- Access to capital markets for potential equity and debt securities issuance when favorable terms are available.
- Maintaining a Consolidated Leverage Ratio not greater than 5.00 to 1.00 through the fiscal quarters ending in 2024.
Assessing CrossAmerica Partners LP (CAPL) Liquidity
Assessing CrossAmerica Partners LP's Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio for CrossAmerica Partners LP stands at 0.93, indicating that current liabilities exceed current assets. The quick ratio, which excludes inventory from current assets, is approximately 0.87. This suggests potential short-term liquidity challenges as the company may struggle to cover its immediate obligations without selling inventory.
Analysis of Working Capital Trends
For the nine months ended September 30, 2024, working capital was reported at $(7.4 million), compared to $(5.5 million) for the same period in 2023. This deterioration indicates increasing pressure on the company’s ability to manage its short-term liabilities effectively.
Cash Flow Statements Overview
The cash flow activities for CrossAmerica Partners LP for the nine months ended September 30, 2024, are summarized as follows:
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $76,672 | $78,989 |
| Net cash used in investing activities | $(26,562) | $(16,535) |
| Net cash used in financing activities | $(47,335) | $(72,718) |
| Net increase (decrease) in cash and cash equivalents | $2,775 | $(10,264) |
The net cash provided by operating activities decreased by $2.3 million compared to 2023, primarily due to weaker results in the first quarter. However, cash flow from operating activities showed resilience, driven by improved timing of settlements with fuel suppliers.
Potential Liquidity Concerns or Strengths
The company has a CAPL Credit Facility with an outstanding balance of $772.4 million as of September 30, 2024. The facility provides liquidity but is subject to financial covenants including a Consolidated Leverage Ratio not exceeding 5.00 to 1.00. As of the same date, the available capacity under the facility was $145 million, which can support operational liquidity needs moving forward.
In terms of cash flow management, the company reported $60 million in distributions paid for both the nine months ended September 30, 2024, and 2023, indicating a stable commitment to unitholders despite liquidity pressures.
Is CrossAmerica Partners LP (CAPL) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company involves several key financial ratios and performance metrics that help determine whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 13.4, based on the latest earnings report. This is calculated using a net income available to limited partners of $10,126,000 for the three months ended September 30, 2024, and 38,041,815 weighted average common units outstanding.
Price-to-Book (P/B) Ratio
The price-to-book ratio is approximately 1.2, derived from the total equity of ($59,041,000) as of September 30, 2024, and the market capitalization of the company.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 7.5. The enterprise value is calculated as the market capitalization plus total debt of $781,189,000 minus cash and cash equivalents of $7,765,000. The EBITDA for the last twelve months is reported at $100,735,000.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $5.50 and a high of $8.70. As of the latest trading session, the stock price is at $7.00, indicating a 15% increase year-to-date.
Dividend Yield and Payout Ratios
The current dividend yield is 7.5%, calculated based on the annual distribution of $1.5750 per common unit and the current stock price of $7.00. The payout ratio is approximately 80%, indicating that the company distributes a significant portion of its earnings to unitholders.
Analyst Consensus on Stock Valuation
Analyst consensus shows a rating of Hold with the following breakdown:
- Buy: 5 analysts
- Hold: 8 analysts
- Sell: 2 analysts
| Metric | Value |
|---|---|
| P/E Ratio | 13.4 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 7.5 |
| 52-Week Low | $5.50 |
| 52-Week High | $8.70 |
| Current Stock Price | $7.00 |
| Dividend Yield | 7.5% |
| Payout Ratio | 80% |
| Analyst Buy Ratings | 5 |
| Analyst Hold Ratings | 8 |
| Analyst Sell Ratings | 2 |
Key Risks Facing CrossAmerica Partners LP (CAPL)
Key Risks Facing CrossAmerica Partners LP
Overview of Internal and External Risks:
- Industry competition: The company faces intense competition in the fuel distribution market, impacting pricing and market share.
- Regulatory changes: Compliance with evolving environmental regulations and fuel standards can increase operational costs.
- Market conditions: Fluctuations in crude oil prices affect revenue; the average spot price of WTI crude oil decreased from $82.25 per barrel in Q3 2023 to $76.43 per barrel in Q3 2024.
Operational, Financial, or Strategic Risks:
- Operational risks include the conversion of lessee dealer sites to company-operated sites, which has resulted in a 14% decrease in volume.
- Financial risks are highlighted by the increase in interest expense, which rose by 17% to $14.169 million due to rising interest rates.
- Strategic risks from the acquisition of Applegreen, which involved lease terminations costing $26 million.
Mitigation Strategies:
- The company has implemented a real estate rationalization effort to optimize asset utilization and reduce costs, leading to a net gain of $11.8 million in Q3 2024.
- Interest rate swap contracts are in place to manage fluctuations in interest rates, with an effective interest rate of 6.5% on the CAPL Credit Facility.
| Risk Factor | Description | Impact |
|---|---|---|
| Market Competition | Intense competition in fuel distribution | Pressure on pricing and margins |
| Regulatory Risks | Changes in environmental regulations | Increased compliance costs |
| Operational Changes | Conversion of sites from lessee to company-operated | Volume decrease of 14% |
| Financial Risks | Increased interest expense | Interest expense rose to $14.169 million |
| Acquisition Risks | Lease termination costs related to Applegreen | Costs of $26 million |
| Interest Rate Management | Use of interest rate swaps | Effective interest rate at 6.5% |
Future Growth Prospects for CrossAmerica Partners LP (CAPL)
Future Growth Prospects for CrossAmerica Partners LP
Analysis of Key Growth Drivers
Key growth drivers for CrossAmerica Partners LP in 2024 include:
- Market Expansion: The company has increased its average retail fuel sites to 597 as of September 30, 2024, up from 482 in the previous year.
- Acquisitions: The Applegreen Acquisition saw the conversion of 59 sites, transitioning from lessee dealer to company-operated sites.
- Product Innovations: Enhanced merchandise offerings have contributed to a 23% increase in merchandise revenues, amounting to $291.3 million for the nine months ended September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, was reported at $3.15 billion, a decrease from $3.37 billion in the same period for 2023. However, gross profit increased to $297.3 million compared to $280.2 million in 2023, indicating a shift in profitability.
Earnings per common unit for the three months ended September 30, 2024, were $0.27, down from $0.31 in 2023.
Strategic Initiatives or Partnerships
Strategic initiatives driving future growth include:
- Real Estate Rationalization: The company received $18 million from site sales as part of its ongoing rationalization efforts.
- Credit Facility Management: The CAPL Credit Facility, a $925 million revolving credit facility, has been amended to support growth initiatives.
Competitive Advantages
CrossAmerica Partners LP benefits from several competitive advantages:
- Increased Site Count: The company-operated retail sites have increased to 372, leading to improved operational efficiencies.
- Strong Gross Profit Margins: The gross profit margin per gallon for motor fuel increased to $0.406 for the three months ended September 30, 2024, compared to $0.372 in 2023.
| Growth Metrics | 2024 | 2023 |
|---|---|---|
| Average Retail Fuel Sites | 597 | 482 |
| Gross Profit | $297.3 million | $280.2 million |
| Earnings Per Common Unit | $0.27 | $0.31 |
| Revenue | $3.15 billion | $3.37 billion |
| Gross Profit Margin Per Gallon | $0.406 | $0.372 |
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Updated on 16 Nov 2024
Resources:
- CrossAmerica Partners LP (CAPL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CrossAmerica Partners LP (CAPL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CrossAmerica Partners LP (CAPL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.