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01/10 18:48
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative trends: declining fuel and rental income, reduced site count, and lower wholesale segment profit. Despite some positive aspects like increased net income and inside sales, the overall sentiment is negative due to asset divestitures and reduced operational capacity. The Q&A section lacked engagement, indicating possible concerns about transparency. Given the company's market cap, the stock price is likely to react negatively, falling between -2% to -8% over the next two weeks.
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.
Retail fuel margin Decreased 5% year-over-year, with a margin of $0.384 per gallon in the third quarter of 2025 compared to $0.406 per gallon in the third quarter of 2024. The decline was due to less volatile crude oil prices, resulting in lower market volatility.
Retail fuel volume (same-store basis) Declined 4% year-over-year. Company-operated sites saw a decline of slightly less than 3%, while commission sites experienced a 7% decline due to deliberate pricing strategy adjustments.
Inside sales (same-store basis) Increased approximately 3% year-over-year for the third quarter. Excluding cigarettes, inside sales increased 4%, driven by strong performance in packaged beverages, other tobacco products, and food categories.
Merchandise gross profit Increased 5% to $32 million, driven by an increase in sales and a 100 basis point increase in merchandise gross margin percentage. This was due to growth in higher-margin categories and transitioning from a commission-based model to direct sales for certain products.
Wholesale segment gross profit Declined 10% to $24.8 million compared to $27.6 million in the third quarter of 2024. The decrease was driven by a decline in fuel volume, fuel margin, and rental income.
Wholesale motor fuel gross profit Declined 7% to $15.7 million from $16.9 million in the third quarter of 2024. The fuel margin decreased 2% from $0.09 per gallon to $0.088 per gallon, primarily due to movements in crude oil prices and lower prompt pay discounts.
Wholesale volume Declined 5% to 177.7 million gallons compared to 186.9 million gallons in the third quarter of 2024. The decline was due to the conversion of lessee dealer sites to retail and the loss of independent dealer volume.
Net income Increased to $13.6 million compared to $10.7 million in the third quarter of 2024. The increase was driven by gains on asset sales and a decline in interest expense.
Adjusted EBITDA Declined 6% to $41.3 million, primarily due to a decline in fuel and rent gross profit, offset by a $4 million decrease in overall expenses.
Distributable cash flow Increased slightly to $27.8 million from $27.1 million in the third quarter of 2024, driven by lower cash interest expense, sustaining capital expenditures, and current income tax expense, offset by lower adjusted EBITDA.
Operating expenses Decreased $4 million or 6% year-over-year to $57.5 million, driven by reduced site count, lower repairs and maintenance spending, and reduced legal fees and equity compensation expense.
Capital expenditures Totaled $6.7 million, with $4.8 million for growth-related expenditures and $1.9 million for sustaining capital expenditures. The decline in sustaining capital expenditures was due to stabilization of the current site count.
Credit facility balance Reduced by $21.5 million since the second quarter of 2025, ending at $705.5 million. Year-to-date, the balance was reduced by $62 million, aided by asset sale proceeds.
Interest expense Decreased from $14.1 million in the third quarter of 2024 to $11.8 million in the third quarter of 2025, due to a lower average interest rate and reduced debt balance.
Retail Segment Gross Profit: Decreased 4% to $80 million compared to $83.6 million in Q3 2024, driven by lower retail fuel margins and a 4% decline in same-store retail fuel volume.
Inside Sales Growth: Increased 3% year-over-year, with a 4% increase excluding cigarettes. Growth driven by packaged beverages, other tobacco products, and food categories.
Merchandise Gross Profit: Increased 5% to $32 million, driven by higher-margin categories and transition to direct product sales.
Operating Expenses: Decreased by $4 million (6%) year-over-year, driven by reduced site count and efficiencies in maintenance operations.
Adjusted EBITDA: Declined 6% to $41.3 million, primarily due to lower fuel and rent gross profit, offset by reduced expenses.
Site Divestitures: Sold 29 sites for $22 million in Q3, focusing on optimizing portfolio and strengthening balance sheet. Year-to-date proceeds from asset sales reached $100 million.
Debt Reduction: Reduced credit facility balance by $21.5 million in Q3 and $62 million year-to-date, lowering leverage ratio to 3.56x from 4.36x at the end of 2024.
Retail segment gross profit: Decreased by 4% year-over-year due to lower retail fuel margins and a 5% decline in retail fuel margin on a cents-per-gallon basis. This was attributed to less volatile crude oil prices and deliberate pricing strategy adjustments, leading to lower same-store volumes.
Retail fuel volume: Declined 4% year-over-year on a same-store basis, with company-operated sites down 3% and commission sites down 7%. The decline was partly due to pricing strategy adjustments and overall market volume decline.
Wholesale segment gross profit: Declined 10% year-over-year due to a 5% drop in fuel volume, lower fuel margins, and reduced rental income. The decline in fuel volume was driven by site conversions to retail and asset divestitures.
Wholesale fuel margin: Decreased by 2% year-over-year due to movements in crude oil prices and lower prompt pay discounts, despite better sourcing costs.
Site divestitures: 29 sites were sold during the quarter, generating $22 million in proceeds. These were lower-performing sites, and while they strengthened the balance sheet, they reduced the overall site count and rental income.
Operating expenses: Decreased by $4 million year-over-year, but reductions were partly due to lower site counts, which could impact future revenue generation.
Interest expense: Declined due to lower average interest rates and reduced debt levels, but this was achieved through significant asset sales, which may limit future operational capacity.
Adjusted EBITDA: Decreased by 6% year-over-year, primarily due to declines in fuel and rent gross profit, despite expense reductions.
Retail Fuel Margins: Retail fuel margins have been significantly higher than the average third quarter retail fuel margins since the quarter end, driven by oil market price volatility. This favorable margin environment is expected to continue benefiting the company in the near term.
Inside Sales Growth: Inside sales, excluding cigarettes, increased 4% year-over-year in the third quarter, driven by strong performance in packaged beverages, other tobacco products, and food categories. This trend is expected to contribute positively to future performance.
Asset Sales and Real Estate Optimization: The company has realized approximately $100 million in proceeds from asset sales year-to-date, with a strong pipeline of asset sales planned for the rest of 2025 and into 2026. These proceeds are expected to strengthen the balance sheet and support future investments.
Capital Expenditures: Growth-related capital expenditures focused on increasing food offerings and targeted fuel brand and backcourt refresh projects are expected to contribute to merchandise sales and margin growth.
Leverage Ratio and Debt Reduction: The company reduced its credit facility balance by $62 million year-to-date, achieving a leverage ratio of 3.56x. Management aims to maintain leverage at approximately 4x, which will provide additional savings on credit facility interest expenses.
Distribution coverage ratio: 1.39x for the third quarter of 2025 compared to 1.36x for the same period of 2024. Trailing 12 months distribution coverage was 1x compared to 1.26x for the same period in 2024.
Distribution payment: $0.525 per unit during the third quarter of 2025.
The earnings call reveals several negative trends: declining fuel and rental income, reduced site count, and lower wholesale segment profit. Despite some positive aspects like increased net income and inside sales, the overall sentiment is negative due to asset divestitures and reduced operational capacity. The Q&A section lacked engagement, indicating possible concerns about transparency. Given the company's market cap, the stock price is likely to react negatively, falling between -2% to -8% over the next two weeks.
The earnings call summary shows a mixed but overall positive sentiment. Strong financial metrics were presented, with a reaffirmed revenue guidance and improved SG&A ratio, alongside strategic partnerships. Despite concerns in the Q&A about morbidity and market shrinkage, management's confidence in pricing and profitability for 2026, along with a competitive pricing strategy, suggests a positive outlook. The market cap indicates a moderate reaction, likely resulting in a positive stock price movement within the 2% to 8% range over the next two weeks.
The earnings call summary indicates strong financial performance with a 42% revenue increase and improved net income. The guidance for 2025 remains optimistic, with expected revenue growth and controlled expenses. The Q&A section reveals proactive measures to manage risks and maintain profitability. The market cap suggests moderate sensitivity to these announcements, leading to a positive outlook for the stock price over the next two weeks.
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