ALLENTOWN - CrossAmerica Partners LP (NYSE:CAPL), a prominent wholesale fuels distributor, has reported a significant beat in its fourth-quarter earnings, posting an adjusted EPS of $0.42, which was $0.20 higher than the analyst consensus of $0.22.
The company's revenue for the quarter was $1.01 billion, also surpassing the consensus estimate of $1.11 billion. Following the announcement, shares of CrossAmerica rose by 1.08%, indicating a positive market response to the company's financial performance.
In comparison to the same quarter last year, the company's net income slightly decreased from $17.1 million to $16.7 million. However, the adjusted EBITDA increased from $44.3 million to $47.6 million, and distributable cash flow saw an improvement from $33.3 million to $35.8 million.
The company's leverage, as defined in the CAPL Credit Facility, rose from 3.7 times as of December 31, 2022, to 4.2 times as of December 31, 2023.
The company's president and CEO, Charles Nifong, attributed the strong quarterly results to the effective execution of their business strategy, which is reflected in the improved fuel gross profit performance in both the wholesale and retail segments and an increase in merchandise and other revenue gross profit in the retail segment. Nifong expressed confidence in the company's position for continued success in 2024.
The retail segment of CrossAmerica reported a 14% increase in gross profit compared to the fourth quarter of the previous year, driven by increases in both motor fuel and merchandise gross profit. The wholesale segment saw a modest 1% increase in gross profit for the quarter, attributed to an 8% increase in fuel margin per gallon, despite a 4% decline in wholesale volume distributed.
CrossAmerica's announcement also included news of an agreement to acquire certain assets from Applegreen Midwest, LLC and Applegreen Florida, LLC, which will result in the conversion of 59 lessee dealer sites to company-operated sites. The transaction is expected to occur during the first and second quarters of 2024, subject to customary closing conditions.
Overall, the company's financial results reflect the ongoing success of its business strategy and its strong balance sheet at the end of the year. With the stock movement up by 1.08%, investors have responded favorably to the earnings and revenue beat, although the increase was not substantial enough to draw major conclusions from the market movement.
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