CrossAmerica Rides Fuel Price Volatility to 40% EBITDA Growth

Quarter in Review

CrossAmerica Partners delivered a standout second quarter: adjusted EBITDA jumped 40% year-over-year to $51.8 million, even as same-store fuel volumes fell 11% in retail. The surge was driven by the volatile fuel price environment, which expanded motor fuel margins per gallon to $0.492 in retail (from $0.37) and $0.111 in wholesale. As CEO Maura Topper explained, “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.” — Maura Topper, CEO and President · 2026-08-06 This is a classic fuel-retail pattern: when pump prices spike, retailers quickly pass through costs, and margins expand even as volumes soften.

The broader market context confirms the fuel-price tailwind – global keywords for 20262 included elevated prices and 'high fuel costs,' and CAPL's own keyword trajectory shows fuel pricing breaking into the top ranks this quarter. But the company's ability to convert that tailwind into bottom-line growth is company-specific, not automatic.

Operational Execution

Beyond fuel margins, the quarter highlighted disciplined cost management and merchandise execution. The segment's merchandise margin percentage rose 130 basis points to 29.5%, driving merchandise gross profit up 2% despite a 9% decline in average company-operated site count. Total operating expenses fell $2.9 million – the seventh consecutive quarter of declines. As CFO Jon Benfield noted, “In total across both segments, we reported operating expenses for the second quarter of 2026 of $55 million, a $2.9 million decrease year-over-year and our seventh consecutive quarter of declining operating expenses across the organization.” — Jonathan Benfield, Chief Financial Officer · 2026-08-06 This focus on expense control is a recurring theme for CAPL, but the tech-enabled staffing improvements and category mix gains are showing up in the numbers.

The company also continued its real estate optimization, selling 5 properties for $2.7 million, and officially promoted Jon Benfield to CFO (removing the 'interim' from his title). The prior quarter's call was notably quiet – “It doesn't appear we have any questions today” — Unknown Executive, Executive · 2025-11-07 – and this quarter also closed without analyst Q&A, suggesting the market is comfortable with the narrative.

Balance Sheet and Outlook

The strong operating results and asset sales funded a $20 million reduction in credit facility debt year-to-date, bringing the leverage ratio to 3.57x (from 3.65x a year ago). The partnership also amended its credit facility on July 15, extending maturity from 2028 to 2031 and removing the SOFR credit spread adjustment – a quiet but meaningful step in a higher-for-longer rate world. Interest expense fell to $11.3 million, and distributable cash flow rose to $33.6 million, pushing the distribution coverage ratio to 1.68x for the quarter and 1.39x trailing twelve months.

The balance sheet trajectory is visible in the fundamentals: interest coverage jumped to 2.2x from 0.8x a year ago, while operating income swung from a loss to a $24 million profit. The company's focus on increase in fuel margin per gallon and merchandise margin improvement is clearly translating into cash generation, even as total revenue declined 2%.

What's Changed

The most notable shift is the explicit prioritization of 'active control over retail fuel pricing' and 'elevated prices' as drivers – these are new top keywords for CAPL this quarter, reflecting the unusual price environment. But the underlying strategy is unchanged: optimize fuel margins, grow merchandise profitability, cut costs, and keep leverage near 4x. The quarter demonstrates that CAPL can outperform in a volatile fuel market, but the sustainability of such margins is uncertain as prices moderate. Management acknowledged that fuel margins have already begun to normalize in Q3. The test will be whether the expense discipline and merchandise gains can hold when the fuel tailwind fades.

We remain 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.

This is a well-executed quarter, but not a strategic pivot – it's a cyclical windfall amplified by good cost control. The stock has risen ~11% in the last 90 days, and the improved coverage ratio provides cushion. For investors, the key watch item is whether the merchandise margin and expense gains are durable once fuel margins revert to historical norms.