CrossAmerica Partners LP

Good morning, ladies and gentlemen, and welcome to the Cross America Partners second quarter 2026 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will begin a question-and-answer session. If at any time during this call you require immediate assistance, please press star followed by the number zero for the operator. This call is being recorded on Thursday, August 6, 2026. I would now like to turn the conference over to Randy Palmer, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, and thank you for joining the Cross America Partners second quarter 2026 earnings call. With me today are Maura Topper, CEO and President, and Jon Benfield, Chief Financial Officer. We'll start off the call today with Maura providing some opening comments and an overview of Cross America's operational performance for the second quarter, and then Jon will discuss the financial results. We'll then 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 Cross America 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 could be no assurance that management's expectations, beliefs and projections will be achieved or that actual results will not differ from expectations. Please see Cross America's filings with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q for discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of Cross America'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 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 Across America 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'm happy to now introduce John 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 Cross America'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 Cross America. 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'm 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. Now, if you'll 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 the 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 the 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, though the pattern we experienced closely tracked the broader industry. With a soft April, a more challenged May, while prices were rising, and then 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 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 49.2 cents per gallon in the second quarter of 2026 compared to 37 cents 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 impact 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, also by slow customer traffic in other areas. Fuel demand does typically correlate to merchandise sales, So 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 operating 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. The increase was primarily driven by an increase in fuel margin per gallon, partially offset by a decline in fuel volume, and to a small extent, rental income. The latter primarily driven by our class of trade change activities. Our wholesale motor fuel growth profit increased 17% to $17.8 million in the second quarter of 2026 from $15.2 million in the second quarter of 2025. This was driven by a 31% increase in fuel margin per gallon, offset by an 11% decline in volume for the quarter. Wholesale segment volume during the second quarter was impacted by many of the same challenges due to elevated prices that I discussed in my comments on the retail segment. Our same store performance in the wholesale segment was down approximately 8% year over year, so in line with our company operating results. But the remaining wholesale segment volume decline primarily due to the net loss of independent dealer contracts. Our second quarter fuel margin of 11.1 cents per gallon was a strong quarter as we continued to benefit from our fuel sourcing efforts and, in this quarter, higher payment terms discounts associated with our higher fuel costs in 2026. We also continued with our real estate optimization work during the second quarter, selling five properties and realizing approximately $2.7 million in proceeds. As we discussed in February, 2025 was our biggest year ever in regards to property sales. We are continuing our targeted real estate sales efforts in 2026, and we continue to have a strong pipeline for the balance of the year, though at a lower level than in 2025. Concluding my comments, the second quarter continued a strong operating start to the year for Cross America. Our priorities remain generating strong and durable cash flows from our operations, maintaining a disciplined approach to our balance sheet and investing in the quality and competitiveness of our network. Before I turn it over to John, I want to be sure to thank our team members around the country for their hard work and dedication this quarter. Managing a business as diverse as ours always requires focus and effort from our team members in our stores and around the country, especially in moments of volatility like we are experiencing in 2026. And our leadership team appreciates all of your hard work. With that, I will turn it over to Jon for a more detailed financial review.