CrossAmerica's Earnings to Test Strategy in Shifting Fuel Market

ALLENTOWN, PA – January 16, 2026 – As CrossAmerica Partners LP prepares to release its fourth-quarter and full-year 2025 financial results on February 25, the investment community is bracing for a report that will serve as a critical barometer for the company's strategic pivot amidst a rapidly evolving energy and retail landscape. The subsequent investor call on February 26 is expected to provide crucial insights into whether the company's shift toward a more robust retail operation can successfully counteract the persistent headwinds facing its traditional wholesale fuel distribution business.

Investors and analysts will be dissecting the numbers not just for bottom-line performance, but for tangible proof that the partnership's strategy of portfolio rationalization and retail enhancement is building a sustainable model for future growth. The upcoming announcement comes at a pivotal moment for an industry grappling with fluctuating fuel margins, changing consumer habits, and the long-term transition toward alternative energy sources.

A Tale of Two Segments

A review of CrossAmerica's performance throughout 2025 paints a clear and diverging picture of its core business segments. The wholesale division has faced significant pressure, a trend that will be under intense scrutiny in the upcoming report. Through the first three quarters of 2025, the segment saw consistent declines in volume distributed, dropping by as much as 11% in the first quarter and 5% in the third quarter compared to the prior year. This was coupled with shrinking fuel margins per gallon due to less favorable market conditions, leading to a 10% decrease in wholesale gross profit in the third quarter alone.

In stark contrast, the retail segment has emerged as a beacon of resilience and growth. While retail fuel volumes have largely tracked the broader market, the real story is inside the convenience stores. CrossAmerica has reported consistent growth in merchandise gross profit, including a 5% increase in the third quarter of 2025. Same-store merchandise sales have also shown strength, particularly when excluding volatile categories like cigarettes. This performance underscores a successful focus on enhancing the in-store experience and product mix, aligning with broader industry trends where foodservice, beverages, and other non-fuel items are becoming primary profit drivers.

This operational dichotomy is the direct result of a deliberate strategic choice: converting sites from dealer-operated wholesale locations to company-operated retail stores. This shift, while pressuring wholesale volumes, has expanded the company's retail footprint and its ability to capture higher-margin in-store sales.

Fortifying the Foundation Through Asset Sales

Beyond the operational shifts, CrossAmerica's management has been aggressively reshaping its portfolio through strategic asset divestitures. This program of "rationalization" has been a cornerstone of its financial strategy over the past two years. In 2024, the company sold thirty properties for $36.3 million in proceeds. This activity accelerated in 2025, with the third quarter alone seeing the sale of 29 properties for $21.9 million, generating a net gain of $7.4 million.

While these sales contribute to one-time gains that have bolstered net income—Q3 2025 net income rose to $13.6 million from $10.7 million a year prior, largely due to these gains—their more significant long-term impact is on the balance sheet. The proceeds have been instrumental in reducing debt and improving the company's financial leverage. CrossAmerica reported a significant improvement in its leverage ratio, which dropped from 4.36 times at the end of 2024 to a healthier 3.56 times by the end of the third quarter of 2025. This deleveraging provides greater financial flexibility and strengthens the partnership's position to weather market volatility or reinvest in higher-quality assets.

An Industry at a Crossroads

The challenges and opportunities facing CrossAmerica are not unique but are reflective of systemic shifts across the entire motor fuel and convenience sector. According to the U.S. Energy Information Administration (EIA), U.S. motor gasoline consumption is forecast to continue a slow decline through 2026, even as vehicle miles driven increase. This paradoxical trend is driven by steady improvements in vehicle fuel efficiency, a long-term structural headwind for fuel distributors.

Simultaneously, the convenience store model is undergoing a profound transformation. Once ancillary to fuel sales, the in-store experience is now central to profitability. Retailers are investing heavily in high-quality foodservice, expanding beverage selections to include trendy options like functional and THC-infused drinks, and implementing sophisticated loyalty programs to drive repeat traffic. For companies like CrossAmerica, success is no longer measured solely by gallons pumped but by the value of the average customer's market basket inside the store.

This industry-wide pressure is also visible in the performance of competitors. Global Partners LP, a key peer, also reported year-over-year declines in net income and EBITDA in its most recent quarterly report, citing lower fuel margins as a primary factor. This context suggests that the margin pressures experienced by CrossAmerica are part of a broader market dynamic rather than an isolated issue.

Key Questions for the Year Ahead

As management takes the stage for its conference call, investors will be listening for answers to several critical questions. The primary focus will be on the outlook for the wholesale segment. Can the company stem the tide of volume declines, or is further contraction expected as the retail conversion strategy continues? Furthermore, can the impressive growth in the retail segment be sustained and scaled quickly enough to offset the persistent weakness in wholesale fuel profits?

For a master limited partnership like CrossAmerica, the stability of its distribution is paramount. The company has maintained a quarterly distribution of $0.5250 per unit. However, with Adjusted EBITDA—a key metric for operational profitability—showing declines in recent quarters, analysts will be keen to understand management's confidence in the sustainability of this payout. The commentary around future capital allocation, including the pace of asset sales and plans for the proceeds, will be scrutinized for clues about the partnership's long-term financial health and growth prospects.

The upcoming earnings report will be more than a simple accounting of the past year; it will be a crucial progress report on a fundamental business transformation. The results and the accompanying guidance will signal whether CrossAmerica Partners is successfully navigating the transition from a traditional fuel distributor to a modern, diversified convenience retailer poised for the future.