CrossAmerica Partners details impacts of last year’s 7-Eleven acquisition

Dive Brief:

CrossAmerica Partners experienced “exceptionally strong” financial results during its fiscal third quarter, many of which were a direct result of its acquisition of 106 7-Eleven stores from May 2021, according to the company’s recent earnings report.
Among the direct results of the 7-Eleven acquisition was CrossAmerica’s increase in net income, which grew from $8.9 million in Q3 2021 to $27.6 million during this quarter, Maura Topper, CFO for CrossAmerica Partners, said during the company’s earnings call Tuesday.
On the retail side, CrossAmerica’s merchandise gross profit grew by about 30% due to the increase in company-operated sites from the acquisition, according to the earnings report.

Dive Insight:

CrossAmerica’s jump in net income was mainly driven by year-over-year increases in operating income in both the wholesale and retail segments, with each segment benefiting from the acquisition of assets from 7-Eleven, Topper said in the earnings call.

The company also noted that “a favorable fuel margin environment” — also a result of the 7-Eleven acquisition — contributed to the increase in net income.

“Our fuel margin also benefited this quarter from having higher fuel volume, and the associated higher fuel margin to our company-operated retail sites as a result of the increase in company-operated retail sites due to our acquisition completed during the third quarter last year,” CEO Charles Nifong said on the earnings call.

Although CrossAmerica’s wholesale business grew overall during the quarter, its wholesale fuel volumes dropped 5% compared to this time last year, mainly due to lower volumes in its base business “partially offset by the acquisition of assets from 7-Eleven,” Nifong said during the earnings call.

“Nationally, it was another challenging quarter for fuel volume,” he said. Gas volume in the U.S. during the second half of 2022 remains below 2021 levels, according to research from Yardeni.

Allentown, Pennsylvania-based CrossAmerica acquired the 106 7-Eleven sites last year for $263 million. The deal consisted of company-operated sites that had to be divested as part of 7-Eleven's $21 billion acquisition of Speedway, which closed a week prior to CrossAmerica’s acquisition.