Company Quick10K Filing
CrossAmerica Partners
Price1.00 EPS-21,501,000
Shares-0 P/E-0
MCap-0 P/FCF-0
Net Debt522 EBIT46
TEV522 TEV/EBIT11
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-26
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-06
10-Q 2019-03-31 Filed 2019-05-07
10-K 2018-12-31 Filed 2019-02-26
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-07
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-02-27
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-19
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-11
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-03-10
10-Q 2013-09-30 Filed 2013-11-12
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-14
10-K 2012-12-31 Filed 2013-03-28
10-Q 2012-09-30 Filed 2012-12-10
8-K 2020-07-23 Officers, Regulation FD, Exhibits
8-K 2020-05-06
8-K 2020-05-05
8-K 2020-04-23
8-K 2020-04-14
8-K 2020-04-07
8-K 2020-03-25
8-K 2020-02-25
8-K 2020-02-06
8-K 2020-01-22
8-K 2020-01-15
8-K 2020-01-15
8-K 2019-12-06
8-K 2019-11-19
8-K 2019-11-07
8-K 2019-10-29
8-K 2019-10-24
8-K 2019-09-05
8-K 2019-08-05
8-K 2019-07-18
8-K 2019-05-21
8-K 2019-05-06
8-K 2019-04-25
8-K 2019-04-01
8-K 2019-02-25
8-K 2019-01-29
8-K 2018-12-17
8-K 2018-11-06
8-K 2018-10-24
8-K 2018-08-06
8-K 2018-07-13
8-K 2018-07-09
8-K 2018-05-07
8-K 2018-04-25
8-K 2018-02-26
8-K 2018-02-23
8-K 2018-01-24

CAPL 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1.Description of Business and Other Disclosures
Note 2. Asset Exchange Transaction with Circle K
Note 3. Cst Fuel Supply Exchange Agreement
Note 4. Retail and Wholesale Acquisition
Note 5. Assets Held for Sale
Note 6. Property and Equipment
Note 7. Intangible Assets
Note 8. Debt
Note 9. Interest Rate Swap Contracts
Note 10. Related - Party Transactions
Note 11. Commitments and Contingencies
Note 12. Fair Value Measurements
Note 13. Equity - Based Compensation
Note 14. Income Taxes
Note 15. Net Income per Limited Partner Unit
Note 16. Segment Reporting
Note 17. Supplemental Cash Flow Information
Note 18. Separation Benefits
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 capl-ex311_7.htm
EX-31.2 capl-ex312_10.htm
EX-32.1 capl-ex321_9.htm
EX-32.2 capl-ex322_6.htm

CrossAmerica Partners Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
96076857638419202012201420172020
Assets, Equity
835665495325155-152012201420172020
Rev, G Profit, Net Income
1508316-51-118-1852012201420172020
Ops, Inv, Fin

10-Q 1 capl-10q_20200331.htm 10-Q capl-10q_20200331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                         to                   

 

Commission File No. 001-35711

 

CROSSAMERICA PARTNERS LP

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

45-4165414

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

 

600 Hamilton Street, Suite 500

Allentown, PA

 

18101

(Zip Code)

(610) 625-8000

(Address of Principal Executive Offices)

 

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Units

CAPL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 1, 2020, the registrant had outstanding 37,866,005 common units.

 


 

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

Commonly Used Defined Terms

 

i

PART I - FINANCIAL INFORMATION

 

1

Item 1. Financial Statements

 

1

Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019

 

1

Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2020 and 2019

 

2

Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2020 and 2019

 

3

Consolidated Statements of Equity and Comprehensive Income (unaudited) for the Three Months Ended March 31, 2020 and 2019

 

4

Condensed Notes to Consolidated Financial Statements

 

5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

40

Item 4. Controls and Procedures

 

40

PART II - OTHER INFORMATION

 

41

Item 1. Legal Proceedings

 

41

Item 1A. Risk Factors

 

41

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

41

Item 6. Exhibits

 

42

SIGNATURE

 

43

 

 

 

 


 

COMMONLY USED DEFINED TERMS

 

The following is a list of certain acronyms and terms generally used in the industry and throughout this document:

 

 

CrossAmerica Partners LP and subsidiaries:

 

CrossAmerica Partners LP

 

CrossAmerica, the Partnership, we, us, our

 

 

 

LGW

 

Lehigh Gas Wholesale LLC

 

 

 

LGPR

 

LGP Realty Holdings LP

 

 

 

LGWS

 

Lehigh Gas Wholesale Services, Inc. and subsidiaries

 

 

 

CrossAmerica Partners LP related parties at any point during 2019 or 2020:

 

Circle K

 

Circle K Stores Inc., a Texas corporation, and a wholly owned subsidiary of Couche-Tard

 

 

 

Couche-Tard

 

Alimentation Couche-Tard Inc. (TSX: ATD.A ATD.B)

 

 

 

CST

 

CST Brands, LLC and subsidiaries, indirectly owned by Circle K.

 

 

 

CST Fuel Supply

 

CST Fuel Supply LP is the parent of CST Marketing and Supply, indirectly owned by Circle K. From July 1, 2015 through March 25, 2020, we owned a 17.5% limited partner interest in CST Fuel Supply. See Note 3 to the financial statements for information regarding the closing of the CST Fuel Supply Exchange.

 

 

 

CST Marketing and Supply

 

CST Marketing and Supply, LLC, indirectly owned by Circle K. It is CST’s wholesale motor fuel supply business, which provides wholesale fuel distribution to the majority of CST’s legacy U.S. retail convenience stores on a fixed markup per gallon.

 

 

 

CST Services

 

CST Services, LLC, a wholly owned subsidiary of Circle K

 

 

 

DMI

 

Dunne Manning Inc. (formerly Lehigh Gas Corporation), an entity affiliated with the Topper Group

 

 

 

DMP

 

Dunne Manning Partners LLC, an entity affiliated with the Topper Group and controlled by Joseph V. Topper, Jr. Since November 19, 2019, DMP has owned 100% of the membership interests in the sole member of the General Partner.

 

 

 

DMR

 

Dunne Manning Realty LP, an entity affiliated with the Topper Group

 

 

 

DMS

 

 

Dunne Manning Stores LLC (formerly known as Lehigh Gas-Ohio, LLC), an entity affiliated with the Topper Group. Through April 14, 2020, DMS was an operator of retail motor fuel stations. DMS leased retail sites from us in accordance with a master lease agreement and purchased a significant portion of its motor fuel for these sites from us on a wholesale basis under rack plus pricing. The financial results of DMS are not consolidated with ours. See Note 4 to the financial statements regarding the acquisition of retail and wholesale assets from the Topper Group and related termination of the fuel supply and master lease agreements with us.

 

 

 

General Partner

 

CrossAmerica GP LLC, the General Partner of CrossAmerica, a Delaware limited liability company, indirectly owned by the Topper Group.

 

 

 

Topper Group

 

Joseph V. Topper, Jr., collectively with his affiliates and family trusts that have ownership interests in the Partnership. Joseph V. Topper, Jr. is the founder of the Partnership and a member of the Board. The Topper Group is a related party and large holder of our common units

 

 

 

TopStar

 

TopStar Inc., an entity affiliated with a family member of Joseph V. Topper, Jr. TopStar is an operator of convenience stores that leases retail sites from us, and since April 14, 2020, also purchases fuel from us.

 

 

 

Recent Acquisitions:

 

 

 

Franchised Holiday Stores

 

The franchised Holiday stores acquired in March 2016

 

 

 

Jet-Pep Assets

 

The assets acquired from Jet-Pep, Inc. in November 2017

 

 

 

 

 

 

Other Defined Terms:

 

 

i


 

 

 

 

ASC

 

Accounting Standards Codification

 

 

 

ASU

 

Accounting Standards Update

 

 

 

Board

 

Board of Directors of our General Partner

 

 

 

BP

 

BP p.l.c.

 

 

 

CDC

 

The Centers for Disease Control and Prevention

 

 

 

Circle K Omnibus Agreement

 

The Amended and Restated Omnibus Agreement, dated October 1, 2014, as amended effective January 1, 2016, February 1, 2018 and April 29, 2019 by and among CrossAmerica, the General Partner, DMI, DMS, CST Services and Joseph V. Topper, Jr., which amends and restates the original omnibus agreement that was executed in connection with CrossAmerica’s IPO on October 30, 2012. The terms of the Circle K Omnibus Agreement were approved by the conflicts committee of the Board. Pursuant to the Circle K Omnibus Agreement, CST Services agreed, among other things, to provide, or cause to be provided, to the Partnership certain management services. See Note 10 to the financial statements for information regarding the termination of this agreement and the concurrent entering into the Transitional Omnibus Agreement.

 

 

 

COVID-19 Pandemic

 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. In March 2020, the World Health Organization declared the outbreak a pandemic.

 

 

 

CST Fuel Supply Exchange

 

Exchange Agreement, dated November 19, 2019, between the Partnership and Circle K, which closed effective March 25, 2020. Pursuant to the Exchange Agreement, Circle K transferred to the Partnership certain owned and leased convenience store properties and related assets (including fuel supply agreements) and wholesale fuel supply contracts covering additional sites, and, in exchange, the Partnership transferred to Circle K 100% of the limited partnership units it held in CST Fuel Supply.

 

 

 

DTW

 

Dealer tank wagon contracts, which are variable cent per gallon priced wholesale motor fuel distribution or supply contracts. DTW also refers to the pricing methodology under such contracts

 

 

 

EBITDA

 

Earnings before interest, taxes, depreciation, amortization and accretion, a non-GAAP financial measure

 

 

 

 

EMV

 

Payment method based upon a technical standard for smart payment cards, also referred to as chip cards

 

 

 

Exchange Act

 

Securities Exchange Act of 1934, as amended

 

 

 

ExxonMobil

 

ExxonMobil Corporation

 

 

 

FASB

 

Financial Accounting Standards Board

 

 

 

Form 10-K

 

CrossAmerica’s Annual Report on Form 10-K for the year ended December 31, 2019

 

 

 

FTC

 

U.S. Federal Trade Commission

 

 

 

GP Purchase

 

Purchase by DMP from subsidiaries of Circle K of: 1) 100% of the membership interests in the sole member of the General Partner; 2) 100% of the Incentive Distribution Rights issued by the Partnership; and 3) an aggregate of 7,486,131 common units of the Partnership. These transactions closed on November 19, 2019.

 

 

 

IDRs

 

Incentive Distribution Rights represented the right to receive an increasing percentage of quarterly distributions after the target distribution levels were achieved. As a result of the GP Purchase, DMP owned 100% of the outstanding IDRs from November 19, 2019 through February 6, 2020. See Note 15 to the financial statements for information regarding the elimination of the IDRs.

 

 

 

Internal Revenue Code

 

Internal Revenue Code of 1986, as amended

 

 

 

IPO

 

Initial public offering of CrossAmerica Partners LP on October 30, 2012

 

 

 

ii


 

LIBOR

 

London Interbank Offered Rate

 

 

 

MD&A

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

 

Motiva

 

Motiva Enterprises LLC

 

 

 

Partnership Agreement

 

The First Amended and Restated Agreement of Limited Partnership of CrossAmerica Partners LP, dated as of October 1, 2014, as amended. See Note 15 to the financial statements regarding the elimination of the IDRs, which triggered the need to further amend the Partnership Agreement.

 

 

 

Predecessor Entity

 

Wholesale distribution contracts and real property and leasehold interests contributed to the Partnership in connection with the IPO

 

 

 

SEC

 

U.S. Securities and Exchange Commission

 

 

 

Terms Discounts

 

Discounts for prompt payment and other rebates and incentives from our suppliers for a majority of the gallons of motor fuel purchased by us, which are recorded within cost of sales. Prompt payment discounts are based on a percentage of the purchase price of motor fuel.

 

 

 

Topper Group Omnibus

Agreement

 

The Topper Group Omnibus Agreement, effective January 1, 2020, by and among the Partnership, the General Partner and DMI. The terms of the Topper Group Omnibus Agreement were approved by the conflicts committee of the Board, which is composed of the independent directors of the Board. Pursuant to the Topper Group Omnibus Agreement, DMI agrees, among other things, to provide, or cause to be provided, to the Partnership certain management services at cost without markup.

 

 

 

Transitional Omnibus

Agreement

 

Upon the closing of the GP Purchase, the Circle K Omnibus Agreement was terminated and the Partnership entered into a Transitional Omnibus Agreement, dated as of November 19, 2019, among the Partnership, the General Partner and Circle K. Pursuant to the Transitional Omnibus Agreement, Circle K has agreed, among other things, to continue to provide, or cause to be provided, to the Partnership certain management services, administrative and operating services, as provided under the Circle K Omnibus Agreement through June 30, 2020 with respect to certain services, unless earlier terminated or unless the parties extend the term of certain services. In addition, from January 1, 2020 until the closing of the CST Fuel Supply Exchange, the General Partner provided Circle K with certain administrative and operational services, on the terms and conditions set forth in the Transitional Omnibus Agreement.

 

 

 

U.S. GAAP

 

U.S. Generally Accepted Accounting Principles

 

 

 

Valero

 

Valero Energy Corporation and, where appropriate in context, one or more of its subsidiaries, or all of them taken as a whole

 

 

 

WTI

 

West Texas Intermediate crude oil

 

 

iii


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CROSSAMERICA PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars, except unit data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,907

 

 

$

1,780

 

Accounts receivable, net of allowances of $642 and $557, respectively

 

 

28,036

 

 

 

38,051

 

Accounts receivable from related parties

 

 

1,687

 

 

 

4,299

 

Motor fuel inventory

 

 

4,945

 

 

 

6,230

 

Assets held for sale

 

 

16,331

 

 

 

13,231

 

Other current assets

 

 

5,272

 

 

 

5,795

 

Total current assets

 

 

65,178

 

 

 

69,386

 

Property and equipment, net

 

 

574,584

 

 

 

565,916

 

Right-of-use assets, net

 

 

123,831

 

 

 

120,767

 

Intangible assets, net

 

 

79,331

 

 

 

44,996

 

Goodwill

 

 

88,764

 

 

 

88,764

 

Other assets

 

 

21,184

 

 

 

21,318

 

Total assets

 

$

952,872

 

 

$

911,147

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of debt and finance lease obligations

 

$

2,515

 

 

$

2,471

 

Current portion of operating lease obligations

 

 

25,127

 

 

 

23,485

 

Accounts payable

 

 

46,921

 

 

 

57,392

 

Accounts payable to related parties

 

 

999

 

 

 

431

 

Accrued expenses and other current liabilities

 

 

14,894

 

 

 

16,382

 

Motor fuel taxes payable

 

 

10,073

 

 

 

12,475

 

Total current liabilities

 

 

100,529

 

 

 

112,636

 

Debt and finance lease obligations, less current portion

 

 

526,981

 

 

 

534,859

 

Operating lease obligations, less current portion

 

 

104,007

 

 

 

100,057

 

Deferred tax liabilities, net

 

 

19,233

 

 

 

19,369

 

Asset retirement obligations

 

 

36,647

 

 

 

35,589

 

Other long-term liabilities

 

 

34,058

 

 

 

30,240

 

Total liabilities

 

 

821,455

 

 

 

832,750

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Common units—(37,023,114 and 34,494,441 units issued and

   outstanding at March 31, 2020 and December 31, 2019, respectively)

 

 

132,214

 

 

 

78,397

 

Accumulated other comprehensive loss

 

 

(797

)

 

 

 

Total equity

 

 

131,417

 

 

 

78,397

 

Total liabilities and equity

 

$

952,872

 

 

$

911,147

 

 

See Condensed Notes to Consolidated Financial Statements.

1


CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of Dollars, except unit and per unit amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating revenues(a)

 

$

391,695

 

 

$

471,786

 

Costs of sales(b)

 

 

355,966

 

 

 

434,709

 

Gross profit

 

 

35,729

 

 

 

37,077

 

 

 

 

 

 

 

 

 

 

Income from CST Fuel Supply equity interests

 

 

3,202

 

 

 

3,426

 

Operating expenses:

 

 

 

 

 

 

 

 

Operating expenses

 

 

10,723

 

 

 

15,353

 

General and administrative expenses

 

 

4,480

 

 

 

4,418

 

Depreciation, amortization and accretion expense

 

 

17,227

 

 

 

13,061

 

Total operating expenses

 

 

32,430

 

 

 

32,832

 

Gain (loss) on dispositions and lease terminations, net

 

 

70,931

 

 

 

(59

)

Operating income

 

 

77,432

 

 

 

7,612

 

Other income, net

 

 

137

 

 

 

86

 

Interest expense

 

 

(5,540

)

 

 

(7,337

)

Income before income taxes

 

 

72,029

 

 

 

361

 

Income tax (benefit) expense

 

 

(32

)

 

 

149

 

Net income

 

 

72,061

 

 

 

212

 

IDR distributions

 

 

(133

)

 

 

(133

)

Net income available to limited partners

 

$

71,928

 

 

$

79

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common unit

 

$

2.00

 

 

$

0.00

 

 

 

 

 

 

 

 

 

 

Weighted-average limited partner units:

 

 

 

 

 

 

 

 

Basic common units

 

 

35,994,972

 

 

 

34,444,113

 

Diluted common units

 

 

35,995,933

 

 

 

34,456,465

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

(a) Includes excise taxes of:

 

$

14,937

 

 

$

20,444

 

(a) Includes rent income of:

 

 

22,688

 

 

 

21,638

 

(b) Includes rent expense of:

 

 

6,920

 

 

 

6,659

 

 

See Condensed Notes to Consolidated Financial Statements.

 

 

2


CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

72,061

 

 

$

212

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion expense

 

 

17,227

 

 

 

13,061

 

Amortization of deferred financing costs

 

 

261

 

 

 

290

 

Credit loss expense

 

 

91

 

 

 

49

 

Deferred income taxes

 

 

(136

)

 

 

(666

)

Equity-based employee and director compensation expense

 

 

31

 

 

 

202

 

(Gain) loss on dispositions and lease terminations, net

 

 

(70,931

)

 

 

59

 

Changes in operating assets and liabilities, net of acquisitions

 

 

(810

)

 

 

(2,209

)

Net cash provided by operating activities

 

 

17,794

 

 

 

10,998

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Principal payments received on notes receivable

 

 

87

 

 

 

85

 

Proceeds from Circle K in connection with CST Fuel Supply Exchange

 

 

15,935

 

 

 

 

Proceeds from sale of assets

 

 

5,032

 

 

 

 

Capital expenditures

 

 

(5,382

)

 

 

(7,078

)

Net cash provided by (used) in investing activities

 

 

15,672

 

 

 

(6,993

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings under the revolving credit facility

 

 

19,000

 

 

 

31,834

 

Repayments on the revolving credit facility

 

 

(26,500

)

 

 

(13,334

)

Payments of long-term debt and finance lease obligations

 

 

(595

)

 

 

(552

)

Payment of deferred financing costs

 

 

 

 

 

(613

)

Distributions paid on distribution equivalent rights

 

 

(1

)

 

 

(16

)

Distributions paid to holders of the IDRs

 

 

(133

)

 

 

(133

)

Distributions paid on common units

 

 

(18,110

)

 

 

(18,083

)

Net cash used in financing activities

 

 

(26,339

)

 

 

(897

)

Net increase in cash and cash equivalents

 

 

7,127

 

 

 

3,108

 

Cash and cash equivalents at beginning of period

 

 

1,780

 

 

 

3,191

 

Cash and cash equivalents at end of period

 

$

8,907

 

 

$

6,299

 

 

See Condensed Notes to Consolidated Financial Statements.

 

 

3


CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME

(Thousands of Dollars, except unit amounts)

(Unaudited)

 

 

 

Limited Partners’ Interest

 

 

Incentive

 

 

Accumulated other

 

 

 

 

 

 

 

Common

Unitholders

 

 

Distribution

Rights

 

 

comprehensive loss

 

 

Total Equity

 

 

 

Units

 

 

Dollars

 

 

Dollars

 

 

Dollars

 

 

Dollars

 

Balance at December 31, 2019

 

 

34,494,441

 

 

$

78,397

 

 

$

 

 

$

 

 

$

78,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

71,928

 

 

 

133

 

 

 

 

 

 

72,061

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Unrealized loss on interest rate swap contract

 

 

 

 

 

 

 

 

 

 

 

(786

)

 

 

(786

)

   Realized gain on interest rate swap contract

      reclassified from AOCI into interest expense

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

(11

)

Total other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(797

)

 

 

(797

)

Comprehensive income (loss)

 

 

 

 

 

71,928

 

 

 

133

 

 

 

(797

)

 

 

71,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions paid

 

 

 

 

 

(18,111

)

 

 

(133

)

 

 

 

 

 

(18,244

)

Issuance of units to the Topper Group in connection

   with the Equity Restructuring Agreement

 

 

2,528,673

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

37,023,114

 

 

$

132,214

 

 

$

 

 

$

(797

)

 

$

131,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

34,444,113

 

 

$

110,933

 

 

$

 

 

$

 

 

$

110,933

 

Transition adjustment upon adoption of ASC 842, net

   of tax

 

 

 

 

 

28,896

 

 

 

 

 

 

 

 

 

28,896

 

Net income and comprehensive income

 

 

 

 

 

79

 

 

 

133

 

 

 

 

 

 

212

 

Distributions paid

 

 

 

 

 

(18,099

)

 

 

(133

)

 

 

 

 

 

(18,232

)

Balance at March 31, 2019

 

 

34,444,113

 

 

$

121,809

 

 

$

 

 

$

 

 

$

121,809

 

 

See Condensed Notes to Consolidated Financial Statements.

 

 

4


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1.DESCRIPTION OF BUSINESS AND OTHER DISCLOSURES

Purchase of the General Partner by the Topper Group

On November 19, 2019, subsidiaries of DMP purchased from subsidiaries of Circle K: 1) 100% of the membership interests in the sole member of the General Partner; 2) 100% of the IDRs issued by the Partnership; and 3) an aggregate of 7,486,131 common units of the Partnership. Joseph V. Topper, Jr. is the founder and, since November 19, 2019, chairman of the Board.

Through its control of DMP, the Topper Group controls the sole member of our General Partner and has the ability to appoint all of the members of the Board and to control and manage the operations and activities of the Partnership. As of May 1, 2020, the Topper Group also has beneficial ownership of a 48.9% limited partner interest in the Partnership. 

Description of Business

Our business consists of:

 

the wholesale distribution of motor fuels;

 

the retail distribution of motor fuels to end customers at retail sites operated by commission agents or through September 2019, us;

 

the owning or leasing of retail sites used in the retail distribution of motor fuels and, in turn, generating rental income from the lease or sublease of the retail sites; and to a lesser extent,

 

through September 2019, the operation of retail sites.

The financial statements reflect the consolidated results of the Partnership and its wholly owned subsidiaries. Our primary operations are conducted by the following consolidated wholly owned subsidiaries:

 

LGW, which distributes motor fuels on a wholesale basis and generates qualifying income under Section 7704(d) of the Internal Revenue Code;

 

LGPR, which functions as our real estate holding company and holds assets that generate qualifying rental income under Section 7704(d) of the Internal Revenue Code; and

 

LGWS, which owns and leases (or leases and sub-leases) real estate and personal property used in the retail distribution of motor fuels, as well as provides maintenance and other services to its customers. In addition, LGWS sells motor fuel on a retail basis at sites operated by commission agents. Through September 2019, LGWS also distributed motor fuels on a retail basis and sold convenience merchandise items to end customers at company operated retail sites. Income from LGWS generally is not qualifying income under Section 7704(d) of the Internal Revenue Code. See Note 4 for information related to our acquisition of retail and wholesale assets that closed on April 14, 2020.

Interim Financial Statements

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and the Exchange Act. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Management believes that the disclosures made are adequate to keep the information presented from being misleading. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K. Financial information as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 included in the consolidated financial statements has been derived from our unaudited financial statements. Financial information as of December 31, 2019 has been derived from our audited financial statements and notes thereto as of that date.

Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Our business exhibits seasonality due to our wholesale and retail sites being located in certain geographic areas that are affected by seasonal weather and temperature trends and associated changes in retail customer activity during different seasons. Historically, sales volumes have been highest in the second and third quarters (during the summer activity months) and lowest during the winter months in the first and fourth quarters. The COVID-19 pandemic is anticipated to cause additional impacts to our business. See the “COVID 19 Pandemic” section below.

5


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions.

Reclassification

Certain prior period amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on net income or total equity.

Significant Accounting Policies

Certain new accounting pronouncements have become effective for our financial statements, but the adoption of these pronouncements did not materially impact our financial position, results of operations or disclosures, other than as described below.

 

Interest Rate Swap Contracts

The Partnership uses interest rate swap contracts to reduce its exposure to unfavorable changes in interest rates. The Partnership accounts for derivative contracts in accordance with ASC Topic 815, “Derivatives and Hedging,” and recognizes derivative instruments as either assets or liabilities on the balance sheet and measures those instruments at fair value. The changes in fair value of the derivative transactions are presented in accumulated other comprehensive income and reclassified to interest expense as the interest payments on our credit facility are made.

The portion of derivative positions that are anticipated to settle within a year are included in other current assets and accrued expenses and other current liabilities, while the portion of derivative positions that are anticipated to settle beyond a year are recorded in other assets or other long-term liabilities.

Cash inflows and outflows related to derivative instruments are included as a component of operating activities on the statements of cash flows, consistent with the classification of the hedged interest payments on our credit facility.

See Note 9 for information related to our interest rate swap contracts.

Financial Instrument Credit Losses 

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard requires that for most financial assets, losses be based on an expected loss approach which includes estimates of losses over the life of exposure that considers historical, current and forecasted information. Expanded disclosures related to the methods used to estimate the losses as well as a specific disaggregation of balances for financial assets are also required. The impact of adopting this guidance effective January 1, 2020 was not material.

The primary financial instrument within the scope of this guidance is our accounts receivable, which mainly result from the sale of motor fuels to customers and, to a lesser extent, rental fees for retail sites. Our accounts receivable is generally considered as having a similar risk profile. Credit is extended to a customer based on an evaluation of the customer’s financial condition. In certain circumstances, collateral may be required from the customer and fuel and lease agreements are generally cross-collateralized when applicable. Receivables are recorded at face value, without interest or discount.

The allowance for credit losses is generally based upon historical experience while also factoring in any new business conditions that might impact the historical analysis, such as market conditions and bankruptcies of particular customers. Credit loss expense is included in general and administrative expenses. We review all accounts receivable balances on at least a quarterly basis. The impact of applying the new expected loss model did not result in a significantly different allowance from that determined under the incurred loss model previously applied.

See Note 16 for additional information on receivables.

6


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

New Accounting Guidance Pending Adoption – Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify GAAP for other areas of ASC 740 by clarifying and amending existing guidance, such as the accounting for a franchise tax (or similar tax) that is partially based on income. This standard is effective January 1, 2021 for the Partnership. The Partnership is assessing the impact of adopting this guidance on its financial statements.

Concentration Risk

For the three months ended March 31, 2020, we distributed 6% of our total wholesale distribution volumes to DMS and DMS accounted for 5% of our rental income. For the three months ended March 31, 2019, we distributed 8% of our total wholesale distribution volumes to DMS and DMS accounted for 9% of our rental income. See Note 4 for information on the termination of the master lease and master fuel supply agreements with DMS in connection with our acquisition of retail and wholesale assets. 

For the three months ended March 31, 2020, we distributed 5% of our total wholesale distribution volume to Circle K retail sites that are not supplied by CST Fuel Supply and received 12% of our rental income from Circle K. For the three months ended March 31, 2019, we distributed 7% of our total wholesale distribution volume to Circle K retail sites that are not supplied by CST Fuel Supply and received 19% of our rental income from Circle K.

For more information regarding transactions with DMS and Circle K, see Note 10.

For the three months ended March 31, 2020, our wholesale business purchased approximately 24%, 23%, 13% and 11% of its motor fuel from ExxonMobil, BP, Motiva and Circle K, respectively. For the three months ended March 31, 2019, our wholesale business purchased approximately 26%, 25%, 13% and 10% of its motor fuel from ExxonMobil, BP, Motiva and Circle K, respectively. No other fuel suppliers accounted for 10% or more of our motor fuel purchases during the three months ended March 31, 2020 and 2019. 

COVID-19 Pandemic

During the first quarter of 2020, an outbreak of a novel strain of coronavirus spread worldwide, including to the U.S., posing public health risks that have reached pandemic proportions.

The impact of COVID-19 to the results for the first quarter of 2020 was not material. However, we experienced a decrease in fuel volume starting in mid-to-late March and continuing through April. For the first quarter of 2020, the negative impact of the volume decrease on fuel gross profit was offset by the positive impact from the decline in crude prices, which increased DTW margins.

As a result of the implications of COVID-19, we assessed property and equipment, other long-lived assets and goodwill for impairment and concluded no assets were impaired as of March 31, 2020. See Note 6 for information regarding impairment charges related primarily to classifying sites as assets held for sale.

We cannot predict the scope and severity with which COVID-19 will impact our business, financial condition, results of operations and cash flows. Sustained decreases in fuel volume or erosion of margin could have a material adverse effect on our results of operations, cash flow, financial position and ultimately our ability to pay distributions.

7


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note 2. ASSET EXCHANGE TRANSACTION WITH CIRCLE K 

Third Asset Exchange

On February 25, 2020, the closing of the third tranche of asset exchanges under the Asset Exchange Agreement, entered into with Circle K on December 17, 2018 (the “Asset Exchange Agreement”), occurred (the “Third Asset Exchange”). In this Third Asset Exchange, Circle K transferred to the Partnership ten (all fee) U.S. company operated convenience and fuel retail stores (“CK Properties”) having an aggregate fair value of approximately $11.0 million, and the Partnership transferred to Circle K the real property for five of the master lease properties (“CAPL Properties”) having an aggregate fair value of approximately $10.3 million.

In connection with the closing of the Third Asset Exchange, the stores transferred by Circle K were dealerized as contemplated by the Asset Exchange Agreement and Circle K’s rights under the dealer agreements and agent agreements that were entered into in connection therewith were assigned to the Partnership.

We accounted for the first two tranches of the asset exchange as transactions between entities under common control as our General Partner was owned by Circle K at the time of closing on those transactions. Since our General Partner was acquired by the Topper Group in November 2019, the Partnership and Circle K are not entities under common control at the time of closing on the Third Asset Exchange. As such, we have recognized a gain on the sale of the five CAPL properties of $1.8 million in the statement of operations. Additionally, we recorded the following to reflect the acquisition of the CK Properties in the Third Asset Exchange (in thousands):

 

Property and equipment, net

 

$

9,922

 

Intangible assets, net

 

 

1,336

 

Total assets

 

 

11,258

 

 

 

 

 

 

Asset retirement obligations

 

 

293

 

Net assets acquired

 

$

10,965

 

Through the Third Asset Exchange, the fair value of the CAPL Properties we have divested exceeds the fair value of the CK Properties we have acquired by $0.7 million. After the final tranche closing, any net valuation difference will be paid by the party owing such amount to the other.

Fourth and Fifth Asset Exchanges

We closed on the fourth and fifth tranches of the asset exchanges on April 7, 2020 and May 5, 2020, respectively. The stores transferred by Circle K were dealerized as contemplated by the Asset Exchange Agreement and Circle K’s rights under the dealer agreements and agent agreements that were entered into in connection therewith were assigned to the Partnership.

In this fourth asset exchange, Circle K transferred to the Partnership 13 (11 fee; 2 leased) U.S. company operated convenience and fuel retail stores having an aggregate fair value of approximately $13.1 million, and the Partnership transferred to Circle K the real property for seven of the master lease properties having an aggregate fair value of approximately $12.8 million.

In the fifth asset exchange, Circle K transferred to the Partnership 29 (22 fee; 7 leased) U.S. company operated convenience and fuel retail stores having an aggregate fair value of approximately $31.5 million, and the Partnership transferred to Circle K the real property for 13 of the master lease properties having an aggregate fair value of approximately $31.7 million.

There are 24 CK Properties and four CAPL Properties remaining to be exchanged, which are anticipated to close in the second half of 2020.

8


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note 3. CST FUEL SUPPLY EXCHANGE AGREEMENT

Effective March 25, 2020, pursuant to the terms of the previously announced CST Fuel Supply Exchange Agreement dated as of November 19, 2019 (the “CST Fuel Supply Exchange Agreement”), between the Partnership and Circle K, Circle K  transferred to the Partnership 33 owned and leased convenience store properties (the “Properties”) and certain assets (including fuel supply agreements) relating to such Properties, as well as U.S. wholesale fuel supply contracts covering 333 additional sites (the “DODO Sites”), subject to certain adjustments, and, in exchange therefore, the Partnership transferred to Circle K all of the limited partnership units in CST Fuel Supply that were owned by the Partnership, which represent 17.5% of the outstanding units of CST Fuel Supply (collectively, the “CST Fuel Supply Exchange”). Twelve Properties and 49 DODO Sites (collectively, the “Removed Properties”) were removed from the Exchange Transaction prior to closing, and Circle K made an aggregate payment of approximately $13.4 million to us at closing in lieu of the Removed Properties, in each case, pursuant to the terms and conditions of the CST Fuel Supply Exchange Agreement.

The assets exchanged by Circle K included (a) fee simple title to all land and other real property and related improvements owned by Circle K at the Properties, (b) Circle K’s leasehold interest in all land and other real property and related improvements leased by Circle K at the Properties, (c) all buildings and other improvements and permanently attached machinery, equipment and other fixtures located on the Properties, (d) all tangible personal property owned by Circle K on the Properties, including all underground storage tanks located on the Properties, (e) all of Circle K’s rights under the dealer agreements related to the Properties and the DODO Sites, (f) Circle K’s rights under the leases to the leased Properties and all tenant leases and certain other contracts related to the Properties, (g) all fuel inventory owned by Circle K and stored in the underground storage tanks at locations operated by dealers that are independent commission marketers, (h) all assignable permits related to the Properties and related assets owned by Circle K, (i) all real estate records and related registrations and reports and other books and records of Circle K to the extent relating to the Properties, and (j) all other intangible assets associated with the foregoing assets (collectively, the “Assets”).  The Partnership will also assume certain liabilities associated with the Assets.

The Partnership and Circle K have agreed to indemnify each other for, among other things, breaches of their respective representations and warranties contained in the CST Fuel Supply Exchange Agreement for a period of 18 months after the date of closing (except for certain fundamental representations and warranties, which survive until the expiration of the applicable statute of limitations) and for breaches of their respective covenants and for certain liabilities assumed or retained by the Partnership or Circle K, respectively. The respective indemnification obligations of each of the Partnership and Circle K to the other are subject to the limitations set forth in the CST Fuel Supply Exchange Agreement.

In connection with the execution of the CST Fuel Supply Exchange Agreement, the Partnership and Circle K also entered into an Environmental Responsibility Agreement, dated as of November 19, 2019 (the “Environmental Responsibility Agreement”), which agreement sets forth the parties’ respective liabilities and obligations with respect to environmental matters relating to the Properties. As further described in the Environmental Responsibility Agreement, Circle K will retain liability for known environmental contamination or non-compliance at the Properties, and the Partnership will assume liability for unknown environmental contamination and non-compliance at the Properties.

The terms of the CST Fuel Supply Exchange Agreement were approved by the independent conflicts committee of the Board.

In connection with closing on the CST Fuel Supply Exchange, on March 25, 2020, we entered into a limited consent (the “Consent”) to our credit facility, among the Partnership, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent. Pursuant to the Consent, the lenders consented to the consummation of the CST Fuel Supply Exchange.

9


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

The fair value of our investment in CST Fuel Supply that was divested and the Assets acquired was $69.0 million based on a discounted cash flow analysis. We accounted for the divestiture of our investment in CST Fuel Supply under ASC 860, “Transfers and Servicing.” We recorded a gain on the divestiture of our investment in CST Fuel Supply of $67.6 million in the first quarter of 2020, representing the fair value of assets received less the carrying value of the investment exchanged. We have no involvement with CST Fuel Supply subsequent to closing on the CST Fuel Supply Exchange. Additionally, we recorded the following to reflect the acquisition of the Assets (in thousands):

 

Motor fuel inventory

 

$

854

 

Property and equipment, net

 

 

23,590

 

Right-of-use assets, net

 

 

4,168

 

Intangible assets, net

 

 

35,636

 

Total assets

 

$

64,248

 

 

 

 

 

 

Accounts payable

 

$

264

 

Current portion of operating lease obligations

 

 

1,129

 

Operating lease obligations, less current portion

 

 

5,479

 

Asset retirement obligations

 

 

1,240

 

Other long-term liabilities

 

 

3,086

 

Total liabilities

 

$

11,198

 

Net assets acquired

 

$

53,050

 

 

 

 

 

 

Cash received from Circle K in lieu of Removed Properties

 

$

13,439

 

Cash received from Circle K related to net liabilities assumed

 

 

2,496

 

Total cash received from Circle K

 

$

15,935

 

Total fair value of assets received in CST Fuel Supply Exchange

 

$

68,985

 

 

Note 4. RETAIL AND WHOLESALE ACQUISITION

 

On April 14, 2020, we closed on an asset purchase agreement (“Asset Purchase Agreement”) with the sellers (“Sellers”) signatories thereto, including certain entities affiliated with Joseph V. Topper, Jr. Pursuant to the Asset Purchase Agreement, we completed the acquisition of the retail operations at 169 sites (154 company operated sites and 15 commission sites), wholesale fuel distribution to 110 sites, including 53 third-party wholesale dealer contracts, and leasehold interests in 62 sites.

 

The Asset Purchase Agreement provides for an aggregate consideration of $36 million, exclusive of inventory and in-store cash, with approximately $21 million paid in cash and 842,891 newly-issued common units valued at $15 million and calculated based on the volume weighted average trading price of $17.80 per common unit for the 20-day period ended on January 8, 2020, five business days prior to the announcement of the transaction. The 842,891 common units were issued to entities controlled by Joseph V. Topper, Jr. The cash portion of the purchase consideration is subject to customary post-closing adjustments pending satisfaction of conditions set forth in the Asset Purchase Agreement. The cash portion of the purchase price was financed with borrowings under our credit facility.

 

In connection with the closing of the transactions contemplated under the Asset Purchase Agreement, we assumed certain contracts with third parties and affiliates necessary for the continued operation of the sites, including agreements with dealers and franchise agreements. Further, we have entered into customary triple-net ten-year master leases with certain affiliates of the Topper Group, with an aggregate annual rent of $8.1 million payable by the Partnership.

 

In connection with the consummation of the transactions contemplated by the Asset Purchase Agreement, our contracts with one of the Sellers, DMS, were terminated and DMS is no longer a customer or lessee of the Partnership.

 

In addition, the parties performed Phase I environmental site assessments with respect to certain sites. The Sellers agreed to retain liability for known environmental contamination or non-compliance at certain sites, and the Partnership agreed to assume liability for unknown environmental contamination and non-compliance at certain sites.

 

Further, the Asset Purchase Agreement contains customary representations and warranties of the parties as well as indemnification obligations by Sellers and the Partnership, respectively, to each other. The indemnification obligations must be asserted within 18 months of the closing and are limited to an aggregate of $7.2 million for each party.

10


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

The terms of the Asset Purchase Agreement were approved by the independent conflicts committee of the Board.

Note 5. ASSETS HELD FOR SALE

We have classified 35 sites and 24 sites as held for sale at March 31, 2020 and December 31, 2019, respectively, which are expected to be sold within one year of such classification. Assets held for sale were as follows (in thousands): 

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Land

 

$

12,372

 

 

$

10,082

 

Buildings and site improvements

 

 

5,360

 

 

 

5,178

 

Equipment

 

 

1,653

 

 

 

1,383

 

Total

 

 

19,385

 

 

 

16,643

 

Less accumulated depreciation

 

 

(3,054

)

 

 

(3,412

)

Assets held for sale

 

$

16,331

 

 

$

13,231

 

 

During the first quarter of 2020, we sold six properties for $5.0 million of proceeds, resulting in a gain of $1.6 million.

 

The increase in the number of sites classified as assets held for sale is related to our ongoing real estate rationalization effort.

Note 6. PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Land

 

$

261,404

 

 

$

257,131

 

Buildings and site improvements

 

 

297,326

 

 

 

296,411

 

Leasehold improvements

 

 

9,484

 

 

 

9,350

 

Equipment

 

 

202,220

 

 

 

194,997

 

Construction in progress

 

 

5,700

 

 

 

4,638

 

Property and equipment, at cost

 

 

776,134

 

 

 

762,527

 

Accumulated depreciation and amortization

 

 

(201,550

)

 

 

(196,611

)

Property and equipment, net

 

$

574,584

 

 

$

565,916

 

 

We recorded an impairment charge of $5.2 million during the three months ended March 31, 2020, included within depreciation, amortization and accretion expenses on the statement of operations.

 

See Notes 2 and 3 for information related to the closing of the Third Asset Exchange and the CST Fuel Supply Exchange.

Note 7. INTANGIBLE ASSETS

Intangible assets consisted of the following (in thousands):

 

 

 

March 31, 2020

 

 

December 31, 2019

 

 

 

Gross

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Gross

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

Wholesale fuel supply contracts/rights

 

$

161,451

 

 

$

(82,391

)

 

$

79,060

 

 

$

124,479

 

 

$

(79,791

)

 

$

44,688

 

Trademarks

 

 

1,078

 

 

 

(1,078

)

 

 

 

 

 

1,078

 

 

 

(1,072

)

 

 

6

 

Covenant not to compete

 

 

4,552

 

 

 

(4,281

)

 

 

271

 

 

 

4,552

 

 

 

(4,250

)

 

 

302

 

Total intangible assets

 

$

167,081

 

 

$

(87,750

)

 

$