10-Q 1 capl-20240331.htm 10-Q 10-Q
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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, 2024

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. 001-35711a

img125315636_0.jpg 

 

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.)

 

 

 

 

645 Hamilton Street, Suite 400

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 3, 2024, the registrant had outstanding 38,027,194 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, 2024 and December 31, 2023

 

1

Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023

 

2

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

 

3

Consolidated Statements of Equity and Comprehensive Income for the Three Months Ended March 31, 2024 and 2023

 

4

Condensed Notes to Consolidated Financial Statements

 

5

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

 

16

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

27

Item 4. Controls and Procedures

 

27

 

 

 

PART II - OTHER INFORMATION

 

27

Item 1. Legal Proceedings

 

27

Item 1A. Risk Factors

 

27

Item 6. Exhibits

 

28

 

 

 

SIGNATURE

 

29

 

 


 

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

 

CrossAmerica Partners LP, the Partnership, CAPL, we, us, our

 

 

 

Holdings

 

CAPL JKM Holdings LLC, an indirect wholly-owned subsidiary of CrossAmerica and sole member of CAPL JKM Partners

 

 

 

CAPL JKM Partners

 

CAPL JKM Partners LLC, a wholly-owned subsidiary of Holdings

 

 

 

Joe’s Kwik Marts

 

Joe’s Kwik Marts LLC, a wholly-owned subsidiary of CAPL JKM Partners

 

 

 

LGWS

 

Lehigh Gas Wholesale Services, Inc., an indirect wholly-owned subsidiary of CrossAmerica

 

 

 

CrossAmerica Partners LP related parties:

 

DMI

 

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

 

 

 

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 sites and purchases fuel from us.

 

 

 

Other Defined Terms:

 

 

 

 

 

AOCI

 

Accumulated other comprehensive income

 

 

 

ASU

 

Accounting Standards Update

 

 

 

Board

 

Board of Directors of our General Partner

 

 

 

Bonus Plan

 

The Performance-Based Bonus Compensation Policy is one of the key components of “at-risk” compensation. The Bonus Plan is utilized to reward short-term performance achievements and to motivate and reward employees for their contributions toward meeting financial and strategic goals.

 

 

 

CAPL Credit Facility

 

Credit Agreement, dated as of April 1, 2019, as amended by the First Amendment to Credit Agreement, dated as of November 19, 2019, and by the Second Amendment to Credit Agreement, dated as of July 28, 2021, and by the Third Amendment to Credit Agreement, dated as of November 9, 2022, and as amended and restated by the Amendment and Restatement Agreement, dated as of March 31, 2023, as amended by the First Amendment to Amendment and Restatement Agreement, dated as of February 20, 2024, among the Partnership and Lehigh Gas Wholesale Services, Inc., as borrowers, the guarantors from time to time party thereto, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent.

 

 

 

DTW

 

Dealer tank wagon contracts, which are variable market-based 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

 

 

 

Exchange Act

 

Securities Exchange Act of 1934, as amended

 

 

 

Form 10-K

 

CrossAmerica’s Annual Report on Form 10-K for the year ended December 31, 2023

 

 

 

Internal Revenue Code

 

Internal Revenue Code of 1986, as amended

 

 

 

i


 

IPO

 

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

 

 

 

JKM Credit Facility

 

Credit Agreement, dated as of July 16, 2021, as amended on July 29, 2021 among CAPL JKM Partners, Holdings and Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing bank. The Term Loan Facility was paid off and the JKM Credit Facility was terminated on March 31, 2023.

 

 

 

MD&A

 

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

 

 

 

Omnibus Agreement

 

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

 

 

 

Partnership Agreement

 

Second Amended and Restated Agreement of Limited Partnership of CrossAmerica Partners LP, dated as of February 6, 2020

 

 

 

Predecessor Entity

 

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

 

 

 

SOFR

 

Secured Overnight Financing Rate

 

 

 

Term Loan Facility

 

$185 million delayed draw term loan facility provided under the JKM Credit Facility, which was paid off and terminated March 31, 2023

 

 

 

U.S. GAAP

 

U.S. Generally Accepted Accounting Principles

 

 

 

WTI

 

West Texas Intermediate crude oil

ii


 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CROSSAMERICA PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars, except unit data)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,278

 

 

$

4,990

 

Accounts receivable, net of allowances of $674 and $709, respectively

 

 

35,087

 

 

 

31,185

 

Accounts receivable from related parties

 

 

1,021

 

 

 

437

 

Inventory

 

 

58,037

 

 

 

52,344

 

Assets held for sale

 

 

4,641

 

 

 

400

 

Current portion of interest rate swap contracts

 

 

7,169

 

 

 

9,321

 

Other current assets

 

 

11,068

 

 

 

9,845

 

Total current assets

 

 

123,301

 

 

 

108,522

 

Property and equipment, net

 

 

692,728

 

 

 

705,217

 

Right-of-use assets, net

 

 

146,170

 

 

 

148,317

 

Intangible assets, net

 

 

90,422

 

 

 

95,261

 

Goodwill

 

 

99,409

 

 

 

99,409

 

Deferred tax assets

 

 

1,425

 

 

 

759

 

Interest rate swap contracts, less current portion

 

 

4,439

 

 

 

687

 

Other assets

 

 

21,579

 

 

 

23,510

 

Total assets

 

$

1,179,473

 

 

$

1,181,682

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of debt and finance lease obligations

 

$

3,133

 

 

$

3,083

 

Current portion of operating lease obligations

 

 

34,973

 

 

 

34,787

 

Accounts payable

 

 

71,490

 

 

 

68,986

 

Accounts payable to related parties

 

 

6,920

 

 

 

10,180

 

Accrued expenses and other current liabilities

 

 

24,570

 

 

 

23,674

 

Motor fuel and sales taxes payable

 

 

18,767

 

 

 

20,386

 

Total current liabilities

 

 

159,853

 

 

 

161,096

 

Debt and finance lease obligations, less current portion

 

 

795,755

 

 

 

753,880

 

Operating lease obligations, less current portion

 

 

116,351

 

 

 

118,723

 

Deferred tax liabilities, net

 

 

7,652

 

 

 

12,919

 

Asset retirement obligations

 

 

48,329

 

 

 

47,844

 

Interest rate swap contracts

 

 

1,139

 

 

 

3,535

 

Other long-term liabilities

 

 

52,212

 

 

 

52,934

 

Total liabilities

 

 

1,181,291

 

 

 

1,150,931

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred membership interests

 

 

28,401

 

 

 

27,744

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common units— 38,027,194 and 37,983,154 units issued and
   outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

(39,616

)

 

 

(2,392

)

Accumulated other comprehensive income

 

 

9,397

 

 

 

5,399

 

Total (deficit) equity

 

 

(30,219

)

 

 

3,007

 

Total liabilities and equity

 

$

1,179,473

 

 

$

1,181,682

 

 

The accompanying notes are an integral part of these 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,

 

 

 

2024

 

 

2023

 

Operating revenues (a)

 

$

941,548

 

 

$

1,016,159

 

Costs of sales (b)

 

 

860,200

 

 

 

934,100

 

Gross profit

 

 

81,348

 

 

 

82,059

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Operating expenses (c)

 

 

52,028

 

 

 

45,623

 

General and administrative expenses

 

 

6,838

 

 

 

5,739

 

Depreciation, amortization and accretion expense

 

 

18,721

 

 

 

19,820

 

Total operating expenses

 

 

77,587

 

 

 

71,182

 

Loss on dispositions and lease terminations, net

 

 

(16,806

)

 

 

(1,767

)

Operating (loss) income

 

 

(13,045

)

 

 

9,110

 

Other income, net

 

 

249

 

 

 

261

 

Interest expense

 

 

(10,541

)

 

 

(12,012

)

Loss before income taxes

 

 

(23,337

)

 

 

(2,641

)

Income tax benefit

 

 

(5,797

)

 

 

(1,662

)

Net loss

 

 

(17,540

)

 

 

(979

)

Accretion of preferred membership interests

 

 

657

 

 

 

601

 

Net loss available to limited partners

 

$

(18,197

)

 

$

(1,580

)

 

 

 

 

 

 

 

Net loss per common unit

 

 

 

 

 

 

Basic

 

$

(0.48

)

 

$

(0.04

)

Diluted

 

$

(0.48

)

 

$

(0.04

)

 

 

 

 

 

 

 

Weighted-average common units:

 

 

 

 

 

 

Basic

 

 

37,994,285

 

 

 

37,940,332

 

Diluted

 

 

37,994,285

 

 

 

37,940,332

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

(a) includes excise taxes of:

 

$

70,713

 

 

$

69,884

 

(a) includes rent income of:

 

 

19,166

 

 

 

21,320

 

(b) excludes depreciation, amortization and accretion

 

 

 

 

 

 

(b) includes rent expense of:

 

 

5,419

 

 

 

5,554

 

(c) includes rent expense of:

 

 

3,942

 

 

 

3,798

 

 

The accompanying notes are an integral part of these consolidated financial statements.

2


 

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(17,540

)

 

$

(979

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, amortization and accretion expense

 

 

18,721

 

 

 

19,820

 

Amortization of deferred financing costs

 

 

483

 

 

 

1,848

 

Credit loss expense

 

 

 

 

 

37

 

Deferred income tax benefit

 

 

(5,932

)

 

 

(2,056

)

Equity-based employee and director compensation expense

 

 

205

 

 

 

561

 

Loss on dispositions and lease terminations, net

 

 

16,806

 

 

 

1,767

 

Changes in operating assets and liabilities, net of acquisitions

 

 

(6,927

)

 

 

(9,460

)

Net cash provided by operating activities

 

 

5,816

 

 

 

11,538

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Principal payments received on notes receivable

 

 

45

 

 

 

53

 

Proceeds from sale of assets

 

 

 

 

 

568

 

Capital expenditures

 

 

(6,105

)

 

 

(6,001

)

Lease termination payments to Applegreen, including inventory purchases

 

 

(19,904

)

 

 

 

Net cash used in investing activities

 

 

(25,964

)

 

 

(5,380

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

49,000

 

 

 

187,400

 

Repayments on revolving credit facilities

 

 

(6,740

)

 

 

(15,537

)

Repayments on the Term Loan Facility

 

 

 

 

 

(158,980

)

Payments of finance lease obligations

 

 

(744

)

 

 

(698

)

Payments of deferred financing costs

 

 

(74

)

 

 

(6,906

)

Distributions paid on distribution equivalent rights

 

 

(65

)

 

 

(56

)

Distributions paid on common units

 

 

(19,941

)

 

 

(19,918

)

Net cash provided by (used in) financing activities

 

 

21,436

 

 

 

(14,695

)

Net increase (decrease) in cash and cash equivalents

 

 

1,288

 

 

 

(8,537

)

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

4,990

 

 

 

16,054

 

Cash and cash equivalents at end of period

 

$

6,278

 

 

$

7,517

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME

(Thousands of Dollars, except unit amounts)

(Unaudited)

 

 

 

Limited Partners' Interest
Common Unitholders

 

 

AOCI

 

 

Total Equity

 

 

 

Units

 

 

Dollars

 

 

Dollars

 

 

Dollars

 

Balance at December 31, 2023

 

 

37,983,154

 

 

$

(2,392

)

 

$

5,399

 

 

$

3,007

 

Net loss

 

 

 

 

 

(17,540

)

 

 

 

 

 

(17,540

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

   Unrealized gain on interest rate swap contracts

 

 

 

 

 

 

 

 

9,131

 

 

 

9,131

 

   Realized gain on interest rate swap contracts
      reclassified from AOCI into interest expense

 

 

 

 

 

 

 

 

(5,133

)

 

 

(5,133

)

Total other comprehensive income

 

 

 

 

 

 

 

 

3,998

 

 

 

3,998

 

Comprehensive (loss) income

 

 

 

 

 

(17,540

)

 

 

3,998

 

 

 

(13,542

)

Issuance of units related to 2023 Bonus Plan

 

 

17,136

 

 

 

381

 

 

 

 

 

 

381

 

Vesting of equity awards, net of units withheld for tax

 

 

26,904

 

 

 

598

 

 

 

 

 

 

598

 

Accretion of preferred membership interests

 

 

 

 

 

(657

)

 

 

 

 

 

(657

)

Distributions paid

 

 

 

 

 

(20,006

)

 

 

 

 

 

(20,006

)

Balance at March 31, 2024

 

 

38,027,194

 

 

$

(39,616

)

 

$

9,397

 

 

$

(30,219

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

37,937,604

 

 

$

36,508

 

 

$

16,469

 

 

$

52,977

 

Net loss

 

 

 

 

 

(979

)

 

 

 

 

 

(979

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

   Unrealized gain on interest rate swap contracts

 

 

 

 

 

 

 

 

137

 

 

 

137

 

   Realized gain on interest rate swap contracts
      reclassified from AOCI into interest expense

 

 

 

 

 

 

 

 

(3,055

)

 

 

(3,055

)

Total other comprehensive loss

 

 

 

 

 

 

 

 

(2,918

)

 

 

(2,918

)

Comprehensive loss

 

 

 

 

 

(979

)

 

 

(2,918

)

 

 

(3,897

)

Issuance of units related to 2022 Bonus Plan

 

 

15,346

 

 

 

322

 

 

 

 

 

 

322

 

Accretion of preferred membership interests

 

 

 

 

 

(601

)

 

 

 

 

 

(601

)

Distributions paid

 

 

 

 

 

(19,974

)

 

 

 

 

 

(19,974

)

Balance at March 31, 2023

 

 

37,952,950

 

 

$

15,276

 

 

$

13,551

 

 

$

28,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1. DESCRIPTION OF BUSINESS AND OTHER DISCLOSURES

Our business consists of:

the wholesale distribution of motor fuels;
the owning or leasing of sites used in the retail distribution of motor fuels and, in turn, generating rental income from the lease or sublease of the sites;
the retail sale of motor fuels to end customers at retail sites operated by commission agents and ourselves; and
the operation of retail sites, including the sale of convenience merchandise to end customers.

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, 2024 and for the three months ended March 31, 2024 and 2023 included in the consolidated financial statements has been derived from our unaudited financial statements. Financial information as of December 31, 2023 has been derived from our audited financial statements and notes thereto as of that date.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 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.

Use of Estimates

The preparation of consolidated 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 consolidated 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.

Recently Adopted Accounting Pronouncements

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, "Improvements in Reportable Segment Disclosures." The amendments in this new guidance improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. These new disclosures will be required in our Annual Report on Form 10-K for the year ending December 31, 2024 and interim and annual reports thereafter. Although we do not anticipate the impact of adopting this guidance will be material, it will affect our disclosures related to our reportable segments starting in our Annual Report on Form 10-K for the year ending December 31, 2024.

 

5


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Income Taxes

 

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.” The amendments in this new guidance require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. This new guidance also requires certain new disclosures such as income taxes paid disaggregated by federal, state and foreign taxes and further disaggregated by individual jurisdictions in which income taxes paid exceeds a quantitative threshold. This new guidance also eliminates certain previously required disclosures. We will adopt this new guidance effective January 1, 2025. Although we do not anticipate the impact of adopting this guidance will be material, it will affect our disclosures related to income taxes.

Certain other new accounting pronouncements have become effective for our financial statements during 2024, but the adoption of these pronouncements did not materially impact our financial position, results of operations or disclosures.

Concentration Risk

For each of the three months ended March 31, 2024 and 2023, we purchased approximately 80% of our motor fuel from four suppliers. Approximately 24% and 23% of our motor fuel gallons sold for the three months ended March 31, 2024 and 2023, respectively, were delivered by two carriers.

For the three months ended March 31, 2024 and 2023, respectively, approximately 11% and 20% of our rent income was from two multi-site operators.

For the three months ended March 31, 2024 and 2023, respectively, approximately 50% and 47% of our merchandise was purchased from one supplier.

Note 2. APPLEGREEN ACQUISITION AND LEASE TERMINATION

On January 26, 2024, we entered into an agreement (the “Applegreen Purchase Agreement”) to acquire certain assets from Applegreen Midwest, LLC and Applegreen Florida, LLC (collectively, the “Sellers”) (the “Applegreen Acquisition”). The assets were acquired via the termination of the Partnership’s existing lease agreements with the Sellers at 59 locations, for total consideration of $16.9 million. The transaction closed on a rolling basis by site beginning during the first quarter of 2024 and ending in April 2024. The Partnership also acquired for cash the inventory at the locations. The terms of the Partnership’s leases with Applegreen Midwest, LLC and Applegreen Florida, LLC could have been extended to 2049 and 2048, respectively, including all renewal options. The Applegreen Purchase Agreement contains customary representations and warranties of the parties as well as indemnification obligations by the Sellers and the Partnership, respectively, to each other.

Of the 59 locations, 31 locations converted during the first quarter of 2024 and the remaining locations converted in April 2024. This transaction resulted in the transition of these lessee dealer sites to company operated sites.

During the first quarter of 2024, we paid $19.9 million of cash and accrued an additional $1.2 million of cash paid in April 2024. In addition, we recorded a non-cash write-off of deferred rent income of $1.4 million during the first quarter of 2024. We recorded these transactions as follows during the first quarter of 2024 (in thousands):

 

Cash consideration

 

 

 

Lease termination payments

 

$

15,800

 

Inventory purchases

 

 

4,104

 

Total cash paid

 

 

19,904

 

Accrued lease termination payments paid in April 2024

 

 

1,183

 

Total consideration

 

 

21,087

 

 

 

 

 

Inventory

 

 

4,104

 

Equipment

 

 

1,550

 

Other assets

 

 

980

 

Loss on lease termination

 

 

14,453

 

Non-cash write-off of deferred rent income

 

 

1,445

 

Total loss on lease termination

 

$

15,898

 

 

6


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

Note 3. ASSETS HELD FOR SALE

We have classified nine sites and two sites as held for sale at March 31, 2024 and December 31, 2023, 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,

 

 

 

2024

 

 

2023

 

Land

 

$

3,056

 

 

$

240

 

Buildings and site improvements

 

 

3,512

 

 

 

380

 

Equipment

 

 

2,579

 

 

 

418

 

Total

 

 

9,147

 

 

 

1,038

 

Less accumulated depreciation

 

 

(4,506

)

 

 

(638

)

Assets held for sale

 

$

4,641

 

 

$

400

 

The Partnership has continued to focus on divesting lower performing assets. During the three months ended March 31, 2023, we sold one property for $0.4 million in proceeds, resulting in a net gain of $0.1 million.

See Note 5 for information regarding impairment charges primarily recorded upon classifying sites within assets held for sale.

Note 4. INVENTORY

Inventory consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Merchandise

 

$

29,808

 

 

$

26,081

 

Motor fuel

 

 

28,229

 

 

 

26,263

 

Inventory

 

$

58,037

 

 

$

52,344

 

 

See Notes 2 and 15 for information regarding the Applegreen Acquisition and other conversions of lessee dealer sites to company operated sites, which caused a significant portion of the increase in inventory.

 

Note 5. PROPERTY AND EQUIPMENT

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

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Land

 

$

323,494

 

 

$

326,571

 

Buildings and site improvements

 

 

362,651

 

 

 

365,528

 

Leasehold improvements

 

 

16,560

 

 

 

16,434

 

Equipment

 

 

358,585

 

 

 

356,160

 

Construction in progress

 

 

5,240

 

 

 

4,462

 

Property and equipment, at cost

 

 

1,066,530

 

 

 

1,069,155

 

Accumulated depreciation and amortization

 

 

(373,802

)

 

 

(363,938

)

Property and equipment, net

 

$

692,728

 

 

$

705,217

 

We recorded impairment charges of $0.3 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively, included within depreciation, amortization and accretion expenses on the statements of operations. These impairment charges were primarily related to sites initially classified within assets held for sale in connection with our ongoing real estate rationalization effort.

7


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note 6. INTANGIBLE ASSETS

Intangible assets consisted of the following (in thousands):

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Gross
Amount

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

 

Gross
Amount

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

Wholesale fuel supply contracts/rights

 

$

234,501

 

 

$

145,557

 

 

$

88,944

 

 

$

234,501

 

 

$

140,714

 

 

$

93,787

 

Trademarks/licenses

 

 

2,118

 

 

 

787

 

 

 

1,331

 

 

 

2,078

 

 

 

761

 

 

 

1,317

 

Covenant not to compete

 

 

200

 

 

 

53

 

 

 

147

 

 

 

200

 

 

 

43

 

 

 

157

 

Total intangible assets

 

$

236,819

 

 

$

146,397

 

 

$

90,422

 

 

$

236,779

 

 

$

141,518

 

 

$

95,261

 

 

Note 7. DEBT

Our balances for long-term debt and finance lease obligations were as follows (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

CAPL Credit Facility

 

$

798,260

 

 

$

756,000

 

Finance lease obligations

 

 

10,320

 

 

 

11,064

 

Total debt and finance lease obligations

 

 

808,580

 

 

 

767,064

 

Current portion

 

 

3,133

 

 

 

3,083

 

Noncurrent portion

 

 

805,447

 

 

 

763,981

 

Deferred financing costs, net

 

 

9,692

 

 

 

10,101

 

Noncurrent portion, net of deferred financing costs

 

$

795,755

 

 

$

753,880

 

 

The CAPL Credit Facility is secured by substantially all of the Partnership’s assets.

Letters of credit outstanding totaled $5.3 million and $4.5 million at March 31, 2024 and December 31, 2023, respectively.

Taking the interest rate swap contracts into account, the effective interest rate on our CAPL Credit Facility at March 31, 2024 was 5.1% (our applicable margin was 2.25% as of March 31, 2024). See Note 8 for additional information on our interest rate swap contracts.

The CAPL Credit Facility contains certain financial covenants. The Partnership is required to maintain a Consolidated Leverage Ratio (as defined in the CAPL Credit Facility) of (i) for each fiscal quarter ending March 31, 2024, June 30, 2024 and September 30, 2024, not greater than 5.00 to 1.00, and (ii) for each fiscal quarter ending December 31, 2024 and thereafter, not greater than 4.75 to 1.00. For the quarter during a Specified Acquisition Period (as defined in the CAPL Credit Facility), such threshold will be increased by increasing the numerator thereof by 0.5, but such numerator may not exceed 5.25 to 1.00. Upon the occurrence of a Qualified Note Offering (as defined in the CAPL Credit Facility), the Consolidated Leverage Ratio threshold when not in a Specified Acquisition Period is increased to 5.25 to 1.00, while the Specified Acquisition Period threshold is 5.50 to 1.00. Upon the occurrence of a Qualified Note Offering, the Partnership is also required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the CAPL Credit Facility) for the most recently completed four fiscal quarter period of not greater than 3.75 to 1.00. Such threshold is increased to 4.00 to 1.00 for the quarter during a Specified Acquisition Period. The Partnership is also required to maintain a Consolidated Interest Coverage Ratio (as defined in the CAPL Credit Facility) of at least 2.50 to 1.00.

On February 20, 2024, in connection with our Applegreen Acquisition, we entered into an amendment (the “Amendment”) to the CAPL Credit Facility. The Amendment, among other things, modified the definition of Consolidated EBITDA contained in the Credit Agreement to permit the full addback of certain lease termination expenses incurred in connection with the Applegreen Acquisition and the addback of other lease termination expenses incurred in connection with future transactions, subject to certain terms and conditions.

As of March 31, 2024, we were in compliance with our financial covenants under the CAPL Credit Facility. The amount of availability under the CAPL Credit Facility at March 31, 2024, after taking into consideration debt covenant restrictions, was $91.2 million.

8


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

In connection with amending the CAPL Credit Facility and terminating the JKM Credit Facility in March 2023, the Partnership wrote off $1.1 million of deferred financing costs in the first quarter of 2023.

Note 8. INTEREST RATE SWAP CONTRACTS

During 2024 and through the date of this report, we held the following interest rate swap contracts (in thousands):

Type

 

Notional Amount

 

 

Termination Date

 

Fixed Rate

 

Spot starting

 

$

150,000

 

 

April 1, 2024

 

 

0.413

%

Spot starting

 

 

75,000

 

 

April 1, 2024

 

 

0.298

%

Spot starting

 

 

75,000

 

 

April 1, 2024

 

 

0.298

%

Spot starting

 

 

50,000

 

 

March 30, 2028

 

 

3.287

%

Spot starting

 

 

100,000

 

 

March 31, 2028

 

 

3.287

%

Spot starting

 

 

50,000

 

 

April 8, 2028

 

 

3.282

%

Forward starting April 1, 2024

 

 

100,000

 

 

April 1, 2028

 

 

2.932

%

Spot starting

 

 

80,000

 

 

March 31, 2028

 

 

4.105

%

Spot starting

 

 

20,000

 

 

March 31, 2028

 

 

4.121

%

 

All of our interest rate swap contracts have been designated as cash flow hedges and are expected to be highly effective.

 

The fair value of each of these interest rate swap contracts was reported as a separate line item within current assets, noncurrent assets and noncurrent liabilities, as applicable. See Note 12 for additional information on the fair value of the interest rate swap contracts.

We report the unrealized gains and losses on our interest rate swap contracts designated as highly effective cash flow hedges as a component of other comprehensive income and reclassify such gains and losses into earnings (interest expense on our statement of operations) in the same period during which the hedged interest expense is recorded. We recognized a net realized gain from settlements of the interest rate swap contracts of $5.1 million and $3.1 million for the three months ended March 31, 2024 and 2023, respectively.

We currently estimate that a gain of $6.1 million will be reclassified from accumulated other comprehensive income into interest expense during the next 12 months; however, the actual amount that will be reclassified will vary based on changes in interest rates.

Note 9. OPERATING LEASES AS LESSOR

 

During the first quarter of 2024, we terminated a significant number of operating leases as lessor through our Applegreen Acquisition. See Note 2 for additional information regarding this transaction and the related write-off of deferred rent income.

 

Motor fuel stations are leased to tenants under operating leases with various expiration dates ranging through 2037. Most lease agreements include provisions for renewals. We generally do not include renewal options in our lease term. Future minimum rental payments under non-cancelable operating leases with third parties as of March 31, 2024 were as follows (in thousands):

 

2024

 

$

29,826

 

2025

 

 

32,495

 

2026

 

 

22,640

 

2027

 

 

12,672

 

2028

 

 

7,899

 

Thereafter

 

 

21,489

 

Total future minimum lease payments

 

$

127,021

 

 

The future minimum rental payments presented above do not include contingent rent based on future inflation, future revenues or volumes of the lessee, or non-lease components for amounts that may be received as tenant reimbursements for certain operating costs.

9


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Deferred rent income from straight-line rent relates to the cumulative amount by which straight-line rental income recorded to date exceeds cash rents billed to date under the lease agreement and totaled $3.3 million and $5.0 million at March 31, 2024 and December 31, 2023, respectively.

Note 10. RELATED-PARTY TRANSACTIONS

Wholesale Motor Fuel Sales and Real Estate Rentals

Revenues from TopStar, an entity affiliated with the Topper Group, were $10.7 million and $11.7 million for the three months ended March 31, 2024 and 2023, respectively. Accounts receivable from TopStar was $1.0 million and $0.4 million at March 31, 2024 and December 31, 2023, respectively.

We lease real estate from the Topper Group. Rent expense under these lease agreements was $2.5 million for each of the three months ended March 31, 2024 and 2023.

Omnibus Agreement

We incurred expenses under the Omnibus Agreement, including costs for store level personnel at our company operated sites as well as other cost reimbursements, totaling $27.8 million and $24.4 million for the three months ended March 31, 2024 and 2023, respectively. Such expenses are included in operating expenses and general and administrative expenses in the statements of operations. Amounts payable to the Topper Group related to expenses incurred by the Topper Group on our behalf in accordance with the Omnibus Agreement totaled $4.8 million and $8.4 million at March 31, 2024 and December 31, 2023, respectively.

Common Unit Distributions and Other Equity Transactions

We distributed $7.7 million to the Topper Group related to its ownership of our common units for the three months ended March 31, 2024 and 2023.

We distributed $2.6 million to affiliates of John B. Reilly, III related to their ownership of our common units for the three months ended March 31, 2024 and 2023.

We recorded accretion on the preferred membership interests issued in March 2022 to related parties of $0.7 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively.

Maintenance and Environmental Costs

Certain maintenance and environmental remediation activities are performed by an entity affiliated with the Topper Group, as approved by the independent conflicts committee of the Board. We incurred charges with this related party of $1.0 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively. Accounts payable to this related party amounted to $0.7 million and $0.3 million at March 31, 2024 and December 31, 2023, respectively.

Convenience Store Products

We purchase certain convenience store products from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of the Board, as approved by the independent conflicts committee of the Board. Merchandise costs amounted to $4.7 million and $4.9 million for the three months ended March 31, 2024 and 2023, respectively. Amounts payable to this related party amounted to $1.4 million at March 31, 2024 and December 31, 2023.

Vehicle Lease

In connection with the services rendered under the Omnibus Agreement, we lease certain vehicles from an entity affiliated with the Topper Group, as approved by the independent conflicts committee of the Board. Lease expense was an insignificant amount for each of the three months ended March 31, 2024 and 2023.

10


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Principal Executive Offices

We lease office space from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of our Board, as approved by the independent conflicts committee of the Board. Rent expense amounted to $0.3 million for each of the three months ended March 31, 2024 and 2023.

Public Relations and Website Consulting Services

We have engaged a company affiliated with John B. Reilly, III, member of the Board, for public relations and website consulting services. The cost of these services was insignificant for the three months ended March 31, 2024 and 2023.

Note 11. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

We have minimum volume purchase requirements under certain of our fuel supply agreements with a purchase price at prevailing market rates for wholesale distribution. In the event we fail to purchase the required minimum volume for a given contractual period, the underlying third party’s exclusive remedies (depending on the magnitude of the failure) are either termination of the supply agreement and/or a financial penalty per gallon based on the volume shortfall for the given period. We did not incur any significant penalties during the three months ended March 31, 2024 or 2023.

Litigation Matters

We are from time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damages, environmental damages, employment-related claims and damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims and proceedings, we record an accrual when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In addition, we disclose matters for which management believes a material loss is at least reasonably possible. We believe that it is not reasonably possible that these proceedings, separately or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flows. In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, giving due consideration to the nature of the claim, the amount and nature of damages sought and the probability of success. Management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

Environmental Matters

We currently own or lease sites where refined petroleum products are being or have been handled. These sites and the refined petroleum products handled thereon may be subject to federal and state environmental laws and regulations. Under such laws and regulations, we could be required to remove or remediate containerized hazardous liquids or associated generated wastes (including wastes disposed of or abandoned by prior owners or operators), to remediate contaminated property arising from the release of liquids or wastes into the environment, including contaminated groundwater, or to implement best management practices to prevent future contamination.

We maintain insurance of various types with varying levels of coverage that is considered adequate under the circumstances to cover operations and properties. The insurance policies are subject to deductibles that are considered reasonable and not excessive. In addition, we have entered into indemnification and escrow agreements with various sellers in conjunction with several of their respective acquisitions, as further described below. Financial responsibility for environmental remediation is negotiated in connection with each acquisition transaction. In each case, an assessment is made of potential environmental liability exposure based on available information. Based on that assessment and relevant economic and risk factors, a determination is made whether to, and the extent to which we will, assume liability for existing environmental conditions.

Environmental liabilities recorded on the balance sheet within accrued expenses and other current liabilities and other long-term liabilities totaled $6.9 million and $7.4 million at March 31, 2024 and December 31, 2023, respectively. Indemnification assets related to third-party escrow funds, state funds or insurance recorded on the balance sheet within other current assets and other noncurrent assets totaled $4.7 million and $5.3 million at March 31, 2024 and December 31, 2023, respectively. State funds represent probable state reimbursement amounts. Reimbursement will depend upon the continued maintenance and solvency of the state. Insurance coverage represents amounts deemed probable of reimbursement under insurance policies.

11


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

The estimates used in these reserves are based on all known facts at the time and an assessment of the ultimate remedial action outcomes. We will adjust loss accruals as further information becomes available or circumstances change. Among the many uncertainties that impact the estimates are the necessary regulatory approvals for, and potential modifications of, remediation plans, the amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims.

Environmental liabilities related to the sites contributed to the Partnership in connection with our IPO have not been assigned to us and are still the responsibility of the Predecessor Entity. The Predecessor Entity indemnified us for any costs or expenses that we incur for environmental liabilities and third-party claims, regardless of when a claim is made, that are based on environmental conditions in existence prior to the closing of the IPO for contributed sites. As such, these environmental liabilities and indemnification assets are not recorded on the consolidated balance sheet of the Partnership.

Similarly, we have generally been indemnified with respect to known contamination at sites acquired from third parties. As such, these environmental liabilities and indemnification assets are also not recorded on the consolidated balance sheet of the Partnership.

Note 12. FAIR VALUE MEASUREMENTS

We measure and report certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). U.S. GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation.

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels in 2024 or 2023.

As further discussed in Note 8, we remeasure the fair value of interest rate swap contracts on a recurring basis each balance sheet date. We used an income approach to measure the fair value of these contracts, utilizing a forward yield curve for the same period as the future interest rate swap settlements. These fair value measurements are classified as Level 2 measurements.

We have accrued for unvested phantom units and phantom performance units as a liability and adjust that liability on a recurring basis based on the market price of our common units each balance sheet date. These fair value measurements are deemed Level 1 measurements.

The fair value of our accounts receivable, notes receivable, and accounts payable approximated their carrying values as of March 31, 2024 and December 31, 2023 due to the short-term maturity of these instruments. The fair value of borrowings under the CAPL Credit Facility approximated its carrying value as of March 31, 2024 and December 31, 2023 due to the frequency with which interest rates are reset and the consistency of the market spread.

Note 13. INCOME TAXES

As a limited partnership, we are not subject to federal and state income taxes. However, our corporate subsidiaries are subject to income taxes. Income tax attributable to our taxable income (including any dividend income from our corporate subsidiaries), which may differ significantly from income for financial statement purposes, is assessed at the individual limited partner unitholder level. We are subject to a statutory requirement that non-qualifying income, as defined by the Internal Revenue Code, cannot exceed 10% of total gross income for the calendar year. If non-qualifying income exceeds this statutory limit, we would be taxed as a corporation. The non-qualifying income did not exceed the statutory limit in any annual period.

Certain activities that generate non-qualifying income are conducted through our wholly owned taxable corporate subsidiaries. Current and deferred income taxes are recognized on the earnings of these subsidiaries. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates.

12


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

We recorded an income tax benefit of $5.8 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively, as a result of the losses incurred by our corporate subsidiaries. The effective tax rate differs from the combined federal and state statutory rate primarily because only LGWS and Joe’s Kwik Marts are subject to income tax.

Note 14. NET INCOME PER COMMON UNIT

The following table provides a reconciliation of net income and weighted-average units used in computing basic and diluted net income per common unit for the following periods (in thousands, except unit and per unit amounts):

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Distributions paid on common units

 

$

19,941

 

 

$

19,974

 

Allocation of distributions in excess of net income

 

 

(38,138

)

 

 

(21,554

)

Limited partners’ interest in net loss - basic and diluted

 

 

(18,197

)

 

 

(1,580

)

Denominator:

 

 

 

 

 

 

Weighted-average common units outstanding - basic

 

 

37,994,285

 

 

 

37,940,332

 

Adjustment for phantom and phantom performance units (a)

 

 

 

 

 

 

Weighted-average common units outstanding - diluted

 

 

37,994,285

 

 

 

37,940,332

 

Net loss per common unit - basic

 

$

(0.48

)

 

$

(0.04

)

Net loss per common unit - diluted

 

$

(0.48

)

 

$

(0.04

)

 

 

 

 

 

 

 

Distributions paid per common unit

 

$

0.5250

 

 

$

0.5250

 

Distributions declared (with respect to each respective period) per common unit

 

$

0.5250

 

 

$

0.5250

 

 

(a)
For the three months ended March 31, 2024, 133,341 potentially dilutive units related to the phantom units and phantom performance units and 1,230,559 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been antidilutive.

For the three months ended March 31, 2023, 168,695 potentially dilutive units related to the phantom units and phantom performance units and 1,125,769 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been antidilutive.

Distributions

Distribution activity for 2024 is as follows:

Quarter Ended

 

Record Date

 

Payment Date

 

Cash
Distribution
(per unit)

 

 

Cash
Distribution
(in thousands)

 

December 31, 2023

 

February 2, 2024

 

February 9, 2024

 

$

0.5250

 

 

$

19,941

 

March 31, 2024

 

May 3, 2024

 

May 10, 2024

 

 

0.5250

 

 

 

19,964

 

 

The amount of any distribution is subject to the discretion of the Board, which may modify or revoke our cash distribution policy at any time. Our Partnership Agreement does not require us to pay any distributions. As such, there can be no assurance we will continue to pay distributions in the future.

Note 15. SEGMENT REPORTING

We conduct our business in two segments: 1) the wholesale segment and 2) the retail segment.

The wholesale segment includes the wholesale distribution of motor fuel to lessee dealers and independent dealers. We have exclusive motor fuel distribution contracts with lessee dealers who lease the property from us. We also have exclusive distribution contracts with independent dealers to distribute motor fuel but do not collect rent from the independent dealers.

13


CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

The retail segment includes the retail sale of motor fuel at retail sites operated by commission agents and the sale of convenience merchandise items and the retail sale of motor fuel at company operated sites. A commission agent site is a retail site where we retain title to the motor fuel inventory and sell it directly to our end user customers. At commission agent retail sites, we manage motor fuel inventory pricing and retain the gross profit on motor fuel sales, less a commission to the agent who operates the retail site. Similar to our wholesale segment, we also generate revenues through leasing or subleasing real estate in our retail segment.

Unallocated items consist primarily of general and administrative expenses, depreciation, amortization and accretion expense, gains on dispositions and lease terminations, net, other income, interest expense and income tax expense. Total assets by segment are not presented as management does not currently assess performance or allocate resources based on that data.

During the three months ended March 31, 2024 and 2023, respectively, we converted 53 and eight sites from lessee dealer sites in the wholesale segment to company operated or commission sites in the retail segment. The sites converted during the first quarter of 2024 include 31 sites from the Applegreen Acquisition. See Note 2 for additional information.

The following table reflects activity related to our reportable segments (in thousands):

 

 

 

Wholesale

 

 

Retail

 

 

Unallocated

 

 

Consolidated

 

Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from fuel sales to external customers

 

$

450,579

 

 

$

389,852

 

 

$

 

 

$

840,431

 

Revenues from food and merchandise sales