CrossAmerica Partners LP

Previous wording

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 will be 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 Partnership will also acquire for cash the inventory at the locations. The terms of the Partnership’s existing leases with Applegreen Midwest, LLC and Applegreen Florida, LLC can be extended to 2049 and 2048, respectively, including all renewal options. The termination of the existing lease agreements pursuant to the Applegreen Purchase Agreement is contemplated to occur during the first and second quarters of 2024 and is subject to customary closing conditions. In addition, 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. This transaction will result in the conversion of these lessee dealer sites to company operated sites.

Current wording

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 in the first quarter of 2024 and ending in April 2024 and resulted in the transition of these lessee dealer sites to company operated sites. 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.

Previous wording

On February 20, 2024, in connection with the Applegreen Acquisition, we entered into an amendment (the “Amendment”) to the CAPL Credit Facility. The Amendment, among other things, modifies the definition of Consolidated EBITDA contained in the CAPL Credit Facility 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. The Amendment does not become effective until the closing of at least one transaction under the Applegreen Purchase Agreement. All other terms and conditions of the CAPL Credit Facility remain in full force and effect.

Current wording

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 other transactions, subject to certain terms and conditions.

Previous wording

The prices paid to our motor fuel suppliers for wholesale motor fuel (which affects our cost of sales) are highly correlated to the price of crude oil. The crude oil commodity markets are highly volatile, and the market prices of crude oil, and, correspondingly, the market prices of wholesale motor fuel, experience significant and rapid fluctuations. For approximately 60% of gallons sold, we receive a per gallon rate equal to the posted rack price, less any applicable discounts, plus transportation costs, taxes and a fixed rate per gallon of motor fuel. The remaining gallons are either retail sales or wholesale DTW contracts that provide for variable, market-based pricing.

Current wording

The prices paid to our motor fuel suppliers for wholesale motor fuel (which affects our cost of sales) are highly correlated to the price of crude oil. The crude oil commodity markets are highly volatile, and the market prices of crude oil, and, correspondingly, the market prices of wholesale motor fuel, experience significant and rapid fluctuations. For approximately 55% of gallons sold, we receive a per gallon rate equal to the posted rack price, less any applicable discounts, plus transportation costs, taxes and a fixed rate per gallon of motor fuel. The remaining gallons are either retail sales or wholesale DTW contracts that provide for variable, market-based pricing.

Previous wording

In our retail business, we attempt to pass along wholesale motor fuel price changes to our retail customers through “at the pump” retail price changes; however, market conditions do not always allow us to do so immediately. The timing of any related increase or decrease in “at the pump” retail prices is affected by competitive conditions in each geographic market in which we operate. As such, the prices we charge our customers for motor fuel and the gross profit we receive on our motor fuel sales can increase or decrease significantly over short periods of time.

Current wording

In our retail business, we attempt to pass along wholesale motor fuel price changes to our retail customers through “at the pump” retail price changes; however, market conditions do not always allow us to do so immediately. The timing of any related increase or decrease in “at the pump” retail prices is affected by competitive conditions in each geographic market in which we operate. As such, the prices we charge our customers for motor fuel and the gross profit we receive on our motor fuel sales can increase or decrease significantly over short periods of time. Further, we are assessed fees as a percentage of debit and credit card sales. Such fees increase as "at the pump" retail prices increase but without necessarily being accompanied by higher retail gross profits.

Previous wording

Inflation affects our financial performance by increasing certain components of cost of goods sold, such as fuel, merchandise, and credit card fees. Inflation also affects certain operating expenses, such as labor costs, certain leases, and general and administrative expenses. While our wholesale segment benefits from higher terms discounts as a result of higher fuel costs, inflation could and recently has negatively impacted our cost of goods sold and operating expenses. Although we have historically been able to pass on increased costs through price increases, there can be no assurance that we will be able to do so in the future.

Current wording

Inflation affects our financial performance by increasing certain components of cost of goods sold, such as fuel, merchandise, and credit card fees. Inflation also affects certain operating expenses, such as labor costs, certain leases, and general and administrative expenses. While our wholesale segment benefits from higher terms discounts as a result of higher fuel costs, inflation can negatively impact our cost of goods sold and operating expenses. Although we have historically been able to pass on increased costs through price increases, there can be no assurance that we will be able to do so in the future.

Previous wording

Gross profit increased $6.5 million (2%), which was primarily driven by an increase in merchandise gross profit driven by the conversion of certain lessee dealer and commission agent sites to company operated sites, partially offset by a decrease in motor fuel gross profit within our retail segment. See "Segment Results" for additional gross profit analyses.

Current wording

Gross profit increased $16 million (4%), which was primarily driven by an increase in merchandise and motor fuel gross profit within our retail segment, partially offset by a decrease in motor fuel and rent gross profit within our wholesale segment. See "Segment Results" for additional gross profit analyses.

Previous wording

Depreciation, amortization and accretion expense decreased $3.5 million (4%) primarily driven by a $2.0 million decrease in impairment charges in comparison to prior year, as well as assets becoming fully depreciated.

Current wording

Depreciation, amortization and accretion expense decreased $1.2 million (2%) primarily due to assets becoming fully depreciated, partially offset by a $3.6 million increase in impairment charges in comparison to prior year.

Previous wording

During 2023 and 2022, respectively, we recorded $6.5 million and $3.5 million in net gains related to sites sold in connection with our ongoing real estate rationalization effort, partially offset by net losses on lease terminations and asset disposals.

Current wording

During 2023, we recorded $6.5 million in net gains in connection with our ongoing real estate rationalization effort, partially offset by net losses on lease terminations and asset disposals.

Previous wording

Interest expense increased $11.6 million (36%), primarily due to an increase in interest rates (net of the impact of the interest rate swaps). In addition, we wrote off $1.1 million in deferred financing costs in the first quarter of 2023 as a result of the amendment and restatement of the CAPL Credit Facility and termination of the JKM Credit Facility.

Current wording

Interest expense increased $8.6 million (20%) due to the maturity of three of our most favorable interest rate swap contracts on April 1, 2024 in addition to the general increase in interest rates, partially offset by the $1.1 million write-off of deferred financing costs in the first quarter of 2023 as a result of the amendment and restatement of the CAPL Credit Facility and termination of the JKM Credit Facility.

Previous wording

We recorded income tax expense of $2.5 million and $0.7 million for 2023 and 2022, respectively, driven by the income generated by our taxable subsidiaries.

Current wording

We recorded income tax (benefit) expense of ($3.4) million and $2.5 million for 2024 and 2023, respectively, driven by (losses incurred) income generated by our taxable subsidiaries.

Previous wording

In connection with the issuance of preferred membership interests in March 2022 as further discussed in Note 18 to the financial statements, we recorded accretion in 2023 and 2022 of $2.5 million and $1.7 million, respectively.

Current wording

As further discussed in Note 18 to the financial statements, we recorded accretion on the preferred membership interests totaling $2.6 million and $2.5 million for 2024 and 2023, respectively.

Previous wording

Cost of sales decreased $588 million (13%), which was a result of the decrease in wholesale motor fuel prices, partially offset by the increase in merchandise cost of sales driven by the conversion of certain lessee dealer and commission agent sites to company operated sites discussed above.

Current wording

The increase in the company operated site count from December 31, 2023 to December 31, 2024 was primarily attributable to the conversion of certain lessee dealer and commission agent sites to company operated sites.

Previous wording

The decrease in the commission agent site count from December 31, 2022 to December 31, 2023 was primarily attributable to the conversion of certain commission agent sites to company operated sites, largely during the first quarter of 2023, offset by the conversion of certain lessee dealer sites to commission sites, largely during the fourth quarter of 2023.

Current wording

The increase in the commission agent site count was primarily attributable to the conversion of certain lessee dealer sites to commission agent sites, partially offset by the conversion of certain commission agent sites to company operated sites.

Previous wording

Gross profit decreased $1.9 million (1%) and operating income decreased $2.9 million (3%). These results were driven by:

Current wording

Gross profit increased $36 million (14%) and operating income decreased $3.2 million (3%). These results were driven by:

Previous wording

Our merchandise gross profit and other revenues increased $13.7 million (18%) and $3.2 million (26%), respectively, driven by an increase in the company operated site count due to the conversion of certain lessee dealer and commission agent sites to company operated sites, in addition to an increase in sales and margin percentage in our base business.

Current wording

Our merchandise gross profit and other revenues increased $20 million (22%) and $3.7 million (23%), respectively, driven by an increase in the average company operated site count due to the conversion of certain lessee dealer and commission agent sites to company operated sites.

Previous wording

The decrease in the lessee dealer site count from December 31, 2022 to December 31, 2023 was primarily attributable to the conversion of certain lessee dealer sites to company operated sites, largely in the second quarter of 2023, the conversion of certain lessee dealer sites to commission sites, largely in the fourth quarter of 2023, and our real estate rationalization effort.

Current wording

The decrease in the lessee dealer site count from December 31, 2023 to December 31, 2024 was primarily attributable to the conversion of certain lessee dealer sites to company operated and commission agent sites, including through the Applegreen Acquisition, and our real estate rationalization effort.

Previous wording

Volume was flat for 2023 as compared to 2022 due to the volume generated by the acquisition of assets from CSS offset by the net loss of independent dealer contracts and the conversion of certain lessee dealer sites to company operated and commission sites.

Current wording

The $9.8 million decrease (13%) in motor fuel gross profit was primarily due to a 12% decrease in volume driven by the conversion of certain lessee dealer sites to company operated and commission agent sites and the net loss of independent dealer contracts. In addition, fuel margin per gallon decreased 2% compared to 2023, driven by the movements of crude oil prices.

Previous wording

See "Results of Operations–Gain on Dispositions and Lease Terminations, net."

Current wording

See "Results of Operations–Gain (loss) on dispositions and Lease Terminations, net."

Previous wording

Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain our long-term operating income or operating capacity. Examples of sustaining capital expenditures are those made to maintain existing contract volumes, including payments to renew existing distribution contracts, or to maintain our sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.

Current wording

Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain our long-term operating income or operating capacity. Examples of sustaining capital expenditures are those made to maintain existing contract volumes or to maintain our sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.

Previous wording

Excludes income tax incurred on the sale of sites.

Current wording

For 2024, excludes $1.9 million of current income tax incurred on sales of sites.

Previous wording

In 2022, we incurred capital expenditures of $30 million driven by site purchases, site upgrades, including store remodels, car wash build-outs, EMV upgrades and rebranding of certain sites, including the sites acquired from 7-Eleven. We paid $28 million in connection with the acquisition of assets from CSS and $2 million in connection with the closing of sites acquired from 7-Eleven. We received $13 million in proceeds primarily from the sale of sites in connection with our real estate rationalization effort.

Current wording

In 2024, we incurred capital expenditures of $26 million driven by site upgrades, including store remodels, rebranding of certain sites, image upgrades funded primarily through incentives from our fuel suppliers and site purchases. We paid $26 million to Applegreen related to lease terminations and inventory purchases. We received $35 million in proceeds primarily from the sale of sites in connection with our real estate rationalization effort.

Previous wording

In 2022, we paid $80 million in distributions to our unitholders. We made net repayments of $48 million on our credit facilities. We received $24 million in net proceeds from the issuance of preferred membership interests during 2022.

Current wording

In 2024, we paid $80 million in distributions to our unitholders. We made net borrowings of $12 million on our credit facility.

Previous wording

See “Recent Developments—Amendment to CAPL Credit Facility” and Note 11 to the financial statements for information regarding the amendment of the CAPL Credit Facility and the termination of the JKM Credit Facility.

Current wording

See “Recent Developments—Amendment to CAPL Credit Facility” and Note 11 to the financial statements for information regarding the amendment of the CAPL Credit Facility.

Previous wording

Taking the interest rate swap contracts into account, our effective interest rate on our CAPL Credit Facility at December 31, 2023 was 4.9% (our applicable margin was 2.25% as of December 31, 2023). Letters of credit outstanding under our CAPL Credit Facility at December 31, 2023 totaled $4.5 million. After taking into consideration debt covenant restrictions and the scheduled change in our maximum leverage ratio from 5.25:1.00 to 5.00:1.00 for the first quarter of 2024, the amount of availability under our CAPL Credit Facility at February 22, 2024 was $125.4 million.

Current wording

Taking the interest rate swap contracts into account, our effective interest rate on our CAPL Credit Facility at December 31, 2024 was 6.2% (our applicable margin was 2.25% as of December 31, 2024). Letters of credit outstanding under our CAPL Credit Facility at December 31, 2024 totaled $5.3 million. The amount of availability under our CAPL Credit Facility at December 31, 2024, after taking into consideration debt covenant restrictions, was $68.9 million.

Previous wording

We continue to consider the highest and best use class of trade for each of our properties, which may result in the conversion of sites from one class of trade to another and ultimately increases or decreases in the gross profit for the wholesale and retail segments.

Current wording

We continue to consider the highest and best use class of trade for each of our properties, which may result in the conversion of sites from one class of trade to another and ultimately increases or decreases in the gross profit for the wholesale and retail segments. The Applegreen Acquisition as well as other conversions of lessee dealer sites to company operated and commission agent sites are anticipated to increase gross profit and operating expenses in the retail segment and reduce gross profit in the wholesale segment.

Previous wording

We account for asset acquisitions (i.e., transactions involving the acquisition of a set of assets that does not meet the definition of a business) in accordance with the guidance under ASC 805-50 and other applicable guidance. Asset acquisitions are generally accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Two of the key differences in accounting for transactions as asset acquisitions as compared to business combinations are summarized below:

Current wording

We account for asset acquisitions (i.e., transactions involving the acquisition of a set of assets that does not meet the definition of a business) in accordance with the guidance under ASC 805-50 and other applicable guidance. Asset acquisitions are generally accounted for by allocating the cost of the acquisition, including acquisition costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. Two of the key differences in accounting for transactions as asset acquisitions as compared to business combinations are summarized below:

Previous wording

Whether we account for a transaction as an asset acquisition or a business combination, determining the fair value of assets and liabilities requires management’s judgment, the utilization of independent valuation experts and involves the use of significant estimates and assumptions with respect to the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items. The judgments made in the determination of the estimated fair value assigned to the assets acquired, the liabilities assumed and any noncontrolling interest in the investee, as well as the estimated useful life of each asset and the duration of each liability, can materially impact the financial statements in periods after acquisition, such as through depreciation and amortization.

Current wording

Whether we account for a transaction as an asset acquisition or a business combination, determining the fair value of assets and liabilities requires management’s judgment, the utilization of independent valuation experts and involves the use of significant estimates and assumptions with respect to the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items. The judgments made in the determination of the estimated fair value assigned to the assets acquired, the liabilities assumed and any noncontrolling interest in the investee, as well as the estimated useful life of each asset and the duration of each liability, can materially impact the consolidated financial statements in periods after acquisition, such as through depreciation and amortization.

Previous wording

At both December 31, 2023 and 2022, we had goodwill totaling $99.4 million. Of the December 31, 2023 balance, $54.7 million was assigned to the wholesale reporting unit and $44.7 million was assigned to the retail reporting unit. After assessing the totality of events and circumstances, we determined that it is more likely than not that the fair value of our reporting units exceed their carrying amounts and therefore goodwill is not impaired at December 31, 2023 or 2022.

Current wording

At both December 31, 2024 and 2023, we had goodwill totaling $99.4 million. Of the December 31, 2024 balance, $54.7 million was assigned to the wholesale reporting unit and $44.7 million was assigned to the retail reporting unit. No goodwill was impaired for any period presented.