UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
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
(State or Other Jurisdiction of
Incorporation or Organization)
645 Hamilton Street, Suite 400
Allentown, PA
(Address of Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Units
Securities registered pursuant to Section 12(g) of the Act: None
Trading Symbol(s)
CAPL
45-4165414
(I.R.S. Employer
Identification No.)
18101
(Zip Code)
(610) 625-8000
(Registrant’s telephone number, including area code)
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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, 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of our common units based on the closing price on the New York Stock Exchange on June 30, 2023, the last business day
of the registrant’s most recently completed second fiscal quarter, held by non-affiliates of the registrant was approximately $360.4 million.
As of February 22, 2024, the registrant had outstanding 37,983,154 common units.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
PART I
Commonly Used Defined Terms
Cautionary Statement Regarding Forward-Looking Statements
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
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PART I
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
LGW
LGPR
LGWS
Holdings
Lehigh Gas Wholesale LLC, an indirect wholly-owned subsidiary of CrossAmerica
LGP Realty Holdings LP, an indirect wholly-owned subsidiary of CrossAmerica
Lehigh Gas Wholesale Services, Inc., an indirect wholly-owned subsidiary of CrossAmerica
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
CAPL JKM Wholesale
CAPL JKM Wholesale LLC, a wholly-owned subsidiary of CAPL JKM Partners
Joe’s Kwik Marts
Joe’s Kwik Marts LLC, a wholly-owned subsidiary of CAPL JKM Partners
CrossAmerica Partners LP related parties:
DMI
DMP
General Partner
Topper Group
TopStar
Other Defined Terms:
7-Eleven
2022 Plan
Dunne Manning Inc. (formerly Lehigh Gas Corporation), an entity affiliated with the Topper
Group
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.
CrossAmerica GP LLC, the General Partner of CrossAmerica, a Delaware limited liability
company, indirectly owned by the 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 Inc., an entity affiliated with a family member of Joseph V. Topper, Jr. TopStar is
an operator of convenience stores that leases sites from us, and since April 14, 2020, also
purchases fuel from us.
7-Eleven, Inc.
In connection with the IPO, the General Partner adopted the Lehigh Gas Partners LP 2012
Incentive Award Plan, a long-term incentive plan for employees, officers, consultants and
directors of the General Partner and any of its affiliates who perform services for the
Partnership. The plan expired and was replaced by the CrossAmerica Partners LP 2022
Incentive Award Plan, effective October 23, 2022.
ASC
AOCI
ASU
Board
Accounting Standards Codification
Accumulated other comprehensive income
Accounting Standards Update
Board of Directors of our General Partner
1
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.
BP
BP p.l.c.
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.
Circle K
Circle K Stores Inc., a Texas corporation, and a wholly owned subsidiary of Alimentation
Couche-Tard Inc.
COVID-19 Pandemic
In December 2019, a novel strain of coronavirus was reported to have surfaced. In March
2020, the World Health Organization declared the outbreak a pandemic.
CSS
DTW
EBITDA
EMV
Exchange Act
ExxonMobil
FASB
Community Service Stations, Inc.
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
Earnings before interest, taxes, depreciation, amortization and accretion, a non-GAAP
financial measure
Payment method based upon a technical standard for smart payment cards, also referred to
as chip cards
Securities Exchange Act of 1934, as amended
ExxonMobil Corporation
Financial Accounting Standards Board
Internal Revenue Code
Internal Revenue Code of 1986, as amended
IPO
IRS
JKM Credit Facility
LIBOR
MD&A
Marathon
Motiva
NYSE
Initial public offering of CrossAmerica Partners LP on October 30, 2012
Internal Revenue Service
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.
London Interbank Offered Rate
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Marathon Petroleum Company LP
Motiva Enterprises, LLC
New York Stock Exchange
2
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
Qualifying Income
SEC
SOFR
Tax Cuts and Jobs Act
Term Loan Facility
Wholesale distribution contracts and real property and leasehold interests contributed to the
Partnership in connection with the IPO
Income and gains received by nontaxable subsidiaries of CrossAmerica or directly by
CrossAmerica from qualifying activities, which generally include interest and dividends, real
property rents, gains on the sale or other disposition of real property and income and gains
from the wholesale distribution of motor fuels as further described in Section 7704(d) of the
Internal Revenue Code; such income and gains are not taxed at the CrossAmerica level but
rather passed through and taxed at the unitholder level
U.S. Securities and Exchange Commission
Secured Overnight Financing Rate
U.S. tax legislation, formally known as Public Law No. 115-97, signed into law on
December 22, 2017.
$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
UST
Valero
WTI
Underground storage tank
Valero Energy Corporation and, where appropriate in context, one or more of its
subsidiaries, or all of them taken as a whole
West Texas Intermediate crude oil
3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future
results of operations, business strategies, financing plans, competitive position, credit ratings, distribution growth, potential
growth opportunities, potential operating performance improvements, potential improvements in return on capital employed, the
effects of competition and the effects of future legislation or regulations. You can identify our forward-looking statements by the
words “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,”
“will,” “would,” “expect,” “objective,” “projection,” “forecast,” “guidance,” “outlook,” “effort,” “target” and similar expressions.
Such statements are based on our current plans and expectations and involve risks and uncertainties that could potentially affect
actual results. These forward-looking statements include, among other things, statements regarding:
future retail and wholesale gross profits, including gasoline, diesel and convenience store merchandise gross profits;
our anticipated level of capital investments, including through acquisitions, and the effect of these capital investments
on our results of operations;
anticipated trends in the demand for, and volumes sold of, gasoline and diesel in the regions where we operate;
volatility in the equity and credit markets limiting access to capital markets;
our ability to integrate acquired businesses;
expectations regarding environmental, tax and other regulatory initiatives; and
the effect of general economic and other conditions on our business.
In general, we based the forward-looking statements included in this report on our current expectations, estimates and projections
about our company and the industry in which we operate. We caution you that these statements are not guarantees of future
performance and involve risks and uncertainties we cannot predict. We anticipate that subsequent events and market
developments will cause our estimates to change. In addition, we based many of these forward-looking statements on assumptions
about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from
what we have expressed or forecasted in the forward-looking statements. Any differences could result from a variety of factors,
including the following:
the Topper Group’s business strategy and operations and the Topper Group’s conflicts of interest with us;
availability of cash flow to pay the current quarterly distributions on our common units;
the availability and cost of competing motor fuel resources;
motor fuel price volatility, including as a result of the conflict in Ukraine or the war between Israel and Hamas;
a reduction in demand for motor fuels;
competition in the industries and geographical areas in which we operate;
the consummation of financing, acquisition or disposition transactions and the effect thereof on our business;
environmental compliance and remediation costs;
our existing or future indebtedness and the related interest expense and our ability to comply with debt covenants;
our liquidity, results of operations and financial condition;
failure to comply with applicable tax and other regulations or governmental policies;
future legislation and changes in regulations, governmental policies, immigration laws and restrictions or changes in
enforcement or interpretations thereof;
future regulations and actions that could expand the non-exempt status of employees under the Fair Labor Standards
Act;
future income tax legislation;
changes in energy policy;
technological advances;
4
the impact of worldwide economic and political conditions;
the impact of wars and acts of terrorism;
weather conditions or catastrophic weather-related damage;
earthquakes and other natural disasters;
hazards and risks associated with transporting and storing motor fuel;
unexpected environmental liabilities;
the outcome of pending or future litigation; and
our ability to comply with federal and state laws and regulations, including those related to environmental matters,
the sale of alcohol, cigarettes and fresh foods, employment and health benefits and immigration.
You should consider the risks and uncertainties described above, and elsewhere in this report, including under Part I. Item 1A
“Risk Factors” and Part II. Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
included in this Form 10-K, in connection with considering any forward-looking statements that may be made by us and our
businesses generally. We cannot assure you that anticipated results or events reflected in the forward-looking statements will be
achieved or will occur. The forward-looking statements included in this report are made as of the date of this report. We undertake
no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of
unanticipated events after the date of this report, except as required by law.
5
ITEM 1. BUSINESS
Overview
We were formed as a Delaware limited partnership in 2011 engaged in the wholesale distribution of motor fuel and the ownership
and leasing of real estate used in the retail distribution of motor fuel. We also generate revenues from the operation of company
operated retail sites.
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 February 22, 2024, the Topper Group also has
beneficial ownership of a 38.6% limited partner interest in the Partnership.
Our principal executive office address is 645 Hamilton Street, Suite 400, Allentown, PA 18101, and our telephone number is
(610) 625-8000. Our common units trade on the NYSE under the ticker symbol “CAPL.”
We conduct our business through two operating segments – wholesale and retail. As of December 31, 2023, we own or lease
approximately 1,100 sites, of which we operate 295 as company operated sites. In all, including our company operated sites, we
distributed motor fuel to approximately 1,700 sites located in 34 states.
We are one of the ten largest independent distributors by motor fuel volume in the United States for ExxonMobil, BP and Motiva,
and we also distribute Shell, Sunoco, Valero, Gulf, Citgo, Marathon and Phillips 66-branded motor fuels (approximately 94% of
the motor fuel we distributed during 2023 was branded). 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.
The following table highlights the aggregate volume of motor fuel distributed to each of our principal customer groups (in
millions). See Item 7—Results of Operations for additional information on the drivers of the fluctuations in the volume and site
counts below.
Independent dealers (a)
Lessee dealers
Company operated
Commission agents (b)
Total
Segment
Wholesale
Wholesale
Retail
Retail
Gallons of Motor Fuel Distributed
Year Ended December 31,
2022
2023
2021
Fuel Distribution Sites
End of Year
2022
2021
2023
518
325
342
165
1,350
496
348
328
168
1,340
550
382
234
169
1,335
632
569
296
199
1,696
663
619
255
200
1,737
666
637
252
198
1,753
(a) Gallons distributed to independent dealers include gallons distributed to sub-wholesalers and commercial accounts, which
are not included in the site counts reported above.
Includes independent commission sites owned or leased by the commission agent.
(b)
We also generate revenues through leasing or subleasing our real estate. We own or lease real and personal property and we lease
or sublease that property to tenants, the substantial majority of which are wholesale customers as described above. We own
approximately 60% of our properties that we lease to our dealers or utilize in our retail business. Our lease agreements with third-
party landlords have an average remaining lease term of 4.5 years as of December 31, 2023.
The following table presents rental income (in millions) and the number of sites from which rental income was generated:
Lessee dealers
Company operated
Commission agents
Total
Segment
Wholesale $
Retail
Retail
$
Rental Income
Year Ended December 31,
2022
2023
2021
Sites from which Rental
Income was Generated
End of Year
2022
2021
2023
69.7 $
2.4
10.2
82.3 $
71.3 $
2.2
10.6
84.1 $
71.6
1.5
10.1
83.2
628
50
188
866
687
44
185
916
716
36
184
936
6
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 and CAPL JKM Wholesale, which distribute motor fuels on a wholesale basis and generate Qualifying Income
under Section 7704(d) of the Internal Revenue Code;
LGPR, which functions as the real estate holding company and holds assets that generate Qualifying Income under
Section 7704(d) of the Internal Revenue Code;
LGWS, which owns and leases (or leases and sub-leases) real estate and personal property used in the retail sale 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. LGWS also sells motor fuels on a retail basis and sells
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; and
Joe’s Kwik Marts, which owns and leases real estate and personal property at certain of our company operated sites.
Joe’s Kwik Marts also sells motor fuels on a retail basis and sells convenience merchandise items to end customers.
Income from Joe’s Kwik Marts generally is not Qualifying Income under Sections 7704(d) of the Internal Revenue
Code.
Available Information
Our internet website is www.crossamericapartners.com. Information on this website is not part of this Form 10-K. Annual reports
on our Form 10-K, quarterly reports on our Form 10-Q and our current reports on Form 8-K filed with (or furnished to) the SEC
are available on this website under the “Investor Relations” tab and are free of charge, soon after such material is filed or
furnished. In this same location, we also post our corporate governance guidelines, code of ethics and business conduct and the
charters of the committees of our Board. These documents are available in print to any unitholder that makes a written request to
CrossAmerica Partners L.P. Attn: Corporate Secretary, 645 Hamilton Street, Suite 400, Allentown, Pennsylvania 18101.
Operations
Below is a summary of our revenues and operating income by segment (in thousands):
Revenues
Operating income
Wholesale Segment
2023
Wholesale
2022
2021
2023
Retail
2022
2021
$
2,290 $
91
2,690 $
94
2,143 $
87
2,096 $
97
2,277 $
107
1,436
56
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. Below is a
description of the wholesale segment's principal customer groups.
Independent Dealer
The independent dealer owns or leases the property and owns all motor fuel and convenience store inventory.
We contract to exclusively distribute motor fuel to the independent dealer at rack-plus pricing or, in some cases,
DTW.
Under our distribution contracts, we agree to supply a particular branded motor fuel or unbranded motor fuel to a site
or group of sites and arrange for all transportation.
Distribution contracts with independent dealers are typically seven to 15 years in length.
As of December 31, 2023, the average remaining distribution contract term was 4.6 years.
7
Lessee Dealer
We own or lease the property and then lease or sublease the site to a dealer.
The lessee dealer owns all motor fuel and retail site inventory and sets its own pricing and gross profit margins.
We collect wholesale motor fuel margins at rack-plus pricing or, in some cases, DTW.
Under our distribution contracts, we agree to supply a particular branded motor fuel or unbranded motor fuel to a site
or group of sites and arrange for all transportation.
Exclusive distribution contracts with dealers who lease property from us run concurrent in length to the retail site’s
lease period (generally three to 10 years).
Leases are generally triple net leases.
As of December 31, 2023, the average remaining lease agreement term was 2.6 years.
Retail Segment
The retail segment includes the sale of convenience merchandise items at company operated sites and the retail sale of motor fuel
at company operated and commission sites. Below is a description of the retail segment's principal customer groups.
Company Operated
We own or lease the property, operate the retail site and retain all profits from motor fuel and retail site operations.
We own the merchandise inventory and retain the profits from the sale of convenience merchandise items.
We own the motor fuel inventory and set the motor fuel pricing.
We maintain inventory from the time of the purchase of motor fuel from third-party suppliers until the retail sale to
the end customer. On average, we maintain approximately 5-days’ worth of motor fuel sales in inventory at each site.
LGW and CAPL JKM Wholesale distribute all of the motor fuel required by our company operated sites to LGWS
and Joe’s Kwik Marts, respectively, which owns the motor fuel inventory and sells motor fuel to retail customers.
LGW and CAPL JKM Wholesale record qualifying wholesale motor fuel distribution gross income and LGWS and
Joe’s Kwik Marts record the non-qualifying retail sale.
Commission
We own or lease the property and then lease or sublease the site to the commission agent, who pays rent to us and
operates all the non-fuel related operations at the sites for its own account.
We own the motor fuel inventory, set the motor fuel pricing and generate revenue from the retail sale of motor fuels
to the end customer.
We pay the commission agent a commission for each gallon of motor fuel sold.
LGW distributes motor fuel to LGWS, which owns the motor fuel inventory and sells motor fuel to retail customers.
LGW records qualifying wholesale motor fuel distribution gross income and LGWS records the non-qualifying retail
sale.
As of December 31, 2023, the average remaining motor fuel distribution and lease agreement term for our
commission agents was 0.8 years.
Business Strategy and Objective
Our primary business objective is to generate sufficient cash flows from operations to make quarterly cash distributions to our
unitholders and, over time, to increase our quarterly cash distributions while maintaining discipline with leverage. The amount
of any distribution is subject to the discretion of the Board, and the Board may modify or revoke the cash distribution policy at
any time. Our Partnership Agreement does not require us to pay any distributions.
8
Our business strategy to achieve our objective of paying and, over time, increasing our quarterly cash distributions, is focused on
the following key initiatives:
Expand within and beyond our existing markets through acquisitions. Since our IPO and through February 22, 2024,
we have completed acquisitions for a total of approximately 1,000 fee and leasehold sites and 700 wholesale fuel
supply contracts for total consideration of approximately $1.5 billion;
Enhance our real estate business’ cash flows by owning or leasing sites in prime locations;
Increase cash flows from our wholesale segment by expanding market share and growing rental income over time;
Increase cash flows from our retail segment by operating our retail sites efficiently with a focus on providing excellent
value and service;
Maintain strong relationships with major integrated oil companies and refiners; and
Optimize the operations of our assets to the most appropriate format (lessee dealer, independent dealer, company
operated, or commission) to maximize our investment return.
We believe our competitive strengths will allow us to capitalize on our strategic opportunities, including:
Stable cash flows from diversified operations of our portfolio of assets, including rental income, motor fuel
distribution and retail convenience store sales;
Established history of acquiring sites and successfully integrating these sites and operations into our existing
business;
Long-term relationships with major integrated oil companies and other key suppliers, which support our negotiations
with and enable us to collaboratively work with our suppliers to maximize benefits to the Partnership; and
Prime real estate locations in areas with high traffic and considerable motor fuel consumption.
Subsequent to an acquisition and throughout the life cycle of a site, we evaluate the optimal operation of each site as company
operated, lessee dealer or commission, or we consider strategic alternatives, including divesting the site, which can result in the
site becoming an independent dealer site if we continue to supply fuel to it after its divestiture.
Supplier Arrangements
We distribute branded motor fuel under the Exxon, Mobil, BP, Shell, Sunoco, Valero, Gulf, Citgo, Marathon and Phillips 66
brands to our customers. Branded motor fuels are purchased from major integrated oil companies and refiners under supply
agreements. For 2023, we purchased approximately 80% of our motor fuel from four suppliers. Certain suppliers offer volume
rebates or incentive payments to drive volumes and provide an incentive for branding new locations. Certain suppliers require
that all or a portion of any such incentive payments be repaid to the supplier in the event that the sites are rebranded within a
stated number of years. We also purchase unbranded motor fuel for distribution. As of December 31, 2023, our supply agreements
had a weighted-average remaining term of approximately 4.9 years.
Competition
Our wholesale segment competes with other motor fuel distributors. Major competitive factors for us include, among others,
customer service, reliability and availability of products and price.
The convenience store industry is highly competitive, fragmented and characterized by constant change in the number and type
of retailers offering products and services of the type sold at our sites. We compete with other retail site chains, independently
owned sites, motor fuel stations, supermarkets, drugstores, discount stores, dollar stores, club stores and hypermarkets. Major
competitive factors include, among others, location, ease of access, product and service selection, motor fuel brands, pricing,
customer service, store appearance and cleanliness.
9
Seasonality
Our business exhibits substantial 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 months) and lowest
during the winter months in the first and fourth quarters.
Trade Names, Service Marks and Trademarks
We are a wholesale distributor of motor fuel for various major integrated oil companies and are licensed to market/resell motor
fuel under their respective motor fuel brands. We are not aware of any facts that would negatively affect our continuing use of
any trademarks, trade names or service marks.
Environmental Laws and Regulations
We are subject to extensive federal, state and local environmental laws and regulations, including those relating to USTs, the
release or discharge of materials into the air, water and soil, waste management, pollution prevention measures, storage, handling,
use and disposal of hazardous materials, the exposure of persons to hazardous materials, greenhouse gas emissions, and
characteristics, composition, storage and sale of motor fuel and the health and safety of our employees. We incorporate by
reference into this section our disclosures included in Note 2 under the captions “Environmental Matters” and “Asset Retirement
Obligations” as well as Note 10 under the caption “Asset Retirement Obligations” and Note 15 to the financial statements.
Other Regulatory Matters
Our retail sites are subject to regulation by federal, state, and/or local agencies and to licensing and regulations by state and local
health, sanitation, safety, fire and other departments relating to the development and operation of retail sites, including regulations
relating to zoning and building requirements and the preparation and sale of food. Our retail sites are also subject to federal, state
and/or local laws governing such matters as wage rates, overtime, working conditions and citizenship requirements. At the federal,
state and local levels, there are proposals under consideration from time to time to increase minimum wage rates and modify or
restrict immigration policies.
Human Capital
The Partnership has no direct employees. As of December 31, 2023, 244 employees of the Topper Group provided management
services to us under the Omnibus Agreement. In addition, 2,277 store employees of the Topper Group provided services at our
company operated sites.
Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and
new employees. As a customer-centric company with a strong service culture, we constantly work to maintain our position as an
employer of choice. This requires a commitment to workplace inclusion and safety, as well as competitive total compensation
that meets the needs of our employees. Our talent management and succession plan process includes the identification of key
positions based on current and future business strategies, the identification of potential successors and a plan for talent
development.
ITEM 1A. RISK FACTORS
If any of the following risks were to occur, our business, financial condition or results of operations could be materially and
adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common
units could decline and you could lose all or part of your investment. Also, please read “Cautionary Statement Regarding
Forward-Looking Statements.”
Limited partner interests are inherently different from the capital stock of a corporation although many of the business risks to
which we are subject are similar to those that would be faced by a corporation engaged in a similar business.
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Risk Factor Summary
Below is a summary of our risk factors:
We may not have sufficient distributable cash from operations to enable us to pay our quarterly distributions.
If we are unable to make acquisitions on economically acceptable terms, our future growth and ability to increase
distributions to unitholders will be limited, and any acquisitions are subject to substantial risks.
Volatility in crude oil and wholesale motor fuel costs affect our business, financial condition and results of operations and
our ability to make distributions to unitholders.
Seasonality in wholesale motor fuel costs and sales, as well as merchandise sales, affect our business, financial condition
and results of operations and our ability to make distributions to unitholders.
Both the wholesale motor fuel distribution and the retail motor fuel industries are characterized by intense competition and
fragmentation.
Changes in credit or debit card expenses could reduce our gross profit, especially on motor fuel sold at company-operated
retail sites.
New entrants or increased competition in the convenience store industry could result in reduced gross profits.
General economic, financial and political conditions that are largely out of our control could adversely affect our business,
financial condition and results of operations and reduce our ability to make distributions to unitholders.
Changes in consumer behavior and travel as a result of changing economic conditions, labor strikes or otherwise could
adversely affect our business, financial condition and results of operations and reduce our ability to make distributions to
unitholders.
Broad-based business or economic disruptions caused by health crises could adversely affect our business, financial
condition, results of operations or cash available for distribution to our unitholders.
A shortage of qualified labor could have a material adverse effect on our business and results of operations.
We are subject to extensive government laws and regulations concerning store merchandise items, operations, employees,
environmental matters and product quality specifications of motor fuel that we distribute and sell. The cost of compliance
with such laws and regulations may be material.
A significant decrease in demand for motor fuel, including increased consumer preference for alternative motor fuels or
improvements in fuel efficiency, in the areas we serve would reduce our ability to make distributions to our unitholders.
Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material
adverse impact on our business, operating results and financial condition.
Increased attention to environmental, social and governance (“ESG”) matters and conservation measures may adversely
impact our business.
Unfavorable weather conditions could adversely affect our business, financial condition and results of operations and
reduce our ability to make distributions to unitholders.
Negative events or developments associated with our branded suppliers could have an adverse impact on our revenues.
We depend on four principal suppliers for the majority of our motor fuel and one principal supplier for our merchandise.
We rely on our suppliers to provide trade credit to adequately fund our ongoing operations.
We could be adversely affected by the creditworthiness and performance of our customers, suppliers and contract
counterparties.
Pending or future litigation could adversely affect our financial condition and results of operations.
The dangers inherent in the storage and transport of motor fuel could cause disruptions and could expose us to potentially
significant losses, costs or liabilities.
We depend on third-party transportation providers for the transportation of all of our motor fuel.
We rely on our information technology systems and network infrastructure to manage numerous aspects of our business
Our motor fuel sales are generated under contracts that must be renegotiated or replaced periodically.
and could be adversely affected by the failure to protect sensitive customer, employee or vendor data.
Our debt levels and debt covenants may limit our flexibility in obtaining additional financing and in pursuing other business
opportunities and our ability to make distributions to unitholders.
A continued increase in interest rates may cause the market price of our common units to decline and a significant increase
in interest rates could adversely affect our ability to service our indebtedness.
We do not own all of the land on which our sites and certain facilities are located, which could result in increased costs and
disruptions to our operations.
We may not be able to lease sites we own or sub-lease sites we lease on favorable terms.
We rely on DMI and Circle K to indemnify us for any costs or expenses that we incur for certain environmental liabilities
and third-party claims.
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The Topper Group controls us and may have conflicts of interest with us. Further, our General Partner and its affiliates,
including the Topper Group, may have conflicts of interest with us and limited fiduciary duties and they may favor their
own interests to the detriment of our unitholders and us.
The Topper Group or the Board may modify or revoke our cash distribution policy at any time at their discretion. Our
Partnership Agreement does not require us to pay any distributions at all.
We rely on the employees of the Topper Group to provide key management services to our business pursuant to the
Omnibus Agreement.
Our General Partner has limited liability regarding our obligations.
If we distribute a significant portion of our cash available for distribution to our partners, our ability to grow and make
acquisitions could be limited.
Our Partnership Agreement replaces, eliminates and modifies, as applicable, the duties, including the fiduciary duties, of
our General Partner, the Board or any committee thereof, and modifies the burden of proof in any action brought against
the General Partner, the Board or any committee thereof.
Our General Partner’s affiliates, including the Topper Group, may compete with us.
Holders of our common units have limited voting rights.
Our General Partner interest or the control of our General Partner may be transferred to a third party without unitholder
consent, and our General Partner has a call right that may require unitholders to sell their common units at an undesirable
time or price.
The market price of our common units could be adversely affected by sales of substantial amounts of our common units in
the public or private markets, including sales by the Topper Group or other large holders.
We may issue unlimited additional units without unitholder approval, which would dilute existing unitholder ownership
interests, and our General Partner’s discretion in establishing cash reserves may reduce the amount of cash available for
distribution to unitholders.
Our Partnership Agreement restricts the voting rights of unitholders owning 20% or more of our common units.
Management fees and cost reimbursements due to our General Partner and the Topper Group for services provided to us or
on our behalf will reduce cash available for distribution to our unitholders.
Our tax treatment depends in large part on our status as a partnership for U.S. federal income tax purposes.
We have subsidiaries that are treated as corporations for U.S. federal income tax purposes and are subject to entity-level
U.S. federal, state and local income and franchise tax.
The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential
legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
Our unitholders are required to pay taxes on their share of income from us even if they do not receive any cash distributions
from us.
Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
Tax gain or loss on the disposition of our common units could be more or less than expected.
Tax-exempt organizations and non-U.S. persons face unique tax issues from owning common units that may result in
adverse tax consequences to them.
Our unitholders are subject to state and local income taxes and return filing requirements in states and localities where they
do not live as a result of investing in our common units.
We will treat each purchaser of our common units as having the same tax characteristics on a per-unit basis without regard
to the actual common units purchased.
We prorate our items of income, gain, loss and deduction for U.S. federal income tax purposes and allocate them between
transferors and transferees of our common units each month based upon the ownership of our common units on the first
business day of each month and as of the opening of the applicable exchange on which our common units are listed, instead
of on the basis of the date a particular common unit is transferred.
If a unitholder loans their common units to a short seller to cover a short sale of common units, they may be considered to
have disposed of those common units for U.S. federal income tax purposes.
We have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between
our General Partner and the unitholders.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it (and some states) may
assess and collect any resulting taxes (including any applicable penalties and interest) directly from us, in which case we
may require our unitholders and former unitholders to reimburse us for such taxes (including any applicable penalties or
interest) or, if we are required to bear such payment, our cash available for distribution to our unitholders might be
substantially reduced.
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Risks Relating to Our Industry and Our Business
We may not have sufficient distributable cash from operations to enable us to pay our quarterly distribution following the
establishment of cash available for distribution and payment of fees and expenses.
We may not have sufficient cash each quarter to pay quarterly distribution at current levels or at all.
The amount of cash we can distribute on our common units principally depends upon the amount of cash we generate from our
operations, which will fluctuate from quarter to quarter based on, among other things:
demand for motor fuel products in the markets we serve, including seasonal fluctuations, and the margin per gallon
we earn selling and distributing motor fuel;
the wholesale price of motor fuel and its impact on the payment discounts we receive;
demand for merchandise and services in the markets we serve, including seasonal fluctuations, and the margin
percentage we earn;
seasonal trends in the industries in which we operate;
supply, and the impact that severe storms could have to our suppliers’ and customers’ operations;
competition from other companies that sell motor fuel products or operate retail sites in our targeted market areas;
the inability to identify and acquire suitable sites or to negotiate acceptable leases for such sites;
the potential inability to obtain adequate financing to fund our expansion;
the level of our operating costs, including payments to the Topper Group under the Omnibus Agreement;
prevailing economic conditions;
regulatory actions affecting the supply of or demand for motor fuel, our operations, our existing contracts or our
operating costs; and
volatility of prices for motor fuel.
In addition, the actual amount of cash we will have available for distribution will depend on other factors such as:
the level and timing of capital expenditures we make;
the level and timing of sales of sites in connection with our real estate optimization plan;
the restrictions contained in our credit facilities;
our debt service requirements and other liabilities;
the cost of acquisitions, if any;
fluctuations in our working capital needs;
our ability to borrow under the CAPL Credit Facility and access capital markets on favorable terms, or at all; and
the amount, if any, of cash reserves established by our General Partner in its discretion.
Incurring additional debt may significantly increase our interest expense and financial leverage and issuing additional limited
partner interests may result in significant unitholder dilution and would increase the aggregate amount of cash required to maintain
the cash distribution rate, which could materially decrease our ability to pay distributions. Consequently, there is no guarantee
that we will distribute quarterly cash distributions to our unitholders in any quarter.
The amount of cash we have available for distribution to unitholders depends primarily on our cash flow rather than on our
profitability, which may prevent us from making cash distributions, even during periods when we record net income.
The amount of cash we have available for distribution depends primarily on our cash flow, and not solely on profitability, which
will be affected by non-cash items. As a result, we may make cash distributions during periods when we record losses for financial
accounting purposes and may not make cash distributions during periods when we record net income for financial accounting
purposes.
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If we are unable to make acquisitions on economically acceptable terms, our future growth and ability to increase distributions
to unitholders will be limited.
Our strategy to grow our business and increase distributions to unitholders is dependent in part on our ability to make acquisitions
that result in an increase in cash flow. Our growth strategy is based, in large part, on our expectation of ongoing divestitures of
retail and wholesale fuel distribution assets by industry participants. We may be unable to make accretive acquisitions for any of
the following reasons:
we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts for them;
we are unable to raise financing for such acquisitions on economically acceptable terms, for example, if the market
price for our common units declines;
we are outbid by competitors; or
we or the seller are unable to obtain any necessary consents.
If we are unable to make acquisitions on economically acceptable terms, our future growth and ability to increase distributions
to unitholders will likely be limited. In addition, if we consummate any future acquisitions, our capitalization and results of
operations may change significantly. We may also consummate acquisitions, which at the time of consummation we believe will
be accretive, but ultimately may not be accretive and may in fact result in a decrease in distributable cash flow per unit as a result
of incorrect assumptions in our evaluation of such acquisitions, unforeseen consequences, or other external events beyond our
control. If any of these events occurred, our future growth could be adversely affected.
Any acquisitions are subject to substantial risks that could adversely affect our business, financial condition and results of
operations and reduce our ability to make distributions to unitholders.
Any acquisitions involve potential risks, including, among other things:
the validity of our assumptions about revenues, demand, capital expenditures and operating costs of the acquired
business or assets, as well as assumptions about achieving synergies with our existing business;
the incurrence of substantial unforeseen environmental and other liabilities arising out of the acquired businesses or
assets, including liabilities arising from the operation of the acquired businesses or assets prior to our acquisition, for
which we are not indemnified or for which the indemnity is inadequate;
the costs associated with additional debt or equity capital, which may result in a significant increase in our interest
expense and financial leverage resulting from any additional debt incurred to finance the acquisition, or the issuance
of additional common units on which we will make distributions, either of which could offset the expected accretion
to our unitholders from any such acquisition and could be exacerbated by volatility in the equity or debt capital
markets;
a failure to realize anticipated benefits, such as increased available distributable cash flow, an enhanced competitive
position or new customer relationships;
the inability to timely and effectively integrate the operations of recently acquired businesses or assets, particularly
those in new geographic areas or in new lines of business;
unforeseen difficulties operating in new and existing product areas or new and existing geographic areas;
a decrease in our liquidity by using a significant portion of our available cash or borrowing capacity to finance the
acquisition;
the incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset
devaluation or restructuring charges;
performance from the acquired assets and businesses that is below the forecasts we used in evaluating the acquisition;
a significant increase in our working capital requirements;
competition in our targeted market areas;
customer or key employee loss from the acquired businesses and the inability to hire, train or retain qualified
personnel to manage and operate such acquired businesses; and
diversion of our management’s attention from other business concerns.
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In addition, our ability to purchase or lease additional sites involves certain potential risks, including the inability to identify and
acquire suitable sites or to negotiate acceptable leases or subleases for such sites and difficulties in adapting our distribution and
other operational and management systems to an expanded network of sites.
Our reviews of businesses or assets proposed to be acquired are inherently imperfect because it generally is not practicable to
perform a perfect review of businesses and assets involved in each acquisition. Even a detailed review of assets and businesses
may not necessarily reveal existing or potential problems, nor will it permit a buyer to become sufficiently familiar with the assets
or businesses to fully assess their deficiencies and potential. For example, inspections may not always be performed on every
asset, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection
is undertaken. Unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that
we will consider in determining the application of our funds and other resources toward the acquisition of certain businesses or
assets.
Volatility in crude oil and wholesale motor fuel costs affect our business, financial condition and results of operations and
our ability to make distributions to unitholders.
For 2023, motor fuel revenues accounted for 90% of our total revenues and motor fuel gross profit accounted for 55% of total
gross profit. Wholesale motor fuel costs are directly related to, and fluctuate with, the price of crude oil. Volatility in the price of
crude oil, and subsequently wholesale motor fuel prices, is caused by many factors, including general political, regulatory and
economic conditions, acts of war, including as a result of the conflict in Ukraine or the war between Israel and Hamas, terrorism
or armed conflict, instability in oil producing regions, particularly in the Middle East and South America, and the value of U.S.
dollars relative to other foreign currencies, particularly those of oil producing nations. In addition, the supply of motor fuel and
our wholesale purchase costs could be adversely affected in the event of a shortage or oversupply of product, which could result
from, among other things, interruptions of fuel production at oil refineries, new supply sources, sustained increases or decreases
in global demand or the fact that our motor fuel contracts do not guarantee an uninterrupted, unlimited supply of motor fuel.
Significant increases and volatility in wholesale motor fuel costs could result in lower gross profit dollars, as an increase in the
retail price of motor fuel could impact consumer demand for motor fuel and convenience merchandise and could result in lower
wholesale motor fuel gross profit dollars. As the market prices of crude oil, and, correspondingly, the market prices of wholesale
motor fuel, experience significant and rapid fluctuations, we attempt to pass along wholesale motor fuel price changes to our
customers through retail price changes; however, we are not always able to do so immediately. The timing of any related increase
or decrease in sales prices is affected by competitive conditions in each geographic market in which we operate. As such, our
revenues and gross profit for motor fuel can increase or decrease significantly and rapidly over short periods of time and
potentially adversely impact our business, financial condition, results of operations and ability to make distributions to our
unitholders. The volatility in crude oil and wholesale motor fuel costs and sales prices makes it extremely difficult to forecast
future motor fuel gross profits or predict the effect that future wholesale costs and sales price fluctuations will have on our
operating results and financial condition.
Seasonality in wholesale motor fuel costs and sales, as well as merchandise sales, affect our business, financial condition and
results of operations and our ability to make distributions to unitholders.
Oil prices, wholesale motor fuel costs, motor fuel sales volumes, motor fuel gross profits and merchandise sales often experience
seasonal fluctuations. For example, consumer demand for motor fuel typically increases during the summer driving season and
typically falls during the winter months. Travel, recreation and construction are typically higher in these months in the geographic
areas in which we operate, increasing the demand for motor fuel and merchandise that we sell. Therefore, our revenues are
typically higher in the second and third quarters of our fiscal year. A significant change in any of these factors, including a
significant decrease in consumer demand (other than typical seasonal variations), could materially affect our motor fuel and
merchandise volumes, motor fuel gross profit and overall customer traffic, which in turn could have a material adverse effect on
our business, financial condition, results of operations and cash available for distribution to our unitholders.
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Both the wholesale motor fuel distribution and the retail motor fuel industries are characterized by intense competition and
fragmentation, and our failure to effectively compete could adversely affect our business, financial condition and results of
operations and reduce our ability to make distributions to unitholders.
The markets for distribution of wholesale motor fuel and the sale of retail motor fuel are highly competitive and fragmented,
which results in narrow margins. We have numerous competitors, and some may have significantly greater resources and name
recognition than we do. We rely on our ability to provide value added reliable services and to control our operating costs to
maintain our margins and competitive position. If we were to fail to maintain the quality of our services, any or all of our wholesale
customers could choose alternative distribution sources and expected retail customers could purchase from other retailers, each
decreasing our margins. Furthermore, major integrated oil companies may decide to distribute their own products in direct
competition with us, or large wholesale customers may attempt to buy directly from the major integrated oil companies. The
occurrence of any of these events could have a material adverse effect on our business, results of operations and our ability to
make distributions to our unitholders.
Changes in credit or debit card expenses could reduce our gross profit, especially on motor fuel sold at company-operated
retail sites.
A significant portion of sales at our company-operated retail sites typically involve payment using credit or debit cards. We are
assessed fees as a percentage of transaction amounts and not as a fixed dollar amount or percentage of our gross profits. Higher
motor fuel prices result in higher credit and debit card expenses, and an increase in credit or debit card use or an increase in fees
have a similar effect. Therefore, credit and debit card fees charged on motor fuel purchases that are more expensive as a result of
higher motor fuel prices are not necessarily accompanied by higher gross profits. In fact, such fees may cause lower gross profits.
Lower gross profits on motor fuel sales caused by higher fees may decrease our overall gross profit and could have a material
adverse effect on our business, financial condition, results of operations and cash available for distribution to our unitholders.
New entrants or increased competition in the convenience store industry could result in reduced gross profits.
At our company operated retail sites, we compete with numerous other convenience store chains, independent convenience stores,
supermarkets, drugstores, discount warehouse clubs, motor fuel service stations, mass merchants, fast food operations and other
similar retail outlets. In addition, several non-traditional retailers, including supermarkets and club stores, compete directly with
convenience stores. An increase in competition from such competitors, or the entrance of additional competitors, could result in
reduced gross profits and have a material adverse effect on our business, financial condition or results of operations.
General economic, financial and political conditions that are largely out of our control could adversely affect our business,
financial condition and results of operations and reduce our ability to make distributions to unitholders.
Recessionary economic conditions, higher interest rates, higher motor fuel and other energy costs, inflation, increases in
commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws
or other economic factors may affect consumer spending or buying habits, and could adversely affect the demand for motor fuel
and convenience items we will sell at our retail sites. Unfavorable economic conditions, higher motor fuel prices and
unemployment levels can affect consumer confidence, spending patterns and miles driven, with many customers “trading down”
to lower priced products in certain categories when unfavorable conditions exist. These factors could lead to sales declines in
both motor fuel and general merchandise, and in turn could have an adverse impact on our business, financial condition and
results of operations.
A tightening of credit in the financial markets or an increase in interest rates may make it more difficult for wholesale customers
and suppliers to obtain financing and, depending on the degree to which it occurs, may cause a material increase in nonpayment
or other nonperformance by our customers and suppliers. Even if our credit review and analysis mechanisms work properly, we
may experience financial losses in our dealings with these third parties. A material increase in nonpayment or other
nonperformance by our wholesale customers and/or suppliers could adversely affect our business, financial condition, results of
operations and cash available for distribution to our unitholders.
Examples of other general economic, financial and political risks include:
a general or prolonged decline in, or shocks to, regional or broader macro-economics;
regulatory changes that could impact the markets in which we operate, which could reduce demand for our goods and
services or lead to pricing, currency, or other pressures; and
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deflationary economic pressures, which could hinder our ability to operate profitably in view of the challenges inherent
in making corresponding deflationary adjustments to our cost structure.
The nature of these types of risks, which are often unpredictable, makes them difficult to plan for, or otherwise mitigate, and they
are generally uninsurable, which compounds their potential impact on our business. Any such event could have a material adverse
effect on our business, financial condition, results of operations and cash available for distributions to our unitholders.
Terrorist attacks and threatened or actual war or armed conflict may adversely affect our business.
Our business is affected by general economic conditions and fluctuations in consumer confidence and spending, which can decline
as a result of numerous factors outside of our control. Terrorist attacks or threats, whether within the United States or abroad,
rumors or threats of war, actual conflicts involving the United States or its allies, or military or trade disruptions impacting our
suppliers or our customers may adversely impact our operations. Specifically, strategic targets such as energy related assets may
be at greater risk of future terrorist attacks than other targets in the United States. These occurrences could have an adverse impact
on energy prices, including prices for motor fuels, and an adverse impact on our operations. Any or a combination of these
occurrences could have a material adverse effect on our business, financial condition, results of operations and cash available for
distribution to our unitholders.
Changes in consumer behavior and travel as a result of changing economic conditions, labor strikes or otherwise could
adversely affect our business, financial condition and results of operations and reduce our ability to make distributions to
unitholders.
In the retail motor fuel industry, customer traffic is generally driven by consumer preferences and spending trends, growth rates
for commercial truck traffic and trends in travel and weather. Changes in economic conditions generally, or in the regions in
which we operate, could adversely affect consumer spending patterns and travel in our markets. In particular, weakening
economic conditions may result in decreases in miles driven and discretionary consumer spending and travel, which affect
spending on motor fuel and convenience items. In addition, changes in the types of products and services demanded by consumers
or labor strikes in the construction industry or other industries that employ customers who visit sites, may adversely affect our
sales and gross profit. Additionally, negative publicity or perception surrounding motor fuel suppliers could adversely affect
reputation and brand image, which may negatively affect our motor fuel sales and gross profit. Similarly, advanced technology
and increased use of electric or hybrid cars or cars using alternative fuels would reduce demand for motor fuel. Our success
depends on our ability to anticipate and respond in a timely manner to changing consumer demands and preferences while
continuing to sell products and services that remain relevant to the consumer and thus generally have a positive impact our overall
merchandise gross profit.
Broad-based business or economic disruptions caused by health crises could adversely affect our business, financial condition,
results of operations or cash available for distribution to our unitholders.
Global health concerns, similar to the COVID-19 Pandemic, could result in social, economic and labor instability that adversely
affect employee, customer, vendor, distribution channel and other business partner relationships, and in so doing could adversely
affect our business, financial condition, results of operations and cash flows. For example, federal, state and local governmental
actions restricting the ability of our customers to essential travel only, would adversely impact consumption of fuel. Sustained
limitation on travel, or a general reluctance to travel due to a health crisis, would adversely impact our fuel volumes. Sustained
fuel volume decreases and less foot traffic would adversely impact our dealer operated locations which could potentially pose
increased credit risks or trigger a default under our fuel supply and lease agreements. Also, we do not have fleet operations but
rather rely on common carriers to distribute and deliver our products. If these distribution channels are adversely impacted by a
health crisis, delivery of our products could be jeopardized.
We may incur costs related to the implementation of prescribed safety protocols related to a health crisis. For example, we may
incur substantial costs in connection with staffing impacted stores and the closing and subsequent cleaning of impacted stores
resulting from a continued spread of a health crisis. We may also temporarily lose the services of employees or experience
interruptions in our business which could lead to inefficiencies, interruptions in our regular operations and potential reputational
harm. If we do not respond appropriately to a health crisis, or if customers do not perceive our response to be adequate for a
particular region or our business as a whole, we could suffer damage to our reputation, which could materially adversely affect
our business, financial condition and results of operations in the future.
There can be no assurances that these and other scenarios resulting from a health crisis will not have a material and adverse
impact on our business, financial condition, results of operations or cash available for distribution to our unitholders.
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A continued prolonged shortage of qualified labor could have a material adverse effect on our business and results of
operations.
Due to general macroeconomic factors, the Topper Group has experienced labor shortages in certain geographies. Outside
suppliers that we rely on have also experienced shortages of qualified labor. The future success of our operations depends on our
ability, and the ability of third parties on which we rely, to identify, recruit, develop and retain qualified and talented individuals
in order to supply and deliver our products. A continued prolonged shortage of qualified labor could decrease our ability to
effectively operate our retail locations, which would negatively impact our business and could have a material adverse effect on
our results of operations. A shortage would also likely result in increased costs from higher overtime, the need to hire temporary
help to meet demand, higher wage rates to attract and retain employees, and higher costs to purchase raw materials or services
from such third parties, all of which would negatively impact our results of operations.
We are subject to extensive government laws and regulations concerning store merchandise items and operations, and the
cost of compliance with such laws and regulations can be material.
Our business and properties are subject to extensive local, state and federal governmental laws and regulations relating to, among
other things, the sale of alcohol and tobacco and public accessibility requirements. The cost of compliance with these laws and
regulations can have a material adverse effect on our operating results and financial condition. In addition, failure to comply with
local, state and federal laws and regulations to which our operations are subject may result in penalties and costs that could
adversely affect our business and our operating results.
In certain areas where our retail sites are located, state or local laws limit the retail sites’ hours of operation or their sale of
alcoholic beverages, tobacco products, possible inhalants and lottery tickets, in particular to minors. Failure to comply with these
laws could adversely affect our revenues and results of operations because these state and local regulatory agencies have the
power to revoke, suspend or deny applications for and renewals of permits and licenses relating to the sale of these products or
to seek other remedies, such as the imposition of fines or other penalties. Moreover, these laws may impact our sales volumes in
general, as customers who purchase certain products such as alcoholic beverages typically buy other products when they shop.
Laws that curtail the consumer’s ability to buy certain products at our retail sites may curtail consumer demand for other products
that we sell.
We are subject to extensive government laws and regulations concerning our employees, and the cost of compliance with such
laws and regulations can be material.
Regulations related to wages and other compensation affect our business. Any appreciable increase in applicable employment
laws and regulations, including the statutory minimum wage, exemption levels or overtime regulations could result in an increase
in labor costs and such cost increase, or the penalties for failing to comply with such statutory minimums, could adversely affect
our business, financial condition, results of operations and cash available for distribution to our unitholders.
In addition, we are directly and indirectly affected by new tax legislation and regulation and the interpretation of tax laws and
regulations. This includes potential changes in tax laws or the interpretation of tax laws relating to incentive compensation.
Changes in such legislation, regulation or interpretation could have an adverse effect on our incentive compensation structures,
which could affect our ability to recruit, develop and retain talented executives and could have a material adverse effect on our
business, financial condition, results of operations and cash available for distribution to our unitholders.
Any changes in the employment, benefit plan, tax or labor laws or regulations described above or new regulations proposed from
time to time, could have a material adverse effect on our employment practices, our business, financial condition, results of
operations and cash available for distribution to our unitholders.
We are subject to extensive federal, state and local environmental laws, and the cost of complying with such laws may be
material.
Our operations are subject to a variety of environmental laws and regulations, including those relating to emissions to the air
(such as the federal Clean Air Act), discharges into water (such as the federal Clean Water Act), releases of hazardous and toxic
substances and remediation of contaminated sites (such as the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (“CERCLA”)), and similar state and local laws and regulations.
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Under CERCLA, we may, as the owner or operator, be liable for the costs of removal or remediation of contamination at our
current locations or our former locations, whether or not we knew of, or were responsible for, the presence of such contamination.
In particular, as an owner and operator of motor fueling stations, we face risks relating to petroleum product contamination that
other retail site operators not engaged in such activities would not face. The remediation costs and other costs required to clean
up or treat contaminated sites could be substantial. Contamination on and from our current or former locations may subject us to
liability to third parties or governmental authorities for injuries to persons, property or natural resources and may adversely affect
our ability to sell or rent our properties or to borrow money using such properties as collateral.
CERCLA also provides that persons who dispose of or arrange for the disposal or treatment of hazardous or toxic substances at
third-party sites may also be liable for the costs of removal or remediation of such substances at these disposal sites although
such sites are not owned by such persons. Our historic and current operation of many locations and the disposal of contaminated
soil and groundwater wastes generated during cleanups of contamination at such locations could expose us to such liability.
Pursuant to the Resource Conservation and Recovery Act of 1976, as amended, the EPA has established a comprehensive
regulatory program for the detection, prevention, investigation and cleanup of leaking underground storage tanks. State or local
agencies are often delegated the responsibility for implementing the federal program or developing and implementing equivalent
state or local regulations. Compliance with existing and future environmental laws regulating such tanks and systems may require
significant expenditures. We pay fees to state “leaking UST” trust funds in states where they exist. These state trust funds are
expected to pay or reimburse us for remediation expenses related to contamination associated with USTs subject to their
jurisdiction. Such payments are always subject to a deductible paid by us, specified per incident caps and specified maximum
annual payments, which vary among the funds.
Additionally, such funds may have eligibility requirements that not all of our current or anticipated sites will meet. To the extent
state funds or other responsible parties do not pay or delay payments for remediation, we will be obligated to make these
payments, which, in the aggregate, could have a material adverse effect on our business, financial condition, results of operations
and cash available for distribution to our unitholders. We can give no assurance that these funds or responsible third parties are
or will continue to remain viable.
Motor fuel operations present risks of soil and groundwater contamination. In the future, we may incur substantial expenditures
for remediation of contamination that has not been discovered at locations which we may acquire. We regularly monitor our
facilities for environmental contamination and record liabilities on our financial statements to cover potential environmental
remediation and compliance costs when probable to occur and reasonably estimable. However, we can make no assurance that
the liabilities we have recorded are the only environmental liabilities relating to our current and former locations, that material
environmental conditions not known to us do not exist, that future laws or regulations will not impose material environmental
liability on us or that our actual environmental liabilities will not exceed our reserves. In addition, failure to comply with
environmental regulations, including the Clean Air Act, the Clean Water Act or CERCLA, or an increase in regulations could
have a material adverse effect on our business, financial condition, results of operations and cash available for distribution to our
unitholders.
A significant decrease in demand for motor fuel, including increased consumer preference for alternative motor fuels or
improvements in fuel efficiency, in the areas we serve would reduce our ability to make distributions to our unitholders.
Developments aimed at reducing greenhouse gas emissions’ contribution to climate change may decrease the demand or increase
the cost for our major product, petroleum-based motor fuel. Attitudes toward this product and its relationship to the environment
may significantly affect our effectiveness in marketing our product and sales. Efforts to steer the public toward non-petroleum-
based fuel dependent modes of transportation such as electric, hybrid, battery powered, hydrogen or other alternative fuel-
powered motor vehicles may foster a negative perception toward motor fuel or increase costs for our product, thus affecting the
public’s attitude toward our primary product. Further, changing consumer preferences or driving habits could lead to new forms
of fueling destinations or potentially fewer customer visits to our sites, resulting in a decrease in gasoline sales and/or sales of
merchandise and food at our company operated sites. In addition, higher prices could reduce the demand for gasoline and the
products and services we offer at our convenience stores and adversely impact our sales. New technologies that increase fuel
efficiency or offer alternative vehicle power sources or laws or regulations to increase fuel efficiency, reduce consumption or
offer alternative vehicle power sources may result in decreased demand for petroleum-based motor fuel. A number of new legal
incentives, regulatory requirements and executive initiatives, including the Clean Power Plan (“CPP”), the Affordable Clean
Energy (“ACE”) rule that the Environmental Protection Agency (the “EPA”) has proposed to replace the CPP, and various
government subsidies such as the extension of certain tax credits for renewable energy, have made these alternative forms of
energy and electric vehicles more competitive. We may also incur increased costs for our product, which we may not be able to
pass along to our customers. These developments could potentially have a material adverse effect on our business, financial
condition, results of operations and cash available for distribution to our unitholders.
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Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse
impact on our business, operating results and financial condition.
The previous U.S. presidential administration indicated its intent to adopt a new approach to trade policy. For example, in 2018,
the U.S. government reached a new trade agreement with the Canadian and Mexican governments that replaced the North
America Free Trade Agreement with the United States-Mexico-Canada Agreement.
The U.S. also initiated tariffs on certain foreign goods and has raised the possibility of imposing significant, additional tariff
increases or expanding the tariffs to capture other types of goods. In response, certain foreign governments imposed retaliatory
tariffs on goods that their countries import from the U.S.
Changes in U.S. trade policy, including due to the change in the U.S. presidential administration, could result in one or more
foreign governments adopting responsive trade policies that make it more difficult or costly for us to do business in or import our
products from those countries. This in turn could require us to increase prices to our customers, which may reduce demand, or,
if we are unable to increase prices, result in lowering our margin on products sold.
We cannot predict the extent to which the U.S. or other countries will impose quotas, duties, tariffs, taxes or other similar
restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the terms of any
renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence
of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact
demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material
adverse effect on our business, operating results and financial condition.
Increased attention to environmental, social and governance matters and conservation measures may adversely impact our
business.
Increasing attention to climate change, societal expectations on companies to address climate change and other ESG matters,
investor and societal expectations regarding voluntary or required ESG disclosures, and consumer demand for alternative forms
of energy may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation,
and negative impacts on our unit price and access to capital markets. Increasing attention to climate change and environmental
conservation, for example, may result in reduced demand for fossil fuel products and additional governmental investigations and
private litigation against us. To the extent that societal pressures or political or other factors are involved, it is possible that such
liability could be imposed without regard to our causation of or contribution to climate change or asserted damage to the
environment, or to other mitigating factors.
Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the
statements in those voluntary disclosures may be based on expectations and assumptions. Such expectations and assumptions are
necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of
an established single approach to identifying, measuring and reporting on many ESG matters.
In addition, organizations that provide information to investors on corporate governance and related matters have developed
ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform
their investment and voting decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from
companies with fossil fuel-related assets could lead to increased negative investor sentiment toward us and our industry and to
the diversion of investment to other industries, which could have a negative impact on our unit price and our access to and costs
of capital. Also, institutional lenders may decide not to provide funding for fossil fuel companies based on climate change related
concerns, which could affect our access to capital.
Unfavorable weather conditions could adversely affect our business, financial condition and results of operations and reduce
our ability to make distributions to unitholders.
Our company operated retail sites are located in regions throughout the U.S. that are susceptible to certain severe weather events,
such as hurricanes, flooding, severe thunderstorms, snowstorms, tornadoes and extreme heat and cold. Inclement weather
conditions could damage our facilities or those of our suppliers or could have a significant impact on consumer behavior, travel
and retail site traffic patterns as well as our ability to operate our retail sites. We could also be affected by regional occurrences,
such as energy shortages or increases in energy prices, fires or other natural disasters. Further, our ability to insure these locations
and the related cost of such insurance coverage could have a material adverse effect on our business, financial condition, results
of operations and cash available for distribution to our unitholders.
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Additionally, many studies have discussed the relationship between greenhouse gas emissions and climate change. One
consequence of climate change noted in many of these reports is the increased severity of extreme weather, such as increased
hurricanes and floods. Such events could adversely affect our operations through water damage, powerful winds or increased
costs for insurance. Climate change also continues to attract considerable public and scientific attention. Litigation has been filed
against companies in the energy industry related to climate change. Should such suits succeed, we could face additional
compliance costs or litigation risks.
We could be adversely affected if we are not able to attract and retain a strong management team.
We are dependent on our ability to attract and retain a strong management team. If, for any reason, we are not able to attract and
retain qualified senior personnel, our business, financial condition, results of operations and cash flows could be adversely
affected. We also are dependent on our ability to recruit qualified retail site and field managers. Failure to attract and retain these
individuals at reasonable compensation levels could have a material adverse effect on our business, financial condition, results
of operations and cash available for distribution to our unitholders.
We depend on four principal suppliers for the majority of our motor fuel and one principal supplier for our merchandise. A
disruption in supply or a change in our relationship with any one of them could adversely affect our business, financial
condition and results of operations and reduce our ability to make distributions to unitholders.
In 2023, our wholesale business purchased approximately 80% of its motor fuel from four suppliers and our retail business
purchased approximately 49% of its merchandise from one supplier. A change of supplier, a disruption in supply or a significant
change in pricing with any of these suppliers could have a material adverse effect on our business, financial condition, results of
operations and cash available for distribution to our unitholders.
Negative events or developments associated with our branded suppliers could have an adverse impact on our revenues.
We believe that the success of our operations is dependent, in part, on the continuing favorable reputation, market value and name
recognition associated with the branded motor fuel sold through our wholesale and retail segments. Erosion of the value of those
brands could have an adverse impact on the volumes of motor fuel we sell, which in turn could have a material adverse effect on
our business, financial condition, results of operations and ability to make distributions to our unitholders.
We rely on our suppliers to provide trade credit to adequately fund our ongoing operations.
Our business is impacted by the availability of trade credit to fund motor fuel purchases and inventory purchases of our retail
sites. An actual or perceived downgrade in our liquidity or operations could cause our suppliers to seek credit support in the form
of additional collateral, limit the extension of trade credit or otherwise materially modify their payment terms. Any material
changes in payments terms, including payment discounts, or availability of trade credit provided by our principal suppliers, could
have a material adverse effect on our business, financial condition, results of operations and cash available for distribution to our
unitholders.
We could be adversely affected by the creditworthiness and performance of our customers, suppliers and contract
counterparties.
We are exposed to risk related to the creditworthiness and performance of our customers, suppliers and contract counterparties.
As of December 31, 2023, we had outstanding accounts receivable totaling $32 million. This amount primarily consisted of
vendor rebates due from our suppliers, credit card receivables, receivables arising from the sale of fuel and other products to
independent franchised or licensed fuel station operators as well as amounts receivable from other industrial and commercial
clients. Contracts with longer payment cycles or difficulties in enforcing contracts or collecting accounts receivable could lead
to material fluctuations in our cash flows and could adversely impact our business, financial condition and results of operations.
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Pending or future litigation could adversely affect our financial condition and results of operations. Litigation and publicity
concerning motor fuel or food quality, health and other issues could result in significant liabilities or litigation costs and
cause consumers to avoid our retail sites.
Retail site businesses can be adversely affected by litigation and complaints from customers or government agencies resulting
from motor fuel or food quality, illness or other health or environmental concerns or operating issues stemming from one or more
locations. Additionally, we may become a party to litigation pertaining to individual personal injury, off-specification motor fuel,
product liability, consumer protection laws, contract disputes, wage and hour unemployment claims and other legal actions in the
ordinary course of our business and we are occasionally exposed to industry-wide or class-action claims arising from the products
we carry or industry-specific business practices. Adverse publicity about these allegations may negatively affect us, regardless
of whether the allegations are true, by discouraging customers from purchasing motor fuel, merchandise or food at one or more
of our retail sites. We could also incur significant liabilities if a lawsuit or claim results in a decision against us. Even if we are
successful in defending such litigation, our litigation costs could be significant, and the litigation may divert time and money
away from our operations and adversely affect our performance. Our defense costs and any resulting damage awards may not be
fully covered by our insurance policies.
The dangers inherent in the storage and transport of motor fuel could cause disruptions and could expose us to potentially
significant losses, costs or liabilities.
We store motor fuel in storage tanks at our retail sites. These operations are subject to significant hazards and risks inherent in
storing and transporting motor fuel. These hazards and risks include, but are not limited to, fires, explosions, traffic accidents,
spills, discharges and other releases, any of which could result in distribution difficulties and disruptions, environmental pollution,
governmentally imposed fines or cleanup obligations, personal injury or wrongful death claims and other damage to our properties
and the properties of others.
We are not fully insured against all risks incident to our business. We may be unable to maintain or obtain insurance of the type
and amount we desire at reasonable rates. As a result of market conditions, premiums and deductibles for certain of our insurance
policies have increased and could escalate further. In some instances, certain insurance could become unavailable or available
only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, it could
have a material adverse effect on our business, financial condition, results of operations and cash available for distribution to our
unitholders.
We depend on third-party transportation providers for the transportation of all of our motor fuel. Thus, a significant change
or shortage of drivers and/or providers or a significant change in our relationship or commercial terms with any of these
providers could adversely affect our business, financial condition and results of operations and reduce our ability to make
distributions to unitholders.
All of the motor fuel we distribute is transported from motor fuel terminals to gas stations by third-party carriers. A change or
shortage of transportation providers, a disruption in service or a significant change in our relationship or commercial terms with
any of these transportation carriers could have a material adverse effect on our business, financial condition, results of operations
and cash available for distribution to our unitholders.
We are subject to federal, state and local laws and regulations that govern the product quality specifications of the motor fuel
that we distribute and sell.
Various federal, state and local agencies have the authority to prescribe specific product quality specifications to the sale of
commodities. Changes in product quality specifications, such as reformulated fuels mandates, reduced sulfur content in refined
petroleum products or other more stringent requirements for fuels, could reduce our ability to procure products and result in a
decrease to our sales volume, require us to incur additional handling costs, and/or require the expenditure of capital. If we are
unable to procure product or recover these costs through increased sales, our ability to meet our financial obligations could be
adversely affected. Failure to comply with these regulations could result in substantial penalties.
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Our motor fuel sales are generated under contracts that must be renegotiated or replaced periodically. If we are unable to
successfully renegotiate or replace these contracts, then our business, financial condition and results of operations and ability
to make distributions to unitholders could be adversely affected.
Our motor fuel sales are generated under contracts that must be periodically renegotiated or replaced. We may be unable to
renegotiate or replace these contracts when they expire, and the terms of any renegotiated contracts may not be as favorable as
the contracts they replace. Whether these contracts are successfully renegotiated or replaced is often times subject to factors
beyond our control. Such factors include fluctuations in motor fuel prices, counterparty ability to pay for or accept the contracted
volumes and a competitive marketplace for the services offered by us. If we cannot successfully renegotiate or replace our
contracts or must renegotiate or replace them on less favorable terms, sales from these arrangements could decline, which could
have a material adverse effect on our business, financial condition, results of operations and cash available for distribution to our
unitholders.
Further, we have contracts with certain multi-site lessee dealers that provide for the ability for each party to sever or recapture a
certain number of sites from the contract. If sites are severed, we will seek to replace the dealer, but it is possible that the agreement
with any new dealer may not provide for an equivalent fuel margin and/or rental income stream, which could have a material
adverse effect on our business, financial condition, results of operations and cash available for distribution to our unitholders. It
is also possible that we will operate the site until the dealer is replaced or indefinitely.
We rely on our information technology ("IT") systems and network infrastructure to manage numerous aspects of our
business, and a disruption of these systems could adversely affect our business, financial condition and results of operations
and reduce our ability to make distributions to unitholders.
We depend on our IT systems and network infrastructure to manage numerous aspects of our business and provide analytical
information to management. These systems are an essential component of our business and growth strategies, and a serious
disruption to them could significantly limit our ability to manage and operate our business efficiently. These systems may be
vulnerable to, among other things, damage and interruption from power loss or natural disasters, computer system and network
failures, loss of telecommunications services, physical and electronic loss of data, security breaches and computer viruses, which
could result in a loss of sensitive business information, systems interruption or the disruption of our business operations. To
protect against unauthorized access or attacks, we have implemented infrastructure protection technologies and disaster recovery
plans, but there can be no assurance that a technology systems breach or systems failure, which may nonetheless occur and go
undetected, will not have a material adverse effect on our business, financial condition, results of operations and cash available
for distribution to our unitholders.
Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or vendor
data, whether as a result of cyber security attacks or otherwise, or to comply with applicable regulations relating to data
security and privacy.
In the normal course of our business as a motor fuel and merchandise retailer, we obtain large amounts of personal data, including
banking information from our customers. While we have invested significant amounts in the protection of our IT systems and
maintain what we believe are adequate security controls over individually identifiable customer, employee and vendor data
provided to us, a breakdown or a breach in our systems that results in the unauthorized release of individually identifiable
customer or other sensitive data could nonetheless occur.
Cyber-attacks are rapidly evolving and becoming increasingly sophisticated. A successful cyber-attack resulting in the loss of
sensitive customer, employee or vendor data could adversely affect our reputation, results of operations, financial condition and
liquidity, and could result in litigation against us or the imposition of penalties. Moreover, a security breach could require that
we expend significant additional resources to further upgrade the security measures that we employ to guard against cyber-attacks.
Further, complying with continually evolving regulations associated with the protection of credit and debit card information is
costly and taking these measures does not necessarily provide an offsetting financial benefit to us. Failure to comply with these
regulations could subject us or our dealers to fines or other regulatory sanctions (potentially including discontinuing operations)
and potentially to lawsuits. Additionally, if we acquire a company that has violated or is not in compliance with applicable data
protection laws, we may incur significant liabilities and penalties as a result. The cost of compliance and the ramifications of
non-compliance could have a material adverse effect on our business, financial condition, results of operations and cash available
for distribution to our unitholders.
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Any significant disruption to our service or access to our systems could adversely affect our business and results of operations.
Further, a penetration of our systems or a third-party’s systems or other misappropriation or misuse of personal information
could subject us to business, regulatory, litigation and reputation risk, which could have a negative effect on our business,
financial condition and results of operations.
Our debt levels and debt covenants may limit our flexibility in obtaining additional financing and in pursuing other business
opportunities.
We have a significant amount of debt. As of December 31, 2023, we had $756 million of total debt and $164.5 million of
availability under our revolving CAPL Credit Facility. Our level of indebtedness could have important consequences to us,
including the following:
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other
purposes may be impaired, or such financing may not be available on favorable terms;
covenants contained in our credit facilities will require us to meet financial tests that may affect our flexibility in
planning for and reacting to changes in our business, including possible acquisition opportunities;
we will need a substantial portion of our cash flow to make interest payments on our indebtedness, reducing the funds
that would otherwise be available for operations, future business opportunities and distributions to unitholders;
our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a
downturn in our business or the economy generally; and
our debt level may limit our flexibility in responding to changing business and economic conditions.
Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance,
which may be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which
are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced
to take actions, such as reducing distributions, reducing or delaying our business activities, acquisitions, investments and/or
capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional equity capital or
bankruptcy protection. We may not be able to take any of these actions on satisfactory terms, or at all.
A continued increase in interest rates may cause the market price of our common units to decline and a significant increase
in interest rates could adversely affect our ability to service our indebtedness.
Like all equity investments, an investment in our common units is subject to certain risks. Borrowings under the CAPL Credit
Facility bear interest at variable rates, subject to interest rate swap contracts we entered into to hedge future changes in variable
rates. If market interest rates continue to increase, such variable-rate debt will create higher debt service requirements, which
could adversely affect our cash flow and ability to make cash distributions. In exchange for accepting these risks, investors may
expect to receive a higher rate of return than would otherwise be obtainable from lower-risk investments. Accordingly, as interest
rates rise, the ability of investors to obtain higher risk-adjusted rates of return by purchasing government-backed debt securities
may cause a corresponding decline in demand for riskier investments generally, including yield-based equity investments such
as publicly traded limited partnership interests. Reduced demand for our common units resulting from investors seeking other
more favorable investment opportunities may cause the trading price of our common units to decline.
The interest rate on the CAPL Credit Facility is variable; therefore, we have exposure to movements in interest rates, subject to
our interest rate swap contracts. A significant increase in interest rates could adversely affect our ability to service our
indebtedness. The increased cost could make the financing of our business activities more expensive. These added expenses could
have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.
The CAPL Credit Facility contains operating and financial restrictions that may limit our business, financing activities and
ability to make distributions to unitholders.
The operating and financial restrictions and covenants in the CAPL Credit Facility and any future financing agreements could
adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities.
For example, our credit facilities may restrict our ability to:
make distributions if any potential default or event of default occurs;
incur additional indebtedness, including the issuance of certain preferred equity interests, or guarantee other
indebtedness;
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grant liens or make certain negative pledges;
make certain advances, loans or investments;
make any material change to the nature of our business, including mergers, consolidations, liquidations and
dissolutions;
make certain capital expenditures in excess of specified levels;
acquire another company;
enter into a sale-leaseback transaction or certain sales or leases of assets;
enter into certain affiliate transactions; or
make certain repurchases of equity interests.
Our CAPL Credit Facility limits our ability to pay distributions upon the occurrence of the following events, among others:
failure to pay any principal when due or failure to pay any interest, fees or other amounts owed under our credit
facility when due, subject to any applicable grace period;
failure of any representation or warranty in our credit agreement to be true and correct, and the failure of any
representation or warranty in any other agreement delivered in connection with our credit facility to be true and
correct in any material respect;
failure to perform or otherwise comply with the covenants in our credit facility or in other loan documents beyond
the applicable notice and grace period;
any default in the performance of any obligation or condition beyond the applicable grace period relating to any other
indebtedness of more than certain thresholds;
failure of the lenders to have a perfected first priority security interest in the collateral pledged by any loan party;
the entry of one or more judgments in excess of certain thresholds, to the extent any payments pursuant to the
judgment are not covered by insurance;
a change in ownership or control of our General Partner or us;
a violation of the Employee Retirement Income Security Act of 1974, or “ERISA”; and
a bankruptcy or insolvency event involving us or any of our subsidiaries.
Our ability to comply with the covenants and restrictions contained in our credit facilities may be affected by events beyond our
control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our
ability to comply with these covenants may be impaired. If we violate any of the restrictions, covenants, ratios or tests in our
credit facilities, the debt issued under the credit facilities may become immediately due and payable, and our lenders’ commitment
to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated
payments. In addition, our obligations under our credit facilities will be secured by substantially all of our assets, and if we are
unable to repay our indebtedness under our credit facilities, the lenders could seek to foreclose on such assets.
We do not own all of the land on which our sites and certain facilities are located, which could result in increased costs and
disruptions to our operations.
We do not own all of the land on which our sites and certain facilities are located, and we lease a portion of such sites from third
parties under long-term arrangements with various expiration dates. As such, we are subject to the possibility that we are unable
to renew such leases or are only able to do so with increased costs or more onerous terms, which could have a material adverse
effect on our business, financial condition, results of operations and cash available for distribution to our unitholders.
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We may not be able to lease sites we own or sub-lease sites we lease on favorable terms and any such failure could adversely
affect our business, financial condition and results of operations and reduce our ability to make distributions to unitholders.
We may lease and/or sub-lease certain sites to lessee dealers or commission agents where the rent expense is more than the lease
payments. If we are unable to obtain tenants on favorable terms for sites we own or lease, the lease payments we receive may not
be adequate to cover our rent expense for leased sites and may not be adequate to ensure that we meet our debt service
requirements. We cannot provide any assurance that the margins on our wholesale distribution of motor fuels to these sites will
be adequate to offset unfavorable lease terms. The occurrence of these events could have a material adverse effect on our business,
financial condition, results of operations and cash available for distribution to our unitholders.
We rely on DMI to indemnify 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 at
our Predecessor Entity’s sites. To the extent escrow accounts, insurance and/or payments from DMI are not sufficient to cover
any such costs or expenses, our business, financial condition and results of operations and ability to make distributions to
unitholders could be adversely affected.
The Circle K Omnibus Agreement provides that DMI must indemnify 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 at our Predecessor Entity’s sites. Such indemnification survives the termination of the Circle K
Omnibus Agreement. DMI is the beneficiary of escrow accounts created to cover the cost to remediate certain environmental
liabilities. In addition, DMI maintains insurance policies to cover environmental liabilities and/or, where available, participates
in state programs that may also assist in funding the costs of environmental liabilities. There are certain sites that were acquired
by us in connection with the IPO with existing environmental liabilities that are not covered by escrow accounts, state funds or
insurance policies. To the extent escrow accounts, insurance and/or payments from DMI are not sufficient to cover any such costs
or expenses, our business, liquidity and results of operations could be adversely affected.
We rely on Circle K to indemnify 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
various asset exchange transactions with Circle K. To the extent escrow accounts, insurance and/or payments from Circle K
are not sufficient to cover any such costs or expenses, our business, financial condition and results of operations and ability
to make distributions to unitholders could be adversely affected.
The agreements associated with the various asset exchange transactions provide that Circle K must indemnify 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 asset exchange transactions with Circle K. Such indemnification
survives the termination of the Circle K Omnibus Agreement. To the extent escrow accounts, insurance and/or payments from
Circle K are not sufficient to cover any such costs or expenses, our business, liquidity and results of operations could be adversely
affected.
Risks Inherent in our Structure
The Topper Group controls the sole member of our General Partner, which has sole responsibility for conducting our business
and managing our operations. Our General Partner and its affiliates, including the Topper Group, may have conflicts of
interest with us and limited fiduciary duties and they may favor their own interests to the detriment of our unitholders and us.
The Topper Group controls the sole member of our General Partner and therefore has the ability to appoint all of the directors of
our Board. Although our General Partner has a legal duty to manage us in good faith, the General Partner and its executive officers
(as employees of the Topper Group) have a fiduciary duty to manage our General Partner in a manner beneficial to its owner, the
Topper Group. Furthermore, certain officers of our General Partner are directors of our Board or officers of affiliates of our
General Partner. Therefore, conflicts of interest may arise between us and our unitholders, on the one hand, and our General
Partner and its affiliates, including the Topper Group, on the other hand. In resolving these conflicts of interest, under the
Partnership Agreement, our General Partner may favor its own interests and the interests of the Topper Group over our interests
and the interests of our common unitholders. These conflicts include the following situations, among others:
our General Partner is allowed to take into account the interests of parties other than us, such as the Topper Group,
in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our unitholders;
neither our Partnership Agreement nor any other agreement requires the Topper Group to pursue a business strategy
that favors us;
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officers of our General Partner who provide services to us may devote time to affiliates of our General Partner and
may be compensated for services rendered to such affiliate;
our Partnership Agreement limits the liability of and reduces fiduciary duties owed by our General Partner and also
restricts the remedies available to unitholders for actions that, without the limitations, might constitute breaches of
fiduciary duty;
except in limited circumstances, our General Partner has the power and authority to conduct our business without
unitholder approval;
our General Partner determines the amount and timing of asset purchases and sales, borrowings, issuances of
additional partnership securities and the creation, reductions or increases of cash reserves, each of which can affect
the amount of cash that is available for distribution to our unitholders;
our General Partner determines the amount and timing of any capital expenditures and whether a capital expenditure
is classified as a maintenance capital expenditure, which reduces operating surplus. Such determination can affect
the amount of cash available for distribution to our unitholders;
our General Partner may cause us to borrow funds in order to permit the payment of cash distributions;
our Partnership Agreement permits us to distribute up to $15 million as operating surplus, even if it is generated from
asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus;
our Partnership Agreement does not restrict our General Partner from causing us to pay it or its affiliates for any
services rendered to us or entering into additional contractual arrangements with its affiliates on our behalf;
our General Partner intends to limit its liability regarding our contractual and other obligations;
our General Partner may exercise its right to call and purchase our common units if it and its affiliates own more than
80% of our common units;
our General Partner controls the enforcement of obligations that it and its affiliates owe to us; and
our General Partner decides whether to retain separate counsel, accountants or others to perform services for us.
The Topper Group or the Board may modify or revoke our cash distribution policy at any time at their discretion. Our
Partnership Agreement does not require us to pay any distributions at all.
The Board has adopted a cash distribution policy pursuant to which we intend to distribute quarterly an amount at least equal to
the minimum quarterly distribution of $0.4375 per unit on all of our units to the extent we have sufficient cash from our operations
after the establishment of reserves and the payment of our expenses. However, the Topper Group, as the owner of our General
Partner, or the Board may change such policy at any time at their discretion and could elect not to pay distributions for one or
more quarters. In addition, the CAPL Credit Facility includes specified restrictions on our ability to make distributions.
Our Partnership Agreement does not require us to pay any distributions at all. Accordingly, investors are cautioned not to place
undue reliance on the permanence of our distribution policy in making an investment decision. Any modification or revocation
of our cash distribution policy could substantially reduce or eliminate the amounts of distributions to our unitholders. The amount
of distributions we make, if any, and the decision to make any distribution at all, will ultimately be determined by the Topper
Group as the owner of all of the membership interests in the sole member of our General Partner, whose interests may differ from
those of our common unitholders.
We rely on the employees of the Topper Group to provide key management services to our business pursuant to the Omnibus
Agreement. If our Omnibus Agreement were to be terminated, we may not be able to find suitable replacements to perform
such services for us without interruption to our business or increased costs.
Under our Omnibus Agreement, the Topper Group provides us with the personnel necessary to support our management,
administrative and operating services, including accounting, tax, legal, internal audit, risk management and compliance,
environmental compliance and remediation management oversight, treasury, information technology and other administrative
functions, as well as the management and operation of our wholesale distribution and retail business. If our Omnibus Agreement
is terminated, we may suffer interruptions to our business or increased costs to replace these services.
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The liability of the Topper Group and Couche-Tard is limited under our Omnibus Agreement and Circle K Omnibus
Agreement and we have agreed to indemnify the Topper Group and Couche-Tard against certain liabilities, which may expose
us to significant expenses.
The Omnibus Agreement and the Circle K Omnibus Agreement provide that we must indemnify the Topper Group and Couche-
Tard for certain liabilities, including any liabilities incurred by the Topper Group and Couche-Tard attributable to the operating
and administrative services provided to us under the agreement, other than liabilities resulting from the Topper Group’s or
Couche-Tard’s bad faith, fraud, or willful misconduct, as applicable.
Our General Partner has limited liability regarding our obligations.
Our General Partner has limited liability under contractual arrangements between us and third parties so that the counterparties
to such arrangements have recourse only against our assets, and not against our General Partner or its assets. Our General Partner
may therefore cause us to incur indebtedness or other obligations that are nonrecourse to our General Partner. Our Partnership
Agreement provides that any action taken by our General Partner to limit its liability is not a breach of our General Partner’s
fiduciary duties, even if we could have obtained more favorable terms without the limitation on liability. In addition, we are
obligated to reimburse or indemnify our General Partner to the extent that it incurs obligations on our behalf. Any such
reimbursement or indemnification payments would reduce the amount of cash otherwise available for distribution to our
unitholders.
If we distribute a significant portion of our cash available for distribution to our partners, our ability to grow and make
acquisitions could be limited.
We may determine to distribute a significant portion of our cash available for distribution to our unitholders. In addition, we
expect to rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and
equity securities, to fund our acquisitions and expansion capital expenditures. To the extent we are unable to finance growth
externally, distributing a significant portion of our cash available for distribution may impair our ability to grow.
In addition, if we distribute a significant portion of our cash available for distribution, our growth may lag behind the growth of
businesses that reinvest all of their cash to expand ongoing operations. To the extent we issue additional units in connection with
any acquisitions or expansion capital expenditures, the payment of distributions on those additional units may increase the risk
that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our Partnership Agreement
or our CAPL Credit Facility on our ability to issue additional common units, provided there is no default under the CAPL Credit
Facility. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in
increased interest expense, which, in turn, may impact the cash available for distribution to our unitholders.
Our Partnership Agreement replaces, eliminates and modifies, as applicable, the duties, including the fiduciary duties, of our
General Partner, the Board or any committee thereof, and modifies the burden of proof in any action brought against the
General Partner, the Board or any committee thereof.
Our Partnership Agreement contains provisions that modify the duties of the General Partner, including the fiduciary duties of
the General Partner, and restricts the remedies available to unitholders for actions taken by our General Partner that might
otherwise constitute breaches of fiduciary duty under Delaware partnership law. For example, our Partnership Agreement:
provides that whenever our General Partner, the Board or any committee of the Board makes a determination or
takes, or declines to take, any other action in its capacity as the general partner of the Partnership, our General Partner
is required to make such determination, or take or decline to take such other action, in good faith, and will not be
subject to any higher standard under any Delaware Act (as defined below), or any other law, rule or regulation, or at
equity;
provides that any determination, act or failure to act by our General Partner will be deemed in good faith unless such
party believed such determination, other action or failure to act, given the totality of the circumstance, was averse to
the interests of the Partnership;
in any proceeding brought by the Partnership, any limited partner, or any Person who acquires an interest in a
Partnership interest or any other Person who is bound by the Partnership Agreement, challenging such action,
determination or failure to act, the Person bringing or prosecuting such proceeding shall have the burden of proving
that such determination, action or failure to act was not in good faith;
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provides that whenever the General Partner makes a determination or takes or declines to take any other action in its
individual capacity as opposed to in its capacity as the general partner of the Partnership, whether under the
Partnership Agreement or any other agreement contemplated thereby, then the General Partner, or any affiliate
thereof, is entitled to the fullest extent permitted by law, to make such determination or to take or decline to take such
other action free of any fiduciary duty, duty of good faith, obligation imposed by Delaware Act, law, rule or in equity
to the Partnership, any limited partner or any Person who acquires an interest in a Partnership interest or any other
Person who is bound by the Partnership Agreement. Examples of decisions that our General Partner may make in its
individual capacity include:
how to allocate business opportunities among us and its affiliates;
whether to exercise its call right; and
whether or not to consent to any merger or consolidation of the Partnership or amendment to the Partnership
Agreement.
provides that our General Partner and its officers and directors will not be liable for monetary damages to the
Partnership or our limited partners resulting from any act or omission unless there has been a final and non-appealable
judgment entered by a court of competent jurisdiction determining that our General Partner or its officers and
directors, as the case may be, acted in bad faith or, in the case of a criminal matter, acted with knowledge that the
conduct was criminal;
provides that the General Partner may consult with legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisers selected by it, and any act taken or omitted in reliance upon
the advice or opinion (including an opinion of counsel) of such persons as to matters that the General Partner
reasonably believes to be within such person’s professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such advice or opinion; and
provides that our General Partner will not be in breach of its obligations under the Partnership Agreement or its
fiduciary duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest
is:
approved by the independent conflicts committee of the Board, although our General Partner is not obligated
to seek such approval; or
approved by the vote of a majority of the outstanding common units, excluding any common units owned by
our General Partner and its affiliates.
By purchasing a common unit, a unitholder is treated as having consented to the provisions in the Partnership Agreement,
including the provisions discussed above.
Our General Partner’s affiliates, including the Topper Group, may compete with us.
Our Partnership Agreement provides that our General Partner will be restricted from engaging in any business activities other
than acting as our General Partner and those activities incidental to its ownership interest in us. Except as provided in the Omnibus
Agreement, affiliates of our General Partner are not prohibited from engaging in other businesses or activities, including those
that might be in direct competition with us.
Pursuant to the terms of our Partnership Agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not
apply to our General Partner, the Topper Group or any of their affiliates, including their executive officers and directors. Any
such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an
opportunity for us will not have any duty to communicate or offer such opportunity to us. Any such person or entity will not be
liable to us or to any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity
pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such
opportunity or information to us. This may create actual and potential conflicts of interest between us and affiliates of our General
Partner and result in less than favorable treatment of our unitholders and us. Conflicts of interest may arise in the future between
us and our unitholders, on the one hand, and the affiliates of our General Partner and the Topper Group, on the other hand. In
resolving these conflicts, the Topper Group may favor its own interests over the interests of our unitholders.
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Holders of our common units have limited voting rights and are not entitled to elect our General Partner or the directors of
the Board, which could reduce the price at which the common units will trade.
Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business
and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders will have no right on an
annual or ongoing basis to elect or remove the members of our Board. The Board, including the independent directors, is chosen
entirely by the Topper Group, as a result of its ownership of all the membership interests in the sole member of our General
Partner, and not by our unitholders. Unlike publicly traded corporations, we will not conduct annual meetings of our unitholders
to elect directors or conduct other matters routinely conducted at annual meetings of stockholders of corporations. As a result of
these limitations, the price at which the common units will trade could be diminished because of the absence or reduction of a
takeover premium in the trading price.
Even if holders of our common units are dissatisfied, they may not be able to remove our General Partner.
If our unitholders are dissatisfied with the performance of our General Partner, they will have limited ability to remove our
General Partner. The vote of the holders of at least 66 2Ú3% of all outstanding common units voting together as a single class is
required to remove our General Partner. As of February 22, 2024, the Topper Group beneficially owned approximately 38.6% of
our outstanding common units.
Our General Partner interest or the control of our General Partner may be transferred to a third party without unitholder
consent.
Our General Partner may transfer its General Partner interest to a third party in a merger or in a sale of all or substantially all of
its assets without the consent of our unitholders. Furthermore, our Partnership Agreement does not restrict the ability of the
Topper Group to transfer its membership interests in the sole member of our General Partner to a third party. The new members
of our General Partner would then be in a position to replace the Board and executive officers of our General Partner with their
own designees and thereby exert significant control over the decisions taken by the Board and executive officers of our General
Partner. This effectively permits a “change of control” without the vote or consent of the unitholders.
Our General Partner has a call right that may require unitholders to sell their common units at an undesirable time or price.
If at any time our General Partner and its affiliates hold more than 80% of the common units, our General Partner will have the
right, but not the obligation, which it may assign to any of its affiliates or to us, to acquire all, but not less than all, of the common
units held by unaffiliated persons at a price equal to the greater of (1) the average of the daily closing price of the common units
over the 20 trading days preceding the date that is three days before notice of exercise of the call right is first mailed and (2) the
highest per-unit price paid by our General Partner or any of its affiliates for common units during the 90-day period preceding
the date such notice is first mailed. As a result, unitholders may be required to sell their common units at an undesirable time or
price and may not receive any return or a negative return on their investment. Unitholders may also incur a tax liability upon a
sale of their units. Our General Partner is not obligated to obtain a fairness opinion regarding the value of the common units to
be repurchased by it upon exercise of the call right. There is no restriction in our Partnership Agreement that prevents our General
Partner from issuing additional common units and exercising its call right. If our General Partner exercised its call right, the effect
would be to take us private and, following the deregistering of the units, we would no longer be subject to the reporting
requirements of the Exchange Act. As of February 22, 2024, the Topper Group beneficially owned approximately 38.6% of our
outstanding common units.
The market price of our common units could be adversely affected by sales of substantial amounts of our common units in
the public or private markets, including sales by the Topper Group or other large holders.
As of February 22, 2024, we had 37,983,154 common units outstanding. Sales by the Topper Group or other large holders of a
substantial number of our common units in the public or private markets, or the perception that such sales might occur, could
have a material adverse effect on the price of our common units or could impair our ability to obtain capital through an offering
of equity securities. In addition, we have agreed to provide registration rights to the Topper Group. Under our Partnership
Agreement and pursuant to a registration rights agreement that we have entered into, the Topper Group has registration rights
relating to the offer and sale of any units that it holds, subject to certain limitations.
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We may issue unlimited additional units without unitholder approval, which would dilute existing unitholder ownership
interests.
Our Partnership Agreement does not limit the number of additional limited partner interests, including limited partner interests
that rank senior to the common units that we may issue at any time without the approval of our unitholders. The issuance of
additional common units or other equity interests of equal or senior rank could have the following effects:
our existing unitholders’ proportionate ownership interest in us will decrease;
the amount of cash available for distribution on each unit may decrease;
the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders
will increase;
the ratio of taxable income to distributions may increase;
the relative voting strength of each previously outstanding unit may be diminished;
the claims of the common unitholders to our assets in the event of our liquidation may be subordinated and/or diluted;
and
the market price of our common units may decline.
Our General Partner’s discretion in establishing cash reserves may reduce the amount of cash available for distribution to
unitholders.
The Partnership Agreement requires our General Partner to deduct from operating surplus cash reserves that it determines are
necessary to fund our future operating expenditures. The General Partner may reduce cash available for distribution by
establishing cash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are
a party or to provide funds for future distributions to partners. These cash reserves will affect the amount of cash available for
distribution to unitholders.
Our Partnership Agreement restricts the voting rights of unitholders owning 20% or more of our common units.
Our Partnership Agreement restricts unitholders’ voting rights by providing that any units held by a person or group that owns
20% or more of any class of units then outstanding, other than our General Partner and its affiliates, their transferees and persons
who acquired such units with the prior approval of the Board, cannot vote on any matter.
Management fees and cost reimbursements due to our General Partner and the Topper Group for services provided to us or
on our behalf will reduce cash available for distribution to our unitholders. The amount and timing of such reimbursements
will be determined by our General Partner.
Prior to making any distribution on our common units, we will pay the Topper Group the management fee and reimburse our
General Partner and the Topper Group for all out-of-pocket third-party expenses they incur and payments they make on our
behalf, pursuant to the Omnibus Agreement. Our Partnership Agreement provides that our General Partner will determine in good
faith the expenses that are allocable to us. In addition, pursuant to the Omnibus Agreement, the Topper Group will be entitled to
reimbursement for certain expenses that they incur on our behalf. Our Partnership Agreement does not limit the amount of
expenses for which our General Partner and the Topper Group may be reimbursed. The reimbursement of expenses and payment
of fees, if any, to our General Partner and the Topper Group will reduce the amount of cash available to pay distributions to our
unitholders.
Unitholders may have liability to repay distributions and in certain circumstances may be personally liable for the obligations
of the Partnership.
Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section
17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”), we may not make a distribution to our
unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a
period of three years from the date of the impermissible distribution, limited partners who received the distribution and who knew
at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount.
Liabilities to partners on account of their partnership interests and liabilities that are non-recourse to the Partnership are not
counted for purposes of determining whether a distribution is permitted.
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It may be determined that the right, or the exercise of the right by the limited partners as a group, to (i) remove or replace our
General Partner, (ii) approve some amendments to our Partnership Agreement or (iii) take other action under our Partnership
Agreement constitutes “participation in the control” of our business. A limited partner that participates in the control of our
business within the meaning of the Delaware Act may be held personally liable for our obligations under the laws of Delaware,
to the same extent as our General Partner. This liability would extend to persons who transact business with us under the
reasonable belief that the limited partner is a General Partner. Neither our Partnership Agreement nor the Delaware Act
specifically provides for legal recourse against our General Partner if a limited partner were to lose limited liability through any
fault of our General Partner.
The NYSE does not require a publicly traded partnership like us to comply with certain of its corporate governance
requirements.
Our common units are listed on the NYSE. Because we are a publicly traded partnership, the NYSE does not require us to have,
and we do not intend to have, a majority of independent directors on our Board or to establish and maintain a compensation
committee or a nominating and corporate governance committee. Additionally, any future issuance of additional common units
or other securities, including to our affiliates, will not be subject to the NYSE’s shareholder approval rules that apply to a
corporation. Accordingly, unitholders will not have the same protections afforded to corporations (other than “controlled
companies”) that are subject to all of the NYSE corporate governance requirements.
Tax Risks
Our tax treatment depends in large part on our status as a partnership for U.S. federal income tax purposes and our otherwise
not being subject to a material amount of U.S. federal, state and local income or franchise tax. If the IRS were to treat us as
a corporation for U.S. federal income tax purposes or if we were to otherwise be subject to a material amount of additional
entity level income, franchise or other taxation for U.S. federal, state or local tax purposes, then our cash available for
distribution to our unitholders would be substantially reduced.
The anticipated after-tax benefit of an investment in our common units depends largely on our being treated as a partnership for
U.S. federal income tax purposes. First, a partnership is exempt from U.S. federal income tax, and the partnership’s income is
instead allocated to the partners for inclusion on their tax returns. Second, under the Tax Cuts and Jobs Act, for taxable years
beginning after December 31, 2017, and before January 1, 2026, the partner may also deduct from the partnership’s taxable
income allocable to such partner an amount equal to 20% of such qualified business income (subject to certain limits), resulting
in a lower effective tax rate for the partner with respect to the partnership’s income. A publicly traded partnership, such as us,
may be treated as a corporation, instead of being treated as a partnership, for U.S. federal income tax purposes unless 90% or
more of its gross income for every taxable year it is publicly traded consists of Qualifying Income. Based on our current operations
we believe that we will be able to satisfy this requirement and, thus, be treated as a partnership, rather than a corporation, for U.S.
federal income tax purposes. However, a substantial change in our business, or a change in current U.S. federal income tax law,
could also cause us to be treated as a corporation for U.S. federal income tax purposes or otherwise subject us to entity-level
taxation.
If we were required to be treated as a corporation for U.S. federal income tax purposes or otherwise subject to entity-level taxation,
then we would pay U.S. federal income tax on our taxable income at the corporate tax rate which, under current law, is 21%. We
would also likely pay state and local income tax at varying rates. Distributions to our unitholders would generally be taxed again
as either a dividend (to the extent of our current and accumulated earnings and profits) and/or as taxable gain after recovery of a
unitholder’s U.S. federal income tax basis in their units, and no income, gains, losses, deductions or credits would flow through
to our unitholders. Because a U.S. federal income tax would be imposed upon us as a corporation, our cash available for
distribution to our unitholders would be substantially reduced. Thus, treatment of us as a corporation would result in a material
reduction in the anticipated cash flow and after-tax return to our unitholders.
At the state level, were we to be subject to U.S. federal income tax, we would also be subject to the income tax provisions of
many states. Moreover, because of widespread state budget deficits and other reasons, several states are evaluating ways to
independently subject partnerships to entity-level taxation through the imposition of state income taxes, franchise taxes and other
forms of taxation. Imposition of any additional such taxes on us or an increase in the existing tax rates would reduce the cash
available for distribution to our unitholders.
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Our Partnership Agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that results in
us becoming subject to either: (a) entity-level taxation for U.S. federal, state, local and/or foreign income and/or withholding tax
purposes to which we were not subject prior to such enactment, modification or interpretation, and/or (b) an increased amount of
one or more of such taxes (including as a result of an increase in tax rates), then the minimum quarterly distribution amounts and
the target distribution amounts may be adjusted (i.e., reduced) to reflect the impact of that law on us.
We have subsidiaries that are treated as corporations for U.S. federal income tax purposes and are subject to entity-level U.S.
federal, state and local income and franchise tax.
We conduct a portion of our operations and business through one or more direct and indirect subsidiaries that are treated as C
corporations for U.S. federal income tax purposes. We may elect to conduct additional operations through these corporate
subsidiaries in the future. These corporate subsidiaries are subject to corporate-level taxes at the corporate tax rate, which is
currently 21% for federal taxes, and will also likely be subject to state (and possibly local) income tax at varying rates, on their
taxable income. Any such entity level taxes will reduce the cash available for distribution to us and, in turn, to unitholders. If the
IRS were to successfully assert that these corporations have more tax liability than we anticipate or legislation were enacted that
increased the corporate tax rate, our cash available for distribution to unitholders would be further reduced. Distributions from
any such C corporation will generally be taxed again to unitholders as dividend income to the extent of current and accumulated
earnings and profits of such C corporation. The maximum U.S. federal income tax rate applicable to qualified dividend income
that is allocable to individuals is 20% (plus an additional 3.8% Medicare tax on net investment income where applicable). An
individual unitholders’ share of dividend and interest income from C corporation subsidiaries would constitute portfolio income
that could not be offset by the unitholders’ share of our other losses or deductions.
The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential
legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
The present U.S. federal income tax treatment of publicly traded partnerships, including us, or of an investment in our common
units may be modified by administrative, legislative or judicial changes or differing interpretations at any time. For example,
from time to time, members of Congress propose and consider such substantive changes to the existing U.S. federal income tax
laws that affect publicly traded partnerships. If implemented, these proposals or other similar proposals could eliminate the
Qualifying Income exception upon which we rely for our treatment as a partnership for U.S. federal income tax purposes.
Any modification to the U.S. federal income tax laws may be applied retroactively and could make it more difficult or impossible
for us to be treated as a partnership for U.S. federal income tax purposes. We are unable to predict whether any of these changes
or other proposals will ultimately be enacted. Any such changes could negatively impact the value of an investment in our
common units.
If the IRS contests the U.S. federal income tax positions we take, the market for our common units may be adversely impacted
and the costs of any contest will reduce our cash available for distribution to our unitholders. We have not requested any ruling
from the IRS with respect to our treatment as a partnership for U.S. federal income tax purposes or any other U.S. federal income
tax matter affecting us. The IRS may adopt positions that differ from the conclusions of our counsel expressed in our disclosures
or from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of our
counsel’s conclusions or the positions we take, and such positions may ultimately not be sustained. A court may not agree with
some or all of our counsel’s conclusions or the positions we take. Any contest with the IRS may materially and adversely impact
the market for our common units and the price at which they trade. In addition, the costs of any contest with the IRS, which will
be borne indirectly by our unitholders and our General Partner, will result in a reduction in cash available for distribution.
Our unitholders are required to pay taxes on their share of income from us even if they do not receive any cash distributions
from us. A unitholder's share of our taxable income, and its relationship to any distributions we make, may be affected by a
variety of factors, including our economic performance, transactions in which we engage or changes in law and may be
substantially different from any estimate we make in connection with a unit offering.
Our unitholders are required to pay U.S. federal income taxes and, in some cases, state and local taxes, on their allocable share
of our taxable income and gain even if they do not receive any cash distributions from us. Our unitholders may not receive cash
distributions from us equal to their share of our taxable income or even equal to the actual tax due with respect to that income.
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A unitholder’s share of our taxable income, and its relationship to any distributions we make, may be affected by a variety of
factors, including our economic performance, which may be affected by numerous business, economic, regulatory, legislative,
competitive and political uncertainties beyond our control, and certain transactions in which we might engage. For example, we
may engage in transactions that produce substantial taxable income allocations to some or all of our unitholders without a
corresponding increase in cash distributions to our unitholders, such as a sale or exchange of assets, the proceeds of which are
reinvested in our business or used to reduce our debt, or an actual or deemed satisfaction of our indebtedness for an amount less
than the adjusted issue price of the debt. A unitholder’s ratio of its share of taxable income to the cash received by it may also be
affected by changes in law.
From time to time, in connection with an offering of our common units, we may state an estimate of the ratio of federal taxable
income to cash distributions that a purchaser of our common units in that offering may receive in a given period. These estimates
depend in part on factors that are unique to the offering with respect to which the estimate is stated, so the expected ratio applicable
to other common units will be different, and in many cases less favorable, than these estimates. Moreover, even in the case of
common units purchased in the offering to which the estimate relates, the estimate may be incorrect, due to the uncertainties
described above, challenges by the IRS to tax reporting positions which we adopt, or other factors. The actual ratio of taxable
income to cash distributions could be higher or lower than expected, and any differences could be material and could materially
affect the value of our common units.
Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
In general, we are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our trade or business
during our taxable year. Under the Tax Cuts and Jobs Act, for taxable years beginning after December 31, 2017, our deduction
for “business interest” is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For
purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business
interest income, and in the case of taxable years beginning before January 1, 2022, any deduction allowable for depreciation,
amortization or depletion. A pending federal bill, The Tax Relief for American Families and Workers Act of 2024 (H.R. 7024),
would extend the ability to compute adjusted taxable income without regard to any deduction allowable for depreciation,
amortization or depletion to taxable years beginning after January 1, 2022 and before January 1, 2026.
Tax gain or loss on the disposition of our common units could be more or less than expected.
If a unitholder sells common units, the unitholder will recognize a gain or loss equal to the difference between the amount realized
and that unitholder’s tax basis in those common units. Distributions per common unit in excess of a unitholder’s allocable share
of our net taxable income result in a decrease in that unitholder’s tax basis in its common units. The amount of this decreased tax
basis, with respect to the units sold will, in effect, become taxable income to that unitholder, if that unitholder sells such units at
a price greater than that unitholder’s tax basis in those units, even if the sales price received is less than the original cost.
Furthermore, a substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due
to potential recapture of depreciation and amortization deductions and certain other items. In addition, because the amount
realized includes a unitholder’s share of our non-recourse liabilities, if a unitholder sells units, that unitholder may incur a tax
liability in excess of the amount of cash received from the sale.
Tax-exempt organizations and non-U.S. persons face unique tax issues from owning common units that may result in adverse
tax consequences to them.
Investment in our common units by organizations that are exempt from U.S. federal income tax, such as employee benefit plans
and individual retirement accounts and non-U.S. persons raises issues unique to them. For example, a substantial amount of our
U.S. federal taxable income and gain constitute gross income from an unrelated trade or business and the amount thereof allocable
to a tax-exempt organization would be taxable to such organization as unrelated business taxable income. Distributions to a non-
U.S. person that holds our common units will be reduced by U.S. federal withholding taxes imposed at the highest applicable
U.S. federal income tax rate and such non-U.S. person will be required to file U.S. federal income tax returns and pay U.S. federal
income tax, to the extent not previously withheld, on his, her or its allocable share of our taxable income and gain.
34
Under the Tax Cuts and Jobs Act, if a unitholder sells or otherwise disposes of a common unit, the transferee is required to
withhold 10% of the amount realized by the transferor unless the transferor certifies that it is not a foreign person, and we are
required to deduct and withhold from the transferee amounts that should have been withheld by the transferee but were not
withheld. The Department of the Treasury and the IRS have issued final regulations providing guidance on the application of
these rules for transfers of certain publicly traded partnership interests, including transfers of our common units, that are generally
applicable to transfers occurring on or after January 1, 2023. Under these regulations, the “amount realized” on a transfer of our
common units will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the
transferor. Such broker will generally be responsible for the 10% withholding obligation, and we will generally not be required
to withhold from the transferee amounts that should have been withheld by the broker but were not withheld. Quarterly
distributions made to our foreign unitholders on or after January 1, 2023 may also be subject to withholding under these rules to
the extent a portion of a distribution is attributable to an amount in excess of our cumulative net income that has not previously
been distributed. Any tax-exempt organization or non-U.S. person should consult its tax advisor before investing in our common
units, including to discuss the potential impact of tax withholding on distributions on or sales or other taxable dispositions of our
common units.
Our unitholders are subject to state and local income taxes and return filing requirements in states and localities where they
do not live as a result of investing in our common units.
In addition to U.S. federal income taxes, our unitholders will likely be subject to other taxes, such as state and local income taxes,
unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which
we do business or own property, even if they do not live in any of those jurisdictions. Our unitholders will likely be required to
file state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further,
our unitholders may be subject to penalties for failure to comply with those requirements. We currently conduct business in 34
states (see “Item 2. Properties”). Each unitholder must assess the need to file and pay income tax in these states on their allocated
share of partnership taxable income. We may own property or conduct business in other states, localities or foreign countries in
the future. It is the responsibility of each unitholder to file all U.S. federal, state, local and foreign tax returns. In certain states,
tax losses may not produce a tax benefit in the year incurred and also may not be available to offset income in subsequent tax
years. Some states may require us, or we may elect, to withhold a percentage of income from amounts to be distributed to a
unitholder not otherwise exempt from withholding, who is not a resident of the state. Withholding, the amount of which may be
greater or less than a particular unitholders’ income tax liability to the state, generally does not relieve a nonresident unitholder
from the obligation to file a state income tax return. Amounts withheld may be treated as if distributed to unitholders for purposes
of determining the amounts distributed by us. Our counsel has not rendered an opinion on the state, local or non-U.S. tax
consequences of an investment in our common units.
We will treat each purchaser of our common units as having the same tax characteristics on a per-unit basis without regard
to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the
common units.
Because we cannot match transferors and transferees of common units, we will adopt depreciation and amortization positions
that may not conform to all aspects of existing Treasury Regulations. A successful IRS challenge to those positions could
adversely affect the amount of U.S. federal income tax benefits available to our unitholders. It also could affect the timing of
these tax benefits or the amount of gain for U.S. federal income tax purposes from any sale of common units and could have a
negative impact on the value of our common units or result in audit adjustments to a unitholder’s U.S. federal income tax returns.
We prorate our items of income, gain, loss and deduction for U.S. federal income tax purposes and allocate them between
transferors and transferees of our common units each month based upon the ownership of our common units on the first
business day of each month and as of the opening of the applicable exchange on which our common units are listed, instead
of on the basis of the date a particular common unit is transferred. The IRS may challenge this treatment, which could change
the allocation of items of income, gain, loss and deduction among our unitholders.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each
month based upon the ownership of our common units on the first day of each month, instead of on the basis of the date a
particular common unit is transferred. Treasury Regulations allow a similar monthly convention, but such regulations do not
specifically authorize the use of the proration method we have adopted. If the IRS were to successfully challenge our proration
method, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.
35
If a unitholder lends its common units to a short seller to cover a short sale of common units, the unitholder may be considered
to have disposed of those common units for U.S. federal income tax purposes. If such event occurs, the unitholder would no
longer be treated for U.S. federal income tax purposes as a partner with respect to those common units during the period of
the loan and may recognize gain or loss as a result of such deemed disposition.
Because a unitholder that lends common units to a “short seller” to cover a short sale of common units may be considered to have
disposed of the loaned common units, the unitholder may not be treated for U.S. federal income tax purposes as a partner with
respect to those common units during the period of the loan to the short seller and the unitholder may recognize gain or loss from
such deemed disposition. Moreover, during the period of the loan of common units to the short seller, any of our income, gain,
loss or deduction with respect to such common units may not be reportable by the respective unitholder, and any cash distributions
received by the unitholder as to those common units could be fully taxable to them as ordinary income. Unitholders desiring to
assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor
to discuss whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from loaning
their common units.
We have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between our
General Partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of the
common units.
When we issue additional units or engage in certain other transactions, our General Partner will determine the fair market value
of our assets and allocate any unrealized gain or loss attributable to our assets to the capital accounts of our unitholders and our
General Partner. Although we may from time to time consult with professional appraisers regarding valuation matters, including
the valuation of our assets, our General Partner will make many of the fair market value determinations of our assets using a
methodology based on the market value of our common units as a means to measure the fair market value of our assets. Our
methodology may be viewed as understating or overstating the value of our assets. In that case, there may be a shift of income,
gain, loss and deduction between certain unitholders and our General Partner, which may be unfavorable to such unitholders. The
IRS may challenge our valuation methods and allocations of income, gain, loss and deduction between our General Partner and
certain of our unitholders.
A successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income, gain or loss
being allocated to our unitholders for U.S. federal income tax purposes. It also could affect the amount of taxable gain from our
unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit
adjustments to our unitholders’ U.S. federal income tax returns without the benefit of additional deductions.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it (and some states) may
assess and collect any resulting taxes (including any applicable penalties and interest) directly from us, in which case we may
require our unitholders and former unitholders to reimburse us for such taxes (including any applicable penalties or interest)
or, if we are required to bear such payment, our cash available for distribution to our unitholders might be substantially
reduced.
Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes audit adjustments to our income tax returns for tax years
beginning after 2017, it (and some states) may assess and collect any resulting taxes (including any applicable interest and
penalties) directly from us. We will generally have the ability to shift any such tax liability to our General Partner and our
unitholders in accordance with their interests in us during the year under audit, but there can be no assurance that we will be able
to do so (or will choose to do so) under all circumstances, or that we will be able to (or choose to) effect corresponding shifts in
state income or similar tax liability resulting from the IRS adjustment in states in which we do business in the year under audit
or in the adjustment year. If we make payments of taxes, penalties and interest resulting from audit adjustments, we may require
our unitholders and former unitholders to reimburse us for such taxes (including any applicable penalties or interest) or, if we are
required to bear such payment, our cash available for distribution to our unitholders might be substantially reduced. Additionally,
we may be required to allocate an adjustment disproportionately among our unitholders, causing the publicly traded units to have
different capital accounts, unless the IRS issues further guidance.
In the event the IRS makes an audit adjustment to our income tax returns and we do not or cannot shift the liability to our
unitholders in accordance with their interests in us during the year under audit, we will generally have the ability to request that
the IRS reduce the determined underpayment by reducing the suspended passive loss carryovers of our unitholders (without any
compensation from us to such unitholders), to the extent such underpayment is attributable to a net decrease in passive activity
losses allocable to certain partners. Such reduction, if approved by the IRS, will be binding on any affected unitholders.
36
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such
term is defined in Item 106(a) of Regulation S-K. These risks include, among other things: operational risks, intellectual property
theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws.
Substantially all our locations are branded fuel locations for which sensitive debit and credit card transactions for fuel or
merchandise products or services do not pass through our networks; rather, such information passes through the branded fuel
supplier’s (or its service providers’) networks.
We have an enterprise-wide information security platform, which is part of our enterprise risk assessment process and designed
to protect, detect, respond to and manage reasonably foreseeable cybersecurity risks and threats. To protect our information
systems from cybersecurity threats, we seek to use best-in-class security tools that help prevent, identify, escalate, investigate,
resolve and recover from identified security incidents in a timely manner. These include, but are not limited to, internal
reporting and monitoring and detection tools. We also maintain a third party security operations service to identify, prioritize,
assess, mitigate and remediate risks. We rely on the third parties we use to implement security programs commensurate with
their risk, and we cannot ensure in all circumstances that their efforts will be successful.
We regularly assess risks from cybersecurity and technology threats and monitor our information systems for potential
vulnerabilities. We conduct regular reviews and tests of our information security program and leverage audits by our internal
audit team and third party consultants, penetration and vulnerability testing, simulations, and other exercises to evaluate the
effectiveness of our information security program and improve our security measures and planning. We also provide employee
training to support identification of and how to respond to cyber attacks. The results of these assessments are reported to the
Audit Committee of the Board.
Our systems periodically experience directed attacks intended to lead to interruptions and delays in our service and operations
as well as loss, misuse or theft of personal information (of third parties and employees) and other data, confidential information
or intellectual property. To date, these incidents have not had a material impact on our service, systems or business and we do
not believe cybersecurity risks from these prior incidents are reasonably likely to materially affect our operations. For further
information on cybersecurity risks and potential related impacts on us, see "Risk Factors – Our business and our reputation
could be adversely affected by the failure to protect sensitive customer, employee or vendor data, whether as a result of cyber
security attacks or otherwise, or to comply with applicable regulations relating to data security and privacy."
The Director of Information Technology is responsible for overseeing the information security program as well as members of
the Information Technology department that execute our program with oversight by members of our senior leadership team.
These members of our Information Technology department have an average of over 15 years of prior work experience in
various roles involving information technology, including security, auditing, compliance and systems. These individuals are
informed about, and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their
management of, and participation in, the cybersecurity risk management and strategy processes described above, including the
operation of our incident response plan, and report to the Audit Committee on any appropriate items.
The Board oversees our annual enterprise risk assessment, where we assess key risks within the company, including security
and technology risks and cybersecurity threats. The Audit Committee of the Board oversees our cybersecurity risk and receives
regular reports from our Director of Information Technology on various cybersecurity matters, including risk assessments,
mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance.
37
ITEM 2. PROPERTIES
The following table shows the aggregate number of sites we owned or leased by customer group at December 31, 2023:
Lessee dealers
Company operated
Commission agents
Total
Owned
Sites
Leased
Sites
Total
Sites
359
169
146
674
273
127
42
442
632
296
188
1,116
We conduct business at sites located in Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky,
Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Mississippi, New Hampshire, New Jersey, New
Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,
Texas, Virginia, West Virginia, Wisconsin and Vermont. Our site count includes those involved in our wholesale and retail
segments.
The following table provides a summary of our sites acquired, changes between customer groups or sold during 2023:
Number at beginning of year
Acquired
Changes between customer groups
Divested
Number at end of year (a)
Lessee
Dealers
Company
Operated
255
2
39
—
296
691
—
(43)
(16)
632
Commission
Agents
Total
185
1
4
(2)
188
1,131
3
—
(18)
1,116
(a)
Excludes independent commission sites and includes sites where we collect rent but to which we do not distribute motor fuel as well as
closed sites.
Our principal executive offices are in Allentown, Pennsylvania in approximately 37,000 square feet of leased office space.
ITEM 3. LEGAL PROCEEDINGS
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. None of these proceedings, separately or in the aggregate,
are expected to have a material adverse effect on our 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.
Additional information regarding legal proceedings is included in Note 16 to the financial statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
38
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
As of February 22, 2024, we had 37,983,154 common units outstanding, held by approximately 29 holders of record. Our common
units are listed and trade on the NYSE under the symbol “CAPL.”
Cash Distribution Policy
General
The Board has adopted a policy to make cash distributions per unit each quarter, in an amount determined by the Board following
the end of such quarter. In general, we expect that cash distributed for each quarter will equal cash generated from operations less
cash needed for maintenance capital expenditures, accrued but unpaid expenses (including the management fee to the Topper
Group), reimbursement of expenses incurred by our General Partner, debt service and other contractual obligations and reserves
for future operating and capital needs or for future distributions to our partners. We expect that the Board will reserve excess
cash, from time to time, in an effort to sustain or permit gradual or consistent increases in quarterly distributions. Restrictions in
our CAPL Credit Facility could limit our ability to pay distributions upon the occurrence of certain events. See “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—
Credit Facility.” The Board may also determine to borrow to fund distributions in quarters when we generate less cash available
for distribution than necessary to sustain or grow our cash distributions per unit. The factors that we believe will be the primary
drivers of our cash generated from operations are changes in demand for motor fuels, the number of sites to which we distribute
motor fuels, the margin per gallon we are able to generate at such sites and the profitability of sites we own and lease, including
our company operated sites.
Our cash distribution policy, established by our General Partner, is to distribute each quarter an amount at least equal to the
minimum quarterly distribution of $0.4375 per unit on all units ($1.75 per unit on an annualized basis). The distribution declared
by the Board on January 22, 2024 was $0.5250 per unit (or $2.10 per unit on an annualized basis). Our General Partner may
determine at any time that it is in the best interest of our Partnership to modify or revoke our cash distribution policy. Modification
of our cash distribution policy may result in distributions of amounts less than, or greater than, our minimum quarterly
distribution, and revocation of our cash distribution policy could result in no distributions at all. In addition, our CAPL Credit
Facility includes certain restrictions on our ability to make cash distributions.
ITEM 6. [Reserved]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following MD&A is intended to help the reader understand our results of operations and financial condition. This section is
provided as a supplement to and should be read in conjunction with Items 1, 1A and 8 (which includes our financial statements)
contained in this report.
MD&A is organized as follows:
Recent Developments—This section describes significant recent developments.
Significant Factors Affecting Our Profitability—This section describes the most significant factors impacting our
results of operations.
Results of Operations—This section provides an analysis of our results of operations on a consolidated basis and
for each of our segments as well as a discussion of non-GAAP financial measures.
Liquidity and Capital Resources—This section provides a discussion of our financial condition and cash flows. It
also includes a discussion of our debt, capital requirements, other matters impacting our liquidity and capital
resources and an outlook for our business.
New Accounting Policies—This section describes new accounting pronouncements that we have already adopted,
those that we are required to adopt in the future and those that became applicable in the current year as a result of
new circumstances.
Critical Accounting Policies and Estimates—This section describes the accounting policies and estimates that we
consider most important for our business and that require significant judgment.
39
Amendment and Restatement of CAPL Credit Facility
Recent Developments
On March 31, 2023, the Partnership and its subsidiary, LGWS (together with the Partnership, the “Borrowers”), amended and
restated the CAPL Credit Facility. As amended, the CAPL Credit Facility provides for an increase of the senior secured revolving
credit facility from $750 million to $925 million and extends the maturity date from April 1, 2024 to March 31, 2028. The credit
facility can be increased from time to time upon the Partnership’s written request, subject to certain conditions, up to an additional
$350 million. The aggregate amount of the outstanding loans and letters of credit under the CAPL Credit Facility cannot exceed
the combined revolving commitments then in effect. Certain subsidiaries of the Borrowers are guarantors ("Guarantors") of all
of the obligations under the CAPL Credit Facility. All obligations under the CAPL Credit Facility are secured by substantially
all of the Partnership’s assets and substantially all of the assets of the Guarantors.
Borrowings under the credit facility bear interest, at the Partnership’s option, at (1) a rate equal to the secured overnight financing
rate (“SOFR”), for interest periods of one, three or six months, plus a margin ranging from 1.75% to 2.75% per annum depending
on the Partnership’s Consolidated Leverage Ratio (as defined in the CAPL Credit Facility) plus a customary credit spread
adjustment or (2) (a) an alternative base rate equal to the greatest of (i) the federal funds rate plus 0.5% per annum, (ii) SOFR for
one month interest periods plus 1.00% per annum or (iii) the rate of interest established by the Agent (as defined in the CAPL
Credit Facility), from time to time, as its prime rate, plus (b) a margin ranging from 0.75% to 1.75% per annum depending on the
Partnership’s Consolidated Leverage Ratio. In addition, the Partnership incurs a commitment fee based on the unused portion of
the credit facility at a rate ranging from 0.25% to 0.45% per annum depending on the Partnership’s Consolidated Leverage Ratio.
The Partnership also has the right to borrow swingline loans under the CAPL Credit Facility in an amount up to $35.0 million.
Swingline loans bear interest at the base rate plus the applicable alternative base rate margin.
Letters of credit may be issued under the CAPL Credit Facility up to an aggregate amount of $65.0 million. Letters of credit are
subject to a 0.125% fronting fee and other customary administrative charges. Letters of credit accrue a fee at a rate based on the
applicable margin of SOFR loans.
The CAPL Credit Facility also 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, 2023, June 30, 2023,
September 30, 2023 and December 31, 2023, not greater than 5.25 to 1.00, (ii) for each fiscal quarter ending March 31, 2024,
June 30, 2024 and September 30, 2024, not greater than 5.00 to 1.00, and (iii) 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.
The incremental borrowings at the closing of the amended and restated CAPL Credit Facility were used to repay outstanding
borrowings under the JKM Credit Facility, which was terminated on March 31, 2023, and to pay fees and expenses in connection
with the CAPL Credit Facility and the termination of the JKM Credit Facility.
The CAPL Credit Facility prohibits the Partnership from making cash distributions to its unitholders if any event of default occurs
or would result from the distribution. In addition, the CAPL Credit Facility contains various covenants that may limit, among
other things, the Partnership’s ability to:
grant liens;
incur or assume other indebtedness;
materially alter the character of the Partnership’s business in any material respect;
enter into certain mergers, liquidations and dissolutions; and
make certain investments, acquisitions or dispositions.
40
If an event of default exists under the CAPL Credit Facility, the lenders will be able to accelerate the maturity of the CAPL Credit
Facility and exercise other rights and remedies. Events of default include, among others, the following:
failure to pay any principal under the CAPL Credit Facility when due or any interest, fees or other amounts under
the CAPL Credit Facility when due after a grace period;
failure of any representation or warranty to be true and correct in any material respect;
failure to perform or otherwise comply with the covenants in the CAPL Credit Facility or in other loan documents
without a waiver or amendment;
any default in the performance of any obligation or condition beyond the applicable grace period relating to any other
indebtedness of more than $45.0 million;
certain judgment default for monetary judgments exceeding $45.0 million;
bankruptcy or insolvency event involving the Partnership or any of its subsidiaries;
certain Employee Retirement Income Security Act of 1974 (ERISA) violations;
a Change of Control (as defined in the CAPL Credit Facility) without a waiver or amendment; and
failure of the lenders for any reason to have a perfected first priority security interest in a material portion of the
collateral granted by the Partnership or any of its subsidiaries.
In connection with amending the CAPL Credit Facility and terminating the JKM Credit Facility, the Partnership wrote off $1.1
million of deferred financing costs in the first quarter of 2023.
See Note 11 to the financial statements for additional information regarding the CAPL Credit Facility and the termination of the
JKM Credit Facility.
Additional Interest Rate Swap Contracts
In April and November 2023, we entered into a total of six additional interest rate swap contracts. Five of the interest rate swap
contracts are spot-start contracts with a total notional amount of $300 million and hedge variable interest rate payments for the
remaining term of the CAPL Credit Facility (through March 2028). One of the interest rate swap contracts has a notional amount
of $100 million and is a forward-starting interest rate swap contract that hedges variable interest rate payments from April 1,
2024 through the remaining term of the CAPL Credit Facility. All of these interest rate swap contracts have been designated as
cash flow hedges and are expected to be highly effective.
See Note 12 to the financial statements for additional information regarding these additional interest rate swap contracts.
Subsequent Events
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.
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.
41
Significant Factors Affecting our Profitability
The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit
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.
Regarding our supplier relationships, a material amount of our total gallons purchased are subject to prompt payment discounts.
The dollar value of these discounts varies with changes in motor fuel prices. Therefore, in periods of lower wholesale motor fuel
prices, our gross profit is negatively affected, and, in periods of higher wholesale motor fuel prices, our gross profit is positively
affected (as it relates to these discounts).
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.
Changes in our average motor fuel selling price per gallon and gross margin are directly related to the changes in crude oil and
wholesale motor fuel prices. Variations in our reported revenues and cost of sales are, therefore, primarily related to the price of
crude oil and wholesale motor fuel prices and generally not as a result of changes in motor fuel sales volumes, unless otherwise
indicated and discussed below.
Seasonality Effects on Volumes
Our business is subject to 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 months) and lowest during the
winter months in the first and fourth quarters.
Impact of Inflation
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.
Impact of Interest Rates
Increases in interest rates (particularly SOFR) have increased our interest expense as further described below. Although we have
hedged $600 million of our variable-rate debt, we are exposed to changes in interest rates on the balance of our variable-rate debt.
Acquisition and Financing Activity
Our results of operations and financial condition are also impacted by our acquisition and financing activities as summarized
below.
2021
2022
From late June 2021 through December 31, 2021, we closed on the purchase of 103 sites of our 106-site acquisition
from 7-Eleven.
In February 2022, we closed on the final three properties of our 106-site acquisition from 7-Eleven.
42
2023
In March 2022, Holdings issued $25 million in preferred membership interests.
On November 9, 2022, we closed on the acquisition of assets from CSS.
On March 31, 2023, we amended and restated the CAPL Credit Facility and terminated the JKM Credit Facility. See
Note 11 to the financial statements for additional information.
Results of Operations
We have omitted discussion of the earliest of the three years covered by our consolidated financial statements presented in this
Annual Report because that disclosure was already included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2022, filed with the SEC on February 28, 2023. You are encouraged to reference Part II, Item 7, within that report,
for a discussion of our financial condition and results of operations for the year ended December 31, 2022 as compared to the
year ended December 31, 2021.
Consolidated Income Statement Analysis
Below is an analysis of our consolidated statements of income and provides the primary reasons for significant increases and
decreases in the various income statement line items from period to period. Our consolidated statements of income are as follows
(in thousands):
Operating revenues
Cost of sales
Gross profit
Operating expenses:
Operating expenses
General and administrative expenses
Depreciation, amortization and accretion expense
Total operating expenses
Gain on dispositions and lease terminations, net
Operating income
Other income, net
Interest expense
Income before income taxes
Income tax expense (benefit)
Net income
Accretion of preferred membership interests
Net income available to limited partners
2023
Year Ended December 31,
2022
$ 4,386,263 $ 4,967,424 $ 3,579,259
3,302,306
276,953
4,003,995
382,268
4,591,653
375,771
2021
194,746
27,031
77,158
298,935
4,737
88,070
790
(43,743)
45,117
2,525
42,592
2,488
40,104 $
174,708
25,575
80,625
280,908
1,143
96,006
504
(32,100)
64,410
714
63,696
1,726
61,970 $
134,079
30,930
77,852
242,861
2,037
36,129
544
(18,244)
18,429
(3,225)
21,654
—
21,654
$
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Consolidated Results
Operating revenues decreased $581 million (12%) and operating income decreased $7.9 million (8%). These results were driven
by:
Operating revenues
A $400 million (15%) decrease in our wholesale segment revenues primarily attributable to an 18% decrease in the
average spot price of WTI crude oil to $77.58 per barrel in 2023, compared to $94.90 per barrel in 2022. The
wholesale price of motor fuel is highly correlated to the price of crude oil. See “Significant Factors Affecting our
Profitability—The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and
Gross Profit.” Volume was flat 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.
43
A $181 million (8%) decrease in our retail segment revenues primarily attributable to a 13% decrease in the average
retail selling price per gallon in 2023 as compared to 2022 generally due to the decrease in wholesale motor fuel
prices noted above. In addition, volume increased 2% due primarily to an increase in site count due to the conversion
of certain lessee dealer sites to company operated and commission sites. Lastly, merchandise revenues increased
$35.8 million (13%) 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 as well as stronger performance in the base business.
Cost of sales
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.
Gross profit
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.
Operating expenses
See “Segment Results” for additional analyses.
General and administrative expenses
General and administrative expenses increased $1.5 million (6%) driven by an increase in equity-based compensation expense as
a result of more grants being outstanding in 2023 as compared to 2022 and higher legal fees.
Depreciation, amortization and accretion expense
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.
Gain on dispositions and lease terminations, net
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.
Interest expense
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.
Income tax expense
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.
Accretion of preferred membership interests
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.
Segment Results
We present the results of operations of our segments consistent with how our management views the business.
44
Wholesale
The following table highlights the results of operations and certain operating metrics of our wholesale segment. The narrative
following these tables provides an analysis of the results of operations of that segment (thousands of dollars, except for the
number of distribution sites and per gallon amounts):
Gross profit:
Motor fuel gross profit
Rent gross profit
Other revenues
Total gross profit
Operating expenses
Operating income
Year Ended December 31,
2022
2023
2021
$
$
72,680 $
50,873
5,248
128,801
(37,988)
90,813 $
73,378 $
50,852
6,509
130,739
(37,072)
93,667 $
70,221
50,736
3,721
124,678
(37,906)
86,772
Motor fuel distribution sites (end of period): (a)
Independent dealers (b)
Lessee dealers (c)
Total motor fuel distribution sites
632
569
1,201
663
619
1,282
666
637
1,303
Average motor fuel distribution sites
1,235
1,286
1,325
Volume of gallons distributed
842,636
844,486
931,288
Margin per gallon
$
0.086 $
0.087 $
0.075
In addition, we distributed motor fuel to sub-wholesalers who distributed to additional sites.
(a)
(b) The decrease in the independent dealer site count from December 31, 2022 to December 31, 2023 was primarily attributable
to the net loss of contracts, partially offset by divestitures of certain lessee dealer sites but with continued fuel supply.
(c) 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.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Gross profit decreased $1.9 million (1%) and operating income decreased $2.9 million (3%). These results were driven by:
Motor fuel gross profit
The $0.7 million (1%) decrease in motor fuel gross profit was primarily driven by a 1% decrease in our average fuel margin per
gallon as compared to 2022 driven by lower terms discounts due to lower crude oil prices, partially offset by better sourcing costs
as a result of brand consolidation and other initiatives. The average spot price of WTI crude oil decreased 18% from $94.90 per
barrel in 2022 to $77.58 per barrel in 2023. See “Significant Factors Affecting our Profitability—The Significance of Crude Oil
and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit.”
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.
Rent gross profit
Rent gross profit was flat for 2023 as compared to 2022 primarily due to $2.1 million of rent increases from our customers as
well as the reopening of closed sites, partially offset by a $2.1 million decrease in rent gross profit due to the conversion of certain
lessee dealer sites to company operated sites.
45
Other revenues
Other revenues decreased $1.3 million (19%) due primarily to lower dealer contract termination fees and the conversion of certain
lessee dealer sites to company operated and commission sites.
Operating expenses
Operating expenses increased $0.9 million (2%), primarily as a result of higher maintenance costs and management fees.
Retail
The following table highlights the results of operations and certain operating metrics of our retail segment. The narrative
following these tables provides an analysis of the results of operations of that segment (in thousands, except for the number of
retail sites and per gallon amounts):
Gross profit:
Motor fuel
Merchandise
Rent
Other revenue
Total gross profit
Operating expenses
Operating income
Retail sites (end of period):
Company operated retail sites (a)
Commission agents (b)
Total retail segment sites
Total retail segment statistics:
Volume of gallons sold
Average retail fuel sites
Margin per gallon, before deducting credit card fees and commissions
Company operated site statistics:
Average retail fuel sites
Margin per gallon, before deducting credit card fees
Merchandise gross profit percentage
Commission site statistics:
Average retail fuel sites
Margin per gallon, before deducting credit card fees and commissions
2023
Year Ended December 31,
2022
2021
$
$
$
138,729
89,847
9,120
15,771
253,467
(156,758)
$
96,709
$
146,546
76,135
9,797
12,554
245,032
(137,636)
$
107,396
79,318
55,117
8,681
9,159
152,275
(96,173)
56,102
296
199
495
255
200
455
252
198
450
506,535
476
0.369
$
496,634
452
0.396
$
403,850
389
0.280
283
0.400
$
28.4%
253
0.426
$
27.2%
187
0.309
26.4%
193
0.306
$
199
0.336
$
202
0.238
$
$
$
(a) The increase in the company operated site count from December 31, 2022 to December 31, 2023 was primarily attributable
to the conversion of certain lessee dealer and commission agent sites to company operated sites, largely during the second
quarter of 2023.
(b) 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.
46
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Gross profit increased $8.4 million (3%) and operating income decreased $10.7 million (10%). These results were driven by:
Gross profit
Our motor fuel gross profit decreased $7.8 million (5%) attributable to a 7% decrease in margin per gallon in 2023
compared to 2022 due to the steep drop in crude oil prices particularly during the third quarter of 2022. In addition,
volume increased 2% due to the site count increase stemming from the conversion of certain lessee dealer sites to
company operated and commission sites.
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.
Operating expenses
Operating expenses increased $19.1 million (14%) 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, store labor increased, in part due to
expanding hours of operation at many of our company operated sites. Lastly, many other cost categories increased due primarily
to inflation.
Non-GAAP Financial Measures
We use the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage
Ratio. EBITDA represents net income before deducting interest expense, income taxes and depreciation, amortization and
accretion (which includes certain impairment charges). Adjusted EBITDA represents EBITDA as further adjusted to exclude
equity-based compensation expense, gains or losses on dispositions and lease terminations, net and certain discrete acquisition
related costs, such as legal and other professional fees, separation benefit costs and certain other discrete non-cash items arising
from purchase accounting. Distributable Cash Flow represents Adjusted EBITDA less cash interest expense, sustaining capital
expenditures and current income tax expense. The Distribution Coverage Ratio is computed by dividing Distributable Cash Flow
by distributions paid on common units.
EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are used as supplemental financial
measures by management and by external users of our financial statements, such as investors and lenders. EBITDA and Adjusted
EBITDA are used to assess our financial performance without regard to financing methods, capital structure or income taxes and
the ability to incur and service debt and to fund capital expenditures. In addition, Adjusted EBITDA is used to assess the operating
performance of our business on a consistent basis by excluding the impact of items which do not result directly from the wholesale
distribution of motor fuel, the leasing of real property, or the day to day operations of our retail site activities. EBITDA, Adjusted
EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are also used to assess the ability to generate cash sufficient
to make distributions to our unitholders.
We believe the presentation of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio provides
useful information to investors in assessing the financial condition and results of operations. EBITDA, Adjusted EBITDA,
Distributable Cash Flow and Distribution Coverage Ratio should not be considered alternatives to net income or any other
measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA, Adjusted EBITDA,
Distributable Cash Flow and Distribution Coverage Ratio have important limitations as analytical tools because they exclude
some but not all items that affect net income. Additionally, because EBITDA, Adjusted EBITDA, Distributable Cash Flow and
Distribution Coverage Ratio may be defined differently by other companies in our industry, our definitions may not be
comparable to similarly titled measures of other companies, thereby diminishing their utility.
47
The following table presents reconciliations of EBITDA, Adjusted EBITDA, and Distributable Cash Flow to net income, the
most directly comparable U.S. GAAP financial measure, for each of the periods indicated (in thousands, except for the
Distribution Coverage Ratio):
Net income
Interest expense
Income tax expense (benefit)
Depreciation, amortization and accretion expense
EBITDA
Equity-based employee and director compensation expense
Gain on dispositions and lease terminations, net (a)
Acquisition-related costs (b)
Adjusted EBITDA
Cash interest expense
Sustaining capital expenditures (c)
Current income tax expense (d)
Distributable Cash Flow
Distributions paid on common units
Distribution Coverage Ratio
Year Ended December 31,
2022
2023
2021
42,592 $
43,743
2,525
77,158
166,018
3,031
(4,737)
1,460
165,772
(40,456)
(7,654)
(953)
116,709 $
79,712 $
1.46x
63,696 $
32,100
714
80,625
177,135
2,294
(1,143)
1,508
179,794
(29,312)
(7,164)
(2,466)
140,852 $
79,625 $
1.77x
21,654
18,244
(3,225)
77,852
114,525
1,311
(2,037)
9,461
123,260
(16,382)
(4,161)
(548)
102,169
79,552
1.28x
$
$
$
(a) See "Results of Operations–Gain on Dispositions and Lease Terminations, net."
(b) Relates to certain acquisition-related costs, such as legal and other professional fees, separation benefit costs and purchase
accounting adjustments associated with recent acquisitions.
(c) 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.
(d) Excludes income tax incurred on the sale of sites.
Liquidity and Capital Resources
Liquidity
Our principal liquidity requirements are to finance our operations, fund acquisitions, service our debt and pay distributions to our
unitholders. We expect our ongoing sources of liquidity to include cash generated by operations, proceeds from sales of sites in
connection with our real estate rationalization efforts, borrowings under the CAPL Credit Facility, and if available to us on
acceptable terms, issuances of equity and debt securities. We regularly evaluate alternate sources of capital to support our liquidity
requirements.
Our ability to meet our debt service obligations and other capital requirements, including capital expenditures, acquisitions, and
partnership distributions, will depend on our future operating performance, which, in turn, will be subject to general economic,
financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal
part of our business, depending on market conditions, we will, from time to time, consider opportunities to repay, redeem,
repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses,
acquisitions or other events may cause us to seek additional debt or equity financing in future periods.
We believe that we will have sufficient cash flow from operations, borrowing capacity under the CAPL Credit Facility, access to
capital markets and alternate sources of funding to meet our financial commitments, debt service obligations, contingencies,
anticipated capital expenditures and partnership distributions. However, we are subject to business and operational risks that
could adversely affect our cash flow. A material decrease in our cash flows would likely produce an adverse effect on our
borrowing capacity as well as our ability to issue additional equity and/or debt securities and/or maintain or increase distributions
to unitholders.
48
Cash Flows
The following table summarizes cash flow activity (in thousands):
Net cash provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by financing activities
$
Year Ended December 31,
2022
2023
117,083 $ 161,317 $
(28,181)
(99,966)
(46,398)
(106,513)
2021
95,468
(298,690)
210,357
Operating Activities
Net cash provided by operating activities decreased $44 million in 2023 compared to 2022 primarily attributable to lower fuel
margins in 2023 and an increase in interest expense driven by higher interest rates. In addition, changes in working capital
decreased cash flow from operating activities by $20 million, primarily driven by the drop in crude oil prices particularly in the
third quarter of 2022. Further, we paid $3 million in income taxes and received net refunds of income taxes of $3 million for
2023 and 2022, respectively.
As is typical in our industry, our current liabilities exceed our current assets as a result of the longer settlement of real estate and
motor fuel taxes as compared to the shorter settlement of receivables for fuel, rent and merchandise.
Investing Activities
In 2023, we incurred capital expenditures of $35 million driven by image upgrades funded primarily through incentives from our
fuel suppliers, rebranding of certain sites, site upgrades, including store remodels and site purchases. We received $6 million in
proceeds primarily from the sale of sites in connection with our real estate rationalization effort.
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.
Financing Activities
In 2023, we paid $80 million in distributions to our unitholders. We made net repayments of $9 million on our credit facility. We
paid $7 million of deferred financing costs in connection with amending and restating the CAPL Credit Facility and terminating
the JKM Credit Facility in the first quarter of 2023.
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.
Distributions
Distribution activity for 2023 was as follows (in thousands):
Quarter Ended
December 31, 2022
March 31, 2023
June 30, 2023
September 30, 2023
December 31, 2023
Record Date
February 3, 2023
May 3, 2023
August 4, 2023
November 3, 2023
February 2, 2024
Payment Date
February 10, 2023
May 10, 2023
August 11, 2023
November 10, 2023
February 9, 2024
Cash Distribution
(per unit)
Cash Distribution
(in thousands)
$
0.5250 $
0.5250
0.5250
0.5250
0.5250
19,918
19,925
19,934
19,935
19,941
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.
49
Debt
As of December 31, 2023, our debt and finance lease obligations consisted of the following (in thousands):
CAPL Credit Facility
Finance lease obligations
Total debt and finance lease obligations
Current portion
Noncurrent portion
Deferred financing costs, net
Noncurrent portion, net of deferred financing costs
$
$
756,000
11,064
767,064
3,083
763,981
10,101
753,880
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.
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.
The CAPL Credit Facility contains financial covenants related to leverage and interest coverage as further described in Note 11
to the financial statements. These financial covenants and other covenants may restrict or limit our ability to make distributions,
incur additional indebtedness, make certain capital expenditures or dispose of assets in excess of specified levels, among other
restrictions.
Capital Expenditures
We make investments to expand, upgrade and enhance existing assets. We categorize our capital requirements as either sustaining
capital expenditures, growth capital expenditures or acquisition capital expenditures. Sustaining capital expenditures are those
capital expenditures required to maintain our long-term operating income or operating capacity. Growth capital expenditures,
which include individual site purchases, and acquisition capital expenditures are those capital expenditures that we expect will
increase our operating income or operating capacity over the long term. We have the ability to fund our capital expenditures by
additional borrowings under our CAPL Credit Facility, or, if available to us on acceptable terms, accessing the capital markets
and issuing additional equity, debt securities or other options, such as the sale of assets. Our ability to access the capital markets
may have an impact on our ability to fund acquisitions. We may not be able to complete any offering of securities or other options
on terms acceptable to us, if at all.
The following table outlines our capital expenditures and acquisitions (in thousands):
Year Ended December 31,
2022
2021
2023
Sustaining capital
Growth
Acquisitions
Total capital expenditures and acquisitions
$
7,654 $
26,974
—
4,161
7,164 $
23,187
37,698
29,594 272,983
$ 34,628 $ 59,945 $ 314,842
Growth capital expenditures increased in 2023 as compared with 2022, primarily due to an increase in image upgrades that
were funded primarily through incentives from our fuel suppliers, partially offset by a reduction in rebranding of certain sites,
including the sites acquired from 7-Eleven.
A significant portion of our growth capital expenditures are discretionary and we regularly review our capital plans in light of
anticipated proceeds from sales of sites.
Contractual Obligations, Contingencies, Off Balance Sheet Arrangements and Concentration Risks
Our contractual obligations primarily include payments of debt and finance lease obligations and related interest payments and
operating lease obligations.
50
As discussed previously, our CAPL Credit Facility matures March 31, 2028. In addition, we have finance lease obligations that
expire in 2027 and operating leases that expire through 2041. See Note 11 to the financial statements for additional information
on our debt and finance lease obligations, Note 12 for information on interest rate swap contracts and Note 13 for information on
our operating lease obligations.
See Note 10 for information on AROs, Note 15 for information on environmental matters and Note 16 for information on
minimum fuel volume purchase commitments and legal matters.
See Note 2 for information on our concentration risks related to our customers, fuel suppliers, fuel carriers and merchandise
suppliers.
Outlook
As noted previously, 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, which affect
our motor fuel gross profit.
Our results for 2024 are anticipated to be impacted by the following:
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.
Given increases in SOFR during 2023 and the timing of when certain interest rate swaps expire during 2024 and the
rates that were locked in under those swaps, we anticipate higher interest expense in 2024 relative to 2023.
We will continue to evaluate acquisitions on an opportunistic basis. Additionally, we will pursue acquisition targets that fit into
our strategy. Whether we will be able to execute acquisitions will depend on market conditions, availability of suitable acquisition
targets at attractive terms, acquisition-related compliance with customary regulatory requirements, and our ability to finance such
acquisitions on favorable terms and in compliance with our debt covenant restrictions.
New Accounting Policies
No new accounting guidance significantly impacted our business in 2023. For information on our significant accounting policies,
see Note 2 to the financial statements.
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.
Actual results could differ from those estimates. See Note 2 to the financial statements for a summary of our significant accounting
policies.
Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and results
and require our most difficult, subjective or complex judgments, often because we must make estimates about the effect of matters
that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially
different amounts being reported under different conditions or using different assumptions. We believe the following policies to
be the most critical in understanding the judgments that are involved in preparing our financial statements.
Revenue Recognition
The core principle of accounting guidance on revenue recognition is that an entity should recognize revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods and services. This guidance applies to over 90% of our revenues as the only primary revenue stream
outside the scope of this guidance is rental income.
51
Revenues from the delivery of motor fuel are recorded at the time of delivery to our customers, by which time the price is fixed,
title to the products has transferred and payment has either been received or collection is reasonably assured, net of applicable
discounts and allowances. Incremental costs incurred to obtain certain contracts with customers are deferred and amortized over
the contract term and are included in other noncurrent assets on the balance sheets. Amortization of such costs are classified as a
reduction of operating revenues.
Revenues from the sale of convenience store products are recognized at the time of sale to the customer.
Revenues from leasing arrangements for which we are the lessor are recognized ratably over the term of the underlying lease.
In transactions in which we sell and lease back property, we apply guidance from ASC 606–Revenue from Contracts with
Customers in determining whether the transfer of the property should be accounted for as a sale. Specifically, we assess if we
have satisfied a performance obligation by transferring control of the property.
Accounts receivable primarily result from the sale of motor fuels to customers. 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.
LGW and CAPL JKM Wholesale collect motor fuel taxes, which consist of various pass-through taxes collected from customers
on behalf of taxing authorities and remits such taxes directly to those taxing authorities. LGW’s and CAPL JKM Wholesale’s
accounting policy is to exclude the taxes collected and remitted from wholesale revenues and cost of sales and account for them
as liabilities. LGWS’s and Joe’s Kwik Marts’ retail sales and cost of sales include motor fuel taxes as the taxes are included in
the cost paid for motor fuel and LGWS and Joe’s Kwik Mart’s have no direct responsibility to collect or remit such taxes to the
taxing authorities.
See Notes 5 and 22 to the financial statements for additional information on our revenues and related receivables.
Asset Acquisitions and Business Combinations
When closing on an acquisition, we must first determine whether substantially all of the fair value of the set of gross assets
acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is
not a business. If this threshold is not met, we determine whether the set meets the definition of a business. We did not close any
major acquisitions in 2023.
A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose
of providing a return to investors or other owners, members or participants. A business typically has inputs, processes applied to
those inputs and outputs that are used to generate a return to investors, but outputs are not required for a set to be a business. A
business must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to
create outputs.
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:
Transaction costs are capitalized as a component of the cost of the assets acquired rather than expensed as incurred;
Goodwill is not recognized. Rather, any excess consideration transferred over the fair value of the net assets acquired
is allocated on a relative fair value basis to the identifiable net assets acquired other than certain non-qualifying assets
as defined in the guidance.
We account for business combinations in accordance with the guidance under ASC 805–Business Combinations. The purchase
price is recorded for assets acquired and liabilities assumed based on fair value. The excess of the fair value of the consideration
conveyed over the fair value of the net assets acquired is recorded as goodwill.
The income statement includes the results of operations for each acquisition from their respective date of acquisition.
52
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.
Goodwill
Goodwill represents the excess of the fair value of the consideration conveyed to acquire a business over the fair value of the net
assets acquired. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level at least annually, and
more frequently if events and circumstances indicate that the goodwill might be impaired. The annual impairment testing date of
goodwill is October 1.
In performing our annual impairment analysis, we use qualitative factors to determine whether it is more likely than not
(likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill. We
consider macroeconomic conditions such as developments in equity and credit markets, industry and market conditions such as
the competitive environment, cost factors such as changes in our cost of fuel, our financial performance and our unit price.
If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a
reporting unit exceeds its carrying amount, no further testing is necessary. However, if we determine that it is more likely than
not that the fair value of a reporting unit is less than its carrying amount, then we perform the goodwill impairment test.
In the goodwill impairment test, the reporting unit’s carrying amount (including goodwill) and its fair value are compared. If the
estimated fair value of a reporting unit is less than the carrying value, an impairment charge is recognized for the deficit up to the
amount of goodwill recorded.
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.
Tax Matters
As a limited partnership, we are not subject to federal and state income taxes. Income tax attributable to our taxable income
generated by our nontaxable subsidiaries (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,
LGWS and Joe’s Kwik Marts. 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.
Valuation allowances are reevaluated each reporting period by assessing the likelihood of the ultimate realization of a deferred
tax asset. We consider a number of factors in assessing the realization of a deferred tax asset, including the reversal of temporary
differences, projections of future taxable income and ongoing prudent and feasible tax planning strategies. The amount of deferred
tax assets ultimately realized may differ materially from the estimates utilized in the computation of valuation allowances and
may materially impact the financial statements in the future.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices. The principal market risks to which we are
exposed are interest rate risk and commodity price risk.
53
Interest Rate Risk
As of December 31, 2023, we had $756.0 million outstanding on our CAPL Credit Facility. Our outstanding borrowings bear
interest at SOFR plus an applicable margin.
See Note 12 to the financial statements for information regarding the amendment of three interest rate swap contracts and the
entry into six additional interest rate swap contracts.
Taking the interest rate swap contracts into account, our effective interest rate on our CAPL Credit Facility at December 31, 2023
was 4.9%. A one percentage point change in SOFR would impact annual interest expense by approximately $1.6 million.
Commodity Price Risk
We purchase gasoline and diesel fuel from several suppliers at costs that are subject to market volatility. These purchases are
generally made pursuant to contracts or at market prices established with the supplier.
We do not currently engage in hedging activities for these purchases due to our pricing structure that allows us to generally pass
on price changes to our customers and related parties.
A material amount of our total gallons purchased are subject to prompt payment discounts for prompt payment and other rebates
and incentives, which are recorded within cost of sales. Prompt payment discounts are based on a percentage of the purchase
price of motor fuel. As such, the dollar value of these discounts increases and decreases corresponding with motor fuel prices.
Based on our current volumes, we estimate a $10 per barrel change in the price of crude oil would impact our annual wholesale
motor fuel gross profit by approximately $2.6 million related to these payment discounts.
Foreign Currency Risk
Our operations are located in the U.S., and therefore are not subject to foreign currency risk.
ITEM 8. FINANCIAL STATEMENTS
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The SEC, as required by Section 404 of the Sarbanes-Oxley Act, adopted rules requiring most companies that file reports with
the SEC to include a management report on such company’s internal control over financial reporting in its Form 10-K. In addition,
our independent registered public accounting firm must attest to our internal control over financial reporting.
The management of CrossAmerica is responsible for establishing and maintaining adequate internal control over financial
reporting. This internal control system was designed to provide reasonable assurance to the company’s management and Board
regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation. CrossAmerica management assessed the effectiveness
of the company’s internal control over financial reporting as of December 31, 2023. In making this assessment, it used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework, 2013 version. Based on our assessment, we believe that, as of December 31, 2023, the Partnership’s internal control
over financial reporting is effective based on those criteria.
Attestation Report of the Independent Registered Public Accounting Firm
Grant Thornton LLP (PCAOB ID No. 248), our independent registered public accounting firm, has audited our internal control
over financial reporting as of December 31, 2023. Their report dated February 26, 2024, expressed an unqualified opinion on our
internal control over financial reporting.
54
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors, General Partner and Limited Partners
CrossAmerica Partners LP
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of CrossAmerica Partners LP (a Delaware partnership) and
subsidiaries (the “Partnership”) as of December 31, 2023 and 2022, the related consolidated statements of income, equity and
comprehensive income and cash flows for each of the three years in the period ended December 31, 2023, and the related notes
and financial statement schedule I (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Partnership as of December 31, 2023 and 2022, and the results
of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with
accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in
the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 26, 2024 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on
the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical
audit matters.
/s/ GRANT THORNTON LLP
We have served as the Partnership’s auditor since 2011.
Charlotte, North Carolina
February 26, 2024
55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors, General Partner and Limited Partners
CrossAmerica Partners LP
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of CrossAmerica Partners LP (a Delaware partnership) and
subsidiaries (the “Partnership”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the
Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based
on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2023, and our
report dated February 26, 2024 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Charlotte, North Carolina
February 26, 2024
56
CROSSAMERICA PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars, except unit data)
Current assets:
ASSETS
Cash and cash equivalents
Accounts receivable, net of allowances of $709 and $686, respectively
Accounts receivable from related parties
Inventory
Assets held for sale
Current portion of interest rate swap contracts
Other current assets
Total current assets
Property and equipment, net
Right-of-use assets, net
Intangible assets, net
Goodwill
Deferred tax assets
Interest rate swap contracts, less current portion
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations
Current portion of operating lease obligations
Accounts payable
Accounts payable to related parties
Accrued expenses and other current liabilities
Motor fuel and sales taxes payable
Total current liabilities
Debt and finance lease obligations, less current portion
Operating lease obligations, less current portion
Deferred tax liabilities, net
Asset retirement obligations
Interest rate swap contracts
Other long-term liabilities
Total liabilities
Commitments and contingencies (Notes 15 and 16)
Preferred membership interests
Equity:
Common units— 37,983,154 and 37,937,604 units issued and
outstanding at December 31, 2023 and 2022, respectively
Accumulated other comprehensive income
Total equity
Total liabilities and equity
$
$
$
December 31,
2023
2022
4,990 $
31,185
437
52,344
400
9,321
9,845
108,522
705,217
148,317
95,261
99,409
759
687
23,510
1,181,682 $
3,083 $
34,787
68,986
10,180
23,674
20,386
161,096
753,880
118,723
12,919
47,844
3,535
52,934
1,150,931
16,054
30,825
743
47,307
983
13,827
8,667
118,406
728,379
164,942
113,919
99,409
2,779
3,401
26,142
1,257,377
11,151
35,345
77,048
7,798
23,144
20,813
175,299
761,638
135,220
13,367
46,431
—
46,289
1,178,244
27,744
26,156
(2,392)
5,399
3,007
$
1,181,682 $
36,508
16,469
52,977
1,257,377
The accompanying notes are an integral part of these consolidated financial statements.
57
CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars, except unit and per unit amounts)
Operating revenues (a)
Cost of sales (b)
Gross profit
Operating expenses:
Operating expenses (c)
General and administrative expenses
Depreciation, amortization and accretion expense
Total operating expenses
Gain on dispositions and lease terminations, net
Operating income
Other income, net
Interest expense
Income before income taxes
Income tax expense (benefit)
Net income
Accretion of preferred membership interests
Net income available to limited partners
Earnings per common unit
Basic
Diluted
Weighted-average common units:
Basic
Diluted
$
$
$
$
For the Year Ended December 31,
2022
4,967,424 $
4,591,653
2023
4,386,263 $
4,003,995
382,268
2021
3,579,259
3,302,306
276,953
375,771
174,708
25,575
80,625
280,908
1,143
96,006
504
(32,100)
64,410
714
63,696
1,726
61,970 $
134,079
30,930
77,852
242,861
2,037
36,129
544
(18,244)
18,429
(3,225)
21,654
—
21,654
194,746
27,031
77,158
298,935
4,737
88,070
790
(43,743)
45,117
2,525
42,592
2,488
40,104 $
1.06 $
1.05 $
1.63 $
1.63 $
0.57
0.57
37,957,727
38,119,461
37,916,829
38,059,774
37,880,910
37,884,124
Supplemental information:
(a) includes excise taxes of:
(a) includes rent income of:
(b) excludes depreciation, amortization and accretion
(b) includes rent expense of:
(c) includes rent expense of:
$
295,762 $
270,501 $
82,331
84,106
22,338
15,460
23,457
15,254
228,764
83,182
23,765
13,531
The accompanying notes are an integral part of these consolidated financial statements.
58
CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization and accretion expense
Amortization of deferred financing costs
Credit loss expense
Deferred income tax expense (benefit)
Equity-based employee and director compensation expense
Gain on dispositions and lease terminations, net
Changes in operating assets and liabilities, net of acquisitions
Net cash provided by operating activities
Cash flows from investing activities:
Principal payments received on notes receivable
Proceeds from sale of assets
Capital expenditures
Cash paid in connection with acquisitions, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities:
Borrowings under revolving credit facilities
Repayments on revolving credit facilities
Borrowings under the Term Loan Facility
Repayments on the Term Loan Facility
Net proceeds from issuance of preferred membership interests
Payments of finance lease obligations
Payments of deferred financing costs
Distributions paid on distribution equivalent rights
Withholding tax distributions paid on preferred membership interests
Distributions paid on common units
Net cash (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents
For the Year Ended December 31,
2022
2023
2021
$
42,592 $
63,696 $
21,654
77,158
3,287
40
1,572
3,031
(4,737)
(5,860)
117,083
213
6,234
(34,628)
—
(28,181)
240,900
(91,037)
—
(158,980)
—
(2,890)
(7,106)
(241)
(900)
(79,712)
(99,966)
(11,064)
80,625
2,788
232
(1,753)
2,294
(1,143)
14,578
161,317
77,852
1,862
253
(3,761)
1,311
(2,037)
(1,666)
95,468
203
13,344
(30,351)
(29,594)
(46,398)
793
15,359
(41,859)
(272,983)
(298,690)
114,100
(138,538)
1,120
(24,600)
24,430
(2,724)
(474)
(202)
—
(79,625)
(106,513)
8,406
194,895
(77,500)
182,460
—
—
(2,604)
(7,201)
(141)
—
(79,552)
210,357
7,135
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
16,054
4,990 $
7,648
16,054 $
513
7,648
The accompanying notes are an integral part of these consolidated financial statements.
59
CROSSAMERICA PARTNERS LP
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
(Thousands of Dollars, except unit amounts)
Balance at December 31, 2020
Net income
Other comprehensive income
Unrealized gain on interest rate swap contracts
Realized loss on interest rate swap contracts
reclassified from AOCI into interest expense
Total other comprehensive income
Comprehensive income
Issuance of units related to 2020 Bonus Plan
Tax effect from intra-entity transfer of assets
Vesting of equity awards, net of units withheld for tax
Distributions paid
Balance at December 31, 2021
Net income
Other comprehensive income
Unrealized gain on interest rate swap contracts
Realized gain on interest rate swap contracts
reclassified from AOCI into interest expense
Total other comprehensive income
Comprehensive income
Issuance of units related to 2021 Bonus Plan
Vesting of equity awards, net of units withheld for tax
Accretion of preferred membership interests
Distributions paid
Balance at December 31, 2022
Net income
Other comprehensive income
Unrealized gain on interest rate swap contracts
Realized gain on interest rate swap contracts
reclassified from AOCI into interest expense
Total other comprehensive income (loss)
Comprehensive income (loss)
Issuance of units related to 2022 Bonus Plan
Vesting of equity awards, net of units withheld for tax
Accretion of preferred membership interests
Distributions paid
Balance at December 31, 2023
Limited Partners’ Interest
Common Unitholders
Dollars
112,124 $
21,654
AOCI
Dollars
Total Equity
Dollars
(2,456 ) $
—
109,668
21,654
Units
37,868,046 $
—
—
—
—
—
6,822
—
21,688
—
37,896,556
—
—
4,466
4,466
—
—
21,654
126
(1,094 )
411
(79,693 )
53,528
63,696
1,020
5,486
5,486
—
—
—
—
3,030
—
1,020
5,486
27,140
126
(1,094 )
411
(79,693 )
56,558
63,696
—
—
17,336
17,336
—
—
—
16,154
24,894
—
—
37,937,604
—
—
—
—
—
15,346
30,204
—
—
37,983,154
$
—
—
63,696
327
510
(1,726 )
(79,827 )
36,508
42,592
(3,897 )
13,439
13,439
—
—
—
—
16,469
—
(3,897 )
13,439
77,135
327
510
(1,726 )
(79,827 )
52,977
42,592
—
5,922
5,922
—
—
42,592
322
627
(2,488 )
(79,953 )
(2,392 ) $
(16,992 )
(11,070 )
(11,070 )
—
—
—
—
5,399 $
(16,992 )
(11,070 )
31,522
322
627
(2,488 )
(79,953 )
3,007
The accompanying notes are an integral part of these consolidated financial statements.
60
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. DESCRIPTION OF BUSINESS
Purchase of the General Partner by the Topper Group
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 February 22, 2024, the Topper Group has
beneficial ownership of a 38.6% limited partner interest in the Partnership.
Description of Business
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.
The consolidated 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 and CAPL JKM Wholesale, which distribute motor fuels on a wholesale basis and generate 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 Income under
Section 7704(d) of the Internal Revenue Code;
LGWS, which owns and leases (or leases and sub-leases) real estate and personal property used in the retail sale of
motor fuels, as well as provides maintenance and other services to its customers. In addition, LGWS distributes motor
fuels on a retail basis and sells convenience merchandise items to end customers at company operated retail sites and
sells motor fuel on a retail basis at sites operated by commission agents. Income from LGWS generally is not
Qualifying Income under Section 7704(d) of the Internal Revenue Code; and
Joe’s Kwik Marts, which owns and leases real estate and personal property at certain of our company operated sites.
Joe’s Kwik Marts also sells motor fuels on a retail basis and sells convenience merchandise items to end customers.
Income from Joe’s Kwik Marts generally is not Qualifying Income under Sections 7704(d) of the Internal Revenue
Code.
Note 2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
These consolidated financial statements were prepared in accordance with U.S. GAAP. These financial statements include the
consolidated accounts of CrossAmerica and subsidiaries. All intercompany accounts and transactions have been eliminated in
consolidation.
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.
61
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and Cash Equivalents
We consider all short-term investments with a maturity of three months or less at the date of purchase to be cash equivalents.
Cash and cash equivalents are stated at cost, which, for cash equivalents, approximates fair value due to their short-term maturity.
We are potentially subject to financial instrument concentration of credit risk through our cash and cash equivalents. We maintain
cash and cash equivalents with several major financial institutions and have approximately $3.5 million of cash and cash
equivalents in excess of FDIC insurance limits at December 31, 2023. We have not experienced any losses on our cash and cash
equivalents and do not believe we have significant credit risk.
Receivables and Financial Instrument Credit Losses
Accounting guidance regarding credit losses on financial instruments 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. 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 primary financial instrument within the scope of this guidance is our accounts receivable, which mainly result from the sale
of motor fuels to customers. Our accounts receivable is generally considered as having a similar risk profile. Credit is extended
to a customer, generally a dealer or a commission agent, based on an evaluation of the customer’s financial condition prior to
entering into fuel supply and/or lease agreements. 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.
Inventories
Motor fuel inventory consists of gasoline, diesel fuel and other petroleum products and is stated at the lower of average cost or
net realizable value using the first-in, first-out method. We record inventory from the time of the purchase of motor fuels from
third-party suppliers until the retail sale to the end customer.
Merchandise inventory is valued at the lower of average cost or net realizable value using the first-in, first-out method, written
down, as necessary, for potentially obsolete or slow-moving inventory.
Asset Acquisitions and Business Combinations
When closing on an acquisition, we must first determine whether substantially all of the fair value of the set of gross assets
acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is
not a business. If this threshold is not met, we determine whether the set meets the definition of a business.
A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose
of providing a return to investors or other owners, members or participants. A business typically has inputs, processes applied to
those inputs and outputs that are used to generate a return to investors, but outputs are not required for a set to be a business. A
business must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to
create outputs.
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.
We account for business combinations in accordance with the guidance under ASC 805–Business Combinations. The purchase
price is recorded for assets acquired and liabilities assumed based on fair value. The excess of the fair value of the consideration
conveyed over the fair value of the net assets acquired is recorded as goodwill.
62
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The income statement includes the results of operations for each acquisition from their respective date of acquisition.
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.
Property and Equipment
Property and equipment is recorded at cost, which equals fair value in the case of a business combination or generally
approximates fair value in the case of an asset acquisition. Depreciation is recognized using the straight-line method over the
estimated useful lives of the related assets, including: 10 to 20 years for buildings and improvements and three to 30 years for
equipment. Amortization of leasehold improvements is based upon the shorter of the remaining terms of the leases including
renewal periods that are reasonably assured, or the estimated useful lives, which generally range from seven to 10 years.
Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized.
Maintenance and repairs are charged to operations as incurred. Gains or losses on the disposition of property and equipment are
recorded in the period the sale meets the criteria for recognition.
Intangible Assets
Intangible assets are recorded at fair value in the case of a business combination or at a value that generally approximates fair
value in the case of an asset acquisition. Intangible assets associated with wholesale fuel supply contracts and wholesale fuel
distribution rights are amortized over 10 years. Trademarks and licenses are amortized over periods from five to 15 years.
Covenants not to compete are amortized over the shorter of the contract term or five years. Intangible assets with finite useful
lives are amortized over their respective estimated useful lives and reviewed for impairment if we believe that changes or
triggering events have occurred that could have caused the carrying value of the intangible assets to exceed its fair value.
Intangible assets with indefinite lives are not amortized but are tested for impairment annually or more frequently if events and
circumstances indicate that the intangible assets might be impaired. No significant impairment charges relating to intangible
assets were recorded for any period presented.
Impairment of Assets
Long-lived assets, which include property and equipment and finite-lived intangible assets, are tested for recoverability whenever
events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is
not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual
disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount
of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other
appropriate methods. See Note 7 for information regarding impairment charges recorded primarily upon classifying sites within
assets held for sale.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets of businesses acquired. Goodwill is not amortized, but
instead is tested for impairment at the reporting unit level at least annually, and more frequently if events and circumstances
indicate that the goodwill might be impaired. The annual impairment testing date of goodwill is October 1.
In performing our annual impairment analysis, we use qualitative factors to determine whether it is more likely than not
(likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill. We
consider macroeconomic conditions such as developments in equity and credit markets, industry and market conditions such as
the competitive environment, cost factors such as changes in our cost of fuel, our financial performance and our unit price.
63
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a
reporting unit exceeds its carrying amount, no further testing is necessary. However, if we determine that it is more likely than
not that the fair value of a reporting unit is less than its carrying amount, then we perform the goodwill impairment test.
In the goodwill impairment test, the reporting unit’s carrying amount (including goodwill) and its fair value are compared. If the
estimated fair value of a reporting unit is less than the carrying value, an impairment charge is recognized for the deficit up to the
amount of goodwill recorded.
No goodwill was impaired for any period presented.
Debt Issuance Costs
Debt issuance costs that are incurred in connection with the issuance of debt are deferred and amortized to interest expense using
the straight-line method (which approximates the effective interest method) over the contractual term of the underlying
indebtedness. Debt issuance costs are classified as a reduction of the associated liability unless there is no balance outstanding
under a revolving line of credit facility, in which case such costs are classified as an asset.
Environmental Matters
Liabilities for future remediation costs are recorded when environmental assessments from governmental regulatory agencies
and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and
magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal
plan of action. Environmental liabilities are based on best estimates of probable undiscounted future costs using currently
available technology and applying current regulations, as well as our own internal environmental policies. Environmental
liabilities are difficult to assess and estimate due to uncertainties related to the magnitude of possible remediation, the timing of
such remediation and the determination of our obligation in proportion to other parties. Such estimates are subject to change due
to many factors, including the identification of new sites requiring remediation, changes in environmental laws and regulations
and their interpretation, additional information related to the extent and nature of remediation efforts and potential improvements
in remediation technologies. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from
third parties.
Asset Retirement Obligations
We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to remove USTs
used to store motor fuel at owned and leased sites at the time we incur that liability, which is generally when the UST is installed
or upon acquiring the site. We record a discounted liability for the fair value of an asset retirement obligation with a corresponding
increase to the carrying value of the related long-lived asset. We depreciate the amount added to property and equipment and
recognize accretion expense in connection with the discounted liability over the estimated remaining life of the UST. Accretion
expense is reflected in depreciation, amortization and accretion expense. We base our estimates of the anticipated future costs for
removal of a UST on our prior experience with removal. Removal costs include the cost to remove the USTs, soil remediation
costs resulting from the spillage of small quantities of motor fuel in the normal operations of our business and other miscellaneous
costs. We review our assumptions for computing the estimated liability for the removal of USTs on an annual basis. Any change
in estimated cash flows is reflected as an adjustment to the liability and the associated asset.
Segment Reporting
We present our segment reporting in accordance with ASC 280–Segment Reporting and engage in both the wholesale and retail
distribution of motor fuels, primarily gasoline and diesel fuel. We present our results to our chief operating decision maker
segregated between wholesale and retail activities. As a result, we are deemed to conduct our business in two segments: 1) the
wholesale segment and 2) the retail segment.
64
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition
The core principle of accounting guidance on revenue recognition is that an entity should recognize revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods and services. This guidance applies to over 90% of our revenues as the only primary revenue stream
outside the scope of this guidance is rental income.
Revenues from the delivery of motor fuel are recorded at the time of delivery to our customers, by which time the price is fixed,
title to the products has transferred and payment has either been received or collection is reasonably assured, net of applicable
discounts and allowances. Incremental costs incurred to obtain certain contracts with customers are deferred and amortized over
the contract term and are included in other noncurrent assets on the consolidated balance sheets. Amortization of such costs are
classified as a reduction of operating revenues.
Revenues from the sale of convenience store products are recognized at the time of sale to the customer.
Revenues from leasing arrangements for which we are the lessor are recognized ratably over the term of the underlying lease.
In transactions in which we sell and lease back property, we apply guidance from ASC 606–Revenue from Contracts with
Customers in determining whether the transfer of the property should be accounted for as a sale. Specifically, we assess if we
have satisfied a performance obligation by transferring control of the property.
See Notes 5 and 22 for additional information on our revenues and related receivables.
Cost of Sales
We include in our cost of sales all costs we incur to acquire motor fuel and merchandise, including the costs of purchasing, storing
and transporting inventory prior to delivery to our customers. A component of our cost of sales is the discount for prompt payment
and other rebates, discounts and incentives offered by our suppliers. Prompt payment discounts from suppliers are based on a
percentage of the purchase price of motor fuel and the dollar value of these discounts varies with motor fuel prices. Cost of sales
does not include any depreciation of our property and equipment, as these amounts are included in depreciation, amortization and
accretion expense on our consolidated statements of income.
Motor Fuel Taxes
LGW and CAPL JKM Wholesale collect motor fuel taxes, which consist of various pass-through taxes collected from customers
on behalf of taxing authorities and remit such taxes directly to those taxing authorities. LGW’s and CAPL JKM Wholesale’s
accounting policy is to exclude the taxes collected and remitted from wholesale revenues and cost of sales and account for them
as liabilities. LGWS’s and Joe’s Kwik Marts’ retail sales and cost of sales include motor fuel taxes as the taxes are included in
the cost paid for motor fuel and LGWS and Joe’s Kwik Marts have no direct responsibility to collect or remit such taxes to the
taxing authorities.
Lease Accounting
We lease certain sites from third parties under long-term arrangements with various expiration dates.
Accounting guidance on leases requires the recognition of lease assets and lease liabilities on the consolidated balance sheet and
disclosing key information about leasing arrangements. In order to measure our lease liability under our leases as lessee, we are
required to discount our minimum rental payments using the rate implicit in the lease, unless such rate cannot be readily
determined, in which case our incremental borrowing rate is used. As we do not know the amount of our lessors’ initial direct
costs, we are generally unable to determine the rate implicit in our leases. As a result, we generally use our incremental borrowing
rate, which is the rate we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a
similar term in a similar economic environment. We considered the rates we paid in previous financing and sale-leaseback
transactions, the rates on our borrowings under our prior secured revolving credit facility and mortgage rates on commercial
properties for various terms in developing our incremental borrowing rates.
65
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ASC 842–Leases requires leases be evaluated and classified as either operating or finance for financial reporting purposes. The
lease term used for lease evaluation includes option periods only in instances in which the exercise of the option period is
reasonably certain. Generally, lease payments are expensed on a straight-line basis over the term of the lease including renewal
periods that are reasonably certain at the inception of the lease. In addition to these lease payments, certain leases require
additional contingent payments based on sales volume or future inflation, which are expensed as incurred.
See Notes 11 and 13 for additional information.
Income Taxes
Our wholly owned taxable subsidiaries recognize deferred income tax assets and liabilities for the expected future income tax
consequences of temporary differences between financial statement carrying amounts and the related income tax basis.
Income tax attributable to our earnings and losses, excluding the earnings and losses of our wholly owned taxable subsidiaries,
are assessed at the individual level of the unitholder. Accordingly, we do not record a provision for income taxes other than for
those earnings and losses generated or incurred by our wholly owned taxable subsidiaries.
Tax positions not meeting the more-likely-than-not recognition threshold at the financial statement date may not be recognized
or continue to be recognized under the accounting guidance for income taxes. Where required, we recognize interest and penalties
for uncertain tax positions in income taxes.
Valuation allowances are reevaluated each reporting period by assessing the likelihood of the ultimate realization of a deferred
tax asset. Management considers a number of factors in assessing the realization of a deferred tax asset, including the reversal of
temporary differences, projections of future taxable income and ongoing prudent and feasible tax planning strategies. The amount
of deferred tax assets ultimately realized may differ materially from the estimates utilized in the computation of valuation
allowances and may materially impact the consolidated financial statements in the future.
Earnings per Common Unit
We compute income per unit using the two-class method under which any excess of distributions declared over net income shall
be allocated to the partners based on their respective sharing of income specified in the Partnership Agreement. Net income per
unit applicable to limited partners is computed by dividing the limited partners’ interest in net income by the weighted-average
number of outstanding common units.
We applied the if-converted method to the preferred membership interests in accordance with ASU 2020-06 for purposes of
computing diluted earnings per unit.
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 815–Derivatives and Hedging, and recognizes derivative instruments
as either assets or liabilities on the consolidated 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 CAPL Credit Facility are made.
The portion of derivative positions that are anticipated to settle within a year are included as a separate line item within current
assets or current liabilities, while the portion of derivative positions that are anticipated to settle beyond a year are recorded as a
separate line item within noncurrent assets or noncurrent liabilities, as applicable.
Cash inflows and outflows related to derivative instruments are included as a component of operating activities on the
consolidated statements of cash flows, consistent with the classification of the hedged interest payments on our CAPL Credit
Facility.
66
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference
Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts,
hedging relationships and other transactions affected by reference rate reform if certain criteria are met to ease an entity’s financial
reporting burden as the market transitions from LIBOR and other interbank offered rates to alternative reference rates.
Subsequently, the FASB issued ASU 2021-01 to clarify the scope of Topic 848 and ASU 2022-06 to defer the sunset date of
Topic 848. The guidance was effective upon issuance and may be applied through December 31, 2024. The adoption of this
guidance did not have a material effect on the Partnership's consolidated financial statements.
See Note 12 for information related to our interest rate swap contracts.
Reclassifications
Certain reclassifications were made to prior year amounts to conform to the current year presentation. Such reclassifications had
no effect on net income or total equity for any periods.
Concentration Risks
For 2023, 2022 and 2021, our wholesale business purchased approximately 80%, 81% and 80% of its motor fuel from
four suppliers, respectively.
For 2023, 2022 and 2021, approximately 23%, 23% and 27% of our motor fuel gallons sold were delivered by two carriers,
respectively.
For 2023, 2022 and 2021, approximately 18%, 21% and 19% of our rent income was from two multi-site operators, respectively.
For each of 2023, 2022 and 2021, approximately 49% of our merchandise was purchased from one supplier.
New Accounting Guidance Pending Adoption
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.
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.
Note 3. PRIOR YEAR ACQUISITIONS
Acquisition of Assets from CSS
On November 9, 2022, we closed on the acquisition of assets from CSS for a purchase price of $27.5 million plus working capital.
The assets consisted of wholesale fuel supply contracts to 38 dealer owned locations, 35 sub-wholesaler accounts and two
commission locations (1 fee based and 1 lease). We funded this acquisition through borrowings on the CAPL Credit Facility and
cash on hand.
67
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquisition of Assets from 7-Eleven
On a rolling basis from June 2021 through February 2022, we closed on the acquisition of assets from 7-Eleven for a purchase
price of $263.0 million plus working capital. The assets acquired related to the ownership and operations of 106 company operated
sites (90 fee; 16 leased). We will pay $1.8 million of purchase price on or prior to February 8, 2027. We funded this acquisition
through borrowings on the CAPL Credit Facility and the JKM Credit Facility as well as cash on hand.
Note 4. ASSETS HELD FOR SALE
We have classified two and three sites as held for sale at December 31, 2023 and 2022, respectively, which are expected to be
sold within one year of such classification. Assets held for sale were as follows (in thousands):
Land
Buildings and site improvements
Equipment
Total
Less accumulated depreciation
Assets held for sale
December 31,
2023
2022
$
$
240 $
380
418
1,038
(638)
400 $
758
457
333
1,548
(565)
983
The Partnership has continued to focus on divesting lower performing assets. During 2023, we sold 10 properties for $9.2 million
in proceeds, resulting in a net gain of $6.5 million. The proceeds for 2023 include $3.8 million of proceeds that were initially
placed in a Section 1031 exchange escrow account and used to purchase replacement properties. As such, these proceeds and
capital expenditures were excluded from the statement of cash flows. During 2022, we sold 27 properties for $12.9 million in
proceeds, resulting in a net gain of $3.5 million. During 2021, we sold 32 properties for $14.0 million in proceeds, resulting in a
net gain of $4.1 million.
See Note 7 for information regarding impairment charges primarily recorded upon classifying sites within assets held for sale.
Note 5. RECEIVABLES
Changes in the allowance for credit losses consisted of the following (in thousands):
Balance at beginning of year
Increase in allowance charged to expense
Accounts charged against the allowance, net of recoveries
Balance at end of year
Year Ended December 31,
2022
2023
2021
$
$
686 $
40
(17)
709 $
458 $
232
(4)
686 $
429
253
(224)
458
Notes receivable totaled $1.0 million and $4.1 million at December 31, 2023 and 2022, respectively, and are included in other
current assets and other noncurrent assets on the consolidated balance sheets.
Note 6. INVENTORIES
Inventories consisted of the following (in thousands):
Merchandise
Motor fuel
Inventories
December 31,
2023
2022
$
$
26,081 $
26,263
52,344 $
22,654
24,653
47,307
68
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
See Note 22 for information regarding the conversion of certain lessee dealer sites to company operated sites, which caused a
significant portion of the increase in merchandise inventory.
Note 7. PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following (in thousands):
December 31,
Land
Buildings and site improvements
Leasehold improvements
Equipment
Construction in progress
Property and equipment, at cost
Accumulated depreciation and amortization
Property and equipment, net
$
2023
326,571 $
365,528
16,434
356,160
4,462
2022
323,882
360,542
15,312
334,324
6,514
1,069,155 1,040,574
(312,195)
728,379
(363,938)
705,217 $
$
Approximately $394 million of property and equipment, net was held for leasing purposes at December 31, 2023.
As discussed in Note 13, we lease sites under a lease with Getty Realty Corporation, for which the building and equipment
components are classified as a finance lease. The right-of-use asset associated with this finance lease is included in the table
above and totaled $5.4 million and $7.1 million at December 31, 2023 and 2022, respectively, net of accumulated amortization.
Amortization of this right-of-use asset is included in depreciation, amortization and accretion expense on the consolidated
statements of income and amounted to $1.7 million, $2.0 million and $2.1 million in 2023, 2022 and 2021, respectively.
Depreciation expense, including amortization of assets recorded under finance lease obligations, was approximately $54.5
million, $58.3 million and $56.1 million for 2023, 2022 and 2021, respectively. Included in these amounts are impairment charges
primarily related to sites classified within assets held for sale totaling $0.8 million, $2.8 million and $7.7 million during 2023,
2022 and 2021, respectively.
Note 8. INTANGIBLE ASSETS
Intangible assets consisted of the following (in thousands):
December 31, 2023
December 31, 2022
Gross
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Amount
Accumulated
Amortization
Net
Carrying
Amount
Wholesale fuel supply contracts/rights
Trademarks/licenses
Covenant not to compete
Total intangible assets
$ 234,501 $ 140,714 $ 93,787 $ 232,932 $ 120,168 $ 112,764
958
1,317
197
157
$ 236,779 $ 141,518 $ 95,261 $ 235,790 $ 121,871 $ 113,919
2,208
650
2,078
200
1,250
453
761
43
Amortization expense was $20.7 million, $21.2 million and $20.0 million for 2023, 2022 and 2021, respectively. Aggregate
amortization expense is expected to be $18.1 million, $16.1 million, $14.3 million, $12.4 million and $11.0 million for 2024,
2025, 2026, 2027 and 2028, respectively.
Note 9. GOODWILL
Goodwill consisted of the following (in thousands):
Balance at December 31, 2023 and 2022
69
Wholesale
Segment
Retail
Segment
$ 54,675 $ 44,734 $
Consolidated
99,409
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES
Accrued expenses and other current liabilities consisted of the following (in thousands):
Taxes other than income
Capital expenditures and maintenance expenses
Current portion of environmental liabilities
Interest
Equity compensation
Professional fees
Other
$
Total accrued expenses and other current liabilities
$
December 31,
2023
2022
7,439 $
3,366
3,394
2,483
3,373
988
2,631
23,674 $
8,452
4,402
3,011
1,764
1,626
393
3,496
23,144
Other long-term liabilities consisted of the following (in thousands):
Security deposits
Deferred fuel supplier rebates (a)
Environmental liabilities
Purchase consideration payable (b)
Other
Total other long-term liabilities
December 31,
2023
2022
$
$
17,749 $
25,979
4,054
1,800
3,352
52,934 $
18,012
18,697
4,474
1,800
3,306
46,289
(a) Increase is primarily driven by the renewal of contracts with certain fuel suppliers and the resulting incentives paid to us to
support the cost of image upgrades at sites supplied by those fuel suppliers.
(b) Purchase consideration related to the acquisition of assets from 7-Eleven; see Note 3 for additional information.
Asset Retirement Obligations
Environmental laws in the U.S. require the permanent closure of USTs within one to two years after the USTs are no longer in
service, depending on the jurisdiction in which the USTs are located. We have estimated that USTs at our owned sites will remain
in service approximately 30 years and that we will have an obligation to remove those USTs at that time. For our leased sites, our
lease agreements generally require that we remove certain improvements, primarily USTs and signage, upon termination of the
lease, and so an asset retirement obligation is incurred upon acquiring the site. There are no assets that are legally restricted for
purposes of settling our asset retirement obligations.
A roll-forward of our asset retirement obligation is below (in thousands):
Balance at beginning of year
Recognition of asset retirement obligations
Changes in estimated cash flows or settlement dates
Accretion
Obligations settled
Balance at end of year
Current portion, included within accrued expenses and
other current liabilities
Long-term portion
$
December 31,
2023
2022
46,810 $
196
(334)
2,039
(802)
47,909
45,749
327
(195)
1,149
(220)
46,810
65
47,844 $
379
46,431
$
70
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. DEBT
Our balances for long-term debt and finance lease obligations are as follows (in thousands):
CAPL Credit Facility
JKM Credit Facility
Finance lease obligations
Total debt and finance lease obligations
Current portion
Noncurrent portion
Deferred financing costs, net
$
Noncurrent portion, net of deferred financing costs
$
December 31,
2023
756,000 $
—
11,064
767,064
3,083
763,981
10,101
753,880 $
2022
606,137
158,980
13,954
779,071
11,151
767,920
6,282
761,638
As of December 31, 2023, future principal payments on debt and future minimum rental payments on finance lease obligations
were as follows (in thousands):
2024
2025
2026
2027
2028
Total future payments
Less impact of discounting
Total future principal payments
Current portion
Long-term portion
Debt
Finance Lease
Obligations
$
$
— $
—
—
—
756,000
756,000
—
756,000
—
756,000 $
3,396 $
3,495
3,596
1,210
—
11,697
633
11,064
3,083
7,981 $
Total
3,396
3,495
3,596
1,210
756,000
767,697
633
767,064
3,083
763,981
On March 31, 2023, the Partnership and its subsidiary, LGWS (together with the Partnership, the “Borrowers”), amended and
restated the CAPL Credit Facility. As amended, the CAPL Credit Facility provides for an increase of the senior secured revolving
credit facility from $750 million to $925 million and extends the maturity date from April 1, 2024 to March 31, 2028. The credit
facility can be increased from time to time upon the Partnership’s written request, subject to certain conditions, up to an additional
$350 million. The aggregate amount of the outstanding loans and letters of credit under the CAPL Credit Facility cannot exceed
the combined revolving commitments then in effect. Certain subsidiaries of the Borrowers are guarantors ("Guarantors") of all
of the obligations under the CAPL Credit Facility. All obligations under the CAPL Credit Facility are secured by substantially
all of the Partnership’s assets and substantially all of the assets of the Guarantors.
Borrowings under the credit facility bear interest, at the Partnership’s option, at (1) a rate equal to the secured overnight financing
rate (“SOFR”), for interest periods of one, three or six months, plus a margin ranging from 1.75% to 2.75% per annum depending
on the Partnership’s Consolidated Leverage Ratio (as defined in the CAPL Credit Facility) plus a customary credit spread
adjustment or (2) (a) an alternative base rate equal to the greatest of (i) the federal funds rate plus 0.5% per annum, (ii) SOFR for
one month interest periods plus 1.00% per annum or (iii) the rate of interest established by the Agent (as defined in the CAPL
Credit Facility), from time to time, as its prime rate, plus (b) a margin ranging from 0.75% to 1.75% per annum depending on the
Partnership’s Consolidated Leverage Ratio. In addition, the Partnership incurs a commitment fee based on the unused portion of
the credit facility at a rate ranging from 0.25% to 0.45% per annum depending on the Partnership’s Consolidated Leverage Ratio.
The Partnership also has the right to borrow swingline loans under the CAPL Credit Facility in an amount up to $35.0 million.
Swingline loans bear interest at the base rate plus the applicable alternative base rate margin.
Letters of credit may be issued under the CAPL Credit Facility up to an aggregate amount of $65.0 million. Letters of credit are
subject to a 0.125% fronting fee and other customary administrative charges. Letters of credit accrue a fee at a rate based on the
applicable margin of SOFR loans.
71
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The CAPL Credit Facility also contains certain financial covenants. The Partnership is required to maintain a Consolidated
Leverage Ratio (as defined in the CAPL Credit Facility) of (i) for the fiscal quarter ending December 31, 2023, not greater than
5.25 to 1.00, (ii) for each fiscal quarter ending March 31, 2024, June 30, 2024 and September 30, 2024, not greater than 5.00 to
1.00, and (iii) 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.
The incremental borrowings at the closing of the amended and restated CAPL Credit Facility were used to repay outstanding
borrowings under the JKM Credit Facility, which was terminated on March 31, 2023, and to pay fees and expenses in connection
with the CAPL Credit Facility and the termination of the JKM Credit Facility.
The CAPL Credit Facility prohibits the Partnership from making cash distributions to its unitholders if any event of default occurs
or would result from the distribution. In addition, the CAPL Credit Facility contains various covenants that may limit, among
other things, the Partnership’s ability to:
grant liens;
incur or assume other indebtedness;
materially alter the character of the Partnership’s business in any material respect;
enter into certain mergers, liquidations and dissolutions; and
make certain investments, acquisitions or dispositions.
If an event of default exists under the CAPL Credit Facility, the lenders will be able to accelerate the maturity of the CAPL Credit
Facility and exercise other rights and remedies. Events of default include, among others, the following:
failure to pay any principal under the CAPL Credit Facility when due or any interest, fees or other amounts under
the CAPL Credit Facility when due after a grace period;
failure of any representation or warranty to be true and correct in any material respect;
failure to perform or otherwise comply with the covenants in the CAPL Credit Facility or in other loan documents
without a waiver or amendment;
any default in the performance of any obligation or condition beyond the applicable grace period relating to any other
indebtedness of more than $45.0 million;
certain judgment default for monetary judgments exceeding $45.0 million;
bankruptcy or insolvency event involving the Partnership or any of its subsidiaries;
certain Employee Retirement Income Security Act of 1974 (ERISA) violations;
a Change of Control (as defined in the CAPL Credit Facility) without a waiver or amendment; and
failure of the lenders for any reason to have a perfected first priority security interest in a material portion of the
collateral granted by the Partnership or any of its subsidiaries.
Taking the interest rate swap contracts described in Note 12 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). See Note 12 for information
regarding additional interest rate swap contracts entered into in April 2023 and November 2023, respectively.
72
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Letters of credit outstanding at December 31, 2023 and December 31, 2022 totaled $4.5 million and $4.6 million, respectively.
As of December 31, 2023, we were in compliance with our financial covenants under the CAPL Credit Facility. The amount of
availability under the CAPL Credit Facility at December 31, 2023, after taking into consideration debt covenant restrictions, was
$164.5 million.
In connection with amending the CAPL Credit Facility and terminating the JKM Credit Facility, the Partnership wrote off $1.1
million of deferred financing costs in the first quarter of 2023.
Finance Lease Obligations
In May 2012, the Predecessor Entity entered into a 15-year master lease agreement with renewal options of up to an additional
20 years with Getty Realty Corporation. Since then, the agreement has been amended from time to time to add or remove sites.
As of December 31, 2023, we lease 108 sites under this lease with a weighted-average remaining lease term of 3.3 years. We pay
fixed rent, which increases 1.5% per year. In addition, the lease requires variable lease payments based on gallons of motor fuel
sold.
Because the fair value of the land at lease inception was estimated to represent more than 25% of the total fair value of the real
property subject to the lease, the land element of the lease was analyzed for operating or capital treatment separately from the
rest of the property subject to the lease. The land element of the lease was classified as an operating lease and all of the other
property was classified as a capital lease. This assessment was not required to be reassessed upon adoption of ASC 842–Leases.
As such, future minimum rental payments are included in both the finance lease obligations table above as well as the operating
lease table in Note 13.
The weighted-average discount rate for this finance lease obligation at December 31, 2023 and 2022 was 3.5%. Interest on this
finance lease obligation amounted to $0.4 million, $0.5 million and $0.6 million for 2023, 2022 and 2021, respectively.
Note 12. INTEREST RATE SWAP CONTRACTS
Through March 31, 2023, the interest payments on our CAPL Credit Facility varied based on monthly changes in the one-month
LIBOR and changes, if any, in the applicable margin, which is based on our leverage ratio as further discussed in Note 11. To
hedge against interest rate volatility on our variable rate borrowings under the CAPL Credit Facility, on March 26, 2020, we
entered into an interest rate swap contract. The interest rate swap contract has a notional amount of $150 million, a fixed rate of
0.495% and matures on April 1, 2024. On April 15, 2020, we entered into two additional interest rate swap contracts, each with
notional amounts of $75 million, a fixed rate of 0.38% and that mature on April 1, 2024.
On April 4, 2023, in connection with amending and restating the CAPL Credit Facility and transitioning from LIBOR to SOFR,
we also amended our three existing interest rate swap contracts to convert the reference rate from LIBOR to SOFR. As a result,
the fixed rate was reduced from 0.495% to 0.4125% for the one contract and from 0.38% to 0.2975% for the other two contracts.
All other critical terms remain the same and so we expect these cash flow hedges to continue to be highly effective. We have
applied certain provisions and practical expedients of ASC 848–Reference Rate Reform related to the transition from LIBOR to
SOFR achieved with amending and restating the CAPL Credit Facility and with amending our existing interest rate swap
contracts.
In April and November 2023, we entered into a total of six additional interest rate swap contracts as summarized below (in
thousands):
Type
Spot starting
Spot starting
Spot starting
Forward starting April 1, 2024
Spot starting
Spot starting
$
Notional Amount
Termination Date
50,000 March 30, 2028
100,000 March 31, 2028
50,000 April 8, 2028
100,000 April 1, 2028
80,000 March 31, 2028
20,000 March 31, 2028
Fixed Rate
3.287%
3.287%
3.282%
2.932%
4.105%
4.121%
73
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 17 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 in the same period during which
the hedged interest expense is recorded. We recognized a net realized gain (loss) from settlements of the interest rate swap
contracts of $17.0 million, $3.9 million and ($1.0) million for 2023, 2022 and 2021, respectively.
We currently estimate that a gain of $8.2 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 13. OPERATING LEASES
Operating Leases of Sites as Lessee
We lease 442 sites from third parties under certain non-cancelable operating leases that expire from time to time through 2041.
The weighted-average remaining lease term was 4.5 years as of December 31, 2023.
Lease expense was classified in the consolidated statements of income as follows (in thousands):
Cost of sales
Operating expenses
General and administrative expenses
Total
2023
Year Ended December 31,
2022
$ 22,338 $ 23,457 $ 23,765
13,531
1,331
$ 38,793 $ 39,642 $ 38,627
15,254
931
15,460
995
2021
Variable lease payments based on inflation or fuel volume included in the table above totaled $4.6 million, $4.4 million and $4.2
million for 2023, 2022 and 2021, respectively. Short-term lease payments included in the table above that are excluded from the
lease liability amounted to $0.2 million, $0.2 million and $0.1 million for 2023, 2022 and 2021, respectively. Cash paid for
amounts included in the measurement of lease liabilities under operating leases totaled $34.0 million, $35.0 million and $34.3
million for 2023, 2022 and 2021, respectively.
As of December 31, 2023, future minimum rental payments under operating leases, excluding variable lease payments or short-
term payments, were as follows (in thousands). The weighted-average discount rate as of December 31, 2023 and 2022 was 5.8%
and 6.0%, respectively.
2024
2025
2026
2027
2028
Thereafter
Total future payments
Less impact of discounting
Current portion
Long-term portion
Third
Parties
Related
Parties
Total
$
25,796 $
23,565
20,510
16,202
11,806
28,745
126,624
10,152 $ 35,948
33,875
10,310
30,905
10,395
25,155
8,953
20,188
8,382
38,095
9,350
57,542 184,166
30,656
153,510
34,787
$ 118,723
74
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Most lease agreements include provisions for renewals. We generally do not include renewal options in our lease term for
purposes of measuring our lease liabilities and right-of-use assets unless the sublease to our customer extends beyond the term of
the head lease.
Of our leased sites, we operate 127 of them as company operated sites. Substantially all the remaining leased sites are subleased
to lessee dealers or commission agents under leases with terms generally ranging from one to ten years and which may include
renewal options. Sublease rental income amounted to $35.3 million, $35.4 million and $34.5 million for 2023, 2022 and 2021,
respectively.
Operating Leases of Sites as Lessor
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 December 31, 2023 were as follows (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total future minimum lease payments
$
$
45,941
38,157
27,715
18,232
12,002
13,143
155,190
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.
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 $5.0 million and $5.1 million at December 31, 2023
and 2022, respectively.
Note 14. RELATED PARTY TRANSACTIONS
Transactions with Affiliates of Members of the Board
Wholesale Motor Fuel Sales and Real Estate Rentals
Revenues from TopStar, an entity affiliated with the Topper Group, were $50.7 million, $74.2 million and $58.0 million for 2023,
2022 and 2021, respectively. Accounts receivable from TopStar were $0.4 million and $0.7 million at December 31, 2023 and
2022, respectively.
CrossAmerica leases real estate from the Topper Group. Rent expense under these lease agreements was $10.3 million, $10.0
million and $9.3 million for 2023, 2022 and 2021, respectively. Generally, rent payable under these leases increases by 1.5% per
year through the 10-year term expiring in April 2030. Generally, there are four five-year renewal options under these leases.
Omnibus Agreement
On January 15, 2020, the Partnership entered into an Omnibus Agreement, effective as of January 1, 2020 (the “Omnibus
Agreement”), 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 agreed, among other things, to provide, or cause to be provided, to the General Partner
for the benefit of the Partnership, at cost without markup, certain management, administrative and operating services.
75
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Omnibus Agreement will continue in effect until terminated in accordance with its terms. The Topper Group has the right to
terminate the Omnibus Agreement at any time upon 180 days’ prior written notice, and the General Partner has the right to
terminate the Omnibus Agreement at any time upon 60 days’ prior written notice.
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 $108.5 million, $91.7 million and $67.3 million for 2023, 2022 and 2021, respectively.
Such expenses are included in operating expenses and general and administrative expenses in the statements of income. Amounts
payable to the Topper Group related to expenses incurred by the Topper Group on our behalf in accordance with the Omnibus
Agreement totaled $8.4 million and $6.1 million at December 31, 2023 and 2022, respectively.
Common Unit Distributions and Other Equity Transactions
We distributed $30.8 million, $30.7 million and $34.7 million to the Topper Group related to its ownership of our common units
during 2023, 2022 and 2021, respectively.
We distributed $10.5 million, $10.5 million and $6.2 million to affiliates of John B. Reilly, III, a member of our Board, related
to their ownership of our common units for 2023, 2022 and 2021, respectively.
See Note 18 for information regarding the preferred membership interests held by related parties.
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 $2.6 million, $2.0
million and $2.2 million for 2023, 2022 and 2021, respectively. Accounts payable to this related party amounted to $0.3 million
at each of December 31, 2023 and 2022.
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 $20.8 million, $21.1
million and $19.7 million for 2023, 2022 and 2021, respectively. Amounts payable to this related party amounted to $1.4 million
at each of December 31, 2023 and 2022.
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 $0.2 million for 2023
and $0.1 million for 2022 and 2021.
Principal Executive Offices
Our principal executive offices are in Allentown, Pennsylvania. 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 $1.0 million, $0.9 million and $1.3 million for 2023, 2022 and 2021, respectively.
Public Relations and Website Consulting Services
We have engaged a company affiliated with John B. Reilly, III, a member of our Board, for public relations and website consulting
services. The cost of these services amounted to $0.1 million for 2023, 2022 and 2021.
Note 15. 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.
76
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
The table below presents a roll-forward of our environmental liabilities (in thousands):
Balance at beginning of year
Provision for new environmental losses
Changes in estimates for previously incurred losses
Payments
Balance at end of year
Current portion, included within accrued expenses and other current liabilities
Long-term portion, included within other long-term liabilities
$
$
2023
2022
7,485 $
1,161
2,028
(3,226)
7,448
3,394
4,054 $
5,376
4,291
33
(2,215 )
7,485
3,011
4,474
At December 31, 2023 and 2022, we were indemnified by third-party escrow funds, state funds or insurance totaling $5.3 million
and $5.2 million, respectively, which are recorded as indemnification assets and included within other current and other
noncurrent assets on the consolidated balance sheets. 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.
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.
77
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. 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. The following provides total annual future minimum volume purchase requirements (in
thousands of gallons):
2024
2025
2026
2027
2028
Thereafter
Total
652,623
573,175
566,363
568,759
503,178
906,639
3,770,737
In the event we fail to purchase the required minimum volume for a given contract year, 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 year. We did not incur any significant penalties in 2023, 2022 or 2021.
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.
Note 17. 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. The following is a description of the three hierarchy
levels.
Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted
assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in
sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2—Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for
substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in
active markets and quoted prices for identical or similar assets or liabilities in inactive markets.
Level 3—Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-
financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using
significant inputs that are generally less readily observable from objective sources.
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 2023 or 2022.
78
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As further discussed in Note 12, 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.
As further discussed in Note 19, 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.
Financial Instruments
The fair value of our accounts receivable, notes receivable, and accounts payable approximated their carrying values as of
December 31, 2023 and 2022 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 December 31, 2023 and 2022 due to the frequency with which interest rates
are reset and the consistency of the market spread.
Note 18. PREFERRED MEMBERSHIP INTERESTS
On March 29, 2022, Holdings issued and sold 12,500 newly created Series A Preferred Interests (“Series A Preferred Interests”)
to each of (i) Dunne Manning JKM LLC (the “DM Investor”), an entity affiliated with Joseph V. Topper, Jr., and (ii) John B.
Reilly, III and a trust affiliated with Mr. Reilly (together with Mr. Reilly, the “JBR Investor;” and the JBR Investor, together with
the DM Investor, the "Investors" and, each, an “Investor”) at a price of $1,000 per Series A Preferred Interest, for an aggregate
purchase price of $25 million in cash (the “Preferred Issuance”), in reliance upon an exemption from the registration requirements
provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Preferred Issuance was consummated pursuant to an
Investment Agreement, entered into as of March 29, 2022 (the “Investment Agreement”), by and among Holdings and each
Investor. Following the Preferred Issuance, the Partnership indirectly retains 100% of the common interests of Holdings, and
Holdings remains a consolidated subsidiary of the Partnership.
In light of the relationships between the Investors and the Partnership, the Preferred Issuance was reviewed by, and received the
approval and recommendation of, the conflicts committee of the Board prior to execution of the Investment Agreement and
consummation of the Preferred Issuance.
In connection with the Preferred Issuance, on March 29, 2022, LGP Operations LLC, a wholly owned subsidiary of the
Partnership, each Investor and the Partnership entered into an amended and restated limited liability company agreement of
Holdings to, among other things, set forth the rights, preferences, entitlements, restrictions and limitations of the Series A
Preferred Interests. The Series A Preferred Interests have an initial liquidation preference of $1,000 per Series A Preferred Interest
and are entitled to a preferred return at a rate of 9% per annum on the liquidation preference, compounded quarterly (the “preferred
return”). Prior to October 16, 2026, the Series A Preferred Interests will not be entitled to receive distributions, but the preferred
return instead will accumulate solely by way of an increase in the liquidation preference of the Series A Preferred Interests. From
and after October 16, 2026, the preferred return will be payable in cash, on a quarterly basis. The Series A Preferred Interests are
subject to exchange (i) upon a liquidation or deemed liquidation event of Holdings, (ii) upon a change of control of the Partnership,
(iii) from and after March 1, 2024, at the option of the Partnership and Holdings, and (iv) on March 31, 2029, if any Series A
Preferred Interests remain outstanding on such date (each of (i) through (iv), an “exchange”). Upon an exchange of any Series A
Preferred Interests, the holders thereof will surrender each such Series A Preferred Interest in exchange for an amount equal to
the then-current liquidation preference of such Series A Preferred Interest plus any preferred return accrued and unpaid with
respect to the period from and after October 16, 2026 (the “Exchange Price”). The Exchange Price will be payable in common
units of the Partnership or, if any holder of Series A Preferred Interests so elects, in cash. Any common units of the Partnership
issued upon any exchange in payment of the Exchange Price will be valued at an amount equal to $23.74 per common unit, which
is equal to 115% of the volume weighted average price of a Partnership common unit on the NYSE over the twenty trading-day
period ending on March 28, 2022, the trading day immediately prior to the date of the Preferred Issuance.
The net proceeds received by Holdings in its sale of the Series A Preferred Interests were contributed to CAPL JKM Partners,
which in turn used such net proceeds to prepay a portion of the outstanding indebtedness under the Term Loan Facility. See Note
11 for additional information on the termination of the Term Loan Facility.
79
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Based on an evaluation of the relevant terms and provisions within the Series A Investment Agreement, the Holdings Operating
Agreement, the CAPL Credit Facility as well as an analysis of the economic characteristics and risks of the Series A Preferred
Interests, management concluded that the Series A Preferred Interests are more akin to equity as opposed to debt and thus, in
accordance with ASC 480, the preferred membership interests are to be presented in mezzanine equity on the consolidated balance
sheet and the carrying amount will be accreted to the Exchange Price over time. We recorded accretion of the preferred
membership interests of $2.5 million and $1.7 million for 2023 and 2022, respectively. We paid income tax distributions related
to the preferred membership interests totaling $0.9 million during 2023.
Note 19. EQUITY-BASED COMPENSATION
On October 23, 2022, the CrossAmerica Partners LP 2022 Incentive Award Plan (the "2022 Plan") became effective, replacing
the prior plan. The maximum number of common units that may be delivered with respect to awards under the 2022 Plan was the
sum of (i) 1,400,000, (ii) the number of common units that remain available for grant under the prior plan (424,066 common
units) and (iii) the number of common units that are subject to or underlie awards which expire or for any reason are cancelled,
terminated, forfeited, fail to vest, or for any other reason are not paid or delivered in common units under the Prior Plan (and as
permitted by the Prior Plan) following the Effective Date. Generally, the 2022 Plan provides for grants of restricted units, unit
options, performance awards, phantom units, unit payment, unit appreciation rights, and other unit-based awards, with various
limits and restrictions attached to these awards on a grant-by-grant basis. The 2022 Plan is administered by the Board or a
committee thereof.
The Board may terminate or amend the 2022 Plan at any time with respect to any common units for which a grant has not yet
been made. The Board also has the right to alter or amend the 2022 Plan or any part of the 2022 Plan from time to time, including
increasing the number of common units that may be granted, subject to unitholder approval as required by the exchange upon
which common units are listed at that time; however, no change in any outstanding grant may be made that would adversely
affect the rights of a participant with respect to awards granted to a participant prior to the effective date of such amendment or
termination, except that the Board may amend any award to satisfy the requirements of Section 409A of the Internal Revenue
Code. The 2022 Plan expires on the tenth anniversary of its approval, when common units are no longer available under the 2022
Plan for grants or upon its termination by the Board, whichever occurs first.
The table below summarizes our equity-based award activity:
Nonvested at December 31, 2021
Granted
Forfeited
Vested
Nonvested at December 31, 2022
Granted
Forfeited
Vested
Nonvested at December 31, 2023
Phantom Units
Employees
Directors
Phantom
Units
Phantom
Units
Employees
Phantom
Performance
Awards
Initial Target
Value
72,033
35,840
(10,201 )
(12,118 )
85,554
40,594
(2,779 )
(19,816 )
103,553
16,260 $
15,205
—
(16,260)
15,205 $
20,470
—
(16,181)
19,494 $
1,673
854
(197)
—
2,330
966
—
—
3,296
In July 2023, the Partnership granted 3,249 phantom units to each of six non-employee directors of the Board. Such awards will
vest in July 2024, conditioned upon continuous service as non-employee directors. These awards were accompanied by tandem
distribution equivalent rights that entitle the holder to cash payments equal to the amount of unit distributions authorized to be
paid to the holders of our common units.
During the fourth quarter of 2023, the Partnership granted 34,051 phantom units to employees of the Topper Group. Of these
awards, 50% vest ratably over three years through December 31, 2026 and 50% vest upon the employee’s death, disability or
retirement. These awards were accompanied by tandem distribution equivalent rights that entitle the holder to cash payments
equal to the amount of unit distributions authorized to be paid to the holders of our common units.
80
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Performance-Based Awards
During the fourth quarter of 2023, the Partnership granted performance-based awards with an initial target value of $0.9 million.
The performance-based awards vest on December 31, 2026, based on attainment of the performance goals set forth in the award
agreements. The performance-based awards are weighted 65% for the increase of funds flow from operations per unit (as defined
in the award agreements) and 35% for leverage (as defined in the award agreements), with a performance period from January 1,
2024 to December 31, 2026 and with 2023 being the reference period. The payout value for both performance conditions will be
interpolated on a linear basis ranging from 0% to 200%, which will then be multiplied by the initial target value to determine the
value of the units to be issued. The value of the units will then be divided by the 20-day volume-weighted average closing price
of our common units as of the close of trading on the day before the conversion date to determine the actual number of units to
be issued.
Overall
Since we grant awards to employees of the Topper Group who provide services to us under the Omnibus Agreement and non-
employee directors of the Board, and since the grants may be settled in cash at the discretion of our Board, unvested phantom
units and unvested performance-based awards receive fair value variable accounting treatment. As such, they are measured at
fair value at each balance sheet reporting date and the cumulative compensation cost recognized is classified as a liability, which
is included in accrued expenses and other current liabilities on the consolidated balance sheet. The balance of the accrual was
$4.0 million and $2.2 million at December 31, 2023 and 2022, respectively.
We record equity-based compensation as a component of general and administrative expenses in the consolidated statements of
income. Equity-based compensation expense was $3.0 million, $2.3 million and $1.3 million for 2023, 2022 and 2021,
respectively.
Note 20. 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. Individual unitholders have different investment basis depending upon the timing and price at which they
acquired their common units. Further, each unitholder’s tax accounting, which is partially dependent upon the unitholder’s tax
position, differs from the accounting followed in the Partnership’s consolidated financial statements. Accordingly, the aggregate
difference in the basis of the Partnership’s net assets for financial and tax reporting purposes cannot be readily determined because
information regarding each unitholder’s tax attributes in the Partnership is not available to the Partnership.
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 presented.
Certain activities that generate non-qualifying income are conducted through our wholly owned taxable corporate subsidiaries,
LGWS and Joe’s Kwik Marts. 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 expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. The Partnership calculates its current and deferred tax provision based on estimates and
assumptions that could differ from actual results reflected in income tax returns filed in subsequent years. Adjustments based on
filed returns are recorded when identified.
81
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Components of income tax expense related to net income were as follows (in thousands):
Current
U.S. federal
U.S. state
Total current
Deferred
U.S. federal
U.S. state
Total deferred
Income tax expense (benefit)
For the Year Ended December 31,
2021
2022
2023
502 $
451
953
1,976 $
491
2,467
329
207
536
946
626
1,572
2,525 $
(2,236 )
483
(1,753 )
714 $
(3,927 )
166
(3,761 )
(3,225 )
$
$
The difference between the actual income tax provision and income taxes computed by applying the U.S. federal statutory rate
to earnings (losses) before income taxes is attributable to the following (in thousands):
Consolidated income from continuing operations before income
taxes - all domestic
Income from continuing operations before income taxes of
non-taxable entities
Income (loss) from continuing operations before income taxes of
corporate entities
Federal income tax expense (benefit) at statutory rate
Increase (decrease) due to:
State income taxes, net of federal income tax benefit
Other
Total income tax expense (benefit)
For the Year Ended December 31,
2022
2023
2021
$
45,117 $
64,410 $
18,429
(34,797)
(65,466)
(37,072)
10,320
2,167
(1,056)
(222)
(18,643)
(3,915)
421
(63)
2,525 $
974
(38)
714 $
372
318
(3,225)
$
The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in
thousands):
Deferred income tax assets:
Operating and finance lease obligations
Asset retirement obligations
Intangible assets
Net operating losses (a)
Other assets and liabilities
Total deferred income tax assets
Deferred income tax liabilities:
Deferred rent income
Property and equipment
Right-of-use assets
Total deferred income tax liabilities
Net deferred income tax liabilities
December 31,
2023
2022
29,193 $
11,045
7,887
5,331
7,394
60,850
841
46,223
25,946
73,010
12,160 $
33,318
10,745
8,505
5,913
6,678
65,159
855
45,440
29,452
75,747
10,588
$
$
(a) Includes a federal deferred tax asset of $3.7 million related to a $16.7 million federal net operating loss that has no
expiration.
82
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We record an accrual for federal, state and local and uncertain tax positions. The development of these tax positions requires
subjective, critical estimates and judgments about tax matters, potential outcomes and timing. Although the outcome of potential
tax examinations is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential
liabilities resulting from these reviews. If actual outcomes differ materially from these estimates, they could have a material
impact on our financial condition and results of operations. Differences between actual results and assumptions, or changes in
assumptions in future periods, are recorded in the period they become known. To the extent additional information becomes
available prior to resolution, such accruals are adjusted to reflect probable outcomes.
We did not have unrecognized tax benefits at December 31, 2023 or 2022. Our practice is to recognize interest and penalties
related to income tax matters in income tax expense. We had no material interest and penalties for 2023, 2022 and 2021.
We file income tax returns with the U.S. federal government as well as the many state jurisdictions in which we operate. The
statute remains open for tax years 2020 through 2023; therefore, these years remain subject to examination by federal, state and
local jurisdiction authorities.
Note 21. NET INCOME PER LIMITED PARTNER 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):
Numerator:
Distributions paid on common units
Allocation of distributions in excess of net income
Limited partners’ interest in net income - basic and diluted
Denominator:
Weighted average common units outstanding - basic
Adjustment for phantom and phantom performance units(a)
Weighted average common units outstanding - diluted
Net income per common unit - basic
Net income per common unit - diluted
Distributions paid per common unit
Distributions declared (with respect to each respective period) per
common unit
2023
Years Ended December 31,
2022
2021
79,712 $
(39,608)
40,104 $
79,625 $
(17,655)
61,970 $
79,552
(57,898)
21,654
37,957,727
161,734
38,119,461
37,916,829
142,945
38,059,774
1.06 $
1.05 $
1.63 $
1.63 $
37,880,910
3,214
37,884,124
0.57
0.57
2.1000 $
2.1000 $
2.1000
2.1000 $
2.1000 $
2.1000
$
$
$
$
$
$
(a) For 2023 and 2022, 1,203,481 and 835,551 potentially dilutive units related to the preferred membership interests were
excluded from the calculation of diluted earnings per unit for 2023 and 2022, respectively, because including them would
have been antidilutive.
Distributions
Quarterly distribution activity to common unitholders for 2023 was as follows:
Quarter Ended
December 31, 2022
March 31, 2023
June 30, 2023
September 30, 2023
December 31, 2023
Record Date
February 3, 2023
May 3, 2023
August 4, 2023
November 3, 2023
February 2, 2024
Payment Date
February 10, 2023
May 10, 2023
August 11, 2023
November 10, 2023
February 9, 2024
Cash
Distribution
(per unit)
Cash
Distribution
(in thousands)
0.5250
0.5250
0.5250
0.5250
0.5250
19,918
19,925
19,934
19,935
19,941
83
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 22. 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.
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 2023, we converted 37 sites from lessee dealer and independent dealer sites in the wholesale segment to company operated
sites in the retail segment.
The following table reflects activity related to our reportable segments (in thousands):
Wholesale
Retail
Unallocated Consolidated
Year Ended December 31, 2023
Revenues from fuel sales to external customers
Revenues from food and merchandise sales
Rent income
Other revenue
Total revenues
Operating income (loss)
Year Ended December 31, 2022
Revenues from fuel sales to external customers
Revenues from food and merchandise sales
Rent income
Other revenue
Total revenues
Operating income (loss)
Year Ended December 31, 2021
Revenues from fuel sales to external customers
Revenues from food and merchandise sales
Rent income
Other revenue
Total revenues
Operating income (loss)
—
69,693
5,248
$ 2,215,110 $ 1,751,846 $
315,957
12,638
15,771
$ 2,290,051 $ 2,096,212 $
96,709 $
$
90,813 $
— $ 3,966,956
315,957
—
—
82,331
21,019
—
— $ 4,386,263
88,070
(99,452) $
—
71,322
6,509
$ 2,612,258 $ 1,971,806 $
280,191
12,784
12,554
$ 2,690,089 $ 2,277,335 $
$
93,667 $ 107,396 $ (105,057) $
—
71,536
3,721
$ 2,067,992 $ 1,206,082 $
209,123
11,646
9,159
$ 2,143,249 $ 1,436,010 $
$
86,772 $
56,102 $ (106,745) $
— $ 4,584,064
280,191
—
84,106
—
19,063
—
— $ 4,967,424
96,006
— $ 3,274,074
209,123
—
83,182
—
—
12,880
— $ 3,579,259
36,129
84
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Receivables relating to the revenue streams above are as follows (in thousands):
Receivables from fuel and merchandise sales
Receivables for rent and other lease-related charges
Total accounts receivable
December 31,
2023
2022
$
$
28,467 $
3,155
31,622 $
28,959
2,609
31,568
Performance obligations are satisfied as fuel is delivered to the customer and as merchandise is sold to the consumer. Many of
our fuel contracts with our customers include minimum purchase volumes measured on a monthly basis, although revenue from
such shortfalls is not material. Receivables from fuel are recognized on a per-gallon rate and are generally collected within 10
days of delivery.
The balance of unamortized costs incurred to obtain certain contracts with customers was $10.0 million and $10.9 million at
December 31, 2023 and 2022, respectively. Amortization of such costs is recorded against operating revenues and amounted to
$1.9 million, $1.7 million and $1.5 million for 2023, 2022 and 2021, respectively
Receivables from rent and other lease-related charges are generally collected at the beginning of the month.
Note 23. SUPPLEMENTAL CASH FLOW INFORMATION
In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in
operating assets and liabilities as follows (in thousands):
For the Year Ended December 31,
2022
2023
2021
$
Decrease (increase):
Accounts receivable
Accounts receivable from related parties
Inventories
Other current assets
Other assets
Increase (decrease):
Accounts payable
Accounts payable to related parties
Accrued expenses and other current liabilities
Motor fuel and taxes payable
Other long-term liabilities
Changes in operating assets and liabilities, net of acquisitions
$
124 $
306
(5,037)
(3,193)
(580)
(8,589)
2,157
(805)
(427)
10,184
(5,860) $
840 $
406
(873)
3,471
(137)
9,271
(38)
1,012
(1,772)
2,398
14,578 $
(5,336)
(218)
(10,307)
390
(2,385)
2,727
1,999
(1,378)
2,850
9,992
(1,666)
The above changes in operating assets and liabilities may differ from changes between amounts reflected in the applicable balance
sheets for the respective periods due to acquisitions and other non-cash activity.
Supplemental disclosure of cash flow information (in thousands):
For the Year Ended December 31,
2022
2023
2021
Cash paid for interest
Cash paid (refunded) for income taxes, net
$
40,051 $
2,853
29,030 $
(3,171)
16,196
331
Supplemental schedule of non-cash investing and financing activities (in thousands):
Accrued capital expenditures
Lease liabilities arising from obtaining right-of-use assets
Accretion of preferred membership interests
Assets acquired with proceeds from Section 1031 exchanges
$
1,803 $
12,697
2,488
3,812
2,320 $
23,997
1,726
—
2,048
30,460
—
—
85
For the Year Ended December 31,
2022
2023
2021
CROSSAMERICA PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 24. SUBSEQUENT EVENTS
On January 26, 2024, we entered into an agreement (“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.
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.
86
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934)
as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective
as of December 31, 2023.
Internal Control over Financial Reporting
(a) Management's Report on Internal Control over Financial Reporting
The management report on our internal control over financial reporting appears in Item 8 and is incorporated herein by
reference.
(b) Attestation Report of the Independent Registered Public Accounting Firm
Grant Thornton LLP’s report on our internal control over financial reporting appears in Item 8 and is incorporated herein
by reference.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2023, that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
87
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Management of CrossAmerica Partners LP
Our General Partner manages our operations and activities on our behalf. DMP indirectly owns all of the membership interests
in our General Partner. The Topper Group has sole and exclusive authority over our General Partner. All of our executive officers
are employed by an affiliate of the Topper Group.
Our General Partner has a Board that oversees our management, operations and activities. Our unitholders are not entitled to elect
the directors of the Board or participate in our management or operations. The Topper Group, as the indirect owner of our General
Partner, has the right to appoint and remove all members of the Board. Our General Partner owes a fiduciary duty to our
unitholders. However, our Partnership Agreement contains provisions that limit the fiduciary duties that our General Partner owes
to our unitholders. Our General Partner is liable, as general partner, for all of our debts (to the extent not paid from our assets),
except for indebtedness or other obligations that are made specifically nonrecourse to it. Whenever possible, our General Partner
intends to incur indebtedness or other obligations that are nonrecourse. Except as described in our Partnership Agreement and
subject to its fiduciary duty to act in good faith, our General Partner has exclusive management power over our business and
affairs.
Our General Partner does not have any employees. All of the personnel who conduct our business are employed by an affiliate
of the Topper Group, and their services are provided to us pursuant to the Omnibus Agreement.
Directors and Executive Officers
The Partnership does not directly employ any of the persons responsible for managing or operating the Partnership. We are
managed and operated by the Board and the executive officers appointed by our General Partner who are employees of an affiliate
of the Topper Group. The following table shows information for the directors of our General Partner and our executive officers
appointed by our General Partner.
Directors and Executive Officers of the General Partner
Current Directors and Executive Officers
Joseph V. Topper, Jr.
John B. Reilly, III
Justin A. Gannon
Thomas E. Kelso (2)
Mickey Kim
Keenan D. Lynch
Charles M. Nifong, Jr.
Maura Topper
Kenneth G. Valosky
David F. Hrinak
Robert Brecker (3)
(1) As of December 31, 2023.
Age (1)
Position with our General Partner
68 Chairman of the Board
62 Vice Chairman of the Board
74 Director
71 Director
65 Director
35 Director, General Counsel and Chief Administrative Officer
50 Director, President and Chief Executive Officer
37 Director, Chief Financial Officer
63 Director
67 Executive Vice President
Executive Vice President of Operations of the Partnership's
Subsidiaries
56
(2) Mr. Kelso was appointed Director effective February 24, 2023.
(3) Mr. Brecker was designated an executive officer of the Partnership's subsidiaries on April 20, 2023.
Our General Partner’s directors hold office until the earlier of their death, resignation, removal, or disqualification or until their
successors have been elected and qualified. Our executive officers serve at the discretion of the Board. In selecting and appointing
directors to the Board, DMP, as the indirect owner of the sole member of our General Partner, does not apply a formal diversity
policy or set of guidelines. However, when appointing new directors, the Topper Group as the owner of the sole member of our
General Partner, will consider each individual director’s qualifications, skills, business experience and capacity to serve as a
director, as described below for each director, and the diversity of these attributes for the Board as a whole.
88
Joseph V. Topper, Jr. has served as a director on the Board since October 2012 and was elected Chairman of the Board effective
November 19, 2019. Mr. Topper is the President of Dunne Manning Holdings LLC (“Dunne Manning”), a diversified portfolio
of companies operating in the real estate and investing industries, affiliated with the Topper Group. Mr. Topper served as
President and Chief Executive Officer of the General Partner from October 2012 to March 2015. Mr. Topper resigned as President
effective March 2015 and his term as Chief Executive Officer ended in September 2015. Mr. Topper also served as Chairman of
the Board from October 28, 2012 through September 30, 2014. Mr. Topper has over 30 years of management experience in the
wholesale and retail fuel distribution business. In 1987, Mr. Topper purchased his family’s retail fuel business and five years later
founded Dunne Manning Inc. (formerly known as Lehigh Gas Corporation), where he has served as the Chief Executive Officer
since 1992. He served on the board of directors of CST Brands Inc. from October 2014 until December 2016. He is the past
President/Chairman of the board of directors for Villanova University, Lehigh Valley PBS and the Lehigh Valley PBS
Foundation. He also served as a board member for the Good Shepherd Rehabilitation Hospital in Allentown. Mr. Topper holds a
Masters’ degree of Business Administration from Lehigh University and a bachelor’s degree in Accounting from Villanova
University. Mr. Topper also previously held the designation of a Certified Public Accountant.
John B. Reilly, III has served as a director on the Board since May 2012 and was elected Vice Chairman of the Board effective
November 19, 2019. He was a member of the Partnership’s audit and conflicts committee from October 2014 through November
2019. Mr. Reilly has served as the President of City Center Investment Corp since May 2011. Prior to then, he was President of
Landmark Communities and Managing Partner of Traditions of America since 1998. Mr. Reilly has thirty years of experience in
commercial and residential real estate development and planning, finance management and law. Mr. Reilly serves as a trustee of
Lafayette College and also served as the chairman of the board of trustees for the Lehigh Valley Health Network. He holds a
Juris Doctor degree from Fordham University Law School and a bachelor’s degree in economics from Lafayette College. He is
a Certified Public Accountant and a member of the Pennsylvania Bar Association.
Justin A. Gannon has served as a director on the Board and Chairman of its audit committee and member of its conflicts
committee since October 2014. Mr. Gannon has acted as an independent consultant and private investor since September 2013.
From February 2003 through August 2013, he served in various roles at Grant Thornton LLP, including as National Leader of
Merger and Acquisition Development from June 2011 through August 2013, Central Region Managing Partner from January
2010 through June 2011, Office Managing Partner in Houston, Texas from August 2007 through June 2011 and Office Managing
Partner in Kansas City, Missouri from August 2005 to July 2007. From 1971 through 2002, Mr. Gannon worked at Arthur
Andersen LLP, the last 21 years as an audit partner. From December 2014 until October 2020, Mr. Gannon served on the board
of directors of California Resources Corporation (NYSE: CRC) and as chair of the audit committee and member of the
compensation committee. Mr. Gannon also served on the board of directors of Vantage Energy Acquisition Corp. (NASDAQ:
VEACU) and as chairman of the audit committee and a member of the compensation committee from April 2017 until its
dissolution in April 2019. He is a former chairman of the board of directors of American Red Cross Chapters in the Tulsa,
Oklahoma and San Antonio, Texas areas. Mr. Gannon received a bachelor’s degree in Accounting from Loyola Marymount
University and is a Certified Public Accountant licensed in California (retired status) and Texas.
Thomas E. Kelso has served as a director on the Board and a member of the audit and conflicts committee since February 24,
2023. He co-founded and operated Ocean Petroleum Co., Inc., a petroleum distributorship and then joined Matrix Capital Markets
Group, Inc. in 1997 and created the firm’s Downstream Energy and Convenience Retail Investment Banking Group. He served
as Group Head until he became President of the firm in 2017. In addition, Mr. Kelso served as Head of Matrix’s Corporate
Recovery and Special Situations Groups. Prior to that, Mr. Kelso managed scores of petroleum distribution and convenience store
transactions and has been a frequent speaker at various industry trade group meetings discussing topics related to capital formation
and mergers and acquisitions. Mr. Kelso retired from Matrix at the end of 2022. He continues to hold Series 79, 63, 24 and 99
FINRA securities licenses. He currently serves as Chairman of the Kelso Bishop Family Foundation. He also serves as Chairman
of An America United, Inc. and Change Maryland, Inc. Previously, Mr. Kelso was Chairman of the Maryland Stadium Authority,
Chairman of the 2018 Hogan Rutherford Re-election Campaign, Chairman of both of Governor Hogan’s inaugural committees
(2014 & 2018), Vice Chairman of the Foundation for the Preservation of Government House Maryland, Chairman of the
Maryland Public Policy Institute and Director and Chairman of the John Carroll School. Mr. Kelso attended the University of
Baltimore and The Johns Hopkins University where he majored in accounting. While enrolled in John Hopkins, he served as
Business Manager of the Evening College and Summer Session.
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Mickey Kim has served as a director on the Board and Chairman of its conflicts committee and member of its audit committee
since June 2017. Mr. Kim is a Member, Chief Operating Officer and Chief Compliance Officer of Kirr, Marbach & Company,
LLC (“KM”), a registered investment adviser. Mr. Kim joined KM in 1986 and has been KM’s Chief Operating Officer since
1996 and Chief Compliance Officer since 2004. Mr. Kim has also served as Vice President, Treasurer and Secretary of Kirr,
Marbach Partners Funds, Inc., a registered investment company, since 1998. Prior to his position with KM, Mr. Kim was a Senior
Research Analyst at Driehaus Capital Management, a Chicago investment management firm, from 1982 to 1985. Mr. Kim has
been a Chartered Financial Analyst (CFA) charter holder since 1985 and passed the Certified Public Accountant examination in
1980. He holds a bachelor’s degree in Accounting from the University of Illinois (1980) and a Masters degree in Business
Administration from the University of Chicago (1982).
Keenan D. Lynch has served as a director on the Board since November 19, 2019. Mr. Lynch was appointed Chief Administrative
Officer of the General Partner effective January 20, 2022 and has served as its General Counsel since February 24, 2020. Mr.
Lynch served as Corporate Secretary of the General Partner from November 19, 2019 through January 19, 2022. Since 2017, he
has served as Vice President and General Counsel of Dunne Manning. Before joining Dunne Manning, from 2015 to 2017, he
was an associate at Skadden, Arps, Slate, Meagher & Flom LLP. He holds a Bachelor of Arts from Villanova University, a Juris
Doctor from the University of Pennsylvania Law School and an L.L.M. in Taxation from the Villanova University Charles Widger
School of Law.
Charles M. Nifong, Jr. has served as a director on the Board and President and Chief Executive Officer of the General Partner,
since November 19, 2019. Prior to assuming his current position, Mr. Nifong was the President of Dunne Manning Stores, LLC,
a convenience store operator and wholesale fuel provider. Mr. Nifong served as the Chief Investment Officer and Vice President
of Finance for the Partnership from 2013 through 2015. Before joining the Partnership, Mr. Nifong worked for more than nine
years in investment banking as a Director at Bank of America Merrill Lynch where he worked on an extensive range of capital
markets and mergers and acquisitions advisory assignments. Prior to his career in investment banking, Mr. Nifong served as a
Captain in the United States Army in armor and reconnaissance units. Mr. Nifong holds a Bachelor of Chemical Engineering
with Highest Honor from the Georgia Institute of Technology and Master of Business Administration from the University of
Virginia.
Maura Topper has served as a director on the Board since November 19, 2019 and was appointed Chief Financial Officer
effective August 11, 2021. Since 2014, she has served as Vice President and Chief Financial Officer of Dunne Manning. Prior to
joining Dunne Manning in 2014, Ms. Topper graduated from the Masters of Business Administration program at Columbia
Business School. Prior to that, she served as a Marketing Account Executive at MSG Promotions, Inc. and a senior accountant in
the audit practice of Deloitte & Touche LLP in New York. Ms. Topper graduated from Villanova University in 2008 with a
Bachelor of Science degree in Accounting and a Bachelor of Science in Business (Finance). From 2012 to 2014, she served as a
director on the Board.
Kenneth G. Valosky has served as a director on the Board and a member of its audit committee and conflicts committee since
November 19, 2019. He is the retired Executive Vice President of Villanova University. He joined Villanova University in 2000
as the Chief Financial Officer and has served as its Vice President for Finance, Acting Senior Vice President for Administration
and Vice President for Administration and Finance and Executive Vice President from 2014 to 2021. He previously held several
senior financial positions at Thomas Jefferson University prior to joining Villanova University in 2000. These positions included
Director of Internal Audit and Controller. He began his career as a public accountant with Touche Ross & Co. (a predecessor to
Deloitte). Mr. Valosky also served as a trustee and chair of the Stewardship Committee of the Mercy Health System of
Southeastern Pennsylvania, trustee and chair of the Finance Committee of Merion Mercy Academy and as a member of the
Auditing and Accounting Committee of the Archdiocese of Philadelphia. He received a B.S. in Accountancy, cum laude from
Villanova University and an M.S. in Organizational Dynamics from the University of Pennsylvania. He is a Certified Public
Accountant, inactive status in the Commonwealth of Pennsylvania.
David F. Hrinak was appointed Executive Vice President of the General Partner effective January 20, 2022. Prior to that he
served as Executive Vice President of Wholesale from February 24, 2020, through January 20, 2022 and Vice President of
Operations from November 19, 2019 through February 23, 2020. Mr. Hrinak previously served as Executive Vice President and
Chief Operating Officer of the General Partner from 2014 until June 2017 and served as President of the General Partner from
May 2012 to October 2014. He previously served as an officer of DMI from 2005 until the founding of the General Partner and
was DMI’s President from September 2010 until May 2012. Mr. Hrinak has more than 36 years of experience in the wholesale
and retail fuel distribution business. Prior to joining DMI, Mr. Hrinak was the Branded Wholesale Manager at ConocoPhillips.
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Robert Brecker was appointed Executive Vice President of Operations effective January 20, 2022, and was designated an
executive officer of the Partnership’s Subsidiaries, April 20, 2023. Prior to that he served as Director of Facilities from November
19, 2019, to January 19, 2022. He also held several positions with Dunne Manning (previously Lehigh Gas) since 2008, serving
as President of Dunne Manning Stores from 2014 to 2017. Before 2008 Mr. Brecker was the Operations Manager for Top Star
Express, a convenience store chain in the Lehigh Valley. He has held Territory Manager and Marketing Representative positions
with Mobil Oil and Amerada Hess through the 1990s. He started his career in the industry as a Store Manager for Atlantic
Petroleum (Aplus) in 1988. Mr. Brecker has a bachelor’s degree from Temple University.
Family Relationships
Mr. Topper, Chairman of the Board, is the father of Ms. Topper, a director of our General Partner and Chief Financial Officer,
and the father-in-law of Mr. Lynch, a director of our General Partner and General Counsel and Chief Administrative officer, and
Ms. Topper is the sister-in-law of Mr. Lynch. There are no other family relationships between any of the directors or executive
officers of the Partnership.
Director Independence
Section 303A of the NYSE Listed Company Manual provides that limited partnerships are not required to have a majority of
independent directors. The Board has adopted a policy that the Board has at all times at least three independent directors or such
higher number as may be necessary to comply with the applicable federal securities law requirements. For the purposes of this
policy, “independent director” has the meaning set forth in Section 10A(m)(3) of the Exchange Act, any applicable stock
exchange rules and the rules and regulations promulgated in the Partnership governance guidelines available on its website
www.crossamericapartners.com.
The Board has determined Messrs. Gannon, Kelso, Kim and Valosky to be independent as defined under the independence
standards established by the NYSE and the Exchange Act. These directors, whom we refer to as independent directors, are not
officers or employees of our General Partner or its affiliates and have been determined by the Board to be otherwise independent
of the Topper Group and its affiliates.
Composition of the Board
The Board consists of nine members. The Board holds regular and special meetings at any time as may be necessary. Regular
meetings may be held without notice on dates set by the Board from time to time. Special meetings of the Board or meetings of
any committee of the Board may be held at the request of the Chairman of the Board or a majority of the Board (or a majority of
the members of such committee) upon at least two days (if the meeting is to be held in person) or 24 hours (if the meeting is to
be held telephonically) prior oral or written notice to the other members of the Board or committee or upon such shorter notice
as may be approved by the directors or members of such committee. A quorum for a regular or special meeting will exist when a
majority of the members are participating in the meeting either in person or by telephone conference. Any action required or
permitted to be taken at a meeting of the Board or at any committee may be taken without a meeting if such action is evidenced
in writing and signed by a majority of the members of the Board.
Committees of the Board
The Board has an audit committee and a conflicts committee. The charter for each of the committees can be found in its entirety
on the Partnership’s website at www.crossamericapartners.com under the “Corporate Governance” tab in the “Investors” section.
As a limited partnership, we are not required by NYSE rules to have a compensation committee or a nominating and corporate
governance committee.
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Audit Committee
The members of the Audit Committee are Messrs. Gannon, Kelso, Kim and Valosky. Mr. Gannon serves as chair. The audit
committee is comprised entirely of directors who meet the financial literacy standards of the NYSE and the Exchange Act. The
rules and regulations established by the NYSE and the Exchange Act also generally require that our audit committee consist
entirely of independent directors. The Board has determined that Messrs. Gannon, Kelso, Kim and Valosky meet the
independence standards required of audit committee members by the NYSE and the Exchange Act and that they meet the financial
literacy standards of directors who serve on the audit committee, and Mr. Gannon is an “audit committee financial expert” as
defined by SEC rules. The audit committee assists the Board in its oversight of the integrity of our financial statements and our
compliance with legal and regulatory requirements, Partnership policies and controls, the independent auditor’s qualifications
and independence, the performance of the Partnership’s internal audit function and risk assessment and risk management. The
audit committee has sole authority with respect to the appointment, retention, compensation, evaluation, oversight of the work
and termination of our independent auditors and has the authority to obtain advice and assistance from outside legal, accounting
or other advisors as the audit committee deems necessary to carry out its duties and receives appropriate funding, as determined
by the audit committee, from the Partnership for such advice and assistance.
Conflicts Committee
The members of the Conflicts Committee are Messrs. Gannon, Kelso, Kim and Valosky. Mr. Kim serves as chair. Pursuant to
our Partnership Agreement, the members of the conflicts committee may not be officers or employees of our General Partner or
directors, officers or employees of its affiliates, must not be holders of any ownership interest in the General Partner or any of its
affiliates, other than Partnership units, that is determined by the Board of Directors, after reasonable inquiry, to be likely to have
an adverse impact on the ability of such director to fulfill his or her obligations as a member of the conflicts committee, and must
meet the independence standards established by the NYSE and the Exchange Act to serve on a conflicts committee of a board of
directors. The Board has determined that Messrs. Gannon, Kelso, Kim and Valosky qualify to serve on the conflicts committee.
The conflicts committee is responsible for reviewing specific matters that the Board believes may involve conflicts of interest
between the General Partner and its affiliates and the Partnership. The conflicts committee determines if the resolution of such
conflict is fair and reasonable to the Partnership.
Meeting of Independent Directors and Communications with Directors
The independent members of the audit committee have met in executive sessions without members of management. The chairman
presides over each executive session of the independent directors. Any independent director may request that additional executive
sessions of the independent directors be held, and the presiding independent director for the previous session will determine
whether to call any such meeting.
Unitholders or interested parties may communicate directly with the Board, any committee of the Board, any independent director,
or any one director, by sending written correspondence by mail addressed to the Board, committee or director to the attention of
our Corporate Secretary at the following address: c/o Corporate Secretary, CrossAmerica Partners LP, 645 Hamilton Street, Suite
400, Allentown, PA 18101. Communications are distributed to the Board, committee of the Board, or director, as appropriate,
depending on the facts and circumstances outlined in the communication. Commercial solicitations or communications will not
be forwarded.
Meetings of Unitholders
Our Partnership Agreement provides that the General Partner manages and operates us and that, unlike holders of common stock
in a corporation, unitholders only have limited voting rights on matters affecting our business or governance as set forth in our
Partnership Agreement. Accordingly, we do not hold annual meetings of unitholders.
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Code of Ethics and Business Conduct
The Board has adopted a Code of Ethics and Business Conduct that applies to directors of the General Partner and our executive
officers. Our General Partner also expects all employees of the Topper Group providing services to or for the benefit of the
Partnership and its operating subsidiaries to adhere to the Code of Ethics and Business Conduct. The Code of Ethics and Business
Conduct can be found on CrossAmerica Partners’ website at www.crossamericapartners.com under the “Corporate Governance”
tab in the “Investors” section. Any amendment to, or waiver from, a provision of the Code of Ethics and Business Conduct for
our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions
will be promptly disclosed under the “Corporate Governance” tab at www.crossmericapartners.com. The Board has also adopted
Corporate Governance Guidelines that outline important policies and practices regarding our governance, which can also be
found in its entirety on CrossAmerica Partners’ website at www.crossamericapartners.com under the “Corporate Governance”
tab in the “Investors” section. Requests for print copies of the Code of Ethics and Business Conduct and/or the Corporate
Governance Guidelines may be directed to Investor Relations at info@crossamericapartners.com or to Investor Relations,
CrossAmerica Partners LP, 645 Hamilton Street, Suite 400, Allentown, PA 18101 or made by telephone at (610) 625-8005. The
information contained on, or connected to, our website is not incorporated by reference into this Annual Report on Form 10-K
and should not be considered part of this or any other report that we file with or furnish to the SEC.
Reimbursement of Expenses of Our General Partner
Except as otherwise set forth in our Omnibus Agreement, our Partnership Agreement requires us to reimburse our General Partner
for all direct and indirect expenses it incurs or payments it makes on our behalf and all other expenses reasonably allocable to us
or otherwise incurred by our General Partner in connection with operating our business. The Partnership Agreement does not
limit the amount of expenses for which our General Partner and its affiliates may be reimbursed. These expenses include (without
limitation) salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf
and expenses allocated to our General Partner by its affiliates. Our General Partner is entitled to determine in good faith the
expenses that are allocable to us. Please read “Item 13. Certain Relationships and Related Party Transactions and Director
Independence – Omnibus Agreement.”
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview
We do not directly employ or compensate any of our executive officers, including our named executive officers who were serving
as our executive officers at the end of the fiscal year ended December 31, 2023 (“NEOs”), or other employees who provide
services necessary for managing our business. Under our Partnership Agreement, the General Partner manages our operations
and activities on our behalf. Our General Partner also does not directly employ any of its executive officers or other employees.
For our fiscal year ending December 31, 2023, our executive officers, including our NEOs, as more fully described below, were
employed and compensated by an affiliate of the Topper Group.
For 2023, the provision of management services by, and payment to, the Topper Group was governed by the Omnibus Agreement.
Named Executive Officers
For 2023, our NEOs were:
Charles M. Nifong, Jr. – Mr. Nifong has served as our Chief Executive Officer and President since November 19, 2019.
Maura Topper – Ms. Topper has served as our Chief Financial Officer since August 11, 2021, during which 90% of Ms.
Topper’s time was allocated to the Partnership.
David F. Hrinak – Mr. Hrinak has served as our Executive Vice President of Wholesale from February 14, 2020 through
January 19, 2022 and our Executive Vice President since January 20, 2022. During 2023, 95% of Mr. Hrinak’s time was
allocated to the Partnership.
Keenan D. Lynch – Mr. Lynch has served as our General Counsel since February 24, 2020 and Chief Administrative
Officer since January 20, 2022. He previously served as Corporate Secretary from November 19, 2019 through January
19, 2022. During 2023, 85% of Mr. Lynch’s time was allocated to the Partnership.
Robert Brecker – Mr. Brecker has served as our Executive Vice President of Operations of the Partnership's Subsidiaries
since January 20, 2022, and was designated an executive officer of the Partnership's subsidiaries on April 20, 2023.
During 2023, 95% of Mr. Brecker's time was allocated to the Partnership.
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The Partnership does not determine the compensation for its NEOs. For 2023, the compensation philosophy and practices of the
Topper Group were used to determine the compensation of the NEOs and all compensation decisions were in the sole discretion
of the Topper Group. The compensation philosophy and practices of the Topper Group were used to determine the total
compensation of the NEOs and all compensation decisions were in the sole discretion of the Topper Group.
The compensation philosophies and practices of the Topper Group during 2023 are described below in this Compensation
Discussion and Analysis, and the compensation actually awarded by the Topper Group to the NEOs for their services to the
Partnership during 2023 is set out in the accompanying Summary Compensation Table and related compensation tables that
follow this Compensation Discussion and Analysis.
Compensation
Objectives and Philosophy
The compensation philosophy of the Topper Group is based on performance and the achievement of predetermined objectives,
and it is a reflection of the entrepreneurial culture of the Topper Group, which is a culture where the financial interests of its
executives are aligned with the performance of the company and the investors they represent. The compensation strategy includes
variable components linked to short term, medium term and long-term performance. The Topper Group compensation plans and
programs for executives are designed to: (i) recruit, develop and retain talented executives; (ii) reward exceptional performance
as measured by predetermined and quantifiable objectives; (iii) establish a direct relation between the interests of the executives
and those of the shareholders of the Topper Group and the unitholders of the Partnership by favoring the creation of value in the
short, medium and long term; (iv) encourage teamwork and promote company values; and (v) support the company’s business
strategy. The Topper Group’s compensation plans and programs are established based on internal principles of equity that take
into consideration the role, nature and level of each of the executives as well as external principles of equity such as fair, equitable
and competitive compensation terms in comparison to peers as well as those of the market in general.
Elements of Executive Compensation
The three main components of the remuneration of the Topper Group’s executive compensation program are base salary, annual
incentive plan and long-term incentive plan, as shown in the table below.
Element
Base salary
2023 Performance Based Bonus
Compensation Policy
Long-term incentive compensation
Description
Annual base salary is based on the
functional responsibilities and competences
of the executives
Performance based target bonus
compensation policy ranging from 50% to
100% of base salary, which payment is
determined by financial and operational
objectives
Objectives
Attract, retain and motivate executives
Motivate executives to achieve objectives
with a higher degree of difficulty and
thereby achieve or exceed the business
plan of the Partnership
Create accountability among executives
for the achievement of these financial
objectives
Phantom stock unit plan with grants varying
according to position held
Align the short-term interests of
executives with those of the Partnership
and its unitholders
Align long-term interests of executives
with those of the Partnership and its
unitholders
Performance payouts also vary depending on
the achievement of special measurable
objectives that are key to the financial
success of the company
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Base Salary
The human resources department of the Topper Group approved the following annualized base salaries for the 2023 fiscal year:
Name
Charles M. Nifong, Jr.
Maura Topper
David F. Hrinak
Keenan D. Lynch
Robert Brecker
2023
Annual
Base
Salary ($)
(1)
500,000
325,000
233,000
300,000
325,000
(1) The amount shown represents annualized base salary, not the portion allocated to the Partnership.
The Summary Compensation Table reflects the portion of the annualized base salary allocated to the Partnership. In addition, for
Mr. Hrinak in lieu of increasing his annual base salary he received a $9,000 spot bonus on August 11, 2023.
Short-Term Incentive Compensation
Performance-Based Bonus Compensation Policy
The 2023 Performance-Based Bonus Compensation Policy (the “2023 Bonus Plan”) is one of the key components of the “at-risk”
compensation. The 2023 Bonus Plan is utilized to reward short-term performance achievements and to motivate and reward
executives for their contributions toward meeting financial and strategic goals.
For the NEOs, the Topper Group determined to include, as part of their compensation, the 2023 Bonus Plan for the fiscal year
ending on December 31, 2023. As approved by the Board on February 23, 2023, the 2023 Bonus Plan included financial and
operational objectives, each with a specified percentage weighting. For Mr. Nifong, the 2023 Bonus Plan is based on the
achievement of (i) be financially efficient operators (76%); and (ii) maximizing the value of our portfolio through the class of
trade conversions (24%). For Ms. Topper, the 2023 Bonus Plan is based on the achievement of (i) be financially efficient operators
(53%), (ii) maximizing the value of our portfolio through the class of trade conversions (17%) and (iii) completion of department
level goals supporting the previously outlined goals (30%). For Messrs. Hrinak, Lynch and Brecker, the 2023 Bonus Plan is based
on the achievement of (i) be financially efficient operators (49%), (ii) maximizing the value of our portfolio through the class of
trade conversions (21%) and (iii) completion of department level goals supporting the previously outlined goals (30%).
Under the 2023 Bonus Plan, Mr. Nifong’s target bonus is 100% of base salary with a payout range of 0% to 117% of base salary.
Ms. Topper’s target bonus is 50% of base salary with a payout range of 0% to 112% of her target bonus. Mr. Hrinak’s target
bonus is 75% of base salary with a payout range of 0% to 115% of his target bonus. Messrs. Lynch and Brecker’s target bonus is
50% of base salary with a payout range of 0% to 115% of their target bonus.
The purpose of the 2023 Bonus Plan is to motivate executives to achieve objectives with a higher degree of difficulty and thereby
achieve or exceed the business plan of the Partnership.
Under the 2023 Bonus Plan, the attainment of performance metrics and the achievement factor are determined once the
measurement period ends on December 31, 2023.
Based on the metrics, weightings assigned, and results achieved, the payout under the 2023 Bonus Plan for executive officers
ranges from 74% to 90% of the target bonus amount. For non-senior management personnel, the bonus plan included departmental
goals for each department that were weighted to arrive at a target bonus amount. Overall, the plan paid at a level of approximately
74% of target bonus, with certain personnel at either higher or lower amounts based on their individual and department level
performance.
Name
Charles M. Nifong, Jr.
Maura Topper
David F. Hrinak
Keenan D. Lynch
Robert Brecker
Target
Bonus Plan
as a % of
Base Salary
2023 Actual
Bonus Plan
as a % of
Bonus Plan
Target
2023 Bonus
Plan
Payment
Approved
($) (2) (3)
Bonus Plan
Target
at 100%
100% $ 500,000
50% 162,500
75% 174,750
50% 150,000
50% 162,500
74% $ 371,256
89% 145,000
89% 155,000
87% 130,000
90% 146,000
2023
Annual
Base
Salary(1)
$ 500,000
325,000
233,000
300,000
325,000
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(1) The amounts shown represent annualized base salary, not the portion allocated to the Partnership.
(2) The amounts shown will be paid in 2024.
(3) The amounts will be paid as follows: the first $25,000 in cash and the remainder of the bonus will be paid 50% in
cash and 50% in fully vested common units. The number of common units will be determined on a 20-day volume
weighted average price through February 21, 2024 with a payment date on or before March 8, 2024.
Long-Term Incentive Compensation
2023 Grants of Equity Awards
Under the CrossAmerica Partners LP 2022 Incentive Award Plan, in 2023, an aggregate of 25,567 equity awards were granted to
Messrs. Nifong, Lynch and Brecker, and Ms. Topper in the form of Time-Based Phantom Units (“TBUAs”) with the associated
Distribution Equivalent Rights (“DERs”). Mr. Hrinak was not granted TBUAs in 2023. Of the total number of TBUAs granted,
50% will vest one-third on each December 31 over three years until December 31, 2026 if the executive remains employed over
the vesting term, and 50% will vest upon death, disability or retirement, as long as such retirement is not adverse to the interests
of the Partnership, as determined by the Board in its sole discretion.
In addition, Performance Based Awards (“PBUAs”) were granted to Messrs. Nifong, Lynch and Brecker, and Ms. Topper with
an "Initial Target Dollar Amount" of $375,000, $112,500, $81,250 and $146,250, respectively, and will be calculated in dollar
amounts and then converted into common units, or cash, or both, at the discretion of the Board, based on attainment of the
Performance Goals as described below. Mr. Hrinak was not granted PBUAs in 2023. The PBUAs vest on December 31, 2026.
Subject to certain discretionary adjustments as determined by the Board, the PBUAs are weighted 50% for Increase of Funds
Flow from Operations per Unit and 50% for Partnership Leverage, with performance measured for the period from January 1,
2024 to December 31, 2026 (“Measurement Period”) and the reference period ending on December 31, 2023. The Board has the
sole and complete discretion over the administration of the PBUAs under the CrossAmerica Partners LP 2022 Incentive Award
Plan.
Increase in Funds Flow from Operations per Unit
The target value with respect to Increase in Funds Flow from Operations per Unit is determined as follows. First, the average
Funds Flow from Operations per Unit will be calculated for the Measurement Period. Next, that number will be divided by the
Funds Flow from Operations per Unit for the twelve-month period ending on December 31, 2023 as the reference period. The
payout percentage for Increase in Funds Flow from Operations per Unit will range from 0-200% of 50% of the Initial Target
Dollar Amount.
“Funds Flow from Operations per Unit” is defined as distributable cash flow per Unit, excluding maintenance capital expenditures
or any other such capital expenditures typically included in calculating distributable cash flow.
Partnership Leverage
The target value associated with Partnership Leverage is determined as follows. First, Partnership Leverage will be calculated for
each of the respective twelve-month periods ending on December 31, 2024, 2025 and 2026. Next, “Average Partnership
Leverage” will be calculated as the sum of three times the Leverage for the year ending December 31, 2026, plus two times the
Leverage for the year ending December 31, 2025, plus the Leverage for the year ending December 31, 2024, divided by six (i.e.,
Average Partnership Leverage will be a weighted average with greater emphasis given to the latter years in the Measurement
Period). The payout percentage for Partnership Leverage will range from 0-200% of 50% of the Initial Dollar Target Amount.
“Partnership Leverage” is defined as the ratio of the Partnership’s total debt as of a specified date (as determined in accordance
with the Partnership’s GAAP financial statements) divided by EBITDA for the twelve-month period prior to such specified date.
In case of acquisitions, EBITDA will be calculated on a pro forma basis for such acquisitions, providing that the debt incurred
for such acquisitions is reflected in the total debt amount.
Distributable cash flow per Unit and EBITDA are calculated consistent with the Partnership’s financial information filed with
the Securities and Exchange Commission.
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2020 PBUAs Results
In November 2020, we granted the 2020 PBUAs to Messrs. Nifong, Lynch and Brecker. The targets for the 2020 PBUA award
included performance goals weighted 65% for Increase of Funds Flow from Operations per Unit and 35% for Partnership
Leverage, with a performance period from January 1, 2021 to December 31, 2023 (“2020 Measurement Period”), subject to
certain discretionary adjustments as determined by the Board. The Board calculated the Funds Flow from Operations per Unit
to account for certain extraordinary periods of fuel margin during the 2020 Measurement Period as well as the issuance of the
Preferred Membership Interests in 2022, and calculated the Partnership Leverage to account for cash holdings and certain gains
on the sale of assets. The performance was calculated consistent with the Partnership’s financial information filed with the
Securities and Exchange Commission and as adjusted in accordance with the preceding sentence. After careful consideration by
the Board, a payout factor of 123% of the target dollar amount for the 2020 PBUAs was determined, based on the achievement
of results against the pre-established target levels and application of the adjustments as described above. The table below shows
the target dollar amount granted in 2020, the dollar payout earned and the actual number of units delivered.
Named Executive Officer
Charles M. Nifong, Jr.
Keenan D. Lynch
Robert Brecker
Target Dollar
Amount ($)
$ 375,000
101,040
52,416
Payout %
Payout
Dollar
Amount ($)
Number of
Units (1)
123% $ 461,625
124,381
123%
64,524
123%
20,344
5,481
2,844
(1) The number of units is equal to the payout dollar amount of the 2020 PBUA divided by the 20-day volume weighted
average price through February 21, 2024 with a payment date on or before March 8, 2024.
Other Benefits
All NEOs were eligible after completing one year of service to participate in the Dunne Manning 401(k) plan, a qualified safe
harbor plan with 100% match of employee contributions up to 4% of the executive’s base salary. All NEOs were eligible to
receive voluntary benefit programs, including medical, dental, vision, life and disability insurance.
Other Compensation Policies and Practices
Restrictions on Hedging, Pledging and Other Transactions
Our Insider Trading Policy prohibits “Covered Persons” from (a) speculative transactions such as short sales, puts, calls or other
similar derivative transactions, hedging or monetization transactions with respect to Partnership securities; (b) holding securities
of the Partnership in a margin account; and (c) pledging Partnership securities as collateral for loans. For purposes of the Insider
Trading Policy, Covered Persons are directors of the Partnership and our General Partner, executive officers of the Partnership
or DMI or their affiliates, including our General Partner and those employees who have, or have access to, certain financial
information regarding the Partnership and are designated as Covered Persons (and in each case their family members and
controlled entities within the meaning of the Insider Trading Policy). Transactions that are otherwise prohibited by our Insider
Trading Policy may be approved by the General Counsel of the General Partner, as the compliance officer of our Insider Trading
Policy. Compliance with these policies is monitored by the Board. A copy of our Insider Trading Policy is available in its entirety
on the CrossAmerica Partners’ website at www.crossamericapartners.com under the “Corporate Governance” tab in the
“Investors” section.
Clawback Policy
We have adopted a “clawback” policy that applies to any bonuses and other incentive and equity compensation awarded to our
executive officers. This policy provides that, in the event of a material restatement of the Partnership’s financial results due to
material noncompliance with certain financial reporting requirements, the Board, or the appropriate committee of the Board, will
review all such incentive compensation and, if such incentive compensation would have been lower had it been calculated based
on the restated results, the Board, or the appropriate committee of the Board, will (to the extent permitted by law and as appropriate
under the circumstances) use reasonable efforts to seek to recover for the benefit of the Partnership all or a portion of such
incentive compensation, subject to a three-year look-back period.
97
In addition, in 2023, we adopted a new Clawback Policy for executive officers in order to comply with new SEC rules
promulgated under the Dodd-Frank Act and NYSE listing standards. This policy applies to all incentive-based compensation
(including cash bonus payments) received by our current and former Section 16 officers on or after October 2, 2023, the effective
date specified in the NYSE listing standards.
Impact of Regulatory Requirements
Internal Revenue Code—We believe we are a limited partnership and not a corporation for U.S. federal income tax purposes. It
is not entirely clear whether the compensation paid to the NEOs is subject to the deduction limitations under Section 162(m) of
the Internal Revenue Code. If we are required to be treated as a corporation for U.S. federal income tax purposes, however, the
limitations of Section 162(m) would apply. In any event, compensation decisions in respect of the NEOs will be made in a manner
designed to best incentivize appropriate performance.
Accounting for Stock-Based Compensation—We account for stock-based compensation in accordance with the requirements of
ASC 718–Compensation–Stock Compensation for all of our stock-based compensation plans. See Note 19 to the financial
statements for a discussion of all assumptions made in the calculation of stock awards to our NEOs.
Compensation Committee Report*
The members of the Board have reviewed and discussed the Compensation Discussion and Analysis included in this Annual
Report on Form 10-K with management and, based on such review and discussions and such other matters the Board deemed
relevant and appropriate, the Board has approved the inclusion of the Compensation Discussion and Analysis in this Annual
Report on Form 10-K.
Members of the Board:
Joseph V. Topper, Jr.
John B. Reilly, III
Justin A. Gannon
Thomas E. Kelso
Mickey Kim
Keenan D. Lynch
Charles M. Nifong, Jr.
Maura Topper
Kenneth G. Valosky
* As a publicly traded limited partnership, we are not required to and do not have a compensation committee. Accordingly, the
Compensation Committee Report required by Item 407(e)(5) of Regulation S-K is given by the Board as specified by Item
407(e)(5)(i) of Regulation S-K.
The foregoing compensation committee report is not “soliciting material,” is not deemed filed with the SEC, and is not to be
incorporated by reference into any of the Partnership’s filings under the Securities Act, or the Exchange Act, respectively, whether
made before or after the date of this annual report on Form 10-K and irrespective of any general incorporation language therein.
98
Summary Compensation Table
The following table sets forth certain information with respect to compensation of our NEOs. Except for the management fee we
paid to the Topper Group under the Omnibus Agreement, we did not pay or reimburse any cash compensation amounts to or for
our NEOs in 2023. The amounts shown for Messrs. Hrinak, Lynch and Brecker and Ms. Topper represent only that portion
allocable to the Partnership.
Name and Principal Position
Charles M. Nifong, Jr.,
President and Chief Executive Officer
Maura Topper, Chief Financial Officer
David F. Hrinak,
Executive Vice President Wholesale
Keenan D. Lynch
General Counsel and Chief
Administrative Officer
Robert Brecker (8)
Executive Vice President of Operations
Salary
($)
Stock
Awards
($) (2)(3)
Options
Awards
Bonus
Year
($) (4)
($) (1)
2023 500,000 — 249,997 —
2022 500,000 — 250,005 —
2021 500,000 — 250,001 —
2023 292,500 — 97,509 —
2022 270,000 — 81,000 —
2021 103,635 50,000 108,504 —
— —
2023 221,350 9,000
— —
2022 221,350 10,500
2021 221,350 75,000
— —
2023 255,000 — 112,497 —
Non-Equity
Incentive Plan
Compensation
($) (5)
371,256
375,000
362,500
145,000
132,000
42,308
155,000
155,337
126,694
130,000
All Other
Compensation
($) (6)
Total
($) (7)
93,132 1,214,385
75,485 1,200,490
54,676 1,167,177
31,880 566,889
24,055 507,055
64,158 368,605
1,011 386,361
1,014 388,201
1,010 424,054
39,938 537,435
2022 229,025 — 85,981 —
2021 229,025 37,048 85,876 —
2023 308,750 — 81,250 —
115,000
97,672
146,000
36,359 466,365
27,055 476,676
32,308 568,308
(1) For Mr. Hrinak the amount represents a spot bonus in the amount of $9,000 received in August 2023.
(2) The amounts shown represent the grant date fair value of awards for each of the years shown computed in accordance
with ASC 718–Compensation-Stock Compensation. See Note 19 to the financial statements for a discussion of all
assumptions made in the calculation of this amount. The grant date fair value for the Performance Based Awards was
$0 because the performance period commenced on January 1, 2024. The maximum amount payable pursuant to the
Performance Based Awards is $750,000 for Mr. Nifong, $270,000 for Ms. Topper, $202,080 for Mr. Lynch and
$162,500 for Mr. Brecker.
(3) See the Grants of Plan-Based Awards table for more information regarding TBUAs and the PBUAs granted in 2023.
(4) There were no stock options granted to NEOs in 2021, 2022 or 2023.
(5) The amounts represent the earned portion of the bonus pursuant to the applicable Bonus Plan.
(6) The amounts listed as “All Other Compensation” for 2023 are composed of these items:
All Other Compensation
Company Match to Defined Contribution Plan
Cell phone taxable compensation
Premiums for group-term life insurance
Distribution Equivalent Rights
Total All Other Compensation
Nifong
Topper
Hrinak
Lynch
Brecker
13,200
900
252
78,780
11,631
—
227
20,022
$ 93,132 $ 31,880 $
855
156
— 7,599 13,200
855
—
252
214
— 32,125
1,011 $39,938
12,540
855
239
18,674
$ 32,308
(7) Represents amounts allocated to the Partnership under the Omnibus Agreement.
(8) Notwithstanding Mr. Brecker's designation as an executive officer effective on April 20, 2023, the amounts listed
reflect Mr. Brecker's full year 2023 compensation.
99
Grants of Plan-Based Awards
The following table provides information regarding grants of plan-based awards to our NEOs during 2023. All equity awards
shown were in the form of TBUAs or PBUAs. For Messrs. Hrinak, Lynch and Brecker and Ms. Topper, full dollar values are
provided and not those allocable to the Partnership as shown in the Summary Compensation Table above.
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
Target
($)
Maximum
($)
Threshold
($)
Grant
Date
Estimated Future Payouts
Under Equity
Incentive Plan Awards (1)
Target
($)
Maximum
($)
Threshold
($)
All Other
Stock Awards:
Number of
Shares of
Stock or Units
(2)
Grant Date
Fair Value
of Stock
and Option
Awards (3)
(#)
($)
10/23/2023
— 500,000 585,000
—
—
—
—
—
—
— 375,000 750,000
—
—
11,809 249,997
10/23/2023
— 162,500 181,838
—
—
—
—
—
—
— 146,250 292,500
—
—
4,606 97,509
— 174,750 200,744
—
—
—
—
—
—
—
—
—
—
—
—
—
10/23/2023
— 150,000 172,313
—
—
—
—
—
—
— 112,500 225,000
—
—
5,314 112,497
10/23/2023
— 162,500 186,672
—
—
—
—
—
—
— 81,250 162,500
—
—
3,838 81,250
Name
Charles M. Nifong, Jr.
CAPL 2023 Bonus Plan
CAPL LTI Plan
Maura Topper
CAPL 2023 Bonus Plan
CAPL LTI Plan
David F. Hrinak
CAPL 2023 Bonus Plan
CAPL LTI Plan
Keenan D. Lynch
CAPL 2023 Bonus Plan
CAPL LTI Plan
Robert Brecker
CAPL 2023 Bonus Plan
CAPL LTI Plan
(1) Represents an award of PBUAs under the long-term incentive plan. The PBUAs are granted and calculated in dollar amounts
and then will convert into common units or cash, or both, at the discretion of the Board, based on attainment of the
performance goals. Therefore, the columns in this table represent the dollar amounts and not the number of units. The PBUAs
vest on December 31, 2026. The PBUAs are weighted 50% for Increase of Funds Flow from Operations per Unit and 50%
for Partnership Leverage, with a performance period from January 1, 2024 to December 31, 2026 and the reference period
ending on December 31, 2023.
(2) Represents an award of TBUAs under the long-term incentive plan. Of this award, 50% will vest a third each on December
31, 2024, 2025 and 2026. The remaining 50% will vest upon death, disability or retirement with board approval.
(3) The amounts shown represent the grant date fair value of the TBUAs computed in accordance with ASC 718– Compensation-
Stock Compensation. See Note 19 to the financial statements for a discussion of all assumptions made in the calculation of
this amount. The grant date fair value for the PBUAs was $0 because the performance period commenced on January 1,
2024.
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Outstanding Equity Awards at Year End
The following table provides information regarding the number of outstanding equity awards held by our NEOs at December 31,
2023. For Messrs. Hrinak, Lynch and Brecker and Ms. Topper, full dollar values are provided and not those allocable to the
Partnership.
Stock Awards (1)
Equity
Incentive Plan
Awards
Number
of Unearned
Shares, Units,
or Other Rights
That Have Not
Vested
(#)
Equity
Incentive Plan
Awards: Market
or Payout
Value of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (6)(7)(8)
($)
Number of
Shares or Units
of Stock That
Have Not
Vested
(#)
Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)
11,809
10,919
8,145
8,458
4,606
3,930
2,933
—
—
—
—
—
5,314
4,413
3,292
3,418
3,838
2,861
1,708
1,773
269,245
248,953
185,706
192,842
105,017
89,604
66,872
—
—
—
—
—
121,159
100,616
75,058
77,930
87,506
65,231
38,942
40,424
375,000
375,000
750,000
—
146,250
135,000
270,000
—
—
—
—
—
112,500
101,040
202,080
—
81,250
65,520
104,832
—
Name
Charles M. Nifong, Jr.
CAPL 2023 Award (2) (6)
CAPL 2022 Award (3) (7)
CAPL 2021 Award (4) (8)
CAPL 2020 Award (5)
Maura Topper
CAPL 2023 Award (2) (6)
CAPL 2022 Award (3) (7)
CAPL 2021 Award (4) (8)
CAPL 2020 Award (5)
David F. Hrinak
CAPL 2023 Award
CAPL 2022 Award
CAPL 2021 Award
CAPL 2020 Award
Keenan D. Lynch
CAPL 2023 Award (2) (6)
CAPL 2022 Award (3) (7)
CAPL 2021 Award (4) (8)
CAPL 2020 Award (5)
Robert Brecker
CAPL 2023 Award (2) (6)
CAPL 2022 Award (3) (7)
CAPL 2021 Award (4) (8)
CAPL 2020 Award (5)
(1) The amounts below include TBUAs and PBUAs.
(2) Fifty percent of the TBUAs will vest a third each on December 31, 2024, 2025 and 2026. The remaining 50% will vest
upon death, disability, or retirement with board approval. The market value is based on the December 29, 2023, closing
unit price of our common units.
(3) Represents the unvested portion of the fifty percent of the TBUAs that will vest a third each on December 31, 2024 and
December 31, 2025. The first third vested on December 31, 2023. The remaining 50% will vest upon death, disability or
retirement with board approval. The market value is based on the December 29, 2023, closing unit price of our common
units.
(4) Represents the unvested portion of the fifty percent of the TBUAs that will vest the final third on December 31, 2024. The
first third vested on December 31, 2022 and the second third on December 31, 2023. The remaining 50% will vest upon
death, disability or retirement with board approval. The market value is based on the December 29, 2023, closing unit
price of our common units.
(5) Represents the unvested portion of fifty percent of the TBUAs that will vest upon death, disability or retirement with
board approval. The market value is based on the December 29, 2023 closing unit price of our common units.
101
(6) Represents the target dollar amount of the PBUAs that will convert into common units or cash, or both, at the discretion of
the Board, based on attainment of the Performance Goals. The PBUAs vest on December 31, 2026. The PBUAs are
weighted 50% for Increase of Funds Flow from Operations per Unit and 50% for Partnership Leverage, with a
performance period from January 1, 2024, to December 31, 2026, and the reference period ending on December 31, 2023.
(7) Represents the target dollar amount of the PBUAs that will convert into common units or cash, or both, at the discretion of
the Board, based on attainment of the Performance Goals. The PBUAs vest on December 31, 2025. The PBUAs are
weighted 65% for Increase of Funds Flow from Operations per Unit and 35% for Partnership Leverage, with a
performance period from January 1, 2023, to December 31, 2025, and the reference period ending on December 31, 2022.
(8) Per the SEC rules, this represents the maximum dollar amount of the PBUAs that will convert into common units or cash,
or both, at the discretion of the Board because the award would have paid out above the target level based on attainment of
the Performance Goals as of December 31, 2023. The PBUAs vest on December 31, 2024. The PBUAs are weighted 65%
for Increase of Funds Flow from Operations per Unit and 35% for Partnership Leverage, with a performance period from
January 1, 2022, to December 31, 2024, and the reference period ending on December 31, 2021.
Option Exercises and Equity Vested
The following table sets forth information regarding vesting during 2023 of equity awards held by our NEOs in respect of
Partnership service. For Messrs. Hrinak, Lynch and Brecker and Ms. Topper, full dollar values are provided and not those
allocable to the Partnership.
Name
Charles M. Nifong, Jr.
Maura Topper
David F. Hrinak
Keenan D. Lynch
Robert Brecker
Stock Awards
Number of
Shares or Units
of Stock
Acquired on
Vesting
(#)
Value Realized
on Vesting
($)
7,959 (1)
7,040 (2)
20,344 (3)
2,433 (1)
1,520 (2)
2,964 (1)
2,047 (1)
2,846 (2)
5,481 (3)
2,661 (1)
1,591 (2)
2,844 (3)
172,153
160,512
461,625
52,626
34,656
64,111
44,277
64,889
124,381
57,557
36,275
64,524
(1)
(2)
(3)
Represents the portion of the bonus under the 2022 Performance Based Bonus Compensation Policy paid in fully
vested common units in 2023.
Represents one third each of the TBUA phantom unit awards granted by the Partnership on October 25, 2022,
October 25, 2021, and November 9, 2020, that vested on December 31, 2023 for Messrs. Nifong, Lynch and
Brecker. For Ms. Topper it represents one third of the TBUA phantom unit award granted by the Partnership on
October 25, 2022 and October 25, 2021, that vested on December 31, 2023.
Represents the number of common units to be issued on or before March 8, 2024, based on the 20-day volume
weighted average price through February 21, 2024, in respect of the PBUA awards granted by the Partnership on
November 9, 2020 that vested on December 31, 2023.
Potential Payments upon Termination or Change in Control
Our executive officers may be entitled to certain payments upon termination of their employment under certain circumstances,
in each case, as more fully described below. Any such payments that are to be made in cash will be subject to reimbursement
under the Omnibus Agreement.
102
Lehigh Gas Partners LP 2012 Incentive Award Plan
Under the Lehigh Gas Partners LP 2012 Incentive Award Plan and the award agreements, in the event an NEO’s employment is
terminated for any reason, all outstanding TBUAs and PBUAs will be forfeited without payment, except that upon an NEO’s
death or disability, the TBUAs will vest in full, and the PBUAs will be determined in accordance with its terms, subject to
adjustments as the Board may make in its reasonable discretion. Upon a change in control of the Partnership, the Board in its sole
discretion may determine the treatment. If, upon death or disability of any of Messrs. Nifong, Lynch and Brecker and Ms. Topper
as of December 31,2023, their TBUAs will vest in full in the amounts of $378,548, $152,988, $79,367 and $66,872, respectively.
CrossAmerica Partners LP 2022 Incentive Award Plan
Under the CrossAmerica Partners LP 2022 Incentive Award Plan and the award agreements, in the event an NEO’s employment
is terminated for any reason, all outstanding TBUAs and PBUAs will be forfeited without payment, except that upon an NEO’s
death or disability, the TBUAs will vest in full, and the PBUAs will be determined in accordance with its terms, subject to
adjustments as the Board may make in its reasonable discretion. Upon a change in control of the Partnership, the Board in its sole
discretion may determine the treatment. If, upon death or disability of any of Messrs. Nifong, Lynch and Brecker and Ms. Topper
as of December 31,2023, their TBUAs will vest in full in the amounts of $518,198, $221,776, $152,737 and $194,621,
respectively. The PBUAs will be valued at zero as the performance period commences on January 1, 2024.
Principal Executive Officer Pay Ratio
We are providing the following information about the relationship of the annual total compensation of individuals providing
services in respect to the Partnership and the annual total compensation of Charles M. Nifong, Jr., our Principal Executive Officer
(our “PEO”):
For the year ended December 31, 2023:
the median of the annual total compensation of all individuals providing services in respect of the Partnership
(other than our PEO) was $79,377; and
the annual total compensation of our PEO was $1,214,385.
Based on this information for 2023, we have determined that the ratio of our PEO’s annual total compensation to the annual total
compensation of our median employee was 15:1. Our pay ratio figure was calculated in a manner consistent with Item 40(u) of
Regulation S-K.
As of December 31, 2023, there were 195 employees of an affiliate of the Topper Group who provided substantial management
services to us for the full year. As discussed in this Form 10-K, our PEO is an employee of an affiliate of the Topper Group, but
we are including his annual total compensation in the determination of the PEO pay ratio, as required under SEC rules.
The date we used to identify our median employee was December 31, 2023.
We identified our median employee based on the aggregate salary actually paid during 2023 to these employees.
For purposes of determining aggregate salary, we included the amount of base salary and overtime the employee received during
the year and all other pay elements related to base salary including, but not limited to, cash bonuses, holiday pay, vacation pay
and other paid time off, if any. Aggregate salary amounts did not include any commissions or other compensation. In making this
determination, we excluded any full-time and part-time permanent employees who were hired in 2023 but were not employed by
us for the entire year ended December 31, 2023.
Once we identified our median employee, we then determined that employee’s annual total compensation, including any
perquisites and other benefits, in the same manner that we determine the annual total compensation of our NEOs for purposes of
the Summary Compensation Table disclosed above. The annual total compensation of our median employee was determined to
be $79,377. This annual total compensation amount for our median employee was then compared to the total compensation of
our PEO for 2023 of $1,214,385. The elements included in the PEO’s annual total compensation are fully discussed above in the
footnotes to the Summary Compensation Table.
103
Director Compensation
Overview
Set out below is a discussion of compensation paid for 2023 to individuals who served as non-employee members of our Board
during any portion of 2023.
Board members who were employees providing services in respect of the Partnership did not receive any separate compensation
for their Board service.
Director Compensation for 2023
During the July 25, 2023 Board meeting a resolution was approved providing that each non-employee director would be granted
cash compensation of $62,500 per year (paid on a quarterly basis) and equity awards with a grant date fair value of $62,500. The
chairman of each of the audit committee and conflicts committee received additional cash compensation of $10,000 for 2023
(paid on a quarterly basis). In addition, each non-employee director received $1,000 per each Board meeting attended and $500
per each Committee meeting attended.
On July 25, 2023, Messrs. Gannon, Kelso, Kim, Reilly, Topper and Valosky received an award of 3,249 phantom units with a
grant date fair value equal to $62,500 based on the closing price of the Partnership’s common units on the close of business the
day prior to the date of grant as compensation for their service from June 28, 2023 until June 27, 2024. Such phantom units vest
one year from the grant date of the award and include the payment made by the Partnership of distribution equivalent rights equal
to the amount of distributions authorized to be paid to holders of common units of the Partnership.
Our directors are reimbursed for all out-of-pocket expenses in connection with attending meetings of the Board or its committees.
To the extent permitted under Delaware law, each director is fully indemnified by us for actions associated with being a director.
The following table provides the compensation amounts for each of our non-employee directors for 2023.
Directors
Justin A. Gannon (4) (5)
Mickey Kim (4) (5)
Kenneth G. Valosky (4)
J.B. Reilly Jr. (4)
Joseph V. Topper, Jr. (4)
Thomas E Kelso (6)
Fees
Earned or
Paid in
Cash ($) (1)
81,500
81,500
71,500
69,500
69,500
64,129
Stock or Unit
Awards and Option
Awards ($) (2)
All Other
Compensation ($)
(3)
Total ($)
62,500
62,500
62,500
62,500
62,500
62,500
6,605 150,605
6,605 150,605
6,605 140,605
6,605 138,605
6,605 138,605
3,924 130,553
(1) Non-employee directors received a cash retainer of $62,500 (paid quarterly) and an additional $10,000 for chairs of the
Committees. In addition, each non-employee director received $1,000 per each Board meeting attended and $500 per each
Committee meeting attended.
(2) Under the CrossAmerica Partners LP 2022 Incentive Award Plan, the directors received phantom units that can be
converted to common units or cash, at the discretion of the Board. The amounts shown represent the grant fair value of
awards for each of the years shown computed in accordance with ASC 718–Compensation-Stock Compensation. See Note
19 to the financial statements for a discussion of all assumptions made in the calculation of this amount.
(3) Represents distribution equivalent rights on unvested units.
(4) As part of the compensation to non-employee directors for the period June 28, 2023 to June 27, 2024, each of Messrs.
Gannon, Kelso, Kim, Reilly, Topper and Valosky received an equity grant of 3,249 phantom units of the Partnership based
upon a fair market value of $19.23 per unit, which was the NYSE closing price of our common units on July 24, 2023.
These phantom unit awards were accompanied by tandem distribution equivalent rights that entitled the holder to cash
payments equal to the amount of unit distributions authorized to be paid to the holders of Partnership common units. There
are no other outstanding equity awards.
(5) Messrs. Kim and Gannon received additional cash compensation of $10,000 per year for their service as chairman of the
conflicts committee and audit committee, respectively.
(6) Mr. Kelso was appointed on February 24, 2023 and as such, his cash retainer for the first quarter was prorated.
104
Compensation Committee Interlocks and Insider Participation
None of the directors or executive officers of our General Partner served as members of the compensation committee of another
entity that has or had an executive officer who served as a member of our Board during 2023. We do not have a separate
compensation committee. Decisions regarding the compensation of our NEOs for 2023 were made, as applicable, by the Topper
Group as the owner of our General Partner prior to the GP Purchase.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
UNITHOLDER MATTERS
As of February 22, 2024, the following table sets forth the beneficial ownership of our common units of:
Each person known by us to be a beneficial owner of more than 5% of our outstanding common units;
Each NEO and director of the Board; and
All of the executive officers and directors of the Board, as a group.
Name of Beneficial Owner
Greater than 5% Stockholders**
Patricia Dunne Topper Trust
Dunne Manning Inc.
DM Partners Management Co LLC
Dunne Manning Partners LLC
2008 Irrevocable Agreement of Trust of John B. Reilly, Jr.
Dunne Manning CAP Holdings I LLC
Directors
Joseph V. Topper, Jr.
John B. Reilly, III
Justin A. Gannon
Thomas E. Kelso
Mickey Kim
Keenan D. Lynch
Charles M. Nifong, Jr.
Maura Topper
Kenneth G. Valosky
Named Executive Officers
David F. Hrinak
Robert Brecker
Directors and executive officers as a group (11 persons)**
Beneficial Ownership of Common Units
Percent of
Class
Number of
Units
12,696,270 (1)
3,782,216 (2)
5,982,871 (3)
5,982,871 (3)
4,964,611 (4)
4,472,235 (3)
14,675,656 (5)
4,991,410 (4)
29,360
1,476
24,176
14,664 (6)
36,218
14,469 (7)
17,136
46,757
11,723 (8)
19,863,045
33.4 %
10.0 %
15.8 %
15.8 %
13.1 %
11.8 %
38.6 %
13.1 %
*
*
*
*
*
*
*
*
*
52.3 %
* The percentage of common units beneficially owned does not exceed one percent of the common units outstanding
** The address for each of our officers and directors listed below is 645 Hamilton Street, Suite 400 Allentown, PA 18101. The
address for the entities listed under “greater than 5% stockholders” is 645 Hamilton St., Suite 400, Allentown, PA 18101.
(1)
233,335 common units are held directly by the Patricia Dunne Topper Trust for the Family of Joseph V. Topper, Jr. (the
"Trust"). The Trust is controlled by Mr. Topper, the Chairman of the Board of the General Partner. The remaining common
units listed here are directly owned by each of Dunne Manning Inc., Energy Realty Partners, LLC, Nova8516 LP, Dunne
Manning Wholesale LLC, Dunne Manning CAP Holdings I LLC and Dunne Manning CAP Holdings II LLC, all entities
controlled by Mr. Topper and the Trust. The inclusion of these common units herein shall not be deemed an admission that
the above have a pecuniary interest in all of the common units reported herein.
(2) All 3,782,216 common units are held directly by Dunne Manning Inc., which is owned 100% by the Trust and Mr. Topper
is its sole director. Mr. Topper may be deemed to beneficially own these common units. The inclusion of these common
units herein shall not be deemed an admission that the above have a pecuniary interest in all of the common units reported
herein.
105
(3) DM Partners Management Co LLC ("DM Management") is a wholly owned subsidiary of the Trust, which is controlled by
Mr. Topper. DM Management controls Dunne Manning Partners, LLC, the 100% owner of each of Dunne Manning CAP
Holdings I LLC ("CAP Holdings I") and Dunne Manning CAP Holdings II LLC ("CAP Holdings II"). Each of CAP
Holdings I and CAP Holdings II directly holds 4,472,235 and 1,510,636 common units, respectively. As a result, each of
DM Management and Dunne Manning Partners LLC may be deemed to beneficially own an aggregate of 5,982,871
common units. The Trust indirectly owns a majority of the member interests in Dunne Manning Partners LLC. The
inclusion of these common units herein shall not be deemed an admission that the above have a pecuniary interest in all of
the common units reported herein.
(5)
(4) Mr. Reilly may be deemed to share beneficial ownership of 4,985,117 common units beneficially owned by the 2008
Irrevocable Agreement of Trust of John B. Reilly, Jr. (the “Reilly Trust”) in his capacity as one of two trustees of the Reilly
Trust. The inclusion of these common units herein shall not be deemed an admission that the above have a pecuniary
interest in all of the common units reported herein.
Includes 374,453 common units held by The Topper Foundation, a 501(c)(3) non-profit corporation. Mr. Topper, who
makes investment and voting decisions with respect to the common units held by The Topper Foundation, has no pecuniary
interest in these common units. 86,736 units are held directly by Mr. Topper in his individual capacity. 637,264 common
units are held by MMSCC-2, LLC (Mr. Topper controls 100% of the voting shares), and 880,933 common units are held
by JVT-JMG EROP Holdings, LP (Mr. Topper controls the general partner and the Trust holds a 45% limited partner
interest). The remaining common units listed here are deemed to be beneficially owned by Mr. Topper as the trustee of the
Trust (see note 2 above). Mr. Topper and entities controlled by Mr. Topper have pledged a total of 3,540,427 common
units (representing approximately 9.0% of outstanding common units) pursuant to a loan. Mr. Topper retains beneficial
ownership of the pledged shares in the absence of a default. Prior to entering into the pledge, the Board granted Mr. Topper
a waiver from the Insider Trading Policy’s prohibition against unit pledges by any director or officer. The inclusion of these
common units herein shall not be deemed an admission that the above have a pecuniary interest in all of the common units
reported herein.
(6) Of the 14,664 units held, 6,803 units are held by the Joseph V. Topper, Jr. Irrevocable Agreement of Trust No. 1 f/b/o
Shannon T. Lynch, Mr. Lynch’s wife, and as a result, Mr. Lynch may be deemed to be the beneficial owner of such units.
The inclusion of these common units herein shall not be deemed an admission that the above have a pecuniary interest in
all of the common units reported herein.
(7) Of the 14,469 units held, 11,224 are directly owned and 3,245 are held by the Joseph V. Topper, Jr. Irrevocable Agreement
of Trust No. 1 f/b/o Maura E. Topper. The inclusion of these common units herein shall not be deemed an admission that
the above have a pecuniary interest in all of the common units reported herein.
(8) Of the 11,723 units held, 1,441 units are held by Mr. Brecker's wife, and as a result, Mr. Brecker may be deemed to be the
beneficial owner of such units. The inclusion of these common units herein shall not be deemed an admission that the above
have a pecuniary interest in all of the common units reported herein.
Securities Authorized for Issuance under Equity Compensation Plans
The following table summarizes information about our equity compensation plans as of December 31, 2023:
Plan Category
Equity compensation plans approved by security holders:
Number of
securities to
be issued upon
exercise
of outstanding
options,
warrants and
rights (1)
Weighted-average
exercise price of
outstanding
options,
warrants and
rights
Number of
securities
remaining
available
for future issuance
under equity
compensation
plans (2)
299,024
n/a
1,614,268
(1) includes performance based awards assuming a 100% payout at the grant-date 20-day VWAP
(2) has been reduced by the number of performance based awards assuming a 100% payout at the grant-date 20-day VWAP
See Note 19 to the financial statements for a discussion of the material terms of the Plan.
106
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
As of February 22, 2024, the Topper Group beneficially owned or controlled 38.6% of the Partnership’s common units.
As of February 22, 2024, John B. Reilly, III owned or controlled 13.1% of the Partnership’s common units.
The following is a description of related party transactions since January 1, 2023 to which the Partnership was or is a party, in
which the amount involved exceeds $120,000 and in which a director, executive officer, holder of more than 5% of our common
units or any member of their immediate family had or will have a direct or indirect material interest, other than the arrangements
that are described under “Item 11-Potential Payments Upon Termination or Change in Control.” The terms of the transactions
and agreements disclosed in this section were determined by and among related parties and, consequently, are not the result of
arm’s length negotiations. Such terms are not necessarily at least as favorable to the parties to these transactions and agreements
as the terms that could have been obtained from unrelated third parties.
Distributions and Payments to our General Partner and Certain Related Parties
The following table summarizes the distributions and payments to be made by us to our General Partner and certain related parties
in connection with the ongoing operation of our business and distributions and payments that would be made by us if we were to
liquidate in accordance with the terms of our Partnership Agreement.
Operational Stage
Distributions
We will generally make cash distributions to the unitholders, including the Topper Group
and Mr. Reilly and their respective affiliates.
Assuming we have sufficient cash available for distribution to pay the full minimum
quarterly distribution on all of our outstanding units for four quarters, the Topper Group
and Mr. Reilly and their respective affiliates would receive an annual distribution of
$34.4 million, collectively, on their common units.
Cash distributions to the Topper Group and Mr. Reilly and their respective affiliates
amounted to $41.2 million in 2023.
Payments to our General Partner
and its affiliates
The Topper Group and CrossAmerica have the right to negotiate the amount of the
management fee on an annual basis, or more often as circumstances require.
The Partnership incurred $108.5 million in management fees under the Omnibus
Agreement for 2023.
Liquidation Stage
Liquidation
Upon our liquidation, the partners, including our General Partner, is entitled to receive
liquidating distributions according to their particular capital account balances.
Ownership of Our General Partner
Since November 19, 2019, the Topper Group has indirectly owned all of the membership interests of our General Partner.
Agreements with the Topper Group and Affiliates
Omnibus Agreement
On January 15, 2020, the Partnership entered into an Omnibus Agreement, effective as of January 1, 2020 (the “Omnibus
Agreement”), 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.
107
Pursuant to the Omnibus Agreement, DMI agreed, among other things, to provide, or cause to be provided, to the General Partner
for the benefit of the Partnership, at cost without markup, certain management, administrative and operating services.
We incurred expenses under the Omnibus Agreement, including costs for store level personnel at our company operated sites,
totaling $108.5 million for 2023. Amounts payable to the Topper Group related to these transactions were $8.4 million at
December 31, 2023. See Note 14 to the financial statements for more information.
Management Services and Term. Pursuant to the Omnibus Agreement, DMI provides us, or causes to be provided to us, and our
General Partner with management, administrative and operating services. These services include accounting, tax, legal, internal
audit, risk management and compliance, environmental compliance and remediation management oversight, treasury,
information technology and other administrative functions. The Topper Group provides the Partnership and our General Partner
with personnel necessary to carry out these services and any other services necessary to operate the Partnership’s business as
requested by the Partnership. We do not have any obligation to directly compensate the officers of our General Partner or
employees of the Topper Group; however, the Partnership reimburses the Topper Group under the Omnibus Agreement for its
services to the General Partner and Partnership, as described in this section.
The Omnibus Agreement will continue in effect until terminated in accordance with its terms. The Topper Group has the right to
terminate the Omnibus Agreement at any time upon 180 days’ prior written notice, and the General Partner has the right to
terminate the Omnibus Agreement at any time upon 60 days’ prior written notice.
Fees and Reimbursements. As indicated previously, we pay the Topper Group a management fee for providing services at cost
without markup. Services provided by, or on behalf of, the Topper Group, not outsourced to an independent third party, include
accounting; administrative; billing and invoicing; books and record keeping; budgeting, forecasting, and financial planning and
analysis; management (including the management and oversight of the MLP’s wholesale motor fuel distribution and real estate
business consistent with past practice); operations; payroll; contract administration; maintenance of internal controls; financial
reporting, including SEC reporting and compliance; office space; purchasing and materials management; risk management and
administration of insurance programs; information technology (includes hardware and software existing or acquired in the future
for which title is retained by the Topper Group); in-house legal; compensation, benefits and human resources administration;
cash management; corporate finance, treasury credit and debt administration; employee training; and miscellaneous
administration and overhead expenses. In addition, the Partnership is required to reimburse the Topper Group for certain
outsourced services to be provided by the Topper Group to or on behalf of the Partnership, as set forth in the Omnibus Agreement.
General Indemnification; Limitation of Liability. Pursuant to the Omnibus Agreement, we are required to indemnify the Topper
Group for any liabilities incurred by the Topper Group attributable to the management, administrative and operating services
provided to us under the agreement, other than liabilities resulting from the Topper Group’s bad faith, fraud or willful misconduct.
In addition, the Topper Group is required to indemnify us for any liabilities we incur as a result of the Topper Group’s bad faith,
fraud or willful misconduct in providing management, administrative and operating services under the Omnibus Agreement.
Other than indemnification claims based on the Topper Group’s bad faith, fraud or willful misconduct, the Topper Group’s
liability to us for services provided under the Omnibus Agreement cannot exceed $5,000,000 in the aggregate.
Preferred Membership Interests
See Note 18 for information regarding the preferred membership interests held by related parties.
Fuel Supply and Lease Agreements
Revenues from TopStar, an entity affiliated with the Topper Group, were $50.7 million for 2023. Accounts receivable from
TopStar were $0.4 million at December 31, 2023.
The Partnership leases certain motor fuel stations from the Topper Group under cancelable operating leases. Rent expense under
these agreements was $10.3 million for 2023.
Maintenance and Environmental Costs
Certain maintenance and environmental monitoring and remediation activities are undertaken by Synergy Environmental, Inc.,
an entity affiliated with the Topper Group, as approved by the conflicts committee of the Board. We incurred charges with this
related party of $2.6 million for 2023. Accounts payable to this related party amounted to $0.3 million at December 31, 2023.
108
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 $20.8 million for
2023. Amounts payable to this related party amounted to $1.4 million at 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 to this related party was $0.2
million for 2023.
Principal Executive Offices
Our principal executive offices are in Allentown, Pennsylvania. 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 $1.0 million for 2023.
Review, Approval and Ratification of Related Person Transactions
The Board has adopted a Code of Ethics and Business Conduct that provides that the Board or its authorized committee will
periodically review all related person transactions that are required to be disclosed under SEC rules and, when appropriate,
initially authorize or ratify all such transactions. In the event that the Board or its authorized committee considers ratification of
a related person transaction and determines not to so ratify, the Code of Ethics and Business Conduct provides that our
management will make all reasonable efforts to cancel or annul the transaction.
The Code of Ethics and Business Conduct provides that, in determining whether or not to recommend the initial approval or
ratification of a related person transaction, the Board or its authorized committee should consider all of the relevant facts and
circumstances available, including (if applicable) but not limited to: (i) whether there is an appropriate business justification for
the transaction; (ii) the benefits that accrue to us as a result of the transaction; (iii) the terms available to unrelated third parties
entering into similar transactions; (iv) the impact of the transaction on a director’s independence (in the event the related person
is a director, an immediate family member of a director or an entity in which a director or an immediately family member of a
director is a partner, shareholder, member or executive officer); (v) the availability of other sources for comparable products or
services; (vi) whether it is a single transaction or a series of ongoing, related transactions; and (vii) whether entering into the
transaction would be consistent with the Code of Ethics and Business Conduct.
Director Independence
For a discussion of the independence of the Board, please see “Item 10. Directors, Executive Officers and Corporate Governance
Management.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The audit committee of the board of directors of our General Partner selected Grant Thornton LLP, or Grant Thornton, an
independent registered public accounting firm, to audit our financial statements for 2023. The audit committee’s charter requires
the audit committee to approve in advance all audit and non-audit services to be provided by our independent registered public
accounting firm. All services reported in the audit, audit-related, tax and all other fees categories below with respect to this 2023
Annual Report on Form 10-K were approved by the audit committee.
The following table summarizes the aggregate Grant Thornton fees that were allocated to us for independent auditing, tax and
related services for each of the last two fiscal years (in thousands):
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees (4)
Total
Year Ended December 31,
2023
2022
1,129 $
—
—
—
1,129 $
1,273
—
—
—
1,273
$
$
109
(1) Audit fees represent amounts billed for each of the years presented for professional services rendered in connection with
those services normally provided in connection with statutory and regulatory filings or engagements including comfort
letters, consents and other services related to SEC matters.
(2) Audit-related fees represent amounts billed in each of the years presented for assurance and related services that are
reasonably related to the performance of the annual audit or quarterly reviews.
(3) Tax fees represent amounts billed in each of the years presented for professional services rendered in connection with tax
compliance, tax advice and tax planning.
(4) All other fees represent amounts billed in each of the years presented for services not classifiable under the other categories
listed in the table above.
Audit Committee Approval of Audit and Non-audit Services
The audit committee of the board of directors of our General Partner has adopted a pre-approval policy with respect to services
which may be performed by Grant Thornton. This policy lists specific audit-related services as well as any other services that
Grant Thornton is authorized to perform and sets out specific dollar limits for each specific service, which may not be exceeded
without additional audit committee authorization. The audit committee reviews the policy at least annually in order to approve
services and limits for the current year. Any service that is not clearly enumerated in the policy must receive specific pre-approval
by the audit committee prior to engagement.
110
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a)
1. Financial Statements. The financial statements of CrossAmerica Partners, LP are included in Part II, Item 8 of
this Form 10-K.
2. Financial Statement Schedules and Other Financial Information. No financial statement schedules are
submitted because either they are inapplicable or because the required information is included in the financial
statements or notes thereto.
3. Exhibits. Filed as part of this Form 10-K are the following exhibits:
Exhibit No.
Description
3.1
3.2
3.3
4.1
Certificate of Limited Partnership of Lehigh Gas Partners LP (incorporated herein by reference to Exhibit 3.1 to
the Registration Statement on Form S-1 for CrossAmerica Partners LP, filed with the Securities and Exchange
Commission on May 11, 2012)
Certificate of Amendment to Certificate of Limited Partnership of Lehigh Gas Partners LP (incorporated by
referenced to Exhibit 3.1 to the Current Report on Form 8-K for CrossAmerica Partners LP, filed with the
Securities and Exchange Commission on October 3, 2014)
Second Amended and Restated Agreement of Limited Partnership of CrossAmerica Partners LP, dated February
6, 2020 (incorporated by reference herein to Exhibit 3.1 to the Current Report on Form 8-K for CrossAmerica
Partners LP, filed with the Securities and Exchange Commission on February 7, 2020)
Description of Common Units (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K for
CrossAmerica Partners LP, filed with the Securities and Exchange Commission on February 26, 2020)
10.1†
Lehigh Gas Partners LP 2012 Incentive Award Plan, dated as of July 27, 2012 (incorporated by reference to
Exhibit 10.11 to the Annual Report on Form 10-K for CrossAmerica Partners LP, filed with the Securities and
Exchange Commission on February 19, 2016)
10.2†
10.3†
Form of Lehigh Gas Partners LP 2012 Incentive Award Plan Award Agreement for Phantom Units for Executive
Officers with distribution equivalent rights (incorporated by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q for CrossAmerica Partners LP, filed with the Securities and Exchange Commission on August 8,
2015)
Form of Lehigh Gas Partners LP 2012 Incentive Award Plan Award Agreement for Phantom Performance Units
for Executive Officers and Employees with distribution equivalent rights from December 20, 2015 (incorporated
by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for CrossAmerica Partners LP, filed with the
Securities and Exchange Commission on November 7, 2018)
10.4†
Award Agreement for Phantom Units for Non-Employee Directors with distribution equivalent rights
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for CrossAmerica Partners LP,
filed with the Securities and Exchange Commission on November 8, 2017)
10.5†
Form of Indemnification Agreement for directors of the Board and certain officers of CrossAmerica GP LLC
(incorporated by reference to Exhibit 10.27 to the Quarterly Report on Form 10-Q for CrossAmerica Partners LP,
filed with the Securities and Exchange Commission on August 8, 2017)
10.6+
Omnibus Agreement, effective as of January 1, 2020, by and among CrossAmerica Partners LP, CrossAmerica
GP LLC and Dunne Manning Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K
for CrossAmerica Partners LP, filed with the Securities and Exchange Commission on January 16, 2020)
10.7
Credit Agreement, dated as of April 1, 2019, among CrossAmerica Partners LP, as borrower, Lehigh Gas
Wholesale Services, Inc., as borrower, certain domestic subsidiaries of CrossAmerica Partners LP and Lehigh Gas
Wholesale Services, Inc. from time to time party thereto, as guarantors, the lenders from time to time party
thereto, and Citizens Bank, N.A., as administrative agent, swing line lender and L/C issuer (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K for CrossAmerica Partners LP, filed with the
Securities and Exchange Commission on April 2, 2019).
111
Exhibit No.
10.8
Amendment to Credit Agreement, dated as of November 19, 2019, among CrossAmerica Partners LP 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, swing line lender and L/C issuer
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K for CrossAmerica Partners LP, filed
with the Securities and Exchange Commission on November 21, 2019)
Description
10.9
Second Amendment to the Credit Agreement, dated as of July 28, 2021, among CrossAmerica Partners LP 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 (incorporated by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q for CrossAmerica Partners LP, filed with the Securities and
Exchange Commission on November 9, 2021)
10.10
Third Amendment to the Credit Agreement, dated November 9, 2022, among CrossAmerica Partners LP 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 (incorporated by reference to
Exhibit 10.10 to the Annual Report on Form 10-K for CrossAmerica Partners LP, filed with the Securities and
Exchange Commission on February 28, 2023)
10.11
Amendment and Restatement Agreement, dated as of March 31, 2023, by and among CrossAmerica Partners LP,
Lehigh Gas Wholesale Services, Inc., the guarantors party thereto, the lenders party thereto and Citizens Bank,
N.A., as administrative agent, swing line lender and L/C issuer (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K for CrossAmerica Partners LP, filed with the Securities and Exchange Commission
on April 3, 2023)
10.12
Credit Agreement, dated as of July 16, 2021, among CAPL JKM Partners LLC, as borrower, CAPL JKM
Holdings LLC, Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing
bank and the other lenders party thereto (incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q for CrossAmerica Partners LP, filed with the Securities and Exchange Commission on November 9,
2021)
10.13
10.14
10.15
10.16†
First Amendment to the Credit Agreement, dated as of July 29, 2021, among CAPL JKM Partners LLC, as
borrower, CAPL JKM Holdings LLC, Manufacturers and Traders Trust Company, as administrative agent,
swingline lender and issuing bank and the other lenders party thereto (incorporated by reference to Exhibit 10.3 to
the Quarterly Report on Form 10-Q for CrossAmerica Partners LP, filed with the Securities and Exchange
Commission on November 9, 2021)
Investment Agreement, dated March 29, 2022, between CAPL JKM Holdings LLC, Dunne Manning JKM LLC,
John B. Reilly III, and the John B. Reilly Trust created under that certain 2008 Irrevocable Agreement of Trust of
John B. Reilly (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K for CrossAmerica
Partners LP, filed with the Securities and Exchange Commission on March 30, 2022)
Amended and Restated Limited Liability Company Agreement of CAPL JKM Holdings LLC, dated as of March
29, 2022 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K for CrossAmerica Partners
LP, filed with the Securities and Exchange Commission on March 30, 2022)
CrossAmerica Partners LP 2022 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K for CrossAmerica Partners LP, filed with the Securities and Exchange Commission on
September 13, 2022)
10.17†
Form of CrossAmerica Partners LP 2022 Incentive Award Plan Award Agreement for Phantom Units - Time-
Based Unit Award (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K for
CrossAmerica Partners LP, filed with the Securities and Exchange Commission on February 28, 2023)
10.18†
Form of CrossAmerica Partners LP 2022 Incentive Award Plan Award Agreement for Phantom Performance
Units - Performance-Based Unit Award (incorporated by reference to Exhibit 10.17 to the Annual Report on Form
10-K for CrossAmerica Partners LP, filed with the Securities and Exchange Commission on February 28, 2023)
21.1 *
List of Subsidiaries of CrossAmerica Partners LP
23.1 *
Consent of Grant Thornton LLP
31.1 *
Certification of Principal Executive Officer of CrossAmerica GP LLC as required by Rule 13a-14(a) of the
Securities Exchange Act of 1934
31.2 *
Certification of Principal Financial Officer of CrossAmerica GP LLC as required by Rule 13a-14(a) of the
Securities Exchange Act of 1934
112
Exhibit No.
Description
32.1**
Certification of Principal Executive Officer of CrossAmerica GP LLC pursuant to 18 U.S.C. §1350
32.2**
Certification of Principal Financial Officer of CrossAmerica GP LLC pursuant to 18 U.S.C. §1350
97.1*†
CrossAmerica Partners LP Clawback Policy
101.INS * Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document.
101.SCH * Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
104 *
Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101
* Filed herewith
** Not considered to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section.
† Management contract or compensatory plan or arrangement.
+ Non-material schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
ITEM 16. FORM 10-K SUMMARY
None.
113
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
CROSSAMERICA PARTNERS LP
By: CROSSAMERICA GP LLC, its General Partner
By: /s/ Charles M. Nifong, Jr.
Charles M. Nifong, Jr.
President and Chief Executive Officer
(On behalf of the registrant, and in the capacity of Principal
Executive Officer)
Date: February 26, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on February 26, 2024.
Signature
/s/ Joseph V. Topper, Jr.
Joseph V. Topper, Jr.
/s/ John B. Reilly, III
John B. Reilly, III
/s/ Charles M. Nifong, Jr.
Charles M. Nifong, Jr.
/s/ Maura Topper
Maura Topper
/s/ Jonathan E. Benfield
Jonathan E. Benfield
/s/ Keenan D. Lynch
Keenan D. Lynch
/s/ Justin A. Gannon
Justin A. Gannon
/s/ Thomas E. Kelso
Thomas E. Kelso
/s/ Mickey Kim
Mickey Kim
/s/ Kenneth G. Valosky
Kenneth G. Valosky
Title
Chairman of the Board of Directors
Vice Chairman of the Board of Directors
President, Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer and Director
(Principal Financial Officer)
Chief Accounting Officer
(Principal Accounting Officer)
General Counsel, Chief Administrative Officer and Director
Director
Director
Director
Director
114
Exhibit 21.1
CROSSAMERICA PARTNERS LP ENTITIES
NAME OF ENTITY
CAP OPERATIONS, INC.
CAP WEST VIRGINIA HOLDINGS, LLC
CAPL JKM HOLDINGS LLC
CAPL JKM PARTNERS LLC
CAPL JKM WHOLESALE LLC
CAPL RETAIL LLC
COBBLER’S CREEK LLC
CROSSAMERICA PARTNERS LP
DELG – UST I, LLC
ERICKSON OIL PRODUCTS, INC.
EXPRESS LANE, INC.
FLLG – UST I, LLC
FREEDOM VALU CENTERS, INC.
HARLEYSVILLE GAS STATION, LLC
JOE’S KWIK MARTS LLC
JOE’S KWIK MARTS MA LLC
KYLG – UST I, LLC
LANSDALE GAS STATION LLC
LEHIGH GAS WHOELSALE LLC
LEHIGH GAS WHOLESALE SERVICES, INC.
LGP OPERATIONS LLC
LGP REALTY HOLDINGS GP LLC
LGP REALTY HOLDINGS LP
M & J OPERATIONS, LLC
MALG – UST I, LLC
MALG - UST II, LLC
MELG – UST I, LLC
MINNESOTA NICE HOLDINGS INC.
NHLG – UST I, LLC
NJLG – UST I, LLC
NTI DROP DOWN ONE, LLC
NYLG – UST I, LLC
OHLG – UST I, LLC
PALG – UST I, LLC
PALG – UST II, LLC
PALG – UST III, LLC
PALG – UST IV, LLC
PALG – UST V, LLV
PALG – UST VI, LLC
PALG – UST VII, LLC
PALG – UST VIII, LLC
PALG – UST IX, LLC
PETROLEUM MARKETERS, INCORPORATED
PM PROPERTIES, INC.
STOP IN FOOD STORES, INC.
79 NEEDHAM STREET NEWTON, LLC
100 EAST UWCHLAN AVE. EXTON, LLC
1001 BALTIMORE AVE. EAST LANDSDOWNE, LLC
103 N. POTTSTOWN PIKE EXTON, LLC
1130 BALTIMORE PIKE GLEN MILLS, LLC
1229 MCDADE BLVD. WOODLYN, LLC
123 NORTH PINE LANGHORNE, LLC
1266 E. OLD LINCOLN HWY. LANGHORNE, LLC
200 W. MONTGOMERY AVE. ARDMORE, LLC
201 W. GERMANTOWN PIKE NORRISTOWN, LLC
JURISDICTION
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Wisconsin
Florida
Delaware
Wisconsin
Delaware
Delaware
Massachusetts
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
West Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Virginia
Virginia
Delaware
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
2306 LYCOMING CREEK ROAD WILLIAMSPORT, LLC
2311 N TRIPHAMMER RD LANSING, LLC
234-248 N. 63RD ST. PHILADELPHIA, LLC
2401 HAVERFORD ROAD ARDMORE, LLC
2405 ROUTE 286, PITTSBURGH, LLC
2501 BRIGHTON AVE PITTSBURGH, LLC
301 S. KEMP ST. LYONS, LLC
3221 ROUTE 22 BRANCHBURG, LLC
3300 GRAYS FERRY AVE LLC
4200 WHITAKER AVE. PHILADELPHIA, LLC
4616 MCKNIGHT RD PITTSBURGH, LLC
4640 CHESTNUT ST LLC
5110 CITY LINE AVE LLC
5250 TORRESDALE AVE., PHILADELPHIA, LLC
528 ALTAMONT BOULEVARD FRACKVILLE, LLC
5700 HOMEVILLE RD WEST MIFFLIN, LLC
5716 HULMEVILLE ROAD BENSALEM, LLC
6101 PASSYUNK AVENUE LLC
615 S BROAD ST LLC
7000 FRANKFURT AVE LLC
7424 WEST CHESTER PIKE UPPER DARBY, LLC
799 VALLEY FORGE PHOENIXVILLE LLC
Delaware
New York
Pennsylvania
Pennsylvania
Delaware
Delaware
Pennsylvania
Delaware
Delaware
Pennsylvania
Delaware
Delaware
Delaware
Pennsylvania
Pennsylvania
Delaware
Pennsylvania
Delaware
Delaware
Delaware
Pennsylvania
Delaware
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated February 26, 2024, with respect to the consolidated financial statements and internal
control over financial reporting included in the Annual Report of CrossAmerica Partners LP on Form 10-K for the
year ended December 31, 2023. We consent to the incorporation by reference of said reports in the Registration
Statement of CrossAmerica Partners LP on Form S-8 (File No. 333-184651 and File No 333-267997).
/s/ GRANT THORNTON LLP
Charlotte, North Carolina
February 26, 2024
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Charles M. Nifong, Jr., certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of CrossAmerica Partners LP;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting.
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2024
/s/ Charles M. Nifong, Jr.
Charles M. Nifong, Jr.
President and Chief Executive Officer
CrossAmerica GP LLC
(as General Partner of CrossAmerica Partners LP)
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Maura Topper, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of CrossAmerica Partners LP;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting.
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2024
/s/ Maura Topper
Maura Topper
Chief Financial Officer
CrossAmerica GP LLC
(as General Partner of CrossAmerica Partners LP)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report on Form 10-K of CrossAmerica Partners LP (the “Partnership”) for the year
ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Charles M. Nifong, Jr., President and Chief Executive Officer of CrossAmerica GP LLC, the General Partner of the
Partnership, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002
that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Partnership.
Date: February 26, 2024
/s/ Charles M. Nifong, Jr.
Charles M. Nifong, Jr.
President and Chief Executive Officer
CrossAmerica GP LLC
(as General Partner of CrossAmerica Partners LP)
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not,
except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
§18 of the Securities Exchange Act of 1964, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report on Form 10-K of CrossAmerica Partners LP (the “Partnership”) for the year
ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Maura Topper, Chief Financial Officer of CrossAmerica GP LLC, the General Partner of the Partnership, certify,
pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Partnership.
Date: February 26, 2024
/s/ Maura Topper
Maura Topper
Chief Financial Officer
CrossAmerica GP LLC
(as General Partner of CrossAmerica Partners LP)
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not,
except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
§18 of the Securities Exchange Act of 1964, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 97.1
CROSSAMERICA PARTNERS LP
CLAWBACK POLICY
The Board of Directors (the “Board”) of CrossAmerica GP LLC, the general partner of
CrossAmerica Partners LP (the “Partnership”), believes that it is appropriate for the Partnership
to adopt this Clawback Policy (the “Policy”) to be applied to the Executive Officers (as defined
in Section 1 below) of the Partnership and adopts this Policy to be effective as of the Effective
Date (as defined in Section 1 below).
1. Definitions
For purposes of this Policy, terms defined in the preamble have their assigned meanings, and
the following terms have the meanings set forth below:
a) “Affiliate” means any domestic or foreign corporation, partnership, association, joint
stock company, joint venture, trust or unincorporated organization “affiliated” with
the Partnership, that is, directly or indirectly, through one or more intermediaries,
“controlling”, “controlled by” or “under common control with”, the Partnership. The
term “Control” for this purpose means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, contract or otherwise.
b) “Committee” means the Compensation Committee of the Board or a committee of the
Board responsible for the Partnership’s executive compensation decisions and
composed entirely of independent directors, as each may be in effect from time to
time.
c) “Covered Compensation” means any Incentive-Based Compensation granted, vested
or paid to a person who served as an Executive Officer at any time during the
performance period for the Incentive-Based Compensation and that was Received (i)
on or after the effective date of the NYSE listing standard, (ii) after the person
became an Executive Officer and (iii) at a time that the Partnership had a class of
securities listed on a national securities exchange or a national securities association.
d) “Effective Date” means October 2, 2023.
e) “Erroneously Awarded Compensation” means the amount of Covered Compensation
granted, vested or paid to a person during the fiscal period when the applicable
Financial Reporting Measure relating to such Covered Compensation was attained
that exceeds the amount of Covered Compensation that otherwise would have been
granted, vested or paid to the person had such amount been determined based on the
applicable Restatement, computed without regard to any taxes paid (i.e., on a pre-tax
basis). For Covered Compensation based on stock price or total shareholder return,
where the amount of Erroneously Awarded Compensation is not subject to
mathematical recalculation directly from the information in a Restatement, the Board
will determine the amount of such Covered Compensation that constitutes
1
Erroneously Awarded Compensation, if any, based on a reasonable estimate of the
effect of the Restatement on the stock price or total shareholder return upon which the
Covered Compensation was granted, vested or paid and the Board shall maintain
documentation of such determination and provide such documentation to the NYSE.
f) “Exchange Act” means the U.S. Securities Exchange Act of 1934.
g) “Executive Officer” means each “officer” of the Partnership as defined under Rule
16a-1(f) under Section 16 of the Exchange Act, which shall be deemed to include any
individuals identified by the Partnership as executive officers pursuant to Item 401(b)
of Regulation S-K under the Exchange Act. Both current and former Executive
Officers are subject to the Policy in accordance with its terms.
h) “Financial Reporting Measure” means (i) any measure that is determined and
presented in accordance with the accounting principles used in preparing the
Partnership’s financial statements, and any measures derived wholly or in part from
such measures and may consist of GAAP or non-GAAP financial measures (as
defined under Regulation G of the Exchange Act and Item 10 of Regulation S-K
under the Exchange Act), (ii) stock price or (iii) total shareholder return. Financial
Reporting Measures may or may not be filed with the SEC and may be presented
outside the Partnership’s financial statements, such as in Managements’ Discussion
and Analysis of Financial Conditions and Result of Operations or in the performance
graph required under Item 201(e) of Regulation S-K under the Exchange Act.
i) “Home Country” means the Partnership’s jurisdiction of incorporation.
j) “Incentive-Based Compensation” means any compensation that is granted, earned or
vested based wholly or in part upon the attainment of a Financial Reporting Measure.
k) “Lookback Period” means the three completed fiscal years (plus any transition period
of less than nine months that is within or immediately following the three completed
fiscal years and that results from a change in the Partnership’s fiscal year)
immediately preceding the date on which the Partnership is required to prepare a
Restatement for a given reporting period, with such date being the earlier of: (i) the
date the Board, a committee of the Board, or the officer or officers of the Partnership
authorized to take such action if Board action is not required, concludes, or
reasonably should have concluded, that the Partnership is required to prepare a
Restatement or (ii) the date a court, regulator or other legally authorized body directs
the Partnership to prepare a Restatement. Recovery of any Erroneously Awarded
Compensation under the Policy is not dependent on if or when the Restatement is
actually filed.
l) “NYSE” means the New York Stock Exchange.
m) “Partnership Group” means the Partnership and each of its Affiliates, as applicable.
n) “Received” means the following: Incentive-Based Compensation is deemed
“Received” in the Partnership’s fiscal period during which the Financial Reporting
Measure specified in or otherwise relating to the Incentive-Based Compensation
award is attained, even if the grant, vesting or payment of the Incentive-Based
Compensation occurs after the end of that period.
o) “Restatement” means a required accounting restatement of any Partnership financial
statement due to the material noncompliance of the Partnership with any financial
reporting requirement under the securities laws, including (i) to correct an error in
previously issued financial statements that is material to the previously issued
financial statements (commonly referred to as a “Big R” restatement) or (ii) to correct
an error in previously issued financial statements that is not material to the previously
issued financial statements but that would result in a material misstatement if the
error were corrected in the current period or left uncorrected in the current period
(commonly referred to as a “little r” restatement). Changes to the Partnership’s
financial statements that do not represent error corrections under the then-current
relevant accounting standards will not constitute Restatements. Recovery of any
Erroneously Awarded Compensation under the Policy is not dependent on fraud or
misconduct by any person in connection with the Restatement.
p) “SEC” means the U.S. Securities and Exchange Commission.
2. Recoupment of Erroneously Awarded Compensation
In the event of a Restatement, any Erroneously Awarded Compensation Received during the
Lookback Period prior to the Restatement (a) that is then-outstanding but has not yet been paid
shall be automatically and immediately forfeited and (b) that has been paid to any person shall be
subject to reasonably prompt repayment to the Partnership Group in accordance with Section 3
of this Policy. The Board must pursue (and shall not have the discretion to waive) the forfeiture
and/or repayment of such Erroneously Awarded Compensation in accordance with Section 3 of
this Policy, except as provided below.
Notwithstanding the foregoing, the Board (or, the Committee, if applicable, or if the Board or
the Committee is not responsible for the Partnership’s executive compensation decisions and
composed entirely of independent directors, a majority of the independent directors serving on
the Board) may determine not to pursue the forfeiture and/or recovery of Erroneously Awarded
Compensation from any person if the Board determines that such forfeiture and/or recovery
would be impracticable due to any of the following circumstances: (i) the direct expense paid to
a third party (for example, reasonable legal expenses and consulting fees) to assist in enforcing
the Policy would exceed the amount to be recovered (following reasonable attempts by the
Partnership Group to recover such Erroneously Awarded Compensation, the documentation of
such attempts, and the provision of such documentation to the NYSE), (ii) pursuing such
recovery would violate the Partnership’s Home Country laws adopted prior to November 28,
2022 (provided that the Partnership obtains an opinion of Home Country counsel acceptable to
the NYSE that recovery would result in such a violation and provides such opinion to the NYSE)
or (iii) recovery would likely cause any otherwise tax-qualified retirement plan, under which
benefits are broadly available to employees of Partnership Group, to fail to meet the
requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
3. Means of Repayment
In the event that the Board determines that any person shall repay any Erroneously Awarded
Compensation, the Board shall provide written notice to such person by email or certified mail to
the physical address on file with the Partnership Group for such person, and the person shall
satisfy such repayment in a manner and on such terms as required by the Board, and the
Partnership Group shall be entitled to set off the repayment amount against any amount owed to
the person by the Partnership Group, to require the forfeiture of any award granted by the
Partnership Group to the person, or to take any and all necessary actions to reasonably promptly
recoup the repayment amount from the person, in each case, to the fullest extent permitted under
applicable law, including without limitation, Section 409A of the U.S. Internal Revenue Code
and the regulations and guidance thereunder. If the Board does not specify a repayment timing
in the written notice described above, the applicable person shall be required to repay the
Erroneously Awarded Compensation to the Partnership Group by wire, cash or cashier’s check
no later than thirty (30) days after receipt of such notice.
4. No Indemnification
No person shall be indemnified, insured or reimbursed by the Partnership Group in respect of
any loss of compensation by such person in accordance with this Policy, nor shall any person
receive any advancement of expenses for disputes related to any loss of compensation by such
person in accordance with this Policy, and no person shall be paid or reimbursed by the
Partnership Group for any premiums paid by such person for any third-party insurance policy
covering potential recovery obligations under this Policy. For this purpose, the term
“indemnification” includes any modification to current compensation arrangements or other
means that would amount to de facto indemnification (for example, providing the person a new
cash award which would be cancelled to effect the recovery of any Erroneously Awarded
Compensation). In no event shall the Partnership Group be required to award any person an
additional payment if any Restatement would result in a higher incentive compensation payment.
5. Miscellaneous
This Policy generally will be administered and interpreted by the Board (or the Committee, if
applicable, in which case, all references herein to “Board” shall be deemed to refer to the
Committee). Any determination by the Board with respect to this Policy shall be final,
conclusive and binding on all interested parties. Any discretionary determinations of the Board
under this Policy, if any, need not be uniform with respect to all persons, and may be made
selectively amongst persons, whether or not such persons are similarly situated.
This Policy is intended to satisfy the requirements of Section 954 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, as it may be amended from time to time, and any
related rules or regulations promulgated by the SEC or the NYSE, including any additional or
new requirements that become effective after the Effective Date which upon effectiveness shall
be deemed to automatically amend this Policy to the extent necessary to comply with such
additional or new requirements.
The provisions in this Policy are intended to be applied to the fullest extent of the law. To
the extent that any provision of this Policy is found to be unenforceable or invalid under any
applicable law, such provision will be applied to the maximum extent permitted and shall
automatically be deemed amended in a manner consistent with its objectives to the extent
necessary to conform to applicable law. The invalidity or unenforceability of any provision of
this Policy shall not affect the validity or enforceability of any other provision of this Policy.
Recoupment of Erroneously Awarded Compensation under this Policy is not dependent upon the
Partnership Group satisfying any conditions in this Policy, including any requirements to provide
applicable documentation to the NYSE.
The rights of the Partnership Group under this Policy to seek forfeiture or reimbursement are
in addition to, and not in lieu of, the Policy on Executive Compensation in Restatement
Situations, effective as of December 10, 2015 (solely to the extent not duplicative of this Policy)
or any rights of recoupment or remedies or rights other than recoupment, that may be available to
the Partnership Group pursuant to the terms of any law, government regulation or stock
exchange listing requirement or any other policy, code of conduct, employee handbook,
employment agreement, equity award agreement, or other plan or agreement of the Partnership
Group.
6. Amendment and Termination
To the extent permitted by, and in a manner consistent with applicable law, including SEC
and NYSE rules, the Board may terminate, suspend or amend this Policy at any time in its
discretion.
7. Successors
This Policy shall be binding and enforceable against all persons and their respective
beneficiaries, heirs, executors, administrators or other legal representatives with respect to any
Covered Compensation granted, vested or paid to or administered by such persons or entities.
*
*
*
*
*
CROSSAMERICA PARTNERS LP
CLAWBACK POLICY
ACKNOWLEDGMENT, CONSENT AND AGREEMENT
I acknowledge that I have received and reviewed a copy of the CrossAmerica Partners LP
Clawback Policy (as may be amended from time to time, the “Policy”) and I have been given an
opportunity to ask questions about the Policy and review it with my counsel. I knowingly,
voluntarily and irrevocably consent to and agree to be bound by and subject to the Policy’s terms
and conditions, including that I will return any Erroneously Awarded Compensation that is
required to be repaid in accordance with the Policy. I further acknowledge, understand and agree
that (i) the compensation that I receive, have received or may become entitled to receive from the
Partnership Group is subject to the Policy, and the Policy may affect such compensation and (ii)
I have no right to indemnification, insurance payments or other reimbursement by or from the
Partnership Group for any compensation that is subject to recoupment and/or forfeiture under the
Policy. Capitalized terms used but not defined herein have the meanings set forth in the Policy.
Signed:
_________________________________________
Print Name:
_________________________________________
Date:
_________________________________________