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

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

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

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

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

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

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

As of ~~November 3, 2022,~~May 4, 2023, the registrant had outstanding ~~37,928,970~~37,952,950 common units.


	September 30,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	11,788	$	7,648	$	7,517	$	16,054
Accounts receivable, net of allowances of $594 and $458, respectively		33,561		33,331
Accounts receivable, net of allowances of $723 and $686, respectively						28,568		30,825
Accounts receivable from related parties		863		1,149		524		743
Inventory		47,258		46,100		47,911		47,307
Assets held for sale		7,097		4,907		2,012		983
Current portion of interest rate swap contracts						13,448		13,827
Other current assets		21,999		13,180		11,512		8,667
Total current assets		122,566		106,315		111,492		118,406
Property and equipment, net		738,200		755,454		716,918		728,379
Right-of-use assets, net		161,196		169,333		161,161		164,942
Intangible assets, net		95,004		114,187		108,338		113,919
Goodwill		99,409		100,464		99,409		99,409
Interest rate swap contracts, less current portion						968		3,401
Other assets		30,163		24,389		25,453		26,142
Total assets	$	1,246,538	$	1,270,142	$	1,223,739	$	1,254,598

LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	8,376	$	10,939	$	2,937	$	11,151
Current portion of operating lease obligations		35,451		34,832		35,288		35,345
Accounts payable		80,267		67,173		69,605		77,048
Accounts payable to related parties		8,464		7,679		5,641		7,798
Accrued expenses and other current liabilities		22,856		20,682		23,556		23,144
Motor fuel and sales taxes payable		20,780		22,585		20,471		20,813
Total current liabilities		176,194		163,890		157,498		175,299
Debt and finance lease obligations, less current portion		752,193		810,635		776,979		761,638
Operating lease obligations, less current portion		131,302		140,149		131,429		135,220
Deferred tax liabilities, net		11,664		12,341		8,532		10,588
Asset retirement obligations		46,352		45,366		46,794		46,431
Other long-term liabilities		46,171		41,203		46,923		46,289
Total liabilities		1,163,876		1,213,584		1,168,155		1,175,465

Commitments and contingencies

Preferred membership interests		25,549		—		26,757		26,156

Equity:
Common units—37,928,970 and 37,896,556 units issued and outstanding at September 30, 2022 and December 31, 2021, respectively		39,811		53,528
Common units— 37,952,950 and 37,937,604 units issued and outstanding at March 31, 2023 and December 31, 2022, respectively						15,276		36,508
Accumulated other comprehensive income		17,302		3,030		13,551		16,469
Total equity		57,113		56,558		28,827		52,977
Total liabilities and equity	$	1,246,538	$	1,270,142	$	1,223,739	$	1,254,598

~~See Condensed Notes to Consolidated Financial Statements.~~The accompanying notes are an integral part of these consolidated financial statements.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2022			2021			2022			2021			2023			2022
Operating revenues (a)	$	1,274,407		$	985,122		$	3,842,651		$	2,501,740		$	1,016,159		$	1,093,211
Cost of sales (b)		1,159,677			909,391			3,560,146			2,306,047
Costs of sales (b)														934,100			1,014,381
Gross profit		114,730			75,731			282,505			195,693			82,059			78,830

Operating expenses:
Operating expenses (c)		46,845			34,548			131,170			95,021			45,623			42,109
General and administrative expenses		6,599			9,903			18,762			24,429			5,739			6,483
Depreciation, amortization and accretion expense		21,329			19,118			61,523			56,732			19,820			20,275
Total operating expenses		74,773			63,569			211,455			176,182			71,182			68,867
(Loss) gain on dispositions and lease terminations, net		(318	)		426			(620	)		375
Loss on dispositions and lease terminations, net														(1,767	)		(244	)
Operating income		39,639			12,588			70,430			19,886			9,110			9,719
Other income, net		120			127			352			419			261			130
Interest expense		(8,351	)		(4,928	)		(22,333	)		(12,295	)		(12,012	)		(6,661	)
Income before income taxes		31,408			7,787			48,449			8,010
Income tax expense (benefit)		3,815			(1,065	)		1,843			(1,664	)
Net income		27,593			8,852			46,606			9,674
(Loss) income before income taxes														(2,641	)		3,188
Income tax benefit														(1,662	)		(1,859	)
Net (loss) income														(979	)		5,047
Accretion of preferred membership interests		575			—			1,138			—			601			—
Net income available to limited partners	$	27,018		$	8,852		$	45,468		$	9,674
Net (loss) income available to limited partners													$	(1,580	)	$	5,047

Earnings per common unit
Basic	$	0.71		$	0.23		$	1.20		$	0.26
Diluted	$	0.71		$	0.23		$	1.20		$	0.26
Basic and diluted (loss) earnings per common unit													$	(0.04	)	$	0.13

Weighted-average limited partner units:
Basic common units		37,925,082			37,887,493			37,912,737			37,877,273			37,940,332			37,900,146
Diluted common units		39,037,660			37,906,799			37,950,362			37,898,036			37,940,332			37,959,441

Supplemental information:
(a) includes excise taxes of:	$	66,129		$	62,427		$	204,588		$	156,180		$	69,884		$	66,858
(a) includes rent income of:		21,260			21,498			62,736			62,832			21,320			20,627
(b) excludes depreciation, amortization and accretion
(b) includes rent expense of:		5,906			5,968			17,692			17,912			5,554			5,841
(c) includes rent expense of:		4,012			3,353			11,521			9,814			3,798			3,708

~~See Condensed Notes to Consolidated Financial Statements.~~The accompanying notes are an integral part of these consolidated financial statements.


	Nine Months Ended September 30,						Three Months Ended March 31,
	2022			2021			2023			2022
Cash flows from operating activities:
Net income	$	46,606		$	9,674
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(979	)	$	5,047
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion expense		61,523			56,732			19,820			20,275
Amortization of deferred financing costs		2,053			1,182			1,848			680
Credit loss expense		139			70			37			45
Deferred income tax benefit		(677	)		(2,199	)		(2,056	)		(2,045	)
Equity-based employee and director compensation expense		1,608			1,096			561			732
Loss (gain) on dispositions and lease terminations, net		620			(375	)
Loss on dispositions and lease terminations, net								1,767			244
Changes in operating assets and liabilities, net of acquisitions		14,588			10,087			(9,460	)		3,410
Net cash provided by operating activities		126,460			76,267			11,538			28,388

Cash flows from investing activities:
Principal payments received on notes receivable		102			151			53			33
Proceeds from sale of assets		4,398			11,012			568			1,460
Capital expenditures		(26,784	)		(32,370	)		(6,001	)		(8,934	)
Cash paid in connection with acquisitions, net of cash acquired		(1,885	)		(261,993	)		—			(1,885	)
Net cash used in investing activities		(24,169	)		(283,200	)		(5,380	)		(9,326	)

Cash flows from financing activities:
Borrowings under revolving credit facilities		64,600			167,000			187,400			30,600
Repayments on revolving credit facilities		(101,815	)		(43,452	)		(15,537	)		(26,575	)
Borrowings under the Term Loan Facility		1,120			159,950			—			1,120
Repayments on the Term Loan Facility		(24,600	)		—			(158,980	)		(24,600	)
Net proceeds from issuance of preferred membership interests		24,430			—			—			24,500
Payments of finance lease obligations		(2,030	)		(1,944	)		(698	)		(658	)
Payments of deferred financing costs		(6	)		(7,135	)		(6,906	)		(6	)
Distributions paid on distribution equivalent rights		(137	)		(93	)		(56	)		(46	)
Distributions paid on common units		(59,713	)		(59,659	)		(19,918	)		(19,896	)
Net cash (used in) provided by financing activities		(98,151	)		214,667
Net increase in cash and cash equivalents		4,140			7,734
Net cash used in financing activities								(14,695	)		(15,561	)
Net (decrease) increase in cash and cash equivalents								(8,537	)		3,501

Cash and cash equivalents at beginning of period		7,648			513			16,054			7,648
Cash and cash equivalents at end of period	$	11,788		$	8,247		$	7,517		$	11,149

~~See Condensed Notes to Consolidated Financial Statements.~~The accompanying notes are an integral part of these consolidated financial statements.


	Limited Partners’ Interest											Limited Partners' Interest Common Unitholders					AOCI			Total Equity
	Common Unitholders					AOCI			Total Equity			Units		Dollars			Dollars			Dollars
	Units		Dollars			Dollars			Dollars
Balance at June 30, 2022		37,912,710	$	32,412		$	13,682		$	46,094
Net income		—		27,593			—			27,593
Balance at December 31, 2022													37,937,604	$	36,508		$	16,469		$	52,977
Net loss													—		(979	)		—			(979	)
Other comprehensive income
Unrealized gain on interest rate swap contracts		—		—			4,992			4,992			—		—			137			137
Realized gain on interest rate swap contracts reclassified from AOCI into interest expense		—		—			(1,372	)		(1,372	)		—		—			(3,055	)		(3,055	)
Total other comprehensive income		—		—			3,620			3,620
Comprehensive income		—		27,593			3,620			31,213
Vesting of equity awards, net of units withheld for tax		16,260		338			—			338
Total other comprehensive loss													—		—			(2,918	)		(2,918	)
Comprehensive loss													—		(979	)		(2,918	)		(3,897	)
Issuance of units related to 2022 Bonus Plan													15,346		322			—			322
Accretion of preferred membership interests		—		(575	)		—			(575	)		—		(601	)		—			(601	)
Distributions paid		—		(19,957	)		—			(19,957	)		—		(19,974	)		—			(19,974	)
Balance at September 30, 2022		37,928,970	$	39,811		$	17,302		$	57,113

Balance at June 30, 2021		37,874,868	$	72,162		$	(23	)	$	72,139
Net income		—		8,852			—			8,852
Other comprehensive income
Unrealized loss on interest rate swap contracts		—		—			(89	)		(89	)
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			265			265
Total other comprehensive income		—		—			176			176
Comprehensive income		—		8,852			176			9,028
Vesting of equity awards, net of units withheld for tax		16,833		318			—			318
Tax effect from intra-entity transfer of assets		—		(12	)		—			(12	)
Distributions paid		—		(19,924	)		—			(19,924	)
Balance at September 30, 2021		37,891,701	$	61,396		$	153		$	61,549
Balance at March 31, 2023													37,952,950	$	15,276		$	13,551		$	28,827

Balance at December 31, 2021		37,896,556	$	53,528		$	3,030		$	56,558			37,896,556	$	53,528		$	3,030		$	56,558
Net income		—		46,606			—			46,606
Other comprehensive loss
Unrealized gain on interest rate swap contracts		—		—			15,689			15,689
Realized gain on interest rate swap contracts reclassified from AOCI into interest expense		—		—			(1,417	)		(1,417	)
Total other comprehensive income		—		—			14,272			14,272
Comprehensive income		—		46,606			14,272			60,878
Issuance of units related to 2020 Bonus Plan		16,154		327			—			327
Vesting of equity awards, net of units withheld for tax		16,260		338			—			338
Accretion of preferred membership interests		—		(1,138	)		—			(1,138	)
Distributions paid		—		(59,850	)		—			(59,850	)
Balance at September 30, 2022		37,928,970	$	39,811		$	17,302		$	57,113

Balance at December 31, 2020		37,868,046	$	112,124		$	(2,456	)	$	109,668
Net income		—		9,674			—			9,674			—		5,047			—			5,047
Other comprehensive income
Unrealized gain on interest rate swap contracts		—		—			1,860			1,860			—		—			8,113			8,113
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			749			749			—		—			206			206
Total other comprehensive income		—		—			2,609			2,609			—		—			8,319			8,319
Comprehensive income		—		9,674			2,609			12,283			—		5,047			8,319			13,366
Issuance of units related to 2020 Bonus Plan		6,822		126			—			126
Tax effect from intra-entity transfer of assets		—		(1,094	)		—			(1,094	)
Vesting of equity awards, net of units withheld for tax		16,833		318			—			318
Issuance of units related to 2021 Bonus Plan													16,154		327			—			327
Distributions paid		—		(59,752	)		—			(59,752	)		—		(19,942	)		—			(19,942	)
Balance at September 30, 2021		37,891,701	$	61,396		$	153		$	61,549

Balance at March 31, 2022													37,912,710	$	38,960		$	11,349		$	50,309

~~See Condensed Notes to Consolidated Financial Statements.~~The accompanying notes are an integral part of these consolidated financial statements.

Note 3. ASSETS HELD FOR SALE

We have classified 18six sites and 12three sites as held for sale at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, which are expected to be sold within one year of such classification. Assets held for sale were as follows (in thousands):


	March 31,			December 31,
	2023			2022
Land	$	1,292		$	758
Buildings and site improvements		1,536			457
Equipment		1,412			333
Total		4,240			1,548
Less accumulated depreciation		(2,228	)		(565	)
Assets held for sale	$	2,012		$	983

September 30,

December 31,

2022

2021

Land

$
3,872

$
3,042

Buildings and site improvements

5,269

2,231

Equipment

2,749

939

Total

11,890

6,212

Less accumulated depreciation

(4,793
)

(1,305
)
Assets held for sale

$
7,097

$
4,907

The Partnership has continued to focus on divesting lower performing assets. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we sold one ~~and~~ ~~ten~~ ~~properties~~property for $~~0.2~~ ~~million and $4.0~~0.4 million in proceeds, resulting in a net ~~gains~~gain of ~~an insignificant amount and~~ $~~0.9~~0.1 ~~million, respectively.~~million. During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, we sold 14 ~~and~~ 23four properties for $~~4.9~~ ~~million and $8.8~~1.5 million in proceeds, resulting in a net ~~gains~~gain of $~~0.4~~0.3 ~~million and $1.5~~ ~~million, respectively.~~million.

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

Note 4. ~~INVENTORIES~~INVENTORY

~~Inventories~~Inventory consisted of the following (in thousands):


	September 30,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
Retail site merchandise	$	22,809	$	22,518	$	23,884	$	22,654
Motor fuel		24,449		23,582		24,027		24,653
Inventories	$	47,258	$	46,100
Inventory					$	47,911	$	47,307

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5. PROPERTY AND EQUIPMENT

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

September 30,

December 31,

2022

2021

Land

$
324,697

$
321,813

Buildings and site improvements

360,649

358,335

Leasehold improvements

15,159

13,437

Equipment

331,834

314,393

Construction in progress

5,774

9,457

Property and equipment, at cost

1,038,113

1,017,435

Accumulated depreciation and amortization

(299,913
)

(261,981
)
Property and equipment, net

$
738,200

$
755,454


	March 31,			December 31,
	2023			2022
Land	$	323,042		$	323,882
Buildings and site improvements		360,015			360,542
Leasehold improvements		15,764			15,312
Equipment		337,606			334,324
Construction in progress		4,226			6,514
Property and equipment, at cost		1,040,653			1,040,574
Accumulated depreciation and amortization		(323,735	)		(312,195	)
Property and equipment, net	$	716,918		$	728,379

We recorded impairment charges of $~~1.6~~0.4 million and $~~1.2~~0.7 million during the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $2.7~~ ~~million and $6.4~~ ~~million during the nine months ended September 30, 2022 and 2021,~~ respectively, included within depreciation, amortization and accretion expenses on the statements of operations. These impairment charges were primarily related to sites initially classified within assets held for sale in connection with our ongoing real estate rationalization effort.

~~See Note 2 regarding the purchase accounting for the final~~ ~~three~~ ~~sites acquired from 7-Eleven during the first quarter.~~

~~Note 8.~~ DEBT

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


	September 30,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
CAPL Credit Facility	$	593,360	$	630,575	$	778,000	$	606,137
JKM Credit Facility		158,980		182,460		—		158,980
Finance lease obligations		14,779		16,809		13,256		13,954
Total debt and finance lease obligations		767,119		829,844		791,256		779,071
Current portion		8,376		10,939		2,937		11,151
Noncurrent portion		758,743		818,905		788,319		767,920
Deferred financing costs, net		6,550		8,270		11,340		6,282
Noncurrent portion, net of deferred financing costs	$	752,193	$	810,635	$	776,979	$	761,638

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

See Note 13 for information regarding the issuance of preferred membership interests during the first quarter of 2022, the proceeds of which were used to pay off borrowings under the Term Loan Facility. As of ~~September 30, 2022,~~March 31, 2023, future principal payments on debt and future minimum rental payments on finance lease obligations were as follows (in thousands):


	Debt		Finance Lease Obligations		Total
Remaining in 2023		—		2,489		2,489
2024		—		3,396		3,396
2025		—		3,495		3,495
2026		—		3,596		3,596
2027		—		1,211		1,211
2028		778,000		—		778,000
Total future payments		778,000		14,187		792,187
Less impact of discounting		—		931		931
		778,000		13,256		791,256
Current portion		—		2,937		2,937
Long-term portion	$	778,000	$	10,319	$	788,319

Debt

Finance Lease Obligations

Total

Remaining in 2022

$
—

$
816

$
816

2023

8,261

3,328

11,589

2024

604,375

3,427

607,802

2025

11,015

3,527

14,542

2026

128,689

3,629

132,318

2027

—

1,221

1,221

Total future payments

752,340

15,948

768,288

Less interest component

—

1,169

1,169

752,340

14,779

767,119

Current portion

5,507

2,869

8,376

Long-term portion

$
746,833

$
11,910

$
758,743

On March 31, 2023, the Partnership and its subsidiary, LGWS (together with the Partnership, the “Borrowers”), amended and restated the CAPL Credit ~~Facility~~

~~Our~~Facility. As amended, the CAPL Credit Facility isprovides 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 ~~our~~the Partnership’s assets ~~including our equity interest in Holdings, other than~~and substantially all of the assets of ~~unrestricted subsidiaries designated~~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, from time to time, as ~~such~~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. Until the Partnership delivers a compliance certificate for the fiscal quarter ending June 30, 2023, the applicable margin for SOFR and alternative base rate loans is 2.25% and 1.25%, respectively, and the commitment fee rate is 0.35%.

The Partnership also has the right to borrow swingline loans under the CAPL Credit ~~Facility. Holdings and its subsidiaries are unrestricted subsidiaries~~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.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 98 into account, our effective interest rate on our CAPL Credit Facility at ~~September 30, 2022~~March 31, 2023 was ~~3.9~~4.98% (our applicable margin was 2.25% as of ~~September 30, 2022)~~March 31, 2023). See Note 8 for information regarding additional interest rate swap contracts entered into in April 2023.

Letters of credit outstanding at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 totaled $~~3.8~~4.5 million and $~~4.0~~4.6 million, respectively.

As of ~~September 30, 2022,~~March 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 ~~September 30, 2022,~~March 31, 2023, after taking into consideration debt covenant restrictions, was $~~152.9~~142.5 million.

~~JKM~~In connection with amending the CAPL Credit Facility

~~The obligations under~~ and terminating the JKM Credit Facility, ~~are guaranteed by Holdings and its subsidiaries (other than CAPL JKM Partners) and secured by a lien on substantially all~~the Partnership wrote off $1.1 million of deferred financing costs in the ~~assets~~first quarter of Holdings and its subsidiaries (including CAPL JKM Partners). The obligations under the JKM Credit Facility are nonrecourse to CrossAmerica and its subsidiaries other than Holdings, CAPL JKM Partners and their respective subsidiaries.

The JKM Credit Facility contains customary events of default and covenants, including, among other things, and subject to certain exceptions, covenants that restrict the ability of Holdings and its subsidiaries to create or incur liens on assets, make investments, incur additional indebtedness, merge or consolidate and dispose of assets.

~~Our borrowings under the JKM Credit Facility had a weighted-average interest rate of~~ ~~5.2% as of September 30, 2022 (LIBOR plus an applicable margin, which was~~ ~~2.5% as of September 30, 2022).~~

~~Letters of credit outstanding at September 30, 2022 and December 31, 2021 totaled $0.8~~ ~~million.~~

As of September 30, 2022, we were in compliance with our financial covenants under the JKM Credit Facility. The amount of availability under the JKM Credit Facility at September 30, 2022, after taking into consideration debt covenant restrictions, was $~~14.2~~ ~~million.~~2023.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.8. INTEREST RATE SWAP CONTRACTS

~~The~~Through March 31, 2023, the interest payments on our CAPL Credit Facility ~~and JKM Credit Facility vary~~varied based on monthly changes in the one-month LIBOR and changes, if any, in the applicable ~~margins,~~margin, which ~~are~~is based on our leverage ~~ratios under each facility~~ratio as further discussed in Note 8.7. To hedge against interest rate volatility on our variable rate borrowings under the CAPL Credit Facility, on March 26, 2020, we entered into ~~three~~an interest rate swap ~~contracts in 2020 that mature on~~ ~~April 1, 2024. One~~contract. The interest rate swap contract has a notional amount of $150 million, ~~and~~ a fixed rate of 0.495% and matures on April 1, 2024. ~~The other~~On April 15, 2020, we entered into two additional interest rate swap contracts, each ~~have a~~with notional ~~amount~~amounts of $75 million, ~~and~~ a fixed rate of 0.38% and that mature on April 1, 2024. All of these interest rate swap contracts have been designated as cash flow hedges and are expected to be highly effective.

The fair value of these interest rate swap contracts, for which the current portion is included in other current assets and the noncurrent portion is included in other assets, totaled $~~17.3~~13.6 million and $~~3.0~~16.5 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. See Note 1211 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 $~~1.4~~3.1 million and $(~~0.3~~0.2) million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $1.4~~ ~~million and $(0.7) million for the nine months ended September 30, 2022 and 2021,~~ respectively.

We currently estimate that a gain of $~~11.6~~12.6 million will be reclassified from ~~AOCI~~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.

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 2023, we entered into four additional interest rate swap contracts as summarized below (in thousands):


Notional Amount		Termination Date	Fixed Rate
$	50,000	March 30, 2028		3.287	%
	100,000	March 31, 2028		3.287	%
	50,000	April 8, 2028		3.282	%
	100,000	April 1, 2028		2.932	%

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

Note ~~10.~~9. RELATED-PARTY TRANSACTIONS

Wholesale Motor Fuel Sales and Real Estate Rentals

Revenues from TopStar, an entity affiliated with the Topper Group, were $~~18.6~~11.7 million and $~~15.7~~17.1 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $58.4~~ ~~million and $41.4~~ ~~million for the nine months ended September 30, 2022 and 2021,~~ respectively. Accounts receivable from TopStar were $~~0.9~~0.5 million and $~~1.3~~0.7 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

CrossAmerica leases real estate from the Topper Group. Rent expense under these lease agreements was $~~2.6~~2.5 million and $~~2.3~~2.4 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $~~respectively.

~~7.5~~10

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~million and $6.8~~ ~~million for the nine months ended September 30, 2022 and 2021, respectively.~~

Omnibus Agreement

We incurred expenses under the Omnibus Agreement, including costs for store level personnel at our company operated sites, totaling $~~22.4~~22.1 million and $~~16.9~~20.1 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $62.9~~ ~~million and $42.7~~ ~~million for the nine months ended September 30, 2022 and 2021,~~ respectively. Such expenses are included in operating expenses and general and administrative expenses in the statements of operations. Amounts payable to the Topper Group related to expenses incurred by the Topper Group on our behalf in accordance with the Omnibus Agreement totaled $~~6.7~~4.0 million and $6.1 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Common Unit Distributions and Other Equity Transactions

We distributed $7.7 million ~~and $7.6~~ ~~million~~ to the Topper Group related to its ownership of our common units during each of the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021 and $23.0~~ ~~million and $27.1~~ ~~million for the nine months ended September 30, 2022 and 2021, respectively.~~2022.

We distributed $~~2.6~~ ~~million and~~ $2.6 million to affiliates of John B. Reilly, III related to their ownership of our common units during each of the three months ended ~~September 30,~~March 31, 2023 and 2022.

We recorded accretion on the preferred membership interests issued in March 2022 ~~and 2021 and~~to related parties of $~~7.9~~ ~~million and $3.6~~0.6 million for the ~~nine~~three months ended ~~September 30, 2022 and 2021, respectively.~~March 31, 2023.

~~See Note 13 for information regarding the issuance of preferred membership interests to related parties.~~

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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 $0.7 million and $~~0.8~~0.3 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $1.6~~ ~~million and $1.7~~ ~~million for the nine months ended September 30, 2022 and 2021,~~ respectively. Accounts payable to this related party amounted to $0.2 million and $0.3 million at ~~September 30, 2022.~~March 31, 2023 and December 31, 2022, respectively.

Convenience Store Products

We purchase certain convenience store products from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of the Board, as approved by the independent conflicts committee of the Board. Merchandise costs amounted to $~~6.2~~4.9 million and $~~5.2~~4.5 million for three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $16.1~~ ~~million and $14.5~~ ~~million for the nine months ended September 30, 2022 and 2021,~~ respectively. Amounts payable to this related party amounted to $~~1.6~~ ~~million and $1.5~~1.4 million at ~~September 30, 2022~~each of March 31, 2023 and December 31, ~~2021, respectively.~~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 an insignificant amount for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021 and $0.1~~ ~~million for each of the nine months ended September 30, 2022 and 2021.~~2022.

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 $0.3 million and $0.2 million for ~~each of~~ the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $0.7~~ ~~million and $0.9~~ ~~million for the nine months ended September 30, 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~~the Board, for public relations and website consulting services. The cost of these services was insignificant for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note ~~11.~~10. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

We have minimum volume purchase requirements under certain of our fuel supply agreements with a purchase price at prevailing market rates for wholesale distribution. In the event we fail to purchase the required minimum volume for a given ~~contract year,~~contractual period, the underlying third party’s exclusive remedies (depending on the magnitude of the failure) are either termination of the supply agreement and/or a financial penalty per gallon based on the volume shortfall for the given year. We did not incur any significant penalties during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 or ~~2021.~~2022.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Litigation Matters

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

Environmental Matters

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

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

Environmental liabilities recorded on the balance sheet within accrued expenses and other current liabilities and other long-term liabilities totaled $~~7.8~~7.6 million and $~~5.4~~7.5 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Indemnification assets related to third-party escrow funds, state funds or insurance recorded on the balance sheet within other current assets and other noncurrent assets totaled $~~5.6~~ ~~million and $3.2~~5.2 million at ~~September 30, 2022~~each of March 31, 2023 and December 31, ~~2021, respectively.~~2022. 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.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 balance sheet of the Partnership.

Similarly, we have generally been indemnified with respect to known contamination at sites acquired from third parties, including our acquisition of certain assets from 7-Eleven. As such, these environmental liabilities and indemnification assets are also not recorded on the balance sheet of the Partnership.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Note ~~12.~~11. FAIR VALUE MEASUREMENTS

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

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels in ~~2022~~2023 or ~~2021.~~2022.

As further discussed in Note 9,8, we ~~entered into interest rate swap contracts during 2020 and~~ remeasure the fair value of ~~such~~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 ~~LIBOR~~ yield curve for the same period as the future interest rate swap settlements. These fair value measurements are classified as Level 2 measurements.

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

The fair value of our accounts receivable, notes receivable, and accounts payable approximated their carrying values as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 due to the short-term maturity of these instruments. The fair ~~values~~value of borrowings under the CAPL Credit Facility ~~and JKM Credit Facility~~ approximated ~~their~~its carrying ~~values~~value as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 due to the frequency with which interest rates are reset and the consistency of the market spread.

Note ~~13. 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 ("the JBR Trust" and 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.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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. As a result of this prepayment, CAPL JKM Partners does not need to make a principal payment on the Term Loan Facility until April 1, 2023. See Note 12 for additional information on the Term Loan Facility.

The preferred membership interests are presented in mezzanine equity on the balance sheet and the carrying amount will be accreted to the Exchange Price over time. We recorded accretion of the preferred membership interests of $~~0.6~~ ~~million and $1.1~~ ~~million for the three and nine months ended September 30, 2022.~~

~~Note 14.~~12. INCOME TAXES

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

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

We recorded an income tax ~~expense (benefit)~~benefit of $~~3.8~~1.7 million and $($~~1.1~~1.9) million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $1.8~~ ~~million and $(1.7) million for the nine months ended September 30, 2022 and 2021,~~ respectively, as a result of the ~~income generated (losses incurred)~~losses incurred by our corporate subsidiaries. The effective tax rate differs from the combined federal and state statutory rate primarily because only LGWS and Joe’s Kwik Marts are subject to income tax.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note ~~15.~~13. NET INCOME PER LIMITED PARTNER 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 as 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 Accounting Standards Update No. 2020-06 for purposes of computing diluted earnings per unit.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2022		2021			2022			2021			2023			2022
Numerator:
Distributions paid	$	19,913	$	19,894		$	59,713		$	59,659		$	19,974		$	19,942
Allocation of distributions in excess of net income		7,105		(11,042	)		(14,245	)		(49,985	)		(21,554	)		(14,895	)
Limited partners’ interest in net income - basic		27,018		8,852			45,468			9,674
Accretion of preferred membership interests (a)		575		—			—			—
Limited partners' interest in net income - diluted	$	27,593	$	8,852		$	45,468		$	9,674
Limited partners’ interest in net (loss) income - basic and diluted												$	(1,580	)	$	5,047
Denominator:
Weighted-average common units outstanding - basic		37,925,082		37,887,493			37,912,737			37,877,273			37,940,332			37,900,146
Adjustment for phantom and phantom performance units		35,809		19,306			37,625			20,763
Adjustment for phantom and phantom performance units (a)													—			35,893
Adjustment for preferred membership interests (a)		1,076,769		—			—			—			—			23,402
Weighted-average common units outstanding - diluted		39,037,660		37,906,799			37,950,362			37,898,036			37,940,332			37,959,441
Net income per common unit - basic	$	0.71	$	0.23		$	1.20		$	0.26
Net income per common unit - diluted	$	0.71	$	0.23		$	1.20		$	0.26
Net (loss) income per common unit - basic and diluted												$	(0.04	)	$	0.13

Distributions paid per common unit	$	0.5250	$	0.5250		$	1.5750		$	1.5750		$	0.5250		$	0.5250
Distributions declared (with respect to each respective period) per common unit	$	0.5250	$	0.5250		$	1.5750		$	1.5750		$	0.5250		$	0.5250

(a)

For the three months ended March 31, 2023, ~~729,679~~168,695 potentially dilutive units related to the phantom units and phantom performance units and 1,125,769 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been ~~antidilutive for the nine months ended September 30, 2022.~~antidilutive.

For the three months ended September 30, 2022, dilutive units related to the preferred membership interests were included in the denominator of the calculation of diluted earnings per unit. Similarly, the accretion of the preferred membership interests was added back in the numerator of the calculation as if the preferred membership interests had been converted to common units at the beginning of the period, in which case no accretion would have been recorded.

Distributions

Distribution activity for ~~2022~~2023 is as follows:

Quarter Ended

Record Date

Payment Date

Cash
Distribution
(per unit)

Cash
Distribution
(in thousands)

December 31, 2021

February 3, 2022

February 10, 2022

$
0.5250

$
19,896

March 31, 2022

May 3, 2022

May 11, 2022

0.5250

19,904

June 30, 2022

August 3, 2022

August 10, 2022

0.5250

19,913

September 30, 2022

November 3, 2022

November 10, 2022

0.5250

19,913


Quarter Ended	Record Date	Payment Date	Cash Distribution (per unit)		Cash Distribution (in thousands)
December 31, 2022	February 3, 2023	February 10, 2023	$	0.5250	$	19,917
March 31, 2023	May 3, 2023	May 10, 2023	$	0.5250	$	19,925

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 ~~16.~~14. 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, commission agents and company operated retail sites.~~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.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Unallocated items consist primarily of general and administrative expenses, depreciation, amortization and accretion expense, gains on dispositions and lease terminations, net, other income, interest expense and the elimination of the retail segment’s intersegment cost of revenues from motor fuel sales against the wholesale segment’s intersegment revenues from motor fuel sales. The profit in ending inventory generated by the intersegment motor fuel sales is also eliminated.income tax expense. Total assets by segment are not presented as management does not currently assess performance or allocate resources based on that data.

~~CROSSAMERICA PARTNERS LP~~During the fourth quarter of 2022, we changed our segment reporting to our chief operating decision maker to simplify the assessment of performance of our segments. Prior to the fourth quarter, the wholesale segment included the wholesale fuel gross profit on intersegment sales by our wholesale segment to our retail segment. Likewise, the wholesale segment included an allocation of operating expenses related to the operation of our sites consistent with the allocation of the overall fuel gross profit.

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Starting in the fourth quarter of 2022, the wholesale segment includes only the fuel gross profit on sales to lessee dealers and independent dealers and the retail segment includes the entire fuel gross profit on sales at our company operated and commission agent sites. Likewise, operating expenses are allocated to each segment based on estimates of the level of effort expended on our 1) lessee and independent dealer business in our wholesale segment; and 2) company operated and commission site business in our retail segment.

This change simplifies the assessment of performance of our segments and eliminates the intersegment sales inherent in our prior segment reporting.

We have recast the results of our segments for March 31, 2022 to be consistent with our new segment reporting.

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


	Wholesale		Retail		Unallocated			Consolidated		Wholesale		Retail		Unallocated			Consolidated
Three Months Ended September 30, 2022
Three Months Ended March 31, 2023
Revenues from fuel sales to external customers	$	653,905	$	518,356	$	—		$	1,172,261	$	521,925	$	402,946	$	—		$	924,871
Intersegment revenues from fuel sales		398,072		—		(398,072	)		—
Revenues from food and merchandise sales		—		76,136		—			76,136		—		65,266		—			65,266
Rent income		18,134		3,126		—			21,260		17,956		3,364		—			21,320
Other revenue		1,657		3,093		—			4,750		1,247		3,455		—			4,702
Total revenues	$	1,071,768	$	600,711	$	(398,072	)	$	1,274,407	$	541,128	$	475,031	$	—		$	1,016,159

Operating income (loss)	$	45,387	$	20,937	$	(26,685	)	$	39,639	$	21,669	$	14,767	$	(27,326	)	$	9,110

Three Months Ended September 30, 2021
Three Months Ended March 31, 2022
Revenues from fuel sales to external customers	$	565,022	$	337,214	$	—		$	902,236	$	583,121	$	422,242	$	—		$	1,005,363
Intersegment revenues from fuel sales		260,713		—		(260,713	)		—
Revenues from food and merchandise sales		—		58,283		—			58,283		—		62,347		—			62,347
Rent income		18,441		3,057		—			21,498		17,477		3,150		—			20,627
Other revenue		795		2,310		—			3,105		1,786		3,088		—			4,874
Total revenues	$	844,971	$	400,864	$	(260,713	)	$	985,122	$	602,384	$	490,827	$	—		$	1,093,211

Operating income (loss)	$	39,496	$	2,007	$	(28,915	)	$	12,588	$	21,593	$	15,128	$	(27,002	)	$	9,719

Nine Months Ended September 30, 2022
Revenues from fuel sales to external customers	$	2,032,950	$	1,519,923		—		$	3,552,873
Intersegment revenues from fuel sales		1,235,496		—		(1,235,496	)		—
Revenues from food and merchandise sales		—		212,417		—			212,417
Rent income		53,450		9,286		—			62,736
Other revenue		5,250		9,375		—			14,625
Total revenues	$	3,327,146	$	1,751,001	$	(1,235,496	)	$	3,842,651

Operating income (loss)	$	126,508	$	25,033	$	(81,111	)	$	70,430

Nine Months Ended September 30, 2021
Revenues from fuel sales to external customers	$	1,493,614	$	794,826	$	—		$	2,288,440
Intersegment revenues from fuel sales		604,043		—		(604,043	)		—
Revenues from food and merchandise sales		—		141,330		—			141,330
Rent income		54,350		8,482		—			62,832
Other revenue		2,658		6,480		—			9,138
Total revenues	$	2,154,665	$	951,118	$	(604,043	)	$	2,501,740

Operating income (loss)	$	97,645	$	3,253	$	(81,012	)	$	19,886

Receivables relating to the revenue streams above are as follows (in thousands):


	September 30,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
Receivables from fuel and merchandise sales	$	33,086	$	27,932	$	27,945	$	29,772
Receivables for rent and other lease-related charges		1,338		6,548		1,147		1,796
Total accounts receivable	$	34,424	$	34,480	$	29,092	$	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

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

such ~~revenue~~shortfalls is not material. Receivables from fuel are recognized on a per-gallon rate and are generally collected within 10 days of delivery.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

The balance of unamortized costs incurred to obtain certain contracts with customers was $~~11.1~~ ~~million and $11.0~~10.9 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively.~~2022. Amortization of such costs is recorded against operating revenues and amounted to $~~0.5~~ ~~million and $~~0.4 million for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021 and $1.3~~ ~~million and $1.1~~ ~~million for the nine months ended September 30, 2022 and 2021, respectively.~~2022.

Receivables from rent and other lease-related charges are generally collected at the beginning of the month.

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.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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:

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:

You should consider the risks and uncertainties described above and elsewhere in this report as well as those set forth in the section entitled “Risk Factors” in our 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.

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, our consolidated financial statements and the accompanying notes to these financial statements contained elsewhere in this report, and the MD&A section and the consolidated financial statements and accompanying notes to those financial statements in our Form 10-K. Our Form 10-K contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates and contractual obligations.

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, 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. Until the Partnership delivers a compliance certificate for the fiscal quarter ending June 30, 2023, the applicable margin for SOFR and alternative base rate loans is 2.25% and 1.25%, respectively, and the commitment fee rate is 0.35%.

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.

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 7 to the financial statements for additional information regarding the CAPL Credit Facility and the termination of the JKM Credit Facility.

In April 2023, we entered into four additional interest rate swap contracts. Three of the interest rate swap contracts are spot-start contracts with a total notional amount of $200 million and hedge variable interest rate payments for the five-year term of the CAPL Credit Facility. 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 the date the existing interest rate swap contracts terminate through the remaining four years 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 8 to the financial statements for additional information regarding these additional interest rate swap contracts.

On ~~August 24,~~November 9, 2022, we ~~entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Community Service Stations, Inc., pursuant to which we have agreed to purchase certain~~closed on the acquisition of assets from ~~Community Service Stations, Inc.~~CSS for a purchase price of $27.5 million plus working capital. The assets ~~consist~~consisted of wholesale fuel supply contracts to 3938 dealer owned locations, 3435 sub-wholesaler accounts and two commission locations (1 fee based and 1 lease).

The acquisition is subject to customary conditions to closing. We expect the transaction to close during the fourth quarter of 2022. It is anticipated that the acquisition will be financed with cash on hand and/or undrawn capacity under the CAPL Credit Facility.

In February 2022, we closed on the final three properties of our 106-site acquisition from 7-Eleven for a purchase price of $3.6 million (including inventory and working capital), of which $1.8 million will be paid on or prior to February 8, 2027.

We funded ~~these transactions primarily~~this acquisition through borrowings on the ~~JKM Credit Facility, undrawn capacity under our~~ CAPL Credit Facility and cash on hand.

~~See Note 2 to the financial statements for additional information regarding this acquisition.~~

On March 29, 2022, Holdings issued and sold 12,500 newly created 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 ("the JBR Trust" and 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 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 proceeds to prepay a portion of the outstanding indebtedness under the Term Loan Facility. As a result of this prepayment, CAPL JKM Partners does not need to make a principal payment on the Term Loan Facility until April 1, 2023.

~~See Note 13 to the financial statements for additional information on the preferred membership interests.~~

During the first quarter of 2020, an outbreak of a novel strain of coronavirus spread worldwide, including to the U.S., posing public health risks that reached pandemic proportions. We experienced a sharp decrease in fuel volume in mid-to-late March 2020. Although the COVID Pandemic has not significantly impacted our results in 2022, fuel volume was recovering throughout 2021, which impacts the comparability of our results between periods.

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 61% of gallons sold, ~~to our customers,~~ 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 ~~primarily~~either retail sales or wholesale DTW ~~priced~~ contracts ~~including intersegment sales to the retail segment. These contracts~~that provide for variable, market-based pricing.

Regarding our supplier relationships, a ~~majority~~material amount of our total gallons purchased are subject to terms 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).

WeIn 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.

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.

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.

Recent increases in interest rates have increased our interest expense as further described below. See "Recent Developments–Additional Interest Rate Swap Contracts" for information regarding additional interest rate swap contracts we entered into in April 2023.

Our results of operations and financial condition are also impacted by our acquisition and financing activities as summarized below.

Below is an analysis of our consolidated statements of operations 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 operations are as follows (in thousands):

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to Three Months Ended ~~September 30, 2021~~March 31, 2022

Operating revenues ~~increased $289~~decreased $77.1 million ~~(29 %)~~(7%) and gross profit increased ~~$39~~$3.2 million ~~(51%~~(4%).

Significant items impacting these results ~~prior to the elimination of intercompany revenues~~ were:

We present the results of operations of our segments on a consistent basis with how our management views the business. Therefore, our segments are presented before intersegment eliminations (which consist of motor fuel sold by our wholesale segment to our retail segment). As a result, in order to reconcile to our consolidated change in operating revenues, a discussion of the change in intersegment revenues is included in our consolidated MD&A discussion.

~~Our intersegment revenues increased $137 million (53%), primarily attributable to the~~base business as well as an increase in ~~wholesale fuel prices and the incremental intersegment revenues generated by~~ the company operated site count due to the conversion of lessee dealer and commission sites ~~acquired in the acquisition of assets from 7-Eleven.~~

Cost of sales ~~increased $250~~decreased $80.3 million ~~(28%~~(8%), which was a result of the ~~increase~~decrease in wholesale motor fuel prices and decrease in volume in our wholesale segment, partially offset by the ~~acquisition of assets from 7-Eleven~~volume increase in our retail segment as discussed above.

Gross profit increased ~~$39~~$3.2 million ~~(51%~~(4%), which was primarily driven by increases in motor fuel, merchandise and ~~merchandise~~rent gross ~~profit due to the acquisition of assets from 7-Eleven along with realizing a higher margin per gallon.~~profit. See “Results of Operations—Segment Results” for additional gross profit analyses.

General and administrative expenses decreased ~~$3.3~~$0.7 million ~~(33%~~(11%) primarily due to a ~~$4.0~~$0.6 million decrease in acquisition-related costs driven by a reduction in legal fees incurred in connection with the acquisition of assets from ~~7-Eleven as compared to the third quarter of 2021, partially offset by higher management fees and equity incentive compensation expense.~~7-Eleven.

Depreciation, amortization and accretion expense ~~increased $2.2~~decreased $0.5 million ~~(12%~~(2%) primarily from incremental depreciation, amortization and accretion expense from the property and equipment and intangible assets acquired in the acquisition of assets from 7-Eleven. In addition, we recorded $1.6 million indriven by lower impairment charges during the ~~third quarter of 2022,~~period as compared to ~~$1.2 million in impairment charges during~~ the same period of ~~the prior year. These impairment charges were primarily related to our ongoing real estate rationalization effort and the resulting reclassification of these sites to assets held for sale.~~2022.

During the three months ended ~~September 30, 2022,~~March 31, 2023, we recorded a ~~$0.3~~$2.0 million ~~net~~ loss on lease terminations and asset ~~disposals.~~disposals, partially offset by a $0.2 million gain in connection with our ongoing real estate rationalization effort.

During the three months ended ~~September 30, 2021,~~March 31, 2022, we recorded a ~~$0.4~~$0.5 million ~~net~~loss on lease terminations and asset disposals, partially offset by a $0.3 million gain in connection with our ongoing real estate rationalization effort.

Interest expense increased ~~$3.4~~$5.4 million ~~(69%~~(80%), primarily ~~driven by~~due to a ~~$1.4~~$4.2 million increase in interest expense incurred on the JKM Credit Facility as a result of the timing of borrowings to fund the acquisition of assets from 7-Eleven as well as the increase in the LIBOR rate. In addition, we incurred $2.0 million more in interest expense on the CAPL Credit Facility (net of the impact of the interest rate swaps) ~~due primarily to~~driven by the increase in interest rates. In addition, we wrote off $1.1 million in deferred financing costs in the ~~LIBOR rate and to~~first quarter of 2023 as a ~~lesser degree, higher borrowings primarily to fund a portion~~result of the ~~purchase price for~~amendment and restatement of the ~~acquisition~~CAPL Credit Facility and termination of ~~assets from 7-Eleven.~~the JKM Credit Facility.

We recorded an income tax ~~expense (benefit)~~benefit of ~~$3.8~~$1.7 million and ~~$(1.1)~~$1.9 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, driven by ~~the income generated (losses incurred) by our taxable subsidiaries.~~

~~Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021~~

~~Operating revenues increased $1.3 billion (54%) and gross profit increased $87 million (44%).~~

~~Significant items impacting these results prior to the elimination of intercompany revenues were:~~

Our intersegment revenues increased $631 million (105%), primarily attributable to the increase in wholesale fuel prices and the incremental intersegment revenues generated by the company operated sites acquired in the acquisition of assets from 7-Eleven.

~~Cost of sales increased $1.3 billion (54%), which was a result of the increase in wholesale motor fuel prices and the acquisition of assets from 7-Eleven discussed above.~~

Gross profit increased $87 million (44%), which was primarily driven by increases in motor fuel, merchandise and other gross profit due to the acquisition of assets from 7-Eleven along with realizing a higher margin per gallon. See “Results of Operations—Segment Results” for additional gross profit analyses.

~~General and administrative expenses decreased $5.7 million (23%) primarily due to a $7.5 million decrease in acquisition-related costs driven by a reduction in legal fees~~losses incurred in connection with the acquisition of assets from 7-Eleven as compared to the nine months ended September 30, 2021, partially offset by higher management fees and equity incentive compensation expense.

Depreciation, amortization and accretion expense increased $4.8 million (8%) primarily from incremental depreciation, amortization and accretion expense from the property and equipment and intangible assets acquired in the acquisition of assets from 7-Eleven. This increase was partially offset by a $3.7 million decrease in impairment charges related to our ongoing real estate rationalization effort and the resulting reclassification of these sites to assets held for sale as compared to the same period of 2021.

During the nine months ended September 30, 2022, we recorded net losses on lease terminations and asset disposals, partially offset by a $0.9 million gain in connection with our ongoing real estate rationalization effort.

During the nine months ended September 30, 2021, we recorded a $1.5 million gain in connection with our ongoing real estate rationalization effort, partially offset by net losses on lease terminations and asset disposals.

Interest expense increased $10 million (82%), primarily driven by a $4.0 million increase in interest expense incurred on the JKM Credit Facility as a result of the timing of borrowings to fund the acquisition of assets from 7-Eleven as well as the increase in the LIBOR rate along with a $0.9 million increase in amortization of deferred financing costs as a result of entering into the JKM Credit Facility and the amendment to the CAPL Credit Facility. In addition, we incurred $5.2 million more in interest expense on the CAPL Credit Facility (net of the impact of the interest rate swaps) due primarily to the increase in the LIBOR rate and to a lesser degree, higher borrowings primarily to fund a portion of the purchase price for the acquisition of assets from 7-Eleven.

~~We recorded income tax expense (benefit) of $1.8 million and $(1.7) million for the nine months ended September 30, 2022 and 2021, respectively, driven by the income generated (losses incurred)~~ by our taxable subsidiaries.

We present the results of operations of our segments consistent with how our management views the business. ~~Therefore,~~

See Note 14 to the financial statements for information regarding a change in our segment reporting. We have recast the results of our segments ~~are presented before intersegment eliminations (which consist~~for first quarter of ~~motor fuel sold by~~2022 to be consistent with our ~~wholesale~~new segment ~~to our retail segment). These comparisons are not necessarily indicative of future results.~~reporting.

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):

Three Months Ended ~~September 30,~~March 31, ~~2022~~2023 Compared to Three Months Ended ~~September 30,~~March 31, ~~2021~~2022

Gross profit increased ~~$8.6~~$0.9 million ~~(18%~~(3%) and operating income increased ~~$5.9 million (15%).~~$0.1 million. These results were impacted by:

The ~~$8.1~~$0.5 million ~~(24%~~(3%) increase in motor fuel gross profit was primarily driven by a ~~30%~~4% increase in our average fuel margin per gallon ~~compared to the third quarter of 2021. Our DTW margins were higher for the third quarter of 2022~~ as compared to the ~~third quarter of 2021 due to greater volatility in the price of crude oil in the third~~first quarter of 2022 ~~as compared to the third quarter of 2021. In addition, we benefited from higher terms discounts~~driven by better sourcing costs as a result of ~~higher crude prices.~~brand consolidation and other initiatives. This increase was partially offset by lower terms discounts. The average spot price of WTI crude oil ~~increased 32%~~decreased 20% from ~~$70.58~~$95.18 per barrel for the ~~third~~first quarter of ~~2021~~2022 to ~~$93.06~~$75.93 per barrel for the ~~third~~first quarter of ~~2022.~~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 declined 5%~~

Also, volume decreased 1% primarily due to lower volume in our base business, ~~(i.e., results excluding the results from the assets acquired from 7-Eleven),~~ partially offset by the volume generated by the acquisition of assets from ~~7-Eleven.~~CSS.

The $0.9 million (7%) increase in rent gross profit was primarily driven by rent increases from our customers as well as the reopening of closed sites.

Other revenues ~~increased $0.9~~decreased $0.5 million ~~(108%~~(30%) due ~~primarily~~ to ~~higher take-or-pay income related to minimum purchase quantities on our~~lower dealer ~~contracts.~~contract termination fees.

Operating expenses increased ~~$2.8 million (32%), primarily as a result of an increase in management fees and environmental costs.~~

~~Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021~~

~~Gross profit increased $31.5 million (25%) and operating income increased $28.9 million (30%). The results were driven by:~~

The $29.7 million (35%) increase in motor fuel gross profit was primarily driven by a 31% increase in our average margin per gallon compared to the nine months ended September 30, 2021. Our DTW margins were higher for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 due to greater volatility in the price of crude oil for the nine months ended September 30, 2022 as compared to the same period of 2021. In addition, we benefited from higher terms discounts as a result of higher crude prices. The average spot price of WTI crude oil increased 52% from $65.05 per barrel for the nine months ended September 30, 2021 to $98.96 per barrel for the nine months ended September 30, 2022. 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 also increased 2% primarily as a result of volume generated by the acquisition of assets from 7-Eleven, partially offset by lower volume in our base business (i.e., results excluding the results from the assets acquired from 7-Eleven).

~~Other revenues increased $2.6 million (98%) due primarily to higher take-or-pay income related to minimum purchase quantities on our dealer contracts and higher dealer contract termination fees.~~

~~Operating expenses increased $2.6~~$0.8 million (9%), primarily as a result of ~~an increase in management fees, partially offset by lower maintenance costs.~~inflation across many cost categories.

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):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2022			2021			2022			2021			2023			2022
Gross profit:
Motor fuel	$	30,206		$	7,750		$	50,031		$	18,120		$	26,760		$	26,304
Merchandise		20,649			15,543			57,496			37,876			18,123			16,682
Rent		2,395			2,266			7,100			6,190			2,511			2,447
Other revenue		3,093			2,310			9,375			6,480			3,455			3,088
Total gross profit		56,343			27,869			124,002			68,666			50,849			48,521
Operating expenses		(35,406	)		(25,862	)		(98,969	)		(65,413	)		(36,082	)		(33,393	)
Operating income	$	20,937		$	2,007		$	25,033		$	3,253		$	14,767		$	15,128

Retail sites (end of period):
Commission agents (a)		198			200			198			200
Company operated retail sites(b)		252			248			252			248
Total system sites at the end of the period		450			448			450			448
Company operated retail sites (a)														268			255
Commission agents (b)														194			201
Total retail segment sites														462			456

Total system operating statistics:
Average retail fuel sites during the period		451			395			452			368
Total retail segment statistics:
Volume of gallons sold		126,669			110,523			371,524			278,564			119,085			116,040
Average retail fuel sites														457			454
Margin per gallon, before deducting credit card fees and commissions														0.318			0.319

Commission agents statistics:
Average retail fuel sites during the period		198			201			199			203
Company operated site statistics:
Average retail fuel sites														258			254
Margin per gallon, before deducting credit card fees													$	0.341		$	0.327
Merchandise gross profit percentage														27.8	%		26.8	%

Company operated retail site statistics:
Average retail fuel sites during the period		253			194			253			165
Merchandise gross profit percentage		27.1	%		26.7	%		27.1	%		26.8	%
Commission site statistics:
Average retail fuel sites														198			200
Margin per gallon, before deducting credit card fees and commissions													$	0.273		$	0.303

Three Months Ended ~~September 30,~~March 31, ~~2022~~2023 Compared to Three Months Ended ~~September 30,~~March 31, ~~2021~~2022

Gross profit increased ~~$28.5~~$2.3 million ~~(102%~~(5%) and operating income ~~increased $18.9 million.~~decreased $0.4 million (2%). These results were impacted by:

Operating expenses increased ~~$9.5~~$2.7 million ~~(37%~~(8%) ~~primarily~~driven by an increase in store labor, in part due to ~~a $9.0 million increase driven by the sites acquired from 7-Eleven.~~

~~Nine Months Ended September 30, 2022 Compared~~expanding hours of operation at many of our company operated sites. In addition, many other cost categories increased due primarily to ~~Nine Months Ended September 30, 2021~~

~~Gross profit~~inflation. Lastly, operating expenses increased ~~$55.3 million (81%) and operating income increased $21.8 million. These results were driven by:~~

~~Operating expenses increased $33.6 million (51%) primarily due to a $32.4 million increase driven by the sites acquired from 7-Eleven.~~company operated sites.

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.

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.

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 per unit amounts):

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 JKM~~ 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 and JKM~~ 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.

Net cash provided by operating activities ~~increased $50.2~~decreased $16.9 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021,~~2022, primarily attributable to the ~~incremental cash flow generated by~~changes in working capital stemming from timing of settlement of fuel purchases and payment of accrued interest in connection with the ~~sites acquired from 7-Eleven~~amendment and restatement of the CAPL Credit Facility and the ~~strong DTW margins in 2022.~~termination of the JKM Credit Facility.

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 well as operating lease obligations as compared to the shorter settlement of receivables for fuel and rent.

We incurred capital expenditures of ~~$26.8~~$6.0 million and ~~$32.4~~$8.9 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. The decrease was largely driven by ~~reductions in EMV upgrades and~~the reduction of rebranding of ~~certain~~ sites including the sites acquired from 7-Eleven. We paid $1.9 million ~~and $262.0 million~~ during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 ~~and 2021, respectively,~~ in connection with the closing of the final three sites acquired from 7-Eleven. We received ~~$4.4~~$0.6 million and ~~$11.0~~$1.5 million in proceeds primarily from the sale of sites in connection with our real estate rationalization effort for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

We paid ~~$59.9~~$20.0 million and ~~$59.8~~$19.9 million in distributions for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. For the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, we made total net ~~repayments of $60.7 million and total net~~ borrowings ~~of $283.5 million~~(repayments) on our credit ~~facilities.~~facilities of $12.9 million and $(19.5) million. We received ~~$24.4~~$24.5 million in net proceeds from the issuance of preferred membership interests during the ~~nine~~three months ended ~~September 30,~~March 31, 2022. We paid ~~$7.1~~$6.9 million inof deferred financing costs ~~during the nine months ended September 30, 2021~~ in connection with ~~entering into~~amending and restating the CAPL Credit Facility and terminating the JKM Credit Facility ~~and amendment~~in the first quarter of ~~the CAPL Credit Facility.~~2023.

As of ~~September 30, 2022,~~March 31, 2023, our debt and finance lease obligations consisted of the following (in thousands):

See Note 7 to the financial statements for information regarding the amendment and restatement 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 ~~September 30, 2022~~March 31, 2023 was ~~3.9%~~4.98% (our applicable margin was 2.25% as of ~~September 30, 2022)~~March 31, 2023). Letters of credit outstanding ~~under our CAPL Credit Facility~~ at ~~September 30, 2022~~March 31, 2023 totaled ~~$3.8 million.~~

Our effective interest rate on our JKM Credit Facility at September 30, 2022 was 5.2% (our applicable margin was 2.5% as of September 30, 2022). Letters of credit outstanding under our JKM Credit Facility at September 30, 2022 totaled $0.8$4.5 million.

The amount of availability under our CAPL Credit Facility at ~~November 3, 2022,~~May 4, 2023, after taking into consideration debt covenant restrictions, was ~~$163.6~~154 million.

~~The amount~~See Note 8 for information regarding the amendment of ~~availability under~~ the ~~JKM Credit Facility at November 3, 2022, after taking~~three existing interest rate swap contracts and the entry into ~~consideration debt covenant restrictions, was $14.2 million.~~four new interest rate swap contracts.

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. Acquisition and growth 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, ~~JKM 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.

Growth capital expenditures decreased ~~during 2022 as compared with 2021,~~ primarily due ~~to decreases in EMV upgrades and~~the decrease of 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.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, approximately 20% and ~~19%~~22% of our rent income was from two multi-site operators.

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. 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” for additional information.

Our results for ~~2022~~2023 relative to ~~2021~~2022 are anticipated to be impacted by the acquisition of assets from ~~7-Eleven,~~CSS, which is anticipated to increase gross profit ~~both~~ within the wholesale segment. In addition, we anticipate that we will continue to realize reductions in our fuel costs as a result of new or amended fuel purchase contracts. We continue to consider the highest and ~~retail segments~~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 ~~operating expenses within~~ultimately increases or decreases in the ~~retail segment. Given~~gross profit for the Wholesale and Retail segments. Lastly, given increases in ~~LIBOR,~~interest rates, we also anticipate higher interest expense in ~~2022~~2023 as compared to ~~2021.~~

~~See "Recent Developments—Acquisition of Assets from Community Service Stations, Inc." for information regarding our recently announced acquisition expected to close in the fourth quarter of~~ 2022.

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~~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.

There is no new accounting guidance effective or pending adoption that has had or is anticipated to have a material impact on our financial statements.

There have been no material changes to the critical accounting policies described in our Form 10-K.

NoOther than interest rate risk, no significant changes to our market risk have occurred since December 31, ~~2021.~~2022. For a discussion of market risks affecting us, refer to Part II, Item 7A—"Quantitative and Qualitative Disclosures About Market Risk” included in our Form 10-K.

As of March 31, 2023, we had $778.0 million outstanding on our CAPL Credit Facility. Our outstanding borrowings bear interest at SOFR plus an applicable margin, which was 2.25% at March 31, 2023.

See Note 8 to the financial statements for information regarding the amendment of our three existing interest rate swap contracts and the entry into four additional interest rate swap contracts.

Taking all of these interest rate swap contracts into account, our effective interest rate on our CAPL Credit Facility at March 31, 2023 was 4.98%. A one percentage point change in SOFR would impact annual interest expense by approximately $2.8 million.

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 Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2022.~~March 31, 2023.

There were no changes in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended ~~September 30, 2022,~~March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We hereby incorporate by reference into this Item our disclosures made in Part I, Item 1 of this report included in Note 1110 of the financial statements.

There were no material changes in the risk factors disclosed in the section entitled "Risk Factors" in our Form 10-K during the period covered by this report.

† 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.

Pursuant to the requirements 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.


Delaware		45-4165414
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

645 Hamilton Street, Suite 400 Allentown, PA		18101 (Zip Code) (610) 625-8000
(Address of Principal Executive Offices)		(Registrant’s telephone number, including area code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	CAPL	New York Stock Exchange


Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐


		PAGE

Commonly Used Defined Terms		i

PART I - FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022		1
Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		2
Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		3
Consolidated Statements of Equity and Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		4
Condensed Notes to Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1917
Item 3. Quantitative and Qualitative Disclosures about Market Risk		3430
Item 4. Controls and Procedures		3430

PART II - OTHER INFORMATION		3430
Item 1. Legal Proceedings		3430
Item 1A. Risk Factors		3430
Item 6. Exhibits		3530

SIGNATURE		3632


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

CrossAmerica Partners LP and subsidiaries:

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

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

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

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

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

CrossAmerica Partners LP related parties:

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

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

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

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

Other Defined Terms:

7-Eleven			7-Eleven, Inc.

ASC			Accounting Standards Codification

AOCI			Accumulated other comprehensive income

ASU			Accounting Standards Update

Board			Board of Directors of our General Partner

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

CAPL Credit Facility			Credit Agreement, dated as of April 1, 2019, as amended by the First Amendment to Credit Agreement, dated as of November 19, 2019, and by the Second Amendment to Credit Agreement, dated as of July 28, 2021, and as amended and restated by the Amendment and Restatement Agreement, dated as of March 31, 2023, 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.

~~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			Community Service Stations, Inc.

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

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

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


Form 10-K		CrossAmerica’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022

Internal Revenue Code		Internal Revenue Code of 1986, as amended

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

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

LIBOR		London Interbank Offered Rate

MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations

NYSE		New York Stock Exchange

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

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

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

SEC		U.S. Securities and Exchange Commission

SOFR		Secured Overnight Financing Rate

Term Loan Facility		$185 million delayed draw term loan facility provided under the JKM Credit Facility

U.S. GAAP		U.S. Generally Accepted Accounting Principles

WTI		West Texas Intermediate crude oil


Inventories	$	271
Other current assets		30
Property and equipment		8,171
Intangible assets		(3,498	)
Goodwill		(1,055	)
Total assets	$	3,919

Accrued expenses and other current liabilities		116
Other non-current liabilities		1,800
Asset retirement obligations		118
Total liabilities	$	2,034
Net assets acquired	$	1,885


	September 30, 2022							December 31, 2021							March 31, 2023						December 31, 2022
	Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization		Net Carrying Amount		Gross Amount		Accumulated Amortization		Net Carrying Amount
Wholesale fuel supply contracts/rights	$	208,696	$	(114,684	)	$	94,012	$	212,194	$	(99,124	)	$	113,070	$	232,932	$	125,720	$	107,212	$	232,932	$	120,168	$	112,764
Trademarks/licenses		2,208		(1,231	)		977		2,208		(1,174	)		1,034		1,630		691		939		2,208		1,250		958
Covenant not to compete		450		(435	)		15		450		(367	)		83		200		13		187		650		453		197
Total intangible assets	$	211,354	$	(116,350	)	$	95,004	$	214,852	$	(100,665	)	$	114,187	$	234,762	$	126,424	$	108,338	$	235,790	$	121,871	$	113,919


	Wholesale Segment			Retail Segment			Consolidated
Balance at December 31, 2021	$	82,328		$	18,136		$	100,464
Adjustments to purchase accounting		(738	)		(317	)		(1,055	)
Balance at September 30, 2022	$	81,590		$	17,819		$	99,409


Exhibit No.		Description

10.1		Amendment and Restatement Agreement, dated as of March 31, 2023, by and among CrossAmerica Partners LP, ~~2022 Incentive Award Plan~~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 ~~September 13, 2022)~~April 3, 2023)

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

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


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 Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

104*		Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101


CROSSAMERICA PARTNERS LP

By:		CROSSAMERICA GP LLC, its General Partner

By:		/s/ Maura Topper
		Maura Topper
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)