☑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

~~(Registrant’s telephone number, including area code)~~Securities registered pursuant to Section 12(b) of the Act:

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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,” ~~“small~~“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

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, 2017,~~August 4, 2022, the registrant had outstanding ~~33,984,970~~37,928,970 common units.

(Thousands of Dollars, ~~Except Unit~~except unit and ~~Per Unit Amounts)~~per unit amounts)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Operating revenues^(a)

$
544,092

$
487,950

$
1,542,167

$
1,368,334

Costs of sales^(b)

502,517

448,812

1,421,524

1,251,491

Gross profit

41,575

39,138

120,643

116,843

Income from CST Fuel Supply equity interests

3,752

4,022

11,185

12,318

Operating expenses:

Operating expenses

15,371

14,224

46,853

45,754

General and administrative expenses

5,994

6,142

23,731

18,068

Depreciation, amortization and accretion expense

14,049

13,432

42,675

40,594

Total operating expenses

35,414

33,798

113,259

104,416

Gain on sales of assets, net

2,371

631

2,013

525

Operating income

12,284

9,993

20,582

25,270

Other income (expense), net

121

(59
)

366

375

Interest expense

(7,102
)

(5,634
)

(20,599
)

(16,403
)
Income before income taxes

5,303

4,300

349

9,242

Income tax expense (benefit)

966

1,308

(1,686
)

851

Net income

4,337

2,992

2,035

8,391

Less: net income (loss) attributable to noncontrolling
   interests

4

3

(1
)

9

Net income attributable to limited partners

4,333

2,989

2,036

8,382

IDR distributions

(1,115
)

(877
)

(3,162
)

(2,456
)
Net income (loss) available to limited partners

$
3,218

$
2,112

$
(1,126
)

$
5,926

Net income (loss) per limited partner unit:

Basic earnings per common unit

$
0.09

$
0.06

$
(0.03
)

$
0.18

Diluted earnings per common unit

$
0.09

$
0.06

$
(0.03
)

$
0.18

Basic and diluted earnings per subordinated unit

n/a

n/a

n/a

$
0.18

Weighted-average limited partner units:

Basic common units

33,931,056

33,366,380

33,773,964

31,714,462

Diluted common units^(c)

33,937,702

33,391,096

33,773,964

31,766,802

Basic and diluted subordinated units

—

—

—

1,537,956

Total diluted common and subordinated units

33,937,702

33,391,096

33,773,964

33,304,758

Distribution paid per common and subordinated unit

$
0.6225

$
0.6025

$
1.8525

$
1.7925

Distribution declared (with respect to each respective
   period) per common and subordinated unit

$
0.6275

$
0.6075

$
1.8675

$
1.8075

Supplemental information:

(a) Includes excise taxes of:

$
19,704

$
19,698

$
58,351

$
59,902

(a) Includes revenues from fuel sales to related parties
      of:

101,190

99,891

281,611

280,330

(a) Includes rental income of:

21,644

19,752

65,090

59,634

(b) Includes rental expense of:

4,876

5,103

14,593

14,870

(c) Diluted common units were not used in the calculation of diluted earnings per common unit for the nine months ended
      September 30, 2017 because to do so would have been antidilutive.

We recorded impairment charges of $0.5 million and $2.9 million during the three months ended June 30, 2022 and 2021 and $1.2 million and $5.2 million during the six months ended June 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.

Note 8. DEBT

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

September 30,

December 31,

2017

2016

$550 million revolving credit facility

$
431,484

$
441,500

Note payable

779

822

Capital lease obligations

27,728

28,455

Total debt and capital lease obligations

459,991

470,777

Current portion

2,884

2,100

Noncurrent portion

457,107

468,677

Deferred financing fees

(2,334
)

(3,558
)
Noncurrent portion, net of deferred financing fees

$
454,773

$
465,119


	June 30,		December 31,
	2022		2021
CAPL Credit Facility	$	626,555	$	630,575
JKM Credit Facility		158,980		182,460
Finance lease obligations		15,471		16,809
Total debt and finance lease obligations		801,006		829,844
Current portion		5,575		10,939
Noncurrent portion		795,431		818,905
Deferred financing costs, net		7,232		8,270
Noncurrent portion, net of deferred financing costs	$	788,199	$	810,635

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, the proceeds of which were used to pay off borrowings under the Term Loan Facility. As of June 30, 2022, 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 2022	$	—	$	1,631	$	1,631
2023		8,261		3,328		11,589
2024		637,570		3,427		640,997
2025		11,015		3,527		14,542
2026		128,689		3,629		132,318
2027		—		1,221		1,221
Total future payments		785,535		16,763		802,298
Less interest component		—		1,292		1,292
		785,535		15,471		801,006
Current portion		2,754		2,821		5,575
Long-term portion	$	782,781	$	12,650	$	795,431

CAPL Credit Facility

Our ~~$550 million revolving credit facility~~CAPL Credit Facility is secured by substantially all of our ~~assets.~~ assets, including our equity interest in Holdings, other than the assets of unrestricted subsidiaries designated as such under the CAPL Credit Facility. Holdings and its subsidiaries are unrestricted subsidiaries under the CAPL Credit Facility.

Taking the interest rate swap contracts described in Note 9 into account, our effective interest rate on our CAPL Credit Facility at June 30, 2022 was 3.2% (our applicable margin was 2.25% as of June 30, 2022).

Letters of credit outstanding at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 totaled $6.5 million, which reduce our availability under the credit facility. The amount of availability at September 30, 2017 under the revolving credit facility, after taking into account debt covenant restrictions, was $53.7$4.0 million. In connection with future acquisitions, the revolving credit facility requires, among other things, that we have, after giving effect to such acquisition, at least $20.0 million in the aggregate of borrowing availability under the revolving credit facility and unrestricted cash on the balance sheet on the date of such acquisition.

~~Financial Covenants and Interest Rate~~

We are required to comply with certain financial covenants under the credit facility. We are required to maintain a total leverage ratio (as defined in the credit facility) for the most recently completed four fiscal quarters of less than or equal to 4.50 : 1.00, except for periods following a material acquisition, generally defined as an acquisition with a purchase price of at least $30.0 million. The total leverage ratio shall not exceed 5.00 : 1.00 for the first three full fiscal quarters following the closing of a material acquisition. If we issued Qualified Senior Notes (as defined in the credit facility) in the aggregate principal amount of $175.0 million or greater, the ratio shall not exceed 5.50 : 1.00. If we issued Qualified Senior Notes of $175.0 million or greater, we are also required to maintain a senior leverage ratio (as defined in the credit facility) of less than or equal to 3.00 : 1.00 and a consolidated interest coverage ratio (as defined in the credit facility) of at least 2.75 : 1.00. As of ~~September~~June 30, ~~2017,~~2022, we were in compliance with ~~these~~our financial ~~covenants.~~covenants under the CAPL Credit Facility. The amount of availability under the CAPL Credit Facility at June 30, 2022, after taking into consideration debt covenant restrictions, was $119.4 million.

~~Outstanding~~JKM Credit Facility

The obligations under the JKM Credit Facility are guaranteed by Holdings and its subsidiaries (other than CAPL JKM Partners) and secured by a lien on substantially all of the assets 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 ~~revolving credit facility bear interest at LIBOR plus~~JKM Credit Facility had a ~~margin of 3.00%. Our borrowings had an effective~~weighted-average interest rate of ~~4.24%~~3.6% as of ~~September~~June 30, ~~2017.~~2022 (LIBOR plus an applicable margin, which was 2.5% as of June 30, 2022).

8Letters of credit outstanding at June 30, 2022 and December 31, 2021 totaled $0.8 million.

As of June 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 June 30, 2022, after taking into consideration debt covenant restrictions, was $10.0 million.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9. INTEREST RATE SWAP CONTRACTS

The interest payments on our CAPL Credit Facility vary based on monthly changes in the one-month LIBOR and changes, if any, in the applicable margin, which is based on our leverage ratio as further discussed in Note 8. To hedge against interest rate volatility on our variable rate borrowings under the CAPL Credit Facility, we entered into 3 interest rate swap contracts in 2020 that mature on April 1, 2024. One interest rate swap contract has a notional amount of $150 million and a fixed rate of 0.495%. The other interest rate swap contracts each have a notional amount of $75 million and a fixed rate of 0.38%. 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 $13.7 million and $3.0 million at June 30, 2022 and December 31, 2021, respectively. See Note 12 for additional information on the fair value of the interest rate swap contracts.

We report the unrealized gains and losses on our interest rate swap contracts designated as highly effective cash flow hedges as a component of other comprehensive income and reclassify such gains and losses into earnings 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 $0.3 million and $(0.3) million for the three months ended June 30, 2022 and 2021 and an insignificant amount and $(0.5) million for the six months ended June 30, 2022 and 2021, respectively.

We currently estimate that a gain of $8.0 million will be reclassified from AOCI into interest expense during the next 12 months; however, the actual amount that will be reclassified will vary based on changes in interest rates.

Note 8.10. RELATED-PARTY TRANSACTIONS

~~Transactions with CST~~

Wholesale Motor Fuel Sales and ~~Rental Income~~Real Estate Rentals

We sell wholesale motor fuel under a master fuel distribution agreement to 48 CST retail sites and lease real property on 73 retail sites to CST under a master lease agreement each having initial 10-year terms. The fuel distribution agreement provides us with a fixed wholesale mark-up per gallon. The master lease agreement is a triple net lease.

Revenues from ~~wholesale fuel sales and real property rental income from CST~~TopStar, an entity affiliated with Joseph V. Topper, Jr., a member of the Board, were ~~as follows (in thousands):~~

For the Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Revenues from motor fuel sales to CST

$
36,449

$
31,738

$
100,683

$
87,819

Rental income from CST

$
4,262

$
4,207

$
12,823

$
12,841

~~Accounts receivable from CST for fuel amounted to $3.5~~$22.7 million and ~~$3.2 million at September 30, 2017 and December 31, 2016, respectively.~~

~~Amended Omnibus Agreement and Management Fees~~

~~We incurred $2.9 million and $3.9~~$14.6 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 and ~~$11.5~~$39.8 million and ~~$12.1~~$25.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, respectively, including incentive compensation costs~~2021, respectively. Accounts receivable from TopStar were $1.2 million and ~~non-cash stock-based compensation~~$1.3 million at June 30, 2022 and December 31, 2021, respectively.

CrossAmerica leases real estate from the Topper Group. Rent expense under these lease agreements was $2.5 million and $2.2 million for the ~~Amended~~three months ended June 30, 2022 and 2021 and $4.8 million and $4.5 million for the six months ended June 30, 2022 and 2021, respectively.

Omnibus Agreement

We incurred expenses under the Omnibus Agreement, ~~which~~including costs for store level personnel at our company operated sites, totaling $20.5 million and $13.0 million for the three months ended June 30, 2022 and 2021 and $40.6 million and $25.8 million for the six months ended June 30, 2022 and 2021, respectively. Such expenses are ~~recorded as a component of~~included in operating expenses and general and administrative expenses in the ~~statement~~statements of operations. Amounts payable to ~~CST were $16.3~~the Topper Group related to expenses incurred by the Topper Group on our behalf in accordance with the Omnibus Agreement totaled $5.1 million and ~~$10.0~~$3.7 million at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively. ~~The amounts payable at September 30, 2017 include separation benefits associated with the Merger~~

Common Unit Distributions and ~~equity compensation expense associated with CST stock-based awards. See Note 15 for additional information.~~Other Equity Transactions

~~Common Units Issued to CST as Consideration for Amounts Due Under the Terms of the Amended Omnibus Agreement~~

~~As approved by the independent conflicts committee of the Board, the Partnership~~We distributed $7.7 million and CST mutually agreed to settle, from time to time, some or all of the amounts due under the terms of the Amended Omnibus Agreement in newly issued common units representing limited partner interests in the Partnership. We issued the following common units to CST as consideration for amounts due under the terms of the Amended Omnibus Agreement:

~~Period~~	~~Date of Issuance~~	~~Number of~~ ~~Common~~ ~~Units Issued~~
~~Quarter ended December 31, 2016~~	~~February 28, 2017~~		~~171,039~~
~~Quarter ended March 31, 2017~~	~~May 10, 2017~~		~~128,983~~
~~Quarter ended June 30, 2017~~	~~August 9, 2017~~		~~124,003~~
~~Quarter ended September 30, 2017~~	*		~~126,491~~

*	~~Expected to be issued on November 10, 2017~~

~~CST Fuel Supply Equity Interests~~

~~CST Fuel Supply provides wholesale motor fuel distribution~~$9.7 million to the majority of CST’s legacy U.S. retail sites at cost plus a fixed markup per gallon. We owned a 17.5% total interest in CST Fuel Supply at September 30, 2017 and 2016. We account for the income derived from our equity interest of CST Fuel Supply as “Income from CST Fuel Supply equity” on our statement of operations, which amounted to $3.8 million and $4.0 million for the three months ended September 30, 2017 and 2016, respectively, and $11.2 million and $12.3 million for the nine months ended September 30, 2017 and 2016, respectively.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

In connection with the Merger, the Federal Trade Commission (FTC) approved a final order requiring the divestiture by CST of certain retail fuel stations. As a result, in September 2017, 61 sites were sold to a third party and removed from the fuel distribution agreement between CST Marketing and Supply, a wholly-owned subsidiary of CST Fuel Supply, and CST Services, a wholly owned subsidiary of Circle K, and CST Marketing and Supply no longer supplies fuel to such sites. To compensate for the decrease in the amount of motor fuels sold by CST Marketing and Supply, CST Services agreed to purchase at least 114.9 million gallons annually (the “Annual Commitment”) in addition to the volumes continued to be sold under the fuel distribution agreement to retail fuel stations that remain with CST after the divestiture. In addition, should CST Services fail to purchase all or a portion of the Annual Commitment, CST Services has agreed to make monthly payments to CST Marketing and Supply in the amount of the seller’s margin of 5 cents per gallon under the fuel distribution agreement multiplied by the number of gallons not physically sold pursuant to the Annual Commitment. Consequently, the Partnership, by virtue of its 17.5% ownership interest in CST Fuel Supply, the 100% owner of CST Marketing and Supply, will continue to receive its share from the volumes sold to the 61 retail sites prior to the FTC mandated divestiture. This agreement continues until the fuel distribution agreement between CST Marketing and Supply and CST Services is terminated, which had an initial term of 10 years expiring in December 2024.

In July 2016, CST provided a refund payment to us related to our 17.5% interest in CST Fuel Supply resulting from the sale by CST of 79 retail sites in California and Wyoming to 7-Eleven, Inc. and its wholly-owned subsidiary, SEI Fuel Services, Inc., to which CST Fuel Supply no longer supplies motor fuel. The purpose of the refund payment was to make us whole for the decrease in the value of our interest in CST Fuel Supply arising from sales volume decreases. The total refund payment received by us, as approved by the independent conflicts committee of the Board and by the executive committee of the board of directors of CST, was approximately $18.2 million ($17.5 million in cash with the remainder in CrossAmerica common units owned by CST) and was accounted for as a contribution to equity.

~~Purchase of Fuel from CST~~

We purchase the fuel supplied to 32 retail sites from CST Fuel Supply of which we own a 17.5% interest, and resell the wholesale motor fuel to independent dealers and sub-wholesalers. We purchased $6.2 million and $5.7 million of motor fuel from CST Fuel Supply for the three months ended September 30, 2017 and 2016, and $17.9 million and $14.7 million for the nine months ended September 30, 2017 and 2016, respectively, in connection with these retail sites.

~~IDR and Common Unit Distributions~~

~~We distributed $1.1 million and $0.9 million to CST related to its ownership of our IDRs and $4.3 million and $3.9 million~~Topper Group related to its ownership of our common units during the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021 and $15.3 million and $19.4 million for the six months ended June 30, 2022 and 2021, respectively.

We distributed ~~$3.2~~$2.6 million and ~~$2.5~~$0.5 million to ~~CST~~affiliates of John B. Reilly, III related to ~~its ownership of our IDRs and $12.6 million and $11.5 million related to its~~their ownership of our common units during the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, respectively.~~

~~Income Tax Reimbursement~~

~~As discussed in Note 3, we sold 2 properties during the three~~2021 and nine months ended September 30, 2017 as a result of the FTC’s requirements associated with Couche-Tard’s acquisition of CST. Couche-Tard agreed to reimburse us for the tax liability incurred on the required sale, resulting in additional proceeds of $0.3 million, which was accounted for as a contribution to partners’ capital.

~~Wholesale Motor Fuel Sales and Real Estate Rentals~~

~~Revenues from motor fuel sales and rental income from DMS and its affiliates were as follows (in thousands):~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Revenues from motor fuel sales to DMS and its affiliates

$
64,741

$
68,153

$
180,928

$
192,511

Rental income from DMS and its affiliates

$
4,739

$
5,037

$
14,472

$
16,250

~~Accounts receivable from DMS and its affiliates totaled $10.3~~$5.2 million and ~~$8.6 million at September 30, 2017 and December 31, 2016, respectively.~~

~~Revenues from rental income from Topstar were $0.2 million and $0.4~~$1.0 million for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

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

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CrossAmerica leases real estate from certain entities affiliated with Joseph V. Topper, Jr., director of the Board. Rent expense paid to these entities was $0.2 million for the three months ended September 30, 2017 and 2016 and $0.7 million and $0.6 million for the nine months ended September 30, 2017 and 2016, respectively.

As discussed in Note 3, DMS renewed its contract with one of its customers, triggering a $0.8 million earn-out payment by DMS to us under a contract entered into with DMS at the time of CST acquiring our General Partner in October 2014.

~~Also as discussed in Note 3, we sold 28 properties to DMR during the three and nine months ended September 30, 2017 for $16.6 million.~~

Maintenance and Environmental Costs

Certain maintenance and environmental ~~monitoring and~~ remediation activities are performed by ~~a related party of~~an entity affiliated with Joseph V. Topper, Jr., a member of the Board, as approved by the independent conflicts committee of the Board. We incurred charges with this related party of ~~$0.4~~$0.6 million and ~~$0.3~~$0.4 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 and ~~$1.3 million and $1.2~~$0.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Accounts payable to this related party amounted to $0.3 million at June 30, 2022.

Convenience Store Products

We purchase certain convenience store products from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of the Board, as approved by the independent conflicts committee of the Board. Merchandise costs amounted to $5.4 million and $5.0 million for three months ended June 30, 2022 and 2021 and $9.9 million and $9.2 million for the six months ended June 30, 2022 and 2021, respectively. Amounts payable to this related party amounted to $2.2 million and $1.5 million at June 30, 2022 and December 31, 2021, respectively.

Vehicle Lease

In connection with the services rendered under the Omnibus Agreement, we lease certain vehicles from an entity affiliated with Joseph V. Topper, Jr., a member of the Board, as approved by the independent conflicts committee of the Board. Lease expense was an insignificant amount for the three and six months ended June 30, 2022 and 2021.

Principal Executive Offices

Our principal executive offices are in Allentown, Pennsylvania. We ~~sublease~~lease office space ~~from CST that CST leases~~ 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. ~~The management fee charged by CST to us under the Amended Omnibus Agreement incorporates this rental~~Rent expense ~~which~~ amounted to ~~$0.2~~$0.2 million and $0.4 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 and ~~$0.5~~$0.5 million and ~~$0.4~~$0.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

Public Relations and Website Consulting Services

We have engaged a company affiliated with a member of the Board for public relations and website consulting services. The cost of these services was insignificant for the three and six months ended June 30, 2022 and 2021.

Note 9.11. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

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

Litigation Matters

We are from time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damages, environmental damages, employment-related claims and damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims and proceedings, we record ~~a reserve~~an accrual when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In addition, we disclose matters for which management believes a material loss is at least reasonably possible. ~~None of~~We believe that it is not reasonably possible that these proceedings, separately or in the aggregate, ~~are expected to~~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.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Environmental Matters

We ~~were a co-defendant, together~~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 ~~our General Partner, CST and CST Services, in a lawsuit brought by Charles Nifong, a former employee~~varying levels of CST Services who, until March 2015, provided services to us as Chief Investment Officer and Vice President of Finance (Court of Common Pleas, Lehigh County, Pennsylvania, case number 2015-1003). Following CST’s acquisition of our General Partner, the plaintiff alleged breach of contract and associated claims relating to his termination of employment and claimed severance benefitscoverage that is considered adequate under the ~~EICP.~~circumstances to cover operations and properties. The ~~trial occurred~~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 ~~early October and the decision by the jury was to award Mr. Nifong a total of $1.7 million. Such amount was recorded in general and administrative expenses~~conjunction with acquisitions. Financial responsibility for ~~the three and nine months ended September 30, 2017. Under the EICP, we were also obligated to pay reasonable legal expenses incurred by the plaintiff~~environmental remediation is negotiated in connection with ~~this dispute,~~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 ~~expensed as incurred. The Partnership incurred total legal fees~~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 $8.5 million and $5.4 million at June 30, 2022 and December 31, 2021, respectively. Indemnification assets related to ~~this case~~third-party escrow funds, state funds or insurance recorded on the balance sheet within other current assets and other noncurrent assets totaled $6.6 million and $3.2 million at June 30, 2022 and December 31, 2021, respectively. State funds represent probable state reimbursement amounts. Reimbursement will depend upon the continued maintenance and solvency of ~~$0.6 million~~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 ~~nine months ended September 30, 2017.~~amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims.

~~Environmental Matters~~

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. ~~Under the Amended Omnibus Agreement, the~~The Predecessor Entity ~~must indemnify~~indemnified us for any costs or expenses that ~~it incurs~~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. ~~The Predecessor Entity’s~~As such, these environmental liabilities and indemnification assets ~~associated~~are not recorded on the balance sheet of the Partnership.

Similarly, we have generally been indemnified with ~~contributed~~respect to known contamination at sites ~~amounted to $4.4 million~~acquired from third parties, including our acquisition of certain assets from 7-Eleven. As such, these environmental liabilities and ~~$2.8 million at September 30, 2017 and $6.1 million and $5.1 million at December 31, 2016, respectively.~~indemnification assets are also not recorded on the balance sheet of the Partnership.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Note ~~10.~~12. FAIR VALUE MEASUREMENTS

~~General~~

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

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets.

Level 3—Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources.

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels in ~~2017~~2022 or ~~2016.~~2021.

As further discussed in Note ~~11,~~9, we entered into interest rate swap contracts during 2020 and remeasure the fair value of such 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.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have accrued for unvested phantom units and ~~vested and unvested profits interests~~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. ~~Such~~These fair value measurements are ~~deemed~~classified as Level 1 measurements.

~~Financial Instruments~~

The fair value of our accounts receivable, notes receivable, and accounts payable approximated their carrying values as of ~~September~~June 30, ~~2017~~2022 and ~~2016~~December 31, 2021 due to the short-term maturity of these instruments. The fair ~~value~~values of borrowings under the ~~revolving credit facility~~CAPL Credit Facility and JKM Credit Facility approximated ~~its~~their carrying values ~~of $431.5 million~~ as of ~~September~~June 30, ~~2017~~2022 and ~~$441.5 million as of~~ December 31, ~~2016,~~2021 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.

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 20 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 ~~11. EQUITY-BASED COMPENSATION~~12 for additional information on the Term Loan Facility.

~~Overview~~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 for the three and six months ended June 30, 2022.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14. 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 ~~record equity-based compensation~~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 ~~component~~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 ~~general~~these subsidiaries. Deferred income tax assets and ~~administrative expenses in~~liabilities are recognized for the ~~statements~~future tax consequences attributable to temporary differences between the financial statement carrying amounts of ~~operations. Compensation expense was $0.2~~existing assets and liabilities and their respective tax bases and are measured using enacted tax rates.

We recorded an income tax benefit of $0.1 million and ~~$0.7~~$0.3 million for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021 and ~~$1.9~~an income tax benefit of $2.0 million and ~~$2.6~~$0.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, respectively.~~

~~Partnership Equity-Based Awards~~

Under the Plan, the Partnership granted 1,233 phantom units in June 2017 to an employee of CST who provides services to the Partnership; such phantom units will vest in equal annual installments on the first, second and third anniversaries2021, respectively, as a result of the ~~date of grant~~losses incurred by our corporate subsidiaries. The effective tax rate differs from the combined federal and this award was accompanied by tandem distribution equivalent rights that entitle the holder to cash payments equal to the amount of unit distributions authorized to be paid to the holders of our common units

~~Since we grant awards to employees of CST who provide services to us under the Amended Omnibus Agreement,~~state statutory rate primarily because only LGWS and ~~since the grants may be settled in cash, unvested phantom units and vested and unvested profits interests receive fair value variable accounting treatment. As such, they~~Joe’s Kwik Marts are measured at fair value at each balance sheet reporting date and the cumulative compensation cost recognized is classified as a liability, which is included in accrued expenses and other current liabilities on the consolidated balance sheet. The balance of the accrual at September 30, 2017 and December 31, 2016 totaled $0.8 million and $1.8 million, respectively.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~CST Awards~~

CST granted equity-based awards of approximately 47,000 and 102,000 in the form of time vested restricted stock units of CST, stock options of CST and market share units of CST for the nine months ended September 30, 2017 and 2016, respectively, which were granted to certain employees of CST for services rendered on our behalf. Expense associated with these awards that was charged to us under the Amended Omnibus Agreement was $0.1 million and $0.3 million for the three months ended September 30, 2017 and 2016 and $1.6 million and $1.3 million for the nine months ended September 30, 2017 and 2016, respectively.

At the completion of the Merger, each CST stock option, restricted stock unit and market share unit that was outstanding immediately prior to the completion of the Merger, excluding the CST restricted stock units granted in February 2017, whether vested or unvested, became fully vested and converted into the right to receive a cash payment as defined in the Merger Agreement. The Partnership was allocated a $0.4 million charge upon the accelerated vesting of these awards, included in the expense amounts for the nine months ended September 30, 2017 set forth above.

At the completion of the Merger, each award of CST restricted stock units that was granted in February 2017 converted into the right to receive a cash payment as defined in the Merger Agreement, but such award will remain subject to the same vesting terms and payment schedule as those set forth in the original restricted stock unit award agreement; provided that such award will vest in full upon an involuntary termination of employment without cause, or termination for “Good Reason,” or termination due to death, “Disability” or “Retirement.” Unrecognized compensation expense associated with CST restricted stock units granted in February 2017 amounted to $0.7 million as of September 30, 2017, which will be recognized over the vesting term through January 2020.income tax.

~~Awards to Members of the Board~~

~~In November 2016, the Partnership granted 5,364 phantom units to non-employee directors of the Board as a portion of director compensation. Such awards vested upon the Merger.~~

In August 2017, the Partnership granted 10,539 phantom units to non-employee directors of the Board as a portion of director compensation. Such awards vest over one year and this award was accompanied by tandem distribution equivalent rights that entitle the holder to cash payments equal to the amount of unit distributions authorized to be paid to the holders of our common units.

The liability for these awards at September 30, 2017 and December 31, 2016 was not significant. The associated compensation expense was not significant for the three months ended September 30, 2017 and 2016 and $0.2 million for the nine months ended September 30, 2017 and 2016.

Note ~~12.~~15. NET INCOME PER LIMITED PARTNER UNIT

~~In addition to the common units, we have identified the IDRs as participating securities and~~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 ~~(loss), after deducting the IDRs,~~ by the weighted-average number of outstanding common units.

13We 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; however, the preferred membership interests are antidilutive.

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

For the Three Months Ended September 30,

2017

2016

Common
Units

Subordinated
Units

Common
Units

Subordinated
Units

Numerator:

Distributions paid^(a)

$
21,079

$
—

$
20,125

$
—

Allocation of distributions in excess of net income^(b)

(17,861
)

—

(18,013
)

—

Limited partners’ interest in net income - basic and
   diluted

$
3,218

$
—

$
2,112

$
—

Denominator:

Weighted average limited partnership units
   outstanding - basic

33,931,056

—

33,366,380

—

Adjustment for phantom units

6,646

—

24,716

—

Weighted average limited partnership units
   outstanding - diluted

33,937,702

—

33,391,096

—

Net income per limited partnership unit - basic

$
0.09

$
—

$
0.06

$
—

Net income per limited partnership unit - diluted

$
0.09

$
—

$
0.06

$
—


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator:
Distributions paid	$	19,904		$	19,884		$	39,800		$	39,765
Allocation of distributions in excess of net income		(6,501	)		(15,095	)		(21,350	)		(38,943	)
Limited partners’ interest in net income - basic and diluted	$	13,403		$	4,789		$	18,450		$	822
Denominator:
Weighted-average common units outstanding - basic		37,912,710			37,874,868			37,906,463			37,872,079
Adjustment for phantom and phantom performance units (a)		44,724			30,142			45,003			30,146
Weighted-average common units outstanding - diluted		37,957,434			37,905,010			37,951,466			37,902,225
Net income per common unit - basic and diluted	$	0.35		$	0.13		$	0.49		$	0.02

Distributions paid per common unit	$	0.5250		$	0.5250		$	1.0500		$	1.0500
Distributions declared (with respect to each respective period) per common unit	$	0.5250		$	0.5250		$	1.0500		$	1.0500

(a) 1,076,769 and 553,257 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been antidilutive for the three and six months ended June 30, 2022, respectively.

For the Nine Months Ended September 30,

2017

2016

Common
Units

Subordinated
Units

Common
Units

Subordinated
Units

Numerator:

Distributions paid^(a)

$
62,439

$
—

$
55,194

$
4,459

Allocation of distributions in excess of net income
   (loss)^(b)

(63,565
)

—

(49,542
)

(4,185
)
Limited partners’ interest in net income (loss) - basic and
   diluted

$
(1,126
)

$
—

$
5,652

$
274

Denominator:

Weighted average limited partnership units
   outstanding - basic

33,773,964

—

31,714,462

1,537,956

Adjustment for phantom units

—

—

52,340

—

Weighted average limited partnership units
   outstanding - diluted^(c)

33,773,964

—

31,766,802

1,537,956

Net income (loss) per limited partnership unit - basic

$
(0.03
)

$
—

$
0.18

$
0.18

Net income (loss) per limited partnership unit - diluted

$
(0.03
)

$
—

$
0.18

$
0.18

~~(a)~~

Distributions paid per unit were $0.6225 and $0.6025 during the three months ended September 30, 2017 and 2016, and $1.8525 and $1.7925 during the nine months ended September 30, 2017 and 2016, respectively.

~~(b)~~

~~Allocation of distributions in excess of net income is based on a pro rata proportion to the common and subordinated units as outlined in the Partnership Agreement.~~

~~(c)~~

~~Excludes 18,217 potentially dilutive securities from the calculation of diluted earnings per common unit because to do so would be antidilutive for the nine months ended September 30, 2017.~~

~~Distributions~~

~~Distribution activity for 2017 was as follows:~~

Quarter Ended

Record Date

Payment Date

Cash
Distribution
(per unit)

Cash
Distribution
(in thousands)

December 31, 2016

February 6, 2017

February 13, 2017

$
0.6125

$
20,534

March 31, 2017

May 8, 2017

May 15, 2017

$
0.6175

$
20,826

June 30, 2017

August 7, 2017

August 14, 2017

$
0.6225

$
21,079

September 30, 2017

November 6, 2017

November 13, 2017

$
0.6275

$
21,326

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Distributions

Distribution activity for 2022 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

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 13. INCOME TAXES~~

As a limited partnership, we are not subject to federal and state income taxes, however our corporate subsidiaries are subject to income taxes. Income tax attributable to our taxable income, which may differ significantly from income for financial statement purposes, is assessed at the individual limited partner unit holder 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 period presented.

Certain activities that generate non-qualifying income are conducted through LGWS. LGWS is a tax paying corporate subsidiary of ours that is subject to federal and state income taxes. Current and deferred income taxes are recognized on the earnings of LGWS. 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 income tax expense of $1.0 million and $1.3 million for the three months ended September 30, 2017 and 2016 and an income tax benefit of $1.7 million and income tax expense of $0.9 million for the nine months ended September 30, 2017 and 2016, respectively, as a result of the income generated or losses incurred by our corporate subsidiaries. The effective tax rate differs from the combined federal and state statutory rate primarily because only LGWS is subject to income tax.

Note ~~14.~~16. SEGMENT REPORTING

We conduct our business in ~~two~~2 segments: 1) the ~~Wholesale~~wholesale segment and 2) the ~~Retail~~retail segment. The wholesale segment includes the wholesale distribution of motor fuel to lessee dealers, independent dealers, commission agents ~~DMS, CST~~ and company operated retail sites. 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. ~~Similar to lessee dealers, we have motor fuel distribution agreements with DMS and CST and collect rent from both.~~ The ~~Retail~~retail segment includes ~~the sale of convenience merchandise items, the retail sale of motor fuel at company operated retail sites and~~ the retail sale of motor fuel at retail sites operated by commission ~~agents.~~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~~wholesale segment, we also generate revenues through leasing or subleasing real estate in our ~~Retail~~retail segment.

As part of our evaluation of the economic performance of our retail sites, we will from time to time convert company owned retail sites from our Retail segment to lessee dealers in our Wholesale segment. As a result, we no longer generate revenues from the retail sale of motor fuel or merchandise at these stores subsequent to the date of conversion and we no longer incur retail operating expenses related to these retail sites. However, we continue to supply these retail sites with motor fuel on a wholesale basis pursuant to the fuel supply contract with the lessee dealer. Further, we continue to own/lease the property and earn rental income under lease/sublease agreements with the lessee dealers under triple net leases. The lessee dealer owns all motor fuel and convenience merchandise and retains all gross profit on such operating activities.

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

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Wholesale		Retail		Unallocated			Consolidated
Three Months Ended September 30, 2017
										Wholesale		Retail		Unallocated			Consolidated
Three Months Ended June 30, 2022
Revenues from fuel sales to external customers	$	400,296	$	93,285	$	—		$	493,581	$	795,924	$	579,325	$	—		$	1,375,249
Intersegment revenues from fuel sales		69,504		—		(69,504	)		—		493,423		—		(493,423	)		—
Revenues from food and merchandise sales		—		28,366		—			28,366		—		73,934		—			73,934
Rent income		20,008		1,636		—			21,644		17,839		3,010		—			20,849
Other revenue		501		—		—			501		1,807		3,194		—			5,001
Total revenues	$	490,309	$	123,287	$	(69,504	)	$	544,092	$	1,308,993	$	659,463	$	(493,423	)	$	1,475,033

Income from CST Fuel Supply Equity	$	3,752	$	—	$	—		$	3,752
Operating income (loss)	$	27,533	$	2,409	$	(17,658	)	$	12,284	$	44,264	$	3,420	$	(26,612	)	$	21,072

Three Months Ended September 30, 2016
Three Months Ended June 30, 2021
Revenues from fuel sales to external customers	$	348,702	$	87,318	$	—		$	436,020	$	530,099	$	260,125	$	—		$	790,224
Intersegment revenues from fuel sales		63,126		—		(63,126)			—		198,878		—		(198,878	)		—
Revenues from food and merchandise sales		—		31,507		—			31,507		—		45,208		—			45,208
Rent income		18,344		1,408		—			19,752		18,209		2,653		—			20,862
Other revenue		671		—		—			671		729		2,311		—			3,040
Total revenues	$	430,843	$	120,233	$	(63,126	)	$	487,950	$	747,915	$	310,297	$	(198,878	)	$	859,334

Income from CST Fuel Supply Equity	$	4,022	$	—	$	—		$	4,022
Operating income (loss)	$	27,030	$	1,893	$	(18,930	)	$	9,993	$	33,244	$	953	$	(26,035	)	$	8,162

Six Months Ended June 30, 2022
Revenues from fuel sales to external customers										$	1,379,045	$	1,001,567	$	—		$	2,380,612
Intersegment revenues from fuel sales											837,424		—		(837,424	)		—
Revenues from food and merchandise sales											—		136,281		—			136,281
Rent income											35,316		6,160		—			41,476
Other revenue											3,593		6,282		—			9,875
Total revenues										$	2,255,378	$	1,150,290	$	(837,424	)	$	2,568,244

Operating income (loss)										$	81,121	$	4,096	$	(54,426	)	$	30,791

Six Months Ended June 30, 2021
Revenues from fuel sales to external customers										$	928,592	$	457,612	$	—		$	1,386,204
Intersegment revenues from fuel sales											343,330		—		(343,330	)		—
Revenues from food and merchandise sales											—		83,047		—			83,047
Rent income											35,909		5,425		—			41,334
Other revenue											1,863		4,170		—			6,033
Total revenues										$	1,309,694	$	550,254	$	(343,330	)	$	1,516,618

Operating income (loss)										$	58,149	$	1,246	$	(52,097	)	$	7,298

Wholesale

Retail

Unallocated

Consolidated

Nine Months Ended September 30, 2017

Revenues from fuel sales to external customers

$
1,122,903

$
272,289

$
—

$
1,395,192

Intersegment revenues from fuel sales

200,147

—

(200,147
)

—

Revenues from food and merchandise sales

80,077

—

80,077

Rent income

60,008

5,082

—

65,090

Other revenue

1,808

—

—

1,808

Total revenues

$
1,384,866

$
357,448

$
(200,147
)

$
1,542,167

Income from CST Fuel Supply Equity

$
11,185

$
—

$
—

$
11,185

Operating income (loss)

$
80,863

$
4,092

$
(64,373
)

$
20,582

Nine Months Ended September 30, 2016

Revenues from fuel sales to external customers

$
958,943

$
253,057

$
—

$
1,212,000

Intersegment revenues from fuel sales

178,772

—

(178,772)

—

Revenues from food and merchandise sales

—

95,253

—

95,253

Rent income

55,540

4,094

—

59,634

Other revenue

1,447

—

—

1,447

Total revenues

$
1,194,702

$
352,404

$
(178,772
)

$
1,368,334

Income from CST Fuel Supply Equity

$
12,318

$
—

$
—

12,318

Operating income (loss)

$
76,971

$
6,291

$
(57,992
)

$
25,270

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


	June 30,		December 31,
	2022		2021
Receivables from fuel and merchandise sales	$	46,277	$	27,932
Receivables for rent and other lease-related charges		3,373		6,548
Total accounts receivable	$	49,650	$	34,480

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 such revenue 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 $11.2 million and $11.0 million at June 30, 2022 and December 31, 2021, respectively. Amortization of such costs is recorded against operating revenues and amounted to $0.4 million for the three months ended June 30, 2022 and 2021 and $0.9 million and $0.7 million for the six months ended June 30, 2022 and 2021, respectively.

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

Note ~~15.~~17. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in ~~current~~operating assets and ~~current~~ liabilities as follows (in thousands):


	Six Months Ended June 30,
	2022			2021
Decrease (increase):
Accounts receivable	$	(15,125	)	$	(6,741	)
Accounts receivable from related parties		(45	)		(216	)
Inventories		(10,403	)		(1,121	)
Other current assets		963			(2,682	)
Other assets		(868	)		(1,379	)
Increase (decrease):
Accounts payable		20,178			6,940
Accounts payable to related parties		(30	)		939
Motor fuel and sales taxes payable		(1,260	)		2,585
Accrued expenses and other current liabilities		(112	)		1,541
Other long-term liabilities		2,276			2,275
Changes in operating assets and liabilities, net of acquisitions	$	(4,426	)	$	2,141

For the Nine Months Ended September 30,

2017

2016

Decrease (increase):

Accounts receivable

$
5,183

$
941

Accounts receivable from related parties

(1,492
)

(2,281
)
Inventories

674

5,515

Other current assets

166

(1,249
)
Other assets

(2,509
)

(3,484
)
Increase (decrease):

Accounts payable

2,882

2,055

Accounts payable to related parties

5,576

(1,021
)
Motor fuel taxes payable

(386
)

1,117

Accrued expenses and other current liabilities

3,270

(1,644)

Other long-term liabilities

178

3,339

Changes in working capital, net of acquisitions

$
13,542

$
3,288

The above changes in ~~current~~operating assets and ~~current~~ liabilities may differ from changes between amounts reflected in the applicable balance sheets for the respective periods due to acquisitions.

Supplemental disclosure of cash flow information (in thousands):


	Six Months Ended June 30,
	2022			2021
Cash paid for interest	$	12,491		$	6,709
Cash paid for taxes, net of refunds received		(2	)		1,570

For the Nine Months Ended September 30,

2017

2016

Cash paid for interest

$
19,185

$
15,355

Cash paid for income taxes, net of refunds received

$
822

$
1,366

Supplemental schedule of non-cash investing and financing activities (in thousands):


	Six Months Ended June 30,
	2022		2021
Accrued capital expenditures	$	1,226	$	996
Lease liabilities arising from obtaining right-of-use assets		9,182		9,156

For the Nine Months Ended September 30,

2017

2016

Sale of property and equipment in Section 1031
   like-kind exchange transactions

$
260

$
1,300

Issuance of capital lease obligations and recognition
   of asset retirement obligation related to Getty lease

$
740

$
1,240

Amended Omnibus Agreement fees settled in our
   common units

$
10,880

$
8,290

~~CROSSAMERICA PARTNERS LP~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 16. SEPARATION BENEFITS~~

During the nine months ended September 30, 2017, the Partnership recognized a $5.3 million charge for severance and benefit costs associated with certain officers and other employees of CST Services who provided services to the Partnership and who terminated employment upon the consummation of the Merger, which constituted a change in control, as defined in the EICP and CST’s severance plans. Such costs are included in general and administrative expenses and were paid by CST in the third quarter of 2017. Accounts payable to related parties includes these costs as we will reimburse CST.

In addition, certain participants in the EICP received retention bonuses that will be paid in annual installments that began in July 2017 and will continue through July 2019. The Partnership recorded a $1.0 million charge during the nine months ended September 30, 2017 in connection with the payments made by CST in July 2017, which were included in general and administrative expenses. In addition, the Partnership recognized a $0.3 million charge for the three and nine months ended September 30, 2017 for the payments expected to be made in July 2018 and July 2019. The Partnership anticipates recognizing future charges totaling $1.2 million over the remaining retention period, of which $0.3 million, $0.8 million and $0.1 million is anticipated to be recognized in 2017, 2018 and 2019, respectively.

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This ~~quarterly~~ report includes forward-looking statements ~~including in~~within the ~~section entitled “Management’s Discussion~~meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and ~~Analysis of Financial Condition and Results of Operations.”~~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 ~~management’s~~our current ~~views~~plans and ~~assumptions,~~expectations and involve risks and uncertainties that could potentially affect ~~expected~~actual results. These forward-looking statements include, among other things, statements regarding:

•

future retail and wholesale gross profits, including gasoline, diesel and convenience store merchandise gross profits;

•

our anticipated level of capital investments, primarily through acquisitions, and the effect of these capital investments on our results of operations;

•

anticipated trends in the demand for, and volumes sold of, gasoline and diesel in the regions where we operate;

•

volatility in the equity and credit markets limiting access to capital markets;

•

our ability to integrate acquired ~~businesses and to transition retail sites to dealer operated sites;~~

businesses;

•

expectations regarding environmental, tax and other regulatory initiatives; ~~and~~

•

the effect of general economic and other conditions on our ~~business.~~

business; and

•

the anticipated results from the assets recently acquired from 7-Eleven.

In general, we based the forward-looking statements included in this ~~quarterly~~ 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 ~~as they involve assumptions that, while made in good faith, may prove to be incorrect,~~ 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:

•

~~Couche-Tard’s~~the Topper Group’s business strategy and operations and ~~Couche-Tard’s~~the Topper Group’s conflicts of interest with us;

•

availability of cash flow to pay the current quarterly distributions on our common units;

•

the availability and cost of competing motor fuels;

•

motor fuel price volatility, including as a result of the conflict in Ukraine, or a reduction in demand for motor ~~fuels;~~

fuels, including as a result of the COVID-19 Pandemic;

•

competition in the industries and geographical areas in which we operate;

•

the consummation of financing, acquisition or disposition transactions and the effect thereof on our business;

•

environmental compliance and remediation costs;

•

our existing or future ~~indebtedness;~~

indebtedness and the related interest expense and our ability to comply with debt covenants;

•

our liquidity, results of operations and financial condition;

•

failure to comply with applicable tax and other regulations or governmental policies;

•

future legislation and changes in regulations, governmental policies, immigration laws and restrictions or changes in enforcement or interpretations thereof;

•

future regulations and actions that could expand the non-exempt status of employees under the Fair Labor Standards Act;

•

future income tax legislation;

•

changes in energy policy;

•

~~increases in energy conservation efforts;~~

technological advances;

•

~~technological advances;~~

the impact of worldwide economic and political conditions;

•

~~the impact of worldwide economic and political conditions;~~

•

the impact of wars and acts of terrorism;

•

weather conditions or catastrophic weather-related damage;

•

earthquakes and other natural disasters;

•

hazards and risks associated with transporting and storing motor fuel;

•

unexpected environmental liabilities;

•

the outcome of pending or future litigation; and

•

our ability to comply with federal and state laws and regulations, including those related to environmental matters, the sale of alcohol, cigarettes and fresh foods, employment and health benefits, including the Affordable Care ~~Act.~~

Act, immigration and international trade.

You should consider the ~~areas of risk~~risks and uncertainties described above and elsewhere in this report as well as those set forth ~~herein and~~ in the section entitled “Risk Factors” ~~included~~ 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 ~~projected~~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.

MD&A is organized as follows:

•

~~CST’s Merger~~Recent Developments—This section ~~provides information on the Merger.~~

describes significant recent developments.

•

Significant Factors Affecting Our Profitability—This section describes the significant impact on our results of operations caused by crude oil commodity price volatility, seasonality and acquisition and financing activities.

•

Results of Operations—This section provides an analysis of our results of operations, including the results of operations of our business segments, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 and non-GAAP financial measures.

•

Liquidity and Capital Resources—This section provides a discussion of our financial condition and cash flows. It also includes a discussion of our debt, capital requirements, other matters impacting our liquidity and capital resources and an outlook for our business.

•

New Accounting Policies—This section describes new accounting pronouncements that we have already adopted, those that we are required to adopt in the future and those that became applicable in the current year as a result of new circumstances.

•

Critical Accounting Policies Involving Critical Accounting Estimates—This section describes the accounting policies and estimates that we consider most important for our business and that require significant judgment.

~~CST’s Merger~~19

~~CST~~Recent Developments

Acquisition of Assets from 7-Eleven

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 through 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.

Issuance of Preferred Membership Interests

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 ~~the Merger Agreement dated~~ as of ~~August 21, 2016,~~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 ~~Circle K and Merger Sub. On June 28, 2017, Merger Sub merged with and into CST, at which time~~ the ~~separate corporate existence of Merger Sub ceased, and CST survived the Merger as an indirect,~~Preferred Issuance, on March 29, 2022, LGP Operations LLC, a wholly owned subsidiary of ~~Circle K.~~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 ~~Merger, Circle K indirectly owns all~~Term Loan Facility until April 1, 2023.

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

COVID-19 Pandemic

During the first quarter of 2020, an outbreak of a novel strain of coronavirus spread worldwide, including to the ~~membership interests~~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 fuel volumes largely recovered during the second half of 2020 and continued to recover in 2021 and 2022, we cannot predict the scope and severity with which COVID-19 will impact our ~~General Partner, as well as~~business. Sustained decreases in fuel volume, erosion of margin and/or volatility in fuel prices could have a ~~20.8% limited partner interest in the Partnership~~material adverse effect on our results of operations, cash flow, financial position and ~~all of the IDRs of the Partnership. Circle K, through its indirect ownership interest in the sole member of~~ultimately our ~~General Partner, has the~~ ability to ~~appoint all of the members of the Board of our General Partner and to control and manage the operations and activities of the Partnership.~~ pay distributions.

Significant Factors Affecting our Profitability

The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit

Wholesale segment

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. ~~We receive a fixed mark-up per gallon on~~For approximately ~~87%~~61% of gallons sold to our ~~customers.~~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 DTW priced contracts, ~~with our customers.~~including intersegment sales to the retail segment. These contracts provide for variable, market based pricing that results in motor fuel gross profit effects similar to retail motor fuel gross profits (as crude oil prices decline, motor fuel gross profit generally increases, as discussed in our Retail segment below). The increase in DTW gross profit results from the acquisition cost of wholesale motor fuel declining at a faster rate as compared to the rate retail motor fuel prices decline. Conversely, our DTW motor fuel gross profit declines when the cost of wholesale motor fuel increases at a faster rate as compared to the rate retail motor fuel prices increase.market-based pricing.

Regarding our supplier relationships, a majority of our total gallons purchased are subject to ~~Terms Discounts.~~terms discounts. The dollar value of these discounts ~~increases and decreases corresponding to~~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).

Retail segment

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 ~~and rapidly~~ over short periods of time.

Changes in our average motor fuel selling price per gallon and gross margin ~~for the periods ended September 30, 2017 and 2016~~ are directly related to the changes in crude oil and wholesale motor fuel ~~prices over the same period.~~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.

We typically experience lower retail motor fuel gross profits in periods when the wholesale cost of motor fuel increases, and higher retail motor fuel gross profits in periods when the wholesale cost of motor fuel declines rapidly.

Seasonality Effects on Volumes

Our business is subject to seasonality due to our wholesale and retail sites being located in certain geographic areas that are affected by seasonal weather and temperature trends and associated changes in retail customer activity during different seasons. Historically, sales volumes have been highest in the second and third quarters (during the summer months) and lowest during the winter months in the first and fourth quarters.

Impact of Inflation

Inflation affects our financial performance by increasing certain components of ~~our operating expenses and~~ cost of goods ~~sold. Operating~~sold, such as fuel, merchandise, and credit card fees. Inflation also affects certain operating expenses, ~~include~~such as labor costs, certain leases, and general and administrative expenses. While our ~~Wholesale~~wholesale segment benefits from higher ~~Terms Discounts~~terms discounts as a result of higher fuel costs, inflation could and recently has negatively ~~impact~~impacted our ~~Retail segment as a result~~cost of ~~higher motor fuel, merchandise~~goods sold and operating ~~costs.~~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.

Acquisition and Financing Activity

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

•

~~On February 5, 2016, we purchased independent dealer and sub-wholesaler contracts from CST for $2.9 million.~~

~~On March 29, 2016,~~From late June 2021 through December 31, 2021, we closed on the ~~acquisition~~purchase of ~~Franchised Holiday Stores and company operated liquor stores from S/S/G Corporation for approximately $52.4 million, including working capital.~~

~~On September 27, 2016, we acquired the State Oil Assets located in the greater Chicago market for approximately $41.9 million, including working capital.~~

~~On December 21, 2016, we sold the real property at 17 fee~~103 sites acquired in the State Oil Assets acquisition for $25.0 million in proceeds, which were used to repay borrowings under the credit facility. We subsequently leased these sites back under a triple net lease agreement.

~~On September 6, 2017, we sold two properties as a result of the FTC’s requirements associated with the Merger for $6.7 million.~~

~~On September 27, 2017, as approved by the conflicts committee~~ of our ~~Board, we sold 28 properties to DMR for $16.6 million. These sites were generally sites at which we did not supply fuel or represented vacant land.~~

~~Separation Benefits~~106-site acquisition from 7-Eleven, and ~~Retention Bonuses~~

~~In addition, certain participants in the EICP received retention bonuses that will be paid in annual installments that began~~ in July 2017 and will continue through July 2019. The Partnership recorded a $1.0 million charge during the nine months ended September 30, 2017 in connection with the payments made by CST in July 2017, which were included in general and administrative expenses. In addition, the Partnership recognized a $0.3 million charge for the three and nine months ended September 30, 2017 the payments expected to be made in July 2018 and July 2019. The Partnership anticipates recognizing future charges totaling $1.2 million over the remaining retention period, of which $0.3 million, $0.8 million and $0.1 million is anticipated to be recognized in 2017, 2018 and 2019, respectively.

~~Acquisition of Jet-Pep Assets~~

~~On August 4, 2017,~~2021, we entered into a ~~definitive asset purchase~~new credit agreement ~~(the “Purchase Agreement”), by~~ and ~~among (i) CrossAmerica, (ii) Jet-Pep, Inc.,~~amended our existing credit facility as further described in Notes 3 and ~~(iii) other persons listed as signatories in the Purchase Agreement (collectively the “Sellers”). Pursuant~~12 to the ~~Purchase Agreement,~~financial statements. In February 2022, we ~~have agreed to purchase~~closed on the ~~real property and the fuel supply business of 92 fee simple sites, and the leasehold interest~~final three properties.

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~~June 30, ~~2017~~2022 Compared to Three Months Ended ~~September~~June 30, ~~2016~~2021

Operating revenues increased ~~$56.1~~$616 million ~~or 12%, while~~(72%) and gross profit increased ~~$2.4~~$24 million ~~or 6%~~(37%).

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.

~~Cost of sales increased $53.7 million or 12% as a result of the increase in wholesale motor fuel prices. See “Results of Operations—Segment Results” for additional gross profit analyses.~~

~~See “Results of Operations—Segment Results” for additional operating expenses analyses.~~

General and administrative expenses decreased $0.1 million primarily attributable to a $1.1 million reduction in costs as a result of headcount and salary reductions effective at the time of the Merger, a $0.5 million reduction in equity compensation expense as a result of fewer awards outstanding, and a $0.5 million reduction in acquisition costs, partially offset by a $1.7 million charge recorded in the third quarter of 2017 related to a court ruling in favor of a former executive’s claim to benefits under the EICP change in control provisions and a $0.2 million increase in severance expense.

During the third quarter of 2017, we recorded a $2.2 million gain on the sale of two properties as required by the FTC in connection with the Merger and a $0.5 million loss on the sale of 28 properties to DMR. We also recorded an $0.8 million gain related to the renewal of a contract by DMS with one of its customers, which triggered an earn out payment to be paid by DMS to us in connection with a contract entered into with DMS at the time of CST’s acquisition of our General Partner in October 2014.

Interest expense increased $1.5 million due to an increase in the average interest rate charged on our credit facility borrowings from 3.5% to 4.3% and additional borrowings to fund the State Oil Assets acquisition in September 2016. In addition, we incurred $0.4 million of interest expense in the third quarter of 2017 related to our sale leaseback executed in December 2016.

We recorded income tax expense of $1.0 million and $1.3 million for the three months ended September 30, 2017 and 2016, respectively. The decrease in income tax expense was primarily due to a decline in the income generated by our corporate subsidiaries.

~~Nine Months Ended September 30,2017 Compared to Nine Months Ended September 30,2016~~

~~Operating revenues increased $173.8 million, or 13%, while gross profit increased $3.8 million, or 3.3%.~~

~~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~~wholesale segment to our ~~Retail~~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 ~~$21.4~~$295 million ~~or 12%~~(148%), primarily attributable to the increase in wholesale ~~motor~~ fuel prices ~~discussed above.~~and the incremental intersegment revenues generated by the company operated sites acquired in the acquisition of assets from 7-Eleven.

Cost of sales increased ~~$170.0~~$592 million ~~or 14% as~~(75%), which was a result of the increase in wholesale motor fuel ~~prices.~~prices and the acquisition of assets from 7-Eleven discussed above.

Gross profit increased $24 million (37%), 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 $1.2 million (17%) primarily due to a $2.0 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 second quarter of 2021, partially offset by higher software and information technology consulting costs, recruiting costs and management fees.

Depreciation, amortization and accretion expense increased $0.3 million (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. This increase was partially offset by a $2.4 million decrease in impairment charges as compared to the same period of 2021 related to our ongoing real estate rationalization effort and the resulting reclassification of these sites to assets held for sale.

During the three months ended June 30, 2022, we recorded net losses on lease terminations and asset disposals, partially offset by a $0.5 million net gain in connection with our ongoing real estate rationalization effort.

During the three months ended June 30, 2021, we recorded a $1.1 million net gain in connection with our ongoing real estate rationalization effort, partially offset by net losses on lease terminations and asset disposals.

Interest expense increased $3.5 million (89%), primarily driven by $1.4 million in interest expense incurred on the JKM Credit Facility along with a $0.4 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 $1.6 million more in interest expense on the CAPL Credit Facility (net of the impact of the interest rate swaps) due both to an increase in the LIBOR rate and the higher outstanding balance driven by the borrowings to fund a portion of the purchase price of the acquisition of assets from 7-Eleven.

We recorded income tax benefits of $0.1 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively, driven by losses incurred by our taxable subsidiaries.

Operating revenues increased $1.1 billion (69%) and gross profit increased $48 million (40%).

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 $494 million (144%), 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 $1.0 billion (72%), 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 $48 million (40%), 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 ~~operating~~gross profit analyses.

General and administrative expenses ~~increased $5.7~~decreased $2.4 million (16%) primarily ~~attributable~~due to a ~~$6.8~~$3.5 million ~~charge recorded upon closing~~decrease in acquisition-related costs driven by a reduction in legal fees incurred in connection with the acquisition of ~~the Merger for severance and benefit costs for certain terminated officers and other employees of CST Services who provided services~~assets from 7-Eleven as compared to the Partnership and retention bonuses to certain EICP participants and a $1.7 million charge related to a court ruling in favor of a former executive’s claim to benefits under the EICP change in control provisions,six months ended June 30, 2021, partially offset by ~~a $1.5 million decrease driven by the integration of prior year acquisitions~~higher software and ~~other cost savings initiatives~~information technology consulting costs, recruiting costs and ~~a $1.3 million decrease in~~ management ~~fees charged by CST as a result of headcount and salary reductions effective at the time of the Merger.~~fees.

Depreciation, amortization and accretion expense increased ~~$1.7~~$2.6 million (7%) 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 $4.0 million decrease in impairment charges as compared to the same period of 2021 related to our ongoing real estate rationalization effort and the resulting reclassification of these sites to assets held for sale.

During the six months ended June 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 six months ended June 30, 2021, we recorded net losses on lease terminations and asset disposals, partially offset by a $1.1 million gain in connection with our ongoing real estate rationalization effort.

Interest expense increased $6.6 million (90%), primarily driven by ~~our recent acquisitions.~~

~~During the nine months ended September 30, 2017, we recorded a $2.2~~$2.6 million ~~gain~~in interest expense incurred on the ~~sale of two properties as required by the FTC in connection~~JKM Credit Facility along with ~~the Merger and a $0.5 million loss on the sale of 28 properties to DMR. We also recorded~~ a $0.8 million ~~gain related~~increase in amortization of deferred financing costs as a result of entering into the JKM Credit Facility and the amendment to the ~~renewal~~CAPL Credit Facility. In addition, we incurred $3.2 million more in interest expense on the CAPL Credit Facility (net of ~~a contract by DMS with one~~the impact of ~~its customers, which triggered an earn out payment to be paid by DMS to us in connection with a contract entered into with DMS at~~ the ~~time of CST’s acquisition of our General Partner in October 2014.~~

~~Interest expense increased $4.2 million~~interest rate swaps) due both to an increase in the ~~average interest~~LIBOR rate ~~charged on our credit facility borrowings from 3.5% to 4.1%~~ and ~~additional~~the higher outstanding balance driven by the borrowings to fund ~~our recent acquisitions. In addition, we incurred $1.2 million~~a portion of ~~interest expense in 2017 related to our sale leaseback executed in December 2016.~~the purchase price of the acquisition of assets from 7-Eleven.

We recorded an income tax ~~benefit~~benefits of ~~$1.7~~$2.0 million and ~~income tax expense of $0.9~~$0.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016, respectively. The benefit in 2017 was primarily due to an increase in the loss generated~~2021, respectively, driven by losses incurred by our ~~corporate~~taxable subsidiaries.

We present the results of operations of our segments consistent with how our management views the business. Therefore, our segments are presented before intersegment eliminations (which consist of motor fuel sold by our ~~Wholesale~~wholesale segment to our ~~Retail~~retail segment). These comparisons are not necessarily indicative of future results.

The following table highlights the results of operations and certain operating metrics of our ~~Wholesale~~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~~June 30,~~2017~~2022 Compared to Three Months Ended ~~September~~June 30,~~2016~~2021

~~The~~Gross profit increased $10.8 million (24%) and operating income increased $11.0 million (33%). These results were ~~driven~~impacted by:

The ~~$1.0~~$10.0 million ~~or 7%~~(33%) increase in motor fuel gross profit was primarily ~~due to~~driven by a ~~higher~~28% increase in our average margin per gallon ~~realized primarily~~compared to the second quarter of 2021. Our DTW margins were higher for the second quarter of 2022 as compared to the second quarter of 2021 due to greater volatility in the price of crude oil in the second quarter of 2022 as compared to the second quarter of 2021. In addition, we benefited from higher ~~DTW margins~~terms discounts as a result of ~~the movements in~~higher crude ~~prices throughout both periods and increased payment discounts and incentives due to the increase in motor fuel prices as a result of the increase in crude oil~~ prices. The average ~~daily~~ spot price of WTI crude oil increased ~~7% to $48.15~~64% from $66.19 per barrel for the ~~third~~second quarter of ~~2017, compared~~2021 to ~~$44.85~~$108.83 per barrel for the ~~third~~second quarter of ~~2016.~~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.”

~~Rent and other gross profit~~ In addition, volume increased ~~$1.8 million~~3% primarily as a result of ~~our September 2016~~volume generated by the acquisition of ~~the State Oil Assets, as well as converting company operated retail sites to lessee dealer sites throughout 2016 and 2017,~~assets from 7-Eleven, partially offset by ~~25 DMS sites being converted~~lower volume in our base business (i.e., results excluding the results from the assets acquired from 7-Eleven).

Other revenues increased $1.1 million (148%) due primarily to ~~commission agent sites in the fourth quarter of 2016, which resulted in the rent~~higher take-or-pay income ~~from these 25 sites being included in the retail segment rather than the wholesale segment.~~related to minimum purchase quantities on our dealer contracts.

~~The decline of~~Operating expenses decreased $0.3 million ~~was primarily attributable to a decrease in volume driven the impacts of Hurricane Harvey.~~

~~Operating expenses increased $2.0 million~~(2%), primarily as a result of ~~our September 2016 State Oil Assets acquisition, which is substantially~~a decrease in maintenance and environmental costs, partially offset by an increase in ~~rent income, as well as our conversion of company operated retail sites~~management fees relating to ~~lessee dealer sites throughout 2016 and 2017.~~an increase in headcount.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2021

Gross profit increased $22.8 million (29%) and operating income increased $23.0 million (40%). The results were driven by:

The ~~$3.2~~$21.6 million (42%) increase in motor fuel gross profit was primarily ~~due to~~driven by a ~~higher~~33% increase in our average margin per gallon ~~realized primarily~~compared to the six months ended June 30, 2021. Our DTW margins were higher for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due to greater volatility in the price of crude oil in the first half of 2022 as compared to the first half of 2021. In addition, we benefited from higher ~~DTW margins~~terms discounts as a result of ~~the movements in~~higher crude ~~prices throughout both periods and increased payment discounts and incentives due to the increase in motor fuel prices as a result of the increase in crude oil~~ prices. The average ~~daily~~ spot price of WTI crude oil increased ~~19% to $49.28~~64% from $62.21 per barrel for the ~~nine~~six months ended ~~September~~June 30, ~~2017, compared~~2021 to ~~$41.35~~$102.01 per barrel for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~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.”

~~Rent and other gross profit~~ In addition, volume increased ~~$5.6 million~~6% primarily as a result of ~~our September 2016~~volume generated by the acquisition of ~~the State Oil Assets, as well as converting company operated retail sites to lessee dealer sites throughout 2016 and 2017,~~assets from 7-Eleven, partially offset by ~~25 DMS sites being converted~~lower volume in our base business (i.e., results excluding the results from the assets acquired from 7-Eleven).

Other revenues increased $1.7 million (93%) due primarily to ~~commission agent sites in the fourth quarter of 2016, which resulted in the rent~~higher take-or-pay income ~~from these 25 sites being included in the retail segment rather than the wholesale segment.~~related to minimum purchase quantities on our dealer contracts.

~~The decline of $1.1 million was primarily attributable to CST’s July 2016 divestiture of its California and Wyoming retail sites and a decrease in volume driven the impacts of Hurricane Harvey.~~

Operating expenses ~~increased $3.7~~decreased $0.2 million (1%), primarily as a result of ~~our September 2016 State Oil Assets acquisition, which is substantially~~a decrease in maintenance and environmental costs, partially offset by an increase in ~~rent income, as well as our conversion of company operated retail sites~~management fees relating to ~~lessee dealer sites throughout 2016 and 2017.~~an increase in headcount.

The following table highlights the results of operations and certain operating metrics of our ~~Retail~~retail segment. The narrative following these tables provides an analysis of the results of operations of that segment ~~(thousands of dollars,~~(in thousands, except for the number of retail sites):

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

~~Gross profit declined $4.8 million, while operating expenses declined $2.6 million.~~

Operating expenses increased $24.0 million (61%) primarily due to a $23.3 million increase driven by the ~~March 2016 Franchised Holiday Stores acquisition.~~

We use the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income ~~available to us~~ before deducting interest expense, income taxes and depreciation, amortization and ~~accretion.~~accretion (which includes certain impairment charges). Adjusted EBITDA represents EBITDA as further adjusted to exclude ~~equity funded expenses related to incentive~~equity-based compensation ~~and the Amended Omnibus Agreement,~~expense, gains or losses on ~~sales of assets,~~dispositions and lease terminations, net and certain discrete acquisition related costs, such as legal and other professional fees, ~~and severance expenses associated with recently acquired companies,~~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 ~~the weighted average diluted common and subordinated units and then dividing that result by the~~ distributions ~~paid per limited partner unit.~~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):

~~The following table reconciles our segment~~Beginning in the second quarter of 2022, we reconcile Adjusted EBITDA to ~~Consolidated~~Net Income rather than to Net income available to limited partners. The difference between Net income and Net income available to limited partners is that, beginning in the second quarter of 2022, the accretion of preferred membership interests issued in late March 2022 is a deduction from Net income in computing Net income available to limited partners. Because Adjusted EBITDA ~~presented~~is used to assess our financial performance, without regard to capital structure, we believe Adjusted EBITDA should be reconciled with Net Income, so that the calculation isn’t impacted by the accretion of preferred membership interests. This approach is comparable to our reconciliation of Adjusted EBIDTA to Net income available to limited partners in past periods, as we have not recorded accretion of preferred membership interests in past periods.

Our principal liquidity requirements are to finance our operations, fund acquisitions, service our debt and pay distributions to our ~~unitholders and IDR distributions.~~unitholders. We expect our ongoing sources of liquidity to include cash generated by operations, proceeds from sales of sites in connection with our ~~operations and~~real estate rationalization efforts, borrowings under the ~~revolving credit facility~~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 ~~including sale-leaseback financing of real property with third parties,~~ 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 ~~revolving credit facility~~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.~~securities and/or maintain or increase distributions to unitholders.

See “Recent Developments—COVID-19 Pandemic” for a discussion of the impacts and potential impacts on our liquidity from the COVID-19 Pandemic.

Net cash provided by operating activities increased ~~$2.7~~$13.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared to the same period in ~~2016, driven~~2021, primarily byattributable to the incremental cash flow generated by the sites acquired from 7-Eleven and the strong DTW margins in the first half of 2022.

As is typical in our acquisitions. In addition, we settled $2.3 million more in management fees related to the services provided under the Amended Omnibus Agreement in equity with CST for the nine months ended September 30, 2017 compared to the same period in 2016.

~~For the nine months ended September 30, 2017, we received $23.9 million of proceeds on sales, largely driven by the sale of 28 properties to DMR and two properties sold~~industry, our current liabilities exceed our current assets as a result of the ~~FTC’s requirements associated with Couche-Tard’s acquisition~~longer settlement of ~~CST.~~ 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 ~~also~~ incurred ~~$10.2 million in~~ capital expenditures of $16.4 million and ~~paid a $2.8~~$21.9 million ~~deposit on~~for the ~~Jet-Pep acquisition. For the nine~~six months ended ~~September~~June 30, ~~2016, we received a $17.5~~2022 and 2021, respectively. The decrease was largely driven by reductions in EMV upgrades and rebranding of certain sites, including the sites acquired from 7-Eleven. We paid $1.9 million ~~refund payment on our investment in CST Fuel Supply~~and $4.2 million during the six months ended June 30, 2022 and 2021, respectively, in connection with ~~CST’s~~the closing of sites acquired from 7-Eleven. We received $3.8 million and $5.6 million in proceeds primarily from the sale of sites in ~~California and Wyoming. In addition, we spent $97.1 million on~~connection with our real estate rationalization effort for the ~~acquisitions of the Franchised Holidays Stores, State Oil Assets, and independent dealer and sub-wholesaler contracts from CST. We also incurred $11.6 million in capital expenditures.~~

~~For the nine~~six months ended ~~September~~June 30, ~~2017, we~~2022 and 2021, respectively.

We paid ~~$65.7~~$39.9 million and $39.8 million in distributions for the six months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021, respectively, we made total net repayments and net borrowings on our credit ~~facility~~facilities of ~~$10.0~~$27.5 million and $20.6 million. ~~For~~We received $24.4 million in net proceeds from the ~~nine~~issuance of preferred membership interests during the six months ended ~~September~~June 30, 2016, we paid $62.2 million in distributions, made net borrowings of $96.1 million primarily to fund our Franchised Holiday Stores and State Oil Assets acquisitions, and purchased $3.3 million in common units under our common unit purchase program.2022.

~~During the three and nine months ended September 30, 2017, we distributed $1.1 million and $3.2 million to CST / Couche-Tarde with respect to the IDRs, respectively.~~Debt

In accordance with the terms of the Partnership Agreement, on February 25, 2016, the first business day after the payment of the fourth quarter 2015 distribution of $0.5925 per unit, the subordination period under the Partnership Agreement ended. At that time, each of the 7,525,000 outstanding subordinated units converted into one common unit and now participates in distributions pro rata with other common units.

As of ~~September~~June 30, ~~2017,~~2022, our ~~consolidated~~ debt and ~~capital~~finance lease obligations consisted of the following (in thousands):

~~Our revolving credit facility is secured by substantially all of our assets. Our borrowings under~~Taking the ~~revolving credit facility had a weighted-average~~ interest rate ~~of 4.24%~~swap contracts into account, our effective interest rate on our CAPL Credit Facility at June 30, 2022 was 3.2% (our applicable margin was 2.25% as of ~~September~~June 30, ~~2017 (LIBOR plus an applicable margin, which was 3.00% as of September 30, 2017)~~2022). Letters of credit outstanding under our CAPL Credit Facility at ~~September~~June 30, ~~2017~~2022 totaled ~~$6.5~~$4.0 million.

Our effective interest rate on our JKM Credit Facility at June 30, 2022 was 3.6% (our applicable margin was 2.5% as of June 30, 2022). Letters of credit outstanding under our JKM Credit Facility at June 30, 2022 totaled $0.8 million.

The amount of availability under ~~the revolving credit facility~~our CAPL Credit Facility at ~~November 3, 2017,~~August 4, 2022, after taking into consideration debt covenant restrictions, was ~~$55.2~~$135.5 million. ~~In connection with future acquisitions, the revolving credit facility requires, among other things, that we have, after giving effect to such acquisition, at least $20 million in the aggregate~~

The amount of ~~borrowing~~ availability under the revolving credit facility and unrestricted cash on the balance sheet on the date of such acquisition. We are required to maintain a total leverage ratio (as defined in the revolving credit facility) for the most recently completed four fiscal quarters of less than or equal to 4.50: 1.00, except for the first three full fiscal quarters following a material acquisition, generally defined as an acquisition with a purchase price ofJKM Credit Facility at least $30.0 million, with a ratio of 5.00: 1.00, and a consolidated interest coverage ratio (as defined in the revolving credit facility) of greater than or equal to 2.75: 1.00. The computation of our total leverage ratio allows for a pro forma application of the EBITDA (as defined in the revolving credit facility) of acquired entities andAugust 4, 2022, after taking into consideration debt covenant restrictions, was ~~4.03: 1.00 as of September 30, 2017. As of September 30, 2017, we were in compliance with these financial covenant ratios.~~$10.0 million.

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 ~~revolving credit facility~~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. With the significant decline in energy prices since 2014, access to the capital markets has tightened for the energy and MLP industries as a whole, which has impacted our cost of capital and our ability to raise equity and debt financing at favorable terms. Our ability to access the capital markets may have an impact on our ability to fund acquisitions. We may not be able to complete any offering of securities or other options on terms acceptable to us, if at all.

The following table outlines our ~~consolidated~~ capital expenditures ~~and acquisitions for the nine months ended September 30, 2017 and 2016~~ (in thousands):

Growth capital expenditures decreased during 2022 as compared with 2021, primarily due to decreases in EMV upgrades and rebranding of certain sites, including the sites acquired from 7-Eleven.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017, we distributed~~2022 and 2021, respectively, approximately ~~14%~~21% and 19% of our total wholesale distribution volumes to DMS and its affiliates and DMS and its affiliates accounted for approximately 23% of our rental income. For the nine months ended September 30, 2017, we distributed 8% of our total wholesale distribution volume to CST retail sites that are not supplied by CST Fuel Supply and received 22% of our rentalrent income was from ~~CST. For more information regarding transactions with DMS and its affiliates and CST, see Note 8 of the Condensed Notes to Consolidated Financial Statements.~~two multi-site operators.

~~For the nine months ended September 30, 2017, we received 9% of our rental income from a lessee dealer that operates certain of the retail sites acquired through the PMI and One Stop acquisitions.~~32

As noted previously, the prices paid to our motor fuel suppliers for wholesale motor fuel (which affects our ~~costs~~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.

~~We expect our rent income~~Our results for 2022 relative to 2021 are anticipated to be impacted by the acquisition of assets from 7-Eleven, which is anticipated to increase gross profit both within the wholesale and retail segments and operating expenses within the retail segment. Given increases in ~~2017 based on our recent acquisitions and our expectation that~~LIBOR, we ~~will continue~~also anticipate higher interest expense in 2022 as compared to ~~convert company operated retail sites to lessee dealers.~~2021.

We will continue to evaluate acquisitions on an opportunistic basis. Additionally, we will pursue acquisition targets that fit into our strategy. Whether we will be able to execute acquisitions will depend on market conditions, availability of suitable acquisition targets at attractive terms, acquisition related compliance with customary regulatory requirements, and our ability to finance such acquisitions on favorable terms and in compliance with our debt covenant restrictions.

~~In May 2014, the FASB issued ASU 2014-09–Revenue from Contracts with Customers (Topic 606), which results in comprehensive~~There is no new ~~revenue~~ accounting guidance ~~requires enhanced disclosures~~effective or pending adoption that has had or is anticipated to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized, and develops a common revenue standard under U.S. GAAP and International Financial Reporting Standards. Specifically, the core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. With the issuance of ASU 2015-14, which deferred the effective date by one year, this guidance is effective January 1, 2018. The guidance can be applied either retrospectively to each prior reporting period presented, or as a cumulative-effect adjustment as of the date of adoption. Although management continues to evaluate the impact of adopting this new guidance, we have completed an assessment and to date, have not identified any material impact on the financial statements, although it will affect disclosures. This guidance is expected to apply to over 90% of our revenues as the only primary revenue stream outside the scope of this guidance is rental income. We anticipate using the modified retrospective method of adoption.

~~In February 2016, the FASB issued ASU 2016-02–Leases (Topic 842).~~ This standard modifies existing guidance for reporting organizations that enter into leases to increase transparency by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. Management continues to evaluate the impact of this new guidance, but the adoption will have a material impact on our balance sheet as we will be required to recognize right-of-use assets and lease liabilities for operating leases. We do not anticipate adopting this guidance early. We intend to apply each of the practical expedients in adopting this new guidance.financial statements.

~~In October 2016, the FASB issued ASU 2016-16–Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.~~ This standard requires companies to account for income tax effects of intercompany transactions other than inventory in the period in which the transfer occurs. This guidance is effective January 1, 2018 and requires a modified retrospective application through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We have chosen to early adopt the standard effective January 1, 2017, which had no impact as of the date of adoption but could impact us in the future.

~~In January 2017, the FASB issued ASU 2017-01–Business Combinations (Topic 805): Clarifying the Definition of a Business.~~ This standard clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 is effective for public fiscal years and interim periods within those years beginning after December 15, 2017. We have chosen to early adopt this standard effective January 1, 2017. Although there was no impact upon adoption, among other things, this guidance will result in the capitalization rather than expensing of acquisition costs in future transactions that will be accounted for as asset acquisitions rather than business combinations under the new definition of a business.

~~In January 2017, the FASB issued ASU 2017-04–Intangibles~~–~~Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ This standard removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for a company's annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Management has elected to early adopt this guidance effective January 1, 2017, which had no impact upon adoption but could result in a change in the measurement of an impairment loss if an impairment was required to be recorded in the future.

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

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ from those estimates.

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

ITEM 3. QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We purchase gasoline and diesel fuel from several suppliers at costs that are subject to market volatility. These purchases are generally made pursuant to contracts or at market prices established with the supplier. We do not currently engage in hedging activities for these purchases due to our pricing structure that allows us to generally pass on priceNo significant changes to our ~~customers~~market risk have occurred since December 31, 2021. For a discussion of market risks affecting us, refer to Part II, Item 7A—"Quantitative and ~~related parties.~~

As of September 30, 2017, we had $431.5 million outstanding on our revolving credit facility. Our outstanding borrowings bear interest at LIBOR plus an applicable margin, which was 3.00% at September 30, 2017. Our borrowings had a weighted-average interest rate at September 30, 2017 of 4.24%. A one percentage point changeQualitative Disclosures About Market Risk” included in our ~~average rate would impact annual interest expense by approximately $4.3 million.~~Form 10-K.

We have not historically hedged or managed our price risk with respect to our commodity inventories (gasoline and diesel fuel), as the time period between the purchases of our motor fuel inventory and the sales to our customers is very short.

Regarding our supplier relationships, a majority of our total gallons purchased are subject to Terms Discounts. We have not historically hedged or managed our price risk with respect to these Terms Discounts. Based on our current volumes, we estimate a $10 per barrel change in the price of crude oil would impact our annual wholesale motor fuel gross profit by approximately $2.2 million related to these Terms Discounts.

~~Our operations are located in the U.S., and therefore are not subject to foreign currency risk.~~

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in ~~Rules~~Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this ~~report, and based~~report. Based on ~~their~~this evaluation, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer have~~Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017.~~2022.

There were no changes in our internal control over financial reporting (as that term is defined in ~~Rules~~Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended ~~September~~June 30, ~~2017,~~2022, 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 ~~quarterly~~ report included in Note 911 of the ~~Condensed Notes to Consolidated Financial Statements.~~financial statements.

There were no material changes in ~~risk factors for the company in the period covered by this report. See~~ the risk factors disclosed in the section entitled ~~“Risk Factors”~~"Risk Factors" in our Form 10-K ~~for~~during the ~~year ended December 31, 2016.~~period covered by this report.

As discussed in Note 8 to Item 1 in Part I above, on February 28, 2017, May 10, 2017 and August 9, 2017, CrossAmerica issued 171,039, 128,983, and 124,003 common units to a subsidiary of CST/Couche-Tard as partial payment for the amounts incurred for the fourth quarter of 2016, the first quarter of 2017 and the second quarter of 2017 respectively, under the terms of the Amended Omnibus Agreement. This issuance of common units was made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.

† 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 Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


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

~~515~~ 645 Hamilton Street, Suite ~~200~~400 Allentown, PA		18101 (Zip Code) (610) 625-8000
(Address of Principal Executive Offices)		~~(Zip Code)~~ (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


		PAGE

Commonly Used Defined Terms		i

PART I - FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021		1
Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021		2
Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021		3
Consolidated Statements of Equity and Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021		4
Condensed Notes to Consolidated Financial Statements		45
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1918
Item 3. Quantitative and Qualitative Disclosures about Market Risk		3733
Item 4. Controls and Procedures		3733

PART II - OTHER INFORMATION		3833
Item 1. Legal Proceedings		3833
Item 1A. Risk Factors		3833
Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~6. Exhibits		3834

~~Item 6. Exhibits~~SIGNATURE		3835

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	~~CrossAmerica Partners LP~~

~~LGW~~Holdings		~~Lehigh Gas Wholesale~~CAPL JKM Holdings LLC, an indirect wholly-owned subsidiary of CrossAmerica and sole member of CAPL JKM Partners

~~LGPR~~CAPL JKM Partners		~~LGP Realty~~CAPL JKM Partners LLC, a wholly-owned subsidiary of Holdings LP

~~LGWS~~Joe’s Kwik Marts		~~Lehigh Gas Wholesale Services, Inc. and subsidiaries~~Joe’s Kwik Marts LLC, a wholly-owned subsidiary of CAPL JKM Partners

CrossAmerica Partners LP related ~~and affiliated~~ parties:

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

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

~~CST~~	~~CST Brands, LLC, a wholly owned subsidiary of Circle K.~~

~~DMR~~	Dunne Manning ~~Realty LP, an entity affiliated with Joseph V. Topper, Jr., a member of the Board.~~

~~DMS~~	~~Dunne Manning Stores LLC~~Inc. (formerly ~~known as~~ Lehigh ~~Gas-Ohio, LLC)~~Gas Corporation), an entity affiliated with the ~~family of Joseph V.~~ Topper Jr., a member of the Board. DMS is an operator of retail motor fuel stations. DMS leases retail sites from us in accordance with a master lease agreement with us and DMS purchases substantially all of its motor fuel for these sites from us on a wholesale basis under rack plus pricing. The financial results of DMS are not consolidated with ours.Group

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

~~CST Fuel Supply~~Topper Group		~~CST Fuel Supply LP is~~Joseph V. Topper, Jr., collectively with his affiliates and family trusts that have ownership interests in the parent of CST Marketing and Supply LLC, CST’s wholesale motor fuel supply business, which provides wholesale fuel distribution to the majority of CST’s U.S. retail convenience stores on a fixed markup per gallon. As of September 30, 2017, our total limited partner interest in CST Fuel Supply was 17.5%.

~~CST Marketing and Supply~~	CST Marketing and Supply, LLC, CST’s wholesale motor fuel supply business, which provides wholesale fuel distribution to the majority of CST’s U.S. retail convenience stores on a fixed markup per gallon. As of September 30, 2017, our total limited partner interest in CST Marketing and Supply was 17.5%.

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

~~Topstar~~	~~Topstar Enterprises, an entity associated with~~Partnership. Joseph V. Topper, Jr. ~~Topstar~~is the founder of the Partnership and a member of the Board. The Topper Group is a related party and large holder of our common units

TopStar		TopStar Inc., an entity affiliated with a family member of Joseph V. Topper, Jr. TopStar is an operator of convenience stores that leases retail sites from us, ~~but does not purchase~~and since April 14, 2020, also purchases fuel from us.

~~Recent Acquisitions:~~Other Defined Terms:

~~PMI~~7-Eleven		~~Petroleum Marketers,~~7-Eleven, Inc.~~, acquired in April 2014~~

~~Erickson~~AOCI		~~Erickson Oil Products, Inc., acquired in February 2015~~Accumulated other comprehensive income

~~One Stop~~Board		~~M&J Operations, LLC, acquired in July 2015~~

~~Franchised Holiday Stores~~	~~The franchised Holiday stores acquired from S/S/G Corporation in March 2016~~

~~State Oil Assets~~	~~The assets acquired from State Oil Company in September 2016~~

~~Other Defined Terms:~~

~~Amended Omnibus Agreement~~	The Amended and Restated Omnibus Agreement, dated October 1, 2014, as amended on February 17, 2016 by and among CrossAmerica, the General Partner, Dunne Manning Inc., DMS, CST Services and Joseph V. Topper, Jr., which amends and restates the original omnibus agreement that was executed in connection with CrossAmerica’s initial public offering on October 30, 2012

~~ASU~~	~~Accounting Standards Update issued by the FASB to communicate changes to the FASB codification.~~

~~Board~~	Board of Directors of our General Partner


BP			~~BP p.l.c.~~
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.
~~DTW~~
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, 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.

DTW			Dealer tank wagon contracts, which are variable market-based cent per gallon priced wholesale motor fuel distribution or supply ~~contracts.~~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

~~EICP~~EMV			~~The Partnership’s Executive Income Continuity Plan,~~Payment method based upon a technical standard for smart payment cards, also referred to as ~~amended~~chip cards

Exchange Act			Securities Exchange Act of 1934, as amended


~~ExxonMobil~~Form 10-K		~~ExxonMobil Corporation~~

~~FASB~~		~~Financial Accounting Standards Board~~

~~Form 10-K~~		CrossAmerica’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021

~~Getty lease~~		In May 2012, the Predecessor Entity, which represents the portion of the business of Dunne Manning Inc. and its subsidiaries and affiliates contributed to the Partnership in connection with the IPO, entered into a 15-year master lease agreement with renewal options of up to an additional 20 years with Getty Realty Corporation. The Partnership pays fixed rent, which increases 1.5% per year. In addition, the lease requires contingent rent payments based on gallons of motor fuel sold. The Partnership leases sites under the lease in Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Pennsylvania and Rhode Island.

~~IDRs~~		Incentive Distribution Rights, which are interests in the Partnership that provide for special distributions associated with increasing partnership distributions. Couche-Tard is the indirect owner of 100% of the outstanding IDRs of CrossAmerica.

Internal Revenue Code		Internal Revenue Code of 1986, as amended

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

~~LIBOR~~JKM Credit Facility		Credit Agreement, 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

LIBOR		London Interbank Offered Rate

~~Merger~~MD&A		~~The merger of Ultra Acquisition Corp. with CST, with CST surviving the merger as a wholly owned subsidiary of Circle K Stores Inc., which closed on June 28, 2017. See Merger Agreement below.~~

~~Merger Agreement~~		CST’s Agreement and Plan of Merger (the “Merger Agreement”) entered into on August 21, 2016 with Circle K and Ultra Acquisition Corp., a Delaware corporation and an indirect, wholly owned subsidiary of Circle K (“Merger Sub”). Under and subject to the terms and conditions of the Merger Agreement, on June 28, 2017, Merger Sub was merged with and into CST, with CST surviving the Merger as a wholly owned subsidiary of Circle K.

~~Merger Sub~~		~~Ultra Acquisition Corp., a Delaware corporation and an indirect, wholly owned subsidiary of Circle K~~

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

~~Motiva~~NYSE		~~Motiva Enterprises LLC~~New York Stock Exchange

~~NTI~~Omnibus Agreement		~~CST’s new to industry stores opened after~~The Omnibus Agreement, effective January 1, ~~2008,~~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 ~~generally when CST began designing and operating its larger format stores that accommodate broader merchandise categories and food offerings and have more fuel dispensers than its legacy stores~~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		~~The First~~Second Amended and Restated Agreement of Limited Partnership of CrossAmerica Partners LP, dated as of ~~October 1, 2014, as amended~~February 6, 2020

Predecessor Entity		Wholesale distribution ~~business of Lehigh Gas-Ohio, LLC~~contracts and real property and leasehold interests contributed to the Partnership in connection with the IPO

~~Plan~~Term Loan Facility		~~In connection with~~$185 million delayed draw term loan facility provided under the ~~IPO, the General Partner adopted the Lehigh Gas Partners LP 2012 Incentive~~ ~~Award Plan, a long-term incentive plan for employees, officers, consultants and directors of the General Partner and any of its affiliates who perform services for the Partnership.~~JKM Credit Facility

~~SEC~~U.S. GAAP		U.S. ~~Securities and Exchange Commission~~

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


~~U.S. GAAP~~		~~United States~~ Generally Accepted Accounting Principles

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

~~WTI~~		West Texas Intermediate crude oil

	September 30,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Current assets:
Cash	$	1,566			1,350
Accounts receivable, net of allowances of $476 and $487, respectively		23,930			29,251
Accounts receivable from related parties		14,994			12,975
Inventories		12,020			13,164
Assets held for sale		2,496			2,111
Other current assets		7,168			6,556
Total current assets		62,174			65,407
Property and equipment, net		634,718			677,329
Intangible assets, net		68,989			80,760
Goodwill		89,109			89,109
Other assets		22,499			19,384
Total assets	$	877,489		$	931,989

LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and capital lease obligations	$	2,884		$	2,100
Accounts payable		37,785			34,903
Accounts payable to related parties		16,289			9,958
Accrued expenses and other current liabilities		19,210			15,705
Motor fuel taxes payable		12,081			12,467
Total current liabilities		88,249			75,133
Debt and capital lease obligations, less current portion		454,773			465,119
Deferred tax liabilities, net		39,952			42,923
Asset retirement obligations		28,155			27,750
Other long-term liabilities		97,085			100,253
Total liabilities		708,214			711,178

Commitments and contingencies

Equity:
Partners’ Capital
Common units—(33,984,970 and 33,524,952 units issued and outstanding at September 30, 2017 and December 31, 2016, respectively)		169,569			221,044
General Partner’s interest		—			—
Total Partners’ Capital		169,569			221,044
Noncontrolling interests		(294	)		(233	)
Total equity		169,275			220,811
Total liabilities and equity	$	877,489		$	931,989

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Operating revenues^(a)	$	544,092		$	487,950		$	1,542,167		$	1,368,334
Costs of sales^(b)		502,517			448,812			1,421,524			1,251,491
Gross profit		41,575			39,138			120,643			116,843

Income from CST Fuel Supply equity interests		3,752			4,022			11,185			12,318
Operating expenses:
Operating expenses		15,371			14,224			46,853			45,754
General and administrative expenses		5,994			6,142			23,731			18,068
Depreciation, amortization and accretion expense		14,049			13,432			42,675			40,594
Total operating expenses		35,414			33,798			113,259			104,416
Gain on sales of assets, net		2,371			631			2,013			525
Operating income		12,284			9,993			20,582			25,270
Other income (expense), net		121			(59	)		366			375
Interest expense		(7,102	)		(5,634	)		(20,599	)		(16,403	)
Income before income taxes		5,303			4,300			349			9,242
Income tax expense (benefit)		966			1,308			(1,686	)		851
Net income		4,337			2,992			2,035			8,391
Less: net income (loss) attributable to noncontrolling interests		4			3			(1	)		9
Net income attributable to limited partners		4,333			2,989			2,036			8,382
IDR distributions		(1,115	)		(877	)		(3,162	)		(2,456	)
Net income (loss) available to limited partners	$	3,218		$	2,112		$	(1,126	)	$	5,926

Net income (loss) per limited partner unit:
Basic earnings per common unit	$	0.09		$	0.06		$	(0.03	)	$	0.18
Diluted earnings per common unit	$	0.09		$	0.06		$	(0.03	)	$	0.18
Basic and diluted earnings per subordinated unit	n/a			n/a			n/a			$	0.18

Weighted-average limited partner units:
Basic common units		33,931,056			33,366,380			33,773,964			31,714,462
Diluted common units^(c)		33,937,702			33,391,096			33,773,964			31,766,802
Basic and diluted subordinated units		—			—			—			1,537,956
Total diluted common and subordinated units		33,937,702			33,391,096			33,773,964			33,304,758

Distribution paid per common and subordinated unit	$	0.6225		$	0.6025		$	1.8525		$	1.7925
Distribution declared (with respect to each respective period) per common and subordinated unit	$	0.6275		$	0.6075		$	1.8675		$	1.8075
Supplemental information:
(a) Includes excise taxes of:	$	19,704		$	19,698		$	58,351		$	59,902
(a) Includes revenues from fuel sales to related parties of:		101,190			99,891			281,611			280,330
(a) Includes rental income of:		21,644			19,752			65,090			59,634
(b) Includes rental expense of:		4,876			5,103			14,593			14,870
(c) Diluted common units were not used in the calculation of diluted earnings per common unit for the nine months ended September 30, 2017 because to do so would have been antidilutive.


	Limited Partners’ Interest
	Common Unitholders					AOCI			Total Equity
	Units		Dollars			Dollars			Dollars
Balance at December 31, 2021		37,896,556	$	53,528		$	3,030		$	56,558
Net income		—		5,047			—			5,047
Other comprehensive income
Unrealized gain on interest rate swap contracts		—		—			8,113			8,113
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			206			206
Total other comprehensive income		—		—			8,319			8,319
Comprehensive income		—		5,047			8,319			13,366
Issuance of units related to 2021 Bonus Plan		16,154		327			—			327
Distributions paid		—		(19,942	)		—			(19,942	)
Balance at March 31, 2022		37,912,710	$	38,960		$	11,349		$	50,309

Net income		—		13,966			—			13,966
Other comprehensive income
Unrealized gain on interest rate swap contracts		—		—			2,584			2,584
Realized gain on interest rate swap contracts reclassified from AOCI into interest expense		—		—			(251	)		(251	)
Total other comprehensive income		—		—			2,333			2,333
Comprehensive income		—		13,966			2,333			16,299
Accretion of preferred membership interests		—		(563	)		—			(563	)
Distributions paid		—		(19,951	)		—			(19,951	)
Balance at June 30, 2022		37,912,710	$	32,412		$	13,682		$	46,094

Balance at December 31, 2020		37,868,046	$	112,124		$	(2,456	)	$	109,668
Net loss		—		(3,967	)		—			(3,967	)
Other comprehensive loss
Unrealized gain on interest rate swap contracts		—		—			2,017			2,017
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			231			231
Total other comprehensive income		—		—			2,248			2,248
Comprehensive (loss) income		—		(3,967	)		2,248			(1,719	)
Issuance of units related to 2020 Bonus Plan		6,822		126			—			126
Tax effect from intra-entity transfer of assets		—		(757	)		—			(757	)
Distributions paid		—		(19,912	)		—			(19,912	)
Balance at March 31, 2021		37,874,868	$	87,614		$	(208	)	$	87,406

Net income		—		4,789			—			4,789
Other comprehensive income
Unrealized loss on interest rate swap contracts		—		—			(68	)		(68	)
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			253			253
Total other comprehensive income		—		—			185			185
Comprehensive income		—		4,789			185			4,974
Tax effect from intra-entity transfer of assets		—		(325	)		—			(325	)
Distributions paid		—		(19,916	)		—			(19,916	)
Balance at June 30, 2021		37,874,868	$	72,162		$	(23	)	$	72,139


Inventories	$	271
Other current assets		30
Property and equipment		8,171
Intangible assets		(3,498	)
Goodwill		(1,027	)
Total assets	$	3,947

Accrued expenses and other current liabilities		144
Other non-current liabilities		1,800
Asset retirement obligations		118
Total liabilities	$	2,062
Net assets acquired	$	1,885


	September 30, 2017							December 31, 2016							June 30, 2022							December 31, 2021
	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	$	118,201	$	(53,607	)	$	64,594	$	118,201	$	(44,298	)	$	73,903	$	208,697	$	(109,499	)	$	99,198	$	212,194	$	(99,124	)	$	113,070
Trademarks		1,094		(807	)		287		1,094		(685	)		409
Trademarks/licenses																2,208		(1,212	)		996		2,208		(1,174	)		1,034
Covenant not to compete		4,131		(3,095	)		1,036		4,131		(2,503	)		1,628		450		(412	)		38		450		(367	)		83
Below market leases		11,401		(8,329	)		3,072		12,081		(7,261	)		4,820
Total intangible assets	$	134,827	$	(65,838	)	$	68,989	$	135,507	$	(54,747	)	$	80,760	$	211,355	$	(111,123	)	$	100,232	$	214,852	$	(100,665	)	$	114,187


	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 June 30, 2022	$	81,590		$	17,819		$	99,409

	For the Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Revenues from motor fuel sales to CST	$	36,449	$	31,738	$	100,683	$	87,819
Rental income from CST	$	4,262	$	4,207	$	12,823	$	12,841


	June 30,			December 31,
	2022			2021
Land	$	3,111		$	3,042
Buildings and site improvements		1,840			2,231
Equipment		837			939
Total		5,788			6,212
Less accumulated depreciation		(1,139	)		(1,305	)
Assets held for sale	$	4,649		$	4,907


	September 30,			December 31,			June 30,			December 31,
	2017			2016			2022			2021
Land	$	270,740		$	280,400		$	324,700		$	321,813
Buildings and site improvements		334,705			346,834			360,743			358,335
Leasehold improvements		9,721			9,095			13,984			13,437
Equipment and other		171,208			169,245
Equipment								327,031			314,393
Construction in progress		3,720			3,173			7,985			9,457
Property and equipment, at cost		790,094			808,747			1,034,443			1,017,435
Accumulated depreciation and amortization		(155,376	)		(131,418	)		(288,849	)		(261,981	)
Property and equipment, net	$	634,718		$	677,329		$	745,594		$	755,454

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Operating revenues	$	544,092		$	487,950		$	1,542,167		$	1,368,334
Cost of sales		502,517			448,812			1,421,524			1,251,491
Gross profit		41,575			39,138			120,643			116,843
Income from CST Fuel Supply equity interests		3,752			4,022			11,185			12,318
Operating expenses:
Operating expenses		15,371			14,224			46,853			45,754
General and administrative expenses		5,994			6,142			23,731			18,068
Depreciation, amortization and accretion expense		14,049			13,432			42,675			40,594
Total operating expenses		35,414			33,798			113,259			104,416
Gain on sales of assets, net		2,371			631			2,013			525
Operating income		12,284			9,993			20,582			25,270
Other income, net		121			(59)			366			375
Interest expense		(7,102	)		(5,634	)		(20,599	)		(16,403	)
Income before income taxes		5,303			4,300			349			9,242
Income tax expense (benefit)		966			1,308			(1,686	)		851
Net income		4,337			2,992			2,035			8,391
Net income (loss) attributable to noncontrolling interests		4			3			(1	)		9
Net income attributable to limited partners		4,333			2,989			2,036			8,382
IDR distributions		(1,115	)		(877	)		(3,162	)		(2,456	)
Net income (loss) available to limited partners	$	3,218		$	2,112		$	(1,126	)	$	5,926

$550 million revolving credit facility	$	431,484
Note payable		779
Capital lease obligations		27,728
Total debt and capital lease obligations		459,991
Current portion		2,884
Noncurrent portion		457,107
Deferred financing fees		(2,334	)
Noncurrent portion, net of deferred financing fees	$	454,773


Exhibit No.		Description

~~10.1~~31.1 *		~~Award Agreement for Phantom Units for Non-Employee Directors with distribution equivalent rights~~

~~10.2~~		~~Asset Purchase Agreement dated August 4, 2017, by and among CrossAmerica Partners LP and Jet-Pep, Inc. and other persons listed as signatories in the Purchase Agreement~~

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 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 101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF 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/ ~~Evan W. Smith~~Maura Topper
		~~Evan W. Smith~~Maura Topper
		~~Vice President~~—~~Finance and~~ Chief Financial Officer
		(Duly Authorized Officer and Principal Financial ~~and Accounting~~ Officer)

Large accelerated filer ☐

Accelerated filer

Non-accelerated filer ☐

Smaller reporting company ☐

~~Non-accelerated filer~~

☐ ~~(do not check if a smaller reporting company)~~

~~Smaller reporting company~~

Emerging growth company