Segment Reporting | 17. Segment Reporting Segment information is prepared on the same basis that our CODM reviews financial information for operational decision-making purposes. Beginning in 2014, with the acquisition of MACS, we began operating our business in two primary operating segments, wholesale and retail, both of which are included as reportable segments. As a result, the Predecessor periods operated as one segment, wholesale, and the Successor period operated with our wholesale and retail segments. No operating segments have been aggregated in identifying the two reportable segments. During the first quarter of 2015, we elected to allocate the revenue and costs previously reported in “All Other” to each segment based on the way our CODM measures segment performance. Partnership overhead costs, interest and other expenses not directly attributable to a reportable segment have been allocated based on segment EBITDA. Wholesale Segment Our wholesale segment purchases fuel from a number of refiners and supplies it to our retail segment, to our affiliate Susser, to our affiliate Sunoco, Inc., to independently-operated dealer stations under long-term supply agreements and to other end users of motor fuel. Also included in the wholesale segment are motor fuel sales to consignment locations. We distribute motor fuels across more than 30 states throughout the East Coast and Southeast regions of the United States from Maine to Florida and from Florida to New Mexico, as well as Hawaii. Sales of fuel from the wholesale segment to our retail segment are delivered at cost plus a profit margin. These amounts are reflected in intercompany eliminations of motor fuel revenue and motor fuel cost of sales. Also included in our wholesale segment is rental income from properties that we lease or sub-lease. Retail Segment Our retail segment operates branded retail convenience stores in Virginia, Maryland, Tennessee, Georgia, and Hawaii, offering motor fuel, merchandise, foodservice, and a variety of other services including car washes, lottery, ATM, money orders, prepaid phone cards and wireless services and movie rentals. It also includes rental income from our sale and leaseback transactions with Susser. We report EBITDA and Adjusted EBITDA by segment as a measure of segment performance. We define EBITDA as net income before net interest expense, income tax expense and depreciation, amortization and accretion expense. Adjusted EBITDA further adjusts EBITDA to reflect certain other non-recurring and non-cash items. Effective September 1, 2014, as a result of the ETP Merger and in an effort to conform the method by which we measure our business to that of ETP’s operations, we now define Adjusted EBITDA to also include adjustments for unrealized gains and losses on commodity derivatives and inventory fair value adjustments. The following table presents financial information by segment for the three and six months ended June 30, 2015: Segment Financial Data for the Three Months Ended June 30, 2015 ( in thousands Wholesale Segment Retail Segment Intercompany Eliminations Totals Revenue Retail motor fuel sales $ — $ 189,894 $ 189,894 Wholesale motor fuel sales to third parties 2,770,695 — 2,770,695 Wholesale motor fuel sales to affiliates 1,156,763 — 1,156,763 Merchandise sales — 56,973 56,973 Rental income 17,403 6,465 23,868 Other income 5,349 2,443 7,792 Intersegment sales 117,099 — (117,099 ) — Total revenue 4,067,309 255,775 (117,099 ) 4,205,985 Gross profit Retail motor fuel sales — 20,880 20,880 Wholesale motor fuel sales 169,983 — 169,983 Merchandise — 14,760 14,760 Rental and other income 22,241 8,909 31,150 Total gross profit 192,224 44,549 236,773 Total operating expenses 85,998 34,982 120,980 Income from operations 106,226 9,567 115,793 Interest expense, net (10,405 ) (9,917 ) (20,322 ) Income before income taxes 95,821 (350) 95,471 Income tax benefit 246 234 480 Net income and comprehensive income $ 96,067 $ (116) $ 95,951 Depreciation, amortization and accretion 22,074 11,156 33,230 Interest expense, net 10,405 9,917 20,322 Income tax benefit (246 ) (234 ) (480 ) EBITDA 128,300 20,723 149,023 Non-cash compensation expense 430 49 479 (Gain) loss on disposal of assets (33 ) 3 (30 ) Unrealized loss on commodity derivatives 785 — 785 Inventory fair value adjustments (49,319 ) (1,410 ) (50,729 ) Adjusted EBITDA $ 80,163 $ 19,365 $ 99,528 Capital expenditures $ 45,854 $ 2,578 $ 48,432 Total assets $ 2,622,967 $ 955,376 $ 3,578,343 Segment Financial Data for the Six Months Ended June 30, 2015 ( in thousands Wholesale Segment Retail Segment Intercompany Eliminations Totals Revenue Retail motor fuel sales $ — $ 350,655 $ 350,655 Wholesale motor fuel sales to third parties 5,219,550 — 5,219,550 Wholesale motor fuel sales to affiliates 1,993,448 — 1,993,448 Merchandise sales — 104,492 104,492 Rental income 34,266 12,425 46,691 Other income 10,201 4,859 15,060 Intersegment sales 208,268 — (208,268 ) — Total revenue 7,465,733 472,431 (208,268 ) 7,729,896 Gross profit Retail motor fuel sales — 42,077 42,077 Wholesale motor fuel sales 269,306 — 269,306 Merchandise — 27,454 27,454 Rental and other income 42,715 17,286 60,001 Total gross profit 312,021 86,817 398,838 Total operating expenses 168,123 64,527 232,650 Income from operations 143,898 22,290 166,188 Interest expense, net (11,741 ) (15,712 ) (27,453 ) Income before income taxes 132,157 6,578 138,735 Income tax (expense) benefit (823 ) 473 (350 ) Net income and comprehensive income $ 131,334 $ 7,051 $ 138,385 Depreciation, amortization and accretion 46,694 16,772 63,466 Interest expense, net 11,741 15,712 27,453 Income tax expense (benefit) 823 (473 ) 350 EBITDA 190,592 39,062 229,654 Non-cash compensation expense 902 124 1,026 (Gain) loss on disposal of assets 126 (282 ) (156 ) Unrealized loss on commodity derivatives 2,191 — 2,191 Inventory fair value adjustments (54,937 ) (984 ) (55,921 ) Adjusted EBITDA $ 138,874 $ 37,920 $ 176,794 Capital expenditures $ 94,213 $ 6,509 $ 100,722 Total assets $ 2,622,967 $ 955,376 $ 3,578,343 |