Segment Reporting | 16. Segment Reporting Segment information is prepared on the same basis that our Chief Operating Decision Maker (“CODM”) reviews financial information for operational decision-making purposes. We operate our business in two primary segments, wholesale and retail, both of which are included as reportable segments. No operating segments have been aggregated in identifying the two reportable segments. We allocate shared revenue and costs 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 are allocated based on segment gross profit. These costs were previously allocated based on segment EBITDA. 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. We define Adjusted EBITDA to include adjustments for non-cash compensation expense, gains and losses on disposal of assets, unrealized gains and losses on commodity derivatives and inventory fair value adjustments. Wholesale Segment Our wholesale segment purchases motor fuel primarily from independent refiners and major oil companies and supplies it to our retail segment, to independently-operated dealer stations under long-term supply agreements, and to distributers and other consumers 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 across more than 20 states throughout the East Coast and Southeast regions of the United States with a significant presence in Texas, Pennsylvania, New York, Florida, Virginia, and Hawaii. These stores offer motor fuel, merchandise, foodservice, and a variety of other services including car washes, lottery, ATM, money orders, prepaid phone cards, wireless services and movie rentals. The following tables present financial information by segment for the three and six months ended June 30, 2016 and 2015: Segment Financial Data ( in thousands For the Three Months Ended June 30, 2016 2015 Wholesale Retail Intercompany Eliminations Total Wholesale Retail Intercompany Eliminations Total Revenues Retail motor fuel $ — $ 1,384,858 $ 1,384,858 $ — $ 1,649,199 $ 1,649,199 Wholesale motor fuel sales to third parties 1,996,716 — 1,996,716 2,845,635 — 2,845,635 Wholesale motor fuel sales to affiliates 9,710 — 9,710 3,972 — 3,972 Merchandise — 576,594 576,594 — 560,680 560,680 Rental income 19,137 3,438 22,575 11,485 9,049 20,534 Other 7,281 54,433 61,714 6,270 39,794 46,064 Intersegment 2,706,287 30,696 (2,736,983 ) — 3,571,017 30,624 (3,601,641 ) — Total revenues 4,739,131 2,050,019 (2,736,983 ) 4,052,167 6,438,379 2,289,346 (3,601,641 ) 5,126,084 Gross profit Retail motor fuel — 155,330 155,330 — 139,788 139,788 Wholesale motor fuel 163,962 — 163,962 162,867 — 162,867 Merchandise — 187,291 187,291 — 176,811 176,811 Other 25,006 48,978 73,984 16,926 48,818 65,744 Total gross profit 188,968 391,599 580,567 179,793 365,417 545,210 Total operating expenses 88,950 367,425 456,375 83,848 337,704 421,552 Income (loss) from operations 100,018 24,174 124,192 95,945 27,713 123,658 Interest expense, net 16,241 34,346 50,587 5,313 15,885 21,198 Income (loss) before income taxes 83,777 (10,172 ) 73,605 90,632 11,828 102,460 Income tax expense (benefit) 606 862 1,468 (262 ) 9,188 8,926 Net income (loss) and comprehensive income (loss) $ 83,171 $ (11,034 ) $ 72,137 $ 90,894 $ 2,640 $ 93,534 Depreciation, amortization and accretion 17,423 61,301 78,724 15,459 54,741 70,200 Interest expense, net 16,241 34,346 50,587 5,313 15,885 21,198 Income tax expense (benefit) 606 862 1,468 (262 ) 9,188 8,926 EBITDA 117,441 85,475 202,916 111,404 82,454 193,858 Non-cash compensation expense 2,796 583 3,379 1,121 1,275 2,396 Loss (gain) on disposal of assets (351 ) 1,852 1,501 (11 ) 189 178 Unrealized loss on commodity derivatives 5,570 — 5,570 786 — 786 Inventory fair value adjustments (48,118 ) (1,250 ) (49,368 ) (51,843 ) (3,002 ) (54,845 ) Adjusted EBITDA $ 77,338 $ 86,660 $ 163,998 $ 61,457 $ 80,916 $ 142,373 Capital expenditures $ 27,831 $ 46,437 $ 74,268 $ 68,737 $ 31,892 $ 100,629 Total assets at end of period $ 2,591,503 $ 6,170,051 $ 8,761,554 $ 2,925,842 $ 5,915,977 $ 8,841,819 Segment Financial Data ( in thousands For the Six Months Ended June 30, 2016 2015 Wholesale Retail Intercompany Eliminations Total Wholesale Retail Intercompany Eliminations Total Revenues Retail motor fuel $ — $ 2,500,573 $ 2,500,573 $ — $ 3,016,855 $ 3,016,855 Wholesale motor fuel sales to third parties 3,492,590 — 3,492,590 5,282,137 — 5,282,137 Wholesale motor fuel sales to affiliates 16,839 — 16,839 4,939 — 4,939 Merchandise — 1,100,688 1,100,688 — 1,043,803 1,043,803 Rental income 37,857 6,842 44,699 22,994 17,322 40,316 Other 13,223 85,868 99,091 11,883 77,003 88,886 Intersegment 4,671,106 61,275 (4,732,381 ) — 6,288,335 59,705 (6,348,040 ) — Total revenues 8,231,615 3,755,246 (4,732,381 ) 7,254,480 11,610,288 4,214,688 (6,348,040 ) 9,476,936 Gross profit Retail motor fuel — 286,603 286,603 — 287,205 287,205 Wholesale motor fuel 315,121 — 315,121 255,537 — 255,537 Merchandise — 353,670 353,670 — 325,012 325,012 Other 48,373 75,543 123,916 32,491 94,198 126,689 Total gross profit 363,494 715,816 1,079,310 288,028 706,415 994,443 Total operating expenses 168,650 694,658 863,308 161,668 643,771 805,439 Income from operations 194,844 21,158 216,002 126,360 62,644 189,004 Interest expense, net 26,214 52,062 78,276 5,547 23,628 29,175 Income (loss) before income taxes 168,630 (30,904 ) 137,726 120,813 39,016 159,829 Income tax expense (benefit) (333 ) 3,913 3,580 773 16,216 16,989 Net income (loss) and comprehensive income (loss) $ 168,963 $ (34,817 ) $ 134,146 $ 120,040 $ 22,800 $ 142,840 Depreciation, amortization and accretion 34,276 122,514 156,790 34,249 102,694 136,943 Interest expense, net 26,214 52,062 78,276 5,547 23,628 29,175 Income tax expense (benefit) (333 ) 3,913 3,580 773 16,216 16,989 EBITDA 229,120 143,672 372,792 160,609 165,338 325,947 Non-cash compensation expense 5,393 1,399 6,792 1,543 2,211 3,754 Loss (gain) on disposal of assets (797 ) 3,512 2,715 148 (1 ) 147 Unrealized loss on commodity derivatives 2,845 — 2,845 2,191 — 2,191 Inventory fair value adjustments (59,340 ) (2,690 ) (62,030 ) (59,989 ) (1,516 ) (61,505 ) Adjusted EBITDA $ 177,221 $ 145,893 $ 323,114 $ 104,502 $ 166,032 $ 270,534 Capital expenditures $ 69,408 $ 110,485 $ 179,893 $ 134,502 $ 67,159 $ 201,661 Total assets at end of period $ 2,591,503 $ 6,170,051 $ 8,761,554 $ 2,925,842 $ 5,915,977 $ 8,841,819 |