CrossAmerica Partners LP - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

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

For the transition period from to

Commission File No. 001-35711

CROSSAMERICA PARTNERS LP

(Exact name of registrant as specified in its charter)

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

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

Securities registered pursuant to Section 12(b) of the Act:


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

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

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

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


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

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

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

As of November 4, 2021, the registrant had outstanding 37,891,701 common units.

TABLE OF CONTENTS

		PAGE

Commonly Used Defined Terms		i

PART I - FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020		1
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020		2
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020		3
Consolidated Statements of Equity and Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020		4
Condensed Notes to Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures about Market Risk		37
Item 4. Controls and Procedures		37

PART II - OTHER INFORMATION		38
Item 1. Legal Proceedings		38
Item 1A. Risk Factors		38
Item 6. Exhibits		38

SIGNATURE		40

COMMONLY USED DEFINED TERMS

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

CrossAmerica Partners LP and subsidiaries:

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

CAPL JKM Wholesale			CAPL JKM Wholesale LLC

Joe’s Kwik Marts			Joe’s Kwik Marts LLC

LGW			Lehigh Gas Wholesale LLC

LGPR			LGP Realty Holdings LP

LGWS			Lehigh Gas Wholesale Services, Inc. and subsidiaries

CrossAmerica Partners LP related parties at any point during 2020 or 2021:

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

DMP			Dunne Manning Partners LLC, an entity affiliated with the Topper Group and controlled by Joseph V. Topper, Jr. Since November 19, 2019, DMP has owned 100% of the membership interests in the sole member of the General Partner.

DMS			Dunne Manning Stores LLC (formerly known as Lehigh Gas-Ohio, LLC), an entity affiliated with the Topper Group. Through April 14, 2020, DMS was an operator of retail motor fuel stations. DMS leased retail sites from us in accordance with a master lease agreement and purchased a significant portion 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.

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

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

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

Other Defined Terms:

2020 Bonus Plan			The 2020 Performance-Based Bonus Compensation Policy is one of the key components of “at-risk” compensation. The 2020 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.

ASC			Accounting Standards Codification

ASU			Accounting Standards Update

Board			Board of Directors of our General Partner

BP			BP p.l.c.

CDC			The Centers for Disease Control and Prevention

Circle K			Circle K Stores Inc., a Texas corporation, and a wholly owned subsidiary of Alimentation Couche-Tard Inc. (TSX: ATD.A ATD.B)

Circle K Omnibus Agreement			The Amended and Restated Omnibus Agreement, dated October 1, 2014, as amended effective January 1, 2016, February 1, 2018 and April 29, 2019 by and among CrossAmerica, the General Partner, DMI, DMS, CST Services and Joseph V. Topper, Jr., which amends and restates the original omnibus agreement that was executed in connection with CrossAmerica’s IPO on October 30, 2012. The terms of the Circle K Omnibus Agreement were approved by the independent conflicts committee of the Board. Pursuant to the Circle K Omnibus Agreement, CST Services agreed, among other things, to provide, or cause to be provided, to the Partnership certain management services.

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.

CST			CST Brands LLC, which merged into Circle K Stores. Inc. on February 28, 2020, and subsidiaries, indirectly owned by Circle K.

CST Fuel Supply			CST Fuel Supply LP is indirectly owned by Circle K and is 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 legacy U.S. retail convenience stores on a fixed markup per gallon. From July 1, 2015 through March 25, 2020, we owned a 17.5% limited partner interest in CST Fuel Supply.

CST Fuel Supply Exchange			Exchange Agreement, dated November 19, 2019, between the Partnership and Circle K, which closed effective March 25, 2020. Pursuant to the Exchange Agreement, Circle K transferred to the Partnership certain owned and leased convenience store properties and related assets (including fuel supply agreements) and wholesale fuel supply contracts covering additional sites, and, in exchange, the Partnership transferred to Circle K 100% of the limited partnership units it held in CST Fuel Supply.

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

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

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

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

Equity Restructuring Agreement			On January 15, 2020, the Partnership entered into an Equity Restructuring Agreement with the General Partner and Dunne Manning CAP Holdings II LLC (“DM CAP Holdings”), a wholly owned subsidiary of DMP. Pursuant to the Equity Restructuring Agreement, all of the outstanding IDRs of the Partnership, all of which were held by DM CAP Holdings, were cancelled and converted into 2,528,673 newly-issued common units representing limited partner interests in the Partnership based on a value of $45 million and calculated using the 20 business day volume weighted average trading price of our common units ended five business days prior to the execution of the Equity Restructuring Agreement. This transaction closed on February 6, 2020.

Exchange Act			Securities Exchange Act of 1934, as amended

ExxonMobil			ExxonMobil Corporation

FASB			Financial Accounting Standards Board

Form 10-K			CrossAmerica’s Annual Report on Form 10-K for the year ended December 31, 2020

GP Purchase			Purchase by DMP from subsidiaries of Circle K of: 1) 100% of the membership interests in the sole member of the General Partner; 2) 100% of the Incentive Distribution Rights issued by the Partnership; and 3) an aggregate of 7,486,131 common units of the Partnership. These transactions closed on November 19, 2019.

IDRs			Incentive Distribution Rights represented the right to receive an increasing percentage of quarterly distributions after the target distribution levels were achieved. As a result of the GP Purchase, DMP owned 100% of the outstanding IDRs from November 19, 2019 through February 6, 2020.

Internal Revenue Code			Internal Revenue Code of 1986, as amended

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

LIBOR			London Interbank Offered Rate

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

Marathon			Marathon Petroleum Company LP

Motiva			Motiva Enterprises LLC

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

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

SEC			U.S. Securities and Exchange Commission

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.

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

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

Valero			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

iii

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CROSSAMERICA PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars, except unit data)

(Unaudited)

	September 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	8,247	$	513
Accounts receivable, net of allowances of $339 and $429, respectively		39,169		28,519
Accounts receivable from related parties		836		931
Inventory		39,552		23,253
Assets held for sale		3,901		9,898
Other current assets		18,290		11,707
Total current assets		109,995		74,821
Property and equipment, net		756,642		570,856
Right-of-use assets, net		170,939		167,860
Intangible assets, net		120,308		92,912
Goodwill		100,115		88,764
Other assets		22,006		19,129
Total assets	$	1,280,005	$	1,014,342

LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	9,923	$	2,631
Current portion of operating lease obligations		34,828		31,958
Accounts payable		85,717		63,978
Accounts payable to related parties		9,205		5,379
Accrued expenses and other current liabilities		24,527		23,267
Motor fuel and sales taxes payable		23,233		19,735
Total current liabilities		187,433		146,948
Debt and finance lease obligations, less current portion		795,626		527,299
Operating lease obligations, less current portion		141,979		141,380
Deferred tax liabilities, net		13,917		15,022
Asset retirement obligations		45,430		41,450
Other long-term liabilities		34,071		32,575
Total liabilities		1,218,456		904,674

Commitments and contingencies

Equity:
Common units—37,891,701 and 37,868,046 units issued and outstanding at September 30, 2021 and December 31, 2020, respectively		61,396		112,124
Accumulated other comprehensive income (loss)		153		(2,456	)
Total equity		61,549		109,668
Total liabilities and equity	$	1,280,005	$	1,014,342

See Condensed Notes to Consolidated Financial Statements.

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of Dollars, except unit and per unit amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating revenues ^(a)	$	985,122		$	591,022		$	2,501,740		$	1,381,119
Costs of sales ^(b)		909,391			528,750			2,306,047			1,225,470
Gross profit		75,731			62,272			195,693			155,649

Income from CST Fuel Supply equity interests		—			—			—			3,202
Operating expenses:
Operating expenses ^(c)		34,548			27,508			95,021			63,328
General and administrative expenses		9,903			5,363			24,429			15,440
Depreciation, amortization and accretion expense		19,118			18,590			56,732			51,867
Total operating expenses		63,569			51,461			176,182			130,635
Gain on dispositions and lease terminations, net		426			12,881			375			79,237
Operating income		12,588			23,692			19,886			107,453
Other income, net		127			143			419			358
Interest expense		(4,928	)		(3,522	)		(12,295	)		(13,183	)
Income before income taxes		7,787			20,313			8,010			94,628
Income tax benefit		(1,065	)		(892	)		(1,664	)		(3,868	)
Net income		8,852			21,205			9,674			98,496
IDR distributions		—			—			—			(133	)
Net income available to limited partners	$	8,852		$	21,205		$	9,674		$	98,363

Basic and diluted earnings per common unit	$	0.23		$	0.56		$	0.26		$	2.64

Weighted-average limited partner units:
Basic common units		37,887,493			37,867,647			37,877,273			37,202,087
Diluted common units		37,906,799			37,868,610			37,898,036			37,202,087

Supplemental information:
(a) includes excise taxes of:	$	62,427		$	47,222		$	156,180		$	95,929
(a) includes rent income of:		21,498			19,747			62,832			62,859
(b) excludes depreciation, amortization and accretion
(b) includes rent expense of:		5,968			6,036			17,912			19,088
(c) includes rent expense of:		3,353			3,310			9,814			5,832

See Condensed Notes to Consolidated Financial Statements.

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

(Unaudited)

	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net income	$	9,674		$	98,496
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion expense		56,732			51,867
Amortization of deferred financing costs		1,182			781
Credit loss expense		70			1,014
Deferred income tax benefit		(2,199	)		(4,047	)
Equity-based employee and director compensation expense		1,096			83
Gain on dispositions and lease terminations, net		(375	)		(87,225	)
Changes in operating assets and liabilities, net of acquisitions		10,087			25,534
Net cash provided by operating activities		76,267			86,503

Cash flows from investing activities:
Principal payments received on notes receivable		151			246
Proceeds from Circle K in connection with CST Fuel Supply Exchange		—			23,049
Proceeds from sale of assets		11,012			13,757
Capital expenditures		(32,370	)		(24,439	)
Cash paid in connection with acquisitions, net of cash acquired		(261,993	)		(28,244	)
Net cash used in investing activities		(283,200	)		(15,631	)

Cash flows from financing activities:
Borrowings under revolving credit facilities		167,000			159,098
Repayments on revolving credit facilities		(43,452	)		(170,580	)
Borrowings under the Term Loan Facility		159,950			—
Payments of finance lease obligations		(1,944	)		(1,830	)
Payments of deferred financing costs		(7,135	)		—
Distributions paid on distribution equivalent rights		(93	)		(8	)
Distributions paid to holders of the IDRs		—			(133	)
Distributions paid on common units		(59,659	)		(57,871	)
Net cash provided by (used in) financing activities		214,667			(71,324	)
Net increase (decrease) in cash and cash equivalents		7,734			(452	)

Cash and cash equivalents at beginning of period		513			1,780
Cash and cash equivalents at end of period	$	8,247		$	1,328

See Condensed Notes to Consolidated Financial Statements.

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME

(Thousands of Dollars, except unit amounts)

(Unaudited)

	Limited Partners' Interest Common Unitholders					Incentive Distribution Rights			AOCI			Total Equity
	Units		Dollars			Dollars			Dollars			Dollars
Balance at June 30, 2021		37,874,868	$	72,162		$	—		$	(23	)	$	72,139
Net income		—		8,852			—			—			8,852
Other comprehensive income
Unrealized loss on interest rate swap contracts		—		—			—			(89	)		(89	)
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			—			265			265
Total other comprehensive income		—		—			—			176			176
Comprehensive income		—		8,852			—			176			9,028
Vesting of equity awards, net of units withheld for tax		16,833		318			—			—			318
Tax effect from intra-entity transfer of assets				(12	)								(12	)
Distributions paid		—		(19,924	)		—			—			(19,924	)
Balance at September 30, 2021		37,891,701	$	61,396		$	—		$	153		$	61,549

Balance at June 30, 2020		37,866,005	$	121,732		$	—		$	(3,218	)	$	118,514
Net income		—		21,205			—			—			21,205
Other comprehensive income
Unrealized gain on interest rate swap contracts		—		—			—			13			13
Realized loss on interest rate swap contracts reclassified from AOCI into interest expense		—		—			—			204			204
Total other comprehensive income		—		—			—			217			217
Comprehensive income		—		21,205			—			217			21,422
Vesting of equity awards, net of units withheld for tax		2,041		26			—			—			26
Distributions paid		—		(19,887	)		—			—			(19,887	)
Balance at September 30, 2020		37,868,046	$	123,076		$	—		$	(3,001	)	$	120,075

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

Balance at December 31, 2019		34,494,441	$	78,397		$	—		$	—		$	78,397
Net income		—		98,363			133			—			98,496
Other comprehensive loss
Unrealized loss on interest rate swap contracts		—		—			—			(3,179	)		(3,179	)
Realized loss on interest rate swap contract reclassified from AOCI into interest expense		—		—			—			178			178
Total other comprehensive loss		—		—			—			(3,001	)		(3,001	)
Comprehensive income (loss)		—		98,363			133			(3,001	)		95,495
Issuance of units to the Topper Group in connection with the Equity Restructuring Agreement		2,528,673		—			—			—			—
Acquisition of assets from entities under common control, net of fair value of common units issued		842,891		4,169			—			—			4,169
Vesting of equity awards, net of units withheld for tax		2,041		26			—			—			26
Distributions paid		—		(57,879	)		(133	)		—			(58,012	)
Balance at September 30, 2020		37,868,046	$	123,076		$	—		$	(3,001	)	$	120,075

See Condensed Notes to Consolidated Financial Statements.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.DESCRIPTION OF BUSINESS AND OTHER DISCLOSURES

Our business consists of:

•

the wholesale distribution of motor fuels;

•

the owning or leasing of retail sites used in the retail distribution of motor fuels and, in turn, generating rental income from the lease or sublease of the retail sites;

•

the retail sale of motor fuels to end customers at retail sites operated by commission agents and, since April 14, 2020, ourselves; and

•

since April 14, 2020, the operation of retail sites, including the sale of convenience merchandise to end customers. We had no company operated sites from September 30, 2019 through April 14, 2020.

The financial statements reflect the consolidated results of the Partnership and its wholly owned subsidiaries. Our primary operations are conducted by the following consolidated wholly owned subsidiaries:

•

LGW and CAPL JKM Wholesale, which distribute motor fuels on a wholesale basis and generate qualifying income under Section 7704(d) of the Internal Revenue Code;

•

LGPR, which functions as our real estate holding company and holds assets that generate qualifying rental income under Section 7704(d) of the Internal Revenue Code;

•

LGWS, which owns and leases (or leases and sub-leases) real estate and personal property used in the retail sale of motor fuels, as well as provides maintenance and other services to its customers. In addition, LGWS sells motor fuel on a retail basis at sites operated by commission agents. Since our acquisition of retail and wholesale assets that closed on April 14, 2020, LGWS also sells motor fuels on a retail basis and sells convenience merchandise items to end customers at company operated retail sites. Income from LGWS generally is not qualifying income under Section 7704(d) of the Internal Revenue Code; and

•

Joe’s Kwik Marts, which owns and leases real estate and personal property at our company operated sites that we recently acquired from 7-Eleven. Joe’s Kwik Marts also sells motor fuels on a retail basis and sells convenience merchandise items to end customers. Income from Joe’s Kwik Marts generally is not qualifying income under Sections 7704(d) of the Internal Revenue Code.

Interim Financial Statements

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and the Exchange Act. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Management believes that the disclosures made are adequate to keep the information presented from being misleading. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K. Financial information as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 included in the consolidated financial statements has been derived from our unaudited financial statements. Financial information as of December 31, 2020 has been derived from our audited financial statements and notes thereto as of that date.

Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Our business exhibits 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 activity months) and lowest during the winter months in the first and fourth quarters. The COVID-19 Pandemic has impacted our business and these seasonal trends typical in our business. See the “COVID-19 Pandemic” section below.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions.

Significant Accounting Policies

Certain new accounting pronouncements have become effective for our financial statements during 2021, but the adoption of these pronouncements did not materially impact our financial position, results of operations or disclosures.

Concentration Risk

Approximately 12% and 14% of our rent income for the nine months ended September 30, 2021 and 2020, respectively, was from one multi-site operator.

For the nine months ended September 30, 2021, our wholesale business purchased approximately 36%, 23%, 11% and 10% of its motor fuel from ExxonMobil, BP, Motiva and Marathon, respectively. For the nine months ended September 30, 2020, our wholesale business purchased approximately 27%, 22%, 13% and 10% of its motor fuel from ExxonMobil, BP, Motiva and Marathon, respectively. No other fuel suppliers accounted for 10% or more of our motor fuel purchases during the nine months ended September 30, 2021 and 2020.

Approximately 16% of our motor fuel gallons sold for the nine months ended September 30, 2021 and 2020, respectively, were delivered by one carrier.

Prior Year Acquisitions

We completed six tranches of the asset exchange with Circle K on May 21, 2019, September 5, 2019, February 25, 2020, April 7, 2020, May 5, 2020 and September 15, 2020. With the closing of the sixth tranche, the transactions contemplated under the Asset Exchange Agreement we entered into with Circle K on December 17, 2018 (“Asset Exchange Agreement”) were concluded. Through these transactions, we acquired 191 sites in exchange for the real property at 56 sites as well as 17 sites previously owned and operated by the Partnership. Although we no longer collect rent from the sites divested in these transactions, we continue to distribute fuel to them on a wholesale basis.

Effective March 25, 2020, we closed on the CST Fuel Supply Exchange. Through this transaction, we acquired 33 sites, wholesale fuel supply to 331 additional sites and $14.1 million in proceeds in exchange for our investment in CST Fuel Supply.

On April 14, 2020, we closed on the acquisition of retail and wholesale assets. Through these transactions, we expanded the retail operations of the Partnership by 169 sites (154 company operated sites and 15 commission sites) through a combination of (1) entering into new leasing arrangements with related parties as the lessee for 62 sites and (2) terminating contracts where we were previously the lessor and fuel supplier under dealer arrangements for 107 sites that then became company operated sites. As a result of closing on these transactions, we expanded our wholesale fuel distribution by 110 sites, including 53 third-party wholesale dealer contracts, and supply of the 62 newly leased sites.

COVID-19 Pandemic

During the first quarter of 2020, an outbreak of a novel strain of coronavirus spread worldwide, including to the U.S., posing public health risks that have 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 continue to recover in 2021, we cannot predict the scope and severity with which COVID-19 will impact our business, financial condition, results of operations and cash flows. Sustained decreases in fuel volume or erosion of margin could have a material adverse effect on our results of operations, cash flow, financial position and ultimately our ability to pay distributions.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2. ACQUISITION OF ASSETS FROM 7-ELEVEN

On April 28, 2021, certain newly formed subsidiaries of CrossAmerica, including Joe’s Kwik Marts (collectively, “Buyer”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with 7-Eleven, Inc., a Texas corporation (“7-Eleven”), pursuant to which Buyer agreed to purchase certain assets related to the ownership and operations of 106 company operated sites (90 fee; 16 leased) located in the Mid-Atlantic and Northeast regions of the U.S. (collectively, the “Properties”) for an aggregate purchase price of $263.0 million, subject to adjustment in accordance with the terms of the Asset Purchase Agreement. The assets are being sold by 7-Eleven as part of a divestiture process in connection with its previously announced acquisition of the Speedway business from MPC.

The assets being purchased by Buyer include real property and leasehold rights to the Properties, and all inventory and other assets located at the Properties, other than specific excluded assets, such as rights to intellectual property or rights with respect to “7-Eleven” or “Speedway” branding. The vast majority of the sites being purchased have been operating under the Speedway brand, and all sites are being rebranded in connection with the closing of such site pursuant to the Asset Purchase Agreement. Buyer is also assuming certain specified liabilities associated with the assets.

The Asset Purchase Agreement contains customary representations, warranties, agreements and obligations of the parties, including covenants regarding the conduct of the business at the Properties prior to the applicable closing of such Property.

Buyer is closing the acquisition of the Properties on a rolling basis of generally ten sites per week. Through September 30, 2021, Buyer consummated the closing under the Asset Purchase Agreement of 98 Properties for a purchase price of $262.0 million, including inventory and other working capital, as summarized in the table below (in thousands).

Inventories	$	11,745
Other current assets		1,301
Property and equipment		200,244
Right-of-use assets		7,886
Goodwill		11,351
Intangible assets		41,655
Total assets	$	274,182

Current portion of operating lease obligations		1,510
Accrued expenses and other current liabilities		675
Operating lease obligations, less current portion		6,376
Asset retirement obligations		3,628
Total liabilities	$	12,189
Total consideration, net of cash acquired	$	261,993

The fair value of inventory was estimated at retail selling price less estimated costs to sell and a reasonable profit allowance for the selling effort.

The fair value of land was based on a market approach. The value of buildings and equipment was based on a cost approach. The buildings and equipment are being depreciated on a straight-line basis, with estimated remaining useful lives of 20 years for the buildings and five to 30 years for equipment.

The fair value of the wholesale fuel distribution rights included in intangible assets was based on an income approach. Management believes the level and timing of cash flows represent relevant market participant assumptions. The wholesale fuel distribution rights are being amortized on a straight-line basis over an estimated useful life of approximately 10 years.

The fair value of goodwill represents expected synergies from combining operations, intangible assets that do not qualify for separate recognition, and other factors. All goodwill is anticipated to be deductible for tax purposes.

Management continues to review the valuation and is confirming the result to determine the final purchase price allocation.

We funded these transactions primarily through the new JKM Credit Facility further described in Note 8 as well as undrawn capacity under our existing revolving credit facility and cash on hand.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Through November 4, 2021, we closed on five additional Properties for a purchase price of $10.4 million. We anticipate closing on the final three Properties once we are in receipt of all required operational licenses and permits.

Aggregate incremental revenues since the closing of the Properties included in CrossAmerica’s statement of operations were $65.3 million for the nine months ended September 30, 2021.

Our pro forma results, giving effect to the acquisition and assuming an acquisition date of January 1, 2020, would have been (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	1,119,219	$	711,413	$	2,911,962	$	1,717,596
Net income		9,805		29,702		22,740		125,625

Such pro forma results are based on historical results of the Partnership, the historical results of the assets acquired or to be acquired from 7-Eleven as they occurred under the ownership of 7-Eleven or MPC, and certain pro forma adjustments relating to acquisition costs, interest expense and income taxes. See our Current Report on Form 8-K/A filed on November 3, 2021, for additional information.

Note 3. ASSETS HELD FOR SALE

We have classified 11 sites and 25 sites as held for sale at September 30, 2021 and December 31, 2020, respectively, which are expected to be sold within one year of such classification. Assets held for sale were as follows (in thousands):

	September 30,			December 31,
	2021			2020
Land	$	3,127		$	7,889
Buildings and site improvements		1,906			2,784
Equipment		886			1,152
Total		5,919			11,825
Less accumulated depreciation		(2,018	)		(1,927	)
Assets held for sale	$	3,901		$	9,898

The Partnership has continued to focus on divesting lower performing assets. During the three and nine months ended September 30, 2021, we sold 14 and 23 properties for $4.9 million and $8.8 million in proceeds, resulting in net gains of $0.4 million and $1.5 million, respectively. During the three and nine months ended September 30, 2020, we sold seven and 20 properties for $3.8 million and $13.3 million of proceeds, resulting in net gains of $2.2 million and $4.0 million, respectively.

Note 4. INVENTORIES

Inventories consisted of the following (in thousands):

	September 30,		December 31,
	2021		2020
Retail site merchandise	$	20,912	$	11,969
Motor fuel		18,640		11,284
Inventories	$	39,552	$	23,253

See Note 2 regarding our acquisition of certain assets from 7-Eleven.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5. PROPERTY AND EQUIPMENT

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

	September 30,			December 31,
	2021			2020
Land	$	319,524		$	241,585
Buildings and site improvements		358,210			284,593
Leasehold improvements		12,308			10,684
Equipment		304,146			236,420
Construction in progress		13,450			15,919
Property and equipment, at cost		1,007,638			789,201
Accumulated depreciation and amortization		(250,996	)		(218,345	)
Property and equipment, net	$	756,642		$	570,856

See Note 2 regarding our acquisition of certain assets from 7-Eleven.

We recorded impairment charges of $1.2 million and $2.7 million during the three months ended September 30, 2021 and 2020 and $6.4 million and $8.2 million during the nine months ended September 30, 2021 and 2020, 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 6. INTANGIBLE ASSETS

Intangible assets consisted of the following (in thousands):

	September 30, 2021							December 31, 2020
	Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount
Wholesale fuel supply contracts/rights	$	223,003	$	(103,852	)	$	119,151	$	187,643	$	(95,694	)	$	91,949
Trademarks/licenses		2,208		(1,156	)		1,052		1,898		(1,115	)		783
Covenant not to compete		450		(345	)		105		4,552		(4,372	)		180
Total intangible assets	$	225,661	$	(105,353	)	$	120,308	$	194,093	$	(101,181	)	$	92,912

See Note 2 regarding our acquisition of certain assets from 7-Eleven.

Note 7. GOODWILL

Changes in goodwill during 2021 were as follows (in thousands):

	Wholesale Segment		Retail Segment		Consolidated
Balance at December 31, 2020	$	74,138	$	14,626	$	88,764
Acquisition		7,946		3,405		11,351
Balance at September 30, 2021	$	82,084	$	18,031	$	100,115

See Note 2 regarding our acquisition of certain assets from 7-Eleven.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. DEBT

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

	September 30,		December 31,
	2021		2020
CAPL Credit Facility	$	636,728	$	513,180
JKM Credit Facility		159,950		—
Finance lease obligations		17,736		20,007
Total debt and finance lease obligations		814,414		533,187
Current portion		9,923		2,631
Noncurrent portion		804,491		530,556
Deferred financing costs, net		8,865		3,257
Noncurrent portion, net of deferred financing costs	$	795,626	$	527,299

As of September 30, 2021, 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 2021	$	—	$	804	$	804
2022		9,597		3,282		12,879
2023		9,597		3,381		12,978
2024		646,325		3,481		649,806
2025		9,597		3,583		13,180
Thereafter		121,562		4,926		126,488
Total future payments		796,678		19,457		816,135
Less interest component		—		1,721		1,721
		796,678		17,736		814,414
Current portion		7,198		2,725		9,923
Long-term portion	$	789,480	$	15,011	$	804,491

CAPL Credit Facility

On July 28, 2021, the Partnership entered into an amendment (the “Amendment”) to its Credit Agreement, dated as of April 1, 2019 (as previously amended by the First Amendment to Credit Agreement, dated as of November 19, 2019, the “CAPL Credit Facility”), 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. The Amendment, among other things, (i) amended certain provisions relating to unrestricted subsidiaries, (ii) increased the maximum level for the consolidated leverage ratio financial covenant to 6.00 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021, 5.75 to 1.00 for the fiscal quarter ending March 31, 2022, 5.50 to 1.00 for the fiscal quarter ending June 30, 2022, and 5.25 to 1.00 for the fiscal quarter ending September 30, 2022, after which the maximum level generally reverts to 4.75 to 1.00 unless in a specified acquisition period or a qualified note offering has occurred, and (iii) modified the applicable margin for borrowings under the CAPL Credit Facility (as amended by the Amendment), such that borrowings will bear interest, at the Partnership’s option, at either LIBOR plus a margin ranging from 1.50% to 3.00% per annum or a base rate plus a margin ranging from 0.50% to 2.00% per annum (in each case depending on the Partnership’s consolidated leverage ratio).

We are also required to maintain a consolidated interest coverage ratio (as defined in the CAPL Credit Facility) of at least 2.50 to 1.00. We were in compliance with our financial covenants at September 30, 2021.

Our CAPL Credit Facility is secured by substantially all of our assets, including our equity interest in an indirect wholly-owned subsidiary of CrossAmerica and the sole member of CAPL JKM Partners LLC named CAPL JKM Holdings LLC (“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. Letters of credit outstanding at September 30, 2021 and December 31, 2020 totaled $4.0 million. The amount of availability under the CAPL Credit Facility at September 30, 2021, after taking into consideration debt covenant restrictions, was $70.5 million.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Taking the interest rate swap contracts described in Note 9 into account, our effective interest rate on our CAPL Credit Facility at September 30, 2021 was 2.3% (our applicable margin was 2.0% as of September 30, 2021).

JKM Credit Facility

On July 16, 2021, CAPL JKM Partners LLC (“Borrower”), an indirect wholly-owned subsidiary of CrossAmerica, entered into a Credit Agreement, as amended on July 29, 2021 (the “JKM Credit Facility”) among Borrower, Holdings, Borrower, and Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing bank.

The JKM Credit Facility provides for a $200 million senior secured credit facility, consisting of a $185 million delayed draw term loan facility (the “Term Loan Facility”) and a $15 million revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility permits up to $7.5 million of swingline borrowings and $5.0 million in letters of credit. The interest rate applicable to loans outstanding under the JKM Credit Facility is equal to, at Borrower’s option, either (i) a base rate plus a margin (which will be determined based on Borrower’s consolidated leverage ratio) ranging from 0.50% to 1.50% per annum or (ii) LIBOR plus a margin (which will also be determined based on Borrower’s consolidated leverage ratio) ranging from 1.50% to 2.50% per annum. Commencing on the earliest of (a) the date on which the entire amount of the Term Loan Facility has been drawn, (b) the date on which the Term Loan Facility has been terminated or reduced to zero pursuant to the JKM Credit Facility, and (c) April 16, 2022, the Term Loan Facility will amortize in equal quarterly installments equal to 1.50% of the unpaid principal amount of the Term Loan Facility, with the balance payable on the maturity date of the Term Loan Facility. Letters of credit are subject to a 0.125% fronting fee and other customary administrative charges. Standby letters of credit accrue a fee at a rate based on the applicable margin of LIBOR loans. In addition, beginning in October 2021, a commitment fee was charged based on the unused portion of the JKM Credit Facility at a rate ranging from 0.25% to 0.375% per annum depending on Borrower’s consolidated leverage ratio. The JKM Credit Facility will mature on July 16, 2026.

The obligations under the JKM Credit Facility are guaranteed by Holdings and its subsidiaries (other than Borrower) and secured by a lien on substantially all of the assets of Holdings and its subsidiaries (including Borrower). The obligations under the JKM Credit Facility are nonrecourse to CrossAmerica and its subsidiaries other than Holdings, Borrower 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.

The JKM Credit Facility also contains financial covenants requiring Borrower to comply with, as of the last day of each fiscal quarter of Borrower, commencing with Borrower’s fiscal quarter ending December 31, 2021, (i) a maximum consolidated leverage ratio of 6.25 to 1.00, with step-downs to 6.00 to 1.00, 5.75 to 1.00, 5.50 to 1.00 and 5.25 to 1.00 on March 31, 2022, March 31, 2023, March 31, 2024 and March 31, 2025, respectively, and (ii) a minimum fixed charge coverage ratio of 1.10 to 1.00.

If an event of default under the JKM Credit Facility occurs and is continuing, the commitments thereunder may be terminated and the principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owed thereunder, may be declared immediately due and payable.

Letters of credit outstanding at September 30, 2021 totaled $0.8 million.

Our borrowings under the JKM Credit Facility had a weighted-average interest rate of 2.6% as of September 30, 2021 (LIBOR plus an applicable margin, which was 2.5% as of September 30, 2021).

As of November 4, 2021, we had $182.5 million outstanding under our Term Loan Facility. The amount of availability under the Term Loan Facility and Revolving Credit Facility at November 4, 2021 was $2.5 million and $14.2 million, respectively.

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, on March 26, 2020, we entered into an interest rate swap contract. The interest rate swap contract has a notional amount of $150 million, a fixed rate of 0.495% and matures on April 1, 2024. On April 15, 2020, we entered into two additional interest rate swap contracts, each with notional amounts of $75 million, a fixed rate of 0.38% and that mature on April 1, 2024. 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 accrued expenses and other current liabilities and the noncurrent portion is included in other assets or other long-term liabilities, as applicable, was a $0.2 million net asset and a $2.5 million net liability at September 30, 2021 and December 31, 2020, 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 loss from settlements of the interest rate swap contracts of $0.3 million and $0.2 million for the three months ended September 30, 2021 and 2020 and $0.7 million and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively.

We currently estimate that a loss of $1.0 million will be reclassified from accumulated other comprehensive loss 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 10. RELATED-PARTY TRANSACTIONS

Wholesale Motor Fuel Sales and Real Estate Rentals

Revenues from motor fuel sales and rental income from DMS for the three and nine months ended September 30, 2020 were as follows (in thousands):

	Three Months Ended		Nine Months Ended
	September 30, 2020		September 30, 2020
Revenues from motor fuel sales to DMS	$	612	$	27,127
Rental income from DMS		—		1,395

As a result of the acquisition of retail and wholesale assets as further described under “Prior Year Acquisitions” in Note 1, as of April 14, 2020, we no longer have any revenue from DMS.

Revenues from TopStar, an entity affiliated with Joseph V. Topper, Jr., a member of the Board, were $15.7 million and $9.4 million for the three months ended September 30, 2021 and 2020 and $41.4 million and $12.2 million for the nine months ended September 30, 2021 and 2020, respectively. Accounts receivable from TopStar were $0.8 million and $0.7 million at September 30, 2021 and December 31, 2020, respectively. Effective April 14, 2020, we acquired wholesale fuel supply rights, including this supply contract, as part of the acquisition of retail and wholesale assets. Prior to April 14, 2020, we were only leasing motor fuel stations to TopStar.

CrossAmerica leases real estate from the Topper Group. Rent expense under these lease agreements, including rent paid under the leases entered into in connection with the acquisition of retail and wholesale assets, was $2.3 million and $2.1 million for the three months ended September 30, 2021 and 2020 and $6.8 million and $4.0 million for the nine months ended September 30, 2021 and 2020, respectively.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Topper Group Omnibus Agreement

We incurred expenses under the Topper Group Omnibus Agreement, including costs for store level personnel at our company operated sites since our April 2020 acquisition of retail and wholesale assets and for our recently acquired Joe’s Kwik Marts sites, totaling $16.9 million and $12.0 million for the three months ended September 30, 2021 and 2020 and $42.7 million and $26.1 million for the nine months ended September 30, 2021 and 2020, respectively. Such expenses are included in operating expenses and general and administrative expenses in the statement of operations. Amounts payable to the Topper Group related to expenses incurred by the Topper Group on our behalf in accordance with the Topper Group Omnibus Agreement totaled $6.8 million and $3.7 million at September 30, 2021 and December 31, 2020, respectively.

IDR and Common Unit Distributions

We distributed $7.6 million and $9.7 million to the Topper Group related to its ownership of our common units during the three months ended September 30, 2021 and 2020 and $27.1 million and $27.4 million for the nine months ended September 30, 2021 and 2020, respectively. We distributed $0.1 million to the Topper Group related to its ownership of our IDRs during the nine months ended September 30, 2020. On February 6, 2020, we closed on the Equity Restructuring Agreement that eliminated the IDRs.

We distributed $2.6 million and $0.5 million to affiliates of John B. Reilly, III related to their ownership of our common units during the three months ended September 30, 2021 and 2020 and $3.6 million and $1.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Maintenance and Environmental Costs

Certain maintenance and environmental remediation activities are performed by 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 $0.8 million and $0.1 million for the three months ended September 30, 2021 and 2020 and $1.7 million and $0.4 million for the nine months ended September 30, 2021 and 2020, respectively. Accounts payable to this related party amounted to $0.3 million and $0.1 million at September 30, 2021 and December 31, 2020, respectively.

Environmental Compliance and Inventory Management Costs

We use certain environmental monitoring and inventory management equipment and services provided by an entity previously affiliated with the Topper Group, as approved by the independent conflicts committee of the Board. We incurred charges with this related party of an insignificant amount for the three months ended September 30, 2021 and $0.2 million and an insignificant amount for the nine months ended September 30, 2021 and 2020, respectively. This entity was sold in July 2021 and is no longer a related party.

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 in connection with the April 2020 acquisition of retail and wholesale assets. Merchandise costs amounted to $5.2 million and $5.8 million for three months ended September 30, 2021 and 2020 and $14.5 million and $10.9 million for the nine months ended September 30, 2021 and 2020, respectively. Amounts payable to this related party amounted to $1.9 million and $1.5 million at September 30, 2021 and December 31, 2020, respectively.

Vehicle Lease

In connection with the services rendered under the Topper Group 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 months ended September 30, 2021 and $0.1 million and an insignificant amount for the nine months ended September 30, 2021 and 2020, respectively.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Principal Executive Offices

Our principal executive offices are in Allentown, Pennsylvania. We lease office space from an affiliate of John B. Reilly, III and Joseph V. Topper, Jr., members of our Board, as approved by the independent conflicts committee of the Board. Rent expense amounted to $0.3 million and $0.3 million for the three months ended September 30, 2021 and 2020 and $0.9 million and $0.8 million for the nine months ended September 30, 2021 and 2020, 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 nine months ended September 30, 2021 and 2020.

Note 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 nine months ended September 30, 2021 or 2020.

Litigation Matters

We are from time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damages, environmental damages, employment-related claims and damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims and proceedings, we record an accrual when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In addition, we disclose matters for which management believes a material loss is at least reasonably possible. None of these proceedings, separately or in the aggregate, are expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, giving due consideration to the nature of the claim, the amount and nature of damages sought and the probability of success. Management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

Environmental Matters

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

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

Environmental liabilities recorded on the balance sheet within accrued expenses and other current liabilities and other long-term liabilities totaled $5.6 million and $3.9 million at September 30, 2021 and December 31, 2020, respectively. Indemnification assets related to third-party escrow funds, state funds or insurance recorded on the balance sheet within other current assets and other noncurrent assets totaled $3.5 million and $3.1 million at September 30, 2021 and December 31, 2020, respectively. State funds represent probable state reimbursement amounts. Reimbursement will depend upon the continued maintenance and solvency of the state. Insurance coverage represents amounts deemed probable of reimbursement under insurance policies.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimates used in these reserves are based on all known facts at the time and an assessment of the ultimate remedial action outcomes. We will adjust loss accruals as further information becomes available or circumstances change. Among the many uncertainties that impact the estimates are the necessary regulatory approvals for, and potential modifications of remediation plans, the amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims.

Environmental liabilities related to the sites contributed to the Partnership in connection with our IPO have not been assigned to us and are still the responsibility of the Predecessor Entity. The Predecessor Entity indemnified us for any costs or expenses that we incur for environmental liabilities and third-party claims, regardless of when a claim is made, that are based on environmental conditions in existence prior to the closing of the IPO for contributed sites. As such, these environmental liabilities and indemnification assets are not recorded on the balance sheet of the Partnership.

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

Note 12. FAIR VALUE MEASUREMENTS

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

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels in 2021 or 2020.

As further discussed in Note 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.

As further discussed in Note 13, we have accrued for unvested phantom units and phantom performance units as a liability and adjust that liability on a recurring basis based on the market price of our common units each balance sheet date. These fair value measurements are classified as Level 1.

The fair value of our accounts receivable, notes receivable, and accounts payable approximated their carrying values as of September 30, 2021 and December 31, 2020 due to the short-term maturity of these instruments. The fair values of borrowings under the CAPL Credit Facility and JKM Credit Facility approximated their carrying values as of September 30, 2021 and December 31, 2020 due to the frequency with which interest rates are reset and the consistency of the market spread.

Note 13. EQUITY-BASED COMPENSATION

Equity-based compensation expense was $0.3 million and insignificant for the three months ended September 30, 2021 and 2020 and $1.1 million and insignificant for the nine months ended September 30, 2021 and 2020, respectively. The liability for equity-based awards was $0.9 million and insignificant at September 30, 2021 and December 31, 2020, respectively.

In February 2021, the Partnership granted 1,509 phantom units to each of three non-employee directors of the Board as a portion of director compensation. In July 2021, 16,833 phantom units vested, including those granted in February 2021.

In July 2021, the Partnership granted 3,252 phantom units to each of five non-employee directors of the Board. Such awards will vest in July 2022, conditioned upon continuous service as non-employee directors. These awards were accompanied by tandem distribution equivalent rights that entitle the holder to cash payments equal to the amount of unit distributions authorized to be paid to the holders of our common units.

During the second quarter of 2021, 6,090 phantom units and performance-based awards with an initial target value of $0.1 million were forfeited.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In October 2021, the Partnership granted 33,045 phantom units to employees of the Topper Group. Of these awards, 50% vest ratably over three years through December 31, 2024 and 50% vest upon the employee’s death, disability or retirement. These awards were accompanied by tandem distribution equivalent rights that entitle the holder to cash payments equal to the amount of unit distributions authorized to be paid to the holders of our common units.

In October 2021, the Partnership granted performance-based awards with an initial target value of $0.8 million. The performance-based awards vest on December 31, 2024 based on attainment of the performance goals set forth in the award agreements. The performance-based awards are weighted 65% for the increase of funds flow from operations per unit (as defined in the award agreements) and 35% for leverage (as defined in the award agreements), with a performance period from January 1, 2022 to December 31, 2024 and the reference period for the year ended December 31, 2021. The payout value for both performance conditions will be interpolated on a linear basis ranging from 0% to 200%, which will then be multiplied by the initial target value to determine the value of the units to be issued. The value of the units will then be divided by the 20-day volume-weighted average closing price of our common units as of the close of trading on the day before the conversion date to determine the actual number of units to be issued.

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 are subject to a statutory requirement that non-qualifying income, as defined by the Internal Revenue Code, cannot exceed 10% of total gross income for the calendar year. If non-qualifying income exceeds this statutory limit, we would be taxed as a corporation. The non-qualifying income did not exceed the statutory limit in any annual period.

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

We recorded an income tax benefit of $1.1 million and $0.9 million for the three months ended September 30, 2021 and 2020 and $1.7 million and $3.9 million for the nine months ended September 30, 2021 and 2020, respectively, as a result of the losses incurred by our corporate subsidiaries. The effective tax rate differs from the combined federal and state statutory rate primarily because only LGWS and Joe’s Kwik Marts are subject to income tax.

Note 15. NET INCOME PER LIMITED PARTNER UNIT

We compute income per unit using the two-class method under which any excess of distributions declared over net income shall be allocated to the partners based on their respective sharing of income as specified in the Partnership Agreement. Net income per unit applicable to limited partners is computed by dividing the limited partners’ interest in net income, after deducting the IDRs, by the weighted-average number of outstanding common units.

Since February 6, 2020, our common units are the only participating securities. On February 6, 2020, we closed on the Equity Restructuring Agreement that eliminated the IDRs.

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
Numerator:
Distributions paid	$	19,924		$	19,887	$	59,752		$	57,879
Allocation of distributions in excess of net income		(11,072	)		1,318		(50,078	)		40,484
Limited partners’ interest in net income - basic and diluted	$	8,852		$	21,205	$	9,674		$	98,363
Denominator:
Weighted-average common units outstanding - basic		37,887,493			37,867,647		37,877,273			37,202,087
Adjustment for phantom and phantom performance units		19,306			963		20,763			—
Weighted-average common units outstanding - diluted		37,906,799			37,868,610		37,898,036			37,202,087
Net income per common unit - basic and diluted	$	0.23		$	0.56	$	0.26		$	2.64

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

Distributions

Distribution activity for 2021 is as follows:

Quarter Ended

Record Date

Payment Date

Cash

Distribution

(per unit)

Cash

Distribution

(in thousands)

December 31, 2020

February 2, 2021

February 9, 2021

0.5250

19,912

March 31, 2021

May 4, 2021

May 11, 2021

0.5250

19,916

June 30, 2021

August 3, 2021

August 10, 2021

0.5250

19,924

September 30, 2021

November 3, 2021

November 10, 2021

0.5250

19,941

The amount of any distribution is subject to the discretion of the Board, which may modify or revoke our cash distribution policy at any time. Our Partnership Agreement does not require us to pay any distributions. As such, there can be no assurance we will continue to pay distributions in the future.

Note 16. SEGMENT REPORTING

We conduct our business in two segments: 1) the Wholesale segment and 2) the Retail segment. The wholesale segment includes the wholesale distribution of motor fuel to lessee dealers, independent dealers, commission agents, DMS (through the closing of the acquisition of retail and wholesale assets as further described under “Prior Year Acquisitions” in Note 1) 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 had motor fuel distribution and lease agreements with DMS (through the closing of the acquisition of retail and wholesale assets). The Retail segment includes the retail sale of motor fuel at retail sites operated by commission agents and the sale of convenience merchandise items and the retail sale of motor fuel at company operated sites. A commission agent is a retail site where we retain title to the motor fuel inventory and sell it directly to our end user customers. At commission agent retail sites, we manage motor fuel inventory pricing and retain the gross profit on motor fuel sales, less a commission to the agent who operates the retail site. Similar to our Wholesale segment, we also generate revenues through leasing or subleasing real estate in our Retail segment.

Unallocated items consist primarily of general and administrative expenses, depreciation, amortization and accretion expense, gains on dispositions and lease terminations, net, and the elimination of the Retail segment’s intersegment cost of revenues from motor fuel sales against the Wholesale segment’s intersegment revenues from motor fuel sales. The profit in ending inventory generated by the intersegment motor fuel sales is also eliminated. 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, 2021
Revenues from fuel sales to external customers	$	565,022	$	337,214	$	—		$	902,236
Intersegment revenues from fuel sales		260,713		—		(260,713	)		—
Revenues from food and merchandise sales		—		58,283		—			58,283
Rent income		18,441		3,057		—			21,498
Other revenue		795		2,310		—			3,105
Total revenues	$	844,971	$	400,864	$	(260,713	)	$	985,122

Operating income (loss)	$	39,496	$	2,007	$	(28,915	)	$	12,588

Three Months Ended September 30, 2020
Revenues from fuel sales to external customers	$	339,277	$	183,617	$	—		$	522,894
Intersegment revenues from fuel sales		128,478		—		(128,478	)		—
Revenues from food and merchandise sales		—		46,266		—			46,266
Rent income		17,144		2,603		—			19,747
Other revenue		290		1,825		—			2,115
Total revenues	$	485,189	$	234,311	$	(128,478	)	$	591,022

Operating income (loss)	$	34,500	$	296	$	(11,104	)	$	23,692

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

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

Nine Months Ended September 30, 2020
Revenues from fuel sales to external customers	$	860,737	$	369,594	$	—		$	1,230,331
Intersegment revenues from fuel sales		254,850		—		(254,850	)		—
Revenues from food and merchandise sales		—		83,178		—			83,178
Rent income		55,275		7,584		—			62,859
Other revenue		1,705		3,046		—			4,751
Total revenues	$	1,172,567	$	463,402	$	(254,850	)	$	1,381,119

Income from CST Fuel Supply equity interests	$	3,202	$	—	$	—		$	3,202
Operating income	$	94,984	$	1,022	$	11,447		$	107,453

From the date of conversion of the 46 company operated sites to dealer operated sites in the third quarter of 2019 through April 14, 2020, we did not have any company operated sites.

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

	September 30,		December 31,
	2021		2020
Receivables from fuel and merchandise sales	$	34,794	$	23,800
Receivables for rent and other lease-related charges		5,211		5,650
Total accounts receivable	$	40,005	$	29,450

CROSSAMERICA PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The balance of unamortized costs incurred to obtain certain contracts with customers was $9.9 million and $8.3 million at September 30, 2021 and December 31, 2020, respectively. Amortization of such costs is recorded against operating revenues and amounted to $0.4 million and $0.3 million for the three months ended September 30, 2021 and 2020 and $1.1 million and $0.9 million for the nine months ended September 30, 2021 and 2020, respectively.

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

Note 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 operating assets and liabilities as follows (in thousands):

	Nine Months Ended September 30,
	2021			2020
(Increase) decrease:
Accounts receivable	$	(11,008	)	$	934
Accounts receivable from related parties		95			1,339
Inventories		(4,667	)		108
Other current assets		(4,965	)		(3,128	)
Other assets		(1,986	)		(1,504	)
Increase (decrease):
Accounts payable (a)		21,271			13,966
Accounts payable to related parties		3,654			3,553
Motor fuel and sales taxes payable		3,498			8,152
Accrued expenses and other current liabilities		1,203			3,819
Other long-term liabilities		2,992			(1,705	)
Changes in operating assets and liabilities, net of acquisitions	$	10,087		$	25,534

(a)

changes were driven by initial build of accounts payable balances after closing on the acquisition of certain assets from 7-Eleven in 2021 and the acquisition of retail and wholesale assets in 2020.

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

Supplemental disclosure of cash flow information (in thousands):

	Nine Months Ended September 30,
	2021		2020
Cash paid for interest	$	10,876	$	12,679
Cash paid for income taxes, net of refunds received		941		534

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

	Nine Months Ended September 30,
	2021		2020
Accrued capital expenditures	$	3,386	$	2,109
Lease liabilities arising from obtaining right-of-use assets		22,358		70,905
Net assets acquired in connection with the asset exchange tranches with Circle K		—		(75,935	)
Net assets acquired in connection with the CST Fuel Supply Exchange with Circle K		—		(54,920	)
Net assets acquired in connection with the acquisition of retail and wholesale assets		—		(17,092	)

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, credit ratings, distribution growth, potential growth opportunities, potential operating performance improvements, potential improvements in return on capital employed, the effects of competition and the effects of future legislation or regulations. You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “guidance,” “outlook,” “effort,” “target” and similar expressions. Such statements are based on our current plans and expectations and involve risks and uncertainties that could potentially affect actual results. These forward-looking statements include, among other things, statements regarding:

•

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

•

our anticipated level of capital investments, 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;

•

expectations regarding environmental, tax and other regulatory initiatives;

•

the effect of general economic and other conditions on our business; and

•

the anticipated results from closing on the Asset Purchase Agreement entered into with 7-Eleven.

In general, we based the forward-looking statements included in this report on our current expectations, estimates and projections about our company and the industry in which we operate. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties we cannot predict. We anticipate that subsequent events and market developments will cause our estimates to change. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. Any differences could result from a variety of factors, including the following:

•

the Topper Group’s business strategy and operations and the Topper Group’s conflicts of interest with us;

•

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

•

the availability and cost of competing motor fuels;

•

motor fuel price volatility or a reduction in demand for motor 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 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;

•

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, immigration and international trade.

You should consider the risks and uncertainties described above and elsewhere in this report as well as those set forth in the section entitled “Risk Factors” in our Form 10-K in connection with considering any forward-looking statements that may be made by us and our businesses generally. We cannot assure you that anticipated results or events reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements included in this report are made as of the date of this report. We undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events after the date of this report, except as required by law.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following MD&A is intended to help the reader understand our results of operations and financial condition. This section is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to these financial statements contained elsewhere in this report, and the MD&A section and the consolidated financial statements and accompanying notes to those financial statements in our Form 10-K. Our Form 10-K contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates and contractual obligations.

MD&A is organized as follows:

•

Recent Developments—This section describes significant recent developments, including our acquisition of certain assets from 7-Eleven, Inc.

•

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 months ended September 30, 2021 and 2020 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.

Recent Developments

Acquisition of Assets from 7-Eleven

On April 28, 2021, Buyer entered into the Asset Purchase Agreement with 7-Eleven, pursuant to which Buyer agreed to purchase certain assets related to the ownership and operations of 106 company operated sites (90 fee; 16 leased) located in the Mid-Atlantic and Northeast regions of the U.S. (the “Properties”) for an aggregate purchase price of $263.0 million, subject to adjustment in accordance with the terms of the Asset Purchase Agreement. The assets are being sold by 7-Eleven as part of a divestiture process in connection with its previously announced acquisition of the Speedway business from MPC.

We funded these transactions primarily through the new JKM Credit Facility further described in Note 8 to the financial statements as well as undrawn capacity under our existing revolving credit facility and cash on hand.

JKM Credit Facility

On July 16, 2021, CAPL JKM Partners LLC (“Borrower”), an indirect wholly-owned subsidiary of CrossAmerica, entered into a Credit Agreement, as amended on July 29, 2021 (the “JKM Credit Facility”) among Borrower, Holdings and Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing bank.

As of November 4, 2021, we had $182.5 million outstanding under our Term Loan Facility.

Amendment to CAPL Credit Facility

On July 28, 2021, the Partnership entered into an amendment (the “Amendment”) to its Credit Agreement, dated as of April 1, 2019 (as previously amended by the First Amendment to Credit Agreement, dated as of November 19, 2019, the “CAPL Credit Facility”), 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. The Amendment, among other things, (i) amended certain provisions relating to unrestricted subsidiaries, (ii) increased the maximum level for the consolidated leverage ratio financial covenant to 6.00 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021, 5.75 to 1.00 for the fiscal quarter ending March 31, 2022, 5.50 to 1.00 for the fiscal quarter ending June 30, 2022, and 5.25 to 1.00 for the fiscal quarter ending September 30, 2022, after which the maximum level generally reverts to 4.75 to 1.00 unless in a specified acquisition period or a qualified note offering has occurred, and (iii) modified the applicable margin for borrowings under the CAPL Credit Facility (as amended by the Amendment), such that borrowings bear interest, at the Partnership’s option, at either LIBOR plus a margin ranging from 1.50% to 3.00% per annum or a base rate plus a margin ranging from 0.50% to 2.00% per annum (in each case depending on the Partnership’s consolidated leverage ratio).

See Notes 2 and 8 to the financial statements for additional information regarding this acquisition and the related financing.

COVID-19 Pandemic

During the first quarter of 2020, an outbreak of a novel strain of coronavirus spread worldwide, including to the U.S., posing public health risks that have 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 continue to recover in 2021, we cannot predict the scope and severity with which COVID-19 will impact our business, financial condition, results of operations and cash flows. Sustained decreases in fuel volume or erosion of margin could have a material adverse effect on our results of operations, cash flow, financial position and ultimately our ability to 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. For the three months ended September 30, 2021, we received a fixed mark-up per gallon on approximately 67% of gallons sold to our customers. The remaining gallons are primarily DTW priced contracts, 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 cost of wholesale motor fuel declining at a faster rate as compared to the rate that retail motor fuel prices decline. Conversely, our DTW motor fuel gross profit generally declines when the cost of wholesale motor fuel increases at a faster rate as compared to the rate that retail motor fuel prices increase.

Regarding our supplier relationships, a majority of our total gallons purchased are subject to Terms Discounts. The dollar value of these discounts increases and decreases corresponding to 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 over short periods of time.

Changes in our average motor fuel selling price per gallon and gross margin are directly related to the changes in crude oil and wholesale motor fuel prices. Variations in our reported revenues and cost of sales are, therefore, primarily related to the price of crude oil and wholesale motor fuel prices and generally not as a result of changes in motor fuel sales volumes, unless otherwise indicated and discussed below.

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. Since the Wholesale segment supplies all fuel requirements to the Retail segment, a portion of that volatility is absorbed by the Wholesale segment.

As previously reported, we converted 46 company operated sites to dealer operated sites in the third quarter of 2019. As a result of this transition, we did not have any company operated sites for the period from September 30, 2019 through closing on the retail and wholesale acquisition on April 14, 2020, since which we have again been operating company operated sites.

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 of our operating expenses and cost of goods sold. Operating expenses include labor costs, leases, and general and administrative expenses. While our Wholesale segment benefits from higher Terms Discounts as a result of higher fuel costs, inflation could negatively impact our operating expenses. Although we have historically been able to pass on increased costs through price increases, there can be no assurance that we will be able to do so in the future.

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 6, 2020, we closed on the Equity Restructuring Agreement that eliminated the IDRs.

•

We completed the final four tranches of the asset exchange with Circle K on February 25, 2020, April 7, 2020, May 5, 2020 and September 15, 2020. With the closing of the sixth tranche, the transactions contemplated under the Asset Exchange were concluded.

•

Effective March 25, 2020, we closed on the CST Fuel Supply Exchange.

•

On April 14, 2020, we closed on the acquisition of retail and wholesale assets.

•

Through September 30, 2021, we closed on the purchase of 98 sites of our 106-site acquisition from 7-Eleven and in July 2021, we entered into a new credit agreement and amended our existing credit facility as previously discussed under “Recent Developments—Acquisition of Assets from 7-Eleven.”

Results of Operations

Consolidated Income Statement Analysis

Below is an analysis of our consolidated statements of operations and provides the primary reasons for significant increases and decreases in the various income statement line items from period to period. Our consolidated statements of operations are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating revenues	$	985,122		$	591,022		$	2,501,740		$	1,381,119
Costs of sales		909,391			528,750			2,306,047			1,225,470
Gross profit		75,731			62,272			195,693			155,649

Income from CST Fuel Supply equity interests		—			—			—			3,202
Operating expenses:
Operating expenses		34,548			27,508			95,021			63,328
General and administrative expenses		9,903			5,363			24,429			15,440
Depreciation, amortization and accretion expense		19,118			18,590			56,732			51,867
Total operating expenses		63,569			51,461			176,182			130,635
Gain on dispositions and lease terminations, net		426			12,881			375			79,237
Operating income		12,588			23,692			19,886			107,453
Other income, net		127			143			419			358
Interest expense		(4,928	)		(3,522	)		(12,295	)		(13,183	)
Income before income taxes		7,787			20,313			8,010			94,628
Income tax benefit		(1,065	)		(892	)		(1,664	)		(3,868	)
Net income		8,852			21,205			9,674			98,496
IDR distributions		—			—			—			(133	)
Net income available to limited partners	$	8,852		$	21,205		$	9,674		$	98,363

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Consolidated Results

Operating revenues increased $394 million (67%) and gross profit increased $13.5 million (22%).

Operating revenues

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

•

A $360 million (74%) increase in our Wholesale segment revenues primarily attributable to a 73% increase in the average daily spot price of WTI crude oil to $70.58 per barrel for the third quarter of 2021, compared to $40.89 per barrel for the third quarter of 2020. The wholesale price of motor fuel is highly correlated to the price of crude oil. See “Significant Factors Affecting our Profitability—The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit.” In addition, volume increased 8% primarily as a result of volume generated by the acquisition of assets from 7-Eleven and the continuing recovery from the COVID-19 Pandemic.

•

A $167 million (71%) increase in our Retail segment revenues primarily attributable to the increase in company operated sites as a result of the acquisition of assets from 7-Eleven and a 43% increase in the average retail fuel price from the third quarter of 2020 to the third quarter of 2021 primarily due to the increase in wholesale motor fuel prices as noted above. Volume also increased 29% for the third quarter of 2021 compared to the third quarter of 2020 as a result of the acquisition of assets from 7-Eleven and the continuing recovery from the COVID-19 Pandemic. Lastly, merchandise revenues increased $12.0 million (26%) driven by the acquisition of assets from 7-Eleven.

Intersegment revenues

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 $132 million (103%), 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

Cost of sales increased $381 million (72%), which was a result of the increase in wholesale motor fuel prices and the acquisition of assets from 7-Eleven and the continuing recovery from the COVID-19 Pandemic discussed above.

Gross profit

Gross profit increased $13.5 million (22%), 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 higher terms discounts as a result of higher crude prices in the third quarter of 2021 as compared to the same period in prior year and incremental fuel margin from higher volume driven by the continuing recovery from the COVID-19 Pandemic. See “Results of Operations—Segment Results” for additional gross profit analyses.

Operating expenses

See “Results of Operations—Segment Results” for analyses.

General and administrative expenses

General and administrative expenses increased $4.5 million (85%) primarily driven by a $3.8 million increase in acquisition-related costs as a result of higher legal fees incurred in connection with the acquisition of assets from 7-Eleven and a $0.3 million increase in equity-based compensation expense as a result of more grants being outstanding during the third quarter of 2021 as compared to the same period of the prior year.

Depreciation, amortization and accretion expense

Depreciation, amortization and accretion expense increased $0.5 million (3%) 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, partially offset by a $1.5 million decrease in impairment charges related to our ongoing real estate rationalization effort and the resulting reclassification of these sites to assets held for sale.

Gain on dispositions and lease terminations, net

During the three months ended September 30, 2021, we recorded $0.4 million in gains in connection with our ongoing real estate rationalization effort, partially offset by net losses on lease terminations and asset disposals.

During the three months ended September 30, 2020, we recorded $11.4 million in gains related to the properties sold in the asset exchanges with Circle K. In addition, we recorded $2.2 million in gains in connection with our ongoing real estate rationalization effort.

Interest expense

Interest expense increased $1.4 million (40%), primarily driven by $0.5 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. Lastly, we incurred $0.4 million more in interest expense on the CAPL Credit Facility due to the higher outstanding balance driven by the borrowings to fund a portion of the purchase price of the acquisition of assets from 7-Eleven.

Income tax benefit

We recorded income tax benefits of $1.1 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively. The benefits were primarily driven by losses incurred by our taxable subsidiaries.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Consolidated Results

Operating revenues increased $1.1 billion (81%) and gross profit increased $40 million (26%).

Operating revenues

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

•

A $982 million (84%) increase in our Wholesale segment revenues primarily attributable to a 71% increase in the average daily spot price of WTI crude oil to $65.05 per barrel for the nine months ended September 30, 2021, compared to $38.04 per barrel for the nine months ended September 30, 2020. The wholesale price of motor fuel is highly correlated to the price of crude oil. See “Significant Factors Affecting our Profitability—The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit.” Volume increased 21% primarily as a result of volume generated by the asset exchanges with Circle K, the CST Fuel Supply Exchange, the acquisition of retail and wholesale assets and the acquisition of assets from 7-Eleven (the average number of sites with wholesale fuel distribution increased 7% for the nine months ended September 30, 2021 compared to the same period in 2020) as well as from the continuing recovery from the COVID-19 Pandemic.

•

A $488 million (105%) increase in our Retail segment revenues primarily attributable to the increase in company operated and commission sites as a result of the April 2020 acquisition of retail and wholesale assets, the March 2020 CST Fuel Supply Exchange and the acquisition of the 7-Eleven assets (the average total system sites increased 27% for the nine months ended September 2021 compared to the same period in 2020). Volume increased 57% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 driven by the acquisitions as well as the continuing recovery from the COVID-19 Pandemic. The average retail fuel price increased 37% between those same periods due primarily due to the increase in wholesale motor fuel prices as noted above. In addition, merchandise revenues increased $58.2 million (70%) driven by the acquisition of retail and wholesale assets and the acquisition of assets from 7-Eleven.

Intersegment revenues

Our intersegment revenues increased $349 million (137%) primarily attributable to the incremental intersegment revenues generated by the company operated and commission sites acquired in the April 2020 acquisition of retail and wholesale assets, the March 2020 CST Fuel Supply Exchange, the acquisition of assets from 7-Eleven as well as higher volume from the continuing recovery from the COVID-19 Pandemic.

Cost of sales

Cost of sales increased $1.1 billion (88%) as a result of the increase in wholesale motor fuel prices and the impact of the increase in sites acquired in the asset exchanges with Circle K, the CST Fuel Supply Exchange, the acquisition of retail and wholesale assets and the acquisition of assets from 7-Eleven as well as the continuing recovery from the COVID-19 Pandemic discussed above.

Gross profit

The $40 million (26%) increase in gross profit was primarily driven by increases in motor fuel and merchandise gross profit due to 1) the CST Fuel Supply Exchange, which primarily resulted in an increase in fuel margin and a decrease in income from CST Fuel Supply equity interests; 2) the acquisition of retail and wholesale assets, which primarily resulted in an increase in fuel margin and merchandise margin and other revenues partially offset by a decrease in lease margin; 3) the acquisition of assets from 7-Eleven, which resulted in an increase in fuel margin, merchandise margin and other revenues; and 4) an increase in volume driven by the continuing recovery from the COVID-19 Pandemic. See “Results of Operations—Segment Results” for additional gross profit analyses.

Income from CST Fuel Supply equity interests and Operating expenses

See “Results of Operations—Segment Results” for analyses.

General and administrative expenses

General and administrative expenses increased $9.0 million (58%) primarily driven by a $5.9 million increase in acquisition-related costs as a result of higher legal fees incurred in connection with the acquisition of assets from 7-Eleven, a $1.5 million increase in management fees related to the increase in headcount, a $1.0 million increase in equity-based compensation expense as a result of more grants being outstanding during the third quarter of 2021 as compared to the same period of the prior year and overall higher general and administrative expenses stemming from the April 2020 acquisition of retail and wholesale assets, partially offset by a $0.9 million decrease in credit loss expense.

Depreciation, amortization and accretion expense

Depreciation, amortization and accretion expense increased $4.9 million (9%) primarily from the property and equipment and intangible assets acquired in the asset exchanges with Circle K, the CST Fuel Supply Exchange, the acquisition of retail and wholesale assets and the acquisition of assets from 7-Eleven. We recorded $6.4 million in impairment charges during the nine months ended September 30, 2021 compared with $8.2 million during the same period of 2020, primarily related to our ongoing real estate rationalization effort and the resulting reclassification of these sites to assets held for sale.

Gain on dispositions and lease terminations, net

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

During the nine months ended September 30, 2020, we recorded a $67.6 million gain on the sale of our 17.5% investment in CST Fuel Supply. In addition, we recorded $19.3 million in gains related to the properties sold in the asset exchanges with Circle K and $4.0 million in gains related to the sale of sites in connection with our ongoing real estate rationalization effort. Partially offsetting these gains, we recorded a $10.9 loss on lease terminations, including a write-off of deferred rent income, in connection with the April 2020 acquisition of retail and wholesale assets.

Interest expense

Interest expense decreased $0.9 million (7%) primarily driven by a reduction in interest expense on borrowings under our CAPL Credit Facility due to a decrease in the average interest rate from 2.8% to 2.1%. This decrease was partially offset by higher interest expense due to the higher outstanding balance on the CAPL Credit Facility driven by the borrowings to fund a portion of the purchase price of the acquisition of assets from 7-Eleven. In addition, we incurred $0.5 million in interest expense 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.

Income tax benefit

We recorded income tax benefits of $1.7 million and $3.9 million for the nine months ended September 30, 2021 and 2020, respectively. The benefits were primarily driven by losses incurred by our taxable subsidiaries.

Segment Results

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 segment to our Retail segment). These comparisons are not necessarily indicative of future results.

Wholesale

The following table highlights the results of operations and certain operating metrics of our Wholesale segment. The narrative following these tables provides an analysis of the results of operations of that segment (thousands of dollars, except for the number of distribution sites and per gallon amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Gross profit:
Motor fuel–third party	$	18,180		$	15,505		$	52,232		$	40,722
Motor fuel–intersegment and related party		15,943			15,181			33,633			38,023
Motor fuel gross profit		34,123			30,686			85,865			78,745
Rent gross profit		13,264			11,853			38,730			38,244
Other revenues		795			290			2,658			1,705
Total gross profit		48,182			42,829			127,253			118,694
Income from CST Fuel Supply equity interests ^(a)		—			—			—			3,202
Operating expenses		(8,686	)		(8,329	)		(29,608	)		(26,912	)
Operating income	$	39,496		$	34,500		$	97,645		$	94,984
Motor fuel distribution sites (end of period): ^(b)
Motor fuel–third party
Independent dealers ^(c)		676			683			676			683
Lessee dealers ^(d)		643			672			643			672
Total motor fuel distribution–third party sites		1,319			1,355			1,319			1,355
Motor fuel–intersegment and related party
Commission agents (Retail segment) ^(d)		200			211			200			211
Company operated retail sites (Retail segment) ^(e)		248			149			248			149
Total motor fuel distribution–intersegment and related party sites		448			360			448			360
Motor fuel distribution sites (average during the period):
Motor fuel-third party distribution		1,325			1,345			1,330			1,253
Motor fuel-intersegment and related party distribution		395			364			368			327
Total motor fuel distribution sites		1,720			1,709			1,698			1,580
Volume of gallons distributed (in thousands)
Third party		244,545			242,826			700,645			613,250
Intersegment and related party		110,087			84,541			277,392			195,008
Total volume of gallons distributed		354,632			327,367			978,037			808,258

Wholesale margin per gallon	$	0.096		$	0.094		$	0.088		$	0.097

(a)	Represents income from our equity interest in CST Fuel Supply. The CST Fuel Supply Exchange closed on March 25, 2020.

(b)	In addition, as of September 30, 2021 and 2020, we distributed motor fuel to 14 sub-wholesalers who distributed to additional sites.

(c)

The decrease in the independent dealer site count was primarily attributable to loss of contracts, most of which were lower margin, partially offset by the increase in independent dealer sites as a result of the real estate rationalization effort and the resulting reclassification of the site from a lessee dealer or commission site to an independent dealer site when we continue to supply the sites after divestiture.

(d)	The decreases in the lessee dealer and commission agent site counts were primarily attributable to our real estate rationalization effort.

(e)	The increase in the company operated site count was primarily attributable to the 98 company operated sites from the acquisition of assets from 7-Eleven.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Gross profit increased $5.4 million (12%) and operating income increased $5.0 million (14%). The results were driven by:

Motor fuel gross profit

The $3.4 million (11%) increase in motor fuel gross profit was primarily driven by an 8% increase in volume as a result of the acquisition of assets from 7-Eleven as well as the continuing recovery from the COVID-19 Pandemic. In addition, we benefited from higher terms discounts as a result of higher crude prices. The average spot price of WTI crude oil increased 73% from $40.89 per barrel for the third quarter of 2020 to $70.58 per barrel for the third quarter of 2021. 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 gross profit

Rent gross profit increased $1.4 million (12%) primarily as a result of the $0.5 million in rent concessions that impacted the third quarter of 2020.

Operating expenses

Operating expenses increased $0.4 million (4%), primarily as a result of increases in management fees and insurance expense.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Gross profit increased $8.6 million (7%) and operating income increased $2.7 million (3%). The results were driven by:

Motor fuel gross profit

The $7.1 million (9%) increase in motor fuel gross profit was primarily driven by a 21% increase in volume as a result of the asset exchanges with Circle K, the CST Fuel Supply Exchange, the acquisition of retail and wholesale assets, the acquisition of assets from 7-Eleven and the continuing recovery from the COVID-19 Pandemic. In addition, we benefited from higher terms discounts as a result of higher crude prices. The average spot price of WTI crude oil increased 71% from $38.04 per barrel for the nine months ended September 30, 2020 to $65.05 per barrel for the nine months ended September 30, 2021. However, DTW margins were lower due to the movements in wholesale fuel prices throughout the nine months ended September 30, 2021 as compared to the same time period of 2020. During the nine months ended September 30, 2021, the daily spot price of WTI crude oil increased from $48 per barrel at the start of the year to $75 per barrel as of September 30, 2021, a 56% increase, which adversely impacted fuel margins for our variable priced gallons during the period. During the nine months ended September 30, 2020, we benefitted from the reduction in wholesale fuel prices. As such, DTW margins were negatively impacted for the first nine months of 2021 as compared to the first nine months of 2020. 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 gross profit

Rent gross profit increased $0.5 million (1%) primarily due to $0.5 million in rent concessions during the second quarter of 2020 and the positive impact from the CST Fuel Exchange, partially offset by a decrease as a result of terminating leases in connection with the April 2020 acquisition of retail and wholesale assets.

Income from CST Fuel Supply equity interests

Income from CST Fuel Supply equity interests is no longer generated as a result of the March 2020 CST Fuel Supply Exchange.

Operating expenses

Operating expenses increased $2.7 million (10%) primarily as a result of a $1.9 million increase in environmental costs related to remediation, costs of compliance testing and monitoring and a $1.2 million increase in insurance costs due to the increase in controlled sites as a result of the acquisitions.

Retail

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Gross profit:
Motor fuel	$	7,750		$	3,487		$	18,120		$	7,176
Merchandise		15,543			12,305			37,876			21,689
Rent		2,266			1,858			6,190			5,527
Other revenue		2,310			1,825			6,480			3,046
Total gross profit		27,869			19,475			68,666			37,438
Operating expenses		(25,862	)		(19,179	)		(65,413	)		(36,416	)
Operating income	$	2,007		$	296		$	3,253		$	1,022

Retail sites (end of period):
Commission agents ^(a)		200			211			200			211
Company operated retail sites ^(b)		248			149			248			149
Total system sites at the end of the period		448			360			448			360

Total system operating statistics:
Average retail fuel sites during the period		395			359			368			289
Volume of gallons sold (in thousands)		110,523			85,902			278,564			177,855

Commission agents statistics:
Average retail fuel sites during the period		201			209			203			196

Company operated retail site statistics:
Average retail fuel sites during the period		194			150			165			93
Merchandise gross profit percentage		26.7	%		26.6	%		26.8	%		26.1	%

(a)	The decrease in the commission site count was primarily attributable to our real estate rationalization effort.

(b)	The increase in the company operated site count was primarily attributable to the 98 company operated sites from the acquisition of assets from 7-Eleven.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Gross profit increased $8.4 million (43%) and operating income increased $1.7 million. These results were impacted by:

Gross profit

•

Our motor fuel gross profit increased $4.3 million (122%) attributable to our company operated sites achieving higher fuel margins for the three months ended September 30, 2021 as compared to the same period in 2020, as well as an increased number of company operated sites in the Retail Segment, as company operated sites typically have a higher retail fuel margin than commission agent sites. In addition, volume increased 29% stemming from the increase in company operated sites as a result of the acquisition of assets from 7-Eleven as well as the continuing recovery from the COVID-19 Pandemic.

•

Our merchandise gross profit and other revenues increased $3.2 million and $0.5 million, respectively, as a result of the increase in company operated sites driven by the acquisition of assets from 7-Eleven.

Operating expenses

Operating expenses increased $6.7 million (35%) primarily due to a $4.4 million increase as a result of the acquisition of assets from 7-Eleven and higher employment costs at the company operated sites acquired in the April 2020 acquisition of retail and wholesale assets.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Gross profit increased $31.2 million (83%) and operating income increased $2.2 million. These results were driven by:

Gross profit

•

Our motor fuel gross profit increased $10.9 million (153%) attributable to our company operated sites achieving higher fuel margins for the nine months ended September 30, 2021 as compared to the same period in 2020, as well as an increased number of company operated sites in the Retail Segment, as company operated sites typically have a higher retail fuel margin than commission agent sites. In addition, volume increased 57% driven by the increase in company operated and commission sites as a result of the April 2020 acquisition of retail and wholesale assets, the March 2020 CST Fuel Supply Exchange, the acquisition of assets from 7-Eleven as well as the continuing recovery from the COVID-19 Pandemic.

•

Our merchandise gross profit and other revenues increased $16.2 million and $3.4 million, respectively, as a result of the increase in company operated sites driven by the April 2020 acquisition of retail and wholesale assets and the acquisition of assets from 7-Eleven.

Operating expenses

Operating expenses increased $29.0 million (80%) primarily due to the increase in company operated and commission sites as a result of the April 2020 acquisition of retail and wholesale assets and the CST Fuel Supply Exchange and a $4.4 million increase as a result of the acquisition of assets from 7-Eleven.

Non-GAAP Financial Measures

We use the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income available to us before deducting interest expense, income taxes and depreciation, amortization and accretion (which includes certain impairment charges). Adjusted EBITDA represents EBITDA as further adjusted to exclude equity-based employee and director compensation expense, gains or losses on dispositions and lease terminations, net and certain discrete acquisition related costs, such as legal and other professional fees, separation benefit costs and certain other discrete non-cash items arising from purchase accounting. Distributable Cash Flow represents Adjusted EBITDA less cash interest expense, sustaining capital expenditures and current income tax benefit or expense. The Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by the weighted-average diluted common units and then dividing that result by the distributions paid per limited partner unit.

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):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Net income available to limited partners	$	8,852		$	21,205		$	9,674		$	98,363
Interest expense		4,928			3,522			12,295			13,183
Income tax benefit		(1,065	)		(892	)		(1,664	)		(3,868	)
Depreciation, amortization and accretion expense		19,118			18,590			56,732			51,867
EBITDA		31,833			42,425			77,037			159,545
Equity-based employee and director compensation expense		342			35			1,096			83
Gain on dispositions and lease terminations, net ^(a)		(426	)		(12,881	)		(375	)		(79,237	)
Acquisition-related costs ^(b)		4,141			385			8,502			2,578
Adjusted EBITDA		35,890			29,964			86,260			82,969
Cash interest expense		(4,267	)		(3,261	)		(11,113	)		(12,401	)
Sustaining capital expenditures ^(c)		(975	)		(745	)		(3,407	)		(1,792	)
Current income tax (expense) benefit ^(d)		(214	)		3,784			(548	)		7,452
Distributable Cash Flow	$	30,434		$	29,742		$	71,192		$	76,228
Weighted-average diluted common units		37,907			37,869			37,898			37,202
Distributions paid per limited partner unit ^(e)	$	0.5250		$	0.5250		$	1.5750		$	1.5750
Distribution Coverage Ratio ^(f)	1.53x			1.50x			1.19x			1.30x

(a)	We recorded gains on the sale of sites in connection with our ongoing real estate rationalization effort of $0.4 million and $1.5 million for the three and nine months ended September 30, 2021, respectively.

During the three months ended September 30, 2020, we recorded gains on the sale of CAPL Properties in connection with the asset exchange with Circle K of $11.4 million and $19.3 million for the three and nine months ended September 30, 2020, respectively. We also recorded gains on the sale of sites in connection with our ongoing real estate rationalization effort of $2.2 million and $4.0 million for the three and nine months ended September 30, 2020, respectively. During the nine months ended September 30, 2020, we recorded a $67.6 million gain on the sale of our 17.5% investment in CST Fuel Supply. Also during the nine months ended September 30, 2020, we recorded a loss on lease terminations, including the non-cash write-off of deferred rent income associated with these leases, of $10.9 million.

(b)	Relates to certain discrete acquisition related costs, such as legal and other professional fees, separation benefit costs and certain purchase accounting adjustments associated with recently acquired businesses.

(c)

Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain our long-term operating income or operating capacity. Examples of sustaining capital expenditures are those made to maintain existing contract volumes, including payments to renew existing distribution contracts, or to maintain our sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.

(d)	Consistent with prior divestitures, the current income tax expense (benefit) excludes income tax incurred on the sale of sites.

(e)	On October 21, 2021, the Board approved a quarterly distribution of $0.5250 per unit attributable to the third quarter of 2021. The distribution is payable on November 10, 2021 to all unitholders of record on November 3, 2021.

(f)	The distribution coverage ratio is computed by dividing Distributable Cash Flow by the weighted-average diluted common units and then dividing that result by the distributions paid per limited partner unit.

Liquidity and Capital Resources

Liquidity

Our principal liquidity requirements are to finance our operations, fund acquisitions, service our debt and pay distributions to our unitholders. We expect our ongoing sources of liquidity to include cash generated by operations, proceeds from sales of sites in connection with our real estate rationalization efforts, borrowings under the CAPL Credit Facility and JKM Credit Facility, and if available to us on acceptable terms, issuances of equity and debt securities. We regularly evaluate alternate sources of capital to support our liquidity requirements.

Our ability to meet our debt service obligations and other capital requirements, including capital expenditures, acquisitions, and partnership distributions, will depend on our future operating performance, which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal part of our business, depending on market conditions, we will, from time to time, consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods.

We believe that we will have sufficient cash flow from operations, borrowing capacity under the CAPL Credit Facility and JKM Credit Facility, access to capital markets and alternate sources of funding to meet our financial commitments, debt service obligations, contingencies, anticipated capital expenditures and partnership distributions. However, we are subject to business and operational risks that could adversely affect our cash flow. A material decrease in our cash flows would likely produce an adverse effect on our borrowing capacity as well as our ability to issue additional equity and/or debt securities and/or maintain or increase distributions to unitholders.

See “Recent Developments—COVID-19 Pandemic” for a discussion of the impacts and potential impacts on our liquidity from the COVID-19 Pandemic as well as actions we have taken or could take to mitigate its impact.

Cash Flows

The following table summarizes cash flow activity (in thousands):

	Nine Months Ended September 30,
	2021			2020
Net cash provided by operating activities	$	76,267		$	86,503
Net cash used in investing activities		(283,200	)		(15,631	)
Net cash provided by (used in) financing activities		214,667			(71,324	)

Operating Activities

Net cash provided by operating activities decreased $10.2 million for the nine months ended September 30, 2021 compared to the same period in 2020, primarily attributable to changes in working capital between the two periods. The biggest driver of this decrease relates to the initial build in accounts payable when acquiring company operated sites. For the nine months ended September 30, 2020, we acquired approximately 150 company operated sites, all in April 2020, and the initial build in accounts payable occurred quickly thereafter. For the nine months ended September 30, 2021, we acquired 98 company operated sites from 7-Eleven but through a rolling close process, and therefore the initial build of accounts payable is still occurring for many of these sites. Additionally, acquisition costs increased $5.9 million for the nine months ended September 30, 2021 as compared to the same period in 2020. These negative drivers were partially offset by the incremental cash flow generated by the sites acquired from 7-Eleven.

As is typical in our industry, our current liabilities exceed our current assets as a result of the longer settlement of real estate and motor fuel taxes as well as operating lease obligations as compared to the shorter settlement of receivables for fuel and rent.

Investing Activities

We incurred capital expenditures of $32.4 million and $24.4 million for the nine months ended September 30, 2021 and 2020, respectively. The increase was largely driven by EMV upgrades and rebranding of certain sites, including the sites being acquired from 7-Eleven. We received $11.0 million and $13.8 million in proceeds from sales of assets, largely driven by our real estate rationalization effort, during the nine months ended September 30, 2021 and 2020, respectively. We paid $262.0 million during the nine months ended September 30, 2021 in connection with our acquisition of assets from 7-Eleven. We paid $28.2 million during the nine months ended September 30, 2020 in connection with our acquisition of retail and wholesale assets. Lastly, we received $23.0 million from Circle K primarily in connection with the CST Fuel Supply Exchange that closed in March 2020.

Financing Activities

We paid $59.8 million in distributions for the nine months ended September 30, 2021. We made net borrowings on our CAPL Credit Facility and JKM Credit Facility of $123.5 million and $160.0 million for the nine months ended September 30, 2021, respectively, primarily to fund the acquisition of assets from 7-Eleven and to pay $8.5 million in acquisition costs and $7.1 million of deferred financing costs. We paid $58.0 million in distributions and made net repayments on our CAPL Credit Facility of $11.5 million for the nine months ended September 30, 2020.

Distributions

Distribution activity for 2021 was as follows:

Quarter Ended

Record Date

Payment Date

Cash Distribution

(per unit)

Cash Distribution

(in thousands)

December 31, 2020

February 2, 2021

February 9, 2021

0.5250

19,912

March 31, 2021

May 4, 2021

May 11, 2021

0.5250

19,916

June 30, 2021

August 3, 2021

August 10, 2021

0.5250

19,924

September 30, 2021

November 3, 2021

November 10, 2021

0.5250

19,941

Debt

As of September 30, 2021, our debt and finance lease obligations consisted of the following (in thousands):

CAPL Credit Facility	$	636,728
JKM Credit Facility		159,950
Finance lease obligations		17,736
Total debt and finance lease obligations		814,414
Current portion		9,923
Noncurrent portion		804,491
Deferred financing costs, net		8,865
Noncurrent portion, net of deferred financing costs	$	795,626

Taking the interest rate swap contracts into account, our effective interest rate on our CAPL Credit Facility at September 30, 2021 was 2.3% (our applicable margin was 2.0% as of September 30, 2021). Letters of credit outstanding under our CAPL Credit Facility at September 30, 2021 totaled $4.0 million.

Our effective interest rate on our JKM Credit Facility at September 30, 2021 was 2.6% (our applicable margin was 2.5% as of September 30, 2021). Letters of credit outstanding under our JKM Credit Facility at September 30, 2021 totaled $0.8 million.

See “Recent Developments—Acquisition of Assets from 7-Eleven” and Note 8 to the financial statements for information regarding a new credit agreement and an amendment of our existing credit agreement, both entered into in July 2021.

The amount of availability under our CAPL Credit Facility at November 4, 2021, after taking into consideration debt covenant restrictions, was $84.6 million.

The amount of availability under the Term Loan Facility and Revolving Credit Facility at November 4, 2021 was $2.5 million and $14.2 million, respectively.

Capital Expenditures

We make investments to expand, upgrade and enhance existing assets. We categorize our capital requirements as either sustaining capital expenditures, growth capital expenditures or acquisition capital expenditures. Sustaining capital expenditures are those capital expenditures required to maintain our long-term operating income or operating capacity. Acquisition and growth capital expenditures are those capital expenditures that we expect will increase our operating income or operating capacity over the long term. We have the ability to fund our capital expenditures by additional borrowings under our CAPL Credit Facility, JKM Credit Facility, or, if available to us on acceptable terms, accessing the capital markets and issuing additional equity, debt securities or other options, such as the sale of assets. Our ability to access the capital markets may have an impact on our ability to fund acquisitions. We may not be able to complete any offering of securities or other options on terms acceptable to us, if at all.

The following table outlines our capital expenditures (in thousands):

	Nine Months Ended September 30,
	2021		2020
Sustaining capital	$	3,407	$	1,792
Growth		28,963		22,647
Acquisitions		261,993		28,244
Total capital expenditures and acquisitions	$	294,363	$	52,683

Growth capital expenditures increased primarily as a result of EMV upgrades and rebranding of certain sites, including the sites being acquired from 7-Eleven.

Contractual Obligations

Our contractual obligations as of September 30, 2021 are summarized below (in thousands):

	Payments Due by Period
	2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt	$	—	$	9,597	$	9,597	$	646,325	$	9,597	$	121,562	$	796,678
Interest payments on debt		4,674		18,695		18,695		8,739		4,159		2,402		57,364
Finance lease obligations		804		3,282		3,381		3,481		3,583		4,926		19,457
Operating lease obligations		9,079		35,339		33,014		29,625		27,277		88,156		222,490
Total consolidated obligations	$	14,557	$	66,913	$	64,687	$	688,170	$	44,616	$	217,046	$	1,095,989

Long-Term Debt

See Note 8 to the financial statements for additional information on the CAPL Credit Facility and JKM Credit Facility.

Interest Payments on Debt

Such amounts include estimates of interest expense related to our CAPL Credit Facility and our JKM Credit Facility assuming a 2.3% interest rate and a 2.6% interest rate, respectively. The rate assumed on our CAPL Credit Facility takes into account the interest rate swap contracts.

Finance Lease Obligations

We have certain retail site properties under finance leases. Finance lease obligations in the table above include both principal and interest.

Operating Lease Obligations

The operating lease obligations include leases for land, office facilities and retail sites. Operating lease obligations reflected in the table above include all operating leases that have initial or remaining non-cancelable terms in excess of one year and are not reduced by minimum rentals to be received by us under subleases. In addition, such amounts do not reflect contingent rentals that may be incurred in addition to minimum rentals.

Our principal executive offices are in Allentown, Pennsylvania, in an office space leased from a related party. Future lease payments on this office lease are included within operating lease obligations. See Note 10 to the financial statements for additional information.

Other Liabilities

We have excluded asset retirement obligations and other liabilities for which the timing of payment or the amount is not determinable.

Under the terms of various supply agreements, the Partnership is obligated to minimum volume purchases measured in gallons of motor fuel. The aggregate dollar amount of the future minimum volume purchase requirements is dependent on the future weighted average wholesale cost per gallon charged under the applicable supply agreements. The amounts and timing of the related payment obligations cannot reasonably be estimated reliably. As a result, payment of these amounts has been excluded from the table above.

Other Matters Impacting Liquidity and Capital Resources

Concentration of Customers

Approximately 12% of our rent income for the nine months ended September 30, 2021 was from one multi-site operator.

Outlook

As noted previously, the prices paid to our motor fuel suppliers for wholesale motor fuel (which affects our cost of sales) are highly correlated to the price of crude oil. The crude oil commodity markets are highly volatile, and the market prices of crude oil, and, correspondingly, the market prices of wholesale motor fuel, experience significant and rapid fluctuations, which affect our motor fuel gross profit. See “Significant Factors Affecting our Profitability—The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit” for additional information.

Our results for 2021 relative to 2020 are anticipated to be impacted by the following:

•

Transactions effected pursuant to the Asset Exchange Agreement entered into with Circle K are anticipated to increase motor fuel volume and motor fuel gross profit.

•

The CST Fuel Supply Exchange is anticipated to increase motor fuel volume and motor fuel gross profit.

•

The acquisition of retail and wholesale contracts from the Topper Group and certain other parties is anticipated to increase gross profit both within the Wholesale and Retail segments.

•

Our volume starting in mid-March 2020 was negatively impacted by the COVID-19 Pandemic. Although fuel volumes largely recovered during the second half of 2020 and continue to recover in 2021, we cannot predict the scope and severity with which COVID-19 will impact our results. See “Recent Developments—COVID-19 Pandemic” for additional information.

•

The acquisition of assets from 7-Eleven is anticipated to increase gross profit both within the Wholesale and Retail segments.

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

New Accounting Policies

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

Critical Accounting Policies Involving Critical Accounting Estimates

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No significant changes to our market risk have occurred since December 31, 2020. For a discussion of market risks affecting us, refer to Part II, Item 7A—"Quantitative and Qualitative Disclosures About Market Risk” included in our Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We hereby incorporate by reference into this Item our disclosures made in Part I, Item 1 of this report included in Note 11 of the financial statements.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Form 10-K, as updated and supplemented below, which could materially affect our business, financial condition or future results. The risks described in this report and in our Form 10-K are not the only risks facing the Partnership. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

A shortage of qualified labor could have a material adverse effect on our business and results of operations.

In our current operating environment, due in part to COVID-19 and general macroeconomic factors, we are experiencing labor shortages in certain geographies. Outside suppliers that we rely on have also experienced shortages of qualified labor. The future success of our operations depends on our ability, and the ability of third parties on which we rely, to identify, recruit, develop and retain qualified and talented individuals in order to supply and deliver our products. A prolonged shortage of qualified labor could decrease our ability to effectively operate our retail locations, which would negatively impact our business and could have a material adverse effect on our results of operations. A shortage would also likely result in increased costs from higher overtime, the need to hire temporary help to meet demand, higher wage rates to attract and retain employees, and higher costs to purchase raw materials or services from such third parties, all of which would negatively impact our results of operations.

ITEM 6. EXHIBITS

Exhibit No.		Description

10.1 *		Second Amendment to the Credit Agreement, dated as of July 28, 2021, among CrossAmerica Partners LP and Lehigh Gas Wholesale Services, Inc., as borrowers, the guarantors from time to time party thereto, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent

10.2 *		Credit Agreement, dated as of July 16, 2021, among CAPL JKM Partners LLC, as borrower, CAPL JKM Holdings LLC, Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing bank and the other lenders party thereto

10.3 *		First Amendment to the Credit Agreement, dated as of July 29, 2021, among CAPL JKM Partners LLC, as borrower, CAPL JKM Holdings LLC, Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing bank and the other lenders party thereto

31.1 *		Certification of Principal Executive Officer of CrossAmerica GP LLC as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2 *		Certification of Principal Financial Officer of CrossAmerica GP LLC as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1*†		Certification of Principal Executive Officer of CrossAmerica GP LLC pursuant to 18 U.S.C. §1350

32.2*†		Certification of Principal Financial Officer of CrossAmerica GP LLC pursuant to 18 U.S.C. §1350

101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

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

*	Filed herewith

†	Not considered to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CROSSAMERICA PARTNERS LP

By:		CROSSAMERICA GP LLC, its General Partner

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

Date: November 8, 2021