Segment Reporting

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Segment information is prepared on the same basis that our Chief Operating Decision Maker (“CODM”) reviews financial information for operational decision-making purposes. We operate our business in two primary segments, wholesale and retail, both of which are included as reportable segments. No operating segments have been aggregated in identifying the two reportable segments.

We allocate shared revenue and costs to each segment based on the way our CODM measures segment performance. Partnership overhead costs, interest and other expenses not directly attributable to a reportable segment are allocated based on segment gross profit. These costs were previously allocated based on segment EBITDA.

We report EBITDA and Adjusted EBITDA by segment as a measure of segment performance. We define EBITDA as net income before net interest expense, income tax expense and depreciation, amortization and accretion expense. We define Adjusted EBITDA to include adjustments for non-cash compensation expense, gains and losses on disposal of assets, unrealized gains and losses on commodity derivatives and inventory fair value adjustments.

Wholesale Segment

Our wholesale segment purchases motor fuel primarily from independent refiners and major oil companies and supplies it to our retail segment, to independently-operated dealer stations under long-term supply agreements, and to distributers and other consumers of motor fuel. Also included in the wholesale segment are motor fuel sales to consignment locations and sales and costs related to processing transmix. We distribute motor fuels across more than 30 states throughout the East Coast and Southeast regions of the United States from Maine to Florida and from Florida to New Mexico, as well as Hawaii. Sales of fuel from the wholesale segment to our retail segment are delivered at cost plus a profit margin. These amounts are reflected in intercompany eliminations of motor fuel revenue and motor fuel cost of sales. Also included in our wholesale segment is rental income from properties that we lease or sub-lease.

Retail Segment

Our retail segment operates branded retail convenience stores across more than 20 states throughout the East Coast and Southeast regions of the United States with a significant presence in Texas, Pennsylvania, New York, Florida, Virginia, and Hawaii. These stores offer motor fuel, merchandise, foodservice, and a variety of other services including car washes, lottery, ATM, money orders, prepaid phone cards and wireless services.

The following tables present financial information by segment for the three and nine months ended September 30, 2016 and 2015 (in thousands): 

	For the Three Months Ended September 30,
	2016											2015
	Wholesale			Retail			Intercompany Eliminations		Total			Wholesale			Retail			Intercompany Eliminations		Total
Revenues
Retail motor fuel	$	—		$	1,401,830				$	1,401,830		$	—		$	1,580,815				$	1,580,815
Wholesale motor fuel sales to third parties	2,026,454			—					2,026,454			2,664,186			—					2,664,186
Wholesale motor fuel sales to affiliates	28,226			—					28,226			3,779			—					3,779
Merchandise	—			605,275					605,275			—			589,299					589,299
Rental income	19,353			3,530					22,883			11,333			9,616					20,949
Other	13,331			39,318					52,649			5,996			41,748					47,744
Intersegment	1,006,088			37,978			(1,044,066	)	—			1,183,629			34,202			(1,217,831	)	—
Total revenues	3,093,452			2,087,931			(1,044,066	)	4,137,317			3,868,923			2,255,680			(1,217,831	)	4,906,772
Gross profit
Retail motor fuel	—			179,003					179,003			—			196,002					196,002
Wholesale motor fuel	138,169			—					138,169			76,174			—					76,174
Merchandise	—			192,292					192,292			—			185,120					185,120
Other	26,629			41,294					67,923			16,099			51,363					67,462
Total gross profit	164,798			412,589					577,387			92,273			432,485					524,758
Total operating expenses	103,775			369,462					473,237			89,527			341,879					431,406
Income (loss) from operations	61,023			43,127					104,150			2,746			90,606					93,352
Interest expense, net	13,198			41,091					54,289			13,106			15,411					28,517
Income (loss) before income taxes	47,825			2,036					49,861			(10,360		)	75,195					64,835
Income tax expense	507			4,803					5,310			39			30,085					30,124
Net income (loss) and comprehensive income (loss)	$	47,318		$	(2,767	)			$	44,551		$	(10,399	)	$	45,110				$	34,711
Depreciation, amortization and accretion	21,819			55,809					77,628			13,571			52,413					65,984
Interest expense, net	13,198			41,091					54,289			13,106			15,411					28,517
Income tax expense	507			4,803					5,310			39			30,085					30,124
EBITDA	82,842			98,936					181,778			16,317			143,019					159,336
Non-cash compensation expense	1,516			1,501					3,017			1,697			435					2,132
Loss (gain) on disposal of assets	(599		)	802					203			921			(174		)			747
Unrealized loss on commodity derivatives	5,689			—					5,689			735			—					735
Inventory fair value adjustments	(1,581		)	(186		)			(1,767		)	87,307			3,456					90,763
Adjusted EBITDA	$	87,867		$	101,053				$	188,920		$	106,977		$	146,736				$	253,713
Capital expenditures	$	34,382		$	76,286				$	110,668		$	17,610		$	123,158				$	140,768
Total assets at end of period	$	2,938,747		$	6,058,254				$	8,997,001		$	2,925,842		$	5,915,977				$	8,841,819

	For the Nine Months Ended September 30,
	2016											2015
	Wholesale			Retail			Intercompany Eliminations		Total			Wholesale		Retail			Intercompany Eliminations		Total
Revenues
Retail motor fuel	$	—		$	3,876,542				$	3,876,542		$	—	$	4,597,670				$	4,597,670
Wholesale motor fuel sales to third parties	5,544,905			—					5,544,905			7,946,323		—					7,946,323
Wholesale motor fuel sales to affiliates	45,065			—					45,065			8,718		—					8,718
Merchandise	—			1,705,963					1,705,963			—		1,633,102					1,633,102
Rental income	57,210			10,372					67,582			34,327		26,938					61,265
Other	30,164			121,576					151,740			17,876		118,754					136,630
Intersegment	2,698,542			99,253			(2,797,795	)	—			3,519,958		93,907			(3,613,865	)	—
Total revenues	8,375,886			5,813,706			(2,797,795	)	11,391,797			11,527,202		6,470,371			(3,613,865	)	14,383,708
Gross profit
Retail motor fuel	—			447,883					447,883			—		483,207					483,207
Wholesale motor fuel	453,887			—					453,887			331,711		—					331,711
Merchandise	—			545,962					545,962			—		510,132					510,132
Other	78,974			129,991					208,965			48,588		145,563					194,151
Total gross profit	532,861			1,123,836					1,656,697			380,299		1,138,902					1,519,201
Total operating expenses	282,966			1,053,579					1,336,545			253,549		983,296					1,236,845
Income from operations	249,895			70,257					320,152			126,750		155,606					282,356
Interest expense, net	41,304			91,261					132,565			33,293		24,399					57,692
Income before income taxes	208,591			(21,004		)			187,587			93,457		131,207					224,664
Income tax expense	1,361			7,529					8,890			898		46,215					47,113
Net income and comprehensive income	$	207,230		$	(28,533	)			$	178,697		$	92,559	$	84,992				$	177,551
Depreciation, amortization and accretion	60,427			173,991					234,418			47,821		155,106					202,927
Interest expense, net	41,304			91,261					132,565			33,293		24,399					57,692
Income tax expense	1,361			7,529					8,890			898		46,215					47,113
EBITDA	310,322			244,248					554,570			174,571		310,712					485,283
Non-cash compensation expense	4,600			4,855					9,455			3,361		2,525					5,886
Loss (gain) on disposal of assets	(1,396		)	4,314					2,918			1,069		(175		)			894
Unrealized loss on commodity derivatives	8,534			—					8,534			2,926		—					2,926
Inventory fair value adjustments	(60,920		)	(2,877		)			(63,797		)	32,200		1,946					34,146
Adjusted EBITDA	$	261,140		$	250,540				$	511,680		$	214,127	$	315,008				$	529,135
Capital expenditures	$	78,369		$	212,191				$	290,560		$	98,283	$	244,146				$	342,429
Total assets at end of period	$	2,938,747		$	6,058,254				$	8,997,001		$	2,925,842	$	5,915,977				$	8,841,819