Segment Reporting

12 Months Ended

Dec. 31, 2019

Our financial statements reflect two reportable segments, Fuel Distribution and Marketing and All Other. After the Retail Divestment and the conversion of 207 retail sites to commission agent sites, the Partnership renamed the former Wholesale segment to Fuel Distribution and Marketing and the former Retail segment to All Other.

We report Adjusted EBITDA by segment as a measure of segment performance. We define Adjusted EBITDA as net income before net interest expense, income tax expense, depreciation, amortization and accretion expense, non-cash compensation expense, gains and losses on disposal of assets and impairment charges, unrealized gains and losses on commodity derivatives, inventory adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations.

Fuel Distribution and Marketing Segment

Our Fuel Distribution and Marketing segment purchases motor fuel primarily from independent refiners and major oil companies and supplies it to independently-operated dealer stations under long-term supply agreements, distributors and other consumers of motor fuel, and Partnership-operated stations included in our All Other segment. Also included in the Fuel Distribution and Marketing segment are motor fuel sales to commission agent locations and sales and costs related to processing transmix. We distribute motor fuels across more than 30 states throughout the East Coast, Midwest, South Central 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 our Fuel Distribution and Marketing segment to Partnership-operated stations included in our All Other segment are delivered at cost plus a profit margin. These amounts are included in intercompany eliminations of motor fuel revenue and motor fuel cost of sales. Also included in our Fuel Distribution and Marketing segment is lease income from properties that we lease or sublease.

All Other Segment

Prior to the completion of the Retail Divestment, our All Other segment primarily operated branded retail 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, and Hawaii. These stores offered motor fuel, merchandise, foodservice, and a variety of other services, including car washes, lottery, automated teller machines, money orders, prepaid phone cards and wireless services. The operations of the Retail Divestment are included in discontinued operations in the following segment information. Subsequent to the completion of the Retail Divestment, the remaining All Other segment includes the Partnership’s credit card services, franchise royalties, and retail operations in Hawaii and New Jersey.

The following tables present financial information by segment for the years ended December 31, 2019, 2018 and 2017.

Segment Financial Data for the Year Ended December 31, 2019



	Fuel Distribution and Marketing			All Other			Intercompany Eliminations		Totals
	(in millions)
Revenue
Motor fuel sales	$	15,522		$	654				$	16,176
Non motor fuel sales	62			216					278
Lease income	131			11					142
Intersegment sales	1,645			48			(1,693	)	—
Total revenue	17,360			929			(1,693	)	16,596
Gross profit (1)
Motor fuel	817			89					906
Non motor fuel	53			115					168
Lease	131			11					142
Total gross profit	1,001			215					1,216
Total operating expenses	550			202					752
Operating income	451			13					464
Interest expense, net	146			27					173
Other expense (income), net	(3		)	—					(3		)
Equity in earnings of unconsolidated affiliate	(2		)	—					(2		)
Income (loss) from continuing operations before income taxes	310			(14		)			296
Income tax expense (benefit)	20			(37		)			(17		)
Net income and comprehensive income	$	290		$	23				$	313
Depreciation, amortization and accretion	144			39					183
Interest expense, net	146			27					173
Income tax expense (benefit)	20			(37		)			(17		)
Non-cash unit-based compensation expense	13			—					13
Loss on disposal of assets and impairment charges	—			68					68
Unrealized gain on commodity derivatives	(5		)	—					(5		)
Inventory adjustments	(79		)	—					(79		)
Equity in earnings of unconsolidated affiliate	(2		)	—					(2		)
Adjusted EBITDA related to unconsolidated affiliate	4			—					4
Other non-cash adjustments	14			—					14
Adjusted EBITDA	$	545		$	120				$	665
Capital expenditures	$	111		$	37				$	148
Total assets, end of period	$	4,189		$	1,249				$	5,438

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(1)	Excludes depreciation, amortization and accretion.

Segment Financial Data for the Year Ended December 31, 2018



	Fuel Distribution and Marketing		All Other			Intercompany Eliminations		Totals
	(in millions)
Revenue
Motor fuel sales	$	15,466	$	1,038				$	16,504
Non motor fuel sales	48		312					360
Lease income	118		12					130
Intersegment sales	1,649		120			(1,769	)	—
Total revenue	17,281		1,482			(1,769	)	16,994
Gross profit (1)
Motor fuel	673		123					796
Non motor fuel	40		156					196
Lease	118		12					130
Total gross profit	831		291					1,122
Total operating expenses	538		239					777
Operating income	293		52					345
Interest expense, net	103		41					144
Loss on extinguishment of debt and other, net	109		—					109
Income from continuing operations before income taxes	81		11					92
Income tax expense	1		33					34
Income (loss) from continuing operations	80		(22		)			58
Loss from discontinued operations, net of income taxes	—		(265		)			(265		)
Net income (loss) and comprehensive income (loss)	$	80	$	(287	)			$	(207	)
Depreciation, amortization and accretion	128		54					182
Interest expense, net (2)	103		43					146
Income tax expense (2)	1		191					192
Non-cash unit-based compensation expense (2)	2		10					12
Loss on disposal of assets and impairment charges (2)	27		53					80
Loss on extinguishment of debt and other, net (2)	109		20					129
Unrealized loss on commodity derivatives (2)	6		—					6
Inventory adjustments (2)	84		—					84
Other non-cash adjustments	14		—					14
Adjusted EBITDA	$	554	$	84				$	638
Capital expenditures (2)	$	77	$	26				$	103
Total assets, end of period (2)	$	3,878	$	1,001				$	4,879

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(1)	Excludes depreciation, amortization and accretion.


(2)	Includes amounts from discontinued operations.

Segment Financial Data for the Year Ended December 31, 2017



	Fuel Distribution and Marketing			All Other			Intercompany Eliminations		Totals
	(in millions)
Revenue
Motor fuel sales	$	9,333		$	1,577				$	10,910
Non motor fuel sales	50			674					724
Lease income	77			12					89
Intersegment sales	1,472			125			(1,597	)	—
Total revenue	10,932			2,388			(1,597	)	11,723
Gross profit (1)
Motor fuel	535			157					692
Non motor fuel	39			288					327
Lease	77			12					89
Total gross profit	651			457					1,108
Total operating expenses	406			473					879
Operating income (loss)	245			(16		)			229
Interest expense, net	88			121					209
Income (loss) from continuing operations before income taxes	157			(137		)			20
Income tax benefit	(10		)	(296		)			(306		)
Income from continuing operations	167			159					326
Loss from discontinued operations, net of income taxes	—			(177		)			(177		)
Net income (loss) and comprehensive income (loss)	$	167		$	(18	)			$	149
Depreciation, amortization and accretion (2)	118			85					203
Interest expense, net (2)	88			157					245
Income tax benefit (2)	(10		)	(248		)			(258		)
Non-cash unit-based compensation expense (2)	2			22					24
Loss on disposal of assets and impairment charges (2)	8			392					400
Unrealized gain on commodity derivatives (2)	(3		)	—					(3		)
Inventory adjustments (2)	(24		)	(4		)			(28		)
Adjusted EBITDA	$	346		$	386				$	732
Capital expenditures (2)	$	71		$	106				$	177
Total assets, end of period (2)	$	3,130		$	5,214				$	8,344

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(1)	Excludes depreciation, amortization and accretion.

(2)

Includes amounts from discontinued operations.