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 June 30, 2026
OR
☐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 July 31, 2026, the registrant had outstanding 38,173,255 common units.
TABLE OF CONTENTS
PAGE
Commonly Used Defined Terms
i
PART I - FINANCIAL INFORMATION
1
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
2
Consolidated Statements of Equity and Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
3
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (Unaudited)
4
Condensed Notes to Consolidated Financial Statements (Unaudited)
5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3. Quantitative and Qualitative Disclosures about Market Risk
31
Item 4. Controls and Procedures
PART II - OTHER INFORMATION
32
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
SIGNATURE
33
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
CrossAmerica Partners LP, the Partnership, CAPL, we, us, our
CrossAmerica Partners LP related parties:
DMI
Dunne Manning Inc. (formerly Lehigh Gas Corporation), an entity affiliated with the Topper Group
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 purchases fuel from us.
Other Defined Terms:
AOCI
Accumulated other comprehensive income (loss)
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
Board
Board of Directors of our General Partner
Bonus Plan
The Performance-Based Bonus Compensation Policy is one of the key components of “at-risk” compensation. The Bonus Plan is utilized to reward short-term annual performance achievements and to motivate and reward Topper Group employees for their contributions toward meeting financial and strategic goals.
Credit Facility
Amendment and Restatement Agreement, dated as of March 31, 2023, as amended by the First Amendment to Amendment and Restatement Agreement, dated as of February 20, 2024, and by the Second Amendment to Amended and Restated Credit Agreement, dated as of July 15, 2026, 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.
DTW
Dealer tank wagon contracts, which are variable market-based 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
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
Form 10-K
CrossAmerica’s Annual Report on Form 10-K for the year ended December 31, 2025
Getty
Getty Properties Corp.
Internal Revenue Code
Internal Revenue Code of 1986, as amended
IPO
Initial public offering of CrossAmerica Partners LP on October 30, 2012
MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Omnibus Agreement
The Omnibus Agreement, effective January 1, 2020, by and among the Partnership, the General Partner and DMI. The terms of the 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 Omnibus Agreement, DMI agrees, among other things, to provide, or cause to be provided, to the Partnership certain management services at cost without markup.
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
SOFR
Secured Overnight Financing Rate
U.S. GAAP
U.S. Generally Accepted Accounting Principles
ii
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars, except unit data)
(Unaudited)
June 30,
December 31,
2026
2025
ASSETS
Current assets:
Cash and cash equivalents
$
4,922
3,137
Accounts receivable, net of allowances of $320 and $635, respectively
33,834
28,566
Accounts receivable from related parties
651
687
Inventory
63,443
59,610
Assets held for sale
9,755
9,690
Current portion of interest rate swap contracts
2,291
801
Other current assets
7,868
8,590
Total current assets
122,764
111,081
Property and equipment, net
579,475
547,686
Right-of-use assets, net
101,463
121,636
Intangible assets, net
54,406
61,638
Goodwill
99,409
Deferred tax assets
—
760
Interest rate swap contracts, less current portion
1,855
325
Other assets
22,614
22,199
Total assets
981,986
964,734
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations
9,774
3,465
Current portion of operating lease obligations
24,584
29,008
Accounts payable
77,725
63,413
Accounts payable to related parties
7,792
6,536
184
697
Accrued expenses and other current liabilities
25,360
27,378
Motor fuel and sales taxes payable
16,409
19,013
Total current liabilities
161,828
149,510
Debt and finance lease obligations, less current portion
715,471
687,187
Operating lease obligations, less current portion
80,680
96,974
Deferred tax liabilities, net
7,479
7,409
Asset retirement obligations
44,222
45,014
109
1,390
Other long-term liabilities
47,878
49,289
Total liabilities
1,057,667
1,036,773
Commitments and contingencies (Note 9)
Preferred membership interests
31,523
30,289
Equity:
Common units— 38,154,331 and 38,135,078 units issued and outstanding at June 30, 2026 and December 31, 2025, respectively
(111,004
)
(101,280
3,800
(1,048
Total deficit
(107,204
(102,328
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, except unit and per unit amounts)
Three Months Ended June 30,
Six Months Ended June 30,
Operating revenues (a)
1,179,017
961,925
2,020,847
1,824,400
Cost of sales (b)
1,066,230
860,933
1,810,437
1,633,594
Gross profit
112,787
100,992
210,410
190,806
Operating expenses:
Operating expenses (c)
55,025
57,949
111,461
116,823
General and administrative expenses
6,809
6,577
13,300
14,249
Depreciation, amortization and accretion expense
16,768
23,334
33,830
49,638
Total operating expenses
78,602
87,860
158,591
180,710
Gain on dispositions and lease terminations, net
1,087
28,365
7,203
33,402
Operating income
35,272
41,497
59,022
43,498
Other income, net
212
136
369
266
Interest expense
(11,342
(12,569
(22,092
(25,413
Income before income taxes
24,142
29,064
37,299
18,351
Income tax expense
3,330
3,896
5,828
298
Net income
20,812
25,168
31,471
18,053
Accretion of preferred membership interests
710
680
1,404
1,345
Net income available to limited partners
20,102
24,488
30,067
16,708
Net income per common unit
Basic
0.53
0.64
0.79
0.44
Diluted
0.52
0.78
Weighted-average common units:
38,154,331
38,097,513
38,148,481
38,085,815
38,323,956
39,545,478
38,318,067
38,260,908
Supplemental information:
(a) includes excise taxes of:
71,954
82,903
140,725
156,253
(a) includes rent income of:
14,666
15,459
29,226
32,661
(b) excludes depreciation, amortization and accretion
(b) includes rent expense of:
3,766
4,923
7,883
9,818
(c) includes rent expense of:
4,492
4,631
9,051
9,242
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
(Thousands of Dollars, except unit amounts)
Limited Partners' InterestCommon Unitholders
Total Equity
Units
Dollars
Balance at December 31, 2025
38,135,078
10,659
Other comprehensive income
Unrealized gain on interest rate swap contracts
2,900
Realized gain on interest rate swap contracts reclassified from AOCI into interest expense
(281
Total other comprehensive income
2,619
Comprehensive income
13,278
Issuance of units related to 2025 Bonus Plan
9,345
194
Vesting of equity awards, net of units withheld for tax
9,908
206
(694
Distributions paid
(20,090
Balance at March 31, 2026
(111,005
1,571
(109,434
2,475
(246
2,229
23,041
(710
(20,101
Balance at June 30, 2026
Balance at December 31, 2024
38,059,702
(61,371
7,595
(53,776
Net loss
(7,115
Unrealized loss on interest rate swap contracts
(3,928
(921
Total other comprehensive loss
(4,849
Comprehensive loss
(11,964
Issuance of units related to 2024 Bonus Plan
7,237
165
30,574
(665
Tax effect of intra-entity transfer of assets
(387
(20,054
Balance at March 31, 2025
(88,730
2,746
(85,984
(1,987
(931
(2,918
Comprehensive income (loss)
22,250
(680
(20,074
Balance at June 30, 2025
(84,316
(172
(84,488
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred financing costs
968
969
Credit loss expense
24
Deferred income tax expense (benefit)
830
(2,696
Equity-based employee and director compensation expense
788
989
(7,203
(33,402
Changes in operating assets and liabilities, net of acquisitions
397
4,146
Net cash provided by operating activities
61,105
37,697
Cash flows from investing activities:
Principal payments received on notes receivable
127
63
Proceeds from sale of assets
16,252
72,766
Capital expenditures
(10,874
(21,958
Cash paid in connection with acquisitions, net of cash acquired
(1,800
Net cash provided by investing activities
3,705
50,871
Cash flows from financing activities:
Borrowings under the Credit Facility
49,500
41,000
Repayments on the Credit Facility
(70,200
(81,500
Payments of finance lease obligations
(1,964
(1,604
Distributions paid on distribution equivalent rights
(139
(146
Distributions paid to preferred membership interests
(170
Distributions paid on common units
(40,052
(39,982
Net cash used in financing activities
(63,025
(82,232
Net increase in cash and cash equivalents
1,785
6,336
Cash and cash equivalents at beginning of period
3,381
Cash and cash equivalents at end of period
9,717
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. DESCRIPTION OF BUSINESS AND OTHER DISCLOSURES
Our business consists of:
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 June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 included in the consolidated financial statements has been derived from our unaudited financial statements. Financial information as of December 31, 2025 has been derived from our audited financial statements and notes thereto as of that date.
Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. 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.
Use of Estimates
The preparation of consolidated 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 consolidated 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.
Reclassifications
Certain prior-year balance sheet amounts were reclassified to conform to the current-year presentation.
New Accounting Pronouncements Pending Adoption
In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses.” The amendments in this new guidance require disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including with respect to purchases of inventory, employee compensation, depreciation and intangible asset amortization. These new disclosures will be required in our Annual Report on Form 10-K for the year ending December 31, 2027 and interim and annual reports thereafter. Although we do not anticipate the impact of adopting this guidance will be material, it will affect our disclosures.
Concentration Risk
For the six months ended June 30, 2026 and 2025, respectively, we purchased approximately 81% and 79% of our motor fuel from four suppliers. Approximately 20% and 22% of our motor fuel gallons sold for the six months ended June 30, 2026 and 2025, respectively, were delivered by our top two carriers.
For each of the six months ended June 30, 2026 and 2025, approximately 56% of our merchandise was purchased from one supplier.
Note 2. ASSETS HELD FOR SALE
We have classified 19 sites and 24 sites as held for sale at June 30, 2026 and December 31, 2025, respectively, which are expected to be sold within one year of such classification. Assets held for sale were as follows (in thousands):
Land
5,330
4,395
Buildings and site improvements
6,094
6,590
Equipment
6,071
6,554
Total
17,495
17,539
Less accumulated depreciation
(7,740
(7,849
The Partnership has continued to focus on optimizing the class of trade for its assets, which has included divesting certain assets, often lower performing, while seeking to maintain a wholesale fuel supply relationship whenever possible. During the three and six months ended June 30, 2026, we sold 5 and 21 properties for $2.7 million and $15.4 million in proceeds, resulting in net gains of $1.1 million and $7.4 million, respectively. During the three and six months ended June 30, 2025, we sold 60 and 67 properties for $64.0 million and $72.6 million in proceeds, resulting in net gains of $29.7 million and $35.2 million, respectively.
See Note 4 for information regarding impairment charges primarily recorded upon classifying sites within assets held for sale.
Note 3. INVENTORY
Inventory consisted of the following (in thousands):
Merchandise
33,258
34,884
Motor fuel
30,185
24,726
6
Note 4. PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following (in thousands):
263,382
268,873
306,292
309,851
Leasehold improvements
20,267
20,760
Equipment and other
324,441
325,389
Right-of-use assets under finance leases
58,044
32,735
Construction in progress
5,308
3,090
Property and equipment, at cost
977,734
960,698
Accumulated depreciation and amortization
(396,275
(382,411
Accumulated amortization of right-of-use assets under finance leases
(1,984
(30,601
We recorded impairment charges of $1.3 million and $6.1 million during the three months ended June 30, 2026 and 2025, and $2.8 million and $14.9 million during the six months ended June 30, 2026 and 2025, respectively, included within depreciation, amortization and accretion expense 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 optimization effort.
Note 5. INTANGIBLE ASSETS
Intangible assets consisted of the following (in thousands):
June 30, 2026
December 31, 2025
GrossAmount
AccumulatedAmortization
NetCarryingAmount
Wholesale fuel supply contracts/rights
142,758
90,043
52,715
147,528
87,623
59,905
Trademarks/licenses
2,688
1,054
1,634
2,638
982
1,656
Covenant not to compete
200
143
57
123
77
Total intangible assets
145,646
91,240
150,366
88,728
Note 6. DEBT
Our balances for long-term debt and finance lease obligations were as follows (in thousands):
671,596
692,295
Finance lease obligations
58,980
4,656
Total debt and finance lease obligations
730,576
696,951
Current portion
Noncurrent portion
720,802
693,486
Deferred financing costs, net
5,331
6,299
Noncurrent portion, net of deferred financing costs
7
As of June 30, 2026, future principal payments on debt and future minimum rental payments on finance lease obligations were as follows (in thousands):
Debt
Finance Lease Obligations
Remainder of 2026
9,867
2027
6,208
2028
6,301
677,897
2029
6,395
2030
6,491
Thereafter
43,420
Total future payments
78,682
750,278
Less impact of discounting
19,702
Total future principal payments
Long-term portion
49,206
The Credit Facility is secured by substantially all of the Partnership’s assets.
Letters of credit outstanding totaled $4.9 million at both June 30, 2026 and December 31, 2025.
Taking the interest rate swap contracts into account, the effective interest rate on our Credit Facility was 5.5% (with an applicable margin of 2.00%) and 5.6% (with an applicable margin of 2.00%) at June 30, 2026 and December 31, 2025, respectively. See Note 7 for additional information on our interest rate swap contracts.
On July 15, 2026, the Partnership and its subsidiary, Lehigh Gas Wholesale Services, Inc., entered into an amendment to the Credit Facility (the "Credit Facility Amendment"). The Credit Facility Amendment, among other things, (x) extends the maturity date from March 31, 2028 to July 15, 2031, (y) removes the SOFR credit spread adjustment and (z) amends the applicable financial covenant to require the Partnership to maintain a Consolidated Leverage Ratio (as defined in the Credit Facility) of (i) for each fiscal quarter ending June 30, 2026, September 30, 2026, December 31, 2026, March 31, 2027, June 30, 2027 and September 30, 2027, not greater than 5.00 to 1.00, and (ii) for each fiscal quarter ending December 31, 2027 and thereafter, not greater than 4.75 to 1.00. All other terms and conditions of the Credit Facility remain in full force and effect.
As of June 30, 2026, we were in compliance with our financial covenants under the Credit Facility. The amount of availability under the Credit Facility at June 30, 2026, after taking into consideration debt covenant restrictions, was $248.5 million.
Cash paid for interest, including debt and finance lease obligations, amounted to $21.3 million and $24.6 million for the six months ended June 30, 2026 and 2025, respectively.
In May 2012, the Predecessor Entity entered into a 15-year master lease agreement with renewal options of up to an additional 20 years with Getty. Since then, the agreement has been amended from time to time to add or remove sites. As of December 31, 2025, we leased 106 sites under this lease. We paid fixed rent, which increased 1.5% per year. In addition, the lease required variable lease payments based on gallons of motor fuel sold.
Because the fair value of the land at lease inception was estimated to represent more than 25% of the total fair value of the real property subject to the lease, the land element of the lease was analyzed for operating or capital treatment separately from the rest of the property subject to the lease. The land element of the lease was classified as an operating lease and all of the other property was classified as a capital lease. This assessment was not required to be reassessed upon adoption of ASC 842–Leases.
On January 31, 2026, we entered into an amendment of this lease with Getty. The amendment reset the rents for all 106 sites to an aggregate $6.9 million in annual rent, subject to annual escalations of 1.5%. The amendment also removed provisions requiring us to pay variable rent based on fuel volume.
8
Through this amendment, we also exercised a renewal option that extends the term through April 30, 2037 and have an additional renewal option that could extend the term through April 30, 2047. The amendment provides for a purchase option to us that can be exercised between October 1, 2026 and June 30, 2027 for up to 25 sites for up to $6.6 million, which is reasonably certain to be exercised. The amendment also provides for a purchase option to us for up to nine additional sites during certain timeframes of the term at values to be agreed upon, which is not reasonably certain to be exercised. Getty has the option to recapture up to six sites during certain timeframes of the term as well, which is also not reasonably certain to be exercised. We have a right of first offer should Getty seek to sell or convey any of the leased properties.
This amendment triggered a reassessment of the lease accounting. Effective January 31, 2026, we are accounting for the modified lease as a finance lease. With respect to the 25 sites for which it is reasonably certain we will exercise our purchase option and have the intent and ability to do so, we are accounting for the finance lease using an anticipated purchase date of October 1, 2026. With respect to the 81 remaining sites, we are accounting for the finance lease through the end of the current term expiring on April 30, 2037. We recorded increases in our finance lease obligations and right-of-use assets under finance leases of $56.3 million during the first quarter of 2026. The weighted-average discount rate for this finance lease obligation was 6.0% at June 30, 2026. Interest on finance lease obligations amounted to $0.9 million and an insignificant amount for the three months ended June 30, 2026 and 2025, and $1.2 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively.
Note 7. INTEREST RATE SWAP CONTRACTS
During 2026 and 2025, we held the following interest rate swap contracts (in thousands):
Type
Notional Amount
Termination Date
Fixed Rate
Spot starting April 2023
50,000
March 30, 2028
3.287
%
100,000
March 31, 2028
April 8, 2028
3.282
Forward starting April 2024
April 1, 2028
2.932
Spot starting November 2023
80,000
4.105
20,000
4.121
Our interest rate swap contracts fix the rate on a portion of our SOFR-based borrowings under our Credit Facility, have been designated as cash flow hedges and are expected to be highly effective.
The fair value of these interest rate swap contracts was reported as a separate line item within current assets, current liabilities, noncurrent assets and noncurrent liabilities, as applicable. See Note 10 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 (interest expense on our statement of operations) in the same period during which the hedged interest expense is recorded. We recognized a net realized gain from settlements of the interest rate swap contracts of $0.2 million and $0.9 million for the three months ended June 30, 2026 and 2025 and $0.5 million and $1.9 million for the six months ended June 30, 2026 and 2025, respectively.
We currently estimate that a net gain of $2.1 million will be reclassified from AOCI 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 8. RELATED-PARTY TRANSACTIONS
Wholesale Motor Fuel Sales and Real Estate Rentals
Revenues from TopStar, an entity affiliated with the Topper Group, were $12.9 million and $9.1 million for the three months ended June 30, 2026 and 2025 and $22.0 million and $17.9 million for the six months ended June 30, 2026 and 2025, respectively. Accounts receivable from TopStar was $0.7 million at both June 30, 2026 and December 31, 2025.
In February 2025, we purchased a property from TopStar for $0.2 million.
9
We lease certain real estate from the Topper Group. Rent expense under these lease agreements was $2.2 million and $2.5 million for the three months ended June 30, 2026 and 2025 and $4.5 million and $5.0 million for the six months ended June 30, 2026 and 2025, respectively.
We incurred expenses under the Omnibus Agreement, including costs for store level personnel at our company operated sites as well as other cost reimbursements, totaling $30.9 million and $32.8 million for the three months ended June 30, 2026 and 2025 and $61.2 million and $64.7 million for the six months ended June 30, 2026 and 2025, respectively. Such expenses are included in operating expenses and general and administrative expenses in the statements of operations. Amounts payable to the Topper Group related to expenses incurred by the Topper Group on our behalf in accordance with the Omnibus Agreement totaled $5.8 million and $4.6 million at June 30, 2026 and December 31, 2025, respectively.
Common Unit Distributions and Other Equity Transactions
We distributed $7.7 million to the Topper Group related to its ownership of our common units for each of the three months ended June 30, 2026 and 2025 and $15.4 million for each of the six months ended June 30, 2026 and 2025.
We distributed $2.6 million to affiliates of John B. Reilly, III, a member of our Board, related to their ownership of our common units for each of the three months ended June 30, 2026 and 2025 and $5.3 million and $5.2 million for the six months ended June 30, 2026 and 2025, respectively.
We recorded accretion on the preferred membership interests issued in March 2022 to related parties of $0.7 million for each of the three months ended June 30, 2026 and 2025 and $1.4 million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively. We paid income tax distributions of $0.2 million related to the preferred membership interests for the three and six months ended June 30, 2026.
Maintenance and Environmental Costs
Certain maintenance and environmental remediation activities are performed by an entity affiliated with the Topper Group, as approved by the independent conflicts committee of the Board. We incurred charges with this related party of $0.5 million and $0.4 million for the three months ended June 30, 2026 and 2025 and $0.9 million and $1.1 million for the six months ended June 30, 2026 and 2025, respectively. Accounts payable to this related party amounted to $0.3 million at both June 30, 2026 and December 31, 2025.
Environmental Remediation Indemnification
Under an indemnification agreement, DMI reimburses us for certain environmental remediation costs incurred by the Partnership. We received $0.1 million for each of the three months ended June 30, 2026 and 2025 and $0.3 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively.
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. Merchandise costs amounted to $4.8 million for each of the three months ended June 30, 2026 and 2025 and $9.2 million and $9.1 million for the six months ended June 30, 2026 and 2025, respectively. Amounts payable to this related party amounted to $1.6 million and $1.7 million at June 30, 2026 and December 31, 2025, respectively.
Vehicle Lease
In connection with the services rendered under the Omnibus Agreement, we lease certain vehicles from an entity affiliated with the Topper Group, as approved by the independent conflicts committee of the Board. Lease expense was an insignificant amount for each of the three months ended June 30, 2026 and 2025 and $0.1 million for each of the six months ended June 30, 2026 and 2025.
10
Principal Executive Offices
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 for each of the three months ended June 30, 2026 and 2025 and $0.6 million for each of the six months ended June 30, 2026 and 2025.
Public Relations and Website Consulting Services
We have engaged a company affiliated with John B. Reilly, III, member of the Board, for public relations and website consulting services. The cost of these services was insignificant for the three and six months ended June 30, 2026 and 2025.
Note 9. 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 period, 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 period. We did not pay any significant penalties in any period presented.
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. We believe that it is not reasonably possible that these proceedings, separately or in the aggregate, will 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 sites where refined petroleum products are being or have been handled. These 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 generally entered into indemnification agreements with various sellers in conjunction with our past 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 $9.8 million and $9.7 million at June 30, 2026 and December 31, 2025, respectively. Indemnification assets related to state funds or insurance recorded on the balance sheet within other current and other noncurrent assets totaled $8.4 million and $8.3 million at June 30, 2026 and December 31, 2025, 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.
11
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 consolidated balance sheet of the Partnership.
Similarly, we have generally been indemnified with respect to known contamination at sites acquired from third parties. As such, these environmental liabilities and indemnification assets are also not recorded on the consolidated balance sheet of the Partnership.
Note 10. 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 2026 or 2025.
As further discussed in Note 7, we remeasure the fair value of interest rate swap 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 yield curve for the same period as the future interest rate swap settlements. These fair value measurements are classified as Level 2 measurements.
We have accrued for outstanding phantom 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 deemed Level 1 measurements.
The fair value of our accounts receivable, notes receivable, and accounts payable approximated their carrying values as of June 30, 2026 and December 31, 2025 due to the short-term maturity of these instruments. The fair value of borrowings under the Credit Facility approximated its carrying value as of June 30, 2026 and December 31, 2025 due to the frequency with which interest rates are reset and the consistency of the market spread.
Note 11. 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. 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.
12
We recorded income tax expense of $3.3 million and $3.9 million for the three months ended June 30, 2026 and 2025 and $5.8 million and $0.3 million for the six months ended June 30, 2026 and 2025, respectively, as a result of the income generated by our corporate subsidiaries. The effective tax rate differs from the combined federal and state statutory rate primarily because only our corporate subsidiaries are subject to income tax.
Cash paid for income taxes, net of refunds received, amounted to $7.2 million and $2.8 million for the six months ended June 30, 2026 and 2025, respectively.
Note 12. NET INCOME PER COMMON UNIT
The following table provides a reconciliation of net income and weighted-average units used in computing basic and diluted net income per common unit for the following periods (in thousands, except unit and per unit amounts):
Numerator:
20,031
20,001
40,052
39,982
Allocation of distributions in excess of net income
71
4,487
(9,985
(23,274
Limited partners’ interest in net income - basic
Accretion of preferred membership interests (a)
Limited partners’ interest in net income - diluted
Denominator:
Weighted-average common units outstanding - basic
Adjustment for phantom and phantom performance units
169,625
174,674
169,586
175,093
Adjustment for preferred membership interests (a)
1,273,291
Weighted-average common units outstanding - diluted
Net income per common unit - basic
Net income per common unit - diluted
Distributions paid per common unit
0.5250
1.0500
Distributions declared (with respect to each respective period) per common unit
For the three months ended June 30, 2025, dilutive units related to the preferred membership interests were included in the denominator of the calculation of diluted earnings per unit. Similarly, the accretion of the preferred membership interests was added back in the numerator of the calculation as if the preferred membership interests had been converted to common units at the beginning of the period, in which case no accretion would have been recorded.
For the six months ended June 30, 2025, 1,273,291 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been antidilutive.
13
Distributions
Distribution activity for 2026 is as follows:
Quarter Ended
Record Date
Payment Date
CashDistribution(per unit)
CashDistribution(in thousands)
February 2, 2026
February 12, 2026
20,021
March 31, 2026
May 4, 2026
May 14, 2026
August 3, 2026
August 13, 2026
20,041
The amount of any distribution is subject to the discretion of the Board, which may reduce or eliminate the cash distribution 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 13. SEGMENT REPORTING
We conduct our business in two reportable segments: 1) the wholesale segment and 2) the retail segment.
The wholesale segment includes the wholesale distribution of motor fuel to lessee dealers and independent dealers. 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.
The retail segment includes the retail sale of motor fuel at retail sites operated by commission agents and the sale of convenience merchandise and the retail sale of motor fuel at company operated sites. A commission agent site 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, other income, interest expense and income tax expense. Total assets by segment are not presented as management does not currently assess performance or allocate resources based on that data.
During the three and six months ended June 30, 2025, respectively, we converted six and 24 sites from lessee dealer sites in the wholesale segment to company operated or commission agent sites in the retail segment, net.
14
The following table reflects activity related to our reportable segments (in thousands):
Wholesale
Retail
Unallocated
Consolidated
Three Months Ended June 30, 2026
Revenues from fuel sales to external customers
527,990
524,475
1,052,465
Revenues from food and merchandise sales
105,287
Rent income
10,634
4,032
Other revenue
1,149
5,450
6,599
Total revenues
539,773
639,244
Cost of goods sold - fuel
510,189
478,014
988,203
Cost of goods sold - food and merchandise
74,261
Cost of goods sold - Rent expense
2,487
1,279
27,097
85,690
Store labor
21,563
Maintenance and environmental costs
1,417
7,014
8,431
Other items (a)
4,913
20,118
22,490
47,521
Operating income (loss)
20,767
36,995
(22,490
Three Months Ended June 30, 2025
399,598
432,813
832,411
108,059
11,851
3,608
1,388
4,608
5,996
412,837
549,088
384,433
394,024
778,457
77,553
3,539
1,384
24,865
76,127
23,468
1,425
7,048
8,473
5,696
20,312
1,546
27,554
17,744
25,299
(1,546
Six Months Ended June 30, 2026
885,602
897,553
1,783,155
195,952
21,173
8,053
2,255
10,259
12,514
909,030
1,111,817
853,348
811,232
1,664,580
137,974
5,265
2,618
50,417
159,993
42,891
2,645
14,640
17,285
10,122
41,163
39,927
91,212
37,650
61,299
(39,927
15
Six Months Ended June 30, 2025
765,359
817,334
1,582,693
197,400
25,135
7,526
2,583
9,063
11,646
793,077
1,031,323
734,431
747,364
1,481,795
141,981
7,127
2,691
51,519
139,287
46,034
2,894
15,119
18,013
11,397
41,379
30,485
83,261
37,228
36,755
(30,485
A reconciliation from operating income to income before income taxes follows (in thousands):
Receivables relating to the revenue streams above are as follows (in thousands):
2024
Receivables from fuel and merchandise sales
33,639
28,316
30,115
Receivables for rent and other lease-related charges
846
937
2,122
Total accounts receivable
34,485
29,253
32,237
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, for which our performance obligations are satisfied as services are rendered. 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 $9.6 million and $9.9 million at June 30, 2026 and December 31, 2025, respectively. Amortization of such costs is recorded against operating revenues and amounted to $0.5 million for each of the three months ended June 30, 2026 and 2025 and $1.0 million for each of the six months ended June 30, 2026 and 2025.
Receivables from rent and other lease-related charges are generally collected at the beginning of the month.
16
Note 14. 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):
(Increase) decrease:
Accounts receivable
(5,278
(229
36
(219
Inventories
(3,900
2,426
1,536
654
(552
(1,008
Increase (decrease):
12,683
390
1,270
(806
(1,490
2,485
(2,604
48
(1,304
405
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 and non-cash activity.
Supplemental schedule of non-cash investing and financing activities (in thousands):
Accrued capital expenditures
2,598
2,840
Lease liabilities arising from obtaining right-of-use assets under operating leases
4,094
6,455
Lease liabilities arising from obtaining right-of-use assets under finance leases
56,288
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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:
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:
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:
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Significant Factors Affecting our Profitability
The Significance of Crude Oil and Wholesale Motor Fuel Prices on Our Revenues, Cost of Sales and Gross Profit
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 approximately 55% of gallons sold, we receive a per gallon rate equal to the posted rack price, less any applicable discounts, plus transportation costs, taxes and a fixed rate per gallon of motor fuel. The remaining gallons are either retail sales or wholesale DTW contracts that provide for variable, market-based pricing.
Regarding our supplier relationships, a material amount of our total gallons purchased are subject to prompt payment discounts. The dollar value of these discounts varies with changes in 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).
In our retail business, 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. Further, we are assessed fees as a percentage of debit and credit card sales. Such fees increase as "at the pump" retail prices increase but without necessarily being accompanied by higher retail gross profits.
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.
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 components of cost of goods sold, such as fuel, merchandise, and credit card fees. Inflation also affects certain operating expenses, such as labor costs, certain leases, and general and administrative expenses. While our wholesale segment benefits from higher terms discounts as a result of higher fuel costs, inflation can negatively impact our cost of goods sold and 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.
Class of Trade Conversions and Divestitures
We consider the highest and best use class of trade for each of our properties, which results in the conversion of sites from one class of trade to another and ultimately increases or decreases in the gross profit and operating income for the wholesale and retail segments. See Note 13 to the financial statements for additional information.
As part of our evaluation of the highest and best use class of trade for each of our properties, we divest certain assets, often lower performing properties. These sales generate gains or impairment charges depending on the site; see Notes 2 and 4 to the financial statements for additional information. These sales result in reductions in gross profit and operating income in the wholesale and retail segments. For many of these divestitures, we continue to supply the sites with fuel through long-term supply contracts. When we sell a lessee dealer site with continued fuel supply, the site is converted from a lessee dealer site to an independent dealer site but remains in the wholesale segment. When we sell company operated or commission agent sites with continued fuel supply, the site is converted from being operated in our retail segment to being operated as an independent dealer site in our wholesale segment.
20
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):
Operating revenues
Cost of sales
Operating expenses
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Operating revenues increased $217 million (23%) and operating income decreased $6.2 million (15%). Significant items impacting these results were:
Revenues from fuel sales increased $220 million (26%) due primarily to a 43% increase in our consolidated average fuel selling price. The average spot price of WTI crude oil increased 48% to $95.65 per barrel for the second quarter of 2026, compared to $64.57 per barrel for the second quarter of 2025. This increase was partially offset by an 11% decrease in volume due to a reduction in volume in our base business and the net loss of independent dealer contracts.
Cost of sales increased $205 million (24%), due to a higher cost per gallon, partially offset by lower volume due to the same drivers discussed above.
Gross profit increased $11.8 million (12%) due primarily to an increase in motor fuel gross profit in both our retail and wholesale segments. See “Results of Operations—Segment Results” for additional gross profit analyses.
See “Results of Operations—Segment Results” for analyses.
21
General and administrative expenses increased $0.2 million (4%) primarily driven by higher legal fees and equity compensation expense, partially offset by lower acquisition-related costs.
Depreciation, amortization and accretion expense decreased $6.6 million (28%) primarily due to a $4.9 million decrease in impairment charges in comparison to prior year, as well as lower depreciation expense resulting from the impact of our site sales.
During the three months ended June 30, 2026, we recorded $1.1 million in net gains in connection with our ongoing real estate optimization effort.
During the three months ended June 30, 2025, we recorded $29.7 million in net gains in connection with our ongoing real estate optimization effort, partially offset by $1.3 million of net losses on lease terminations and asset disposals.
Interest expense decreased $1.2 million (10%) due to a lower average outstanding debt balance resulting from applying the proceeds from site sales to our Credit Facility as well as a lower average SOFR rate. These decreases were partially offset by a $0.8 million increase in interest expense on our finance lease obligations as a result of the reassessment of the accounting for our lease with Getty required by the amendment of this lease during the first quarter of 2026. See Note 6 to the financial statements for additional information.
We recorded income tax expense of $3.3 million and $3.9 million for the three months ended June 30, 2026 and 2025, respectively, driven by income generated by our taxable subsidiaries.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Operating revenues increased $196 million (11%) and operating income increased $15.5 million (36%). Significant items impacting these results were:
Revenues from fuel sales increased $200 million (13%) due primarily to a 24% increase in our consolidated average fuel selling price. The average spot price of WTI crude oil increased 24% to $84.29 per barrel for the first half of 2026, compared to $68.12 per barrel for the first half of 2025. This increase was partially offset by a 9% decrease in volume due to a reduction in volume in our base business and the net loss of independent dealer contracts.
Cost of sales increased $177 million (11%), due to a higher cost per gallon, partially offset by lower volume due to the same drivers discussed above.
Gross profit increased $19.6 million (10%) due primarily to an increase in motor fuel gross profit in both our retail and wholesale segments. See “Results of Operations—Segment Results” for additional gross profit analyses.
22
General and administrative expenses decreased $0.9 million (7%) primarily driven by lower equity compensation expense, acquisition-related costs and management fees.
Depreciation, amortization and accretion expense decreased $15.8 million (32%) primarily due to a $12.2 million decrease in impairment charges in comparison to prior year, as well as lower depreciation expense resulting from the impact of our site sales.
During the six months ended June 30, 2026, we recorded $7.4 million in net gains in connection with our ongoing real estate optimization effort, partially offset by $0.2 million of net losses on lease terminations and asset disposals.
During the six months ended June 30, 2025, we recorded $35.2 million in net gains in connection with our ongoing real estate optimization effort, partially offset by $1.8 million of net losses on lease terminations and asset disposals.
Interest expense decreased $3.3 million (13%) due to a lower average outstanding debt balance resulting from applying the proceeds from site sales to our Credit Facility as well as a lower average SOFR rate. These decreases were partially offset by a $1.1 million increase in interest expense on our finance lease obligations as a result of the reassessment of the accounting for our lease with Getty required by the amendment of this lease during the first quarter of 2026. See Note 6 to the financial statements for additional information.
We recorded income tax expense of $5.8 million and $0.3 million for the six months ended June 30, 2026 and 2025, respectively, driven by income generated by our taxable subsidiaries.
Segment Results
We present the results of operations of our segments consistent with how our management views the business.
23
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 and per gallon amounts):
Gross profit:
46,461
38,789
86,321
69,970
31,026
30,506
57,978
55,419
Rent
2,753
2,224
5,435
4,835
Total gross profit
(48,695
(50,828
(98,694
(102,532
Retail sites (end of period):
Company operated retail sites (a)
334
361
Commission agents (b)
221
236
Total retail sites
555
597
Total retail segment statistics:
Volume of gallons sold
124,032
141,683
241,718
268,216
Average retail fuel sites
560
603
568
600
Margin per gallon, before deducting credit card fees and commissions
0.492
0.370
0.465
0.355
Company operated site statistics:
336
368
341
367
Margin per gallon, before deducting credit card fees
0.513
0.395
0.486
0.385
Merchandise gross profit percentage
29.5
28.2
29.6
28.1
Commission site statistics:
224
235
227
233
0.436
0.313
0.411
0.289
Gross profit increased $9.6 million (13%) and operating income increased $11.7 million (46%). These results were impacted by:
Operating expenses decreased $2.1 million (4%) driven by a decrease in store labor as well as a decrease in the average retail site count due to the sale of certain sites in connection with our real estate optimization effort.
Gross profit increased $20.7 million (15%) and operating income increased $24.5 million (67%). These results were impacted by:
Operating expenses decreased $3.8 million (4%) driven by a decrease in store labor as well as a decrease in the average retail site count due to the sale of certain sites in connection with our real estate optimization effort.
25
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 (in thousands of dollars, except for the number of distribution sites and per gallon amounts):
Motor fuel gross profit
17,801
15,165
32,254
30,928
Rent gross profit
8,147
8,312
15,908
18,008
Other revenues
(6,330
(7,121
(12,767
(14,291
Motor fuel distribution sites (end of period): (a)
Independent dealers (b)
664
639
Lessee dealers (c)
317
365
Total motor fuel distribution sites
981
1,004
Average motor fuel distribution sites
984
1,009
985
1,021
Volume of gallons distributed
160,276
179,241
313,864
342,159
Margin per gallon
0.111
0.085
0.103
0.090
Gross profit increased $2.2 million (9%) and operating income increased $3.0 million (17%). These results were impacted by:
The $2.6 million increase (17%) in motor fuel gross profit was attributable to a 31% increase in our margin per gallon due to greater volatility in the price of crude oil for the three months ended June 30, 2026 as compared to the same period of 2025 as well as higher payment terms discounts due to the higher cost of fuel. This increase was partially offset by an 11% decrease in volume driven by a reduction in volume in our base business and the net loss of independent dealer contracts.
Rent gross profit decreased $0.2 million (2%) primarily due to the sale of certain lessee dealer sites in connection with our real estate optimization effort. This decrease was partially offset by an increase in rent gross profit as a result of the reassessment of the accounting for our lease with Getty required by the amendment of this lease during the first quarter of 2026, which resulted in certain payments to Getty that were previously accounted for as rent expense now being accounted for as principal payments and interest expense.
Operating expenses decreased $0.8 million (11%), primarily due to the sale of certain lessee dealer sites in connection with our real estate optimization effort.
26
Gross profit decreased $1.1 million (2%) and operating income increased $0.4 million (1%). These results were impacted by:
The $1.3 million increase (4%) in motor fuel gross profit was attributable to a 14% increase in our margin per gallon due to greater volatility in the price of crude oil for the six months ended June 30, 2026 as compared to the same period of 2025 as well as higher payment terms discounts due to the higher cost of fuel. This increase was partially offset by an 8% decrease in volume driven by a reduction in volume in our base business and the net loss of independent dealer contracts.
Rent gross profit decreased $2.1 million (12%) primarily due to the sale of certain lessee dealer sites in connection with our real estate optimization effort. This decrease was partially offset by an increase in rent gross profit as a result of the reassessment of the accounting for our lease with Getty required by the amendment of this lease during the first quarter of 2026, which resulted in certain payments to Getty that were previously accounted for as rent expense now being accounted for as principal payments and interest expense.
Operating expenses decreased $1.5 million (11%), primarily due to the sale of certain lessee dealer sites in connection with our real estate optimization effort.
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 (loss) 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 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 expense. The Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by distributions paid on common units.
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.
27
The following table presents reconciliations of EBITDA, Adjusted EBITDA, and Distributable Cash Flow to net income (loss), the most directly comparable U.S. GAAP financial measure, for each of the periods indicated (in thousands, except for Distribution Coverage Ratio):
11,342
12,569
22,092
25,413
52,252
64,967
93,221
93,402
587
176
Gain on dispositions and lease terminations, net (a)
(1,087
(28,365
Acquisition-related costs (b)
305
44
363
Adjusted EBITDA
51,769
37,083
86,850
61,352
Cash interest expense
(10,858
(12,085
(21,123
(24,444
Sustaining capital expenditures (c)
(4,952
(2,550
(6,302
(5,271
Current income tax expense (d)
(2,378
(52
(4,342
Distributable Cash Flow
33,581
22,396
55,083
31,491
Distribution Coverage Ratio
1.68x
1.12x
1.38x
0.79x
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 optimization efforts, borrowings under the 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, distributions on the preferred membership interests 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 Credit Facility, access to capital markets and alternate sources of funding to meet our financial commitments, debt service obligations, contingencies, anticipated capital expenditures, distributions on the preferred membership interests 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.
28
Cash Flows
The following table summarizes cash flow activity (in thousands):
Operating Activities
Net cash provided by operating activities increased $23 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to stronger operating results in 2026 and a decrease in interest expense driven by a lower average outstanding debt balance as well as a lower average SOFR rate, partially offset by higher income tax payments in 2026 compared to 2025.
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 compared to the shorter settlement of receivables for fuel, rent and merchandise.
Investing Activities
We incurred capital expenditures of $11 million and $22 million for the six months ended June 30, 2026 and 2025, respectively. We received $16 million and $73 million in proceeds primarily from the sale of sites in connection with our real estate optimization effort for the six months ended June 30, 2026 and 2025, respectively. We also paid $1.8 million as a final payment in connection with a prior-year acquisition.
Financing Activities
We paid $40 million in distributions for each of the six months ended June 30, 2026 and 2025. For the six months ended June 30, 2026 and 2025, we made total net repayments on the Credit Facility of $21 million and $41 million, respectively.
Distributions to Common Unitholders
Distribution activity for 2026 was as follows:
Distributions on Preferred Membership Interests
Distributions on the preferred membership interests are payable in cash quarterly starting in the fourth quarter of 2026. See Note 18 to the financial statements included in our Form 10-K for additional information.
29
As of June 30, 2026, our debt and finance lease obligations consisted of the following (in thousands):
Taking the interest rate swap contracts into account, the effective interest rate on our Credit Facility at June 30, 2026 was 5.5% (our applicable margin was 2.0% as of June 30, 2026). Letters of credit outstanding at June 30, 2026 totaled $4.9 million.
The amount of availability under our Credit Facility at July 31, 2026, after taking into consideration debt covenant restrictions, was $244.2 million.
See Note 6 for information on an amendment of our lease with Getty.
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. Growth capital expenditures, which include individual site purchases, and acquisition 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 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):
Sustaining capital
6,302
5,271
Growth
4,572
16,687
Total capital expenditures
10,874
21,958
A significant portion of our growth capital expenditures are discretionary and we regularly review our capital plans in light of our operational results, anticipated proceeds from sales of sites and credit facility capacity as well as capital market opportunities.
Concentration Risks
See Note 1 for information on our concentration risks related to our fuel suppliers, fuel carriers and merchandise suppliers.
30
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.
Our results for 2026 are anticipated to be impacted by the following:
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. See Note 1 to the financial statements for information on new accounting guidance that will impact future disclosures.
Critical Accounting Policies and 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, 2025. 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 June 30, 2026.
(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 June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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 9 of the financial statements.
ITEM 1A. RISK FACTORS
There were no material changes in the risk factors disclosed in the section entitled "Risk Factors" in our Form 10-K during the period covered by this report.
ITEM 6. EXHIBITS
Exhibit No.
Description
10.1
Second Amendment to Amended and Restated Credit Agreement, dated as of July 15, 2026, by and among CrossAmerica Partners LP, Lehigh Gas Wholesale Services, Inc., certain entities listed on the signature pages thereto, as guarantors, the lenders and L/C issuers party thereto, and Citizens Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K for CrossAmerica Partners LP, filed with the Securities and Exchange Commission on July 16, 2026)
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 as its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents
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.
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.
By:
CROSSAMERICA GP LLC, its General Partner
/s/ Maura Topper
Maura Topper
President and Chief Executive Officer
(Duly Authorized Officer and Principal Executive Officer)
Date: August 5, 2026