Financial Data and Key Metrics Changes - For Q2 2020, adjusted EBITDA was $27.7 million, flat compared to Q2 2019, while distributable cash flow increased by 17% year-over-year to $26 million from $22.3 million [26][32] - Distribution coverage on a paid basis was 1.31 times for Q2 2020, compared to 1.24 times in Q2 2019, and trailing 12-month coverage improved to 1.21 times from 1.06 times [27][32] - Operating expenses increased by $11 million year-over-year, primarily due to an increase in company-operated sites from 55 to 128 [27][28] Business Line Data and Key Metrics Changes - Wholesale fuel volume increased by 1% year-over-year, with a significant increase in wholesale fuel gross profit up 48% due to higher margins [8][11] - Rental gross profit decreased by 6% year-over-year to $14.3 million, mainly due to lease terminations related to acquisitions [14] - Inside store sales at company-operated sites showed strong performance, with same-store sales up 5% to 10% year-over-year since early May [20] Market Data and Key Metrics Changes - Same-site year-over-year volume performance improved from a decline of 50% in early April to a decline of approximately 10% in recent weeks [10] - Regional performance varied, with states like Alabama showing strong volume while New Jersey and New York lagged due to COVID-19 impacts [39] Company Strategy and Development Direction - The company completed the acquisition of retail and wholesale assets, increasing company-operated sites by over 200% year-over-year [19] - Ongoing asset exchanges with Circle K are expected to be completed in the second half of 2020, with only 23 properties remaining [22] - The company plans to continue divesting non-core properties as part of its real estate optimization strategy [23] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding future volume performance due to COVID-19, particularly concerning back-to-school trends [35] - Margins are expected to remain good, with potential for a reset to higher levels due to changes in volume dynamics [42] Other Important Information - The company provided approximately $500,000 in rent waivers and recorded a similar amount in bad debt expense for the quarter [15] - The leverage ratio improved to 2.96 times, down from 4.19 times as of March 31, 2020, indicating better financial health [29] Q&A Session Summary Question: How much seasonally stronger is the third quarter normally? - Management noted that the second and third quarters are typically the strongest volume quarters, but uncertainty remains due to COVID-19 [34][35] Question: Could you discuss your capital deployment strategies going forward? - Management indicated a conservative approach to capital expenditures due to ongoing uncertainty from COVID-19, while aiming to improve coverage ratios [36] Question: Can you share some of the volume trends by region? - Management highlighted that volume performance varies by region, with Alabama performing well and New Jersey lagging due to COVID-19 impacts [38][39] Question: What are your expectations for margins going forward? - Management stated that margins have remained good despite increased crude oil prices, and there is optimism for potential margin resets [41][42]

Financial Performance - Operating revenues for the three months ended June 30, 2020, were $398,402,000, a decrease of 34.2% from $605,528,000 for the same period in 2019[23] - Net income for the three months ended June 30, 2020, was $5,230,000, down from $6,441,000 in the same period of 2019, reflecting a decline of 18.8%[23] - Basic and diluted earnings per common unit for the three months ended June 30, 2020, were $0.14, compared to $0.18 for the same period in 2019, a decrease of 22.2%[23] - Operating income for the three months ended June 30, 2020, was $6.3 million, a significant decrease from $13.9 million in the same period of 2019[180] - Total revenues for the three months ended June 30, 2020, were $398.4 million, compared to $605.5 million for the same period in 2019, reflecting a decrease of approximately 34.2%[180] - Revenues from wholesale fuel sales and rental income from Circle K amounted to $46.6 million for the six months ended June 30, 2020, down from $75.6 million in 2019[129] Assets and Liabilities - Total assets increased to $1,021,660,000 as of June 30, 2020, compared to $911,147,000 at December 31, 2019, representing a growth of approximately 12.1%[19] - Total current liabilities increased to $154,659,000 as of June 30, 2020, from $112,636,000 at December 31, 2019, an increase of 37.3%[19] - Total equity increased to $118,514,000 as of June 30, 2020, from $78,397,000 at December 31, 2019, reflecting a growth of 51.1%[19] - Long-term debt and finance lease obligations totaled $524.9 million as of June 30, 2020, down from $541.6 million at the end of 2019[101] - The company classified 28 sites as held for sale, with total assets held for sale valued at $12.1 million as of June 30, 2020[91] Cash Flow and Investments - Net cash provided by operating activities was $61,643 for the six months ended June 30, 2020, up from $34,170 in the prior year, indicating a 80.7% increase[26] - The company experienced a net increase in cash and cash equivalents of $405 for the six months ended June 30, 2020, compared to a decrease of $(918) in the same period of 2019[26] - Cash paid for interest decreased to $9.533 million for the six months ended June 30, 2020, down from $13.441 million for the same period in 2019, a reduction of approximately 29%[188] - Cash paid for income taxes, net of refunds received, was $87, significantly lower than $2.398 million for the same period in 2019[188] Inventory and Expenses - Inventory levels rose significantly to $19,606,000 as of June 30, 2020, compared to $6,230,000 at December 31, 2019, marking an increase of 215.5%[19] - Operating expenses for the three months ended June 30, 2020, were $46,744,000, up from $30,815,000 in the same period of 2019, an increase of 51.7%[23] - The company recorded a loss on lease terminations of $7.8 million and wrote off $3.1 million in deferred rent income related to terminated leases[85] Segment Performance - The company operates in two segments: Wholesale and Retail, with the Wholesale segment focusing on fuel distribution and the Retail segment on fuel sales and convenience merchandise[176] - The Retail segment generated revenues of $161.1 million for the three months ended June 30, 2020, compared to $142.6 million in the same period of 2019, representing an increase of approximately 12.9%[180] - Revenues from fuel sales to external customers in the Wholesale segment were $219.3 million for the three months ended June 30, 2020, down from $442.4 million in the same period of 2019, a decline of about 50.4%[180] Debt and Financing - The revolving credit facility had an availability of $203.1 million after considering debt covenant restrictions as of June 30, 2020[101] - As of June 30, 2020, the company had a weighted-average interest rate of 2.20% on borrowings under the revolving credit facility[103] - The company entered into an interest rate swap contract with a notional amount of $150 million at a fixed rate of 0.495%, maturing on April 1, 2024[105] Other Notable Events - The company has expanded its operations to include the retail distribution of motor fuels and convenience merchandise since April 14, 2020[34] - The Partnership experienced a sharp decrease in fuel volume in mid-to-late March 2020 due to the COVID-19 pandemic, although volumes began to recover in the second quarter, remaining below historical levels[59] - The company recorded separation benefit costs totaling $0.4 million in the first quarter of 2019 related to the conversion of 46 company operated sites to dealer operated sites[192]

Financial Data and Key Metrics Changes - For Q1 2020, wholesale fuel volume declined by 5% compared to Q1 2019, primarily due to COVID-19 impacts [8] - Wholesale fuel gross profit increased by 35% year-over-year, driven by a 41% increase in wholesale fuel margin per gallon, which reached $0.09 [9][10] - Adjusted EBITDA for Q1 2020 was $25.3 million, an 18% increase from $21.4 million in Q1 2019 [20] - Distributable cash flow rose by 54% year-over-year to $20.4 million from $13.3 million [21] - Distribution coverage on a paid basis improved to 1.08x from 0.73x year-over-year [22] Business Line Data and Key Metrics Changes - Rental gross profit for Q1 2020 was $15.8 million, a 5% increase attributed to asset exchanges and site conversions [11] - Operating and SG&A expenses were reduced by 23%, reflecting a focus on expense control [12] Market Data and Key Metrics Changes - The decline in crude oil prices from $61 per barrel to just over $20 per barrel (a 66% drop) positively impacted variable fuel margins [10] - Same-site year-over-year volume declines were around 40%, with geographical variations; Alabama saw a 28% decline while New Jersey experienced a 58% decline [30] Company Strategy and Development Direction - The company completed acquisitions involving over 550 sites during the quarter, enhancing operational strength and providing immediate financial benefits [13][14] - The company is working to complete remaining asset exchanges from a prior agreement, with expectations to finalize in the second half of 2020 [16] - The recent retail acquisition has made 25% of the portfolio variable margin, allowing for broader acquisition opportunities [32] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic has dramatically impacted operations, with significant volume declines observed since mid-March [28] - There has been a stabilization in volumes since early April, with some moderate increases noted [30] - The company has suspended financial guidance due to the uncertainty created by COVID-19 [39] Other Important Information - The company entered into interest rate swap contracts to hedge against interest rate volatility, converting nearly 60% of variable rate borrowings to fixed rates [24][25] - The company sold six non-core properties for a total of $5 million as part of real estate optimization plans [20] Q&A Session Summary - No specific questions were recorded during the Q&A session, indicating that management addressed all concerns in their commentary [40]

| --- | --- | --- | --- | --- | --- | |-------|-------|----------|---------------|--------------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | First Quarter 2020 | | | | | | | | | | | | | Earnings Call | | | | | | May 2020 | | | | First Quarter 2020 Earnings Call May 2020 Forward Looking Statements Statements contained in this presentation that state the Partnership's or management's expectations or predictions of the future are forward-looking statements. The words "believe," "expect," ...

Financial Performance - Operating revenues for Q1 2020 were $391.7 million, a decrease of 16.9% from $471.8 million in Q1 2019[22] - Gross profit for Q1 2020 was $35.7 million, down from $37.1 million in Q1 2019, reflecting a decline of 3.6%[22] - Net income for Q1 2020 was $72.1 million, significantly higher than $0.2 million in Q1 2019, indicating a substantial increase[22] - Basic and diluted earnings per common unit for Q1 2020 were $2.00, compared to $0.00 in Q1 2019[22] - Operating income for the three months ended March 31, 2020, was $77.4 million, compared to $7.6 million in the same period of 2019, reflecting a significant increase in profitability[163] - For the three months ended March 31, 2020, total revenues were $391.7 million, a decrease from $471.8 million for the same period in 2019, representing a decline of approximately 17%[163] Assets and Liabilities - Total assets as of March 31, 2020, were $952.9 million, an increase from $911.1 million at the end of 2019[18] - Total liabilities decreased to $821.5 million as of March 31, 2020, from $832.8 million at the end of 2019[18] - Total current liabilities decreased to $100.5 million as of March 31, 2020, from $112.6 million at the end of 2019[18] - Total debt and finance lease obligations as of March 31, 2020, amounted to $533.5 million, a decrease from $541.6 million as of December 31, 2019, representing a reduction of approximately 1.99%[91] - As of March 31, 2020, accounts receivable totaled $29.7 million, down from $42.4 million at December 31, 2019, indicating improved collection efficiency[164] Cash Flow and Distributions - Cash and cash equivalents at the end of Q1 2020 were $8.9 million, up from $6.3 million at the end of Q1 2019[25] - Net cash provided by operating activities for Q1 2020 was $17.8 million, compared to $11.0 million in Q1 2019[25] - Distributions paid during the same period amounted to $18,111,000, resulting in a total equity of $131,417,000 as of March 31, 2020[27] - Cash distributions per common unit remained consistent at $0.5250 for both March 31, 2020, and March 31, 2019[151] Business Operations - The partnership's wholesale business purchased approximately 24% of its motor fuel from ExxonMobil, 23% from BP, 13% from Motiva, and 11% from Circle K for the three months ended March 31, 2020[53] - For the three months ended March 31, 2020, 6% of total wholesale distribution volumes were distributed to DMS, which accounted for 5% of rental income[50] - The partnership's operations are primarily conducted through its subsidiaries, including LGW for wholesale distribution and LGPR for real estate holdings[32] - The partnership's business exhibits seasonality, with historically higher sales volumes in the second and third quarters[34] Asset Transactions - The third tranche of asset exchanges with Circle K closed on February 25, 2020, involving the transfer of ten convenience and fuel retail stores valued at approximately $11.0 million[60] - The company completed the acquisition of retail operations at 169 sites for an aggregate consideration of $36 million, including $21 million in cash[76][77] - The company classified 35 sites as held for sale, with total assets held for sale amounting to $16.331 million as of March 31, 2020[85] - The fair value of the investment in CST Fuel Supply divested and the assets acquired was $69.0 million, with a gain of $67.6 million recorded in Q1 2020[75] Environmental and Impairment Charges - Environmental liabilities recorded on the balance sheet totaled $4.1 million and $3.4 million at March 31, 2020, and December 31, 2019, respectively[132] - An impairment charge of $5.2 million was recorded during the three months ended March 31, 2020[86] - The company assessed its assets for impairment due to COVID-19 and concluded that no impairments were necessary as of March 31, 2020[56] Interest Rates and Financial Instruments - The revolving credit facility had a weighted-average interest rate of 3.34% as of March 31, 2020, with an applicable margin of 2.25%[93] - The company entered into an interest rate swap contract with a notional amount of $150 million at a fixed rate of 0.495%, maturing on April 1, 2024, to hedge against interest rate volatility[95] - The fair value of the interest rate swap contract was $0.8 million as of March 31, 2020[96] - The company entered into interest rate swap contracts totaling $300 million to hedge against interest rate volatility, effectively converting approximately 60% of its variable rate borrowings to a fixed rate[299] Revenue Sources - Revenues from motor fuel sales to DMS for the three months ended March 31, 2020, were $22.1 million, down from $34.1 million for the same period in 2019, reflecting a decline of approximately 35.4%[102] - Revenues from motor fuel sales to Circle K for the three months ended March 31, 2020, were $29.2 million, compared to $33.3 million for the same period in 2019, indicating a decrease of about 12.3%[117] - Rental income from Circle K for the three months ended March 31, 2020, was $2.7 million, down from $4.2 million in the same period of 2019, a decline of approximately 35.5%[117] Miscellaneous - The impact of COVID-19 on the first quarter of 2020 was not material, although a decrease in fuel volume was noted starting in mid-to-late March[55] - The effective tax rate for the company differs from the combined federal and state statutory rate primarily because only its corporate subsidiary, LGWS, is subject to income tax[148] - The company did not incur any significant penalties related to minimum volume purchase requirements during the three months ended March 31, 2020, or 2019[128] - The company has not recorded any environmental liabilities related to sites contributed to the Partnership in connection with its IPO, as these remain the responsibility of the Predecessor Entity[135]

Financial Data and Key Metrics Changes - For Q4 2019, adjusted EBITDA was $25.6 million, down 11% from $28.7 million in Q4 2018, while distributable cash flow decreased by 11% to $18.8 million from $21 million in the previous year [26] - For the full year 2019, adjusted EBITDA was $103.7 million, a decline of 2%, but distributable cash flow increased by 5% to $80.1 million [27] - The distribution coverage ratio for Q4 2019 was 1.04 times, compared to 1.16 times in Q4 2018, while the full year coverage improved to 1.11 times from 1.01 times in 2018 [26][27] Business Line Data and Key Metrics Changes - Wholesale fuel gross profit for Q4 2019 decreased by 11% year-over-year, with a wholesale fuel margin of $0.068 per gallon, down from $0.076 per gallon in Q4 2018 [13][14] - For the full year 2019, wholesale fuel gross profit increased by 3%, driven by a 7% increase in wholesale fuel margin per gallon, which reached $0.072, the highest in the partnership's history [16][19] - Rental and other gross profit for Q4 2019 was $17.2 million, a 10% increase compared to the previous year, representing 42% of total gross profit for 2019 [14][16] Market Data and Key Metrics Changes - The company reported a relatively flat wholesale fuel volume compared to Q4 2018, indicating stable market conditions despite the decline in fuel margins [13] - The overall decrease in operating expenses for 2019 was 13%, attributed to divestitures and dealerization of sites [20] Company Strategy and Development Direction - The company plans to complete remaining asset exchanges with Couche-Tard and Circle K, with 76 sites expected to be dealerized by early Q2 2020 [22] - A focus on integrating new acquisitions and optimizing real estate portfolios is emphasized, alongside maintaining discipline in expense management [24][20] - The company anticipates generating between $125 million and $135 million in adjusted EBITDA and $100 million to $110 million in distributable cash flow for 2020 [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the guidance provided earlier in the year, highlighting the positive impact of upcoming transactions on financial performance [25] - The management team is focused on closing announced acquisitions and ensuring effective integration into the organization [32] Other Important Information - The company completed two asset exchanges in 2019, adding 116 sites to its wholesale segment [21] - The partnership's leverage ratio at year-end was 4.70 times, with sufficient liquidity to execute plans [28] Q&A Session Summary Question: Expected CapEx step down for 2020 - Management anticipates CapEx to remain higher than historical levels due to ongoing upgrades, despite the completion of certain projects [31] Question: M&A market size and future prospects - Management noted ongoing interest in M&A but emphasized focus on closing and integrating current acquisitions [32] Question: Bridging Q4 results to full year 2020 expectations - Management indicated that annualizing Q4 results would not accurately reflect future performance due to pending acquisitions [34] Question: Maintenance CapEx run rate - Maintenance CapEx is expected to remain in the $1 million to $2 million range, with additional costs from new retail assets [36]

| --- | --- | --- | --- | --- | |-------|-------|---------------|---------------------|-------| | | | | | | | | | | | | | | | | | | | | | | Fourth Quarter 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings Call | | | | | | | | | | | | | | | | | | February 2020 | | | Fourth Quarter 2019 Earnings Call February 2020 Forward Looking Statement Statements contained in this presentation that state the Partnership's or management's expectations or predictions of the future are forward-looking s ...

Financial Performance - The Wholesale segment generated revenues of $2.0 billion in 2019, distributing motor fuel to approximately 1,300 sites across 31 states[35]. - The Retail segment generated revenues of $456 million in 2019, with no company-operated sites since September 30, 2019[51]. - The total volume of motor fuel distributed in 2019 was 1,004 million gallons, a decrease from 1,047.3 million gallons in 2018[39]. - Motor fuel revenues accounted for 93% of total revenues in 2019, with motor fuel gross profit making up 50% of total gross profit[89]. - Rental income for 2019 was $90.1 million, an increase from $85.6 million in 2018[48]. Contracts and Agreements - The average remaining distribution contract term for independent dealers was 5.3 years as of December 31, 2019[40]. - The average remaining lease term for properties leased to third-party landlords was 5.8 years as of December 31, 2019[47]. - The average remaining term on motor fuel distribution agreements with DMS was 7.8 years as of December 31, 2019[45]. - The company has a weighted-average remaining term of approximately 6.1 years on its supply agreements as of December 31, 2019[62]. Acquisitions and Growth Strategy - The company has completed acquisitions totaling approximately $1.0 billion for about 600 fee and leasehold sites since its IPO[59]. - The company is in the process of acquiring retail and wholesale assets from the Topper Group, expected to close before the end of Q2 2020, which may enhance strategic flexibility[91]. - The company aims to enhance cash flows by owning or leasing sites in prime locations and converting retail sites to lessee dealer sites for stable cash flows[59]. - The company’s growth strategy relies on the ability to make accretive acquisitions, which may be limited by various market conditions[82]. Market and Competition - The company anticipates competition from various retail outlets post-Retail Acquisition, which may impact gross profits[95]. - Intense competition in the wholesale and retail motor fuel industries leads to narrow margins, with potential adverse effects on financial condition if service quality declines[93]. - Seasonal fluctuations in oil prices and motor fuel sales volumes typically result in higher revenues during the second and third quarters of the fiscal year[91]. - The company’s business exhibits substantial seasonality, with sales volumes historically highest in the second and third quarters[66]. Financial Risks and Liabilities - A tightening of credit markets may increase nonpayment risks from wholesale customers and suppliers, adversely affecting financial performance[97]. - The company may incur significant liabilities from litigation related to motor fuel quality and other operational issues, which could negatively impact revenues and consumer behavior[130]. - The company is exposed to variable interest rates on its credit facility, which could increase debt service requirements and adversely affect cash flow and distributions to unitholders[194]. - A significant increase in interest rates could negatively impact the company's ability to service its indebtedness and increase financing costs, potentially affecting financial condition and results of operations[195]. Regulatory and Environmental Risks - Compliance with extensive government regulations regarding store operations and merchandise could materially impact operating results and financial condition[103]. - Environmental laws and potential liabilities related to contamination could lead to significant remediation costs, affecting cash available for distribution[109]. - The company is subject to federal, state, and local laws governing product quality specifications, and changes in these regulations could reduce sales volume and increase handling costs[133]. - Developments aimed at reducing greenhouse gas emissions may decrease demand for petroleum-based motor fuel, potentially affecting the company's financial condition and cash available for distribution to unitholders[115]. Taxation and Unitholder Implications - The company relies on its partnership status for favorable tax treatment; any change in this status could substantially reduce cash available for distribution to unitholders[198]. - Unitholders are required to pay taxes on their share of income even if no cash distributions are made, which may lead to discrepancies between taxable income and actual cash received[211]. - The IRS may challenge the company's valuation methodologies, potentially affecting the allocation of income, gain, loss, and deduction between the General Partner and unitholders[224]. - Unitholders may face limitations on deducting interest expenses due to the Tax Cuts and Jobs Act, which caps the deduction for business interest to 30% of adjusted taxable income[214]. Management and Governance - The Topper Group controls the company and may have conflicts of interest that could impact financial results and cash distributions to unitholders[159]. - The cash distribution policy is subject to modification or revocation at the discretion of the Topper Group or the Board, which may affect distributions to unitholders[163]. - The company relies on the Topper Group for key management services, and termination of the Omnibus Agreement could lead to business interruptions or increased costs[165]. - The Partnership Agreement allows the issuance of unlimited additional units without unitholder approval, potentially diluting existing unitholder ownership interests[183].

Financial Performance - Operating revenues for Q3 2019 were $559,736,000, a decrease of 16.6% from $670,810,000 in Q3 2018[20] - Gross profit for Q3 2019 was $41,145,000, down 6.0% from $43,798,000 in Q3 2018[20] - Net income attributable to limited partners for Q3 2019 was $7,165,000, compared to $5,308,000 in Q3 2018, representing a 35.0% increase[20] - Operating income for Q3 2019 was $12,349,000, slightly down from $13,652,000 in Q3 2018, a decrease of 9.6%[20] - Revenues from fuel sales to external customers in the Wholesale segment were $426,161,000, while the Retail segment generated $99,935,000[161] - The limited partners' interest in net income for the three months ended September 30, 2019, was $7.032 million, compared to $5.175 million for the same period in 2018[153] Assets and Liabilities - Total current assets increased to $56,246,000 as of September 30, 2019, from $50,862,000 at December 31, 2018, a growth of 10.0%[17] - Total assets reached $919,061,000 as of September 30, 2019, compared to $866,922,000 at December 31, 2018, reflecting a 6.0% increase[17] - Total liabilities increased to $827,269,000 as of September 30, 2019, up from $755,989,000 at December 31, 2018, a rise of 9.4%[17] - Total current liabilities increased to $130,080,000 as of September 30, 2019, from $88,448,000 at December 31, 2018, an increase of 47.0%[17] - As of September 30, 2019, total debt and finance lease obligations amounted to $527.2 million, a slight increase from $522.9 million as of December 31, 2018[82] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2019, was $69,502,000, compared to $57,270,000 for the same period in 2018, representing an increase of approximately 21.5%[25] - Capital expenditures for the nine months ended September 30, 2019, totaled $(18,398,000), an increase from $(10,217,000) in the same period of 2018, indicating a significant investment in growth[25] - Net cash used in investing activities was $(13,447,000) for the nine months ended September 30, 2019, compared to $(4,941,000) in the prior year, reflecting increased capital outlays[25] - The balance of cash and cash equivalents at the end of the period was $5,385,000, up from $3,791,000 at the end of September 30, 2018, showing improved liquidity[25] Equity and Distributions - The total equity for common unitholders at September 30, 2019, was $91,792,000, reflecting a decrease from $116,912,000 at the same time in 2018, indicating potential challenges in equity retention[29] - Distributions paid per common unit remained consistent at $0.5250 for the quarters ended March 31, June 30, and September 30, 2019[156] - The total cash distribution for the quarter ended September 30, 2019, was $18,115 thousand[156] Lease and Asset Management - The adoption of new lease accounting guidance resulted in the recognition of right-of-use assets totaling $133.3 million and lease liabilities of $135.9 million effective January 1, 2019[40] - The company recorded a net adjustment to equity of $28.9 million due to the adoption of the new lease accounting guidance[43] - The company recorded impairment charges totaling $1.8 million during the three and nine months ended September 30, 2019, related to certain sites classified within assets held for sale[75] - The company has a revolving credit facility with a balance of $504 million as of September 30, 2019, compared to $498 million at the end of 2018[82] Operational Changes - The company dealerized 46 company-operated sites in the Upper Midwest during Q3 2019, transitioning them to lessee dealers[167] - As of September 30, 2019, the company no longer has any company-operated sites, focusing solely on wholesale and commission operations[169] - The company completed upgrades of dispensers and rebranding of substantially all Jet-Pep Assets sites in Q3 2019, anticipating a positive impact on volume and fuel margin[305] Revenue Sources - Rental income from Circle K for the three months ended September 30, 2019, was $3.4 million, down 19.8% from $4.2 million in the prior year[107] - Income from CST Fuel Supply equity interests was $3.9 million for the three months ended September 30, 2019, compared to $3.5 million for the same period in 2018, reflecting an increase of 11.4%[108] - Total motor fuel purchases from Circle K amounted to $82.3 million for the three months ended September 30, 2019, up 56.2% from $52.7 million in 2018[112] Tax and Compliance - The effective tax rate differs from the combined federal and state statutory rate primarily because only the corporate subsidiary is subject to income tax[150] - The company recorded an income tax benefit of $(1.2) million for the three months ended September 30, 2019[150]

Financial Performance - Operating revenues for Q2 2019 were $605.5 million, a decrease of 10.1% from $673.3 million in Q2 2018[22] - Gross profit for Q2 2019 was $41.4 million, down 6.0% from $44.0 million in Q2 2018[22] - Net income attributable to limited partners for Q2 2019 was $6.4 million, compared to a net loss of $6.9 million in Q2 2018[22] - Operating expenses for Q2 2019 were $30.8 million, a decrease of 27.5% from $42.4 million in Q2 2018[22] - Basic and diluted income per limited partner unit for Q2 2019 was $0.18, compared to a loss of $0.21 in Q2 2018[22] - The company reported a loss on dispositions and lease terminations of $0.4 million in Q2 2019, significantly lower than the $6.8 million loss in Q2 2018[22] - Net income for the six months ended June 30, 2019, was $6,653,000, compared to a net loss of $(7,745,000) for the same period in 2018, representing a significant turnaround[27] - Net cash provided by operating activities was $34,170,000 for the six months ended June 30, 2019, down from $37,229,000 in the prior year, indicating a decrease of approximately 5%[27] - Revenues from motor fuel sales to Circle K were $42.307 million for the three months ended June 30, 2019, and $75.622 million for the six months[106] - Revenues from fuel sales to external customers in the Wholesale segment for the three months ended June 30, 2019, were $442.4 million, down from $477.6 million in the same period of 2018, a decrease of about 7.4%[156] Assets and Liabilities - Total current assets increased to $53.4 million as of June 30, 2019, from $50.9 million at the end of 2018[19] - Total assets reached $928.7 million as of June 30, 2019, up from $866.9 million at the end of 2018[19] - Total liabilities increased to $825.1 million as of June 30, 2019, compared to $756.0 million at the end of 2018[19] - The balance of cash and cash equivalents at the end of the period was $2,273,000, down from $2,475,000 at the end of June 2018, representing a decrease of approximately 8%[27] - Total debt and finance lease obligations increased to $534,103 million as of June 30, 2019, from $522,927 million at the end of 2018[78] - The company recorded lease liabilities related to operating leases, including those from sale-leaseback transactions, totaling $135.9 million[42] Cash Flow and Investments - Cash and cash equivalents were $2.3 million as of June 30, 2019, down from $3.2 million at the end of 2018[19] - Capital expenditures increased to $(10,710,000) in the first half of 2019, compared to $(6,250,000) in the same period of 2018, reflecting a rise of approximately 71%[27] - Net cash used in investing activities was $(6,359,000) for the six months ended June 30, 2019, compared to $(5,987,000) in the prior year, showing an increase of about 6%[27] - Cash received from Circle K during Q2 2019 was $2.8 million, primarily for inventory and security deposits[69] Equity and Distributions - Distributions paid to common unit holders totaled $(36,167,000) for the six months ended June 30, 2019, compared to $(39,401,000) in the same period of 2018, indicating a reduction of about 6%[27] - Distributions paid per common unit remained stable at $0.5250 for the three months ended June 30, 2019, consistent with the previous quarter[148] - The partnership agreement does not require the company to pay any distributions, indicating potential variability in future distributions[151] Lease and Environmental Liabilities - The adoption of ASU 2016-02 resulted in the recognition of right-of-use assets totaling $133.3 million and lease liabilities of $135.9 million effective January 1, 2019[42] - Environmental liabilities recorded on the balance sheet totaled $3.5 million as of June 30, 2019, down from $3.6 million at December 31, 2018[130] - Indemnification assets related to environmental liabilities amounted to $3.0 million as of June 30, 2019, compared to $3.2 million at December 31, 2018[130] Operational Changes and Agreements - The company plans to dealerize 46 company-operated sites in the Upper Midwest, transitioning during Q3 2019, with an initial 10-year term lease agreement[162] - The company will supply fuel to LGW for resale to dealers at the 60 stores transferred from Circle K under a Sub-Jobber Agreement[62] - The company has exclusive motor fuel distribution contracts with lessee dealers and independent dealers, contributing to its revenue streams[152] Financial Ratios and Compliance - The company is required to maintain a consolidated leverage ratio of not greater than 5.00 to 1.00 for each quarter ending on or before June 30, 2019, and 4.75 to 1.00 thereafter[87] - As of June 30, 2019, the company was in compliance with financial covenants, including a consolidated interest coverage ratio of at least 2.50 to 1.00[87] Miscellaneous - The company recorded separation benefit costs totaling $0.4 million in Q1 2019, related to the exit from the company-operated business[169] - A one percentage point change in the average interest rate would impact annual interest expense by approximately $5.1 million, based on a weighted-average interest rate of 4.66% as of June 30, 2019[292] - The company recognized impairment charges totaling $7.6 million and $8.9 million during the three and six months ended June 30, 2018, respectively[75]