CrossAmerica Partners(CAPL) - 2023 Q4 - Annual Report

Fuel Distribution Volume - Total motor fuel distribution volume for 2023 was 1,350 million gallons, a slight increase from 1,340 million gallons in 2022[10] - The wholesale segment includes distribution to independent dealers and lessee dealers, with 518 million gallons distributed to independent dealers and 325 million gallons to lessee dealers in 2023[10] - The company distributed 82.3 million gallons in 2023, down from 84.1 million gallons in 2022, with a total of 866 sites at the end of 2023[34] Financial Performance - The total revenues for 2023 were $2,290 million, a decrease from $2,690 million in 2022, while operating income was $91 million compared to $94 million in the previous year[36] - The effective interest rate on the CAPL Credit Facility was 4.9% as of December 31, 2023, with $756.0 million outstanding, indicating a potential annual interest expense impact of approximately $1.6 million for a one percentage point change in SOFR[365] Supply Chain and Inventory Management - Approximately 80% of motor fuel purchased in 2023 came from four major suppliers, highlighting reliance on a concentrated supplier base[22] - The weighted-average remaining term of supply agreements as of December 31, 2023, was approximately 4.9 years, providing a stable supply chain[22] - The company maintains approximately 5-days' worth of motor fuel sales in inventory at each site, ensuring operational efficiency[19] Operational Strategy - The company aims to enhance cash flows from its wholesale segment by expanding market share and growing rental income over time[21] - The company focuses on optimizing operations to maximize investment returns across various dealer formats[21] - The average remaining lease agreement term as of December 31, 2023, was 2.6 years, indicating stability in rental income sources[16] Management and Governance - The company relies on the Topper Group for key management services, which may present conflicts of interest[29] - Management fees and cost reimbursements to the General Partner and the Topper Group will reduce cash available for distribution to unitholders[41] - The company may issue unlimited additional units without unitholder approval, which could dilute existing unitholder ownership interests[41] Cash Distribution and Tax Implications - The company has the discretion to modify or revoke its cash distribution policy at any time, and the Partnership Agreement does not mandate any distributions[41] - Tax treatment for unitholders may be affected by legislative changes, and unitholders are required to pay taxes on their share of income even without cash distributions[41] Market Dynamics - The company operates in a seasonal business, with sales volumes typically highest in the second and third quarters and lowest in the first and fourth quarters[44] - The market price of common units could be adversely affected by substantial sales from large holders, including the Topper Group[29]