Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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:

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 54% 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.

Impact of Interest Rates

Three of our most favorable interest rate swap contracts matured April 1, 2024. See Note 8 to the financial statements for additional information regarding the impact of the maturity of those interest rate swap contracts on our interest expense.

Acquisition and Financing Activity

During the first half of 2024, we converted the 59 sites included in the Applegreen Acquisition and transitioned these sites from lessee dealer sites in the wholesale segment to company operated sites in the retail segment. See Note 2 to the financial statements for additional information.

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 14 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 3 and 5 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.

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):

(a) excludes depreciation, amortization and accretion expense

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Operating revenues decreased $107 million (10%) and operating income increased $1 million (4%). Significant items impacting these results were:

Operating revenues

Revenues from fuel sales decreased $107 million (11%) due primarily to a 7% decrease in our consolidated average fuel selling price. The average spot price of WTI crude oil decreased 14% to $65.78 per barrel for the third quarter of 2025, compared to $76.43 per barrel for the third quarter of 2024. In addition, volume decreased 5% due to the net loss of independent dealer contracts and a reduction in volume in our base business.

Cost of sales

Cost of sales decreased $101 million (10%) due primarily to a lower cost per gallon and lower volume driven by the same drivers as discussed above.

Gross profit

Gross profit decreased $6.5 million (6%) due primarily to a decrease in aggregate motor fuel gross profit as well as a decrease in rent gross profit in our wholesale segment, partially offset by an increase in merchandise gross profit in our retail segment. See "Results of Operations-Segment Results" for additional gross profit analyses.

Operating expenses

See "Results of Operations-Segment Results" for analyses.

General and administrative expenses

General and administrative expenses decreased $0.8 million (11%) primarily driven by lower legal fees and equity compensation expense.

Depreciation, amortization and accretion expense

Depreciation, amortization and accretion expense decreased $0.7 million (3%) primarily due to the impact of assets becoming fully depreciated, partially offset by an increase in impairment charges.

Gain (loss) on dispositions and lease terminations, net

During the three months ended September 30, 2025, we recorded $7.4 million in net gains in connection with our ongoing real estate rationalization effort.

During the three months ended September 30, 2024, we recorded $5.3 million in net gains in connection with our ongoing real estate rationalization effort, partially offset by $0.6 million of net losses on lease terminations and asset disposals.

Interest expense

Interest expense decreased $2.4 million (17%) due to a lower average SOFR rate along with a lower average outstanding debt balance resulting from applying the proceeds from site sales to our Credit Facility.

Income tax expense

We recorded income tax expense of $2.9 million and $2.4 million for the three months ended September 30, 2025 and 2024, respectively, driven by income generated by our taxable subsidiaries.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Operating revenues decreased $358 million (11%) and operating income increased $29 million (70%). Significant items impacting these results were:

Operating revenues

Revenues from fuel sales decreased $368 million (13%) due primarily to a 9% decrease in our consolidated average fuel selling price. The average spot price of WTI crude oil decreased 14% to $67.31 per barrel for the first nine months of 2025, compared to $78.58 per barrel for the same period of 2024. In addition, volume decreased 5% due to the net loss of independent dealer contracts and a reduction in volume in our base business. The decrease in fuel sales was partially offset by a $17 million (6%) increase in merchandise revenues driven by an increase in sales in our base business as well as an increase in our average company operated site count due to the conversion of certain lessee dealer sites to company operated sites, partially offset by the sale of certain company operated sites in connection with our real estate rationalization effort.

Cost of sales

Cost of sales decreased $356 million (12%), due primarily to a lower cost per gallon and lower volume, partially offset by an increase in merchandise cost of sales driven by the same drivers as discussed above.

Gross profit

Gross profit decreased $1.8 million (1%), which was primarily due to a decrease in aggregate motor fuel gross profit as well as a decrease in rent gross profit in our wholesale segment, partially offset by an increase in merchandise gross profit in our retail segment . See "Results of Operations-Segment Results" for additional gross profit analyses.

Operating expenses

See "Results of Operations-Segment Results" for analyses.

General and administrative expenses

General and administrative expenses decreased $1.3 million (6%) primarily driven by lower acquisition-related costs and legal fees, partially offset by higher management fees.

Depreciation, amortization and accretion expense

Depreciation, amortization and accretion expense increased $12 million (20%) primarily due to a $15.5 million increase in impairment charges, partially offset by the impact of assets becoming fully depreciated.

Gain (loss) on dispositions and lease terminations, net

During the nine months ended September 30, 2025, we recorded $42.5 million in net gains in connection with our ongoing real estate rationalization effort, partially offset by $1.7 million of net losses on lease terminations and asset disposals.

During the nine months ended September 30, 2024, we recorded a $16.0 million loss on lease termination with Applegreen, including a $1.5 million non-cash write-off of deferred rent income (see Note 2 to the financial statements for additional information). In addition, we recorded $2.3 million of other losses on lease terminations and asset disposals, including non-cash write-offs of deferred rent income. We recorded an $11.8 million net gain in connection with our ongoing real estate rationalization effort.

Interest expense

Interest expense decreased $1.7 million (4%) due to a lower average SOFR rate along with a lower average outstanding debt balance resulting from applying the proceeds from site sales to our Credit Facility, partially offset by the maturity of three of our most favorable interest rate swap contracts on April 1, 2024.

Income tax expense (benefit)

We recorded income tax expense (benefit) of $3.2 million and $(1.7) million for the nine months ended September 30, 2025 and 2024, respectively, driven by income generated (losses incurred) by our taxable subsidiaries.

Segment Results

We present the results of operations of our segments consistent with how our management views the business.

Retail

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):

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Gross profit decreased $3.6 million (4%) and operating income decreased $2.0 million (6%). These results were impacted by:

Gross profit

Operating expenses

Operating expenses decreased $1.6 million (3%) driven by a 4% decrease in the average company operated site count due to the sale of certain company operated sites in connection with our real estate rationalization effort, partially offset by the conversion of certain lessee dealer sites to company operated sites.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Gross profit increased $4.7 million (2%) and operating income decreased $4.5 million (6%). These results were impacted by:

Gross profit

Operating expenses

Operating expenses increased $9.2 million (6%) driven by a 6% increase in the average retail site count due to the conversion of certain lessee dealer sites to company operated and commission agent sites, partially offset by the sale of certain company operated and commission agent sites in connection with our real estate rationalization effort.

Wholesale

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):

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Gross profit decreased $2.9 million (10%) and operating income decreased $1.2 million (6%). These results were impacted by:

Motor fuel gross profit

The $1.2 million (7%) decrease in motor fuel gross profit was primarily due to a 5% decrease in volume driven by the conversion of certain lessee dealer sites to company operated and commission agent sites, the net loss of independent dealer contracts and a decrease in volume in our base business. These decreases were partially offset by the sale of certain company operated and commission agent sites but with continued fuel supply, thereby converting the site to an independent dealer site and for which the volume is included in the wholesale segment. In addition, our average fuel margin per gallon decreased 2% as compared to the same period of 2024, driven by lower prompt payment discounts associated with lower crude oil prices, partially offset by better sourcing costs.

Rent gross profit

Rent gross profit decreased $1.7 million (18%) primarily due to the sale of certain lessee dealer sites in connection with our real estate rationalization effort as well as the conversion of certain lessee dealer sites to company operated and commission agent sites.

Operating expenses

Operating expenses decreased $1.6 million (19%), primarily due to the sale of certain lessee dealer sites in connection with our real estate rationalization effort, as well as the conversion of certain lessee dealer sites to company operated and commission agent sites.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Gross profit decreased $6.4 million (8%) and operating income decreased $3.0 million (5%). These results were impacted by:

Motor fuel gross profit

The $1.5 million (3%) decrease in motor fuel gross profit was primarily due to an 8% decrease in volume driven by the conversion of certain lessee dealer sites to company operated and commission agent sites, the net loss of independent dealer contracts and a decrease in volume in our base business. These decreases were partially offset by the sale of certain company operated and commission agent sites but with continued fuel supply, thereby converting the site to an independent dealer site and for which the volume is included in the wholesale segment. In addition, our average fuel margin per gallon increased 5% as compared to the same period of 2024, driven by better sourcing costs, partially offset by lower prompt payment discounts associated with lower crude oil prices.

Rent gross profit

Rent gross profit decreased $5.5 million (18%), primarily due to the sale of certain lessee dealer sites in connection with our real estate rationalization effort as well as the conversion of certain lessee dealer sites to company operated and commission agent sites.

Operating expenses

Operating expenses decreased $3.4 million (14%), primarily due to the sale of certain lessee dealer sites in connection with our real estate rationalization effort, as well as the conversion of certain lessee dealer sites to company operated and commission agent sites.

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.

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):

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 rationalization 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, 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 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.

Cash Flows

The following table summarizes cash flow activity (in thousands):

Operating Activities

Net cash provided by operating activities decreased $15 million for the nine months ended September 30, 2025 compared to the same period in 2024, primarily attributable to a $7 million net usage of cash flow from changes in working capital, stemming primarily from timing of settlement with our suppliers as well as settlement of rebates owed by our fuel suppliers in addition to weaker results in 2025 compared to 2024.

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 $29 million and $19 million for the nine months ended September 30, 2025 and 2024, respectively. We received $95 million and $18 million in proceeds primarily from the sale of sites in connection with our real estate rationalization effort for the nine months ended September 30, 2025 and 2024, respectively. We paid $26 million to Applegreen related to lease terminations and inventory purchases during the nine months ended September 30, 2024.

Financing Activities

We paid $60 million in distributions for each of the nine months ended September 30, 2025 and 2024. For the nine months ended September 30, 2025 and 2024, we made total net (repayments) borrowings on our Credit Facility of $(62) million and $16 million, respectively.

Distributions

Distribution activity for 2025 was as follows:

The amount of any distribution is subject to the discretion of the Board, which may modify or revoke our cash distribution policy 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.

Debt

As of September 30, 2025, 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 September 30, 2025 was 5.8% (our applicable margin was 2.00% as of September 30, 2025). Letters of credit outstanding at September 30, 2025 totaled $4.4 million.

The amount of availability under our Credit Facility at October 31, 2025, after taking into consideration debt covenant restrictions, was $232.6 million.

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):

A significant portion of our growth capital expenditures are discretionary and we regularly review our capital plans in light of anticipated proceeds from sales of sites. The increase in growth capital expenditures for the nine months ended September 30, 2025 as compared to the same period of the prior year was primarily driven by investments in our company operated sites and included targeted material renovations as well as projects to increase food offerings.

Concentration Risks

See Note 1 for information on our concentration risks related to our fuel suppliers, fuel carriers and merchandise suppliers.

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 2025 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.