Allentown, PA, Feb. 27, 2023 (GLOBE NEWSWIRE) --

CrossAmerica Partners LP Reports Fourth Quarter and Full Year 2022 Results

Reported Fourth Quarter 2022 Net Income of $17.1 million, Adjusted EBITDA of $44.3 million and Distributable Cash Flow of $33.3 million
Generated Full Year 2022 Net Income of $63.7 million, Adjusted EBITDA of $179.8 million and Distributable Cash Flow of $140.9 million
Reported Fourth Quarter 2022 Gross Profit for the Wholesale Segment of $32.8 million compared to $31.1 million of Gross Profit for the Fourth Quarter 2021 and Fourth Quarter 2022 Gross Profit for the Retail Segment of $60.4 million compared to $50.2 million of Gross Profit for the Fourth Quarter 2021
Generated Full Year 2022 Gross Profit for the Wholesale Segment of $130.7 million compared to $124.7 million of Gross Profit for the Full Year 2021 and Full Year 2022 Gross Profit for the Retail Segment of $245.0 million compared to $152.3 million of Gross Profit for the Full Year 2021
Leverage, as defined in the CAPL Credit Facility, was 3.7 times as of December 31. 2022, compared to 5.1 times as of December 31, 2021
The Distribution Coverage Ratio was 1.67 times for the Fourth Quarter 2022 compared to 1.56 times for the Fourth Quarter 2021 and for the Full Year 2022 was 1.77 times compared to 1.28 times for the comparable period of 2021
Appointed Thomas E. Kelso as a member of the Board of Directors, effective February 24, 2023
During the Fourth Quarter 2022, CrossAmerica changed its segment reporting to simplify the assessment of the performance of its operating segments

Allentown, PA February 27, 2023 – CrossAmerica Partners LP (NYSE:CAPL) ("CrossAmerica" or the "Partnership"), a leading wholesale fuels distributor, convenience store operator, and owner and lessor of real estate used in the retail distribution of motor fuels, today reported financial results for the fourth quarter and full year ended December 31, 2022.

"Our results for the quarter, and year, were outstanding and our year-end balance sheet reflects our strong overall financial position," said Charles Nifong, President and CEO of CrossAmerica. "Due to the strategic actions the board and management team have taken since re-acquiring the general partner, the Partnership was well positioned to capitalize on the favorable operating environment in the second half of 2022. Our strong strategic position and our excellent operational execution combined to generate exceptional financial performance for the year."

New Segment Reporting

During the fourth quarter of 2022, CrossAmerica changed its segment reporting to simplify the assessment of the performance of its operating segments. Prior to the fourth quarter, the wholesale segment included the wholesale fuel gross profit on intersegment sales by the wholesale segment to the retail segment. Likewise, the wholesale segment included an allocation of operating expenses related to the operation of CrossAmerica's retail sites consistent with the allocation of the overall fuel gross profit.

Starting in the fourth quarter of 2022, the wholesale segment includes only the fuel gross profit on sales to lessee dealers and independent dealers and the retail segment includes the entire fuel gross profit on sales at CrossAmerica's company operated and commission agent sites. Likewise, operating expenses are allocated to each segment based on estimates of the level of effort expended on the lessee and independent dealer business in CrossAmerica's wholesale segment; and the company operated and commission site business in the Partnership's retail segment.

CrossAmerica has recast the results of its segments for periods prior to October 1, 2022 to be consistent with the new segment reporting. CrossAmerica has provided tables at the end of this press release to show the effects of this new segment reporting for the past quarterly periods of 2022 and 2021.

Non-GAAP Measures and Same Store Metrics

Non-GAAP measures used in this release include EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. These Non-GAAP measures are further described and reconciled to their most directly comparable GAAP measures in the Supplemental Disclosure Regarding Non-GAAP Financial Measures section of this release.

Same store fuel volume and same store merchandise sales include aggregated individual store results for all stores that had fuel volume or merchandise sales in all months for both periods. Same store merchandise sales excludes branded food sales and other revenues such as lottery commissions and car wash sales. Joe's Kwik Marts' volume/sales are not included in the full year same store metrics, as the stores were not part of the CrossAmerica retail segment in all months for both years (2022 and 2021).

Fourth Quarter and Full Year Results

Consolidated Results

Key Operating Metrics	Q4 2022	Q4 2021	FY2022	FY2021
Net Income	$17.1M	$12.0M	$63.7M	$21.7M
Adjusted EBITDA	$44.3M	$37.0M	$179.8M	$123.3M
Distributable Cash Flow	$33.3M	$31.0M	$140.9M	$102.2M
Distribution Coverage Ratio	1.67x	1.56x	1.77x	1.28x

CrossAmerica reported increases in Operating Income, Net Income, Adjusted EBITDA and its Distribution Coverage Ratio for the fourth quarter 2022 compared to the fourth quarter 2021 primarily due to improved fuel gross profit performance in both the wholesale and retail segments. CrossAmerica also reported increases in Operating Income, Net Income, Adjusted EBITDA and its Distribution Coverage Ratio for the full year 2022 compared to the full year 2021 due to the acquisition of assets from 7-Eleven in the third quarter of 2021 as well as improved fuel gross profit performance in the wholesale and retail segments.

Wholesale Segment

Key Operating Metrics	Q4 2022		Q4 2021		FY 2022		FY 2021
Wholesale segment gross profit	$32.8M		$31.1M		$130.7M		$124.7M
Wholesale motor fuel gallons distributed	213.5M		230.6M		844.5M		931.3M
Average wholesale gross profit per gallon	$	0.087	$	0.078	$	0.087	$	0.075

During the fourth quarter 2022, CrossAmerica's wholesale segment gross profit increased 6% compared to the fourth quarter 2021. This was driven by an increase in motor fuel gross profit resulting from a 12% increase in fuel margin per gallon, partially offset by a 7% decline in wholesale volume distributed.

For the full year 2022, the Partnership's gross profit increased 5% from $124.7 million in 2021 to $130.7 million for the full year 2022. During both the fourth quarter and full year 2022, the Partnership's wholesale fuel margin benefited from its ongoing execution of strategic initiatives and higher variable margins. Higher wholesale variable margins were due to greater market volatility during both the fourth quarter and full year 2022 as compared to the fourth quarter and full year 2021. CrossAmerica also benefited from higher terms discounts as a result of higher fuel prices during the quarter and full year 2022 as compared to the fourth quarter and full year 2021. Wholesale volume distributed declined primarily due to lower volume in the CrossAmerica base business during the fourth quarter and full year and, to a lesser extent, the Partnership's real estate optimization efforts.

Retail Segment

Key Operating Metrics

Q4 2022

Q4 2021

FY 2022

FY 2021

Retail segment gross profit

$60.4M

$50.2M

$245.0M

$152.3M

Retail segment motor fuel gallons distributed

125.1M

125.3M

496.6M

403.9M

Same store motor fuel gallons distributed

119.2M

120.2M

324.8M

329.3M

Retail segment motor fuel gross profit

$35.9M

$27.8M

$146.5M

$79.3M

Retail segment margin per gallon, before deducting credit card fees and commissions

0.383

0.309

0.396

0.280

Same store merchandise sales excluding cigarettes*

$42.6M

$40.3M

$103.9M

$101.9M

Merchandise gross profit*

$18.6M

$17.2M

$76.1M

$55.1M

Merchandise gross profit percentage*

27.5

25.4

27.2

26.4

*Includes only company operated retail sites

For the fourth quarter 2022, the retail segment generated a 20% increase in gross profit compared to the fourth quarter 2021. The retail segment generated a 61% increase in gross profit for the full year 2022 when compared to the full year 2021. The increases for both the fourth quarter and full year 2022 were primarily due to higher motor fuel and merchandise gross profit, partially offset by increased expenses, particularly in the areas of labor and maintenance.

The retail segment sold 125.1 million of retail fuel gallons during the fourth quarter 2022, which was relatively flat when compared to the fourth quarter 2021. Same store retail segment fuel volume for the fourth quarter 2022 declined 1% from 120.2 million gallons during the fourth quarter 2021 to 119.2 million gallons. The retail segment generated $8.1 million of additional motor fuel gross profit for the three months ended December 31, 2022, as compared to the same period in 2021 due to higher fuel margins per gallon.

For the full year 2022, CrossAmerica sold 496.6 million of retail fuel gallons, which was an increase of 23% when compared to the full year 2021. The increase was primarily driven by the acquisition of assets from 7-Eleven, which occurred primarily during the third quarter 2021. Same store fuel volume for the full year 2022 was 324.8 million gallons compared to 329.3 million gallons for the same period of 2021, representing a slight decline of 1%. The retail segment generated $67.2 million of additional motor fuel gross profit for the twelve months ended December 31, 2022, as compared to the same period in 2021 due to both an increase in overall volume and a higher fuel margin per gallon.

For both the fourth quarter and full year 2022, CrossAmerica's merchandise gross profit and other revenue increased when compared to the fourth quarter and full year 2021. The fourth quarter increase was primarily due to an increase in overall store sales due to higher retail prices and improved product margins. Same store merchandise sales excluding cigarettes increased 6% for the fourth quarter 2022 when compared to the fourth quarter 2021. The full year increase was due to higher retail prices and the increase in company operated sites driven by the acquisition of assets from 7-Eleven. Same store merchandise sales excluding cigarettes increased 2% for the full year 2022 when compared to the full year 2021. Merchandise gross profit percentage increased from 25.4% for the fourth quarter 2021 to 27.5% for the fourth quarter 2022 primarily due to improved merchandise margins in the categories of packaged beverages, snacks and certain tobacco products, including cigarettes. For the full year 2022, the merchandise gross profit percentage increased to 27.2% from 26.4% for the full year 2021 due to similar factors that impacted the fourth quarter improvement in merchandise gross profit margin.

Acquisition and Divestment Activity

On November 9, 2022, CrossAmerica closed on the acquisition of assets from Community Service Stations, Inc. for a purchase price of $27.5 million plus working capital. The assets consisted of wholesale fuel supply contracts to 38 dealer owned locations, 35 sub-wholesaler accounts and two commission locations (1 fee based and 1 lease). CrossAmerica funded this acquisition through borrowings on the CAPL Credit Facility and cash on hand.

During the twelve months ended December 31, 2022, CrossAmerica sold 27 properties for $12.9 million in proceeds, resulting in a net gain of $3.5 million.

Liquidity and Capital Resources

As of December 31, 2022, CrossAmerica had $606.1 million outstanding under its CAPL Credit Facility and $159.0 million outstanding under its JKM Credit Facility. As of February 23, 2023, after taking into consideration debt covenant restrictions, approximately $120.5 million was available for future borrowings under the CAPL Credit Facility. Leverage, as defined in the CAPL Credit Facility, was 3.7 times as of December 31, 2022, compared to 5.1 times as of December 31, 2021. As of December 31, 2022, CrossAmerica was in compliance with its financial covenants under the credit facilities.

Distributions

On January 19, 2023, the Board of the Directors of CrossAmerica's General Partner ("Board") declared a quarterly distribution of $0.5250 per limited partner unit attributable to the fourth quarter 2022. As previously announced, the distribution was paid on February 10, 2023 to all unitholders of record as of February 3, 2023. The amount and timing of any future distributions is subject to the discretion of the Board as provided in CrossAmerica's Partnership Agreement.

New Board Member

Effective as of February 24, 2023, Lehigh Gas GP Holdings LLC, as the sole member of the General Partner, appointed Thomas E. Kelso as a member of the Board. Prior to being appointed a board member, Mr. Kelso co-founded and operated Ocean Petroleum Co., Inc., a petroleum distributorship, and then joined Matrix Capital Markets Group, Inc. in 1997 and created the firm's Downstream Energy and Convenience Retail Investment Banking Group. He served as Group Head until he became President of the firm in 2017. Before retiring from Matrix in 2022, Mr. Kelso managed scores of petroleum distribution and c-store transactions and has been a frequent speaker at various industry trade group meetings discussing topics related to capital formation and mergers and acquisitions. He continues to hold Series 79, 63, 24 and 99 FINRA securities licenses and has been active in numerous charitable boards and community endeavors. Full biographical information for Mr. Kelso is available on CrossAmerica's website and in CrossAmerica's 2022 Annual Report on Form 10-K.

The Board has named Mr. Kelso as a member of the audit and conflicts committees of the Board.

Conference Call

The Partnership will host a conference call on February 28, 2023 at 9:00 a.m. Eastern Time to discuss fourth quarter and full year 2022 earnings results. A live webcast of the call can be accessed by going to the investor section of the CrossAmerica Partners website at https://caplp.gcs-web.com/webcasts-presentations. Interested parties may participate live via telephone by registering at a conference call link also provided at https://caplp.gcs-web.com/webcasts-presentations. Please follow this link and register with a valid email address. A PIN will be provided to you with dial-in instructions. Also included on the website on that same day will be related earnings materials, including reconciliations of any non-GAAP financial measures to GAAP financial measures and any other applicable disclosures. After the live conference call, an archive of the webcast will be available on the investor section of the CrossAmerica site at https://caplp.gcs-web.com/webcasts-presentations within 24 hours after the call for a period of sixty days.

CROSSAMERICA PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars, except unit data)

	December 31,
	2022		2021

ASSETS
Current assets:
Cash and cash equivalents	$	16,054	$	7,648
Accounts receivable, net of allowances of $686 and $458, respectively		30,825		33,331
Accounts receivable from related parties		743		1,149
Inventory		47,307		46,100
Assets held for sale		983		4,907
Current portion of interest rate swap contracts		13,827		115
Other current assets		8,667		13,065
Total current assets		118,406		106,315
Property and equipment, net		728,379		755,454
Right-of-use assets, net		164,942		169,333
Intangible assets, net		113,919		114,187
Goodwill		99,409		100,464
Interest rate swap contracts, less current portion		3,401		2,916
Other assets		26,142		21,473
Total assets	$	1,254,598	$	1,270,142

LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and finance lease obligations	$	11,151	$	10,939
Current portion of operating lease obligations		35,345		34,832
Accounts payable		77,048		67,173
Accounts payable to related parties		7,798		7,679
Accrued expenses and other current liabilities		23,144		20,682
Motor fuel and sales taxes payable		20,813		22,585
Total current liabilities		175,299		163,890
Debt and finance lease obligations, less current portion		761,638		810,635
Operating lease obligations, less current portion		135,220		140,149
Deferred tax liabilities, net		10,588		12,341
Asset retirement obligations		46,431		45,366
Other long-term liabilities		46,289		41,203
Total liabilities		1,175,465		1,213,584

Commitments and contingencies (Notes 15 and 16)

Preferred membership interests		26,156		—

Equity:
Common units— 37,937,604 and 37,896,556 units issued and outstanding at December 31, 2022 and 2021, respectively		36,508		53,528
Accumulated other comprehensive income		16,469		3,030
Total equity		52,977		56,558
Total liabilities and equity	$	1,254,598	$	1,270,142

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of Dollars, Except Unit and Per Unit Amounts)

	(Unaudited) Three Months Ended December 31,						Year Ended December 31,
	2022			2021			2022			2021
Operating revenues ^(a)	$	1,124,773		$	1,077,519		$	4,967,424		$	3,579,259
Cost of sales ^(b)		1,031,507			996,259			4,591,653			3,302,306
Gross profit		93,266			81,260			375,771			276,953

Operating expenses:
Operating expenses ^(c)		43,538			39,058			174,708			134,079
General and administrative expenses		6,813			6,501			25,575			30,930
Depreciation, amortization and accretion expense		19,102			21,120			80,625			77,852
Total operating expenses		69,453			66,679			280,908			242,861
Gain on dispositions and lease terminations, net		1,763			1,662			1,143			2,037
Operating income		25,576			16,243			96,006			36,129
Other income, net		152			125			504			544
Interest expense		(9,767	)		(5,949	)		(32,100	)		(18,244	)
Income before income taxes		15,961			10,419			64,410			18,429
Income tax (benefit) expense		(1,129	)		(1,561	)		714			(3,225	)
Net income		17,090			11,980			63,696			21,654
Accretion of preferred membership interests		588			—			1,726			—
Net income available to limited partners	$	16,502		$	11,980		$	61,970		$	21,654


Earnings per common unit
Basic	$	0.44		$	0.32		$	1.63		$	0.57
Diluted	$	0.43		$	0.32		$	1.63		$	0.57

Weighted-average common units:
Basic common units		37,928,970			37,891,701			37,916,829			37,880,910
Diluted common units		38,085,600			37,913,003			38,059,774			37,884,124

Supplemental information:
(a) includes excise taxes of:	$	65,913		$	72,584		$	270,501		$	228,764
(a) includes rent income of:		21,370			20,350			84,106			83,182
(b) excludes depreciation, amortization and accretion
(b) includes rent expense of:		5,765			5,853			23,457			23,765
(c) includes rent expense of:		3,733			3,717			15,254			13,531

CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of Dollars)

	For the Year Ended December 31,
	2022			2021			2020
Cash flows from operating activities:
Net income	$	63,696		$	21,654		$	107,456
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion expense		80,625			77,852			68,742
Amortization of deferred financing costs		2,788			1,862			1,042
Credit loss expense		232			253			1,210
Deferred income tax benefit		(1,753	)		(3,761	)		(4,436	)
Equity-based employee and director compensation expense		2,294			1,311			172
Gain on dispositions and lease terminations, net		(1,143	)		(2,037	)		(88,912	)
Changes in operating assets and liabilities, net of acquisitions		14,578			(1,666	)		19,210
Net cash provided by operating activities		161,317			95,468			104,484

Cash flows from investing activities:
Principal payments received on notes receivable		203			793			974
Proceeds from sale of assets		13,344			15,359			21,729
Proceeds from sale of assets to Circle K		—			—			23,049
Capital expenditures		(30,351	)		(41,859	)		(37,057	)
Cash paid in connection with acquisitions, net of cash acquired		(29,594	)		(272,983	)		(28,244	)
Net cash used in investing activities		(46,398	)		(298,690	)		(19,549	)

Cash flows from financing activities:
Borrowings under revolving credit facilities		114,100			194,895			106,180
Repayments on revolving credit facilities		(138,538	)		(77,500	)		(112,000	)
Borrowings under the Term Loan Facility		1,120			182,460			—
Repayments on the Term Loan Facility		(24,600	)		—			—
Net proceeds from issuance of preferred membership interests		24,430			—			—
Payments of finance lease obligations		(2,724	)		(2,604	)		(2,458	)
Payments of deferred financing costs		(474	)		(7,201	)		—
Distributions paid on distribution equivalent rights		(202	)		(141	)		(40	)
Distributions paid to holders of the IDRs		—			—			(133	)
Distributions paid on common units		(79,625	)		(79,552	)		(77,751	)
Net cash (used in) provided by financing activities		(106,513	)		210,357			(86,202	)
Net increase (decrease) in cash and cash equivalents		8,406			7,135			(1,267	)

Cash and cash equivalents at beginning of period		7,648			513			1,780
Cash and cash equivalents at end of period	$	16,054		$	7,648		$	513

Segment Results

Wholesale

The following table highlights the results of operations and certain operating metrics of the Wholesale segment (thousands of dollars, except for the number of distribution sites and per gallon amounts):

	Three Months Ended December 31,						Year Ended December 31,
	2022			2021			2022			2021
Gross profit:
Motor fuel gross profit	$	18,659		$	17,990		$	73,378		$	70,221
Rent gross profit		12,908			12,006			50,852			50,736
Other revenues		1,259			1,063			6,509			3,721
Total gross profit		32,826			31,059			130,739			124,678
Operating expenses		(8,956	)		(8,942	)		(37,072	)		(37,906	)
Operating Income	$	23,870		$	22,117		$	93,667		$	86,772

Motor fuel distribution sites (end of period): ^(a)
Independent dealers ^(b)		663			666			663			666
Lessee dealers ^(c)		619			637			619			637
Total motor fuel distribution sites		1,282			1,303			1,282			1,303

Motor fuel distribution sites (average):		1,274			1,309			1,286			1,325

Volume of gallons distributed		213,501			230,643			844,486			931,288

Margin per gallon	$	0.087		$	0.078		$	0.087		$	0.075

(a) In addition, CrossAmerica distributed motor fuel to sub-wholesalers who distributed to additional sites.

(b) The decrease in the independent dealer site count for both periods (fourth quarter 2021 to fourth quarter 2022 and December 31, 2021 to December 31, 2022) was primarily attributable to expiration of contracts, most of which were lower margin, partially offset by the increase in independent dealer sites as a result of the acquisition of assets from Community Service Stations, Inc.

(c) The decreases in the lessee dealer count for both periods (fourth quarter 2021 to fourth quarter 2022 and December 31, 2021 to December 31, 2022) were primarily attributable to the real estate rationalization effort.

Retail

The following table highlights the results of operations and certain operating metrics of the Retail segment (in thousands, except for the number of retail sites):

	Three Months Ended December 31,						Year Ended December 31,
	2022			2021			2022			2021
Gross profit:
Motor fuel	$	35,925		$	27,791		$	146,546		$	79,318
Merchandise		18,639			17,241			76,135			55,117
Rent		2,697			2,491			9,797			8,681
Other revenue		3,179			2,679			12,554			9,159
Total gross profit		60,440			50,202			245,032			152,275
Operating expenses		(34,582	)		(30,116	)		(137,636	)		(96,173	)
Operating income	$	25,858		$	20,086		$	107,396		$	56,102

Retail sites (end of period):
Company operated retail sites		255			252			255			252
Commission agents		200			198			200			198
Total retail segment sites		455			450			455			450

Total retail segment statistics:
Volume of gallons sold		125,110			125,286			496,634			403,850
Same store total system gallons sold		119,181			120,199			324,763			329,346
Average retail fuel sites		451			451			452			389
Margin per gallon, before deducting credit card fees and commissions	$	0.383		$	0.309		$	0.396		$	0.280

Company operated site statistics:
Average retail fuel sites		253			253			253			187
Same store fuel volume ^(a)		77,785			79,388			167,762			170,082
Margin per gallon, before deducting credit card fees	$	0.422		$	0.328		$	0.426		$	0.309
Same store merchandise sales ^(a)	$	63,283		$	62,763		$	150,408		$	153,305
Same store merchandise sales excluding cigarettes ^(a)	$	42,597		$	40,258		$	103,914		$	101,888
Merchandise gross profit percentage		27.5	%		25.4	%		27.2	%		26.4	%

Commission site statistics:
Average retail fuel sites		198			198			199			202
Margin per gallon, before deducting credit card fees and commissions	$	0.310		$	0.270		$	0.336		$	0.238

(a) Same store fuel volume and same store merchandise sales include aggregated individual store results for all stores that had fuel volume or merchandise sales in all months for both periods. Same store merchandise sales excludes branded food sales and other revenues such as lottery commissions and car wash sales.

Supplemental Disclosure Regarding Non-GAAP Financial Measures

CrossAmerica uses the non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income 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.

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 CrossAmerica's 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 the Partnership's 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 CrossAmerica's 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 CrossAmerica's unitholders.

CrossAmerica believes 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 the industry, CrossAmerica's 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, the most directly comparable U.S. GAAP financial measure, for each of the periods indicated (in thousands, except for per unit amounts):

	Three Months Ended December 31,						Year Ended December 31,
	2022			2021			2022			2021
Net income ^(a)	$	17,090		$	11,980		$	63,696		$	21,654
Interest expense		9,767			5,949			32,100			18,244
Income tax (benefit) expense		(1,129	)		(1,561	)		714			(3,225	)
Depreciation, amortization and accretion		19,102			21,120			80,625			77,852
EBITDA		44,830			37,488			177,135			114,525
Equity-based employee and director compensation expense		686			215			2,294			1,311
Gain on dispositions and lease terminations, net		(1,763	)		(1,662	)		(1,143	)		(2,037	)
Acquisition-related costs ^(b)		523			959			1,508			9,461
Adjusted EBITDA		44,276			37,000			179,794			123,260
Cash interest expense		(9,032	)		(5,269	)		(29,312	)		(16,382	)
Sustaining capital expenditures ^(c)		(1,973	)		(754	)		(7,164	)		(4,161	)
Current income tax benefit (expense)		53			—			(2,466	)		(548	)
Distributable Cash Flow	$	33,324		$	30,977		$	140,852		$	102,169
Distributions paid	$	19,913		$	19,893		$	79,625		$	79,552
Distribution Coverage Ratio ^(d)	1.67x			1.56x			1.77x			1.28x

(a) Beginning in the second quarter of 2022, CrossAmerica reconciled Adjusted EBITDA to Net Income rather than to Net income available to limited partners. The difference between Net income and Net income available to limited partners is that, beginning in the second quarter of 2022, the accretion of preferred membership interests issued in late March 2022 is a deduction from Net income in computing Net income available to limited partners. Because Adjusted EBITDA is used to assess our financial performance, without regard to capital structure, CrossAmerica believes Adjusted EBITDA should be reconciled with Net Income, so that the calculation isn't impacted by the accretion of preferred membership interests. This approach is comparable to the reconciliation of Adjusted EBITDA to Net income available to limited partners in past periods, as the Partnership has not recorded accretion of preferred membership interests in past periods.

(b) Relates to certain discrete acquisition-related costs, such as legal and other professional fees, separation benefit costs and certain purchase accounting adjustments associated with recently acquired businesses.

(c) Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain CrossAmerica's long-term operating income or operating capacity. Examples of sustaining capital expenditures are those made to maintain existing contract volumes, including payments to renew existing distribution contracts, or to maintain the sites in conditions suitable to lease, such as parking lot or roof replacement/renovation, or to replace equipment required to operate the existing business.

(d) In 2022, CrossAmerica updated its calculation of its Distribution Coverage Ratio to divide Distributable Cash Flow by distributions paid, whereas in prior periods, the Distribution Coverage Ratio was calculated as Distributable Cash Flow divided by the weighted-average diluted common units and then CrossAmerica divided that result by distributions paid per limited partner unit.

New Segment Reporting

During the fourth quarter of 2022, CrossAmerica changed its segment reporting to simplify the assessment of performance of its operating segments. CrossAmerica has recast the results of its segments for periods prior to October 1, 2022 to be consistent with the new segment reporting. CrossAmerica has provided tables below to show the effects of this new segment reporting for the past quarterly periods of 2022 and 2021.

Wholesale Segment

2022

	Three Months Ended,												Year Ended December 31,
	3/31/2022			6/30/2022			9/30/2022			12/31/2022			2022
Gross profit:
Motor fuel gross profit	$	16,184		$	19,034		$	19,501		$	18,659		$	73,378
Rent gross profit		12,339			12,646			12,959			12,908			50,852
Other revenues		1,786			1,807			1,657			1,259			6,509
Total gross profit		30,309			33,487			34,117			32,826			130,739
Operating expenses		(8,716	)		(9,329	)		(10,071	)		(8,956	)		(37,072	)
Operating Income	$	21,593		$	24,158		$	24,046		$	23,870		$	93,667

Motor fuel distribution sites (end of period):
Independent dealers		656			637			623			663			663
Lessee dealers		642			645			641			619			619
Total motor fuel distribution sites		1,298			1,282			1,264			1,282			1,282

Motor fuel distribution sites (average):		1,302			1,289			1,273			1,274			1,286

Volume of gallons distributed		203,915			214,413			212,657			213,501			844,486

Margin per gallon	$	0.079		$	0.089		$	0.092		$	0.087		$	0.087

2021

	Three Months Ended,												Year Ended December 31,
	3/31/2021			6/30/2021			9/30/2021			12/31/2021			2021
Gross profit:
Motor fuel gross profit	$	15,523		$	18,529		$	18,179		$	17,990		$	70,221
Rent gross profit		12,493			12,973			13,264			12,006			50,736
Other revenues		1,134			729			795			1,063			3,721
Total gross profit		29,150			32,231			32,238			31,059			124,678
Operating expenses		(9,755	)		(10,730	)		(8,479	)		(8,942	)		(37,906	)
Operating Income	$	19,395		$	21,501		$	23,759		$	22,117		$	86,772

Motor fuel distribution sites (end of period):
Independent dealers		683			675			676			666			666
Lessee dealers		648			651			643			637			637
Total motor fuel distribution sites		1,331			1,326			1,319			1,303			1,303

Motor fuel distribution sites (average):		1,338			1,328			1,325			1,309			1,325

Volume of gallons distributed		213,708			242,392			244,545			230,643			931,288

Margin per gallon	$	0.073		$	0.076		$	0.074		$	0.078		$	0.075

Retail Segment

2022

	Three Months Ended,												Year Ended December 31,
	3/31/2022			6/30/2022			9/30/2022			12/31/2022			2022
Gross profit:
Motor fuel	$	26,304		$	29,841		$	54,476		$	35,925		$	146,546
Merchandise		16,682			20,165			20,649			18,639			76,135
Rent		2,447			2,258			2,395			2,697			9,797
Other revenue		3,088			3,194			3,093			3,179			12,554
Total gross profit		48,521			55,458			80,613			60,440			245,032
Operating expenses		(33,393	)		(32,887	)		(36,774	)		(34,582	)		(137,636	)
Operating income	$	15,128		$	22,571		$	43,839		$	25,858		$	107,396

Retail sites (end of period):
Company operated retail sites		255			253			252			255			255
Commission agents		201			199			198			200			200
Total retail segment sites		456			452			450			455			455

Total retail segment statistics:
Volume of gallons sold		116,040			128,815			126,669			125,110			496,634
Average retail fuel sites		454			454			451			451			452
Margin per gallon, before deducting credit card fees and commissions	$	0.319		$	0.340		$	0.534		$	0.383		$	0.396

Company operated site statistics:
Average retail fuel sites		254			254			253			253			253
Same store fuel volume		39,182			45,078			45,829			77,785			167,762
Margin per gallon, before deducting credit card fees	$	0.327		$	0.350		$	0.596		$	0.422		$	0.426
Same store merchandise sales	$	34,447		$	40,744		$	42,044		$	63,283		$	150,408
Same store merchandise sales excluding cigarettes	$	23,081		$	28,187		$	29,167		$	42,597		$	103,914
Merchandise gross profit percentage		26.8	%		27.3	%		27.1	%		27.5	%		27.2	%

Commission site statistics:
Average retail fuel sites		200			200			198			198			199
Margin per gallon, before deducting credit card fees and commissions	$	0.303		$	0.320		$	0.410		$	0.310		$	0.336

2021

	Three Months Ended,												Year Ended December 31,
	3/31/2021			6/30/2021			9/30/2021			12/31/2021			2021
Gross profit:
Motor fuel	$	11,429		$	16,725		$	23,373		$	27,791		$	79,318
Merchandise		10,364			11,969			15,543			17,241			55,117
Rent		2,066			1,858			2,266			2,491			8,681
Other revenue		1,859			2,311			2,310			2,679			9,159
Total gross profit		25,718			32,863			43,492			50,202			152,275
Operating expenses		(19,648	)		(20,340	)		(26,069	)		(30,116	)		(96,173	)
Operating income	$	6,070		$	12,523		$	17,423		$	20,086		$	56,102

Retail sites (end of period):
Company operated retail sites		151			152			248			252			252
Commission agents		205			202			200			198			198
Total retail segment sites		356			354			448			450			450

Total retail segment statistics:
Volume of gallons sold		78,235			89,806			110,523			125,286			403,850
Average retail fuel sites		356			353			395			451			389
Margin per gallon, before deducting credit card fees and commissions	$	0.224		$	0.268		$	0.295		$	0.309		$	0.280

Company operated site statistics:
Average retail fuel sites		151			150			194			253			187
Same store fuel volume		37,499			44,340			49,478			79,388			170,082
Margin per gallon, before deducting credit card fees	$	0.261		$	0.299		$	0.321		$	0.328		$	0.309
Same store merchandise sales	$	35,579		$	42,017		$	42,871		$	62,763		$	153,305
Same store merchandise sales excluding cigarettes	$	22,953		$	27,952		$	28,737		$	40,258		$	101,888
Merchandise gross profit percentage		27.4	%		26.5	%		26.7	%		25.4	%		26.4	%

Commission site statistics:
Average retail fuel sites		205			203			201			198			202
Margin per gallon, before deducting credit card fees and commissions	$	0.190		$	0.236		$	0.255		$	0.270		$	0.238

About CrossAmerica Partners LP

CrossAmerica Partners LP is a leading wholesale distributor of motor fuels, convenience store operator, and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is indirectly owned and controlled by entities affiliated with Joseph V. Topper, Jr., the founder of CrossAmerica Partners and a member of the board of the general partner since 2012. Formed in 2012, CrossAmerica Partners LP is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to approximately 1,750 locations and owns or leases approximately 1,150 sites. With a geographic footprint covering 34 states, the Partnership has well-established relationships with several major oil brands, including ExxonMobil, BP, Shell, Sunoco, Valero, Gulf, Citgo, Marathon and Phillips 66. CrossAmerica Partners LP ranks as one of ExxonMobil's largest distributors by fuel volume in the United States and in the top 10 for additional brands. For additional information, please visit www.crossamericapartners.com.

Contact

Investor Relations: Randy Palmer, rpalmer@caplp.com or 210-742-8316

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this release that state the Partnership's or management's expectations or predictions of the future are forward-looking statements. The words "believe," "expect," "should," "intends," "estimates," "target" and other similar expressions identify forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see CrossAmerica's Form 10-K or Forms 10-Q filed with the Securities and Exchange Commission, and available on CrossAmerica's website at www.crossamericapartners.com. The Partnership undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.