UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2018

CrossAmerica Partners LP

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code: (610) 625-8000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Condition.

On May 7, 2018, CrossAmerica Partners LP (NYSE: CAPL) (“CrossAmerica” or the “Partnership”) issued a press release announcing the financial results for CrossAmerica for the quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Furnished herewith as Exhibit 99.2 are slides that senior management of CrossAmerica will utilize in CrossAmerica’s 2018 first quarter earnings call. The slides are available on the Webcasts & Presentations page of CrossAmerica’s website at www.crossamericapartners.com.

Item 7.01 Regulation FD Disclosure.

On May 7, 2018, the Partnership issued a press release announcing that the Board approved a quarterly distribution of $0.5250 per unit attributable to the first quarter of 2018 (annualized $2.10 per unit), representing a 15.0% decrease compared with the distribution per unit attributable to the first quarter of 2017. The distribution attributable to the first quarter is payable on May 25, 2018 to all unitholders of record on May 18, 2018. A copy of the press release is furnished as Exhibit 99.3 to the Current Report on Form 8-K.

The information in this Current Report on Form 8-K is being furnished pursuant to Regulation FD. The information in Items 2.02 and 7.01 and Exhibits 99.1, 99.2 and 99.3 of Item 9.01 of this report, according to general instruction B.2., shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. By filing this report on Form 8-K and furnishing this information, the Partnership makes no admission as to the materiality of any information in this report that the Partnership chooses to disclose solely because of Regulation FD.

Safe Harbor Statement

Statements contained in the exhibit to this report that state the Partnership’s or its management’s expectations or predictions of the future are forward-looking statements. It is important to note that the Partnership’s actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the documents that the Partnership has filed with the Securities and Exchange Commission (the “SEC”). The Partnership undertakes no duty or obligation to publicly update or revise the information contained in this report, although the Partnership may do so from time to time as management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: May 7, 2018

Exhibit 99.1

 

CrossAmerica Partners LP Reports First Quarter 2018 Results

 

Allentown, PA May 7, 2018 – CrossAmerica Partners LP (NYSE: CAPL) (“CrossAmerica” or the “Partnership”), a leading wholesale fuels distributor and owner and lessor of real estate used in the retail distribution of motor fuels, today reported financial results for the first quarter ended March 31, 2018.

 

“Both our wholesale and retail segments performed well during the quarter with a 7% year-over-year increase in gross profit,” said Gerardo Valencia, President of CrossAmerica. “While we did experience some softness with our recent Jet-Pep assets acquisition due to higher cost of product as a result of certain market dynamics in the region, we were still able to grow Adjusted EBITDA 10% to $26.0 million compared to $23.7 million in the first quarter of 2017.” Valencia went on to say, “We remain ahead of schedule in capturing previously communicated synergies, we have identified further synergies that we will capture with the support of our General Partner, and are in a good position as we move into the summer driving season.”

 

“As we continue to focus on the long-term growth of the Partnership and the improvement of our coverage ratio, our management team and board of directors made the decision to reduce our distribution attributable to the first quarter of 2018,” said Jeremy Bergeron, CEO of CrossAmerica. “Due to the continued weakness in the MLP market and the resulting elevated yield of our common units, we anticipate funding expenses related to our Amended Omnibus Agreement primarily with cash from operations rather than the issuance of common units, resulting in lower distributable cash flow.” Bergeron continued, “We remain confident in our underlying business and our outlook for the remainder of 2018 and we will continue to monitor the equity and debt markets and position ourselves for future growth.”

First Quarter Results

Consolidated Results

Operating income was $7.4 million for the first quarter 2018 compared to $5.6 million achieved in the first quarter 2017, representing an increase of 33%. EBITDA was $21.8 million for the three month period ended March 31, 2018 compared to $19.1 million for the same period in 2017, representing a 15% increase. Adjusted EBITDA was $26.0 million for the first quarter 2018 compared to $23.7 million for the same period in 2017, representing an increase of 10%. The increase in EBITDA and Adjusted EBITDA was due to an increase in operating income driven by increases in both the wholesale and retail segments and a reduction in general and administrative expenses (Non-GAAP measures, including EBITDA, as described are reconciled to the corresponding GAAP measures in the Supplemental Disclosure section of this release).

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Wholesale Segment

During the first quarter 2018, CrossAmerica’s wholesale segment generated $30.7 million in gross profit compared to $29.3 million in gross profit for the first quarter 2017, representing a 5% increase. The Partnership distributed, on a wholesale basis, 249.5 million gallons of motor fuel at an average wholesale gross profit of $0.057 per gallon, resulting in motor fuel gross profit of $14.3 million. For the three month period ended March 31, 2017, CrossAmerica distributed, on a wholesale basis, 238.4 million gallons of fuel at an average wholesale gross profit of $0.056 per gallon, resulting in motor fuel gross profit of $13.3 million. The 7% increase in motor fuel gross profit was primarily due to a 5% increase in volume driven primarily by the November 2017 Jet-Pep Assets acquisition. In addition, the Partnership realized a higher margin per gallon primarily due to higher dealer-tank wagon (DTW) margins and increased payment discounts and incentives due to the increase in motor fuel prices as a result of the increase in crude oil prices.

The prices paid by the Partnership to its motor fuel suppliers for wholesale motor fuel (which affects the cost of sales) are highly correlated to the price of crude oil. The average daily spot price of West Texas Intermediate crude oil increased approximately 22% to $62.91 per barrel during the first quarter 2018 as compared to $51.62 per barrel during the same period in 2017.  Additionally, for the Partnership’s newly acquired Jet-Pep Assets in Alabama, CrossAmerica has noted that it is exposed to more price risk as its purchases are based on Platts bulk index-priced contracts with fuel suppliers. During the first quarter 2018, the Partnership experienced lower than normal fuel margins due to some weaker conditions in the region that negatively impacted both its wholesale fuel margin and volumes at these sites. The Partnership does not expect this trend to continue over the long term. The Partnership is also completing the integration and optimization of the fuel supply chain and fuel programs for the Jet-Pep network that should provide benefits in the coming quarters of 2018.

 

CrossAmerica’s gross profit from Rent and Other for the wholesale segment, which primarily consists of rental income, was $16.4 million for the first quarter 2018 compared to $16.0 million for the first quarter 2017, representing an increase of 3%.

 

Operating expenses increased $1.1 million primarily as a result of environmental costs related to increased compliance requirements in certain states as well as remediation costs incurred at individual sites that are not covered by state UST funds, insurance or other indemnifications.

 

Adjusted EBITDA for the wholesale segment was $26.2 million for the first quarter 2018 compared to $25.7 million for the same period in 2017. As discussed above, the year-over-year increase was primarily driven by an increase in motor fuel gross profit, which was offset slightly by an increase in operating expenses (see Supplemental Disclosure Regarding Non-GAAP Financial Information below).

Retail Segment

For the first quarter 2018, the Partnership sold 51.7 million gallons of motor fuel at an average retail motor fuel gross profit of $0.042 per gallon, net of commissions and credit card fees, resulting in motor fuel gross profit of $2.2 million. For the same period in 2017, CrossAmerica sold 36.8 million gallons in its retail segment at an average gross profit of $0.032 per gallon, net of commissions and credit card fees, resulting in motor fuel gross profit of $1.2 million. The increase in motor fuel gross profit is attributable due to an increase in margin per gallon as a result of the movements in crude oil prices throughout the two periods and an increase in the average number of retail sites during the first quarter 2018 period due to the acquisition of the Jet-Pep sites.  

During the quarter, the Partnership generated $5.7 million in gross profit from merchandise and services versus $5.8 million for the same period in 2017. Gross profit from Rent and Other for the retail segment was $1.5 million for the first quarter 2018 compared to $1.2 million for the same period in 2017, reflecting an increase of 21%. Adjusted EBITDA for the retail segment was $1.3 million for the first quarter 2018 compared to $0.1 million for the first quarter 2017.  

The increase in gross profit and Adjusted EBITDA were primarily due to an increase in motor fuel gross profit (see Supplemental Disclosure Regarding Non-GAAP Financial Information below).

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Distributable Cash Flow and Distribution Coverage Ratio

Distributable Cash Flow was $16.7 million for the three month period ended March 31, 2018, compared to $16.9 million for the same period in 2017. The slight decrease in Distributable Cash Flow was due primarily to an increase in cash interest expense from additional borrowings to fund the Partnership’s recent acquisitions and an increase in the average rate on the Partnership’s credit facility borrowings, partially offset by synergies in general and administrative expenses. The Distribution Coverage Ratio was 0.78 times for the three months ended March 31, 2018 (see Supplemental Disclosure Regarding Non-GAAP Financial Information below).

Liquidity and Capital Resources

As of May 3, 2018, after taking into consideration debt covenant constraints, approximately $98.9 million was available for future borrowings under the Partnership's revolving credit facility. In connection with future acquisitions, the revolving credit facility requires, among other things, that CrossAmerica have, after giving effect to such acquisition, at least, in the aggregate, $20 million of borrowing availability under the revolving credit facility and unrestricted cash on the balance sheet on the date of such acquisition.

On April 25, 2018, the Partnership’s credit facility was amended to:

Distributions

On May 7, 2018, 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 first quarter of 2018. As previously announced, the distribution will be paid on May 25, 2018 to all unitholders of record as of May 18, 2018. The amount and timing of any future distributions is subject to the discretion of the Board (see Supplemental Disclosure Regarding Non-GAAP Financial Information below).

Conference Call

The Partnership will host a conference call on May 8, 2018 at 9:00 a.m. Eastern Time to discuss first quarter 2018 earnings results. The conference call numbers are 877-615-4335 or 847-944-7271 and the passcode for both is 9222849#. A live audio webcast of the conference call and the related earnings materials, including reconciliations of non-GAAP financial measures to GAAP financial measures and any other applicable disclosures, will be available on that same day on the investor section of the CrossAmerica website (www.crossamericapartners.com). A slide presentation for the conference call will also be available on the investor section of the Partnership’s website. To listen to the audio webcast, go to http://www.crossamericapartners.com/en-us/investors/eventsandpresentations. After the live conference call, a replay will be available for a period of thirty days. The replay numbers are 888-843-7419 or 630-652-3042 and the passcode for both is 9222849#. An archive of the webcast will be available on the investor section of the CrossAmerica website at www.crossamericapartners.com/en-us/investors/eventsandpresentations within 24 hours after the call for a period of sixty days.

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CROSSAMERICA PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

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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): 

 

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Retail

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

 

 

Supplemental Disclosure Regarding Non-GAAP Financial Measures

CrossAmerica uses non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income available to the Partnership before deducting interest expense, income taxes, depreciation, amortization and accretion. Adjusted EBITDA represents EBITDA as further adjusted to exclude equity funded expenses related to incentive compensation and the Amended Omnibus Agreement, gains or losses on sales of assets, certain discrete acquisition related costs, such as legal and other professional fees and severance expenses associated with recently acquired companies, 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. Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by the weighted average diluted common and subordinated units and then dividing that result by the distributions paid per limited partner unit.

EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are used as supplemental financial measures by management and by external users of the CrossAmerica financial statements, such as investors and lenders. EBITDA

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and Adjusted EBITDA are used to assess the 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 CrossAmerica 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 the Partnership’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 the Partnership’s unit-holders.

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, the Partnership’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):

 

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The following table reconciles the segment Adjusted EBITDA to Consolidated Adjusted EBITDA presented in the table above (in thousands):

 

About CrossAmerica Partners LP

CrossAmerica Partners LP is a leading wholesale distributor of motor fuels and owner and lessee of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Alimentation Couche-Tard Inc. 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 1,300 locations and owns or leases approximately 900 sites. With a geographic footprint covering 32 states, the Partnership has well-established relationships with several major oil brands, including ExxonMobil, BP, Shell, Chevron, 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.

CrossAmerica Partners has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2017 with the U.S. Securities and Exchange Commission (SEC). The filing can be viewed through a link on the Partnership's website at www.crossamericapartners.com or on the SEC's website at www.sec.gov. The Partnership's unitholders may also request a printed copy of the report, which contains the Partnership's audited financial statements. Requests should be submitted at http://www.crossamericapartners.com/investors/information-request/page.aspx?id=1112 or by contacting investor relations at 210-692-2160.

 

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Contact

Investor Relations:      Randy Palmer, Director – Investor Relations, 210-692-2160

Safe Harbor Statement

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 the 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.

Note to Non-United States Investors: This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of CrossAmerica Partners LP’s distributions to non-U.S. investors as attributable to income that is effectively connected with a United States trade or business. Accordingly, CrossAmerica Partners LP’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

May 2018 First Quarter 2018 Earnings Call Exhibit 99.2

Safe Harbor Statement 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,” “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 Forms 10-Q or Form 10-K filed with the Securities and Exchange Commission and available on CrossAmerica’s website at www.crossamericapartners.com. If any of these factors materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you see or hear during this presentation reflects our current views as of the date of this presentation with respect to future events. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.

CrossAmerica Business Overview Gerardo Valencia, President

CrossAmerica Partners LP Overview Master limited partnership and leading wholesale fuels distributor, convenience store lessor, and c-store operator Distributes annually over 1 billion gallons of fuel Annual gross rental income of over $85 million 17.5% equity interest in CST Brands’ wholesale fuels business, approximately 1.7 billion gallons of annual fuel supply Approx. 1,350 locations – 565 owned sites 626 Lessee Dealers 383 Independent Dealers 71 Company Operated Sites 180 Commission Agents 54 Non-fuel Tenant Sites (rent only) Equity market capitalization of approx. $700 million and enterprise value of $1.2 billion Note: All information is as of March 31, 2018

First Quarter Operating Results OPERATING RESULTS (in thousands, except for per gallon and site count) Three Months ended March 31, 2018 2017 % Change Total Motor Fuel Distribution Sites (period avg.) 1,259 1,186 6% Total Volume of Gallons Distributed 249,508 238,420 5% Wholesale Fuel Margin per Gallon $0.057 $0.056 2% Wholesale Fuel Gross Profit $14,299 $13,346 7% Rental & Other Gross Profit (Net) (Wholesale & Retail) $17,852 $17,184 4% Company Operated Sites (period avg.) 70 72 (3%) Company Op Fuel Margin Per Gallon $0.101 $0.056 80% General & Administrative Expenses $4,720 $5,817 (19%)

First Quarter Highlights Adjusted EBITDA Increased Adjusted EBITDA 10% from First Quarter 2017 to First Quarter 2018 G&A Expense Reduction Reduced G&A expense 19% from First Quarter 2017 to First Quarter 2018 Performance of Jet-Pep Assets In November 2017, we closed on the acquisition of the real property and fuel supply business of 101 commission operated sites in Alabama Integration of sites during the First Quarter 2018 Experienced some margin weakness due to market dynamics during the quarter that impacted both the fuel margin and volume Continuing to integrate and improve supply chain and fuel programs Note: See the reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to net income and the definitions of EBITDA, Adjusted EBITDA and DCF in the appendix of this presentation.

CrossAmerica Synergies In July 2017, we announced that we expected to capture annual cost synergies of $10 million within the first three years following the merger of ACT and CST with approximately half of the synergies to be achieved within the first twelve months Through the first three quarters since the transaction closed, we have captured over $5.8 million of cost savings and are ahead of our synergy plan. After additional review and analysis of CrossAmerica’s portfolio of supplier contracts, in the context of ACT/Circle K’s significant purchasing scale, we have identified further opportunities to lower our costs and deliver total synergies, which we believe can exceed $15 million by the end of 2020. CUMULATIVE TOTAL ($m) 2018 2019 2020 +2021 Total Cost Synergies $7m to $11m $11m to $14m $15m to $20m $20m - $25m

CrossAmerica Financial Overview Evan Smith, Chief Financial Officer

First Quarter Results Summary OPERATING RESULTS (in millions, except for per gallon and site count) Three Months ended March 31, 2018 2017 % Change Gross Profit $40.0 $37.4 7% Adjusted EBITDA $26.0 $23.7 10% Distributable Cash Flow $16.7 $16.9 (1%) Weighted Avg. Diluted Units 34.2 33.6 2% Distribution Paid per LP Unit $0.6275 $0.6125 2% Distribution Attributable to Each Respective Period per LP Unit $0.5250 $0.6175 (15%) Distribution Coverage (Paid Basis) 0.78x 0.82x (5%) Note: See the reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow (or “DCF”) to net income and the definitions of EBITDA, Adjusted EBITDA and DCF in the appendix of this presentation.

Capital Strength Leverage, as defined under our credit facility, was 4.21X as of March 31, 2018 Amended Credit Agreement on April 25th Extended maturity date from March 4, 2019 to April 25, 2020 Increased the capacity from $550 million to $650 million Extend the period during which the permitted leverage ratio is increased from 4.50X to 5.00X after the closing of a material acquisition from three quarters to four quarters Modification of the rate schedule, generally reducing our applicable margin by 50 basis points Distribution reduction Distribution rate of $0.5250 per unit ($2.10 per unit annualized) attributable to the first quarter of 2018 Reduces further dilution by settling Omnibus expenses in cash versus units Immediately improves coverage ratio

Appendix First Quarter 2018 Earnings Call

Non-GAAP Financial Measures Non-GAAP Financial Measures We use non-GAAP financial measures EBITDA, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio. EBITDA represents net income available to us before deducting interest expense, income taxes and depreciation, amortization and accretion. Adjusted EBITDA represents EBITDA as further adjusted to exclude equity funded expenses related to incentive compensation and the Amended Omnibus Agreement, gains or losses on sales of assets, certain discrete acquisition related costs, such as legal and other professional fees and severance expenses associated with recently acquired companies, 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. Distribution Coverage Ratio is computed by dividing Distributable Cash Flow by the weighted average diluted common and subordinated units and then dividing that result by the distributions paid per limited partner unit. 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 unit-holders. 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.

Non-GAAP Reconciliation 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):   (a)As approved by the independent conflicts committee of the Board, the Partnership, CST and Circle K mutually agreed to settle certain amounts due under the terms of the Amended Omnibus Agreement in limited partnership units of the Partnership. Relates to certain discrete acquisition related costs, such as legal and other professional fees, severance expenses and purchase accounting adjustments associated with recently acquired businesses. Under the Partnership Agreement, sustaining capital expenditures are capital expenditures made to maintain our 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 our 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)On May 7, 2018, the Board approved a quarterly distribution of $0.5250 per unit attributable to the first quarter of 2018. The distribution will be paid on May 25, 2018 to all unitholders of record on May 18, 2018. (e)The distribution coverage ratio is computed by dividing Distributable Cash Flow by the weighted average diluted common and subordinated units and then dividing that result by the distributions paid per limited partner unit. Three Months Ended March 31, 2018 2017 Net income available to limited partners $ (1,985 ) $ 704 Interest expense 8,052 6,702 Income tax expense (benefit) 273 (2,701 ) Depreciation, amortization and accretion 15,500 14,348 EBITDA 21,840 19,053 Equity funded expenses related to incentive compensation and the Amended Omnibus Agreement (a) 3,343 4,166 Gain on sales of assets, net (230 ) 44 Acquisition-related costs (b) 1,056 473 Adjusted EBITDA 26,009 23,736 Cash interest expense (7,624 ) (6,157 ) Sustaining capital expenditures (c) (790 ) (364 ) Current income tax expense (924 ) (359 ) Distributable Cash Flow $ 16,671 $ 16,856 Weighted average diluted common units 34,165 33,623 Distributions paid per limited partner unit (d) $ 0.6275 $ 0.6125 Distribution Coverage Ratio (e) 0.78x 0.82x

Exhibit 99.3

CrossAmerica Partners LP Announces Reduction in Quarterly Distribution

ALLENTOWN, PA (May 7, 2018) – CrossAmerica Partners LP (NYSE: CAPL) announced today that the Board of Directors of its general partner has approved a quarterly distribution of $0.5250 per unit attributable to the first quarter of 2018 (annualized $2.10 per unit). The distribution attributable to the first quarter is payable on May 25, 2018 to all unitholders of record on May 18, 2018.

Following the acquisition of our former General Partner in 2014, we began funding expenses related to the Amended Omnibus Agreement with issuance of common units, which in 2017 alone totaled 550,516 units. While this practice allowed the Partnership to maximize distributable cash flow and increase the equity position of its General Partner, the continued weakness in the MLP market and resulting elevated yield of our common units, has made this a very expensive source of funding for its management fees. Going forward, the Partnership anticipates funding such expenses primarily with cash from existing operations, resulting in lower distributable cash flow. We will continue to monitor the equity and debt markets and position ourselves for future growth, but our management team and board believe that it is important to reduce any further future dilution and provide immediate improvement in our coverage ratio.

CrossAmerica will host a conference call on May 8^th at 9:00 a.m. Eastern Time to discuss first quarter earnings results, which will be released after the market closes on Monday, May 7.

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About CrossAmerica Partners LP

CrossAmerica Partners is a leading wholesale distributor of motor fuels and owner and lessor of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Alimentation Couche-Tard Inc.  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 1,300 locations and owns or leases approximately 900 sites. With a geographic footprint covering 32 states, the Partnership has well-established relationships with several major oil brands, including ExxonMobil, BP, Shell, Chevron, Sunoco, Valero, Gulf, Citgo, Marathon and Phillips 66. CrossAmerica Partners 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.

 

Safe Harbor Statement

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," "plan" 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 Forms 10-Q or Form 10-K 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.

Note to Non-United States Investors: This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100%) of CrossAmerica Partners LP’s distributions to non-U.S. investors as attributable to income that is effectively connected with a United States trade or business. Accordingly, CrossAmerica Partners LP’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

 

Contact - Randy Palmer, Investor Relations, 210-692-2160