Segment Reporting

3 Months Ended

Mar. 31, 2018

Segment information is prepared on the same basis that our Chief Operating Decision Maker (“CODM”) reviews financial information for operational decision-making purposes. We operate our business in two primary segments, wholesale and retail, both of which are included as reportable segments. No operating segments have been aggregated in identifying the two reportable segments.

We allocate shared revenue and costs to each segment based on the way our CODM measures segment performance. Partnership overhead costs, interest and other expenses not directly attributable to a reportable segment are allocated based on segment gross profit.

We report EBITDA and Adjusted EBITDA by segment as a measure of segment performance. We define EBITDA as net income before net interest expense, income tax expense and depreciation, amortization and accretion expense. We define Adjusted EBITDA to include adjustments for non-cash compensation expense, gains and losses on disposal of assets and impairment charges, unrealized gains and losses on commodity derivatives and inventory adjustments.

Wholesale Segment

Our wholesale segment purchases motor fuel primarily from independent refiners and major oil companies and supplies it to our retail segment, to independently-operated dealer stations under long-term supply agreements, and to distributors and other consumers of motor fuel. Also included in the wholesale segment are motor fuel sales to commission agent locations and sales and costs related to processing transmix. We distribute motor fuels across more than 30 states throughout the East Coast and Southeast regions of the United States from Maine to Florida and from Florida to New Mexico, as well as Hawaii. Sales of fuel from our wholesale segment to our retail segment are delivered at cost plus a profit margin. These amounts are reflected in intercompany eliminations of motor fuel revenue and motor fuel cost of sales. Also included in our wholesale segment is rental income from properties that we lease or sublease.

Retail Segment

Prior to the completion of the Retail Divestment, our retail segment primarily operated branded retail convenience stores across more than 20 states throughout the East Coast and Southeast regions of the United States with a significant presence in Texas, Pennsylvania, New York, Florida, and Hawaii. These stores offer motor fuel, merchandise, foodservice, and a variety of other services including car washes, lottery, automated teller machines, money orders, prepaid phone cards and wireless services. The operations of the Retail Divestment are included in discontinued operations in the following segment information. Subsequent to the completion of the Retail Divestment, the remaining retail segment includes the Partnership's ethanol plant, credit card services, franchise royalties, and its retail operations in Hawaii and the continental United States.

The following tables present financial information by segment for the three months ended March 31, 2018 and 2017:



	For the Three Months Ended March 31,
	2018											2017
	Wholesale Segment			Retail Segment			Intercompany Eliminations		Totals			Wholesale Segment			Retail Segment			Intercompany Eliminations		Totals
	(in millions)
Revenue
Retail motor fuel	$	—		$	445				$	445		$	—		$	353				$	353
Wholesale motor fuel sales to third parties	3,094			—					3,094			2,244			—					2,244
Wholesale motor fuel sales to affiliates	12			—					12			21			—					21
Merchandise	—			135					135			—			131					131
Rental income	19			3					22			19			3					22
Other	14			27					41			13			24					37
Intersegment sales	404			34			(438	)	—			327			35			(362	)	—
Total revenue	3,543			644			(438	)	3,749			2,624			546			(362	)	2,808
Gross profit
Retail motor fuel	—			44					44			—			36					36
Wholesale motor fuel	161			—					161			122			—					122
Merchandise	—			42					42			—			43					43
Rental and other	29			20					49			28			27					55
Total gross profit	190			106					296			150			106					256
Total operating expenses	119			81					200			91			109					200
Operating income (loss)	71			25					96			59			(3		)			56
Interest expense, net	19			15					34			20			38					58
Loss on extinguishment of debt and other	109			—					109			—			—					—
Income (loss) from continuing operations before income taxes	(57		)	10					(47		)	39			(41		)			(2		)
Income tax expense (benefit)	1			30					31			1			(15		)			(14		)
Income (loss) from continuing operations	(58		)	(20		)			(78		)	38			(26		)			12
Loss from discontinued operations, net of income taxes (See Note 4)	—			(237		)			(237		)	—			(11		)			(11		)
Net income (loss) and comprehensive income (loss)	$	(58	)	$	(257	)			$	(315	)	$	38		$	(37	)			$	1
Depreciation, amortization and accretion (1)	28			21					49			22			65					87
Interest expense, net (1)	19			17					36			20			44					64
Income tax expense (benefit) (1)	1			203					204			1			(18		)			(17		)
EBITDA	(10		)	(16		)			(26		)	81			54					135
Non-cash compensation expense (1)	—			3					3			—			4					4
Loss on disposal of assets (1)	3			23					26			2			5					7
Loss on extinguishment of debt and other (1)	109			20					129			—			—					—
Unrealized gain on commodity derivatives (1)	—			—					—			(5		)	—					(5		)
Inventory fair value adjustments (1)	(25		)	(1		)			(26		)	13			1					14
Other non-cash adjustments	3			—					3			—			—					—
Adjusted EBITDA	$	80		$	29				$	109		$	91		$	64				$	155
Capital expenditures (1)	$	12		$	7				$	19		$	12		$	54				$	66
Total assets as of March 31, 2018 and December 31, 2017, respectively	$	3,073		$	1,846				$	4,919		$	3,130		$	5,214				$	8,344

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(1)	Includes amounts from discontinued operations.