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Segment Reporting
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting

Note 24. SEGMENT REPORTING

We conduct our business in two segments: 1) the Wholesale segment and 2) the Retail segment. The wholesale segment includes the wholesale distribution of motor fuel to lessee dealers, independent dealers, commission agents, DMS (through the closing of the acquisition of retail and wholesale assets), Circle K and company operated retail sites. We have exclusive motor fuel distribution contracts with lessee dealers who lease the property from us. We also have exclusive distribution contracts with independent dealers to distribute motor fuel but do not collect rent from the independent dealers. Similar to lessee dealers, we have motor fuel distribution agreements with DMS (through the closing of the acquisition of retail and wholesale assets) and Circle K and collect rent from both. The Retail segment includes the retail sale of motor fuel at retail sites operated by commission agents and the sale of convenience merchandise items and the retail sale of motor fuel at company operated sites. A commission agent is a retail site where we retain title to the motor fuel inventory and sell it directly to our end user customers. At commission agent retail sites, we manage motor fuel inventory pricing and retain the gross profit on motor fuel sales, less a commission to the agent who operates the retail site. Similar to our Wholesale segment, we also generate revenues through leasing or subleasing real estate in our Retail segment.

Unallocated items consist primarily of general and administrative expenses, depreciation, amortization and accretion expense, gains on dispositions and lease terminations, net, and the elimination of the Retail segment’s intersegment cost of revenues from motor fuel sales against the Wholesale segment’s intersegment revenues from motor fuel sales. The profit in ending inventory generated by the intersegment motor fuel sales is also eliminated. Total assets by segment are not presented as management does not currently assess performance or allocate resources based on that data.

The following table reflects activity related to our reportable segments (in thousands):

 

 

 

Wholesale

 

 

Retail

 

 

Unallocated

 

 

Consolidated

 

Year Ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from fuel sales to external customers

 

$

1,176,943

 

 

$

541,882

 

 

$

—

 

 

$

1,718,825

 

Intersegment revenues from fuel sales

 

 

370,916

 

 

 

—

 

 

 

(370,916

)

 

 

—

 

Revenues from food and merchandise sales (a)

 

 

—

 

 

 

123,295

 

 

 

—

 

 

 

123,295

 

Rent income

 

 

72,799

 

 

 

10,434

 

 

 

—

 

 

 

83,233

 

Other revenue (a)

 

 

2,344

 

 

 

4,626

 

 

 

—

 

 

 

6,970

 

Total revenues

 

$

1,623,002

 

 

$

680,237

 

 

$

(370,916

)

 

$

1,932,323

 

Income from CST Fuel Supply equity interests

 

$

3,202

 

 

$

—

 

 

$

—

 

 

$

3,202

 

Operating income (loss) (b)

 

$

123,457

 

 

$

1,328

 

 

$

(9,193

)

 

$

115,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from fuel sales to external customers

 

$

1,609,547

 

 

$

397,474

 

 

$

—

 

 

$

2,007,021

 

Intersegment revenues from fuel sales

 

 

306,070

 

 

 

—

 

 

 

(306,070

)

 

 

—

 

Revenues from food and merchandise sales (a)

 

 

—

 

 

 

47,875

 

 

 

—

 

 

 

47,875

 

Rent income

 

 

81,427

 

 

 

8,712

 

 

 

—

 

 

 

90,139

 

Other revenue (a)

 

 

2,887

 

 

 

1,507

 

 

 

—

 

 

 

4,394

 

Total revenues

 

$

1,999,931

 

 

$

455,568

 

 

$

(306,070

)

 

$

2,149,429

 

Income from CST Fuel Supply equity interests

 

$

14,768

 

 

$

—

 

 

$

—

 

 

$

14,768

 

Operating income (loss) (b)

 

$

113,299

 

 

$

3,189

 

 

$

(73,166

)

 

$

43,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from fuel sales to external customers

 

$

1,713,227

 

 

$

546,061

 

 

$

—

 

 

$

2,259,288

 

Intersegment revenues from fuel sales

 

 

425,610

 

 

 

—

 

 

 

(425,610

)

 

 

—

 

Revenues from food and merchandise sales (a)

 

 

—

 

 

 

93,872

 

 

 

—

 

 

 

93,872

 

Rent income

 

 

77,404

 

 

 

8,238

 

 

 

—

 

 

 

85,642

 

Other revenue (a)

 

 

3,384

 

 

 

3,731

 

 

 

—

 

 

 

7,115

 

Total revenues

 

$

2,219,625

 

 

$

651,902

 

 

$

(425,610

)

 

$

2,445,917

 

Income from CST Fuel Supply equity interests

 

$

14,948

 

 

$

—

 

 

$

—

 

 

$

14,948

 

Operating income (loss) (b)

 

$

117,848

 

 

$

8,429

 

 

$

(91,265

)

 

$

35,012

 

 

 

(a)

We reclassified revenues related to certain ancillary items such as car wash revenue, lottery commissions and ATM commissions from revenues from food and merchandise sales to other revenue to conform to the current year presentation, which amounted to $1.5 million and $3.7 million for 2019 and 2018, respectively.

 

(b)

As discussed in Note 2, as a result of the adoption of ASC 842, operating income for 2020 and 2019 is not comparable to operating income for 2018. Most significantly, payments on our previous failed sale-leaseback obligations were characterized as principal and interest expense in periods prior to 2019. Starting in 2019, these payments are characterized as rent expense and thus reduce operating income. These payments for the Wholesale and Retail segments amounted to approximately $6.7 million and $0.5 million for 2018, respectively. Of the total payments, $5.5 million was classified as interest expense in 2018.

 

Receivables relating to the revenue streams above are as follows (in thousands):

 

 

December 31,

 

 

 

2020

 

 

2019

 

Receivables from fuel and merchandise sales

 

$

23,800

 

 

$

33,032

 

Receivables for rent and other lease-related charges

 

 

5,650

 

 

 

9,318

 

Total accounts receivable

 

$

29,450

 

 

$

42,350

 

 

Performance obligations are satisfied as fuel is delivered to the customer and as merchandise is sold to the consumer. Many of our fuel contracts with our customers include minimum purchase volumes measured on a monthly basis, although such revenue is not material. Receivables from fuel are recognized on a per-gallon rate and are generally collected within 10 days of delivery.

The balance of unamortized costs incurred to obtain certain contracts with customers was $8.3 million and $6.5 million at December 31, 2020 and 2019, respectively. Amortization of such costs is recorded against operating revenues and amounted to $1.2 million, $1.0 million and $0.9 million for 2020, 2019 and 2018, respectively

Receivables from rent and other lease-related charges are generally collected at the beginning of the month.

Conversion of Upper Midwest Company Operated Sites to Lessee Dealer Sites

When we convert company owned retail sites from our Retail segment to lessee dealers in our Wholesale segment, we no longer generate revenues from the retail sale of motor fuel or merchandise at these stores subsequent to the date of conversion and we no longer incur retail operating expenses related to these retail sites. However, we continue to supply these retail sites with motor fuel on a wholesale basis pursuant to the fuel supply contract with the lessee dealer. Further, we continue to own or lease the property and earn rental income under lease/sublease agreements with the lessee dealers under triple net leases. The lessee dealer owns all motor fuel and convenience merchandise and retains all gross profit on such operating activities.

During the third quarter of 2019, we converted 46 company operated Upper Midwest sites to dealer operated sites. In connection with the conversion of these company operated sites in our Retail segment to lessee dealer sites in our Wholesale segment, we recognized a $0.5 million loss on sale of inventory to the multi-site operator, classified within the loss on dispositions and lease terminations, net line item of the statement of income. As further discussed in Note 11, we also reassigned $4.5 million of goodwill from the Retail segment to the Wholesale segment.

As a result of this transition, we did not have any company operated sites from September 30, 2019 through April 14, 2020. See Note 5 for information regarding the acquisition of retail and wholesale assets from the Topper Group and certain other parties.