Global Partners LP (NYSE: GLP) (“Global” or the “Partnership”)
today reported financial results for the second quarter ended June
30, 2023.
“We delivered solid second-quarter results with Wholesale and
GDSO performing above our expectations,” said Eric Slifka, the
Partnership’s President and Chief Executive Officer. “In June, we
began operating the 64 Houston-area convenience and fueling
facilities acquired in our previously disclosed joint venture with
ExxonMobil, expanding our presence into Texas. The expansion of our
retail footprint reflects the continued execution of our overall
growth strategy: to acquire, invest and optimize.”
Financial Highlights
Net income was $41.4 million, or $1.05 per diluted common
limited partner unit, for the second quarter of 2023, compared with
net income of $162.8 million, or $4.61 per diluted common limited
partner unit, in the same period of 2022.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $90.7 million in the second quarter of 2023 compared
with $211.8 million in the same period of 2022.
Adjusted EBITDA was $91.6 million in the second quarter of 2023
versus $134.9 million in the same period of 2022.
Distributable cash flow (DCF) was $54.8 million in the second
quarter of 2023 compared with $178.2 million in the same period of
2022.
Net income, EBITDA and DCF for the second quarter of 2022
included a net gain on sale and disposition of assets of $76.8
million, primarily related to the sale of the Partnership’s
terminal in Revere, Massachusetts in June 2022.
Gross profit in the second quarter of 2023 was $242.7 million
compared with $281.5 million in the same period of 2022.
Combined product margin, which is gross profit adjusted for
depreciation allocated to cost of sales, was $265.6 million in the
second quarter of 2023 compared with $301.9 million in the same
period of 2022.
Combined product margin, EBITDA, Adjusted EBITDA, and DCF are
non-GAAP (Generally Accepted Accounting Principles) financial
measures, which are explained in greater detail below under “Use of
Non-GAAP Financial Measures.” Please refer to Financial
Reconciliations included in this news release for reconciliations
of these non-GAAP financial measures to their most directly
comparable GAAP financial measures for the three months ended June
30, 2023, and 2022.
Gasoline Distribution and Station Operations (GDSO) segment
product margin was $199.1 million in the second quarter of 2023
compared with $198.9 million in the same period of 2022. Product
margin from gasoline distribution decreased to $127.9 million from
$129.9 million in the year-earlier period, reflecting a slight
decrease in volume sold. Product margin from station operations
increased to $71.2 million from $69.0 million in the second quarter
of 2022, in part due to the acquisition of Tidewater Convenience in
the third quarter of 2022.
Wholesale segment product margin was $59.7 million in the second
quarter of 2023 compared with $90.5 million in the same period of
2022, primarily due to less favorable market conditions in
distillates and residual oil.
Commercial segment product margin was $6.8 million in the second
quarter of 2023 compared with $12.5 million in the same period of
2022, primarily due to less favorable market conditions in
bunkering.
Total sales were $3.8 billion in the second quarter of 2023
compared with $5.3 billion in the same period of 2022. Wholesale
segment sales were $2.1 billion in the second quarter of 2023
compared with $3.0 billion in the same period of 2022. GDSO segment
sales were $1.5 billion in the second quarter of 2023 versus $1.9
billion in the same period of 2022. Commercial segment sales were
$226.5 million in the second quarter of 2023 compared with $363.4
million in the second quarter of 2022.
Total volume was 1.3 billion gallons in the second quarter of
2023 and 2022. Wholesale segment volume was 809.6 million gallons
in the second quarter of 2023 compared with 792.6 million gallons
in the same period of 2022. GDSO volume was 417.4 million gallons
in the second quarter of 2023 compared with 422.3 million gallons
in the same period of 2022. Commercial segment volume was 102.5
million gallons in the second quarter of 2023 compared with 95.4
million gallons in the same period of 2022.
Recent Developments
- In June, a joint venture owned by subsidiaries of Global and
ExxonMobil Corporation completed its previously disclosed
acquisition of 64 Houston-area convenience and fueling facilities.
Global manages and operates the facilities.
- Global announced a quarterly cash distribution of $0.6750
($2.70 on an annualized basis) on all of its outstanding common
units for the period from April 1 to June 30, 2023. The
distribution will be paid on August 14, 2023 to unitholders of
record as of the close of business on August 8, 2023.
Business Outlook
“We have a healthy and well-capitalized balance sheet that
continues to position us positively for long-term growth,” Slifka
said. “Looking ahead, we remain focused on executing our strategic
priorities to maintain our competitive position and drive value for
our unitholders.”
Financial Results Conference Call
Management will review the Partnership’s second-quarter 2023
financial results in a teleconference call for analysts and
investors today.
Time:
10:00 a.m. ET
Dial-in numbers:
(877) 709-8155 (U.S. and Canada)
(201) 689-8881 (International)
Please plan to dial in to the call at least 10 minutes prior to
the start time. The call also will be webcast live and archived on
Global Partners’ website, https://ir.globalp.com.
About Global Partners LP
With approximately 1,700 locations primarily in the Northeast,
Global Partners is one of the region’s largest independent owners,
suppliers and operators of gasoline stations and convenience
stores. Global also owns, controls or has access to one of the
largest terminal networks in New England and New York, through
which it distributes gasoline, distillates, residual oil and
renewable fuels to wholesalers, retailers and commercial customers.
In addition, Global engages in the transportation of petroleum
products and renewable fuels by rail from the mid-continental U.S.
and Canada. Global, a master limited partnership, trades on the New
York Stock Exchange under the ticker symbol “GLP.” For additional
information, visit www.globalp.com.
Use of Non-GAAP Financial Measures
Product Margin
Global Partners views product margin as an important performance
measure of the core profitability of its operations. The
Partnership reviews product margin monthly for consistency and
trend analysis. Global Partners defines product margin as product
sales minus product costs. Product sales primarily include sales of
unbranded and branded gasoline, distillates, residual oil,
renewable fuels and crude oil, as well as convenience store and
prepared food sales, gasoline station rental income and revenue
generated from logistics activities when the Partnership engages in
the storage, transloading and shipment of products owned by others.
Product costs include the cost of acquiring products and all
associated costs including shipping and handling costs to bring
such products to the point of sale as well as product costs related
to convenience store items and costs associated with logistics
activities. The Partnership also looks at product margin on a per
unit basis (product margin divided by volume). Product margin is a
non-GAAP financial measure used by management and external users of
the Partnership’s consolidated financial statements to assess its
business. Product margin should not be considered an alternative to
net income, operating income, cash flow from operations, or any
other measure of financial performance presented in accordance with
GAAP. In addition, product margin may not be comparable to product
margin or a similarly titled measure of other companies.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures used
as supplemental financial measures by management and may be used by
external users of Global Partners’ consolidated financial
statements, such as investors, commercial banks and research
analysts, to assess the Partnership’s:
- compliance with certain financial covenants included in its
debt agreements;
- financial performance without regard to financing methods,
capital structure, income taxes or historical cost basis;
- ability to generate cash sufficient to pay interest on its
indebtedness and to make distributions to its partners;
- operating performance and return on invested capital as
compared to those of other companies in the wholesale, marketing,
storing and distribution of refined petroleum products, gasoline
blendstocks, renewable fuels, crude oil and propane, and in the
gasoline stations and convenience stores business, without regard
to financing methods and capital structure; and
- viability of acquisitions and capital expenditure projects and
the overall rates of return of alternative investment
opportunities.
Adjusted EBITDA is EBITDA further adjusted for gains or losses
on the sale and disposition of assets and goodwill and long-lived
asset impairment charges. EBITDA and Adjusted EBITDA should not be
considered as alternatives to net income, operating income, cash
flow from operating activities or any other measure of financial
performance or liquidity presented in accordance with GAAP. EBITDA
and Adjusted EBITDA exclude some, but not all, items that affect
net income, and these measures may vary among other companies.
Therefore, EBITDA and Adjusted EBITDA may not be comparable to
similarly titled measures of other companies.
Distributable Cash Flow
Distributable cash flow is an important non-GAAP financial
measure for the Partnership’s limited partners since it serves as
an indicator of success in providing a cash return on their
investment. Distributable cash flow as defined by the Partnership’s
partnership agreement is net income plus depreciation and
amortization minus maintenance capital expenditures, as well as
adjustments to eliminate items approved by the audit committee of
the board of directors of the Partnership’s general partner that
are extraordinary or non-recurring in nature and that would
otherwise increase distributable cash flow.
Distributable cash flow as used in our partnership agreement
also determines our ability to make cash distributions on our
incentive distribution rights. The investment community also uses a
distributable cash flow metric similar to the metric used in our
partnership agreement with respect to publicly traded partnerships
to indicate whether or not such partnerships have generated
sufficient earnings on a current or historical level that can
sustain distributions on preferred or common units or support an
increase in quarterly cash distributions on common units. Our
partnership agreement does not permit adjustments for certain
non-cash items, such as net losses on the sale and disposition of
assets and goodwill and long-lived asset impairment charges.
Distributable cash flow should not be considered as an
alternative to net income, operating income, cash flow from
operations, or any other measure of financial performance presented
in accordance with GAAP. In addition, distributable cash flow may
not be comparable to distributable cash flow or similarly titled
measures of other companies.
Forward-looking Statements
Certain statements and information in this press release may
constitute “forward-looking statements.” The words “believe,”
“expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,”
“would,” “could” or other similar expressions are intended to
identify forward-looking statements, which are generally not
historical in nature, although not all forward-looking statements
contain such identifying words. These forward-looking statements
are based on Global’s current expectations and beliefs concerning
future developments and their potential effect on the Partnership.
While management believes that these forward-looking statements are
reasonable as and when made, there can be no assurance that future
developments affecting the Partnership will be those that it
anticipates. Forward-looking statements involve significant risks
and uncertainties (some of which are beyond the Partnership’s
control) including, without limitation, uncertainty around the
timing of an economic recovery in the United States which will
impact the demand for the products we sell and the services that we
provide, and assumptions that could cause actual results to differ
materially from the Partnership’s historical experience and present
expectations or projections. We believe these assumptions are
reasonable given currently available information. Our assumptions
and future performance are subject to a wide range of business
risks, uncertainties and factors, which are described in our
filings with the Securities and Exchange Commission (SEC).
For additional information regarding known material factors that
could cause actual results to differ from the Partnership’s
projected results, please see Global’s filings with the SEC,
including its Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
Global undertakes no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise.
GLOBAL PARTNERS LP CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per unit data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Sales $ 3,831,690 $ 5,323,650 $ 7,862,017 $ 9,824,188 Cost of sales
3,589,031 5,042,174 7,397,294 9,336,474 Gross profit 242,659
281,476 464,723 487,714 Costs and operating expenses:
Selling, general and administrative expenses 66,696 60,870 128,952
117,151 Operating expenses 110,379 108,525 218,732 207,758
Amortization expense 2,018 2,117 4,102 4,616 Net loss (gain) on
sale and disposition of assets 884 (76,849 ) (1,244 ) (81,760 )
Total costs and operating expenses 179,977 94,663 350,542 247,765
Operating income 62,682 186,813 114,181 239,949 Other
income (expense): Income from equity method investment 1,204 -
1,204 - Interest expense (21,806 ) (21,056 ) (43,874 ) (42,530 )
Income before income tax expense 42,080 165,757 71,511
197,419 Income tax expense (691 ) (2,950 ) (1,091 ) (4,127 )
Net income 41,389 162,807 70,420 193,292 Less:
General partner's interest in net income, including incentive
distribution rights 2,339 2,166 4,121 3,343 Less: Preferred limited
partner interest in net income 3,463 3,463 6,926 6,926 Net
income attributable to common limited partners $ 35,587 $ 157,178 $
59,373 $ 183,023 Basic net income per common limited partner
unit (1) $ 1.05 $ 4.63 $ 1.75 $ 5.39 Diluted net income per
common limited partner unit (1) $ 1.05 $ 4.61 $ 1.75 $ 5.37
Basic weighted average common limited partner units outstanding
33,986 33,928 33,986 33,940 Diluted weighted average common
limited partner units outstanding 34,006 34,066 34,008 34,074
(1) Under the Partnership's partnership agreement, for any
quarterly period, the incentive distribution rights ("IDRs")
participate in net income only to the extent of the amount of cash
distributions actually declared, thereby excluding the IDRs from
participating in the Partnership's undistributed net income or
losses. Accordingly, the Partnership's undistributed net income or
losses is assumed to be allocated to the common unitholders and to
the General Partner's general partner interest. Net income
attributable to common limited partners is divided by the weighted
average common units outstanding in computing the net income per
limited partner unit.
GLOBAL PARTNERS LP CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited)
June 30,
December 31,
2023
2022
Assets Current assets: Cash and cash equivalents
$
11,044
$
4,040
Accounts receivable, net
430,792
478,837
Accounts receivable - affiliates
10,745
2,380
Inventories
343,866
566,731
Brokerage margin deposits
15,647
23,431
Derivative assets
16,539
19,848
Prepaid expenses and other current assets
72,354
73,992
Total current assets
900,987
1,169,259
Property and equipment, net
1,199,986
1,218,171
Right of use assets, net
271,051
288,142
Intangible assets, net
22,753
26,854
Goodwill
427,715
427,780
Equity method investment
70,686
-
Other assets
43,732
30,679
Total assets
$
2,936,910
$
3,160,885
Liabilities and partners' equity
Current liabilities:
Accounts payable
$
398,648
$
530,940
Working capital revolving credit facility - current portion
89,400
153,400
Lease liability - current portion
60,102
64,919
Environmental liabilities - current portion
4,941
4,606
Trustee taxes payable
55,992
42,972
Accrued expenses and other current liabilities
140,236
156,964
Derivative liabilities
5,027
17,680
Total current liabilities
754,346
971,481
Working capital revolving credit facility - less current portion
-
-
Revolving credit facility
119,000
99,000
Senior notes
741,867
741,015
Long-term lease liability - less current portion
218,879
231,427
Environmental liabilities - less current portion
62,419
64,029
Financing obligations
140,235
141,784
Deferred tax liabilities
66,159
66,400
Other long-term liabilities
58,473
57,305
Total liabilities
2,161,378
2,372,441
Partners' equity
775,532
788,444
Total liabilities and partners' equity
$
2,936,910
$
3,160,885
GLOBAL PARTNERS LP FINANCIAL RECONCILIATIONS (In
thousands) (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Reconciliation of gross profit to product margin Wholesale
segment: Gasoline and gasoline blendstocks
$
39,023
$
41,034
$
59,409
$
38,749
Distillates and other oils (1)
20,699
49,541
53,446
98,914
Total
59,722
90,575
112,855
137,663
Gasoline Distribution and Station Operations segment:
Gasoline distribution
127,883
129,852
248,699
244,738
Station operations
71,196
69,008
133,926
127,105
Total
199,079
198,860
382,625
371,843
Commercial segment
6,757
12,512
14,884
20,653
Combined product margin
265,558
301,947
510,364
530,159
Depreciation allocated to cost of sales
(22,899
)
(20,471
)
(45,641
)
(42,445
)
Gross profit
$
242,659
$
281,476
$
464,723
$
487,714
Reconciliation of net income to EBITDA and Adjusted EBITDA
Net income
41,389
$
162,807
$
70,420
$
193,292
Depreciation and amortization
26,797
24,951
53,445
51,652
Interest expense
21,806
21,056
43,874
42,530
Income tax expense
691
2,950
1,091
4,127
EBITDA
90,683
211,764
168,830
291,601
Net loss (gain) on sale and disposition of assets
884
(76,849
)
(1,244
)
(81,760
)
Adjusted EBITDA
$
91,567
$
134,915
$
167,586
$
209,841
Reconciliation of net cash provided by operating activities to
EBITDA and Adjusted EBITDA
Net cash provided by operating activities
$
265,262
$
362,565
$
245,937
$
385,193
Net changes in operating assets and liabilities and certain
non-cash items
(197,076
)
(174,807
)
(122,072
)
(140,249
)
Interest expense
21,806
21,056
43,874
42,530
Income tax expense
691
2,950
1,091
4,127
EBITDA
90,683
211,764
168,830
291,601
Net loss (gain) on sale and disposition of assets
884
(76,849
)
(1,244
)
(81,760
)
Adjusted EBITDA
$
91,567
$
134,915
$
167,586
$
209,841
Reconciliation of net income to distributable cash flow
Net income
$
41,389
$
162,807
$
70,420
$
193,292
Depreciation and amortization
26,797
24,951
53,445
51,652
Amortization of deferred financing fees
1,364
1,347
2,711
2,737
Amortization of routine bank refinancing fees
(1,155
)
(1,138
)
(2,293
)
(2,319
)
Maintenance capital expenditures
(13,595
)
(9,778
)
(23,155
)
(17,296
)
Distributable cash flow (2)(3)(4)
54,800
178,189
101,128
228,066
Distributions to preferred unitholders (5)
(3,463
)
(3,463
)
(6,926
)
(6,926
)
Distributable cash flow after distributions to preferred
unitholders
$
51,337
$
174,726
$
94,202
$
221,140
Reconciliation of net cash provided by operating activities to
distributable cash flow
Net cash provided by operating activities
$
265,262
$
362,565
$
245,937
$
385,193
Net changes in operating assets and liabilities and certain
non-cash items
(197,076
)
(174,807
)
(122,072
)
(140,249
)
Amortization of deferred financing fees
1,364
1,347
2,711
2,737
Amortization of routine bank refinancing fees
(1,155
)
(1,138
)
(2,293
)
(2,319
)
Maintenance capital expenditures
(13,595
)
(9,778
)
(23,155
)
(17,296
)
Distributable cash flow (2)(3)(4)
54,800
178,189
101,128
228,066
Distributions to preferred unitholders (5)
(3,463
)
(3,463
)
(6,926
)
(6,926
)
Distributable cash flow after distributions to preferred
unitholders
$
51,337
$
174,726
$
94,202
$
221,140
(1) Segment reporting results for the three and six months ended
June 30, 2022 have been reclassified within the Wholesale segment
to conform to the Partnership's current presentation. Specifically,
results from crude oil previously shown separately are included in
distillates and other oils as results from crude oil are
immaterial.
(2) As defined by the Partnership's partnership agreement,
distributable cash flow is not adjusted for certain non-cash items,
such as net losses on the sale and disposition of assets and
goodwill and long-lived asset impairment charges.
(3) Distributable cash flow for each of the three and six months
ended June 30, 2023 includes $1.2 million of income from the equity
method investment related to the Partnership's 49.99% interest in
its Spring Partners Retail LLC joint venture.
(4) Distributable cash flow for the three and six months ended
June 30, 2022 includes a net gain on sale and disposition of assets
of $76.8 million and $81.7 million, respectively, primarily related
to the sale of the Partnership's terminal in Revere, Massachusetts
in June 2022.
(5) Distributions to preferred unitholders represent the
distributions payable to the Series A preferred unitholders and the
Series B preferred unitholders earned during the period.
Distributions on the Series A preferred units and the Series B
preferred units are cumulative and payable quarterly in arrears on
February 15, May 15, August 15 and November 15 of each year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803240628/en/
Gregory B. Hanson Chief Financial Officer Global Partners LP
(781) 894-8800
Sean T. Geary Chief Legal Officer and Secretary Global Partners
LP (781) 894-8800
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