Global Partners Reports Second-Quarter 2021 Financial Results

WALTHAM, Mass.–(BUSINESS WIRE)–
Global Partners LP (NYSE: GLP) today reported financial results for the second quarter ended June 30, 2021.

“Increased activity at our gasoline stations and convenience markets drove strong performance in our Gasoline Distribution and Station Operations (GDSO) segment in the second quarter,” said Eric Slifka, Global’s President and Chief Executive Officer. “Consistent with industry trends, retail fuel margins remained relatively healthy in the quarter despite the rising commodity price environment.

“In our Wholesale segment, the impact of the extraordinary market events and the flattening of the forward-product pricing curve that occurred in the second quarter of 2020 create a difficult comparison with the same period this year. However, the Wholesale segment’s performance in this year’s second quarter was consistent with our expectations,” Slifka said.


Financial Highlights

Net income attributable to the Partnership was $12.1 million, or $0.23 per diluted common limited partner unit, for the second quarter of 2021 compared with net income attributable to the Partnership of $76.3 million, or $2.17 per diluted common limited partner unit, for the same period of 2020.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $58.5 million in the second quarter of 2021 compared with $125.7 million in the comparable period of 2020.

Adjusted EBITDA was $58.7 million in the second quarter of 2021 versus $126.6 million in the year-earlier period.

Distributable cash flow (DCF) was $26.6 million in the second quarter of 2021 compared with $95.8 million in the same period of 2020.

Gross profit in the second quarter of 2021 was $178.0 million compared with $239.9 million in the first quarter of 2020.

Combined product margin, which is gross profit adjusted for depreciation allocated to cost of sales, was $198.6 million in the second quarter of 2021 compared with $260.1 million in the second quarter of 2020.

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 and six months ended June 30, 2021 and 2020.

GDSO segment product margin was $162.4 million in the second quarter of 2021 compared with $145.6 million in the second quarter of 2020, primarily reflecting increased activity at our convenience stores and, to a lesser extent, an increase in fuel volume.

Wholesale segment product margin was $33.5 million in the second quarter of 2021 compared with $112.0 million in the second quarter of 2020, reflecting more favorable market conditions in the 2020 period resulting from a significant recovery in the supply/demand imbalance at the end of the first quarter and resultant flattening of the forward product pricing curve.

Commercial segment product margin was $2.7 million compared with $2.5 million in the second quarter of 2020.

Sales were $3.3 billion in the second quarter of 2021 compared with $1.5 billion in the same period of 2020, reflecting increases in volume and prices. Wholesale segment sales increased to $2.0 billion in the second quarter of 2021 from $0.8 billion in the year-earlier period. GDSO segment sales were $1.1 billion in the second quarter of 2021 versus $0.6 billion in the second quarter of 2020. Commercial segment sales were $135.2 million in the second quarter of 2021 compared with $66.2 million in the second quarter of 2020.

Volume in the second quarter of 2021 was 1.4 billion gallons compared with 1.2 billion gallons in the same period of 2020. Wholesale segment volume was 943.6 million gallons in the second quarter of 2021 and 862.8 million gallons in the second quarter of 2020. GDSO volume was 395.1 million gallons in the second quarter of 2021 compared with 278.6 million gallons in the second quarter of 2020. Commercial segment volume was 68.5 million gallons in the second quarter of 2021 compared with 56.8 million gallons in the year-earlier period.

Recent Developments

  • In July, Global announced a quarterly cash distribution of $0.5750 per unit, or $2.30 per unit on an annualized basis, on all of its outstanding common units for the period from April 1 to June 30, 2021. The distribution will be paid August 13, 2021 to unitholders of record as of the close of business on August 9, 2021.
  • In May, Global entered into an amended credit agreement that extended the maturity date from April 2022 to May 2024, reduced the applicable rate for borrowings and letters of credit, increased the working capital revolving credit facility from $770 million to $800 million, and increased the revolving credit facility from $400 million to $450 million.

Business Outlook

“Looking ahead, we remain committed to building on the strength of our terminal and retail portfolio through strategic acquisitions and organic growth initiatives ─ raze-and-rebuilds, new-to-industry locations and site enhancements ─ that enable us to deliver value, quality and hospitality for our guests,” added Slifka. “We recognize a growing change in consumer demands and fueling habits and are positioning ourselves to be a location of choice, whatever the fuel type may be. We continue to prepare select retail sites for EV infrastructure, explore other green technologies, and expand our café, Wi-Fi, and fresh food options in addition to rolling out touch-free purchase options. Our fuel terminals and gas stations remain integral to the energy needs of the regions we serve. In the near term, we remain mindful of the economic uncertainty related to COVID-19, as states and communities weigh a return to restrictions in response to the Delta variant.”

The extent to which the COVID-19 pandemic may affect our operating results remains uncertain. The COVID-19 pandemic has had, and may continue to have, material adverse consequences for general economic, financial and business conditions, and could materially and adversely affect our business, financial condition and results of operations and those of our customers, suppliers and other counterparties.

Financial Results Conference Call

Management will review the Partnership’s second-quarter 2021 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)

Due to the expected high demand on our conference call provider, please plan to dial in to the call at least 20 minutes prior to the start time. The call also will be webcast live and archived on Global’s website, https://ir.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, crude oil and propane, as well as convenience store 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 historic 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.

About Global Partners LP

With approximately 1,550 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.

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, the impact and duration of the COVID-19 pandemic, 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, uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform their obligations and/or utilize the products we sell and/or services we provide, uncertainty around the impact and duration of federal, state and municipal regulations related to the COVID-19 pandemic, and assumptions that could cause actual results to differ materially from the Partnership’s historical experience and present expectations or projections.

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,

2021

 

 

2020

 

2021

 

 

2020

Sales $

    3,279,145

$

    1,469,577

$

    5,832,472

$

    4,064,670

Cost of sales  

    3,101,100

 

    1,229,630

 

    5,509,395

 

    3,678,985

Gross profit

       178,045

       239,947

       323,077

       385,685

 
Costs and operating expenses:
Selling, general and administrative expenses

         54,031

         59,017

       100,355

         99,940

Operating expenses

         88,169

         76,714

       168,697

       159,267

Amortization expense

           2,673

           2,713

           5,396

           5,425

Net gain on sale and disposition of assets

                 (8)

             (811)

             (483)

               (68)

Long-lived asset impairment  

              188

 

           1,724

 

              188

 

           1,724

Total costs and operating expenses  

       145,053

 

       139,357

 

       274,153

 

       266,288

 
Operating income

         32,992

       100,590

         48,924

       119,397

 
Interest expense  

        (20,320)

 

        (21,089)

 

        (40,679)

 

        (42,690)

 
Income before income tax (expense) benefit

         12,672

         79,501

           8,245

         76,707

 
Income tax (expense) benefit  

             (533)

 

          (3,528)

 

             (403)

 

           2,341

 
Net income

         12,139

         75,973

           7,842

         79,048

 
Net loss attributable to noncontrolling interest  

                   –

              289

                   –

              490

       
Net income attributable to Global Partners LP

         12,139

         76,262

           7,842

         79,538

 
Less: General partner’s interest in net income, including 
 incentive distribution rights

              849

              511

           1,588

              533

Less: Preferred limited partner interest in net income  

           3,463

 

           1,682

 

           5,283

 

           3,364

 
Net income attributable to common limited partners $

           7,827

$

         74,069

$

              971

$

         75,641

 
Basic net income per common limited partner unit (1) $

             0.23

$

             2.19

$

             0.03

$

             2.23

 
Diluted net income per common limited partner unit (1) $

             0.23

$

             2.17

$

             0.03

$

             2.21

 
Basic weighted average common limited partner units outstanding  

         33,939

 

         33,869

 

         33,953

 

         33,869

 
Diluted weighted average limited partner units outstanding   

         34,290

 

         34,204

 

         34,295

 

         34,248

(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,

2021

 

 

 

2020

Assets
Current assets:
Cash and cash equivalents $

          6,177

$

         9,714

Accounts receivable, net

      349,950

     227,317

Accounts receivable – affiliates

          2,218

         2,410

Inventories

      490,952

     384,432

Brokerage margin deposits

        25,104

       21,661

Derivative assets

          5,227

       16,556

Prepaid expenses and other current assets  

        79,320

 

     119,340

    Total current assets

      958,948

     781,430

 
Property and equipment, net

   1,073,665

  1,082,486

Right of use assets, net

      284,482

     290,506

Intangible assets, net

        31,329

       35,925

Goodwill

      328,569

     323,565

Other assets  

        32,826

 

       26,588

 
    Total assets $

   2,709,819

$

  2,540,500

 
 
Liabilities and partners’ equity
Current liabilities:
Accounts payable $

      247,638

$

     207,873

Working capital revolving credit facility – current portion

      192,900

       34,400

Lease liability – current portion

        67,901

       75,376

Environmental liabilities – current portion

          4,455

         4,455

Trustee taxes payable

        49,989

       36,598

Accrued expenses and other current liabilities

      123,438

     126,774

Derivative liabilities  

        32,151

 

       12,055

    Total current liabilities

      718,472

     497,531

 
Working capital revolving credit facility – less current portion

      150,000

     150,000

Revolving credit facility

        33,400

     122,000

Senior notes

      738,457

     737,605

Long-term lease liability – less current portion

      227,597

     226,648

Environmental liabilities – less current portion

        47,731

       49,166

Financing obligations

      145,573

     146,535

Deferred tax liabilities

        56,320

       56,218

Other long-term liabilities  

        61,650

 

       59,298

    Total liabilities

   2,179,200

  2,045,001

 
Partners’ equity  

      530,619

 

     495,499

 
    Total liabilities and partners’ equity $

   2,709,819

$

  2,540,500

GLOBAL PARTNERS LP
FINANCIAL RECONCILIATIONS
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,

2021

 

2020

 

2021

 

2020

Reconciliation of gross profit to product margin 
Wholesale segment: (1)
Gasoline and gasoline blendstocks  $ 

      23,516

 $ 

      58,283

 $ 

      39,921

 $ 

      67,830

Crude oil

       (3,321)

        9,203

       (7,848)

        4,733

Other oils and related products

      13,340

      44,505

      31,955

      44,891

Total  

      33,535

 

    111,991

 

      64,028

 

    117,454

Gasoline Distribution and Station Operations segment:
Gasoline distribution 

    101,303

      96,770

    181,555

    204,000

Station operations

      61,141

      48,801

    111,298

      97,442

Total  

    162,444

 

    145,571

 

    292,853

 

    301,442

Commercial segment (1)

        2,701

        2,517

        6,891

        7,853

Combined product margin  

    198,680

 

    260,079

 

    363,772

 

    426,749

Depreciation allocated to cost of sales

     (20,635)

     (20,132)

     (40,695)

     (41,064)

Gross profit  $ 

    178,045

 $ 

    239,947

 $ 

    323,077

 $ 

    385,685

 
Reconciliation of net income to EBITDA and Adjusted EBITDA
Net income  $ 

      12,139

 $ 

      75,973

 $ 

        7,842

 $ 

      79,048

Net loss attributable to noncontrolling interest

                –

           289

                –

           490

Net income attributable to Global Partners LP  

      12,139

 

      76,262

 

        7,842

 

      79,538

Depreciation and amortization

      25,505

      24,779

      50,480

      50,447

Interest expense

      20,320

      21,089

      40,679

      42,690

Income tax expense (benefit)

           533

        3,528

           403

       (2,341)

EBITDA (2)  

      58,497

 

    125,658

 

      99,404

 

    170,334

Net gain on sale and disposition of assets

              (8)

          (811)

          (483)

            (68)

Long-lived asset impairment

           188

        1,724

           188

        1,724

Adjusted EBITDA (2)  $ 

      58,677

 $ 

    126,571

 $ 

      99,109

 $ 

    171,990

 
Reconciliation of net cash provided by (used in) operating activities to EBITDA and Adjusted EBITDA
Net cash provided by (used in) operating activities  $ 

      52,425

 $ 

      24,086

 $ 

     (53,558)

 $ 

    162,003

Net changes in operating assets and liabilities and certain non-cash items

     (14,781)

      76,767

    111,880

     (32,300)

Net cash from operating activities and changes in operating
assets and liabilities attributable to noncontrolling interest

                –

           188

                –

           282

Interest expense

      20,320

      21,089

      40,679

      42,690

Income tax expense (benefit)

           533

        3,528

           403

       (2,341)

EBITDA (2)  

      58,497

 

    125,658

 

      99,404

 

    170,334

Net gain on sale and disposition of assets

              (8)

          (811)

          (483)

            (68)

Long-lived asset impairment

           188

        1,724

           188

        1,724

Adjusted EBITDA (2)  $ 

      58,677

 $ 

    126,571

 $ 

      99,109

 $ 

    171,990

 
Reconciliation of net income to distributable cash flow
Net income  $ 

      12,139

 $ 

      75,973

 $ 

        7,842

 $ 

      79,048

Net loss attributable to noncontrolling interest  

                –

 

           289

 

                –

 

           490

Net income attributable to Global Partners LP

      12,139

      76,262

        7,842

      79,538

Depreciation and amortization

      25,505

      24,779

      50,480

      50,447

Amortization of deferred financing fees

        1,255

        1,306

        2,599

        2,567

Amortization of routine bank refinancing fees

       (1,013)

          (985)

       (2,050)

       (1,925)

Maintenance capital expenditures  

     (11,263)

 

       (5,546)

 

     (18,294)

 

     (12,826)

Distributable cash flow (2)(3)(4)

      26,623

      95,816

      40,577

    117,801

Distributions to preferred unitholders (5)  

       (3,463)

 

       (1,682)

 

       (5,283)

 

       (3,364)

Distributable cash flow after distributions to preferred unitholders  $ 

      23,160

 $ 

      94,134

 $ 

      35,294

 $ 

    114,437

 
Reconciliation of net cash (used in) provided by operating activities to distributable cash flow
Net cash provided by (used in) operating activities  $ 

      52,425

 $ 

      24,086

 $ 

     (53,558)

 $ 

    162,003

Net changes in operating assets and liabilities and certain non-cash items

     (14,781)

      76,767

    111,880

     (32,300)

Net cash from operating activities and changes in operating
assets and liabilities attributable to noncontrolling interest

                –

           188

                –

           282

Amortization of deferred financing fees

        1,255

        1,306

        2,599

        2,567

Amortization of routine bank refinancing fees

       (1,013)

          (985)

       (2,050)

       (1,925)

Maintenance capital expenditures  

     (11,263)

 

       (5,546)

 

     (18,294)

 

     (12,826)

Distributable cash flow (2)(3)(4)

      26,623

      95,816

      40,577

    117,801

Distributions to preferred unitholders (5)  

       (3,463)

 

       (1,682)

 

       (5,283)

 

       (3,364)

Distributable cash flow after distributions to preferred unitholders  $ 

      23,160

 $ 

      94,134

 $ 

      35,294

 $ 

    114,437

(1)

  Segment reporting results for the three and six months ended June 30, 2020 have been reclassified between the Wholesale and Commercial segments to conform to the Partnership’s current presentation.

(2)

  EBITDA, Adjusted EBITDA and distributable cash flow for each of the three and six months ended June 30, 2021 include a $6.6 million expense for compensation and benefits resulting from the passing of the Partnership’s general counsel in May of 2021.  The expense relates to contractual commitments including the acceleration of grants previously awarded as well as a discretionary award in recognition of service.

(3)

  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.

(4)

  Distributable cash flow for the six months ended June 30, 2020 includes a $6.3 million income tax benefit related to the CARES Act net operating loss carryback provisions.

(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.

 


Daphne H. Foster

Chief Financial Officer

Global Partners LP

(781) 894-8800

Sean T. Geary

Acting General Counsel and Vice President – Mergers & Acquisitions

Global Partners LP

(781) 894-8800

Source: Global Partners LP