Global Partners LP (NYSE: GLP) today reported financial results
for the quarter ended June 30, 2020.
“We delivered strong results in the second quarter, reflecting
the extreme contango market structure,” said Eric Slifka, the
Partnership’s President and Chief Executive Officer. “Our terminal
network enabled us to benefit from a dramatic shift in the forward
product pricing curve in Q2, leading to a $73.5 million increase in
Wholesale product margin from the same period last year. The Q2
increase sharply contrasts with the nearly $30 million decline in
Wholesale segment product margin in the first quarter this year,
which reflected less favorable market conditions due in part to the
steepening forward curve. In our Gasoline Distribution and Station
Operations (GDSO) segment, our second-quarter 2020 results
benefited from higher fuel margins that more than offset a
year-over-year decline in volume related to COVID-19. Business
activity remains below pre-pandemic levels. In comparison with July
2019, in July 2020 retail gas volume was down mid-teens on a
percentage basis and convenience store sales were down less than
10%. That said, the extent to which the COVID-19 pandemic may
affect our operating results remains uncertain.
“I’m extremely proud of our entire team, which continues to
provide essential products and services while ensuring the safety
of our guests, customers, suppliers and one another,” Slifka said.
“Our office staff has adapted to working remotely and our retail
stations and terminals are fully operational.”
Financial Highlights
Net income attributable to the Partnership was $76.3 million, or
$2.17 per diluted common limited partner unit, for the second
quarter of 2020 compared with net income attributable to the
Partnership of $14.5 million, or $0.36 per diluted common limited
partner unit, for the same period of 2019.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $125.7 million in the second quarter of 2020 compared
with $64.0 million in the comparable period of 2019.
Adjusted EBITDA was $126.6 million in the second quarter of 2020
versus $62.8 million in the year-earlier period.
Distributable cash flow (DCF) was $95.8 million in the second
quarter of 2020 compared with $28.1 million in the same period of
2019.
Gross profit in the second quarter of 2020 was $239.9 million
compared with $167.1 million in the second quarter of 2019,
primarily due to more favorable market conditions in the Wholesale
segment.
Combined product margin, which is gross profit adjusted for
depreciation allocated to cost of sales, was $260.1 million in the
second quarter of 2020 compared with $188.0 million in the second
quarter of 2019.
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, 2020 and 2019.
GDSO segment product margin was $145.6 million in the second
quarter of 2020 compared with $145.4 million in the same period of
2019, reflecting higher fuel margins largely offset by lower
station operations product margins due primarily to the reduction
in in-store traffic.
Wholesale segment product margin was $111.5 million in the
second quarter of 2020 compared with $38.0 million in the same
period of 2019, due to 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 $3.0 million in the second
quarter of 2020 compared with $4.5 million in the second quarter of
2019, primarily reflecting a decrease in bunkering activity.
Sales were $1.5 billion in the second quarter of 2020 compared
with $3.5 billion in the second quarter of 2019, due to lower
volume and a decrease in prices. Wholesale segment sales were $0.8
billion in the second quarter of 2020 compared with $2.0 billion in
the second quarter of 2019. GDSO segment sales were $0.6 billion in
the second quarter of 2020 compared with $1.1 billion in the second
quarter of 2019. Commercial segment sales were $133.0 million in
the second quarter of 2020 compared with $356.8 million in the
second quarter of 2019.
Volume in the second quarter of 2020 was 1.2 billion gallons
compared with 1.6 billion gallons in the same period of 2019.
Wholesale segment volume was 794.4 million gallons in the second
quarter of 2020 compared with 1.0 billion gallons in the same
period of 2019. GDSO volume was 278.6 million gallons in the second
quarter of 2020 compared with 411.0 million gallons in the second
quarter of 2019. Commercial segment volume was 125.2 million
gallons in the second quarter of 2020 compared with 183.3 million
gallons in the second quarter of 2019.
Recent Developments
- Global’s Board of Directors announced a quarterly cash
distribution of $0.45875 per unit, or $1.835 per unit on an
annualized basis, on all of its outstanding common units for the
period from April 1 to June 30, 2020. The distribution will be paid
August 14, 2020 to unitholders of record as of the close of
business on August 10, 2020.
Business Outlook
“There is a continuing uncertainty surrounding the short- and
long-term impact of COVID-19 to our businesses. While we believe
that our integrated business model, diversified product portfolio
and versatile asset base provide us with operating and financial
flexibility, our performance in the quarters ahead will be affected
by the extent and duration of the pandemic,” Slifka said.
Any COVID-19 related events or conditions, or other unforeseen
consequences of COVID-19 could significantly adversely affect our
business and financial condition and the business and financial
condition of our customers, suppliers and counterparties. The
ultimate extent of the impact of COVID-19 on our business,
financial condition and results of operations depends in large part
on future developments which are uncertain and cannot be predicted
at this time. That uncertainty includes the duration (including its
potential return) of the COVID-19 pandemic, the geographic regions
so impacted, the extent of said impact within specific boundaries
of those areas and, lastly, the impact to the local, state and
national economies.
Financial Results Conference Call
Management will review the Partnership’s second-quarter 2020
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 Partners 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 Partners engages in the transportation of
petroleum products and renewable fuels by rail from the
mid-continental U.S. and Canada. Global Partners LP, 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. These forward-looking statements are based on
Global Partners’ 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. All comments concerning the Partnership’s expectations
for future revenues and operating results and otherwise are based
on forecasts for its existing operations and do not include the
potential impact of any future acquisitions. 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 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 Partners’ 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
thereof. The Partnership 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,
2020
2019
2020
2019
Sales $
1,469,577
$
3,507,540
$
4,064,670
$
6,487,166
Cost of sales
1,229,630
3,340,397
3,678,985
6,163,179
Gross profit
239,947
167,143
385,685
323,987
Costs and operating expenses: Selling, general and
administrative expenses
59,017
40,968
99,940
82,058
Operating expenses
76,714
86,451
159,267
169,395
Lease exit and termination gain
-
-
-
(493)
Amortization expense
2,713
2,977
5,425
5,953
Net gain on sale and disposition of assets
(811)
(1,128)
(68)
(575)
Long-lived asset impairment
1,724
-
1,724
-
Total costs and operating expenses
139,357
129,268
266,288
256,338
Operating income
100,590
37,875
119,397
67,649
Interest expense
(21,089)
(23,066)
(42,690)
(46,022)
Income before income tax (expense) benefit
79,501
14,809
76,707
21,627
Income tax (expense) benefit
(3,528)
(438)
2,341
(462)
Net income
75,973
14,371
79,048
21,165
Net loss attributable to noncontrolling interest
289
118
490
450
Net income attributable to Global Partners LP
76,262
14,489
79,538
21,615
Less: General partner's interest in net income, including
incentive distribution rights
511
366
533
670
Less: Series A preferred limited partner interest in net income
1,682
1,682
3,364
3,364
Net income attributable to common limited partners $
74,069
$
12,441
$
75,641
$
17,581
Basic net income per common limited partner unit (1) $
2.19
$
0.37
$
2.23
$
0.52
Diluted net income per common limited partner unit (1) $
2.17
$
0.36
$
2.21
$
0.51
Basic weighted average common limited partner units
outstanding
33,869
33,755
33,869
33,754
Diluted weighted average limited partner units outstanding
34,204
34,286
34,248
34,259
(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,
2020
2019
Assets Current assets: Cash and cash equivalents $
10,358
$
12,042
Accounts receivable, net
232,832
413,195
Accounts receivable - affiliates
7,496
7,823
Inventories
344,026
450,482
Brokerage margin deposits
32,296
34,466
Derivative assets
48,571
4,564
Prepaid expenses and other current assets
93,397
81,940
Total current assets
768,976
1,004,512
Property and equipment, net
1,075,084
1,104,863
Right of use assets, net
282,025
296,746
Intangible assets, net
41,340
46,765
Goodwill
323,889
324,474
Other assets
30,964
31,067
Total assets $
2,522,278
$
2,808,427
Liabilities and partners' equity Current
liabilities: Accounts payable $
163,351
$
373,386
Working capital revolving credit facility - current portion
41,700
148,900
Lease liability - current portion
70,622
68,160
Environmental liabilities - current portion
5,009
5,009
Trustee taxes payable
43,739
42,932
Accrued expenses and other current liabilities
94,586
102,802
Derivative liabilities
8,089
12,698
Total current liabilities
427,096
753,887
Working capital revolving credit facility - less current
portion
175,000
175,000
Revolving credit facility
188,000
192,700
Senior notes
691,355
690,533
Long-term lease liability - less current portion
223,547
239,349
Environmental liabilities - less current portion
51,290
54,262
Financing obligations
147,400
148,127
Deferred tax liabilities
54,999
42,879
Other long-term liabilities
55,085
52,451
Total liabilities
2,013,772
2,349,188
Partners' equity Global Partners LP equity
507,422
458,065
Noncontrolling interest
1,084
1,174
Total partners' equity
508,506
459,239
Total liabilities and partners' equity $
2,522,278
$
2,808,427
GLOBAL PARTNERS LP FINANCIAL RECONCILIATIONS
(In thousands) (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Reconciliation of gross profit to product margin Wholesale
segment: Gasoline and gasoline blendstocks $
57,779
$
29,384
$
66,923
$
56,374
Crude oil
9,203
(798)
4,733
(7,024)
Other oils and related products
44,523
9,415
44,733
23,495
Total
111,505
38,001
116,389
72,845
Gasoline Distribution and Station Operations segment: Gasoline
distribution
96,770
87,874
204,000
175,299
Station operations
48,801
57,552
97,442
108,512
Total
145,571
145,426
301,442
283,811
Commercial segment
3,003
4,546
8,918
11,004
Combined product margin
260,079
187,973
426,749
367,660
Depreciation allocated to cost of sales
(20,132)
(20,830)
(41,064)
(43,673)
Gross profit $
239,947
$
167,143
$
385,685
$
323,987
Reconciliation of net income to EBITDA and Adjusted
EBITDA Net income
$
75,973
$
14,371
$
79,048
$
21,165
Net loss attributable to noncontrolling interest
289
118
490
450
Net income attributable to Global Partners LP
76,262
14,489
79,538
21,615
Depreciation and amortization, excluding the impact of
noncontrolling interest
24,779
25,977
50,447
53,912
Interest expense, excluding the impact of noncontrolling interest
21,089
23,066
42,690
46,022
Income tax expense (benefit)
3,528
438
(2,341)
462
EBITDA
125,658
63,970
170,334
122,011
Net gain on sale and disposition of assets
(811)
(1,128)
(68)
(575)
Long-lived asset impairment
1,724
-
1,724
-
Adjusted EBITDA $
126,571
$
62,842
$
171,990
$
121,436
Reconciliation of net cash provided by (used in)
operating activities to EBITDA and Adjusted EBITDA Net cash
provided by (used in) operating activities $
24,086
$
53,545
$
162,003
$
(33,492)
Net changes in operating assets and liabilities and certain
non-cash items
76,767
(13,069)
(32,300)
108,967
Net cash from operating activities and changes in operating assets
and liabilities attributable to noncontrolling interest
188
(10)
282
52
Interest expense, excluding the impact of noncontrolling interest
21,089
23,066
42,690
46,022
Income tax expense (benefit)
3,528
438
(2,341)
462
EBITDA
125,658
63,970
170,334
122,011
Net gain on sale and disposition of assets
(811)
(1,128)
(68)
(575)
Long-lived asset impairment
1,724
-
1,724
-
Adjusted EBITDA $
126,571
$
62,842
$
171,990
$
121,436
Reconciliation of net income to distributable cash
flow Net income $
75,973
$
14,371
$
79,048
$
21,165
Net loss attributable to noncontrolling interest
289
118
490
450
Net income attributable to Global Partners LP
76,262
14,489
79,538
21,615
Depreciation and amortization, excluding the impact of
noncontrolling interest
24,779
25,977
50,447
53,912
Amortization of deferred financing fees and senior notes discount
1,306
1,600
2,567
3,327
Amortization of routine bank refinancing fees
(985)
(890)
(1,925)
(1,912)
Maintenance capital expenditures, excluding the impact of
noncontrolling interest
(5,546)
(13,060)
(12,826)
(21,066)
Distributable cash flow (1)(2)
95,816
28,116
117,801
55,876
Distributions to Series A preferred unitholders (3)
(1,682)
(1,682)
(3,364)
(3,364)
Distributable cash flow after distributions to Series A preferred
unitholders $
94,134
$
26,434
$
114,437
$
52,512
Reconciliation of net cash provided by (used in)
operating activities to distributable cash flow Net cash
provided by (used in) operating activities $
24,086
$
53,545
$
162,003
$
(33,492)
Net changes in operating assets and liabilities and certain
non-cash items
76,767
(13,069)
(32,300)
108,967
Net cash from operating activities and changes in operating assets
and liabilities attributable to noncontrolling interest
188
(10)
282
52
Amortization of deferred financing fees and senior notes discount
1,306
1,600
2,567
3,327
Amortization of routine bank refinancing fees
(985)
(890)
(1,925)
(1,912)
Maintenance capital expenditures, excluding the impact of
noncontrolling interest
(5,546)
(13,060)
(12,826)
(21,066)
Distributable cash flow (1)(2)
95,816
28,116
117,801
55,876
Distributions to Series A preferred unitholders (3)
(1,682)
(1,682)
(3,364)
(3,364)
Distributable cash flow after distributions to Series A preferred
unitholders $
94,134
$
26,434
$
114,437
$
52,512
(1)
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.
(2)
Distributable cash flow includes a net gain on sale and
disposition of assets of $0.8 million and $1.1 million for the
three months ended June 30, 2020 and 2019, respectively, and $0.1
million and $0.6 million for the six months ended June 30, 2020 and
2019, respectively. Distributable cash flow for each of the three
and six months ended June 30, 2020 includes a $1.7 million
long-lived asset impairment charge. Excluding the net gain on
sale and disposition of assets and the impairment charge,
distributable cash flow would have been $96.7 million and $27.0
million for the three months ended June 30, 2020 and 2019,
respectively, and $119.4 million and $55.3 million for the six
months ended June 30, 2020.
(3)
Distributions to Series A preferred unitholders represent
the distributions payable to the preferred unitholders during the
period. Distributions on the Series A 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/20200806005287/en/
Daphne H. Foster Chief Financial Officer Global Partners LP
(781) 894-8800
Edward J. Faneuil Executive Vice President, General Counsel and
Secretary Global Partners LP (781) 894-8800
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