Global Partners LP (NYSE: GLP) (“Global” or the “Partnership”)
today reported financial results for the fourth quarter and full
year ended December 31, 2022.
“Our fourth-quarter and full-year 2022 performance demonstrates
the resilience of our business model, the strength of our assets
and the value that our team delivers for customers at our gas
stations, convenience markets and liquid energy terminals every
day,” said Eric Slifka, the Partnership’s President and Chief
Executive Officer. “We navigated a constrained supply chain and
steep commodity price volatility throughout the year. Diligent
planning, effective fuel inventory management and solid execution
by the entire team allowed us to drive increased profitability,
highlighted by healthy margin contributions from all three segments
of our business.
“For the fourth quarter, our Wholesale segment product margin
more than doubled from the same period in 2021, as market
conditions and effective management of our inventories amid
sustained backwardation in the distillates markets combined to
drive strong margin capture. In our Gasoline Distribution and
Station Operations (GDSO) segment, we continued to benefit from
higher retail fuel margins and increased activity at our
convenience stores, in part as a result of our recent acquisitions.
Our Commercial segment also capped 2022 with a strong fourth
quarter, as bunkering activity remained robust.”
Financial Highlights
Net income was $57.5 million, or $1.54 per diluted common
limited partner unit, for the fourth quarter of 2022 compared with
net income of $19.3 million, or $0.44 per diluted common limited
partner unit, in the same period of 2021.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $105.3 million in the fourth quarter of 2022 compared
with $65.7 million in the same period of 2021.
Adjusted EBITDA was $106.9 million in the fourth quarter of 2022
versus $66.0 million in the same period of 2021.
Distributable cash flow (DCF) was $57.3 million in the fourth
quarter of 2022 compared with $30.5 million in the same period of
2021.
Gross profit in the fourth quarter of 2022 was $281.6 million
compared with $193.1 million in the same period of 2021, driven
primarily by increases in the GDSO and Wholesale segments.
Combined product margin, which is gross profit adjusted for
depreciation allocated to cost of sales, was $303.8 million in the
fourth quarter of 2022 compared with $214.4 million in the same
period of 2021.
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 twelve months
ended December 31, 2022, and 2021.
GDSO segment product margin was $223.2 million in the fourth
quarter of 2022 compared with $177.0 million in the same period of
2021. Product margin from gasoline distribution increased to
approximately $156.0 million from $119.7 million in the year
earlier period, primarily due to higher fuel margins (cents per
gallon) and an increase in volume sold due to our recent
acquisitions. Product margin from station operations increased to
$67.2 million from $57.3 million in the fourth quarter of 2021,
primarily due to increased convenience store sales in part as a
result of the Partnership’s recent acquisitions.
Wholesale segment product margin was $70.7 million in the fourth
quarter of 2022 compared with $32.6 million in the same period of
2021. The increase was primarily driven by more favorable market
conditions in other oils and related products, primarily in
distillates, partly offset by less favorable market conditions in
gasoline and gasoline blendstocks, largely ethanol.
Commercial segment product margin was $9.9 million in the fourth
quarter of 2022 compared with $4.8 million in the same period of
2021, primarily reflecting an increase in bunkering activity.
Total sales were $4.4 billion in the fourth quarter of 2022
compared with $4.1 billion in the same period of 2021. Wholesale
segment sales were $2.6 billion in the fourth quarter of 2022
compared with $2.5 billion in the same period of 2021. GDSO segment
sales were $1.5 billion in the fourth quarter of 2022 versus $1.3
billion in the same period of 2021. Commercial segment sales were
$0.3 billion in each of the fourth quarters of 2022 and 2021.
Total volume was 1.4 billion gallons in the fourth quarter of
2022 compared with 1.5 billion gallons in the same period of 2021.
Wholesale segment volume was 860.1 million gallons in the fourth
quarter of 2022 compared with 1.0 billion gallons in the same
period of 2021. GDSO volume was 419.3 million gallons in the fourth
quarter of 2022 compared with 400.5 million gallons in the same
period of 2021. Commercial segment volume was 100.6 million gallons
in the fourth quarter of 2022 compared with 118.9 million gallons
in the same period of 2021.
Recent Developments
- In December 2022, Global entered into a purchase agreement with
Gulf Oil Limited Partnership pursuant to which Global will acquire
five refined-products terminals for $273 million in cash. The
terminals, located in Connecticut, Maine, Massachusetts and New
Jersey, have an aggregate storage capacity of approximately 3.9
million barrels. The transaction is expected to close in the first
half of 2023, subject to customary closing conditions, including
regulatory approval.
- The Partnership donated $2 million to provide heating oil for
communities in need across seven Northeast states. The donation,
distributed to local nonprofit entities serving low-income
households, will provide heating fuel for an estimated 4,000
households this winter.
- Global announced a cash distribution of $1.5725 per unit on all
of its outstanding common units from October 1, 2022 through
December 31, 2022, consisting of a quarterly distribution of
$0.6350 per unit, or $2.54 per unit on an annualized basis, and a
one-time special distribution of $0.9375 per common unit. The
distribution was paid on February 14, 2023 to unitholders of record
as of the close of business on February 8, 2023. Global GP LLC
agreed to waive its incentive distribution rights with respect to
the one-time special distribution.
Business Outlook
“Our vertically integrated assets, adaptable operating model and
strong balance sheet position us well for 2023,” Slifka concluded.
“While macroeconomic uncertainty remains, we continue to focus on
driving returns for unitholders through a combination of organic
growth, strategic acquisitions and operational efficiency.”
Financial Results Conference Call
Management will review the Partnership’s fourth-quarter and
full-year 2022 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.
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 Twelve
Months Ended December 31, December 31,
2022
2021
2022
2021
Sales $
4,426,951
$
4,091,895
$
18,877,886
$
13,248,277
Cost of sales
4,145,395
3,898,767
17,780,237
12,529,014
Gross profit
281,556
193,128
1,097,649
719,263
Costs and operating expenses: Selling, general and
administrative expenses
80,838
57,849
263,112
212,878
Operating expenses
117,964
92,734
445,271
353,582
Amortization expense
2,117
2,573
8,851
10,711
Net loss (gain) on sale and disposition of assets
1,595
169
(79,873)
(506)
Long-lived asset impairment
-
192
-
380
Total costs and operating expenses
202,514
153,517
637,361
577,045
Operating income
79,042
39,611
460,288
142,218
Interest expense
(19,682)
(19,747)
(81,259)
(80,086)
Income before income tax expense
59,360
19,864
379,029
62,132
Income tax expense
(1,884)
(547)
(16,822)
(1,336)
Net income
57,476
19,317
362,207
60,796
Less: General partner's interest in net income, including
incentive distribution rights
1,768
1,000
7,138
3,581
Less: Preferred limited partner interest in net income
3,463
3,463
13,852
12,209
Net income attributable to common limited partners $
52,245
$
14,854
$
341,217
$
45,006
Basic net income per common limited partner unit (1) $
1.54
$
0.44
$
10.06
$
1.33
Diluted net income per common limited partner unit (1) $
1.54
$
0.44
$
10.02
$
1.31
Basic weighted average common limited partner units
outstanding
33,943
33,953
33,935
33,942
Diluted weighted average common limited partner units
outstanding
33,999
34,080
34,044
34,278
(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) December 31, December
31,
2022
2021
Assets Current assets: Cash and cash equivalents $
4,040
$
10,849
Accounts receivable, net
478,837
411,194
Accounts receivable - affiliates
2,380
1,139
Inventories
566,731
509,517
Brokerage margin deposits
23,431
33,658
Derivative assets
19,848
11,652
Prepaid expenses and other current assets
73,992
87,076
Total current assets
1,169,259
1,065,085
Property and equipment, net
1,218,171
1,099,348
Right of use assets, net
288,142
280,284
Intangible assets, net
26,854
26,014
Goodwill
427,780
328,135
Other assets
30,679
32,299
Total assets $
3,160,885
$
2,831,165
Liabilities and partners' equity Current
liabilities: Accounts payable $
530,940
$
353,296
Working capital revolving credit facility - current portion
153,400
204,700
Lease liability - current portion
64,919
62,352
Environmental liabilities - current portion
4,606
4,642
Trustee taxes payable
42,972
44,223
Accrued expenses and other current liabilities
156,964
138,733
Derivative liabilities
17,680
31,654
Total current liabilities
971,481
839,600
Working capital revolving credit facility - less current
portion
-
150,000
Revolving credit facility
99,000
43,400
Senior notes
741,015
739,310
Long-term lease liability - less current portion
231,427
228,203
Environmental liabilities - less current portion
64,029
48,163
Financing obligations
141,784
144,444
Deferred tax liabilities
66,400
56,817
Other long-term liabilities
57,305
53,461
Total liabilities
2,372,441
2,303,398
Partners' equity
788,444
527,767
Total liabilities and partners' equity $
3,160,885
$
2,831,165
GLOBAL PARTNERS LP FINANCIAL
RECONCILIATIONS (In thousands) (Unaudited)
Three Months Ended Twelve Months Ended December
31, December 31,
2022
2021
2022
2021
Reconciliation of gross profit to product margin Wholesale
segment: Gasoline and gasoline blendstocks $
13,973
$
23,910
$
106,982
$
86,289
Other oils and related products
59,387
10,849
190,077
65,429
Crude oil
(2,656)
(2,183)
(9,362)
(12,845)
Total
70,704
32,576
287,697
138,873
Gasoline Distribution and Station Operations segment: Gasoline
distribution
155,944
119,755
588,676
413,756
Station operations
67,222
57,314
267,941
233,881
Total
223,166
177,069
856,617
647,637
Commercial segment
9,931
4,797
40,973
15,604
Combined product margin
303,801
214,442
1,185,287
802,114
Depreciation allocated to cost of sales
(22,245)
(21,314)
(87,638)
(82,851)
Gross profit $
281,556
$
193,128
$
1,097,649
$
719,263
Reconciliation of net income to EBITDA and Adjusted
EBITDA Net income $
57,476
$
19,317
$
362,207
$
60,796
Depreciation and amortization
26,224
26,069
104,796
102,241
Interest expense
19,682
19,747
81,259
80,086
Income tax expense
1,884
547
16,822
1,336
EBITDA (1)
105,266
65,680
565,084
244,459
Net loss (gain) on sale and disposition of assets
1,595
169
(79,873)
(506)
Long-lived asset impairment
-
192
-
380
Adjusted EBITDA (1) $
106,861
$
66,041
$
485,211
$
244,333
Reconciliation of net cash (used in) provided by
operating activities to EBITDA and Adjusted EBITDA Net cash
(used in) provided by operating activities $
(96,910)
$
(48,839)
$
479,996
$
50,218
Net changes in operating assets and liabilities and certain
non-cash items
180,610
94,225
(12,993)
112,819
Interest expense
19,682
19,747
81,259
80,086
Income tax expense
1,884
547
16,822
1,336
EBITDA (1)
105,266
65,680
565,084
244,459
Net loss (gain) on sale and disposition of assets
1,595
169
(79,873)
(506)
Long-lived asset impairment
-
192
-
380
Adjusted EBITDA (1) $
106,861
$
66,041
$
485,211
$
244,333
Reconciliation of net income to distributable cash
flow Net income $
57,476
$
19,317
$
362,207
$
60,796
Depreciation and amortization
26,224
26,069
104,796
102,241
Amortization of deferred financing fees
1,348
1,221
5,432
5,031
Amortization of routine bank refinancing fees
(1,139)
(1,012)
(4,596)
(4,064)
Maintenance capital expenditures
(26,600)
(15,119)
(54,444)
(43,254)
Distributable cash flow (1)(2)(3)
57,309
30,476
413,395
120,750
Distributions to preferred unitholders (4)
(3,463)
(3,463)
(13,852)
(12,209)
Distributable cash flow after distributions to preferred
unitholders $
53,846
$
27,013
$
399,543
$
108,541
Reconciliation of net cash (used in) provided by
operating activities to distributable cash flow Net cash (used
in) provided by operating activities $
(96,910)
$
(48,839)
$
479,996
$
50,218
Net changes in operating assets and liabilities and certain
non-cash items
180,610
94,225
(12,993)
112,819
Amortization of deferred financing fees
1,348
1,221
5,432
5,031
Amortization of routine bank refinancing fees
(1,139)
(1,012)
(4,596)
(4,064)
Maintenance capital expenditures
(26,600)
(15,119)
(54,444)
(43,254)
Distributable cash flow (1)(2)(3)
57,309
30,476
413,395
120,750
Distributions to preferred unitholders (4)
(3,463)
(3,463)
(13,852)
(12,209)
Distributable cash flow after distributions to preferred
unitholders $
53,846
$
27,013
$
399,543
$
108,541
(1) EBITDA, Adjusted EBITDA and distributable cash flow for
the twelve months ended December 31, 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 and a $3.1 million
expense for compensation resulting from the retirement of the
Partnership's former chief financial officer in August of 2021. The
$6.6 million expense relates to contractual commitments including
the acceleration of grants previously awarded as well as a
discretionary award in recognition of service. (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 the twelve months ended December 31, 2022 includes a net
gain on sale and disposition of assets of $79.9 million, primarily
related to the sale of the Partnership's terminal in Revere,
Massachusetts in June of 2022. (4) 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/20230224005382/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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