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Global Partners Reports Fourth-Quarter and Full-Year 2021 Financial Results

Global Partners LP (NYSE: GLP) (“Global” or the “Partnership”) today reported financial results for the fourth quarter and full year ended December 31, 2021.

“Sustained momentum in our Gasoline Distribution and Station Operations (GDSO) segment contributed to a strong fourth-quarter performance for Global,” said Eric Slifka, the Partnership’s President and Chief Executive Officer. “Retail fuel volume and margins increased year-over-year in the quarter while demand across our convenience store portfolio continued to improve amid the recovery in the U.S. economy.

“We had a solid year in 2021, successfully navigating the pandemic and the related macroeconomic challenges that affected virtually all industries during the past year,” Slifka continued. “Our performance speaks to the scale and reliability of our vertically integrated assets and businesses, which enable us to deliver significant value for our customers, consumers and unitholders.”

Financial Highlights

Net income was $19.3 million, or $0.44 per diluted common limited partner unit, for the fourth quarter of 2021 compared with $4.4 million, or $0.06 per diluted common limited partner unit, for the same period in 2020.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $65.7 million for the fourth quarter of 2021 compared with $50.2 million for the year-earlier period.

Adjusted EBITDA for the fourth quarter of 2021 was $66.0 million compared with $49.9 million for the fourth quarter of 2020.

Distributable cash flow (“DCF”) was $30.5 million for the fourth quarter of 2021 compared with $7.3 million for the 2020 period.

Gross profit in the fourth quarter of 2021 increased to $193.1 million from $166.2 million a year earlier.

Combined product margin, which is gross profit adjusted for depreciation allocated to cost of sales, was $214.4 million in the fourth quarter of 2021 compared with $186.2 million in the fourth 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 12 months ended December 31, 2021 and 2020.

GDSO segment product margin was $177.0 million in the fourth quarter of 2021 compared with $143.6 million in the fourth quarter of 2020, primarily reflecting higher fuel volume and margin (cents per gallon) and an increase in activity at the Partnership’s convenience stores.

Wholesale segment product margin was $32.6 million in the fourth quarter of 2021 compared with $39.7 million in the fourth quarter of 2020, primarily reflecting less favorable market conditions in other oils and related products, partly offset by more favorable market conditions in gasoline and gasoline blendstocks, largely ethanol.

Commercial segment product margin was $4.8 million compared with $2.9 million in the fourth quarter of 2020, primarily due to an increase in volume sold and improved margins.

Total sales were $4.1 billion in the fourth quarter of 2021 compared with $2.2 billion in the same period of 2020, primarily due to an increase in prices. Wholesale segment sales increased to $2.5 billion in the fourth quarter of 2021 from $1.3 billion in the year-earlier period. GDSO segment sales were $1.3 billion in the fourth quarter of 2021 versus $0.8 billion in the fourth quarter of 2020. Commercial segment sales were $0.3 billion in the fourth quarter of 2021 compared with $0.1 billion in the fourth quarter of 2020.

Total volume in the fourth quarter of 2021 was 1.5 billion gallons, essentially unchanged from the same period of 2020. Wholesale segment volume was 1.0 billion gallons in each of the fourth quarters of 2021 and 2020. GDSO volume was 400.5 million gallons in the fourth quarter of 2021 compared with 354.0 million gallons in the fourth quarter of 2020. Commercial segment volume was 118.9 million gallons in the fourth quarter of 2021 compared with 69.9 million gallons in the year-earlier period.

Recent Highlights

  • Executed an agreement to sell its Boston Harbor terminal in Revere, Massachusetts. In connection with the closing of the transaction, Global will lease back from the buyer key infrastructure that will allow the Partnership to continue operations at the terminal post-closing. The transaction is expected to close in the first half of 2022, subject to customary closing conditions.
  • Completed the purchase of retail fuel and convenience store assets from Consumers Petroleum of Connecticut, Inc. The transaction included 26 company-owned Wheels convenience stores and related fuel operations in Connecticut and fuel-supply agreements at 22 sites in Connecticut and New York.
  • Expanded its presence in the mid-Atlantic region with the acquisition of Miller’s Neighborhood Market. The transaction added 23 convenience stores, including 21 company-operated sites, and fuel supply agreements with 34 locations, primarily in Virginia.
  • Announced a quarterly cash distribution of $0.5850 per unit, or $2.34 per unit on an annualized basis, on all of its outstanding common units for the period from October 1 to December 31, 2021. The distribution was paid February 14, 2022 to unitholders of record as of the close of business on February 8, 2022.

Business Outlook

“As demonstrated by recent transactions, we continue to deliver on our strategy to drive growth through optimization and expansion of our assets,” Slifka said. “Upon completion, the Revere transaction will provide us with significant proceeds and ongoing cash flow as we continue operations at the terminal. The retail acquisitions enable us to leverage our scale, supply relationships and integrated business model to enhance returns. As a critical infrastructure business, we provide vital energy products and essential goods and services across a significant portion of the U.S. The demand for those products and services remains robust, and we believe that we are well positioned for the year ahead.”

Conference Call and Webcast

Global Partners’ fourth-quarter and full-year 2021 earnings conference call is scheduled to begin at 10:00 a.m. ET today. The dial-in numbers are (877) 709-8155 (U.S. and Canada) or (201) 689-8881 (International). Please plan to dial in to the call at least 15 minutes prior to the start time. The webcast can be accessed via a link at 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 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.

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 Twelve Months Ended
December 31, December 31,

2021

2020

2021

2020

Sales $

4,091,895

 

$

2,195,547

 

$

13,248,277

 

$

8,321,599

 

Cost of sales

3,898,767

 

2,029,335

 

12,529,014

 

7,600,461

 

Gross profit

193,128

 

166,212

 

719,263

 

721,138

 

 
Costs and operating expenses:
Selling, general and administrative expenses

57,849

 

49,375

 

212,878

 

192,533

 

Operating expenses

92,734

 

81,796

 

353,582

 

323,298

 

Amortization expense

2,573

 

2,702

 

10,711

 

10,839

 

Net loss (gain) on sale and disposition of assets

169

 

(348

)

(506

)

275

 

Long-lived asset impairment

192

 

-

 

380

 

1,927

 

Total costs and operating expenses

153,517

 

133,525

 

577,045

 

528,872

 

 
Operating income

39,611

 

32,687

 

142,218

 

192,266

 

 
Interest expense

(19,747

)

(20,995

)

(80,086

)

(83,539

)

Loss on early extinguishment of debt

-

 

(7,164

)

-

 

(7,164

)

 
Income before income tax (expense) benefit

19,864

 

4,528

 

62,132

 

101,563

 

 
Income tax (expense) benefit

(547

)

(86

)

(1,336

)

119

 

 
Net income

19,317

 

4,442

 

60,796

 

101,682

 

 
Net loss attributable to noncontrolling interest

-

 

-

 

-

 

528

 

 
Net income attributable to Global Partners LP

19,317

 

4,442

 

60,796

 

102,210

 

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

1,000

 

542

 

3,581

 

1,399

 

Less: Preferred limited partner interest in net income

3,463

 

1,682

 

12,209

 

6,728

 

 
Net income attributable to common limited partners $

14,854

 

$

2,218

 

$

45,006

 

$

94,083

 

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

0.44

 

$

0.06

 

$

1.33

 

$

2.77

 

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

0.44

 

$

0.06

 

$

1.31

 

$

2.74

 

 
Basic weighted average common limited partner units outstanding

33,953

 

33,966

 

33,942

 

33,907

 

 
Diluted weighted average common limited partner units outstanding

34,080

 

34,260

 

34,278

 

34,308

 

 
 
(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,

2021

 

 

 

2020

Assets
Current assets:
Cash and cash equivalents $

10,849

$

9,714

Accounts receivable, net

411,194

227,317

Accounts receivable - affiliates

1,139

2,410

Inventories

509,517

384,432

Brokerage margin deposits

33,658

21,661

Derivative assets

11,652

16,556

Prepaid expenses and other current assets

87,076

119,340

Total current assets

1,065,085

781,430

 
Property and equipment, net

1,099,348

1,082,486

Right of use assets, net

280,284

290,506

Intangible assets, net

26,014

35,925

Goodwill

328,135

323,565

Other assets

32,299

26,588

 
Total assets $

2,831,165

$

2,540,500

 
 
Liabilities and partners' equity
Current liabilities:
Accounts payable $

353,296

$

207,873

Working capital revolving credit facility - current portion

204,700

34,400

Lease liability - current portion

62,352

75,376

Environmental liabilities - current portion

4,642

4,455

Trustee taxes payable

44,223

36,598

Accrued expenses and other current liabilities

138,733

126,774

Derivative liabilities

31,654

12,055

Total current liabilities

839,600

497,531

 
Working capital revolving credit facility - less current portion

150,000

150,000

Revolving credit facility

43,400

122,000

Senior notes

739,310

737,605

Long-term lease liability - less current portion

228,203

226,648

Environmental liabilities - less current portion

48,163

49,166

Financing obligations

144,444

146,535

Deferred tax liabilities

56,817

56,218

Other long-term liabilities

53,461

59,298

Total liabilities

2,303,398

2,045,001

 
Partners' equity

527,767

495,499

 
Total liabilities and partners' equity $

2,831,165

$

2,540,500

 
GLOBAL PARTNERS LP
FINANCIAL RECONCILIATIONS
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,

2021

 

2020

 

2021

 

2020

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

23,910

 

$

18,060

 

$

86,289

 

$

103,026

 

Other oils and related products

10,849

 

24,293

 

65,429

 

83,707

 

Crude oil

(2,183

)

(2,676

)

(12,845

)

(672

)

Total

32,576

 

39,677

 

138,873

 

186,061

 

Gasoline Distribution and Station Operations segment:
Gasoline distribution

119,755

 

92,611

 

413,756

 

398,016

 

Station operations

57,314

 

51,022

 

233,881

 

205,926

 

Total

177,069

 

143,633

 

647,637

 

603,942

 

Commercial segment (1)

4,797

 

2,881

 

15,604

 

12,279

 

Combined product margin

214,442

 

186,191

 

802,114

 

802,282

 

Depreciation allocated to cost of sales

(21,314

)

(19,979

)

(82,851

)

(81,144

)

Gross profit $

193,128

 

$

166,212

 

$

719,263

 

$

721,138

 

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

19,317

 

$

4,442

 

$

60,796

 

$

101,682

 

Net loss attributable to noncontrolling interest

-

 

-

 

-

 

528

 

Net income attributable to Global Partners LP

19,317

 

4,442

 

60,796

 

102,210

 

Depreciation and amortization

26,069

 

24,707

 

102,241

 

99,899

 

Interest expense

19,747

 

20,995

 

80,086

 

83,539

 

Income tax expense (benefit)

547

 

86

 

1,336

 

(119

)

EBITDA (2)(3)

65,680

 

50,230

 

244,459

 

285,529

 

Net loss (gain) on sale and disposition of assets

169

 

(348

)

(506

)

275

 

Long-lived asset impairment

192

 

-

 

380

 

1,927

 

Adjusted EBITDA (2)(3) $

66,041

 

$

49,882

 

$

244,333

 

$

287,731

 

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

(48,839

)

$

62,237

 

$

50,218

 

$

312,526

 

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

94,225

 

(33,088

)

112,819

 

(110,709

)

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

-

 

-

 

-

 

292

 

Interest expense

19,747

 

20,995

 

80,086

 

83,539

 

Income tax expense (benefit)

547

 

86

 

1,336

 

(119

)

EBITDA (2)(3)

65,680

 

50,230

 

244,459

 

285,529

 

Net loss (gain) on sale and disposition of assets

169

 

(348

)

(506

)

275

 

Long-lived asset impairment

192

 

-

 

380

 

1,927

 

Adjusted EBITDA (2)(3) $

66,041

 

$

49,882

 

$

244,333

 

$

287,731

 

 
Reconciliation of net income to distributable cash flow
Net income $

19,317

 

$

4,442

 

$

60,796

 

$

101,682

 

Net loss attributable to noncontrolling interest

-

 

-

 

-

 

528

 

Net income attributable to Global Partners LP

19,317

 

4,442

 

60,796

 

102,210

 

Depreciation and amortization

26,069

 

24,707

 

102,241

 

99,899

 

Amortization of deferred financing fees

1,221

 

1,345

 

5,031

 

5,241

 

Amortization of routine bank refinancing fees

(1,012

)

(1,037

)

(4,064

)

(3,970

)

Maintenance capital expenditures

(15,119

)

(22,199

)

(43,254

)

(46,988

)

Distributable cash flow (2)(3)(4)(5)

30,476

 

7,258

 

120,750

 

156,392

 

Distributions to preferred unitholders (6)

(3,463

)

(1,682

)

(12,209

)

(6,728

)

Distributable cash flow after distributions to preferred unitholders $

27,013

 

$

5,576

 

$

108,541

 

$

149,664

 

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

(48,839

)

$

62,237

 

$

50,218

 

$

312,526

 

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

94,225

 

(33,088

)

112,819

 

(110,709

)

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

-

 

-

 

-

 

292

 

Amortization of deferred financing fees

1,221

 

1,345

 

5,031

 

5,241

 

Amortization of routine bank refinancing fees

(1,012

)

(1,037

)

(4,064

)

(3,970

)

Maintenance capital expenditures

(15,119

)

(22,199

)

(43,254

)

(46,988

)

Distributable cash flow (2)(3)(4)(5)

30,476

 

7,258

 

120,750

 

156,392

 

Distributions to preferred unitholders (6)

(3,463

)

(1,682

)

(12,209

)

(6,728

)

Distributable cash flow after distributions to preferred unitholders $

27,013

 

$

5,576

 

$

108,541

 

$

149,664

 

 
 

(1)

Segment reporting results for the three and twelve months ended December 31, 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 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.

(3)

EBITDA, Adjusted EBITDA and distributable cash flow for the three and twelve months ended December 31, 2020 include a loss on early extinguishment of debt of $7.2 million related to the redemption of the 7.00% senior notes due 2023.

(4)

Distributable cash flow for the twelve months ended December 31, 2020 includes a $6.3 million income tax benefit related to the CARES Act net operating loss carryback provisions.

(5)

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.

(6)

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.

 

Contacts

Gregory B. Hanson

Chief Financial Officer

Global Partners LP

(781) 894-8800



Sean T. Geary

Acting General Counsel, Secretary and

Vice President – Mergers & Acquisitions

Global Partners LP

(781) 894-8800

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