Global Partners Reports Second-Quarter 2021 Financial Results

WALTHAM, Mass.--(BUSINESS WIRE)--August 6, 2021--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.

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.