Global Partners LP (NYSE: GLP) today reported financial results
for the fourth quarter and full year ended December 31, 2018.
“We capped 2018 with a record fourth quarter in our Gasoline
Distribution and Station Operations (GDSO) segment,” said Eric
Slifka, the Partnership’s President and Chief Executive Officer.
“GDSO product margin increased more than $46 million in the
quarter, primarily driven by significantly stronger than expected
fuel margins in November and December and a full quarter’s
performance of Champlain Oil and Cheshire Oil, which were acquired
in July 2018.
“Our full-year results reflect the continued focus on optimizing
our assets and expanding the footprint of our business,” Slifka
said. “In GDSO, the Champlain and Cheshire acquisitions added 136
sites, including 62 owned properties, to our retail portfolio.
These transactions further leverage our terminal assets and drive
economies of scale.”
For the fourth quarter of 2018 net income attributable to the
Partnership was $52.5 million, or $1.47 per diluted common limited
partner unit, compared with net income attributable to the
Partnership of $18.6 million, or $0.55 per diluted common limited
partner unit, for the same period of 2017.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $109.7 million in the fourth quarter of 2018 compared
with $41.0 million in the year-earlier period.
Distributable cash flow (DCF) was $67.6 million in the fourth
quarter of 2018 compared with $10.0 million in the same period of
2017. Results for the fourth quarter of 2017 included a net loss on
sale and disposition of assets of $5.6 million. Excluding this
charge, distributable cash flow would have been $15.6 million for
the three months ended December 31, 2017.
Adjusted EBITDA was $109.8 million in the fourth quarter of 2018
compared with $46.7 million in the fourth quarter of 2017.
Gross profit in the fourth quarter of 2018 was $221.8 million
compared with $157.6 million in the fourth quarter of 2017,
primarily due to the strong GDSO fuel margins in the last two
months of 2018. Combined product margin, which is gross profit
adjusted for depreciation allocated to cost of sales, was $244.1
million in the fourth quarter of 2018 compared with $179.1 million
in the fourth quarter of 2017.
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, 2018 and 2017.
GDSO segment product margin was $188.5 million in the fourth
quarter of 2018, an increase of $46.2 million from $142.3 million
in the fourth quarter of 2017. This performance primarily reflected
the strong fuel margins in November and December and, to a lesser
extent, the acquisitions of Champlain Oil and Cheshire Oil.
Wholesale segment product margin was $48.5 million in the fourth
quarter of 2018 compared with $32.2 million in the fourth quarter
of 2017, primarily due to more favorable market conditions in
distillates and gasoline blendstocks.
Commercial segment product margin was $7.1 million in the fourth
quarter of 2018 compared with $4.5 million in the same period of
2017.
Sales in the fourth quarter of 2018 were $3.3 billion compared
with $2.4 billion in the fourth quarter of 2017. Wholesale segment
sales were $1.8 billion in the fourth quarter of 2018 compared with
$1.2 billion in the fourth quarter of 2017. GDSO segment sales were
$1.1 billion in the fourth quarter of 2018 compared with $1.0
billion in the fourth quarter of 2017. Commercial segment sales
were $0.4 billion in the fourth quarter of 2018 compared with $0.2
billion in the fourth quarter of 2017.
Volume in the fourth quarter of 2018 was 1.6 billion gallons
compared with 1.2 billion gallons in the same period of 2017.
Wholesale segment volume was 1.0 billion gallons in the fourth
quarter of 2018 compared with 656.8 million gallons in the fourth
quarter of 2017. GDSO volume was 415.2 million gallons in the
fourth quarter of 2018 compared with 400.5 million gallons in the
same period of 2017. Commercial segment volume was 179.2 million
gallons in the fourth quarter of 2018 compared with 138.8 million
gallons in the same period of 2017.
Recent Highlights
- Global’s Board of Directors announced a
quarterly cash distribution of $0.50 per unit, or $2.00 per unit on
an annualized basis, on all of its outstanding common units for the
period from October 1 to December 31, 2018. The distribution was
paid on February 14, 2019 to unitholders of record as of the close
of business on February 8, 2019.
- Global’s Board of Directors announced a
quarterly cash distribution of $0.609375 per unit, or $2.4375 per
unit on an annualized basis, on the Partnership’s Series A
preferred units for the period from November 15, 2018 through
February 14, 2019. This distribution was paid on February 15, 2019
to holders of record as of the opening of business on February 1,
2019.
Business Outlook
“We continue to demonstrate our expertise in acquiring,
integrating, operating and leveraging high-quality assets,” Slifka
said. “Looking ahead, we are well positioned to capitalize on
opportunities across our businesses.”
For full-year 2019, Global expects to generate EBITDA of $200
million to $225 million. This EBITDA guidance excludes gains or
losses on the sale and disposition of assets and goodwill and
long-lived asset impairment charges.
The Partnership’s guidance and future performance are based on
assumptions regarding market conditions such as the crude oil
market, business cycles, demand for petroleum products and
renewable fuels, utilization of assets and facilities, weather,
credit markets, the regulatory and permitting environment and the
forward product pricing curve, which could influence quarterly
financial results. The Partnership believes these assumptions are
reasonable given currently available information and its assessment
of historical trends. Because Global’s assumptions and future
performance are subject to a wide range of business risks and
uncertainties, the Partnership can provide no assurance that actual
performance will fall within guidance ranges.
With respect to 2019 net income and net cash from operating
activities, the most comparable financial measures to EBITDA
calculated in accordance with GAAP, the Partnership is unable to
project either metric without unreasonable effort and for the
following reasons: 1) The Partnership is unable to project net
income because this metric includes the impact of certain non-cash
items, most notably those resulting from the sale of non-strategic
sites, which the Partnership is unable to project with any
reasonable degree of accuracy; and 2) The Partnership is unable to
project net cash from operating activities because this metric
includes the impact of changes in commodity prices, including their
impact on inventory volume and value, receivables, payables and
derivatives, which the Partnership is unable to project with any
reasonable degree of accuracy. Please see the "Use of Non-GAAP
Financial Measures" section of this news release.
Financial Results Conference Call
Management will review the Partnership’s fourth-quarter and
full-year 2018 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)
The call also will be webcast live and archived on Global’s
website.
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 the refined petroleum
products, renewable fuels, crude oil and propane, 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 1,600 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. 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 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) 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 hereof.
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 LPCONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per unit
data)(Unaudited)
Three Months EndedDecember
31, Twelve Months EndedDecember 31, 2018
2017 2018 2017 Sales $ 3,274,301 $ 2,400,492 $
12,672,602 $ 8,920,552 Cost of sales 3,052,457
2,242,923 12,022,193 8,337,500
Gross profit 221,844 157,569 650,409 583,052 Costs and
operating expenses: Selling, general and administrative expenses
49,555 43,433 171,002 155,033 Operating expenses 87,072 74,930
321,115 283,650 Loss (gain) on trustee taxes - 16,194 (52,627 )
16,194 Lease exit and termination gain - - (3,506 ) - Amortization
expense 2,976 2,425 10,960 9,206 Net loss (gain) on sale and
disposition of assets 40 5,667 5,880 (1,624 ) Goodwill and
long-lived asset impairment - -
414 809 Total costs and operating expenses
139,643 142,649 453,238
463,268 Operating income 82,201 14,920 197,171
119,784 Interest expense (23,508 ) (20,394 )
(89,145 ) (86,230 ) Income (loss) before income tax
(expense) benefit 58,693 (5,474 ) 108,026 33,554 Income tax
(expense) benefit (6,523 ) 23,635
(5,623 ) 23,563 Net income 52,170 18,161
102,403 57,117 Net loss attributable to noncontrolling
interest 360 393 1,502
1,635 Net income attributable to Global
Partners LP 52,530 18,554 103,905 58,752
Less: General partner's interest in net
income, including incentive distribution rights
554 124 1,033 394 Less: Series A preferred limited partner interest
in net income
1,682 - 2,691 -
Net income attributable common limited partners $ 50,294
$ 18,430 $ 100,181 $ 58,358
Basic net income per common limited partner unit (1) $ 1.49
$ 0.55 $ 2.97 $ 1.74 Diluted net income
per common limited partner unit (1) $ 1.47 $ 0.55 $
2.95
$ 1.74 Basic weighted average common limited
partner units outstanding 33,750 33,645
33,701 33,589 Diluted weighted
average limited partner units outstanding
34,066
33,751
33,972
33,634
(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 LPCONSOLIDATED BALANCE
SHEETS(In thousands)(Unaudited)
December 31, 2018
2017 Assets Current assets: Cash and cash equivalents
$ 8,121 $ 14,858 Accounts receivable, net 334,777 417,263 Accounts
receivable - affiliates 5,435 3,773 Inventories 386,442 350,743
Brokerage margin deposits 14,766 9,681 Derivative assets 26,390
3,840 Prepaid expenses and other current assets 98,977
77,977 Total current assets 874,908 878,135 Property
and equipment, net 1,132,632 1,036,667 Intangible assets, net
58,532 56,545 Goodwill 327,406 312,401 Other assets 30,813
36,421 Total assets $ 2,424,291 $ 2,320,169
Liabilities and partners' equity Current liabilities:
Accounts payable $ 308,979 $ 313,412 Working capital revolving
credit facility - current portion 103,300 126,700 Environmental
liabilities - current portion 6,092 5,009 Trustee taxes payable
42,613 110,321 Accrued expenses and other current liabilities
117,274 99,507 Derivative liabilities 4,494 13,708
Total current liabilities 582,752 668,657 Working capital
revolving credit facility - less current portion 150,000 100,000
Revolving credit facility 220,000 196,000 Senior notes 664,455
661,774 Environmental liabilities - less current portion 57,132
52,968 Financing obligations 149,997 150,334 Deferred tax
liabilities 42,856 40,105 Other long-term liabilities 57,905
56,013 Total liabilities 1,925,097 1,925,851
Partners' equity Global Partners LP equity 497,331 390,953
Noncontrolling interest 1,863 3,365 Total partners'
equity 499,194 394,318 Total liabilities and
partners' equity $ 2,424,291 $ 2,320,169
GLOBAL
PARTNERS LPFINANCIAL RECONCILIATIONS(In
thousands)(Unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2018
2017 2018 2017
Reconciliation of gross profit to product margin Wholesale
segment: Gasoline and gasoline blendstocks $ 22,318 $ 17,709 $
76,741 $ 82,124 Crude oil 4,274 4,031 7,159 7,279 Other oils and
related products 21,912 10,509
53,389 62,799 Total 48,504 32,249 137,289
152,202 Gasoline Distribution and Station Operations segment:
Gasoline distribution 134,869 95,928 373,303 326,536 Station
operations 53,619 46,357 203,098
174,986 Total 188,488 142,285 576,401 501,522
Commercial segment 7,087 4,523
23,611 17,858 Combined product margin 244,079
179,057 737,301 671,582 Depreciation allocated to cost of sales
(22,235 ) (21,488 ) (86,892 ) (88,530 )
Gross profit $ 221,844 $ 157,569 $ 650,409 $
583,052
Reconciliation of net income to EBITDA and
Adjusted EBITDA Net income $ 52,170 $ 18,161 $ 102,403 $ 57,117
Net loss attributable to noncontrolling interest 360
393 1,502 1,635 Net
income attributable to Global Partners LP 52,530 18,554 103,905
58,752 Depreciation and amortization, excluding the impact of
noncontrolling interest 27,156 25,716 105,639 103,601 Interest
expense, excluding the impact of noncontrolling interest 23,508
20,394 89,145 86,230 Income tax expense (benefit) 6,523
(23,635 ) 5,623 (23,563 ) EBITDA
109,717 41,029 304,312 225,020 Net loss (gain) on sale and
disposition of assets 40 5,667 5,880 (1,624 ) Goodwill and
long-lived asset impairment - -
414 809 Adjusted EBITDA (1) $ 109,757 $
46,696 $ 310,606 $ 224,205
Reconciliation of net cash provided by (used in) operating
activities to EBITDA and Adjusted EBITDA Net cash provided by
(used in) operating activities $ 214,758 $ (13,999 ) $ 168,856 $
348,442 Net changes in operating assets and liabilities and certain
non-cash items (135,160 ) 58,389 40,385 (185,673 )
Net cash from operating activities and
changes in operating assets and liabilities attributable to
noncontrolling interest
88 (120 ) 303 (416 ) Interest expense, excluding the impact of
noncontrolling interest 23,508 20,394 89,145 86,230 Income tax
expense (benefit) 6,523 (23,635 ) 5,623
(23,563 ) EBITDA 109,717 41,029 304,312 225,020 Net
loss (gain) on sale and disposition of assets 40 5,667 5,880 (1,624
) Goodwill and long-lived asset impairment - -
414 809 Adjusted EBITDA (1) $
109,757 $ 46,696 $ 310,606 $ 224,205
Reconciliation of net income to distributable cash
flow Net income $ 52,170 $ 18,161 $ 102,403 $ 57,117 Net loss
attributable to noncontrolling interest 360
393 1,502 1,635 Net income
attributable to Global Partners LP 52,530 18,554 103,905 58,752
Depreciation and amortization, excluding the impact of
noncontrolling interest 27,156 25,716 105,639 103,601 Amortization
of deferred financing fees and senior notes discount 1,723 1,715
6,873 7,089 Amortization of routine bank refinancing fees (1,022 )
(1,028 ) (4,088 ) (4,277 ) Non-cash tax reform benefit - (22,183 )
- (22,183 ) Maintenance capital expenditures, excluding the impact
of noncontrolling interest (12,781 ) (12,775 )
(38,641 ) (34,718 ) Distributable cash flow (2)(3) 67,606
9,999 173,688 108,264 Distributions to Series A preferred
unitholders (4) (1,682 ) - (2,691 )
- Distributable cash flow after distributions to
Series A preferred unitholders
$
65,924
$
9,999
$
170,997
$
108,264
Reconciliation of net cash provided by
(used in) operating activities to distributable cash flow Net
cash provided by (used in) operating activities $ 214,758 $ (13,999
) $ 168,856 $ 348,442 Net changes in operating assets and
liabilities and certain non-cash items (135,160 ) 58,389 40,385
(185,673 )
Net cash from operating activities and
changes in operating assets and liabilities attributable to
noncontrolling interest
88 (120 ) 303 (416 ) Amortization of deferred financing fees and
senior notes discount 1,723 1,715 6,873 7,089 Amortization of
routine bank refinancing fees (1,022 ) (1,028 ) (4,088 ) (4,277 )
Non-cash tax reform benefit - (22,183 ) - (22,183 ) Maintenance
capital expenditures, excluding the impact of noncontrolling
interest (12,781 ) (12,775 ) (38,641 )
(34,718 ) Distributable cash flow (2)(3) 67,606 9,999 173,688
108,264 Distributions to Series A preferred unitholders (4)
(1,682 ) - (2,691 ) -
Distributable cash flow after distributions to Series A preferred
unitholders $ 65,924 $ 9,999 $ 170,997 $
108,264 (1) Adjusted EBITDA for the twelve
months ended December 31, 2018 includes a one-time gain of
approximately $52.6 million as a result of the extinguishment of a
contingent liability related to a Volumetric Ethanol Excise Tax
Credit. (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 includes a net
loss on sale and disposition of assets of $0.1 million and $5.6
million for the three months ended December 31, 2018 and 2017,
respectively, and a net loss on sale and disposition of assets and
a net goodwill and long-lived asset impairment of $6.3 million and
$13.3 million for the twelve months ended December 31, 2018 and
2017, respectively. Excluding these charges,
distributable cash flow would have been $67.7 million and $15.6
million for the three months ended December 31, 2018 and 2017,
respectively, and $180.0 million and $121.6 million for the twelve
months ended December 31, 2018 and 2017,
respectively. For the twelve months ended December 31,
2018, distributable cash flow includes a one-time gain of
approximately $52.6 million as a result of the extinguishment of a
contingent liability related to a Volumetric Ethanol Excise Tax
Credit. For the twelve months ended December 31, 2017,
distributable cash flow includes a $14.2 million gain on the sale
of the Partnership's natural gas marketing and electricity
brokerage businesses in February 2017.
(4) Distributions to Series A preferred unitholders
represent the distributions earned by 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/20190307005351/en/
Daphne H. FosterChief Financial OfficerGlobal Partners
LP(781) 894-8800Edward J. FaneuilExecutive Vice President,
General Counsel and SecretaryGlobal Partners LP(781) 894-8800
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