UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Perpetual Preferred Units representing limited partner interests | ||||
Perpetual Preferred Units representing limited partner interests |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ | |||
Non-accelerated filer ☐ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The issuer had
TABLE OF CONTENTS
Item 1.Financial Statements
GLOBAL PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
June 30, | December 31, | ||||||
| 2023 |
| 2022 | ||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Accounts receivable, net | | | |||||
Accounts receivable-affiliates |
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Inventories |
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Brokerage margin deposits |
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Derivative assets |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use assets, net | | | |||||
Intangible assets, net |
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Goodwill |
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Equity method investment | | — | |||||
Other assets |
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Total assets | $ | | $ | | |||
Liabilities and partners’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | | $ | | |||
Working capital revolving credit facility-current portion |
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Lease liability-current portion | | | |||||
Environmental liabilities-current portion |
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Trustee taxes payable |
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Accrued expenses and other current liabilities |
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Derivative liabilities |
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Total current liabilities |
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Working capital revolving credit facility-less current portion |
| — |
| — | |||
Revolving credit facility |
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Senior notes |
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Long-term lease liability-less current portion | | | |||||
Environmental liabilities-less current portion |
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Financing obligations | | | |||||
Deferred tax liabilities | | | |||||
Other long-term liabilities |
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Total liabilities |
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Partners’ equity | |||||||
Series A preferred limited partners ( | | | |||||
Series B preferred limited partners ( | | | |||||
Common limited partners ( |
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General partner interest ( |
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Accumulated other comprehensive loss |
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| ( | |||
Total partners’ equity |
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Total liabilities and partners’ equity | $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
3
GLOBAL PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)
Three Months Ended |
| Six Months Ended |
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June 30, | June 30, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
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Sales | $ | | $ | | $ | | $ | | |||||
Cost of sales |
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Gross profit |
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Costs and operating expenses: | |||||||||||||
Selling, general and administrative expenses |
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Operating expenses |
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Amortization expense |
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Net loss (gain) on sale and disposition of assets | | ( | ( | ( | |||||||||
Total costs and operating expenses |
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Operating income |
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Other income (expense): | |||||||||||||
Income from equity method investment | | — | | — | |||||||||
Interest expense |
| ( |
| ( |
| ( |
| ( | |||||
Income before income tax expense |
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Income tax expense |
| ( |
| ( |
| ( |
| ( | |||||
Net income |
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Less: General partner’s interest in net income, including incentive distribution rights |
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Less: Preferred limited partner interest in net income | | | | | |||||||||
Net income attributable to common limited partners | $ | | $ | | $ | | $ | | |||||
Basic net income per common limited partner unit | $ | | $ | | $ | | $ | | |||||
Diluted net income per common limited partner unit | $ | | $ | | $ | | $ | | |||||
Basic weighted average common limited partner units outstanding | |
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Diluted weighted average common limited partner units outstanding |
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The accompanying notes are an integral part of these consolidated financial statements.
4
GLOBAL PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Three Months Ended | Six Months Ended |
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June 30, | June 30, | ||||||||||||
2023 |
| 2022 |
| 2023 | 2022 |
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Net income | $ | | $ | | $ | | $ | | |||||
Other comprehensive income (loss): | |||||||||||||
Change in pension liability |
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| ( |
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| ( | |||||
Total other comprehensive income (loss) |
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| ( |
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| ( | |||||
Comprehensive income | $ | | $ | | $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
5
GLOBAL PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended | |||||||
June 30, | |||||||
| 2023 |
| 2022 |
| |||
Cash flows from operating activities | |||||||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | | | |||||
Amortization of deferred financing fees |
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Bad debt expense |
| | ( | ||||
Unit-based compensation expense |
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Write-off of financing fees | | — | |||||
Net gain on sale and disposition of assets |
| ( | ( | ||||
Income from equity method investment | ( | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
| | ( | ||||
Accounts receivable-affiliate |
| ( | ( | ||||
Inventories |
| | | ||||
Broker margin deposits |
| | ( | ||||
Prepaid expenses, all other current assets and other assets |
| ( | | ||||
Accounts payable |
| ( | | ||||
Trustee taxes payable |
| | ( | ||||
Change in derivatives |
| ( | | ||||
Accrued expenses, all other current liabilities and other long-term liabilities |
| ( | ( | ||||
Net cash provided by operating activities |
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Cash flows from investing activities | |||||||
Equity method investment |
| ( | — | ||||
Acquisitions |
| — | ( | ||||
Capital expenditures |
| ( | ( | ||||
Seller note issuances | ( | — | |||||
Proceeds from sale of property and equipment, net |
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Net cash used in investing activities |
| ( |
| ( | |||
Cash flows from financing activities | |||||||
Net payments on working capital revolving credit facility | ( | ( | |||||
Net borrowings from revolving credit facility |
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Repurchase of common units | — | ( | |||||
LTIP units withheld for tax obligations |
| ( | ( | ||||
Distribution equivalent rights | ( | — | |||||
Distributions to limited partners and general partner |
| ( | ( | ||||
Net cash used in financing activities |
| ( |
| ( | |||
Cash and cash equivalents | |||||||
Increase (decrease) increase in cash and cash equivalents |
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| ( | |||
Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | $ | | $ | | |||
Supplemental information | |||||||
Cash paid during the period for interest |
| $ | |
| $ | |
The accompanying notes are an integral part of these consolidated financial statements.
6
GLOBAL PARTNERS LP
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY
(In thousands)
(Unaudited)
Series A | Series B | Accumulated | |||||||||||||||||
Preferred | Preferred | Common | General | Other | Total | ||||||||||||||
Limited | Limited | Limited | Partner | Comprehensive | Partners’ |
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Three and six months ended June 30, 2023 |
| Partners | Partners | Partners |
| Interest |
| Income (Loss) |
| Equity |
| ||||||||
Balance at December 31, 2022 | $ | | $ | | $ | | $ | | $ | ( | $ | | |||||||
Net income |
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| — |
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Distributions to limited partners and general partner | ( | ( |
| ( |
| ( |
| — | ( | ||||||||||
Unit-based compensation | — | — |
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| — |
| — | | ||||||||||
Other comprehensive income | — | — |
| — |
| — |
| | | ||||||||||
LTIP units withheld for tax obligations | — | — |
| ( |
| — |
| — | ( | ||||||||||
Distribution equivalent rights | — | — |
| ( |
| — |
| — | ( | ||||||||||
Dividends on repurchased units | — | — |
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| — |
| — | | ||||||||||
Balance at March 31, 2023 | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Net income |
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| — |
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Distributions to limited partners and general partner | ( | ( |
| ( |
| ( |
| — | ( | ||||||||||
Unit-based compensation | — | — |
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| — |
| — | | ||||||||||
Other comprehensive income | — | — |
| — |
| — |
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Distribution equivalent rights | — | — | ( | — | — | ( | |||||||||||||
Dividends on repurchased units | — | — |
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| — |
| — | | ||||||||||
Balance at June 30, 2023 | $ | | $ | | $ | | $ | | $ | | $ | |
Series A | Series B | Accumulated | |||||||||||||||||
Preferred | Preferred | Common | General | Other | Total | ||||||||||||||
Limited | Limited | Limited | Partner | Comprehensive | Partners’ |
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Three and six months ended June 30, 2022 |
| Partners | Partners | Partners |
| Interest |
| Income (Loss) |
| Equity |
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Balance at December 31, 2021 | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Net income |
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| — |
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Distributions to limited partners and general partner | ( | ( |
| ( |
| ( |
| — | ( | ||||||||||
Unit-based compensation | — | — |
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| — |
| — | | ||||||||||
Other comprehensive loss | — | — |
| — |
| — |
| ( | ( | ||||||||||
LTIP units withheld for tax obligations | — | — |
| ( |
| — |
| — | ( | ||||||||||
Dividends on repurchased units | — | — |
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| — |
| — | | ||||||||||
Balance at March 31, 2022 | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Net income |
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| — |
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Distributions to limited partners and general partner | ( | ( |
| ( |
| ( |
| — | ( | ||||||||||
Unit-based compensation | — | — |
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| — |
| — | | ||||||||||
Other comprehensive loss | — | — |
| — |
| — |
| ( | ( | ||||||||||
Repurchase of common units | — | — | ( | — | — | ( | |||||||||||||
Distribution equivalent rights | — | — | ( | — | — | ( | |||||||||||||
Dividends on repurchased units | — | — |
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| — |
| — | | ||||||||||
Balance at June 30, 2022 | $ | | $ | | $ | | $ | ( | $ | ( | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
7
Note 1. Organization and Basis of Presentation
Organization
Global Partners LP (the “Partnership”) is a master limited partnership formed in March 2005. The Partnership owns, controls or has access to one of the largest terminal networks of refined petroleum products and renewable fuels in Massachusetts, Maine, Connecticut, Vermont, New Hampshire, Rhode Island, New York, New Jersey and Pennsylvania (collectively, the “Northeast”). The Partnership is one of the region’s largest independent owners, suppliers and operators of gasoline stations and convenience stores. As of June 30, 2023, the Partnership had a portfolio of
Global GP LLC, the Partnership’s general partner (the “General Partner”), manages the Partnership’s operations and activities and employs its officers and substantially all of its personnel, except for most of its gasoline station and convenience store employees who are employed by Global Montello Group Corp. (“GMG”), a wholly owned subsidiary of the Partnership.
The General Partner, which holds a
2023 Events
Acquisition of Houston Sites—On June 1, 2023, Spring Partners Retail LLC, a joint venture owned by subsidiaries of the Partnership and Exxon Mobil Corporation, completed its acquisition of 64 Houston-area convenience and fueling facilities from Landmark Industries, LLC and its related entities. See Note 11 for additional information.
Amendments to the Credit Agreement—On February 2, 2023, the Partnership and certain of its subsidiaries entered into the eighth amendment to the third amended and restated credit agreement which, among other things, permits the Partnership to request up to
Basis of Presentation
The accompanying consolidated financial statements as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 reflect the accounts of the Partnership. Upon consolidation, all intercompany balances and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial condition and operating results for the interim periods. The interim financial information, which has been prepared pursuant to the
8
rules and regulations of the Securities and Exchange Commission (“SEC”), should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto contained in the Partnership’s Annual Report on Form 10-K. Other than the new accounting policy for equity method investments discussed below, the significant accounting policies described in Note 2, “Summary of Significant Accounting Policies,” of such Annual Report on Form 10-K are the same used in preparing the accompanying consolidated financial statements.
The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations that will be realized for the entire year ending December 31, 2023. The consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Partnership applies the equity method of accounting to investments when the Partnership has significant influence, but not a controlling interest in the investee. Under this method, the investment is carried originally at cost, increased by any allocated share of the investee’s net income and contributions made, and decreased by any allocated share of the investee’s net losses and distributions received. The investee’s allocated share of income and losses is based on the rights and priorities outlined in the joint venture agreement discussed in Note 11.
Concentration of Risk
Due to the nature of the Partnership’s businesses and its reliance, in part, on consumer travel and spending patterns, the Partnership may experience more demand for gasoline during the late spring and summer months than during the fall and winter months. Travel and recreational activities are typically higher in these months in the geographic areas in which the Partnership operates, increasing the demand for gasoline. Therefore, the Partnership’s volumes in gasoline are typically higher in the second and third quarters of the calendar year. As demand for some of the Partnership’s refined petroleum products, specifically home heating oil and residual oil for space heating purposes, is generally greater during the winter months, heating oil and residual oil volumes are generally higher during the first and fourth quarters of the calendar year. These factors may result in fluctuations in the Partnership’s quarterly operating results.
The following table presents the Partnership’s product sales and other revenues as a percentage of the consolidated sales for the periods presented:
Three Months Ended | Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |
Gasoline sales: gasoline and gasoline blendstocks (such as ethanol) |
| | % | | % | | % | | % |
Distillates (home heating oil, diesel and kerosene), residual oil and crude oil sales |
| | % | | % | |