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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

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 001-32593

Global Partners LP

(Exact name of registrant as specified in its charter)

Delaware

74-3140887

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

P.O. Box 9161
800 South Street
Waltham, Massachusetts 02454-9161
(Address of principal executive offices, including zip code)

(781) 894-8800
(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

Common Units representing limited partner interests

GLP

New York Stock Exchange

Series A Fixed-to-Floating Rate Cumulative Redeemable

GLP pr A

New York Stock Exchange

Perpetual Preferred Units representing limited partner interests

9.50% Series B Fixed Rate Cumulative Redeemable

GLP pr B

New York Stock Exchange

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.Yes No

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.Yes No

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.

Large accelerated filer  

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 No

The issuer had 33,995,563 common units outstanding as of August 2, 2023.

TABLE OF CONTENTS

PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements (unaudited)

3

Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022

3

Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022

4

Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022

5

Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022

6

Consolidated Statements of Partners’ Equity for the three and six months ended June 30, 2023 and 2022

7

Notes to Consolidated Financial Statements

8

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

33

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

55

Item 4.     Controls and Procedures

57

PART II.     OTHER INFORMATION

58

Item 1.     Legal Proceedings

58

Item 1A.   Risk Factors

58

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds

58

Item 5.      Other Information

58

Item 6.     Exhibits

58

SIGNATURES

60

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

$

11,044

$

4,040

Accounts receivable, net

430,792

478,837

Accounts receivable-affiliates

 

10,745

 

2,380

Inventories

 

343,866

 

566,731

Brokerage margin deposits

 

15,647

 

23,431

Derivative assets

 

16,539

 

19,848

Prepaid expenses and other current assets

 

72,354

 

73,992

Total current assets

 

900,987

 

1,169,259

Property and equipment, net

 

1,199,986

 

1,218,171

Right of use assets, net

271,051

288,142

Intangible assets, net

 

22,753

 

26,854

Goodwill

 

427,715

 

427,780

Equity method investment

70,686

Other assets

 

43,732

 

30,679

Total assets

$

2,936,910

$

3,160,885

Liabilities and partners’ equity

Current liabilities:

Accounts payable

$

398,648

$

530,940

Working capital revolving credit facility-current portion

 

89,400

 

153,400

Lease liability-current portion

60,102

64,919

Environmental liabilities-current portion

 

4,941

 

4,606

Trustee taxes payable

 

55,992

 

42,972

Accrued expenses and other current liabilities

 

140,236

 

156,964

Derivative liabilities

 

5,027

 

17,680

Total current liabilities

 

754,346

 

971,481

Working capital revolving credit facility-less current portion

 

 

Revolving credit facility

 

119,000

 

99,000

Senior notes

 

741,867

 

741,015

Long-term lease liability-less current portion

218,879

231,427

Environmental liabilities-less current portion

 

62,419

 

64,029

Financing obligations

140,235

141,784

Deferred tax liabilities

66,159

66,400

Other long-term liabilities

 

58,473

 

57,305

Total liabilities

 

2,161,378

 

2,372,441

Partners’ equity

Series A preferred limited partners (2,760,000 units issued and outstanding at June 30, 2023 and December 31, 2022)

67,226

67,226

Series B preferred limited partners (3,000,000 units issued and outstanding at June 30, 2023 and December 31, 2022)

72,305

72,305

Common limited partners (33,995,563 units issued and 33,985,772 outstanding at June 30, 2023 and 33,995,563 units issued and 33,937,519 outstanding at December 31, 2022)

 

634,500

 

648,956

General partner interest (0.67% interest with 230,303 equivalent units outstanding at June 30, 2023 and December 31, 2022)

 

826

 

406

Accumulated other comprehensive loss

 

675

 

(449)

Total partners’ equity

 

775,532

 

788,444

Total liabilities and partners’ equity

$

2,936,910

$

3,160,885

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

 

June 30,

June 30,

    

2023

      

2022

    

2023

   

2022

 

Sales

$

3,831,690

$

5,323,650

$

7,862,017

$

9,824,188

Cost of sales

 

3,589,031

 

5,042,174

 

7,397,294

 

9,336,474

Gross profit

 

242,659

 

281,476

 

464,723

 

487,714

Costs and operating expenses:

Selling, general and administrative expenses

 

66,696

 

60,870

 

128,952

 

117,151

Operating expenses

 

110,379

 

108,525

 

218,732

 

207,758

Amortization expense

 

2,018

 

2,117

 

4,102

 

4,616

Net loss (gain) on sale and disposition of assets

884

(76,849)

(1,244)

(81,760)

Total costs and operating expenses

 

179,977

 

94,663

 

350,542

 

247,765

Operating income

 

62,682

 

186,813

 

114,181

 

239,949

Other income (expense):

Income from equity method investment

1,204

1,204

Interest expense

 

(21,806)

 

(21,056)

 

(43,874)

 

(42,530)

Income before income tax expense

 

42,080

 

165,757

 

71,511

 

197,419

Income tax expense

 

(691)

 

(2,950)

 

(1,091)

 

(4,127)

Net income

 

41,389

 

162,807

 

70,420

 

193,292

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

 

2,339

 

2,166

 

4,121

 

3,343

Less: Preferred limited partner interest in net income

3,463

3,463

6,926

6,926

Net income attributable to common limited partners

$

35,587

$

157,178

$

59,373

$

183,023

Basic net income per common limited partner unit

$

1.05

$

4.63

$

1.75

$

5.39

Diluted net income per common limited partner unit

$

1.05

$

4.61

$

1.75

$

5.37

Basic weighted average common limited partner units outstanding

33,986

 

33,928

 

33,986

 

33,940

Diluted weighted average common limited partner units outstanding

 

34,006

 

34,066

 

34,008

 

34,074

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

 

June 30,

June 30,

2023

    

2022

    

2023

2022

 

Net income

$

41,389

$

162,807

$

70,420

$

193,292

Other comprehensive income (loss):

Change in pension liability

 

672

 

(2,946)

 

1,124

 

(4,453)

Total other comprehensive income (loss)

 

672

 

(2,946)

 

1,124

 

(4,453)

Comprehensive income

$

42,061

$

159,861

$

71,544

$

188,839

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

$

70,420

$

193,292

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

53,445

51,652

Amortization of deferred financing fees

 

2,711

2,737

Bad debt expense

 

496

(255)

Unit-based compensation expense

 

3,161

706

Write-off of financing fees

482

Net gain on sale and disposition of assets

 

(1,244)

(81,760)

Income from equity method investment

(1,204)

Changes in operating assets and liabilities:

Accounts receivable

 

47,549

(103,734)

Accounts receivable-affiliate

 

(8,365)

(511)

Inventories

 

222,251

83,037

Broker margin deposits

 

7,784

(2,295)

Prepaid expenses, all other current assets and other assets

 

(5,568)

19,964

Accounts payable

 

(132,292)

220,328

Trustee taxes payable

 

13,020

(6,907)

Change in derivatives

 

(9,344)

16,315

Accrued expenses, all other current liabilities and other long-term liabilities

 

(17,365)

(7,376)

Net cash provided by operating activities

 

245,937

 

385,193

Cash flows from investing activities

Equity method investment

 

(69,482)

Acquisitions

 

(214,826)

Capital expenditures

 

(37,286)

(42,417)

Seller note issuances

(8,155)

Proceeds from sale of property and equipment, net

 

7,350

124,673

Net cash used in investing activities

 

(107,573)

 

(132,570)

Cash flows from financing activities

Net payments on working capital revolving credit facility

(64,000)

(284,000)

Net borrowings from revolving credit facility

 

20,000

79,600

Repurchase of common units

(2,567)

LTIP units withheld for tax obligations

 

(469)

(6)

Distribution equivalent rights

(560)

Distributions to limited partners and general partner

 

(86,331)

(49,118)

Net cash used in financing activities

 

(131,360)

 

(256,091)

Cash and cash equivalents

Increase (decrease) increase in cash and cash equivalents

 

7,004

 

(3,468)

Cash and cash equivalents at beginning of period

 

4,040

 

10,849

Cash and cash equivalents at end of period

$

11,044

$

7,381

Supplemental information

Cash paid during the period for interest

 

$

33,400

 

$

31,713

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’

 

Three and six months ended June 30, 2023

    

Partners

Partners

Partners

    

Interest

    

Income (Loss)

    

Equity

 

Balance at December 31, 2022

$

67,226

$

72,305

$

648,956

$

406

$

(449)

$

788,444

Net income

 

1,682

 

1,781

 

23,786

 

1,782

 

 

29,031

Distributions to limited partners and general partner

(1,682)

(1,781)

 

(53,458)

 

(1,952)

 

(58,873)

Unit-based compensation

 

1,094

 

 

1,094

Other comprehensive income

 

 

 

452

452

LTIP units withheld for tax obligations

 

(469)

 

 

(469)

Distribution equivalent rights

 

(406)

 

 

(406)

Dividends on repurchased units

 

15

 

 

15

Balance at March 31, 2023

$

67,226

$

72,305

$

619,518

$

236

$

3

$

759,288

Net income

 

1,682

 

1,781

 

35,587

 

2,339

 

 

41,389

Distributions to limited partners and general partner

(1,682)

(1,781)

 

(22,267)

 

(1,749)

 

(27,479)

Unit-based compensation

 

2,067

 

 

2,067

Other comprehensive income

 

 

 

672

672

Distribution equivalent rights

(411)

(411)

Dividends on repurchased units

 

6

 

 

6

Balance at June 30, 2023

$

67,226

$

72,305

$

634,500

$

826

$

675

$

775,532

Series A

Series B

Accumulated

Preferred

Preferred

Common

General

Other

Total

Limited

Limited

Limited

Partner

Comprehensive

Partners’

 

Three and six months ended June 30, 2022

    

Partners

Partners

Partners

    

Interest

    

Income (Loss)

    

Equity

 

Balance at December 31, 2021

$

67,226

$

72,305

$

392,086

$

(1,948)

$

(1,902)

$

527,767

Net income

 

1,682

 

1,781

 

25,845

 

1,177

 

 

30,485

Distributions to limited partners and general partner

(1,682)

(1,781)

 

(19,887)

 

(1,012)

 

(24,362)

Unit-based compensation

 

204

 

 

204

Other comprehensive loss

 

 

 

(1,507)

(1,507)

LTIP units withheld for tax obligations

 

(6)

 

 

(6)

Dividends on repurchased units

 

25

 

 

25

Balance at March 31, 2022

$

67,226

$

72,305

$

398,267

$

(1,783)

$

(3,409)

$

532,606

Net income

 

1,682

 

1,781

 

157,178

 

2,166

 

 

162,807

Distributions to limited partners and general partner

(1,682)

(1,781)

 

(20,227)

 

(1,117)

 

(24,807)

Unit-based compensation

 

502

 

 

502

Other comprehensive loss

 

 

 

(2,946)

(2,946)

Repurchase of common units

(2,567)

(2,567)

Distribution equivalent rights

(324)

(324)

Dividends on repurchased units

 

26

 

 

26

Balance at June 30, 2022

$

67,226

$

72,305

$

532,855

$

(734)

$

(6,355)

$

665,297

The accompanying notes are an integral part of these consolidated financial statements.

7

Table of Contents

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 1,646 owned, leased and/or supplied gasoline stations, including 341 directly operated convenience stores, primarily in the Northeast. The Partnership is also one of the largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers in the New England states and New York. The Partnership engages in the purchasing, selling, gathering, blending, storing and logistics of transporting petroleum and related products, including gasoline and gasoline blendstocks (such as ethanol), distillates (such as home heating oil, diesel and kerosene), residual oil, renewable fuels, crude oil and propane and in the transportation of petroleum products and renewable fuels by rail from the mid-continent region of the United States and Canada.

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 0.67% general partner interest in the Partnership, is owned by affiliates of the Slifka family. As of June 30, 2023, affiliates of the General Partner, including its directors and executive officers and their affiliates, owned 6,374,780 common units, representing a 18.7% limited partner interest.

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 two reallocations per calendar year of the lending commitments among its facilities under the credit agreement. On May 2, 2023, the Partnership and certain of its subsidiaries entered into the ninth amendment to third amended and restated credit agreement and joinder which, among other things, increased the applicable revolver rate by 25 basis points on borrowings under the revolving credit facility and extended the maturity date from May 6, 2024 to May 2, 2026. See Note 7 for additional information on the credit agreement.

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

Table of Contents

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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)

 

73

%  

72

%  

66

%  

67

%  

Distillates (home heating oil, diesel and kerosene), residual oil and crude oil sales

 

23

%  

25

%