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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 March 31, 2022

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

9.75% 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 May 4, 2022.

TABLE OF CONTENTS

PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements (unaudited)

3

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021

4

Consolidated Statements of Comprehensive Income (loss) for the three months ended March 31, 2022 and 2021

5

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

6

Consolidated Statements of Partners’ Equity for the three months ended March 31, 2022 and 2021

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

56

Item 4.     Controls and Procedures

57

PART II.     OTHER INFORMATION

58

Item 1.     Legal Proceedings

58

Item 1A.   Risk Factors

58

Item 6.     Exhibits

58

SIGNATURES

60

Item 1.Financial Statements

GLOBAL PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

March 31,

December 31,

 

    

2022

    

2021

 

Assets

Current assets:

Cash and cash equivalents

$

10,834

$

10,849

Accounts receivable, net

526,098

411,194

Accounts receivable—affiliates

 

2,238

 

1,139

Inventories

 

511,905

 

509,517

Brokerage margin deposits

 

53,563

 

33,658

Derivative assets

 

17,828

 

11,652

Prepaid expenses and other current assets

 

77,935

 

87,076

Total current assets

 

1,200,401

 

1,065,085

Property and equipment, net

 

1,202,867

 

1,099,348

Right of use assets, net

277,157

280,284

Intangible assets, net

 

33,207

 

26,014

Goodwill

 

409,424

 

328,135

Other assets

 

30,016

 

32,299

Total assets

$

3,153,072

$

2,831,165

Liabilities and partners’ equity

Current liabilities:

Accounts payable

$

466,275

$

353,296

Working capital revolving credit facility—current portion

 

178,600

 

204,700

Lease liability—current portion

57,514

62,352

Environmental liabilities—current portion

 

4,642

 

4,642

Trustee taxes payable

 

43,881

 

44,223

Accrued expenses and other current liabilities

 

105,013

 

138,733

Derivative liabilities

 

52,008

 

31,654

Total current liabilities

 

907,933

 

839,600

Working capital revolving credit facility—less current portion

 

200,000

 

150,000

Revolving credit facility

 

228,000

 

43,400

Senior notes

 

739,736

 

739,310

Long-term lease liability—less current portion

228,702

228,203

Environmental liabilities—less current portion

 

59,913

 

48,163

Financing obligations

143,837

144,444

Deferred tax liabilities

57,279

56,817

Other long—term liabilities

 

55,066

 

53,461

Total liabilities

 

2,620,466

 

2,303,398

Partners’ equity

Series A preferred limited partners (2,760,000 units issued and outstanding at March 31, 2022 and December 31, 2021)

67,226

67,226

Series B preferred limited partners (3,000,000 units issued and outstanding at March 31, 2022 and December 31, 2021)

72,305

72,305

Common limited partners (33,995,563 units issued and 33,953,227 outstanding at March 31, 2022 and 33,995,563 units issued and 33,953,227 outstanding at December 31, 2021)

 

398,267

 

392,086

General partner interest (0.67% interest with 230,303 equivalent units outstanding at March 31, 2022 and December 31, 2021)

 

(1,783)

 

(1,948)

Accumulated other comprehensive loss

 

(3,409)

 

(1,902)

Total partners’ equity

 

532,606

 

527,767

Total liabilities and partners’ equity

$

3,153,072

$

2,831,165

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

 

March 31,

    

2022

      

2021

 

Sales

$

4,500,538

$

2,553,327

Cost of sales

 

4,294,300

 

2,408,295

Gross profit

 

206,238

 

145,032

Costs and operating expenses:

Selling, general and administrative expenses

 

56,281

 

46,324

Operating expenses

 

99,233

 

80,528

Amortization expense

 

2,499

 

2,723

Net gain on sale and disposition of assets

(4,911)

(475)

Total costs and operating expenses

 

153,102

 

129,100

Operating income

 

53,136

 

15,932

Interest expense

 

(21,474)

 

(20,359)

Income before income tax (expense) benefit

 

31,662

 

(4,427)

Income tax (expense) benefit

 

(1,177)

 

130

Net income (loss)

 

30,485

 

(4,297)

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

 

1,177

 

739

Less: Preferred limited partner interest in net income

3,463

1,820

Net income (loss) attributable to common limited partners

$

25,845

$

(6,856)

Basic net income (loss) per common limited partner unit

$

0.76

$

(0.20)

Diluted net income (loss) per common limited partner unit

$

0.76

$

(0.20)

Basic weighted average common limited partner units outstanding

33,953

 

33,967

Diluted weighted average common limited partner units outstanding

 

34,085

 

34,296

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

4

GLOBAL PARTNERS LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

Three Months Ended

 

March 31,

2022

    

2021

 

Net income (loss)

$

30,485

$

(4,297)

Other comprehensive (loss) income:

Change in fair value of cash flow hedges

 

 

2,052

Change in pension liability

 

(1,507)

 

46

Total other comprehensive (loss) income

 

(1,507)

 

2,098

Comprehensive income (loss)

$

28,978

$

(2,199)

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

5

GLOBAL PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

March 31,

 

    

2022

    

2021

 

Cash flows from operating activities

Net income (loss)

$

30,485

$

(4,297)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

26,701

24,975

Amortization of deferred financing fees

 

1,390

1,344

Bad debt expense

 

51

(68)

Unit-based compensation expense

 

204

259

Net gain on sale and disposition of assets

 

(4,911)

(475)

Changes in operating assets and liabilities:

Accounts receivable

 

(114,955)

(86,794)

Accounts receivable-affiliate

 

(1,099)

(2,110)

Inventories

 

2,229

(84,024)

Broker margin deposits

 

(19,905)

(9,687)

Prepaid expenses, all other current assets and other assets

 

10,658

33,628

Accounts payable

 

112,979

30,118

Trustee taxes payable

 

(342)

4,332

Change in derivatives

 

14,178

16,918

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

 

(35,035)

(30,102)

Net cash provided by (used in) operating activities

 

22,628

 

(105,983)

Cash flows from investing activities

Acquisitions

 

(214,894)

 

(7,071)

Capital expenditures

 

(17,093)

(16,901)

Seller note issuances

(1,690)

Proceeds from sale of property and equipment

 

25,187

2,994

Net cash used in investing activities

 

(206,800)

 

(22,668)

Cash flows from financing activities

Net proceeds from issuance of Series B preferred units

72,167

Net borrowings from working capital revolving credit facility

23,900

168,000

Net borrowings from (payments on) revolving credit facility

 

184,600

(88,600)

LTIP units withheld for tax obligations

 

(6)

(26)

Distributions to limited partners and general partner

 

(24,337)

(21,006)

Net cash provided by financing activities

 

184,157

 

130,535

Cash and cash equivalents

(Decrease) increase in cash and cash equivalents

 

(15)

 

1,884

Cash and cash equivalents at beginning of period

 

10,849

 

9,714

Cash and cash equivalents at end of period

$

10,834

$

11,598

Supplemental information

Cash paid during the period for interest

 

$

29,524

 

$

16,235

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 months ended March 31, 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 income

 

 

 

(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

Series A

Series B

Accumulated

Preferred

Preferred

Common

General

Other

Total

Limited

Limited

Limited

Partner

Comprehensive

Partners’

 

Three months ended March 31, 2021

    

Partners

Partners

Partners

    

Interest

    

Income (Loss)

    

Equity

 

Balance at December 31, 2020

$

67,226

$

$

428,842

$

(2,169)

$

1,600

$

495,499

Issuance of Series B preferred units

72,167

72,167

Net income (loss)

 

1,682

 

138

 

(6,856)

 

739

 

 

(4,297)

Distributions to limited partners and general partner

(1,682)

 

(18,698)

 

(642)

 

(21,022)

Unit-based compensation

 

259

 

 

259

Other comprehensive income

 

 

 

2,098

2,098

LTIP units withheld for tax obligations

 

(26)

 

 

(26)

Dividends on repurchased units

 

16

 

 

16

Balance at March 31, 2021

$

67,226

$

72,305

$

403,537

$

(2,072)

$

3,698

$

544,694

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 March 31, 2022, the Partnership had a portfolio of 1,689 owned, leased and/or supplied gasoline stations, including 342 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 March 31, 2022, affiliates of the General Partner, including its directors and executive officers and their affiliates, owned 6,173,345 common units, representing a 18.2% limited partner interest.

COVID-19 Pandemic

The COVID-19 pandemic continues to make its presence felt at home, in the workplace, at the Partnership’s retail sites and terminal locations and in the global supply chain. The Partnership remains active in responding to the challenges posed by the COVID-19 pandemic and continues to provide essential products and services while prioritizing the safety of its employees, customers and vendors in the communities where the Partnership operates.

2022 Events

Amendments to the Credit Agreement—On March 9, 2022, the Partnership and certain of its subsidiaries entered into the sixth amendment to third amended and restated credit agreement which, among other things, increased the total aggregate commitment to $1.55 billion. On March 30, 2022, the Partnership and certain of its subsidiaries entered into the seventh amendment to third amended and restated credit agreement which, among other things, refreshed the accordion feature under the credit agreement. See Note 7 for additional information on these amendments.

Acquisitions—On February 1, 2022, the Partnership acquired substantially all of the retail motor fuel assets from Miller Oil Co., Inc. (“Miller Oil”). See Note 2.

On January 25, 2022, the Partnership acquired substantially all of the assets from Connecticut-based Consumers Petroleum of Connecticut, Incorporated (“Consumers Petroleum”). See Note 2.

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Basis of Presentation

The financial results of Miller Oil and Consumers Petroleum since the respective acquisition date are included in the accompanying statement of operations for the three months ended March 31, 2022. The accompanying consolidated financial statements as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021 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 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, 2021 and notes thereto contained in the Partnership’s Annual Report on Form 10-K. 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 months ended March 31, 2022 are not necessarily indicative of the results of operations that will be realized for the entire year ending December 31, 2022. The consolidated balance sheet at December 31, 2021 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, 2021.

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. However, the COVID-19 pandemic has had a negative impact on gasoline demand and the extent and duration of that impact remains uncertain. 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

March 31,

    

2022

    

2021

    

Gasoline sales: gasoline and gasoline blendstocks (such as ethanol)

 

60

%  

62

%  

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

 

37

%  

33

%  

Crude oil sales and crude oil logistics revenue

 

%  

1

%  

Convenience store and prepared food sales, rental income and sundries

3

%  

4

%  

Total

 

100

%  

100

%  

9

Table of Contents

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the Partnership’s product margin by segment as a percentage of the consolidated product margin for the periods presented:

Three Months Ended

March 31,

    

2022

    

2021

    

Wholesale segment

 

21

%  

18

%

Gasoline Distribution and Station Operations segment

 

76

%  

79

%

Commercial segment

3

%  

3

%

Total

 

100

%  

100

%

See Note 13, “Segment Reporting,” for additional information on the Partnership’s operating segments.

None of the Partnership’s customers accounted for greater than 10% of total sales for the three months ended March 31, 2022 and 2021.

Note 2.    Business Combinations

Acquisition from Miller Oil Co., Inc.On February 1, 2022, the Partnership acquired substantially all of the retail motor fuel assets from Miller Oil in a cash transaction. The acquisition includes 21 company-operated Miller’s Neighborhood Market convenience stores and 2 fuel sites that are either owned or leased, including lessee dealer and commissioned agent locations, all located in Virginia, and 34 fuel supply only sites, primarily in Virginia. The purchase price was approximately $60.2 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.

The preliminary fair values of the assets acquired and liabilities assumed as of February 1, 2022, the acquisition date, are set forth in the table below. The excess of the purchase price over the aggregate acquisition date value of identifiable net assets acquired was recorded as goodwill and assigned to the GDSO segment. Substantially all of the goodwill is expected to be deductible for tax purposes. These preliminary acquisition date values were generally determined through established and generally accepted valuation techniques and are subject to change during the measurement period as valuations are finalized. As a result, the acquisition accounting is not complete, and additional information that existed at the acquisition date may become known to the Partnership during the remainder of the measurement period. As of the filing date of this Form 10-Q, the Partnership is still in the process of valuing the assets acquired from Miller Oil, including inventory, property and equipment, right of use assets, intangible assets and liabilities.

10

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Assets purchased:

   

Inventory

$

2,317

Property and equipment

37,530

Right of use assets

5,139

Intangibles

5,555

Total identifiable assets purchased

50,541

Liabilities assumed:

Accrued expenses and other current liabilities

(851)

Environmental liabilities

(4,596)

Lease liability

(5,969)

Other non-current liabilities

(406)

Total liabilities assumed

(11,822)

Net identifiable assets acquired

38,719

Goodwill

21,448

Net assets acquired

 

$

60,167

The fair values of the remaining assets and liabilities noted above approximate their carrying values at February 1, 2022.

The Partnership utilized accounting guidance related to intangible assets which lists the pertinent factors to be considered when estimating the useful life of an intangible asset. These factors include, in part, a review of the expected use by the Partnership of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets and legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset. The Partnership amortizes these intangible assets over their estimated useful lives which is consistent with the estimated undiscounted future cash flows of these assets.

As part of the purchase price allocation, identifiable intangible assets include dealer supply contracts that are being amortized over three to eight years. Amortization expense related to the intangible assets was immaterial for the three months ended March 31, 2022.

In connection with the acquisition of Miller Oil, the Partnership incurred acquisition costs of approximately $0.4 million for the three months ended March 31, 2022, which are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

Acquisition from Consumers Petroleum of Connecticut IncorporatedOn January 25, 2022, the Partnership acquired substantially all of the assets from Consumers Petroleum in a cash transaction. The acquisition includes 26 company-owned Wheels convenience stores and related fuel operations located in Connecticut and 22 fuel-supply only sites located in Connecticut and New York. The purchase price, subject to post-closing adjustments, was approximately $154.7 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.

The preliminary fair values of the assets acquired and liabilities assumed as of January 25, 2022, the acquisition date, are set forth in the table below. The excess of the purchase price over the aggregate acquisition date value of identifiable net assets acquired was recorded as goodwill and assigned to the GDSO segment. Substantially all of the goodwill is expected to be deductible for tax purposes. These preliminary acquisition date values were generally determined through established and generally accepted valuation techniques and are subject to change during the measurement period as valuations are finalized. As a result, the acquisition accounting is not complete, and additional

11

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

information that existed at the acquisition date may become known to the Partnership during the remainder of the measurement period. As of the filing date of this Form 10-Q, the Partnership is still in the process of valuing the assets acquired from Consumers Petroleum, including inventory, property and equipment, right of use assets, intangible assets and liabilities.

The following table presents the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Assets purchased:

   

Inventory

$

2,475

Property and equipment

88,288

Right of use assets

4,482

Intangibles

4,136

Other non-current assets

182

Total identifiable assets purchased

99,563

Liabilities assumed:

Environmental liabilities

(7,256)

Lease liability

(2,372)

Other non-current liabilities

(329)

Total liabilities assumed

(9,957)

Net identifiable assets acquired

89,606

Goodwill

65,121

Net assets acquired

$

154,727

The fair values of the remaining assets and liabilities noted above approximate their carrying values at January 25, 2022.

The Partnership utilized accounting guidance related to intangible assets which lists the pertinent factors to be considered when estimating the useful life of an intangible asset. These factors include, in part, a review of the expected use by the Partnership of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets and legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset. The Partnership amortizes these intangible assets over their estimated useful lives which is consistent with the estimated undiscounted future cash flows of these assets.

As part of the purchase price allocation, identifiable intangible assets include dealer supply contracts that are being amortized over four to eight years. Amortization expense related to the intangible assets was immaterial for the three months ended March 31, 2022.

In connection with the acquisition of Consumers Petroleum, the Partnership incurred acquisition costs of approximately $0.9 million for the three months ended March 31, 2022, which are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

Supplemental Pro Forma Information—Revenues and net income not included in the Partnership’s consolidated operating results for Miller Oil and Consumers Petroleum from January 1, 2022 through the respective acquisition date were immaterial.

12

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3.     Revenue from Contract Customers

Disaggregation of Revenue

The following table provides the disaggregation of revenue from contracts with customers and other sales by segment for the periods presented (in thousands):

Three Months Ended March 31, 2022

 

Revenue from contracts with customers:

    

Wholesale

    

GDSO

    

Commercial

    

Total

 

Refined petroleum products, renewable fuels and crude oil

$

1,011,786

$

1,276,961

$

222,573

$

2,511,320

Station operations

 

 

96,566

 

 

96,566

Total revenue from contracts with customers

1,011,786

1,373,527

222,573

2,607,886

Other sales:

Revenue originating as physical forward contracts and exchanges

1,765,004

107,409

1,872,413

Revenue from leases

 

913

 

19,326

 

 

20,239

Total other sales

1,765,917

19,326

107,409

1,892,652

Total sales

$

2,777,703

$

1,392,853

$

329,982

$

4,500,538

Three Months Ended March 31, 2021

 

Revenue from contracts with customers:

    

Wholesale

    

GDSO

    

Commercial

    

Total

 

Refined petroleum products, renewable fuels and crude oil

$

684,014

$

756,008

$

18,784

$

1,458,806

Station operations

 

 

81,848

 

 

81,848

Total revenue from contracts with customers

684,014

837,856

18,784

1,540,654

Other sales:

Revenue originating as physical forward contracts and exchanges

866,904

126,886

993,790

Revenue from leases

 

567

 

18,316

 

 

18,883

Total other sales

867,471

18,316

126,886

1,012,673

Total sales

$

1,551,485

$

856,172

$

145,670

$

2,553,327

Contract Balances

A receivable, which is included in accounts receivable, net in the accompanying consolidated balance sheets, is recognized in the period the Partnership provides services when its right to consideration is unconditional. In contrast, a contract asset will be recognized when the Partnership has fulfilled a contract obligation but must perform other obligations before being entitled to payment.

The nature of the receivables related to revenue from contracts with customers and other revenue, as well as contract assets, are the same, given they are related to the same customers and have the same risk profile and securitization. Payment terms on invoiced amounts are typically 2 to 30 days.

A contract liability is recognized when the Partnership has an obligation to transfer goods or services to a customer for which the Partnership has received consideration (or the amount is due) from the customer. The Partnership had no significant contract liabilities at both March 31, 2022 and December 31, 2021.

13

Table of Contents

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4.    Inventories

The Partnership hedges substantially all of its petroleum and ethanol inventory using a variety of instruments, primarily exchange-traded futures contracts. These futures contracts are entered into when inventory is purchased and are either designated as fair value hedges against the inventory on a specific barrel basis for inventories qualifying for fair value hedge accounting or not designated and maintained as economic hedges against certain inventory of the Partnership on a specific barrel basis. Changes in fair value of these futures contracts, as well as the offsetting change in fair value on the hedged inventory, are recognized in earnings as an increase or decrease in cost of sales. All hedged inventory designated in a fair value hedge relationship is valued using the lower of cost, as determined by specific identification, or net realizable value, as determined at the product level. All petroleum and ethanol inventory not designated in a fair value hedging relationship is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value. Renewable Identification Numbers (“RINs”) inventory is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value. Convenience store inventory is carried at the lower of historical cost, based on a weighted average cost method, or net realizable value.

Inventories consisted of the following (in thousands):

March 31,

December 31,

    

2022

    

2021

 

Distillates: home heating oil, diesel and kerosene

$

134,882

$

244,067

Gasoline

 

202,582

 

123,824

Gasoline blendstocks

 

96,331

 

50,599

Crude oil

 

3,252

 

3,678

Residual oil

 

41,357

 

60,286

Renewable identification numbers (RINs)

 

6,462

 

4,218

Convenience store inventory

 

27,039

 

22,845

Total

$

511,905

$

509,517

In addition to its own inventory, the Partnership has exchange agreements for petroleum products and ethanol with unrelated third-party suppliers, whereby it may draw inventory from these other suppliers and suppliers may draw inventory from the Partnership. Positive exchange balances are accounted for as accounts receivable and amounted to $1.0 million and $1.3 million at March 31, 2022 and December 31, 2021, respectively. Negative exchange balances are accounted for as accounts payable and amounted to $32.2 million and $20.6 million at March 31, 2022 and December 31, 2021, respectively. Exchange transactions are valued using current carrying costs.

Note 5.    Goodwill

The following table presents changes in goodwill, all of which has been allocated to the Gasoline Distribution and Station Operations (“GDSO”) segment (in thousands):

Balance at December 31, 2021

$

328,135

Acquisition of Miller Oil (1)

21,448

Acquisition of Consumers Petroleum (1)

65,121

Dispositions (2)

(5,280)

Balance at March 31, 2022

$

409,424

(1)See Note 2 for information on the Partnership’s business combinations.
(2)Dispositions represent derecognition of goodwill associated with the sale and disposition of certain assets.

14

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6.    Property and Equipment

Property and equipment consisted of the following (in thousands):

March 31, 

December 31,

    

2022

    

2021

 

Buildings and improvements

$

1,393,464

$

1,327,002

Land

 

516,278

 

457,260

Fixtures and equipment

 

39,232

 

38,646

Idle plant assets

30,500

30,500

Construction in process

 

50,591

 

52,716

Capitalized internal use software

 

32,740

 

32,740

Total property and equipment

 

2,062,805

 

1,938,864

Less accumulated dep