GLOBAL PARTNERS LP [GLP] Filings

10-Q 1 glp-20230630x10q.htm 10-Q

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

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

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	$	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.

Table of Contents

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.

Table of Contents

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.

Table of Contents

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.

Table of Contents

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.

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

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	%

GLOBAL PARTNERS LP [GLP] Filings
GLOBAL PARTNERS LP [GLP-PA] Filings
GLOBAL PARTNERS LP [GLP-PB] Filings
10-Q	[2023-08-04]
10-Q	[2023-05-05]
10-K	[2023-02-27]
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-02-28]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-05]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-08]
10-K	[2020-03-06]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-09]
10-K	[2019-03-08]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-09]
10-K	[2018-03-09]
10-Q	[2017-11-08]
10-Q	[2017-08-09]
10-Q	[2017-05-09]
10-K	[2017-03-10]
10-Q	[2016-11-07]
10-Q	[2016-08-08]
10-Q	[2016-05-09]
10-K	[2016-02-29]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-03-13]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-04-01]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-03-15]
10-Q	[2012-11-09]
10-Q	[2012-08-08]
10-Q	[2012-05-09]
10-K	[2012-03-12]

GLOBAL PARTNERS LP [GLP] Filings

GLOBAL PARTNERS LP [GLP-PA] Filings

GLOBAL PARTNERS LP [GLP-PB] Filings