Business Wire | Aug 6, 2021 08:00AM EDT

Global Partners Reports Second-Quarter 2021 Financial Results

Aug. 06, 2021

WALTHAM, Mass.--(BUSINESS WIRE)--Aug. 06, 2021--Global Partners LP (NYSE: GLP) today reported financial results for the second quarter ended June 30, 2021.

"Increased activity at our gasoline stations and convenience markets drove strong performance in our Gasoline Distribution and Station Operations (GDSO) segment in the second quarter," said Eric Slifka, Global's President and Chief Executive Officer. "Consistent with industry trends, retail fuel margins remained relatively healthy in the quarter despite the rising commodity price environment.

"In our Wholesale segment, the impact of the extraordinary market events and the flattening of the forward-product pricing curve that occurred in the second quarter of 2020 create a difficult comparison with the same period this year. However, the Wholesale segment's performance in this year's second quarter was consistent with our expectations," Slifka said.

Financial Highlights

Net income attributable to the Partnership was $12.1 million, or $0.23 per diluted common limited partner unit, for the second quarter of 2021 compared with net income attributable to the Partnership of $76.3 million, or $2.17 per diluted common limited partner unit, for the same period of 2020.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $58.5 million in the second quarter of 2021 compared with $125.7 million in the comparable period of 2020.

Adjusted EBITDA was $58.7 million in the second quarter of 2021 versus $126.6 million in the year-earlier period.

Distributable cash flow (DCF) was $26.6 million in the second quarter of 2021 compared with $95.8 million in the same period of 2020.

Gross profit in the second quarter of 2021 was $178.0 million compared with $239.9 million in the first quarter of 2020.

Combined product margin, which is gross profit adjusted for depreciation allocated to cost of sales, was $198.6 million in the second quarter of 2021 compared with $260.1 million in the second quarter of 2020.

Combined product margin, EBITDA, Adjusted EBITDA, and DCF are non-GAAP (Generally Accepted Accounting Principles) financial measures, which are explained in greater detail below under "Use of Non-GAAP Financial Measures." Please refer to Financial Reconciliations included in this news release for reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures for the three and six months ended June 30, 2021 and 2020.

GDSO segment product margin was $162.4 million in the second quarter of 2021 compared with $145.6 million in the second quarter of 2020, primarily reflecting increased activity at our convenience stores and, to a lesser extent, an increase in fuel volume.

Wholesale segment product margin was $33.5 million in the second quarter of 2021 compared with $112.0 million in the second quarter of 2020, reflecting more favorable market conditions in the 2020 period resulting from a significant recovery in the supply/demand imbalance at the end of the first quarter and resultant flattening of the forward product pricing curve.

Commercial segment product margin was $2.7 million compared with $2.5 million in the second quarter of 2020.

Sales were $3.3 billion in the second quarter of 2021 compared with $1.5 billion in the same period of 2020, reflecting increases in volume and prices. Wholesale segment sales increased to $2.0 billion in the second quarter of 2021 from $0.8 billion in the year-earlier period. GDSO segment sales were $1.1 billion in the second quarter of 2021 versus $0.6 billion in the second quarter of 2020. Commercial segment sales were $135.2 million in the second quarter of 2021 compared with $66.2 million in the second quarter of 2020.

Volume in the second quarter of 2021 was 1.4 billion gallons compared with 1.2 billion gallons in the same period of 2020. Wholesale segment volume was 943.6 million gallons in the second quarter of 2021 and 862.8 million gallons in the second quarter of 2020. GDSO volume was 395.1 million gallons in the second quarter of 2021 compared with 278.6 million gallons in the second quarter of 2020. Commercial segment volume was 68.5 million gallons in the second quarter of 2021 compared with 56.8 million gallons in the year-earlier period.

Recent Developments

* In July, Global announced a quarterly cash distribution of $0.5750 per unit, or $2.30 per unit on an annualized basis, on all of its outstanding common units for the period from April 1 to June 30, 2021. The distribution will be paid August 13, 2021 to unitholders of record as of the close of business on August 9, 2021. * In May, Global entered into an amended credit agreement that extended the maturity date from April 2022 to May 2024, reduced the applicable rate for borrowings and letters of credit, increased the working capital revolving credit facility from $770 million to $800 million, and increased the revolving credit facility from $400 million to $450 million.

Business Outlook

"Looking ahead, we remain committed to building on the strength of our terminal and retail portfolio through strategic acquisitions and organic growth initiatives raze-and-rebuilds, new-to-industry locations and site enhancements that enable us to deliver value, quality and hospitality for our guests," added Slifka. "We recognize a growing change in consumer demands and fueling habits and are positioning ourselves to be a location of choice, whatever the fuel type may be. We continue to prepare select retail sites for EV infrastructure, explore other green technologies, and expand our caf, Wi-Fi, and fresh food options in addition to rolling out touch-free purchase options. Our fuel terminals and gas stations remain integral to the energy needs of the regions we serve. In the near term, we remain mindful of the economic uncertainty related to COVID-19, as states and communities weigh a return to restrictions in response to the Delta variant."

The extent to which the COVID-19 pandemic may affect our operating results remains uncertain. The COVID-19 pandemic has had, and may continue to have, material adverse consequences for general economic, financial and business conditions, and could materially and adversely affect our business, financial condition and results of operations and those of our customers, suppliers and other counterparties.

Financial Results Conference Call

Management will review the Partnership's second-quarter 2021 financial results in a teleconference call for analysts and investors today.

Time: 10:00 a.m. ET

Dial-in numbers: (877) 709-8155 (U.S. and Canada)

(201) 689-8881 (International)

Due to the expected high demand on our conference call provider, please plan to dial in to the call at least 20 minutes prior to the start time. The call also will be webcast live and archived on Global's website, https://ir.globalp.com.

Use of Non-GAAP Financial Measures

Product Margin

Global Partners views product margin as an important performance measure of the core profitability of its operations. The Partnership reviews product margin monthly for consistency and trend analysis. Global Partners defines product margin as product sales minus product costs. Product sales primarily include sales of unbranded and branded gasoline, distillates, residual oil, renewable fuels, crude oil and propane, as well as convenience store sales, gasoline station rental income and revenue generated from logistics activities when the Partnership engages in the storage, transloading and shipment of products owned by others. Product costs include the cost of acquiring products and all associated costs including shipping and handling costs to bring such products to the point of sale as well as product costs related to convenience store items and costs associated with logistics activities. The Partnership also looks at product margin on a per unit basis (product margin divided by volume). Product margin is a non-GAAP financial measure used by management and external users of the Partnership's consolidated financial statements to assess its business. Product margin should not be considered an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, product margin may not be comparable to product margin or a similarly titled measure of other companies.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP financial measures used as supplemental financial measures by management and may be used by external users of Global Partners' consolidated financial statements, such as investors, commercial banks and research analysts, to assess the Partnership's:

* compliance with certain financial covenants included in its debt agreements; * financial performance without regard to financing methods, capital structure, income taxes or historical cost basis; * ability to generate cash sufficient to pay interest on its indebtedness and to make distributions to its partners; * operating performance and return on invested capital as compared to those of other companies in the wholesale, marketing, storing and distribution of refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane, and in the gasoline stations and convenience stores business, without regard to financing methods and capital structure; and * viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.

Adjusted EBITDA is EBITDA further adjusted for gains or losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Distributable Cash Flow

Distributable cash flow is an important non-GAAP financial measure for the Partnership's limited partners since it serves as an indicator of success in providing a cash return on their investment. Distributable cash flow as defined by the Partnership's partnership agreement is net income plus depreciation and amortization minus maintenance capital expenditures, as well as adjustments to eliminate items approved by the audit committee of the board of directors of the Partnership's general partner that are extraordinary or non-recurring in nature and that would otherwise increase distributable cash flow.

Distributable cash flow as used in our partnership agreement also determines our ability to make cash distributions on our incentive distribution rights. The investment community also uses a distributable cash flow metric similar to the metric used in our partnership agreement with respect to publicly traded partnerships to indicate whether or not such partnerships have generated sufficient earnings on a current or historic level that can sustain distributions on preferred or common units or support an increase in quarterly cash distributions on common units. Our partnership agreement does not permit adjustments for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.

Distributable cash flow should not be considered as an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies.

About Global Partners LP

With approximately 1,550 locations primarily in the Northeast, Global Partners is one of the region's largest independent owners, suppliers and operators of gasoline stations and convenience stores. Global also owns, controls or has access to one of the largest terminal networks in New England and New York, through which it distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers. In addition, Global engages in the transportation of petroleum products and renewable fuels by rail from the mid-continental U.S. and Canada. Global, a master limited partnership, trades on the New York Stock Exchange under the ticker symbol "GLP." For additional information, visit www.globalp.com.

Forward-looking Statements

Certain statements and information in this press release may constitute "forward-looking statements." The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Global's current expectations and beliefs concerning future developments and their potential effect on the Partnership. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Partnership will be those that it anticipates. Forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership's control) including, without limitation, the impact and duration of the COVID-19 pandemic, uncertainty around the timing of an economic recovery in the United States which will impact the demand for the products we sell and the services that we provide, uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform their obligations and/or utilize the products we sell and/or services we provide, uncertainty around the impact and duration of federal, state and municipal regulations related to the COVID-19 pandemic, and assumptions that could cause actual results to differ materially from the Partnership's historical experience and present expectations or projections.

For additional information regarding known material factors that could cause actual results to differ from the Partnership's projected results, please see Global's filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Global undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

GLOBALPARTNERS LPCONSOLIDATEDSTATEMENTS OFOPERATIONS(In thousands,except perunit data)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020

Sales $ 3,279,145 $ 1,469,577 $ 5,832,472 $ 4,064,670

Cost of sales 3,101,100 1,229,630 5,509,395 3,678,985

178,045 323,077 385,685Gross profit 239,947

Costs andoperatingexpenses:Selling, general and 54,031 59,017 100,355 99,940administrativeexpensesOperating 88,169 168,697 159,267expenses 76,714

Amortization 2,673 5,396 expense 2,713 5,425

Net gain on sale and (8) (811) (483) (68)disposition ofassetsLong-lived 188 188 asset 1,724 1,724impairmentTotal costs 145,053 274,153 266,288and operating 139,357 expenses Operating 32,992 48,924 119,397income 100,590

Interest (20,320) (40,679) expense (21,089) (42,690)

Income before income tax 12,672 79,501 8,245 76,707(expense)benefit Income tax (533) (403) (expense) (3,528) 2,341benefit 12,139 7,842 Net income 75,973 79,048

Net lossattributable to - 289 - 490noncontrollinginterest Net income attributable 12,139 76,262 7,842 79,538to GlobalPartners LP Less: Generalpartner'sinterest innet income,including incentive 849 1,588 distribution 511 533rightsLess:Preferred limited 3,463 1,682 5,283 3,364partnerinterest innet income Net incomeattributable 7,827 971 to common $ $ 74,069 $ $ 75,641limitedpartners Basic netincome per 0.23 0.03 common limited $ $ 2.19 $ $ 2.23partner unit(1) Diluted netincome per 0.23 0.03 common limited $ $ 2.17 $ $ 2.21partner unit(1) Basic weightedaverage common 33,939 33,953 limited 33,869 33,869partner unitsoutstanding Dilutedweighted average 34,290 34,204 34,295 34,248limitedpartner unitsoutstanding (1) Under the Partnership's partnership agreement, for any quarterly period, the incentive distribution rights ("IDRs") participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in the Partnership's undistributed net income or losses. Accordingly, the Partnership's undistributed net income or losses is assumed to be allocated to the common unitholders and to the General Partner's general partner interest. Net income attributable to common limited partners is divided by the weighted average common units outstanding in computing the net income per limited partner unit.(1) Under the Partnership's partnership agreement, for any quarterlyperiod, the incentive distribution rights ("IDRs") participate in netincome only to the extent of the amount of cash distributions actuallydeclared, thereby excluding the IDRs from participating in thePartnership's undistributed net income or losses. Accordingly, thePartnership's undistributed net income or losses is assumed to beallocated to the common unitholders and to the General Partner's generalpartner interest. Net income attributable to common limited partners isdivided by the weighted average common units outstanding in computing thenet income per limited partner unit.GLOBAL PARTNERS LPCONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited) June 30, December 31, 2021 2020

AssetsCurrent assets: Cash and cash equivalents $ 6,177 $ 9,714

Accounts receivable, net 349,950 227,317

Accounts receivable - affiliates 2,218 2,410

Inventories 490,952 384,432

Brokerage margin deposits 25,104 21,661

Derivative assets 5,227 16,556

Prepaid expenses and other current assets 79,320 119,340

Total current assets 958,948 781,430

Property and equipment, net 1,073,665 1,082,486

Right of use assets, net 284,482 290,506

Intangible assets, net 31,329 35,925

Goodwill 328,569 323,565

Other assets 32,826 26,588

Total assets $ 2,709,819 $ 2,540,500

Liabilities and partners' equityCurrent liabilities: Accounts payable $ 247,638 $ 207,873

Working capital revolving credit facility - current portion 192,900 34,400

Lease liability - current portion 67,901 75,376

Environmental liabilities - current portion 4,455 4,455

Trustee taxes payable 49,989 36,598

Accrued expenses and other current liabilities 123,438 126,774

Derivative liabilities 32,151 12,055

Total current liabilities 718,472 497,531

Working capital revolving credit facility - less current portion 150,000 150,000

Revolving credit facility 33,400 122,000

Senior notes 738,457 737,605

Long-term lease liability - less current portion 227,597 226,648

Environmental liabilities - less current portion 47,731 49,166

Financing obligations 145,573 146,535

Deferred tax liabilities 56,320 56,218

Other long-term liabilities 61,650 59,298

Total liabilities 2,179,200 2,045,001

Partners' equity 530,619 495,499

Total liabilities and partners' equity $ 2,709,819 $ 2,540,500

GLOBAL PARTNERSLPFINANCIALRECONCILIATIONS(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020

Reconciliationof gross profitto productmargin Wholesalesegment: (1) Gasoline and 23,516 39,921 gasoline $ $ 58,283 $ $ 67,830 blendstocks (3,321) (7,848) Crude oil 9,203 4,733

Other oils and 13,340 31,955 related 44,505 44,891 products 33,535 64,028 117,454 Total 111,991

GasolineDistributionand StationOperationssegment: Gasoline 101,303 181,555 204,000 distribution 96,770

Station 61,141 111,298 operations 48,801 97,442

162,444 292,853 301,442 Total 145,571

Commercial 2,701 6,891 segment (1) 2,517 7,853

Combined 198,680 363,772 426,749product margin 260,079

Depreciation (20,635) (40,695) allocated to (20,132) (41,064)cost of sales 178,045 323,077 385,685Gross profit $ $ 239,947 $ $

Reconciliationof net incometo EBITDA andAdjusted EBITDA 12,139 7,842 Net income $ $ 75,973 $ $ 79,048

Net loss attributable to - 289 - 490 noncontrolling interest Net income attributable 12,139 76,262 7,842 79,538 to Global Partners LP Depreciation 25,505 50,480 and 24,779 50,447 amortization Interest 20,320 40,679 expense 21,089 42,690

Income tax 533 403 expense 3,528 (2,341) (benefit) 58,497 99,404 170,334 EBITDA (2) 125,658

Net gain on sale and (8) (811) (483) (68) disposition of assets Long-lived 188 188 asset 1,724 1,724 impairment Adjusted 58,677 99,109 171,990 EBITDA (2) $ $ 126,571 $ $

Reconciliationof net cashprovided by(used in)operatingactivities toEBITDA andAdjusted EBITDA Net cash provided by 52,425 (53,558) 162,003 (used in) $ $ 24,086 $ $ operating activities Net changes in operating assets and (14,781) 76,767 111,880 (32,300) liabilities and certain non-cash items Net cash from operating activities and changes in operating assets and liabilities attributable - 188 - 282 to noncontrolling interest Interest 20,320 40,679 expense 21,089 42,690

Income tax 533 403 expense 3,528 (2,341) (benefit) 58,497 99,404 170,334 EBITDA (2) 125,658

Net gain on sale and (8) (811) (483) (68) disposition of assets Long-lived 188 188 asset 1,724 1,724 impairment Adjusted 58,677 99,109 171,990 EBITDA (2) $ $ 126,571 $ $

Reconciliationof net incometodistributablecash flow 12,139 7,842 Net income $ $ 75,973 $ $ 79,048

Net loss attributable to - 289 - 490 noncontrolling interest Net income attributable 12,139 76,262 7,842 79,538 to Global Partners LP Depreciation 25,505 50,480 and 24,779 50,447 amortization Amortization 1,255 2,599 of deferred 1,306 2,567 financing fees Amortization of routine (1,013) (2,050) bank (985) (1,925) refinancing fees Maintenance (11,263) (18,294) capital (5,546) (12,826) expenditures Distributable 26,623 40,577 117,801 cash flow (2) 95,816 (3)(4) Distributions to preferred (3,463) (1,682) (5,283) (3,364) unitholders (5) Distributable cash flow after $ 23,160 $ 94,134 $ 35,294 $ 114,437 distributions to preferred unitholders Reconciliationof net cash(used in)provided byoperatingactivities todistributablecash flow Net cash provided by 52,425 (53,558) 162,003 (used in) $ $ 24,086 $ $ operating activities Net changes in operating assets and (14,781) 76,767 111,880 (32,300) liabilities and certain non-cash items Net cash from operating activities and changes in operating assets and liabilities attributable - 188 - 282 to noncontrolling interest Amortization 1,255 2,599 of deferred 1,306 2,567 financing fees Amortization of routine (1,013) (2,050) bank (985) (1,925) refinancing fees Maintenance (11,263) (18,294) capital (5,546) (12,826) expenditures Distributable 26,623 40,577 117,801 cash flow (2) 95,816 (3)(4) Distributions to preferred (3,463) (1,682) (5,283) (3,364) unitholders (5) Distributable cash flow after $ 23,160 $ 94,134 $ 35,294 $ 114,437 distributions to preferred unitholders(1)

Segment reporting results for the three and six months ended June 30, 2020 have been reclassified between the Wholesale and Commercial segments to conform to the Partnership's current presentation.(2)

EBITDA, Adjusted EBITDA and distributable cash flow for each of the three and six months ended June 30, 2021 include a $6.6 million expense for compensation and benefits resulting from the passing of the Partnership's general counsel in May of 2021. The expense relates to contractual commitments including the acceleration of grants previously awarded as well as a discretionary award in recognition of service.(3)

As defined by the Partnership's partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.(4)

Distributable cash flow for the six months ended June 30, 2020 includes a $6.3 million income tax benefit related to the CARES Act net operating loss carryback provisions.(5)

Distributions to preferred unitholders represent the distributions payable to the Series A preferred unitholders and the Series B preferred unitholders earned during the period. Distributions on the Series A preferred units and the Series B preferred units are cumulative and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year. View source version on businesswire.com: https://www.businesswire.com/news/home/20210806005055/en/

CONTACT: Daphne H. Foster Chief Financial Officer Global Partners LP (781) 894-8800 Sean T. Geary Acting General Counsel and Vice President - Mergers & Acquisitions Global Partners LP (781) 894-8800