WALTHAM, Mass.--(BUSINESS WIRE)--Global Partners LP (NYSE: GLP) today reported financial results for the quarter ended September 30, 2012.
Third-Quarter 2012 Financial Summary
Net income for the third quarter of 2012 was $6.9 million, or $0.24 per diluted limited partner unit, compared with net income of $1.9 million, or $0.08 per diluted limited partner unit, for the third quarter of 2011.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2012 were $29.5 million, compared with $18.7 million for the same period of 2011.
Distributable cash flow (DCF) for the third quarter of 2012 was $15.0 million, compared with $8.6 million for the third quarter of 2011.
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 months ended September 30, 2012 and 2011.
“Our year-over-year improvement reflects the success of our strategy, as we continue to strengthen our business through organic growth and strategic acquisitions,” said Eric Slifka, the Partnership’s President and Chief Executive Officer. “The combination of our Alliance Energy acquisition, which was completed in the first quarter of this year, our growing crude oil business and our fuel supply and services agreement with Getty Realty helped to drive our year-over-year results for Global Partners. In addition to volume of 1.6 billion gallons of petroleum products – the largest single quarter in our history – we generated record third-quarter net income, EBITDA and distributable cash flow.”
“As we expected, our third quarter results did not match the performance we achieved in the second quarter due to the significant increase in gasoline prices from the end of June to the end of September, which adversely affected our margin results.”
Slifka continued, “We recently signed a purchase agreement to acquire a 60% ownership interest in Basin Transload LLC, expanding our presence in the Bakken region as a hub for the gathering, storage, transportation and marketing of crude oil and associated petroleum products. We also completed the major rail expansion of our Albany, NY terminal, increasing its capacity to receive up to 160,000 barrels of products per day by rail. In addition, we recently signed an agreement to acquire six stations from Massachusetts-based Mutual Oil Company.”
Sales for the third quarter of 2012 increased to $4.6 billion from $3.8 billion for the same period in 2011, driven primarily by the Alliance acquisition as well as the increasing crude oil business. Wholesale segment sales of $3.5 billion were up 11.6% from $3.1 billion in the third quarter of 2011 due to an increase in volume. Sales from the Gasoline Distribution and Station Operations segment more than doubled to $944.3 million compared with $416.3 million for the same period in 2011, reflecting the Alliance acquisition as well as the fuel supply and services agreement with Getty Realty. Commercial segment sales decreased 19.4% to $165.3 million from $205.1 million in the third quarter of 2011.
Wholesale segment volume was 1.2 billion gallons for the third quarter of 2012 compared with 1.1 billion gallons for the third quarter of 2011. Volume in the Gasoline Distribution and Station Operations segment was up 131% to a record 282.5 million gallons in the third quarter of 2012 from 122.1 million gallons in the comparable period of 2011. Commercial segment volume was 80.7 million, compared with 83.2 million gallons in the third quarter of 2011.
Combined gross profit increased to $82.6 million in the third quarter of 2012, compared with $49.3 million in the third quarter of 2011. Total wholesale net product margin grew to $34.9 million in the third quarter of 2012, compared with $25.4 million for the same period in 2011. In the Gasoline Distribution and Station Operations segment, net product margin increased 103% to $52.2 million from $25.7 million in the comparable period of 2011. Commercial segment net product margin increased to $4.8 million in the third quarter of 2012 compared with $4.3 million in the same period of 2011.
Recent Highlights
- Global signed a purchase agreement to acquire a majority ownership interest in Basin Transload, which operates two transloading facilities in North Dakota with a combined rail loading capacity of 160,000 barrels per day. The total purchase price is approximately $80 million. Under the purchase agreement, Global will acquire a 60% ownership interest in Basin Transload, with the remaining 40% split evenly between current owners TGC, L.P. and MBI Holdings, LLC. This transaction is expected to close by year-end.
- The Board of Directors of the Partnership’s general partner, Global GP LLC, increased the Partnership’s quarterly cash distribution to $0.5325 per unit ($2.13 per unit on an annualized basis) on all of its outstanding common units for the period from July 1 through September 30, 2012. The distribution will be paid on November 14, 2012 to unitholders of record as of the close of business November 5, 2012.
- Global signed an agreement to acquire six New England gasoline stations from Massachusetts-based Mutual Oil Company. This transaction is expected to close by year-end.
Business Outlook
“Strategic acquisitions and organic projects, including the expansion of our rail logistics business and the growth of our gasoline distribution and station operations, position the Partnership to capitalize on the many opportunities in the dynamic and rapidly changing energy market,” Slifka said. “Based on our performance through the first nine months of 2012 and current market conditions, we are narrowing our full-year 2012 EBITDA guidance to a range of $115 million to $130 million.” The Partnership’s outlook is also based on assumptions regarding market conditions, including demand for petroleum products and renewable fuels, weather, credit markets and the forward product pricing curve, which will influence quarterly financial results.
Financial Results Conference Call
Management will review the Partnership’s third-quarter 2012 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) | ||||
The call also will be webcast live and archived on Global’s website, www.globalp.com.
Use of Non-GAAP Financial Measures
EBITDA
EBITDA is a non-GAAP financial measure used as a supplemental financial measure by management and 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, renewable fuels and crude oil, 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.
EBITDA should not be considered as an alternative 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 excludes some, but not all, items that affect net income, and this measure may vary among other companies. Therefore, 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 Global Partners' limited partners since it serves as an indicator of the Partnership's success in providing a cash return on their investment. Distributable cash flow means the Partnership's 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. Specifically, this financial measure indicates to investors whether or not the Partnership has generated sufficient earnings on a current or historic level that can sustain or support an increase in its quarterly cash distribution. Distributable cash flow is a quantitative standard used by the investment community with respect to publicly traded partnerships. 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, Global Partners' distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies.
About Global Partners LP
Global Partners LP, a publicly traded master limited partnership based in Waltham, Massachusetts, owns, controls or has access to one of the largest terminal networks of refined petroleum products and renewable fuels in the Northeast. Global Partners is a leader in the logistics of transporting crude and other products from the mid-continent region of the U.S. and Canada to the East Coast. The Partnership is one of the largest wholesale distributors of gasoline (including blendstocks such as ethanol and naphtha), distillates (such as home heating oil, diesel and kerosene), residual oil and renewable fuels to wholesalers, retailers and commercial customers in the New England states and New York. In addition, the Partnership has a portfolio of approximately 1,000 gas stations in nine Northeastern states. The Partnership also is a distributor of natural gas. A FORTUNE 500® company, Global Partners trades on the New York Stock Exchange under the ticker symbol "GLP." For additional information, please visit www.globalp.com.
Forward-looking Statements
Some of the information contained in this news release may contain forward-looking statements. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words “may,” “believe,” “should,” “could,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “continue,” “will likely result,” or other similar expressions. In addition, any statement made by Global Partners LP’s management concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and possible actions by Global Partners LP or its subsidiaries are also forward-looking statements.
Although Global Partners LP believes these forward-looking statements are reasonable as and when made, there may be events in the future that Global Partners LP is not able to predict accurately or control, and there can be no assurance that future developments affecting Global Partners LP’s business will be those that it anticipates. Estimates for Global Partners LP’s future EBITDA are based on a number of assumptions regarding market conditions, including demand for petroleum products and renewable fuels, weather, credit markets and the forward product pricing curve. Therefore, Global Partners LP can give no assurance that its future EBITDA will be as estimated.
For additional information about risks and uncertainties that could cause actual results to differ materially from the expectations Global Partners LP describes in its forward-looking statements, please refer to Global Partners LP’s Annual Report on Form 10-K for the year ended December 31, 2011 and subsequent filings the Partnership makes with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made. Global Partners LP expressly disclaims any obligation or undertaking to update forward-looking statements to reflect any change in its expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based.
| GLOBAL PARTNERS LP | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (In thousands, except per unit data) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Sales | $ | 4,617,194 | $ | 3,765,765 | $ | 12,508,738 | $ | 10,728,985 | ||||||||||
| Cost of sales | 4,534,574 | 3,716,486 | 12,280,124 | 10,578,885 | ||||||||||||||
| Gross profit | 82,620 | 49,279 | 228,614 | 150,100 | ||||||||||||||
| Costs and operating expenses: | ||||||||||||||||||
| Selling, general and administrative expenses | 24,105 | 17,166 | 70,608 | 57,085 | ||||||||||||||
| Operating expenses | 40,196 | 19,373 | 100,692 | 54,932 | ||||||||||||||
| Restructuring charges | - | 1,719 | - | 1,719 | ||||||||||||||
| Amortization expense | 1,511 | 1,216 | 5,373 | 3,583 | ||||||||||||||
| Total costs and operating expenses | 65,812 | 39,474 | 176,673 | 117,319 | ||||||||||||||
| Operating income | 16,808 | 9,805 | 51,941 | 32,781 | ||||||||||||||
| Interest expense | (9,237 | ) | (7,947 | ) | (27,705 | ) | (23,478 | ) | ||||||||||
| Income before income tax expense | 7,571 | 1,858 | 24,236 | 9,303 | ||||||||||||||
| Income tax expense | (678 | ) | - | (228 | ) | - | ||||||||||||
| Net income | 6,893 | 1,858 | 24,008 | 9,303 | ||||||||||||||
| Less: General partner's interest in net income, including | ||||||||||||||||||
| incentive distribution rights (1)(2) | (316 | ) | (142 | ) | (733 | ) | (455 | ) | ||||||||||
| Limited partners' interest in net income | $ | 6,577 | $ | 1,716 | $ | 23,275 | $ | 8,848 | ||||||||||
| Basic net income per limited partner unit (3) | $ | 0.24 | $ | 0.08 | $ | 0.89 | $ | 0.42 | ||||||||||
| Diluted net income per limited partner unit (3) | $ | 0.24 | $ | 0.08 | $ | 0.89 | $ | 0.41 | ||||||||||
| Basic weighted average limited partner units outstanding | 27,311 | 21,567 | 26,085 | 21,188 | ||||||||||||||
| Diluted weighted average limited partner units outstanding | 27,485 | 21,752 | 26,258 | 21,388 | ||||||||||||||
| (1) Calculations for 2012 include the effect of the March 1, 2012 issuance of 5,850,000 common units in connection with the acquisition of Alliance Energy LLC. As a result, the general partner interest was reduced to 0.83% for the three months ended September 30, 2012 and, based on a weighted average, 0.87% for the nine months ended September 30, 2012. |
| (2) Calculations for 2011 include the effect of the November 2010 and February 2011 public offerings. As a result, the general partner interest was reduced to 1.06% for the three months ended September 30, 2011 and, based on a weighted average, 1.10% for the nine months ended September 30, 2011. |
| (3) 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 is assumed to be allocated to the limited partners' interest and to the General Partner's general partner interest. Limited partners' interest in net income is divided by the weighted average limited partner units outstanding in computing the net income per limited partner unit. |
| GLOBAL PARTNERS LP | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
|
September 30, |
December 31, | ||||||
| 2012 | 2011 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 1,073 | $ | 4,328 | |||
| Accounts receivable, net | 680,438 | 621,670 | |||||
| Accounts receivable - affiliates | 1,277 | 1,776 | |||||
| Inventories | 593,727 | 664,144 | |||||
| Brokerage margin deposits | 30,272 | 43,935 | |||||
| Fair value of forward fixed price contracts | 30,138 | 15,450 | |||||
| Prepaid expenses and other current assets | 62,031 | 61,561 | |||||
| Total current assets | 1,398,956 | 1,412,864 | |||||
| Property and equipment, net | 700,913 | 408,850 | |||||
| Goodwill | 29,123 | - | |||||
| Intangible assets, net | 64,623 | 36,710 | |||||
| Other assets | 13,681 | 10,427 | |||||
| Total assets | $ | 2,207,296 | $ | 1,868,851 | |||
| Liabilities and partners' equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 704,459 | $ | 575,776 | |||
| Working capital revolving credit facility - current portion | 149,081 | 62,805 | |||||
| Environmental liabilities - current portion | 4,373 | 2,936 | |||||
| Trustee taxes payable | 78,977 | 76,523 | |||||
| Accrued expenses and other current liabilities | 59,967 | 41,307 | |||||
| Obligations on forward fixed price contracts | 945 | 11,707 | |||||
| Total current liabilities | 997,802 | 771,054 | |||||
| Working capital revolving credit facility - less current portion | 278,019 | 526,095 | |||||
| Revolving credit facility | 422,000 | 205,000 | |||||
| Environmental liabilities - less current portion | 46,422 | 27,303 | |||||
| Other long-term liabilities | 33,438 | 24,110 | |||||
| Total liabilities | 1,777,681 | 1,553,562 | |||||
| Partners' equity | 429,615 | 315,289 | |||||
| Total liabilities and partners' equity | $ | 2,207,296 | $ | 1,868,851 | |||
| GLOBAL PARTNERS LP | ||||||||||||||||
| FINANCIAL RECONCILIATIONS | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Reconciliation of net income to EBITDA | ||||||||||||||||
| Net income | $ | 6,893 | $ | 1,858 | $ | 24,008 | $ | 9,303 | ||||||||
| Depreciation and amortization and amortization of deferred financing fees | 12,662 | 8,865 | 36,769 | 26,175 | ||||||||||||
| Interest expense | 9,237 | 7,947 | 27,705 | 23,478 | ||||||||||||
| Income tax expense | 678 | - | 228 | - | ||||||||||||
| EBITDA | $ | 29,470 | $ | 18,670 | $ | 88,710 | $ | 58,956 | ||||||||
| Reconciliation of net cash (used in) provided by operating activities to EBITDA | ||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (26,600 | ) | $ | 52,505 | $ | 189,700 | $ | (6,779 | ) | ||||||
| Net changes in operating assets and liabilities and certain non-cash items | 46,155 | (41,782 | ) | (128,923 | ) | 42,257 | ||||||||||
| Interest expense | 9,237 | 7,947 | 27,705 | 23,478 | ||||||||||||
| Income tax expense | 678 | - | 228 | - | ||||||||||||
| EBITDA | $ | 29,470 | $ | 18,670 | $ | 88,710 | $ | 58,956 | ||||||||
| Reconciliation of net income to distributable cash flow | ||||||||||||||||
| Net income | $ | 6,893 | $ | 1,858 | $ | 24,008 | $ | 9,303 | ||||||||
| Depreciation and amortization and amortization of deferred financing fees | 12,662 | 8,865 | 36,769 | 26,175 | ||||||||||||
| Amortization of routine bank refinancings | (960 | ) | (932 | ) | (2,878 | ) | (2,508 | ) | ||||||||
| Maintenance capital expenditures | (3,641 | ) | (1,193 | ) | (9,198 | ) | (2,681 | ) | ||||||||
| Distributable cash flow | $ | 14,954 | $ | 8,598 | $ | 48,701 | $ | 30,289 | ||||||||
|
Reconciliation of net cash (used in) provided by operating activities to distributable cash flow |
||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (26,600 | ) | $ | 52,505 | $ | 189,700 | $ | (6,779 | ) | ||||||
| Net changes in operating assets and liabilities and certain non-cash items | 46,155 | (41,782 | ) | (128,923 | ) | 42,257 | ||||||||||
| Amortization of routine bank refinancings | (960 | ) | (932 | ) | (2,878 | ) | (2,508 | ) | ||||||||
| Maintenance capital expenditures | (3,641 | ) | (1,193 | ) | (9,198 | ) | (2,681 | ) | ||||||||
| Distributable cash flow | $ | 14,954 | $ | 8,598 | $ | 48,701 | $ | 30,289 | ||||||||