Growth of Higher Margin Products Drives Net Income of $6.2 Million
WALTHAM, Mass., Nov. 9 /PRNewswire-FirstCall/ -- Global Partners LP
(NYSE: GLP) today announced financial results for the third quarter ended
September 30, 2006.
Financial Results for the Three Months Ended September 30, 2006 and 2005
Net income for the three months ended September 30, 2006 increased to $6.2
million, or $0.53 per diluted limited partner unit, from a net loss of $2.0
million for the same period in 2005. In last year's third quarter, the
Partnership paid $3.1 million in bonuses to certain officers and employees in
connection with the organization of Global Partners LP and recorded a $1.1
million charge for the termination of an insurance policy. Adjusted net income
per diluted limited partner unit was $0.54 for the third quarter of 2006.
There is no period-to-period per unit comparison because Global Partners'
common units did not begin trading until September 30, 2005.
Adjusted net income per diluted limited partner unit is a non-GAAP
(Generally Accepted Accounting Principles) financial measure explained in
greater detail below under "Use of Non-GAAP Financial Measures." Please refer
to Financial Reconciliations included in this news release for a
reconciliation of net income per diluted limited partner unit to adjusted net
income per diluted limited partner unit for the three months ended September
30, 2006.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
for the three months ended September 30, 2006 increased more than 395% to
$10.9 million from $2.2 million for the same period in 2005. EBITDA is a
non-GAAP financial measure 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 net income to EBITDA and
cash flow from operating activities to EBITDA for the three months ended
September 30, 2006 and 2005.
Distributable cash flow for the third quarter of 2006 was $6.7 million.
Distributable cash flow is a non-GAAP financial measure 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
net income to distributable cash flow and cash flow from operating activities
to distributable cash flow for the three months ended September 30, 2006.
Sales for the three months ended September 30, 2006 grew 16% to $995.8
million from $854.9 million in the same period of 2005 as a result of an
increase in commodity prices and product volumes. Wholesale segment sales
increased 19% to $927.7 million from $776.7 million in the third quarter of
2005. Commercial segment sales decreased to $68.1 million from $78.2 million
in the third quarter of 2005.
For the three months ended September 30, 2006, Global Partners reported
combined gross profit of $25.7 million, compared with $19.0 million in the
same period of 2005.
"Our third-quarter financial results demonstrate the successful execution
of our corporate strategy, which combines internal growth and strategic
acquisitions, complemented by a period of favorable market conditions," said
President and Chief Executive Officer Eric Slifka. "We continue to expand our
higher margin product lines and broaden the non-weather dependent components
of our business, generating record third-quarter operating income."
"Product volumes were up significantly through increased business with
existing customers, the addition of new accounts and incremental contributions
from our recent acquisitions," Slifka continued. "We are pleased with the
third-quarter performance of the Bridgeport refined products terminal we
purchased in May. The preliminary returns on our recently acquired Macungie
terminal in Pennsylvania are in line with our expectations, and we continue to
evaluate other accretive acquisition opportunities."
Recent Highlights
Since the end of the second quarter:
* The Partnership declared a cash distribution of $0.4450 per unit for the
period from July 1, 2006 through September 30, 2006 ($1.78 per unit on
an annualized basis). The distribution represents an increase of 1.7%
over the second-quarter distribution of $0.4375 per unit and of 7.9%
since Global Partners' initial public offering in September 2005.
* Global Partners completed the acquisition of a refined petroleum
products terminal in Macungie, Pennsylvania. The terminal has storage
capacity for approximately 170,000 barrels of refined products and is
being used as a distribution point for diesel fuel, home heating oil,
specialty fuel additives and multiple grades of gasoline.
Financial Results for the Nine Months Ended September 30, 2006 and 2005
For the first nine months of 2006, Global Partners reported combined gross
profit of $78.6 million, an increase of 27% from $61.8 million for the same
period in 2005. Sales for the first nine months of 2006 increased to $3.4
billion compared with $2.8 billion for the same period in 2005. Sales in the
Wholesale segment rose 24% to $3.1 billion in the first nine months of 2006
from $2.5 billion in the same period of 2005. Sales in the Commercial segment
increased 7% in the first nine months of 2006 to $302.7 million from $282.1
million in the same period of 2005.
Net income for the nine months ended September 30, 2006 was $22.4 million,
or $1.68 per diluted limited partner unit, versus $8.3 million for the first
nine months of 2005. Adjusted net income per diluted limited partner unit was
$1.95 for the first nine months of 2006. There is no period-to-period per
unit comparison because Global Partners' common units did not begin trading
until September 30, 2005. Please refer to Financial Reconciliations included
in this news release for a reconciliation of net income per diluted limited
partner unit to adjusted net income per diluted limited partner unit for the
nine months ended September 30, 2006.
EBITDA was $34.3 million for the first nine months of 2006, compared with
$18.8 million for the same period in 2005. Please refer to Financial
Reconciliations included in this news release for reconciliations of net
income to EBITDA and cash flow from operating activities to EBITDA for the
nine months ended September 30, 2006 and 2005.
Distributable cash flow for the first nine months of 2006 was $24.5
million. Please refer to Financial Reconciliations included in this news
release for reconciliations of net income to distributable cash flow and cash
flow from operating activities to distributable cash flow for the nine months
ended September 30, 2006.
Financial Results Conference Call
Management will review Global Partners' third-quarter 2006 financial
results in a teleconference call for analysts and investors at 10:00 a.m. ET
today.
Dial-in numbers: (800) 289-0544 (U.S. and Canada)
(913) 981-5533 (International)
Five-day replay: (888) 203-1112 (U.S. and Canada)
(719) 457-0820 (International)
Conference code: 6454958 (Required for replay only)
The call also will be webcast live and archived on the Global Partners'
website, http://www.globalp.com.
Use of Non-GAAP Financial Measures
Net income per diluted limited partner unit as dictated by Emerging Issues
Task Force 03-06 ("EITF 03-06") is theoretical and pro forma in nature and
does not reflect the economic probabilities of whether earnings for an
accounting period would or could be distributed to unitholders. The limited
partnership agreement of Global Partners does not provide for the quarterly
distribution of net income, rather, it provides for the distribution of
available cash, which is a contractually defined term that generally means all
cash on hand at the end of each quarter after establishment of sufficient cash
reserves required to operate the Partnership in a prudent manner. Accordingly,
the distributions the Partnership has paid historically and will pay in future
periods are not impacted by net income per diluted limited partner unit as
dictated by EITF 03-06.
Global Partners uses adjusted net income per diluted limited partner unit
to measure its per unit financial performance. Adjusted net income per
diluted limited partner unit, as presented in the table below, is defined as
net income after adding back the theoretical amount allocated to Global
Partners' general partner interest as provided under EITF 03-06, divided by
the weighted average number of outstanding diluted limited partner units
during the period.
Global Partners uses EBITDA as a supplemental financial measure to assess:
its 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; its operating performance and return on invested capital as
compared to those of other companies in the wholesale marketing and
distribution of refined petroleum products business, without regard to
financing methods and capital structure; and the viability of acquisitions and
capital expenditure projects and the overall rates of return of alternative
investment opportunities. EBITDA is not calculated or presented in accordance
with GAAP. EBITDA should not be considered 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 operating income,
and these measures may vary among other companies. Therefore, EBITDA as
presented below may not be comparable to similarly titled measures of other
companies.
Distributable cash flow also is an important non-GAAP financial measure
for limited partners of Global Partners since it serves as an indicator of the
Partnership's success in providing a cash return on their investment.
Specifically, this financial measure indicates to investors whether or not
Global Partners is generating cash flows at a level that can sustain or
support an increase in its quarterly cash distribution. Distributable cash
flow is also 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 or any other indicator of the
Partnership's performance required by GAAP. In addition, the distributable
cash flow of Global Partners may not be comparable to similarly titled
measures of other companies.
About Global Partners LP
Global Partners LP, a publicly traded limited partnership based in
Waltham, Massachusetts, owns, controls or has access to one of the largest
terminal networks of refined petroleum products in the Northeast. It is one
of the region's largest wholesale distributors of distillates (such as home
heating oil, diesel and kerosene), gasoline and residual oil to wholesalers,
retailers and commercial customers. Global Partners LP trades on the New York
Stock Exchange under the ticker symbol "GLP." For additional information,
please visit http://www.globalp.com.
Safe Harbor Statement
This news release contains certain "forward-looking statements" within the
meaning of the federal securities laws. These forward-looking statements are
identified as any statements that do not relate strictly to historical or
current facts and can generally be identified by the use of forward-looking
terminology including "will," "may," "believe," "expect," "anticipate,"
"estimate," "continue" or other similar words. Such statements may discuss
business prospects, new developments and future expectations or contain
projections of results of operations, financial condition and Global Partners
LP's ability to make distributions to unitholders. These statements are not
guarantees of performance. Although Global Partners LP believes these
forward-looking statements are based on reasonable assumptions, statements
made regarding future results are subject to a number of assumptions,
uncertainties and risks, many of which are beyond the control of Global
Partners LP, which may cause actual results to be materially different from
the forward-looking statements contained in this news release. For specific
risks and uncertainties that could cause actual results to differ materially
from forward-looking statements, please refer to Global Partners LP's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and its
Annual Report on Form 10-K for the year ended December 31, 2005. All
forward-looking statements included in this news release and all subsequent
written or oral forward-looking statements attributable to Global Partners LP
or persons acting on its behalf are expressly qualified in their entirety by
these cautionary statements. The forward-looking statements speak only as of
the date made, and Global Partners LP undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
The financial statements and financial information presented below reflect
the operations of Global Partners LP
GLOBAL PARTNERS LP
CONSOLIDATED/COMBINED STATEMENTS OF OPERATIONS
(In thousands, except for per unit data)
(Unaudited)
Successor Predecessor Successor Predecessor
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Consolidated Combined Consolidated Combined
Sales $995,834 $854,853 $3,378,210 $2,770,129
Cost of sales 970,113 835,903 3,299,628 2,708,300
Gross profit 25,721 18,950 78,582 61,829
Selling, general and
administrative expenses 10,284 11,644 30,272 29,427
Operating expenses 5,336 4,707 16,153 14,617
Amortization expenses 358 406 1,170 1,217
Operating income 9,743 2,193 30,987 16,568
Interest expense 3,414 3,191 7,520 7,169
Other expense - 1,050 - 1,050
Income before income tax
expense 6,329 (2,048) 23,467 8,349
Income tax expense 95 - 1,065 -
Net income (loss) 6,234 $(2,048) 22,402 $8,349
Less:
General partner's interest
in net income 125 449
Limited partners' interest
in net income $6,109 $21,953
Net income per limited
partner unit, basic and
diluted(1)(2) $0.53 $1.68
Weighted average limited
partners' units
outstanding,
basic and diluted 11,285 11,285
(1) Under the provisions of Emerging Issues Task Force ("EITF") 03-06,
"Participating Securities and the Two-Class Method under FASB
Statement No. 128," ("EITF 03-06"), net income per limited partner
unit for the three and nine months ended September 30, 2006 assumes a
theoretical distribution of earnings. Although this theoretical
calculation provided by EITF 03-06 does not impact the Partnership's
overall net income, it does reduce the Partnership's net income per
limited partner unit for the three and nine months ended September 30,
2006.
(2) See Financial Reconciliations, Table #1.
GLOBAL PARTNERS LP
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
September 30, December 31,
2006 2005
Assets
Current assets:
Cash and cash equivalents $2,051 $1,769
Accounts receivable, net 156,476 237,861
Accounts receivable - affiliates 1,156 2,005
Inventories 250,112 260,714
Brokerage margin deposits 8,933 9,210
Fair value of forward fixed price
contracts 59,170 -
Prepaid expenses and other current
assets 14,092 7,781
Total current assets 491,990 519,340
Property and equipment, net 31,030 21,975
Intangible assets, net 9,434 10,603
Other assets 2,648 2,838
Total assets $535,102 $554,756
Liabilities and partners' equity
Current liabilities:
Accounts payable $158,239 $259,463
Notes payable, other -- current portion 298 297
Income taxes payable 834 1,200
Accrued expenses and other current
liabilities 25,815 28,615
Obligations on forward fixed price
contracts and other derivatives - 1,038
Total current liabilities 185,186 290,613
Long-term liabilities:
Revolving line of credit 259,700 181,600
Notes payable, other -- less current portion 1,337 1,559
Other long-term liabilities 4,834 4,676
Total long-term liabilities 265,871 187,835
Partners' equity 84,045 76,308
Total liabilities and partners'
equity $535,102 $554,756
GLOBAL PARTNERS LP
Financial Reconciliations
(In thousands, except per unit data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Table 1 - Reconciliation of net
income per diluted limited partner
unit to adjusted net income per
diluted limited partner unit
Net income per diluted limited
partner unit under EITF 03-06 $0.53 $1.68
Dilutive impact of theoretical
distribution of earnings 0.01 0.27
Adjusted net income per diluted
limited partner unit $0.54 $1.95
Table 2 - Reconciliation of net
income (loss) to EBITDA
Net income (loss) $6,234 $(2,048) $22,402 $8,349
Depreciation and amortization 1,127 1,049 3,287 3,276
Interest expense 3,414 3,191 7,520 7,169
Income tax expense 95 - 1,065 -
EBITDA $10,870 $2,192 $34,274 $18,794
Table 3 - Reconciliation of cash
flow from operating activities to
EBITDA
Cash flow from operating
activities $(64,121) $(43,337) $(51,882) $(2,376)
Increase in operating assets and
liabilities 71,482 42,338 77,571 14,001
Interest expense 3,414 3,191 7,520 7,169
Income tax expense 95 - 1,065 -
EBITDA $10,870 $2,192 $34,274 $18,794
Table 4 - Reconciliation of net
income to distributable cash flow
Net income $6,234 $22,402
Depreciation and amortization 1,127 3,287
Maintenance capital expenditures (692) (1,207)
Distributable cash flow $6,669 $24,482
Table 5 - Reconciliation of cash
flow from operating activities to
distributable cash flow
Cash flow from operating
activities $(64,121) $(51,882)
Increase in operating assets and
liabilities 71,482 77,571
Maintenance capital expenditures (692) (1,207)
Distributable cash flow $6,669 $24,482
Contacts:
Thomas J. Hollister Edward J. Faneuil
Executive Vice President and Executive Vice President,
Chief Financial Officer General Counsel and Secretary
Global Partners LP Global Partners LP
(781) 894-8800 (781) 894-8800
SOURCE Global Partners LP
CONTACT: Thomas J. Hollister, Executive Vice President and Chief
Financial Officer, +1-781-894-8800, or Edward J. Faneuil, Executive Vice
President, General Counsel and Secretary, +1-781-894-8800, both of Global
Partners LP