WALTHAM, Mass.--(BUSINESS WIRE)--May 8, 2008--Global Partners LP
(NYSE:GLP) today reported financial results for the first quarter
ended March 31, 2008.
Financial Highlights
Net income for the first quarter of 2008 was $8.6 million, or
$0.63 per diluted limited partner unit, based on 13.1 million weighted
average diluted limited partner units outstanding. This compared with
net income of $32.9 million, or $1.75 per diluted limited partner
unit, based on 11.3 million weighted average diluted limited partner
units outstanding for the first quarter of 2007. Net income for the
first quarter of 2007 included a $14.1 million gain from the
partnership's sale of its investment in NYMEX Holdings, Inc. and
related NYMEX seats. Net income as adjusted for the one-time gain on
sale was $18.8 million for the first quarter of 2007.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the first quarter of 2008 was $18.5 million compared with
$38.0 million for the corresponding period of 2007. Adjusted EBITDA,
which excluded the $14.1 million gain, was $23.9 million for the first
quarter of 2007.
Distributable cash flow for the first quarter of 2008 was $11.8
million compared with $19.3 million for the first quarter of 2007.
"Consistent with the expectations we provided to investors when we
announced our fourth-quarter results in March, a confluence of
industry factors, many of which are transitory, had a significant
negative impact on our financial performance in the first quarter of
2008," said Global Partners President and Chief Executive Officer Eric
Slifka. "Higher energy prices prompted meaningful energy conservation,
as consumers drove less, increased their use of public transportation,
lowered thermostat settings, took smaller oil deliveries and
maintained less oil in home storage tanks. Warmer weather also
adversely affected demand in the quarter. On a combined basis,
temperatures in January and February, which account for about 37% of
total heating degree days for the year, were approximately 9% warmer
than normal and last year. In addition, the widening price disparity
between oil and natural gas increased the commercial use of natural
gas and may, over time, encourage homeowners to consider natural gas
as an alternative."
"In evaluating our performance for the first quarter of 2008,
another important item to factor into the year-over-year comparison is
the favorable buying opportunities we capitalized on in the wholesale
residual fuel market during the first quarter of last year," Slifka
said. "We estimate that the favorable environment contributed
approximately $4 million to our bottom-line in the first quarter of
2007."
"Despite a variety of challenges in the first quarter of 2008, we
continued to successfully execute our strategy to grow by further
broadening and diversifying our portfolio of transportation fuels,"
Slifka said. "Gasoline sales, gasoline volume and gasoline net product
margin all increased significantly year-over-year, reflecting our
acquisitions of five strategically located refined petroleum product
terminals from ExxonMobil Oil Corporation in 2007. These terminals
have continued to meet or exceed our expectations and have become
central components of our terminal and marketing network."
Sales for the first quarter of 2008 increased to $2.7 billion from
$1.6 billion for the first quarter of 2007. Wholesale segment sales
were $2.6 billion in the first quarter of 2008 compared with $1.4
billion for the first quarter of 2007, reflecting the partnership's
acquisitions of the five terminals and higher refined petroleum
product prices. Commercial segment sales were $124.2 million for the
first quarter of 2008 compared with $132.6 million in the first
quarter of 2007, reflecting a significant decline in residual oil
volumes.
Combined gross profit was $35.6 million in the first quarter of
2008 compared with $42.3 million in the first quarter of 2007.
Net income as adjusted for one-time gains, adjusted net income per
diluted limited partner unit, EBITDA, adjusted EBITDA and
distributable cash flow are non-GAAP (Generally Accepted Accounting
Principles) financial measures 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 March 31, 2008 and
2007.
Since the beginning of 2008:
-- Global Partners announced a quarterly cash distribution of
$0.4875 per unit ($1.95 on an annualized basis) on all of its
outstanding limited partner units for the period from January
1 through March 31, 2008. The distribution will be paid May 15
to unitholders of record as of the close of business May 6,
2008.
-- Early in 2008, Global Partners opened a new distillates and
biofuels tank farm at the Port of Providence with storage
capacity of 244,000 barrels of refined petroleum products. The
second phase of this project, a 230,000-barrel residual fuels
storage terminal, is expected to be available later in 2008.
These facilities will enable the partnership to more
effectively supply existing wholesale and commercial customers
across Rhode Island and southeastern Massachusetts and
cultivate new customers in the region.
Business Outlook
"The strategic steps we have taken in recent years to expand our
asset base and diversify our product mix position us well for the
future," Slifka said. "Our growing transportation fuel volume creates
a strong base of business that enables us to more effectively respond
to the challenges of a changing industry environment with initiatives
designed to improve margins and expand our presence in core markets.
Despite the recent confluence of negative factors, the underlying
dynamics of our industry remain unchanged - people still need to fuel
their vehicles and heat their homes and businesses. Global Partners
has consistently demonstrated the ability to succeed in a changing
environment by capitalizing on market inefficiencies, taking advantage
of market dislocations and seizing new opportunities for growth. As a
result, we remain confident in the long-term prospects for our
business."
Financial Results Conference Call
Management will review Global Partners' first quarter 2008
financial results in a teleconference call for analysts and investors
at 10:00 a.m. ET today.
Time: 10:00 a.m. ET
Dial-in numbers: (877) 407-5790 (U.S. and Canada)
(201) 689-8328 (International)
The call also will be webcast live and archived on the Global
Partners' website, www.globalp.com.
Use of Non-GAAP Financial Measures
Global Partners uses adjusted net income per diluted limited
partner unit to measure its financial performance on a per unit basis.
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's
interest as provided under Emerging Issues Task Force 03-06,
"Participating Securities and the Two-Class Method under FASB
Statement 128" ("EITF 03-06"), divided by the weighted average number
of outstanding diluted common and subordinated units, or limited
partner units, during the period. Net income per diluted limited
partner unit as dictated by 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 partnership agreement 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
business. Accordingly, the distributions the partnership historically
paid and will pay in future periods are not impacted by net income per
diluted limited partner unit as dictated by EITF 03-06.
Adjusted net income per diluted limited partner unit should not be
considered as an alternative to net income per diluted limited partner
unit or any other measure of financial performance presented in
accordance with GAAP. In addition, Global Partners' adjusted net
income per diluted limited partner unit may not be comparable to the
adjusted net income per diluted limited partner unit or similarly
titled measure of other companies.
EBITDA, adjusted EBITDA and net income as adjusted for one-time
gains are used as supplemental financial measures by management and
external users of the partnership's financial statements, such as
investors, commercial banks and research analysts, to assess:
-- its compliance with certain financial covenants included in
its debt agreements;
-- its financial performance without regard to financing methods,
capital structure, income taxes or historical cost basis;
-- its 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.
Adjusted EBITDA and net income as adjusted for one-time gains
reflect the exclusion of the $14.1 million gain on investment for the
quarter ended March 31, 2007. EBITDA, adjusted EBITDA and net income
as adjusted for one-time gains should not be considered 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, adjusted EBITDA and net income as
adjusted for one-time gains exclude some, but not all, items that
affect net income, and these measures may vary among other companies.
Therefore, EBITDA, adjusted EBITDA and net income as adjusted for
one-time gains as presented below may not be comparable to similarly
titled measures of other companies.
Distributable cash flow 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 has generated sufficient cash
flow 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
reflects the exclusion of the $14.1 million gain on investment in the
first quarter of 2007. Distributable cash flow should not be
considered as an alternative to net income, cash flow from operations
or any other measure of financial performance presented in accordance
with 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 master limited partnership
based in Waltham, Massachusetts, owns, controls and has access to one
of the largest terminal networks of refined petroleum products in the
Northeast. The partnership is one of the largest wholesale
distributors of gasoline, distillates (such as home heating oil,
diesel and kerosene) and residual oil to wholesalers, retailers and
commercial customers in the region. Global Partners LP, a FORTUNE
500(R) company, trades on the New York Stock Exchange under the ticker
symbol "GLP." For additional information, please visit
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, goals, 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
Annual Report on Form 10-K for the year ended December 31, 2007 and
subsequent filings the partnership makes with the Securities and
Exchange Commission. 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 STATEMENTS OF INCOME
(In thousands, except for per unit data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2008 2007
----------- -----------
Sales $2,720,992 $1,573,176
Cost of sales 2,685,376 1,530,924
---------- ----------
Gross profit 35,616 42,252
Costs and operating expenses:
Selling, general and administrative 11,073 13,406
Operating expenses 9,025 5,890
Amortization expenses 724 358
---------- ----------
Total costs and operating expenses 20,822 19,654
---------- ----------
Operating income 14,794 22,598
Interest expense (6,030) (3,316)
Gain on sale of investment - 14,118
---------- ----------
Income before income tax expense 8,764 33,400
Income tax expense (145) (525)
---------- ----------
Net income 8,619 32,875
Less: General partner's interest in net
income(1) (149) (657)
---------- ----------
Limited partners' interest in net income $ 8,470 $ 32,218
========== ==========
Net income per limited partner unit, basic
and diluted(2) $ 0.63 $ 1.75
========== ==========
Weighted average limited partners' units
outstanding, basic and diluted 13,071 11,285
========== ==========
(1) Calculation includes the effect of the private placement of Class
B units on May 9, 2007 and, as a result, the general partner interest
was 1.73% for the three months ended March 31, 2008. For the three
months ended March 31, 2007, the general partner interest was 2%.
(2) Under the provisions of EITF 03-06, "Participating Securities and
the Two-Class Method under FASB Statement No. 128," net income per
limited partner unit for the three months ended March 31, 2008 and
2007 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 these periods.
GLOBAL PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March December
31, 31,
2008 2007
-------- ----------
Assets
Current assets:
Cash and cash equivalents $ 3,524 $ 2,110
Accounts receivable, net 370,313 439,165
Accounts receivable - affiliates 3,034 4,308
Inventories 328,736 484,259
Brokerage margin deposits 16,151 12,545
Fair value of forward fixed price contracts 231 742
Prepaid expenses and other current assets 22,850 17,736
------- ---------
Total current assets 744,839 960,865
Property and equipment, net 162,150 161,734
Intangible assets, net 33,486 34,168
Other assets 2,339 2,460
------- ---------
Total assets $942,814 $1,159,227
======= =========
Liabilities and partners' equity
Current liabilities:
Accounts payable $292,716 $ 371,341
Revolving line of credit - current portion 218,200 304,800
Environmental liabilities - current portion 876 876
Note payable, other 1,156 1,239
Accrued expenses and other current
liabilities 51,040 69,762
Obligations on forward fixed price
contracts and other derivatives 6,918 41,892
------- ---------
Total current liabilities 570,906 789,910
Revolving line of credit - less current portion 190,200 190,200
Environmental liabilities - less current portion 8,323 8,340
Accrued pension benefit cost 6,101 5,236
Deferred compensation 1,527 1,481
Other long-term liabilities 6,086 3,709
------- ---------
Total liabilities 783,143 998,876
Partners' equity 159,671 160,351
------- ---------
Total liabilities and partners' equity $942,814 $1,159,227
======= =========
GLOBAL PARTNERS LP
Financial Reconciliations
(In thousands, except per unit data)
(Unaudited)
Three Months Ended
March 31,
--------------------
2008 2007
--------- ----------
Table 1 - Reconciliation of net income to net
income as adjusted for one-time gains
-----------------------------------------------
Net income $ 8,619 $ 32,875
Gain on sale of investment - (14,118)
-------- ---------
Net income as adjusted for one-time gains $ 8,619 $ 18,757
======== =========
Table 2 - 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 $ 0.63 $ 1.75
Dilutive impact of theoretical
distribution of earnings under EITF 03-06 0.02 1.10
-------- ---------
Adjusted net income per diluted limited
partner unit $ 0.65 $ 2.85
======== =========
Table 3 - Reconciliation of net income to
EBITDA and Adjusted EBITDA
-----------------------------------------------
Net income $ 8,619 $ 32,875
Depreciation and amortization 3,682 1,269
Interest expense 6,030 3,316
Income tax expense 145 525
-------- ---------
EBITDA 18,476 37,985
Gain on sale of investment - (14,118)
-------- ---------
Adjusted EBITDA $ 18,476 $ 23,867
======== =========
Table 4 - Reconciliation of cash flow provided
by operating activities to
EBITDA and Adjusted EBITDA
-----------------------------------------------
Cash flow provided by operating activities $ 97,817 $ 140,728
Net change in operating assets and
liabilities (85,516) (106,584)
Interest expense 6,030 3,316
Income tax expense 145 525
-------- ---------
EBITDA 18,476 37,985
Gain on sale of investment - (14,118)
-------- ---------
Adjusted EBITDA $ 18,476 $ 23,867
======== =========
Table 5 - Reconciliation of net income to
distributable cash flow
-----------------------------------------------
Net income $ 8,619 $ 32,875
Depreciation and amortization 3,682 1,269
Gain on sale of investment - (14,118)
Maintenance capital expenditures (492) (767)
-------- ---------
Distributable cash flow $ 11,809 $ 19,259
======== =========
Table 6 - Reconciliation of cash flow provided
by operating activities to
distributable cash flow
-----------------------------------------------
Cash flow provided by operating activities $ 97,817 $ 140,728
Net change in operating assets and
liabilities (85,516) (106,584)
Gain on sale of investment - (14,118)
Maintenance capital expenditures (492) (767)
-------- ---------
Distributable cash flow $ 11,809 $ 19,259
======== =========
CONTACT: Global Partners LP
Thomas J. Hollister, 781-894-8800
Chief Operating Officer and
Chief Financial Officer
or
Edward J. Faneuil, 781-894-8800
Executive Vice President,
General Counsel and Secretary
SOURCE: Global Partners LP