Recently Acquired Terminal Assets Drive Strong Performance of
Transportation Fuels
WALTHAM, Mass.--(BUSINESS WIRE)--Nov. 6, 2008--Global Partners LP
(NYSE:GLP) today reported financial results for the third quarter and
nine months ended September 30, 2008.
Net income for the third quarter of 2008 was $1.0 million, or
$0.08 per diluted limited partner unit, compared with net income of
$2.5 million, or $0.19 per diluted limited partner unit, for the same
period in 2007. The decrease in net income largely reflected higher
depreciation in the third quarter of 2008 associated with the refined
petroleum product terminals acquired late last year from ExxonMobil
Oil Corp. The partnership had approximately 13.1 million weighted
average limited partner units outstanding (basic and diluted) for the
three months ended September 30, 2008 and 2007.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the three months ended September 30, 2008 was $10.1
million, compared with $9.9 million for the same period in 2007.
Distributable cash flow for the third quarter of 2008 was $4.2
million, compared with $4.5 million for the comparable quarter of
2007.
"We are pleased with our third-quarter results, which were
highlighted by solid distributable cash flow and year-over-year
increases in gross profit and EBITDA," said Global Partners President
and Chief Executive Officer Eric Slifka. "Our performance underscores
the success of the strategic initiatives we have implemented over the
past 18 months to significantly expand our asset base and diversify
our product mix.
"The refined petroleum product terminals we acquired from
ExxonMobil Oil Corp. in 2007 are performing ahead of plan and have
contributed positively to our third-quarter results," Slifka said.
"Even with macroeconomic issues that have prompted consumers and
businesses to focus more intently on conservation, on a year-over-year
basis gasoline net product margin grew approximately $11 million to
$13.6 million in the third quarter of 2008 on a 15% increase in
volume. These assets, which enabled us to more than offset volume
weakness in distillates and residual fuels in the third quarter,
provide Global with a growing and significant base of year-round
business."
Sales for the three months ended September 30, 2008 increased to
$2.3 billion from $1.6 billion for the same period in 2007. This
increase reflected higher refined petroleum product prices as well as
the partnership's acquisition of two refined petroleum product
terminals in Glenwood Landing and Inwood, New York in the fourth
quarter of last year. Wholesale segment sales were $2.2 billion in the
third quarter of 2008, compared with $1.5 billion for the third
quarter of 2007. Commercial segment sales were $102.1 million for the
third quarter of 2008, compared with $58.5 million in the third
quarter of 2007. Combined gross profit for the three months ended
September 30, 2008 was $25.9 million, compared with $23.9 million in
the same period in 2007.
Financial Results for the Nine Months Ended September 30, 2008 and
2007
For the nine months ended September 30, 2008, net income was $8.4
million, or $0.62 per diluted limited partner unit, compared with
$36.0 million, or $0.66 per diluted limited partner unit, in 2007. The
partnership had approximately 13.1 million and 12.2 million weighted
average limited partner units outstanding (basic and diluted) for the
nine months ended September 30, 2008 and 2007, respectively.
EBITDA for the first nine months of 2008 was $35.3 million,
compared with $53.5 million for the nine months ended September 30,
2007.
Net income and EBITDA for the first nine months of 2007 included
one-time gains of $14.1 million from Global Partners' sale of its
investment in NYMEX Holdings, Inc. and related NYMEX seats. Net income
as adjusted for the NYMEX-related gains was $21.9 million, while
adjusted EBITDA was $39.3 million.
Distributable cash flow for the nine-month period of 2008 was
$18.2 million, compared with $25.4 million for the first nine months
of 2007.
Sales through the first nine months of 2008 increased to $7.3
billion from $4.6 billion for the same period in 2007. Wholesale
segment sales were $7.0 billion in the first nine months of 2008,
compared with $4.3 billion in the same period in 2007. Commercial
segment sales were $331.5 million in the first nine months of 2008,
compared with $271.0 million in the comparable period of 2007.
Combined gross profit for the nine months ended September 30, 2008 was
$84.2 million, compared with $87.8 million for the same period in
2007.
EBITDA and distributable cash flow 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 and other non-GAAP financial
measures to their most directly comparable GAAP financial measures for
the three months and nine months ended September 30, 2008 and 2007.
The Board of Directors of Global Partners' general partner, Global
GP LLC, declared a quarterly cash distribution of $0.4875 per unit
($1.95 per unit on an annualized basis) on all of its outstanding
common and subordinated units for the period from July 1, 2008 through
September 30, 2008. The distribution will be paid November 14, 2008 to
unitholders of record as of the close of business November 5, 2008.
Business Outlook
"In today's challenging global economic environment, we believe
that our healthy balance sheet and ample liquidity are important
competitive advantages for Global Partners," Slifka said. "As of
September 30, we had $212 million available under our $750 million
credit agreement, which is committed through early 2011.
"It remains our intention to recommend to the Board of Directors
of our general partner that we maintain our cash distribution at
$0.4875 per unit for the fourth quarter of 2008," Slifka concluded.
"We believe that our strong capital position, tight expense management
and diversified product mix will enable us to remain financially
flexible and well positioned for long-term growth."
Financial Results Conference Call
Management will review Global Partners' third-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) 709-8155 (U.S. and Canada)
(201) 689-8881 (International)
The call also will be webcast live and archived on the Global
Partners' website, www.globalp.com.
Use of Non-GAAP Financial Measures
Adjusted Net Income Per Diluted Limited Partner Unit
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 is defined as net
income after adding back the theoretical amount allocated to the
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") and a non-cash reduction in net
income available to limited partners under Emerging Issues Task Force
98-05, "Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios"
("EITF 98-05"), 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 its business. Accordingly, the
distributions we 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.
The non-cash reduction under EITF 98-05 for the nine months ended
September 30, 2007 was the result of accounting for the sale of
Class B units. Although EITF 98-05 affected net income available to
limited partners, it did not affect net income or distributable cash
flow to limited partners, nor did it affect total partners' equity.
Adjusted net income per diluted limited partner unit is a non-GAAP
financial measure and 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
EBITDA, adjusted EBITDA and net income as adjusted for one-time
gains are used as supplemental financial measures 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 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
nine months ended September 30, 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 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. Specifically, this financial measure indicates to
investors whether or not the partnership 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 for the
nine months ended September 30, 2007. Distributable cash flow is a
non-GAAP financial measure and 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, Global Partners' distributable cash flow may not be
comparable to distributable cash flow or similarly titled measure 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.
Forward-looking Statements
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 per unit data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Sales $2,272,079 $1,598,461 $7,290,780 $4,555,727
Cost of sales 2,246,151 1,574,514 7,206,563 4,467,906
--------- --------- --------- ---------
Gross profit 25,928 23,947 84,217 87,821
Costs and operating
expenses:
Selling, general and
administrative 10,457 9,476 31,712 34,340
Operating expenses 8,429 6,939 26,225 19,139
Amortization expenses 738 388 2,199 1,104
--------- --------- --------- ---------
Total costs and
operating expenses 19,624 16,803 60,136 54,583
--------- --------- --------- ---------
Operating income 6,304 7,144 24,081 33,238
Interest expense (5,297) (4,614) (15,414) (10,453)
Gain on sale of investment - - - 14,118
--------- --------- --------- ---------
Income before income tax
expense 1,007 2,530 8,667 36,903
Income tax expense - - (295) (888)
--------- --------- --------- ---------
Net income 1,007 2,530 8,372 36,015
Less: General partner's
interest in net income(1) (17) (44) (144) (712)
--------- --------- --------- ---------
Limited partners' interest
in net income $ 990 $ 2,486 $ 8,228 $ 35,303
========= ========= ========= =========
Net income per limited
partner unit, basic and
diluted(2)(3)(4) $ 0.08 $ 0.19 $ 0.62 $ 0.66
========= ========= ========= =========
Weighted average limited
partners' units
outstanding, basic and
diluted 13,071 13,071 13,071 12,233
========= ========= ========= =========
(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 and nine months ended September 30, 2008 and
for the three months ended September 30, 2007. For the nine months
ended September 30, 2007, the general partner interest was 1.99%,
based on a weighted average.
(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 nine months ended September 30, 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. EITF 03-06
does not impact the net income per limited partner unit calculation
for the three months ended September 30, 2008 and 2007 because the
Partnership's net income did not exceed its distribution for these
periods.
(3) In connection with the private placement of Class B units, the
Partnership was required to take into account the effect of EITF 98-
05, "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios." As a result,
a non-cash reduction in net income available to limited partners was
recorded for the nine months ended September 30, 2007 because the
fair value of the Partnership's common units on May 9, 2007 (the date
on which the Class B units were issued) was greater than the purchase
price of the Class B units which was established at the time of the
execution of the Unit Purchase Agreement on March 14, 2007. Although
EITF 98-05 affected net income available to limited partners, it did
not affect net income nor did it affect total partners' equity.
(4) Calculation includes the weighted average effect of the private
placement of Class B units which were converted to common units for
the nine months ended September 30, 2007. Per unit data is calculated
on a quarterly basis; therefore, per unit data for the nine months
ended September 30, 2008 and 2007 equals the sums of the respective
first three quarters.
GLOBAL PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2008 2007
------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 605 $ 2,110
Accounts receivable, net 349,432 439,165
Accounts receivable - affiliates 2,768 4,308
Inventories 359,250 484,259
Brokerage margin deposits 5,397 12,545
Fair value of forward fixed price
contracts 48,221 742
Prepaid expenses and other current assets 22,632 17,736
------------ -----------
Total current assets 788,305 960,865
Property and equipment, net 161,631 161,734
Intangible assets, net 32,072 34,168
Other assets 2,789 2,460
------------ -----------
Total assets $ 984,797 $ 1,159,227
============ ===========
Liabilities and partners' equity
Current liabilities:
Accounts payable $ 292,870 $ 371,341
Working capital revolving credit facility
- current portion 250,579 304,800
Environmental liabilities - current
portion 876 876
Note payable, other - 1,239
Accrued expenses and other current
liabilities 51,543 69,762
Obligations on forward fixed price
contracts and other derivatives 2,803 41,892
------------ -----------
Total current liabilities 598,671 789,910
Working capital revolving credit facility -
less current portion 146,721 119,000
Acquisition facility 71,200 71,200
Environmental liabilities - less current
portion 7,912 8,340
Accrued pension benefit cost 7,061 5,236
Deferred compensation 1,618 1,481
Other long-term liabilities 3,842 3,709
------------ -----------
Total liabilities 837,025 998,876
Partners' equity 147,772 160,351
------------ -----------
Total liabilities and partners' equity $ 984,797 $ 1,159,227
============ ===========
GLOBAL PARTNERS LP
FINANCIAL RECONCILIATIONS
(In thousands, except per unit data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2008 2007 2008 2007
--------- ---------- --------- ---------
Table 1 - Reconciliation of
net income to net income as
adjusted for one-time gains
Net income $ 1,007 $ 2,530 $ 8,372 $ 36,015
Gain on sale of investment - - - (14,118)
-------- --------- -------- --------
Net income as adjusted for
one-time gains $ 1,007 $ 2,530 $ 8,372 $ 21,897
======== ========= ======== ========
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 and EITF 98-05 $ 0.08 $ 0.19 $ 0.62 $ 0.66
Dilutive impact of
theoretical distribution of
earnings under EITF 03-06 - - 0.02 1.10
Dilutive impact of non-cash
reduction under EITF 98-05 - - - 1.33
-------- --------- -------- --------
Adjusted net income per
diluted limited partner
unit $ 0.08 $ 0.19 $ 0.64 $ 3.09
======== ========= ======== ========
Table 3 - Reconciliation of
net income to EBITDA and
Adjusted EBITDA
Net income $ 1,007 $ 2,530 $ 8,372 $ 36,015
Depreciation and
amortization 3,749 2,771 11,241 6,107
Interest expense 5,297 4,614 15,414 10,453
Income tax expense - - 295 888
-------- --------- -------- --------
EBITDA 10,053 9,915 35,322 53,463
Gain on sale of investment - - - (14,118)
-------- --------- -------- --------
Adjusted EBITDA $ 10,053 $ 9,915 $ 35,322 $ 39,345
======== ========= ======== ========
Table 4 - Reconciliation of
cash flow provided by (used
in) operating activities to
EBITDA and Adjusted EBITDA
Cash flow provided by (used
in) operating activities $ 60,097 $(120,936) $ 54,124 $(19,639)
Net change in operating
assets and liabilities (55,341) 126,237 (34,511) 61,761
Interest expense 5,297 4,614 15,414 10,453
Income tax expense - - 295 888
-------- --------- -------- --------
EBITDA 10,053 9,915 35,322 53,463
Gain on sale of investment - - - (14,118)
-------- --------- -------- --------
Adjusted EBITDA $ 10,053 $ 9,915 $ 35,322 $ 39,345
======== ========= ======== ========
Table 5 - Reconciliation of
net income to distributable
cash flow
Net income $ 1,007 $ 2,530 $ 8,372 $ 36,015
Depreciation and
amortization 3,749 2,771 11,241 6,107
Gain on sale of investment - - - (14,118)
Maintenance capital
expenditures (605) (756) (1,405) (2,623)
-------- --------- -------- --------
Distributable cash flow $ 4,151 $ 4,545 $ 18,208 $ 25,381
======== ========= ======== ========
Table 6 - Reconciliation of
cash flow provided by (used
in) operating activities to
distributable cash flow
Cash flow provided by (used
in) operating activities $ 60,097 $(120,936) $ 54,124 $(19,639)
Net change in operating
assets and liabilities (55,341) 126,237 (34,511) 61,761
Gain on sale of investment - - - (14,118)
Maintenance capital
expenditures (605) (756) (1,405) (2,623)
-------- --------- -------- --------
Distributable cash flow $ 4,151 $ 4,545 $ 18,208 $ 25,381
======== ========= ======== ========
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