- Product Volume Increases 53% to 1.1 Billion Gallons
- Gross Profit Up 39% to $44.6 Million
WALTHAM, Mass., Aug 04, 2011 (BUSINESS WIRE) --
Global Partners LP (NYSE: GLP) today reported financial results for the
three months ended June 30, 2011.
The net loss for the second quarter of 2011 was $848,000, or $0.04 per
limited partner unit, consistent with the Partnership's preliminary
estimate announced on July 21 of a net loss of no more than $2 million.
In the second quarter of 2010, the Partnership reported net income of
$3.2 million, or $0.18 per diluted limited partner unit. Second-quarter
2011 results included a $1.7 million benefit from the reduction of an
environmental reserve.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the three months ended June 30, 2011 was $15.5 million, consistent
with the Partnership's preliminary estimate of EBITDA in the range of
$14 million to $16 million. EBITDA increased 29% from $12.1 million in
the second quarter of 2010.
Distributable cash flow (DCF) for the second quarter of 2011 was $5.9
million, compared with $7.1 million for the comparable period in 2010.
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 June 30, 2011 and 2010.
"Although product volumes remain strong, our second-quarter results were
negatively affected by a challenging forward product pricing curve that
is creating margin pressure in our business," said Eric Slifka,
President and Chief Executive Officer of Global Partners. "An important
goal for the Partnership is to maintain and increase the distribution
and maximize returns to our unitholders over time. We have moved
proactively to adjust the business in order to experience less pressure
in unfavorable markets and be positioned to take advantage of
opportunities to increase profits in favorable markets. We believe that
is the right way to run our business. Therefore, we implemented a number
of cost savings initiatives during the past month, including reducing
our workforce by 10%, lowering certain selling, general and
administrative expenses and decreasing operating expenses. Together,
these initiatives are expected to result in annualized savings in the
range of $10 million to $12 million in 2012."
Sales for the second quarter of 2011 were $3.4 billion, compared with
$1.5 billion for the same period in 2010, due primarily to a combination
of volume increases and higher refined petroleum product prices.
Wholesale segment sales were $3.2 billion, or 92% of total sales, for
the second quarter of 2011, compared with $1.4 billion, or 94% of total
sales, for the second quarter of 2010. Commercial fuel sales were $244.0
million, or 7% of total sales, for the second quarter of 2011 compared
with $96.0 million, or 6% of total sales, for the second quarter of 2010.
Combined product volume grew by 53% to 1.1 billion gallons in the second
quarter of 2011, from 735.8 million gallons in the second quarter of
2010. Wholesale segment volume increased to 1.0 billion gallons in the
second quarter of 2011 from 682.0 million gallons in the second quarter
of 2010. Commercial segment volume increased to 89.5 million gallons in
the second quarter of 2011 from 53.8 million gallons in the comparable
period of 2010.
"An important contributor to our strong wholesale volume growth is our
2010 acquisition of gas stations and supply rights from Exxon Mobil,"
Slifka said. "When we purchased these assets last year, we announced an
expected return in the mid-teens. To date, the acquisition has performed
in line with our estimate. We believe that these are among the highest
quality retail gasoline assets in the Northeast. They have performed
well, and we expect that they will continue to do so. In addition to the
Mobil acquisition, volumes have benefitted significantly from our 2010
purchase of the Warex terminal assets as well as an increase in exchange
and supply activity and strong demand for gasoline blend stocks such as
ethanol."
Combined gross profit increased 39% to $44.6 million in the second
quarter of 2011 from $32.0 million in the second quarter of 2010. Within
Global Partners' wholesale segment, distillate net product margin
decreased 19% to $5.2 million in the second quarter of 2011 from $6.5
million in the second quarter of 2010. Wholesale gasoline net product
margin improved 21% to a record $28.0 million from $23.2 million in the
second quarter of 2010. Residual oil net product margin decreased to
$0.6 million in the second quarter of 2011 from $2.4 million in the
second quarter of 2010.
On July 21, the Partnership announced an amendment to its bank revolving
credit agreement to modify certain financial covenants. Interest
borrowing spreads were unchanged. Global Partners' 21-member bank group
unanimously approved the amendment to the $1.25 billion credit facility,
which is committed through May 14, 2014.
The Board of Directors of the Partnership's general partner, Global GP
LLC, declared a quarterly cash distribution of $0.50 per unit ($2.00 per
unit on an annualized basis) on all of its outstanding common units for
the period from April 1 through June 30, 2011. The distribution will be
paid August 12, 2011 to unitholders of record as of the close of
business August 3, 2011.
Business Outlook
"An important priority is to maintain and increase the distribution to
our unitholders over time," said Slifka. "We intend to recommend to the
Board that we maintain the current 50-cent distribution during the next
two quarters of 2011. This recommendation is subject, of course, to
revision each quarter, depending upon a variety of factors, including
then-existing market conditions."
"Despite a less favorable forward-product pricing environment, our Mobil
and Warex acquisitions are performing well. We are taking proactive
steps to better address the forward-product-pricing environment and
adjust our expenses accordingly. At the same time, we are continuing to
invest in key areas to better position the Partnership for future growth
and enhanced profitability," Slifka concluded.
Based on Global's first-half performance and current market conditions
including the forward product pricing curve, the Partnership currently
expects full year 2011 EBITDA of $75 million to $85 million. From a
bottom-line perspective, the Partnership currently expects to report a
net loss in the third quarter, to be profitable in the fourth quarter
and profitable for the full year 2011.
Financial Results Conference Call
Management will review Global Partners' second-quarter 2011 financial
results in a teleconference call for analysts and investors today.
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Time:
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10:00 a.m. ET
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Dial-in numbers:
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(877) 709-8155 (U.S. and Canada)
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(201) 689-8881 (International)
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The call also will be webcast live and archived on the Global Partners'
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:
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compliance with certain financial covenants included in its debt
agreements;
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financial performance without regard to financing methods, capital
structure, income taxes or historical cost basis;
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ability to generate cash sufficient to pay interest on its
indebtedness and to make distributions to its partners;
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operating performance and return on invested capital as compared to
those of other companies in the wholesale, marketing and distribution
of refined petroleum products, without regard to financing methods and
capital structure; and
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the 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, 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.
Forward-looking Statements
Some of the information contained in this news release may contain
forward-looking statements. Forward-looking statements do not relate
strictly to historical or current facts and 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. Estimates for Global Partners LP's
future EBITDA and profits or losses 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 our
future EBITDA and profits or losses will be as estimated.
Forward-looking 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
future results to be materially different from the results stated or
implied in this news release. For additional information about 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, 2010 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 of this news
release, and Global Partners LP expressly disclaims any obligation or
undertaking to update these 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.
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| GLOBAL PARTNERS LP |
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| CONSOLIDATED STATEMENTS OF OPERATIONS |
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| (In thousands, except per unit data) |
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| (Unaudited) |
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Sales
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$
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3,412,148
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$
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1,534,701
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$
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6,963,220
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$
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3,499,446
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Cost of sales
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3,367,577
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1,502,740
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6,862,399
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3,419,717
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Gross profit
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44,571
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31,961
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100,821
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79,729
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Costs and operating expenses:
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Selling, general and administrative expenses
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18,809
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13,891
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39,919
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30,469
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Operating expenses
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17,755
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9,803
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35,559
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18,462
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Amortization expenses
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1,204
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734
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2,367
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1,425
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Total costs and operating expenses
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37,768
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24,428
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77,845
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50,356
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Operating income
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6,803
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7,533
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22,976
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29,373
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Interest expense
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(7,651)
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(4,374)
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(15,531)
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(8,438)
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(Loss) income before income tax expense
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(848)
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3,159
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7,445
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20,935
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Income tax expense
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-
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-
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(387)
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Net (loss) income
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(848)
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3,159
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7,445
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20,548
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Less: General partner's interest in net (loss) income, including
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incentive distribution rights (1)
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(113)
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(107)
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(313)
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(446)
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Limited partners' interest in net (loss) income
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$
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(961)
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$
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3,052
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$
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7,132
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$
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20,102
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Basic net (loss) income per limited partner unit (2)
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$
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(0.04)
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$
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0.18
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$
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0.34
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$
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1.32
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Diluted net (loss) income per limited partner unit (2)
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$
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(0.04)
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$
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0.18
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$
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0.34
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$
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1.30
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Basic weighted average limited partner units outstanding
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21,562
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16,917
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20,996
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15,260
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Diluted weighted average limited partner units outstanding
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21,785
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17,155
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21,205
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15,496
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(1) For 2011, the calculation includes the effect of the public
offerings in November 2010 and February 2011 and, as a result, the
general partner's interest was reduced to 1.06% for the three
months ended June 30, 2011 and, based on a weighted average, 1.12%
for the six months ended June 30, 2011. For 2010, the calculation
includes the effect of the public offering in March 2010 and, as a
result, the general partner's interest was reduced to 1.34% for
the three months ended June 30, 2010 and, based on a weighted
average, 1.61% for the six months ended June 30, 2010.
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(2) 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 (loss) income is divided by the weighted average
limited partner units outstanding in computing the net (loss)
income per limited partner unit.
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| GLOBAL PARTNERS LP |
| CONSOLIDATED BALANCE SHEETS |
| (In thousands) |
| (Unaudited) |
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June 30, |
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December 31, |
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2011 |
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2010 |
| Assets |
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Current assets:
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Cash and cash equivalents
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$
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7,523
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$
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2,361
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Accounts receivable, net
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415,790
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553,066
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Accounts receivable - affiliates
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1,307
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1,230
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Inventories
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635,709
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586,831
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Brokerage margin deposits
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36,057
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15,501
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Fair value of forward fixed price contracts
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1,361
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1,942
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Prepaid expenses and other current assets
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65,348
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36,714
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Total current assets
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1,163,095
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1,197,645
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Property and equipment, net
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413,405
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422,684
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Intangible assets, net
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39,143
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40,065
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Other assets
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13,533
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11,922
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Total assets
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$
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1,629,176
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$
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1,672,316
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| Liabilities and partners' equity |
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Current liabilities:
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Accounts payable
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$
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321,894
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$
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443,469
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Working capital revolving credit facility - current portion
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102,683
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193,198
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Environmental liabilities - current portion
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2,973
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5,535
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Trustee taxes payable
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69,578
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69,828
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Accrued expenses and other current liabilities
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45,392
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30,494
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Obligations on forward fixed price contracts and other derivatives
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1,196
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9,157
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Total current liabilities
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543,716
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751,681
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Working capital revolving credit facility - less current portion
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498,817
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293,502
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Revolving credit facility
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205,000
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|
|
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300,000
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Environmental liabilities - less current portion
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|
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28,132
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|
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28,970
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Other long-term liabilities
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20,828
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|
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|
|
21,347
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Total liabilities
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|
1,296,493
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1,395,500
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Partners' equity
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332,683
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276,816
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Total liabilities and partners' equity
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$
|
1,629,176
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$
|
1,672,316
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| GLOBAL PARTNERS LP |
| FINANCIAL RECONCILIATIONS |
| (In thousands) |
| (Unaudited) |
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Three Months Ended |
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Six Months Ended |
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June 30, |
|
June 30, |
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2011 |
|
2010 |
|
2011 |
|
2010 |
| Reconciliation of net (loss) income to EBITDA |
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|
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|
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Net (loss) income
|
|
$
|
(848)
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|
$
|
3,159
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|
$
|
7,445
|
|
$
|
20,548
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Depreciation and amortization and amortization of deferred financing
fees
|
|
|
8,708
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|
|
4,525
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|
|
17,310
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|
|
8,574
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|
Interest expense
|
|
|
7,651
|
|
|
4,374
|
|
|
15,531
|
|
|
8,438
|
|
Income tax expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
387
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EBITDA
|
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$
|
15,511
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$
|
12,058
|
|
$
|
40,286
|
|
$
|
37,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of net cash provided by (used in) operating
activities to EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
682
|
|
$
|
5,070
|
|
$
|
(59,284)
|
|
$
|
50,564
|
|
Net changes in operating assets and liabilities and certain non-cash
items
|
|
|
7,178
|
|
|
2,614
|
|
|
84,039
|
|
|
(21,442)
|
|
Interest expense
|
|
|
7,651
|
|
|
4,374
|
|
|
15,531
|
|
|
8,438
|
|
Income tax expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
387
|
|
EBITDA
|
|
$
|
15,511
|
|
$
|
12,058
|
|
$
|
40,286
|
|
$
|
37,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of net (loss) income to distributable cash flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(848)
|
|
$
|
3,159
|
|
$
|
7,445
|
|
$
|
20,548
|
|
Depreciation and amortization and amortization of deferred financing
fees
|
|
|
8,708
|
|
|
4,525
|
|
|
17,310
|
|
|
8,574
|
|
Amortization of routine bank refinancings (1)
|
|
|
(793)
|
|
|
-
|
|
|
(1,576)
|
|
|
-
|
|
Maintenance capital expenditures
|
|
|
(1,119)
|
|
|
(573)
|
|
|
(1,488)
|
|
|
(1,057)
|
|
Distributable cash flow
|
|
$
|
5,948
|
|
$
|
7,111
|
|
$
|
21,691
|
|
$
|
28,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of net cash provided by (used in) operating
activities to |
|
|
|
|
|
|
|
|
|
|
|
|
| distributable cash flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
682
|
|
$
|
5,070
|
|
$
|
(59,284)
|
|
$
|
50,564
|
|
Net changes in operating assets and liabilities and certain non-cash
items
|
|
|
7,178
|
|
|
2,614
|
|
|
84,039
|
|
|
(21,442)
|
|
Amortization of routine bank refinancings (1)
|
|
|
(793)
|
|
|
-
|
|
|
(1,576)
|
|
|
-
|
|
Maintenance capital expenditures
|
|
|
(1,119)
|
|
|
(573)
|
|
|
(1,488)
|
|
|
(1,057)
|
|
Distributable cash flow
|
|
$
|
5,948
|
|
$
|
7,111
|
|
$
|
21,691
|
|
$
|
28,065
|
|
|
(1) Commencing with the quarter ended March 31, 2011, our
calculation of distributable cash flow excludes non-cash
amortization of deferred financing fees related to routine bank
refinancings. Amortization of deferred financing fees in connection
with our expansion-related activities will continue to be included.
We believe that this provides a more conservative methodology to
this non-GAAP financial measure. Had this methodology been used
previously, it would not have affected distribution decisions or the
outcome of the recent conversion of subordinated units to common
units. Had this methodology been used for the three and six months
ended June 30, 2010, distributable cash flow would have been lower
by approximately $583,000 and $970,000, respectively.
|
SOURCE: Global Partners LP
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