Global Partners LP (NYSE:GLP) today reported financial results for the
quarter and twelve months ended December 31, 2009.

Net income for the fourth quarter of 2009 was $12.2 million, or $0.91
per diluted limited partner unit, compared with net income of $12.7
million, or $0.95 per diluted limited partner unit, for the same period
in 2008. Fourth-quarter 2009 results included a $1.5 million curtailment
gain resulting from an amendment freezing the Partnership’s Pension
Plan. Results for the fourth quarter of 2008 included a $2.8 million
benefit resulting from a favorable adjustment of an environmental
reserve that reduced operating expenses.

Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the three months ended December 31, 2009 was $20.7 million, compared
with $22.8 million for the same period in 2008.

Distributable cash flow for the fourth quarter of 2009 was $15.2
million, compared with $15.9 million for the comparable quarter in 2008.

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 non-GAAP financial measures to their most
directly comparable GAAP financial measures for the three and twelve
months ended December 31, 2009 and 2008.

“We delivered excellent fourth-quarter and full-year results in 2009 by
continually optimizing the margin and volume balance across our supply
chain to maximize returns,” said Eric Slifka, president and chief
executive officer of Global Partners. “On an operating basis, excluding
a prior-year’s one-time gain-on-sale of $14.1 million, we achieved
record net income, EBITDA and distributable cash flow in 2009. At the
same time, we continued to invest in infrastructure expansion,
technology and personnel to further grow the business. These results
speak to the quality of our network of terminal assets as well as our
ability to configure our storage profile to capitalize on opportunities
in the marketplace.”

Sales for the fourth quarter of 2009 were $1.7 billion, essentially
unchanged from the same period in 2008. Wholesale segment sales were
$1.6 billion, or 94% of total sales, for the fourth quarter of 2009,
compared with $1.6 billion, or 94% of total sales, for the fourth
quarter of 2008. Commercial segment sales were $102.6 million, or 6% of
total sales, for the fourth quarter of 2009, compared with $98.4
million, or 6% of total sales, for the fourth quarter of 2008.

Combined product volume totaled 863.4 million gallons in the fourth
quarter of 2009, compared with 1.0 billion gallons in the fourth quarter
of 2008. Wholesale segment volume decreased to 805.2 million gallons in
the fourth quarter of 2009 from 943.9 million gallons for the same
period in 2008. Commercial segment volume decreased to 58.2 million
gallons in the fourth quarter of 2009 from 60.1 million gallons for the
same period in 2008.

“Although fourth-quarter product volumes were affected by conservation
and the overall economic environment, our strategy of focused margin
management enabled us to offset the variance in volumes and, at the same
time, price our products competitively and add value for customers
across each phase of our business,” Slifka said.

Combined gross profit improved 18% to $42.1 million in the fourth
quarter of 2009 from $35.6 million for the same period in 2008. Within
Global Partners’ wholesale segment, distillate net product margin
increased 26% to $32.3 million in the fourth quarter of 2009 from $25.6
million in the year-earlier period. Gasoline net product margin improved
49% to $5.8 million from $3.9 million in the fourth quarter of 2008.
Residual oil net product margin decreased 39% to $2.5 million in the
fourth quarter of 2009 from $4.1 million in the comparable period of
2008.
Financial Results for the Twelve Months Ended December 31, 2009 and
2008
Net income for the twelve months ended December 31, 2009 was $34.1
million, or $2.51 per diluted limited partner unit, a 62% increase from
net income of $21.1 million, or $1.57 per diluted limited partner unit,
for the same period in 2008. The Partnership had approximately 13.3
million and 13.1 million diluted weighted average limited partner units
outstanding for the twelve months ended December 31, 2009 and 2008,
respectively.

EBITDA for the twelve months ended December 31, 2009 increased 15% to
$66.7 million from $58.1 million for the same period in 2008.

Distributable cash flow for 2009 increased 33% to $45.4 million,
compared with $34.1 million for the comparable period in 2008.

Sales for the twelve months ended December 31, 2009 decreased to $5.8
billion compared with $9.0 billion for the same period in 2008 due to
lower refined petroleum product prices. Wholesale segment sales were
$5.5 billion, or 94% of total sales, for 2009, compared with $8.6
billion, or 95% of total sales, for the same period of 2008. Commercial
segment sales were $363.3 million, or 6% of total sales, for 2009,
compared with $429.9 million, or 5% of total sales, for 2008.

Combined product volume was 3.4 billion gallons in 2009, compared with
3.6 billion gallons in 2008. Wholesale segment volume was 3.2 billion
gallons, versus 3.3 billion gallons in 2008. Commercial segment volume
increased 12% to 226.2 million gallons in 2009, compared with 202.1
million gallons for 2008.

Combined gross profit increased 25% to $149.8 million in 2009 from
$119.8 million for 2008. Within Global Partners’ wholesale segment,
distillate net product margin increased 36% to $95.1 million from $70.0
million in the year-earlier period. Wholesale gasoline net product
margin rose 12% to $40.7 million in 2009 from $36.5 million in 2008.
Wholesale residual oil net product margin decreased to $9.4 million in
2009 from $11.7 million for 2008.
Recent Developments
As previously announced, 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
October 1 through December 31, 2009.

In a separate news release this morning, Global Partners announced a
terminal and rail expansion project that will add 180,000 barrels of
ethanol storage at its refined petroleum product terminal in Albany,
NY. The project, expected to be operational in 2010, is being jointly
developed with Canadian Pacific Railway (CP) and includes
modifications that will enable the terminal to schedule the delivery
of 80-car trains of ethanol. The Partnership will connect the terminal
to CP’s adjacent Kenwood Yard rail facility via pipeline. In a
separate and complementary project, Global Partners also is converting
two distillate storage tanks to gasoline storage at the Albany
facility. These initiatives will increase the total storage capacity
of the Partnership’s Albany terminal to approximately 1.2 million
barrels, up from 737,000 barrels when Global Partners acquired the
terminal in May 2007.

In December 2009, unitholders approved an amendment replacing the
terms “operating surplus” and “adjusted operating surplus” in Global
Partners’ partnership agreement with the term “distributable cash
flow” as the metric to measure the Partnership’s ability to fund
distributions from earnings and to test whether the subordinated units
are entitled to convert into common units.
Business Outlook
“The results Global Partners achieved in 2009 underscore our strategic
commitment to optimizing our terminal infrastructure to generate
logistically advantaged, profitable, long-term growth,” Slifka said.
“Our expertise in sourcing, storing, blending and marketing refined
petroleum products provides us with the ability to add margin value
across our terminal network. By capitalizing on organic opportunities
such as our new Albany rail expansion and other projects, we are well
positioned for 2010.”
Financial Results Conference Call
Management will review Global Partners’ fourth-quarter 2009 financial
results in a teleconference call for analysts and investors 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 MeasuresEBITDA
EBITDA is a non-GAAP financial measure used as a supplemental financial
measure by management and external users of Global Partners’
consolidated financial statements, such as investors, commercial banks
and research analysts, to assess the Partnership’s:

compliance with certain financial covenants included in its debt
agreements;

financial performance without regard to financing methods, capital
structure, income taxes or historical cost basis;

ability to generate cash sufficient to pay interest on its
indebtedness and to make distributions to its partners;

operating performance and return on invested capital as compared to
those of other companies in the wholesale, marketing and distribution
of refined petroleum products, 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 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. In
December 2009, we amended our partnership agreement to restate the
provisions governing conversion of the subordinated units to use
distributable cash flow to test whether we have “earned” the minimum
quarterly distribution. 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.
About Global Partners LPGlobal
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® 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, 2008, Form 10-Q for the quarter ended September 30, 2009
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 LPCONSOLIDATED STATEMENTS OF INCOME(In thousands, except per unit data)(Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended
Twelve Months Ended

December 31,
December 31,

2009

2008
2009

2008

 

Sales

$

1,698,976

$

1,728,343

$

5,818,411

$

9,019,123

Cost of sales

 

1,656,924

 

 

1,692,769

 

 

5,668,583

 

 

8,899,332

 

Gross profit

42,052

35,574

149,828

119,791

 

Costs and operating expenses:

Selling, general and administrative expenses

15,815

10,348

61,048

42,060

Operating expenses

8,765

5,563

35,043

31,788

Amortization expenses

 

636

 

 

738

 

 

2,986

 

 

2,937

 

Total costs and operating expenses

 

25,216

 

 

16,649

 

 

99,077

 

 

76,785

 

 

Operating income

16,836

18,925

50,751

43,006

 

Interest expense

 

(4,248

)

 

(5,385

)

 

(15,188

)

 

(20,799

)

 

Income before income tax expense

12,588

13,540

35,563

22,207

 

Income tax expense

 

(354

)

 

(857

)

 

(1,429

)

 

(1,152

)

 

Net income

12,234

12,683

34,134

21,055

 

 

Less: General partner’s interest in net income, including
incentive distribution rights

 

(262

)

 

(270

)

 

(791

)

 

(564

)

 

Limited partners’ interest in net income

$

11,972

 

$

12,413

 

$

33,343

 

$

20,491

 

 

Basic net income per limited partner unit(1)

$

0.92

 

$

0.95

 

$

2.56

 

$

1.57

 

 

Diluted net income per limited partner unit(1)

$

0.91

 

$

0.95

 

$

2.51

 

$

1.57

 

 

Basic weighted average limited partner units outstanding

 

12,961

 

 

13,071

 

 

13,017

 

 

13,071

 

 

Diluted weighted average limited partner units outstanding

 

13,207

 

 

13,071

 

 

13,279

 

 

13,071

 

 

 

 

(1) On January 1, 2009, the Partnership adopted guidance issued by
the Financial Accounting Standards Board related to the calculation
of earnings per unit. This guidance provides that net income for the
current period is to be reduced by the amount of available cash that
will be distributed with respect to that period for purposes of
calculating net income per unit. Any residual amount representing
undistributed net income (or losses) is assumed to be allocated to
the ownership interests in accordance with the contractual
provisions of the partnership agreement. 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 loss. Accordingly, the Partnership’s
undistributed net income is assumed to be allocated to the limited
partners’ interest and to the general partner’s interest. The
Partnership adopted this guidance on a retroactive basis which had
an immaterial impact on the limited partners’ interest in net income
and net income per limited partner unit (basic and diluted) for the
three and twelve months ended December 31, 2008.

GLOBAL PARTNERS LPCONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited)

 

 

 

 

 

December 31,

December 31,

2009

2008Assets

Current assets:

Cash and cash equivalents

$

662

$

945

Accounts receivable, net

335,912

246,638

Accounts receivable – affiliates

1,565

2,518

Inventories

465,923

240,346

Brokerage margin deposits

18,059

8,991

Fair value of forward fixed price contracts

3,089

161,787

Prepaid expenses and other current assets

37,648

32,082

Total current assets

862,858

693,307

 

Property and equipment, net

159,292

161,988

Intangible assets, net

28,557

31,403

Other assets

 

1,996

 

2,564

 

Total assets

$

1,052,703

$

889,262

 

 
Liabilities and partners’ equity

Current liabilities:

Accounts payable

$

243,449

$

219,783

Working capital revolving credit facility – current portion

221,711

208,210

Environmental liabilities – current portion

3,296

4,191

Accrued expenses and other current liabilities

77,604

54,054

Income taxes payable

461

520

Obligations on forward fixed price contracts and other derivatives

 

21,114

 

7,954

Total current liabilities

567,635

494,712

 

Working capital revolving credit facility – less current portion

240,889

154,090

Acquisition facility

71,200

71,200

Environmental liabilities – less current portion

2,254

2,377

Accrued pension benefit cost

2,751

8,853

Deferred compensation

1,840

1,663

Other long-term liabilities

 

8,714

 

12,899

Total liabilities

895,283

745,794

 

Partners’ equity

 

157,420

 

143,468

 

Total liabilities and partners’ equity

$

1,052,703

$

889,262

GLOBAL PARTNERS LPFINANCIAL RECONCILIATIONS(In thousands)(Unaudited)

 

 

 

 

 

 

 

Three Months Ended
Twelve Months Ended

December 31,
December 31,

2009
2008
2009
2008Reconciliation of net income to EBITDA

Net income

$

12,234

$

12,683

$

34,134

$

21,055

Depreciation and amortization and amortization of deferred financing
fees

3,892

3,885

15,909

15,126

Interest expense

4,248

5,385

15,188

20,799

Income tax expense

 

354

 

 

857

 

 

1,429

 

 

1,152

 

EBITDA

$

20,728

 

$

22,810

 

$

66,660

 

$

58,132

 

 
Reconciliation of net cash (used in) provided by operating
activities to EBITDA

Net cash (used in) provided by operating activities

$

(86,907

)

$

45,096

$

(61,129

)

$

99,220

Net changes in operating assets and liabilities and certain non-cash
items

103,033

(28,528

)

111,172

(63,039

)

Interest expense

4,248

5,385

15,188

20,799

Income tax expense

 

354

 

 

857

 

 

1,429

 

 

1,152

 

EBITDA

$

20,728

 

$

22,810

 

$

66,660

 

$

58,132

 

 
Reconciliation of net income to distributable cash flow

Net income

$

12,234

$

12,683

$

34,134

$

21,055

Depreciation and amortization and amortization of deferred financing
fees

3,892

3,885

15,909

15,126

Maintenance capital expenditures

 

(955

)

 

(715

)

 

(4,610

)

 

(2,120

)

Distributable cash flow

$

15,171

 

$

15,853

 

$

45,433

 

$

34,061

 

 
Reconciliation of net cash (used in) provided by operating
activities to distributable cash flow

Net cash (used in) provided by operating activities

$

(86,907

)

$

45,096

$

(61,129

)

$

99,220

Net change in operating assets and liabilities and certain non-cash
items

103,033

(28,528

)

111,172

(63,039

)

Maintenance capital expenditures

 

(955

)

 

(715

)

 

(4,610

)

 

(2,120

)

Distributable cash flow

$

15,171

 

$

15,853

 

$

45,433

 

$

34,061