8-K: Global Partners LP Announces Fourth Quarter and Full Year 2023 Financial Results, Highlights Strategic Acquisitions

Global Partners LP reports its fourth quarter and full year 2023 financial results, showcasing a transformational year marked by strategic acquisitions and solid performance.

Summary

• Global Partners LP released its financial results for the fourth quarter and full year of 2023.
• The company's net income for the fourth quarter was $55.3 million, or $1.41 per diluted common limited partner unit, compared to $57.5 million, or $1.54 per unit, in the same period of 2022.
• EBITDA for the fourth quarter of 2023 was $110.9 million, up from $105.3 million in the fourth quarter of 2022.
• Adjusted EBITDA was $112.1 million for the fourth quarter of 2023, compared to $106.9 million in the same period of 2022.
• Distributable cash flow (DCF) was $59.4 million in the fourth quarter of 2023, compared to $57.3 million in the same period of 2022.
• Adjusted DCF was $58.8 million in the fourth quarter of 2023, compared to $57.3 million in 2022.
• Gross profit for the fourth quarter of 2023 was $280.4 million, slightly down from $281.6 million in the same period of 2022.
• Combined product margin was $305.7 million in the fourth quarter of 2023, compared to $303.8 million in the same period of 2022.
• Total sales were $4.4 billion in both the fourth quarters of 2023 and 2022.
• Total volume was 1.6 billion gallons in the fourth quarter of 2023, compared to 1.4 billion gallons in the same period of 2022.
• In January 2024, Global completed a private offering of $450 million in senior unsecured notes due 2032.
• In December 2023, Global completed the acquisition of 25 liquid energy terminals from Motiva Enterprises for $313.2 million in cash.
• A cash distribution of $0.7000 per unit ($2.80 per unit on an annualized basis) was announced for the period from October 1, 2023, through December 31, 2023.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the strategic acquisitions and solid financial performance, although there are some minor decreases in certain metrics. The company's future outlook is also positive.

Positives

• The company's EBITDA and adjusted EBITDA increased in the fourth quarter of 2023 compared to the same period in 2022.
• Distributable cash flow and adjusted distributable cash flow also increased in the fourth quarter of 2023 compared to the same period in 2022.
• The acquisition of 25 liquid energy terminals from Motiva Enterprises significantly expands the company's terminal storage capacity.
• The 25-year take-or-pay throughput agreement with Motiva provides a stable revenue stream.
• The joint venture acquisition with ExxonMobil diversifies the company's market presence.
• The company's retail fuel margins were higher in the fourth quarter of 2023 compared to the fourth quarter of 2022.
• The company has a strong balance sheet and cash flows to execute on strategic priorities.
• The company completed a $450 million private offering of senior unsecured notes.

Negatives

• Net income decreased slightly in the fourth quarter of 2023 compared to the same period in 2022.
• Gross profit decreased slightly in the fourth quarter of 2023 compared to the same period in 2022.
• Wholesale segment product margin decreased due to less favorable market conditions in distillates.
• Commercial segment product margin decreased due to less favorable market conditions in bunkering.
• GDSO segment sales decreased in the fourth quarter of 2023 compared to the same period in 2022.
• GDSO volume decreased in the fourth quarter of 2023 compared to the same period in 2022.

Risks

• The company's performance is subject to market conditions, particularly in the wholesale and commercial segments.
• Economic conditions in the United States could impact the demand for the company's products and services.
• The company's future performance is subject to a wide range of business risks, uncertainties, and factors as described in their SEC filings.

Future Outlook

The company begins 2024 with a strong balance sheet and cash flows, positioning it to continue executing on its strategic priorities.

Management Comments

• 2023 was a transformational year for Global, as we completed the strategic acquisition of 25 liquid energy terminals from Motiva Enterprises and completed the first acquisition in our retail joint venture with ExxonMobil, said Eric Slifka, the Partnerships President and Chief Executive Officer.
• The Motiva transaction creates an exciting opportunity for our supply, storage, terminalling and retail networks in some of the fastest-growing regions of the country.
• With these two deals, our market diversification and growth potential have never been stronger.
• We capped the year with a solid fourth-quarter performance, highlighted by higher retail fuel margins compared with the fourth quarter of 2022.
• Our ability to deliver strong performance in a less volatile market environment demonstrates the value of our integrated asset base, diverse portfolio of liquid energy products and the operational skill of our exceptional team.

Industry Context

The announcement reflects a trend in the energy sector where companies are focusing on expanding their infrastructure and diversifying their market presence through strategic acquisitions and joint ventures. The acquisition of terminals and retail sites is a common strategy to increase market share and operational efficiency.

Comparison to Industry Standards

• Global Partners' acquisition of 25 liquid energy terminals from Motiva is similar to other midstream companies expanding their storage and transportation infrastructure.
• The 25-year take-or-pay agreement is a common practice in the industry to secure long-term revenue streams, similar to agreements seen with companies like Kinder Morgan and Energy Transfer.
• The joint venture with ExxonMobil is comparable to other partnerships between fuel suppliers and retail operators, such as the partnerships between Marathon and Speedway.
• The company's focus on increasing retail fuel margins is a key performance indicator for companies in the downstream energy sector, similar to how companies like Sunoco and Casey's General Stores are evaluated.
• The financial metrics reported by Global Partners, such as EBITDA and distributable cash flow, are standard measures used by investors to assess the performance of master limited partnerships in the energy sector, similar to how Enterprise Products Partners and Magellan Midstream Partners are evaluated.

Stakeholder Impact

• Shareholders will receive a cash distribution of $0.7000 per unit for the fourth quarter of 2023.
• The strategic acquisitions and strong financial performance are expected to benefit shareholders.
• The company's growth and diversification efforts may lead to increased job opportunities for employees.
• The company's expanded terminal network and retail presence may improve service for customers.
• The 25-year take-or-pay agreement with Motiva provides a stable revenue stream for the company and its suppliers.

Next Steps

• Management will review the Partnerships fourth-quarter and full-year 2023 financial results in a teleconference call for analysts and investors.
• The company will continue to execute on its strategic priorities.

Key Dates

Keywords

Financial Results, EBITDA, Distributable Cash Flow, Acquisition, Energy Terminals, Retail Fuel, Motiva, ExxonMobil, Senior Notes, Product Margin, Gasoline, Distillates