Global Partners LP (GLP-PB) is a master limited partnership that owns, controls, and has access to a vast network of refined petroleum products and renewable fuel terminals, strategically positioned from Maine to Florida and into the U.S. Gulf States. With a strong foothold in the Northeast and a growing presence in the Mid-Atlantic region, the company has emerged as a dominant player in the wholesale, marketing, storing, and distribution of essential energy resources.
Company History and Challenges
The company’s history can be traced back to its formation in March 2005, when it was established as a master limited partnership. Over the past two decades, Global Partners has strategically expanded its operations through a series of acquisitions and organic growth initiatives, solidifying its position as one of the largest independent owners, suppliers, and operators of gasoline stations and convenience stores in the Northeast and Mid-Atlantic regions. In 2015, the company acquired the Revere Terminal located on Boston Harbor in Revere, Massachusetts, which provided key infrastructure and access for its business operations. However, in 2022, Global Partners completed the sale of the Revere Terminal to Revere MA Owner LLC, entering into a leaseback agreement to continue utilizing certain assets at the terminal.
Throughout its history, Global Partners has faced and overcome various challenges. In 2017, the company received a notice of intent to sue from Earthjustice related to alleged violations of the Clean Air Act at its Albany Terminal. While no further action was taken by the EPA or the New York State Department of Environmental Protection, this presented a potential issue that the company had to address. Additionally, Global Partners has been involved in various lawsuits related to employee health and safety, which it has worked to resolve.
Portfolio and Operations
As of September 30, 2024, Global Partners’ portfolio consisted of 1,589 owned, leased, and/or supplied gasoline stations, including 306 directly operated convenience stores, primarily in the Northeast, as well as 64 gasoline stations located in Texas that are operated by the company’s unconsolidated affiliate, Spring Partners Retail LLC. Additionally, the company is one of the largest distributors of gasoline, distillates, residual oil, and renewable fuels to wholesalers, retailers, and commercial customers in the New England states and New York.
Financials
Global Partners’ financial performance has been robust, with the company reporting total revenue of $16.49 billion, net income of $152.51 million, operating cash flow of $512.44 million, and free cash flow of $110.42 million for the fiscal year ended December 31, 2023. These strong financial metrics underpin the company’s ability to generate consistent returns for its unitholders.
During the first nine months of 2024, Global Partners continued to execute on its strategy, delivering year-over-year gains across key financial metrics. For the third quarter of 2024, the company reported revenue of $8.56 billion, net income of $45.9 million, operating cash flow of $122.7 million, and free cash flow of $313.4 million. Adjusted EBITDA for the quarter was $114 million, up from $77.7 million in the same period of the prior year. Distributable cash flow and adjusted distributable cash flow also increased to $71.1 million and $71.6 million, respectively, from $42.2 million and $43.3 million in the prior-year period.
The company’s Gasoline Distribution and Station Operations (GDSO) segment performed particularly well, with product margin increasing by $31.2 million to $237.7 million in the third quarter of 2024. This was primarily driven by higher fuel margins, which increased by $0.09 to $0.40 per gallon compared to the same quarter in 2023. The Wholesale segment also contributed to the company’s strong performance, with product margin increasing by $33.9 million to $71.1 million, aided by the acquisition of Motiva terminals and more favorable market conditions.
In the Wholesale segment, sales from gasoline and gasoline blendstocks were $1.79 billion for the third quarter of 2024, an increase of 11% compared to the prior-year period, primarily due to an increase in volume sold, partially offset by a decrease in prices. The product margin for gasoline and gasoline blendstocks was $43.02 million, an increase of 111% year-over-year. For the nine months ended September 30, 2024, sales from gasoline and gasoline blendstocks were $4.91 billion, an increase of 17% year-over-year, while the product margin increased 79% to $143.20 million.
Sales from the Wholesale segment’s distillates and other oils were $933.91 million for the third quarter of 2024, an increase of 31% compared to the prior-year period. The product margin from distillates and other oils was $28.12 million, an increase of 67% year-over-year. For the nine-month period, sales of distillates and other oils were $3.12 billion, up 16%, while the product margin decreased 1% to $69.23 million.
In the GDSO segment, gasoline distribution sales were $1.27 billion for the third quarter of 2024, a decrease of 13% compared to the prior-year period. However, the product margin increased 24% to $164.12 million, driven by higher fuel margins per gallon. Station operations generated revenues of $150.94 million in the third quarter of 2024, a decrease of 4% year-over-year, with a product margin of $73.59 million, a decrease of 1%.
The Commercial segment reported sales of $277.13 million in the third quarter of 2024, an increase of 1% compared to the prior-year period, with a product margin of $9.51 million, an increase of 13%. For the nine months ended September 30, 2024, Commercial segment sales were $836.67 million, up 10% year-over-year, while the product margin decreased 3% to $22.70 million.
Liquidity
As of September 30, 2024, Global Partners had a cash balance of $20.57 million and a $1.55 billion senior secured credit facility with $1.09 billion in remaining availability. The company’s current ratio stood at 1.14, while its quick ratio was 0.64, indicating a solid liquidity position.
Global Partners’ strategic initiatives have been key to its success. In April 2024, the company acquired four refined-product terminals from Gulf Oil, further expanding its operational capabilities and supply options in the Northeast. Additionally, the company’s acquisition of a 730-acre liquid energy terminal in East Providence, Rhode Island from ExxonMobil Oil Corporation in October 2024 has enhanced its ability to serve the Rhode Island, Northern Connecticut, and Southern Massachusetts markets.
Strategic Initiatives and Future Outlook
The company’s focus on diversifying its revenue streams and enhancing its operational efficiency has also been evident. Global Partners’ partnership with the Massachusetts Department of Transportation to deploy NEVI-funded electric vehicle (EV) charging infrastructure across its retail network is a testament to its forward-looking approach and commitment to adapting to evolving market dynamics.
Despite the challenges posed by the ongoing COVID-19 pandemic and macroeconomic uncertainty, Global Partners has demonstrated its ability to navigate these turbulent waters. The company’s financial strength, diversified business model, and strategic investments have positioned it well to capitalize on emerging opportunities and continue delivering value to its unitholders.
For the full year of 2024, Global Partners currently expects maintenance capital expenditures in the range of $50 million to $60 million. The company has revised its planned expansion capital expenditures for 2024 to a range of $40 million to $50 million, down from the previous expectation of $60 million to $70 million. This revision depends on factors such as the timing of project completion, availability of equipment and workforce, weather, and unanticipated events or opportunities.
As Global Partners looks ahead, the company remains committed to pursuing accretive acquisitions, investing in organic growth projects, and exploring new avenues for revenue generation. With its comprehensive network of terminals, gasoline stations, and strategic partnerships, Global Partners is poised to play a pivotal role in the evolving energy landscape, powering the communities it serves with essential products and services.
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