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EX-32.2 - EX-32.2 - GLOBAL PARTNERS LPglp-20200331ex322483981.htm
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EX-31.1 - EX-31.1 - GLOBAL PARTNERS LPglp-20200331ex311a07222.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


 

FORM 10-Q

 


(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended March  31, 2020

 

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from           to           

 

Commission file number 001-32593

 

Global Partners LP

(Exact name of registrant as specified in its charter)

 

Delaware

 

74-3140887

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

P.O. Box 9161
800 South Street
Waltham, Massachusetts 02454-9161
(Address of principal executive offices, including zip code)

 

(781) 894-8800
(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of class

 

Trading Symbol(s)

 

Name of exchange on which registered

Common Units representing limited partner interests

 

GLP

 

New York Stock Exchange

 

 

 

 

 

9.75% Series A Fixed-to-Floating Cumulative Redeemable

 

GLP pr A

 

New York Stock Exchange

Perpetual Preferred Units representing limited partner interests

 

 

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

Large accelerated filer  ☐

 

 

Accelerated filer  ☒

Non-accelerated filer  ☐

 

 

Smaller reporting company  ☐

 

 

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The issuer had 33,995,563 common units outstanding as of May 6, 2020.

 

 

 

 

TABLE OF CONTENTS

 

PART I.     FINANCIAL INFORMATION

 

 

 

 

 

Item 1.     Financial Statements (unaudited) 

 

3

 

 

 

Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 

 

3

 

 

 

Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 

 

4

 

 

 

Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2020 and 2019 

 

5

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 

 

6

 

 

 

Consolidated Statements of Partners’ Equity for the three months ended March 31, 2020 and 2019 

 

7

 

 

 

Notes to Consolidated Financial Statements 

 

8

 

 

 

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations 

 

45

 

 

 

Item 3.     Quantitative and Qualitative Disclosures About Market Risk 

 

71

 

 

 

Item 4.     Controls and Procedures 

 

72

 

 

 

PART II.     OTHER INFORMATION 

 

73

 

 

 

Item 1.     Legal Proceedings 

 

73

 

 

 

Item 1A.   Risk Factors 

 

73

 

 

 

Item 6.     Exhibits 

 

74

 

 

 

SIGNATURES 

 

75

 

 

 

 

 

 

 

 

Item 1.Financial Statements

 

GLOBAL PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

    

2020

    

2019

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

54,389

 

$

12,042

 

Accounts receivable, net

 

 

189,977

 

 

413,195

 

Accounts receivable—affiliates

 

 

10,126

 

 

7,823

 

Inventories

 

 

214,408

 

 

450,482

 

Brokerage margin deposits

 

 

21,135

 

 

34,466

 

Derivative assets

 

 

79,788

 

 

4,564

 

Prepaid expenses and other current assets

 

 

109,179

 

 

81,940

 

Total current assets

 

 

679,002

 

 

1,004,512

 

Property and equipment, net

 

 

1,091,440

 

 

1,104,863

 

Right of use assets, net

 

 

291,004

 

 

296,746

 

Intangible assets, net

 

 

44,052

 

 

46,765

 

Goodwill

 

 

324,341

 

 

324,474

 

Other assets

 

 

31,346

 

 

31,067

 

Total assets

 

$

2,461,185

 

$

2,808,427

 

Liabilities and partners’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

145,698

 

$

373,386

 

Working capital revolving credit facility—current portion

 

 

33,900

 

 

148,900

 

Lease liability—current portion

 

 

67,084

 

 

68,160

 

Environmental liabilities—current portion

 

 

5,009

 

 

5,009

 

Trustee taxes payable

 

 

36,082

 

 

42,932

 

Accrued expenses and other current liabilities

 

 

70,452

 

 

102,802

 

Derivative liabilities

 

 

11,277

 

 

12,698

 

Total current liabilities

 

 

369,502

 

 

753,887

 

Working capital revolving credit facility—less current portion

 

 

175,000

 

 

175,000

 

Revolving credit facility

 

 

242,700

 

 

192,700

 

Senior notes

 

 

690,944

 

 

690,533

 

Long-term lease liability—less current portion

 

 

234,513

 

 

239,349

 

Environmental liabilities—less current portion

 

 

52,884

 

 

54,262

 

Financing obligations

 

 

147,782

 

 

148,127

 

Deferred tax liabilities

 

 

52,666

 

 

42,879

 

Other long—term liabilities

 

 

55,102

 

 

52,451

 

Total liabilities

 

 

2,021,093

 

 

2,349,188

 

Partners’ equity

 

 

 

 

 

 

 

Global Partners LP equity:

 

 

 

 

 

 

 

Series A preferred limited partners (2,760,000 units issued and outstanding at March 31, 2020 and December 31, 2019, respectively)

 

 

67,226

 

 

67,226

 

Common limited partners (33,995,563 units issued and 33,869,880 outstanding at March 31, 2020 and 33,995,563 units issued and 33,867,393 outstanding at December 31, 2019)

 

 

382,590

 

 

398,535

 

General partner interest (0.67% interest with 230,303 equivalent units outstanding at March 31, 2020 and December 31, 2019)

 

 

(3,041)

 

 

(2,620)

 

Accumulated other comprehensive loss

 

 

(8,056)

 

 

(5,076)

 

Total Global Partners LP equity

 

 

438,719

 

 

458,065

 

Noncontrolling interest

 

 

1,373

 

 

1,174

 

Total partners’ equity

 

 

440,092

 

 

459,239

 

Total liabilities and partners’ equity

 

$

2,461,185

 

$

2,808,427

 

The accompanying notes are an integral part of these consolidated financial statements.

3

 

GLOBAL PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

    

 

 

March 31,

 

 

    

2020

      

2019

    

Sales

 

$

2,595,093

 

$

2,979,626

 

Cost of sales

 

 

2,449,355

 

 

2,822,782

 

Gross profit

 

 

145,738

 

 

156,844

 

Costs and operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

40,923

 

 

41,090

 

Operating expenses

 

 

82,553

 

 

82,944

 

Lease exit and termination gain

 

 

 —

 

 

(493)

 

Amortization expense

 

 

2,712

 

 

2,976

 

Net loss on sale and disposition of assets

 

 

743

 

 

553

 

Total costs and operating expenses

 

 

126,931

 

 

127,070

 

Operating income

 

 

18,807

 

 

29,774

 

Interest expense

 

 

(21,601)

 

 

(22,956)

 

(Loss) income before income tax benefit (expense)

 

 

(2,794)

 

 

6,818

 

Income tax benefit (expense)

 

 

5,869

 

 

(24)

 

Net income

 

 

3,075

 

 

6,794

 

Net loss attributable to noncontrolling interest

 

 

201

 

 

332

 

Net income attributable to Global Partners LP

 

 

3,276

 

 

7,126

 

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

 

 

22

 

 

304

 

Less:  Series A preferred limited partner interest in net income

 

 

1,682

 

 

1,682

 

Net income attributable to common limited partners

 

$

1,572

 

$

5,140

 

Basic net income per common limited partner unit

 

$

0.05

 

$

0.15

 

Diluted net income per common limited partner unit

 

$

0.05

 

$

0.15

 

Basic weighted average common limited partner units outstanding

 

 

33,868

 

 

33,753

 

Diluted weighted average common limited partner units outstanding

 

 

34,275

 

 

34,230

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4

 

GLOBAL PARTNERS LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

    

2019

 

Net income

 

$

3,075

 

$

6,794

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

Change in pension liability

 

 

(2,980)

 

 

1,744

 

Total other comprehensive (loss) income

 

 

(2,980)

 

 

1,744

 

Comprehensive income

 

 

95

 

 

8,538

 

Comprehensive loss attributable to noncontrolling interest

 

 

201

 

 

332

 

Comprehensive income attributable to Global Partners LP

 

$

296

 

$

8,870

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

GLOBAL PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

6

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

 

$

3,075

 

$

6,794

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

25,775

 

 

28,205

 

Amortization of deferred financing fees

 

 

1,261

 

 

1,343

 

Amortization of senior notes discount

 

 

 —

 

 

384

 

Bad debt expense

 

 

223

 

 

209

 

Unit-based compensation expense

 

 

288

 

 

795

 

Net loss on sale and disposition of assets

 

 

743

 

 

553

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

Accounts receivable

 

 

222,995

 

 

(69,108)

 

Accounts receivable-affiliate

 

 

(2,303)

 

 

562

 

Inventories

 

 

235,979

 

 

(78,578)

 

Broker margin deposits

 

 

13,331

 

 

(5,177)

 

Prepaid expenses, all other current assets and other assets

 

 

(27,813)

 

 

766

 

Accounts payable

 

 

(227,688)

 

 

34,219

 

Trustee taxes payable

 

 

(6,850)

 

 

(3,155)

 

Change in derivatives

 

 

(76,645)

 

 

26,768

 

Accrued expenses, all other current liabilities and other long-term liabilities

 

 

(24,454)

 

 

(31,617)

 

Net cash provided by (used in) operating activities

 

 

137,917

 

 

(87,037)

 

Cash flows from investing activities

 

 

 

 

 

 

 

Capital expenditures

 

 

(11,690)

 

 

(10,229)

 

Seller note issuances

 

 

(539)

 

 

(640)

 

Proceeds from sale of property and equipment

 

 

1,189

 

 

4,228

 

Net cash used in investing activities

 

 

(11,040)

 

 

(6,641)

 

Cash flows from financing activities

 

 

 

 

 

 

 

Net (payments on) borrowings from working capital revolving credit facility

 

 

(115,000)

 

 

116,200

 

Net borrowings from (payments on) revolving credit facility

 

 

50,000

 

 

(3,000)

 

LTIP units withheld for tax obligations

 

 

(25)

 

 

(8)

 

Noncontrolling interest capital contribution

 

 

400

 

 

 —

 

Distributions to limited partners and general partner

 

 

(19,905)

 

 

(18,997)

 

Net cash (used in) provided by financing activities

 

 

(84,530)

 

 

94,195

 

Cash and cash equivalents

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

42,347

 

 

517

 

Cash and cash equivalents at beginning of period

 

 

12,042

 

 

8,121

 

Cash and cash equivalents at end of period

 

$

54,389

 

$

8,638

 

Supplemental information

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

18,526

 

$

18,191

 

 

The accompanying notes are an integral part of these consolidated financial statements.

6

GLOBAL PARTNERS LP

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY 

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners' Equity

 

 

 

 

 

 

 

 

 

Series A

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Preferred

 

Common

 

General

 

Other

 

 

 

 

Total

 

 

 

Limited

 

Limited

 

Partner

 

Comprehensive

 

Noncontrolling

 

Partners’

 

Three months ended March 31, 2020

    

Partners

    

Partners

    

Interest

    

Loss

    

Interest

    

Equity

 

Balance at December 31, 2019

 

$

67,226

 

$

398,535

 

$

(2,620)

 

$

(5,076)

 

$

1,174

 

$

459,239

 

Net income (loss)

 

 

1,682

 

 

1,572

 

 

22

 

 

 —

 

 

(201)

 

 

3,075

 

Noncontrolling interest capital contribution

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

400

 

 

400

 

Distributions to limited partners and general partner

 

 

(1,682)

 

 

(17,848)

 

 

(443)

 

 

 —

 

 

 —

 

 

(19,973)

 

Unit-based compensation

 

 

 —

 

 

288

 

 

 —

 

 

 —

 

 

 —

 

 

288

 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

(2,980)

 

 

 —

 

 

(2,980)

 

LTIP units withheld for tax obligations

 

 

 —

 

 

(25)

 

 

 —

 

 

 —

 

 

 —

 

 

(25)

 

Dividends on repurchased units

 

 

 —

 

 

68

 

 

 —

 

 

 —

 

 

 —

 

 

68

 

Balance at March 31, 2020

 

$

67,226

 

$

382,590

 

$

(3,041)

 

$

(8,056)

 

$

1,373

 

$

440,092

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners' Equity

 

 

 

 

 

 

 

 

 

Series A

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Preferred

 

Common

 

General

 

Other

 

 

 

 

Total

 

 

 

Limited

 

Limited

 

Partner

 

Comprehensive

 

Noncontrolling

 

Partners’

 

Three months ended March 31, 2019

    

Partners

    

Partners

    

Interest

    

Loss

    

Interest

    

Equity

 

Balance at December 31, 2018

 

$

67,226

 

$

437,874

 

$

(2,509)

 

$

(5,260)

 

$

1,863

 

$

499,194

 

Net income (loss)

 

 

1,682

 

 

5,140

 

 

304

 

 

 —

 

 

(332)

 

 

6,794

 

Distributions to limited partners and general partner

 

 

(1,682)

 

 

(16,998)

 

 

(317)

 

 

 —

 

 

 —

 

 

(18,997)

 

Unit-based compensation

 

 

 —

 

 

795

 

 

 —

 

 

 —

 

 

 —

 

 

795

 

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

1,744

 

 

 —

 

 

1,744

 

LTIP units withheld for tax obligation

 

 

 —

 

 

(8)

 

 

 —

 

 

 —

 

 

 —

 

 

(8)

 

Balance at March 31, 2019

 

$

67,226

 

$

426,803

 

$

(2,522)

 

$

(3,516)

 

$

1,531

 

$

489,522

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

7

Table of Contents 

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1.    Organization and Basis of Presentation

 

Organization

 

Global Partners LP (the “Partnership”) is a master limited partnership formed in March 2005.  The Partnership owns, controls or has access to one of the largest terminal networks of refined petroleum products and renewable fuels in Massachusetts, Maine, Connecticut, Vermont, New Hampshire, Rhode Island, New York, New Jersey and Pennsylvania (collectively, the “Northeast”).  The Partnership is one of the region’s largest independent owners, suppliers and operators of gasoline stations and convenience stores.  As of March 31, 2020, the Partnership had a portfolio of 1,536 owned, leased and/or supplied gasoline stations, including 283 directly operated convenience stores, primarily in the Northeast.  The Partnership is also 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.  The Partnership engages in the purchasing, selling, gathering, blending, storing and logistics of transporting petroleum and related products, including gasoline and gasoline blendstocks (such as ethanol), distillates (such as home heating oil, diesel and kerosene), residual oil, renewable fuels, crude oil and propane and in the transportation of petroleum products and renewable fuels by rail from the mid‑continent region of the United States and Canada.

 

Global GP LLC, the Partnership’s general partner (the “General Partner”), manages the Partnership’s operations and activities and employs its officers and substantially all of its personnel, except for most of its gasoline station and convenience store employees who are employed by Global Montello Group Corp. (“GMG”), a wholly owned subsidiary of the Partnership.

 

The General Partner, which holds a 0.67% general partner interest in the Partnership, is owned by affiliates of the Slifka family.  As of March 31, 2020, affiliates of the General Partner, including its directors and executive officers and their affiliates, owned 7,402,711 common units, representing a 21.8% limited partner interest.

 

Recent Event

 

Amended Credit Agreement—On May 7, 2020, the Partnership and certain of its subsidiaries entered into the fourth amendment to third amended and restated credit agreement which, among other things, provides temporary adjustments to certain covenants and reduces the total aggregate commitment by $130.0 million.  See Note 8 for additional information.

 

Basis of Presentation

 

The accompanying consolidated financial statements as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 reflect the accounts of the Partnership.  Upon consolidation, all intercompany balances and transactions have been eliminated.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial condition and operating results for the interim periods.  The interim financial information, which has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019 and notes thereto contained in the Partnership’s Annual Report on Form 10-K.  The significant accounting policies described in Note 2, “Summary of Significant Accounting Policies,” of such Annual Report on Form 10-K are the same used in preparing the accompanying consolidated financial statements, except as described in Note 19, “New Accounting Standards,” as it relates to the adoption of Accounting Standard Update (“ASU”) ASU 2016-13, “Measurement of Credit Losses on Financial

8

Table of Contents 

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Instruments,” including modifications to that standard thereafter, and now codified as Accounting Standards Codification 326 (“ASC 326”), which the Partnership adopted on January 1, 2020.

 

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results of operations that will be realized for the entire year ending December 31, 2020.  The consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

Noncontrolling Interest

 

The Partnership acquired a 60% interest in Basin Transload, LLC (“Basin Transload”) on February 1, 2013.  After evaluating Accounting Standards Codification (“ASC”) Topic 810, “Consolidations,” the Partnership concluded it is appropriate to consolidate the balance sheet and statements of operations of Basin Transload based on an evaluation of the outstanding voting interests.  Amounts pertaining to the noncontrolling ownership interest held by third parties in the financial position and operating results of the Partnership are reported as a noncontrolling interest in the accompanying consolidated balance sheets and statements of operations.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The outbreak of COVID-19 across the United States and the responses of governmental bodies (federal, state and municipal), companies and individuals, including mandated and/or voluntary restrictions to mitigate the spread of the virus,  have caused a significant economic downturn.  The uncertainty surrounding the short and long-term impact of COVID-19, including the inability to project the timing of an economic recovery, may have an impact on the Partnership’s use of estimates.  Among the estimates made by management are (i) estimated fair value of assets and liabilities acquired in a business combination and identification of associated goodwill and intangible assets, (ii) fair value of derivative instruments, (iii) accruals and contingent liabilities, (iv) allowance for credit losses, (v) assumptions used to evaluate goodwill, property and equipment and intangibles for impairment, (vi) environmental and asset retirement obligation provisions, (vii) cost of sales accrual, and (viii) weighted average discount rate used in lease accounting.  Although the Partnership believes its estimates are reasonable, actual results could differ from these estimates.

 

Concentration of Risk

 

Due to the nature of the Partnership’s businesses and its reliance, in part, on consumer travel and spending patterns, the Partnership may experience more demand for gasoline during the late spring and summer months than during the fall and winter.  Travel and recreational activities are typically higher in these months in the geographic areas in which the Partnership operates, increasing the demand for gasoline.  Therefore, the Partnership’s volumes in gasoline are typically higher in the second and third quarters of the calendar year.  However, the COVID-19 pandemic has had a significantly negative impact on gasoline demand and the extent and duration of that impact is uncertain.  As demand for some of the Partnership’s refined petroleum products, specifically home heating oil and residual oil for space heating purposes, is generally greater during the winter months, heating oil and residual oil volumes are generally higher during the first and fourth quarters of the calendar year.  These factors may result in fluctuations in the Partnership’s quarterly operating results.

 

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the Partnership’s product sales and other revenues as a percentage of the consolidated sales for the periods presented:

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Gasoline sales: gasoline and gasoline blendstocks (such as ethanol)

 

67

%  

67

%  

Distillates (home heating oil, diesel and kerosene), residual oil and propane sales

 

29

%  

29

%  

Crude oil sales and crude oil logistics revenue

 

 —

%  

 1

%  

Convenience store sales, rental income and sundries

 

 4

%  

 3

%  

Total

 

100

%  

100

%  

 

The following table presents the Partnership’s product margin by segment as a percentage of the consolidated product margin for the periods presented:

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Wholesale segment

 

 3

%  

19

%

Gasoline Distribution and Station Operations segment

 

93

%  

77

%

Commercial segment

 

 4

%  

 4

%

Total

 

100

%  

100

%

 

See Note 15, “Segment Reporting,” for additional information on the Partnership’s operating segments.

 

None of the Partnership’s customers accounted for greater than 10% of total sales for the three months ended March 31, 2020 and 2019.

 

 

Note 2.     Revenue from Contract Customers

 

Disaggregation of Revenue

 

The following table provides the disaggregation of revenue from contracts with customers and other sales by segment for the periods presented (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020

 

Revenue from contracts with customers:

    

Wholesale

    

GDSO

    

Commercial

    

Total

 

Refined petroleum products, renewable fuels, crude oil and propane

 

$

430,340

 

$

745,615

 

$

147,614

 

$

1,323,569

 

Station operations

 

 

 —

 

 

80,901

 

 

 —

 

 

80,901

 

Total revenue from contracts with customers

 

 

430,340

 

 

826,516

 

 

147,614

 

 

1,404,470

 

Other sales:

 

 

 

 

 

 

 

 

 

Revenue originating as physical forward contracts and exchanges

 

 

1,056,598

 

 

 —

 

 

115,760

 

 

1,172,358

 

Revenue from leases

 

 

540

 

 

17,725

 

 

 —

 

 

18,265

 

Total other sales

 

 

1,057,138

 

 

17,725

 

 

115,760

 

 

1,190,623

 

Total sales

 

$

1,487,478

 

$

844,241

 

$

263,374

 

$

2,595,093

 

 

10

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

Revenue from contracts with customers:

    

Wholesale

    

GDSO

    

Commercial

    

Total

 

Refined petroleum products, renewable fuels, crude oil and propane

 

$

543,917

 

$

830,172

 

$

178,342

 

$

1,552,431

 

Station operations

 

 

 —

 

 

86,627

 

 

 —

 

 

86,627

 

Total revenue from contracts with customers

 

 

543,917

 

 

916,799

 

 

178,342

 

 

1,639,058

 

Other sales:

 

 

 

 

 

 

 

 

 

Revenue originating as physical forward contracts and exchanges

 

 

1,164,772

 

 

 —

 

 

157,247

 

 

1,322,019

 

Revenue from leases

 

 

517

 

 

18,032

 

 

 —

 

 

18,549

 

Total other sales

 

 

1,165,289

 

 

18,032

 

 

157,247

 

 

1,340,568

 

Total sales

 

$

1,709,206

 

$

934,831

 

$

335,589

 

$

2,979,626

 

 

Nature of Goods and Services

 

Revenue from Contracts with Customers (ASC 606):

 

·

Refined petroleum products, renewable fuels, crude oil and propane sales—Under the Partnership’s Wholesale, Gasoline Distribution and Station Operations (“GDSO”) and Commercial segments, revenue is recognized at the point where control of the product is transferred to the customer and collectability is reasonably assured. 

 

·

Station operations—Revenue from convenience store sales of grocery and other merchandise and sundries (such as car wash sales and lottery and ATM commissions) is recognized at the time of the sale to the customer.

 

Other Revenue:

 

·

Revenue Originating as Physical Forward Contracts and Exchanges—The Partnership’s commodity contracts and derivative instrument activity include physical forward commodity sale contracts.  The Partnership does not take the normal purchase and sale exemption available under ASC 815, “Derivatives and Hedging,” for any of its physical forward contracts.  This income is recognized under ASC 815 and is included in sales at the contract value at the point where control of the product is transferred to the customer.  Income from net exchange differentials included in sales is recognized under ASC 845, “Nonmonetary Transactions,” upon delivery of product to exchange partners.

 

·

Revenue from Leases—The Partnership has rental income from gasoline stations and cobranding arrangements and lease income from space leased to several unrelated third parties at several of the Partnership’s terminals. 

 

Transaction Price Allocated to Remaining Performance Obligations

 

The Partnership has elected certain of the optional exemptions from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue.  Accordingly, the Partnership applies the practical expedient in paragraph ASC 606-10-50-14 to its contracts with customers where revenue is tied to a market-index and does not disclose information about variable consideration from remaining performance obligations for which the Partnership recognizes revenue.

 

The fixed component of estimated revenues expected to be recognized in the future related to performance obligations tied to a market index that are unsatisfied (or partially unsatisfied) at the end of the reporting period are not significant.

11

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GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Contract Balances

 

A receivable, which is included in accounts receivable, net in the accompanying consolidated balance sheets, is recognized in the period the Partnership provides services when its right to consideration is unconditional.  In contrast, a contract asset will be recognized when the Partnership has fulfilled a contract obligation but must perform other obligations before being entitled to payment. 

 

The nature of the receivables related to revenue from contracts with customers and other revenue, as well as contract assets, are the same, given they are related to the same customers and have the same risk profile and securitization.    Payment terms on invoiced amounts are typically 2 to 30 days.

 

A contract liability is recognized when the Partnership has an obligation to transfer goods or services to a customer for which the Partnership has received consideration (or the amount is due) from the customer.  The Partnership had no significant contract liabilities at both March 31, 2020 and December 31, 2019. 

 

Note 3.    Net Income Per Common Limited Partner Unit

 

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 or losses is assumed to be allocated to the common unitholders and to the General Partner’s general partner interest.

 

Common units outstanding as reported in the accompanying consolidated financial statements at March 31, 2020 and December 31, 2019 excludes 125,683 and  128,170 common units, respectively, held on behalf of the Partnership pursuant to its repurchase program (see Note 13).  These units are not deemed outstanding for purposes of calculating net income per common limited partner unit (basic and diluted).    For all periods presented below, the Series A Preferred Units (as defined in Note 14)  are not potentially dilutive securities based on the nature of the conversion feature. 

 

12

Table of Contents 

GLOBAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides a reconciliation of net income and the assumed allocation of net income (loss) to the common limited partners (after deducting amounts allocated to Series A preferred unitholders) for purposes of computing net income per common limited partner unit for the periods presented (in thousands, except per unit data):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020

 

 

Three Months Ended March 31, 2019

 

 

 

 

 

  

Common

  

General

  

 

 

 

 

 

 

  

Common

  

General

  

 

 

 

 

 

 

 

 

Limited

 

Partner

 

 

 

 

 

 

 

 

Limited

 

Partner

 

 

 

 

Numerator:

  

Total

  

Partners

  

Interest

  

IDRs

 

 

Total

  

Partners

  

Interest

  

IDRs

 

Net income attributable to Global Partners LP

 

$

3,276

 

$

3,254

 

$

22

 

$

 —

 

 

$

7,126

 

$

6,822

 

$

304

 

$

 —

 

Declared distribution

 

$

13,519

 

$

13,428

 

$

91

 

$

 —

 

 

$

17,711

 

$

17,338

 

$

117

 

$

256

 

Assumed allocation of undistributed net loss

 

 

(10,243)

 

 

(10,174)

 

 

(69)

 

 

 —

 

 

 

(10,585)

 

 

(10,516)

 

 

(69)

 

 

 —

 

Assumed allocation of net income

 

$

3,276

 

$

3,254

 

$

22

 

$

 —

 

 

$

7,126

 

$

6,822

 

$

48

 

$

256

 

Less net income attributable to Series A preferred limited partners

 

 

 

 

 

1,682

 

 

 

 

 

 

 

 

 

 

 

 

1,682

 

 

 

 

 

 

 

Net income attributable to common limited partners

 

 

 

 

$

1,572

 

 

 

 

 

 

 

 

 

 

 

$

5,140

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common units outstanding

 

 

 

 

 

33,868

 

 

 

 

 

 

 

 

 

 

 

 

33,753

 

 

 

 

 

 

 

Dilutive effect of phantom units

 

 

 

 

 

407

 

 

 

 

 

 

 

 

 

 

 

 

477

 

 

 

 

 

 

 

Diluted weighted average common units outstanding

 

 

 

 

 

34,275

 

 

 

 

 

 

 

 

 

 

 

 

34,230

 

 

 

 

 

 

 

Basic net income per common limited partner unit

 

 

 

 

$

0.05