Global Partners Closes Out a 'Transformational' 2023
WALTHAM, Mass. — This past year was "a transformational year" for Global Partners LP, according to President and CEO Eric Slifka, referring to the partnership's strategic acquisition of 25 liquid energy terminals from Motiva Enterprises as well as the first acquisition in its retail joint venture with ExxonMobil.
"These accretive deals position the company to drive new growth opportunities and increase our earnings power," he said during Global Partners' recent fourth quarter and full year 2024 earnings call. "With these two deals, our market diversification and growth potential have never been stronger."
Through a joint venture with ExxonMobil, the convenience retailer signed an agreement to acquire 64 Houston-area convenience stores and fueling facilities from the Landmark Group earlier in 2023. The assets were purchased under the joint venture Spring Partners Retail LLC, with Global Partners acting as the management company and operator.
"This transaction enables us to apply our extensive operational and management expertise in the growing Houston metro area," Slifka said.
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At the end of 2023, the partnership acquired 25 liquid energy terminals from Motiva, nearly doubling its storage capacity by adding terminals in seven new states. Through the $313.2 million deal, Global Partners now owns or leases 49 liquid energy terminals in the United States, totaling approximately 18.3 million barrels in shell capacity.
The transaction is underpinned by a 25-year take-or-pay throughput agreement with Motiva, the anchor tenant at the terminals, which includes minimum annual revenue commitments.
"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," Slifka explained, noting that the integration of the Motiva assets is underway and the partnership expects to achieve target acquisition multiples below seven times in the second year of ownership.
He also provided an update on the partnership's agreement to acquire five refined product terminals from Gulf Oil in Connecticut, Maine, Massachusetts and New Jersey, noting that the refined products terminal in Portland, Maine, will be removed from the transaction and that the purchase price of the deal will be reduced to $212.3 million from $273 million.
The partnership continues to work through the regulatory process, he added.
By the Numbers
Bolstered by an integrated asset base and diverse portfolio of liquid energy products, Global Partners capped the year with a solid fourth-quarter performance, Slifka reported.
Looking at the partnership's various segments, the Gasoline Distribution and Station Operations (GDSO) segment product margin was up from $223.2 million in the fourth quarter of 2022 to $245.4 million in the fourth quarter of 2023. Product margin from gasoline distribution increased to $177.8 million from approximately $156 million in the year-ago period, primarily due to higher fuel margins (cents per gallon).
Station operations product margin — which includes convenience store and prepared food sales, sundries and rental income — increased from $67.2 million in Q4 2022 to $67.6 million in Q4 2023.
Wholesale segment product margin was $51.9 million in the fourth quarter of 2023, compared to $70.7 million in the same period of 2022. The decrease is primarily due to less favorable market conditions in distillates, partially offset by more favorable market conditions in gasoline and residual oil, according to Global Partners.
Commercial segment product margin was $8.4 million in the fourth quarter of 2023, compared to $9.9 million in the same period of 2022, primarily due to less favorable market conditions in bunkering activity.
Other Financials
Global Partners' adjusted EBITDA for the fourth quarter of 2023 was $112.1 million, compared to $106.9 million for the same period in 2022. Net income for the fourth quarter was $55.3 million vs. $57.5 million for the same period of 2022.
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Total sales for the partnership were $4.4 billion in both the fourth quarters of 2023 and 2022. Wholesale segment sales increased to $2.7 billion in Q4 2023 vs. $2.6 billion in Q4 2022. GDSO segment sales were $1.4 billion vs. $1.5 billion in the year-ago period. Commercial segment sales were $0.3 billion in both fourth quarters.
Total volume was 1.6 billion gallons in the fourth quarter of 2023 vs. 1.4 billion gallons in the year-ago period. Wholesale segment volume was 1.1 billion gallons for the quarter ended Dec. 31, 2023, vs. 860.1 million gallons for the quarter ended Dec. 31, 2022. GDSO volume was 404.9 million gallons in Q4 2023 compared to 419.3 million gallons in the same period of 2022. Commercial segment volume was 110.7 million gallons in the fourth quarter of 2023 compared to 100.6 million gallons for the year-ago period.
"We begin 2024 with a strong balance sheet and cash flows that position us to continue to execute our strategic priorities," Slifka concluded.
For the quarter ended Dec. 31, 2023, Global Partners' portfolio consisted of 1,627 sites, comprised of 341 company-operated sites, 302 commission agents, 182 leasing dealers and 802 contract dealers.
With approximately 1,700 locations primarily in the Northeast, Waltham-based Global Partners is one of the region's largest independent owners, suppliers and operators of gasoline stations and convenience stores. Global Partners also owns, controls or has access to one of the largest terminal networks in New England and New York, through which it distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers. In addition, it engages in the transportation of petroleum products and renewable fuels by rail from the mid-continental United States and Canada.