Global Partners Credits Business Model for Record 2022 Performance
WALTHAM, Mass. — Global Partners LP President and CEO Eric Slifka credits the partnership's fourth quarter and full-year 2022 performance to the resilience of its business model, the strength of its assets, and the value that its team delivers for customers at its gas stations, convenience markets and liquid energy terminals.
"We navigated a constrained supply chain and steep commodity price volatility throughout the year. Diligent planning, effective fuel inventory management and solid execution by the entire team allowed us to drive increased profitability, highlighted by healthy margin contributions from all three segments of our business," he said during the company's fourth-quarter and full-year 2022 earnings call on Feb. 28.
For the fourth quarter of 2022, combined product margin was $303.8 million vs. $214.4 million in the same period of 2021. Full-year combined product margin was $1.1 billion vs. $802 million the previous year.
Looking at the partnership's various segments, the gasoline distribution and stations operations (GDSO) segment product margin was up $46.1 million to $223.2 million in the fourth quarter. For the full year, GDSO product margin was up $209 million to $856.6 million, with fuel margins increasing 9 cents per gallon to 36 cents per gallon.
Wholesale segment product margin was $70.7 million in the fourth quarter of 2022 compared with $32.6 million in the same period of 2021. The increase was mostly driven by more favorable market conditions in other oils and related products, primarily in distillates, partly offset by less favorable market conditions in gasoline and gasoline blendstocks, largely ethanol, according to Global Partners.
Commercial segment product margin was $9.9 million in the fourth quarter of 2022 compared with $4.8 million in the same period of 2021, primarily reflecting an increase in bunkering activity.
The increases in the fourth quarter and full year of 2022 were largely due to the partnership's wholesale and GDSO segment, which experienced higher fuel volume and margin, as well as increased activity in its convenience stores, according to Gregory Hanson, chief financial officer.
By the Numbers
Global Partners' adjusted EBITDA for the fourth quarter of 2022 was $106.9 million, compared to $66 million for the same period in 2021. For the full year, adjusted EBITDA was $485.2 million, compared to $244.3 million for the same period in 2021.
Net income for the fourth quarter was $57.5 million vs. $19.3 million for the same period of 2021. For full-year 2022, net income increased to $362.2 million from $60.8 million in the prior year.
Total sales for the partnership were $4.4 billion in the fourth quarter of 2022 vs. $4.1 billion a year ago. Wholesale segment sales increased to $2.6 billion in Q4 2022 vs. $2.5 billion in Q4 2021. GDSO segment sales were $1.5 billion vs. $1.3 billion in the year-ago period. Commercial segment sales were $0.3 billion in each of the fourth quarters of 2022 and 2021.
Operating expenses increased $25.2 million to $118 million for the fourth quarter of 2022 and $91.7 million to $445.3 million for the full year. The increases were largely associated with GDSO operations, including its recent acquisitions, reflecting higher credit card fees related to increases in volume and price, higher salary and rent expenses, partially due to greater activity at the partnership's c-stores, and increases in its environmental reserve and maintenance and repair expenses.
At the end of 2022, Global Partners' GDSO portfolio consisted of 1,673 sites, comprised of 353 company-operated sites, 295 commission agents, 192 leasing dealers and 833 contract dealers.
Transaction Highlights
Consistent with Global Partners' focus on strategic transactions that strengthen its long-term earnings power, the partnership closed on more than $255 million in retail acquisitions.
With the purchases of Consumers Petroleum of Connecticut Inc., Miller Oil Co. and Tidewater Convenience, it added more than 60 company-operated convenience markets and related fuel operations in 2022, as well as fuel supply arrangements at more than 55 additional sites.
The Consumers Petroleum acquisition strengthened Global Partners' footprint in the New England region, while the Miller Oil and Tidewater deals expanded its reach into Virginia.
"The retail fuel M&A [merger-and-acquisition] pipeline remains very active and we continue to evaluate potential opportunities that align with our financial and operating objectives," Slifka said.
Additionally, in December, the partnership entered into a purchase agreement with Gulf Oil Limited Partnership in which Global will acquire five refined-products terminals for $273 million in cash. The terminals, located in Connecticut, Maine, Massachusetts and New Jersey, have an aggregate storage capacity of approximately 3.9 million barrels.
The transaction is expected to close in the first half of 2023, subject to customary closing conditions, including regulatory approval.
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 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, Global engages in the transportation of petroleum products and renewable fuels by rail from the mid-continental United States and Canada.