Global Partners Sees COVID-19 Challenges Ease in Q2 2021

WALTHAM, Mass. — Global Partners LP,  parent company of Alltown Fresh and several other convenience store banners, is seeing an uptick in activity at its gas stations and c-store markets, which was reflected in its recent earnings.

Product margin in the company's gasoline distribution and station operations (GDSO) segment was $162.4 million in the second quarter of 2021, compared to $145.6 million in the second quarter of 2020. 

"Higher fuel volume helped drive the increase in our gasoline distribution product margin, suggesting at least for the moment that the significant demand destruction caused by COVID-19 has begun to subside," President and CEO Eric Slifka said during Global Partners' second- quarter earnings call, held Aug. 6. "Retail margins remained relatively healthy in Q2 of '21 despite a sharp rise in wholesale gasoline prices during the quarter."

In addition, the company's station operations component of GDSO performed well with increased foot traffic and a rise in sales driving up its product margin.

"While we were not immune from the effects of the driver shortages or supply chain issues that have affected many sectors of the economy in recent months, we saw no material impact from those issues," Slifka noted. "Our associates and partners did an outstanding job keeping our stores stocked and minimizing any disruptions."

Looking at the company's overall Q2 results, Global Partners reported net income of $12.1 million, compared to $76.3 million for the same period of 2020. Adjusted EBITDA was $58.7 million, compared to $126.6 million in the year-ago period.

Chief Financial Officer Daphne Foster pointed out that "it's important to keep in mind the difficult comparison with our record performance in Q2 of last year, which benefited from a flattening of the forward product pricing curve, providing an extraordinary benefit to our wholesale segment product margin."

By segment, the GDSO product margin of $162.4 million marked an increase of $16.8 million compared to the year-ago period, as significantly higher retail fuel volumes more than offset a decline in retail fuel margins, Foster said.

The gasoline distribution contribution to product margin was up $4.5 million for the quarter, to $101.3 million, despite a 9-cent-per-gallon decrease in fuel margins to 25 cents per gallon. Retail fuel volume increased by almost 42 percent to 395 million gallons.

"Volumes in the second quarter of 2021 outperformed our expectations, although they continue to be below 2019. In addition, we were pleased with fuel margins in light of the 22-cent-per-gallon rise in wholesale gasoline prices during this year's second quarter," Foster said, adding that wholesale gasoline prices were up approximately 5 cents per gallon during April, 7 cents during May, and an additional 10 cents by the end of June.

The station operations component of GDSO contributed $61.1 million to Q2 product margin, up $12.3 million year over year, driven by an increase in activity at Global Partners' convenience stores. 

At the end of the second quarter, the company's GDSO portfolio consisted of 1,564 sites primarily in the Northeast, including 283 company-operated stores, 283 commissioned agents, 205 lessee dealers, and 793 contract dealers.

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 Partners engages in the transportation of petroleum products and renewable fuels by rail from the midcontinental United States and Canada.