Three-Pronged Growth Strategy Pays Off for Global Partners During Q2 2023

WALTHAM, Mass. — Global Partners LP's continued execution of its overall growth strategy to acquire, invest and optimize paid off for the partnership during the second quarter of the 2023.

During the quarter, a joint venture owned by subsidiaries of Global Partners and ExxonMobil Corp. completed its previously disclosed acquisition of 64 Houston-area convenience and fueling facilities, expanding the partnership's retail footprint into Texas. Global Partners invested approximately $69.5 million in cash for a 49.9 percent ownership interest in the joint venture. Under an operations and maintenance agreement, it operates and manages these locations.

[Read more: Recent Acquisitions Bolster Results for Global Partners' 2023 First Quarter]

Additionally, Global Partners' planned acquisition of five refined product terminals from Gulf Oil in Connecticut, Maine, Massachusetts and New Jersey continues to work its way through the regulatory review process. The partnership expects the deal will close in the second half of 2023.

Including the Gulf transaction, the partnership will have announced or completed more than $570 million of acquisitions in less than two years, Global Partners President and CEO Eric Slifka said during the partnership's second quarter 2023 earnings call on Aug. 4.

"Applying our target mid-teens returns, these deals are transformative for Global, building on our competitive position and driving increased value for unitholders," Slifka said.

Bolstered by the partnership's growth strategy, its Wholesale and Gasoline Distribution and Station Operations (GDSO) segments delivered solid results, performing above company expectations, according to Slifka.

For the second quarter ending June 30, GDSO product margin was $199.1 million compared to $198.9 million for the same period of 2022. Product margin from gasoline distribution decreased $2 million to $127.9 million from $129.9 million in the year-earlier period, reflecting a slight decrease in volume sold.

Station operations product margin — which includes convenience store and prepared food sales, sundries and rental income — increased $2.2 million from $69 million in Q2 2022 to $71.2 million in Q2 2023 in part to the acquisition of Tidewater Convenience that closed last September.

At the end of the second quarter, Global Partners' portfolio consisted of 1,646 sites, comprised of 341 company-operated sites, 298 commission agents, 187 leasing dealers and 820 contract dealers. The company-operated sites excludes the 64 sites included in the joint venture with ExxonMobil.

Q2 2023 by the Numbers

For the period ended June 30, Global Partners' adjusted EBITDA was $91.6 million in the second quarter of 2023 vs. $134.9 million in the same period of 2022. Net income was $41.4 million compared to $162.8 million year over year.

Other financial results included:

• Gross profit in the second quarter of 2023 was $242.6 million compared with $281.4 million in the second quarter of 2022.
• Combined product margin, which is gross profit adjusted for depreciation allocated to cost of sales, was $265.5 million in Q2 of 2023 vs. $301.9 million in Q2 of 2022.
• Wholesale product margin was $59.7 million vs. $90.5 million in the year-ago period, primarily due to less favorable market conditions in distillates and residual oil.
• Total sales were $3.8 billion vs. $5.3 billion year over year.

Updates in the Clean Fuel Space

Global Partners continues to make strides in the clean fuel space, Slifka reported. In June, the partnership was the title sponsor for the inaugural Northeast Hydrogen Infrastructure Summit held at the Federal Reserve Bank of Boston. The event brought together a dynamic group of leaders in the hydrogen infrastructure, transportation and policy space, as well as potential users to develop solutions to scale the Northeast hydrogen economy.

Additionally, the company recently brought in its first cargo of renewable diesel to its Albany, N.Y., terminal. From Albany, product can be distributed throughout the Northeast.

"New York's ambitious climate goals coupled with sustainability-oriented customers eager to decarbonize their footprint, made Albany the perfect location to test the product. We are encouraged by the early demand and interest from customers, both existing and new," Slifka said. "Our infrastructure is positioned to play a vital role in storing and distributing fuels that will help our country decarbonize.

"We will continue to create opportunities in the low carbon transportation and power sectors through cultivation of relationships, policy advocacy and problem solving," he added.

[Read more: Global Partners to Shed 50-Plus Nonstrategic Sites]

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.