Table of Contents
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 September 30, 2022
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 9161800 South StreetWaltham, 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 each class
Trading Symbol(s)
Name of each exchange on which registered
Common Units representing limited partner interests
GLP
New York Stock Exchange
9.75% Series A Fixed-to-Floating Rate Cumulative Redeemable
GLP pr A
Perpetual Preferred Units representing limited partner interests
9.50% Series B Fixed Rate Cumulative Redeemable
GLP pr B
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 November 2, 2022.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
3
Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021
Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021
4
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021
5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021
6
Consolidated Statements of Partners’ Equity for the nine months ended September 30, 2022 and 2021
7
Notes to Consolidated Financial Statements
8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
36
Item 3. Quantitative and Qualitative Disclosures About Market Risk
61
Item 4. Controls and Procedures
63
PART II. OTHER INFORMATION
64
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
SIGNATURES
66
Item 1.Financial Statements
GLOBAL PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
September 30,
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
15,486
10,849
Accounts receivable, net
430,081
411,194
Accounts receivable—affiliates
3,470
1,139
Inventories
427,731
509,517
Brokerage margin deposits
28,581
33,658
Derivative assets
21,758
11,652
Prepaid expenses and other current assets
73,994
87,076
Total current assets
1,001,101
1,065,085
Property and equipment, net
1,217,006
1,099,348
Right of use assets, net
287,691
280,284
Intangible assets, net
28,972
26,014
Goodwill
410,826
328,135
Other assets
29,666
32,299
Total assets
2,975,262
2,831,165
Liabilities and partners’ equity
Current liabilities:
Accounts payable
549,464
353,296
Working capital revolving credit facility—current portion
—
204,700
Lease liability—current portion
64,245
62,352
Environmental liabilities—current portion
4,582
4,642
Trustee taxes payable
38,344
44,223
Accrued expenses and other current liabilities
144,181
138,733
Derivative liabilities
24,425
31,654
Total current liabilities
825,241
839,600
Working capital revolving credit facility—less current portion
150,000
Revolving credit facility
99,000
43,400
Senior notes
740,589
739,310
Long-term lease liability—less current portion
231,704
228,203
Environmental liabilities—less current portion
62,749
48,163
Financing obligations
142,526
144,444
Deferred tax liabilities
65,199
56,817
Other long—term liabilities
58,794
53,461
Total liabilities
2,225,802
2,303,398
Partners’ equity
Series A preferred limited partners (2,760,000 units issued and outstanding at September 30, 2022 and December 31, 2021)
67,226
Series B preferred limited partners (3,000,000 units issued and outstanding at September 30, 2022 and December 31, 2021)
72,305
Common limited partners (33,995,563 units issued and 33,948,203 outstanding at September 30, 2022 and 33,995,563 units issued and 33,953,227 outstanding at December 31, 2021)
617,281
392,086
General partner interest (0.67% interest with 230,303 equivalent units outstanding at September 30, 2022 and December 31, 2021)
71
(1,948)
Accumulated other comprehensive loss
(7,423)
(1,902)
Total partners’ equity
749,460
527,767
Total liabilities and partners’ equity
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
Three Months Ended
Nine Months Ended
Sales
4,626,747
3,323,910
14,450,935
9,156,382
Cost of sales
4,298,368
3,120,852
13,634,842
8,630,247
Gross profit
328,379
203,058
816,093
526,135
Costs and operating expenses:
Selling, general and administrative expenses
65,123
54,674
182,274
155,029
Operating expenses
119,549
92,151
327,307
260,848
Amortization expense
2,118
2,742
6,734
8,138
Net loss (gain) on sale and disposition of assets
292
(192)
(81,468)
(675)
Long-lived asset impairment
188
Total costs and operating expenses
187,082
149,375
434,847
423,528
Operating income
141,297
53,683
381,246
102,607
Interest expense
(19,047)
(19,660)
(61,577)
(60,339)
Income before income tax expense
122,250
34,023
319,669
42,268
Income tax expense
(10,811)
(386)
(14,938)
(789)
Net income
111,439
33,637
304,731
41,479
Less: General partner’s interest in net income, including incentive distribution rights
2,027
993
5,370
2,581
Less: Preferred limited partner interest in net income
3,463
10,389
8,746
Net income attributable to common limited partners
105,949
29,181
288,972
30,152
Basic net income per common limited partner unit
3.12
0.86
8.52
0.89
Diluted net income per common limited partner unit
8.48
0.88
Basic weighted average common limited partner units outstanding
33,917
33,897
33,932
33,934
Diluted weighted average common limited partner units outstanding
34,008
34,087
34,058
34,225
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Other comprehensive loss:
Change in fair value of cash flow hedges
(3,760)
(2,936)
Change in pension liability
(1,068)
(350)
(5,521)
1,270
Total other comprehensive loss
(4,110)
(1,666)
Comprehensive income
110,371
29,527
299,210
39,813
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
78,572
76,172
Amortization of deferred financing fees
4,084
3,810
Bad debt expense
(303)
(20)
Unit-based compensation expense
1,521
563
Write-off of financing fees
365
Net gain on sale and disposition of assets
Changes in operating assets and liabilities:
Accounts receivable
(18,584)
(133,591)
Accounts receivable-affiliate
(2,331)
19
87,356
(27,726)
Broker margin deposits
5,077
(13,656)
Prepaid expenses, all other current assets and other assets
14,226
28,637
196,168
107,076
(5,879)
3,257
Change in derivatives
(17,335)
32,097
Accrued expenses, all other current liabilities and other long-term liabilities
11,071
(18,938)
Net cash provided by operating activities
576,906
99,057
Cash flows from investing activities
Acquisitions
(255,268)
(18,034)
Capital expenditures
(65,829)
(65,557)
Seller note issuances
(1,690)
Proceeds from sale of property and equipment, net
126,395
3,804
Net cash used in investing activities
(194,702)
(81,477)
Cash flows from financing activities
Net proceeds from issuance of Series B preferred units
72,167
Net (payments on) borrowings from working capital revolving credit facility
(354,700)
68,500
Net borrowings from (payments on) revolving credit facility
55,600
(78,600)
Repurchase of common units
(2,567)
(3,772)
LTIP units withheld for tax obligations
(1,559)
(2,209)
Distributions to limited partners and general partner
(74,341)
(68,015)
Net cash used in financing activities
(377,567)
(11,929)
Increase in cash and cash equivalents
4,637
5,651
Cash and cash equivalents at beginning of period
9,714
Cash and cash equivalents at end of period
15,365
Supplemental information
Cash paid during the period for interest
59,649
52,775
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY
Series A
Series B
Accumulated
Preferred
Common
General
Other
Total
Limited
Partner
Comprehensive
Partners’
Three and nine months ended September 30, 2022
Partners
Interest
Income (Loss)
Equity
Balance at December 31, 2021
1,682
1,781
25,845
1,177
30,485
(1,682)
(1,781)
(19,887)
(1,012)
(24,362)
Unit-based compensation
204
Other comprehensive loss
(1,507)
(6)
Dividends on repurchased units
25
Balance at March 31, 2022
398,267
(1,783)
(3,409)
532,606
157,178
2,166
162,807
(20,227)
(1,117)
(24,807)
502
(2,946)
Distribution equivalent rights
(324)
26
Balance at June 30, 2022
532,855
(734)
(6,355)
665,297
(20,567)
(1,222)
(25,252)
815
(1,553)
(247)
29
Balance at September 30, 2022
Three and nine months ended September 30, 2021
Balance at December 31, 2020
428,842
(2,169)
1,600
495,499
Issuance of Series B preferred units
Net income (loss)
138
(6,856)
739
(4,297)
(18,698)
(642)
(21,022)
259
Other comprehensive income
2,098
(26)
16
Balance at March 31, 2021
403,537
(2,072)
3,698
544,694
7,827
849
12,139
(19,547)
(906)
(23,916)
352
346
(10)
786
Balance at June 30, 2021
389,173
(2,129)
4,044
530,619
(48)
LTIP units withheld for tax obligation
(2,173)
37
Balance at September 30, 2021
396,623
(2,042)
(66)
534,046
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 September 30, 2022, the Partnership had a portfolio of 1,684 owned, leased and/or supplied gasoline stations, including 356 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 September 30, 2022, affiliates of the General Partner, including its directors and executive officers and their affiliates, owned 6,311,366 common units, representing a 18.6% limited partner interest.
COVID-19
Although the impact of COVID-19 has declined to date, it continues to make its presence felt in the Partnership’s corporate offices, at its retail sites and terminal locations and in the global supply chain. The Partnership continues to monitor these impacts while providing essential products and services, prioritizing the safety of the Partnership’s employees, customers and vendors in the communities where it operates.
2022 Events
Sale of the Revere Terminal—On June 28, 2022, the Partnership completed the sale of its terminal located on Boston Harbor in Revere, Massachusetts for a purchase price of $150.0 million in cash. See Note 11.
Amendments to the Credit Agreement—On March 9, 2022, the Partnership and certain of its subsidiaries entered into the sixth amendment to third amended and restated credit agreement which, among other things, increased the total aggregate commitment to $1.55 billion. On March 30, 2022, the Partnership and certain of its subsidiaries entered into the seventh amendment to third amended and restated credit agreement which, among other things, refreshed the accordion feature under the credit agreement. See Note 7 for additional information on these amendments.
Acquisitions— On September 20, 2022, the Partnership acquired substantially all of the assets from Tidewater Convenience, Inc. (“Tidewater”). See Note 2.
On February 1, 2022, the Partnership acquired substantially all of the retail motor fuel assets from Miller Oil Co., Inc. (“Miller Oil”). See Note 2.
On January 25, 2022, the Partnership acquired substantially all of the assets from Connecticut-based Consumers Petroleum of Connecticut, Incorporated (“Consumers Petroleum”). See Note 2.
Basis of Presentation
The financial results of Tidewater, Miller Oil and Consumers Petroleum since the respective acquisition date are included in the accompanying statements of operations for the three and nine months ended September 30, 2022. The accompanying consolidated financial statements as of September 30, 2022 and December 31, 2021 and for the three and nine months ended September 30, 2022 and 2021 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, 2021 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.
The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results of operations that will be realized for the entire year ending December 31, 2022. The consolidated balance sheet at December 31, 2021 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, 2021.
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 months. 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, COVID-19 has had a negative impact on gasoline demand and the extent and duration of that impact remains 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.
9
The following table presents the Partnership’s product sales and other revenues as a percentage of the consolidated sales for the periods presented:
Gasoline sales: gasoline and gasoline blendstocks (such as ethanol)
%
76
68
73
Distillates (home heating oil, diesel and kerosene) and residual oil sales
22
Crude oil sales and crude oil logistics revenue
1
Convenience store and prepared food sales, rental income and sundries
100
The following table presents the Partnership’s product margin by segment as a percentage of the consolidated product margin for the periods presented:
Wholesale segment
23
18
Gasoline Distribution and Station Operations segment
74
79
72
80
Commercial segment
2
See Note 13, “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 and nine months ended September 30, 2022 and 2021.
Note 2. Business Combinations
Acquisition from Tidewater Convenience, Inc.—On September 20, 2022, the Partnership acquired substantially all of the assets from Tidewater in a cash transaction. The acquisition includes 14 company-operated Tidewater convenience stores and 1 fuel site, all located in Virginia. The purchase price was approximately $40.4 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.
The preliminary fair values of the assets acquired and liabilities assumed as of September 20, 2022, the acquisition date, are set forth in the table below. The excess of the purchase price over the aggregate acquisition date value of identifiable net assets acquired was recorded as goodwill and assigned to the GDSO segment. Substantially all of the goodwill is expected to be deductible for tax purposes. These preliminary acquisition date values were generally determined through established and generally accepted valuation techniques and are subject to change during the measurement period as valuations are finalized. As a result, the acquisition accounting is not complete, and additional information that existed at the acquisition date may become known to the Partnership during the remainder of the measurement period. As of the filing date of this Form 10-Q, the Partnership is still in the process of valuing the assets acquired from Tidewater, including inventory, property and equipment and right of use assets, and liabilities.
10
The following table presents the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):
Assets purchased:
Inventory
1,125
Property and equipment
40,706
Right of use assets
828
Total identifiable assets purchased
42,659
Liabilities assumed:
Environmental liabilities
(2,154)
Lease liability
(508)
Other non-current liabilities
(293)
Total liabilities assumed
(2,955)
Net identifiable assets acquired
39,704
738
Net assets acquired
40,442
The fair values of the remaining assets and liabilities noted above approximate their carrying values at September 20, 2022, the acquisition date.
In connection with the acquisition of Tidewater, the Partnership incurred acquisition costs of approximately $0.3 million for each of the three and nine months ended September 30, 2022, which are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.
Acquisition from Miller Oil Co., Inc.—On February 1, 2022, the Partnership acquired substantially all of the retail motor fuel assets from Miller Oil in a cash transaction. The acquisition includes 21 company-operated Miller’s Neighborhood Market convenience stores and 2 fuel sites that are either owned or leased, including lessee dealer and commissioned agent locations, all located in Virginia, and 34 fuel supply only sites, primarily in Virginia. The purchase price was approximately $60.1 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.
The preliminary fair values of the assets acquired and liabilities assumed as of February 1, 2022, the acquisition date, are set forth in the table below. The excess of the purchase price over the aggregate acquisition date value of identifiable net assets acquired was recorded as goodwill and assigned to the GDSO segment. Substantially all of the goodwill is expected to be deductible for tax purposes. These preliminary acquisition date values were generally determined through established and generally accepted valuation techniques and are subject to change during the measurement period as valuations are finalized. As a result, the acquisition accounting is not complete, and additional information that existed at the acquisition date may become known to the Partnership during the remainder of the measurement period. As of the filing date of this Form 10-Q, the Partnership is still in the process of valuing the assets acquired from Miller Oil, including inventory, property and equipment, right of use assets, intangible assets and liabilities.
11
2,249
37,530
5,139
Intangibles
5,555
837
51,310
(1,190)
(4,816)
(5,969)
(1,384)
(13,359)
37,951
22,148
60,099
During the three months ended September 30, 2022, the Partnership recorded the following changes to the preliminary purchase accounting, which resulted in an increase in goodwill to $22.1 million at September 30, 2022 from $21.8 million at June 30, 2022 (in thousands):
Goodwill – June 30, 2022
21,800
Decrease in deferred tax asset
128
Increase in environmental liabilities
220
Goodwill – September 30, 2022
The fair values of the remaining assets and liabilities noted above approximate their carrying values at February 1, 2022, the acquisition date.
The Partnership utilized accounting guidance related to intangible assets which lists the pertinent factors to be considered when estimating the useful life of an intangible asset. These factors include, in part, a review of the expected use by the Partnership of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets and legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset. The Partnership amortizes these intangible assets over their estimated useful lives which is consistent with the estimated undiscounted future cash flows of these assets.
As part of the purchase price allocation, identifiable intangible assets include dealer supply contracts that are being amortized over three to eight years. Amortization expense related to the intangible assets was $0.2 million and $0.6 million for the three and nine months ended September 30, 2022, respectively.
In connection with the acquisition of Miller Oil, the Partnership incurred acquisition costs of approximately $0.2 million and $1.0 million for the three and nine months ended September 30, 2022, respectively, which are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.
Acquisition from Consumers Petroleum of Connecticut Incorporated—On January 25, 2022, the Partnership acquired substantially all of the assets from Consumers Petroleum in a cash transaction. The acquisition includes 26 company-owned Wheels convenience stores and related fuel operations located in Connecticut and 22 fuel-supply only
12
sites located in Connecticut and New York. The purchase price, subject to post-closing adjustments, was approximately $154.7 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.
The preliminary fair values of the assets acquired and liabilities assumed as of January 25, 2022, the acquisition date, are set forth in the table below. The excess of the purchase price over the aggregate acquisition date value of identifiable net assets acquired was recorded as goodwill and assigned to the GDSO segment. Substantially all of the goodwill is expected to be deductible for tax purposes. These preliminary acquisition date values were generally determined through established and generally accepted valuation techniques and are subject to change during the measurement period as valuations are finalized. As a result, the acquisition accounting is not complete, and additional information that existed at the acquisition date may become known to the Partnership during the remainder of the measurement period. As of the filing date of this Form 10-Q, the Partnership is still in the process of valuing the assets acquired from Consumers Petroleum, including inventory, property and equipment, right of use assets, intangible assets and liabilities.
2,475
88,262
4,482
4,136
Other non-current assets
366
99,721
(7,161)
(2,372)
(609)
(10,334)
89,387
65,340
154,727
During the three months ended September 30, 2022, the Partnership recorded the following change to the preliminary purchase accounting, which resulted in an increase in goodwill to $65.3 million at September 30, 2022 from $65.2 million at June 30, 2022 (in thousands):
65,210
130
The fair values of the remaining assets and liabilities noted above approximate their carrying values at January 25, 2022, the acquisition date.
The Partnership utilized accounting guidance related to intangible assets which lists the pertinent factors to be considered when estimating the useful life of an intangible asset. These factors include, in part, a review of the expected use by the Partnership of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets and legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset.
13
The Partnership amortizes these intangible assets over their estimated useful lives which is consistent with the estimated undiscounted future cash flows of these assets.
As part of the purchase price allocation, identifiable intangible assets include dealer supply contracts that are being amortized over four to eight years. Amortization expense related to the intangible assets was $0.2 million and $0.4 million for the three and nine months ended September 30, 2022, respectively
In connection with the acquisition of Consumers Petroleum, the Partnership incurred acquisition costs of approximately $0.1 million and $1.0 million for the three and nine months ended September 30, 2022, respectively, which are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.
Supplemental Pro Forma Information—Revenues and net income not included in the Partnership’s consolidated operating results for Tidewater, Miller Oil and Consumers Petroleum from January 1, 2022 through the respective acquisition date were immaterial.
Note 3. 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 September 30, 2022
Revenue from contracts with customers:
Wholesale
GDSO
Commercial
Refined petroleum products, renewable fuels and crude oil
752,652
1,631,078
199,386
2,583,116
Station operations
138,978
Total revenue from contracts with customers
1,770,056
2,722,094
Other sales:
Revenue originating as physical forward contracts and exchanges
1,757,406
126,764
1,884,170
Revenue from leases
508
19,975
20,483
Total other sales
1,757,914
1,904,653
Total sales
2,510,566
1,790,031
326,150
Three Months Ended September 30, 2021
586,951
1,151,251
133,011
1,871,213
114,807
1,266,058
1,986,020
1,248,474
69,535
1,318,009
562
19,319
19,881
1,249,036
1,337,890
1,835,987
1,285,377
202,546
14
Nine Months Ended September 30, 2022
2,778,837
4,721,475
665,143
8,165,455
360,211
5,081,686
8,525,666
5,509,881
354,398
5,864,279
2,042
58,948
60,990
5,511,923
5,925,269
8,290,760
5,140,634
1,019,541
Nine Months Ended September 30, 2021
1,890,838
2,930,446
228,895
5,050,179
301,459
3,231,905
5,351,638
3,492,524
254,534
3,747,058
1,693
55,993
57,686
3,494,217
3,804,744
5,385,055
3,287,898
483,429
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 September 30, 2022 and December 31, 2021.
Note 4. Inventories
The Partnership hedges substantially all of its petroleum and ethanol inventory using a variety of instruments, primarily exchange-traded futures contracts. These futures contracts are entered into when inventory is purchased and are either designated as fair value hedges against the inventory on a specific barrel basis for inventories qualifying for fair value hedge accounting or not designated and maintained as economic hedges against certain inventory of the Partnership on a specific barrel basis. Changes in fair value of these futures contracts, as well as the offsetting change in fair value on the hedged inventory, are recognized in earnings as an increase or decrease in cost of sales. All hedged inventory designated in a fair value hedge relationship is valued using the lower of cost, as determined by specific identification, or net realizable value, as determined at the product level. All petroleum and ethanol inventory not
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designated in a fair value hedging relationship is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value. Renewable Identification Numbers (“RINs”) inventory is carried at the lower of historical cost, on a first-in, first-out basis, or net realizable value. Convenience store inventory is carried at the lower of historical cost, based on a weighted average cost method, or net realizable value.
Inventories consisted of the following (in thousands):
Distillates: home heating oil, diesel and kerosene
116,792
244,067
Gasoline
130,261
123,824
Gasoline blendstocks
46,915
50,599
Crude oil
2,618
3,678
Residual oil
97,960
60,286
Renewable identification numbers (RINs)
3,418
4,218
Convenience store inventory
29,767
22,845
In addition to its own inventory, the Partnership has exchange agreements for petroleum products and ethanol with unrelated third-party suppliers, whereby it may draw inventory from these other suppliers and suppliers may draw inventory from the Partnership. Positive exchange balances are accounted for as accounts receivable and amounted to $0.7 million and $1.3 million at September 30, 2022 and December 31, 2021, respectively. Negative exchange balances are accounted for as accounts payable and amounted to $38.5 million and $20.6 million at September 30, 2022 and December 31, 2021, respectively. Exchange transactions are valued using current carrying costs.
Note 5. Goodwill
The following table presents changes in goodwill, all of which has been allocated to the Gasoline Distribution and Station Operations (“GDSO”) segment (in thousands):
Acquisition of Tidewater (1)
Acquisition of Miller Oil (1)
Acquisition of Consumers Petroleum (1)
Dispositions (2)
(5,535)
Note 6. Property and Equipment
Property and equipment consisted of the following (in thousands):
Buildings and improvements
1,410,991
1,327,002
Land
536,927
457,260
Fixtures and equipment
41,202
38,646
Idle plant assets
30,500
Construction in process
50,644
52,716
Capitalized internal use software
33,610
32,740
Total property and equipment
2,103,874
1,938,864
Less accumulated depreciation
886,868
839,516
Property and equipment includes retail gasoline station assets held for sale of $0 and $6.1 million at September 30, 2022 and December 31, 2021, respectively, and terminal assets held for sale of $0 and $26.3 million at September 30, 2022 and December 31, 2021, respectively.
At September 30, 2022, the Partnership had a $38.2million remaining net book value of long-lived assets at its West Coast facility, including $30.5 million related to the Partnership’s ethanol plant acquired in 2013. The Partnership would need to take certain measures to prepare the facility for ethanol production in order to place the plant into service and commence depreciation. Therefore, the $30.5 million related to the ethanol plant was included in property and equipment and classified as idle plant assets at September 30, 2022 and December 31, 2021.
If the Partnership is unable to generate cash flows to support the recoverability of the plant and facility assets, this may become an indicator of potential impairment of the West Coast facility. The Partnership believes these assets are recoverable but continues to monitor the market for ethanol, the continued business development of this facility for ethanol or other product transloading, and the related impact this may have on the facility’s operating cash flows and whether this would constitute an impairment indicator.
Note 7. Debt and Financing Obligations
Credit Agreement
Certain subsidiaries of the Partnership, as borrowers, and the Partnership and certain of its subsidiaries, as guarantors, have a $1.55 billion senior secured credit facility (the “Credit Agreement”). The Credit Agreement matures on May 6, 2024.
On March 9, 2022, the Partnership and certain of its subsidiaries entered into a sixth amendment to the Credit Agreement (the “Sixth Amendment”) which, among other things, amended certain terms and provisions of the Credit Agreement to provide for $200.0 million of working capital interim commitments which increased the total aggregate commitment from $1.35 billion to $1.55 billion. On March 30, 2022, the Partnership and certain of its subsidiaries entered into a seventh amendment to the Credit Agreement (the “Seventh Amendment”) which, among other things, (i) increased the working capital revolving credit facility by $200.0 million and simultaneously reduced the working capital interim commitments to $0; (ii) refreshed the accordion feature under the Credit Agreement to permit the Partnership to request increases of up to $300.0 million in the total credit facility; and (iii) replaced the Cost of Funds (as defined in the Credit Agreement) pricing option with a Daily secured overnight financing rate (“SOFR”) pricing option. All other material terms of the Credit Agreement remain substantially the same as disclosed in Note 8 of Notes to
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Consolidated Financial Statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021.
There are two facilities under the Credit Agreement:
In addition, the Credit Agreement has an accordion feature whereby the Partnership may request on the same terms and conditions then applicable to the Credit Agreement, provided no Event of Default (as defined in the Credit Agreement) then exists, an increase to the working capital revolving credit facility, the revolving credit facility, or both, by up to another $300.0 million, in the aggregate, for a total credit facility of up to $1.85 billion. Any such request for an increase must be in a minimum amount of $25.0 million. The Partnership cannot provide assurance, however, that its lending group will agree to fund any request by the Partnership for additional amounts in excess of the total available commitments of $1.55 billion.
In addition, the Credit Agreement includes a swing line pursuant to which Bank of America, N.A., as the swing line lender, may make swing line loans in U.S. dollars in an aggregate amount equal to the lesser of (a) $75.0 million and (b) the Aggregate WC Commitments (as defined in the Credit Agreement). Swing line loans will bear interest at the Base Rate (as defined in the Credit Agreement). The swing line is a sub-portion of the working capital revolving credit facility and is not an addition to the total available commitments of $1.55 billion.
Availability under the working capital revolving credit facility is subject to a borrowing base which is redetermined from time to time and based on specific advance rates on eligible current assets. Availability under the borrowing base may be affected by events beyond the Partnership’s control, such as changes in petroleum product prices, collection cycles, counterparty performance, advance rates and limits and general economic conditions.
Borrowings under the working capital revolving credit facility bear interest at (1) the Daily or Term SOFR plus a 0.10% SOFR adjustment plus 2.00% to 2.50%, or (2) the base rate plus 1.00% to 1.50%, each depending on the Utilization Amount (as defined in the Credit Agreement). Borrowings under the revolving credit facility bear interest at (1) the Daily or Term SOFR plus a 0.10% SOFR adjustment plus 1.75% to 2.75%, or (2) the base rate plus 0.75% to 1.75%, each depending on the Combined Total Leverage Ratio (as defined in the Credit Agreement).
The average interest rates for the Credit Agreement were 4.1% and 2.3% for the three months ended September 30, 2022 and 2021, respectively, and 3.1% and 2.5% for the nine months ended September 30, 2022 and 2021, respectively.
The Partnership classifies a portion of its working capital revolving credit facility as a current liability and a portion as a long-term liability. The portion classified as a long-term liability represents the amounts expected to be outstanding throughout the next twelve months based on an analysis of historical daily borrowings under the working capital revolving credit facility, the seasonality of borrowings, forecasted future working capital requirements and forward product curves, and because the Partnership has a multi-year, long-term commitment from its bank group. Accordingly, at September 30, 2022 the Partnership estimated working capital revolving credit facility borrowings will equal or exceed $0 over the next twelve months.
The table below presents the total borrowings and availability under the Credit Agreement (in thousands):
Total available commitments
1,550,000
1,350,000
Total borrowings outstanding
398,100
Less outstanding letters of credit
205,200
156,000
Total remaining availability for borrowings and letters of credit (1)
1,245,800
795,900
The Credit Agreement imposes financial covenants that require the Partnership to maintain certain minimum working capital amounts, a minimum combined interest coverage ratio, a maximum senior secured leverage ratio and a maximum total leverage ratio. The Partnership was in compliance with the foregoing covenants at September 30, 2022.
Please read Note 8 of Notes to Consolidated Financial Statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on the Credit Agreement.
Deferred Financing Fees
The Partnership incurs bank fees related to its Credit Agreement and other financing arrangements. These deferred financing fees are capitalized and amortized over the life of the Credit Agreement or other financing arrangements. In connection with the Sixth Amendment and Seventh Amendment, the Partnership capitalized additional financing fees of $1.0 million. The Partnership had unamortized deferred financing fees of $15.7 million and $18.8 million at September 30, 2022 and December 31, 2021, respectively.
Unamortized fees related to the Credit Agreement are included in other current assets and other long-term assets and amounted to $5.7 million and $7.5 million at September 30, 2022 and December 31, 2021, respectively. Unamortized fees related to the senior notes are presented as a direct deduction from the carrying amount of that debt liability and amounted to $9.4 million and $10.7 million at September 30, 2022 and December 31, 2021, respectively. Unamortized fees related to the Partnership’s sale-lease transactions are presented as a direct deduction from the carrying amount of the financing obligation and amounted to $0.6 million at both September 30, 2022 and December 31, 2021.
Amortization expense of approximately $1.3 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively, and $4.1 million and $3.8 million for the nine months ended September 30, 2022 and 2021, respectively is included in interest expense in the accompanying consolidated statements of operations.
Supplemental cash flow information
The following table presents supplemental cash flow information related to the Credit Agreement for the periods presented (in thousands):
Borrowings from working capital revolving credit facility
1,641,800
1,573,700
Payments on working capital revolving credit facility
(1,996,500)
(1,505,200)
Borrowings from revolving credit facility
423,000
10,000
Payments on revolving credit facility
(367,400)
(88,600)
Senior Notes
The Partnership had 7.00% senior notes due 2027 and 6.875% senior notes due 2029 outstanding at September 30, 2022 and December 31, 2021. Please read Note 8 of Notes to Consolidated Financial Statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on these senior notes.
Financing Obligations
The Partnership had financing obligations outstanding at September 30, 2022 and December 31, 2021 associated with historical sale-leaseback transactions that did not meet the criteria for sale accounting. Please read Note 8 of Notes to Consolidated Financial Statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on these financial obligations.
Note 8. Derivative Financial Instruments
The Partnership principally uses derivative instruments, which include regulated exchange-traded futures and options contracts (collectively, “exchange-traded derivatives”) and physical and financial forwards and over-the-counter (“OTC”) swaps (collectively, “OTC derivatives”), to reduce its exposure to unfavorable changes in commodity market prices. The Partnership uses these exchange-traded and OTC derivatives to hedge commodity price risk associated with its inventory and undelivered forward commodity purchases and sales (“physical forward contracts”). The Partnership accounts for derivative transactions in accordance with ASC Topic 815, “Derivatives and Hedging,” and recognizes derivatives instruments as either assets or liabilities in the consolidated balance sheet and measures those instruments at fair value. The changes in fair value of the derivative transactions are presented currently in earnings, unless specific hedge accounting criteria are met.
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The following table summarizes the notional values related to the Partnership’s derivative instruments outstanding at September 30, 2022:
Units (1)
Unit of Measure
Exchange-Traded Derivatives
Long
67,667
Thousands of barrels
Short
(70,208)
OTC Derivatives (Petroleum/Ethanol)
5,980
Derivatives Accounted for as Hedges
Fair Value Hedges
The Partnership’s fair value hedges include exchange-traded futures contracts and OTC derivative contracts that are hedges against inventory with specific futures contracts matched to specific barrels. The change in fair value of these futures contracts and the change in fair value of the underlying inventory generally provide an offset to each other in the consolidated statements of operations.
The following table presents the gains and losses from the Partnership’s derivative instruments involved in fair value hedging relationships recognized in the consolidated statements of operations for the periods presented (in thousands):
Statement of Gain (Loss)
Recognized in Income on
Derivatives
Derivatives in fair value hedging relationship
Exchange-traded futures contracts and OTC derivative contracts for petroleum commodity products
11,859
(25,270)
8,514
(54,933)
Hedged items in fair value hedge relationship
Physical inventory
(5,532)
28,695
19,544
53,073
Cash Flow Hedges
In 2020, to hedge the Partnership’s cash flow risk relative to certain trends and the fluctuations in commodity prices observed within the GDSO segment, the Partnership entered into exchange-traded commodity swap contracts and designated them as a cash flow hedge of its fuel purchases designed to reduce its cost of fuel if market prices rise through 2021 or increase its cost of fuel if market prices decrease through 2021. All exchange traded commodity swap contracts expired on December 31, 2021; therefore, the amount of income recognized in other comprehensive income as of September 30, 2022 and expected to be reclassified into earnings within the next 12 months was $0.
The amount of income recognized in other comprehensive income for derivatives designated in cash flow hedging relationships was $0 and $0.5 million for the three months ended September 30, 2022 and 2021, respectively, and $0 and $7.7 million for the nine months ended September 30, 2022 and 2021, respectively. The amount of income reclassified from other comprehensive income into cost of sales for derivatives designated in cash flow hedging relationships was $0
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and $4.3 million for the three months ended September 30, 2022 and 2021, respectively, and $0 and $10.7 million for the nine months ended September 30, 2022 and 2021, respectively.
Derivatives Not Accounted for as Hedges
The Partnership utilizes petroleum and ethanol commodity contracts to hedge price and currency risk in certain commodity inventories and physical forward contracts.
The following table presents the gains and losses from the Partnership’s derivative instruments not involved in a hedging relationship recognized in the consolidated statements of operations for the periods presented (in thousands):
Derivatives not designated as
Recognized in
hedging instruments
Income on Derivatives
Commodity contracts
8,195
1,977
17,269
3,110
Commodity Contracts and Other Derivative Activity
The Partnership’s commodity contracts and other derivative activity include: (i) exchange-traded derivative contracts that are hedges against inventory and either do not qualify for hedge accounting or are not designated in a hedge accounting relationship, (ii) exchange-traded derivative contracts used to economically hedge physical forward contracts, (iii) financial forward and OTC swap agreements used to economically hedge physical forward contracts and (iv) the derivative instruments under the Partnership’s controlled trading program. The Partnership does not take the normal purchase and sale exemption available under ASC 815 for any of its physical forward contracts.
The following table presents the fair value of each classification of the Partnership’s derivative instruments and its location in the consolidated balance sheets at September 30, 2022 and December 31, 2021 (in thousands):
September 30, 2022
Derivatives Not
Designated as
Hedging
Balance Sheet Location
Instruments
Asset Derivatives:
Exchange-traded derivative contracts
4,149
115,081
119,230
Forward derivative contracts (1)
Total asset derivatives
136,839
140,988
Liability Derivatives:
(66,501)
(24,425)
Total liability derivatives
(90,926)
December 31, 2021
1,476
106,629
108,105
118,281
119,757
(9,201)
(72,993)
(82,194)
(31,654)
(104,647)
(113,848)
Credit Risk
The Partnership’s derivative financial instruments do not contain credit risk related to other contingent features that could cause accelerated payments when these financial instruments are in net liability positions.
The Partnership is exposed to credit loss in the event of nonperformance by counterparties to the Partnership’s exchange-traded and OTC derivative contracts, but the Partnership has no current reason to expect any material nonperformance by any of these counterparties. Exchange-traded derivative contracts, the primary derivative instrument utilized by the Partnership, are traded on regulated exchanges, greatly reducing potential credit risks. The Partnership utilizes major financial institutions as its clearing brokers for all New York Mercantile Exchange (“NYMEX”), Chicago Mercantile Exchange (“CME”) and Intercontinental Exchange (“ICE”) derivative transactions and the right of offset exists with these financial institutions under master netting agreements. Accordingly, the fair value of the Partnership’s exchange-traded derivative instruments is presented on a net basis in the consolidated balance sheets. Exposure on OTC derivatives is limited to the amount of the recorded fair value as of the balance sheet dates.
Please read Note 2 of Notes to Consolidated Financial Statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on derivative financial instruments.
Note 9. Fair Value Measurements
The following tables present, by level within the fair value hierarchy, the Partnership’s financial assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 (in thousands):
Fair Value at September 30, 2022
Cash Collateral
Level 1
Level 2
Netting
Assets:
Exchange-traded/cleared derivative instruments (2)
52,729
(24,148)
Pension plans
17,253
69,982
67,592
Liabilities:
Fair Value at December 31, 2021
25,911
7,747
22,703
48,614
68,013
This table excludes cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. The carrying amounts of certain of the Partnership’s financial instruments, including cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate fair value due to their short maturities. The carrying value of the credit facility approximates fair value due to the variable rate nature of these financial instruments.
The carrying value of the inventory qualifying for fair value hedge accounting approximates fair value due to adjustments for changes in fair value of the hedged item. The fair values of the derivatives used by the Partnership are disclosed in Note 8.
The determination of the fair values above incorporates factors including not only the credit standing of the counterparties involved, but also the impact of the Partnership’s nonperformance risks on its liabilities.
The Partnership estimates the fair values of its senior notes using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates, which are considered
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Level 2 inputs. The fair values of the senior notes, estimated by observing market trading prices of the respective senior notes, were as follows (in thousands):
Face
Fair
Value
7.00% senior notes due 2027
400,000
364,000
412,000
6.875% senior notes due 2029
350,000
314,125
358,750
Non-Recurring Fair Value Measures
Certain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as acquired assets and liabilities, losses related to firm non-cancellable purchase commitments or long-lived assets subject to impairment. For assets and liabilities measured on a non-recurring basis during the period, accounting guidance requires quantitative disclosures about the fair value measurements separately for each major category. See Note 2 for acquired assets and liabilities measured on a non-recurring basis.
Note 10. Environmental Liabilities
In connection with the acquisitions of retail gasoline and convenience store assets described in Note 2, the Partnership assumed certain environmental liabilities, including certain ongoing environmental remediation efforts. As a result, the Partnership recorded, on an undiscounted basis, a total environmental liability of approximately $2.1 million, $4.8 million and $7.2 million for Tidewater, Miller Oil and Consumers Petroleum, respectively, as of September 30, 2022.
The following table presents a summary roll forward of the Partnership’s environmental liabilities at September 30, 2022 (in thousands):
Balance at
Additions
Payments
Dispositions
Adjustments
Environmental Liability Related to:
Retail gasoline stations
49,261
14,131
(2,558)
(469)
5,011
65,376
Terminals
3,544
(46)
(1,543)
1,955
Total environmental liabilities
52,805
(2,604)
(2,012)
67,331
Current portion
Long-term portion
The Partnership’s estimates used in these environmental liabilities are based on all known facts at the time and its assessment of the ultimate remedial action outcomes. Among the many uncertainties that impact the Partnership’s estimates are the necessary regulatory approvals for, and potential modification of, its remediation plans, the amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment, relief of obligations through divestitures of sites and the possibility of existing legal claims giving rise to additional claims. Dispositions generally represent relief of legal obligations through the sale of the related property with no retained obligation. Other adjustments generally represent changes in estimates for existing obligations or obligations associated with new sites. Therefore, although the Partnership believes that these environmental liabilities are adequate, no assurances can be made that any costs incurred in excess of these environmental liabilities or outside of indemnifications or not otherwise covered by insurance would not have a material adverse effect on the Partnership’s financial condition, results of operations or cash flows.
Note 11. Related Party Transactions
The Partnership is a party to a services agreement with various entities which own limited partner interests in the Partnership and interests in the General Partner and which are 100% owned by members of the Slifka family (the “Slifka Entities Services Agreement”), pursuant to which the Partnership provides certain tax, accounting, treasury, and legal support services and such Slifka entities pay the Partnership an annual services fee of $20,000, and which Slifka Entities Services Agreement has been approved by the Conflicts Committee of the board of directors of the General Partner. The Slifka Entities Services Agreement is for an indefinite term and any party may terminate some or all of the services upon ninety (90) days’ advance written notice. As of September 30, 2022, no such notice of termination had been given by any party to the Slifka Entities Services Agreement.
The General Partner employs substantially all of the Partnership’s employees, except for most of its gasoline station and convenience store employees, who are employed by GMG. The Partnership reimburses the General Partner for expenses incurred in connection with these employees. These expenses, including bonus, payroll and payroll taxes, were $45.8 million and $48.0 million for the three months ended September 30, 2022 and 2021, respectively, and $128.0 million and $113.0 million for the nine months ended September 30, 2022 and 2021, respectively The Partnership also reimburses the General Partner for its contributions under the General Partner’s 401(k) Savings and Profit Sharing Plans and the General Partner’s qualified and non-qualified pension plans.
The table below presents receivables from the General Partner (in thousands):
Receivables from the General Partner (1)
Sale of the Revere Terminal—On June 28, 2022, the Partnership completed the sale of its terminal located on Boston Harbor in Revere, Massachusetts (the “Revere Terminal”) to Revere MA Owner LLC (the “Revere Buyer”) for a purchase price of $150.0 million in cash. In connection with closing under the purchase agreement between the Partnership and the Revere Buyer, the Partnership entered into a leaseback agreement, which meets the criteria for sale accounting, with the Revere Buyer pursuant to which the Partnership leases back key infrastructure at the Revere Terminal, including certain tanks, dock access rights, and loading rack infrastructure, to allow the Partnership to continue business operations at the Revere Terminal. The term of the leaseback agreement, including all renewal options exercisable at the Partnership’s election, could extend through September 30, 2039.
Pursuant to the terms of the purchase agreement the Partnership entered into with affiliates of the Slifka family (the “Initial Sellers”), related parties, in 2015 to acquire the Revere Terminal, the Initial Sellers are entitled to an amount equal to fifty percent of the net proceeds (as defined in the 2015 purchase agreement) (the “Initial Sellers Share”) from the sale of the Revere Terminal. At the time of the 2022 closing, the preliminary calculation of the Initial Sellers Share was approximately $44.3 million, which amount is subject to future revisions. The final calculation of the Initial Sellers Share, including a sharing of any additional expenses in order to satisfy outstanding obligations under the Partnership’s current government storage contract at the Revere Terminal and potential operating losses or profits relating to the operation of the Revere Terminal during the initial leaseback term, will occur upon the expiration of such storage contract. The Partnership recorded approximately $2.7 million of additional expenses due to the Initial Sellers which are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet as of September 30, 2022 and in selling, general and administrative expenses in the accompanying consolidated statements of income for each of three and nine months ended September 30, 2022.
After closing costs and the preliminary payment of the Initial Sellers Share, the Partnership received net proceeds of approximately $98.8 million, which is included in proceeds from sale of property and equipment, net in the accompanying consolidated statement of cash flows for the nine months ended September 30, 2022.
In connection with the sale of the Revere Terminal, the Partnership recognized a net gain of approximately $76.7 million for the nine months ended September 30, 2022, which is included in net gain on sale and disposition of assets in the accompanying consolidated statement of income. The preliminary payment of approximately $44.3 million to the Initial Sellers is included in the measurement of the $76.7 million net gain recognized.
Note 12. Partners’ Equity and Cash Distributions
Partners’ Equity
Common Units and General Partner Interest
At September 30, 2022, there were 33,995,563 common units issued, including 6,311,366 common units held by affiliates of the General Partner, including directors and executive officers, collectively representing a 99.33% limited partner interest in the Partnership, and 230,303 general partner units representing a 0.67% general partner interest in the Partnership. There have been no changes to common units or the general partner interest during the three and nine months ended September 30, 2022.
Series A Preferred Units
At September 30, 2022, there were 2,760,000 9.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units issued representing limited partner interests (the “Series A Preferred Units”) for $25.00 per Series A Preferred Unit. There have been no changes to the Series A Preferred Units during the three and nine months ended September 30, 2022.
Series B Preferred Units
At September 30, 2022, there were 3,000,000 9.50% Series B Fixed Rate Cumulative Redeemable Perpetual Preferred Units issued representing limited partners interests (the “Series B Preferred Units”) for $25.00 per Series B Preferred Unit. There have been no changes to the Series B Preferred Units during the three and nine months ended September 30, 2022.
Cash Distributions
Common Units
The Partnership intends to make cash distributions to common unitholders on a quarterly basis, although there is no assurance as to the future cash distributions since they are dependent upon future earnings, capital requirements, financial condition and other factors. The Credit Agreement prohibits the Partnership from making cash distributions if any potential default or Event of Default, as defined in the Credit Agreement, occurs or would result from the cash distribution. The indentures governing the Partnership’s outstanding senior notes also limit the Partnership’s ability to make distributions to its common unitholders in certain circumstances.
Within 45 days after the end of each quarter, the Partnership will distribute all of its Available Cash (as defined in its partnership agreement) to common unitholders of record on the applicable record date.
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The Partnership will make distributions of Available Cash from distributable cash flow for any quarter in the following manner: 99.33% to the common unitholders, pro rata, and 0.67% to the General Partner, until the Partnership distributes for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter; and thereafter, cash in excess of the minimum quarterly distribution is distributed to the common unitholders and the General Partner based on the percentages as provided below.
As holder of the IDRs, the General Partner is entitled to incentive distributions if the amount that the Partnership distributes with respect to any quarter exceeds specified target levels shown below:
Marginal Percentage
Total Quarterly Distribution
Interest in Distributions
Target Amount
Unitholders
General Partner
First Target Distribution
up to $0.4625
99.33
0.67
Second Target Distribution
above $0.4625 up to $0.5375
86.33
13.67
Third Target Distribution
above $0.5375 up to $0.6625
76.33
23.67
Thereafter
above $0.6625
51.33
48.67
The Partnership paid the following cash distributions to common unitholders during 2022 (in thousands, except per unit data):
For the
Per Unit
Cash Distribution
Quarter
Cash
Incentive
Total Cash
Payment Date
Ended
Distribution
Units
2/14/2022 (1)
12/31/21
0.5850
19,887
141
871
20,899
5/13/2022 (1)
03/31/22
0.5950
20,227
144
973
21,344
8/12/2022 (1)
06/30/22
0.6050
20,567
147
1,075
21,789
In addition, on October 25, 2022, the board of directors of the General Partner declared a quarterly cash distribution of $0.6250 per unit ($2.50 per unit on an annualized basis) on all of its outstanding common units for the period from July 1, 2022 through September 30, 2022. On November 14, 2022, the Partnership will pay this cash distribution to its common unitholders of record as of the close of business on November 8, 2022.
Preferred Units
Distributions on the Series A Preferred Units are cumulative from August 7, 2018, the original issue date of the Series A Preferred Units, and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (each, a “Series A Distribution Payment Date”), commencing on November 15, 2018, to holders of record as of the opening of business on the February 1, May 1, August 1 or November 1 next preceding the Series A Distribution Payment Date, in each case, when, as, and if declared by the General Partner out of legally available funds for such purpose. Distributions on the Series A Preferred Units will be paid out of Available Cash with respect to the quarter immediately preceding the applicable Series A Distribution Payment Date.
Distributions on the Series B Preferred Units are cumulative from March 24, 2021, the original issue date of the Series B Preferred Units, and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (each, a “Series B Distribution Payment Date”), commencing on May 15, 2021, to holders of record as of the opening of business on the February 1, May 1, August 1 or November 1 next preceding the Series B Distribution Payment Date, in each case, when, as, and if declared by the General Partner out of legally available funds for such
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purpose. Distributions on the Series B Preferred Units will be paid out of Available Cash with respect to the quarter immediately preceding the applicable Series B Distribution Payment Date.
The Partnership paid the following cash distributions on the Series A Preferred Units and the Series B Preferred Units during 2022 (in thousands, except per unit data):
Quarterly Period
Covering
2/15/2022
11/15/21 - 2/14/22
0.609375
0.59375
5/16/2022
2/15/22 - 5/14/22
8/15/2022
5/15/22 - 8/14/22
In addition, on October 17, 2022, the board of directors (“the Board”) of the General Partner declared a quarterly cash distribution of $0.609375 per unit ($2.4375 per unit on an annualized basis) on the Series A Preferred Units for the period from August 15, 2022 through November 14, 2022. This distribution will be payable on November 15, 2022 to holders of record as of the opening of business on November 1, 2022.
The Board also declared a quarterly cash distribution of $0.59375 per unit ($2.375 per unit on an annualized basis) on the Series B Preferred Units for the period from August 15, 2022 through November 14, 2022. This distribution will be payable on November 15, 2022 to holders of record as of the opening of business on November 1, 2022.
Note 13. Segment Reporting
Summarized financial information for the Partnership’s reportable segments is presented in the table below (in thousands):
Wholesale Segment:
Gasoline and gasoline blendstocks
1,623,599
1,371,621
5,046,457
3,696,677
Other oils and related products (1)
886,877
451,172
3,242,031
1,641,250
Crude oil (2)
90
13,194
2,272
47,128
Product margin
54,260
22,458
93,009
62,379
25,716
22,625
130,690
54,580
(646)
(2,814)
(6,706)
(10,662)
79,330
42,269
216,993
106,297
Gasoline Distribution and Station Operations Segment:
Station operations (3)
158,953
134,126
419,159
357,452
187,994
112,446
432,732
294,001
73,614
65,269
200,719
176,567
261,608
177,715
633,451
470,568
Commercial Segment:
3,916
31,042
10,807
Combined sales and Product margin:
Product margin (4)
351,327
223,900
881,486
587,672
Depreciation allocated to cost of sales
(22,948)
(20,842)
(65,393)
(61,537)
Combined gross profit
Approximately 111 million gallons and 123 million gallons of the GDSO segment’s sales for the three months ended September 30, 2022 and 2021, respectively, and 318 million gallons and 342 million gallons of the GDSO segment’s sales for the nine months ended September 30, 2022 and 2021, respectively, were supplied from petroleum products and renewable fuels sourced by the Wholesale segment. The Commercial segment’s sales were predominantly sourced by the Wholesale segment. These intra-segment sales are not reflected as sales in the Wholesale segment as they are eliminated.
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A reconciliation of the totals reported for the reportable segments to the applicable line items in the consolidated financial statements is as follows (in thousands):
Operating costs and expenses not allocated to operating segments:
Total operating costs and expenses
The Partnership’s foreign assets and foreign sales were immaterial as of and for the three and nine months ended September 30, 2022 and 2021.
Segment Assets
The Partnership’s terminal assets are allocated to the Wholesale and Commercial segments, and its retail gasoline stations are allocated to the GDSO segment. Due to the commingled nature and uses of the remainder of the Partnership’s assets, it is not reasonably possible for the Partnership to allocate these assets among its reportable segments.
The table below presents total assets by reportable segment at September 30, 2022 and December 31, 2021 (in thousands):
Unallocated
606,227
1,918,464
450,571
739,523
1,655,475
436,167
Note 14. 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 September 30, 2022 and December 31, 2021, respectively, excludes 47,360 and 42,336 common units held on behalf of the Partnership pursuant to its repurchase program. 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 Partnership’s preferred units are not potentially dilutive securities based on the nature of the conversion feature.
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The following table provides a reconciliation of net income and the assumed allocation of net income to the common limited partners (after deducting amounts allocated to preferred unitholders) for purposes of computing net income per common limited partner unit for the periods presented (in thousands, except per unit data):
Numerator:
IDRs
109,412
32,644
Declared distribution
22,680
21,247
153
1,280
20,453
19,547
768
Assumed allocation of undistributed net income
88,759
88,165
594
13,184
13,097
87
Assumed allocation of net income
747
225
Denominator:
Basic weighted average common units outstanding
Dilutive effect of phantom units
91
190
Diluted weighted average common units outstanding
299,361
38,898
65,813
62,041
444
3,328
61,359
58,641
414
2,304
Assumed allocation of undistributed net income (loss)
238,918
237,320
1,598
(19,880)
(19,743)
(137)
277
126
291
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The board of directors of the General Partner declared the following quarterly cash distributions on its common units:
Per Unit Cash
Distribution Declared for the
Cash Distribution Declaration Date
Distribution Declared
Quarterly Period Ended
April 26, 2022
March 31, 2022
July 26, 2022
June 30, 2022
October 25, 2022
0.6250
The board of directors of the General Partner declared the following quarterly cash distributions on the Series A Preferred Units and the Series B Preferred Units:
Quarterly Period Covering
April 18, 2022
0.593750
February 15, 2022 - May 14, 2022
July 18, 2022
May 15, 2022 - August 14, 2022
October 17, 2022
August 15, 2022 - November 14, 2022
See Note 12, “Partners’ Equity and Cash Distributions” for further information.
Note 15. Changes in Accumulated Other Comprehensive Loss
The following table presents the changes in accumulated other comprehensive income by component for the periods presented (in thousands):
Pension
Plan
(832)
Amount of (income) loss reclassified from accumulated other comprehensive income (loss)
(236)
Total comprehensive loss
(4,814)
(707)
Amounts are presented prior to the income tax effect on other comprehensive income. Given the Partnership’s partnership status for federal income tax purposes, the effective tax rate is immaterial.
Note 16. Legal Proceedings
Although the Partnership may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business, the Partnership does not believe that it is a party to any litigation that will have a material adverse impact on its financial condition or results of operations. Except as described below and in Note 10
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included herein, the Partnership is not aware of any significant legal or governmental proceedings against it or contemplated to be brought against it. The Partnership maintains insurance policies with insurers in amounts and with coverage and deductibles as its general partner believes are reasonable and prudent. However, the Partnership can provide no assurance that this insurance will be adequate to protect it from all material expenses related to potential future claims or that these levels of insurance will be available in the future at economically acceptable prices.
In January 2022, the Partnership was served with a complaint filed in the Middlesex County Superior Court of the Commonwealth of Massachusetts against the Partnership and its wholly owned subsidiaries, Global Companies LLC (“Global Companies”) and Alliance Energy LLC (“Alliance”), alleging, among other things, that a plaintiff truck driver, while (1) loading gasoline and diesel fuel at terminals owned and operated by the Partnership located in Albany, New York and Revere, Massachusetts and (2) unloading gasoline and diesel fuel at gasoline stations owned and/or operated by the Partnership throughout New York, Massachusetts and New Hampshire, contracted aplastic anemia as a result of exposure to benzene-containing products and/or vapors therefrom. The Partnership, Global Companies and Alliance have meritorious defenses to the allegations in the complaint and will vigorously contest the actions taken by the plaintiff.
In October 2020, the Partnership was served with a complaint filed against the Partnership and its wholly owned subsidiary, Global Companies alleging, among other things, wrongful death and loss of consortium. The complaint, filed in the Middlesex County Superior Court of the Commonwealth of Massachusetts, alleges, among other things, that a truck driver (whose estate is a co-plaintiff), while loading gasoline and diesel fuel at terminals owned and operated by the Partnership located in Albany, New York and Burlington, Vermont, was exposed to benzene-containing products and/or vapors therefrom. The Partnership and Global Companies have meritorious defenses to the allegations in the complaint and will vigorously contest the actions taken by the plaintiffs.
By letter dated January 25, 2017, the Partnership received a notice of intent to sue (the “2017 NOI”) from Earthjustice related to alleged violations of the CAA; specifically alleging that the Partnership was operating the Albany Terminal without a valid CAA Title V Permit. On February 9, 2017, the Partnership responded to Earthjustice advising that the 2017 NOI was without factual or legal merit and that the Partnership would move to dismiss any action commenced by Earthjustice. No action was taken by either the EPA or the NYSDEC with regard to the Earthjustice allegations. At this time, there has been no further action taken by Earthjustice. Neither the EPA nor the NYSDEC has followed up on the 2017 NOI. The Albany Terminal is currently operating pursuant to its Title V Permit, which has been extended in accordance with the State Administrative Procedures Act. Additionally, the Partnership has submitted a Title V Permit renewal and a request for modifications to its existing Title V Permit. The Partnership believes that it has meritorious defenses against all allegations.
The Partnership received letters from the EPA dated November 2, 2011 and March 29, 2012, containing requirements and testing orders (collectively, the “Requests for Information”) for information under the CAA. The Requests for Information were part of an EPA investigation to determine whether the Partnership has violated sections of the CAA at certain of its terminal locations in New England with respect to residual oil and asphalt. On June 6, 2014, a NOV was received from the EPA, alleging certain violations of its Air Emissions License issued by the Maine Department of Environmental Protection, based upon the test results at the South Portland, Maine terminal. The Partnership met with and provided additional information to the EPA with respect to the alleged violations. On April 7, 2015, the EPA issued a Supplemental Notice of Violation modifying the allegations of violations of the terminal’s Air Emissions License. The Partnership has entered into a consent decree (the “Consent Decree”) with the EPA and the United States Department of Justice (the “Department of Justice”), which was filed in the U.S. District Court for the District of Maine (the “Court”) on March 25, 2019. The Consent Decree was entered by the Court on December 19, 2019. The Partnership believes that compliance with the Consent Decree and implementation of the requirements of the Consent Decree will have no material impact on its operations.
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The Partnership received a Subpoena Duces Tecum dated May 13, 2022 from the Office of the Attorney General of the State of New York (“NY AG”) requesting information regarding charges paid by retailers, distributors, or consumers for oil and gas products in or within the proximity of the State of New York during the disruption of the market triggered by Russia’s 2022 invasion of Ukraine. The Partnership has been advised that the NY AG’s office sent similar subpoena requests for information to market participants across the petroleum industry. The Partnership made an initial submission of information to the NY AG’s office and continues to cooperate with the NY AG’s office to satisfy its obligations under the subpoena.
The Partnership received a letter from the Office of the Attorney General of the State of Connecticut (“CT AG”) dated June 28, 2022 seeking information from the Partnership related to its sales of motor fuel to retailers within the State of Connecticut from February 3, 2022 through June 28, 2022. The Partnership has been advised that the CT AG’s office sent similar requests for information to market participants across the petroleum industry. The Partnership has complied with the CT AG’s request and submitted information responsive thereto.
Note 17. New Accounting Standards
There have been no recently issued accounting standards that are expected to have a material impact on the Partnership’s consolidated financial statements.
Note 18. Subsequent Events
Distribution to Common Unitholders—On October 25, 2022, the board of directors of the General Partner declared a quarterly cash distribution of $0.6250 per unit ($2.50 per unit on an annualized basis) for the period from July 1, 2022 through September 30, 2022. On November 14, 2022, the Partnership will pay this cash distribution to its common unitholders of record as of the close of business on November 8, 2022.
Distribution to Series A Preferred Unitholders—On October 17, 2022, the board of directors of the General Partner declared a quarterly cash distribution of $0.609375 per unit ($2.4375 per unit on an annualized basis) on the Series A Preferred Units, covering the period from August 15, 2022 through November 14, 2022. This distribution will be payable on November 15, 2022 to holders of record as of the opening of business on November 1, 2022.
Distribution to Series B Preferred Unitholders—On October 17, 2022, the board of directors of the General Partner declared a quarterly cash distribution of $0.59375 per unit ($2.375 per unit on an annualized basis) on the Series B Preferred Units, covering the period from August 15, 2022 through November 14, 2022. This distribution will be payable on November 15, 2022 to holders of record as of the opening of business on November 1, 2022.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations of Global Partners LP should be read in conjunction with the historical consolidated financial statements of Global Partners LP and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
Some of the information contained in this Quarterly Report on Form 10-Q may contain forward-looking statements. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words “may,” “believe,” “should,” “could,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “continue,” “will likely result,” or other similar expressions although not all forward-looking statements contain such identifying words. In addition, any statement made by our management concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions by us are also forward-looking statements. Forward-looking statements are not guarantees of performance. Although we believe these forward-looking statements are based on reasonable assumptions, statements made regarding future results are subject to a number of assumptions, uncertainties and risks, many of which are beyond our control, which may cause future results to be materially different from the results stated or implied in this document. These risks and uncertainties include, among other things:
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Additional information about risks and uncertainties that could cause actual results to differ materially from forward-looking statements is contained in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2021 and Part II, Item 1A, “Risk Factors,” in this Quarterly Report on Form 10-Q.
We expressly disclaim any obligation or undertaking to update these statements to reflect any change in our expectations or beliefs or any change in events, conditions or circumstances on which any forward-looking statement is based, other than as required by federal and state securities laws. All forward-looking statements included in this Quarterly Report on Form 10-Q and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.
Overview
We are a master limited partnership formed in March 2005. We own, control or have 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”). We are one of the region’s largest independent owners, suppliers and operators of gasoline stations and convenience stores. As of September 30, 2022, we had a portfolio of 1,684 owned, leased and/or supplied gasoline stations, including 356 directly operated convenience stores, primarily in the Northeast. We are 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. We engage 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.
Collectively, we sold approximately $4.4 billion and $14.0 billion of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil for the three and nine months ended September 30, 2022, respectively. In addition, we had other revenues of approximately $0.2 billion and $0.4 billion for the three and nine months ended September 30, 2022, respectively, from convenience store and prepared food sales at our directly operated stores, rental income from dealer leased and commissioned agent leased gasoline stations and from cobranding arrangements, and sundries.
We base our pricing on spot prices, fixed prices or indexed prices and routinely use the New York Mercantile Exchange (“NYMEX”), Chicago Mercantile Exchange (“CME”) and Intercontinental Exchange (“ICE”) or other counterparties to hedge the risk inherent in buying and selling commodities. Through the use of regulated exchanges or derivatives, we seek to maintain a position that is substantially balanced between purchased volumes and sales volumes or future delivery obligations.
Although the impact of COVID-19 has declined to date, it continues to make its presence felt in our corporate offices, at our retail sites and terminal locations and in the global supply chain. We continue to monitor these impacts while providing essential products and services, prioritizing the safety of our employees, customers and vendors in the communities where we operate.
COVID-19 resulted in an economic downturn, restricted travel to, from and within the states in which we conduct our businesses, and in decreases in the demand for gasoline and convenience store products. While market conditions have improved, COVID-19 may continue to impact our operations and financial performance, and uncertainties surrounding the duration of COVID-19 and demand at the pump, inside our stores and at our terminals remain.
The extent to which COVID-19 may continue to affect our operating results remains uncertain. COVID-19 has had, and may continue to have, material adverse consequences for general economic, financial and business conditions, and could materially and adversely affect our business, financial condition and results of operations and those of our customers, suppliers and other counterparties.
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Our inventory management is dependent on the use of hedging instruments which are managed based on the structure of the forward pricing curve. Daily market changes may impact periodic results due to the point-in-time valuation of these positions. Volatility in the petroleum markets resulting from COVID-19 and geopolitical events may impact our results.
Business operations today reflect changes which may remain for an indefinite period of time. In these uncertain times and volatile markets, we believe that we are operationally nimble and that our portfolio of assets will continue to provide us with opportunities.
Acquisition from Tidewater Convenience, Inc.—On September 20, 2022, we acquired substantially all of the assets from Tidewater Convenience, Inc. (“Tidewater”) for approximately $40.4 million, including inventory, funded with borrowings under our revolving credit facility. The acquisition includes 14 company-operated Tidewater convenience stores and 1 fuel site, all located in Virginia.
Sale of the Revere Terminal—On June 28, 2022, we completed the sale of our terminal located on Boston Harbor in Revere, Massachusetts for a purchase price of $150.0 million in cash. See Note 11 of Notes to Consolidated Financial Statements.
Amendments to the Credit Agreement—On March 9, 2022, we and certain of our subsidiaries entered into the sixth amendment to third amended and restated credit agreement which, among other things, increased the total aggregate commitment to $1.55 billion. On March 30, 2022, we and certain of our subsidiaries entered into the seventh amendment to third amended and restated credit agreement which, among other things, refreshed the accordion feature under the credit agreement. See “—Liquidity and Capital Resources—Credit Agreement.”
Acquisition from Miller Oil Co., Inc.—On February 1, 2022, we acquired substantially all of the retail motor fuel assets from Miller Oil Co., Inc. (“Miller Oil”) for approximately $60.1 million, including inventory, funded with borrowings under our revolving credit facility. The acquisition includes 21 company-operated Miller’s Neighborhood Market convenience stores and 2 fuel sites that are either owned or leased, including lessee dealer and commissioned agent locations, all located in Virginia, and 34 fuel supply only sites, primarily in Virginia. See Note 2 of Notes to Consolidated Financial Statements.
Acquisition from Consumers Petroleum of Connecticut Incorporated—On January 25, 2022, we acquired substantially all of the assets from Consumers Petroleum of Connecticut, Incorporated (“Consumers Petroleum”) for approximately $154.7 million, including inventory, funded with borrowings under our revolving credit facility. The acquisition includes 26 company-owned Wheels convenience stores and related fuel operations located in Connecticut and 22 fuel-supply only sites located in Connecticut and New York. See Note 2 of Notes to Consolidated Financial Statements.
Operating Segments
We purchase refined petroleum products, gasoline blendstocks, renewable fuels and crude oil primarily from domestic and foreign refiners and ethanol producers, crude oil producers, major and independent oil companies and trading companies. We operate our businesses under three segments: (i) Wholesale, (ii) Gasoline Distribution and Station Operations (“GDSO”) and (iii) Commercial.
In our Wholesale segment, we engage in the logistics of selling, gathering, blending, storing and transporting refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane. We transport these products by railcars, barges, trucks and/or pipelines pursuant to spot or long-term contracts. From time to time, we aggregate crude oil by truck or pipeline in the mid-continent region of the United States and Canada, transport it by rail and ship it
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by barge to refiners. We sell home heating oil, branded and unbranded gasoline and gasoline blendstocks, diesel, kerosene and residual oil to home heating oil retailers and wholesale distributors. Generally, customers use their own vehicles or contract carriers to take delivery of the gasoline, distillates and propane at bulk terminals and inland storage facilities that we own or control or at which we have throughput or exchange arrangements. Ethanol is shipped primarily by rail and by barge.
In our Wholesale segment, we obtain Renewable Identification Numbers (“RIN”) in connection with our purchase of ethanol which is used for bulk trading purposes or for blending with gasoline through our terminal system. A RIN is a renewable identification number associated with government-mandated renewable fuel standards. To evidence that the required volume of renewable fuel is blended with gasoline, obligated parties must retire sufficient RINs to cover their Renewable Volume Obligation (“RVO”). Our U.S. Environmental Protection Agency (“EPA”) obligations relative to renewable fuel reporting are comprised of foreign gasoline and diesel that we may import and blending operations at certain facilities.
Gasoline Distribution and Station Operations
In our GDSO segment, gasoline distribution includes sales of branded and unbranded gasoline to gasoline station operators and sub-jobbers. Station operations include (i) convenience store and prepared food sales, (ii) rental income from gasoline stations leased to dealers, from commissioned agents and from cobranding arrangements and (iii) sundries (such as car wash sales and lottery and ATM commissions).
As of September 30, 2022, we had a portfolio of owned, leased and/or supplied gasoline stations, primarily in the Northeast, that consisted of the following:
Company operated
356
Commissioned agents
293
Lessee dealers
196
Contract dealers
839
1,684
At our company-operated stores, we operate the gasoline stations and convenience stores with our employees, and we set the retail price of gasoline at the station. At commissioned agent locations, we own the gasoline inventory, and we set the retail price of gasoline at the station and pay the commissioned agent a fee related to the gallons sold. We receive rental income from commissioned agent leased gasoline stations for the leasing of the convenience store premises, repair bays and/or other businesses that may be conducted by the commissioned agent. At dealer-leased locations, the dealer purchases gasoline from us, and the dealer sets the retail price of gasoline at the dealer’s station. We also receive rental income from (i) dealer-leased gasoline stations and (ii) cobranding arrangements. We also supply gasoline to locations owned and/or leased by independent contract dealers. Additionally, we have contractual relationships with distributors in certain New England states pursuant to which we source and supply these distributors’ gasoline stations with ExxonMobil-branded gasoline.
In our Commercial segment, we include sales and deliveries to end user customers in the public sector and to large commercial and industrial end users of unbranded gasoline, home heating oil, diesel, kerosene, residual oil and bunker fuel. In the case of public sector commercial and industrial end user customers, we sell products primarily either through a competitive bidding process or through contracts of various terms. We respond to publicly issued requests for product proposals and quotes. We generally arrange for the delivery of the product to the customer’s designated location. Our Commercial segment also includes sales of custom blended fuels delivered by barges or from a terminal dock to ships through bunkering activity.
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Seasonality
Due to the nature of our businesses and our reliance, in part, on consumer travel and spending patterns, we may experience more demand for gasoline during the late spring and summer months than during the fall and winter months. Travel and recreational activities are typically higher in these months in the geographic areas in which we operate, increasing the demand for gasoline. Therefore, our volumes in gasoline are typically higher in the second and third quarters of the calendar year. However, COVID-19 has had a negative impact on gasoline demand and the extent and duration of that impact remains uncertain. As demand for some of our 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 our quarterly operating results.
Outlook
This section identifies certain risks and certain economic or industry-wide factors, in addition to those described under “—COVID-19,” that may affect our financial performance and results of operations in the future, both in the short-term and in the long-term. Our results of operations and financial condition depend, in part, upon the following:
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Results of Operations
Evaluating Our Results of Operations
Our management uses a variety of financial and operational measurements to analyze our performance. These measurements include: (1) product margin, (2) gross profit, (3) earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA, (4) distributable cash flow, (5) selling, general and administrative expenses (“SG&A”), (6) operating expenses and (7) degree days.
Product Margin
We view product margin as an important performance measure of the core profitability of our operations. We review product margin monthly for consistency and trend analysis. We define product margin as our product sales minus product costs. Product sales primarily include sales of unbranded and branded gasoline, distillates, residual oil, renewable fuels and crude oil, as well as convenience store and prepared food sales, gasoline station rental income and revenue generated from our logistics activities when we engage in the storage, transloading and shipment of products owned by others. Product costs include the cost of acquiring products and all associated costs including shipping and handling costs to bring such products to the point of sale as well as product costs related to convenience store items and costs associated with our logistics activities. We also look at product margin on a per unit basis (product margin divided by volume). Product margin is a non-GAAP financial measure used by management and external users of our consolidated financial statements to assess our business. Product margin should not be considered an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, our product margin may not be comparable to product margin or a similarly titled measure of other companies.
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Gross Profit
We define gross profit as our product margin minus terminal and gasoline station related depreciation expense allocated to cost of sales.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures used as supplemental financial measures by management and may be used by external users of our consolidated financial statements, such as investors, commercial banks and research analysts, to assess:
Adjusted EBITDA is EBITDA further adjusted for gains or losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
Distributable cash flow is an important non-GAAP financial measure for our limited partners since it serves as an indicator of our success in providing a cash return on their investment. Distributable cash flow as defined by our partnership agreement is net income plus depreciation and amortization minus maintenance capital expenditures, as well as adjustments to eliminate items approved by the audit committee of the board of directors of our general partner that are extraordinary or non-recurring in nature and that would otherwise increase distributable cash flow.
Distributable cash flow as used in our partnership agreement also determines our ability to make cash distributions on our incentive distribution rights. The investment community also uses a distributable cash flow metric similar to the metric used in our partnership agreement with respect to publicly traded partnerships to indicate whether or not such partnerships have generated sufficient earnings on a current or historic level that can sustain distributions on preferred or common units or support an increase in quarterly cash distributions on common units. Our partnership agreement does not permit adjustments for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.
Distributable cash flow should not be considered as an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, our distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies.
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Selling, General and Administrative Expenses
Our SG&A expenses include, among other things, marketing costs, corporate overhead, employee salaries and benefits, pension and 401(k) plan expenses, discretionary bonuses, non-interest financing costs, professional fees and information technology expenses. Employee-related expenses including employee salaries, discretionary bonuses and related payroll taxes, benefits, and pension and 401(k) plan expenses are paid by our general partner which, in turn, are reimbursed for these expenses by us.
Operating Expenses
Operating expenses are costs associated with the operation of the terminals, transload facilities and gasoline stations and convenience stores used in our businesses. Lease payments, maintenance and repair, property taxes, utilities, credit card fees, taxes, labor and labor-related expenses comprise the most significant portion of our operating expenses. While the majority of these expenses remains relatively stable, independent of the volumes through our system, they can fluctuate depending on the activities performed during a specific period. In addition, they can be impacted by new directives issued by federal, state and local governments.
Degree Days
A “degree day” is an industry measurement of temperature designed to evaluate energy demand and consumption. Degree days are based on how far the average temperature departs from a human comfort level of 65°F. Each degree of temperature above 65°F is counted as one cooling degree day, and each degree of temperature below 65°F is counted as one heating degree day. Degree days are accumulated each day over the course of a year and can be compared to a monthly or a long-term (multi-year) average, or normal, to see if a month or a year was warmer or cooler than usual. Degree days are officially observed by the National Weather Service and officially archived by the National Climatic Data Center. For purposes of evaluating our results of operations, we use the normal heating degree day amount as reported by the National Weather Service at its Logan International Airport station in Boston, Massachusetts.
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Key Performance Indicators
The following table provides a summary of some of the key performance indicators that may be used to assess our results of operations. These comparisons are not necessarily indicative of future results (gallons and dollars in thousands):
EBITDA (1)(3)
168,217
79,375
459,818
178,779
Adjusted EBITDA (1)(3)
168,509
79,183
378,350
178,292
Distributable cash flow (2)(3)(4)
128,020
49,697
356,086
90,274
Volume (gallons)
779,175
813,411
2,548,607
2,642,437
Other oils and related products (5)
Crude oil (6)
430,001
416,778
1,228,769
1,146,001
Station operations (7)
102,092
101,157
314,288
251,070
Combined sales and product margin:
Product margin (8)
GDSO portfolio as of September 30, 2022 and 2021:
295
203
808
Total GDSO portfolio
1,597
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Weather conditions:
Normal heating degree days
96
3,750
Actual heating degree days
57
3,482
3,311
Variance from normal heating degree days
(41)
(78)
(7)
(12)
Variance from prior period actual heating degree days
171
(71)
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The following table presents reconciliations of EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measures on a historical basis for each period presented (in thousands):
Reconciliation of net income to EBITDA and Adjusted EBITDA:
26,920
25,692
19,047
19,660
61,577
60,339
10,811
386
14,938
789
EBITDA (1)
Adjusted EBITDA (1)
Reconciliation of net cash provided by (used in) operating activities to EBITDA and Adjusted EBITDA:
Net cash provided by (used in) operating activities
191,713
152,615
Net changes in operating assets and liabilities and certain non-cash items
(53,354)
(93,286)
(193,603)
18,594
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The following table presents reconciliations of distributable cash flow to the most directly comparable GAAP financial measures on a historical basis for each period presented (in thousands):
Reconciliation of net income to distributable cash flow:
1,347
1,211
Amortization of routine bank refinancing fees
(1,138)
(1,002)
(3,457)
(3,052)
Maintenance capital expenditures
(10,548)
(9,841)
(27,844)
(28,135)
Distributable cash flow (1)(2)(3)
Distributions to preferred unitholders (4)
(3,463)
(10,389)
(8,746)
Distributable cash flow after distributions to preferred unitholders
124,557
46,234
345,697
81,528
Reconciliation of net cash provided by (used in) operating activities to distributable cash flow:
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Consolidated Sales
Our total sales were $4.6 billion and $3.3 billion for the three months ended September 30, 2022 and 2021, respectively, an increase of $1.3 billion, or 39%, primarily due to an increase in prices. Our aggregate volume of product sold was 1.3 billion gallons for each of the three months ended September 30, 2022 and 2021.
Our total sales were $14.4 billion and $9.1 billion for the nine months ended September 30, 2022 and 2021, respectively, an increase of $5.3 billion, or 58%, primarily due to increases in prices and, to a lesser extent, volume sold. Our aggregate volume of product sold was 4.1 billion gallons and 4.0 billion gallons for the nine months ended September 30, 2022 and 2021, respectively, increasing 52 million gallons (consisting of increases of 83 million gallons and 63 million gallons in our GDSO and Commercial segments, respectively, offset by a decrease of 94 million gallons in our Wholesale segment due to decreased volume in gasoline and gasoline blendstocks and crude oil, offset by an increase in other oils and related products).
Our gross profit was $328.4 million and $203.1 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $125.3 million, or 62%. In our GDSO segment, our gasoline distribution product margin increased due to higher fuel margins (cents per gallon) and higher volume in part due to the acquisitions of Miller Oil and Consumers Petroleum (collectively the “Recent Acquisitions”). Our station operations product margin increased due to increased activity at our convenience stores, also partially due to the Recent Acquisitions. In our Wholesale segment, our product margins in gasoline and gasoline blendstocks and in other oils and related products benefitted from more favorable market conditions. In our Commercial segment, our product margin increased largely due to an increase in bunkering activity.
Our gross profit was $816.1 million and $526.1 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $290.0 million, or 55%. In our GDSO segment, our gasoline distribution product margin increased due to higher fuel margins (cents per gallon) and higher volume in part due to the Recent Acquisition. Our station operations product margin increased due to increased activity at our convenience stores, also partially due to the Recent Acquisitions. Our Wholesale segment product margins in gasoline and gasoline blendstocks and in other oils and related products increased largely due to more favorable market conditions. In our Commercial segment, our product margin increased largely due to an increase in bunkering activity.
Results for Wholesale Segment
Gasoline and Gasoline Blendstocks. Sales from wholesale gasoline and gasoline blendstocks were $1.6 billion and $1.3 billion for the three months ended September 30, 2022 and 2021, respectively, increasing $252.0 million, or 18%, primarily due to an increase in prices, partially offset by a decline in volume sold. Our gasoline and gasoline blendstocks product margin was $54.2 million and $22.5 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $31.7 million, or 141%, primarily due to more favorable market conditions in gasoline.
Sales from wholesale gasoline and gasoline blendstocks were $5.0 billion and $3.7 billion for the nine months ended September 30, 2022 and 2021, respectively, an increase of $1.3 billion, or 35%, primarily due to an increase in prices, partially offset by a decline in volume sold. Our gasoline and gasoline blendstocks product margin was $93.0 million and $62.4 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $30.6 million, or 49%, primarily due to more favorable market conditions in gasoline during the second and third quarters of 2022.
Other Oils and Related Products. Sales from other oils and related products (primarily distillates and residual oil) were $886.9 million and $451.2 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $435.7 million, or 97%, primarily due to an increase in distillate prices and to higher residual oil volume sold. Our product margin from other oils and related products was $25.7 million and $22.6 million for the three months ended
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September 30, 2022 and 2021, respectively, an increase of $3.1 million, or 14%, primarily due to more favorable market conditions in distillates.
Sales from other oils and related products were $3.2 billion and $1.6 billion for the nine months ended September 30, 2022 and 2021, respectively, an increase of $1.6 billion, or 100%, primarily due to an increase in distillate prices and to higher distillate and residual volume sold. Our product margin from other oils and related products was $130.7 million and $54.6 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $76.1 million, or 139%, primarily due to more favorable market conditions.
Crude Oil. Crude oil sales and logistics revenues were $0.1 million and $13.2 million for the three months ended September 30, 2022 and 2021, respectively, a decrease of $13.1 million, or 99%, due to a decrease in volume sold. Our crude oil product margin was ($0.6 million) and ($2.8 million) for the three months ended September 30, 2022 and 2021, respectively, an increase of $2.2 million, or 78%, primarily due to the expiration of a pipeline connection agreement in August of 2021.
Crude oil sales and logistics revenues were $2.3 million and $47.1 million for the nine months ended September 30, 2022 and 2021, respectively, a decrease of $44.8 million, or 95%, primarily due to a decrease in volume sold. Our crude oil product margin was ($6.7 million) and ($10.7 million) for the nine months ended September 30, 2022 and 2021, respectively, an increase of $4.0 million, or 37%, primarily due to the expiration of a pipeline connection agreement in August of 2021.
Results for Gasoline Distribution and Station Operations Segment
Gasoline Distribution. Sales from gasoline distribution were $1.6 billion and $1.2 billion for the three months ended September 30, 2022 and 2021, respectively, increasing $479.8 million, or 42%, primarily due to an increase in prices and an increase in volume sold in part due to the Recent Acquisitions. Our product margin from gasoline distribution was $188.0 million and $112.4 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $75.6 million, or 67%, primarily due to higher fuel margins (cents per gallon) and an increase in volume sold due to the Recent Acquisitions.
Sales from gasoline distribution were $4.7 billion and $2.9 billion for the nine months ended September 30, 2022 and 2021, respectively, an increase of $1.8 billion, or 62%, primarily due to an increase in prices and an increase in volume sold in part due to the Recent Acquisitions. Our product margin from gasoline distribution was $432.7 million and $294.0 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $138.7 million, or 47%, primarily due to higher fuel margins (cents per gallon) and an increase in volume sold in part due to the Recent Acquisitions.
Station Operations. Our station operations, which include (i) convenience store and prepared food sales at our directly operated stores, (ii) rental income from gasoline stations leased to dealers or from commissioned agents and from cobranding arrangements and (iii) sale of sundries, such as car wash sales and lottery and ATM commissions, collectively generated revenues of $158.9 million and $134.1 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $24.8 million, or 18%. Our product margin from station operations was $73.6 million and $65.3 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $8.3 million, or 13%. The increases in sales and product margin are primarily due to an increase in activity at our convenience stores, in part due to the Recent Acquisitions.
Sales from our station operations were $419.1 million and $357.4 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $61.7 million, or 17%. Our product margin from station operations was $200.7 million and $176.6 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $24.1 million, or 14%. The increases in sales and product margin are primarily due to an increase in activity at our convenience stores, in part due to the Recent Acquisitions.
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Results for Commercial Segment
Our commercial sales were $326.1 million and $202.5 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $123.6 million or 61%, primarily due to an increase in prices. Our commercial product margin was $10.4 million and $3.9 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $6.5 million, or 166%. The increases in sales and product margin are largely due to an increase in bunkering activity.
Our commercial sales were $1.0 billion and $0.5 billion for the nine months ended September 30, 2022 and 2021, respectively, increasing $536.1 million or 111%, due to increases in prices and volume sold. Our commercial product margin was $31.0 million and $10.8 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $20.2 million, or 187%. The increases in sales and product margin are largely due to an increase in bunkering activity.
SG&A expenses were $65.1 million and $54.7 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $10.4 million, or 19%, including increases of $4.8 million in accrued discretionary incentive compensation, $2.3 million in wages and benefits and $6.4 million in various other SG&A expenses. The increase in SG&A expenses was offset by a $3.1 million expense incurred in the third quarter of 2021 for compensation resulting from the retirement of our former chief financial officer in recognition of service.
SG&A expenses were $182.3 million and $155.0 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $27.3 million, or 18%, including increases of $16.3 million in accrued discretionary incentive compensation, $7.8 million in wages and benefits, $1.9 million in advertising and marketing expenses, $1.7 million in bank fees and $9.3 million in various other SG&A expenses. The increase in SG&A expenses was offset by a $3.1 million expense incurred in the third quarter of 2021 for compensation resulting from the retirement of our former chief financial officer in recognition of service and a $6.6 million expense incurred in the second quarter of 2021 for compensation and benefits resulting from the passing of our general counsel. The $6.6 million expense relates to contractual commitments including the acceleration of grants previously awarded as well as a discretionary award in recognition of service.
Operating expenses were $119.5 million and $92.1 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $27.4 million, or 30%, including an increase of $25.1 million associated with our GDSO operations, including the Recent Acquisitions, in part due to increased credit card fees related to the increases in volume and price, higher salary expense and higher rent expense due in part to greater activity at our stores, an increase in our environmental reserve and an increase in maintenance and repair expenses. Operating expenses associated with our terminal operations increased $2.3 million, in part due to increased maintenance and repair expenses.
Operating expenses were $327.3 million and $260.8 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $66.5 million, or 25%, including an increase of $65.1 million associated with our GDSO operations, including the Recent Acquisitions, in part due to increased credit card fees related to the increases in volume and price, higher salary expense and higher rent expense due in part to greater activity at our stores, an increase in our environmental reserve and an increase in maintenance and repair expenses. Operating expenses associated with our terminal operations increased $1.4 million.
Amortization Expense
Amortization expense related to intangible assets was $2.1 million and $2.7 million for the three months ended September 30, 2022 and 2021, respectively, and $6.7 million and $8.1 million for the nine months ended September 30, 2022 and 2021, respectively.
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Net (Loss) Gain on Sale and Disposition of Assets
Net gain on sale and disposition of assets was $81.5 million for the nine months ended September 30, 2022, primarily related to the sale of the Revere Terminal (see Note 11 of Notes to Consolidated Financial Statements for more information) and to a gain of $4.9 million, primarily due to the sale of GDSO sites. The respective net (loss) gain on sale and disposition of assets for the three months ended September 30, 2022 and for each of the three and nine months ended September 30, 2021 was immaterial.
Interest Expense
Interest expense was $19.0 million and $19.7 million for the three months ended September 30, 2022 and 2021, respectively, a decrease of $0.7 million, or 3%.
Interest expense was $61.5 million and $60.3 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $1.2 million, or 2%.
Income Tax Expense
Income tax expense was $10.8 million and $0.4 million for the three months ended September 30, 2022 and 2021, respectively, and $14.9 million and $0.8 million for the nine months ended September 30, 2022 and 2021, respectively. The respective income tax expense reflects the income tax expense from the operating results of GMG, which is a taxable entity for federal and state income tax purposes.
Liquidity and Capital Resources
Liquidity
Our primary liquidity needs are to fund our working capital requirements, capital expenditures and distributions and to service our indebtedness. Our primary sources of liquidity are cash generated from operations, amounts available under our working capital revolving credit facility and equity and debt offerings. Please read “—Credit Agreement” for more information on our working capital revolving credit facility.
Working capital was $175.9 million and $225.5 million at September 30, 2022 and December 31, 2021, respectively, a decrease of $49.6 million. Changes in current assets and current liabilities decreasing our working capital primarily include an increase of $196.2 million in accounts payable primarily due to higher prices and a decrease of $81.8 million in inventories due to market structure. The decrease in working capital was offset by a decrease of $204.7 million in the current portion of our working capital revolving credit facility and an increase of $18.9 million in accounts receivable also primarily due to higher prices.
During 2022, we paid the following cash distributions to our common unitholders and our general partner:
Distribution Paid for the
Cash Distribution Payment Date
Total Paid
February 14, 2022
20.9 million
Fourth quarter 2021
May 13, 2022
21.3 million
First quarter 2022
August 12, 2022
21.8 million
Second quarter 2022
In addition, on October 25, 2022, the board of directors of our general partner declared a quarterly cash distribution of $0.6250 per unit ($2.50 per unit on an annualized basis) on all of our outstanding common units for the
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period from July 1, 2022 through September 30, 2022 to our common unitholders of record as of the close of business on November 8, 2022. We expect to pay the total cash distribution of approximately $22.7 million on November 14, 2022.
During 2022, we paid the following cash distributions to holders of the Series A Preferred Units and the Series B Preferred Units:
February 15, 2022
1.7 million
1.8 million
November 15, 2021 - February 14, 2022
May 16, 2022
August 15, 2022
In addition, on October 17, 2022, the board of directors of our general partner declared a quarterly cash distribution of $0.609375 per unit ($2.4375 per unit on an annualized basis) on the Series A Preferred Units for the period from August 15, 2022 through November 14, 2022 to our Series A preferred unitholders of record as of the opening of business on November 1, 2022. We expect to pay the total cash distribution of approximately $1.7 million on November 15, 2022.
The board of directors of our general partner also declared a quarterly cash distribution of $0.59375 per unit ($2.375 per unit on an annualized basis) on the Series B Preferred Units for the period from August 15, 2022 through November 14, 2022 to our Series B preferred unitholders of record as of the opening of business on November 1, 2022. We expect to pay the total cash distribution of approximately $1.8 million on November 15, 2022.
Contractual Obligations
We have contractual obligations that are required to be settled in cash. The amounts of our contractual obligations at September 30, 2022 were as follows (in thousands):
Payments Due by Period
Remainder of
Beyond 2022
Credit facility obligations (1)
776
102,738
103,514
Senior notes obligations (2)
1,046,408
Operating lease obligations (3)
18,743
320,669
339,412
Other long-term liabilities (4)
6,559
66,470
73,029
Financing obligations (5)
3,858
113,449
117,307
29,936
1,649,734
1,679,670
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Capital Expenditures
Our operations require investments to maintain, expand, upgrade and enhance existing operations and to meet environmental and operational regulations. We categorize our capital requirements as either maintenance capital expenditures or expansion capital expenditures. Maintenance capital expenditures represent capital expenditures to repair or replace partially or fully depreciated assets to maintain the operating capacity of, or revenues generated by, existing assets and extend their useful lives. Maintenance capital expenditures also include expenditures required to maintain equipment reliability, tank and pipeline integrity and safety and to address certain environmental regulations. We anticipate that maintenance capital expenditures will be funded with cash generated by operations. We had approximately $27.8 million and $28.1 million in maintenance capital expenditures for the nine months ended September 30, 2022 and 2021, respectively, which are included in capital expenditures in the accompanying consolidated statements of cash flows, of which approximately $25.0 million and $25.9 million for the nine months ended September 30, 2022 and 2021, respectively, are related to our investments in our gasoline station business. Repair and maintenance expenses associated with existing assets that are minor in nature and do not extend the useful life of existing assets are charged to operating expenses as incurred.
Expansion capital expenditures include expenditures to acquire assets to grow our businesses or expand our existing facilities, such as projects that increase our operating capacity or revenues by, for example, increasing dock capacity and tankage, diversifying product availability, investing in raze and rebuilds and new-to-industry gasoline stations and convenience stores, increasing storage flexibility at various terminals and by adding terminals to our storage network. We have the ability to fund our expansion capital expenditures through cash from operations or our credit agreement or by issuing debt securities or additional equity. We had approximately $204.5 million and $37.4 million in expansion capital expenditures, including acquired property and equipment, for the nine months ended September 30, 2022 and 2021, respectively, primarily related to investments in our gasoline station business.
For the nine months ended September 30, 2022, the $204.5 million in expansion capital expenditures includes approximately $166.5 million in property and equipment associated with the acquisitions of Tidewater, Miller Oil and Consumers Petroleum (see Note 2 of Notes to Consolidated Financial Statements), and $38.0 million in expansion capital expenditures, primarily related to investments in our gasoline stations.
We currently expect maintenance capital expenditures of approximately $45.0 million to $55.0 million and expansion capital expenditures, excluding acquisitions, of approximately $50.0 million to $60.0 million in 2022, relating primarily to investments in our gasoline station business. These current estimates depend, in part, on the timing of completion of projects, availability of equipment and workforce, weather, the scope and duration of COVID-19 and unanticipated events or opportunities requiring additional maintenance or investments.
We believe that we will have sufficient cash flow from operations, borrowing capacity under our credit agreement and the ability to issue additional equity and/or debt securities to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. However, we are subject to business and operational risks, including uncertainties related to the extent and duration of COVID-19 and geopolitical events, each of which could adversely affect our cash flow. A material decrease in our cash flows would likely have an adverse effect on our borrowing capacity as well as our ability to issue additional equity and/or debt securities.
Cash Flow
The following table summarizes cash flow activity (in thousands):
Operating Activities
Cash flow from operating activities generally reflects our net income, balance sheet changes arising from inventory purchasing patterns, the timing of collections on our accounts receivable, the seasonality of parts of our businesses, fluctuations in product prices, working capital requirements and general market conditions.
Net cash provided by operating activities was $576.9 million and $99.1 million for the nine months ended September 30, 2022 and 2021, respectively, for a period-over-period increase in cash flow from operating activities of $477.8 million. The period-over-period change primarily reflects a net gain on the sale and disposition of assets of $81.5 million, primarily related to the sale of the Revere Terminal (see Note 11 of Notes to Consolidated Financial Statements).
Except for net income, the primary drivers of the changes in operating activities include the following (in thousands):
Increase in accounts receivable
Decrease (increase) in inventories
Increase in accounts payable
For the nine months ended September 30, 2022, the increases in accounts receivable and accounts payable are in part due to the increase in prices. The decrease in inventories is primarily due to carrying lower levels of inventories during the period, offset by the increase in prices.
For the nine months ended September 30, 2021, the increases in accounts receivable, inventories and accounts payable are largely due to the increase in prices.
Investing Activities
Net cash used in investing activities was $194.7 million for the nine months ended September 30, 2022 and included $255.2 million in acquisitions ($154.7 million for Consumers Petroleum, $60.1 million for Miller Oil and $40.4 million for Tidewater), $38.0 million in expansion capital expenditures and $27.8 million in maintenance capital expenditures. Net cash used in investing activities was offset by $126.3 million in proceeds from the sale of property and equipment, primarily related to the sale of the Revere Terminal.
Net cash used in investing activities was $81.4 million for the nine months ended September 30, 2021 and included $37.4 million in expansion capital expenditures, $28.1 million in maintenance capital expenditures, $18.0 million in acquisitions, primarily related to company-operated gasoline stations and convenience stores, and $1.7 million in seller note issuances which represent notes we received from buyers in connection with the sale of certain of our gasoline stations. Net cash used in investing activities was offset by $3.8 million in proceeds from the sale of property and equipment.
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Please read “—Capital Expenditures” for a discussion of our capital expenditures for the nine months ended September 30, 2022 and 2021.
Financing Activities
Net cash used in financing activities was $377.6 million for the nine months ended September 30, 2022 and included $354.7 million in net payments on our working capital revolving credit facility, $74.3 million in cash distributions to our limited partners (preferred and common unitholders) and our general partner, $2.6 million in the repurchase of common units pursuant to our repurchase program for future satisfaction of our LTIP obligations and $1.6 million in LTIP units withheld for tax obligations related to awards that vested in 2022. Net cash used in financing activities was offset by $55.6 million in net borrowings from our revolving credit facility, primarily to fund our acquisitions.
Net cash used in financing activities was $11.9 million for the nine months ended September 30, 2021 and included $78.6 million in net payments on our revolving credit facility, $68.0 million in cash distributions to our limited partners (preferred and common unitholders) and our general partner, $3.8 million in the repurchase of common units pursuant to our repurchase program for future satisfaction of our LTIP obligations and $2.2 million in LTIP units withheld for tax obligations related to awards that vested in 2021, offset by $72.2 million in net proceeds from the issuance of the Series B Preferred Units and $68.5 million in net borrowing from our working capital revolving credit facility due primarily to the increase in prices. The proceeds from the issuance of the Series B units were used to pay down the revolving credit facility.
See Note 7 of Notes to Consolidated Financial Statements for supplemental cash flow information related to our working capital revolving credit facility and revolving credit facility.
Certain subsidiaries of ours, as borrowers, and we and certain of our subsidiaries, as guarantors, have a $1.55 billion senior secured credit facility. The credit agreement expires on May 6, 2024.
On March 9, 2022, we and certain of our subsidiaries entered into a sixth amendment to the credit agreement which, among other things, amended certain terms and provisions of the credit agreement to provide for $200.0 million of working capital interim commitments which increased the total aggregate commitment from $1.35 billion to $1.55 billion. On March 30, 2022, we and certain of our subsidiaries entered into a seventh amendment to the credit agreement which, among other things, (i) increased the working capital revolving credit facility by $200.0 million and simultaneously reduced the working capital interim commitments to $0; (ii) refreshed the accordion feature under the credit agreement to permit us to request increases of up to $300.0 million in the total credit facility; and (iii) replaced the Cost of Funds (as defined in the credit agreement) pricing option with a Daily SOFR pricing option. All other material terms of the credit agreement remain substantially the same as disclosed in Note 8 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021.
We repay amounts outstanding and reborrow funds based on our working capital requirements and, therefore, classify as a current liability the portion of the working capital revolving credit facility we expect to pay down during the course of the year. The long-term portion of the working capital revolving credit facility is the amount we expect to be outstanding during the entire year.
There are two facilities under the credit agreement:
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In addition, the credit agreement has an accordion feature whereby we may request on the same terms and conditions then applicable to the credit agreement, provided no Event of Default (as defined in the credit agreement) then exists, an increase to the working capital revolving credit facility, the revolving credit facility, or both, by up to another $300.0 million, in the aggregate, for a total credit facility of up to $1.85 billion. Any such request for an increase must be in a minimum amount of $25.0 million. We cannot provide assurance, however, that our lending group will agree to fund any request by us for additional amounts in excess of the total available commitments of $1.55 billion.
In addition, the credit agreement includes a swing line pursuant to which Bank of America, N.A., as the swing line lender, may make swing line loans in U.S. dollars in an aggregate amount equal to the lesser of (a) $75.0 million and (b) the Aggregate WC Commitments (as defined in the credit agreement). Swing line loans will bear interest at the Base Rate (as defined in the credit agreement). The swing line is a sub-portion of the working capital revolving credit facility and is not an addition to the total available commitments of $1.55 billion.
Availability under the working capital revolving credit facility is subject to a borrowing base which is redetermined from time to time and based on specific advance rates on eligible current assets. Availability under the borrowing base may be affected by events beyond our control, such as changes in petroleum product prices, collection cycles, counterparty performance, advance rates and limits and general economic conditions.
Borrowings under the working capital revolving credit facility bear interest at (1) the Daily or Term SOFR plus a 0.10% SOFR adjustment plus 2.00% to 2.50%, or (2) the base rate plus 1.00% to 1.50%, each depending on the Utilization Amount (as defined in the credit agreement). Borrowings under the revolving credit facility bear interest at (1) the Daily or Term SOFR plus a 0.10% SOFR adjustment plus 1.75% to 2.75%, or (2) the base rate plus 0.75% to 1.75%, each depending on the Combined Total Leverage Ratio (as defined in the credit agreement).
The average interest rates for the credit agreement were 4.1% and 2.3% for the three months ended September 30, 2022 and 2021, respectively, and 3.1% and 2.5% for the nine months ended September 30, 2022 and 2021, respectively.
As of September 30, 2022, we had $0 borrowings outstanding on the working capital revolving credit facility and $99.0 million outstanding on the revolving credit facility. In addition, we had outstanding letters of credit of $205.2 million. Subject to borrowing base limitations, the total remaining availability for borrowings and letters of credit was $1.25 billion and $795.9 million at September 30, 2022 and December 31, 2021, respectively.
The credit agreement imposes financial covenants that require us to maintain certain minimum working capital amounts, a minimum combined interest coverage ratio, a maximum senior secured leverage ratio and a maximum total leverage ratio. We were in compliance with the foregoing covenants at September 30, 2022.
Please read Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Credit Agreement” in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on the credit agreement.
We had 7.00% senior notes due 2027 and 6.875% senior notes due 2029 outstanding at September 30, 2022 and December 31, 2021. Please read Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Notes” in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on these senior notes.
We had financing obligations outstanding at September 30, 2022 and December 31, 2021 associated with historical sale-leaseback transactions that did not meet the criteria for sale accounting. Please read Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.
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Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The significant accounting policies and estimates that we have adopted and followed in the preparation of our consolidated financial statements are detailed in Note 2 of Notes to Consolidated Financial Statements, “Summary of Significant Accounting Policies,” included in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes in our policies that had a significant impact on our financial condition and results of operations for the periods covered in this report.
During the three and nine months ended September 30, 2022, there has been no material change to our critical accounting estimates discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2021, with the addition of the following:
Business Combinations
Under the purchase method of accounting, we recognize tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We record any excess of the purchase price over the fair value of the net tangible and intangible assets acquired as goodwill. The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing purchased dealer supply contracts include, in part, the expected use of the assets acquired, the expected useful life of another asset (or group of assets) related to the acquired assets and legal, regulatory or other contractual provisions that may limit the useful life of an acquired asset. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.
Recent Accounting Pronouncements
A description and related impact expected from the adoption of certain new accounting pronouncements is provided in Note 17 of Notes to Consolidated Financial Statements included elsewhere in this report.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices. The principal market risks to which we are exposed are interest rate risk and commodity risk. We currently utilize various derivative instruments to manage exposure to commodity risk.
Interest Rate Risk
We utilize variable rate debt and are exposed to market risk due to the floating interest rates on our credit agreement. Therefore, from time to time, we utilize interest rate collars, swaps and caps to hedge interest obligations on specific and anticipated debt issuances.
As of September 30, 2022, we had total borrowings outstanding under our credit agreement of $99.0 million. Please read Part I, Item 2. “Management’s Discussion and Analysis—Liquidity and Capital Resources—Credit Agreement,” for information on interest rates related to our borrowings. The impact of a 1% increase in the interest rate on this amount of debt would have resulted in an increase in interest expense, and a corresponding decrease in our results
of operations, of approximately $1.0 million annually, assuming, however, that our indebtedness remained constant throughout the year.
Commodity Risk
We hedge our exposure to price fluctuations with respect to refined petroleum products, renewable fuels, crude oil and gasoline blendstocks in storage and expected purchases and sales of these commodities. The derivative instruments utilized consist primarily of exchange-traded futures contracts traded on the NYMEX, CME and ICE and over-the-counter transactions, including swap agreements entered into with established financial institutions and other credit-approved energy companies. Our policy is generally to purchase only products for which we have a market and to structure our sales contracts so that price fluctuations do not materially affect our profit. While our policies are designed to minimize market risk, as well as inherent basis risk, exposure to fluctuations in market conditions remains. Except for the controlled trading program discussed below, we do not acquire and hold futures contracts or other derivative products for the purpose of speculating on price changes that might expose us to indeterminable losses.
While we seek to maintain a position that is substantially balanced within our commodity product purchase and sales activities, we may experience net unbalanced positions for short periods of time as a result of variances in daily purchases and sales and transportation and delivery schedules as well as other logistical issues inherent in our businesses, such as weather conditions. In connection with managing these positions, we are aided by maintaining a constant presence in the marketplace. We also engage in a controlled trading program for up to an aggregate of 250,000 barrels of commodity products at any one point in time. Changes in the fair value of these derivative instruments are recognized in the consolidated statements of operations through cost of sales. In addition, because a portion of our crude oil business may be conducted in Canadian dollars, we may use foreign currency derivatives to minimize the risks of unfavorable exchange rates. These instruments may include foreign currency exchange contracts and forwards. In conjunction with entering into the commodity derivative, we may enter into a foreign currency derivative to hedge the resulting foreign currency risk. These foreign currency derivatives are generally short-term in nature and not designated for hedge accounting.
We utilize exchange-traded futures contracts and other derivative instruments to minimize or hedge the impact of commodity price changes on our inventories and forward fixed price commitments. Any hedge ineffectiveness is reflected in our results of operations. We utilize regulated exchanges, including the NYMEX, CME and ICE, which are exchanges for the respective commodities that each trades, thereby reducing potential delivery and supply risks. Generally, our practice is to close all exchange positions rather than to make or receive physical deliveries.
At September 30, 2022, the fair value of all of our commodity risk derivative instruments and the change in fair value that would be expected from a 10% price increase or decrease are shown in the table below (in thousands):
Fair Value at
Gain (Loss)
Effect of 10%
Price Increase
Price Decrease
Exchange traded derivative contracts
(21,144)
21,144
Forward derivative contracts
(2,667)
(6,786)
6,786
50,062
(27,930)
27,930
The fair values of the futures contracts are based on quoted market prices obtained from the NYMEX, CME and ICE. The fair value of the swaps and option contracts are estimated based on quoted prices from various sources such as independent reporting services, industry publications and brokers. These quotes are compared to the contract price of the swap, which approximates the gain or loss that would have been realized if the contracts had been closed out at September 30, 2022. For positions where independent quotations are not available, an estimate is provided, or the prevailing market price at which the positions could be liquidated is used. All hedge positions offset physical exposures to the physical market; none of these offsetting physical exposures are included in the above table. Price-risk sensitivities were calculated by assuming an across-the-board 10% increase or decrease in price regardless of term or historical relationships between the contractual price of the instruments and the underlying commodity price. In the event of an actual 10% change in prompt month prices, the fair value of our derivative portfolio would typically change less than that shown in the table due to lower volatility in out-month prices. We have a daily margin requirement to
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maintain a cash deposit with our brokers based on the prior day’s market results on open futures contracts. The balance of this deposit will fluctuate based on our open market positions and the commodity exchange’s requirements. The brokerage margin balance was $28.6 million at September 30, 2022.
We are exposed to credit loss in the event of nonperformance by counterparties to our exchange-traded derivative contracts, physical forward contracts, and swap agreements. We anticipate some nonperformance by some of these counterparties which, in the aggregate, we do not believe at this time will have a material adverse effect on our financial condition, results of operations or cash available for distribution to our unitholders. Exchange-traded derivative contracts, the primary derivative instrument utilized by us, are traded on regulated exchanges, greatly reducing potential credit risks. We utilize major financial institutions as our clearing brokers for all NYMEX, CME and ICE derivative transactions and the right of offset exists with these financial institutions. Accordingly, the fair value of our exchange-traded derivative instruments is presented on a net basis in the consolidated balance sheet. Exposure on physical forward contracts and swap agreements is limited to the amount of the recorded fair value as of the balance sheet dates.
Item 4.Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our principal executive officer and principal financial officer, management evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were operating and effective as of September 30, 2022.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 1.Legal Proceedings
The information required by this item is included in Note 16 of Notes to Consolidated Financial Statements and is incorporated herein by reference.
Item 1A.Risk Factors
In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition or future results.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 6.Exhibits
2.1**
Purchase and Sale Agreement, dated as of December 9, 2020, by and between Consumers Petroleum of Connecticut, Incorporated, Putling Greens I, LLC, Wheels of CT, Inc., CPCI, LLC and Wiehl Estate, LLC, as collective Seller, and Global Partners LP, as Buyer (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on January 31, 2022).
3.1
Certificate of Limited Partnership of Global Partners LP (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on May 10, 2005).
3.2
Fifth Amended and Restated Agreement of Limited Partnership of Global Partners LP dated as of March 24, 2021 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 24, 2021).
4.1
Indenture, dated as of July 31, 2019, among the Issuers, the Guarantors and Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on July 31, 2019).
4.2
Indenture, dated October 7, 2020, among the Issuers, the Guarantors and Regions Bank, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on October 8, 2020).
4.3
First Supplemental Indenture, dated as of October 28, 2020, among the Issuers, the Guarantors and Regions Bank, as trustee (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-4 filed on December 16, 2020).
4.4
First Supplemental Indenture, dated as of October 28, 2020, among the Issuers, the Guarantors and Regions Bank, as successor to Deutsche Bank Trust Company Americas, as trustee (incorporated herein by reference to Exhibit 4.5 to the Registration Statement on Form S-4 filed on December 16, 2020).
10.1*
Form of Phantom Unit Award Agreement for Independent Directors under Global Partners LP Long-Term Incentive Plan.
31.1*
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of Global GP LLC, general partner of Global Partners LP.
31.2*
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of Global GP LLC, general partner of Global Partners LP.
32.1†
Section 1350 Certification of Chief Executive Officer of Global GP LLC, general partner of Global Partners LP.
32.2†
Section 1350 Certification of Chief Financial Officer of Global GP LLC, general partner of Global Partners LP.
101.INS*
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Partnership undertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.
† Not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By:
Global GP LLC,
its general partner
Dated: November 4, 2022
/s/ Eric Slifka
Eric Slifka
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Gregory B. Hanson
Gregory B. Hanson
Chief Financial Officer
(Principal Financial Officer)