WALTHAM, Mass. — Global Partners LP is continuing to deliver value across the midstream and downstream liquid energy markets, providing customers with essential products and services through its integrated fuel storage, distribution and retail assets, President and CEO Eric Slifka said during the partnership's third quarter 2023 earnings call, held on Nov. 9.
In continuing this strategy, Global Partners entered into an asset purchase agreement with Motiva Enterprises LLC to acquire 25 liquid energy terminals along the Atlantic Coast, in the Southeast and in Texas. The partnership will purchase the terminals for $305.8 million in cash.
Global Partners currently owns or leases 24 liquid energy terminals in states throughout the Northeast, and in North Dakota and Oregon. This acquisition will significantly increase the partnership's terminal capacity and geographic reach to cover the Atlantic Coast and the U.S. Gulf. The strategically located assets have a direct connection to a critical network of docks and refined product pipelines, including Colonial, Plantation, Enterprise, Explorer and Magellan.
Upon closing, Global Partners' storage capacity will increase approximately 85 percent to 18.3 million barrels.
"This acquisition is an exceptional opportunity to deliver on our strategy and create value by expanding our footprint into areas with increasing population centers. As a premier operator of terminals, wholesale distribution and retail marketing, we believe these terminals allow us to leverage our expertise in supply and give us a platform for growth in all aspects of our business," Slifka said. "The transaction is backed by a 25-year agreement with Motiva, our anchor tenant, that includes minimum annual revenue commitments. This acquisition, underpinned by the strength of a long-term throughput agreement, will provide the potential for growth into the future."
The deal is expected to close by the end of the year, and is subject to customary and conditions, including regulatory approvals.
Global Partners expects the acquisition to be accretive to distributable cash flow per common unit in the first full year of operations, excluding the impact of first year transition-related expenses. The purchase price will be funded with borrowings under the partnership’s revolving credit facility.
Slifka also provided an update on Global Partners' planned acquisition of five Gulf Oil refined product terminals in Maine, Massachusetts, Connecticut and New Jersey. "We continue to diligently work through the regulatory review process and remain hopeful that we will be able to complete the acquisition this year," the chief executive shared.
Q3 By the Numbers
For the third quarter ended Sept. 30, Global Partners delivered "solid results" in Q3, which was in line with the partnership's expectations in a more normalized market compared with last year, Slifka said.
Net income was $26.8 million vs. $11.4 million for the year-ago period. Adjusted EBITDA was $77.7 million vs. $168.5 million for the third quarter of 2022.
Looking at the partnership's various segments, the gasoline distribution and stations operations (GDSO) segment product margin was down $55.1 million to $206.5 million in the third quarter. Product margin from gasoline distribution decreased $56 million to $132 million, primarily due to lower fuel margins for the third quarter of 2022.
Stations operations product margin — which includes convenience store, prepared food, sundries and rental income — increased $900,000 to $74.5 million this recent quarter partly due to the partnership's acquisition of Tidewater Convenience Inc. in last September.
"GDSO product margins both from gasoline distribution and station operations, were negatively impacted for the quarter due to excessive rain with the Northeast experiencing its third-wettest summer since record keeping began 129 years ago, per the National Oceanic and Atmospheric Administration. That influenced consumer demand for gasoline, c-store products and sundries, such as car wash sales," explained Gregory Hanson, chief financial officer of Global Partners.
Given the scale of the partnership's GDSO business, Slifka believes the company is well positioned to play an integral role in the transition to alternative energy sources, providing a range of multiple fueling options for consumers.
As part of its alternative fuel strategy, Global Partners recently activated its first company-owned electric vehicle (EV) charging stations. The DC fast charging stations are located at the operator's Xtra Mart convenience and fueling station in Worcester, Mass., and at a newly opened Alltown Fresh Kitchen and Marketplace in Fort Edward, N.Y.
While the new charging stations are the first owned by Global Partners, they're not the first in its portfolio. The partnership operates two EV charging station sites owned by a third party and have five more sites under construction.
"We continue to focus on contributing to state and regional energy initiatives," Slifka noted.
At the end of the third quarter, Global Partners' GDSO portfolio consisted of 1,624 sites comprised of 342 company-operated sites, 300 commission agents, 184 DC dealers and 798 contract dealers.
With approximately 1,700 locations primarily in the Northeast, Waltham-based Global Partners is one of the region's largest independent owners, suppliers and operators of gasoline stations and convenience stores. Global Partners also owns, controls or has access to one of the largest terminal networks in New England and New York, through which it distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers. In addition, it engages in the transportation of petroleum products and renewable fuels by rail from the mid-continental United States and Canada.