Global Partners LP (GLP) Bundle
Understanding Global Partners LP (GLP) Revenue Streams
Understanding Global Partners LP’s Revenue Streams
The revenue streams of the company are primarily derived from three main segments: Wholesale, Gasoline Distribution and Station Operations (GDSO), and Commercial. Each segment contributes significantly to the overall financial performance.
Breakdown of Primary Revenue Sources
| Segment | Revenue (Q3 2024) | Revenue (Q3 2023) | Change (%) |
|---|---|---|---|
| Wholesale | $2,724,210 | $2,329,896 | 16.9% |
| Gasoline Distribution and Station Operations | $1,420,898 | $1,617,355 | -12.1% |
| Commercial | $277,130 | $273,794 | 1.2% |
| Total Revenue | $4,422,238 | $4,221,045 | 5.0% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total revenue increased to $12,977,328 from $12,083,062 in the same period of 2023, representing a year-over-year growth rate of 7.4%.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (9M 2024) | Revenue (9M 2023) | Percentage of Total Revenue (9M 2024) |
|---|---|---|---|
| Wholesale | $8,026,246 | $6,896,029 | 61.9% |
| GDSO | $4,114,416 | $4,428,841 | 31.7% |
| Commercial | $836,666 | $758,192 | 6.4% |
Analysis of Significant Changes in Revenue Streams
The Wholesale segment saw a substantial growth due to increased volume sold, accounting for a significant portion of the overall sales increase. The GDSO segment, however, experienced a decline in revenue, attributed to decreased volumes sold compared to the previous year. The Commercial segment showed modest growth, indicating stable demand in that area.
For the three months ended September 30, 2024, the total sales from contracts with customers were $2,136,402, with the Wholesale segment contributing $544,210, the GDSO segment contributing $1,399,531, and the Commercial segment contributing $192,661.
| Segment | Q3 2024 Revenue from Contracts | Q3 2023 Revenue from Contracts | Change (%) |
|---|---|---|---|
| Wholesale | $544,210 | $1,027,213 | -47.0% |
| GDSO | $1,399,531 | $1,596,803 | -12.3% |
| Commercial | $192,661 | $183,421 | 5.0% |
A Deep Dive into Global Partners LP (GLP) Profitability
A Deep Dive into Global Partners LP's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
The gross profit for the three months ended September 30, 2024, was $286.0 million, compared to $228.5 million for the same period in 2023, reflecting an increase of 25%. For the nine months ended September 30, 2024, gross profit reached $789.1 million, up from $693.2 million, a 14% increase year-over-year.
Operating profit for the nine months ended September 30, 2024, was $69.2 million, while operating profit for the same period in 2023 was $70.2 million, indicating a slight decrease of 1%.
Net profit margins for the nine months ended September 30, 2024, were reported at 0.66%, down from 0.80% in 2023, indicating a contraction in profitability despite increased sales.
Trends in Profitability Over Time
Over the past year, the company's profitability has shown fluctuations. The gross profit margin improved due to higher product margins, especially in the wholesale segment, which benefited from favorable market conditions and acquisitions. However, net profit margins have contracted slightly due to increased operational costs and interest expenses.
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the gross profit margin stands at 6.1%, compared to the industry average of 5.8%. The operating profit margin is slightly below the industry average of 0.8% at 0.7%. The net profit margin of 0.66% remains in line with the industry average of 0.65%.
| Metric | Global Partners LP (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 6.1% | 5.8% |
| Operating Profit Margin | 0.7% | 0.8% |
| Net Profit Margin | 0.66% | 0.65% |
Analysis of Operational Efficiency
Operational efficiency has been impacted by rising costs associated with acquisitions and increased interest expenses, which totaled $100.3 million for the nine months ended September 30, 2024, compared to $64.9 million in the previous year, marking a 54% increase . The company’s SG&A expenses were $212.6 million for the nine months ended September 30, 2024, an increase of 10% from $192.4 million in 2023 .
Despite these challenges, the overall gross margin trends remain positive, driven by improved product margins in the wholesale segment, which increased from $150.0 million to $212.4 million for the nine months ended September 30, 2024.
The company's ability to manage costs effectively while maintaining sales growth will be critical for sustaining profitability moving forward.
Debt vs. Equity: How Global Partners LP (GLP) Finances Its Growth
Debt vs. Equity: How Global Partners LP Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Global Partners LP reported total borrowings of $396.2 million, comprised of $219.2 million on the working capital revolving credit facility and $177.0 million on the revolving credit facility. Additionally, the company had outstanding letters of credit totaling $68.2 million.
In terms of long-term obligations, the company has 7.00% senior notes due in 2027, 6.875% senior notes due in 2029, and 8.250% senior notes due in 2032.
Debt-to-Equity Ratio
The debt-to-equity ratio for Global Partners LP stood at 0.55 as of September 30, 2024. This compares favorably to the industry average of approximately 0.65, indicating a relatively lower reliance on debt financing.
Recent Debt Issuances
On January 18, 2024, the company issued $450.0 million in 8.250% senior notes due 2032. The proceeds were utilized to repay a portion of outstanding borrowings under the credit agreement and for general corporate purposes. The interest expense for the nine months ended September 30, 2024, was $100.4 million, reflecting a significant increase from $64.9 million for the same period in the previous year.
Credit Ratings
Global Partners LP maintains a credit rating of B2 from Moody's, which indicates a moderate credit risk.
Debt Financing vs. Equity Funding
The company has strategically balanced its growth through a combination of debt and equity financing. As of September 30, 2024, the total equity attributable to common limited partners was $647.8 million, representing a solid equity base to support further expansion. The company has also paid cash distributions to common unitholders totaling $28.2 million in August 2024.
| Financial Metric | Value |
|---|---|
| Total Borrowings | $396.2 million |
| Working Capital Revolving Credit Facility | $219.2 million |
| Revolving Credit Facility | $177.0 million |
| Outstanding Letters of Credit | $68.2 million |
| Debt-to-Equity Ratio | 0.55 |
| Industry Average Debt-to-Equity Ratio | 0.65 |
| Recent Debt Issuance (January 2024) | $450.0 million |
| Interest Expense (9M 2024) | $100.4 million |
| Credit Rating (Moody's) | B2 |
| Total Equity (September 30, 2024) | $647.8 million |
| Cash Distributions (August 2024) | $28.2 million |
Assessing Global Partners LP (GLP) Liquidity
Assessing Global Partners LP's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
Current Assets: $398.8 million
Current Liabilities: $257.2 million
Current Ratio = Current Assets / Current Liabilities = $398.8 million / $257.2 million = 1.55
Quick Ratio: The quick ratio is calculated using the following data:
Current Assets: $398.8 million
Inventories: $215.0 million
Quick Assets = Current Assets - Inventories = $398.8 million - $215.0 million = $183.8 million
Quick Ratio = Quick Assets / Current Liabilities = $183.8 million / $257.2 million = 0.71
Analysis of Working Capital Trends
Working Capital as of September 30, 2024: $141.6 million
Working Capital as of December 31, 2023: $115.0 million
Increase in Working Capital: $26.6 million
Cash Flow Statements Overview
| Cash Flow Type | 9 Months Ended September 30, 2024 | 9 Months Ended September 30, 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $(35.6) million | $343.0 million |
| Net Cash Used in Investing Activities | $(230.4) million | $(121.8) million |
| Net Cash Provided by (Used in) Financing Activities | $266.9 million | $(213.9) million |
Potential Liquidity Concerns or Strengths
Borrowings Outstanding:
- Working Capital Revolving Credit Facility: $219.2 million
- Revolving Credit Facility: $177.0 million
- Total Borrowings Outstanding: $396.2 million
- Outstanding Letters of Credit: $68.2 million
Total Remaining Availability for Borrowings and Letters of Credit:
$1.09 billion as of September 30, 2024
Financial Covenants Compliance: The company was in compliance with all financial covenants at September 30, 2024.
Is Global Partners LP (GLP) Overvalued or Undervalued?
Valuation Analysis
In evaluating whether the company is overvalued or undervalued, we will analyze key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yield, and analyst consensus ratings.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio stood at 16.4. This is calculated based on a net income attributable to common limited partners of $40.0 million for the three months ended September 30, 2024, and a market capitalization of approximately $656.0 million.
Price-to-Book (P/B) Ratio
The current P/B ratio is approximately 0.8, derived from total partners’ equity of $723.3 million and a market capitalization of $656.0 million.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 7.2, using an enterprise value of approximately $1.95 billion and EBITDA of $291.1 million for the nine months ended September 30, 2024.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $12.50 and a high of $20.00. As of the latest trading session, the stock price is approximately $19.00.
Dividend Yield and Payout Ratios
The annualized dividend yield is 15.3%, based on a quarterly cash distribution of $0.7300 per unit, translating to an annualized payout of $2.92 per unit. The payout ratio stands at 50% of the net income attributable to common limited partners.
Analyst Consensus on Stock Valuation
Analyst consensus currently rates the stock as a Hold, with a target price range of $18.00 to $22.00.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 16.4 |
| P/B Ratio | 0.8 |
| EV/EBITDA Ratio | 7.2 |
| Stock Price (Current) | $19.00 |
| Dividend Yield | 15.3% |
| Payout Ratio | 50% |
| Analyst Consensus | Hold |
Key Risks Facing Global Partners LP (GLP)
Key Risks Facing Global Partners LP
Overview of Internal and External Risks:
Global Partners LP faces various internal and external risks that could impact its financial health significantly. Key risks include:
- Industry Competition: Intense competition within the petroleum and energy sector can pressure margins and market share.
- Regulatory Changes: Compliance with evolving environmental regulations and safety standards can lead to increased operational costs.
- Market Conditions: Volatility in oil prices and changes in consumer demand can adversely affect revenue.
Operational Risks:
The company has identified several operational risks in its recent filings:
- Increased operational costs due to higher fuel margins and depreciation expenses—$8.7 million increase in depreciation allocated to cost of sales.
- Potential disruptions in supply chains due to geopolitical tensions or natural disasters.
Financial Risks:
Financial health is also at risk from:
- Interest Rate Fluctuations: The interest expense increased by 54% to $100.3 million for the nine months ended September 30, 2024, compared to $64.9 million for the same period in 2023, primarily due to new debt obligations.
- Liquidity Risks: Working capital was reported at $141.6 million as of September 30, 2024, an increase of $26.6 million from December 31, 2023.
Strategic Risks:
Strategic plans may also be hindered by:
- Acquisition Integration: The successful integration of the Motiva Terminal Facilities and Gulf Terminals is critical for achieving projected synergies.
- Market Positioning: Failure to adapt to changing market dynamics could lead to a loss of competitive advantage.
Mitigation Strategies:
The company has implemented several strategies to mitigate risks:
- Operational Improvements: Investments in technology and efficiency improvements are aimed at reducing operational costs.
- Diversification: Expanding product offerings to include renewable energy sources to adapt to market changes.
| Risk Category | Description | Financial Impact |
|---|---|---|
| Operational Risks | Increased depreciation costs | $8.7 million increase |
| Financial Risks | Interest expense growth | $100.3 million |
| Liquidity Risks | Current working capital | $141.6 million |
| Market Conditions | Volatility in oil prices | Revenue fluctuations |
Future Growth Prospects for Global Partners LP (GLP)
Future Growth Prospects for Global Partners LP
Analysis of Key Growth Drivers
The company has demonstrated significant growth opportunities through strategic acquisitions and market expansions. In December 2023, the acquisition of 25 refined product terminals from Motiva Enterprises LLC enhanced operational capacity along the Atlantic Coast and Texas. This acquisition contributed to a 5% increase in total sales, reaching $4.4 billion for the three months ended September 30, 2024, compared to $4.2 billion for the same period in 2023. Furthermore, the acquisition of four refined-product terminals from Gulf in April 2024 has also played a role in expanding the company’s footprint.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to continue due to increased volume sales, with aggregate product sold increasing by 776 million gallons from the prior year to 4.9 billion gallons for the nine months ended September 30, 2024. Analysts estimate that adjusted distributable cash flow will reach $154.0 million for the nine months ended September 30, 2024, compared to $132.3 million in the same period of 2023.
Strategic Initiatives or Partnerships Driving Future Growth
The company has engaged in strategic partnerships and initiatives that are expected to drive growth. For instance, it has focused on enhancing its operational capabilities through capital expenditures, with estimates of approximately $40 million to $50 million allocated for expansion capital expenditures in 2024. Furthermore, the company is leveraging its existing facilities for operational capacity increases, such as diversifying product availability and increasing storage flexibility.
Competitive Advantages Positioning the Company for Growth
Global Partners LP maintains several competitive advantages that position it favorably for future growth. The firm has a robust network of strategic terminals and distribution capabilities, which allowed it to capture a market share of approximately 25% in the Northeast region. Additionally, the company reported a 25% increase in gross profit to $286.0 million for the three months ended September 30, 2024, driven by favorable market conditions and improved product margins.
| Growth Driver | Details | Financial Impact |
|---|---|---|
| Acquisitions | Acquisition of 25 terminals from Motiva and 4 from Gulf | Increased sales by 5%; total sales reached $4.4 billion |
| Volume Sales | Increase in aggregate product sold | Increased by 776 million gallons; total volume sold 4.9 billion gallons |
| Capital Expenditures | Estimated $40 million to $50 million for expansion | Supports operational capacity and market expansion |
| Gross Profit | Increase in gross profit | Up 25% to $286.0 million |
Overall, the combination of strategic acquisitions, increased volume sales, and significant capital investments positions the company favorably for sustained growth in the coming years.
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Updated on 16 Nov 2024
Resources:
- Global Partners LP (GLP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Global Partners LP (GLP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Global Partners LP (GLP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.