Business Context and Reporting Period
This Form 8-K, dated November 13, 2012, reports on Global Partners LP's acquisition of 100% of the outstanding membership interests in Alliance Energy LLC ("Alliance") from AE Holdings Corp. The acquisition was completed on March 1, 2012. Alliance operates as a gasoline distributor and operator of gasoline stations and convenience stores. The filing provides historical financial statements for AE Holdings and pro forma financial statements for Global Partners LP reflecting the acquisition.
Key Financial Metrics
The filing presents EBITDA reconciliations for AE Holdings and Pro Forma Global Partners LP. Specific revenue, profit, cash flow, debt, and liquidity figures are not explicitly detailed in the text of this report, as the full financial statements are filed as Exhibits 99.1 and 99.2. However, the following EBITDA data is provided (in millions):
| Entity / Period | Net Income | Depreciation & Amortization | Interest Expense | EBITDA |
|---|---|---|---|---|
| AE Holdings (Year Ended Dec 31, 2011) | $15.3 | $15.3 | $11.6 | $42.3 |
| AE Holdings (Year Ended Dec 31, 2010) | $6.3 | $11.6 | $7.6 | $25.7 |
| AE Holdings (Year Ended Dec 31, 2009) | $1.9 | $12.2 | $8.2 | $22.2 |
| Pro Forma Global Partners (Nine Months Ended Sep 30, 2012) | $18.3 | $39.7 | $28.9 | $87.1 |
| Pro Forma Global Partners (Year Ended Dec 31, 2011) | $40.2 | $51.0 | $38.5 | $129.9 |
EBITDA is utilized by management to assess compliance with debt covenants, financial performance independent of capital structure, and the ability to service debt and make distributions.
Material Changes
The primary material change is the consolidation of Alliance Energy LLC into Global Partners LP following the March 1, 2012 acquisition. The pro forma data indicates a significant increase in EBITDA for Global Partners LP when including Alliance, rising from $40.2 million in net income (historical) to $129.9 million in EBITDA (pro forma) for the year ended December 31, 2011. The filing does not provide a direct year-over-year comparison of Global Partners' standalone historical results versus the pro forma results in the text body, other than the table above.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, specific management commentary on future outlook, or a detailed discussion of risks and contingencies beyond the standard disclosure that EBITDA is a non-GAAP measure. The text notes that EBITDA excludes items affecting net income and may not be comparable to similarly titled measures of other companies. It is not an alternative to net income, operating income, or cash flow from operating activities under GAAP.
Investor Verification Checklist
- Review Exhibit 99.1 for the full audited consolidated financial statements of AE Holdings.
- Review Exhibit 99.2 for the unaudited pro forma combined financial statements of Global Partners LP.
- Verify the specific debt covenants mentioned as being assessed via EBITDA.
- Confirm the exact purchase price and capital structure changes resulting from the Alliance acquisition, as these are not detailed in the summary text.
- Compare the pro forma EBITDA margins against industry peers to validate the "return on invested capital" assessment mentioned by management.