Business Context and Reporting Period
Company: Global Partners LP (GLP)
Filing Type: Form 8-K (Current Report)
Date of Report: July 22, 2019
Reporting Period: Preliminary financial estimates for the three months ended June 30, 2019.
The filing discloses preliminary second-quarter 2019 financial results in connection with the commencement of a private offering of senior unsecured notes and a cash tender offer for existing debt.
Key Financial Metrics (Preliminary Estimates)
The following figures represent management's estimates for the three months ended June 30, 2019, and are subject to final audit and closing procedures.
| Financial Metric | Low Estimate (in millions) | High Estimate (in millions) |
|---|---|---|
| Net Income Attributable to Global Partners LP | $8.6 | $13.6 |
| EBITDA | $58.1 | $63.1 |
| Adjusted EBITDA | $57.0 | $62.0 |
| Depreciation and Amortization | $26.0 | $26.0 |
| Interest Expense | $23.0 | $23.0 |
| Income Tax Expense | $0.5 | $0.5 |
Debt and Liquidity Actions:
- New Offering: Intent to commence a private offering of $400 million in aggregate principal amount of senior unsecured notes due 2027.
- Tender Offer: Commencement of a cash tender offer to purchase up to $375 million aggregate principal amount of 6.25% senior notes due 2022.
- Use of Proceeds: Funds from the new offering are intended to fund the tender offer and repay a portion of borrowings under the company's credit agreement.
Material Changes and Unusual Items
The filing does not provide comparative financial data for the prior period (Q2 2018) to calculate specific material changes in revenue or profit. However, the filing highlights the following material events:
- Capital Structure Restructuring: The company is actively refinancing its debt profile by issuing new long-term notes (2027) to retire shorter-term, higher-cost debt (2022).
- Asset Dispositions: The reconciliation of EBITDA to Adjusted EBITDA includes a net gain on the sale and disposition of assets of approximately $1.1 million.
Guidance, Outlook, and Risks
Management Commentary:
Management utilizes EBITDA and Adjusted EBITDA to assess compliance with financial covenants, ability to service debt, and operating performance independent of capital structure. The filing explicitly states that the preliminary results are not a comprehensive statement of financial results and have not been audited.
Risks and Contingencies:
- Estimation Risk: Actual results may differ materially from the preliminary estimates due to items identified during the final financial closing process.
- Market Conditions: The new offering is subject to market and other conditions.
- Forward-Looking Statements: The filing contains forward-looking statements regarding the tender offer and offering, which are subject to risks and uncertainties that could cause actual results to differ materially.
Investor Verification Checklist
- Final Q2 2019 Results: Verify the final audited financial statements for the quarter ended June 30, 2019, to confirm if actual results fall within the estimated ranges provided.
- Offering Completion: Confirm whether the $400 million senior notes offering was successfully completed and the final interest rate/terms.
- Tender Offer Outcome: Verify the final amount of 6.25% senior notes due 2022 tendered and repurchased by the company.
- Debt Covenants: Review the final Adjusted EBITDA to ensure compliance with financial covenants in existing debt agreements.
- Asset Sale Details: Investigate the specific nature of the asset dispositions that generated the $1.1 million net gain.