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What changed in GLOBAL PARTNERS LP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GLOBAL PARTNERS LP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+384 added−340 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-27)

Top changes in GLOBAL PARTNERS LP's 2023 10-K

384 paragraphs added · 340 removed · 284 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

146 edited+35 added−19 removed295 unchanged
Biggest changeImplementation of regulations and directives related to these transportation services as well as disruption in any 22 Table of Contents of these transportation services could adversely affect our logistics activities. ● Changes in government usage mandates and tax credits could adversely affect the availability and pricing of ethanol and renewable fuels, which could negatively impact our sales. ● We may not be able to obtain state fund or insurance reimbursement of our environmental remediation costs. ● Our results can be adversely affected by unforeseen events, such as adverse weather, natural disasters, terrorism, cyber attacks, pandemics or other catastrophic events. ● Our businesses are subject to federal, state and municipal environmental and non-environmental regulations which could have a material adverse effect on such businesses. ● New, stricter environmental laws and other industry-related regulations or environmental litigation could significantly impact our operations and/or increase our costs. ● Our operations are subject to a series of risks arising from climate change. ● Cyber security breaches and other disruptions could compromise our information and operations, and expose us to liability, which would cause our business and reputation to suffer. ● We depend on unionized labor for the operation of certain of our terminals.
Biggest changeRegulations and directives related to these transportation services as well as disruption in any of these transportation services could adversely affect our logistics activities. ● Changes in government usage mandates and tax credits could adversely affect the availability and pricing of ethanol and renewable fuels, which could negatively impact our sales. ● We may not be able to obtain state fund or insurance reimbursement of our environmental remediation costs. 23 Table of Contents ● Our results can be adversely affected by unforeseen events, such as adverse weather, natural disasters, terrorism, cyberattacks, pandemics or other catastrophic events. ● Our businesses, including our gasoline station and convenience store business, expose us to litigation which could result in an unfavorable outcome or settlement of one or more lawsuits where insurance proceeds are insufficient or otherwise unavailable. ● Our businesses are subject to federal, state and municipal environmental and non-environmental regulations which could significantly impact our operations, increase our costs and have a material adverse effect on such businesses. ● Our assets and operations are subject to a series of risks arising from climate change. ● A disruption to our information technology systems, including cybersecurity, could significantly limit our ability to manage and operate our businesses. ● Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which could permit them to favor their own interests to the detriment of our unitholders. ● Our tax treatment depends on our status as a partnership for federal income tax purposes. ● Unitholders may be required to pay taxes on their share of our income even if they do not receive any cash distributions from us.
Such factors include fluctuations in refined petroleum products, gasoline blendstocks, renewable fuels and crude oil prices, counterparty’s ability to pay for or accept contracted volumes and a competitive marketplace for the services offered by us.
Such factors include fluctuations in refined petroleum products, gasoline blendstocks, renewable fuels and crude oil prices, counterparty’s ability to pay for or accept contracted volumes and a competitive marketplace for the services and products offered by us.
Any such transactions involves potential risks, including: ● performance from the acquired assets and businesses or completed growth projects that is below the forecasts we used in evaluating the acquisition; ● mistaken assumptions about price, demand, market growth, volumes, revenues and costs, including synergies; ● a project that is behind schedule or in excess of budgeted costs; ● a significant increase in our indebtedness and working capital requirements; ● an inability to hire, train or retain qualified personnel to manage and operate the businesses or assets; ● the inability to timely and effectively integrate the operations of recently acquired businesses or assets, particularly those in new geographic areas or in new lines of business; ● mistaken assumptions about the overall costs of equity or debt; ● the assumption of substantial unknown or unforeseen environmental and other liabilities arising out of the acquired businesses or assets, including liabilities arising from the operation of the acquired businesses or assets prior to our acquisition, for which we are not indemnified or for which the indemnity is inadequate; ● limitations on rights to indemnity from the seller; 25 Table of Contents ● customer or key employee loss from the acquired businesses; ● unforeseen difficulties operating in new and existing product areas or new and existing geographic areas; and ● diversion of our management’s and employees’ attention from other business concerns.
Any such transactions involves potential risks, including: ● performance from the acquired assets and businesses or completed growth projects that is below the forecasts we used in evaluating the transaction; ● mistaken assumptions about price, demand, market growth, volumes, revenues and costs, including synergies; ● a project that is behind schedule or in excess of budgeted costs; ● a significant increase in our indebtedness and working capital requirements; ● an inability to hire, train or retain qualified personnel to manage and operate the businesses or assets; 25 Table of Contents ● the inability to timely and effectively integrate the operations of recently acquired businesses or assets, particularly those in new geographic areas or in new lines of business; ● mistaken assumptions about the overall costs of equity or debt; ● the assumption of substantial unknown or unforeseen environmental and other liabilities arising out of the acquired businesses or assets, including liabilities arising from the operation of the acquired businesses or assets prior to our acquisition, for which we are not indemnified or for which the indemnity is inadequate; ● limitations on rights to indemnity from the seller of the acquired assets and businesses; ● customer or key employee loss from the acquired businesses; ● unforeseen difficulties operating in new and existing product areas or new and existing geographic areas; and ● diversion of our management’s and employees’ attention from other business concerns.
For example, each of our credit agreement and the indentures limits our ability to pay distributions upon the occurrence of the following events, among others: ● failure to pay any principal, interest, fees or other amounts when due; ● failure to perform or otherwise comply with the covenants in the credit agreement, the indentures or in other loan documents to which we are a borrower; and ● a bankruptcy or insolvency event involving us, our general partner or any of our subsidiaries.
For example, our credit agreement and the indentures limits our ability to pay distributions upon the occurrence of the following events, among others: ● failure to pay any principal, interest, fees or other amounts when due; ● failure to perform or otherwise comply with the covenants in the credit agreement, the indentures or in other loan documents to which we are a borrower; and ● a bankruptcy or insolvency event involving us, our general partner or any of our subsidiaries.
Additionally, our partnership agreement provides that we, and the officers and directors of our general partner, do not owe any duties, including fiduciary duties, or have any liabilities to holders of our preferred units. ● Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and reserves, each of which can affect the amount of cash available for distribution to our unitholders. 44 Table of Contents ● Our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is a maintenance capital expenditure, which reduces distributable cash flow, or a capital expenditure for acquisitions or capital improvements, which does not, and such determination can affect the amount of cash distributed to our unitholders. ● In some instances, our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions. ● Our general partner determines which costs incurred by it and its affiliates are reimbursable by us. ● Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or entering into additional contractual arrangements with any of these entities on our behalf. ● Our general partner intends to limit its liability regarding our contractual and other obligations. ● Our general partner may exercise its limited right to call and purchase common units if it and its affiliates own more than 80% of the common units. ● Our general partner controls the enforcement of obligations owed to us by it and its affiliates. ● Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
Additionally, our partnership agreement provides that we, and the officers and directors of our general partner, do not owe any duties, including fiduciary duties, or have any liabilities to holders of our preferred units. ● Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and reserves, each of which can affect the amount of cash available for distribution to our unitholders. ● Our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is a maintenance capital expenditure, which reduces distributable cash flow, or a capital expenditure for acquisitions or capital improvements, which does not, and such determination can affect the amount of cash distributed to our unitholders. ● In some instances, our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions. ● Our general partner determines which costs incurred by it and its affiliates are reimbursable by us. ● Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or entering into additional contractual arrangements with any of these entities on our behalf. ● Our general partner intends to limit its liability regarding our contractual and other obligations. ● Our general partner may exercise its limited right to call and purchase common units if it and its affiliates own more than 80% of the common units. ● Our general partner controls the enforcement of obligations owed to us by it and its affiliates. ● Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
Examples include the exercise of its limited call right, its voting rights with respect to the units it owns, its registration rights and its determination whether or not to consent to any merger or consolidation of us; ● provides that our general partner shall not have any liability to us or our unitholders for decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed that the decision was in our best interests; ● generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and 45 Table of Contents ● provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud or willful misconduct.
Examples include the exercise of its limited call right, its voting rights with respect to the units it owns, its registration rights and its determination whether or not to consent to any merger or consolidation of us; ● provides that our general partner shall not have any liability to us or our unitholders for decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed that the decision was in our best interests; ● generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and ● provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud or willful misconduct.
Changes proposed by EPA for the renewable volume obligations may increase the cost to consumers for transportation fuel, which could result in a decline in demand for fuels and lower revenues for our business. We may not be able to obtain state fund or insurance reimbursement of our environmental remediation costs.
Future changes proposed by EPA for the renewable volume obligations may increase the cost to consumers for transportation fuel, which could result in a decline in demand for fuels and lower revenues for our business. We may not be able to obtain state fund or insurance reimbursement of our environmental remediation costs.
As of December 31, 2022, we conducted substantially all of our operations of our end-user business through six subsidiaries that are treated as corporations for U.S. federal income tax purposes. These corporations primarily engage in the retail sale of gasoline and/or operate convenience stores and collect rents on personal property leased to dealers and commissioned agents at other stations.
As of December 31, 2023, we conducted substantially all of our operations of our end-user business through six subsidiaries that are treated as corporations for U.S. federal income tax purposes. These corporations primarily engage in the retail sale of gasoline and/or operate convenience stores and collect rents on personal property leased to dealers and commissioned agents at other stations.
Any of these consequences could have material adverse effect on our financial condition, results of operations and cash available for distributions to our unitholders. In addition, the European Union and other non-U.S. jurisdictions are implementing regulations with respect to the derivatives market. To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations.
Any of these consequences could have material adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. In addition, the European Union and other non-U.S. jurisdictions are implementing regulations with respect to the derivatives market. To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations.
Separately, President Biden has already issued a suite of executive orders that, among other things, recommitted the United States to the Paris Agreement, called for the revision of Trump Administration changes to the CAFE standards, and called for the issuance of methane-emission standards for new, modified, and existing oil and gas facilities, including in the transmission and storage segments.
Separately, President Biden issued a suite of executive orders that, among other things, recommitted the United States to the Paris Agreement, called for the revision of Trump Administration changes to the CAFE standards, and called for the issuance of methane-emission standards for new, modified, and existing oil and gas facilities, including in the transmission and storage segments.
Competition from other providers of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil that are able to supply our customers with those products and services at a lower price and have capital resources many times greater than ours could reduce our ability to make distributions to our unitholders.
Competition from other providers of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil that are able to supply our customers with those products and services at a lower price and have capital resources greater than ours could reduce our ability to make distributions to our unitholders.
Directors and officers of our general partner’s owners have a fiduciary duty to make these decisions in the best interest of such owners which may be contrary to our interests. ● Some officers of our general partner who provide services to us devote time to affiliates of our general partner. ● Our general partner has limited its liability and reduced its fiduciary duties under the partnership agreement, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty.
Directors and officers of our general partner’s owners have a 45 Table of Contents fiduciary duty to make these decisions in the best interest of such owners which may be contrary to our interests. ● Some officers of our general partner who provide services to us devote time to affiliates of our general partner. ● Our general partner has limited its liability and reduced its fiduciary duties under the partnership agreement, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty.
New, stricter environmental laws and other industry-related regulations or environmental litigation could significantly impact our operations and/or increase our costs, which could adversely affect our results of operations and financial condition. Our operations are subject to federal, state and municipal laws and regulations regulating, among other matters, logistics activities, product quality specifications and other environmental matters.
Environmental laws and other industry-related regulations or environmental litigation could significantly impact our operations and/or increase our costs, which could adversely affect our results of operations and financial condition. Our operations are subject to federal, state and municipal laws and regulations regulating, among other matters, logistics activities, product quality specifications and other environmental matters.
In addition to the threat of terrorist attacks, we face various other security threats, including cyber security threats to gain unauthorized access to sensitive information or systems or to render data or systems unusable; threats to the safety of our employees; threats to the security of our facilities, such as terminals and pipelines, and infrastructure or third-party facilities and infrastructure.
In addition to the threat of terrorist attacks, we face various other security threats, including cybersecurity threats to gain unauthorized access to sensitive information or systems or to render data or systems unusable; threats to the safety of our employees; threats to the security of our facilities, such as terminals and pipelines, and infrastructure or third-party facilities and infrastructure.
Cyber security attacks in particular continue to evolve and include malicious software, attempts to gain unauthorized access to, or otherwise disrupt, pipeline control systems, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, including pipeline control systems, unauthorized release of confidential or otherwise protected information and corruption of data.
Cybersecurity attacks in particular continue to evolve and include malicious software, attempts to gain unauthorized access to, or otherwise disrupt, pipeline control systems, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, including pipeline control systems, unauthorized release of confidential or otherwise protected information and corruption of data.
General political conditions, acts of war such as the conflict in Ukraine, terrorism and instability in oil producing regions, particularly in the United States, Canada, Middle East, Russia, Africa and South America, could significantly impact crude oil supplies and crude oil and refined petroleum product costs.
General political conditions, acts of war such as the conflicts in Ukraine and the Middle East, terrorism and instability in oil producing regions, particularly in the United States, Canada, Middle East, Russia, Africa and South America, could significantly impact crude oil supplies and crude oil and refined petroleum product costs.
A unitholder could be liable for our obligations as if he were a general partner if: ● a court or government agency determined that we were conducting business in a state but had not complied with that particular state’s partnership statute; or ● a unitholder’s right to act with other unitholders to remove or replace the general partner, approve some amendments to our partnership agreement or take other actions under our partnership agreement constitute “control” of our businesses.
A unitholder could be liable for our obligations as if he were a general partner if: ● a court or government agency determined that we were conducting business in a state but had not complied with that particular state’s partnership statute; or 50 Table of Contents ● a unitholder’s right to act with other unitholders to remove or replace the general partner, approve some amendments to our partnership agreement or take other actions under our partnership agreement constitute “control” of our businesses.
While the determination of a partner’s “amount realized” generally includes any decrease of a partner’s share of the partnership’s liabilities, the Treasury regulations provide that the “amount realized” on a transfer of an interest in a publicly traded partnership, such as our units, will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and thus will be determined without regard to any decrease in that partner’s share of a publicly traded partnership’s liabilities.
While the determination of a partner’s “amount realized” generally includes any decrease of a partner’s share of the partnership’s liabilities, the Treasury regulations provide that the “amount realized” on a transfer of an interest in a publicly traded partnership, such as our units, will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and thus will be determined without regard to any decrease in that 54 Table of Contents partner’s share of a publicly traded partnership’s liabilities.
Basis risk cannot be entirely eliminated, and basis exposure, particularly in backward or other adverse market conditions, can adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. We monitor processes and procedures to prevent unauthorized trading and to maintain substantial balance between purchases and sales or future delivery obligations.
Basis risk cannot be entirely eliminated, and basis exposure, particularly in backward or other adverse market conditions, can adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. 32 Table of Contents We monitor processes and procedures to prevent unauthorized trading and to maintain substantial balance between purchases and sales or future delivery obligations.
In addition, as technologies evolve, cyber attacks become increasingly sophisticated, and the regulatory framework for data privacy and security worldwide continues to evolve and develop, we may incur significant costs to modify, upgrade or enhance our security measures and we may face difficulties in fully anticipating or implementing adequate security measures or new or revised mandated processes or in generally mitigating potential harm.
In addition, as technologies evolve, cyberattacks become increasingly sophisticated, and the regulatory framework for data privacy and security worldwide continues to evolve and develop, we may incur significant costs to modify, upgrade or enhance our security measures and we may face difficulties in fully anticipating or implementing adequate security measures or new or revised mandated processes or in generally mitigating potential harm.
If our general partner exercises its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Securities Exchange Act of 1934. 48 Table of Contents Our partnership agreement restricts the voting rights of unitholders owning 20% or more of any class of our units.
If our general partner exercises its limited call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Securities Exchange Act of 1934. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of any class of our units.
Our terminalling operations involving the receipt, storage and delivery of primarily refined petroleum products, gasoline blendstocks, renewable fuels and crude oil are subject to stringent federal, state and municipal laws and regulations governing the discharge of materials into the environment, or otherwise relating to the protection of the environment, operational safety and related matters.
Our terminalling operations involving the receipt, storage and delivery of primarily refined petroleum products, gasoline blendstocks, renewable fuels and crude oil are subject to stringent federal, 38 Table of Contents state and municipal laws and regulations governing the discharge of materials into the environment, or otherwise relating to the protection of the environment, operational safety and related matters.
We are subject to various federal and state laws related to cybersecurity, privacy and data protection which can impact our operations and increase our costs. ​ We are subject to various federal and state laws related to cybersecurity, privacy and data protection, including privacy laws in Virginia and Connecticut which take effect during 2023.
We are subject to various federal and state laws related to cybersecurity, privacy and data protection which can impact our operations and increase our costs. ​ We are subject to various federal and state laws related to cybersecurity, privacy and data protection, including privacy laws in Virginia and Connecticut which took effect during 2023.
You are urged to consult with your own tax advisor with respect to this potential limitation on the deductibility of interest expense and its impact on your investment in our common units. 52 Table of Contents Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them .
You are urged to consult with your own tax advisor with respect to this potential limitation on the deductibility of interest expense and its impact on your investment in our common units. Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them .
Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. Our partnership agreement provides that we, and the officers and directors of our general partner, do not owe any duties, including fiduciary duties, or have any liabilities to holders of our preferred units.
Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. Our partnership agreement provides that we, and the officers and directors 46 Table of Contents of our general partner, do not owe any duties, including fiduciary duties, or have any liabilities to holders of our preferred units.
Despite our security measures and those of our vendors and suppliers, our information technology and infrastructure may be vulnerable to ransomware, malware or other cyber attacks by hackers, employee error or malfeasance, natural disasters, power loss, telecommunication failures or other disruptions, or as a result of similar disruptions experienced by our business partners, suppliers and/or vendors.
Despite our security measures and those of our vendors and suppliers, our information technology and infrastructure may be vulnerable to ransomware, malware or other cyberattacks by hackers, employee error or malfeasance, natural disasters, power loss, telecommunication failures or other disruptions, or as a result of similar disruptions experienced by our business partners, suppliers and/or vendors.
Although our general partner may elect to have our unitholders and former unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties or interest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such 51 Table of Contents election will be practical, permissible or effective in all circumstances.
Although our general partner may elect to have our unitholders and former unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties or interest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances.
Although we expect to qualify for the end-user exception from such margin requirements for swaps entered into to hedge our commercial risks, the application of such requirements to other market participants, such as swap dealers, may change the cost and availability of the swaps that we use for hedging.
Although we expect to qualify for the end-user exception from such margin requirements for swaps entered into to hedge our commercial 31 Table of Contents risks, the application of such requirements to other market participants, such as swap dealers, may change the cost and availability of the swaps that we use for hedging.
Basis risk is the inherent market price risk created when a commodity of certain grade or location is purchased, sold or exchanged as compared to a purchase, sale or exchange of a like commodity at a different time or place. 31 Table of Contents Transportation costs and timing differentials are components of basis risk.
Basis risk is the inherent market price risk created when a commodity of certain grade or location is purchased, sold or exchanged as compared to a purchase, sale or exchange of a like commodity at a different time or place. Transportation costs and timing differentials are components of basis risk.
Such an event may impair our suppliers’ ability to provide the volumes and types of 35 Table of Contents product and goods we sell. A disease outbreak could affect the health of our workforce or result in travel restrictions, in either case rendering employees unable to work or travel.
Such an event may impair our suppliers’ ability to provide the volumes and types of product and goods we sell. A disease outbreak could affect the health of our workforce or result in travel restrictions, in either case rendering employees unable to work or travel.
Because holders of our preferred units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders will be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.
Because holders of our preferred units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders will be required to recharacterize any 56 Table of Contents portion of their gain as ordinary income as a result of the recapture rules.
Due to our lack of asset and geographic diversification, adverse developments in the terminals we use or in our operating areas would reduce our ability to make distributions to our unitholders. We rely primarily on sales generated from products distributed from terminals we own or control or to which we have access.
Due to our limited asset and geographic diversification, adverse developments in the terminals we use or in our operating areas would reduce our ability to make distributions to our unitholders. We rely primarily on sales generated from products distributed from terminals we own or control or to which we have access.
In addition, the actual amount of cash we have available for distribution will depend on other factors such as: ● the level of capital expenditures we make; ● the restrictions contained in our credit agreement and the indentures governing our senior notes, including financial covenants, borrowing base limitations and advance rates; ● distributions paid on our preferred units; ● redemptions of some or all of our preferred units; ● our debt service requirements; ● the cost of acquisitions; ● fluctuations in our working capital needs; ● our ability to borrow under our credit agreement to make distributions to our unitholders; and ● the amount of cash reserves established by our general partner. 24 Table of Contents The amount of cash we have available for distribution to unitholders depends on our cash flow and does not depend solely on profitability.
In addition, the actual amount of cash we have available for distribution will depend on other factors such as: ● the level of capital expenditures we make; 24 Table of Contents ● the restrictions contained in our credit agreement and the indentures governing our senior notes, including financial covenants, borrowing base limitations and advance rates; ● distributions paid on our preferred units; ● redemptions of some or all of our preferred units; ● our debt service requirements; ● the cost of acquisitions; ● fluctuations in our working capital needs; ● our ability to borrow under our credit agreement to make distributions to our unitholders; and ● the amount of cash reserves established by our general partner.
In addition, accidents, labor disputes between providers and their 33 Table of Contents employees and labor renegotiations, including strikes, lockouts or a work stoppage, shortage of railcars, trucks and barges, mechanical difficulties or bottlenecks and disruptions in transportation logistics could also disrupt our business operations.
In addition, accidents, labor disputes between providers and their employees and labor renegotiations, including strikes, lockouts or a work stoppage, shortage of railcars, trucks and barges, mechanical difficulties or bottlenecks and disruptions in transportation logistics could also disrupt our business operations.
If any of these events were to materialize, they could lead to losses of sensitive information, 41 Table of Contents critical infrastructure, personnel or capabilities, essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations, or cash flows.
If any of these events were to materialize, they could lead to losses of sensitive information, critical infrastructure, personnel or capabilities, essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations, or cash flows.
From time to time, members of Congress have proposed and considered substantive changes to the existing U.S. federal income tax laws that would affect publicly traded partnerships, including proposals that would eliminate our 50 Table of Contents ability to qualify for partnership tax treatment.
From time to time, members of Congress have proposed and considered substantive changes to the existing U.S. federal income tax laws that would affect publicly traded partnerships, including proposals that would eliminate our ability to qualify for partnership tax treatment.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first day of each month (the 53 Table of Contents “Allocation Date”), instead of on the basis of the date a particular common unit is transferred.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first day of each month (the “Allocation Date”), instead of on the basis of the date a particular common unit is transferred.
Due to our lack of diversification in asset type and location, an adverse development in these businesses or areas, including adverse developments due to catastrophic events or weather and corresponding decreases in demand for refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane, could have a significantly greater impact on our results of operations and cash available for distribution to our unitholders than if we maintained more diverse assets and locations.
Due to our limited diversification in asset type and location, an adverse development in these businesses or areas, including 37 Table of Contents adverse developments due to catastrophic events or weather and corresponding decreases in demand for refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane, could have a significantly greater impact on our results of operations and cash available for distribution to our unitholders than if we maintained more diverse assets and locations.
Our level of indebtedness could have important consequences to us, including the following: ● our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms; ● covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests that may affect our flexibility in planning for and reacting to changes in our businesses, including possible acquisition opportunities; ● we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders; ● our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our businesses; and ● our debt level may limit our flexibility in responding to changing businesses and economic conditions.
Our level of indebtedness could have important consequences to us, including the following: ● our ability to obtain additional financing for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms; ● covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests that may affect our flexibility in planning for and reacting to changes in our businesses, including possible acquisition opportunities; 28 Table of Contents ● we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations, business opportunities and distributions to unitholders; ● our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our businesses; ● our debt level may limit our flexibility in responding to changing businesses and economic conditions; and ● our debt may increase our cost of borrowing.
If the IRS were to contest the U.S. federal income tax positions we take, it may adversely impact the market for our units, and the costs of any such contest would reduce our cash available for distribution to our unitholders.
If the IRS were to contest the U.S. federal income tax positions we take, it may adversely impact the market for our 52 Table of Contents units, and the costs of any such contest would reduce our cash available for distribution to our unitholders.
The operating and financial restrictions and covenants in our credit agreement and the indentures governing our senior notes and any future financing agreements could restrict our ability to finance future operations or capital needs or to engage, expand or pursue our business activities.
The operating and financial restrictions and covenants in our credit agreement and the indentures governing our senior notes and any future financing agreements and borrowing base requirements in our credit agreement could restrict our ability to finance operations or capital needs or to engage, expand or pursue our business activities.
We compete with terminal companies, major integrated oil companies and their marketing affiliates, wholesalers, producers and independent marketers of varying sizes, financial resources and experience. In our Northeast market, we compete in various product lines and for all customers of those various products lines.
We compete with terminal companies, major integrated oil companies and their marketing affiliates, wholesalers, producers and independent marketers of varying sizes, financial resources and experience. In our markets, we compete in various product lines and for all customers of those various products lines.
As of December 31, 2022, we owned, operated and maintained dedicated storage facilities at 17 bulk terminals, leased the entirety of one bulk terminal that we operated exclusively for our businesses, and maintained dedicated storage at six facilities at which we have terminalling agreements. These lease and terminalling agreements are subject to expiration at various times through 2028.
As of December 31, 2023, we owned, operated and maintained dedicated storage facilities at 42 bulk terminals, leased the entirety of one bulk terminal that we operated exclusively for our businesses, and maintained dedicated storage at six bulk terminals at which we have terminalling agreements. These lease and terminalling agreements are subject to expiration at various times through 2028.
This additional coverage resulted in additional insurance premiums which could increase further in the future. Cyber security breaches and other disruptions could compromise our information and operations, and expose us to liability, which would cause our business and reputation to suffer.
This additional coverage resulted in additional insurance premiums which could increase further in the future. Cybersecurity breaches and other disruptions could compromise our information and operations, and expose us to liability, which would cause our business and reputation to suffer.
Rule 144 under the Securities Act provides that after a 47 Table of Contents holding period of six months, non-affiliates may resell restricted securities of reporting companies, provided that current public information for the reporting company is available.
Rule 144 under the Securities Act provides that after a holding period of six months, non-affiliates may resell restricted securities of reporting companies, provided that current public information for the reporting company is available.
The IRS may challenge these valuation methods and the resulting allocations of income, gain, loss and deduction. A successful IRS challenge to these methods or allocations could adversely affect the timing or amount of taxable income or loss being allocated to our unitholders.
The IRS may challenge these valuation 55 Table of Contents methods and the resulting allocations of income, gain, loss and deduction. A successful IRS challenge to these methods or allocations could adversely affect the timing or amount of taxable income or loss being allocated to our unitholders.
While there have been incidents of security breaches and unauthorized access to our information technologies, we have not experienced any material impact to our operations or business as a result of this attack; however, other similar incidents could have a significant negative impact on our systems and operations.
While there have been incidents of security breaches and unauthorized access to our information technologies, we have not experienced any material impact to our operations or business as a result of these attacks; however, other similar incidents could have a significant negative impact on our systems and operations.
We are allowed to issue additional preferred units and parity securities without any vote of the holders of our preferred units, except where the cumulative distributions on our preferred units or any parity securities are in arrears.
We are allowed to 47 Table of Contents issue additional preferred units and parity securities without any vote of the holders of our preferred units, except where the cumulative distributions on our preferred units or any parity securities are in arrears.
Furthermore, there is no restriction in the partnership agreement on the ability of the members of our general partner from transferring their respective membership interests in 49 Table of Contents our general partner to a third party.
Furthermore, there is no restriction in the partnership agreement on the ability of the members of our general partner from transferring their respective membership interests in our general partner to a third party.
In addition, the indentures governing our senior notes limit our ability to, among other things: ● incur additional indebtedness; ● make distributions to equity owners; ● make certain investments; ● restrict distributions by our subsidiaries; ● create liens; ● sell assets; or 29 Table of Contents ● merge with other entities.
In addition, the indentures governing our senior notes limit our ability to, among other things: ● incur additional indebtedness; ● make distributions to equity owners; ● make certain investments; ● restrict distributions by our subsidiaries; ● create liens; ● sell assets; or ● merge with other entities.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced and our current and former unitholders may be required to indemnify us for any taxes (including any applicable penalties and interest) resulting from such audit adjustments that were paid on such unitholders’ behalf.
If the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced and our current and former unitholders may be required to indemnify us for any taxes (including any applicable penalties and interest) resulting from such audit adjustments that were paid on such unitholders’ behalf.
Significant increases and volatility in wholesale gasoline costs could result in significant 32 Table of Contents increases in the retail price of motor fuel products and in lower margins per gallon. Increases in the retail price of motor fuel products could impact consumer demand for motor fuel.
Significant increases and volatility in wholesale gasoline costs could result in significant increases in the retail price of motor fuel products and in lower margins per gallon. Increases in the retail price of motor fuel products could impact consumer demand for motor fuel.
A reduction or waiver of the RFS mandate or oxygenate blending requirements could adversely affect the availability and pricing of ethanol, which in turn could adversely affect our future gasoline and ethanol sales.
A reduction or waiver of the RFS mandate or oxygenate blending requirements could 34 Table of Contents adversely affect the availability and pricing of ethanol, which in turn could adversely affect our future gasoline and ethanol sales.
For a transfer of interests in a publicly traded partnership that is effected through a broker on or after January 1, 2023, the obligation to withhold is imposed on the transferor’s broker. Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our units.
For a transfer of interests in a publicly traded partnership that is effected through a broker, the obligation to withhold is imposed on the transferor’s broker. Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our units.
Our credit agreement and indentures limit our ability to pay distributions upon the occurrence of certain events.
Restrictions in our credit agreement and indentures limit our ability to pay distributions upon the occurrence of certain events. Our credit agreement and indentures limit our ability to pay distributions upon the occurrence of certain events.
Our gasoline, convenience store and prepared food sales could be significantly reduced by a reduction in demand due to higher prices and inflation in general and new technologies and alternative fuel sources, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles.
Our gasoline, convenience store and prepared food sales could be significantly reduced by a reduction in demand due to higher prices and inflation in general and new technologies and alternative fuel sources, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles and changing consumer preferences and driving habits.
If we do not pay the required distributions on our preferred units, we will be unable to pay distributions on our common units. Additionally, because 46 Table of Contents distributions to our preferred units are cumulative, we will have to pay all unpaid accumulated preferred distributions before we can pay any distributions to our common unitholders.
If we do not pay the required distributions on our preferred units, we will be unable to pay distributions on our common units. Additionally, because distributions to our preferred units are cumulative, we will have to pay all unpaid accumulated preferred distributions before we can pay any distributions to our common unitholders.
Any such cyber attack or breach or other disruption could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
Any such cyberattack or breach or other disruption could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
An unfavorable outcome or settlement of one or more of these lawsuits could have a material adverse effect on our financial condition, results of operations and cash available for distributions.
An unfavorable outcome or settlement of one or more of these lawsuits could have a material adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.
Moreover, federal regulators and state and local governments have taken (or announced that they plan to take) actions that have or may have a significant influence on our operations.
Moreover, federal regulators and state and local governments have taken (or announced that they plan to take) actions that have or may 39 Table of Contents have a significant influence on our operations.
In 2021 and 2022, the EPA proposed several federal regulations to try to fulfill these directives. In addition, it is possible federal legislation could be adopted in the future to restrict GHGs, as Congress has considered various proposals to reduce GHG emissions from time to time. Many states and regions have also adopted GHG initiatives.
Over the past three years, the EPA has proposed and finalized several federal regulations to try to fulfill these directives. In addition, it is possible federal legislation could be adopted in the future to restrict GHGs, as Congress has considered various proposals to reduce GHG emissions from time to time. Many states and regions have also adopted GHG initiatives.
“Business and Properties—Regulation—Climate Change.” Our terminalling operations are subject to federal, state and municipal laws and regulations relating to environmental protection and operational safety that could require us to incur substantial costs. The risk of substantial environmental costs and liabilities is inherent in terminal operations, and we may incur substantial environmental costs and liabilities.
Our terminalling operations are subject to federal, state and municipal laws and regulations relating to environmental protection and operational safety that could require us to incur substantial costs. The risk of substantial environmental costs and liabilities is inherent in terminal operations, and we may incur substantial environmental costs and liabilities.
These shippers could increase their charges to us or discontinue service altogether. Similarly, many of our suppliers face a trend of increasing environmental regulations, which could likewise restrict their ability to produce crude oil or fuels, or increase their costs of production, and thus impact the price of, and/or their ability to deliver, these products.
Similarly, many of our suppliers face a trend of increasing environmental regulations, which could likewise restrict their ability to produce crude oil or fuels, or increase their costs of production, and thus impact the price of, and/or their ability to deliver, these products.
The secure storage, processing, maintenance and transmission of this information is critical to our operations and business strategy.
The secure storage, processing, maintenance and transmission of this 43 Table of Contents information is critical to our operations and business strategy.
We may be subject to complaints or litigation arising out of alleged contamination and/or exposure to chemicals or other regulated materials, such as various perfluorinated compounds, including perfluorooctanoate, perfluorooctane sulfonate, perfluorohexane sulfonate, or other per- and polyfluoroalkyl substances, benzene and/or petroleum hydrocarbons, at or from our facilities.
We may be subject to complaints or litigation arising out of alleged contamination and/or exposure to chemicals or other regulated materials, such as various perfluorinated compounds, including perfluorooctanoate, perfluorooctane sulfonate, perfluorohexane sulfonate, or other per- and polyfluoroalkyl substances, benzene and/or petroleum hydrocarbons, at or from our facilities. Such complaints or litigation could have a negative impact on our businesses.
We have the ability to incur additional debt, including the capacity to borrow up to $1.55 billion under our credit agreement, subject to limitations in our credit agreement.
Effective February 8, 2024, we have the ability to incur additional debt, including the capacity to borrow up to $1.55 billion under our credit agreement, subject to limitations in our credit agreement.
Private parties, including the owners of properties located near our terminal facilities and those with whom we do business, also may have the right to pursue legal actions against us to enforce 38 Table of Contents compliance with environmental laws, as well as seek damages for personal injury or property damage.
Private parties, including the owners of properties located near our terminal facilities and those with whom we do business, also may have the right to pursue legal actions against us to enforce compliance with environmental laws, as well as seek damages for personal injury or property damage. We may also be held liable for damages to natural resources.
Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes an audit adjustment to our income tax return, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us.
Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes an audit adjustment to our income tax return, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us.
In addition, any noncompliance with our risk management policies could result in significant financial losses. ● We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course of our business activities. ● Higher prices, new technology and alternative fuels, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles, and energy efficiency could reduce demand for our products. ● We depend upon marine, pipeline, rail and truck transportation services for our logistics activities.
In addition, any noncompliance with our risk management policies could result in significant financial losses. ● We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course of our businesses. ● Higher prices, new technology and alternative fuels, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles, energy efficiency and changing consumer preferences or driving habits could reduce demand for our products. ● We depend upon marine, pipeline, rail and truck transportation services for the petroleum products we purchase and sell.
“Business and Properties—Regulation—Climate Change.” Such increased costs could result in reduced demand for refined petroleum products and some customers switching to alternative sources of fuel which could have a material adverse effect on our financial condition, results of operations and cash available for distributions to our unitholders. 39 Table of Contents Climate change continues to attract considerable public and scientific attention.
Such increased costs could result in reduced demand for refined petroleum products and some customers switching to alternative sources of fuel which could have a material adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. Climate change continues to attract considerable public and scientific attention.
Factors that could lead to a decrease in market demand for products we sell, including refined petroleum products, gasoline blendstocks, renewable fuels and crude oil include: ● a recession or other adverse economic conditions or an increase in the market price or of an oversupply of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil or higher taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline or other refined petroleum products, gasoline blendstocks, renewable fuels and crude oil; ● a shift by consumers to more fuel-efficient or alternative fuel vehicles, including hybrids, or an increase in fuel economy of vehicles, whether as a result of technological advances by manufacturers, governmental or regulatory actions or otherwise; and ● conversion from consumption of home heating oil or residual oil to natural gas and/or electric heat pumps and utilization of propane and/or natural gas (instead of heating oil) as primary fuel sources. 26 Table of Contents Certain of our operating costs and expenses are fixed and do not vary with the volumes we store and distribute.
Factors that could lead to a decrease in market demand for products we sell, including refined petroleum products, gasoline blendstocks, renewable fuels and crude oil, include: ● a recession or other adverse economic conditions or an increase in the market price or of an oversupply of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil or higher taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline or other refined petroleum products, gasoline blendstocks, renewable fuels and crude oil; ● a shift by consumers to more fuel-efficient or alternative fuel vehicles, including hybrids, or an increase in fuel economy of vehicles, whether as a result of technological advances by manufacturers, governmental or regulatory actions or otherwise; and ● conversion from consumption of home heating oil or residual oil to natural gas and/or electric heat pumps and utilization of propane and/or natural gas (instead of heating oil) as primary fuel sources.
Our partnership agreement defines “Available Cash” to generally mean, for each fiscal quarter, all cash and cash equivalents on hand on the date of determination of available cash with respect to such quarter, less the amount of any cash reserves established by our general partner to: ● provide for the proper conduct of our businesses; ● comply with applicable law or the terms of any of our debt instruments or other agreements; or ● provide funds for distributions to holders of our common units and preferred units for any one or more of the next four quarters.
Our partnership agreement defines “Available Cash” to generally mean, for each fiscal quarter, all cash and cash equivalents on hand on the date of determination of available cash with respect to such quarter, less the amount of any cash reserves established by our general partner to: ● provide for the proper conduct of our businesses; ● comply with applicable law or the terms of any of our debt instruments or other agreements; or ● provide funds for distributions to holders of our common units and preferred units for any one or more of the next four quarters. 48 Table of Contents As a result, we do not expect to accumulate significant amounts of cash.
Possible negative impacts in the future could include a decrease in the availability of borrowings under our credit agreement, increased counterparty credit risk on our derivatives contracts and our contractual counterparties could require us to provide collateral.
In the past, world financial markets experienced a severe reduction in the availability of credit. Possible negative impacts in the future could include a decrease in the availability of borrowings under our credit agreement, increased counterparty credit risk on our derivatives contracts and our contractual counterparties could require us to provide collateral.
Although we expect that much of the income we earn is generally eligible for the 20% deduction for qualified business income, the Treasury Regulations provide that income attributable to a guaranteed payment for the use of capital is not eligible for the 20% deduction for qualified publicly traded partnership income.
Although we expect that much of the income we earn is generally eligible for the 20% deduction for qualified business income for taxable years beginning before December 31, 2025, the Treasury Regulations provide that income attributable to a guaranteed payment for the use of capital is not eligible for the 20% deduction for qualified publicly traded partnership income.
We depend on key personnel for the success of our businesses. We depend on the services of our senior management team and other key personnel. The loss of the services of any member of senior management or key employee could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.
The loss of the services of any member of senior management or key employee could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.
All holders of our preferred units are urged to consult a tax advisor with respect to the consequences of owning our preferred units. Item 1B. Unresolved Staff Comments . None. 55 Table of Contents Item 3. Legal Proceedings .
All holders of our preferred units are urged to consult a tax advisor with respect to the consequences of owning our preferred units. Item 1B. Unresolved Staff Comments . None.
These developments have subjected our operations to increased risks. Although we utilize various procedures and controls to monitor these threats and mitigate our exposure to security threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing.
Although we utilize various procedures and controls to monitor these threats and mitigate our exposure to security threats, there can be no assurance that these procedures and controls will be sufficient in preventing such threats from materializing.
These factors could materially affect the sale of this product mix which in turn could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders.
These factors could materially affect the sale of this product mix which in turn could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. Our financial condition, results of operations, and cash available for distribution to our unitholders may be adversely affected by global and national health concerns.
There can be no assurances as to the timing and type of such changes in existing laws or the promulgation of new laws or the amount of any required expenditures associated therewith. Climate change continues to attract considerable public and scientific attention.
There can be no assurances as to the timing and type of such changes in existing laws or the promulgation of new laws or the amount of any required expenditures associated therewith.
Because a tax would be imposed upon us as a corporation, our cash available for distribution to our unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units.
Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+2 added−1 removed15 unchanged
Biggest changeEquity Compensation Plan The equity compensation plan information required by Item 201(d) of Regulation S-K in response to this item is incorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Equity Compensation Plan Table.” 58 Table of Contents Recent Sales of Unregistered Securities None.
Biggest changeWe must provide not less than 30 days’ and not more than 60 days’ advance written notice of any such redemption. 61 Table of Contents Equity Compensation Plan The equity compensation plan information required by Item 201(d) of Regulation S-K in response to this item is incorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Equity Compensation Plan Table.” Recent Sales of Unregistered Securities None.
As holder of the incentive distribution rights, the general partner is entitled to incentive distributions if the amount we distribute 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 % Series A Preferred Units On August 7, 2018, we issued 2,760,000 9.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests (the “Series A Preferred Units”) at a price of $25.00 per Series A Preferred Unit.
As holder of the incentive distribution rights, the general partner is entitled to incentive distributions if the amount we distribute 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 % Series A Preferred Units On August 7, 2018, we issued 2,760,000 Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests (the “Series A Preferred Units”) at a price of $25.00 per Series A Preferred Unit.
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 57 Table of Contents year, commencing on November 15, 2018 (each, a “Series A Distribution Payment Date”), 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 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 60 Table of Contents 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.
Market Information and Holders Our common units trade on the New York Stock Exchange (“NYSE”) under the symbol “GLP.” At the close of business on February 21, 2023, based upon information received from our transfer agent, we had 33 holders of record of our common units. The number of record holders does not include common units held in street name.
Market Information and Holders Our common units trade on the New York Stock Exchange (“NYSE”) under the symbol “GLP.” At the close of business on February 22, 2024, based upon information received from our transfer agent, we had 32 holders of record of our common units. The number of record holders does not include common units held in street name.
At any time on or after August 15, 2023, we may redeem, in whole or in part, the Series A Preferred Units at a redemption price in cash of $25.00 per Series A Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared.
We may redeem, at our option and at any time, in whole or in part, the Series A Preferred Units at a redemption price in cash of $25.00 per Series A Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared.
The distribution rate for the Series A Preferred Units from and including the original issue date, but excluding, August 15, 2023 is 9.75% per annum of the $25.00 liquidation preference per Series A Preferred Unit (equal to $2.4375 per Series A Preferred Unit per annum).
The initial distribution rate for the Series A Preferred Units from and including the original issue date, but excluding, August 15, 2023 was 9.75% per annum of the $25.00 liquidation preference per unit.
Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number (or ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ ​ ​ ​ ​ Units Purchased as ​ Value) of Units That May ​ ​ Total Number ​ Average ​ Part of Publicly ​ Yet Be Purchased ​ ​ Of Units ​ Price Paid ​ Announced Plans or ​ Under the Plans or Period ​ Purchased ​ Per Unit($) ​ Programs (1) ​ Programs (1) October 1—October 31, 2022 — — — — ​ November 1—November 30, 2022 10,684 30.94 — 319,602 ​ December 1—December 31, 2022 — — — — ​ ​ (1) In May 2009, the board of directors of our general partner authorized the repurchase of our common units for the purpose of meeting our general partner’s anticipated obligations to deliver common units under the Long-Term Incentive Plan (“LTIP”) and meeting the general partner’s obligations under existing employment agreements and other employment related obligations of the general partner.
Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number (or ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ ​ ​ ​ ​ Units Purchased as ​ Value) of Units That May ​ ​ Total Number ​ Average ​ Part of Publicly ​ Yet Be Purchased ​ ​ Of Units ​ Price Paid ​ Announced Plans or ​ Under the Plans or Period ​ Purchased ​ Per Unit($) ​ Programs (1) ​ Programs (1) October 1—October 31, 2023 — — — — ​ November 1—November 30, 2023 75,000 33.90 — 224,187 ​ December 1—December 31, 2023 8,000 37.78 — 216,187 ​ ​ (1) In May 2009, the board of directors of our general partner authorized the repurchase of our common units for the purpose of meeting our general partner’s anticipated obligations to deliver common units under the Long-Term Incentive Plan (“LTIP”) and meeting the general partner’s obligations under existing employment agreements and other employment related obligations of the general partner.
On and after August 15, 2023, distributions on the Series A Preferred Units will accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 6.774% per annum.
On and after August 15, 2023, distributions on the Series A Preferred Units accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to (i) an annual floating rate of a substitute or successor base rate that a calculation agent determines to be the most comparable to the three-month LIBOR plus (ii) a spread of 6.774% per annum.
Such authorized unit repurchases may be modified, suspended or terminated at any time, and are subject to price, economic and market conditions, applicable legal requirements and available liquidity. Item 6. [Reserved] ​ 59 Table of Contents
Common units may be repurchased from time to time in open market transactions, including block purchases, or in privately negotiated transactions. Such authorized unit repurchases may be modified, suspended or terminated at any time, and are subject to price, economic and market conditions, applicable legal requirements and available liquidity. Item 6. [Reserved] ​ ​ 62 Table of Contents
Our general partner is currently authorized to acquire up to 1,437,427 of our common units in the aggregate over an extended period of time, consistent with the general partner’s obligations under the LTIP and employment agreements. Common units may be repurchased from time to time in open market transactions, including block purchases, or in privately negotiated transactions.
As of February 28, 2024, our general partner is authorized to acquire up to 216,187 of our common units in the aggregate over an extended period of time, consistent with the general partner’s obligations under the LTIP and employment agreements.
Removed
We must provide not less than 30 days’ and not more than 60 days’ advance written notice of any such redemption.
Added
For the successor base rate comparable to the three-month LIBOR, a calculation agent selected the industry-accepted substitute which is the 3-month CME Term SOFR plus the applicable tenor spread of 0.26161% per annum.
Added
Since the repurchase program was implemented and through December 31, 2023, our general partner repurchased 1,221,240 common units pursuant to this repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe $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. ​ ​ 71 Table of Contents The following table presents reconciliations of distributable cash flow to the most directly comparable GAAP financial measures on a historical basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2022 2021 Reconciliation of net income to distributable cash flow: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 362,207 ​ $ 60,796 ​ Depreciation and amortization ​ 104,796 ​ 102,241 ​ Amortization of deferred financing fees ​ 5,432 ​ 5,031 ​ Amortization of routine bank refinancing fees ​ (4,596) ​ (4,064) ​ Maintenance capital expenditures ​ (54,444) ​ (43,254) ​ Distributable cash flow (1)(2)(3) ​ ​ 413,395 ​ ​ 120,750 ​ Distributions to preferred unitholders (4) ​ ​ (13,852) ​ ​ (12,209) ​ Distributable cash flow after distributions to preferred unitholders ​ $ 399,543 ​ $ 108,541 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of net cash provided by operating activities to distributable cash flow: ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 479,996 ​ $ 50,218 ​ Net changes in operating assets and liabilities and certain non-cash items ​ (12,993) ​ 112,819 ​ Amortization of deferred financing fees ​ 5,432 ​ 5,031 ​ Amortization of routine bank refinancing fees ​ (4,596) ​ (4,064) ​ Maintenance capital expenditures ​ (54,444) ​ (43,254) ​ Distributable cash flow (1)(2)(3) ​ ​ 413,395 ​ ​ 120,750 ​ Distributions to preferred unitholders (4) ​ ​ (13,852) ​ ​ (12,209) ​ Distributable cash flow after distributions to preferred unitholders ​ $ 399,543 ​ $ 108,541 ​ ​ (1) Distributable cash flow is a non-GAAP financial measure which is discussed above under “—Evaluating Our Results of Operations.” As defined by our partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.
Biggest change(7) Excludes 64 sites at December 31, 2023 that are operated by our SPR joint venture (see Note 17 of Notes to Consolidated Financial Statements). ​ ​ 74 Table of Contents ​ The following table presents reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP financial measures on a historical basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 2022 Reconciliation of net income to EBITDA and adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 152,506 ​ $ 362,207 ​ Depreciation and amortization ​ 110,090 ​ 104,796 ​ Interest expense ​ 85,631 ​ 81,259 ​ Income tax expense ​ 8,136 ​ 16,822 ​ EBITDA ​ ​ 356,363 ​ ​ 565,084 ​ Net gain on sale and disposition of assets ​ ​ (2,626) ​ ​ (79,873) ​ Income from equity method investments (1) ​ ​ (2,503) ​ ​ — ​ EBITDA related to equity method investments (1) ​ ​ 5,030 ​ ​ — ​ Adjusted EBITDA ​ $ 356,264 ​ $ 485,211 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of net cash provided by operating activities to EBITDA and adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 512,441 ​ $ 479,996 ​ Net changes in operating assets and liabilities and certain non-cash items ​ (249,845) ​ (12,993) ​ Interest expense ​ 85,631 ​ 81,259 ​ Income tax expense ​ 8,136 ​ 16,822 ​ EBITDA ​ ​ 356,363 ​ ​ 565,084 ​ Net gain on sale and disposition of assets ​ ​ (2,626) ​ ​ (79,873) ​ Income from equity method investments (1) ​ ​ (2,503) ​ ​ — ​ EBITDA related to equity method investments (1) ​ ​ 5,030 ​ ​ — ​ Adjusted EBITDA ​ $ 356,264 ​ $ 485,211 ​ (1) Represents our proportionate share of income and EBITDA, as applicable, related to our 49.99% interest in our SPR joint venture (see Note 17 of Notes to Consolidated Financial Statements). ​ ​ 75 Table of Contents The following table presents reconciliations of distributable cash flow and adjusted distributable cash flow to the most directly comparable GAAP financial measures on a historical basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 2022 Reconciliation of net income to distributable cash flow and adjusted distributable cash flow: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 152,506 ​ $ 362,207 ​ Depreciation and amortization ​ 110,090 ​ 104,796 ​ Amortization of deferred financing fees ​ 5,651 ​ 5,432 ​ Amortization of routine bank refinancing fees ​ (4,700) ​ (4,596) ​ Maintenance capital expenditures ​ (60,838) ​ (54,444) ​ Distributable cash flow (1)(2) ​ ​ 202,709 ​ ​ 413,395 ​ Income from equity method investments (3) ​ ​ (2,503) ​ ​ — ​ Distributable cash flow from equity method investments (3) ​ ​ 1,509 ​ ​ — ​ Adjusted distributable cash flow (1) ​ ​ 201,715 ​ ​ 413,395 ​ Distributions to preferred unitholders (4) ​ ​ (14,559) ​ ​ (13,852) ​ Adjusted distributable cash flow after distributions to preferred unitholders ​ $ 187,156 ​ $ 399,543 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of net cash provided by operating activities to distributable cash flow and adjusted distributable cash flow: ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 512,441 ​ $ 479,996 ​ Net changes in operating assets and liabilities and certain non-cash items ​ (249,845) ​ (12,993) ​ Amortization of deferred financing fees ​ 5,651 ​ 5,432 ​ Amortization of routine bank refinancing fees ​ (4,700) ​ (4,596) ​ Maintenance capital expenditures ​ (60,838) ​ (54,444) ​ Distributable cash flow (1)(2) ​ ​ 202,709 ​ ​ 413,395 ​ Income from equity method investments (3) ​ ​ (2,503) ​ ​ — ​ Distributable cash flow from equity method investments (3) ​ ​ 1,509 ​ ​ — ​ Adjusted distributable cash flow (1) ​ ​ 201,715 ​ ​ 413,395 ​ Distributions to preferred unitholders (4) ​ ​ (14,559) ​ ​ (13,852) ​ Adjusted distributable cash flow after distributions to preferred unitholders ​ $ 187,156 ​ $ 399,543 ​ ​ (1) Distributable cash flow and adjusted distributable cash flow are non-GAAP financial measures which are discussed above under “—Evaluating Our Results of Operations.” As defined by our partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.
Financing Activities Net cash used in financing activities was $250.6 million for 2022 and included $201.3 million in net payments on our working capital revolving credit facility, $100.4 million in cash distributions to our limited partners (preferred and common unitholders) and our general partner, $2.9 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 $250.6 million for 2022 and included $201.3 million in net payments on our working capital revolving credit facility, $100.4 million in cash distributions to our limited partners (preferred and common unitholders) and our general partner, $2.9 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.
Events of default under the 2029 Notes Indenture include (i) a default in payment of principal of, or interest or premium, if any, on, the 2029 Notes, (ii) breach of our covenants under the 2029 Notes Indenture, (iii) certain events of bankruptcy and insolvency, (iv) any payment default or acceleration of indebtedness of ours or certain subsidiaries if the total amount of such indebtedness unpaid or accelerated exceeds $50.0 million and (v) failure to pay within 60 days uninsured final judgments exceeding $50.0 million. 7.00% Senior Notes Due 2027 On July 31, 2019, the Issuers issued $400.0 million aggregate principal amount of 7.00% senior notes due 2027 (the “2027 Notes”) to several initial purchasers (the “2027 Notes Initial Purchasers”) in a private placement exempt from the registration requirements under the Securities Act.
Events of default under the 2029 Notes Indenture include (i) a default in payment of principal of, or interest or premium, if any, on, the 2029 Notes, (ii) breach of our covenants under the 2029 Notes Indenture, (iii) certain events of bankruptcy and insolvency, (iv) any payment default or acceleration of indebtedness of ours or certain subsidiaries if the total amount of such indebtedness unpaid or accelerated exceeds $50.0 million and (v) failure to pay within 60 days uninsured final judgments exceeding $50.0 million. 7.00% Senior Notes Due 2027 On July 31, 2019, the Issuers issued $400.0 million aggregate principal amount of 7.00% senior notes due 2027 (the “2027 Notes”) to several initial purchasers in a private placement exempt from the registration requirements under the Securities Act.
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: ● our compliance with certain financial covenants included in our debt agreements; ● our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis; ● our ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; ● our operating performance and return on invested capital as compared to those of other companies in the wholesale, marketing, storing and distribution of refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane, and in the gasoline stations and convenience stores business, without regard to financing methods and capital structure; and ● the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.
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: ● our compliance with certain financial covenants included in our debt agreements; ● our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis; ● our ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; ● our operating performance and return on invested capital as compared to those of other companies in the wholesale, marketing, storing and distribution of refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane, and in the gasoline stations and convenience stores business, without regard to financing methods and capital structure; and 70 Table of Contents ● the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.
Increased conservation and technological advances have adversely affected the demand for home heating oil and residual oil. Consumption of residual oil has steadily declined over the last four decades. We could face additional competition from alternative energy sources as a result of future government-mandated controls or regulations further promoting the use of cleaner fuels.
Increased conservation and technological advances have adversely affected the demand for home heating oil and residual oil. Consumption of residual oil has steadily declined over the last several decades. We could face additional competition from alternative energy sources as a result of future government-mandated controls or regulations further promoting the use of cleaner fuels.
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 . 68 Table of Contents 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.
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 . 72 Table of Contents 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 factors could materially affect the sale of this product mix which in turn could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. ● New, stricter environmental laws and other industry-related regulations or environmental litigation could significantly impact our operations and/or increase our costs, which could adversely affect our results of operations and financial condition.
These factors could materially affect the sale of this product mix which in turn could have an adverse effect on our financial condition, results of operations and cash available for distribution to our unitholders. ● Environmental laws and other industry-related regulations or environmental litigation could significantly impact our operations and/or increase our costs, which could adversely affect our results of operations and financial condition.
When prices for the products we sell decline, our exposure to risk of loss in the event of nonperformance by our customers of our forward contracts may be increased as they and/or their customers may breach their contracts and purchase the products we sell at the then lower market price from a competitor. ● We commit substantial resources to pursuing acquisitions and expending capital for growth projects, although there is no certainty that we will successfully complete any acquisitions or growth projects or receive the economic results we anticipate from completed acquisitions or growth projects.
When prices for 66 Table of Contents the products we sell decline, our exposure to risk of loss in the event of nonperformance by our customers of our forward contracts may be increased as they and/or their customers may breach their contracts and purchase the products we sell at the then lower market price from a competitor. ● We commit substantial resources to pursuing acquisitions and expending capital for growth projects, although there is no certainty that we will successfully complete any acquisitions or growth projects or receive the economic results we anticipate from completed acquisitions or growth projects.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
Goodwill is tested for impairment annually as of October 1 or when events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. All of our goodwill is allocated to the GDSO segment. During 2022 and 2021, we completed a quantitative assessment for the GDSO reporting unit.
Goodwill is tested for impairment annually as of October 1 or when events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. All of our goodwill is allocated to the GDSO segment. During 2023 and 2022, we completed a quantitative assessment for the GDSO reporting unit.
In addition, we had other revenues of approximately $0.6 billion for the year ended December 31, 2022 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.
In addition, we had other revenues of approximately $0.6 billion for the year ended December 31, 2023 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.
Net Gain on Sale and Disposition of Assets Net gain on sale and disposition of assets was $79.9 million for 2022, consisting of a net gain of $76.8 million related to the sale of the Revere Terminal (see Note 17 of Notes to Consolidated Financial Statements for more information) and to a net gain of $3.1 million, primarily due to the sale of GDSO sites.
Net gain on sale and disposition of assets was $79.9 million for 2022, consisting of a net gain of $76.8 million related to the sale of the Revere Terminal (see Note 18 of Notes to Consolidated Financial Statements for more information) and to a net gain of $3.1 million, primarily due to the sale of GDSO sites.
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.
We sell home heating oil, branded and unbranded gasoline and gasoline blendstocks, diesel, kerosene and residual oil to home heating oil and propane retailers and wholesale distributors.
These governmental actions, as well 65 Table of Contents as national, state and municipal campaigns to discourage smoking, tax increases, and imposition of regulations restricting the sale of flavored tobacco products, e-cigarettes and vapor products, have and could result in reduced consumption levels, higher costs which we may not be able to pass on to our customers, and reduced overall customer traffic.
These governmental actions, as well as national, state and municipal campaigns to discourage smoking, tax increases, and imposition of regulations restricting the sale of flavored tobacco products, e-cigarettes and vapor products, have and could result in reduced consumption levels, higher costs which we may not be able to pass on to our customers, and reduced overall customer traffic.
In addition, we could experience a tightening of trade credit from our suppliers. ● We depend upon marine, pipeline, rail and truck transportation services for a substantial portion of our logistics activities in transporting the products we sell.
In addition, we could experience a tightening of trade credit from our suppliers. ● We depend upon marine, pipeline, rail and truck transportation services for a substantial portion of our logistics activities in transporting the petroleum products we purchase and sell.
In addition, in 2022, we incurred approximately $7.5 million in connection with an ongoing dispute between us and the landlord at certain of our sites, which we disputed and believe have meritorious defenses.
In addition, in 2022 we incurred approximately $7.5 million in connection with an ongoing dispute between us and the landlord at certain of our sites, a dispute in which we believe we have meritorious defenses.
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.
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 71 Table of Contents fluctuate depending on the activities performed during a specific period.
The Issuers have the option to redeem the 2027 Notes, in whole or in part, at any time on or after August 1, 2022, at the redemption prices of 103.500% for the twelve-month period beginning on August 1, 2022, 102.333% for the twelve-month period beginning August 1, 2023, 101.167% for the twelve-month period beginning August 1, 2024, and 100% beginning on August 1, 2025 and at any time thereafter, together with any accrued and unpaid interest to the date of redemption.
The Issuers have the option to redeem the 2027 Notes, in whole or in part, at any time on or after August 1, 2023, at the redemption prices of 102.333% for the twelve-month period beginning August 1, 2023, 101.167% for the twelve-month period beginning August 1, 2024, and 100% beginning on August 1, 2025 and at any time thereafter, together with any accrued and unpaid interest to the date of redemption.
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 66 Table of Contents accordance with GAAP.
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.
We used the net proceeds from the offering to fund the redemption of our 7.00% senior notes due 2023 (the “2023 Notes”) and to repay a portion of the borrowings outstanding under our credit agreement.
We used the net proceeds from the offering to fund the redemption of our 7.00% senior notes due 2023 and to repay a portion of the borrowings outstanding under our credit agreement.
The respective income tax expense predominantly 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.
The respective income tax expense predominantly reflects the income tax expense from the operating results of GMG, which is a taxable entity for federal and state income tax purposes. 78 Table of Contents 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.
Valuation of Physical Forward Derivative Contracts As described in Note 10 and Note 11 of Notes to Consolidated Financial Statements, we enter into different commodity contracts that qualify as derivative instruments. These include physical forward purchase and sale contracts 82 Table of Contents and are accounted for at fair value.
Valuation of Physical Forward Derivative Contracts As described in Note 10 and Note 11 of Notes to Consolidated Financial Statements, we enter into different commodity contracts that qualify as derivative instruments. These include physical forward purchase and sale contracts and are accounted for at fair value.
Borrowings under the revolving credit facility bear interest at (1) the Daily or Term SOFR plus a 0.10% SOFR adjustment plus a margin of 1.75% to 2.75% depending on the Combined Total Leverage Ratio (as defined in the credit agreement), or (2) the base rate plus 0.75% to 1.75% depending on the Combined Total Leverage Ratio.
Borrowings under the revolving credit facility bear interest at (1) the Daily or Term SOFR plus a 0.10% SOFR adjustment plus a margin of 2.00% to 3.00% depending on the Combined Total Leverage Ratio (as defined in the credit agreement), or (2) the base rate plus a margin of 1.00% to 2.00% depending on the Combined Total Leverage Ratio.
Financing Obligations Capitol Acquisition In connection with the June 2015 acquisition of retail gasoline stations and dealer supply contracts from Capitol, we assumed a financing obligation of $89.6 million associated with two sale-leaseback transactions for 53 81 Table of Contents leased sites.
Financing Obligations Capitol Acquisition In connection with the June 2015 acquisition of retail gasoline stations and dealer supply contracts from Capitol, we assumed a financing obligation of $89.6 million associated with two sale-leaseback transactions for 53 leased sites.
(2) Distributable cash flow is a non-GAAP financial measure which is discussed above under “—Evaluating Our Results of Operations.” As defined by our partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.
(2) Distributable cash flow and adjusted distributable cash flow are non-GAAP financial measures which are discussed above under “—Evaluating Our Results of Operations.” As defined by our partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.
During the terms of these leases, which expire in May 2028 and September 2029, in lieu of recognizing lease expense for the lease rental payments, we incur interest expense associated with the financing obligation. Interest expense of approximately $9.0 million and $9.2 million was recorded for the years ended December 31, 2022 and 2021, respectively.
During the terms of these leases, which expire in May 2028 and September 2029, in lieu of recognizing lease expense for the lease rental payments, we incur interest expense associated with the financing obligation. Interest expense of approximately $8.8 million and $9.0 million was recorded for the years ended December 31, 2023 and 2022, respectively.
Travel and recreational activities are typically higher in these months in the geographic areas in which we operate, 62 Table of Contents increasing the demand for gasoline. Therefore, our volumes in gasoline are typically higher in the second and third quarters of the calendar year.
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.
Our credit agreement has a contractual maturity of May 6, 2024 and no principal payments are required prior to that date. However, we repay amounts outstanding and reborrow funds based on our working capital requirements.
Our credit agreement has a contractual maturity of May 2, 2026 and no principal payments are required prior to that date. However, we repay amounts outstanding and reborrow funds based on our working capital requirements.
The period-over-period change reflects a net gain on the sale and disposition of assets of $79.9 million, primarily related to the sale of the Revere Terminal (see Note 17 of Notes to Consolidated Financial Statements).
The period-over-period change reflects a net gain on the sale and disposition of assets of $79.9 million in 2022, primarily related to the sale of the Revere Terminal (see Note 18 of Notes to Consolidated Financial Statements).
These contracts are considered Level 2 derivative instruments under the fair value hierarchy as inputs used to determine fair value are not quoted prices in active markets. As of December 31, 2022, derivative assets of $19.8 million and derivative liabilities of $17.7 million were recorded for physical forward derivative contracts based on Level 2 fair value measurements.
These contracts are considered Level 2 derivative instruments under the fair value hierarchy as inputs used to determine fair value are not quoted prices in active markets. As of December 31, 2023, derivative assets of $17.7 million and derivative liabilities of $5.0 million were recorded for physical forward derivative contracts based on Level 2 fair value measurements.
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 $559.8 million and $476.4 million for 2022 and 2021, respectively, an increase of $83.4 million, or 17%.
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 $572.2 million and $559.8 million for 2023 and 2022, respectively, an increase of $12.4 million, or 2%.
There were no Level 3 physical forward derivative contracts as of December 31, 2022 and 2021. Accounting for the fair value measurement of physical forward derivative instruments is complex given the judgmental nature of the assumptions used as inputs into the valuation models.
There were no Level 3 physical forward derivative contracts as of December 31, 2023 and 2022. 87 Table of Contents Accounting for the fair value measurement of physical forward derivative instruments is complex given the judgmental nature of the assumptions used as inputs into the valuation models.
The long-term portion of the working capital revolving credit facility is the amount we expect to be outstanding during the entire year. The credit agreement expires on May 6, 2024.
The long-term portion of the working capital revolving credit facility is the amount we expect to be outstanding during the entire year. The credit agreement expires on May 2, 2026.
These distributions are cumulative and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year. ​ Results of Operations Consolidated Sales Our total sales were $18.9 billion and $13.2 billion for 2022 and 2021, respectively, an increase of $5.7 billion, or 43%, primarily due to an increase in prices, partially offset by a decline in volume sold.
These distributions are cumulative and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year . ​ ​ Results of Operations Consolidated Sales Our total sales were $16.5 billion and $18.9 billion for 2023 and 2022, respectively, a decrease of $2.4 billion, or 13%, primarily due to a decrease in prices, partially offset by an increase in volume sold.
The EPA has implemented a RFS pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.
The EPA has implemented a 68 Table of Contents RFS pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.
This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Because we supply distributors whose customers depend on home heating oil and residual oil for space heating purposes during the winter, warmer-than-normal temperatures during the first and fourth calendar quarters can decrease the total volume we sell and the gross profit realized on those sales. ● Our gasoline, convenience store and prepared food sales could be significantly reduced by a reduction in demand due to higher prices and inflation in general and new technologies and alternative fuel sources, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles. 64 Table of Contents Technological advances and alternative fuel sources, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles, may adversely affect the demand for gasoline.
Because we supply distributors whose customers depend on home heating oil and residual oil for space heating purposes during the winter, warmer-than-normal temperatures during the first and fourth calendar quarters can decrease the total volume we sell and the gross profit realized on those sales. ● Our gasoline, convenience store and prepared food sales could be significantly reduced by a reduction in demand due to higher prices and inflation in general and new technologies and alternative fuel sources, such as electric, hybrid, battery powered, hydrogen or other alternative fuel-powered motor vehicles and changing consumer preferences and driving habits.
Factors included in the assessment included both macro-economic conditions and industry specific conditions, and the fair value of the GDSO reporting unit was estimated using a weighted average of a discounted cash flow approach and a market comparables approach.
Factors included in the assessment included both macro-economic conditions and industry specific conditions, and the fair value of the GDSO reporting unit was estimated using a weighted average of a discounted cash flow approach and a market comparables approach. Based on our assessment, no impairment was identified.
On February 15, 2023, we paid the total cash distribution of approximately $1.8 million. ​ 75 Table of Contents Contractual Obligations We have contractual obligations that are required to be settled in cash.
On February 15, 2024, we paid the total cash distribution of approximately $1.8 million. Contractual Obligations We have contractual obligations that are required to be settled in cash.
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 $197.8 million and $225.5 million at December 31, 2022 and 2021, respectively, a decrease of $27.7 million.
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 $115.0 million and $197.8 million at December 31, 2023 and 2022, respectively, a decrease of $82.8 million.
In addition, we incur a commitment fee on the unused portion of each facility under the credit agreement, ranging from 0.35% to 0.50% per annum. As of December 31, 2022, we had $153.4 million outstanding on the working capital revolving credit facility and $99.0 million outstanding on the revolving credit facility.
In addition, we incur a commitment fee on the unused portion of each facility under the credit agreement, ranging from 0.35% to 0.50% per annum. As of December 31, 2023, we had $16.8 million outstanding on the working capital revolving credit facility and $380.0 million outstanding on the revolving credit facility.
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 November 15, 2022 through February 14, 2023 to our Series B preferred unitholders of record as of the opening of business on February 1, 2023.
On February 15, 2024, we paid the total cash distribution of approximately $2.1 million. 79 Table of Contents 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 November 15, 2023 through February 14, 2024 to our Series B preferred unitholders of record as of the opening of business on February 1, 2024.
Cash Flow The following table summarizes cash flow activity for the years ended December 31 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Net cash provided by operating activities ​ $ 479,996 ​ $ 50,218 ​ Net cash used in investing activities ​ $ (236,193) ​ $ (115,050) ​ Net cash (used in) provided by financing activities ​ $ (250,612) ​ $ 65,967 ​ 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.
Cash Flow The following table summarizes cash flow activity for the years ended December 31 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Net cash provided by operating activities ​ $ 512,441 ​ $ 479,996 ​ Net cash used in investing activities ​ $ (492,380) ​ $ (236,193) ​ Net cash used in financing activities ​ $ (4,459) ​ $ (250,612) ​ 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.
For example, President Biden signed an executive order calling for new or more stringent emissions standards for new, modified and existing oil and gas facilities, and the EPA has released both a proposed rule and a supplemental proposal to that effect. Our businesses may be adversely affected by increased costs and liabilities resulting from such stricter laws and regulations.
For example, President Biden signed an executive order calling for new or more stringent emissions standards for new, modified and existing oil and gas facilities, and the EPA finalized rules to that effect. Our businesses may be adversely affected by increased costs and liabilities resulting from such stricter laws and regulations.
Changes proposed by EPA for the renewable volume obligations may increase the cost to consumers for transportation fuel, which could result in a decline in demand for fuels and lower revenues for our business. ● Governmental action and campaigns to discourage smoking and use of other products may have a material adverse effect on our revenues and gross profit.
Future changes proposed by EPA for the renewable volume obligations may increase the cost to consumers for transportation fuel, which could result in a decline in demand for fuels and lower revenues for our business. ● Governmental action and campaigns to discourage smoking and use of other products may have a material adverse effect on our financial condition, results of operations, and cash available for distribution to our unitholders.
Based on our assessment, no impairment was identified. 83 Table of Contents Environmental and Other Liabilities We record accrued liabilities for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated.
Environmental and Other Liabilities We record accrued liabilities for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be 88 Table of Contents reasonably estimated.
The financing obligation will amortize through expiration of the leases based upon the lease rental payments which were $10.6 million and $10.4 million for the years ended December 31, 2022 and 2021, respectively. The financing obligation balance outstanding at December 31, 2022 was $83.3 million associated with the acquisition.
The financing obligation will amortize through expiration of the leases based upon the lease rental 86 Table of Contents payments which were $10.9 million and $10.6 million for the years ended December 31, 2023 and 2022, respectively. The financing obligation balance outstanding at December 31, 2023 was $81.3 million associated with the acquisition.
We had approximately $54.4 million and $43.2 million in maintenance capital expenditures for the years ended December 31, 2022 and 2021, respectively, which are included in capital expenditures in the accompanying consolidated statements of cash flows, of which approximately $45.0 million and $38.5 million for 2022 and 2021, respectively, are related to our investments in our gasoline station business.
We had approximately $60.8 million and $54.4 million in maintenance capital expenditures for the years ended December 31, 2023 and 2022, respectively, which are included in capital expenditures in the accompanying consolidated statements of cash flows, of which approximately $52.9 million and $45.0 million for 2023 and 2022, respectively, are related to our investments in our gasoline station business.
Collectively, we sold approximately $18.3 billion of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil for the year ended December 31, 2022.
Collectively, we sold approximately $15.9 billion of refined petroleum products, gasoline blendstocks, renewable fuels and crude oil for the year ended December 31, 2023.
In addition, we had outstanding letters of credit of $181.4 million. Subject to borrowing base limitations, the total remaining availability for borrowings and letters of credit was $1.12 billion and $795.9 million at December 31, 2022 and 2021, respectively.
In addition, we had outstanding letters of credit of $220.2 million. Subject to borrowing base limitations, the total remaining availability for borrowings and letters of credit was $1.13 billion and $1.12 billion at December 31, 2023 and 2022, respectively.
There can be no assurances as to the timing and type of such changes in existing laws or the promulgation of new laws or the amount of any required expenditures associated therewith. Climate change continues to attract considerable public and scientific attention.
There can be no assurances as to the timing and type of such changes in existing laws or the promulgation of new laws or the amount of any required expenditures associated therewith.
Interest expense was $4.2 million and $4.3 million for the years ended December 31, 2022 and 2021, respectively, and lease rental payments were $4.8 million and $4.7 million for the years ended December 31, 2022 and 2021, respectively. The financing obligation balance outstanding at December 31, 2022 was $61.2 million associated with this transaction.
Interest expense was $4.2 million for both years ended December 31, 2023 and 2022, and lease rental payments were $4.9 million and $4.8 million for the years ended December 31, 2023 and 2022, respectively. The financing obligation balance outstanding at December 31, 2023 was $60.5 million associated with this transaction.
We currently expect maintenance capital expenditures of approximately $50.0 million to $60.0 million and expansion capital expenditures, excluding acquisitions, of approximately $55.0 million to $65.0 million in 2023, relating primarily to investments in our gasoline station business.
We currently expect maintenance capital expenditures of approximately $50.0 million to $60.0 million and expansion capital expenditures, excluding acquisitions, of approximately $60.0 million to $70.0 million in 2024, relating primarily to investments in our gasoline station and terminal businesses.
Sales from wholesale gasoline and gasoline blendstocks were $6.4 billion and $5.3 billion for 2022 and 2021, respectively, an increase of $1.1 billion, or 20%, primarily due to an increase in prices, partially offset by a decline in volume sold.
Sales from wholesale gasoline and gasoline blendstocks were $5.9 billion and $6.4 billion for 2023 and 2022, respectively, a decrease of $0.5 billion, or 8%, primarily due to a decrease in prices, partially offset by an increase in volume sold.
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.
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 and adjusted distributable cash flow, (5) selling, general and administrative expenses (“SG&A”), (6) operating expenses and (7) degree days.
Preferred Units During 2022, we paid the following cash distributions to holders of the Series A Preferred Units and the Series B Preferred Units: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series B ​ ​ ​ ​ Preferred Units ​ Preferred Units ​ Distribution Paid for the ​ Cash Distribution Payment Date ​ Total Paid ​ Total Paid ​ Quarterly Period Covering ​ February 15, 2022 ​ $ 1.7 million ​ $ 1.8 million November 15, 2021 - February 14, 2022 ​ May 16, 2022 ​ $ 1.7 million ​ $ 1.8 million February 15, 2022 - May 14, 2022 ​ August 15, 2022 ​ $ 1.7 million ​ $ 1.8 million May 15, 2022 - August 14, 2022 ​ November 15, 2022 ​ $ 1.7 million ​ $ 1.8 million August 15, 2022 - November 14, 2022 ​ In addition, on January 17, 2023, 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 November 15, 2022 through February 14, 2023 to our Series A preferred unitholders of record as of the opening of business on February 1, 2023.
Preferred Units During 2023, we paid the following cash distributions to holders of the Series A Preferred Units and the Series B Preferred Units: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Distribution ​ Series A Preferred Units ​ Series B Preferred Units ​ Distribution Paid for the ​ Payment Date ​ Total Paid ​ Rate ​ Total Paid ​ Rate ​ Quarterly Period Covering ​ 2/15/2023 ​ $ 1.7 million ​ 9.75% ​ $ 1.8 million ​ 9.50% 11/15/22 - 2/14/23 ​ 5/15/2023 ​ $ 1.7 million ​ 9.75% ​ $ 1.8 million ​ 9.50% 2/15/23 - 5/14/23 ​ 8/15/2023 ​ $ 1.7 million ​ 9.75% ​ $ 1.8 million ​ 9.50% 5/15/23 - 8/14/23 ​ 11/15/2023 ​ $ 2.1 million ​ 12.40% ​ $ 1.8 million ​ 9.50% 8/15/23 - 11/14/23 ​ In addition, on January 16, 2024, the board of directors of our general partner declared a quarterly cash distribution of $0.77596 per unit ($3.10 per unit on an annualized basis) on the Series A Preferred Units for the period from November 15, 2023 through February 14, 2024 to our Series A preferred unitholders of record as of the opening of business on February 1, 2024.
Recent Event Amendment to the Credit Agreement —On February 2, 2023, we and certain of our subsidiaries entered into the eighth amendment to our credit agreement which, among other things, permits us to request up to two reallocations per calendar year of the lending commitments among our facilities under our credit agreement.
Amendments to the Credit Agreement and Accordion Exercise and Facility Reallocation —On February 2, 2023, we entered into the eighth amendment to the third amended and restated credit agreement which, among other things, permits us to request up to two reallocations per calendar year of the lending commitments among the facilities under our credit agreement.
Other disruptions, such as those due to an act of terrorism or war, could also adversely affect our businesses. ● We have contractual obligations for certain transportation assets such as railcars, barges and pipelines.
Other disruptions, such as those due to an act of terrorism or war, could also adversely affect our businesses. ● We have contractual obligations for certain transportation assets such as barges and railcars. A decline in demand for the products we sell could result in a decrease in the utilization of our transportation assets.
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.
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. 80 Table of Contents 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.
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.
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.
Net cash provided by operating activities was $480.0 million and $50.2 million for 2022 and 2021, respectively, for a period-over-period increase in cash flow from operating activities of $429.8 million.
Net cash provided by operating activities was $512.4 million and $480.0 million for 2023 and 2022, respectively, for a period-over-period increase in cash flow from operating activities of $32.4 million.
A decline in demand for the products we sell could result in a decrease in the utilization of our transportation assets, which could negatively impact our financial condition, results of operations and cash available for distribution to our unitholders. ● Our gasoline financial results in our GDSO segment can be lower in the first and fourth quarters of the calendar year due to seasonal fluctuations in demand.
As a result, our financial condition, results of operations and cash available for distribution to our unitholders may be negatively impacted. ● Our gasoline financial results in our GDSO segment can be lower in the first and fourth quarters of the calendar year due to seasonal fluctuations in demand.
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.
Therefore, EBITDA and adjusted EBITDA may not be comparable to similarly titled measures of other companies. Distributable Cash Flow and Adjusted 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.
In addition, our distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies. 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.
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.
Senior Notes 6.875% Senior Notes Due 2029 On October 7, 2020, we and GLP Finance Corp. (the “Issuers”) issued $350.0 million aggregate principal amount of 6.875% senior notes due 2029 (the “2029 Notes”) to several initial purchasers (the “2029 Notes Initial Purchasers”) in a private placement exempt from the registration requirements under the Securities Act of 1933 (the “Securities Act”).
Senior Notes 8.250% Senior Notes Due 2032 On January 18, 2024, we and GLP Finance Corp. (the “Issuers”) issued $450.0 million aggregate principal amount of 8.250% senior notes due 2032 (the “2032 Notes”) to several initial purchasers in a private placement exempt from the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”).
(2) Distributable cash flow for 2022 includes a net gain on sale and disposition of assets of $79.9 million, primarily related to the sale of the Revere Terminal (see Note 17 of Notes to Consolidated Financial Statements).
Distributable cash flow for 2022 includes a net gain on sale and disposition of assets of $79.9 million, primarily related to the sale of our terminal in Revere, Massachusetts (the “Revere Terminal”) in June 2022 (see Note 18 of Notes to Consolidated Financial Statements). (4) Distillates and other oils (primarily residual oil and crude oil).
Investing Activities Net cash used in investing activities was $236.2 million for 2022 and included $256.2 million in acquisitions (see Note 3 to Notes to Consolidated Financial Statements), $54.4 million in maintenance capital expenditures, $52.4 million in expansion capital expenditures 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, offset by $128.5 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 offset by $12.9 million in proceeds from the sale of property and equipment and $2.0 million in dividends received of equity method investment in SPR. ​ Net cash used in investing activities was $236.2 million for 2022 and included $256.2 million in acquisitions (see Note 3 to Notes to Consolidated Financial Statements), $106.8 million in capital expenditures and $1.7 million in seller note issuances, offset by $128.5 million in proceeds from the sale of property and equipment, primarily related to the sale of the Revere Terminal.
See “ — Liquidity and Capital Resources — Credit Agreement.” 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.
Please read “—Liquidity and Capital Resources—Credit Agreement.” 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.
As of December 31, 2022, there were two facilities under the credit agreement: ● a working capital revolving credit facility to be used for working capital purposes and letters of credit in the principal amount equal to the lesser of our borrowing base and $1.1 billion; and ​ ● a $450.0 million revolving credit facility to be used for general corporate purposes. 78 Table of Contents 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 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.
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 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.
We had approximately $206.8 million and $58.5 million in 76 Table of Contents expansion capital expenditures, including acquired property and equipment, for the years ended December 31, 2022 and 2021, respectively, primarily related to investments in our gasoline station business.
We had approximately $28.0 million and $52.4 million in expansion capital expenditures, excluding acquired property and equipment, for the years ended December 31, 2023 and 2022, respectively, primarily related to investments in our gasoline station business.
The holders of the 2029 Notes may require the Issuers to repurchase the 2029 Notes following certain asset sales or a Change of Control Triggering Event (as defined in the 2029 Notes Indenture) at the prices and on the terms specified in the 2029 Notes Indenture. 80 Table of Contents The 2029 Notes Indenture contains covenants that limit our ability to, among other things, incur additional indebtedness and issue preferred securities, make certain dividends and distributions, make certain investments and other restricted payments, restrict distributions by its subsidiaries, create liens, sell assets or merge with other entities.
The 2029 Notes Indenture contains covenants that limit our ability to, among other things, incur additional indebtedness and issue preferred securities, make certain dividends and distributions, make certain investments and other 85 Table of Contents restricted payments, restrict distributions by our subsidiaries, create liens, sell assets or merge with other entities.
See Note 4 of Notes to Consolidated Financial Statements for additional information. (4) Includes amounts related to our brand fee agreement and amounts related to our access right agreements and our pension and deferred compensation obligations.
(4) Includes amounts related to our brand fee agreement, amounts related to our access right agreements and our pension and deferred compensation obligations.
We review product margin monthly for consistency and trend analysis. We define product margin as our product sales minus product costs.
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.
Our product margin from station operations was $267.9 million and $233.9 million for 2022 and 2021, respectively, an increase of $34.0 million, or 15%. 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.
Our product margin from station operations was $276.0 million and $267.9 million for 2023 and 2022, respectively, an increase of $8.1 million, or 3%. The increases in sales and product margin are primarily due to an increase in activity at our convenience stores, in part due to the acquisition of Tidewater, partially offset by the sale of non-strategic sites.
We may not be able to renew the permits necessary for our operations, or we may be forced to accept terms in future permits that limit our operations or result in additional compliance costs.
We may not be able to renew the permits necessary for our 69 Table of Contents operations, or we may be forced to accept terms in future permits that limit our operations or result in additional compliance costs. Results of Operations Evaluating Our Results of Operations Our management uses a variety of financial and operational measurements to analyze our performance.
Our crude oil product margin was ($9.4 million) and ($12.8 million) for 2022 and 2021, respectively, an increase of $3.4 million, or 27%, primarily due to the expiration of a pipeline connection agreement in August of 2021. Results for Gasoline Distribution and Station Operations Segment Gasoline Distribution .
The decrease in product margin was offset by an increase in crude oil product margin due to the expiration of a pipeline connection agreement in December of 2022. Results for Gasoline Distribution and Station Operations Segment Gasoline Distribution .
Except for net income, the primary drivers of the changes in operating activities include the following for the years ended December 31 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Increase in accounts receivable ​ $ (67,774) ​ $ (183,826) ​ Increase in inventories ​ $ (52,086) ​ $ (123,889) ​ Increase in accounts payable ​ $ 177,644 ​ $ 145,423 ​ In 2022, the increases in accounts receivable inventories and accounts payable are in part due to the increase in prices. 77 Table of Contents In 2021, the increases in accounts receivable, inventories and accounts payable are largely due to the increase in prices.
Except for net income, the primary drivers of the changes in operating activities include the following for the years ended December 31 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Increase in accounts receivable ​ $ (73,782) ​ $ (67,774) ​ Decrease (increase) in inventories ​ $ 172,112 ​ $ (52,086) ​ Increase in accounts payable ​ $ 117,777 ​ $ 177,644 ​ In 2023, the increases in accounts receivable and accounts payable are in part due to timing of sales and payments, offset by a decrease in prices.
In addition, the credit agreement provides the ability for the borrowers to repay certain junior indebtedness, subject to a $100.0 million cap, so long as, among other things, no Default has occurred or will exist immediately after making such repayment. 79 Table of Contents 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.
In addition, the credit agreement provides the ability for the borrowers to repay certain junior indebtedness, subject to a $100.0 million cap, so long as, among other things, no Default has occurred or will exist immediately after making such repayment.
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. 67 Table of Contents 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.
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. Adjusted distributable cash flow is a non-GAAP financial measure intended to provide management and investors with an enhanced perspective of our financial performance.
Many of these transactions involve numerous regulatory, environmental, commercial and legal 63 Table of Contents uncertainties beyond our control. Required approvals, permits and licenses may not be obtained, may be delayed or may be obtained with conditions that materially alter the expected return associated with the underlying projects.
Many of these transactions involve numerous regulatory, environmental, commercial and legal uncertainties beyond our control, which may materially alter the expected return associated with the underlying transaction.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed17 unchanged
Biggest changeExcept 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. 84 Table of Contents 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.
Biggest changeWhile 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, 89 Table of Contents such as weather conditions.
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 December 31, 2022.
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 December 31, 2023.
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. 85 Table of Contents Item 8. Financial Statements and Supplementary Dat a.
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. 90 Table of Contents Item 8. Financial Statements and Supplementary Dat a.
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 $2.5 million annually, assuming, however, that our indebtedness remained constant throughout the year.
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 $4.0 million annually, assuming, however, that our indebtedness remained constant throughout the year.
We have a daily margin requirement to 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 $23.4 million at December 31, 2022.
We have a daily margin requirement to 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 $12.8 million at December 31, 2023.
As of December 31, 2022, we had total borrowings outstanding under our credit agreement of $252.4 million. Please read Part II, Item 7, “Management’s Discussion and Analysis—Liquidity and Capital Resources—Credit Agreement,” for information on interest rates related to our borrowings.
As of December 31, 2023, we had total borrowings outstanding under our credit agreement of $396.8 million. Please read Part II, Item 7, “Management’s Discussion and Analysis—Liquidity and Capital Resources—Credit Agreement,” for information on interest rates related to our borrowings.
At December 31, 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) ​ ​ December 31, ​ Effect of 10% Effect of 10% ​ ​ 2022 ​ Price Increase ​ Price Decrease Exchange traded derivative contracts ​ $ (5,111) ​ $ (32,507) ​ $ 32,507 ​ Forward derivative contracts ​ 2,168 ​ (11,615) ​ 11,615 ​ Total ​ $ (2,943) ​ $ (44,122) ​ $ 44,122 ​ The fair values of the futures contracts are based on quoted market prices obtained from the NYMEX, CME and ICE.
At December 31, 2023, 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) ​ ​ December 31, ​ Effect of 10% Effect of 10% ​ ​ 2023 ​ Price Increase ​ Price Decrease Exchange traded derivative contracts ​ $ 33,421 ​ $ (18,458) ​ $ 18,458 ​ Forward derivative contracts ​ 12,669 ​ (13,072) ​ 13,072 ​ Total ​ $ 46,090 ​ $ (31,530) ​ $ 31,530 ​ The fair values of the futures contracts are based on quoted market prices obtained from the NYMEX, CME and ICE.
Added
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.

Other GLP 10-K year-over-year comparisons