The following discussion and analysis of financial condition and results of operations of Global Partners LP should be read in conjunction with the historical consolidated financial statements of Global Partners LP and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.





Forward-Looking Statements



Some of the information contained in this Quarterly Report on Form 10-Q may
contain forward-looking statements. Forward-looking statements include, without
limitation, any statement that may project, indicate or imply future results,
events, performance or achievements, and may contain the words "may," "believe,"
"should," "could," "expect," "anticipate," "plan," "intend," "estimate,"
"continue," "will likely result," or other similar expressions. In addition, any
statement made by our management concerning future financial performance
(including future revenues, earnings or growth rates), ongoing business
strategies or prospects, and possible actions by us are also forward-looking
statements. Forward-looking statements are not guarantees of performance.
Although we believe these forward-looking statements are based on reasonable
assumptions, statements made regarding future results are subject to a number of
assumptions, uncertainties and risks, many of which are beyond our control,
which may cause future results to be materially different from the results
stated or implied in this document. These risks and uncertainties include,

among
other things:


We may not have sufficient cash from operations to enable us to pay ? distributions on our Series A Preferred Units or maintain distributions on our

common units at current levels following establishment of cash reserves and


  payment of fees and expenses, including payments to our general partner.

A significant decrease in price or demand for the products we sell or a ? significant decrease in the pricing of and demand for our logistics activities

could have an adverse effect on our financial condition, results of operations


  and cash available for distribution to our unitholders.



The outbreak of COVID-19 and certain developments in global oil markets have

had, and may continue to have, material adverse consequences for general ? economic, financial and business conditions, and could materially and adversely

affect our business, financial condition and results of operation and those of


  our customers, suppliers and other counterparties.




?We depend upon marine, pipeline, rail and truck transportation services for a
substantial portion of our logistics activities in transporting the products we
sell. Implementation of regulations and directives that adversely impact the
market for transporting these products by rail or otherwise could adversely
affect those activities. In addition, implementation of regulations and
directives related to these aforementioned services as well as a disruption in
any of these transportation services could have an adverse effect on our
financial condition, results of operations and cash available for distribution
to our unitholders.


?We have contractual obligations for certain transportation assets such as railcars, barges and pipelines. A decline in demand for (i) the products we sell or (ii) our logistics activities, which has resulted and could continue to result in a decrease in the utilization of our transportation assets, could negatively impact our financial condition, results of operations and cash available for distribution to our unitholders.

We may not be able to fully implement or capitalize upon planned growth

projects. Even if we consummate acquisitions or expend capital in pursuit of ? growth projects that we believe will be accretive, they may in fact result in


  no increase or even a decrease in cash available for distribution to our
  unitholders.



?Erosion of the value of major gasoline brands could adversely affect our gasoline sales and customer traffic.


?Our gasoline sales could be significantly reduced by a reduction in demand due
to higher prices and to new technologies and alternative fuel sources, such as
electric, hybrid, battery powered, hydrogen or other alternative fuel-powered
motor vehicles. Changing consumer preferences or driving habits could lead

to
new forms of

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fueling destinations or potentially fewer customer visits to our sites,
resulting in a decrease in gasoline sales and/or sales of food, sundries and
other on-site services. Any of these outcomes could negatively affect our
financial condition, results of operations and cash available for distribution
to our unitholders.


?Physical effects from climate change and impacts to areas prone to sea level rise or other extreme weather events could have the potential to adversely affect our assets and operations.





?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.



?Our petroleum and related products sales, logistics activities and results of
operations have been and could continue to be adversely affected by, among other
things, changes in the petroleum products market structure, product
differentials and volatility (or lack thereof), implementation of regulations
that adversely impact the market for transporting petroleum and related products
by rail and other modes of transportation, severe weather conditions,
significant changes in prices and interruptions in transportation services and
other necessary services and equipment, such as railcars, barges, trucks,
loading equipment and qualified drivers.



?Our risk management policies cannot eliminate all commodity risk, basis risk or
the impact of unfavorable market conditions, each of which can adversely affect
our financial condition, results of operations and cash available for
distribution to our unitholders. In addition, noncompliance with our risk
management policies could result in significant financial losses.



?Our results of operations are affected by the overall forward market for the products we sell, and pricing volatility may adversely impact our results.


?Our businesses could be affected by a range of issues, such as changes in
commodity prices, energy conservation, competition, the global economic climate,
movement of products between foreign locales and within the United States,
changes in refiner demand, weekly and monthly refinery output levels, changes in
local, domestic and worldwide inventory levels, changes in health, safety and
environmental regulations, including, without limitation, those related to
climate change, failure to obtain renewal permits on terms favorable to us,
seasonality, supply, weather and logistics disruptions and other factors and
uncertainties inherent in the transportation, storage, terminalling and
marketing of refined products, gasoline blendstocks, renewable fuels and crude
oil.



?Increases and/or decreases in the prices of the products we sell could
adversely impact the amount of availability for borrowing working capital under
our credit agreement, which credit agreement has borrowing base limitations

and
advance rates.



?Warmer weather conditions could adversely affect our home heating oil and
residual oil sales. Our sales of home heating oil and residual oil continue to
be reduced by conversions to natural gas and by utilization of propane and/or
natural gas (instead of heating oil) as primary fuel sources.



?We are exposed to trade credit risk and risk associated with our trade credit support in the ordinary course of our businesses.

? The condition of credit markets may adversely affect our liquidity.

Our credit agreement and the indentures governing our senior notes contain

operating and financial covenants, and our credit agreement contains borrowing ? base requirements. A failure to comply with the operating and financial

covenants in our credit agreement, the indentures and any future financing

agreements could impact our access to bank loans and other sources of financing


  as well as our ability to pursue our business activities.



A significant increase in interest rates could adversely affect our results of ? operations and cash available for distribution to our unitholders and our

ability to service our indebtedness.






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Our gasoline station and convenience store business, including with the onset ? of the COVID-19 pandemic, could expose us to an increase in consumer litigation

and result in an unfavorable outcome or settlement of one or more lawsuits


  where insurance proceeds are insufficient or otherwise unavailable.



Congress has given the Food and Drug Administration ("FDA") broad authority to

regulate tobacco and nicotine products, and the FDA and states have enacted and

are pursuing enaction of numerous regulations restricting the sale of such

products. These governmental actions, as well as national, state and municipal

campaigns to discourage smoking, tax increases, and imposition of regulations

restricting the sale of 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. Also, increasing

regulations related to and restricting the sale of vapor products and

e-cigarettes may offset some of the gains we have experienced from selling

these types of products. 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 results can be adversely affected by unforeseen events, such as adverse
weather, natural disasters, terrorism, pandemics, or other catastrophic events
which could have an adverse effect on our financial condition, results of
operations and cash available for distributions to our unitholders.



Our businesses could expose us to litigation and result in an unfavorable ? outcome or settlement of one or more lawsuits where insurance proceeds are


  insufficient or otherwise unavailable.




?Adverse developments in the areas where we conduct our businesses could have a
material adverse effect on such businesses and could reduce our ability to make
distributions to our unitholders.



?A serious disruption to our information technology systems could significantly limit our ability to manage and operate our businesses efficiently.

?We are exposed to performance risk in our supply chain.





?Our businesses are subject to federal, state and municipal environmental and
non-environmental regulations which could have a material adverse effect on

such
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.



?Unitholders have limited voting rights and are not entitled to elect our general partner or its directors or remove our general partner without the consent of the holders of at least 66 2/3% of the outstanding common units (including common units held by our general partner and its affiliates), which could lower the trading price of our units.

?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.





Additional information about risks and uncertainties that could cause actual
results to differ materially from forward-looking statements is contained in
Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year
ended December 31, 2019 and Part II, Item 1A, "Risk Factors," in this Quarterly
Report on Form 10-Q.



We expressly disclaim any obligation or undertaking to update these statements
to reflect any change in our expectations or beliefs or any change in events,
conditions or circumstances on which any forward-looking statement is based,
other than as required by federal and state securities laws. All forward-looking
statements included in this Quarterly Report on Form 10-Q and all subsequent
written or oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by these cautionary

statements.

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Overview



General



We are a master limited partnership formed in March 2005. We own, control or
have access to one of the largest terminal networks of refined petroleum
products and renewable fuels in Massachusetts, Maine, Connecticut, Vermont, New
Hampshire, Rhode Island, New York, New Jersey and Pennsylvania (collectively,
the "Northeast"). We are one of the region's largest independent owners,
suppliers and operators of gasoline stations and convenience stores. As of
June 30, 2020, we had a portfolio of 1,532 owned, leased and/or supplied
gasoline stations, including 277 directly operated convenience stores, primarily
in the Northeast. We are also one of the largest distributors of gasoline,
distillates, residual oil and renewable fuels to wholesalers, retailers and
commercial customers in the New England states and New York. We engage in the
purchasing, selling, gathering, blending, storing and logistics of transporting
petroleum and related products, including gasoline and gasoline blendstocks
(such as ethanol), distillates (such as home heating oil, diesel and kerosene),
residual oil, renewable fuels, crude oil and propane and in the transportation
of petroleum products and renewable fuels by rail from the mid-continent region
of the United States and Canada.



Collectively, we sold approximately $1.4 billion and $3.9 billion of refined
petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane
for the three and six months ended June 30, 2020, respectively. In addition, we
had other revenues of approximately $0.1 billion and $0.2 billion for the three
and six months ended June 30, 2020, respectively, from convenience store sales
at our directly operated stores, rental income from dealer leased and
commissioned agent leased gasoline stations and from cobranding arrangements,
and sundries.



We base our pricing on spot prices, fixed prices or indexed prices and routinely
use the New York Mercantile Exchange ("NYMEX"), Chicago Mercantile Exchange
("CME") and Intercontinental Exchange ("ICE") or other counterparties to hedge
the risk inherent in buying and selling commodities. Through the use of
regulated exchanges or derivatives, we seek to maintain a position that is
substantially balanced between purchased volumes and sales volumes or future
delivery obligations.


Our Perspective on Global and the COVID-19 Pandemic





Overview



The COVID-19 pandemic has continued to make its presence felt at home, in the
office workplace and at our retail sites and terminal locations. We have
successfully executed our business continuity plans and at this time we continue
to work remotely. We remain active in responding to the challenges posed by the
COVID-19 pandemic and continue to provide essential products and services while
prioritizing the safety of our employees, customers and vendors in the
communities where we operate.



The COVID-19 pandemic has resulted in an economic downturn and restricted travel
to, from and within the states in which we conduct our businesses. Federal,
state and municipal "stay at home" or similar-like directives have resulted in
decreases in the demand for gasoline and convenience store products. Social
distancing guidelines and directives limiting food operations at our convenience
stores have further contributed to a reduction in in-store traffic and sales.
The demand for diesel fuel has similarly (but not as drastically) been impacted.
We remain well positioned to pivot and address different (and, at times,
conflicting) directives from federal, state and municipal authorities designed
to mitigate the spread of the COVID-19 pandemic, permit the opening of
businesses and promote an economic recovery. From mid-March into April, we saw
reductions of more than 50% in gasoline volume and more than 20% in convenience
store sales but saw gradual increases in both gasoline volume and convenience
store sales during the remainder of the second quarter as businesses reopened
and directives from federal, state and municipal authorities became less
restrictive. That said, uncertainties surrounding the duration of the COVID-19
pandemic and demand at the pump, inside our stores and at our terminals remain.



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Second Quarter 2020 Performance





During March, the COVID-19 pandemic-related demand destruction and the price war
between Saudi Arabia and Russia caused a rapid decline in fuel prices. The price
of crude oil (WTI) fell from $46.75/barrel on March 2, 2020 to $20.48/barrel on
March 31, 2020. Similarly, the price of wholesale gasoline (87 RBOB) on the
NYMEX fell from $1.54/gallon to $0.57/gallon during the same timeframe,
steepening the forward product pricing curve. During the first quarter of 2020,
this decline in prices had a positive impact on fuel margin in our GDSO segment,
but a negative impact on the product margins in our Wholesale segment which
decreased $29.9 million year over year.



In the second quarter, margins in our Wholesale segment increased $73.5 million
year over year due to a significant recovery in the supply/demand imbalance at
the end of the first quarter and resultant flattening of the forward product
pricing curve. In our GDSO segment, while volumes decreased year over year, fuel
margins remained strong resulting in a $9.0 million increase in gasoline
distribution product margin which offset an $8.8 million decrease in our station
operations product margin, primarily due to a decrease in store traffic.



Given the uncertainty surrounding the short-term and long-term impacts of
COVID-19, including the timing of an economic recovery, early in the second
quarter we took certain steps to increase liquidity and create additional
financial flexibility. Such steps included a 25% decrease to our quarterly
distribution on our common units for the period from January 1, 2020 to
March 31, 2020. In addition, we borrowed $50.0 million under our revolving
credit facility which was included in cash on our balance sheet. We also reduced
planned expenses and 2020 capital spending. We amended our credit agreement to
provide temporary adjustments to certain covenants. Given the
stronger-than-expected performance in the second quarter, we paid down our
revolving credit facility with the $50.0 million cash on hand and increased our
planned 2020 capital spending. In addition, we increased our quarterly
distribution on our common units for the period from April 1, 2020 to June

30,
2020.


Moving Forward - Our Perspective


In July, while we have seen a slight uptick in transportation fuels volume and
convenience store sales, volume and sales are lower year over year. Fuel margins
(cents per gallon) in our GDSO segment have declined but remain above prior year
margins. We could reasonably expect volumes and sales to continue to increase
assuming more of the economy "re-opens" and more people travel. However, the
extent to which the COVID-19 pandemic may affect our operating results remains
uncertain. The outbreak of the COVID-19 pandemic has had, and may continue to
have, material adverse consequences for general economic, financial and business
conditions, and could materially and adversely affect our business, financial
condition and results of operations and those of our customers, suppliers and
other counterparties.



Our inventory management is dependent on the use of hedging instruments which
are managed based on the structure of the forward pricing curve. Daily market
changes may impact periodic results due to the point-in-time valuation of these
positions. Volatility in the oil markets resulting from COVID-19 and
geopolitical events may impact our results.



Business operations today, as compared to how we conducted our business in early
March, reflect changes which may well remain for an indefinite period of time.
In these uncertain times and volatile markets, we believe that we are
operationally nimble and that our portfolio of assets may continue to provide us
with opportunities.



Recent Event



Amended Credit Agreement-On May 7, 2020, we and certain of our subsidiaries
entered into the fourth amendment to third amended and restated credit agreement
which, among other things, provides temporary adjustments to certain covenants
and reduces the total aggregate commitment by $130.0 million. See "-Liquidity
and Capital Resources-Credit Agreement."



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Operating Segments



We purchase refined petroleum products, gasoline blendstocks, renewable fuels,
crude oil and propane 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.



Wholesale



In our Wholesale segment, we engage in the logistics of selling, gathering,
blending, storing and transporting refined petroleum products, gasoline
blendstocks, renewable fuels, crude oil and propane. We transport these products
by railcars, barges, trucks and/or pipelines pursuant to spot or long-term
contracts. From time to time, we aggregate crude oil by truck or pipeline in the
mid-continent region of the United States and Canada, transport it by rail and
ship it by barge to refiners. We sell home heating oil, branded and unbranded
gasoline and gasoline blendstocks, diesel, kerosene, residual oil and propane to
home heating oil and propane retailers and wholesale distributors. Generally,
customers use their own vehicles or contract carriers to take delivery of the
gasoline, distillates and propane at bulk terminals and inland storage
facilities that we own or control or at which we have throughput or exchange
arrangements. Ethanol is shipped primarily by rail and by barge.



In our Wholesale segment, we obtain Renewable Identification Numbers ("RIN") in
connection with our purchase of ethanol which is used for bulk trading purposes
or for blending with gasoline through our terminal system. A RIN is a renewable
identification number associated with government-mandated renewable fuel
standards. To evidence that the required volume of renewable fuel is blended
with gasoline, obligated parties must retire sufficient RINs to cover their
Renewable Volume Obligation ("RVO"). Our U.S. Environmental Protection Agency
("EPA") obligations relative to renewable fuel reporting are comprised of
foreign gasoline and diesel that we may import and blending operations at
certain facilities.



Gasoline Distribution and Station Operations

In our GDSO segment, gasoline distribution includes sales of branded and unbranded gasoline to gasoline station operators and sub-jobbers. Station operations include (i) convenience stores, (ii) rental income from gasoline stations leased to dealers, from commissioned agents and from cobranding arrangements and (iii) sundries (such as car wash sales and lottery and ATM commissions).

As of June 30, 2020, we had a portfolio of owned, leased and/or supplied gasoline stations, primarily in the Northeast, that consisted of the following:






Company operated      277
Commissioned agents   257
Lessee dealers        211
Contract dealers      787
Total               1,532


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. We receive rental income from commissioned
agent leased gasoline stations for the leasing of the convenience store
premises, repair bays and other businesses that may be conducted by the
commissioned agent. At dealer-leased locations, the dealer purchases gasoline
from us, and the dealer sets the retail price of gasoline at the dealer's
station. We also receive rental income from (i) dealer-leased gasoline stations
and (ii) cobranding arrangements. We also supply gasoline to locations owned
and/or leased by independent contract dealers. Additionally, we have contractual
relationships with distributors in certain New England states pursuant to which
we source and supply these distributors' gasoline stations with
ExxonMobil-branded gasoline.



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Commercial



In our Commercial segment, we include sales and deliveries to end user customers
in the public sector and to large commercial and industrial end users of
unbranded gasoline, home heating oil, diesel, kerosene, residual oil and bunker
fuel. In the case of public sector commercial and industrial end user customers,
we sell products primarily either through a competitive bidding process or
through contracts of various terms. We respond to publicly issued requests for
product proposals and quotes. We generally arrange for the delivery of the
product to the customer's designated location. Our Commercial segment also
includes sales of custom blended fuels delivered by barges or from a terminal
dock to ships through bunkering activity.



Seasonality



Due to the nature of our businesses and our reliance, in part, on consumer
travel and spending patterns, we may experience more demand for gasoline during
the late spring and summer months than during the fall and winter. 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. However, the COVID-19 pandemic has had a negative impact on
gasoline demand and the extent and duration of that impact is uncertain. As
demand for some of our refined petroleum products, specifically home heating oil
and residual oil for space heating purposes, is generally greater during the
winter months, heating oil and residual oil volumes are generally higher during
the first and fourth quarters of the calendar year. These factors may result in
fluctuations in our quarterly operating results.



Outlook



This section identifies certain risks and certain economic or industry-wide
factors, in addition to those described under "-Our Perspective on Global and
the COVID-19 Pandemic," that may affect our financial performance and results of
operations in the future, both in the short-term and in the long-term. Our
results of operations and financial condition depend, in part, upon the
following:



Our businesses are influenced by the overall markets for refined petroleum

products, gasoline blendstocks, renewable fuels, crude oil and propane and

increases and/or decreases in the prices of these products may adversely impact


  our financial condition, results of operations and cash available for
  distribution to our unitholders and the amount of borrowing available for
  working capital under our credit agreement. Results from our purchasing,
  storing, terminalling, transporting, selling and blending operations are

influenced by prices for refined petroleum products, gasoline blendstocks,

renewable fuels, crude oil and propane, price volatility and the market for

such products. Prices in the overall markets for these products may affect our

financial condition, results of operations and cash available for distribution

to our unitholders. Our margins can be significantly impacted by the forward

product pricing curve, often referred to as the futures market. We typically

hedge our exposure to petroleum product and renewable fuel price moves with

futures contracts and, to a lesser extent, swaps. In markets where future

prices are higher than current prices, referred to as contango, we may use our

storage capacity to improve our margins by storing products we have purchased ? at lower prices in the current market for delivery to customers at higher

prices in the future. In markets where future prices are lower than current

prices, referred to as backwardation, inventories can depreciate in value and

hedging costs are more expensive. For this reason, in these backward markets,

we attempt to reduce our inventories in order to minimize these effects. Our

inventory management is dependent on the use of hedging instruments which are

managed based on the structure of the forward pricing curve. Daily market

changes may impact periodic results due to the point-in-time valuation of these

positions. Volatility in oil markets may impact our results. When prices for

the products we sell rise, some of our customers may have insufficient credit

to purchase supply from us at their historical purchase volumes, and their

customers, in turn, may adopt conservation measures which reduce consumption,

thereby reducing demand for product. Furthermore, when prices increase rapidly

and dramatically, we may be unable to promptly pass our additional costs on to

our customers, resulting in lower margins which could adversely affect our

results of operations. Higher prices for the products we sell may (1) diminish

our access to trade credit support and/or cause it to become more expensive and

(2) decrease the amount of borrowings available for working capital under our

credit agreement as a result of total available commitments,




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borrowing base limitations and advance rates thereunder. 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. We are continuously

engaged in discussions with potential sellers and lessors of existing (or

suitable for development) terminalling, storage, logistics and/or marketing

assets, including gasoline stations, convenience stores and related businesses.

Our growth largely depends on our ability to make accretive acquisitions and/or

accretive development projects. We may be unable to execute such accretive ? transactions for a number of reasons, including the following: (1) we are

unable to identify attractive transaction candidates or negotiate acceptable

terms; (2) we are unable to obtain financing for such transactions on

economically acceptable terms; or (3) we are outbid by competitors. In

addition, we may consummate transactions that at the time of consummation we

believe will be accretive but that ultimately may not be accretive. If any of

these events were to occur, our future growth and ability to increase or

maintain distributions on our common units could be limited. We can give no

assurance that our transaction efforts will be successful or that any such


  efforts will be completed on terms that are favorable to us.



The condition of credit markets may adversely affect our liquidity. 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 requiring us to provide collateral. 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. Implementation of regulations and directives related to these

aforementioned services as well as disruption in any of these transportation

services could have an adverse effect on our financial condition, results of

operations and cash available for distribution to our unitholders. Hurricanes,

flooding and other severe weather conditions could cause a disruption in the

transportation services we depend upon and could affect the flow of service. 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. These events could result in service disruptions and increased

costs which could also adversely affect our financial condition, results of


  operations and cash available for distribution to our unitholders. 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. A decline in demand for (i) the products we ? sell or (ii) our logistics activities, 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, with particular impact to our GDSO segment, are

seasonal and can be lower in the first and fourth quarters of the calendar

year. Due to the nature of our businesses and our reliance, in part, on

consumer travel and spending patterns, we may experience more demand for

gasoline during the late spring and summer months than during the fall and ? winter. Travel and recreational activities are typically higher in these months

in the geographic areas in which we operate, increasing the demand for gasoline

that we sell. Therefore, our results of operations in gasoline can be lower in

the first and fourth quarters of the calendar year. The COVID-19 pandemic has

had a negative impact on gasoline demand and the extent and duration of that


  impact is uncertain.



Our heating oil and residual oil financial results are seasonal and can be ? lower in the second and third quarters of the calendar year. Demand for some


  refined petroleum products, specifically home heating oil and residual



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oil for space heating purposes, is generally higher during November through

March than during April through October. We obtain a significant portion of

these sales during the winter months. Therefore, our results of operations in

heating oil and residual oil for the first and fourth calendar quarters can be

better than for the second and third quarters.

Warmer weather conditions could adversely affect our results of operations and

financial condition. Weather conditions generally have an impact on the demand

for both home heating oil and residual oil. 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. Therefore, our results of operations in

heating oil and residual oil for the first and fourth calendar quarters can be

better than for the second and third quarters.

? Energy efficiency, higher prices, new technology and alternative fuels could

reduce demand for our products.




Higher prices and new technologies and alternative fuel sources, such as
electric, hybrid or battery powered motor vehicles, could reduce the demand for
transportation fuels and adversely impact our sales of transportation fuels. A
reduction in sales of transportation fuels could have an adverse effect on our
financial condition, results of operations and cash available for distribution
to our unitholders. In addition, 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 three
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. End users who are dual-fuel users have the ability to
switch between residual oil and natural gas. Other end users may elect to
convert to natural gas. During a period of increasing residual oil prices
relative to the prices of natural gas, dual-fuel customers may switch and other
end users may convert to natural gas. During periods of increasing home heating
oil prices relative to the price of natural gas, residential users of home
heating oil may also convert to natural gas. As described above, such switching
or conversion could have an adverse effect on our financial condition, results
of operations and cash available for distribution to our unitholders.



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. The EPA has implemented a Renewable Fuels Standard ("RFS")

pursuant to the Energy Policy Act of 2005 and the Energy Independence and

Security Act of 2007. The RFS program seeks to promote the incorporation of

renewable fuels in the nation's fuel supply and, to that end, sets annual

quotas for the quantity of renewable fuels (such as ethanol) that must be

blended into transportation fuels consumed in the United States. A RIN is

assigned to each gallon of renewable fuel produced in or imported into the

United States. We are exposed to volatility in the market price of RINs. We

cannot predict the future prices of RINs. RIN prices are dependent upon a

variety of factors, including EPA regulations related to the amount of RINs

required and the total amounts that can be generated, the availability of RINs

for purchase, the price at which RINs can be purchased, and levels of ? transportation fuels produced, all of which can vary significantly from quarter

to quarter. If sufficient RINs are unavailable for purchase or if we have to

pay a significantly higher price for RINs, or if we are otherwise unable to

meet the EPA's RFS mandates, our results of operations and cash flows could be

adversely affected. Future demand for ethanol will be largely dependent upon

the economic incentives to blend based upon the relative value of gasoline and

ethanol, taking into consideration the EPA's regulations on the RFS program and

oxygenate blending requirements. 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. In addition, changes in blending requirements or broadening

the definition of what constitutes a renewable fuel could affect the price of

RINs which could impact the magnitude of the mark-to-market liability recorded

for the deficiency, if any, in our RIN position relative to our RVO at a point


  in time.




  We may not be able to fully implement or capitalize upon planned growth

projects. We could have a number of organic growth projects that may require

the expenditure of significant amounts of capital in the aggregate. Many of ? these projects involve numerous regulatory, environmental, commercial and legal

uncertainties beyond our control. As these projects are undertaken, 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


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underlying projects. Moreover, revenues associated with these organic growth

projects may not increase immediately upon the expenditures of funds with

respect to a particular project and these projects may be completed behind

schedule or in excess of budgeted cost. We may pursue and complete projects in

anticipation of market demand that dissipates or market growth that never

materializes. As a result of these uncertainties, the anticipated benefits

associated with our capital projects may not be achieved.

Governmental action and campaigns to discourage smoking and use of other

products may have a material adverse effect on our revenues and gross

profit. Congress has given the FDA broad authority to regulate tobacco and

nicotine products, and the FDA and states have enacted and are pursuing

enaction of numerous regulations restricting the sale of such products. These

governmental actions, as well as national, state and municipal campaigns to

discourage smoking, tax increases, and imposition of regulations restricting ? the sale of 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. Also, increasing regulations

related to and restricting the sale of vapor products and e-cigarettes may

offset some of the gains we have experienced from selling these types of

products. 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. 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. The trend in

environmental regulation has been towards more restrictions and limitations on

activities that may affect the environment over time. Our businesses may be

adversely affected by increased costs and liabilities resulting from such

stricter laws and regulations. We try to anticipate future regulatory

requirements that might be imposed and plan accordingly to remain in compliance

with changing environmental laws and regulations and to minimize the costs of

such compliance. Risks related to our environmental permits, including the risk

of noncompliance, permit interpretation, permit modification, renewal of

permits on less favorable terms, judicial or administrative challenges to

permits by citizens groups or federal, state or municipal entities or permit

revocation are inherent in the operation of our businesses, as it is with other

companies engaged in similar businesses. 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. In recent years, the transport of crude oil and ethanol has become

subject to additional regulation. The establishment of more stringent design or

construction standards, or other requirements for railroad tank cars that are

used to transport crude oil and ethanol with too short of a timeframe for

compliance may lead to shortages of compliant railcars available to transport

crude oil and ethanol, which could adversely affect our businesses. Likewise,

in recent years, efforts have commenced to seek to use federal, state and

municipal laws to contest issuance of permits, contest renewal of permits and

restrict the types of railroad tanks cars that can be used to deliver products,

including, without limitation, crude oil and ethanol to bulk storage terminals.

Were such laws to come into effect and were they to survive appeals and

judicial review, they would potentially expose our operations to duplicative

and possibly inconsistent regulation. 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. In

recent years environmental interest groups have filed suit against companies in

the energy industry related to climate change. Should such suits succeed, we

could face additional compliance costs or litigation risks.




Results of Operations


Evaluating Our Results of Operations

Our management uses a variety of financial and operational measurements to analyze our performance. 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.



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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. Product sales primarily include sales of unbranded and
branded gasoline, distillates, residual oil, renewable fuels, crude oil and
propane, as well as convenience store sales, gasoline station rental income and
revenue generated from our logistics activities when we engage in the storage,
transloading and shipment of products owned by others. Product costs include the
cost of acquiring products and all associated costs including shipping and
handling costs to bring such products to the point of sale as well as product
costs related to convenience store items and costs associated with our logistics
activities. We also look at product margin on a per unit basis (product margin
divided by volume). 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. In addition, our
product margin may not be comparable to product margin or a similarly titled
measure of other companies.



Gross Profit


We define gross profit as our product margin minus terminal and gasoline station related depreciation expense allocated to cost of sales.

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.




Adjusted EBITDA is EBITDA further adjusted for gains or losses on the sale and
disposition of assets and goodwill and long-lived asset impairment charges.
EBITDA and Adjusted EBITDA should not be considered as alternatives to net
income, operating income, cash flow from operating activities or any other
measure of financial performance or liquidity presented in accordance with GAAP.
EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net
income, and these measures may vary among other companies. Therefore, EBITDA and
Adjusted EBITDA may not be comparable to similarly titled measures of other

companies.



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. Distributable cash flow as defined by our



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partnership agreement is net income plus depreciation and amortization minus
maintenance capital expenditures, as well as adjustments to eliminate items
approved by the audit committee of the board of directors of our general partner
that are extraordinary or non-recurring in nature and that would otherwise
increase distributable cash flow.



Distributable cash flow as used in our partnership agreement also determines our
ability to make cash distributions on our incentive distribution rights. The
investment community also uses a distributable cash flow metric similar to the
metric used in our partnership agreement with respect to publicly traded
partnerships to indicate whether or not such partnerships have generated
sufficient earnings on a current or historic level that can sustain
distributions on preferred or common units or support an increase in quarterly
cash distributions on common units. 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.

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. 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. Employee-related expenses including employee
salaries, discretionary bonuses and related payroll taxes, benefits, and pension
and 401(k) plan expenses are paid by our general partner which, in turn, are
reimbursed for these expenses by us.



Operating Expenses



Operating expenses are costs associated with the operation of the terminals,
transload facilities and gasoline stations and convenience stores used in our
businesses. 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 slightly depending on the activities performed during
a specific period. In addition, they can be impacted by new directives issued by
federal, state and local governments.



Degree Days



A "degree day" is an industry measurement of temperature designed to evaluate
energy demand and consumption. Degree days are based on how far the average
temperature departs from a human comfort level of 65°F. Each degree of
temperature above 65°F is counted as one cooling degree day, and each degree of
temperature below 65°F is counted as one heating degree day. Degree days are
accumulated each day over the course of a year and can be compared to a monthly
or a long-term (multi-year) average, or normal, to see if a month or a year was
warmer or cooler than usual. Degree days are officially observed by the National
Weather Service and officially archived by the National Climatic Data Center.
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.



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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 comparisons are not
necessarily indicative of future results (gallons and dollars in thousands):




                                              Three Months Ended            Six Months Ended
                                                   June 30,                     June 30,
                                             2020           2019          2020           2019
Net income attributable to Global
Partners LP                               $    76,262    $    14,489   $    79,538    $    21,615
EBITDA (1)                                $   125,658    $    63,970   $   170,334    $   122,011
Adjusted EBITDA (1)                       $   126,571    $    62,842   $   171,990    $   121,436

Distributable cash flow (2)(3)            $    95,816    $    28,116   $  

117,801    $    55,876
Wholesale Segment:
Volume (gallons)                              794,350      1,054,285     1,793,662      2,062,185
Sales
Gasoline and gasoline blendstocks         $   516,326    $ 1,634,618   $ 1,414,783    $ 2,640,323
Crude oil (4)                                   9,039         28,535        15,492         42,528
Other oils and related products (5)           251,994        341,375       834,562      1,030,883
Total                                     $   777,359    $ 2,004,528   $ 2,264,837    $ 3,713,734
Product margin
Gasoline and gasoline blendstocks         $    57,779    $    29,384   $    66,923    $    56,374
Crude oil (4)                                   9,203          (798)         4,733        (7,024)
Other oils and related products (5)            44,523          9,415        44,733         23,495
Total                                     $   111,505    $    38,001   $   116,389    $    72,845
Gasoline Distribution and Station
Operations Segment:
Volume (gallons)                              278,561        411,016       629,983        790,750
Sales
Gasoline                                  $   455,161    $ 1,025,669   $ 1,200,776    $ 1,855,841
Station operations (6)                        104,095        120,526       202,721        225,185
Total                                     $   559,256    $ 1,146,195   $ 1,403,497    $ 2,081,026
Product margin
Gasoline                                  $    96,770    $    87,874   $   204,000    $   175,299
Station operations (6)                         48,801         57,552        97,442        108,512
Total                                     $   145,571    $   145,426   $   301,442    $   283,811
Commercial Segment:
Volume (gallons)                              125,243        183,250       288,493        374,756
Sales                                     $   132,962    $   356,817   $   396,336    $   692,406
Product margin                            $     3,003    $     4,546   $     8,918    $    11,004
Combined sales and product margin:
Sales                                     $ 1,469,577    $ 3,507,540   $ 4,064,670    $ 6,487,166
Product margin (7)                        $   260,079    $   187,973   $   426,749    $   367,660
Depreciation allocated to cost of sales      (20,132)       (20,830)      (41,064)       (43,673)
Combined gross profit                     $   239,947    $   167,143   $  

385,685 $ 323,987



GDSO portfolio as of June 30, 2020 and
2019:                                            2020           2019
Company operated                                  277            295
Commissioned agents                               257            252
Lessee dealers                                    211            226
Contract dealers                                  787            794
Total GDSO portfolio                            1,532          1,567




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                                              Three Months Ended         Six Months Ended
                                                   June 30,                  June 30,
                                             2020            2019        2020         2019
Weather conditions:
Normal heating degree days                       784             784       3,654       3,654
Actual heating degree days                       927             653       3,248       3,377

Variance from normal heating degree days          18 %          (17) %      (11) %       (8) %
Variance from prior period actual
heating degree days                               42 %          (18) %       (4) %       (4) %



EBITDA and Adjusted EBITDA are non-GAAP financial measures which are (1) discussed above under "-Evaluating Our Results of Operations." The table

below presents reconciliations of EBITDA and Adjusted EBITDA to the most

directly comparable GAAP financial measures.

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 (2) non-cash items, such as net losses on the sale and disposition of assets and

goodwill and long-lived asset impairment charges. The table below presents

reconciliations of distributable cash flow to the most directly comparable

GAAP financial measures.

Distributable cash flow includes a net gain on sale and disposition of assets

of $0.8 million and $1.1 million for the three months ended June 30, 2020 and

2019, respectively, and $0.1 million and $0.6 million for the six months

ended June 30, 2020 and 2019, respectively. Distributable cash flow also (3) includes a long-lived asset impairment of $1.7 million for each of the three

and six months ended June 30, 2020. Excluding the net gain on sale and

disposition of assets and long-lived asset impairment, distributable cash

flow would have been $96.7 million and $27.0 million for the three months

ended June 30, 2020 and 2019, respectively, and $119.4 million and

$55.3 million for the six months ended June 30, 2020 and 2019, respectively.

(4) Crude oil consists of our crude oil sales and revenue from our logistics

activities.

(5) Other oils and related products primarily consist of distillates, residual

oil and propane.

(6) Station operations consist of convenience stores sales, rental income and

sundries.

Product margin is a non-GAAP financial measure which is discussed above under (7) "-Evaluating Our Results of Operations." The table above includes a


    reconciliation of product margin on a combined basis to gross profit, a
    directly comparable GAAP measure.






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The following table presents reconciliations of EBITDA and Adjusted EBITDA to
the most directly comparable GAAP financial measures on a historical basis for
each period presented (in thousands):




                                                     Three Months Ended           Six Months Ended
                                                          June 30,                    June 30,
                                                     2020          2019          2020          2019
Reconciliation of net income to EBITDA and
Adjusted EBITDA:
Net income                                         $  75,973    $   14,371    $   79,048    $   21,165
Net loss attributable to noncontrolling interest         289           118           490           450
Net income attributable to Global Partners LP         76,262        14,489        79,538        21,615
Depreciation and amortization, excluding the
impact of noncontrolling interest                     24,779        25,977        50,447        53,912
Interest expense, excluding the impact of
noncontrolling interest                               21,089        23,066        42,690        46,022
Income tax expense (benefit)                           3,528           438       (2,341)           462
EBITDA                                               125,658        63,970       170,334       122,011

Net gain on sale and disposition of assets             (811)       (1,128) 

        (68)         (575)
Long-lived asset impairment                            1,724             -         1,724             -
Adjusted EBITDA                                    $ 126,571    $   62,842    $  171,990    $  121,436

Reconciliation of net cash provided by (used in)
operating activities to EBITDA and Adjusted
EBITDA:
Net cash provided by (used in) operating
activities                                         $  24,086    $   53,545    $  162,003    $ (33,492)
Net changes in operating assets and liabilities
and certain non-cash items                            76,767      (13,069)      (32,300)       108,967
Net cash from operating activities and changes
in operating assets and liabilities attributable
to noncontrolling interest                               188          (10)           282            52
Interest expense, excluding the impact of
noncontrolling interest                               21,089        23,066        42,690        46,022
Income tax expense (benefit)                           3,528           438       (2,341)           462
EBITDA                                               125,658        63,970       170,334       122,011

Net gain on sale and disposition of assets             (811)       (1,128) 

        (68)         (575)
Long-lived asset impairment                            1,724             -         1,724             -
Adjusted EBITDA                                    $ 126,571    $   62,842    $  171,990    $  121,436




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The following table presents reconciliations of distributable cash flow to the
most directly comparable GAAP financial measures on a historical basis for each
period presented (in thousands):




                                                          June 30,                    June 30,
                                                     2020          2019          2020          2019
Reconciliation of net income to distributable
cash flow:
Net income                                         $  75,973    $   14,371    $   79,048    $   21,165
Net loss attributable to noncontrolling interest         289           118           490           450
Net income attributable to Global Partners LP         76,262        14,489        79,538        21,615
Depreciation and amortization, excluding the
impact of noncontrolling interest                     24,779        25,977        50,447        53,912
Amortization of deferred financing fees and
senior notes discount                                  1,306         1,600         2,567         3,327
Amortization of routine bank refinancing fees          (985)         (890)       (1,925)       (1,912)
Maintenance capital expenditures, excluding the
impact of noncontrolling interest                    (5,546)      (13,060)      (12,826)      (21,066)
Distributable cash flow (1)(2)                        95,816        28,116       117,801        55,876
Distributions to Series A preferred unitholders
(3)                                                  (1,682)       (1,682)       (3,364)       (3,364)
Distributable cash flow after distributions to
Series A preferred unitholders                     $  94,134    $   26,434

$ 114,437 $ 52,512



Reconciliation of net cash provided by (used in)
operating activities to distributable cash flow:
Net cash provided by (used in) operating
activities                                         $  24,086    $   53,545    $  162,003    $ (33,492)
Net changes in operating assets and liabilities
and certain non-cash items                            76,767      (13,069)      (32,300)       108,967
Net cash from operating activities and changes           188          (10)           282            52
in operating assets and liabilities attributable
to noncontrolling interest
Amortization of deferred financing fees and
senior notes discount                                  1,306         1,600         2,567         3,327
Amortization of routine bank refinancing fees          (985)         (890)       (1,925)       (1,912)
Maintenance capital expenditures, excluding the
impact of noncontrolling interest                    (5,546)      (13,060)      (12,826)      (21,066)
Distributable cash flow (1)(2)                        95,816        28,116       117,801        55,876
Distributions to Series A preferred unitholders
(3)                                                  (1,682)       (1,682)       (3,364)       (3,364)
Distributable cash flow after distributions to
Series A preferred unitholders                     $  94,134    $   26,434

$ 114,437 $ 52,512

Distributable cash flow is a non-GAAP financial measure which is discussed

above under "-Evaluating Our Results of Operations." As defined by our (1) 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.

Distributable cash flow includes a net gain on sale and disposition of assets

of $0.8 million and $1.1 million for the three months ended June 30, 2020 and

2019, respectively, and $0.1 million and $0.6 million for the six months

ended June 30, 2020 and 2019, respectively. Distributable cash flow also (2) includes a long-lived asset impairment of $1.7 million for each of the three

and six months ended June 30, 2020. Excluding the net gain on sale and

disposition of assets and long-lived asset impairment, distributable cash

flow would have been $96.7 million and $27.0 million for the three months

ended June 30, 2020 and 2019, respectively, and $119.4 million and

$55.3 million for the six months ended June 30, 2020 and 2019, respectively.

Distributions to Series A preferred unitholders represent the distributions (3) payable to the preferred unitholders during the period. Distributions on the

Series A Preferred Units 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 $1.5 billion and $3.5 billion for the three months ended
June 30, 2020 and 2019, respectively, a decrease of $2.0 billion, or 58.1%, due
to decreases in prices and volume sold. Our aggregate volume of product sold was
1.2 billion gallons and 1.6 billion gallons for the three months ended June 30,
2020 and 2019, respectively, declining by 450 million gallons including
decreases of 260 million gallons in our Wholesale segment, due to a decline in
gasoline and gasoline blendstocks partially offset by increased volume in other
oils and related products, 132 million gallons in our GDSO segment and
58 million gallons in our Commercial segment.



Our total sales were $4.1 billion and $6.5 billion for the six months ended
June 30, 2020 and 2019, respectively, a decrease of $2.4 billion, or 37%, due to
decreases in prices and volume sold. Our aggregate volume of product sold was
2.7 billion gallons and 3.2 billion gallons for the six months ended June 30,
2020 and 2019, respectively, declining by 515 million gallons including
decreases of 268 million gallons in our Wholesale segment, primarily in gasoline
and

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gasoline blendstocks partially offset by increased volume in other oils and related products, 161 million gallons in our GDSO segment and 86 million gallons in our Commercial segment.





Gross Profit



Our gross profit was $239.9 million and $167.1 million for the three months
ended June 30, 2020 and 2019, respectively, an increase of $72.8 million, or
44%, primarily due to more favorable market conditions in our Wholesale segment.
During the second quarter of 2020, there was a significant recovery in the
supply/demand imbalance at the end of the first quarter. The forward product
pricing curve flattened which positively impacted our Wholesale segment in the
quarter. Our gross profit also benefitted from higher fuel margins (cents per
gallon) in gasoline distribution in our GDSO segment which offset a decrease in
fuel volume and a decrease in our station operations product margin.



Our gross profit was $385.7 million and $324.0 million for the six months ended
June 30, 2020 and 2019, respectively, an increase of $61.7 million, or 19%,
primarily due to more favorable market conditions in our Wholesale segment in
the second quarter. During the second quarter of 2020, there was a significant
recovery in the supply/demand imbalance at the end of the first quarter. The
forward product pricing curve flattened which positively impacted our Wholesale
segment in the quarter. Our gross profit also benefitted from higher fuel
margins (cents per gallon) in our GDSO segment.



Results for Wholesale Segment





Gasoline and Gasoline Blendstocks. Sales from wholesale gasoline and gasoline
blendstocks were $0.5 billion and $1.6 billion for the three months ended
June 30, 2020 and 2019, respectively, a decrease of $1.1 billion, or 68%, due to
a decrease in volume sold and in prices period over period. Our gasoline and
gasoline blendstocks product margin was $57.8 million and $29.4 million for the
three months ended June 30, 2020 and 2019, respectively, an increase of
$28.4 million, or 96%, primarily due to more favorable market conditions
compared to the same period in 2019. During the second quarter of 2020, there
was a significant recovery in the supply/demand imbalance at the end of the
first quarter. The forward product pricing curve flattened which positively
impacted our product margins in the quarter.



Sales from wholesale gasoline and gasoline blendstocks were $1.4 billion and
$2.6 billion for the six months ended June 30, 2020 and 2019, respectively, a
decrease of $1.2 billion, or 46%, due to a decrease in volume sold and in prices
period over period. Our gasoline and gasoline blendstocks product margin was
$66.9 million and $56.4 million for the six months ended June 30, 2020 and 2019,
respectively, an increase $10.5 million, or 18%. During the second quarter of
2020, there was a significant recovery in the supply/demand imbalance at the end
of the first quarter. The forward product pricing curve flattened which
positively impacted our product margins. In the first quarter of 2020, the
COVID-19 pandemic and the price war between Saudi Arabia and Russia caused a
rapid decline in prices, steepening the forward product pricing curve which
negatively impacted our product margin in gasoline for the first three months of
2020.



Crude Oil. Crude oil sales and logistics revenues were $9.0 million and
$28.5 million for the three months ended June 30, 2020 and 2019, respectively, a
decrease of $19.5 million, or 68%, due to a decrease in prices. Our crude oil
product margin was $9.2 million and ($0.8 million) for the three months ended
June 30, 2020 and 2019, respectively, an increase of $10.0 million, primarily
due to more favorable market conditions, including the flattening of the forward
product pricing curve.



Crude oil sales and logistics revenues were $15.5 million and $42.5 million for
the six months ended June 30, 2020 and 2019, respectively, a decrease of
$27.0 million, or 63%, due to decreases in prices and volume sold. Our crude oil
product margin was $4.7 million and ($7.0 million) for the six months ended
June 30, 2020 and 2019, respectively, an increase of $11.7 million, or 167%,
primarily due to more favorable market conditions and lower railcar related
expenses.



Other Oils and Related Products. Sales from other oils and related products
(primarily distillates and residual oil) were $0.2 billion and $0.3 billion for
the three months ended June 30, 2020 and 2019, respectively, decreasing
$89.4 million, or 26%, due to a decrease in prices period over period, offset by
an increase in volume sold. Our product

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margin from other oils and related products was $44.5 million and $9.4 million
for the three months ended June 30, 2020 and 2019, respectively, an increase of
$35.1 million, or 373%, primarily due to more favorable market conditions
compared to the same period in 2019, largely in distillates but also in residual
oil. During the second quarter of 2020, there was a significant recovery in the
supply/demand imbalance at the end of the first quarter. The forward product
pricing curve flattened which positively impacted our product margins in the
quarter. Our product margin in distillates was positively impacted during the
second quarter by colder weather. Temperatures in the second quarter were 42%
colder than the second quarter of 2019 and 18% colder than normal.



Sales from other oils and related products were $0.8 billion and $1.0 billion
for the six months ended June 30, 2020 and 2019, respectively, a decrease of
$0.2 billion, or 20%, due to a decrease in prices period over period, offset by
an increase in volume sold. Our product margin from other oils and related
products was $44.7 million and $23.5 million for the six months ended June 30,
2020 and 2019, respectively, an increase of $21.2 million, or 90%. During the
second quarter of 2020, there was a significant recovery in the supply/demand
imbalance at the end of the first quarter. The forward product pricing curve
flattened which positively impacted our product margins. In the first quarter of
2020, the COVID-19 pandemic and the price war between Saudi Arabia and Russia
caused a rapid decline in prices, steepening the forward product pricing curve,
which negatively impacted our product margins for the first three months of
2020.



Results for Gasoline Distribution and Station Operations Segment





Gasoline Distribution. Sales from gasoline distribution were $0.5 billion and
$1.0 billion for the three months ended June 30, 2020 and 2019, respectively,
decreasing $570.5 million, or 56%, due to decreases in prices and volume sold
largely due to the impact of the COVID-19 pandemic. Our product margin from
gasoline distribution was $96.8 million and $87.8 million for the three months
ended June 30, 2020 and 2019, respectively, an increase of $9.0 million, or 10%,
due to higher fuel margins (cents per gallon) which more than offset the decline
in volume sold.



Sales from gasoline distribution were $1.2 billion and $1.8 billion for the six
months ended June 30, 2020 and 2019, respectively, a decrease of $0.6 million,
or 34%, due to decreases in prices and volume sold largely due to the impact of
the COVID-19 pandemic. Our product margin from gasoline distribution was
$204.0 million and $175.3 million for the six months ended June 30, 2020 and
2019, respectively, an increase of $28.7 million, or 16%, primarily due to
higher fuel margins (cents per gallon) which more than offset the decline in
volume sold. Our product margin for the first six months of 2020 benefitted from
declining wholesale prices in the first quarter of 2020, primarily in March due
to the COVID-19 pandemic and geopolitical events. Declining wholesale gasoline
prices can improve our gasoline product margin, the extent of which depends on
the magnitude and duration of the decline.



Station Operations. Our station operations, which include (i) convenience stores
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 $104.1 million and
$120.5 million for the three months ended June 30, 2020 and 2019, respectively,
a decrease of $16.4 million, or 14%. Our product margin from station operations
was $48.8 million and $57.6 million for the three months ended June 30, 2020 and
2019, respectively, a decrease of $8.8 million, or 15%. The decreases in sales
and product margin are primarily due to less activity at our convenience stores,
primarily due to the impact of the COVID-19 pandemic.



Sales from our station operations were $202.7 million and $225.2 million for the
six months ended June 30, 2020 and 2019, respectively, a decrease of
$22.5 million, or 10%. Our product margin from station operations was
$97.4 million and $108.5 million for the six months ended June 30, 2020 and
2019, respectively, a decrease of $11.1 million, or 10%. The decreases in sales
and product margin are primarily due to less activity at our convenience stores,
primarily due to the impact of the COVID-19 pandemic.



Results for Commercial Segment





Our commercial sales were $133.0 million and $356.8 million for the three months
ended June 30, 2020 and 2019, respectively, a decrease of $223.8 million, or
63%, due to decreases in prices and volume sold. Our commercial product

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margin was $3.0 million and $4.5 million for the three months ended June 30,
2020 and 2019, respectively, a decrease of $1.5 million, or 33%, primarily due
to a decrease in bunkering activity.



Our commercial sales were $396.4 million and $692.4 million for the six months
ended June 30, 2020 and 2019, respectively, a decrease of $296.0 million, or
43%, due to decreases in prices and volume sold. Our commercial product margin
was $8.9 million and $11.0 million for the six months ended June 30, 2020 and
2019, respectively, a decrease of $2.1 million, or 19%, primarily due to a
decrease in bunkering activity.



Selling, General and Administrative Expenses





SG&A expenses were $59.0 million and $41.0 million for the three months ended
June 30, 2020 and 2019, respectively, an increase of $18.0 million, or 44%,
including increases of $14.8 million in accrued discretionary incentive
compensation, $1.2 million in professional fees, $0.9 million in costs
associated with the COVID-19 pandemic, $0.7 million in wages and benefits and
$0.4 million in various other SG&A expenses.



SG&A expenses were $99.9 million and $82.1 million for the six months ended June 30, 2020 and 2019, respectively, an increase of $17.8 million, or 22%, including increases of $12.3 million in accrued discretionary incentive compensation, $2.0 million in wages and benefits, $1.0 million in costs associated with the COVID-19 pandemic, $0.8 million in advertising costs, $0.7 million in professional fees and $1.0 million in various other SG&A expenses.





Operating Expenses



Operating expenses were $76.7 million and $86.4 million for the three months
ended June 30, 2020 and 2019, respectively, a decrease of $9.7 million, or 11%,
including decreases of $8.2 million associated with our GDSO operations,
primarily due to lower credit card fees and maintenance and repair expenses and
to the sale of sites, and $1.5 million associated with our terminal operations,
primarily due to lower maintenance and repair expenses.



Operating expenses were $159.3 million and $169.4 million for the six months
ended June 30, 2020 and 2019, respectively, a decrease of $10.1 million, or 6%,
including decreases of $8.3 million associated with our GDSO operations,
primarily due to lower credit card fees and maintenance and repair expenses and
to the sale of sites, and $1.8 million associated with our terminal operations,
primarily due to lower maintenance and repair expenses.



Lease Exit and Termination Gain


During the six months ended June 30, 2019, we were released from certain of our
remaining obligations to provide future railcar storage, freight, insurance and
other services for railcars under a fleet management services agreement
associated with our 2016 voluntary termination of a railcar sublease. The
release of certain obligations resulted in a $0.5 million reduction of the
remaining accrued incremental costs, which benefit is included in lease exit and
termination gain in the accompanying statement of operations for the six months
ended June 30, 2019.



Amortization Expense



Amortization expense related to intangible assets was $2.7 million and
$2.9 million for the three months ended June 30, 2020 and 2019, respectively,
and $5.4 million and $5.9 million for the six months ended June 30, 2020 and
2019, respectively.


Net Gain on Sale and Disposition of Assets





Net gain on sale and disposition of assets was $0.8 million and $1.1 million for
the three months ended June 30, 2020 and 2019, respectively, and $0.1 million
and $0.6 million for the six months ended June 30, 2020 and 2019, respectively,
primarily due to the sale of GDSO sites.



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Long-Lived Asset Impairment


We recognized an impairment charge relating to certain right of use assets allocated to the Wholesale segment in the amount of $1.7 million for each of the three and six months ended June 30, 2020.





Interest Expense



Interest expense was $21.1 million and $23.1 million for the three months ended
June 30, 2020 and 2019, respectively, and $42.7 million and $46.0 million for
the six months ended June 30, 2020 and 2019, respectively. The decreases of
$2.0 million, or 9%, and $3.3 million, or 7%, for the three and six months ended
June 30, 2020, respectively, were due to lower average balances on our credit
facilities and lower interest rates, which more than offset the $0.7 million
write-off of deferred financing fees associated with the amendment to our credit
agreement in May 2020.



Income Tax (Expense) Benefit



Income tax (expense) benefit was ($3.5 million) and ($0.4 million) for the three
months ended June 30, 2020 and 2019, respectively, and $2.3 million and
($0.5 million) for the six months ended June 30, 2020 and 2019, respectively,
which reflects the income tax (expense) benefit from the operating results of
GMG, which is a taxable entity for federal and state income tax purposes. For
the six months ended June 30, 2020, the income tax benefit consists of an income
tax benefit of $6.3 million (discussed below) offset by an income tax expense of
($4.0 million).



On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the
"CARES Act") was enacted and signed into law. The CARES Act is an emergency
economic stimulus package that includes spending and tax breaks to strengthen
the United States economy and fund a nationwide effort to curtail the effect of
COVID-19. The CARES Act provides certain tax changes in response to the COVID-19
pandemic, including the temporary removal of certain limitations on the
utilization of net operating losses, permitting the carryback of net operating
losses generated in 2018, 2019 or 2020 to the five preceding taxable years,
increasing the ability to deduct interest expense, deferring the employer share
of social security tax payments, as well as amending certain provisions of the
previously enacted Tax Cuts and Jobs Act. As a result, we recognized a benefit
of $6.3 million related to the CARES Act net operating loss carryback provisions
which is included in income tax benefit in the accompanying statement of
operations for the six months ended June 30, 2020. We expect to receive cash
refunds totaling $15.8 million associated with the carryback of losses generated
in 2018 to the 2016 and 2017 tax years, and this income tax receivable is
included in prepaid expenses and other current assets in the accompanying
consolidated balance sheet as of June 30, 2020.



Net Loss Attributable to Noncontrolling Interest


In February 2013, we acquired a 60% membership interest in Basin Transload. The
net loss attributable to the noncontrolling interest was $0.3 million and
$0.1 million for the three months ended June 30, 2020 and 2019, respectively,
and $0.5 million and $0.4 million for the six months ended June 30, 2020 and
2019, respectively which represents the 40% noncontrolling ownership of the

net
loss reported.


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. 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.

Given the uncertainty surrounding the short-term and long-term impacts of COVID-19, including the timing of an economic recovery, early in the second quarter we took certain steps to increase liquidity and create additional financial flexibility. Such steps included a 25% decrease to our quarterly distribution on our common units for the period from



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January 1, 2020 to March 31, 2020. In addition, we borrowed $50.0 million under
our revolving credit facility which was included in cash on our balance sheet.
We also reduced planned expenses and 2020 capital spending. We amended our
credit agreement to provide temporary adjustments to certain covenants. Given
the stronger-than-expected performance in the second quarter, we paid down our
revolving credit facility with the $50.0 million cash on hand and increased our
planned 2020 capital spending. In addition, we increased our quarterly
distribution on our common units for the period from April 1, 2020 to June 30,
2020. We believe that our current level of cash and borrowing capacity under our
credit agreement will be sufficient to meet our liquidity needs.



Working capital was $341.9 million and $250.6 million at June 30, 2020 and
December 31, 2019, respectively, an increase of $91.3 million. Changes in
current assets and current liabilities increasing working capital include
(i) decreases of $210.0 million in accounts payable and $107.2 million in the
current portion of our working capital revolving credit facility, primarily due
to lower prices, and (ii) an increase of $48.6 million in derivatives, for a
total increase in working capital of $365.8 million. The increase in working
capital was offset by decreases of $180.4 million in accounts receivable and
$106.5 million in inventories, also primarily due to lower prices.



Cash Distributions



Common Units



During 2020, we paid the following cash distributions to our common unitholders
and our general partner:




                                                  Distribution Paid for the

Cash Distribution Payment Date Total Paid Quarterly Period Ended February 14, 2020

$ 18.3 million      Fourth quarter 2019
May 15, 2020                     $ 13.5 million      First quarter 2020


In addition, on July 31, 2020, the board of directors of our general partner
declared a quarterly cash distribution of $0.45875 per unit ($1.835 per unit on
an annualized basis) on all of our outstanding common units for the period from
April 1, 2020 through June 30, 2020 to our common unitholders of record as of
the close of business on August 10, 2020. We expect to pay the total cash
distribution of approximately $15.7 million on August 14, 2020.



Preferred Units



During 2020, we paid the following cash distributions to holders of the Series A
Preferred Units:




                                                       Distribution Paid for the
Cash Distribution Payment Date    Total Paid           Quarterly Period Covering
February 18, 2020                $ 1.7 million   November 15, 2019 - February 14, 2020
May 15, 2020                     $ 1.7 million     February 15, 2020 - May 14, 2020


In addition, on July 20, 2020, 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 our Series A Preferred Units for the period from
May 15, 2020 through August 14, 2020 to our preferred unitholders of record as
of the opening of business on August 3, 2020. We expect to pay the total cash
distribution of approximately $1.7 million on August 17, 2020.



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Contractual Obligations



We have contractual obligations that are required to be settled in cash. The
amounts of our contractual obligations at June 30, 2020 were as follows (in
thousands):




                                                                       Payments Due by Period
                                   Remainder of                                          2024 and
Contractual Obligations                2020          2021        2022        2023       Thereafter       Total

Credit facility obligations (1)   $       27,204   $ 250,703   $ 146,720   $       -   $          -   $   424,627
Senior notes obligations (2)              24,500      49,000      49,000     338,500        512,000       973,000
Operating lease obligations (3)           45,631      87,446      57,392      42,986        116,451       349,906
Other long-term liabilities (4)           15,691      26,901      22,091      13,259         50,808       128,750
Financing obligations (5)                  7,423      15,016      15,261      15,510         97,874       151,084
Total                             $      120,449   $ 429,066   $ 290,464   $ 410,255   $    777,133   $ 2,027,367


    Includes principal and interest on our working capital revolving credit
    facility and our revolving credit facility at June 30, 2020 and assumes a
    ratable payment through the expiration date. Our credit agreement has a

contractual maturity of April 29, 2022 and no principal payments are required

prior to that date. However, we repay amounts outstanding and reborrow funds (1) based on our working capital requirements. Therefore, the current portion of

the working capital revolving credit facility included in the accompanying

consolidated balance sheets is the amount we expect to pay down during the

course of the year, and the long-term portion of the working capital

revolving credit facility is the amount we expect to be outstanding during

the entire year. Please read "-Credit Agreement" for more information on our

working capital revolving credit facility.

Includes principal and interest on our senior notes. No principal payments (2) are required prior to maturity. See Note 8 of Notes to Consolidated Financial

Statements in our Annual Report on Form 10-K for the year ended December 31,

2019 for additional information on our senior notes.

(3) Includes operating lease obligations related to leases for office space and

computer equipment, land, gasoline stations, railcars and barges.

Includes amounts related to our 15-year brand fee agreement entered into in (4) 2010 with ExxonMobil and amounts related to our pipeline connection

agreements, natural gas transportation and reservation agreements, access

right agreements and our pension and deferred compensation obligations.

Includes lease rental payments in connection with (i) the acquisition of

Capitol related to properties previously sold by Capitol within two

sale-leaseback transactions; and (ii) the sale of real property assets at 30 (5) gasoline stations and convenience stores. These transactions did not meet the

criteria for sale accounting and the lease rental payments are classified as

interest expense on the respective financing obligation and the pay-down of


    the related financing obligation. See Note 8 of Notes to Consolidated
    Financial Statement for additional information.




Capital Expenditures



Our operations require investments to maintain, expand, upgrade and enhance
existing operations and to meet environmental and operational regulations. We
categorize our capital requirements as either maintenance capital expenditures
or expansion capital expenditures. Maintenance capital expenditures represent
capital expenditures to repair or replace partially or fully depreciated assets
to maintain the operating capacity of, or revenues generated by, existing assets
and extend their useful lives. Maintenance capital expenditures also include
expenditures required to maintain equipment reliability, tank and pipeline
integrity and safety and to address certain environmental regulations. We
anticipate that maintenance capital expenditures will be funded with cash
generated by operations. We had approximately $12.8 million and $21.1 million in
maintenance capital expenditures for the six months ended June 30, 2020 and
2019, respectively, which are included in capital expenditures in the
accompanying consolidated statements of cash flows, of which approximately
$10.9 million and $19.7 million for the six months ended June 30, 2020 and 2019,
respectively, are related to our investments in our gasoline station business.
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.



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.
We have the ability to fund our expansion capital expenditures through cash

from
operations or our credit

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agreement or by issuing debt securities or additional equity. We had
approximately $8.9 million in expansion capital expenditures for each of the six
months ended June 30, 2020 and 2019, primarily related to investments in our
gasoline station business.



We currently expect maintenance capital expenditures of approximately
$45.0 million to $55.0 million and expansion capital expenditures, excluding
acquisitions, of approximately $30.0 million to $40.0 million in 2020, relating
primarily to investments in our gasoline station business. These current
estimates depend, in part, on the timing of completion of projects, availability
of equipment and workforce, weather, the scope and duration of the COVID-19
pandemic and unanticipated events or opportunities requiring additional
maintenance or investments.



We believe that we will have sufficient cash flow from operations, borrowing
capacity under our credit agreement and the ability to issue additional equity
and/or debt securities to meet our financial commitments, debt service
obligations, contingencies and anticipated capital expenditures. However, we are
subject to business and operational risks, including uncertainties related to
the extent and duration of the COVID-19 pandemic and geopolitical events, each
of which could adversely affect our cash flow. A material decrease in our cash
flows would likely have an adverse effect on our borrowing capacity as well as
our ability to issue additional equity and/or debt securities.



Cash Flow


The following table summarizes cash flow activity (in thousands):






                                                          Six Months Ended
                                                              June 30,
                                                         2020           2019

Net cash provided by (used in) operating activities $ 162,003 $ (33,492) Net cash used in investing activities

$  (16,852)    $ 

(20,561)

Net cash (used in) provided by financing activities $ (146,835) $ 56,378




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.


Net cash provided by (used in) operating activities was $162.0 million and ($33.5 million) for the six months ended June 30, 2020 and 2019, respectively, for a period-over-period increase in cash flow from operating activities of $195.5 million.

Except for net income, the primary drivers of the changes in operating activities include the following (in thousands):






                                                    Six Months Ended         Period over
                                                        June 30,                Period
                                                   2020           2019          Change

Decrease (increase) in accounts receivable $ 180,003 $ (39,467)

  $    219,470
Decrease (increase) in inventories              $   106,142    $ (40,009)    $    146,151
Decrease in accounts payable                    $ (210,035)    $ (25,852)    $  (184,183)
(Increase) decrease in change in derivatives    $  (48,616)    $   25,408
 $   (74,024)




For the six months ended June 30, 2020, the decreases in accounts receivable,
inventories and accounts payable are largely due to the decrease in prices,
primarily caused by the COVID-19 pandemic and geopolitical events. The increase
in operating cash flow was also impacted by the year-over-year change in
derivatives of $74.0 million in part due to the decrease in prices and an
increase in the volume of physical forward contracts.



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For the six months ended June 30, 2019, the increases in accounts receivable and
inventories were primarily due to an increase in prices. The decrease in
accounts payable was due in part to carrying lower levels of inventory, partly
due to the change in activity as we exited the heating season.



Investing Activities



Net cash used in investing activities was $16.8 million for the six months ended
June 30, 2020 and included $12.8 million in maintenance capital expenditures,
$8.9 million in expansion capital expenditures and $1.2 million in seller note
issuances, offset by $6.1 million in proceeds from the sale of property and
equipment. The seller note issuances represent notes we received from buyers in
connection with the sale of certain of our gasoline stations.



Net cash used in investing activities was $20.6 million for the six months ended
June 30, 2019 and included $21.1 million in maintenance capital expenditures,
$8.9 million in expansion capital expenditures and $0.6 million in seller note
issuances, offset by $10.0 million in proceeds from the sale of property and
equipment.


Please read "-Capital Expenditures" for a discussion of our capital expenditures for the six months ended June 30, 2020 and 2019.





Financing Activities



Net cash used in financing activities was $146.8 million for the six months
ended June 30, 2020 and included $107.2 million in net payments on our working
capital revolving credit facility due to lower prices and an increase in net
income, $35.0 million in cash distributions to our limited partners (preferred
and common unitholders) and our general partner, $4.7 million in net payments on
our revolving credit facility, and $0.3 million in the repurchase of common
units pursuant to our repurchase program for future satisfaction of our LTIP
obligations. Net cash used in financing activities was offset by $0.4 million in
capital contributions from our noncontrolling interest at Basin Transload.



Net cash provided by financing activities was $56.4 million for the six months
ended June 30, 2019 and primarily included $102.8 million in net borrowings from
our working capital revolving credit facility primarily due to the increase in
inventories and accounts receivable, offset by $38.4 million in cash
distributions to our limited partners (preferred and common unitholders) and our
general partner and $8.0 million in net payments on our revolving credit
facility.



See Note 8 of Notes to Consolidated Financial Statement for supplemental cash
flow information related to our working capital revolving credit facility and
revolving credit facility.



Credit Agreement



Certain subsidiaries of ours, as borrowers, and we and certain of our
subsidiaries, as guarantors, have a $1.17 billion senior secured credit facility
which was amended on May 7, 2020 to, among other things, provide temporary
adjustments to certain covenants and reduce the total aggregate commitment by
$130.0 million from $1.3 billion (see "-Fourth Amendment to the Credit
Agreement" below).



We repay amounts outstanding and reborrow funds based on our working capital
requirements and, therefore, classify as a current liability the portion of the
working capital revolving credit facility we expect to pay down during the
course of the year. 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 matures on April 29, 2022.



There are 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 $770.0 million; and






 ? a $400.0 million revolving credit facility to be used for general corporate
   purposes.




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Availability under the working capital revolving credit facility is subject to a
borrowing base which is redetermined from time to time and based on specific
advance rates on eligible current assets. Availability under the borrowing base
may be affected by events beyond our control, such as changes in petroleum
product prices, collection cycles, counterparty performance, advance rates and
limits and general economic conditions.



The average interest rates for the Credit Agreement were 2.8% and 4.5% for the
three months ended June 30, 2020 and 2019, respectively, and 3.1% and 4.6% for
the six months ended June 30, 2020 and 2019, respectively.



As of June 30, 2020, we had total borrowings outstanding under the credit agreement of $404.7 million, including $188.0 million outstanding on the revolving credit facility. In addition, we had outstanding letters of credit of $39.9 million. Subject to borrowing base limitations, the total remaining availability for borrowings and letters of credit was $725.4 million and $660.2 million at June 30, 2020 and December 31, 2019, respectively.





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. We were in compliance with the foregoing covenants at June 30, 2020. The
credit agreement also contains a representation whereby there can be no event or
circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect (as defined in the
credit agreement). In addition, the credit agreement limits distributions by us
to our unitholders to the amount of Available Cash (as defined in the
partnership agreement).



Please read Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Credit Agreement" in our Annual Report on
Form 10-K for the year ended December 31, 2019 for additional information on the
credit agreement.


Fourth Amendment to the Credit Agreement


On May 7, 2020, we and certain of our subsidiaries entered into the Fourth
Amendment to Third Amended and Restated Credit Agreement (the "Fourth
Amendment"), which further amends the credit agreement. Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
credit agreement.


The Fourth Amendment amends certain terms, provisions and covenants of the credit agreement, including, without limitation:

increases by 0.125% the applicable rate under the working capital facility

(i) for borrowings of base rate loans, Eurocurrency rate loans and cost of funds


     rate loans and for issuances of letters of credit;



adds two pricing levels under the revolving credit facility for borrowings

(ii) of base rate loans, Eurocurrency rate loans and cost of funds rate loans and


      for issuances of letters of credit;



(iii) adds a Eurocurrency rate floor of 0.75% and a cost of funds rate floor of


       0.50%;



for the four (4) quarters commencing with the quarter ended June 30, 2020,

(iv) (a) increases to Combined Total Leverage Ratio covenant levels and (b) a

reduction to the Combined Interest Coverage Ratio covenant levels; and

reduces the aggregate commitments under the facilities by 10%, with the

(v) commitments under the working capital facility reduced to $770.0 million from

$850.0 million and the commitments under the revolving credit facility
     reduced to $400.0 million from $450.0 million.




All other material terms of the credit agreement remain substantially the same
as disclosed in Part II, Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Credit Agreement" in our Annual
Report on Form 10-K for the year ended December 31, 2019.



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Senior Notes



We had 7.00% senior notes due 2027 and 7.00% senior notes due 2023 outstanding
at March 31, 2020. Please read Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources-Senior Notes" in our Annual Report on Form 10-K for the year ended
December 31, 2019 for additional information on these senior notes due 2023.



Financing Obligations



Capitol Acquisition



On June 1, 2015, we acquired retail gasoline stations and dealer supply
contracts from Capitol Petroleum Group ("Capitol"). In connection with the
acquisition, we assumed a financing obligation of $89.6 million associated with
two sale-leaseback transactions by Capitol for 53 leased sites that did not meet
the criteria for sale accounting. 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 $2.3 million was recorded for each
of the three months ended June 30, 2020 and 2019, and $4.6 million and
$4.7 million was recorded for the six months ended June 30, 2020 and 2019,
respectively, which is included in interest expense in the accompanying
consolidated statements of operations. The financing obligation will amortize
through expiration of the leases based upon the lease rental payments which were
$2.5 million and $2.4 million for the three months ended June 30, 2020 and 2019,
respectively, and $5.0 million and $4.9 million for the six months ended
June 30, 2020 and 2019, respectively. The financing obligation balance
outstanding at June 30, 2020 was $86.6 million associated with the Capitol

acquisition.



Sale-Leaseback Transaction



On June 29, 2016, we sold to a premier institutional real estate investor (the
"Buyer") real property assets, including the buildings, improvements and
appurtenances thereto, at 30 gasoline stations and convenience stores located in
Connecticut, Maine, Massachusetts, New Hampshire and Rhode Island (the
"Sale-Leaseback Sites") for a purchase price of approximately $63.5 million. In
connection with the sale, we entered into a Master Unitary Lease Agreement with
the Buyer to lease back the real property assets sold with respect to the
Sale-Leaseback Sites (such Master Lease Agreement, together with the
Sale-Leaseback Sites, the "Sale-Leaseback Transaction").



As a result of not meeting the criteria for sale accounting for these sites, the
Sale-Leaseback Transaction is accounted for as a financing arrangement. As such,
the property and equipment sold and leased back by us has not been derecognized
and continues to be depreciated. We recognized a corresponding financing
obligation of $62.5 million equal to the $63.5 million cash proceeds received
for the sale of these sites, net of $1.0 million financing fees. During the term
of the lease, which expires in June 2031, in lieu of recognizing lease expense
for the lease rental payments, we incur interest expense associated with the
financing obligation. Lease rental payments are recognized as both interest
expense and a reduction of the principal balance associated with the financing
obligation. Lease rental payments are recognized as both interest expense and a
reduction of the principal balance associated with the financing obligation.
Interest expense was $1.1 million for each of the three months ended June 30,
2020 and 2019 and $2.2 million for each of the six months ended June 30, 2020
and 2019. Lease rental payments were $1.1 million for each of the three months
ended June 30, 2020 and 2019, and $2.3 million and $2.2 million for the six
months ended June 30, 2020 and 2019, respectively. The financing obligation
balance outstanding at June 30, 2020 was $62.2 million.



Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these



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consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. The outbreak of COVID-19 across the United States and the
responses of governmental bodies (federal, state and municipal), companies and
individuals, including mandated and/or voluntary restrictions to mitigate the
spread of the virus, have caused a significant economic downturn. The
uncertainty surrounding the short and long-term impact of COVID-19, including
the inability to project the timing of an economic recovery, may have an impact
on our use of estimates. Actual results may differ from these estimates under
different assumptions or conditions.



These estimates are based on our knowledge and understanding of current
conditions and actions that we may take in the future. Changes in these
estimates will occur as a result of the passage of time and the occurrence of
future events. Subsequent changes in these estimates may have a significant
impact on our financial condition and results of operations and are recorded in
the period in which they become known. We have identified the following
estimates that, in our opinion, are subjective in nature, require the exercise
of judgment, and involve complex analysis: inventory, leases, revenue
recognition, trustee taxes, derivative financial instruments, goodwill,
evaluation of long-lived asset impairment and environmental and other
liabilities.



The significant accounting policies and estimates that we have adopted and
followed in the preparation of our consolidated financial statements are
detailed in Note 2 of Notes to Consolidated Financial Statements, "Summary of
Significant Accounting Policies" included in our Annual Report on Form 10-K for
the year ended December 31, 2019. There have been no subsequent changes in these
policies and estimates that had a significant impact on our financial condition
and results of operations for the periods covered in this report, except as
described in Note 19 of Notes to Consolidated Financial Statements herein for
the adoption of ASU 2016-13, "Measurement of Credit Losses on Financial
Instruments," including modifications to that standard thereafter, and now
codified as ASC 326 which we adopted on January 1, 2020.



Recent Accounting Pronouncements

A description and related impact expected from the adoption of certain new accounting pronouncements is provided in Note 19 of Notes to Consolidated Financial Statements included elsewhere in this report.

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