Good day, everyone, and welcome to the Global Partners fourth quarter 2021 financial results conference call. Today's call is being recorded. There will be an opportunity for questions at the end of the call. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slifka, Chief Financial Officer, Mr. Gregory Hanson, Chief Operating Officer, Mr. Mark Romaine, and Acting General Counsel and Vice President of Mergers and Acquisitions, Mr. Sean Geary. At this time, I would like to turn the call over to Mr. Geary for opening remarks. Please go ahead, sir.
Good morning, everyone. Thank you for joining us. Before we begin, let me remind everyone that this morning we will be making forward-looking statements within the meaning of federal securities laws. These statements may include, but are not limited to, projections, beliefs, goals, and estimates concerning the future financial and operational performance of Global Partners. Forward-looking statements are based on assumptions regarding market conditions such as the crude oil market, business cycles, demand for petroleum products, including gasoline and gasoline blend stocks and renewable fuels, utilization of assets and facilities, weather, credit markets, demand for convenience store operators, the regulatory and permitting environment, and the forward product pricing curve, which could influence quarterly financial results.
These statements involve significant risks and uncertainties, some of which are beyond the partnership's control, including without limitation, the impact and duration of the COVID-19 pandemic, uncertainty around the timing of an economic recovery in the United States, which will impact the demand for the products we sell and the services we provide, uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform the obligations and/or utilize the products we sell and/or the services we provide, uncertainty around the impact and duration of federal, state, and municipal regulations and directives related to the COVID-19 pandemic, and other assumptions that could cause actual results to differ materially from the partnership's historical experience and present expectations or projections. We believe these assumptions are reasonable given currently available information.
Our assumptions and future performance are subject to a wide range of business risks and uncertainties. In addition, such performance is subject to risk factors, including but not limited to, those described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements that may be made during today's conference call. With Regulation FD in effect, it is our policy that any material comments concerning future results of operations will be communicated through news releases, publicly announced conference calls, or other means that will constitute public disclosure for the purposes of Regulation FD. Now it is my pleasure to turn the call over to our President and Chief Executive Officer, Eric Slifka.
Thank you, Sean. Good morning, everyone, and thank you for joining us. Sustained momentum in our GDSO segment contributed to a solid fourth quarter performance for Global. Retail fuel volume and margins increased year over year in the quarter, while demand across our convenience store portfolio continued to improve amid the recovery in the U.S. economy. Our Q4 results capped a successful 2021 in which we continued to navigate the pandemic and the related macroeconomic challenges that have affected virtually all industries during the past year. Combined product margin, which came in at $802 million for the full year, was on par with 2020. That is remarkable. That is a remarkable result when you consider the extraordinary benefit to wholesale product margins that we saw in Q2 of 2020 as a result of the extreme shift in the forward product pricing curve.
Our performance this past year speaks to the strength of our vertically integrated assets, a high-value portfolio comprised of approximately 400 owned and 450 leased properties. These assets help us create long-term value for our unit holders and deliver exceptional performance for the consumers and businesses across the regions we serve. Now let me touch on our recent highlights, which advance our strategy of driving profitable growth in consolidating markets. In November, we signed an agreement to sell our Revere terminal in Boston Harbor for $150 million in cash. The transaction is expected to close in the first half of this year, subject to customary closing conditions. As part of the agreement, we will lease back key infrastructure from the buyer and continue operations at the terminal post-closing. From a capital allocation perspective, the deal demonstrates our goal of optimizing our asset base.
Upon closing, the transaction provides us with significant cash proceeds upfront and strong cash flows over the life of the agreement. On the retail side, we recently closed two acquisitions that added nearly 50 company-owned sites to our portfolio. In January, we completed the purchase of Consumers Petroleum of Connecticut. The transaction included 26 company-operated Wheels convenience stores and related fuel operations in Connecticut and fuel supply agreements at 22 sites in Connecticut and New York. This month, we expanded our presence in Virginia with the purchase of Miller's Neighborhood Market. The transaction added 23 convenience stores, including 21 company-operated sites and fuel supply agreements with 34 locations. Like Global, Consumers Petroleum and Miller's Neighborhood Market are family-founded businesses with a strong and loyal base of customers.
In each case, the acquisition enables us to leverage our scale, supply relationships, and integrated business model to enhance returns and our guests' experience. Turning to our distribution, in January, the board increased the distribution on our common units by 1 cent per unit to $2.34 per unit on an annualized basis, maintaining our commitment to returning capital to our unit holders. This distribution was paid on February 14 to unit holders of record as of the close of business on February 8, 2022. On a personal note, I'd like to express my gratitude to Ken Watchmaker, who retired from the board of directors in December. Ken had been a director since our initial public offering in 2005 and played a key role in our progress over the past 16 years. In his retirement, we wish him health and happiness.
I'd also like to extend a warm welcome to Jaime Pereira, who joined the board in Q4. Jaime spent two decades as a partner at Ernst & Young, where he oversaw the firm's consumer products group in the Northeast and acted as a coordinating partner for a variety of clients, including Global. Jaime brings to the board excellent accounting and financial skills, as well as relevant consumer product experience, which will help us as we continue to grow. Looking ahead, our strategy in 2022 is clear to continue profitable growth by investing in and optimizing our portfolio and acquiring assets that complement our skills and enable us to generate mid-teen returns. The M&A market remains very active, and we continue to evaluate all opportunities that we consider appropriate to achieve our business objectives. Our role in energy transition is also at the forefront of our plans.
We are aggressively pursuing opportunities to utilize our terminal assets for renewable fuels while encouraging policies that promote and monetize their adoption. To that end, we continue to advance our grassroots coalition Project Carbon Freedom. The coalition of over a hundred members and nearly a thousand advocates is promoting clean energy solutions that utilize the infrastructure and equipment we have in place as a means to meet policy-driven climate goals today. Earlier this year, we onboarded an electric innovation strategist as part of our sustainability team. The position demonstrates our commitment to planning for electric vehicle adoption and responsibly incorporating EV charging into our portfolio. We continue to look for public-private partnerships in the space, and were recently awarded funds from the Commonwealth of Massachusetts to install fast-charging electric vehicle charging ports at nine of our owned or controlled retail locations.
Finally, I want to acknowledge the global team whose commitment, growth mindset, and execution allows us to continue delivering outstanding results. As we look to 2022, we will continue to invest in our people who underpin our ability to execute our strategy. With that, let me turn the call over to Greg for his financial review. Greg?
Thank you, Eric, and good morning, everyone. As Eric noted, we capped a solid performance in 2021 with a strong fourth quarter, highlighted by continued strength in our GDSO segment. As we go through the results, please keep in mind that net income, EBITDA, adjusted EBITDA and DCF in full year 2021 include a total of $9.7 million in compensation and benefits and expenses associated with the passing of our general counsel in May and the retirement of our former CFO in August. For the fourth quarter and full year of 2020, these metrics include a $7.2 million loss on the early extinguishment of debt related to the redemption of our 7% 2023 senior notes in the fourth quarter of 2020.
Adjusted EBITDA for the fourth quarter of 2021 was $66 million, compared with $49.9 million for the same period in 2020. The $16.1 million increase was due largely to our GDSO segment, which experienced higher fuel volume and margin as well as increased activity in the C-stores. For the full year, adjusted EBITDA was $244.3 million, compared with $287.7 million in the same period of 2020. As Eric noted, our full year 2020 results benefited from an extreme shift in the forward product pricing curve in the second quarter of the year that significantly strengthened our wholesale segment. Net income for the fourth quarter of 2021 was $19.3 million, compared with $4.4 million for the same period in 2020.
For full year 2021, net income attributable to the partnership was $60.8 million, compared with $102.2 million for 2020. DCF was $30.5 million for the fourth quarter of 2021, compared with $7.3 million in the prior year period. DCF for the full year of 2021 was $120.7 million, compared with $156.4 million in 2020. TTM distribution coverage as of December 31, 2021 was 1.5 x or 1.3 x after factoring in distributions to our preferred unit holders.
Turning to our segment details, GDSO product margin in Q4 2021 was $177 million, up $33.4 million from the year earlier period, reflecting a continuation of the strong margins, increased fuel volume, and C-store activity we saw in the second and third quarters of the year. The gasoline distribution contribution to product margin was up $27.1 million in the quarter to $119.7 million, reflecting a $0.04 per gallon increase in average fuel margin to $0.30 from the prior year period. While wholesale gasoline prices were relatively flat from the beginning to the end of the quarter, the price volatility in the quarter led to an over $0.50 spread from the high to low price experienced in the quarter.
Station operations product margin, which includes convenience store and prepared food sales, sundries, and rental income, contributed $57.3 million, up $6.3 million from the fourth quarter of 2020 due to increased activity at our convenience stores. For full year 2021, GDSO product margin increased $43.7 million to $647.6 million, as a 13.7% increase in volume offset a $0.02 per gallon decrease in fuel margin to $0.27 from $0.29 in the prior year period. Gasoline distribution contributed $413.7 million to product margin for the full year, up $15.7 million from 2020. Station operation product margin was $233.9 million for the full year 2021, up $28 million from 2020.
At the end of 2021, our GDSO portfolio consisted of 1,595 sites, comprised of 295 company-operated sites, 293 commission agents, 201 lessee dealers, and 806 contract dealers. Looking at the wholesale segment, fourth quarter 2021 product margin decreased $7.1 million to $32.6 million, reflecting less favorable market conditions in other oils and related products, partially offset by more favorable market conditions in gasoline and gasoline blend stocks, largely in ethanol. Gasoline and gasoline blend stock product margin contributed $23.9 million to wholesale product margin, up $7.1 million from the same period in 2020. Product margin from other oils and related products, which include distillates and residual oil, was down $14.7 million to $10.8 million.
Product margin from crude oil was - $2.1 million in the fourth quarter, up $500,000 from a year earlier. For full year 2021, wholesale product margin decreased $47.1 million to $138.9 million due to less favorable market conditions. Gasoline and gasoline blend stock product margin decreased $15.5 million to $86.3 million for the full year. Product margin from other oils and related products was $65.4 million for the full year, declining $19.5 million from 2020. Crude oil product margin decreased from - $700,000 to - $12.8 million. Turning to the commercial segment, product margin increased $1.9 million in the fourth quarter to $4.8 million, primarily due to an increase in volume sold and improved margins.
Those factors also drove the segment's full-year results as product margin increased $3.3 million to $15.6 million. Looking at expenses, operating expenses increased $10.9 million to $92.7 million for the fourth quarter and $30.3 million to $353.6 million for the full year. The increases were largely associated with our GDSO operations, primarily reflecting increased credit card fees related to the increases in volume and price, higher rent expense, and higher salary expense, due in part to greater activity at our convenience stores. SG&A expenses increased $8.5 million in the fourth quarter to $57.8 million, in part due to higher wages and benefits and professional fees. On a full year basis, SG&A was up $20.4 million to $212.9 million.
As mentioned earlier, during 2021, we incurred a number of one-time SG&A expenses, including $9.7 million in one-time compensation and benefits expenses mentioned earlier. Excluding the $9.7 million, SG&A would have been approximately $203.2 million for the year. Interest expense was $19.7 million in the quarter, compared with $21 million a year earlier. Full year 2021, interest expense declined $3.4 million to $80.1 million. CapEx in the fourth quarter of 2021 was approximately $36.1 million, consisting of $15.1 million of maintenance CapEx and $21 million of expansion CapEx, the majority of which relates to our convenience stores.
CapEx for full year 2021 was $101.7 million, consisting of $43.2 million in maintenance CapEx, slightly below our guidance of $45 million-$55 million, and $58.5 million in expansion CapEx, in line with our guidance of $50 million-$60 million, excluding acquisitions. For full year 2022, we expect maintenance CapEx in the range of $45 million-$55 million and expansion CapEx, excluding acquisitions in the range of $50 million-$60 million. We continue to manage our balance sheet prudently. Leverage, which is defined in our credit agreement as funded debt to EBITDA, was approximately 3.3 x at the end of the fourth quarter. We continue to have ample excess capacity in our credit facility.
As of December 31, 2021, total borrowings outstanding under the credit agreement were $398.1 million. This consisted of $354.7 million under our working capital revolving credit facility, which was increased in November by $100 million to $900 million, and $43.4 million under our $450 million revolving credit facility. Looking at our upcoming IR calendar, on March 10, we will be hosting one-on-one meetings at the Crédit Agricole 15th Annual Global High Yield and Leveraged Finance Conference. For those of you who are participating, we look forward to meeting with you. Now, let me turn the call back to Eric for closing comments.
Thanks, Greg. As demonstrated by recent transactions, we continue to deliver on our strategy to optimize and grow our assets. We are focused on deals that provide ongoing cash flow and acquisitions to enable us to leverage our scale, supply relationships, and integrated business model. We are putting significant effort into positioning our assets and infrastructure to play a critical role in the energy transition while also investing in the people power that keeps us growing and innovating. As a critical infrastructure business serving a significant portion of the U.S., we are confident in our ability to provide the vital energy products, goods, and services of today and tomorrow. Now, Greg, Mark, and I will be happy to take your questions. Operator?
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, if you would like to ask a question, press star one on your telephone keypad. One moment please while we poll for questions. Thank you. Our first question comes from the line of Selman Akyol with Stifel. Please proceed with your question.
Thank you. Good morning, all.
Morning.
Morning.
Can you maybe just start off with just how are margins going in this current environment, given the consistent upward pressure we've seen on prices?
Hey, Selman. It's Eric. I would say it's been really interesting over the past almost two years now. There has clearly been a shift in the market as to how it passes through increased costs and margin. You know, obviously there are no guarantees there. You know, over the last couple of years, as we've seen markets increase, you know, in commodity cost, margins have either kept pace or increased at retail. You know, volumes given the change in flow are still a little bit off. But it appears so far that those increasing costs and the margins that are needed to increase with those costs have more than kept pace.
All right. Appreciate that. Maybe could you discuss a little bit more what you're hoping or expecting out of your electric innovation strategist?
Yeah, I think.
I don't know if there's any goalposts you can pull with that in terms of maybe how many chargers you guys getting sold or, you know, just anything we should be looking for, I guess.
Yeah, I mean, I think. Look, the math is still difficult. We're trying to be very thoughtful about how we approach it. Working with the state and the federal governments to figure out how to expand that business in a thoughtful way is gonna be really important. That's not to say that, you know. That's on the electric side, right? I do think the very, very broad brush way of thinking about terminaling, for example, is there's gonna be a requirement to carry different fuels and different products that are less commodity than, let's say, gasoline. I think that's going to be a fundamental pressure and change that happens to the business, and I think there's gonna be an opportunity around that.
Got it. Let me just ask you a little bit about G&A, and I clearly hear you on the higher benefits wages. Coming out of Q3, as you noted, there were some one-time fees in there for Daphne of $3 million. When I look at the fourth quarter, I'm really looking at sort of, you know, $51 million-$57 million. I'm just wondering, is that, you know, the run rate sort of less higher professional fees should we be thinking about? Is there any way you can maybe help quantify sort of what the ongoing expense would be? Because, you know, clearly you've done a couple of acquisitions. You've had a disposition as well. I'm just trying to figure out maybe the professional fees aren't as recurring and just trying to get to a run rate.
Sure. This is Greg Hanson, Selman. How you doing? To help you out there. Yeah. I mean, even in the fourth quarter, we had a number of one-time things. We didn't break them out, but we did have acquisition expense one time, and we actually had some additional severance expense, unfortunately, from a passing of another colleague in the quarter. That said, I would say overall, you know, our expectation is the run rate right now is a little high. We have added some overhead related to the acquisitions. We're also investing heavily on our HR and employee recruiting areas, also in technology. But we're also, you know, making a big push to hire additional, you know, top staff for sort of our human capital initiatives to help us further expand the business.
I'd say that the fourth quarter overall was a little bit heavy, and the run rate should be a little bit better going forward.
Understood. Thanks. Can you also just maybe just comment on the impacts you're seeing from inflation?
Yeah. I mean, I can start off and Eric and Mark, you can go ahead. You know, I would say there has not been material impacts to our business. I would say on the C-store side, you know, we have seen some price increases from our suppliers, but we've been able to pass those along to our consumers. You know, I think if you look historically, the C-store space has historically benefited, not benefited, but done much better during periods of inflation and periods of potential recessions. Overall, we're not seeing it. I would say we've seen some on the CapEx side from equipment and building materials. We've seen some inflation there that, you know, that could potentially impact the way we look at our expansion CapEx. But nothing that's impacted our returns to date.
Great. Last one for me. You guys have any more potential assets for sale? Should we be thinking about that as being another source of cash this year?
Yeah. You know, obviously we always look to optimize what we have, you know, and as you buy and consolidate businesses, your perspective on individual locations may change. There is always, I'd say, a natural churn of assets. You know, is there anything material like that on the horizon? You know, not that I'm aware of, but that's not to say that, you know, if somebody came along and we thought we could get the right deal for the right asset, that we wouldn't take a hard look at doing something with it.
Yeah. We were about $7 million in net proceeds from retail asset sales, Selman, in 2021. We still, as Eric mentioned, we've got, you know, a number of sites that are on the market for sale. You know, nothing big or material, but sort of our normal course upgrading of our portfolio as we turn through stuff. I, you know, I do from a sort of capital financing perspective, I do view it as a, as a source of proceeds to reinvest into our expansion CapEx on NTIs and raise and rebuilds.
Yeah. I mean, Selman, I do think you know, very broadly, industrial space today is going for you know, much bigger numbers than ever. At triple net prices that I don't think anybody would have ever imagined five years ago, right? We're going to try and be efficient if we can and if there's opportunity.
Got it. Okay. Thank you very much. That does it for me.
Thanks, Selman.
Thank you. Mr. Slifka, I now would like to turn the floor back over to you for closing comments.
Thank you for joining us this morning. We look forward to keeping you updated on our progress. Thanks everyone, and have a good day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.