Q4 2019 Earnings Call

Good day, everyone and welcome to Global Partners fourth quarter 2019 financial results Conference call. Today's call is being recorded so we'll be an opportunity for questions at the end of the call. If any what's your require operator assistance during the conference. Please press star zero on your telephone keypad.

With us from global partners, our President and Chief Executive Officer, Mr., Eric just got.

Chief Financial Officer, Ms. staffed <unk> Foster Chief operating officer, Mr., Mark Bromine and executive Vice President and General Counsel Mr. Edward Federal I will now turn the call over to Mr. fed well. Please go ahead Sir.

Good morning, everyone. Thank you for joining us today.

Again, let me remind everyone. This morning, we'll be making forward looking statements within the meaning of federal Securities Law [noise].

Statements made but are not limited to projections beliefs.

And estimates concerning the future financial and operational performance of global partners.

Estimates for California is EBITDA guidance and future performance are based on assumptions regarding market conditions, such as a crude oil market.

It's a cycle.

Dan for petroleum products, including gasoline and gasoline blendstocks and renewable fuels.

Vision of assets or facilities, whether credit markets, the regulatory and permitting environment and the Ford product pricing curve, which could influence quarterly financial results.

We believe these are assumptions are reasonable given currently available information in our assessment of historical trends.

Because our assumptions and future performance are subject to a wide range of business risks and uncertainties [laughter] provide no assurance that actual performance will fall within guidance ranges and intuition such performance is subject to risks factors, including but not limited to those described in our filings with the Securities and Exchange Commission.

Well the partners undertakes no obligation to revise it publicly released the results of any revision to the forward looking statements that may be made during today's conference call.

With regulation FD in effect. It is our policy in 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 regulation FD.

Now please me a lot. Please allow me to turn the call over to our President and Chief Executive Officer, Mr., Eric Slifka.

Thank you Ed we're good morning, everyone and thank you for joining US we delivered strong results in 2019 exceeding our full year EBITDA guidance product margin in our gasoline distribution and station operations segment increased more than 23 million for the year attributable primarily to the acquisitions of Champagne.

Lane and Cheshire oil in the fourth quarter 2019, our results were negatively impacted by less favorable market conditions in our wholesale segment.

Our GDS Whos segment continued to perform well in that quarter, recognizing that we did not see the exceptionally strong fuel margins that benefited this segment in the fourth quarter of 2018.

Turning to our distribution in January our board raise a quarterly distribution on our common units from 52 cents to 50 to 50 per unit or to 10 on an annualized basis. The distribution was paid on February 14th the common unitholders of record as of February Ted.

Our integrated portfolio of terminals and retail assets together with our wholesale in commercial supply infrastructure continue to position us well going forward.

Before concluding lastly, let me briefly touch on a topic that's on everyone's mind, the Corona virus to date, we've not seen any impact of the virus on our operation.

That said, we are monitoring the situation closely and taking measures to ensure that health and safety of our employees and customers.

Now with that I'll turn the call over to Daphne for her financial review Daphne. Thank you, Eric and good morning, everyone.

Q4, 2019 results were consistent with our expectation.

I can only in the context as a very strong Q4 of 2018.

However, the fourth quarter of 2019 fourth quarter of 2018 saw significantly higher fuel margin in our GDS, though segment as well as more favorable market conditions across the wholesale segment.

Adjusted EBITDA for the fourth quarter of 2019 was 46.2 million compared with one of 9.8 million for the same period of 2018.

For the full year 2019, adjusted EBITDA was she was 33.7 million compared with adjusted EBITDA of 310.6 million for full year 2018.

As we go through the results. Please keep in mind that EBITDA adjusted EBITDA net income and DCF for full year 2019 include a 13.1 million a lot on the early extinguishment of debt related to our repurchase I'll just six in the quarter percent senior notes for full.

Your 2018. These metrics include a onetime gain of approximately 52.6 million, resulting from the extinguishment of a contingent liability related to the ethanol excise tax credit.

For the fourth quarter of 19th we reported a net loss attributable to the partnership of point 8 million versus net income of 52.5 million for the same period a year earlier.

For full year 2019, net income was 35.9 million birth is one it was 3.9 million for 2018.

DCF in the fourth quarter of 2019 was 9.4 million compared with 67.6 million in the prior year period.

DCF for the full year was 95.7 million compared with 173.7 million in 2018.

TTM distribution coverage at the end of the fourth quarter was 1.3 times.

After factoring in distributions to the preferred unit holders that coverage was 1.2 times.

Thank you I segment detail GDS, so product margin in Q4, 19 was 147.1 million compared with 188.5 million in Q4 18.

The gasoline distribution contribution to product margins decreased 43.2 million in the quarter to 91.6 million.

Keep in mind that the fourth quarter of 2018 was a record quarter. So he has also benefiting from expanded fuel margin primarily due to an 80 cents per gallon decrease in wholesale gasoline prices from October to December 31st 2018.

The average fuel margin per gallon declined 10 cents.

22.5 cents in Q4 19 from 32.5, that's in the fourth quarter of 18.

For the full year Tds their product market increased 23.2 million.

99.6 million in 2019.

Due primarily to contribution from the July 2018 acquisitions have Champlain, while in Chester wells.

The gasoline distribution contribution to product margin was 374.6 million in 2019.

1.2 million from the prior year due to a full year performance from those acquisitions, partially offset by small decrease in average fuel margin per gallon.

Station operations product margin, which includes convenience store sales sundries and rental income increased 1.8 million 55.5 million in the fourth quarter of 2019, due primarily to the acquisition.

Full year station operations product margin was approximately 22 million did you want Didnt 25.1 million also due primarily to the acquisitions.

At the end of 2019, IGDSS portfolio, consisting of 1551 site.

Right, That's 289 company operated stores.

I didn't 58 Commission agent 216, lessee dealers and 788 contract dealers.

Looking at the wholesale segment fourth quarter 2019 product margin decline 33.1 million to 15.4 million.

48.5 million in the prior year period, reflecting several factors.

Less favorable market conditions in gasoline and gasoline Blendstock contributed to a 14.9 million product margin decrease which came in at 7.4 million in the fourth quarter of 2019, compared with 22.3 million a year earlier.

Product margin from food I was negative 3 million in the fourth quarter compared with positive 4.3 million in Q4 18.

While expenses related to pipeline commitments were approximately 3.5 million in both quarters. In Q4 18, we utilized our crude oil storage assets can take advantage contango opportunities.

That was opportunities we're not present in the fourth quarter of 2019.

Quite as much as mother wasn't related products was 11 million compared with 21.9 million as you for 18, reflecting less favorable market conditions, primarily in did [noise].

For the full year wholesale segment product margin was 122.5 million compared with 137.3 million in 2018, primarily due to lower crude oil product margin.

Decrease include all product margin was primarily due to the mid 2018 expiration of the take or pay contract with one particular customer.

As it was out of the expiration of that type of that contract 21.6 million in revenue recognized in 2018 was not recognized in 2019.

Who'd all product margin was negative 13 million for the full year.

This positive 7.2 million in 2018 due to the expiration of that take or pay contract.

<unk> expenses related to pipeline commitments were approximately 14 million each year.

Gasoline and gasoline Blendstocks product margin increased 7.2 million to 84 million for full year 2019.

Primarily due to more favorable market conditions, and gasoline offset by less favorable market conditions in gasoline blendstocks primarily ethanol.

Product margin from other wells and related products was 51.6 million in full year 2019, compared with 53.4 million in 2018.

Our product margin and disciplined for 2019 was negatively impacted due to less favorable market conditions largely in the fourth quarter.

And whether that was both warmer than normal and warmer than in 2018.

Turning to our commercial segment product margin increased 3.2 million to 10.3 million in the fourth quarter of 2019, due primarily to contributions from a bunkering business.

Full year commercial segment product margin was up 4.9 million to 28.5 million also primarily due to favorable market conditions in bumper.

Turning to expenses operating expenses decreased 1.9 million to 85.2 million in the fourth quarter, primarily reflecting lower standing and our terminal.

For the full year expenses were up 21.3 million to 342.4 million, primarily reflecting the Champlain in Cheshire acquisition.

As teenage expenses decreased 6 million to 43.5 million in the fourth quarter, primarily due to a decrease in discretionary incentive compensation.

On a full year basis as DNA remained flat at 171 million with decreases in both incentive comp and acquisition costs.

Offset impart by increases in wages and benefits attributed impart to our GDS, though business.

Interest expense is 21.7 million in Q4, 2019, compared with 23.5 million in the year earlier period, primarily due to lower average balances on our credit facility as well as lower rates.

For full year 2019 interest expense was 89.9 million up about 8.7 million from the prior year.

Capex in the fourth quarter was approximately 30.4 million consisting of 16.6 million of maintenance and 13.8 million of expansion Capex.

Most of which relates to our gas station and convenience store business.

For full year 19 maintenance Capex was 49.9 million in line with her guidance of 45 to 55 million.

Expansion Capex was 33 million for full year slightly below full year guidance of 35 million to 45 million.

Turning to our balance sheet leverage defined in our credit agreement is funded debt to EBITDA was approximately 3.8 times at the end of the fourth quarter.

We continue to have ample excess capacity under our $1.3 billion credit facility.

As of December 31, yet total borrowings outstanding the 515.6 million, including 192.7 million under our 450 million dollar revolving credit facility.

And 323.9 million under our 850 million dollar working capital facility.

The reduction in our revolver from 220 million at yearend 2018 was due in part to proceeds from the sale of assets and a larger bond offering.

Turning to guidance for full year 2020, we expect EBITDA in the range of two well five to 230 million.

This guidance excludes any gains or losses on the sale and disposition of assets and goodwill and long lived asset impairment charges.

With that air I mean, I'd be happy to take your questions operator.

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One moment, well, we pull for questions.

[noise] [noise]. Our first question is from David site, there with perspective capital management. Please proceed.

Good morning, and congratulations on beating the high end of guidance Oh.

I have one question, which is at the low end of the current guidance what would be the coverage ratio on the dividend as it is today at 53 cents.

Hi, Good morning, David I haven't done that calculation, you're talking about to apply them up with a coverage. They I see no assuming all else being equal.

I don't have them a hip pocket.

Okay, and you know at the high end up guidance would be equivalent to what we did this year.

And the coverage ratio was was very very good.

But the difference of 25 million might make a difference on the coverage ratio.

Yes, that's totally fair okay.

Alright, great. Thanks very much.

As a reminder, this star one on your telephone keypad, if he would like to ask a question.

[noise] reached end of our question answer session I would like to turn the conference back over to Mr.

Cisco for closing remarks, thank you for joining us. This morning, we look forward to keeping you updated on our progress. Thank you [noise].

Thank you. This concludes today's conference you may disconnect. Your lines at this time and have a wonderful day.