Q1 2025 Global Partners LP Earnings Call

Operator: Good day, everyone, and welcome to the Global Partners 1st Quarter 2025 Financial Results Conference Call. Today's call is being recorded. All lines have been placed in listen-only mode. If anyone requires operator assistance during the call, please press star zero.

Good day, everyone and welcome to the global partners.

2025 financial results Conference call today's call is being recorded all lines have been placed in a listen only mode.

Speaker Change: If anyone requires operator assistance during the call. Please press star zero 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.

Operator: 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 Chief Legal Officer and Secretary, Mr. Sean Geary.

Schwan theory: And Chief legal Officer, and Secretary, Mr. Schwan theory.

Sean Geary: At this time, I'd like to turn the call over to Mr. Geary for opening remarks. Please go ahead.

Schwan theory: At this time I'd like to turn the call over to Mr. Gary for opening remarks. Please go ahead Sir.

Sean Geary: Good morning, everyone, and thank you for joining us. Today's call will include forward-looking statements within the meaning of federal securities laws, including projections and expectations concerning the future financial and operational performance of global partners. No assurances can be given that these projections will be attained or that these expectations will be met.

Speaker Change: Good morning, everyone and thank you for joining US today's call will include forward looking statements within the meaning of federal securities laws, including projections and expectations concerning the future financial and operational performance of global partners.

Schwan theory: No assurances can be given that these projections will be attained or that these expectations will be met.

Sean Geary: Our assumptions and future performance are subject to a wide range of business risks, uncertainties, and factors, which could cause actual results to differ materially, as described in our filings of the Securities Exchange Commission. Global Partners undertakes no obligation to revise or update any forward-looking statements.

Schwan theory: Our assumptions and future performance are subject to a wide range of business risks, uncertainties and factors, which could cause actual results to differ materially as described in our filings with the.

Schwan theory: Global partners undertakes no obligation to revise or update any forward looking statements.

Eric Slifka: Now it's my pleasure to turn the call over to our President and Chief Executive Officer, Eric Slifka. Thank you Sean. Good morning everyone. We had a strong first quarter across the company generating healthy year-over-year growth across our key profitability metrics. Product Margin in our Wholesale segment was up from the prior year, reflecting strong execution by our teams, a favorable market environment, and the successful integration of additional terminal assets. Since the end of 2023, we have continued to invest in and optimize our thermal assets, expanding our midstream footprint to more efficiently serve our throughput and wholesale customers.

Schwan theory: My pleasure to turn the call over to our President and Chief Executive Officer, Eric Slifka.

Eric Slifka: Thank you Sean Good morning, everyone. We had a strong first quarter across the company generating healthy year over year growth across our key profitability metrics.

Eric Slifka: Margin in our wholesale segment was up from the prior year, reflecting strong execution by our teams a favorable market environment and the successful integration of additional terminal assets.

Eric Slifka: Since the end of 2023, we've continued to invest in and optimize our terminal assets, expanding our midstream footprint to more efficiently serve our throughput and wholesale customers.

Eric Slifka: These enhancements strengthen our ability to link refined liquid energy products with downstream markets, supporting the evolving needs of suppliers and customers in today's dynamic energy landscape. Our gasoline distribution business benefited from healthy fuel margins, supporting strong overall performance. Ongoing portfolio optimization resulted in a decrease in company-operated sites, reducing our station operations product margin year-on-year in the quarter. By maintaining financial discipline and carefully directing our capital, we are able to invest in accretive organic growth and selective acquisition opportunities while continuing to consistently return cash to unit holders.

Eric Slifka: These enhancements strengthen our ability to link for fine liquid energy products with downstream markets supporting the evolving needs of suppliers and customers in today's dynamic energy landscape.

Eric Slifka: Our gasoline distribution business benefited from healthy fuel margins supporting strong overall performance ongoing portfolio optimization resulted in a decrease in company operated sites, reducing our station operations product margin year on year in the quarter.

Eric Slifka: By maintaining financial discipline and carefully directing our capital.

Eric Slifka: We are able to invest in accretive organic growth and selective acquisition opportunities, while continuing to consistently return cash to unitholders in April our board increased our quarterly cash distributions on common units to 74 and a half cents per unit.

Eric Slifka: In April, our board increased our quarterly cash distribution on common units to $0.74.5 per unit. equating to $2.98 on an annualized basis. The distribution will be paid May 15th to unit holders as of the close of business on May 9th.

Eric Slifka: Waiting to $2 98 on an annualized basis. The distribution will be paid may 15th to unit holders as of the close of business on May nine.

Gregory Hanson: With that, now let me turn the call over to Greg for the financial review. Greg. Thank you, Eric. And good morning, everyone. As I review the numbers, please note that all comparisons leave with the first quarter of 2024, unless otherwise noted. Looking at our key profitability metrics, net income for the first quarter was $18.7 million versus a net loss of $5.6 million last year. EBITDA for the first quarter increased to $91.9 million from $56.9 million and adjusted EBITDA increased to $91.1 million from $56 million in the prior year period. Distributable cash flow was $45.7 million in the first quarter, compared with $15.8 million in the prior year period.

Greg: With that now let me turn the call over to Greg for the financial review Greg.

Greg: Thank you Eric and good morning, everyone as I review the numbers. Please note that all comparisons will be with the first quarter of 2024, unless otherwise noted.

Greg: Looking at our key profitability metrics net income for the first quarter was $18 7 million versus a net loss of $5 6 million last year EBIT.

Greg: EBITDA for the first quarter increased to $91 9 million from $56 9 million and adjusted EBITDA increased to $91 1 million from $56 million in the prior year period.

Greg: Distributable cash flow was $45 7 million in the first quarter compared with $15 8 million in the prior year period, and adjusted DCF was $46 4 million compared with $16 million last year.

Gregory Hanson: And adjusted DCF was $46.4 million, compared with $16 million last year. The primary growth driver behind these results was the strong performance of our wholesale segment. It's important to provide some context for the year-over-year comparison. As a reminder, in Q1 of 2024, certain products in our wholesale segment were negatively impacted by the timing of mark-to-market valuations, which were then fully recovered in what was a very strong second quarter last year. In contrast, the timing and magnitude of mark-to-market impacts were minimal in Q1 this year, meaning our reported results more closely aligned with the strong performance of our core operations.

Greg: The primary growth driver behind these results was the strong performance of our wholesale segment. It's important to provide some context for the year over year comparison as a reminder, in Q1 of 'twenty 'twenty four certain products in our wholesale segment were negatively impacted by the timing of Mark to market valuations, which would then fully recovered in what was a very strong second quarter last year.

Greg: In contrast, the timing and magnitude of the Mark to market impacts were minimal in Q1 this year, meaning our reported results more closely aligned with the strong performance of our core operations.

Gregory Hanson: TTM distribution coverage as of March 31, 2025 was 2.03 times, or 1.96 times after factoring in distributions to our preferred unit. Turning to our segment details, GDSL product margin increased 0.2 million to 187.9 million in the quarter. Product margin from gasoline distribution increased 4.2 million to 125.8 million, primarily reflecting higher fuel margins year-over-year. On a cents per gallon basis, fuel margins increased 2 cents to 35 cents in Q125 from 33 cents in Q124.

Greg: TTM distribution coverage as of March 31, 2025 was 2.03 times or 196 times after factoring in distributions to our preferred unit holders.

Greg: Turning to our segment details GDS L product margin increased <unk> 2 million to $187 9 million in the quarter.

Greg: Margin from gasoline distribution increased $4 2 million to $125 8 million, primarily reflecting higher fuel margins year over year.

Greg: On a cents per gallon basis fuel margins increased two cents to 35 cents in Q1 25 from 33 <unk> to Q1 'twenty four.

Gregory Hanson: Station operations product margin, which includes convenience store and prepared food sales, sundries and rental income, decreased $4 million to $62.1 million in the first quarter of 2025. The decrease was due in part to the sales and conversions of certain company-operated sites, consistent with our ongoing strategy of portfolio optimization. At quarter end, we had a portfolio of 1,561 sites, a decrease of 40 sites year over year. In addition, we operated or supplied 66 sites under our Spring Partners Retail Joint Venture. Looking at the wholesale segment, first quarter 2025 product margin increased $44.2 million to $93.6 million.

Greg: Station operations product margin, which includes convenience store in prepared food sales sundries and rental income decreased 4 million to $62 1 million in the first quarter of 2025.

Greg: The decrease was due in part to the sales and conversions of certain company operated sites consistent with our ongoing strategy of portfolio optimization.

Greg: At quarter end, we had a portfolio of 1561 sites a decrease of 40 sites year over year. In addition, we operate are supplied 66 sites under our spring partners retail joint venture.

Greg: Looking at the wholesale segment first quarter 2025 product margin increased $44 2 million to $93 6 million.

Gregory Hanson: Product margin from gasoline and gasoline blend stocks increased $27.4 million to $57.1 million, primarily due to more favorable market conditions in gasoline. Product margin also benefited from the 2024 acquisitions of terminals from Gulf Oil and ExxonMobil, which were acquired in the second and fourth quarters of 2024. Product margin from distillates and other oils increased $16.8 million to $36.5 million, primarily due to more favorable market conditions in distillates and winter weather that was on average 9% colder than the prior year period. Commercial Segment Product Margin increased $0.1 million to $7.1 million. Looking at expenses, operating expenses increased $6.6 million to $126.7 million in the first quarter of 2025, primarily related to our terminal operations and the addition of the Gulf and ExxonMobil terminals in 2024.

Greg: Product margin from gasoline and gasoline blend stocks increased $27 4 million to $57 1 million, primarily due to more favorable market conditions in gasoline.

Greg: Product margin also benefited from the 'twenty 'twenty four acquisitions of terminals from Gulf oil in Exxonmobil, which were acquired in the second and fourth quarters of 2024.

Greg: Product margin from just listen other oils increased $16 8 million to $36 5 million, primarily due to more favorable market conditions and desktops and winter weather that was on average 9% colder than the prior year period.

Greg: Commercial segment product margin increased <unk> 1 million to $7 1 million.

Greg: Looking at expenses operating expenses increased $6 6 million to $126 7 million in the first quarter of 'twenty five primarily ready to our terminal operations and the addition of the Gulf and Exxonmobil terminals in 2024.

Gregory Hanson: SG&A expense increased $3.9 million in Q1'25 to $73.7 million, reflecting in part increases in long-term incentive comp, wages and benefits, and various other SG&A expenses, and a decrease in acquisition costs. Interest expense was $36 million in the first quarter of 2025, up $6.3 million from last year, primarily due to higher average balances on our credit facilities related to our terminal acquisitions in 2025. CapEx in the first quarter was $17.9 million, consisting of $9.6 million of maintenance CapEx and $8.3 million of expansion CapEx, primarily related to investments in our gasoline stations and terminals. Our balance sheet remained strong on March 31st, with leverage as defined in our credit agreement as funded debt to EBITDA at 3.28 times, and ample excess capacity in our credit facilities.

Greg: SG&A expense increased $3 9 million in Q1, 25 to $73 7 million, reflecting in part increases in long term incentive comp wages and benefits and various other SG&A expenses and a decrease in acquisition costs.

Greg: Interest expense was 36 million in the first quarter of 25 up $6 3 million from last year, primarily due to higher average balances on our credit facilities related to our terminal acquisitions in 2024.

Greg: Capex in the first quarter was $17 9 million consisting of $9 6 million of maintenance Capex and $8 3 million of expansion Capex, primarily related to investments in our gasoline stations and terminals.

Greg: Our balance sheet remains strong at March 30, <unk> with leverage as defined in our credit agreement as funded debt to EBITDA of 3.28 times.

Greg: Ample excess capacity aircraft facilities, we had $354 7 million outstanding on the working capital revolving facility and $167 million outstanding on the revolving credit facility.

Gregory Hanson: We had $354.7 million outstanding on the Working Capital Revolving Facility and $167 million outstanding on the Revolving Credit Facility.

Gregory Hanson: Before I turn the call back to Eric for closing comments, let me review our upcoming investor relations calendar. This month, we'll be participating in EIC's 22nd Annual Energy Infrastructure Investor Conference, and in June, we'll be participating at the Stifel Cross-Sector Insight Conference and the B of A Energy Credit Conference. If you're attending one or more of these events, we look forward to meeting you there.

Speaker Change: Before I turn the call back to Eric for closing comments, Let me review our upcoming Investor Relations calendar. This month, we'll be participating in Eic's twenty-second annual energy infrastructure Investor Conference and in June we'll be participating at the Stifel Cross sector insight conference and the Bofa Energy Credit Conference you go to any one or more of these events. We look forward to meet you there.

Eric Slifka: Now let me turn the call back to Eric for closing comments.

Greg: Now, let me turn the call back to Eric for closing comments Eric.

Eric Slifka: Eric? Thank you, Greg. As we look ahead, the power of our scale, the resiliency of our integrated model, and the creativity of our people position us into just not weather disruption, but to find opportunity within it. We are confident in our strategy, focused on disciplined execution, and committed to delivering long-term growth for our unit holders.

Eric Slifka: Thank you Greg as we look ahead the power of our scale the resiliency of our integrated model and the creativity of our people position us and it just not weather disruption, but to find opportunity within it we are confident in our strategy focused on disciplined execution and committed to delivering.

Greg: Long term growth for our unit holders.

Eric Slifka: Now, Greg, Mark, and I would be happy to take your questions. Operator, please open the line for Q&A. Thank you.

Speaker Change: Now, Greg Mark and I would be happy to take your questions. Operator. Please open the line for Q&A.

Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Kim.

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Selman Akyol: Our first question comes from the line of Selman Akyol with Stifel. Please proceed with your question. Thank you. Good morning. Congratulations on a very nice quarter.

Speaker Change: Our first question comes from the line of Selman <unk> with Stifel. Please proceed with your question.

Speaker Change: Thank you good morning, congratulations on a very nice quarter.

Speaker Change: Hum.

Eric Slifka: Just wanted to start off with, and I understand the GDSO, you know, the high grading of it and sort of repositioning the capital, I guess, into the terminals. Can you just maybe talk about, and I know it's a continuous thing that goes on, but can you just talk about the opportunity you're seeing for continuing that as well as potential acquisitions or what you're just seeing out there on the terminal side as well? Yeah, I mean, I think some, you know, basically, we're always reviewing our retail business. And we're looking at our assets, and we're looking at the most efficient or best way to operate or supply those assets.

Speaker Change: Just wanted to start off with and I understand the G. D S. So.

Speaker Change: You know the high grading of it and sort of repositioning the capital I guess into.

Speaker Change: The terminals can you just maybe talk about and I know, it's a continuous thing that goes on but can you just talk about the opportunity you're seeing for continuing that as well as potential acquisitions or what you're just seeing out there on the terminal side as well.

Speaker Change: Yeah, I mean, I think some of you know basically we're always reviewing.

Speaker Change: Our retail business and we're looking at our assets and we're looking at the most efficient or best way to.

Speaker Change: To operate or supply those assets.

Eric Slifka: It's not a static environment. And we continue to look at them. But as we acquire assets and operate them, you know, we may take decisions later on that optimize the value that we can generate from those assets. I wouldn't look at it as repositioning capital per se to terminals. The way I really think of it is we're trying to be opportunistic and do what is best at that moment in time. So if there are look, M&A is busy, it's busy at every level, whether that's terminal or whether that's retail. And it's really about finding the right deal that fits the company that we think competitively advantages us and allows us to make a somewhat higher return.

It's not a static environment.

Speaker Change: And we continue to look at them, but as we acquire assets and operate them. You know we may take decisions later on that that's optimized the value that we can generate from those assets I wouldn't look at it as repositioning capital per se to a.

Speaker Change: Terminals I the way I really think of it is we're trying to be opportunistic.

Speaker Change: And do what is best at that moment in time. So if there are look M&A is busy it's busy.

Speaker Change: At every level, whether that's terminal or whether that's retail and it's really about finding the right deal that fits the company that we think competitively advantages us.

Speaker Change: And allows us to make us somewhat higher return and so those are the places we're going to continue to focus on and try to be competitive.

Eric Slifka: And so those are the places we're going to continue to focus on and try to be competitive.

Selman Akyol: Got it.

Speaker Change: Got it. Thank you for that and then me could you just talk a little bit about the market conditions that allowed.

Selman Akyol: Thank you for that.

Gregory Hanson: And then me, could you just talk a little bit about the market conditions that allowed Wholesale to do so well and then currently what you're seeing in the marketplace. Yeah, I guess I can mark and fill in anything I miss, Selman. It's Greg. A couple things. One, it was it was a nice cold winter up here in the Northeast, which definitely helped our wholesale distillate business. You know, we've had two back to back warm winters, it was 9% colder. And then it was really the integration of our terminaling assets, the ExxonMobil terminal in East Providence and the Gulf terminals that really added to our additional capacity on the wholesale side and allowed us to take advantage of opportunities that were out there.

Speaker Change: Wholesale to do so well and then currently what you're seeing in the marketplace.

Greg Mark: Yes, I can start and mark can fill in anything I Miss Selman, It's Greg.

Greg Mark: Yeah, a couple of things one it was it was a nice cold winter up here in the North East, which definitely helped our wholesale distillate business.

Greg Mark: We've had two back to back of warm winters. It was 9% colder and then it was really the integration of our Terminalling assets are the Exxon Mobil.

Greg Mark: Terminal in East Providence in the Gulf terminals that really added to our additional capacity on the wholesale side and allowed us to take advantage of market opportunities that were out there. So you know I think it was a nice normalized quarter for us.

Gregory Hanson: So, you know, I think it was a nice normalized quarter for us. You know, I mentioned in my in my speaking points that, you know, last year was there was definitely some mark to market that impacted us in the first quarter last year. So it's a tougher comparison. We didn't do as bad as it looks like last quarter, we just in the first quarter of 24, we just got that back in 25. But I think really, it was it was a nicely nice quarter that was optimized around the integrated assets we've had on the terminaling side and market being anything to add there.

Greg Mark: And might it might be a point that you know last year was there was definitely some mark to market that impacted us in the first quarter of last year. So it was a tougher comparison, we didn't do as bad as it looks like last quarter, but just in the first quarter of 'twenty. Four we just got that back in 25, but I think really it was it was a nicely nice quarter that was optimized around the integrated assets we've had on the <unk>.

Greg Mark: <unk> I don't know Mark if you have anything to add there.

Gregory Hanson: Let me just ask in In terms of just sort of timing and tariffs and all that, was there anything, any dislocation up there in the northeast markets where you were able to take advantage of? The tariff, you know, there was a very brief period of time. When the tariffs applied to Canadian oil and oil from Mexico, Canadian oil specifically more relevant to us, but very brief, created some volatility, you know, which often benefits us, but it was very short-lived and right now there's really no impact from a supply or a Or a market condition standpoint, you know, the only thing we're thinking about relative to how tariffs may impact us is, you know, perhaps as it starts to affect the consumer, it may have some impact on our store sales, but that's yet to be determined.

Greg Mark: Let me just ask you you didn't.

Greg Mark: In terms of just sort of timing and tariffs and all that was there anything any dislocation up there in the north East markets, where you were able to take advantage of.

Mark: Yes, Selman it's mark.

Mark: The tariff there was a very brief period of time it was probably two days.

Mark: When when the tariffs applied to Canadian.

Mark: And oil from Mexico, Canadian oil, specifically more relevant to us but.

Mark: Very brief created some volatility you know, which often benefits us but it was very short lived and right now there's really no impact from a from a supply or a.

Mark: Or a market condition standpoint, the only thing, we're thinking about where relative to how tariffs may impact us as perhaps as it starts to affect the consumer.

Mark: It may have some impact on our store sales, but that's yet to be determined I think if that if it is going to impact us it'll impact us there from a supply and a.

Selman Akyol: I think if it's going to impact us, it'll impact us there. From a supply and a, you know, and a margin and optimizing the business, not a real impact. Got it. Okay. Appreciate the color. Thank you so much. Thanks, Al. Thanks.

Mark: And a N a.

Mark: Margin and optimizing the business.

Mark: Not a real impact.

Mark: Got it okay. Appreciate the color. Thank you so much.

Mark: Thanks Al.

Mark: Yeah.

Mark: Thank you.

Operator: Mr. Slifka, there are no further questions in the queue.

Speaker Change: Mr. <unk> there are no further questions in the queue I will turn the floor back to you for any final comments.

Eric Slifka: I'll turn the floor back to you for any final. Thank you for joining us this morning. We look forward to keeping you updated on our progress.

Speaker Change: Thank you for joining us. This morning, we look forward to keeping you updated on our progress enjoy the rest of your spring everyone.

Operator: Enjoy the rest of your spring, everyone. Thank you.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.