Q3 2025 Global Partners LP Earnings Call

Speaker #3: Good day . Everyone , and welcome to the Global Partners . Third quarter 2020 financial results conference call . Today's call is being recorded .

Speaker #3: All lines have been placed in a listen only mode . With us from Global Partners are President and Chief Executive Officer , Mr. Eric Slifka .

Speaker #3: Chief Financial officer . Mr. Gregory Hanson . Chief operating officer . Mr. Marc Romaine and chief legal officer and secretary Mr. Sean Geary .

Speaker #3: At this time , I'd like to turn the floor over to Mr. Geary for opening remarks . Please go ahead , sir .

Speaker #4: 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 or expectations concerning the future financial and operational performance of Global Partners .

Speaker #4: No assurances can be given that these projections will be attained or that these expectations will be met . 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 Securities and Exchange Commission .

Speaker #4: Global Partners undertakes no obligation to revise or update any forward looking statements . Now it's my pleasure to turn the call over to our President and Chief Executive Officer , Eric Slifka .

Speaker #5: Thank you . Sean . Good morning , everyone , and thank you for joining us . We perform well in the third quarter , consistent with our expectations reflecting operational strength and disciplined execution across the organization .

Speaker #5: We experienced a strong performance in our wholesale segment in Q3 , driven by favorable market conditions in gasoline and the continued optimization of our liquid energy terminal network .

Speaker #5: Over the past two years , we have significantly scaled our terminal assets meaningfully , meaningfully enhancing our product distribution network and positioning Global Partners for long term growth .

Speaker #5: This effort reflects our strategy of efficiently connecting liquid energy products with downstream markets , leveraging the integration of terminals acquired from Motiva , Gulf and ExxonMobil .

Speaker #5: These assets continue to perform well , strengthening our supply chain flexibility , contributing to throughput growth and enhancing our network . We're pleased that fuel margins have remained historically strong , even with the year over year decline .

Speaker #5: Our retail network is a critical part of our strategy as we invest in , optimize and upgrade our portfolio . Recently , we expanded our marine fuel supply operations into the Port of Houston .

Speaker #5: As a reminder , today our bunkering business is centered in the northeast . And now have we . Now we have extended this business into the Gulf Coast on the retail side , we're continuing to redefine the convenience store experience through our all time fresh and newly reimagined Honey Farms market brands .

Speaker #5: These brands embody our four pillars community , hospitality , local and fresh . While introducing chef driven menus , clean label offerings and hyper local engagement through our new loyalty platform .

Speaker #5: Bee's knees benefits , we're creating a seamless , personalized experience designed to drive repeat business , build long term loyalty and strengthen the connection between our guests and our brands .

Speaker #5: Turning to our distribution in October , the board declared a quarterly cash distribution of 75 $0.50 per common unit , or 302 on an annualized basis .

Speaker #5: This marked our 16th consecutive quarterly distribution increase . The distribution will be paid on November 14th . To unit holders of record as of the close of business on November 10th , with that overview , I'll turn it over to Greg for the Financial Review .

Speaker #5: Greg .

Speaker #6: Thank you , Eric , and good morning , everyone . As I review the numbers , please note that all comparisons will be with the third quarter of 2024 unless otherwise noted .

Speaker #6: Noted net income for the third quarter was $29 million versus 45.4 5.9 million last year . I would note that last year's quarter had a 7.8 million one time gain on asset sales .

Speaker #6: That affected that number . EBITDA was 97.1 million for the third quarter , compared with 119.1 million . And adjusted EBITDA was 98.8 million versus 114 million .

Speaker #6: Distributable cash flow was 53 million , compared to 71.1 million . While adjusted distributable cash flow was 53.3 million versus 71.6 million . Trailing 12 month distribution , coverage remains strong as of September 30th , with 1.64 times coverage , or 1.5 times .

Speaker #6: After factoring in distributions to our preferred unitholders . Turning to our segment details details . Product margin decreased 18.8 million to 218.9 million .

Speaker #6: Product margin from gasoline distribution decreased 19.3 million to 144.8 million , primarily due to lower fuel margins compared with the same period in 2024 .

Speaker #6: On a cents per gallon basis , fuel margins of $0.37 were down 7% from the previous year . In the third quarter of 2024 , we experienced strong fuel margins , in part due to wholesale gasoline prices declining by $0.57 during the quarter .

Speaker #6: In comparison , in this year's third quarter , wholesale gasoline prices declined only $0.11 . Station operations . Product margin , which includes convenience store and prepared food sales , sundries and rental income , increased 0.5 million to 74.1 million .

Speaker #6: In part due to an increase in sundries at quarter end . We had a portfolio of 1540 sites , 49 fewer than the same period last year .

Speaker #6: The site count does not include the 67 locations we operate or supply under our sparring partners retail joint venture . Looking at the wholesale segment , excuse me , looking at the wholesale segment , third quarter product margin increased 6.9 million to 78 million .

Speaker #6: Product margin from gasoline and gasoline blend stocks increased 18.5 million to 61.5 million , primarily due to more favorable market conditions and gasoline .

Speaker #6: And the expansion of our terminal network . Product margin from distillates and other oils decreased 11.6 million to 16.5 million , primarily due to less favorable market conditions in residual oil .

Speaker #6: Commercial segment product margin decreased 2.5 million to 7 million , in part due to less favorable market conditions in bunkering . Turning to expenses .

Speaker #6: Operating expenses decreased 4.6 million to 132.5 million . In the third quarter , primarily related to lower maintenance and repair expenses at our terminal operations , SG&A expense increased 5.8 million to 76.3 million , reflecting in part increases in wages and benefits and various other G&A expenses .

Speaker #6: Interest expense was 33.3 million in the third quarter of 25 , down 1.8 million from last year , in part due to lower average balances on our credit facilities .

Speaker #6: CapEx in the third quarter was 19.7 million , consisting of 11.9 million of maintenance CapEx and 7.8 million of expansion CapEx , primarily related to investments in our gasoline stations and terminals .

Speaker #6: For the full year , we now anticipate maintenance capital expenditures of approximately 45 million to 55 million , while expansion capital expenditures excluding acquisitions , are anticipated to be approximately 40 to $50 million , relating primarily to investments in our gas station and terminal business .

Speaker #6: Our current CapEx estimates depend in part on the timing of completion of projects , availability of equipment and workforce , weather , and unanticipated events or opportunities requiring additional maintenance or investments .

Speaker #6: Turning to our balance sheet . As of September 30th , leverage as defined in our credit agreement as funded debt to EBITDA was 3.6 times .

Speaker #6: We had 246 , 240.6 million outstanding on the working capital revolving credit facility and 124.8 million outstanding on the revolving credit facility . Looking ahead to our investor Relations calendar next month , we'll be participating in two events the B of A securities 2025 Leveraged Finance Conference and the Wells Fargo 24th Annual Energy and Power Symposium .

Speaker #6: Please contact our Investor Relations team if you'd like to schedule a meeting during the conference . Now , let me turn the call back to Eric for closing comments .

Speaker #6: Eric .

Speaker #5: Thanks , Greg . We remain focused on capital , discipline and operational efficiency , continuously seeking opportunities to drive sustainable returns and long term value creation for our unitholders .

Speaker #5: Our scale integrated operations and talented team give us the flexibility to respond to market shifts and pursue growth opportunities that create lasting value for all of our stakeholders .

Speaker #5: Now , Greg , Mark and I would be happy to take your questions . Operator . Please open the line for the Q&A .

Speaker #3: 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 .

Speaker #3: 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 .

Speaker #3: For participants using speaker equipment , it may be necessary to pick up your handset before pressing the star keys . One moment please .

Speaker #3: While we poll for questions . Thank you . Our first question comes from the line of Selman Akil with Stifel . Please proceed with your question .

Speaker #7: Thank you . Good morning . Good morning . Can you talk a little bit more about entering the bunker ? The bunkering market in Houston ?

Speaker #5: Yeah . I mean , we're already obviously in the business . We felt that there was an opportunity and we feel like the assets that we've entered into there are differentiated versus our competition .

Speaker #5: And so . You know , we're already , like I said , in that business , we already have the customer list . We already have the know how .

Speaker #5: And the knowledge . And we think it's a good fit for the company .

Speaker #7: Got it . When you say sort of differentiated offering , can you just explain that a little bit ?

Speaker #5: Yeah , primarily just the location of the facilities and how we're going to go to market to supply that very busy corridor that is not always so easy to to deliver fuel in .

Speaker #7: So you're on the Houston Ship Channel .

Speaker #5: We're outside of it . Yeah .

Speaker #7: Just outside. Okay. Can you talk a little bit about the acquisition environment? You noted that store counts were lower relative to where you were.

Speaker #7: Third quarter last year . And so I'm just curious to know more to go there or do you think you can , you know , add stores from here ?

Speaker #7: How should we be thinking about that ?

Speaker #4: Yeah .

Speaker #6: Hey , Steve , it's Greg Hanson . I can talk a little bit about the sites . I mean , you know , I think we went through a pretty big optimization program on our sites last year .

Speaker #6: So year over year , you know , we've in the last 12 months , we've sold seven sites . We've converted 15 sites , and then we've terminated some of our dealer relationships that were low margin .

Speaker #6: So , you know , we continue to optimize . I think that said , there's probably not a that big a runway right now on sort of site divestitures for us .

Speaker #6: I think we're pretty happy with our portfolio in general . It still looks a little obviously down year over year because last year was a big optimization period for us .

Speaker #6: But , you know , we'll continue to , I think , move around the edges on that portfolio . But we're pretty happy where it is now .

Speaker #6: And then you know the M&A side , I think , you know , overall it was pretty quiet going into the fourth quarter .

Speaker #6: On the retail M&A . I think we're seeing some signs of life and more more deals that are out there on the the fourth quarter and on the retail side .

Speaker #6: And then the traveling side , you know , we continue to look at at opportunities as we go through the year . But I think that we have seen a pickup on the retail side .

Speaker #6: .

Speaker #7: Got it . So parkland , which is north of the border , was recently acquired . But they have stores in the US .

Speaker #7: Do you face much competition from them ?

Speaker #6: We do not . No , we don't . We're not in none of our retail . Segment operates in their footprint as of today .

Speaker #7: Got it . And then there's been reports of sort of the lower end consumer being under pressure . And I'm wondering if you're seeing that and if you have any thoughts going forward on that .

Speaker #6: Yeah , I mean , we've I think not unlike a lot of other retailers out there , we've definitely seen it . This year .

Speaker #6: Is definitely pressure on lower income . You see you see consumers trading down from , you know , more premium brands to more generic brands .

Speaker #6: We continue to try and leverage our loyalty program that Eric mentioned earlier to to grow promotions . But I think it's yeah , they've definitely been under pressure overall .

Speaker #6: That said , you know , look , in the quarter , we were pretty happy with this summer . How the C stores did we were actually up year over year .

Speaker #6: And that's not even adjusting for same site . You know , that's just pure . And we were you know , we were down 16 company operated sites year over year .

Speaker #6: So to be above on the DSO station , station operations is is pretty good . In our book . It was a decent strong summer .

Speaker #6: And you know where we're located in the northeast . I think , you know , continues to be a trend towards a higher income consumer .

Speaker #6: So overall , we're pretty happy with how the summer went on . The C store . But yeah , I would agree . I mean , I think it's it's pretty well recognized that the lower end consumer continues to face pressure .

Speaker #6: But you know , the higher end consumer has been continuing to spend , which is good .

Speaker #7: Got it . And then the last one for me just how's labor going for you guys . Is it getting any easier .

Speaker #6: It's the I would say the wage inflation has you know , calmed down a little bit . But you know , operating in a retail environment , you continue to face a lot of high turnover .

Speaker #6: But , you know , compared with the 22 and 23 time frame , I think we're still we're in a better place . You know I think what we're working on is trying to optimize around our labor hours and make sure we have the the right associates in the right stores to optimize sales .

Speaker #6: And we'll continue to work on that .

Speaker #7: Got it . I guess I guess what I was thinking about is , is it easier to get people now ? Are you seeing more resumes , more people resumes ?

Speaker #7: Too strong of a word . But are you seeing more applicants ? That kind of thing ?

Speaker #6: Yeah , I think I think we are overall versus the last couple of years . Definitely .

Speaker #7: Okay . Thank you so much .

Speaker #3: We have reached the end of the question and answer session . Mr. Slifka , I'd like to turn the floor back over to you for closing comments .

Speaker #5: Thanks for joining us this morning . We look forward to keeping you updated on our progress . Everyone have a great Thanksgiving .

Speaker #3: 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.