Global Partners LP Price & Performance (GLP)

Good morning, everyone. 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 Gold Partners. 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 to differ materially. As described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or update any forward looking statement 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 on today's earnings [indiscernible] 2024 was a transformative year of the growth for Global partners. We integrated 30 new terminals across the Atlantic Coast, the Southeast, Texas and the Northeast more than doubling our storage capacity to approximately 22,000,000 barrels. Our expansion included 25 terminals acquired in the [indiscernible] take or pay contract with Motiva Enterprises, a subsidiary of Savi Miramco. In April, we added four Northeast terminals complementing our network in that region.

And in November, we acquired a 959,000 barrel terminal located on a seven thirty acre parcel in East Providence, Rhode Island with infrastructure capabilities to accommodate long range vessels. These strategic investments totaling more than $528,000,000 have solidified our role as an essential part of The U. S. Energy infrastructure and enhanced our ability to serve our rapidly growing customer base. We could not have accomplished this without the dedication, resilience and innovative spirit of our employees across our businesses.

From our terminal operations to our retail locations, every member of our team has played a crucial role in our success I'm especially proud of the way in which we've navigated the dynamic energy landscape while maintaining our commitment to operational excellence and customer satisfaction. While our retail teams have continued to elevate the experience with new offerings for our guests at our few locations and convenience markets.

Both our wholesale and GDSO segments demonstrated robust growth in 2024. The $90,000,000 increase in wholesale segment product margin reflected in part a full twelve months of contributions from the terminals acquired from Motiva and a partial year of ownership of the terminals acquired from Gulf and ExxonMobil Global. GDSO product margin was up almost $26,000,000 for the year even with a tough comparison due to an especially strong retail fuel margin in the fourth quarter of twenty twenty three. Let me briefly address the steps we are taking to prepare for the potential implementation of tariffs on oil and gas imports We continue to actively monitor global economic conditions and the evolving supply landscape, holding as we always do daily meetings and additional scenario planning to assess potential impacts of any imposed and proposed tariffs.

Turning to our distribution. In January, the Board declared a distribution of $0.74 on all outstanding common units for the fourth quarter.

This marked the thirteenth consecutive quarterly increase and reflects our continued strong financial position. The distribution was paid on February 14 to Unitholders of record as of Feb ten. In summary, as evidenced by our results, our diverse asset portfolio continues to drive strong performance. With our expanded operating footprint greater access to critical pipeline and marine infrastructure, and a strong balance sheet we are well positioned to leverage our supply terminalling marketing expertise to seize growth opportunities and create value for our unitholders. With that, let me turn the call over to Greg for his financial review. Greg? Thank you, Eric, and good morning, everyone. As we review the numbers, please note that unless otherwise noted, all comparisons will be with the fourth quarter of twenty three. Adjusted EBITDA for the fourth quarter of twenty twenty four was $97,800,000 compared with $112,100,000 in the same period of 2023. And adjusted DCF was $46,100,000 versus $5,858,800,000.0 dollars in 2023. Across these numbers, the variance between the fourth quarter of twenty twenty four and 2023 is primarily related to the exceedingly strong fuel margin environment we experienced in our GDSO segment in the fourth quarter of twenty twenty three. Trailing twelve month distribution coverage as December 31 was 1.81 times or 1.72 times after factoring in distributions for our preferred unitholders.

Turning to our segment details, GDSO product margin decreased $31,800,000 in the quarter to 213,600,000.0 Product margin from gasoline distribution decreased $32,100,000 to $145,700,000 primarily reflecting lower fuel margins year over year.

On a cents per gallon basis, fuel margin decreased $0.08 to $0.36 in Q4 twenty twenty four from $0.44 in Q4 twenty twenty three. This was primarily driven by the volatility in wholesale Arbar prices during the fourth quarter of twenty twenty three when wholesale Arbov prices decreased $0.34 per gallon the September to December 2023. In contrast, wholesale hardbulk prices increased $0.04 per gallon in the fourth quarter of twenty twenty four. That said, the retail fuel margin environment in the fourth quarter of twenty continue to be constructive and above historical averages. And we are pleased with the results from gasoline distribution, which increased on a full year basis for 2024 by $20,200,000 or 4% over the corresponding period in 'twenty three. With fuel margins on a cents per gallon basis for the full year of 2024, of $0.36 versus $0.34 in fiscal year 'twenty three. Station operations product margin which includes convenience store and prepared food sales, sundries and rental income, increased $300,000 to $67,900,000 in the fourth quarter of twenty twenty four. During the year, we continued to optimize our retail portfolio through divestitures and conversions of certain company operated sites.

As quarter end, our GDSO portfolio of fueling stations and C stores totaled fifteen eighty four sites.

In addition, we operate 64 sites under our Spring Partners retail joint venture. Looking at the Wholesale segment, fourth quarter twenty twenty four product margin increased $27,900,000 to 79,800,000.0 Product margin from gasoline and gasoline blend stocks increased $13,200,000 to $38,600,000 primarily due to the acquisition 25 terminals for Motiva in December of twenty twenty three. And to more favorable market conditions. Product margin from distillates and other oils increased $14,700,000 $41,200,000 primarily due to more favorable market conditions than distillates. The commercial segment product margin increased $200,000 to $8,600,000 Looking at expenses, operating expenses increased $12100000.0128100000.0 dollars in the fourth quarter of twenty twenty four. In the quarter to 79,400,000 Interest expense was $34,400,000 in the quarter compared with 20,700,000.0 primarily due to interest expense related to our 8.25 senior notes issued in January of twenty twenty four. Which were used to facilitate the Motiva acquisition into higher average balances on our credit facility in part due to the Gulf Terminals acquisition. CapEx in the fourth quarter was 46,800,000.0 consisting of maintenance CapEx of $15,000,000 and expansion CapEx of $31,800,000 primarily related to investments in our terminal and gasoline station business. For the full year 2024, we had $46,900,000 in maintenance CapEx and $56,400,000 in expansion CapEx.

The full year of 2025, we expect maintenance capital expenditures in the range of $60,000,000 to $70,000,000 and expansion capital expenditures excluding acquisitions in the range of $75,000,000 to $85,000,000 relating primarily to our gasoline station and terminalling businesses. These current estimates depend in part on the timing of project completion, availability of equipment and workforce, whether in unanticipated events or opportunities requiring additional Our balance sheet remained strong at December 31 with leverage as defined in our credit agreement as funded debt to EBITDA at 3.47 times and ample excess capacity in our credit facilities. As of December 31, we had $229,500,000 in borrowings outstanding on our working capital revolving credit facility and $167,000,000 outstanding on the revolving credit facility. Now let me turn the call back to Eric for his closing comments. Thanks, Greg. We begin 2025 in a strong financial and operational position. Our strategic investments to expand our portfolio, strengthen our asset base and broaden our customer relationships prepare us not only to capitalize on the dynamic market environment of today, but to thrive in the evolving energy landscape. We expect this to be a year of opportunity and growth for global as we build on our success of the past year.

We continue to integrate our recently acquired assets We look to deliver continued value to our unitholders. With that, Greg Mark and I will be happy to take your questions. Operator, please open the line for Q and A. Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Selman Akhil with Stifel. Please proceed with your question.

Thank you. Good morning. Appreciate all your comments on GDSO. In terms of your your thoughts on tariffs, can you just say how much of your supply comes from Outside U. S. Borders, Hey, Selman, it's Mark. Good morning. I can't tell you exactly what percent of our supply comes Not something we break out for obvious reasons, for competitive reasons, but I will say that Canadian barrels are they're an important part of the [indiscernible] the entire supply landscape for the really for New England maybe into the Northeast The further north you get, the more important that barrel is [indiscernible] New Hampshire, Maine, and then as you move down into Boston, Providence, maybe into Connecticut. So It's an important barrel for the region. But I think for us, Eric talked about it in his comments, We're looking at this. We're meeting. We're doing scenario planning, we're trying to understand what the potential impact might be We've never really dealt with this before, so it's a little bit unknown at the moment. What I will say is that our system is designed to allow us to source barrels from anywhere. And the that's one of the great things about our system and our assets is that we're not tied into one source of supply.

So we can literally go anywhere for a barrel.

And I think that's important. So while we'll stay close to it, We'll make sure that our system we do the best to supply our system for our customers. But I think we have flexibility to go anywhere to get a barrel. And whether that's shipping up Colonial, whether that's taking in imports from from other regions the Caribs, anywhere. We can take a barrel from anywhere. So, I'm not that worried about the supply dynamics. The price will be the price You may have to pay a little bit extra for the airline. I don't know. We'll see how that works But I think the key thing for us is that our system really allows us to to source barrels from anywhere and that's a a key point not just for this particular for this potential event, but I think it's a key point In general, when you look at our system, because it allows us to source from anywhere source the lowest cost barrel, optimize around that effort. And I think we're very comfortable in that setting.

Understood. And no doubt tariffs are creating a lot of uncertainty out there and you're not the only trying to wrap your head around it. Let me ask you, so with that is a backdrop, does that in any way change sort of your thought plans or just in terms of maybe doing an acquisition or does it change desire of where you would want to be more emphasis to get into other parts of the country? [indiscernible] It does not. What I want to be very clear about is the terminals in the Northeast that take a lot of product from Canada are incredibly flexible facilities. Because they can take product in from anywhere in the world. And so it's not a matter of if, it's a matter of what price because there's great clearing mechanisms So our perspective here is although it may increase cost of supply the barrel is still going to be there and we given our system actually have the ultimate flexibility As to how we source and where we source that barrel, And so albeit it might be not the best economic outcome, for others, for the consumer. At the end of the day, we're going to make sure that the barrel gets supplied.

It just might be a little bit more costly. So it's a minor bump in the road Over time, those supply chains will adjust. And by the way, because it's all on the water, Literally, they will adjust in weeks. So our perspective is it's business as usual.

It's going to change how supply moves. Around the globe. But for us, we're going to be as efficient as we can be in supplying and sourcing the lowest cost barrels. To make sure that we're delivering on our promise to our guests and customers. [indiscernible] to the question, but it doesn't affect how we think about our business and how we want to invest and where we believe we actually have competitive advantages. Actually, we think this highlights our competitive advantages in the markets that we're in. So we're I hate to say it, but it's positive for our business model. And I actually think it's one of the things that differentiates us versus our competitors. Got it. Can you maybe talk about what you're seeing in Houston and maybe what the growth plans are for that? You've had it now for a while. Just kind of wondering what your Yes. Simon, it's Mark again. I mean, just broadly, we've got We've got the retail down there. We've got terminals and we've got a pretty sizable wholesale and branded rack business down there. I think from a growth standpoint, we'll look to grow All three legs of that stool will look to we've consider new retail assets every time they become available.

You know, we're very disciplined So we're not going to do a deal for the sake of growing. We're going to do a deal if we think we can add value and we think we could drive synergies through it. So we continue to look look for retail opportunities to grow.

Some of the assets that we bought and that we got in that Motiva transaction, we have seven terminals in [indiscernible] some of them have real growth opportunities and so we'll look to organically grow [indiscernible] It may take some time because there's permitting and things like that. These are not These aren't flip the switch opportunities like adding new companies. These are investments I think we have the opportunity to make We'll continue to try to leverage our sales and supply functions to grow that supply and wholesale presence. So I think it is an area that we're very interested in. We're going to keep focusing on that and other regions as and look for opportunities to grow through acquisition, but also look for opportunities to grow organically. And then if you flip if you just dial it back to retail, we've been operating those assets, I think, [indiscernible] I think we've got our arms around them. I think there's a lot of opportunity to grow those volumes and store sales on-site. So we're very focused on that region and I think we're we're positive about our opportunities down there.

Got it. And then just last one just in kind of staying on acquisitions. Anything changing in terms of either the number of potentials you see out there or anything in terms of pricing, bid ask spreads getting closer?

Anything you can just make on commentary along those lines? Yes. I mean, I think it continues to be really busy. There's lots of stuff out there and there's lots of movements, whether that's retail or whether that's terminalling. We continue to look at at whatever is out there. I think generally speaking, depending asset quality really matters. As to what multiples things go at. And I do think that there are some spreads that have opened up between certain types of sites, but we continue to be very active. And we're hopeful that we'll get some transactions done in the next year. Okay. Thank you very much.

Thank you. We have reached the end of the question and answer session. Mr. Slifka, I would like to turn the floor back over to you closing comments.

Thanks for joining us this morning, everyone. We look forward to keeping you updated on our progress. And everyone, enjoy the weekend. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time.