GLP - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone. And welcome to the Global Partners' Second Quarter 2018 Financial Results Conference Call. Today's call is being recorded. There will be an opportunity for questions at the end of the call. At this time, all participants are in a listen only mode [Operator Instructions]. Partners and Global Mr. Executive from us are Chief President Officer, With Slifka; Ms. Financial Eric Officer, Chief Chief Officer, Foster; Daphne Operating Mr. Mark Romaine; General Counsel, and Executive Vice President and Mr. Faneuil. Edward call time, to this would over the to At Mr. I turn like remarks. Faneuil for opening ahead, go sir. Please

Edward Faneuil

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

of Global of historical We weather, on which remind are pricing can to let Partners. projections, concerning for we the the will but a guidance conditions, within future petroleum that this of these performance financial our product are the may fuels, credit assessment of future beliefs, fall include, the subject performance environment that performance Federal uncertainties, estimates Securities results. not Before assets market, based be range operational me EBITDA and products Partners’ are such oil and for will morning, forward-looking assumptions Estimates curve, guidance reasonable permitting to, currently cycles, renewable information trends. making crude future and Global market and facilities, of financial actual markets, risks within believe business and quarterly goals and we demand no business wide and everyone begin, are assurance and and statements and regulatory as available forward limited statements meaning provide performance the ranges. given assumptions assumptions could influence our we Laws. Because utilizations These regarding

revise the any Partners the undertakes statements described be In conference Exchange conference Global Regulation purposes Securities public our future obligation that that the of announced effect, factors, to but FD. call. to Regulation filings and such news including made or concerning not limited addition, is in revision or for to, results will those subject that performance policy is it the other of any forward-looking risk disclosure during release to releases, will operations be Commission. may publicly of publicly results constitute no material calls through means comments in communicated our FD today's With with

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

Eric Slifka

Eddie. a of quarter. thank for second completed you everyone with half XXXX the We Good you, first solid Thank joining morning, and us.

Daphne? XXX stations, leased stores; major XX XX branded gas Company-operated including sites sites convenience as owned T-Bird continue us The our Citgo, such our July properties. and Vermont, New owned location Daphne with drive and Cheshire, economies growth XXth our record close let turn in for Albany, distribution acquisitions integrating assets. strategy unit and business fuel of pipeline of on second on our our increased these sites, XX or convenience today, to the as Irving. of investments Champlain to always convenience In and cash The XX within Xth. paid We very and marts. be gasoline stations. stations The call to of Cheshire opportunities including over unit me to that, the to asset which acquisition strategic quarterly evaluating is to basis. of fuel acquisition execute market be review. the retail distribution terminal continue in expand fuel operationally and consisting will The our business month, expand fuel Champlain objectives. August Board through with portfolio. XXX Burlington, financially retail Vermont and execute deal assets XXXX primarily to supply agreements XX the leverage to active, acquiring, for Mart-branded begin an fuel summary, Hampshire expertise stations of we allow gas sites, half Shell, Sonoco scale. XX.XX brands and the location Mobil, and of New in Company-operated and our to Last and We we’re holders added and and operating the market York well continues M&A, $X.XX approximately expand our The organic both store to per base financial on her leveraging annualized The Jiffy August With positioned are added or of included

Daphne Foster

Thank you, morning good everyone. and Eric

by A Series completed me Let discussing X.XX% begin morning unit offering. this recently preferred our

and which to on and LIBOR after the equal X.XX% each period On will be on distributions $XX.X quarterly pleased a annum. an under units at were accumulate Distributions units of A million August investment annual months indebtedness of opportunities. us to for $XX unit, use are payable raise, generating which for per distribution to capital net will proceed, rate at this units acquisitions approximately rate in three to credit take advantage agreement. sold reduce we total positions X.XX with continue XXXX, organic X.XXX%. at million spread the floating We of of expansion per the our XX, fixed the

primarily our conditions rent, gasoline as our favorable $XXX.X million the XX Farm wholesale from taxes, Honey results sites driven segment. Combined expenses. GDSO associated profit product real million the with contributions maintenance well to in and million, sites increased $XX.X market utilities in second by add, as and to quarter $XX.X $XX.X headcount estate, to $X million Turning expenses addition primarily Operating in within quarter, Farm million $XXX.X reflecting increased margins million. the gross Honey increased to the of

interest XXXX. $XX.X higher DCF million Net doubled increase QX $X.X year. than more year from in as sale $XX.X associated EBITDA financing refinancing in same of up disposition a rates. included results and was expenses, compared agreement, year, amendment second was second million million $XX.X second earlier quarter quarter $XX.X in GDSO fees of SG&A the income of $XX $X.X same on to period in the primarily compared fees therefore the million. deferred due $X.X an million increased Adjusted the $XX.X assets with the write EBITDA benefits year-over-year in last as compared depreciation $X quarter an the of also and in XXXX expense due million to credit Professional fees million and increased business. and credit year-over-year. was million in million, expenses into $XX ’XX. portion XXXX million related addition respectively. to QX same loss period $X.X $XX.X our with of of our These than million in partially with quarter the with net period In prices. off $X.X million to and to in in well support by offset increased the was and million, reflecting XXXX $X.X Interest increased our last gasoline million salaries million in higher card to marketing promotional XXXX

XXX margin in XXXX, due year’s gallon months to second average of in XQ offset convenient sale $X.XXX compared ‘XX million with $XXX.X of last impacted was and The product and in the consisted the million fuel in store for Farms. GDSO XXX gasoline details. lower our GDSO gasoline fuel Farms quarter margin segment to by contract acquisition. XXX dealers million was our includes agents, gallon by of per income to XXX largely rising which margins, first due $X.XXX the quarter million, product million. $XX.X sales, total increased of to end, Company-operated stores, due commission increased sundries quarter. rental At product distribution margin, portfolio contribution wholesale negatively The increase margins second quarter, to quarter $XX.X to prices $X.X to XX.XX. partially and a two lessee the Station the operations Honey down in Honey $X.X to primarily was million product $X.X dealers Turning per margin during

expense part X.X in to about commercial expense due With XXX sites. a GDSO of margins residual $X.X improved in In related segment, gasoline million a in with approximately volume million expiration products total decline in our due $X.X crude Total gallons. lower terminal to Volume segment in $XX.X XQ increased and X.X million XX.X to million second margin stores. condition million, to our differentials lower increased with and Expansion rail July, to in from $X.X gasoline. XXX XX blend and XX In Product million product to as million in more was gallons wholesale, our challenged. market an in XX, Product million increased up lease volume related CapEx to commercial QX, due other million, million favorable partially product Company-operated approximately million maintenance and million, to CapEx, sold primarily gallons primarily to $XX.X to increased acquisitions of to to count $X.X associated Champlain in gas by bunkering including million and $X.X and activity. $X.X in was increases be lease million million $X.X by wholesale the Oil $X.X gallons, retail respectively. our offset continue oil. segment, quarter railcar our XXX margin which of crude the to increased about lease station margins was billion gasoline stock due and Cheshire million oil increase margin XX.XX from terminal consisting site approximately of sites. the oil CapEx by part in related the primarily our retail convenience gallons

$XX $XX full the we of million. continue range to in CapEx [Technical CapEx the Difficulty] expect maintenance in For to expansion year XXXX, of and range million

our Turning sheet. balance to

of outstanding agreement as raised receiving borrowings have for excluding approximately $XXX of Oil million Cheshire the million debt facility. $XXX and $XXX million consisted Leverage As our approximately credit was under the of of Champlain we’ve on million our million, of preferred and we acquisitions as end working the and to Since facility June funded respectively, under we $XX total EBITDA billion revolving into $XX.X second Borrowings inventory. million of of credit and million facility. Oil $XXX our end our proceeds had $XXX X.X net equity XX, approximately at in $X.X capital closed quarter. the times XQ, defined $XXX million

X XX TTM raised was quarter term continue the coverage to better. said As we X.X the times. times XQ past, at of We the end to annually June $X.XX the have at strong distribution for target we and or we long coverage. have in leverage ending

Turning to guidance.

loss This full million sale long and compared of the lived or with of We range million impairment range disposition a on assets, excludes million. and to prior $XXX any to $XXX have asset revised of and guidance $XXX million $XXX our gain goodwill any charges. XXXX EBITDA to guidance year

EBITDA as extinguishment the gain quarter to one-time a the ethanol tax $XX.X contingent liability excludes recognized related volumetric in excise the guidance the As million first a of the result reminder, XXXX credit. of

to be take one-on-one XXXX Citi the happy Eric meetings, With One-on-One Before wanted MLP you will I participating we Infrastructure go know XXth that, your August to let at I that Midstream or to Conference. Operator? Q&A, in questions. will we and XXth be

Operator

you. Thank

now will session a Instructions]. We be [Operator conducting question-and-answer

the James. question with of first with Brownlow comes Our line your from Ben question. Raymond Please proceed

Ben Brownlow

quarter on the acquisitions. Congratulations the and

or On Can the acquired. cents you around that volume expected XXX be and outlets the about distribution or the color impact? what margin give some contribution fuel gallon talk would per were

Eric Slifka

would down and much fairway plus have operated. that you’re stations $X.XX the in question pretty the that margins was depending the products generally that sites traditionally range that markets operating how as selling, had the on way to What area you’re it’s I you well, with operated in company up Ben? say in other gallon so I’d specific the all say this market company $X.XX per on

Ben Brownlow

the or total contribution were acquired? were that The outlets fuel XXX volume -- outlets distribution of that

Eric Slifka

million. $XXX approximately have We

Ben Brownlow

so a sale that Is little $X.XX just XX average in gallon range. on to bit basis the merchandise per acquired same? common on the this, across an similar And that to color Company-operated more $X.XX there’s locations

Eric Slifka

are bit have are the they because broadly more size than stores there say total bit complicated, would larger just little that a we bigger, the little a I chain little today. bit

counts sales, though and are the in higher large there this… manage to the average population sites employee too is those higher there size So of there, on even the

Ben Brownlow

but to the What we -- rate we policy. you distribution And your you just about that? just just to should the and previously, this one back on approach distribution just by should think more that just us an update. talked the obviously, jump that How the I'll long-term have but give thought guys revisit it steady for increase, annual depend respected and is targeting coverage about in me about think the on market. Are queue, growth well ratio,

Eric Slifka

what’s happening those I’d they get it account company. Board of taken all say and at all and so depends the looks into the frankly factors, in

deals look continue that going We’re transactions and well. for in to to weigh look and as for

Operator

your question Please comes with Our from of next Tim the line Howard proceed Stifel. question. with

Tim Howard

invested multiple flow Will completed recently you two expectations for when provide the cash acquisitions?

Eric Slifka

we we’ve do say the think for we break a I that than We to for and try upper acquisitions, about with better and in little our can returns at us, things these if stated think historically bit mid we is. way the So broadly teens get for look just But deals. returns. to right We a at that’s hope target I’d that. even look somewhere

Tim Howard

have deals you these end particular or different from -- expect can these do two… do the provide synergies any do pull And to insight to your you or of that any upper historical out

Eric Slifka

we specifically say to; through facilities then particular; acquisition controlling the the the the So they of drive the assets goes happen that terminal surround lower A, and through I good way out are of figure hope terminal that cost our facilities. business that that product and facilities. sites, would a can these we around to would on have Overtime, be be assets that also

Burlington we’re talking of specifically Albany. So and

Operator

line Our with from next the Will question. proceed RBC. comes Please Hardy your of question with

Will Hardy

increase, see GP again long dividend the I It’s have are question LP? don’t the One what a Nice the we been thank between is, they I you. to are. what time remember the and splits and

Daphne Foster

just the split X%. its into are and X.XX of in little that in over -- a X.XX just They and south

Will Hardy

an don’t you Daphne you. I have sending me mind if will to and send like that spread, email you later it. I’d Thank

Daphne Foster

The then the clear Q. be and we that it also expectation later Q will in today is filed

Operator

Our comes with Janney. next from Mike your of question. Gyure line Please question proceed the with

Mike Gyure

over guess term? talk [Technical you the bit rail and going about portfolio Can and transloading if long the assets, anything how on guys a little Difficulty] maybe I what’s with

Mark Romaine

about we’ve time. there. going in few Dakota over As some idled transloading assets before, those for There on last is have North minimal talked rails activity been the years

either certainly that there’s picking or activity will while there. business third of some to going lot for some that for not that utilized -- have there have own we’re We our back of say so benefit looking up. any through is storage parties, we the run that on there’s opportunity a I market

in just have those predominantly nothing we we’re -- trying so to to utilize up the to with with And the at moment. any but opportunity of third parties exploring concrete process facilities, speak

Operator

Fargo. [Operator line Instructions] Our the comes Ned from with Baramov proceed your question. of Please with question next Wells

Ned Baramov

talk leverage. I were two expect I came the pro about my of the in you at forma be just X.X quick quarter. third end answered. of offering, maybe where Most to end a guess, the you questions at the the the in transactions had and of leverage on one second you maybe at in Could preferred do quarter at year-end?

Daphne Foster

really we million So also we’ll asset on in terms cap to proceeds that better. XXX Champlain. terms that spent have we back there or about with the view or so we’ll assets X sales and XX% $XX in of continue net fly term we turn times a of a to leverage when the continuing with of non-strategic continue long having to to continue through, of about in the Cheshire equates rate And the of that terms

Operator

line next your with Lin Hedge. HITE with of question. question Our Shen comes Please from proceed the

Lin Shen

questions, James the maybe Jampel on also line I couple think, has he of I have questions. is two

wholesale XX% year-over-year. bit of First, little is color reasons? on talk you volume up what the Can over a

Eric Slifka

that’s really do gasoline Lin, our to to supply related got business.

to have we businesses, Harbor opportunity and in that taken some it’s So market. the New of us storage additional parts given the supply different logistics and access to York run

been for storage third book to the to that addition requirement well. of we've advantage benefit in in utilizing party that we able our our system, sales So some also as through of take

-- So real it. the it’s of really that’s driver

Lin Shen

for think we this wholesale the about rate So volume? should run

Eric Slifka

it’s is business focus on low that so and very a opportunistic. much, very also volume margin the I wouldn’t because

activity something -- see, not and opportunity the we -- So to I it’s to by be you’ll you’re be in. have driven that necessarily likely we to think will see going engaged

use So a I going think to it’d forward that as be hard number.

Lin Shen

about And also also the what forma OpEx think we acquisitions? SG&A rate run for pro should

Daphne Foster

in then of have card is take look So Obviously, line site utilities timing on certainly maintenance additional go got in Company-operated there it’s quarter. OpEx obviously you what not. you’ve maintenance of and all and credit first employees be some and fees pretty certainly when we where at new noise second would an But then OpEx, quarter impact. would much and as terms the

on but OpEx to the acquisition. related a can’t certainly uptake So number in see use you’ll that an

impact So would we’re of less modest be at in a therefore those SG&A XQ. basically over in which million above in running employees take of $XX our and impact run above today, we where that so rate. certainly from those site, are current call was that much an acquisitions,

Lin Shen

Great, thank questions Also you. think have James also. I

James Jampel

like then increased what in could view? down seem you EBITDA the I put low would given a and higher in second Looking even a you you it in EBITDA be and puzzlingly at did little the made than release. given guidance higher, It’s acquisitions little the our guidance, guess the maybe press what quarter

Daphne Foster

So and at also comfortable where we we have to quarter solid costs that completed XXX year-to-date, to looking and acquisitions, the XXX. to acquisitions. feel and we a reflect were XXX with And at transaction XXX the looking we XXX to forward related which that one-time are to XXX, any certainly

James Jampel

And have financing. getting brain then you in a on seen the and I’ve terms rack at what got question and just sure not of ever same going guys time did. my I’ve distribution the preferred. raising I’d to I’m about

in So capital of case the the case raising the capital there in are right. both -- giving ways distribution of back of and the proffered

vis-à-vis preferred think straight you price did equity you route? using wondering better where how in financing, So same you it as of saved stock time. what ago. couple by weeks just was the preferred given much a both to common than the the using opposed the do was your general route is the about I just And just now for financing equity is you did at think And coming

Daphne Foster

terms say a have access past MLPs the in two. the preferred market year to and preferred of would I handful certainly or over Well, of

very of for this I we take would fixed at the five rate attractive think we and next capital years. par in a have view it as year. it the option And out source five to

attractive equity So we capital. of source view very that a as

James Jampel

math Was price without to preferred like just to there preferred common? some use raise And decide better? given is and looking you where e analysis could the that you bankers prefer think common. saying, okay, you can could the the go here going or the both, just did we at did looking at Or -- and

Daphne Foster

assess in general, companies all options. equity at look that pretty you market. of all say MPL f certainly. the the small of has I number look on We and that options units that would issuances the year-to-date financing market passed a We been issued at have number today common

James Jampel

And at it market the was all? considered at

Daphne Foster

market bleed in daily something the average trading volume. is our you that would to relative At overtime

would over time, a add not accessed to-date. have that ATM be So we slow the

James Jampel

are The is terms among liquid point over. the am among shares this reason guys MLP’s, least I turning belaboring you in that of

is you wow, we now the go, actually more preferred common than the And expensive it -- to so that be much. common because thank thought if get that at which you you market the all have to have -- trade way the being without could would preferred it out units very same well, but still going the equity, to and – now so this hardly either, is you

Operator

closing floor Mr. you. questions would for have you back time. to to Slifka, no now turn comments. at the like Thank this we further over I

Eric Slifka

upcoming morning. and us conference a you with forward our day. this progress. at you Thank keeping to look updated We Everybody Thanks for have on the great joining you. meeting

Operator

Ladies teleconference. gentlemen, today’s this does conclude and

participation have you lines time. disconnect at day. and may your wonderful Thank a You your for this

Global Partners (GLP) 9 Aug 182018 Q2 Earnings call transcript