GLP - Earnings call transcript Q3 2019

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Operator

Good day, everyone, and welcome to the Global Partners Third Quarter 2019 Financial Results Conference Call. Today’s call is being recorded. There will be an opportunity for question at the end of the call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. from are us Executive and With Mr. Officer, Instructions] Global President Partners Chief [Operator Financial Officer, Chief Slifka; Eric Ms. Chief Foster; Daphne Operating Officer, Mr. Mark General Counsel, Vice President Executive Romaine; Mr. and and Edward Faneuil.

Mr. turn At sir. ahead, call like time, opening to this over Please I’d to Faneuil go for remarks. the

Edward Faneuil

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

beliefs, morning, limited may the Partners. and Before federal meaning performance goals we this securities begin, to, include, making future be laws. operational remind me will let statements but of not are forward-looking projections, that These the and concerning everyone we statements estimates within financial Global of

Estimates results. gasoline guidance such permitting which based as influence Global product and of utilizations blendstocks products, cycles; facilities; future conditions on oil forward pricing crude curve, performance petroleum market; business renewable credit and fuels; for are regulatory Partners and markets; EBITDA the the demand financial environment; assets market and assumptions weather; could the gasoline regarding and for and including quarterly

are ranges. available a wide We our and performance fall that to subject these actual historical no information are provide assumptions of guidance and performance given business Because can of assessment assumptions within uncertainties, range risks trends. believe assurance our future and reasonable, we will currently

obligation conference to In any made be call. revise not with of described no statements factors in Global or today’s performance the Commission. results subject our publicly forward-looking the revision Securities including, addition, to such limited that to undertakes during risk Partners filings is release but to, those the and may Exchange

or means of the communicated announced results disclosure public in concerning policy that of will With will through that purposes be other effect, calls constitute Regulation any future our publicly FD. is releases, conference news Regulation comments FD operations it for material

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

Eric Slifka

third Eddie. results increases. delivered you, for by us. thank everyone, product highlighted you and morning, strong joining quarter Good Thank margin We

quarter retail a primarily which acquired In of favorable and Champlain market we from from retail margins Cheshire and in results Gasoline of last fuel lines Oil stores, benefited full our of Distribution Station convenience Operations product portfolio benefited year. and segment, July higher Our from and conditions. Wholesale our stations

our to unitholders or distribution our a basis. of on of from The an as $X.XXX on per units common Board the $X.XX quarterly In raised to record Turning XX $X.XX paid November be distribution October, common to distribution. unit November X. annualized on will

months as retail us summary, network In had through of forward. a terminal provide we the nine we and move assets strong foundation strong a and our performance first XXXX, with

call her to the over review. for turn Daphne financial Daph? I’ll Now

Daphne Foster

and Eric, you, Thank good morning, everyone.

As we EBITDA and senior deferred million net issue of $X.X issuance a and a $XX.X DCF of repurchase EBITDA, the of debt of the fees consists to numbers, the original through The write-off adjusted the expected, a notes million the mind and XXXX million discount. please premium million of noncash XXXX million $X.X unamortized notes. the and financing $XX.X in early call as this of year income, QX related go $XXX on for extinguishment include keep loss that

prior million third Third million $XX.X $XX.X loss XXXX. QX XXXX in million was same income DCF quarter in Net the compared period. EBITDA XXXX. $XX.X year net of versus the million quarter adjusted was $XX.X a with with million million was $XX.X $X.X in of compared

in that the unitholders, the of quarter third distribution After preferred coverage X.X coverage distribution TTM at factoring was X.X times. to was times. the end

growth million to driven GDSO the by Turning to quarter in million segments. product margin product third million. $XX.X $XX in to margin million margins. GDSO and $XXX Wholesale Combined our increased increased $XXX.X

to margin per higher $X.XXX and, acquisitions. and from to extent, average $XX.X primarily in approximately The the product due to Cheshire to a contribution million Champlain last $X.XXX year’s Distribution Gasoline third up quarter. The $X.XXX fuel was lesser fuel margins gallon the margin improved

approximately sites, store to by includes Year-over-year sale income the the increased gallons in part $XX.X which sites $X.X segment of sundries product to million nonstrategic of million to due our margin, sales, due offset sale company-operated rental the which decreased the to partially convenience XXX,XXX added acquisitions. and volume GDSO XX retail in Station Operations portfolio. primarily acquisition

At the lessee stores, contract comprised X,XXX of our end agents, XXX XXX the GDSO XXX of quarter, portfolio dealers. and company-operated commissioned of dealers sites, consisted XXX

$XX.X favorable the to a and conditions segment, gasoline and gasoline market a $XX.X third million, Wholesale product to weak quarter our more increased blendstocks margin XXXX. In million comparison reflecting of

sometimes call, can be As we a last year’s product timing. QX swings of margin matter quarter-to-quarter mentioned on

variability As inventory product quarter and values. prices a marks end quarter, of the instance, at change, impacting by hedge end margin for can caused be thereby

margin reflects lower railcar-related from expenses. XXXX. $X.X quarter improvement negative in negative compared $X.X third a oil primarily of million with the The QX Product was million crude last from of year

Product to more margin increase million and residual oil. conditions distillates also in from other oils largely million. was due and market favorable increased related to This products primarily $XX.X in $XX.X

Volume blendstocks. and X%, in in increased gallons, approximately gasoline to gasoline segment our XX million increases primarily Wholesale or due

increased distillates our quarter increases product lines. multiple with million Commercial million In million increased in X in segment Volume margin $X.X on increases and XXXX product $X.X to of segment, Commercial gasolines. gallons our in third in the

$XX.X operations. $X $X.X with Cheshire $X.X acquisitions, terminal and was primarily in Turning million million with third the to was increased GDSO, Approximately million associated million Champlain the the expenses, associated increase of operating while the expenses quarter. to remaining

including XXXX that acquisitions, in in incurred acquisition $XX.X up million. in compensation $X.X in the the support This XXXX. costs would QX and million SG&A in wages incentive of to offset increases in same period increases included XXXX million GDSO to partially $X.X and incurred not have were in part benefits by expenses QX our business,

sales $XX.X was period. primarily working Outstanding expense million Interest million credit was due in on XXXX our $XXX our lower revolver and decrease year-earlier notes. And issuance the average part facilities. on million capital under compared facility the $XXX lower to were our with of $XX.X the QX The asset to due year-over-year due million outstandings in lower were lower million from balances proceeds primarily $XXX prices. commodity to in

million approximately $XX.X million was gas of business. consisting of CapEx, million, roughly majority convenience and $XX.X CapEx third the of station $XX.X our to CapEx in and quarter related of expansion store maintenance expenditures these the

with maintenance and $XX the $XX prior now year For $XX million $XX range range we full million $XX in million the CapEx CapEx million million of to of million expect with million, $XX range in XXXX, range of to the to $XX $XX compared to million. compared the of expansion

balance the debt sheet. Leverage, our times was funded approximately credit as EBITDA, agreement quarter. to to Turning at X.X in defined end of third our the

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

and facility. September million September as in borrowings under revolver million of of XX from $XXX including under proceeds of $XXX at total facility, bond XX, had The reduction well due revolving the capital assets $XXX.X our at we in $XXX to million million part As working the XXXX million to million as our credit from million billion was $XXX facility outstanding our $XXX year-end sale under $XXX.X our offering. larger $X.X

or full the EBITDA to range Turning for are to performance raising the asset assets $XXX guidance. our a in $XXX any $XX.X related and disposition of XXXX of extinguishment losses year, the Based million the recognition months debt and private long-lived on million completed impairment guidance the to This the of of of and nine recently before our loss XXXX on offering. goodwill to quarter we year third early million of gains on charges. sale the excludes first

forward RBC Before meeting Finance Leveraged and we Lynch those the hosting Raton Capital Merrill look you. Markets the Symposium let America you November, York in Conference in December, we we one-on-one be of meetings Conference To Bank all New in be Fargo wanted the at go with will MLP Wells Q&A, In at Dallas. to I Boca to in City. know will that we attending, Midstream to

your and be Eric happy take Operator? to will that, With questions. I

Operator

Our be will from proceed this conducting Wells question comes At you. Ned of first Instructions] Baramov Thank question. time, your session. Fargo. of [Operator question-and-answer line Please the a with we

Ned Baramov

morning, guidance. with and the taking one thanks start I’ll for Hi, question. on good

in it your Or down by midpoint fourth in Is are EBITDA revised than in play? imply. significant quarter, So other we based there weakness range, on expecting step the normal guidance dynamics and you're more seasonal this conservatism of on seems what part? the that's the a driven

Eric Slifka

the morning reflects guidance good strong really it's Ned. too but mean performance, increase in quarter. early year-to-date the Yes, I the fourth certainly, predict to

as, can fuel on can like, can have hard predict, price in impact are side drone business the and then margins to which movements events As the have Certainly, such you attacks, segment. had September the Saudi we retail obviously, And singular of an impact. an know, weather GDSO with impact.

too it's tell. So early really to

Ned Baramov

on That’s is latest potential fair. then a what And IDR elimination transaction? the

Eric Slifka

are always IDRs. their periodically the the structure. space we in We in examining capital MLP eliminated others review certainly, all Well, That marketplace. our said, opportunities have

Ned Baramov

your of we're your simplification there's And on type guess, It the format then, I well up also, a it. or has topic restructuring, be this. And in seems of market assets discussions? REIT broader this suited would for Got like structure. that while the come

Eric Slifka

looking from Yes, structural looking to position, out our alternatives mean always a standpoint. we're business at there, I same a comment. both maximize and

Ned Baramov

Thanks for the had. I time this morning, that’s all

Operator

you. Thank

from of next of the Jeremy JPMorgan. of comes question comes Our line your proceed the Tonet question. line question Please from with

Charlie Barber

this Charlie on morning for good is Hey Jeremy.

and where will XQ Just that'll increased XQ guidance, be I you fuel maybe into the understand looking stepping start you the rate margin kind not embed numbers? at typically – the annual guidance. to shake But when guidance movements to that there out. but what's obviously, as run you XXXX, margins guidance fuel well, dictate the or back that look price forward of your

Eric Slifka

in I GDSO on I as an because happening you Yes, down terms give Charlie. basis. that's the something mean or the margins down, fairway that it's fuel terms segment, mean, on up in annual worry that net-net, of you I depending go on movement frankly, can't we directly of not a about can just And morning of good pretty what's Yes, – number prices. that. much know,

Charlie Barber

this the anything side? margins quarter, – was fundamentally change guess, that Okay. I And then, – I on helping kind did it any of mean, largely improve swings? nothing Or past there is price fuel was

Eric Slifka

Yes.

look if are course, you was think relative in quarter, then gas wholesale peak July, the that basically mid local NYMEX, site. the late competition early of every to the to and very at August we And down much bottomed you it obviously, it if September. pretty see your somewhere pricing for out look prices and in I you'll during then at in

hold margins of months last two the really So quarter. the continue to in

Charlie Barber

OpEx. And Okay. on

remarks. I it prepared the tick Cheshire? there? Is there else if Sorry largely up, missed is that in The and anything Champlain

Eric Slifka

No.

general, of quarter the at also quarter �� stations. can quarter in second run in terms I little happening terminals, a the second I in quite the third probably third and and the general, what's but quarter, would heavier the maintenance certainly, say, think in quarter heavy. in first that third from up of terms bit it's at it's million a $XX a bit quarter, from the

Charlie Barber

great. Okay

Eric Slifka

seasonal as anything But maintenance know, than more else. it's maintenance. you Seasonal

Charlie Barber

maintenance. Seasonal

potentially supply looking is as Okay. the of influenced with the enter coming at Do we low. that – what PES, in I heating or, are be of And Colonial more issue question, causing imports? the an data outage shortage guess, do importing the much of a I EIA – on how don't that kind that and then distillates does just – easily more in know this Can that rectified pretty terms season? from what you last inventory inventory? been they pretty see with that but can appear Northeast by refinery seen

Mark Romaine

Mark. Hey It’s good morning.

distillate be event low and demand heading right, cold – gets – more yes, solved in are as into your that let's that attract a how XX-year far spikes, at the just might are question And think, winter's say, the the regarding You will winter. inventories as barrels. market I below they

be on the barrel, risk I find barrel, more if itself I the upside just to any prices it to little volatility. be impact low have – market distillate say bit imports. inventories it'll a would the the barrels. more to what greater. will more will But felt So price so of the the needs is be incent the will It but here could attract disruption –

Charlie Barber

me. Sure, that Thank That’s you. it makes from sense.

Operator

Our your from the the line line of question [Operator proceed next question Instructions] with comes of Our Lin from Shen next of question. comes Please Hite.

Lin Shen

Thanks questions. have good taking lot call. Hey I And a a quarter. for the for morning. two great congratulations

some Maybe should other for – reported you also of When reason? great the there's for Also, or some quarter. competition couple structural margin think for by we your peers used or change the at we margin be? First, less change third industry, reported about think, a to is margin. the a that, better industry it the than GDSO, average, fundamental

Eric Slifka

Very, very piece broadly – it. a so that's been one of lot of I the Eric. There's Lin it's think in consolidation business,

go lot a think here you order their that to in of have into and of assets I buy had borrows ownership change money is that that lot – a assets.

it could, it that in change market. upset and takes in there's one market. player And in so is some the the be But fact, come to all

couple the So that I thing. things market. a in on in of fact think I there's Yes, here. really believe consolidation structurally, there's one do That's going

certain is take can place other models. it market out different And that are successful that been have on also a yet, executing ways, really executing markets, there But by have players large right? disruptions who, in in there in independents different

there that that So as there's think risk I also well.

somebody different. which execute bad are going way, different. for side in And their leveraging side generally, there's sure. right, model – think, fashion Companies out do to that are on there, can also acquisitions their be always on other a a the that's a other said, than they not the that equation. economics has a those better then so the I business in risk consolidation of And economics others, if in but piece are to But there market is

Lin Shen

And you to part the Or impact to mentioned going see winter, are you're QX? impact? their are are XXXX inventories – low. their in IMO XXXX distillate to their you. going IMO that or going also, Is seeing this what Thank QX you're Great. you of

Daphne Foster

– to is XXXX? Lin, due that So what see impact question was we're your IMO to the on going

Lin Shen

Yes.

Daphne Foster

fuel. impact be. there's to Obviously, little is to say contributing sulfur that demand a be lower on what going a larger a Yes, greater going lower to the is hard inventories And it's distillate presumably for to scale.

There's respect year, business, bunker and expectation, be our nature, be going that spec especially change, to going a likely increased Our time – this any like with resid there's to of for be this going one volatility. was through it to dislocations. there'll you're supply is

and our conditions that markets we're experience think as storage our us. business position they come marketplace continue operate, well run on and capitalize that is given to expectation I the Our we positioned at to in the the in

XXXX, is kind impact's fairly choppy So continue It's it. been say hard to a what so to be. choppiness but going should that to well be it's exactly into the going we for expect of XXXX, same positioned

Lin Shen

demand asset? see? mean on already it's Or customer change see too some or you their, So do like, to I your �� early

Daphne Foster

Yes, it's that There major little end a as to the we continue have year. will been we be early. basis, owners may and either large-scale likely it as probably some a it's – or through ship will of factor. start get recently a probably about are transitioning. the occurring But But hasn't speak on

Lin Shen

much. thank very Great, you it. I appreciate

Operator

question. the Our line proceed Selman Akyol Stifel. from next of your with comes Please question

Will Axmacher

this Hi Will for is Selman. on

had SG&A questions. a quarter of in what estimated. above couple a Just came this we bit

your a rate? So and million I run just could And $XX outlook that if if on was just – is wondering good you SG&A.

Daphne Foster

third $XX and and so, as SG&A in both the Yes, from incentive certainly due of or morning. which largely quarter, million first the up was is quarter, good Yes the the increase $XX to crude second that's comp. million in the the

Will Axmacher

And M&A then could guys maybe What the about Okay. are market? What's just going talk on you out seeing? there? you

Eric Slifka

what as are of but out but quite From I pretty mean markets well. and continues there, it you've assets, I there particularly retail the across we'll try as multiples participate are is Not had some see, And I in high. be just any that's that processes Obviously, these board. think seem changing. a to does active. in major to can movement it if bit terminaling

Will Axmacher

you. Thank Okay.

Operator

now over Mr. closing There further turn like are questions to back floor for the conference. Slifka over I to comments. will of portion the audio the no

Eric Slifka

this We us day a joining look you for Have keeping on Thanks forward morning. everybody. to updated great progress. our

Operator

participation. today’s concludes for This your conference. Thank you

You may time. Have your a wonderful of disconnect your at lines rest day. this

Global Partners (GLP) 7 Nov 192019 Q3 Earnings call transcript