GLP - Earnings call transcript Q1 2022

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Operator

Good day, everyone and welcome to the Global Partners First Quarter 2022 Financial Results Conference Call. [Operator Instructions] 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. Geary. Sean I turn time, to call like Mr. would this the to over At remarks. for Geary opening ahead, go Please sir.

Sean Geary

Good us. everyone. morning, Thank you for joining

liquid begin, cycles, our partnership’s statements and forward and These are of regarding financial include, operations. and everyone store results. risks assets and customers forward-looking remind including control, expectations and of facilities, These factors, forward-looking statements the meaning let performance demand convenience and duration financial the regulatory call conditions, LNG the projections, federal our products, and market we pandemic, future concerning our of COVID-XX the These significant include the and products the involve uncertainties, impact statements permitting without assumptions limitation, of some that laws. looking based utilization and environment securities pricing which operational the for its on statements estimates our of will and product, could business which within impact counterparties, on Before influence other beyond curve today’s me the our Global Partners. are

As currently from partnership’s assumptions experience that actual present could well believe and We or available given the information. expectations projections. are historical differ to reasonable as these other results assumptions materially cause

of no it to other Our the will forward-looking that announced statements with FD. news Securities risks, material subject be and is conference to which assumptions conference of communicated to of publicly any purposes today’s call. through Regulation future of policy for constitute comments during or calls in performance Global operations any Regulation any revise results the our filings results and undertakes With in made a or the disclosure business that are be effect, Partners will range FD wide public obligation means may concerning releases, are that future our publicly uncertainties revision Commission. described and release factors, Exchange

our to Executive Eric call pleasure turn Officer, my to is President it Slifka. and the over Now Chief

Eric Slifka

highlighting of delivering Good We Thank vertically the EBITDA liquid value you, net integrated significant everyone. with Sean. flow. quarter XXXX We in cash system. in distributable increases opened quarter, adjusted our income, the distribution first and morning, executed effectively strong a energy

performance to point of our maximize the over acquiring QX of a returns. presence formidable wholesale have business we a assets our the footprint. accretive portfolio broadened and that through we on M&A and focal NTIs key while terminaling our XX tenants past are the built our As company have managing delivering great deals remains demonstrates through and raze-and-rebuilds strategy, our enhancing years, retail geographic

acquisitions recent first presence in portfolio, Connecticut assets $XXX our our combined and over mid Our by XXX of increasing to these locations. Mid-Atlantic identifying, our acquiring synergies retail and operated Significantly additional and region, for we our Consumers demonstrate retail million Petroleum and transactions Miller’s in success locations generating We a the the a adding return company in integrating of scale. These Market anticipate Virginia. Neighborhood in added our teens. into acquisitions highlighted a spent two

of our advance fuel the liquid to advantage other whether initiatives, continue or opportunities, We renewable involve positioning to renewables also products. take new company those

paid set basis. of The the In to the of of by annualized increase will unitholders an to on business May Board record units Turning on to on XX the per on unit our our quarterly distribution as May per common X. April, to voted XXX one distribution distribution. be close unit

financial over review. Now, to Greg Greg? let turn his me for the call

Gregory Hanson

million to period in for for compared $XX.X everyone. morning, net for the million for the $XX.X good and Adjusted with million the the coverage, DCF on LTM of $XX.X was first Eric, in and or after net distributions same EBITDA was and include compared for first same of million March X.X XX, $X.X $X.X Net $XX.X you, assets gain disposition a the as note with quarter income times $XX of was XXXX. million EBITDA XXXX. XXXX. quarter Please period quarter preferred sale distribution of adjusted of loss DCF increased times XXXX to XXXX. EBITDA, million factoring for a compared X.X the that quarter unitholders. million Thank first in with the first our

gasoline $XX.X our margin, increase margin increase XXX an income gallon from during last an commission the up $X.XX XXX to product segment product $X.XX million $XXX per our increase leasing convenience $X.XX from in up sharp $X.XX the operated in sites At dealers, convenience in details. was increased gasoline volume XXXX. contract sundries, million up Reflecting GDSO increased to the XXXX. first operations during end XX, $XXX.X million activity same stores. the gallon sites, per XXX margin, $XX.X in X,XXX portfolio of March quarter our of XXX fuel increase comprised light the of sales, the three in with quarter, the pleased million Turning in dealers. ended from contribute period XXXX margins million prices quarter. was same in an and quarter $XX.X of The per consists XXXX product which gallon QX gasoline distribution includes sold $X.X period the to million. performance the company at We to GDSO and agents, NYMEX in rental prices the of quarter. were average and first in in wholesale fuel a and contribution of first year’s store XXXX margin Station food $X.XX versus prepared months

the portfolio of reflect results As in segment QX and GDSO mentioned, our our inclusion GDSO acquisitions. recent our our Eric

negative distillates Wholesale include million and which $X.X gasoline first products, XXX,XXX quarter, and from earlier. other in favorable related the oil, million blendstocks. product quarter XXXX to was market oil product increased conditions to offset compared increased $XX.X more primarily $XX.X million. related negative favorable less $XX.X in residual positive year in period the the gasoline last $X.X with $XX.X same first margin in million, from $XX.X reflecting in segment, and quarter the by other from at margin first Product up Looking and and was Gasoline conditions oils million margin a million oils million Product crude market products, margins gasoline year. blendstock

are strength the carrying will current inventory backwardation periods, in with and that We the the Wholesale of expect We of cost performed extreme to XXXX. our should pleased results continued of forward rack first of price the the experience margins. curve but our despite product steep pricing to increase also quarter do segment, and contribute expectations volatility which hedged commodity the future the

product the in our to and quarter Commercial million Turning segment, increased had margin margins. $X.X bunkering to which million $X.X improved volumes the business, higher first by led

average expenses well increases recent salary million $XX.X as driven rent the related to expense operating for balances $XX.X prices for from to was due the the our million and higher partly expenses, benefits. acquisitions. up credit to to relates in and acquisitions, $X.X expansion commodity due million, of comp by of Interest Looking as and our $XX GDSO in higher part in SG&A to million $XX.X in facilities $XX.X $XX.X and higher our increase recent card which for first expense, CapEx, volume. borrowings in incentive part to first from at CapEx first higher fees million price in million $X.X on million our credit CapEx, of $XX.X quarter million and majority the wages maintenance of convenience expense the increases quarter consisting our of increased stores. XXXX the approximately quarter to segment. increased higher quarter million Due was

million $XX expect to of maintenance the range XXXX, $XX $XX million For CapEx and CapEx of continue acquisitions full in expansion in to year million. $XX million we the excluding range to

to agreement leverage quarter. defined as the the which prudently, in debt-to-EBITDA first sheet of continue manage funded approximately credit balance X.X is end times our We was at our

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

borrowings XX, credit under under March $XXX credit and $XXX the credit working This capital revolving million. million were As agreement under of revolving million $XXX.X consisted facility facility. million $XXX.X outstanding total billion $X.X our of our XXXX,

participating Cross coming Insight upcoming Looking we Finance weeks, in Conference, the Leveraged are the Sector BofA at Energy conferences. the the Conference and Council Infrastructure Stifel our investor Investor Conference. In

with look meeting are we of you to those who For participating, forward you.

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

Eric Slifka

Thanks Greg.

off We’re XXXX. in strong start a to

value returns to increased to continue to integrated our experience new an and unitholders, assets efficiencies, identify opportunities drive network guests. for further through and outstanding customers and We enhanced deliver strategically and located our

I and will happy Mark, Greg, Now, questions. take your be to

Operator

Thank you. you. Thank [Operator Instructions]

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

Selman Akyol

with Very inflation how and Thank seeing first you’re talk nice that and ways Couple quarter. about it? just you Can morning. you. things. impact of you’re dealing Good

Eric Slifka

materially been on as Sure. whole, inflation Yes, I we haven’t I as of a mean, impacted by yet. think, we

side. on at side, stable. doing We’ve made expenses our vendors. from tight. it last lot still cost HR have find been were retail be very to hasn’t this to haven’t our And increased through really and – that’s in The quarter. that that all. some been We line, through inflation retail a impact material somewhat of operating pass pass wage you’ll seen see We’ve obviously able stabilized employment still big a our really is said, environment hourly people third wages but We’ve to tough people. the seen team a our find keep to in quarter. job it, That increases able on good in them to It’s is continues hard a

Selman Akyol

like look are from you at and seeing, but it seeing then indications are And you. Thank all? any volumes, destruction it. of certainly doesn’t guys you it in April demand Got

Eric Slifka

from I quarter. about last still off gasoline would is say we’re XXXX, demand mean, if demand, what but it is certainly talking interesting. Well I is

that true topics holds this you’re think, for I identifying. both

at the in, how demand. factors all The it’s we’re publicly happened XX%, are I that going still, until can it’s first you think many at you some to still hasn’t yet, studies, one office gasoline that you going into not in When other look available breaks look movement the around right, the there have driving think that’s inflation, right? demand, see. documents I markets people you’re it are that

consumers is where driving they’re is times different. are So different are driving going, where different

transit, they issues. have same the public at look You

pretty being have So, but still that said and margin been demand decent.

Selman Akyol

expand maybe, just about related and you that little because the impressive. a and strengths Good. margin, bit on could was other And oils products the then pretty

Mark Romaine

morning Good it’s Selman, Mark.

Selman Akyol

Good Mark. morning,

Mark Romaine

touched on inventory. both and the on and was margins, that while rack Yes, quarter supply backwardation costs And bit a certainly distillates weather, carrying good presentation. side earlier decent Greg the some increases side. margin in in had decent. little We we his for on had Volume a

supporting seeing good the wholesale is racks quarter We’ve And We in in demand in things of group our driving those the, structure. two our and lot and there. bunker demand that a are other good margin that the oils. key a higher that’s resilient margin are really tightness good are seen

Selman Akyol

Got it. All right. Thank you much. very

Mark Romaine

Selman. Thanks,

Operator

[Operator Instructions] you. Thank

Please America. of question from with comes proceed of Gregg next Brody Bank Our line your the question. with

Gregg Brody

guys. morning Good

a Just maybe some some what’s like? small maybe just mouth, putting question seeing. mom-and-pops potential there the sales can handle these bit or pickup I’m on my so M&A – is answer capital a could what you little talk you there environment, actually words in about because environment you’re M&A business. can the the Are for needs in look of

Eric Slifka

think Yes. Eric, I Hi Gregg important. and do is information it’s scale

I at so believe think the still level out. We industry I every also it has scale asset stores at good in seeing But think a an and what that But itself knowing hard and businesses. within the is price? themselves, consolidation. continue good asset is it’s is there it’s supply historically is the supply to been, get hard heavy, that’s a to perspective price? an that exists small light to you compete that isn’t these I chain, think that. have our it’s consolidation on a play And you’re level if what ripe is execution And What right? the for

have, going unsure COVID from M&A being to during the people going on took a themselves little just us executed here down” And to to I there. and was opportunities just because there historically going continue beginning And allow and to think we volumes as are today, identified have break, of I other and I what available. footprint a issues think, Right. our and those market think that I I think very as in right. to COVID, company. through we grow market I continue to we’ve back, of a think the “settled to are bit be certainly is a public opportunity as come And but continues we think, of were execute since be and present that

Gregory Hanson

you’re throughout, as I from industry just equipment expenses is, Eric’s I if of And add we’ve Yes. bottom it on seen pressure to the those us in helps from don’t to we’ve to effective And increased more mitigate comments, if your smaller salaries that. players think operating to you’re think mean, to operating seen increase you. everything, of sort have scale definitely what you insurance, But line. some I a puts player, expense scale, definitely smaller have on

Gregg Brody

very That’s helpful.

you inflation I business your curious think someone’s question in it’s coming you pointed price out in about, and fuel higher on based response business, the you I’m from consumer back that are store you inconvenience higher prices just see any general? asking seeing impact to in the for levels. any just and particular pre-COVID segment, that’s, the in

Mark Romaine

asking you the about – performance? the Gregg, about the store store asking So same of you’re kind

Gregg Brody

you edge cutting up Are where more February, Yes. like any I on since But changes… mean are Or it’s just, you margin, you been have today? seeing prices the going down. are behavior the of on obviously

Mark Romaine

really. not performance store would good. pretty has I say been The

first mentioned Eric are, We XXXX. the is comp

was fuel large, are but margins Transactions sales about the are by volume still we think and are also, behind are I XXXX. talking good he store. in seeing good, we lagging

so to continue get But on to think They stores large, perform well. are to And to performed that. and year; the try there’s pre-COVID this last back by year. we they opportunity an performing levels

through So mentioned that. that a I become we say Greg and scale. every is lot day effort. organized better intentional We around become, of would

that We we’ve efficient decisions stores optimization added disposal business. And become, some, got talented lot resources or make more lines day. got and we’ve stores we’ve run are those do those that of every help run us. quickly helping, have, those the for to more some tools We’ve price a then that are

commissary and like success food we’re service, get food to that. the like high things all increase to and that. continue expanded We relaunched down cup our our way And made recently food more exposure to seeing bean involved made anything could service. and some to and app really to, to order look service, We’ve quality that lines coffee order loyalty with

in have we success doing we’re on, going initiatives a the what upside a there. to are stores. we to lot And the So, seeing are we’re that of contributing there’s that think tremendous that

issues. so chain tough there are some while it’s supply yeah, certainly environment, a we’re And been

those. our I shelves good We’ve We’ve we’ve diligent manufacture think a pretty have done have able in a substituting store mitigating are very good full outages. substitute been we when been job and guests items, around experience. to

in we’re think a I spot. net-net, So pretty good

Gregg Brody

repeatable is quarter or is outsize into it, you isn’t there? persisted money, a I’m to was said on saw has last the or sort that, particularly follow for just someone much there’s wholesale say curious, the demand storage then volatility trying that relative bunker you I’m the to this And the commodities and XQ make your those our where I good resilient the quarter we when to that has you – one, opportunity It just assets in of an have touched outperformance and you’re group. doesn’t did on on given surprise doesn’t day-to-day happens assets. XQ where guess it’s volatility there as us did

Eric Slifka

didn’t hear I’m of Gregg. sorry. tail the that, I end

Gregg Brody

for So is commodities really that with wholesale are… on the the question XQ repeatable based is dynamics

Eric Slifka

know we to don’t, day’s I because it’s that at don’t a little it bit bit a different, hard way certainly different. look every little quarter’s every

think manage stay because little maybe I before tight done a markets heard what we’ve or you markets We we – think, that. in differently, bit not we’ve opportunity my I we’ve say, just at light a the that, time with reference with are in are of in job dealt of of good little will degree toes. you volatility sense than, These here; think bit with volatility. you we’ve right haven’t our we business backwardation. dealt in with I backward a the and a dealt got I just on long this to before. I least But markets different

been those have that done And levels. historically. levels drive we working contemplated what inventory reduce things not kind levels to down levels have inventory like I’m we our of our we’ve We sure to – to I able

of less those moving And inventory that then, carry. so markets more day. helps yes, that the helps inventory. big mitigate costs obviously that the every The carrying you are can you And

present it opportunities. does while so does, challenges, And it presents also it

And we we’re do. gets a little to that if team at right have It looking have on looking it’s operate it work attention, at automatic, you to deal you opportunities execute close you way, that in find that’s do, but deal we but shot. those. and a a have scrutinizing able every not this to if and you is, think looking the environment. will is is said, does, We’re being be every it got it enough how I painstaking, you experienced pay And it’s you hard you enough if to

expect alike if they yes, to I time. And QX. mean, so anyway I look like normal not I’m can say, we sure look, QX don’t in

going just that’s So, to if whether the the We super year, ago, it’s have years had we had the be, you yes the operate of to years a two think we’re balance little for ago future, bit opposite. foreseeable contango. two exact differently to going about or

And so differently we were operating there.

we’re conditions. hard continue I think, to according, based risk. grab work always the to opportunities we’ll as the and just those on we trying mitigate as So, can to adjust And

Gregg Brody

any I direction, tough it’s I but the to line one know color. Great. appreciate appreciate a straight in it.

Eric Slifka

June Gregg. see We’ll you you hopefully. Thanks, see in early

Operator

Thank you.

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

Eric Slifka

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

Operator

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

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

Global Partners (GLP) 6 May 222022 Q1 Earnings call transcript