Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to the Global Partners Second Quarter 2023 Financial Results Conference Call. Today's call is being recorded. There will be an opportunity for questions at the end of the call. [Operator Instructions]. With us from Global Partners are President and Chief Executive Officer, Mr. Officer, Financial Chief Slifka; Mr. Eric Operating Gregory Mr. Hansen, Chief Officer, Officer, Romaine; and Legal Chief Mark Mr. Geary. Sean I'd the At Mr. to this like time, turn call to over Geary for opening remarks. sir. ahead, go Please

Sean Geary

Good future laws. product are These regulatory call pricing include liquid for and us. on available Partners, projections, within assumptions morning, which reasonable estimates for based and operational statements products meaning convenience could permitting include concerning store conditions, given performance environment, and results. these which the Global regarding factors, the securities forward-looking statements energy and products, everyone. Today's federal financial We of expectations you financial Thank will joining curve and other demand currently our assumptions market influence information. believe of are

comments the subject risks, present update experience of FD. are to described actual undertakes now no conference wide future Our Eric means over differ call forward-looking and my obligation which the and I Executive cause from future to will other President to calls uncertainties Chief historical material disclosure publicly be projections. our concerning news Officer, regulation factors Slifka. Commission, Any statements. will or the assumptions revise business and results filings with Global or of announced Exchange results to Partners expectations materially in public or Securities constitute turn performance the range that purpose communicated through and could of a any for operations releases, pleasure It's which to and partnership's our

Eric Slifka

and Thank good you, everyone. Sean, morning,

high created With an us operating maintain and to industry. From to with our above our we recognizing amassed a members work decades expertise energy our GDSO segments expectations. relationships contributing bring From guests performing differentiator and entire marketing competitive an by our terminals in businesses. this fueling our and begin Let and of key perspective, morning of to by terrific technical, advantage the energy markets level a team M&A stations that a Wholesale exceptionally me solid liquid day over convenience second quarter. customers every our the is team allows across in our the

powers expertise and acquire, tenets invest the of This X our strategy, optimize. growth core

advance we owned our these area, and the facilities joint Houston XX.X% in subsidiaries and quarter. which a into the expands Exxon of We second fueling completed Greater In of and locations. We footprint in continue June, in ownership joint strategy XX the by operations to Mobil, in invested our its acquisition venture convenience under the $XX.X cash venture approximately manage Texas. operate interest and maintenance agreement, an million and Global for

will of second acquisition terminals less competitive we announced these planned or than acquisitions X in Gulf's the for our and position than to We in years, New its increased remain way year. Applying process. unitholders. mid-teens Gulf, half New sheet. and hopeful Jersey and have of that through flexibility strength our refined of target deals this our balance will of the product acquisitions $XXX continues building Global, while for review X the million returns, regulatory value transformative Our England maintaining the are of Including work close driving completed on more in

held the to of inaugural the clean In were energy Bank Reserve Hydrogen Boston. the for We work Northeast put to continue we at the sponsor in our potential Summit title together fuel to June, vision, Federal develop as users space. of well the brought a team's the Northeast as policy solutions the leaders infrastructure, event our Through hydrogen in and to transportation hydrogen group scale economy. space dynamic Infrastructure

Albany our the the terminal. be cargo From renewable first to Albany of We Northeast. distributed also recently brought can in product our diesel throughout

product. the Albany made coupled climate goals to to eager ambitious the with decarbonize footprint, customers test their York's perfect sustainability-oriented New location

demand We both and by interest new. are customers, the and encouraged early existing from

Our infrastructure decarbonize. will country and storing help is fuels that in to a our role distributing vital play positioned

to solving. low policy and the relationships, create We cultivation problem will opportunities carbon continue in transportation power and through advocacy sectors of

distribution. quarterly August the on X a cash common the Board our $X.XXXX period on upon on of of or August for as unitholders our $X.XX will July, of X, XXXX. In to close to of paid distribution be distribution basis of all XXXX. XX, units the agreed an Turning June to record outstanding April annualized on The business XX

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

Gregory Hanson

everyone. Thank you, morning, Eric, and good

second We with our pleased are results. very quarter

our keep year. Revere our second and in terminal of given of that by in I net gain However, backwardation the June of DCF of disposition challenging, for comparing historically Wholesale our period. in product the second will the which sale million, comparison a is strong in quarter forward mind curves the of last XXXX, steep in driven year-over-year XXXX Also of year-over-year exceptionally quarter performance, note EBITDA results pricing of income, segment and assets the the that the primarily related on that to of net sale included $XX.X were

EBITDA after was same at compared continues X.Xx the of Net million period quarter X.X with was period year. compared XX, with it strong million coverage or in $XX.X million income to XXXX, unitholders. million and for million XXXX. to XXXX including second adjusted be was special in with QX compared distribution June DCF the million the last $XXX.X $XX.X $XX.X same $XXX.X our was factoring For $XXX.X preferred times the x distributions in XXXX, distribution TTM

gasoline of to the our margins of second includes part Turning continue in details. to of Station stores to be to million due last $XXX.X volumes primarily and million increase which food quarter to and XXXX. store an $X.X quarter of second to $X.XX the second decline sundries GDSO million in flat million, product the XXXX, operations Convenience was with gallon million. margin sold. prepared per $XX.X Fuel at due contribution XXXX, $X.X to acquisition income, margin convenience sales, strong activity $X was due down our part Tidewater the compared million margin, essentially quarter September. in increased rental at the product in segment product to in convenience from The $XXX.X in up to distribution quarter

At XXX quarter, commission sorry, consisted sites excludes XXX XX the and GDSO dealers end dealers. XXX of venture sites lessee agents, joint -- our Texas. company-operated company of sites, sites, portfolio in X,XXX and operated of the second XXX comprised XXX The contract the our

segment. Looking at the Wholesale

due product margin to $XX.X million quarter million, in favorable Second XXXX and less residual primarily distillates $XX.X conditions market decreased to oil.

favorable inventory gasoline during blendstock earlier, a and as of quarter Gasoline experienced mentioned historically margins the we result I conditions. conditions $X in contributed XXXX, and period in market margin conditions blendstocks. second down from partially same by wholesale million market favorable steep to million, product XXXX less backwardation the offset segment gasoline, in tight our $XX As strong primarily more gasoline of due in

$XX.X less in distillates decreased Product due pipeline $XX.X million agreement in to market and of expiration crude connection partially to XXXX. million, to primarily the oil of oil, in other oils distillates conditions an favorable residual by due increase a and margin from offset December

due $X.X less Our market million Commercial segment bunkering. product favorable in margin conditions to to $X.X million, decreased primarily

our increases expenses in related the credit related other benefits increased to Looking the million discretionary to $X.X reflecting sale quarter partially $XXX.X in to XXXX, offset quarter card in lower of second decrease SG&A at by million, a million terminal, in accrued compensation. associated partially reflecting million various expense decreases and Revere $XX.X fees with offset incentive second price. of to wages increases $X.X higher and by expenses. our acquisitions, increased expenses, Operating the

in the primarily the second $XX.X million same $XX.X was versus $XX.X investments million our $X.X of quarter station in consisting maintenance quarter expense CapEx, second CapEx and in $XX to was gasoline the in Interest XXXX. of expansion related of million, of CapEx of business. XX million million period

half expansion CapEx $XX.X year, million of we had first the in $XX.X CapEx. Through in the million and maintenance

of availability the whether equipment These expect XXXX, or unanticipated $XX completion range in to million, additional our of maintenance For acquisitions, million gasoline to expenditures capital depend on capital workforce, and estimates expansion $XX range expenditures, investments to full business. opportunities primarily million year $XX in of in investments. in relating $XX and or station of timing part excluding the to maintenance projects, requiring and current the million we of continue events

remains quarter, facility. and second at our with of credit X/XX as which to EBITDA leverage, of defined continue debt end strong in funded is ample balance the to our the we agreement excess credit sheet approximately in Our have X.XXx at capacity

million of As under consists and agreement credit XX, under revolving credit $XXX facility. outstand our outstanding million $XXX our the capital outstanding outstanding borrowings were June in million. revolving XXXX, credit $XXX under working $XXX.X $XX.X million of facility million total This borrowings

to hope be will August Citi ahead conference. there. and the on We Investor Infrastructure calendar. out many we Looking On Midstream XX our participating in of you Energy Relations XX, see

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

Eric Slifka

you, Greg. Thank

long-term have well-capitalized a for that balance sheet and growth. positively We healthy us to continues position

Looking ahead, priorities we our value executing and for on unitholders. our drive to maintain our focused competitive remain strategic position

and Mark I Operator? happy take any to will be Greg, questions. Now

Operator

[Operator Instructions].

first of Bank of America. line with Gregg from Brody Our comes question the

Gregg Brody

a provider perspective? about you you the observations higher, little how of about competitor the -- break-evens the for and talk what are the Thanks consumer you you're that's of which just talk going we on how in your bit they demand at little bit the Can your the of there? for helps time behavior trending? Can marginal your pump here. a the quarter, seeing every -- talk from improving Are And for side gasoline. terms

Mark Romaine

tracking good of year-over-year and down I think still the with diesel part equation, I number. been has rest a to that. didn't demand a missed and with to we I end side and think gasoline at compare Gregg. gasoline pleased in that's off things different hear still the a positively. Yes, the that story, of seeing the we've end we're seen year-over-year the we're we've XXXX. consistent of what But standpoint, demand versus industry. year our stations, we're last I of were But the that, been XXXX, From similar demand diesel, on standpoint, from but We

was question not I sure I'm think So the of...

Gregg Brody

I can repeat.

margins GDSO keep it Do the see Can trending? we and how different little Just continues? talk how on segment, getting one anything it's or that's quarter about the that the -- you is a at be bit breaking anything the break-evens of that you to better that's every up. seem trend arguments talk going

Mark Romaine

-- business. see we'll downs, we see to overall, going see But we're margins mean I we'll mean, margins nature I of some I overall, compress. just see the and ups expand continue that's positively. to think and think trend I the

we it's will I our continue. increased the our that business. cost expansion run as go expand somewhat think and to seen just that overall see But biases forward, to margins we you're in going that have due bias to margins

Gregg Brody

to just then And over moving the wholesale.

the in has you I think year and dialed that started talking greater last we was was just there curious, earn where year. how was allowing much was year element that margins still down? is I'm more last a there business about or special it But volatility that to

Mark Romaine

last year unique I as seen never would conditions last was, was as well. before, like say market say XXXX that's that it you very had that would conditions, true I and was -- in was said, we market year especially

So year risks market this were seeing we've were more Margins would conditions. extremes seen year, higher, we're Last I in seen say costs a year. -- higher, was saw higher normalized. real is -- we've last everything much we higher. that were what

of seeing we're side used the both to, back what -- on business. we're the the so we're of what to seeing market wholesale volume the and kind normalize margin And

Gregg Brody

last just one. And then

On Or about you're how know if for the comfortable a much set. them, just the you specifics there. I us side, don't And telling Can give you're on M&A seeing? you opportunity most how acquisition, us can much paying whatever bit synergies you're little the recent to talk

Eric Slifka

it's Eric Sure. Greg, Slifka.

good that active. the of finding Just in best go terminals, I've I'd winner. to just don't and very every there, us be continues them one. said after whether There's then the ones whether it's is say news fit be the we opportunities this I'd out retail, and it past, it's trying successful it's win to lots and the say,

we're that the not So and right we're I in think overpaying, us tells that zone.

off really may of think sort assets, But to them were look depends to continue right? say little work on bring maybe be at we going terms right? a and deals it be it and multiples, turn were to most maybe half who of be seems right? the hard of, the But as to to usual, they're pay where In they that always wouldn't there fits we assets. the willing that are winners another better bit value or bidder and depends ones a ones the more, So bit. I on it turn a little the likely to can a competitive the

Gregg Brody

you are saying Or... valuations it's you When lower? off a are little bit, say

Eric Slifka

Yes.

I have higher cost even I think to right? people get financing mean think the that more I in. has -- yes. is baked and too. discipline And expensive think is more I of money it's longer-term And have to that

I interest think cost your isn't it's hard higher. to pretend that

And be And they've so competitors borrowing acquirers, right? right? the to even got And more that has borrowing that not most expensive banks, they're multiples little a may So they of right? are money. it from depress bit, money

they stretch. bring set for Because transaction. have it's can But little this looks a for going say, again, of just right? everyone's market, different particular once a economics more and could it a "Oh, It a somebody not Because they that the depends, we're to because into to got value slightly really right. stretch them,

Operator

Instructions]. [Operator

from line Rakers of comes Tyler Stifel. question next with the Our

Tyler Rakers

Tyler color GDSO during as the being given down that share volumes you the period. Rakers to on a for year-over-year, some acquisitions guys little Selman. just Could made

Gregory Hanson

X.X% were basis. We year-over-year, Tyler, Yes. on down a total

As seen Mark mentioned, of diesel off have industry seen. think a as the lot I year-over-year, other participants we've

here a every of not think us. but had standpoint was quarter very wet a traffic rained how quantify much Northeast. I up And it weekend that played for can't June from the great role, a we it day in June. -- also a We was -- a rainy And definitely weather

that in. So factors

is could still better? volumes better. there. think overall, Could I demand where think, overall. Definitely out we're I gasoline they they happy decent pretty But are be be

Mark Romaine

Yes.

me of create and for part clarify regard right? stations, I comment that to got our do I -- due to were think I to the and -- that just of to and the think with where that . demand experience our -- part specific the made talk to we made and Let running I with about quality earlier we of is sites, we're gasoline comments the specific is company-operated with we run sites when margin, you how volume the that So

clarify if on want that volume those sites. I our just to to operated specific comments So company were

Tyler Rakers

we'd with the the And forward? you if if with with I JV regarding ask, see M&A well the we'd maybe see higher we're deal, seeing, Exxon more said, the interest as could as structured of environment these if going as deals

Eric Slifka

the is that. a business the to Texas expand differently Exxon at concept know. a wholesale. extension really we're frankly, opportunistic, try I'd it. for doing But do, be mean, -- And because JV we is, this market, which we're We've right? I in with Yes. is over we we're is regardless it's right. for in say I'd that We I how to global we're having doing now more conversations going the don't think what least Texas. can with what already in natural And been decades of generally recognized built we've of while say

Operator

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

Eric Slifka

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

Operator

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

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

Global Partners (GLP) 4 Aug 232023 Q2 Earnings call transcript