Global Partners LP (GLP) 2011 Q2 法說會逐字稿

Good day, everyone, and welcome to the Global Partners Second Quarter 2011 Financial Results Conference Call. Today's call is being recorded. There will be an opportunity for questions at the end of the call.

With us from Global Partners and President and Chief Executive Officer, Mr. Eric Slifka; Chief Operating Office and Chief Financial Officer, Mr. Tom Hollister; Executive Vice President, Chief Accounting Officer and Co-Director of Mergers and Acquisitions, Mr. Charles Rudinsky; and Executive Vice President and General Counsel, Mr. Edward Faneuil.

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

Good morning, everyone, and thank you for joining us. Let me remind everyone that during today's call we will be making forward-looking statements within the meaning of the federal securities laws. These statements may include, but are not limited to, projections, beliefs, goals and estimates concerning the future financial and operational performance of Global Partners LP.

Estimates for Global Partners' future EBITDA and profits or losses are based on a number of assumptions regarding market conditions, including demand for petroleum products and renewable fuels, weather, credit markets or the forward product pricing curve. Therefore, Global Partners can give no assurance of our future EBITDA and profits or losses will be as estimated. Forward-looking statements are not guarantees of performance.

The actual performance for Global Partners may differ materially from those expressed or implied by any such forward-looking statements. In addition, such performance is subject to risk factors including but not limited to those described in Global Partners' filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statement that may be made during today's conference call.

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

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

Thank you, Edward, and good morning, everyone. Since issuing our preliminary results two weeks ago, we have received several comments from investors seeking some additional color on our business model and more detail about market factors that influence our results. So before we get into the specifics of the quarter, let me spend a few minutes discussing our business philosophy and approach to the market.

An important goal for the Partnership is to maintain and increase the distribution, and maximize returns to our unitholders over time. We have moved proactively to adjust the business for the current challenging market environment. We have reduced our workforce, lowered certain selling, general and administrative expenses, and decreased operating expenses. These steps enable us to manage through these conditions and position Global to take advantage of all opportunities as they present themselves.

It's important to understand that there is variability in parts of our earnings stream. It is for this reason that we have historically and purposefully maintained wider distribution coverage ratios than many in the MLP industry. Our strategy is to maximize the Partnership's earnings through a longer-term view by taking advantage of both asset opportunities and commodity market opportunities.

Overtime, we believe that this provides us with higher levels of return. This explains why our historic annual coverage ratios have ranged between 1.3 to 1.8 times of our distributions, which is a comparatively healthy cushion by MLP industry standards.

We have a broad-based business model that goes beyond just leasing our storage tanks. We have positioned ourselves to take full advantage of the market when there are favorable conditions and buying opportunities. At the same time, we attempt to minimize our exposure when we are faced with difficult market conditions similar to what we've seen in the past three quarters and continue to see so far this quarter.

Whether we're talking about gasoline, heating oil, residual fuel or natural gas, the two key metrics for our business every quarter are volume and margin. That is, how much product we move and the profit we make on each unit. In both instances, our strategy is not just to move product, but to optimize the volume while maximizing the margin to enhance returns.

A range of issues, such as energy conservation, competition, the global economic climate and weather, each affect the wholesale and commercial volumes and margins within our business. Volumes in margins also are affected by a variety of other factors, such as movement of products between Europe and the US, weekly and monthly refinery output levels, changes in domestic and worldwide inventory levels, seasonality and supply disruptions.

Another very significant factor with respect to our margins is the forward product pricing curve; often referred to as the futures market for the products we sell. Futures prices for products such as heating oil and gasoline are posted by month for many months in the future on the NYMEX and other exchanges.

Directionally, if futures prices are rising from month to month, it is called a "contango" market. For example, if the price for September is $3 and the price for December is $3.30, that's a contango market. If futures prices are declining from month to month, it is called a "backward" market.

For example, if December is $3.30 and next June is $3, that's a backward market. If future prices are flat, it's called a "flat" market. A key point to remember is the futures market is a snapshot at a specific point in time and can change minute-to-minute, day by day.

The direction of the futures market affects our margins because we utilize the futures market to hedge substantially all of our inventory. We believe it is prudent to hedge our inventory in order to minimize outright commodity risk. In order to help you better understand our inventory hedging activity in simplest terms, when we buy a barrel of gasoline, we are physically "long" that barrel.

In order to hedge the price risk, we simultaneously sell a barrel in the futures market, which is an offsetting "short" position. We try at all times to keep our inventory related "longs" and "shorts" balanced. Consequently, when prices move up or down, losses or gains on the physical inventory are offset by gains or losses in the matched futures contract.

The subtlety in our business, which is incidentally true of many physical commodity businesses that hedge, is that contango markets offer improved margin opportunities, flat markets generally are neutral to margins and backward markets tend to squeeze margins.

When the market is in a contango direction, we can "lock-in" higher margins because inventory values are increasing. In these instances, we will maximize the use of our storage capacity to hold higher inventory levels and "lock-in" improved margins.

When the market is in a backward direction, our inventories are losing value because we are "locking-in" lower futures prices as part of our hedging activities, making our hedging costs more expensive and negatively impacting margins. In these instances, we minimize our inventories. Keep in mind that we are a critical player in the supply and marketing business and a vital part of the northeast energy infrastructure. Therefore, we always have to maintain enough inventory to satisfy our customers' needs.

What we've been experiencing over the past three quarters are less favorable futures markets. Beginning in the fourth quarter of last year, we began seeing fewer contango opportunities in the distillates market than we have in the past. In the second quarter of this year, the gasoline market was steeply backward and it remains so in the third quarter. I'll talk more specifically about how these conditions affect our margins in a minute.

With that as background, let's turn to volume. Product volume has never been stronger. Wholesale volume for Q2 increased 52% year-over-year to more than 1 billion gallons, and commercial volume grew 66% to nearly 90 million gallons. We sold more gasoline and gasoline blend stocks in Q2 than in any other quarter in our history. This record level of gasoline is the result of our multi-year strategic shift towards transportation fuels.

In 2006, gasoline accounted for 40% of our total wholesale volume. Now, for the trailing 12 months from June 30, gasoline accounted for 68% of our total wholesale volume. Wholesale distillate volume in the second quarter was also robust and enjoyed the highest second quarter since 2007.

In our commercial segment, bunker fuel and natural gas volumes, which we do not disclose for competitive reasons, also posted their best quarters ever. A factor behind our strong wholesale volume growth was the acquisition of gas stations and supply rights from Exxon Mobil. From the time we bought these assets we said we expected a return in the mid to high-teens.

Now let me be specific, we believe the collective streams of this acquisition, as reported in the various segments of our business, will produce $35 million to $40 million of annual EBITDA, which is of course our earnings before interest, taxes, depreciation and amortization. These new assets have performed at that level on an annualized basis since we acquired them.

These are among the highest quality retail gasoline locations in the Northeast. They have performed well and we expect that they will continue to do so. Other reasons for strong wholesale volume growth include our 2010 purchase of the Warex terminal assets, as well as an increase in exchange and supply activity and strong demand for blend stocks, such as ethanol.

Now let me turn to margins in more detail. Due to a less favorable futures market, our wholesale distillate margin at $5.2 million was down approximately $1.2 million from the second quarter of last year. Less favorable buying opportunities have also been a factor in the wholesale distillate business. Though not a significant quarter for distillates due to seasonality, this is a continuation of the trend we experienced in the fourth quarter of 2010 and Q1 of this year.

Our wholesale gasoline margin, at $28 million is higher than any previous quarter in our history, and ended up $4.8 million from a year ago. This is directly related to the increase in volumes attributable to the Mobil and Warex transactions. Given the expansion in our volumes, however, we would have expected better wholesale gasoline margin results.

Our results were negatively impacted by the steeply backward gasoline futures market. The backward gasoline futures market direction is still present in the third quarter. In a minute, Tom will provide more guidance on Q3 and the rest of the year in his remarks.

We are often asked by investors if the direction of the economy consumption trends on refined products and the absolute price of oil affect our business. They do to some degree, but at this time they are far less significant than the impact of the futures market on our margins. We have been actively hedging for years. The backwardation we see in the gasoline markets during the spring and summer of this year is unusual. It is as steep and as extended as we have seen in recent years.

Importantly to us, the particular grade of gasoline that is backward, Reformulated Blendstock for Oxygenated Blending, or "RBOB," is primarily consumed on the East Coast of the United States and the backwardation is caused by tightness of physical barrels. By tradition, Global has been a lean and entrepreneurial company.

We believe that's the right way to run our business. Therefore, we implement that a number of cost-saving initiatives during the past month, including reducing our workforce by approximately 10% and lowering certain selling, general and administrative costs and operating expenses. We expect these initiatives to result in annualized savings of between $10 million and $12 million in 2012.

Tom will discuss these recent expense reductions in more details shortly, but our objective is to right-size the Company to generate adequate distributable cash flow in any market condition. By proactively adjusting our operating activities and controlling expenses, we should experience less pressure in unfavorable markets and be positioned to take advantage of opportunities to increase profits in favorable ones.

Turning back to our Q2 performance, one area that is doing well from a margin standpoint is our commercial category. We earned $8.8 million in net product margin from our commercial business in the second quarter. Not only is this the strongest second quarter results for our commercial operation in the history of the partnership, it is more than three times last year's result of $2.8 million.

A large contributor to this year-over-year improvement is the sale of our gasoline at our approximately 40 company-operated sites, which we do not break out for competitive reasons. Net product margins in our natural gas and bunker businesses also were up substantially. We currently have a number of organic growth opportunities in the Global pipeline.

Among these near-term projects, we are continuing to develop and enhance our Mobil assets, gain further attraction in natural gas, bid on new commercial energy supply opportunities and expand our wholesale gasoline and blend stock business.

We also believe that some of Global's assets are uniquely positioned to take advantage of some of the products, production opportunities and related services being discovered and developed within North America's energy patch. We will keep you apprised of the progress that we are making in the pursuit of these opportunities.

As I mentioned at the outset of my remarks today, an important priority is to maintain and grow the distribution to our unitholders. In July we announced that our Board had approved a continuation of our quarterly distribution of $0.50 per unit for Q2.

While we cannot guarantee any course of action, it is Management's intent to recommend to the Board of Directors that we maintain our cash distribution of $0.50 per unit for the third and fourth quarters of 2011. This recommendation is subject, of course, to revision each quarter depending upon a variety of factors including then existing market conditions.

As I said earlier, our goal is to ensure that Global can pay its distribution in the most difficult markets, while being positioned to take advantage of income generating opportunities as we identify them.

So in summary, the issue over the past few quarters has been lower margins in our traditional wholesaling business, primarily due to the condition of the futures market, first with distillates and then -- and currently with gasoline. In response, we have taken proactive steps to streamline the organization, with an eye towards having adequate distributable cash flow to cover our distributions to unitholders in difficult market conditions such as we have today. We are pleased that our volumes are very strong.

Our Mobil and Warex acquisitions are performing well and our commercial activities are setting records. The market for potential acquisitions remains very active, and we have seen several promising organic projects in development. As market conditions improved, we're well positioned to take advantage of opportunities in the marketplace.

Tom, now let me turn the call over to you.

Thank you, Eric. Before detailing the cost reductions Eric mentioned, let me comment on expenses for the second quarter. Our SG&A expenses of $18.8 million versus $13.9 million last year, reflect the increased costs related to running our now fully integrated recent acquisitions. SG&A expenses are down from the high of $21.1 million in the first quarter.

As a reminder, however, SG&A expenses in Q1 included an extra $1.5 million reserve for credit losses, and therefore the more comparable adjusted number for the first quarter is $19.6 million. In the second quarter, we received a benefit from the reduction of an environmental reserve on our balance sheet. Based on revised estimates, we will not have to spend $1.7 million that we previously anticipated.

Without the $1.7 million adjustment to the environmental reserve, operating expenses would have been $19.5 million. Instead, operating expenses were $17.8 million, which was flat with the first quarter and substantially up from the $9.8 million we reported in the second quarter of last year, reflecting the year-over-year addition of the associated costs of operating our new Warex and Mobil assets.

Headcount was down slightly on a sequential basis at the end of the second quarter from 298 to 293, which does not take into account the 10% workforce reduction I will discuss further in a moment. Interest expense was up $3.2 million due to increased borrowings under our revolver for the Mobil acquisition, as well as absolute higher product prices, and thus higher dollar levels of working capital borrowings to support higher dollar levels of inventory. For example, on the New York Mercantile Exchange, a gallon of gasoline sold at $3.03 at June 30 of this year compared to $2.06 on June 30 a year ago.

As Eric mentioned, investors frequently ask us whether the absolute price of products influences our results. To some degree, the answer is yes. When prices rise, our borrowings and interest expense increase to support our inventory. Margins in our industry typically expand to cover these increases, although it does take time for this to occur. However, the primary issue negatively impacting our margins at this time is the backwardation of gasoline and not absolute price levels.

Now let me turn to the cost reductions we implemented over the past month. I'd like to point out that this was not an "across the board" exercise -- quite the contrary. We continue to invest in the most promising areas of our business. We expect the annualized range of savings to be $10 million to $12 million beginning in 2012. This should be viewed in the context of our six month total costs and operating expenses of $77.8 million, or about $156 million on an annualized basis.

The expense reductions are not related to the new Mobil acquisition, but are targeted at corporate overhead and, to a lesser extent, on our terminal operations. Although you will see some impact in expense reductions in the second half of this year, the full effect of the $10 million to $12 million in savings will not be apparent until 2012.

As I know many of you will be trying to adjust your models, I would estimate that roughly two-thirds of the savings will be in SG&A and one-third in operating expenses. Of the $10 million to $12 million, we would estimate that approximately 40% of these reductions are people related. Nearly 90% of the headcount reduction was overhead positions. In the third quarter of 2011, we expect to take a charge of approximately $1 million to $2 million associated with our workforce reduction.

As you may have seen, we amended our bank agreement in the third quarter. Given that we are experiencing a period of margin pressure, we thought it prudent to request a loosening of some of our financial covenants for the next few quarters. An amendment of this kind takes a 50% vote from our bank group. It is indicative of the strong support from our bank group that all 21 banks approve the amendment without any increase to our borrowing spread.

We have five financial covenants. We amended three of them. It's important to know that the amendment with respect to our EBITDA and minimum interest coverage ratios are only in effect for the next several quarters, reflecting our view that some of the challenging market conditions and the corresponding pressure on our margins are shorter term in nature. We have seen this kind of pressure in the past and we are proactively managing through it. We are taking the right steps and we look forward to keeping you apprised of our progress.

We continue to make capital investments in the business. In the second half of the year we expect maintenance capital expenditures to be in the range of $3 million to $4 million. Combined with the $1.5 million spent in the first and second quarters, total maintenance capital expenditures in 2011 are forecast to be in the range of $4.5 million to $5.5 million.

This is less than the $10 million annual approximately estimate for maintenance capital expenditures we had previously mentioned consisting of $4 million for the terminal business and $6 million for the Mobil gas stations. Although that remains a good annual estimate going forward, it is expected to be less this year, in particular with our gas stations, first because they are new to us and we are still evaluating the right investments. Other factors include contractor lead times, weather and the timing of permits.

We have spent $2.9 million of expansion capital in the first six months of the year on projects such as bringing the final two tanks online, approximately 190,000 total barrels in Albany, tank conversions to provide product flexibility, developing of gasoline blending capabilities, dock capacity expansion and flexibility as well as an implementation of information technology systems and gas station improvements. We will be spending expansion capital in the second half of the year on a variety of organic projects that Eric discussed earlier.

On a separate topic, in recent weeks some investors have asked us about the lawsuit filed by a number of Connecticut Mobil dealers against Alliance Energy. Alliance, as you know, operates and manages our Mobil stations in Massachusetts, New Hampshire and Rhode Island as our management agent. I want to make certain that investors understand that Global Partners is not a party to the Connecticut suit and we do not own or operate any of the stations that are the subject of the suit. In fact, we do not own or operate any stations in the state of Connecticut.

Looking forward, although we typically do not offer guidance on future results, there is enough going on with our businesses that we thought some guidance at this time might be useful. Let me begin by looking at our EBITDA results for the past three years.

If we eliminate the results from the Mobil asset acquisition from our 2010 results, our three-year average historic EBITDA is approximately $63 million. As Eric mentioned earlier, based on nine month results, our new Mobil assets are producing $35 million to $40 million of EBITDA on an annualized basis. This would imply on a combined basis that the current EBITDA for Global should be in the $95 million to $105 million range.

For 2011, however, because of the condition of the futures markets, we expect EBITDA to be in the range of $75 million to $85 million. Our guidance is based on a number of assumptions regarding current market conditions, including the forward product pricing curve, which continually changes. As a result, we have made our EBITDA range reasonably wide.

From a net income standpoint, we expect to show a net loss for the third quarter, a net profit for the fourth quarter and, of course, profitability for the year. Looking beyond 2011, we expect our Mobil assets, the Warex terminal, organic projects and the affect of our cost reductions to contribute positively to results. This will be complimented by improving results for our natural gas, bid and bunkering businesses. At the same time, we expect volume sin the residual fuel oil and heating oil businesses to continue to decline.

Given these factors, we believe in difficult markets, such as we have now, we should have adequate distributable cash flow to cover our distributions. For example, in 2011 we expect $75 to $85 million of EBITDA, which on a pro-forma basis should be improved by the estimated $10 to $12 million in annualized expensed savings, which will not be fully realized until 2012.

In a flat futures market for our business, a reasonable expectation for EBITDA should be between $90 million to $110 million, particularly after giving effect to the projected expense reductions. In times of favorable contango markets, we could reasonably expect to product higher EBITDA results.

With that, we are happy to take your questions. Operator?

Thank you. We will now be conducting a question and answer session.

(Operator Instructions)

Our first question comes from the line of Cathleen King with Bank of America Merrill Lynch. You may proceed with your question.

Good morning, guys.

Good morning, Cathleen.

Yes. A couple of questions, first of all, on guidance and just -- I know you said it's wider range and you talked a lot about what's incorporated there, but as far as specifically with regard to the forward curve for gasoline going forward, is there an expectation in that guidance that there's some improvement from the current backwardated state? Or, could you just talk about there relatively speaking what you're assuming.

Cathleen, we are assuming that the current backwardation in the gasoline curve, which more or less extends through the end of the year -- remains in place.

Okay. So basically the bottom of that guidance saying $75 million is saying, okay, things don't really get better from here.

Exactly. It's really a snapshot of exactly where the existing market conditions are now.

Okay. And you talked about a tight gasoline market causing the backwardation. What do you guys think could change as far as the supply/demand situation to make that better or, in your view, what's really driving that?

Cathleen, one of the things that happens in the markets is you go to a summertime gasoline, which is a slightly less fungible product, meaning that it's not produced as readily as, let's say, wintertime gas and it's primarily the RVP difference. And so directionally, summertime gas is tighter than wintertime gas.

What also happened this year is there were a lot of refinery problems with the refineries coming out of their turnaround that I think added to that. And even though national demand was off a little bit, I think versus two years ago -- a couple years ago the demand was a little bit different.

Okay. Got it. And if you were guys to end up being at the low end of guidance this year, the $75 million, you would still be okay with regard to all your debt covenants and hopefully have some room there. Is that right?

Yes.

Okay. And then one more from me and then I'll hop back in the queue. But I know you talked about organic growth and just in general with what's going on in the energy world today, would those opportunities be staying within your refined products niche, if you will? Or, would you go outside and look into crude oil or natural gas or other hydrocarbons?

We would look at all potential opportunities. As I'm sure you're well aware, there is such a fundamental change taking place in the energy markets with all of these new shale plays coming on that the demands are really across the board. So, it's really just sifting through that and picking which ones we can make the most money on.

And will it be the kind of thing where you would look to acquire an asset as a start and then grow that asset from there, or you're saying like go build something from scratch in the Marseilles, for example?

The good news for us is we think our existing asset base will allow us to take advantage of some of those plays already now with some minor investment.

Okay.

So, we think in some instances we're actually uniquely positioned.

Okay. Okay. Got it. I'll hop back in the queue. Thanks.

Thanks.

Our next question comes from the line of TJ Schultz with RBC Capital Markets. Please proceed with your question.

Hey, guys. Good morning. I appreciate all the color. Just kind of following up on the guidance that you guys provided. Appreciate that. Just trying to get a feel, understanding most of the cost reductions on a run rate basis will start impacting in 2012, but in the $75 million to $85 million guidance you provided, is there some level of that that's baked in for the second half of this year?

I think, TJ, you'll see a little bit. As I mentioned, we'll be taking a charge we expect of $1 million to $2 million in the third quarter, so you may not see much then -- some in the fourth. But it really more is a 2012 impact.

Okay. And then just on the cost side, if these market conditions persist do you think this round of cost reductions that you've enacted is really addressing what you see as an ongoing issue? Are there more costs that can be taken out or what else can be done on the cost side?

TJ, we think $10 million to $12 million is the right amount to get the Company positioned, as Eric said, to handle any market condition.

Okay. Great. I appreciate all the color.

Our next question comes from the line of [Paul Jacob] with Raymond James. Please proceed with your question.

Good morning, guys.

Good morning, Paul.

A couple quick questions. First, as it relates to rationalizing the cost basis in terms of workforce reduction, if you could add some more color as to what types of impacts you're currently seeing and the extent of the permanency of those changes.

Well, we think, as we mentioned, that it should be a structural permanent change of $10 million to $12 million, all other things being equal in 2012. In terms of changes, we think we can run -- well, as Eric has said, Global has always been lean in entrepreneurial and we think this is the right way to run the Company.

Okay. Great. And as it relates to the volume increases, could you add some color as to how much of that is stemming from organic growth versus the recent acquisition?

Well, I would say in the gasoline wholesale business, certainly the Mobil acquisition, as well as the Warex terminals are big contributors. But interestingly another big portion of it was increase and exchanges in other sale activity in the gasoline markets across our whole system.

Great. Thanks, guys. That's all that I had.

(Operator Instructions)

Our next question comes from the line of [Lin Chen] with HITE. You may proceed with your question.

Yes, it's James Jampel from HITE. Hi, guys.

Hi, James.

Just a couple of questions. Has the competitive environment changed at all?

You know, I'd say -- look, the competitive environment is always evolving and it's always changing. I wouldn't say that in and of itself that that's been a problem for us, though.

We don't see another competitor -- or someone doing something different.

I'm sorry. I couldn't hear you.

You don't see someone doing something different that would impact your margins?

No. I think it's pretty much the same group of competitors. Like I say, everybody is always evolving and looking to go into new markets and sometimes you see it but it's a hard business, right, so at the end of the day you're out there and you're competing. If you've been there for a long time it's going to be hard for somebody to come in and break into the market.

Now the recent purchase by Sunoco of assets in East Boston --

Yes.

-- is that something you guys took a look at or were involved in at all?

We did and we looked at it very, very closely and it was an interesting asset but at the end of the day we decided to pass on it.

Is it something you could have done or were there any antitrust issues that --

No. Don't forget we have a facility right next to it, not contiguous, but maybe a half a mile from there.

I see. On the workforce reduction, is there anything specific you guys think you can't pursue now or would have more difficulty pursuing now that you could have done before with the enhanced workforce?

No.

So it was truly surplus tasks.

We just felt like it was the right way to run the Company on a go-forward basis and just make sure that we're positioned so that we still can take advantage of opportunities and exactly as we said in the script. I mean, we think it's the right place for the Company to be.

All right. And the last one from me is if the backwardation continues, does that mean that you would not have one-times coverage next year?

I think in terms of the backwardation, the way we've positioned the Company is to make sure that we can pay our distributions. And that's really ultimately the goal.

But if the guidance -- sort of the low end of the guidance for this year, bakes in the continued backwardation in the curves, and then you spoke a little bit about -- or Tom did about next year and I just want to understand --

Maybe -- let me try this, Eric. James, this year we're saying $75 million to $85 million without the $10 million to $12 million of expense cuts, which could help position the Company that in very adverse market conditions such as this year we expect to be comfortable on the distribution.

And then on next year?

Next year we've set in flat futures market and we expensed sort of normalized EBITDA would be in the $90 million to $110 million range, and in more favorable contango markets could be better than that.

Okay. Thanks, guys.

Our next question comes from the line of Cathleen King with Bank of America Merrill Lynch. Please proceed with your question.

Hi, just one to follow-up, if I may. Talking about the ultimate goal of maintaining the distribution and just thinking hypothetically here if things did continue to be worse than you may expect, at what point would your general partner step in and provide some support as has happened with other MLPs in the past to make sure you're able to maintain your distribution?

Really I can't comment on what the general partner may or may not do.

Okay.

I can say, Cathleen, I think the key point today is that we believe with the actions we've taken we've endeavored to position the Company to thrive including paying its distribution in very difficult markets, and then be in a position to take advantage of more profits for our unitholders with increasing distributions and better markets.

Got it. Got it. Okay. Thanks, guys.

Thank you.

At this time we have reached the end of the Q&A session. I would like to turn the floor back over to Mr. Slifka for closing comments.

That concludes today's call. We look forward to updating you on our progress, and thanks for joining us this morning.