Global Partners LP (GLP) 2025 Q3 法說會逐字稿

Good day everyone, and welcome to the Global Partners third quarter 2025 financial results conference call.

(Operator Instructions)

With us from Global Partners, our 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. Sean Geary.

At this time I'd like to turn the floor over to Mr. Geary for opening remarks. Please go ahead, sir.

Good morning everyone and thank you for joining us. Today's call will include forward-looking statements within the meanings of federal securities laws, including projections or expectations concerning the future financial and operational performance of global partners. No assurances can be given that these projections will be attained or that these expectations will be met.

Our assumptions and future performance are subject to a wide range of business risks, uncertainties, and factors which could cause actual results to differ materially as described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or update any forward-looking statements. Now it's my pleasure to turn the call over to our President and Chief Executive Officer Eric Slifka.

Thank you, Sean. Good morning, everyone, and thank you for joining us.

We performed well in the third quarter, consistent with our expectations reflecting operational strength and disciplined execution across the organization.

We experienced a strong performance in our wholesale segment in Q3, driven by favorable market conditions in gasoline in the continued optimization of our liquid energy terminal network.

Over the past 2 years, we've significantly scaled our terminal assets, meaning meaningfully enhancing our product distribution network and positioning global partners for long-term growth.

This effort reflects our strategy of efficiently connecting liquid energy products with downstream markets, leveraging the integration of terminals acquired for Motiva, Gulf, and ExxonMobil. These assets continue to perform well, strengthening our supply chain flexibility, contributing to throughput growth, and enhancing our network.

We're pleased that fuel margins have remained historically strong, even with the year over year decline.

Our retail network is a critical part of our strategy as we invest in, optimize, and upgrade our portfolio.

Recently, we expanded our marine fuel supply operations into the port of Houston.

As a reminder, today our bunkering business is centered in the Northeast, and now we have extended this business into the Gulf Coast.

On the retail side, we're continuing to redefine the convenience store experience through our all-town Fresh and newly reimagined honey Farms Market brands. These brands embody our four pillars community, hospitality, local, and fresh, while introducing chef-driven menus, clean label offerings, and hyper-local engagement.

Through our new loyalty platform, these these Benefits, we're creating a seamless personalized experience designed to drive repeat business, build long-term loyalty, and strengthen the connection between our guests and our brands.

Turning to our distribution in October, the board declared a quarterly cash distribution of 7550 per common unit, or 302 on an annualized basis. This marked our 16th consecutive quarterly distribution increase. The distribution will be paid on November 14th to unit holders of record as of the close of business on November 10th.

With that overview, I'll turn it over to Greg for the Financial Review. Greg.

Thank you, Eric, and good morning everyone. As I review the numbers, please note that all comparisons will be with the third quarter of 2024 unless otherwise noted.

Net income for the third quarter was $29 million versus $45.9 million last year. I would note that last year's quarter had a $7.8 million one-time gain on asset sales that affected that number.

EBITDA was $97.1 million for the third quarter compared with $119.1 million and adjusted EBITDA was $98.8 million versus $114 million. Distributable cash flow was $53 million compared to $71.1 million while adjusted distributable cash flow was $53.3 million versus $71.6 million.

Trailing 12 month distribution coverage remains strong as of September 30, with 1.64 times coverage, or 1.5 times after factoring in distributions to our preferred unit holders.

Turning to our segment details, GDSO product margin decreased $18.8 million to $218.9 million. Product margin from gasoline distribution decreased $19.3 million to $144.8 million, primarily due to lower fuel margins compared with the same period in 2024. On a cents per gallon basis, fuel margins of $0.37 were down 7% from the previous year. In the third quarter of 2024, we experienced strong fuel margins in part due to wholesale gasoline prices declining by $0.57 during the quarter. In comparison, in this year's third quarter, wholesale gasoline prices declined only $0.11.

Station operations product margin, which includes convenience store and prepared food sales, sundries and rental income, increased $0.5 million to $74.1 million, in part due to an increase in sundries.

At quarter end, we had a portfolio of 1,540 sites, 49 fewer than the same period last year. The site count does not include the 67 locations we operate or supply under our Spring partners retail joint venture.

Looking at the wholesale segment, third quarter product margin increased $6.9 million to $78 million. Product margin from gasoline and gasoline blend stocks increased $18.5 million to $61.5 million primarily due to more favorable marketing conditions and gasoline and the expansion of our terminal network.

Product margin from distillates and other oils decreased $11.6 million to $16.5 million, primarily due to less favorable market conditions in residual oil.

Commercial segment product margin decreased $2.5 million to $7 million in part due to less favorable market conditions and bunkering.

Turning to expenses, operating expenses decreased $4.6 million to $132.5 million in the third quarter, primarily related to lower maintenance and repair expenses at our terminal operations.

SG&A expense increased $5.8 million to $76.3 million reflecting in part increases in wages and benefits and various other SG&A expenses.

Interest expense was $33.3 million in the third quarter of 2025, down $1.8 million from last year, in part due to lower average balances on our credit facilities.

Capbacks in the third quarter was $19.7 million consisting of $11.9 million of maintenance capbacks and $7.8 million of expansion capbacks, primarily related to investments in our gasoline stations and terminals. For the full year, we now anticipate maintenance capital expenditures of approximately $45 million to $55 million while expansion capital expenditures excluding acquisitions are anticipated to be approximately $40million to $50 million.

Relating primarily to investments in our gas station and terminal business, our current cap estimates depend in part on the timing of completion of projects, availability of equipment and workforce, whether in unanticipated events or opportunities requiring additional maintenance or investments.

Turning to our balance sheet, as of September 30th, leverage as defined in our credit agreement as funded debt to EBITDA was 3.6 times. We had $240.6 million outstanding on the working capital revolving credit facility and $124.8 million outstanding on the revolving credit facility.

Looking ahead to our investor relations calendar, next month we'll be participating in two events, the BFA Securities 2025 Leverage Finance conference and the Wells Fargo 24th annual Energy and Power symposium. Please contact our investment relations team if you'd like to schedule a meeting during the conference.

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

Thanks, Greg. We remain focused on capital discipline and operational efficiency, continuously seeking opportunities to drive sustainable returns and long-term value creation for our unit holders.

Our scale, integrated operations, and talented team give us the flexibility to respond to market shifts and pursue growth opportunities that create lasting value for all of our stakeholders. Now, Greg, Mark, and I would be happy to take your questions. Operator, please open the line for the Q&A.

(Operator Instructions)

Selman Akil with Stifel.

Thank you. Good morning.

Can you talk a little bit more about, entering the bunk, the bunkering market in Houston?

Yeah I mean we're already obviously in the business we felt that there was an opportunity and we feel like the assets that we've entered into there are differentiated versus our competition and so you know we're already like I said in that business we already have the customer list we already have the know-how and the knowledge and we think it's a good fit for the company.

Got it. And when you say sort of differentiated offering, can you just explain that a little bit?

Primarily just the location of the facilities and how we're going to go to market to supply, that very busy corridor that is not always so easy to deliver fuel in.

So you're on the Houston ship channel?

We're outside of it.

Can you talk a little bit about the acquisition environment in You noted that store counts were lower relative to where you were third quarter last year and so I'm just curious to, more to go there or do you think you can add stores from here. How should we be thinking about that?

I can talk a little about the sites. I mean, I think we went through a pretty big optimization program on our sites last year. So year over year, we've, in the last 12 months we've sold 7 sites, we've converted 15 sites, and then we terminated some of our dealer relationships that were. Low margin so you know we continue to optimize. I think that said, there's probably not that big a runway right now on sort of site divestitures for us. I think we're pretty happy with our portfolio in general. It still looks a little obviously down year over year because last year was a big optimization period for us, but we'll continue to, I think, move around the edges on that portfolio, but we're pretty happy where it is now and then. The M&A side, I think, overall it was pretty quiet going into the fourth quarter on the retail M&A. I think we're seeing some signs of life and more deals that are out there on the fourth quarter on the retail side. And then the term side, we continue to look at opportunities as we go through, the year, but I think that, yeah, we have seen a pick up on the retail side.

Got it. So Parkland, which is north of the border, was recently acquired, but they have stores in the USD. Do you face much competition from them?

We do not know, we're not in none of our retail the GDSO segment operates in their footprint as of today.

Got it. And then there's been reports of sort of the lower end consumer being under pressure and I'm wondering if you're seeing that and if you have any thoughts going forward on that.

Yeah I mean we we've, I think not unlike a lot of other retailers out there we we've definitely seen it this year there's definitely pressure on lower income.

You see consumers trading down from, more premium brands to more sub-generic brands. We continue to try and leverage our loyalty program that Eric mentioned earlier to grow promotions, but I think it's, yeah, they've definitely been under pressure overall. That said, looking at the quarter, we were pretty happy with this summer, how, the cease to. Did we were actually up year over year and that's not even adjusting for same site that's just pure and we were you know we were down 16 company operated sites year over year so to be above on the GDSO station operations is pretty good in our book. It was a decent strong summer and you know where we're located in the Northeast I think you know continues to be a trend towards a higher income consumer so you know overall we're pretty happy with how the summer went on the CTR but yeah I would agree. I mean I think it's pretty well recognized that the lower end consumer continues to face pressure but you know the higher end consumer has been continuing to spend, which is good.

Got it. And then the last one for me just how's labor going for you guys? Is it getting any easier?

I would say the wage inflation has, calmed down a little bit, but, operating in a retail environment, you continue to face a lot of high turnover, but, compared with the 2022 and 2023 time frame, I think we're still, we're in a better place, I think what we're working on is trying to optimize around our labor hours and make sure we have the right associates in the right stores to optimize sales, and we'll continue to work on that.

Got it, I guess what I was thinking about is it easier to get people now? Are you seeing more resumes, more people? I mean resumes is too strong of a word, but are you seeing more applicants, that kind of thing?

Yeah, I think we are overall versus the last couple of years definitely.

Okay, thank you so much.

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

Thanks for joining us this morning. We look forward to keeping you updated on our progress. Everyone have a great Thanksgiving.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time.

Thank you for your participation and have a wonderful day.