Global Partners Notches Steady Performance in Q3
WALTHAM, Mass. — Global Partners LP had fewer retail sites during the third quarter of 2017 than it did in the same period the previous year, but the smaller count did not have a noticeable effect on its earnings results.
"Our third-quarter results reflect solid performance across our businesses. Profit margin in the wholesale segment more than doubled from last year's third quarter to more than $36 million and the gasoline distribution and station operations (GDSO) segment performed better than expected," President and CEO Eric Slifka stated during the company's third-quarter earnings call, held Nov. 8.
Global Partners continues to pursue strategic acquisitions to drive volume and margin, including the October acquisition of Honey Farms Inc.'s convenience store/gas station assets for approximately $36 million in cash.
"The addition of Honey Farms expands our footprint in the Worcester, Mass., region and achieves larger economies of scale," Slifka explained, adding that the company expects the deal to be accretive within the first full year of operations.
At the end of September, Waltham-based Global Partners' retail portfolio consisted of 1,435 owned, leased or supplied gasoline stations in the Northeast, Maryland and Virginia — including 234 company-operated convenience stores.
Looking at key financial metrics for the third quarter, gross profit was up 13 percent year over year to $150 million. Adjusted EBITDA increased 23 percent to nearly $64 million.
"We are pleased with our financial and operating performance through the first nine months of 2017," Slifka said. "We look forward to continuing to invest in our business and optimizing our retail and terminal assets."
GDSO SEGMENT Close-UP
Product margin for the company's GDSO segment in the third quarter was $130.7 million, $6.2 million lower than the same period last year. The change reflected, in part, the sale of sites including locations sold to Mirabito Holdings Inc. in August 2016, according to Daphne Foster, chief financial officer for Global Partners.
As CSNews Online previously reported, Global Partners, through a wholly owned subsidiary, sold 30 non-strategic gasoline stations and convenience stores in New York and Pennsylvania to Mirabito for approximately $40 million. The transaction included long-term supply contracts for branded and unbranded gasoline and other petroleum products.
Gasoline distribution product margin was down $3.9 million to $84.2 million, while station operations product margin decreased by $2.2 million to $46.5 million, Foster reported.
Fuel margin averaged 20.5 cents a gallon, down from 21.2 cents in the third quarter of 2016, reflecting the change in Global Partners' retail portfolio with the sale of some company-operated sites, she added.
However, even though the company had fewer sites in its retail portfolio in this year's third quarter compared to the same period a year ago, fuel volumes in the GDSO segment declined by only 5 million gallons as Global Partners retained supply agreements with the buyers of many of the sold sites, Foster explained.
According to Mark Romaine, chief operating officer, Global Partners is "pleased with our same-site performance, both on fuel and the c-store."
Although the company does not get into specific numbers, he said on the fuel side Global Partners tracks with the Energy Information Administration or Department of Energy numbers — and that remains consistent.
"On the store [side], we still think there is a lot of opportunity to grow sales through our existing store operations. We're fairly pleased with that," Romaine said.
Global Partners is a midstream logistics and marketing master limited partnership that owns, controls or has access to one of the largest terminal networks of petroleum products and renewable fuels in the Northeast. It is one of the largest regional independent owners, suppliers and operators of gasoline stations and convenience stores.
Global Partners is also one of the largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers in New England and New York.