A Little 'Xtra' for Global Partners

WALTHAM, Mass. — The $387-million acquisition of Warren Equities Inc. — including 147 Xtra Mart convenience stores — has been a great addition for Global Partners LP, President and CEO Eric Slifka stressed during Thursday's 2014 fiscal fourth-quarter earnings call.

The stores, located in New England, New York and Pennsylvania and featuring quick-service restaurants, should help boost the master limited partnership's (MLP) bottom line in the near future, the chief executive said, noting the company can achieve synergies with its existing retail division.

In addition, Slifka said he is pleased with Global Partners' retail geographic footprint, which now comprises 10 states in the Northeast and Mid-Atlantic.

"The gas station business is excellent and provides great diversity [for our overall company]," he said.

Since Global Partners closed the Warren Equities deal on Jan. 8, operating results from Xtra Mart were not included in its fourth-quarter results, which ended Dec. 31. Despite this fact, Global Partners' gasoline distribution and station operations division achieved a record $86-million profit margin in its most recent quarter, a 42-percent increase compared to 2013's fourth quarter.

The company attributed lower gas prices and strong in-store merchandise margins for the record retail quarter.

When questioned by an analyst, Slifka did acknowledge that the margin environment is beginning to return to more normal levels thus far in 2015 as gas prices stabilize.

Looking ahead, Global Partners did not discuss the possibility of further retail acquisitions. However, organic growth through the buildout of new-to-industry stores and raze and rebuilds is definitely in the plans. In fact, the company recently renovated 19 of the 23 convenience stores it operates along the Connecticut Turnpike, with the remaining four sites to be completed soon.

Companywide, Global Partners' retail division was a major contributor to the MLP's reported profits. The company earned net income of $27.9 million for its latest quarter, compared to $34 million for the fourth quarter of 2013. A main reason for the overall profit decline was Global Partners' wholesale segment, according to Slifka.

"Gasoline and gasoline blendstocks product margin declined due to less favorable market conditions," he said.

Waltham-based Global Partners is an owner, supplier and operator of nearly 1,500 convenience stores and gas stations.

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