Global Partners LP (GLP) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...
Adjusted EBITDA: $56 million in Q1 2024, down from $76 million in Q1 2023.
Net Loss: $5.6 million in Q1 2024, compared to net income of $29 million in Q1 2023.
Distributable Cash Flow: $15.8 million in Q1 2024, down from $46.3 million in Q1 2023.
Adjusted Distributable Cash Flow: $16 million in Q1 2024, compared to $46.3 million in Q1 2023.
Quarterly Cash Distribution: $0.71 per common unit, an 8.4% increase year-over-year.
Product Margin (GDSO): Increased by $4.2 million to $187.7 million in Q1 2024.
Product Margin (Gasoline Distribution): Increased by $0.8 million to $121.6 million in Q1 2024.
Product Margin (Station Operations): Increased by $3.4 million to $66.1 million in Q1 2024.
Operating Expenses: Increased by $11.8 million to $120.1 million in Q1 2024.
SG&A Expenses: Increased by $7.5 million to $69.8 million in Q1 2024.
Interest Expense: $29.7 million in Q1 2024, up from $22.1 million in Q1 2023.
Capital Expenditures: $16.6 million in Q1 2024, including $11.7 million for maintenance and $4.9 million for expansion.
Leverage Ratio: Funded debt to EBITDA at 3.26 times as of March 31, 2024.
Total Borrowings: $226 million as of March 31, 2024, all under working capital revolver.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Global Partners LP significantly expanded its terminal network, more than doubling its storage capacity through strategic acquisitions.
The company successfully completed the acquisition of 25 liquid energy terminals from Motiva ahead of schedule, enhancing operational efficiency.
Declared a quarterly cash distribution of $0.71 per common unit, representing an 8.4% increase over the prior year, payable to unitholders.
Redeemed all outstanding Series B preferred units, which is expected to be accretive to distributable cash flow by approximately $0.09 per unit annually.
Maintained a strong balance sheet with leverage well within credit agreement limits, and ample excess capacity on credit facilities.
Negative Points
Reported a net loss of $5.6 million for the quarter, compared to a net income of $29 million in the same period last year.
Adjusted EBITDA and distributable cash flow both decreased significantly from the previous year.
Product margin from distillates and other oils decreased by $13 million due to less favorable market conditions.
Operating expenses increased by $11.8 million, primarily due to the acquisition of terminals from Motiva.
The first quarter performance of the retail joint venture was impacted negatively by severe weather conditions and a competitive margin environment.
Q & A Highlights
Q: Can you provide an update on the integration and performance of the newly acquired Motiva terminals? A: Mark Romaine, COO of Global Partners, noted that the integration of the Motiva terminals was completed ahead of schedule and they are actively working on adding new volumes and optimizing the terminals. He expressed optimism about exceeding initial expectations with further investments and optimizations planned.
Q: Are the Motiva terminals performing as expected, and do you see more opportunities than initially anticipated? A: Eric Slifka, CEO, added that the assets are well-located with significant potential for expansion and optimization, which could lead to performance exceeding initial expectations.
Q: How is the joint venture performing, and what are the growth expectations? A: Gregory Hanson, CFO, mentioned that the JV's performance was slightly below expectations due to adverse weather but remains optimistic about its future performance. Eric Slifka also highlighted ongoing efforts to identify potential assets for acquisition that could complement the JV.
Q: With the redemption of the Series B preferred units being accretive to earnings, how might this influence future dividend decisions? A: Gregory Hanson explained that the redemption should positively impact the bottom line and support future distribution growth, although specific decisions on distributions remain at the discretion of the Board.
Q: What are the company's expectations for M&A activities in other markets? A: Eric Slifka indicated an active M&A landscape, with the company evaluating opportunities that align with its strategic goals and can drive high returns.
Q: Can you comment on the financial performance in the first quarter compared to the previous year? A: Gregory Hanson reported a decrease in adjusted EBITDA and net income, attributing the changes to various market conditions and increased expenses related to recent acquisitions. However, he highlighted strong product margin growth in the gasoline distribution and station operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
