Global Partners posts $29 million net income in Q3, maintains strong margins amid market fluctuations and announces increased cash distribution to investors.

OPERATOR - (00:01:01)

Good day everyone and welcome to Global Partners 3rd Quarter 2025 Financial Results Conference call. Today's call is being recorded. All lines have been placed in a listen only mode. With us from Global Partners are President and Chief Executive Officer Mr. Eric Slivka, Chief Financial Officer Mr. Gregory Hansen, Chief Operating Officer Mr. Mark Romain 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.

Sean Geary - Chief Legal Officer and Secretary - (00:01:39)

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.

Eric Slifka - (00:02:25)

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 and the continued optimization of our liquid energy terminal network. Over the past two years we have significantly scaled our terminal assets, 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 from Motiva Gulf and Exxon Mobil. 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 Alltown 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, hyper local engagement through our new loyalty platform Bee's Knees 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 75. 50 per common unit or 302 on an annualized basis. This marked our 16th consecutive quarterly distribution increase. The distribution will be paid on November 14 to unitholders 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.

Gregory Hansen - Chief Financial Officer - (00:05:12)

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 noticed. 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 30th with 1.64 times coverage or 1.5 times after factoring in distributions to our preferred unitholders. Turning to our segment details, GDSO product margin decreased 18.8 million despite 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 Excuse me, 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 market conditions in 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 in 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 are terminal operations. SGA expense increased 5.8 million to 76.3 million, reflecting in part increases in wages and benefits and various other SGA expenses. Interest expense was 33.3 million in third quarter of 25, down 1.8 million from last year, in part due to lower average balances on our credit facilities. CapEx in the third quarter was 19.7 million, consisting of 11.9 million of maintenance CapEx and 7.8 million of expansion CapEx 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 40 to $50 million relating primarily to investments in our gas station and terminal business. Our current CAPEX estimates depend in part on the timing of completion of projects, availability of equipment and workforce, weather and unanticipated events or opportunities requiring additional maintenance or investments. Turning to our balance sheet as of September 30, leverage as defined in our credit agreement as funded debt to EBITDA was 3.6 times. We had 246 240.6 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 BofA Securities 2025 Leverage Finance Conference and the Wells Fargo 24th Annual Energy and Power Symposium. Please contact our investment related 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 Slifka - (00:09:34)

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 unitholders. 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 and A.

OPERATOR - (00:10:12)

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Selman Akul with Stifel. Please proceed with your question.

Selman Akul - Equity Analyst - (00:10:50)

Thank you. Good morning. Can you talk a little bit more about entering the bunkering market in Houston?

UNKNOWN - (00:11:02)

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.

Selman Akul - Equity Analyst - (00:11:30)

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

UNKNOWN - (00:11:38)

Yeah, primarily just the location of the facilities and how we plan to go to market to supply that very busy corridor that is not always so easy to deliver fuel in.

Selman Akul - Equity Analyst - (00:11:52)

So you're on the Houston ship channel? We're outside of it, yeah, just outside. Okay. Can you talk a little bit about the acquisition environment? And you noted that store counts were lower relative to where you were third quarter last year. And so I'm just curious to, you know, more to go there, or do you think you can, you know, add stores from here? How should we be thinking about that?

Gregory Hansen - Chief Financial Officer - (00:12:23)

Yeah, hey, Steve. Oh, it's Greg Hanson. I can talk a little about the sites. I mean, you know, I think we went through a pretty big optimization program on our sites last year. So year over year, you know, we've. In the last 12 months, we've sold seven 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, you know, we'll continue to, I think, move around the edges on that portfolio. But we're pretty happy where it is now. And then, you know, on the M&A side, I think, you know, 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 terminaling side. You know, we continue to look at, at opportunities as we go through the year, but I think that we have seen a pickup on the retail side.

Selman Akul - Equity Analyst - (00:13:28)

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

UNKNOWN - (00:13:39)

We do not. No, we don't. We're not in none of our retail. The GDSO segment operates in their footprint as of today.

Selman Akul - Equity Analyst - (00:13:48)

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.

Gregory Hansen - Chief Financial Officer - (00:14:00)

Yeah, I mean we've, I think not unlike a lot of other retailers out there, we've definitely seen it this year. There's definitely pressure on lower income. You see, you see consumers trading down from, you know, more premium brands to more sub generic brands. We continue to try and leverage our loyalty program that Eric mentioned earlier to, to grow promotions. But I think it's yeah, they've definitely been under pressure overall. That said, you know, look in the quarter we were pretty happy with this summer how the C stores did. We were actually up year over year and that's not even adjusting for a same site. You know, 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 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 C store. 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.

Selman Akul - Equity Analyst - (00:15:14)

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

Gregory Hansen - Chief Financial Officer - (00:15:24)

It's the, I would say the wage inflation has, you know, calmed down a little bit. But you know, operating in a retail environment, you continue to face a lot of high turnover. But you know, compared with the 22 and 23 time frame. I think we're still. We're in a better place. You know, 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.

Selman Akul - Equity Analyst - (00:15:52)

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

Gregory Hansen - Chief Financial Officer - (00:16:04)

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

Selman Akul - Equity Analyst - (00:16:10)

Okay. Thank you so much.

OPERATOR - (00:16:15)

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.

Eric Slifka - (00:16:22)

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

OPERATOR - (00:16:32)

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.