WALTHAM, Mass. -- Following the acquisition in October of 33 convenience stores from Honey Farms Inc., Global Partners LP plans to streamline how fuel and merchandise are supplied to those locations, said President and CEO Eric Slifka on the company’s Nov. 8 earnings call.
Global Partners acquired the Honey Farms locations for about $36 million. The deal included 11 company-operated sites with fuel and c-stores and 22 company-operated stand-alone c-stores. The acquisition expands the company’s footprint in the Worcester, Mass., region and achieved larger economies of scale.
“We know that the assets really fit our business model. They fit our geographic footprint,” Slifka said. “We think there is absolutely an opportunity for us to streamline both the way that the fuel is supplied, as well as the way the stores themselves are supplied and merchandised. And so the focus initially is going to be around executing on those two major things as we own the assets over time."
In terms of spending capital, “we look at all our assets, and we're going to try and make sure that we invest in the assets that give us the highest returns,” he said. “We continue to pursue strategic acquisitions that drive volume and margin.”
At the end of September, Global Partners’ retail portfolio consisted of 1,435 owned, leased or supplied gas stations and c-stores in the Northeast, including 234 company-operated c-stores under the Alltown Market, Alliance Energy, Honey Farms, Xtra Mart names; 269 commission agents; 234 lessee-dealers; and 698 contract dealers.
Quarterly highlights:
- Net income in third-quarter 2017 was $14.9 million, compared with a net loss of $119.6 million in third-quarter 2016. Results for third-quarter 2016 included a $147.8 million noncash goodwill and long-lived asset impairment related to the company’s wholesale segment.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) in third-quarter 2017 was $60.8 million, compared with negative EBITDA of $67.8 million in the comparable period of 2016.
- Gross profit in third-quarter 2017 was $150.1 million, compared with $132.6 million for the comparable period of 2016.
- Combined product margin was $172.3 million and $157.2 million for the third quarters of 2017 and 2016, respectively.
- Gasoline distribution and station operations (GDSO) segment product margin was $130.7 million in third-quarter 2017 vs. $136.8 million in the comparable period of 2016, reflecting in part the sale of certain retail sites in third-quarter 2016.
- Wholesale segment product margin was $36.6 million in third-quarter 2017, compared with $16.1 million in third-quarter 2016. The increase was due in part to weather-related supply disruptions that benefited wholesale gasoline, among other factors, said the company.
- Sales were $2.2 billion in third-quarter 2017 compared with $2 billion in the same period of 2016 due to an increase in prices. Wholesale segment sales were $962 million compared with $947.7 million in third-quarter 2016. Sales in the GDSO segment were $992.3 million in third-quarter 2017 vs. $920.3 million for the same period in 2016. Commercial segment sales were $205.4 million, compared with $162.1 million in third-quarter 2016.
- Wholesale segment volume was 580.8 million gallons in third-quarter 2017 vs. 687.5 million gallons for the same period of 2016. The year-over-year decrease was primarily due to lower volumes of gasoline, gasoline blendstocks and crude oil.
- Volume in the GDSO segment was 410.1 million gallons in third-quarter 2017 vs. 415.2 million gallons in third-quarter 2016 reflecting, in part, the sale of certain retail sites in third-quarter 2016.
“Our third-quarter results reflect solid performance,” said Slifka.
Global Partners is No. 31 in CSP's update of its 2017 Top 202 ranking of largest c-store chains in the United States. Honey Farms ranked No. 174 in the complete list.
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