WALTHAM, Mass. -- Global Partners LP is "already seeing anticipated synergies" from its $387 million acquisition of Xtra Mart convenience store operator Warren Equities Inc., which closed in early January, Eric Slifka, president and CEO of Global Partners, said during the company's fourth-quarter 2014 earnings call. "The integration is proceeding on plan."
"This is a transformational addition to our gas station and convenience store network, which now includes approximately 1,500 locations in 10 states, eight in the Northeast and two in the Mid-Atlantic," he said. "[In] round numbers, our retail gasoline volume in 2014 was approximately one billion gallons, and with Warren, that figure increases by roughly 500 million gallons a year. With Xtra Mart, we've added an extremely well-recognized regional brand to our convenience store portfolio."
The acquisition expands Global Partners' portfolio with the addition of 147 company-operated Xtra Mart convenience stores in New England, New York and Pennsylvania and related fuel operations, 53 commission agent locations and fuel supply rights for approximately 320 dealers.
Along with acquisitions, the company has continued to augment its portfolio with new-to-industry (NTI) sites, raze-and-rebuilds and merchandizing initiatives at the convenience stores, said Slifka.
Net income for fourth-quarter 2014 was $27.9 million, compared with $34 million for fourth-quarter 2013. Net income for the 12 months ended Dec. 31, 2014, was $114.7 million, compared with $42.6 million for 2013.
"Global delivered record full-year net income, EBITDA and distributable cash flow in 2014," Slifka said. "Our results benefited in part from significantly colder weather and an unusually favorable gasoline blendstocks market in the first quarter and from the steep decline in gasoline prices during the second half of 2014. Our ability to capitalize on favorable market opportunities reflects the breadth of our asset base and the diversity of our products and businesses."
For the quarter, the company's Gasoline Distribution & Station Operations (GDSO) had a record quarter due to the decline-in-price environment, CFO Daphne Foster said on the call. This segment generated a 42% increase in product margins up $25.3 million from the prior-year period to $86 million. The NYMEX price for 87 or above regular gasoline fell $1.15 per gallon from $2.59 at the end of September to 1.44 at the end of December and was the primary reason for our 59% increase in fuel price margins at $62.8 million.
Station operation product margin increased $2.1 million from fourth-quarter 2013 due primarily to continued expansion of key store operations and merchandizing efforts as well as the addition of 11th commission agent Mass Turnpike site.
The GDSO segment also has significant increases year over year largely due to an extraordinary period of declining prices. During periods of falling pricing, retail fuel margins typically expand. For the year, fuel margin increased $39 million from $150 million in 2013 to $189 million in 2014.
"While some of this increase was due to new or retail sites streaming on, the favorable price environment was the primary reason for the increase," she said.
Contributions from station operations within the GDSO segment also increased, up $11.6 million to $91.8 million due to additional sites including the Mass Turnpike site and merchandizing efforts.
A publicly traded master limited partnership (MLP), Waltham, Mass.-based Global Partners is a midstream logistics and marketing company that owns, controls or has access to one of the largest terminal networks of petroleum products and renewable fuels in the Northeast. It also is 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. With nearly 1,500 locations, primarily in the Northeast, Global also is one of the largest independent owners, suppliers and operators of gas stations and convenience stores.
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