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Global Partners Gunning for Growth and Profitability

Asset sale helped company focus efforts on high-return businesses

WALTHAM, Mass. -- Positioning itself for “growth and profitability,” Global Partners LP has executed on the strategic action that its president and CEO, Eric Slifka, outlined a year ago.

“Our plan included cutting expenses and implementing an asset sale program across our portfolio concentrated on nonstrategic assets,” Slifka said during the company’s fourth-quarter earnings call March 9.

The company sold most of its nonstrategic retail sites. It also terminated a sublease for more than 1,600 rail cars, saving more than $10 million.

“At the same time, we focused our efforts on businesses that provide the highest returns and are fundamental to our long-term growth. While year over year our 2016 financial results were negatively impacted by the challenging crude-oil environment, the core elements of our business—terminaling, marketing and retail—are fundamentally strong,” said Slifka.

For fourth-quarter 2016, Global Partners reported a net loss of $65.5 million, compared to a net loss of $2.3 million in the same period in 2015.

Financial results for the quarter reflect an $80.7 million lease exit expense associated with the voluntary early termination of a rail-car sublease and a $6.5 million net loss on sale and disposition of nonstrategic retail gasoline assets.

The gasoline distribution and station operations (GDSO) segment product margin was $111.7 million in fourth-quarter 2016 vs. $121.3 million in fourth-quarter 2015. The year-over-year decline was due to rising wholesale gasoline prices and the divestiture of nonstrategic retail sites.

Wholesale segment product margin was $56.8 million, compared with $31.6 million in fourth-quarter 2015.

Sales for fourth-quarter 2016 were $2.3 billion, compared with $2.2 billion for the same period in 2015. Wholesale segment sales were $1.2 billion in both periods. Sales in the GDSO segment were $904.9 million in fourth-quarter 2016 vs. $853.7 million for the same period in 2015.

Wholesale segment volume was 757.9 million gallons in fourth-quarter 2016, compared with 849.6 million gallons for the same period in 2015.

Volume in the GDSO segment was 405.6 million gallons for fourth-quarter 2016, compared with 391.5 million gallons in fourth-quarter 2015. The increase was primarily attributable to the expansion of the partnership’s portfolio, including 22 sites in western Massachusetts acquired from O’Connell Oil Associates Inc., Pittsfield, Mass.

With approximately 1,500 retail locations, primarily in the Northeast, Waltham, Mass.-based Global Partners is one of the largest regional independent owners, suppliers and operators of gas stations and c-stores.

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