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Global Partners Prepped for Growth

A strong Q1 has MLP ready to ‘increase its investments’

WALTHAM, Mass. -- Expect to see Global Partners LP make some growth moves this year, as it builds upon its financial health to find assets to buy, build or rebuild.

The company reported strong financial results for its first quarter ending March 31, 2017.

“With our increased financial flexibility, we are better positioned to increase our investments in organic growth opportunities, raze-and-rebuilds, new-to-industry sites and acquisitions,” said Global Partners President and CEO Eric Slifka. “As always, we will be selective, focusing on accretive deals including those that leverage our integrated network of terminals and retail sites.”

“We are also strengthening and expanding our retail assets through branding and marketing alliances, additional technology improvements and in-store enhancements designed to drive margin.”

Global Partners owns and operates 251 convenience stores in 10 states under several brand names, including Alltown, Alliance Energy and Xtra Mart.

The company's earnings highlights reflect Slifka’s stated plan to “see everything that's out there, and then pursue that which we think fits us the best”:

  • Gross profit was up 8% to $140 million compared with $130 million for the comparable period of 2016.
  • Net income in Q1 2017 was $22.9 million, compared with a net loss of $7 million in the first quarter of 2016.
  • EBITDA increased 69% to nearly $72 million from the same period in 2016, while adjusted EBITDA grew more than 23% to $60 million.
  • The Gasoline Distribution and Station Operations (GDSO) segment product margin was $106 million vs. $108.3 million a year prior. The decline was in part due to the sale of nonstrategic sites, including those sold to Mirabito Holdings Inc., partially offset by the addition of leased company-operated sites.
  • Distributable cash flow was up 170% to more than $44 million.
  • Combined product margin, which is gross profit minus depreciation allocated to cost of sales, increased 5% year-over-year to $162.4 million, driven by the company’s wholesale segment.
  • Operating expenses declined $5 million, or 7%, from the first quarter of 2016 to $67.2 million, primarily due to decreases in its GDSO segment relating to the sale of nonstrategic sites.

“Over the past several quarters, we have focused on monetizing nonstrategic assets, capitalizing on the value of our real-estate portfolio and reducing costs,” said Slifka. “These steps, along with our recently restated credit agreement, have strengthened our financial position and increased our flexibility to invest in opportunities fundamental to our growth strategy.”

The company is also shedding “nonstrategic assets,” including the sale of its natural-gas and electricity brokerage businesses and 17 retail sites. The former generated more than $16 million in proceeds; the latter approximately $8 million.

It’s currently soliciting proposals for the potential sale of refined-product terminals in New England, New York and Pennsylvania.

Waltham, Mass.-based Global Partners is a midstream logistics and marketing master limited partnership (MLP) that owns, controls or has access to one of the largest terminal networks of petroleum products and renewable fuels in the Northeast, according to the company. With approximately 1,500 sites, Global is also one of the largest regional independent owners, suppliers and operators of gasoline stations and convenience stores. It operates 251 stores itself, according toCSP’s Top 202, putting it at No. 33 on the list.

Global Partners is also 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. It is also engaged in the transportation of petroleum products and renewable fuels by rail from the midcontinental United States and Canada.

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