WALTHAM, Mass. -- Global Partners LP’s gasoline distribution and station operations (GDSO) segment delivered positive results for second-quarter 2016, prompting a drive to optimize the company’s retail portfolio.
“GDSO product margin increased 18% year over year in the second quarter. This result reflected better gasoline margins and growth in our retail portfolio,” said Eric Slifka, Global’s president and CEO.
In May, Global Partners sold 31 convenience stores, 26 in New York and five in Pennsylvania, to Binghamton, N.Y.-based Mirabito Holdings Inc.
“We are focused on maximizing returns on our existing retail portfolio and expanding our network through long-term leases and other cost-efficient approaches,” Slifka said on the company’s earnings call. “Selling stations is one way in which we are optimizing our portfolio. We are also adding high-return locations to our retail deck, where we can leverage our scale in branding and merchandising.”
For example, the company expanded its retail network into western Massachusetts by signing a long-term agreement for 22 c-stores with O’Connell Oil Associates.
“We expect these sites, which generated incremental volume of 6 million gallons in the second quarter, to contribute several million dollars of EBITDA in the first full year of operation.”
For organic projects within its GDSO segment, over the past year, the company opened seven new-to-industry (NTI) and renovated sites for total investment of approximately $9 million with expected returns “in the high teens,” he said. “Over the next 12 months, we expect to open as many five additional NTI and complete seven raze-and-rebuilds. Through organic growth, marketing efforts and the efficiencies of our vertically integrated system, we are realizing higher throughput volume at our strategic gasoline terminals in the Northeast.”
Global Partners reported a net loss for second-quarter 2016 of $7.3 million, compared with net income of $7.2 million for second-quarter 2015.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $41.3 million for second-quarter 2016, compared with $48.7 million for the same period of 2015.
Gross profit was $129.3 million for second-quarter 2016, compared with $144.2 million for second-quarter 2015. GDSO segment product margin was $116.3 million vs. $98.3 million period over period. The company attributed this primarily to improved gasoline margins, the June 2015 acquisition of Capitol Petroleum Group, expansion of Global’s leased portfolio (including the addition of 22 sites in April 2016) and the opening for business of certain raze-and-rebuild projects and NTI sites.
Sales for second-quarter 2016 were $2.1 billion, compared with $2.7 billion for the same period in 2015, primarily reflecting lower commodity prices. Sales in the GDSO segment were $916.7 million vs. $1 billion period over period.
Volume in the GDSO segment was 403.6 million gallons for the second quarter of 2016, compared with 376.9 million gallons in the second quarter of 2015, primarily attributable to the Capitol Petroleum transaction as well as expansion of the partnership’s leased portfolio and the opening for business of certain raze-and-rebuilds and NTI sites.
Combined product margin for second-quarter 2016 was $154.5 million, compared with $166.2 million for second-quarter 2015.
Wholesale segment sales were $1.1 billion in second-quarter 2016, compared with $1.5 billion for second-quarter 2015.
A publicly traded master limited partnership, Waltham, Mass.-based Global 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. Global 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 approximately 1,500 locations, primarily in the Northeast, Global also is one of the largest independent owners, suppliers and operators of convenience stores.
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