Global Partners Selling 125 Convenience Stores

Trimming ‘non-strategic’ sites from GDSO segment

Greg Lindenberg, Editor, CSP

Global Partners Eric Slifka

Eric Slifka

WALTHAM, Mass. -- Global Partners LP president and CEO Eric Slifka said the master limited partnership (MLP) expects to sell 125 “non-strategic” convenience stores within the next year.

“As we focus on further optimizing the cash flow from our retail portfolio of 844 owned or lease sites, we have identified approximately 125 non-strategic sites for sale,” he said during the company’s fourth-quarter and full-year 2015 earnings call. “We anticipate maintaining wholesale supply to some of these sites. We also have identified an additional 25 locations that warrant a change in mode of operation to maximize value.”

He said that the company has been “very active in pulling together all the information and trying to execute on it. And frankly, it's the right thing to do. And hopefully in the next 12 months, we'll be in a good position here to say we've completed most of it.”

Slifka said that the company’s gasoline distribution and station operations (GDSO) segment “had another strong year in 2015. We made significant investments in the business and those investments are paying off. Having completed the integration of Warren Equities and the assets acquired from Capitol Petroleum, our GDSO business in 2015 generated more than $455 million of our $692 million in combined product margin. Both of those transactions exceeded expectations for the year.”

He added that the company will continue to pursue the development of new-to-industry (NTI) sites and raze and rebuilds.

The company also reduced its non-convenience store workforce by 8%, or 70 people, which will generate annual savings of approximately $5 million, Slifka said.

The company has reported a net loss for fourth-quarter 2015 was $2.3 million, compared with net income of $27.9 million for fourth-quarter 2014.

Combined product margin for fourth-quarter 2015 was $157.4 million, compared with $159.4 million for fourth-quarter 2014.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for fourth-quarter 2015 was $45.8 million, compared with $61.9 million for the same period of 2014.

“These results were largely offset by our growing [GDSO] business, as well as more favorable conditions in the gasoline and gasoline blendstocks market,” Slifka said. “GDSO product margin grew 39% in the fourth quarter from the same period in 2014, primarily reflecting last year’s Warren Equities and Capitol Petroleum acquisitions, which contributed to additional gasoline volume through our retail network.”

Gross profit was $132.6 million for fourth-quarter 2015, compared with $142.6 million for fourth-quarter of 2014, as the decline in the wholesale segment offset the increase in the GDSO segment. Product margin in the GDSO segment was $121.3 million versus $87.1 million in fourth-quarter 2014, driven primarily by the Warren and Capitol acquisitions.

Sales for fourth-quarter 2015 were $2.2 billion, compared with $3.5 billion for the same period in 2014, primarily attributable to lower commodity prices. Wholesale segment sales were $1.2 billion, compared with $2.6 billion for fourth-quarter 2014. Primarily reflecting the Warren and Capitol acquisitions, sales in the GDSO segment were $853.7 million versus $744.3 million for the same period in 2014. Commercial segment sales were $153.2 million, compared with $191.1 million for fourth-quarter 2014.

Primarily due to a change in supply logistics for a particular gasoline customer and the discontinuation of a small discrete blendstocks distribution activity, wholesale segment volume was 849.6 million gallons in fourth-quarter 2015, compared with 1.2 billion gallons for the same period of 2014. Volume in the GDSO segment was 391.5 million gallons for fourth-quarter 2015, compared with 262.3 million gallons in fourth-quarter 2014, primarily attributable to the acquisitions of Warren and Capitol. Commercial segment volume was 115.4 million gallons, compared with 92.9 million gallons for fourth-quarter 2014.

A publicly traded MLP, 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. The partnership is engaged in the transportation of crude oil and other products by rail across its “virtual pipeline” from the mid-continental United States and Canada to the East and West Coasts for distribution to refiners and others. With approximately 1,600 locations, primarily in the Northeast, Global also is one of the largest independent owners, suppliers and operators of gas stations and convenience stores.