WALTHAM, Mass. -- Expansion into convenience stores helped Global Partners’ core supply and distribution business last quarter, providing healthy returns at the consumer end over decreases in sales and earnings further upstream, according to officials on the company’s quarterly earnings call.
Overall sales for first-quarter 2015 were $3 billion, compared to $5.1 billion over the same period in 2014, while earnings were $71.8 million, compared with $86.5 million the year before, officials said.
Gross profit rose to $168.5 million for first-quarter of 2015 versus $159 million in 2014, with a marked contribution coming from product margin in its retail end. The company bought 147 Xtra Marts when it purchased Providence, R.I.-based Warren Equities earlier this year. That deal and the “favorable impact” of falling gasoline prices brought product margins of $98.4 million compared to $53.1 million the year before.
“Global delivered strong EBITDA [earnings before interest, taxes, depreciation and amortization] and distributable cash flow, demonstrating the strength of our vertically integrated business,” said Eric Slifka, president and CEO of Global Partners, Waltham, Mass. “Reflecting the January acquisition of Warren Equities as well as the favorable impact of declining gasoline prices, our gasoline distribution and station operations segment delivered record product margin of more than $98 million for the quarter, up 85% from the same period last year.”
Two notable moves Global made in the first quarter:
- Global completed the acquisition of independent petroleum marketer Warren Equities Inc. from The Warren Alpert Foundation for approximately $381 million. The acquisition expanded Global’s portfolio with the addition of 147 company-operated Xtra Mart convenience stores and related fuel operations, 53 commission agent locations and fuel-supply rights for approximately 320 dealers.
- Global entered into an agreement with Capitol Petroleum Group, Springfield, Va., to purchase a portfolio of 97 primarily Mobil- and Exxon-branded owned or leased retail gas stations and seven dealer supply contracts in New York City and Prince George’s County, Md., for total consideration, subject to closing adjustments, of $156 million. The company expects to close the deal in second-quarter 2015.
“From a strategic standpoint, the acquisition of the [Capitol Petroleum] portfolio creates density for us in two very attractive markets,” Slifka said. “We are acquiring 51 retail locations and seven dealer supply accounts in New York City and 46 retail sites in the Maryland-Washington, D.C., market. … These stations sold approximately 125 million gallons of fuel in 2014.”
Net income attributable to Global Partners for first-quarter 2015 was $30.4 million, compared with $57 million for first-quarter 2014.
Combined product margin for first-quarter 2015 was $190.1 million, compared with $173.2 million for first-quarter 2014.
Wholesale segment sales were $2 billion for first-quarter 2015, compared with $4 billion for first-quarter 2014. Sales in the gasoline distribution and station operations segment were $780.4 million for first-quarter 2015 versus $802.9 million for the same period in 2014.
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. 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.
Global Partners has a focus on transporting of crude oil and other products by rail across its “virtual pipeline” from the mid-continental U.S. and Canada to the East and West coasts for distribution to refiners and others. 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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