Global Partners LP

Good day, everyone, and welcome to the Global Partners First Quarter 2020 Financial Results Conference Call. Today's call is being recorded. There will be an opportunity for questions at the end of the program. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Sliska, Chief Financial Officer, Ms. Daphne Foster, Chief Operating Officer, Mr. Mark Romain, and Chief and Executive Vice President and General Counsel, Mr. Edward Fanuel. At this time, I'd like to turn the call over to Mr. Fanuel. Thank you. You may begin.

Thank you. Good morning, everyone. Thank you for joining us today. Before we begin, let me remind everyone that this morning we will be making forward-looking statements within the meaning of federal securities laws. These statements may include but are not limited to projections, beliefs, goals, estimates concerning the future financial and operational performance of global partners. Forward-looking statements are based on assumptions regarding market conditions, such as the crude oil market, business cycles, demand for petroleum products, including gasoline and gasoline blend stocks and renewable fuels, utilization of assets and facilities, weather, credit markets, the regulatory and permitting environment, and the forward product pricing curve, which could influence quarterly financial results. These statements involve significant risks and uncertainties some of which are beyond the partnership's control, including without limitation, the impact and duration of the COVID-19 pandemic, uncertainty around the timing of an economic recovery in the United States, which will impact the demand for the products we sell and the services we provide, uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform their obligations, and or utilize the products we sell and or services we provide, uncertainty around the impact and duration of federal, state, and municipal regulations and directives related to the COVID-19 pandemic, and assumptions that could cause actual results to differ materially from the partnership's historical experience and present expectations or projections. We believe these assumptions are reasonable given currently available information and our assessment of historical trends. Because our assumptions of future performance are subject to a wide range of business risks and uncertainties, we can provide no assurance that actual performance will fall within any guidance ranges. In addition, such performance is subject to risk factors, including but not limited to those described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or publicly release the results of any revision, to the forward-looking statements that may be made during today's conference call. With Regulation FD in effect, it is our policy that any material comments concerning future results of operations will be communicated through news releases, publicly announced conference calls, or other means that will constitute public disclosure for the purposes of Regulation FD. Now, my pleasure, please allow me to turn the call over to our President, and Chief Executive Officer, Mr. Eric Slifka.

Thank you, Edward. Good morning, everyone, and thank you for joining us. In these difficult and uncertain times, I hope that you and your families are staying safe. Before viewing the quarter, I want to begin by thanking the people across our organization for their unyielding commitment to our guests and customers. First and foremost, we are a critical energy infrastructure business. What I'm proudest of is the 3,800 global employees on the front lines, including terminal operators, convenience store associates, store managers, and office staff. Throughout this crisis, they have come through for those who are also on the front lines, first responders, doctors, nurses, truck drivers, and others by safely delivering fuel as well as other daily goods and services at a time when much of the country was under stay at home orders. I also want to talk about the measures we took early on to get ahead of the COVID-19 from a health and safety perspective. Specifically, we proactively mobilized our crisis incidents management team in anticipation of the possibility that the virus could strike in the regions where we operate. Our real-time crisis management exercises enabled us to successfully execute our business continuity planning in a measured and deliberate manner. In addition, we have transitioned our office staff to working remotely, a move that has been successfully implemented and we believe has long-term bandwidth. We also put procedures in place across our terminals, stations, and retail stores with a primary focus in mind, continuing to provide essential products and services while prioritizing the safety and wellbeing of our employees, guests, customers, and suppliers in the communities where we do business. Today, some eight weeks after COVID-19 first made its present felt, I'm proud to say that our locations are open, operating, and fulfilling that commitment. To navigate the challenges of this unprecedented environment, We have implemented a number of operational measures at our stations, stores, and terminals, from providing gloves and masks for employees to putting in place social distancing procedures, all with an eye toward keeping our team members, guests, business, and suppliers safe. We also have taken a number of actions to provide additional financial flexibility in this challenging environment. These include reducing the quarterly distribution on our common units, amending our credit agreement, drawing on our revolver and putting that cash on our balance sheet, and reducing planned expenses and 2020 capital spending. Looking at our first quarter, in light of the circumstances, we were pleased with our Q1 performance. In our GDSO segment, gasoline distribution product margin was up 23% year over year. This increase reflected the decline of wholesale gasoline prices due to COVID-19 and the price war between Saudi Arabia and Russia. While the decline in wholesale prices negatively impacted our wholesale segment product margin in the first quarter, our excess storage capacity in our terminal network positioned us to take advantage of the contango environment resulting from the steepening forward product pricing curve. From mid-March into April, we saw reductions of more than 50% in gasoline volume and more than 20% in convenience store sales. Fewer cars on the road translates to fewer guests at our stores, resulting in fewer sales at the register. Social distancing guidelines and directives limiting food operations at our convenience stores have also contributed to a reduction in in-store traffic and sales. Fuel margins in our GDSO segment declined in April, but still remained strong. Over the past few weeks, we have seen a slight uptick in volume, customer count, and convenience store sales. We could reasonably expect that increase to continue as states begin to lift restrictions and allow nonessential businesses to gradually reopen. It's a promising sign, but we remain cautious given the many variables and uncertainties associated with COVID-19. I think it's fair to say that our business has changed in the past eight weeks. These changes will be with us for an indefinite period, and we would certainly expect to see an increase in costs to comply with both governmental directives and other voluntary measures we adopt to support the safety of our employees, customers, and suppliers. That being said, we think that over the long term, we're advantaged by having a strong and integrated asset base. And while the near-term outlook remains uncertain, we believe that our diversified product portfolio and significant storage capacity provide operating and financial flexibility that will enable us to weather the current market challenges and capitalize on opportunities as market conditions improve. Now, let me turn it over to Daphne to review our financial results in detail. Daphne?