Global Partners LP

Good day, everyone, and welcome to the Global Partners first quarter 2021 financial results conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during today's call, please press star zero on your telephone keypad. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slivka, Chief Financial Officer, Ms. Daphne Foster, Chief Operating Officer, Mr. Mark Romain, Treasurer and incoming CFO, Mr. Gregory Hanson, and Executive Vice President of the General Counsel, Mr. Edward Fanuel. At this time, I'd like to turn the call over to Mr. Fanuel for opening remarks. Please go ahead, sir.

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 law. 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 sun stocks, and renewable fuels. Utilizations of assets and facilities, weather, credit markets, demand for convenience store offerings, the regulatory and permitting environment, and the forward product pricing curve, which could influence quarterly financial results. These statements involve significant risk 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 the 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. Our assumptions and future performance are subject to a wide range of business risks and uncertainties. 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 any 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, it is my pleasure to turn the call over to our President and Chief Executive Officer, Eric Schlisselman.

Thank you, Edward, and good morning, everyone. Before we review the quarter, let me take a moment to welcome our Treasurer, Greg Hansen, to his inaugural call. As we announced in March, Greg assumes the role of CFO in September upon Daphne's retirement from Global. I'll have more to say on our Q2 call in August about Daphne's outstanding contributions to Global over the past 14 years and the great work Greg has done in the lead-up to his promotion. Welcome, Greg. With more than one-third of the U.S. now fully vaccinated against COVID-19 and a growing number of businesses reopening, economic landscape is improving and industry-wide fuel demand is increasing as more people take to the roads in the first quarter of 2021 our fuel volumes in gdso those fill up from the same period in 2020 showed signs of rebounding from covid lows while retail fuel margins remained relatively strong despite a significant first quarter spike in wholesale gasoline prices which were up more than 70 cents through mid-March. In our wholesale segment, product margin in the first quarter of 2021 was $25 million better than the same period a year earlier. The improvement was driven by more favorable market conditions, primarily in gasoline and other oils and related products, as well as colder temperatures. Looking at recent highlights, in the first quarter we launched Project Carbon Freedom, a pioneering coalition designed to responsibly decarbonize home heat and help states meet their climate policies that expand the use of biofuels in New England, New York, and throughout the Northeast. This initiative brings together heating oil distributors, farmers, domestic biodiesel producers, and policymakers from the Northeast and Midwest. Through outreach, education, and advocacy, the coalition aims to bring awareness to several important realities that aren't addressed by climate bills calling to electrify home heating across our region. Project Carbon Freedom supports optimizing existing supply chain infrastructures in order to meet state and federal decarbonization targets with domestically produced renewable biofuels, which are already being used to heat homes across the Northeast and beyond. Since the March launch, we have seen tremendous support across a number of sectors for this common-sense approach. In just two months, we mobilized over 700 advocates from 21 states acted more than 500 state and federal legislators, and signed up nearly 90 coalition members. Complementing the rollout of Project Carbon Freedom, we continue to increase our ability to move renewable fuels and help customers reduce their carbon footprint. Towards that end, we recently secured a U.S. Department of Agriculture grant that will allow us to expand biofuel capabilities at five of our terminals and distribute higher blends of low-carbon biodiesel to customers in the Northeast. Turning to GDSOs, to our GDSO segment. We are continuing to expand our retail footprint in the greater Philadelphia market with the addition of more than 30 sites since mid-2020, which strengthens the integration with our terminal network in the Pennsylvania and New Jersey markets. We have an expansion CapEx range of $40 to $50 million in 2021 and plan to deploy that capital across a broad range of projects, including raise and rebuilds, new to industry sites, and remodels. From a strategic standpoint, our focused real estate investments are vital to the future delivery of motoring products, whether they be liquid fuels, electric charging stations, or other forms of energy. Appealing to a growing consumer niche and an investment in sustainability, we continue to broaden our homegrown, all-town fresh market footprint. Our market provides fresh, locally sourced, chef-driven meals and provisions, and cafe-inspired spaces to sit and enjoy freshly brewed coffee. With seven currently in operation, we plan to open seven more in 2020 or early 2022. On the M&A front, the pipeline is very active. We continue to evaluate opportunities to expand our geographic footprint, complement our service offerings, and drive profitability and growth. As I've noted on previous calls, our capital investments and strategic acquisition initiatives are designed with the goal of mid-teen returns or higher. We spoke with you last quarter about our acquisition of retail fuel and convenience store assets of Consumer Petroleum of Connecticut. We now expect this transaction to close in the third quarter. Turning to our distribution, last month the Board of Directors of our General Partner declared a quarterly castor distribution of $57.50 per common unit or $2.30 on an annualized basis on all outstanding units for the period from January 1 to March 31, 2021. This marks the fourth consecutive quarter in which the Board has raised the distribution, which is an important component of our overall capital allocation strategy and commitment to drive value for our unit holders. Looking at the demand forecast for the upcoming summer driving season, Energy Information Administration projects that U.S. gasoline consumption will improve slightly from 2020 but still remain below 2019. While the EIA expects ongoing effects from the pandemic to have a significant effect on petroleum markets this summer, those effects are expected to lessen through 2021 as an increasing percentage of the U.S. population is vaccinated. For our retail fuel business, which operates across 10 states, improving demand trends depend very much on the pace at which each region's schools, youth sports, and other extracurricular activities fully reopens. the return of rush hour commuters, and all the other events that put people in their cars. Heading into summer, we're encouraged by the data that appears to show many states turning a corner in terms of the pandemic. We'll have to see how the rest of the year plays out. Now, without, let me turn the call over to Daphne for her financial review. Daphne?