Global Partners LP

Good day, everyone, and welcome to the Global Partners Second Quarter 2021 Financial Results Conference Call. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Today's call is being recorded. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slifka, Chief Financial Officer, Ms. Daphne Foster, Chief Operating Officer, Mr. Mark Romain, Treasurer and incoming CFO, Mr. Gregory Hanson, and Mr. Sean Geary, Acting General Counsel and Vice President of Mergers and Acquisitions. At this time, I'd like to turn the call over to Mr. Geary 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, and 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-blended stocks and renewable fuels, utilization of assets and facilities, weather, credit markets, demand for convenience store operators, the regulatory and permanent 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 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 Commissions. 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 Slifka.

Thank you, Sean. Good morning, everyone, and thank you for joining us. I begin this morning with an in memoriam. In May, we were deeply saddened by the sudden passing of our Executive Vice President and General Counsel, Edward Faneuil. Eddie was a treasured colleague, a loyal friend, and a trusted advisor whom I had the privilege of working with for the past 30 years. In business, he was a skilled negotiator. In his personal and professional life, he was as caring, present, and abundantly giving to family, friends, and associates as anyone I've ever known. He was a wonderful human being and colleague, and we all miss him dearly. Turning to our results, our second quarter performance was solid, particularly in light of the extraordinary market conditions in Q2 2020 and the rising commodity price environment in the second quarter this year. In our GDSO segment, product margins were up nicely year over year. Higher fuel volume helped drive the increase in our gasoline distribution product margin, suggesting, at least for the moment, that the significant demand destruction caused by COVID-19 has begun to subside. Retail margins remain relatively healthy in Q2 of 21, despite a sharp rise in wholesale gasoline prices during the quarter. The station operations component of GDSO also performed well. Product margin grew due in part to a rise in sales as foot traffic across RC stores increased. While we were not immune from the effects of the driver shortages or supply chain issues that have affected many sectors of the economy in recent months, we saw no material impact from those issues. Our associates and partners did an outstanding job keeping our stores stocked and minimizing any disruptions. In looking at our performance in the wholesale segment, it's important to put the results in contact with the extraordinary market environment of the second quarter of 2020. Last year's second quarter was marked by a significant recovery in the supply-demand imbalance caused by COVID-19-related demand destruction and the geopolitical events in Russia and Saudi Arabia. This recovery caused historic contango and ultimately flattening of the forward pricing curve, substantially benefiting our wholesale product margins. While this year's second quarter saw far less favorable market conditions, the segment performed consistent with our expectations. On our Q1 call, I highlighted the launch of Project Carbon Freedom, a cross-industry effort organized by Global to advocate for legislation that supports the growth of renewable liquid heating fuel in the Northeast. To date, the initiative has generated nearly 5,800 advocacy letters for more than 800 advocates during this year's state legislative session. And I'm extremely pleased to report that since its March 8 launch, Project Carbon Freedom, or PCF, has supported the successful passage of landmark bio-heat mandates in New York, Rhode Island, and Connecticut. As the heating season approaches, PCF will continue to build out and work with its coalition of more than 100 organizations to empower industry stakeholders, including consumers, with tools and resources to forge a responsible, equitable path toward carbon-neutral home heating. Turning to our distribution, last week, the Board of Directors of our General Partner declared a quarterly cash distribution of $57.50 per common unit, or $2.30, on an annualized basis on all outstanding units for the period from April 1st to June 30th, 2021. The distribution will be paid August 13th to unit holders of record as of August 9th. On the M&A front, We are hopeful that our acquisition of Consumers Petroleum of Connecticut will close this quarter, subject to finalizing pending regulatory approvals. Looking ahead, we remain committed to building on the strength of our terminal and retail portfolio through strategic acquisitions and organic growth initiatives, raise and rebuilds, new to industry locations, and site enhancements that enable us to deliver value, quality, and hospitality for our guests. We recognize the growing change in consumer demands and fueling habits and are positioning ourselves to be a location of choice, whatever the fuel type may be. We continue to prepare select retail sites for EV infrastructure, explore other green technologies, and expand our cafe, Wi-Fi, and fresh food options in addition to rolling out touch-free purchase options. Our fuel terminals and stations are integral to the energy needs of the regions we serve and will remain so as we move forward. As many of you know, Daphne is retiring this month after nearly 15 years with Global. The past eight is our accomplished and extremely hardworking CFO. One of the perks of my job is being able to work alongside with some of the best people in the industry. Daphne has been a terrific business partner, forging great relationships with our bank group, guiding several successful financial transactions, and helping to put us in a strong financial position. She has also built a strong finance team, enabling us to promote from within our ranks our new CFO, Greg Hansen. Greg's business acumen, leadership skills, and outstanding relationships with our banking partners make him an ideal choice. I want to thank Daphne for all she has achieved and wish her a happy and healthy retirement and a lower handicap.