Global Partners LP

Good day, everyone, and welcome to the Global Partners Fourth Quarter and Full Year 2025 Financial Results Conference Call. Today's call is being recorded. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slifka, Chief Financial Officer, Mr. Gregory Hansen, Chief Operating Officer, Mr. Mark Romain, and Chief Legal Officer, Ms. Kristen Seabrook. At this time, I would like to turn the call over to Ms. Seabrook for opening remarks. Please go ahead.

Good morning, everyone. Thank you for joining us. Today's call will include forward-looking statements within the mean of federal securities law, including projections and expectations concerning the future financial and operational performance of global partners. No assurances can be given that these projections will be attained or that these expectations will be met. Our assumptions and future performance are subject to a wide range of business risk, uncertainties, and factors which could cause actual results to differ materially are described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or update any forward-looking statements. Now, it's my pleasure to turn the call over to our President and Chief Executive Officer, Eric Flipka.

Thank you, Kristen, and good morning, everyone. Before I begin, I want to welcome Kristin to her first earnings call as our Chief Legal Officer. Kristin brings valuable business and legal experience, including her leadership roles at Pilot, and she has already made a strong impact. Her judgment and perspective will be important as we continue to execute our strategy and position Global for the future. We're very pleased to have her on our team. Our full year performance in 2025 reflects disciplined execution of a strategy we have built and refined over many years. Higher volumes across our terminal and wholesale network, along with a double digit increase in wholesale segment product margin, demonstrates the benefits of investments that expand capabilities and enhance the performance of our integrated network. Our GDSO segment delivered solid results, Strong fuel margins help partially offset a decline in volumes and lower station operations contribution due in part to a reduced site count related to site optimization efforts. As we have said before, different parts of our business will experience different conditions at different times. What defines Global's performance over time is the strength of our diversified and integrated platform. Our business spans supply, terminals, wholesale distribution, bunkering, and retail operations, providing multiple sources of earnings that help balance performance across. This is important, is how these segments work together. Our ability to source product, move it efficiently through our terminals, supply our customers, and ultimately serve guests through our owned and operated retail sites allows us to capture value across the system and deliver consistent, durable results. Our strategy remains focused on acquiring strategic assets, investing in our existing network, and continuously optimizing our portfolio. On the acquisition front, the East Providence Terminal marked its first full year as part of our network in 2025 and has already exceeded our expectations. This asset expanded our storage, marine, and truck rack capabilities and strengthened our service footprint across key Northeastern markets, enhancing connectivity and flexibility across our system. We also expanded our bunkering business into the Houston market through a lease at the Texas City Terminal, providing access to one of the largest refining and fuel hubs in the world, and establishing a strong platform for future growth. We continue to invest in strengthening our existing portfolio Our wholesale segment benefited from the continued growth of our terminal network, where we expanded capabilities and grew third-party volumes. We also strengthened our data and analytics infrastructure, improving operational visibility and enabling more informed and timely decision-making across the business. At the same time, we remain focused on optimizing our portfolio. During the year, we divested non-strategic retail locations and converted sites to higher value formats. These actions improve overall portfolio quality and position the business for more consistent performance over time. As an owner, supplier, and operator of critical energy infrastructure, we manage global with a clear understanding how each part of the system contributes to overall performance. This perspective allows us to allocate capital with discipline, strengthen our platform, and focus on long-term cash flow generation and returns. Looking ahead, our priorities remain clear. We will continue to execute with discipline, invest in capabilities that enhance our platform, and build on the strong foundation we have established. Supported by a strong balance sheet, consistent cash flow generation, and a network built thoughtfully over time, We believe Global is well positioned to deliver sustainable value for our unit holders. Turning to our distribution, last month the Board approved a quarterly cash distribution of 76 cents per common unit, our 17th consecutive increase. The distribution was paid on February 13th to unit holders of record as of the close of business on Feb 9th. With that, I'll turn the call over to Greg for the financial review.

Thank you, Eric, and good morning, everyone. As we review the numbers, please note that unless otherwise noted, all comparisons will be with the fourth quarter of 2024. Adjusted EBITDA for the fourth quarter of 25 was $94.8 million compared with $97.8 million. Net income for the fourth quarter was $25.1 million versus $23.9 million. Distributable cash flow was $38.4 million for the fourth quarter compared with $45.7 million, and adjusted DCF was $38.8 million versus $46.1 million. The variance between the fourth quarter of 2025 versus 2024 primarily reflects less favorable market conditions in our wholesale and commercial segments, partially offset by a stronger fuel margin environment in our GDSO segment. We continue to maintain a solid distribution coverage of 1.56 times as of December 31st, or 1.5 times after including distributions to our preferred unit holders. Turning to our segment details, GDSO product margin increased 17.7 million in the quarter, to $231.3 million. Product margin from gasoline distribution increased $19.9 million to $165.6 million, primarily reflecting higher fuel margins year over year. On a cents per gallon basis, fuel margins increased by $0.09 to $0.45 in Q4-25 from $0.36 in 24, as volatility in RBOB prices during the quarter provided a favorable fuel margin environment. Station operations product margin, which includes convenience stores, and prepared food sales, sundries, and rental income decreased by $2.2 million to $65.7 million in the fourth quarter, due in part to a lower company-operated site count as a result of the sale and conversion of certain company-operated sites. At year end, our GDSO portfolio of fueling stations and C-stores totaled 1,524 sites. In addition, we operate or supplied 67 sites under our Spring Partners Retail Joint Venture. Turning to our wholesale segment, fourth quarter product margin decreased 21.5 million to 58.3 million. Product margin from gasoline and gasoline blend stocks decreased 10.5 million to 28.1 million, primarily reflecting less favorable market conditions than gasoline. Product margin from distillates and other oils decreased 11 million to 30.2 million, driven by less favorable market conditions. In our commercial segment, product margin decreased 2.6 million to 6 million, primarily due to less favorable market conditions and bunkering. Operating expenses decreased $3.5 million in the fourth quarter to $124.6 million, while SG&A increased $1.5 million to $80.9 million. Interest expense was $33.3 million in the fourth quarter, compared with $34.4 million in the same period in 24. CapEx in the fourth quarter was $38.8 million, consisting of maintenance CapEx of $22.6 million and expansion CapEx of $16.2 million. primarily related to investments in our terminal and gas station business. Full year 2025, we had $54 million in maintenance capex and $37.5 million in expansion capex. For the full year 2026, we expect maintenance capex in the range of $60 million to $70 million and expansion capex, excluding acquisitions, in the range of $75 to $85 million. Our current capex estimates depend in part on the timing of project completions, the availability of equipment and labor, whether in any unforeseen events or opportunities that require additional maintenance or investment. Our balance sheet remains strong at year end, with leverage as defined in our credit agreement as funded debt to EBITDA at 3.59 times, and ample excess capacity in our credit facilities. As of December 31st, we had $226.1 million borrowing outstanding on our working capital revolver, and $103.5 million outstanding on our $500 million revolving credit facility. On our IR calendar, next week we'll be hosting one-on-one meetings at the J.P. Morgan Leverage Finance Conference. For those of you participating, we look forward to seeing you in Miami. Now let me turn the call back to Eric for his closing comments.

Thanks, Greg. As we look ahead, the message is simple. Global is built for durability. Our integrated footprint, scale across the liquid energy value chain, and disciplined approach to capital allow us to manage the uneven markets, adjusting as conditions evolve, and leaning in when opportunities emerge. Early year cold weather conditions in the Northeast have supported solid wholesale fuel demand, and our footprint is well positioned to meet that demand and serve customers reliably. With strong fundamentals, a proven operating model, and a clear strategic framework, we remain focused on disciplined execution and on enhancing value over time for our unit holders. We start 2026. As we start 2026, we've never felt more confident about the ability of our complementary assets to drive growth. With that, Greg, Mark, and I will be happy to take your questions. Operator, please open the line for Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Selman Akil with Stiefel. Please proceed with your question.

Thank you. Good morning, everybody. I'd like to start on the site optimization you guys referenced several times. Should we think of that as being completed? I know you're always doing some fine-tuning, but for the most part, is that done?

Salman, it's Eric Slifka. Look, we continue to optimize. We continue to look at what we believe is the most efficient way to run all of our locations. Um, so that is a continual process. Uh, the goal here is, uh, really to be as efficient as we possibly can throughout the entire organization. So, uh, I would say that is a never ending process.

Okay. Um, and then pivoting over just to your CapEx and you guys called out, you know, it's going to be in terminals and GDSO. Is there a way to break that up between the two and maybe just thoughts on where you want to be investing or how much?

Yeah, I think, based on this, Greg, I mean, I think on the maintenance side, you know, you'll see that a little bit uptick year over year versus last year. That was primarily related to the terminals and the terminals we acquired over the last couple of years. So that's up a little bit overall. But, you know, I think our Our goal is hopefully to be conservative in that maintenance capex range we gave for guidance. I think we have a lot of efforts to drive down our capital spend through procurement on the maintenance side. And then on the expansion side, we've got three raise and rebuilds that we're working on on the GDSO side. That's a decent part of that. But then the major potential spend, I think, is more on the terminaling side. We're looking at some projects for expanding the capabilities of our terminals, expanding the throughput, expanding the logistics of them. Some of that is going to be uncertain due to timing on permitting and contracts, but we're seeing a real opportunity, especially around some of the terminals we've acquired in the last three years, to really expand the capabilities down there, either through logistics efforts or just expanding the actual capacity of the terminals.

That's great to hear. Eric, in your comments, you talked about sort of the you know, looking for growth in the Houston bunkering market. Can you expand on that? And does that tie into potentially some of your comments in terms of the capital?

In terms of Houston, you know, what we think is we've found a little bit of a niche location, and that's specific to what we're trying to do there. Obviously, we're in that business throughout the Northeast, so this is an expansion that Um, and we have, uh, tankage and we have, uh, barges and whatnot. So, uh, we think we're in a good position to deliver, uh, to the, to the needs of that market in the specific location that we're at.

Yeah. The only thing I would add to that Salman is on the CapEx, I related to that. It's pretty CapEx light. It's it's leased, it's leased barges and leased terminals, you know, where there's CapEx opportunities and in Texas is around. our other seven terminals that we have in the Texas market that we acquired through the Motiva acquisition.

Got it. And then you also referenced data analytics, and I presume that results more in cost savings than it does in revenue gains, but is there anything to expand on that?

Yeah, good morning, Solomon. It's Mark. I think it's both. Actually, I think it's a few things. First of all, we... I know I'm stating the obvious, but we generate a tremendous amount of data from our business, whether it be through our stores, whether it be through our terminals. And so part of this is just building the infrastructure to organize that data better and make it accessible to the people running the business. Our expectation on the benefit of that is twofold. One, it should... and is already providing efficiencies for the business and, you know, and also enhancing decision-making. And then the second part of that is around the analytics side is using that data to drive better business decisions and perhaps even embedding some, you know, AI capabilities into some modeling to help us with, some of the decisions we have to make on a day-in, day-out basis. Got it.

Yeah, the other thing I would add to that is I think, you know, I think we're very excited about the future potential there. I will say as it relates to 25, you know, some of the SG&A increase you see year over year in SG&A is related to, you know, salaries and labor related to that effort and also, you know, an uptick in licensing subscription fees for software related to that too. So that's somewhere where we've invested some of our SG&A dollars to, you know, I think hopefully get to significant cost savings in the future and potential hopefully helping our margins too.

Got it. And then last one for me, it sounded like weather was favorable for you in Q1 and the wholesale segment. And I get there's a lot of volatility and always sort of difficult to know, but Any way to sort of maybe frame up what 1Q looks like and how we should be thinking about it?

Yeah, I mean, I don't think we're going to – it's hard to frame up from a guidance perspective or anything. I think we just really wanted to recognize that, you know, the latter half of January into February was extremely cold in the Northeast, which led to a lot of heating degree days, which is, as you know, historically is very helpful for our rack wholesale business in general. and should give us a decent tailwind to start the year.

Got it. All right. Thank you very much.

Thank you. Mr. Kliska, I'd like to turn the floor back over to you for closing comments.

Thank you for joining us this morning. We look forward to keeping you updated on our progress. Thanks so much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.