Global Partners LP(US:GLP)2022-05-06 17:08Financial Data and Key Metrics Changes - Net income for Q1 2022 was $30.5 million compared to a net loss of $4.3 million in Q1 2021 [12] - Adjusted EBITDA for Q1 2022 was $74.9 million, up from $40.4 million in the same period last year [12] - Distributable cash flow (DCF) increased to $49.9 million from $14 million in Q1 2021 [12] - LTM distribution coverage as of March 31, 2022, was 1.9 times, or 1.7 times after factoring in distributions to preferred unitholders [12] Business Line Data and Key Metrics Changes - GDSO product margin in Q1 2022 was $173 million, an increase of $42.6 million from Q1 2021 [13] - Gasoline distribution contribution to product margin rose by $34.7 million to $114.9 million, driven by increased volume sold and a rise in average fuel margins [13] - Station operations product margin, including convenience store sales, was $58.1 million, up $7.9 million from the previous year [15] - Wholesale segment product margin increased by $16.6 million to $47.1 million, with favorable market conditions in other oils [17] Market Data and Key Metrics Changes - NYMEX gasoline prices increased by $0.96 per gallon in Q1 2022, compared to an increase of $0.54 per gallon in Q1 2021 [14] - Product margins from other oils and related products increased by $18.6 million to $53.1 million, while gasoline and gasoline blendstock product margin was negative $2.3 million [18] Company Strategy and Development Direction - The company focuses on M&A as a key strategy, having built a strong retail presence through accretive deals over the past 12 years [9] - Recent acquisitions of Consumers Petroleum and Miller's Neighborhood Market added over 100 retail locations, enhancing the company's footprint in the Mid-Atlantic region [10] - The company is advancing renewable fuel initiatives to capitalize on new opportunities in liquid renewables and other products [10] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation has not materially impacted operations, with costs being passed through to retail [30] - Gasoline demand remains below 2019 levels, but management sees no significant demand destruction as of April [34] - The company is optimistic about the M&A environment, believing it is ripe for consolidation, especially among smaller players facing increased operating expenses [42][45] Other Important Information - The quarterly distribution on common units was increased to $0.238 per unit, with payment scheduled for May 13, 2022 [11] - Operating expenses rose by $18.7 million to $99.2 million, driven by recent acquisitions and higher salary and rent expenses [21] Q&A Session Summary Question: Impact of inflation on operations - Management indicated that inflation has not materially impacted the company, with costs being passed through to retail and wage inflation stabilizing [30] Question: Demand destruction indications - Management noted that gasoline demand is still off from 2019 levels but has not seen significant demand destruction [34] Question: Strengths in other oils and related products - Management highlighted good performance in distillates, supported by favorable market conditions and strong demand in the bunkering business [38] Question: M&A environment - Management believes the industry is ripe for consolidation, with opportunities for growth through M&A as smaller players struggle with rising operating expenses [42][45] Question: Consumer response to higher fuel prices - Management reported that store performance remains strong, with good sales and margins despite some lag in transaction volumes compared to 2019 [47] Question: Repeatability of Q1 results in wholesale - Management stated that while Q1 results were strong, each quarter presents different challenges and opportunities, making it difficult to predict repeatability [55]