Global Partners LP(US:GLP)2019-11-07 19:50Financial Data and Key Metrics Changes - Third quarter 2019 adjusted EBITDA was $66.1 million compared to $37.2 million in Q3 2018, indicating a significant increase [11] - Net income for Q3 2019 was $15.1 million, a turnaround from a net loss of $14.1 million in Q3 2018 [11] - DCF for Q3 2019 was $30.4 million, up from $5.3 million in the same period last year [11] - Combined product margin increased by $53 million to $210 million, driven by growth in Gasoline Distribution and Station Operations (GDSO) and Wholesale segments [12] Business Line Data and Key Metrics Changes - GDSO product margin increased by $20.1 million to $168.7 million, primarily due to higher fuel margins and acquisitions [12] - Gasoline Distribution contribution to product margin rose by $16.3 million, with average fuel margin per gallon improving to $0.254 from $0.215 year-over-year [13] - Station Operations product margin increased by $3.8 million to $61.1 million, attributed to the acquisition of 47 company-operated sites [14] - Wholesale segment product margin increased by $14.6 million to $20.2 million, reflecting favorable market conditions [15] Market Data and Key Metrics Changes - Volume in the Wholesale segment increased by 71 million gallons, or approximately 8%, primarily due to increases in gasoline and gasoline blendstocks [17] - Distillate inventories in the Northeast are at a 10-year low heading into winter, which could lead to increased volatility in prices [41] Company Strategy and Development Direction - The company is focused on leveraging its terminal network and retail assets for future growth [9] - Management is continuously reviewing capital structure and exploring opportunities for simplification, including potential IDR elimination and REIT format discussions [30][32] Management Comments on Operating Environment and Future Outlook - Management indicated that it is too early to predict Q4 performance due to potential price movements and external events impacting fuel margins [29] - There is a belief that consolidation in the industry may be contributing to improved margins, but risks remain from market disruptions [45][46] - The company expects increased volatility and supply dislocations due to the IMO 2020 regulations, but feels well-positioned to capitalize on market conditions [49][50] Other Important Information - The company raised its quarterly distribution from $0.515 to $0.52 per unit, reflecting strong performance [9] - CapEx for Q3 was approximately $22.5 million, with maintenance CapEx expected to be in the range of $45 million to $55 million for the full year [22][23] Q&A Session Summary Question: Guidance for Q4 and potential dynamics affecting EBITDA - Management noted that while guidance reflects strong year-to-date performance, predicting Q4 is challenging due to price movements and external events [29] Question: Potential IDR elimination transaction - Management stated they periodically review capital structure and explore opportunities in the marketplace [30] Question: Changes in fuel margins and operational impacts - Management indicated that fuel margins can fluctuate based on price movements and local competition, with seasonal maintenance affecting operational expenses [37][39] Question: Impact of low distillate inventories heading into winter - Management acknowledged low distillate inventories could lead to increased volatility in prices, but the market would attract more barrels as needed [41] Question: Impact of IMO 2020 regulations - Management expressed uncertainty about the exact impact but noted that increased demand for lower sulfur fuel could contribute to lower distillate inventories [49][50]