Global Partners ((GLP)) has held its Q4 earnings call. Read on for the main highlights of the call.
The latest earnings call from Global Partners presented a mixed outlook, highlighting significant achievements in terminal expansion and strategic growth, while also addressing declines in EBITDA and increased expenses. Despite these financial challenges, the company remains optimistic about future growth, thanks to strategic investments and a robust operational framework.
Expansion and Integration of Terminals
Global Partners has successfully integrated thirty new terminals across various regions, effectively doubling its storage capacity to approximately twenty-two million barrels. This expansion includes terminals acquired in December 2023 and is supported by a 25-year contract with Motiva Enterprises, showcasing the company’s commitment to long-term growth and stability.
Robust Segment Growth
The company reported strong growth in its wholesale segment, with a product margin increase of $90 million. Additionally, the GDSO product margin rose by almost $26 million for the year, demonstrating resilience and robust performance despite challenging market conditions.
Successful Distribution and Financial Position
Reflecting its strong financial position, Global Partners’ board declared a $0.74 distribution on common units, marking the thirteenth consecutive quarterly increase. This consistent growth in distributions underscores the company’s stable financial health and commitment to shareholder returns.
Strategic Positioning for Future Opportunities
Global Partners has expanded its operating footprint and strengthened its asset base, positioning itself to leverage supply, terminalling, and marketing expertise for future growth opportunities. This strategic positioning is expected to enhance the company’s ability to capitalize on emerging market trends.
Decrease in Adjusted EBITDA and DCF
The company experienced a decrease in adjusted EBITDA, reporting $97.8 million for Q4 2024 compared to $112.1 million in Q4 2023. Adjusted DCF also declined to $46.1 million from $58.8 million in the previous year, primarily due to a strong fuel margin environment in Q4 2023.
GDSO Product Margin Decrease
The GDSO product margin decreased by $31.8 million in Q4 2024 to $213.6 million, with gasoline distribution margins particularly impacted by lower fuel margins year over year. This decline highlights the challenges faced in maintaining previous margin levels.
Increased Operating and Interest Expenses
Operating expenses rose by $12.1 million due to recent acquisitions, while interest expenses increased to $34.4 million from $20.7 million in 2023. These increases were attributed to senior notes and higher credit facility balances, reflecting the financial impact of the company’s growth initiatives.
Forward-Looking Guidance
Looking ahead, Global Partners LP expects maintenance capital expenditures for 2025 to be between $60 million to $70 million, with expansion capital expenditures ranging from $75 million to $85 million. The company also expressed confidence in navigating potential tariffs on oil and gas imports, emphasizing the flexibility of its supply system and its preparedness for future challenges.
In summary, Global Partners’ earnings call conveyed a mixed sentiment, balancing significant achievements in expansion and strategic growth with challenges in financial metrics. The company remains well-positioned for future growth, supported by strategic investments and a strong operational framework, despite the current financial hurdles.