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WALTHAM, Mass. -- Despite a Northeast gas price squeeze, Global Partners LP is starting to reap the fiscal rewards of its acquisition of Alliance Energy, as indicated in its 2013 first-quarter earnings call today.
"Our results reflected our diverse product mix, our crude logistics activities and our additional station count primarily related to gas stations and convenience stores acquired in March 2012," said Global Partners CEO Eric Slifka.
The master limited partnership saw double-digit percentage gains in net product margin for each of its business segments in the 2013 first quarter and generated net income of $14.8 million. EBITA (earnings before the deduction of interest, tax and amortization) more than doubled year over year to $38.8 million, while distributable cash flow was $26.6 million, up 276 percent year over year.
"Our gasoline distribution and station operation segment was a key driver of our performance as the net product margin nearly doubled to $46 million. Keep in mind that this year's first quarter included a full three months of contributions from Alliance Energy compared with just one month in Q1 a year ago," Slifka explained.
Thomas Hollister, Global Partners' chief financial officer (CFO), chief operating officer (COO) and director, added that the gasoline distribution and station operation segment showed an 87-percent increase in volume to 264.6 million gallons, plus a net product margin increase of $22.9 million to $46 million, up from $23.2 million one year ago.
Despite these increases in distribution and volume, the management team concluded that it was a weak first quarter for the segment, compared to an average net product margin of $57.2 million per quarter over the last 12 months.
In his analysis, Hollister pointed to a margin squeeze brought on by rising gas prices. He spoke about the period from Jan. 15 to March 8 and cited AAA's report that indicated street prices for regular gasoline in New York State increased from $3.54 to $3.78. He also pointed to lost volume related to Northeast storms.
"In summary, we posted a solid first quarter despite a challenging gasoline pricing environment, and we remain encouraged about our prospects in 2013," Slifka said.
Personnel changes to Global Partners’ senior management team were also addressed during today’s call, as the chief executive took a moment to thank Hollister who is retiring June 30. Hollister, 58, joined Global Partners as CFO in July 2006 and was additionally named COO in 2007. He was elected to the board of directors in 2009.
"I want to thank Tom for his financial stewardship and his dedicated service over the past seven years. Tom has contributed his expertise during a period of significant growth for the partnership and we wish him well in his retirement," Slifka said.
Effective July 1, Treasurer Daphne Foster will take over as CFO and Mark Romaine, senior vice president, light oil supply and distribution, will assume the role of COO. Foster, 55, joined the company in 2007 and was elected treasurer in 2010. Romaine joined a predecessor company to Global Partners in 1998 as premium fuels marketing manager and became senior vice president, light oil supply and distribution, in 2006.
"Global has a superb management team and a roster of committed, highly skilled employees. Having worked closely with Daphne and Mark for many years, I am pleased to know that Global's financial and operational leadership is in excellent hands for the future," Hollister concluded.
Waltham, Mass.-based Global Partners LP owns, leases or supplies fuel to approximately 1,000 convenience stores and gas stations throughout the United States.