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    Global Partners Strengthens Retail Network

    Partnership continues to divest non-strategic assets.

    By Melissa Kress, Convenience Store News
    Eric Slifka is the president and CEO of Global Partners.

    WALTHAM, Mass. — Global Partners LP notched a solid first quarter as it positions itself for growth and bolsters its retail network. 

    According to Global Partners President and CEO Eric Slifka, over the past several quarters, the company has focused on monetizing non-strategic assets, capitalizing in the value of its real estate portfolio, and reducing costs.

    "These steps, along with our recently restated credit agreement, have strengthened our financial position and increased our flexibility to invest in opportunities fundamental to our growth strategies," Slifka said during the master limited partnership's first-quarter earnings call May 9.

    "Moving forward, we plan to monetize assets that do not fit our long-term strategic investments and reinvest those assets back into the business," he said, adding that Global will maintain a tight rein on investments and continue to run "its operations as efficiently as possible."

    Since the first quarter of 2016, Global has divested roughly 85 non-strategic sites, including the sale of 30 retail sites to Mirabito Holdings Inc. in August. The divestures continued in the first quarter of this year.

    "We remain pleased with the progress of our non-strategic asset divestiture program. In February, we completed the sale of our natural gas and electric brokerage businesses, generating more than $16 million for the partnership," Slifka said. "In addition, we generated approximately $8 million in proceeds from the sale of non-strategic retail sites."

    On the wholesale side of the business, Global is soliciting proposals for the potential sale of six non-strategic refined product terminals in New England, New York and Pennsylvania.

    "With our increased financial flexibility, we are better positioned to increase our investments in organic growth opportunities, raze-and-rebuilds, new-to-industry sites and acquisitions. As always, we will be selective, focusing on accretive deals, including those that leverage our integrated network of terminals and retail sites," the CEO said.

    "We are also strengthening and expanding our retail assets through branding and marketing alliances, additional technology improvements, and in-store enhancements designed to drive margin," Slifka continued.

    Q1 FINANCIALS

    In its latest quarter, gross profit was up 8 percent vs. the first quarter of 2016, to $140 million. Net income was $22.9 million vs. a net loss of  $7 million in last year's first quarter. EBITDA increased 69 percent to nearly $72 million, while adjusted EBITDA grew more than 23 percent to $60 million. 

    Global's wholesale business performed well in the quarter, generating a product margin increase of nearly $13 million, or 33 percent year over year. The business was positively impacted by favorable conditions in the wholesale distillates market and improved margins in the crude oil business. 

    The partnership's gasoline distribution and station operations (GDSO) business also continued to be a strong contributor, accounting for approximately 65 percent of the combined product margin in the first quarter. 

    Also in the quarter, operating expenses declined 7 percent from the same period a year ago, to $57.2 million. This was primarily due to decreases in the GDSO segment related to the sale of non-strategic sites, including those sold to Mirabito Holdings, partially offset by expenses including rents associated with leased sites.

    In a recent development, the partnership entered into an amended and restated credit agreement that provides, in part, for aggregate commitments of $1.3 billion, including an $850-million revolving credit facility to be used for working capital purposes, and a $450-million revolving credit facility to be used for general corporate purposes. The credit agreement has a maturity date of April 30, 2020.

    Waltham-based Global Partners is a midstream logistics and marketing master limited partnership that owns, controls or has access to one of the largest terminal networks of petroleum products and renewable fuels in the Northeast. With approximately 1,500 locations, primarily in the Northeast, Global is one of the largest regional independent owners, suppliers and operators of gasoline stations and convenience stores. 

    Global is also one of the largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers in New England and New York. 

    By Melissa Kress, Convenience Store News
    • About Melissa Kress Melissa Kress joined EnsembleIQ's Convenience Store News in November 2010. Her primary beats include alcoholic beverages and tobacco. Kress has been a professional journalist since 1995. A graduate of West Virginia University, she began her career in community journalism before moving to business-to-business publishing in 2000, covering commercial real estate.

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