Operator
Good day, everyone, and welcome to the Global Partners Second Quarter 2025 Financial Results Conference Call. Today's call is being recorded. All lines have been placed in a listen-only mode. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slipka, Chief Financial Officer, Mr. Gregory Hansen, Chief Operating Officer, Mr. Mark Romain, and Chief Legal Officer and Secretary Mr. Sean Geary. At this time, I'd like to turn the call over to Mr. Geary for opening remarks. Please go ahead, sir.
Good morning, everyone, and thank you for joining us. Today's call will include forward-looking statements within the meanings of federal securities laws, including projections or expectations concerning the future financial and operational performance of global partners. No assurances can be given that these projections will be attained or that these expectations will be met. Our assumptions and future performance are subject to a wide range of business risks, uncertainties, and factors which could cause actual results to differ materially as described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or update any forward-looking statements. Now, it's my pleasure to turn the call over to our President and Chief Executive Officer Eric Slifka.
Thank you Sean and good morning everyone. Global delivered strong second quarter results in line with our expectations. These results reflect the strength of our integrated business and the value of staying focused on disciplined execution. For the first half of 2025 we grew earnings and cash flow year-over-year with net income increasing 8%, adjusted EBITDA increasing 7%, and adjusted DCF increasing 9% from the same period last year. That kind of performance speaks to the power of our diversified platform and our ability to execute in a dynamic market. We see continued strength across our retail, terminal, and wholesale liquid energy segments. Our recent terminal acquisitions have expanded our reach, strengthened our presence in key markets, and established an even stronger platform for long-term unit holder value and future M&A opportunities. To that end, last month the Board approved a quarterly cash distribution of 75 cents per unit, our 15th consecutive increase. The distribution is payable on August 14th to unit holders of record as of the close of business on August 8th. Before I turn the call over to Greg, I want to take a moment to reflect on the passing of my uncle, Richard Slifka, our longtime chairman of the board who left us peacefully in May at the age of 85. Richard was part of Global for more than 60 years. His steady leadership and deep integrity helped shape the company we are today. Richie cared deeply about people, always guided by a strong sense of purpose and a commitment to doing what was right for the long term. Those who knew him will remember his generosity, thoughtfulness and quiet strength. His presence is deeply missed and his legacy continues to live on in the values he instilled across our organization and community. Following Richie's passing, we welcome Tom Jauka to our board of directors. Tom brings a wealth of experience from his long legal career at Nutter, McClellan, and Fish, where he has served as a partner since 1985. With that, I'll turn the call over to Greg for the financial review. Greg?
Thank you, Eric, and good morning, everyone. Turning to our results, it's important to note the difficult comparison of our second quarter of 2025 results with the second quarter of 2024. As you might recall, in the first quarter of 2024, certain products in our wholesale segment were negatively impacted by the timing of mark-to-market valuations that were then realized in the second quarter of 2024, leading to outsized wholesale segment results in that quarter. As a result, we believe that our year-to-date results through June provide a more accurate gauge of our performance. As Eric mentioned, for the first six months of 2025 compared to 2024, we saw strong growth in our performance, with adjusted EBITDA of $189.4 million versus $177.3 million in 2024, an adjusted DCF of 98.8 million compared with 90.4 million. Now turning to our quarterly results, as I review the numbers, please note that all comparisons will be with the second quarter of 2024, unless otherwise noted. Net income for the second quarter was 25.2 million versus 46.1 million in Q2 last year. EBITDA was 95.7 million for the second quarter compared with 118.8 million, and adjusted EBITDA was $98.2 million versus $121.1 million. Distributable cash flow was $52 million for the second quarter compared with $73.1 million and adjusted DCF was $52.3 million compared with $74.2 million last year. For the second quarter this year, net income, EBITDA, adjusted EBITDA, DCF, and adjusted DCF included a loss on early extinguishment of debt of $2.8 million related to the redemption of our senior notes due 2027 in the quarter. Adjusting for this loss on early extinguishment of debt, our adjusted EBITDA for 2Q25 was $101 million. Trailing 12-month distribution coverage as of June 30, 2025 was 1.81 times or 1.75 times after factoring in distributions to our preferred unit holders. Turning to our segment details, GDSO product margin decreased $13.6 million to $207.9 million in the quarter, primarily as a result of lower site count year-over-year and the impact of adverse weather conditions in the Northeast, which saw a record 13 weekends of consecutive rain. Product margin from gasoline distribution decreased $9.4 million to $137.9 million, preventing lower fuel volume due in part to the decreased site count year-over-year and the weather impact. On a cents-per-gallon basis, fuel margins of $0.36 per gallon remain flat with the second quarter of 2024 station operations product margin which includes convenience store and prepared food sales sundries and rental income was similarly impacted by the weather and lower site count it decreased 4.2 million to 70 million in the second quarter of 2025 at quarter-end we had a portfolio of 1553 sites 42 fewer than prior year as we continued our strategic divestment activities to enhance and optimize our overall portfolio of sites in addition we operated or supplied 66 sites under our spring partners retail joint venture looking at the wholesale segment second quarter product margin was 91.7 million product margin from gasoline and gasoline blend stocks decreased 11.6 million to 58.8 million primarily due to less favorable marketing conditions largely in gasoline but also in gasoline blend stocks that decline was partially offset by terminal acquisitions from Gulf Oil and Exxon mobile in the second and fourth quarters of last year, respectively. Product margin from distillates and other oils increased $11.4 million to $32.9 million, primarily due to more favorable market conditions. The commercial segment product margin decreased $0.1 million to $6.1 million, in part due to less favorable market conditions and bunkering. Looking at expenses, operating expenses increased $5.7 million to $135.7 million in the second quarter, primarily related to our terminal operations and the additions of the Gulf and Exxon Mobil terminals. SG&A increased $2.4 million in Q225 to $74.7 million, reflecting in part increases in wages and benefits and various other SG&A expenses. Interest expense was $34.5 million in the second quarter of 2025, down $1 million from last year, in part due to lower average balances on our revolving credit facility. CapEx in the second quarter quarter was 15 million consisting of 9.9 million of maintenance capex and 5.1 million of expansion capex that primary related to investments in our gasoline stations and terminals for the full year we continue to anticipate maintenance capital expenditures of approximately 60 to 70 million dollars expansion capital expenditures excluding acquisitions are anticipated to be approximately 65 to 75 million in 2025 relating primarily to investments in our gasoline station and terminal business at 70 million the midpoint of our expansion capex range is down 10 million from the range stated on our year-end 2024 call. Our current CapEx estimates depend in part on the timing of completion of projects, availability of equipment and workforce, weather, and unanticipated events or opportunities requiring additional maintenance or investments. Turning to the balance sheet, at June 30th, leverage as defined in our credit agreement as funded debt to EBITDA was 3.5 times. we had 198.5 million outstanding on the working capital revolving credit facility and 88.2 million outstanding on the revolving credit facility during the quarter we completed an upsized private offering of 450 million senior unsecured notes with a seven and one-eighth interest rate in a 2033 maturity we used the proceeds to retire our 400 million seven percent senior notes due 2027 through a combination of a cash tender offer and a subsequent redemption The remaining funds were used to pay down borrowings under our credit facility. This transaction strengthens our balance sheet, extends our debt maturity profile, enhances our financial flexibility moving forward. Before I hand the call back to Eric for closing remarks, I'll just mention that we'll be participating in Citi's 2025 Natural Resources Conference next week. If you're attending, we look forward to seeing you there. Now let me turn the call back to Eric for closing comments.
Thanks, Greg. As we move into the second half of the year our focus remains on operational excellence, disciplined capital allocation, and delivering consistent returns for our unit holders. Now Greg, Mark, and I would be happy to take your questions. Operator please open the line for Q&A.
Operator
At this time we will conduct the question-and-answer session. If you would like to ask a question please press star then the number one on your telephone keypad now and you will be placed in the queue in the order received once again in order to ask a question at this time please press star then the number one on your telephone keypad now your first question comes from Selman Akil with Stiefel your line is open thank you good morning um eric those were truly kind words on your uncle and they were heartfelt and sorry for your loss um thank you thank you very much i do appreciate that um i guess just you guys talked
about the weather and i'm just wondering is there any way you can quantify what impact you thought that had on the quarter hey someone's correct yeah it's hard candidly we look at it a thousand different ways to try and figure it out you know we look at same site volumes we look at same site store merchandising and really it really impacted may and into the first couple weeks of june i don't have a number for you but it was material it rained those every saturday for those 13 weeks you know that's that hasn't rained that much on weekends in the northeast since 1970 that's the last time it was 12 weeks was the previous record of 13 weeks so we really saw it in our may results and impacted not just the merchandising and pack-fab sales and things like that, but also the fuel side. But I don't have an exact number to give to you.
And you also referenced sort of 42 fewer sites, so I'm just curious how close are you to being done on the rationalization or is there much more to go?
Yeah, I'd quantify it as not much more to go. I think we're very happy where we are on a site count. you know we do an annual review every year and looking at our sites we look at you know the sustainability of those sites over the next 10 years if they fit our operating model if they're if they should be a company operated or they should be a dealer or a commission agent looked at the class of trade too you know I think where we sit right now we're very satisfied with our portfolio overall there's probably a handful of sites that we'd look to potentially either convert or divest and then you know we will do another review process as we annually do towards the fourth quarter and look at the process. But it's a continuing process, especially as we buy sites or, you know, do raise and rebuilds or NTIs. It's just a constant sort of churn in the portfolio. But that was probably a bigger chunk last year, the 40 cents we did. But I think overall we're pretty comfortable with the portfolio as it stands today.
Got it. And you guys had strength in your CPG. And so I'm curious, is that, you know, tied back to the terminals you've been acquiring and we're seeing that kind of get layered in there?
No, it's really independent from our terminals. You know, our supply advantages and our vertical integration, that really shows up on our wholesale segment. You know, those cents per gallon in the GDSO segment are pretty pure cents per gallon numbers. You know, I think, you know, overall, it wasn't that volatile of a quarter from a pricing standpoint. if you look at the RBOB curve, you had a big sell-off in early April, so you had some pretty strong margin early April after the Independence Day or Liberation Day when prices crashed pretty quickly and you had decent margins in April. And then, you know, May was sort of a grinded out month until, you know, June. You saw the big spike when Iran, the bombing of Iran happened, and then it quickly came off.
So towards the end of June, there were some opportunities for decent margins but overall I'd probably say it's a more normalized quarter overall got it and then can you guys just sort of comment on the acquisition outlook and what you're seeing out there and you know bid ask spread still pretty wide or coming in anything you can offer color there yeah I mean it I think you it's Eric's look I think you hit it right on the on the knows their bid offers are wide on the terminal link side I'd say on the retail side it remains active but you know I think there's some opportunities out there and we'll just see if there's a way to try and move forward all right I'll leave it at that thank you kindly at this time I'd like to turn the call back to mr. Slifka for closing comments thank you for joining us this morning and we look forward to keeping you updated on our progress. Thanks everyone.
Operator
This concludes today's call. Thank you for attending and have a wonderful rest of your day.
