Participants

Sean Geary; Chief Legal Officer and Secretary of the General Partner; Global Partners LP

Eric Slifka; President, Chief Executive Officer, Vice Chairman of the Board of the General Partner; Global Partners LP

Gregory Hanson; Chief Financial Officer of the General Partner; Global Partners LP

Selman Akyol; Analyst; Stifel

Mark Romaine; Chief Operating Officer of the General Partner; Global Partners LP

Presentation

Operator

Good day, everyone, and welcome to the Global Partners fourth quarter and full-year 2024 financial results conference call. Today's call is being recorded. (Operator Instructions)
With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slifka; Chief Financial Officer, Mr. Gregory Hanson; Chief Operating Officer, Mr. Mark Romaine; and Chief Legal Officer and Secretary, Mr. Sean Geary.
At this time, I would like to turn the call over to Mr. Geary for opening remarks. Please go ahead, sir.

Sean Geary

Good morning, everyone. Thank you for joining us. Today's call will include forward-looking statements within the meaning of federal securities laws, including projections and 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.

Eric Slifka

Thank you, Sean. Good morning, everyone, and thank you for joining us on today's earnings call. 2024 was a transformative year of the growth for Global Partners. We integrated 30 new terminals across the Atlantic Coast, the Southeast, Texas and the Northeast, more than doubling our storage capacity of approximately 22 million barrels.
Our expansion included 25 terminals acquired in December 2023, backed by a significant 25-year take-or-pay contract with Motiva Enterprises, a subsidiary of Saudi Aramco. In April, we added 4 Northeast terminals, complementing our network in that region. And in November, we acquired a 959,000-barrel terminal located on a 730-acre parcel in East Providence, Rhode Island, with infrastructure capabilities to accommodate long-range vessels. These strategic investments totaling more than $528 million have solidified our role as an essential part of the US energy infrastructure and enhanced our ability to serve our rapidly growing customer base.
We could not have accomplished this without the dedication, resilience and innovative spirit of our employees across our businesses. From our terminal operations to our retail locations, every member of our team has played a crucial role in our success. I'm especially proud of the way in which we've navigated the dynamic energy landscape while maintaining our commitment to operational excellence and customer satisfaction. Despite severe weather during the year, our terminal staff has consistently demonstrated exceptional service for our customers, while our retail teams have continued to elevate the experience with new offerings for our guests at our few locations and convenience markets.
Both our Wholesale and GDSO segments demonstrated robust growth in 2024. The [$90 million] increase in Wholesale segment product margin reflected in part a full 12 months of contributions from the terminals acquired from Motiva and a partial year of ownership of the terminals acquired from Gulf and ExxonMobil. GDSO product margin was up almost [$26 million] for the year, even with a tough comparison due to an especially strong retail fuel margin in the fourth quarter of 2023.
Let me briefly address the steps we are taking to prepare for the potential implementation of tariffs on oil and gas imports, particularly from Canada and Europe. We continue to actively monitor global economic conditions and the evolving supply landscape, holding, as we always do, daily meetings and additional scenario planning to assess potential impacts of any imposed and proposed tariffs.
Turning to our distribution. In January, the Board declared a distribution of $0.74 on all outstanding common units for the fourth quarter. This marked the 13th consecutive quarterly increase and reflects our continued strong financial position. The distribution was paid on February 14 to unitholders of record as of Feb 10.
In summary, as evidenced by our results, our diverse asset portfolio continues to drive strong performance. With our expanded operating footprint, greater access to critical pipeline and marine infrastructure and a strong balance sheet, we are well positioned to leverage our supply, terminalling and marketing expertise to seize growth opportunities and create value for our unitholders.
With that, let me turn the call over to Greg for his financial review. Greg?

Gregory Hanson

Thank you, Eric, and good morning, everyone. As we review the numbers, please note that unless otherwise noted, all comparisons will be with the fourth quarter of 2023.
Adjusted EBITDA for the fourth quarter of 2024 was $97.8 million compared with $112.1 million in the same period of '23. And adjusted DCF was $46.1 million versus $58 million -- $58.8 million in 2023. Across these numbers, the variance between the fourth quarter of 2024 and 2023 is primarily related to the exceedingly strong fuel margin environment we experienced in our GDSO segment in the fourth quarter of 2023. Trailing 12-month distribution coverage as of December 31 was 1.81x or 1.72x after factoring in distributions for our preferred unitholders.
Turning to our segment details. GDSO product margin decreased $31.8 million in the quarter to $213.6 million. Product margin from gasoline distribution decreased $32.1 million to $145.7 million, primarily reflecting lower fuel margins year-over-year.
On a cents per gallon basis, fuel margins decreased $0.08 to $0.36 in Q4 2024 from $0.44 in Q4 2023. This was primarily driven by the volatility in Wholesale RBOB prices during the fourth quarter of '23 when wholesale RBOB prices decreased $0.34 per gallon from the end of September to end of December 2023. In contrast, wholesale RBOB prices increased $0.04 per gallon in the fourth quarter of 2024.
That said, the retail fuel margin environment in the fourth quarter of '24 continued to be constructive and above historical averages. And we are pleased with the results from gasoline distribution, which increased on a full year basis for 2024 by $20.2 million or 4% over the corresponding period in '23, with fuel margins on a cents per gallon basis for the full year of 2024 of $0.36 versus $0.34 in fiscal year '23.
Station operations product margin, which includes convenience store and prepared food sales, sundries and rental income, increased $0.3 million to $67.9 million in the fourth quarter of 2024. During the year, we continued to optimize our retail portfolio through divestitures and conversions of certain company-operated sites. At quarter end, our GDSO portfolio of fueling stations and C-stores totaled 1,584 sites. In addition, we operate 64 sites under our Spring Partners Retail joint venture.
Looking at the Wholesale segment. Fourth quarter 2024 product margin increased $27.9 million to $79.8 million. Product margin from gasoline and gasoline blendstocks increased $13.2 million to $38.6 million, primarily due to the acquisition of 25 terminals from Motiva in December of 2023 and to more favorable market conditions. Product margin from distillates and other oils increased $14.7 million to $41.2 million, primarily due to more favorable market conditions in distillates. The Commercial segment product margin increased $0.2 million to $8.6 million.
Looking at expenses. Operating expenses increased $12.1 million to $128.1 million in the fourth quarter of 2024, primarily reflecting the addition of 30 terminals from Motiva, Gulf and East Providence acquisitions. SG&A decreased $1.9 million in the quarter to $79.4 million. Interest expense was $34.4 million in the quarter compared with $20.7 million in 2023, primarily due to interest expense related to our 8.25% senior notes issued in January of 2024, which were used to facilitate the Motiva acquisition and to higher average balances on our credit facility, in part due to the Gulf terminals acquisition.
CapEx in the fourth quarter was $46.8 million, consisting of maintenance CapEx of $15 million and expansion CapEx of $31.8 million primarily related to investments in our terminal and gasoline station business. For the full year of 2024, we had $46.9 million in maintenance CapEx and $56.4 million in expansion CapEx.
For the full year of 2025, we expect maintenance capital expenditures in the range of $60 million to $70 million and expansion capital expenditures, excluding acquisitions, in the range of $75 million to $85 million relating primarily to our gasoline station and terminalling businesses. These current estimates depend in part on the timing of project completion, availability of equipment and workforce, weather and unanticipated events or opportunities requiring additional maintenance investments.
Our balance sheet remains strong at December 31, with leverage as defined in our credit agreement as funded debt-to-EBITDA at 3.47x and ample excess capacity in our credit facilities. As of December 31, we had $229.5 million in borrowings outstanding on our working capital revolving credit facility and $167 million outstanding on the revolving credit facility.
Now let me turn the call back to Eric for his closing comments.

Eric Slifka

Thanks, Greg. We begin 2025 at a strong financial and operational position. Our strategic investments to expand our portfolio, strengthen our asset base and broaden our customer relationships prepare us not only to capitalize on the dynamic market environment of today, but to thrive in the evolving energy landscape.
We expect this to be a year of opportunity and growth for Global as we build on our success of the past year. We continue to integrate our recently acquired assets. We look to deliver continued value to our unitholders. I'm excited about the opportunities ahead.
With that, Greg, Mark and I will be happy to take your questions. Operator, please open the line for Q&A.

Question and Answer Session

Operator

(Operator Instructions) Selman Akyol, Stifel.

Selman Akyol

Appreciate all your comments on GDSO. In terms of your thoughts on tariffs, can you just say how much of your supply comes from outside US borders?

Mark Romaine

Selman, it's Mark. I can't tell you exactly what percent of our supply comes. It's not something we break out for obvious reasons, for competitive reasons. But I will say that Canadian barrels are -- they're an important part of the supply landscape, the entire supply landscape for the -- really for New England maybe into the Northeast. The further north you get, the more important that barrel is. So Vermont, New Hampshire, Maine and then as you move down into Boston, Providence, maybe into Connecticut.
So it's an important barrel for the region. But I think for us, Eric talked about it in his comments, we're looking at this, we're meeting, we're doing scenario planning, we're trying to understand what the potential impact might be. We've never really dealt with this before. So it's a little bit unknown at the moment.
What I will say is that our system is designed to allow us to source barrels from anywhere. And that's one of the great things about our system and our assets is that we're not tied into one source of supply. So we can literally go anywhere for a barrel. And I think that's important.
So while we'll stay close to it. We'll make sure that our system -- we do the best to supply our system for our customers. But I think we have flexibility to go anywhere to get a barrel. And whether that's shipping up Colonial, whether that's taking in imports from other regions, whether it be Canada, Europe, the Caribbs, anywhere. We can take a barrel from anywhere.
So I'm not that worried about the supply dynamics, the price will be the price. You may have to pay a little bit extra for a barrel. I don't know, we'll see how that works out. But I think the key thing for us is that our system really allows us to source barrels from anywhere. And that's a -- it's a key point, not just for this particular for this potential event, but I think it's a key point in general, when you look at our system because it allows us to source from anywhere, source the lowest cost barrel, optimize around that effort. And I think we're very comfortable in that setting.

Selman Akyol

Understood. And no doubt tariffs are creating a lot of uncertainty out there, and you're not the only company trying to wrap your head around it. Let me ask you -- so with that as a backdrop, does that in any way change sort of your thought plans or just in terms of maybe doing an acquisition? Or does it change desire of where you would want to be? More emphasis to get into other parts of the country?

Eric Slifka

Yes. Selman, it's Eric Slifka. It does not. What I want to be very clear about is the terminals in the Northeast that take a lot of product from Canada are incredibly flexible facilities because they can take product in from anywhere in the world.
And so it's not a matter of if, it's a matter of what price because there's great clearing mechanisms. So our perspective here is although it may increase costs of supply, the barrel is still going to be there. And we, given our system, actually have the ultimate flexibility as to how we source and where we source that barrel. And so albeit it might be not the best economic outcome for others, for the consumer, at the end of the day, we're going to make sure that the barrel gets supplied. It just might be a little bit more costly.
So it's a minor bump in the road. Over time, those supply chains will adjust. And by the way, because it's all on the water, literally, they will adjust in weeks. So our perspective is it's business as usual. It's going to change how supply moves around the globe. But for us, we're going to be as efficient as we can be in supplying and sourcing the lowest cost barrels to make sure that we're delivering on our promise to our guests and customers.
So long answer to the question, but it doesn't affect how we think about our business and how we want to invest, and where we believe we actually have competitive advantages. Actually, we think this highlights our competitive advantages in the markets that we're in. So we're -- I hate to say it, but it's positive for our business model, and I actually think it's one of the things that differentiates us versus our competitors.

Selman Akyol

Got it. Can you maybe talk about what you're seeing in Houston and maybe what the growth plans are for that? You've had it now for a while. Just kind of wondering what you're thinking on.

Mark Romaine

Yes. Selman, it's Mark again. I mean, just broadly, we've got the retail down there, we've got terminals, and we've got a pretty sizable wholesale and branded rack business down there. I think from a growth standpoint, we'll look to grow all 3 legs of that stool, we'll look to -- we consider new retail assets every time they become available. As you know, we're very disciplined. So we're not going to do a deal for the sake of growing, we're going to do a deal if we think we can add value, and we think we can drive synergies through it. So we continue to look for retail opportunities to grow.
Some of the assets that we bought, that we got in that Motiva transaction, we have 7 terminals in Texas. Some of them have real growth opportunities. And so we'll look to kind of organically grow those. It may take some time because there's permitting and things like that. These are not -- these aren't flip-the-switch opportunities like adding new [indiscernible] these are investments that I think we have the opportunity to make. We'll continue to try to leverage our sales and supply functions to grow that supply and wholesale presence.
So I think it is an area that we're very interested in. We're going to keep focusing on that in other regions and look for opportunities to grow through acquisition, but also look for opportunities to grow organically.
And then if you flip -- if you just dial it back to retail, we've been operating those assets, I think, for 1.5 years. And I think we've got our arms around them, I think there's a lot of opportunity to grow those volumes and store sales on site. So we're very focused on that region. And I think we're positive about our opportunities down there.

Selman Akyol

Got it. And then just last one, just in kind of staying on acquisitions. Anything changing in terms of either the number of potentials you see out there? Anything in terms of pricing, bid-ask spreads getting closer? Anything you can just make on commentary along those lines?

Eric Slifka

Yes. I mean, I think it continues to be really busy. And there's lots of stuff out there, and there's lots of movements, whether that's retail or whether that's terminalling. We continue to look at whatever is out there.
I think, generally speaking, depending -- asset quality really matters as to what multiples things go at. And I do think that there are some spreads that have opened up between certain types of sites, but we continue to be very active. And we're hopeful that we'll get some transactions done in the next year.

Operator

We have reached the end of the question-and-answer session. Mr. Slifka, I would like to turn the floor back over to you for closing comments.

Eric Slifka

Thanks for joining us this morning, everyone. We look forward to keeping you updated on our progress. Everyone, enjoy the weekend. Thank you.

Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.