Good day, everyone, and welcome to the Global Partners First Quarter 2021 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, Ms. Daphne Foster; Chief Operating Officer, Mr. Mark Romaine; Treasurer and Incoming CFO, Mr. Gregory Hanson; and Executive Vice President, General Counsel, Mr. Edward Faneuil. At this time, I'd like to turn the call over to Mr. Faneuil for opening remarks. Please go ahead, sir.

Good morning, everyone. Thank you for joining us today. Before we begin, let me mind everyone, that this morning we will be making forward-looking statements within the meaning of federal securities law. These statements may include, but are not limited to, projections, beliefs, goals, estimates, concerning the future, financial and operational performance of Global Partners. Forward-looking statements are based on assumptions regarding market conditions such as the crude oil market business cycles, demand for petroleum products, including gasoline and gasoline blendstocks and renewable fuels, utilization of assets and facilities, weather, credit markets, demand for convenience store operators, the regulatory and permitting environment and the forward product pricing curve, which could influence quarterly financial results. These statements involve significant risks and uncertainties, some of which are beyond the partnership's control, including without limitation the impact and duration of the COVID-19 pandemic, uncertainty around the timing of an economic recovery in the United States, which will impact the demand for the products we sell and the services we provide. Uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform their obligations and/or utilize the products we sell and/or the services we provide. Uncertainty around the impact and duration of federal, state and municipal regulations and directives related to the COVID-19 pandemic, and assumptions that could cause actual results to differ materially from the partnership's historical experience and present expectations or projections. We believe these assumptions are reasonable given currently available information. Our assumptions and future performance are subject to a wide range of business risks and uncertainties. In addition, such performance is subject to risk factors, including but not limited to, those described in our filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements that may be made during today's conference call. With Regulation FD in effect, it is our policy that any material comments concerning future results of operations will be communicated through news releases, publicly announced conference calls or other means that will constitute public disclosure for the purposes of Regulation FD. Now, it is my pleasure to turn the call over to our President and Chief Executive Officer, Eric Slifka.

Thank you, Edward, and good morning, everyone. Before we review the quarter, let me take a moment to welcome our Treasurer, Gregory Hanson, to his inaugural call. As we announced in March, Greg assumes the role of CFO in September upon Daphne's retirement from Global. I'll have more to say on our Q2 call in August about Daphne's outstanding contributions to Global over the past14 [Technical Difficulty] and the great work Greg has done in the lead up to his promotion. Welcome, Greg. With more than 1/3 of the U.S. now fully vaccinated against COVID-19 and a growing number of businesses reopening, the economic landscape is improving and industrywide fuel demand is increasing as more people take to the roads. In the first quarter of 2021, our fuel volumes GDSO, though, still off from the same period in 2020, showed signs of rebounding from COVID lows, while retail fuel margins remained relatively strong, despite a significant first quarter spike in wholesale gasoline prices, which were up more than $0.70 in March. In our Wholesale segment, product margin in the first quarter of 2021 was $25 million better than the same period a year earlier. The improvement was driven by more favorable market conditions, primarily in gasoline and other oils and related products as well as colder temperatures. Looking at recent highlights. In the first quarter, we launched Project Carbon Freedom, a pioneering coalition designed to responsibly decarbonize home heat and help states meet their climate policies that expand the use biofuels in New England, New York and throughout the Northeast. This initiative brings together heating oil distributors, farmers, domestic biodiesel producers and policy-makers from the Northeast and Midwest. Through outreach, education and advocacy, the coalition aims to bring awareness to several important realities that are addressed by climate bills calling…

Thank you, Eric, and good morning, everyone. Let me begin this morning by discussing our recently completed Series B preferred unit offering, which further positions us to capitalize on acquisitions and organic expansion opportunities. A total of 3 million units were sold at $25 per unit, generating net proceeds of approximately $72.2 million, which were used to reduce indebtedness under our credit agreement. Distributions on the Series B units will be payable quarterly at a fixed rate of 9.5% per annum. As previously announced, a pro-rated initial distribution of $0.3365 will be payable on May 17 to holders of record as of the opening of business on May 3. Turning to our results. Adjusted EBITDA for the first quarter of 2021 was $40.4 million compared with $45.4 million for the same period of 2020. The $5 million delta reflects a decrease in combined product margins due largely to lower volume and weaker fuel margins in our GDSO segment, as well as an increase in SG&A expense. The net loss attributable to the partnership was $4.3 million in the first quarter of 2021, compared with net income of $3.3 million for the same period of 2020. DCF was $14 million in the first quarter of 2021, compared with $22 million in the prior year period. Both net income and DCF in the first quarter of 2020 included a tax benefit of $6.3 million related to the carryback of net operating losses reported under the CARES Act. In the first quarter of 2021, we received $15.8 million in cash refund associated with that carryback. TTM distribution coverage as of March 31, 2021 was 2.04x or 1.94x after factoring in distribution to our preferred unitholders. Turning to our segment details. GDSO product margin in Q1 was $130.4 million, down $25.5 million, compared with…

Thanks, Daphne. Looking ahead, we are following through on a number of strategic initiatives and positioning ourselves to take advantage of our infrastructure, low-carbon fuel and other opportunities. We remain focused on our strategy to grow through organic initiative and strategic M&A. We have a robust pipeline of retail investments and other projects planned for 2021 and believe that we are well positioned for the future. Now, Daphne and I are happy to take your questions. Operator?

[Operator Instructions]. Our first question comes from the line of Selman Akyol with Stifel.

Can you maybe talk a little bit more about what you're seeing in the M&A market?

It's Eric. It's just very busy. It's just very busy. So I -- we continue to sort of look at companies and try to do deals that will fit us and deals where we can bring value and be disciplined. I don't -- look, I don't know if it's people are being driven by taxes or other things, but it just continues to be busy. And there's a lot of it.

Are you seeing sellers expecting, more reasonable, more in line?

I think for us -- we're not going to win every deal and we do the deals that fit us, that fit into our network and our system. And so, I don't -- whether somebody thinks it's a lot or a little. I think it's -- we just try to stay disciplined and make sure that we can get the returns for our investors and for the company.

Got it. I think previously you had installed 1 or 2 charging stations at some of your stations, and I'm just kind of curious how that was going?

Yeah. I mean, so on 1, we've partnered with Electrify America and that's a high-speed charging station. I don't know the exact usage rate but very low-single digits, it might be 1%, 2%.

Got it. And then last one. You guys have been consistently growing the distribution, is there any comments you can make going forward?

No, I don't think there's any comment we can give you in terms of forward guidance on distributions. I think you can use the comment that we made in the script and how revolving thought about it. We're looking at what the investment opportunities are for us and how to provide the best return for investors, which doesn't show in distribution, so -- and yes, making sure the balance sheet is in good shape and deciding it forward.

Our next question comes from the line of Theresa Chen with Barclays.

I wanted to touch on the biofuels front and just wanted to ask about your early learnings on your renewable diesel handling activities, question from my end is that, if any of those lessons are translatable to what you're trying to do in the Northeast.

Yes. I mean, in terms -- I'd say renewable diesel on the West Coast it's -- for us, the handling of it has been, I'd say, pretty seamless. I think, the production side a bit is maybe a little bit different than that and just how it gets transported. But in terms of the facilities and our ability to take it and our ability to control and manage it, it's been seamless.

Got it. And just understanding a little bit on the puts and takes of the economic process related to this, so is the product primarily being distributed within Oregon or do you also handle the transportation a bit to California?

So as -- yes, in that facility, we are just a throughput. It's a long-term throughput agreement and the business partner takes it out by barge or ship and they deliver it to wherever they want to take it. It's likely it's going to California, right? But I can't tell you that with a 100% certainty.

Got it. And as incremental production capacity is likely coming online and need throughput agreements before destination terminals, when you renegotiate or when you contract these agreements to begin with, what do you think about the economics of the fee relative to -- but like a traditional petroleum product would typically command.

Yes. I mean, I don't think they are all that much different. I mean, it's -- that particular [Technical Difficulty] has rail in or rail out. It has tankage and it has a large dock, right? And those are really the premises that help it to be -- that healthy asset to be positioned well in the marketplace. And so, the real question isn't on the rates per se, but it's -- you've got to have those certain attributes to be competitive for that business.

Got it. And as Washington State recently passed its own clean fuel standard legislation to the State Assembly, is that incremental opportunity for that terminal to handle additional products since there will be more end demand in the Pacific Northwest?

Yes. I mean, specifically, I believe that there will continue to be additional pressure on every state to lower their carbon footprint. Historically, California sort of led the way, I'm not sure if every state is going to follow it exactly, but I do believe as we move forward, whether it's a renewable diesel or some other liquid fuel, that there's going to be opportunities on inside and I think it's just general, just very generally going to be -- it's going to become a broader fuel that gets used not just on the West Coast but really throughout the country, right? So at the end of the day, we have this base infrastructure and how do we take that infrastructure and move those renewable fuels for either for ourselves or for our partners? Because I do believe it's going to over time, take a piece of demand away from what I would say, is historical fuels. So it's going to be -- I think, it's an opportunity. So all this change -- and this is just very generally, all this change may create some anxiety, but it creates a lot of opportunity because half the change would be opportunities. They are new and they are different, you've just got to be aware of them and then try to market into them, right? So I look at it as a glass that's half full.

Our next question comes from the line of Ned Baramov with Wells Fargo.

First off, Daphne, congrats on your retirement, and Greg, good luck in your new role. My first question is on fuel margins in the GDSO segment, could you maybe talk about how fuel margins have been trending in the month of April and May and what your expectation is for the rest of the year, given rising crude oil prices and like the higher fuel demand as this driving season shapes up to be more normal than what we saw last year?

Ned, I'll give you the specifics on April in terms of margin, but I would say that, overall, we continue to see this over the last couple of years and certainly saw this, this cash quarter in terms of -- in an off-market, margins continue to be better. And I was actually looking back at first quarter of '19, first quarter of '19 prices were going up at $0.50 the last 2 months of that year. And then, going back to '19 and 2020 is an adoration and our margins were $0.23 per gallon. This quarter, it was $0.24 per gallon and prices increased $0.70 through mid-March and then that's up about $0.20. So we continue to be pleased with the margins relative in an off-market. And so, our volumes will be the best, should continue and has been somewhat of an offset to shortfall in volume, but the expectation is that volumes will continue to pick up as modern traffic increases.

Got it. And then, could you talk about the closing of the Connecticut acquisition, it seems that it is delayed by a quarter or so. So I was just wondering what's driving the longer process here. And also to the extent you can comment on this, can you provide any financial metrics related to this transaction?

Yes. So we just -- in terms of the timing, it's -- it just slipped a little bit. We continue to work with government agencies to come to a resolution. So -- but we really feel like it just slipped the limit there. What was the second question, again?

If you could provide any financial metrics related to this transaction? I totally understand if you decline to give a comment on this, given how close you are to the completion of the deal.

Yes. I -- what I would say is, in our comments earlier on the call, we said our deals are roughly mid-teens kind of cut the deals, I'd say that's consistent.

Okay, got it. And then, last question, I presume the preferred issuance in March, the period of the funding or be it the bulk of the funding you need to close the Connecticut deal. As you look at other potential M&A transactions, how do you think about the potential funding of future acquisitions?

Ned, well, we have $33 million outstanding under our revolver today and a $450 million revolver, so we have seen a sizable flexibility, if you will. As you said that we're always going to be looking at our leverage and making sure that our balance sheet is in good order, but we upsized that upto $450 million on the revolver and not be race impressed, being opportunistic more than anything else.

There are no further questions at this time. I would like to turn the floor back over to Mr. Slifka for closing comments.

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

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.