Edward Faneuil - Executive Vice President and General Counsel Eric Slifka - President and Chief Executive Officer Daphne Foster - Chief Financial Officer Mark Romaine - Chief Operating Officer Charles Rudinsky - Executive Vice President and Chief Administrative Officer.

Benjamin Brownlow - Raymond James & Associates, Inc. Barrett Blaschke - Mitsubishi UFJ Securities James Jampel - HITE Hedge Asset Management LLC Ned Baramov - Wells Fargo Securities.

Good day, everyone, and welcome to the Global Partners’ Third Quarter 2017 Financial Results Conference Call. Today's call is being recorded. There will be an opportunity for questions at the end of the call. 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; Executive Vice President and Chief Accounting Officer, Mr. Charles Rudinsky; and Executive Vice President and General Counsel, Mr. Edward Faneuil. At this time, I would like to turn the call over to Mr. Faneuil for opening remarks. Please go ahead, sir..

Good morning, everyone, and thank you for joining us today. Before we begin, let me remind everyone that this morning, we will be making forward-looking statements within the meaning of Federal Securities Laws.

These statements may include, but are not limited to, projections, beliefs, goals and estimates concerning the future financial and operational performance of Global Partners.

Estimates for Global Partners EBITDA guidance and future performance are based on assumptions regarding market conditions, such as the crude oil market business cycles, demand for petroleum products, renewable fuels and logistics, weather, credit markets, the regulatory and permitting environment and the forward product pricing curve, which could influence quarterly financial results.

We believe these assumptions are reasonable given currently available information and our assessment of historical trends. Because our assumptions and future performance are subject to a wide range of business risks and uncertainties, we can provide no assurance that actual performance will fall within guidance ranges.

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 the 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 release, publicly announced conference calls or other means that will constitute public disclosure for the purposes of Regulation FD.

Now, please allow me to turn the call over to our President and Chief Executive Officer, Eric Slifka..

Thank you, Edward. Good morning, everyone, and thank you for joining us. Our third quarter results reflect solid performance across our businesses. Product margin in the Wholesale segment more than doubled from last year's third quarter more than $36 million and in Gasoline Distribution and Station Operations segment performed better than expected.

We continue to pursue strategic acquisitions that drive volume and margin. In October, we acquired the retail gasoline stations and convenience store assets of Honey Farms approximately $36 million in cash. The addition of Honey Farms expands our footprint in the Worcester, Mass. region and achieves larger economies of scale.

We expect this transaction to be accretive within the first full-year of operation. At the end of September our retail portfolio consisted of 1,435 owned, leased or supplied gasoline stations in the Northeast, Maryland and Virginia, including 234 company operated convenience stores.

Looking in our key financial metrics, gross profit was up 13% from the third quarter of 2016 to $150 million. Adjusted EBITDA increased 23% to nearly $64 million. Distributable cash flow for the third quarter of 2017 was more than $32 million.

Excluding certain non-cash charges in both period DCF would have been approximately $35 million compared with above $19 million in Q3 last year and improvements of 83%. In October, our Board announced quarterly cash distribution of $0.4625 or $1.85 on an annual basis.

The distribution will be paid on November 14, to unitholders of record as of the close of business on November 9. Turning to our guidance, the full-year 2017 we expect to achieve EBITDA above the midpoint of our guidance of $190 million to $220 million, which excludes the gain or loss on the sale and disposition of assets and any impairment charges.

To summarize we are pleased with our financial and operating performance through the first nine months of 2017. We look forward to continuing to invest in our business and optimizing our retail and terminal assets. With that, let me turn the call over to Daphne for her financial review.

Dap?.

Thank you, Eric, and good morning, everyone. Turning to our third quarter results combined product margin increased $15.1 million year-over-year to $172.3 million. The increase primarily reflected improved product margins in Wholesale segment with gasoline and crude oil driving the majority of that increase.

As you look at the P&L, keep in mind that last years third quarter included $121.7 million non-cash goodwill impairment charge in our wholesale segment as well as $26.1 million long lived asset impairment charge primarily related to our crude oil transloading terminals in North Dakota.

Third quarter 2017 operating expenses of $70.3 million were essentially unchanged from last year. SG&A expenses of $40.1 million were up $3.4 million from last years third quarter, primarily reflecting increases in professional fees, severance charges related to the sale of our natural gas business and accrued incentive comp.

The increase in product margin drove to $12.2 million increase in adjusted EBITDA from $51.6 million to $63.8 million in this years third quarter. DCF was $32.3 million in Q3 this year.

DCF excluding certain non-cash charges, such as net losses on the sale and disposition of assets and goodwill and long lived asset impairment would have been $35.3 million and $19.3 million for the three months ended September 30, 2017 and 2016 respectively. Interest expense was $20.6 million compared to $21.2 million in the year earlier period.

The decrease was due to lower average balances on our credit facility, partially offset by a year-over-year increase in interest rates. Now let me take you through our segments in more detail beginning with GDSO.

Product margin was $130.7 million, $6.2 million lower than the same period a year earlier, reflecting in part the sale of sites, including the Mirabito sites sold in August 2016. Gasoline distribution product margin was down $3.9 million to $84.2 million and Station Operations product margin decreased $2.2 million to $46.5 million.

Fuel margin averaged $0.205 per gallon, down from $0.212 in last year third quarter, reflecting the change in our retail portfolio with the sale of some company-operated sites. Wholesale segment product margin increased $20.5 million to $36.6 million.

Weather-related supply disruptions was the primary reason for the increase in gasoline and gasoline blendstocks margins which was up $8.9 million to $30.4 million.

Product margin in other oils and related products increased $3.2 million to $14.6 million, primarily due to improved margins in residual oil which also benefited from weather-related supply disruptions. Crude oil product margin was negative $8.4 million for the quarter compared with negative $16.8 million in the same period last year.

The $8.4 million improvement reflected a $10.8 million in revenue related to crude oil take-or-pay contract with one particular customer and a $9 million decrease in railcar lease expense as the result of our early termination of a sublease in December 2016.

However, crude oil product margin was negatively impacted by $13.1 million expense associated with the acceleration and corresponding termination of a contractual obligation under our pipeline connection agreement with Tesoro related to the Beulah, North Dakota facility.

The contractual obligation was accelerated due to a lack of crude oil movement through the pipeline. Absent that expense, our crude oil business performed as expected. Completing our segment review, commercial segment product margin increased approximately $800,000 to $5 million in part due to an increase in bunkering activity.

Total volume decreased about 105 million gallons to 1.1 billion primarily due to lower volumes of gasoline and gasoline blendstocks and crude oil in our Wholesale segment.

Although, we had fewer sites in our retail portfolio in Q3 2017 versus Q3 2016, volume in our GDSO segment declined only 5 million gallons as we retained supply agreement with buyers of many of our sold sites.

CapEx in the quarter was approximately $12.3 million consisting of $9.2 million of maintenance CapEx including $8.1 million related to our retail sites. Expansion CapEx of $3.1 million in Q3 related primarily to investment in our retail gas stations.

For full-year 2017, we current expect maintenance CapEx of approximately $35 million to $45 million and expansion CapEx excluding acquisitions of $20 million to $30 million, primarily relating to investments in our gas station business.

Turning to our balance sheet, as of September 30, we had total borrowings outstanding of $329.2 million under our $1.3 billion facility. Borrowings consisted of $190 million under our $450 million revolving credit facility and $139.2 under our $850 million working capital facility.

Our leverage defined as funded debt to EBITDA was approximately 3.7 times at the end of the third quarter and in line with our long-term leverage target of 4 times or lower.

Before I turn it back to the operator for Q&A, I want to let you know that on [December 6] we will be taking part in the Wells Fargo Securities Pipeline, MLP and Utility Symposium. We look forward to meeting with investors there. Now we’re happy to take your questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Ben Brownlow with Raymond James. Please proceed with your question..

Hi, good morning..

Good morning..

Congratulations on a very strong quarter..

Thank you.

The guidance that you gave above the midpoint for the year on EBITDA kind of a $205 million midpoint, implies a pretty low fourth quarter EBITDA contribution in the $27 million range? And just given what you've seen over the past three quarters of that continued year-over-year growth in EBITDA and that kind of $60 million a quarter run rate.

Is there a headwind that's coming in the fourth quarter or some sort of shift? How should we think about that looking at the fourth quarter?.

Hi, Ben, it’s Daphne. I think sitting here today, we are not seeing headwinds. And I think we have chosen to guide to above the midpoint, and I feel comfortable with that today. Certainly we're only early in November and we've got the other ways to go before we conclude the quarter..

Understood and the expense terminations with the elimination of the contract with Tesoro, is there any sort of your residual EBITDA impact going forward or was that just a one-off charge?.

One-off charge and that's I mean fully disclosed in a public filings in terms of obligation, which effectively was going to be through the end of 2019 and just accelerated because of lack of movement..

Okay, great. And one last one for me and then I’ll hop back in the queue.

The GDSO segment, any color around demand metrics or any sort of sense or sales trends you're seeing there? I know one of your peers sided kind of along the East Coast just being a weaker spot for them?.

Yes, Ben, this is Mark. I think – in general I think we're pleased with our same site performance both on the fuel and the C-store. We don't get into the specific numbers, but generally on the fuel side, we track with the EIA or the DOE numbers, and I think that remains consistent. So those numbers are kind of flattish on the fuel side.

And on the stores, we still think there's a lot of opportunity to grow sales through our through us existing store operation. So we're fairly pleased with that..

Okay, great. And just one housekeeping on – thank you for given the company operated site count.

Do you have the commission less in the dealer count in front of you?.

Sure. So Company op is 234, commission agents is 269, [lendee] dealers 234, contract dealers 698, so 1,435. .

Perfect. Thanks again..

Our next question comes from line of Barrett Blaschke with MUFJ. Please proceed with your question..

Good morning.

Just a couple quick ones, one, any impact on your supplies or margins at all from the hurricane and the disruptions that happened in the Gulf, and second, with crude oil sort of creeping north slowly is there any positive outlook for any part of your businesses spread start to pick up a little bit?.

Hey, good morning, Barrett. So the first question with regard to the impact from the hurricane we certainly did benefit from the increase margins in the supply - as a result of the supply disruptions back in late August and into September.

The market has normalized on the supply side of things and supply up in the northeast although it did tighten up a little bit was never severely disrupted, but certainly provided a benefit for us in Q3. With respect to crude spreads moving forward at the moment they have widened out, they look a little bit wider further up the curve.

So that's directionally that's positive there's no prompt opportunity as a result of that. But we continue to keep an eye on that and certainly that's one of the things as we look at some of the assets like we're in a North Dakota we're going to need a little bit of help from the market.

So as with the spreads moving in that direction it does prompt additional conversations but there's nothing at the moment..

Is there a level that sort of triggers may be because either kind of more pressing conversations in around the organ assets?.

I am not sure there's a specific level because the market may be a little bit different for everybody and in terms of costs to move through various different alternatives and then also what - how particular customer may view their market versus another. So I don't think there's a particular number that works.

We're trying to stay as close as we can to the customer base so that when the market gets in a spot where it makes sense we will be prepared to execute if the opportunity arises..

Okay. Thank you..

Our next question comes from the line of James Jampel with HITE Hedge. Please proceed with your question..

Hey, guys.

Just a couple of questions, can you talk remind us a little bit about how backwardation in the crude curve impacts your business?.

So the backwardation in the crude market shouldn’t impact us, we don't have a lot of crude inventory on hand we have very little – we had some storage on the East Coast that we're out of now and so we really reduce crude inventory, really just as a part of declining operations in that piece of business.

So backwardation in the crude curve in/and of itself shouldn't have a meaningful impact. As it relates to market structure in general, you may be able to draw some correlation between crude spreads and product spreads but I think it's easier to just focus on product spreads..

Okay. Fair enough.

Given what we see in the press about your refineries are going to have to change their sleet to produce low sulfur bunker fuel? Have you guys thought about it all what that means for you guys if anything?.

Yes, I can't speak to what the impact is what the initiative is on the refinery side but our expectation is that we will continue to have opportunity and in the bunkering market we have some strategic assets and we have a customer base and an established business with pretty well established operations.

So I don't see any change to our business model in the immediate future..

Okay. Thank you. Our next question comes from the line of Ned Baramov with Wells Fargo. Please proceed with your question..

Good morning..

Good morning..

Could you talk about the Honey Farms transaction? Was this a competitive process? Also are there any growth capital opportunities in and around these assets? And if yes, could you quantify those opportunities?.

I mean I think what I'd say is, it was in fact a competitive process. If we do think we bought – this right, we know that the assets really fit our business model. They fit our geographic footprint.

We think there is absolutely an opportunity for us to streamline both the way that the fuel is supplied as well as the way the stores themselves are supplied and merchandised. And so the focus initially is going to be around executing on those sorts of two major things as we own the assets over time.

And then obviously in terms of spending capital and money, we look at all our assets and we're going to try and make sure that we invest in the asset that give us the highest returns..

Got it and then on your divestiture program, could you just provide an update, assuming that all remaining non-strategic assets that you've identified or sold at the price, you would ideally take what does that mean in terms of approximate amount of proceeds to the partnership?.

Hi, Ned, it’s Daphne. So we are seeing who we engaged last year to take on about 75 sites approximately at the beginning, we’ve added – since then we added about 20 sites as we continue to review our portfolio and assess how to best optimize the portfolio.

We have sold just shy of 60 of those sites so far, about six or so in this quarter at 30 so far this year. Proceeds this year have been approximately $30 million or so. That actually includes the $16 million from the nat gas, so about $14 million.

And in terms of – for the most part we – for the majority of those sites, we do retain supply and so we've been very pleased with the multiples that we have been receiving, which really of course the double-digit, it’s not just in the double-digit after supply retention. So we’ve been very pleased with that so far..

Okay, great. And my last question on maintenance CapEx.

I think you have guidance for the year of $35 million to $45 million, just looking at how it’s been trending so far year-to-date, it would either imply a significant ramp in the fourth quarter or maybe that your guidance is a little bit aggressive? Could you comment on that?.

Yes, I mean I certainly – I’m aware of that, but I’m talking to the team and what their plans are. Their plans already get somewhere – some fair of way there. This year obviously there is timing that is can impact that, but that is 10 seconds that is what they’re aiming to do..

Okay, thank you. That’s all I had. End of Q&A.

Thank you. We have reached the end of the question-and-answer session. I would now like to turn the floor back over 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..

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