Good day, everyone, welcome to the Global Partners Q1 2026 financial results conference call. Today's call is being recorded. With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slifka, Chief Financial Officer, Mr. Gregory B. Hanson, Chief Operating Officer, Mr. Mark Romaine, and Chief Legal Officer, Ms. Kristin Seabrook. At this time, I would like to turn the call over to Ms. Seabrook for opening remarks. Please go ahead.
Good morning, everyone, and thank you for joining us. Today's call will include forward-looking statements within the meaning of federal security 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, including supply and demand, 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?
Thank you, Kristin. Good morning, everyone, and thank you for joining us on today's earnings call. We started 2026 with a strong Q1 , driven by solid execution across our operating segments and supported by the continued strength of our integrated liquid energy platform in a dynamic commodity environment marked by heightened geopolitical tension and global supply disruptions. Our business is built to perform across a wide range of market conditions, given the current volatility, we remain focused on managing risks and opportunities while continuing to optimize our asset base to enhance returns. Our results this quarter were driven by a colder than normal winter in the Northeast and more favorable market conditions in wholesale and commercial, along with improved fuel margins in our gasoline distribution and station operations segment. Importantly, these results reinforce the resiliency of our model.
We do not rely on any single commodity, geography, or market dynamic to generate cash flow. Instead, we manage a diversified portfolio of assets and adjust our operating approach to reflect the conditions in front of us. That flexibility remains a core strength of Global. Whether markets are volatile or more stable, our focus is the same: disciplined execution, prudent capital allocation, and maintaining a strong balance sheet to support long-term value creation for our unit holders. Turning briefly to our distribution, last month our board approved a quarterly cash distribution of $0.7650 per common unit or $3.06 on an annualized basis. This marks our eighteenth consecutive quarterly increase, supported by healthy coverage and the cash-generating capacity of our business. The distribution will be paid on May fifteenth to unit holders of record as of May 11th.
Now let me turn the call over to Gregory for the financial review. Gregory?
Thank you, Eric. Good morning, everyone. As we review the numbers, unless otherwise noted, all comparisons will be with the Q1 of 2025. Net income in the Q1 of 2026 was $70.1 million versus $18.7 million. EBITDA was $142.1 million in the Q1 versus $91.9 million in 2025. Adjusted EBITDA was $140.4 million in 2026, compared with $91.3 million. Distributable cash flow was $96.4 million in the Q1 of 2026, compared with $45.7 million. Adjusted DCF was $96.8 million versus $46.5 million. We maintained healthy distribution coverage at the quarter end of 1.96 times or 1.9 times after including distributions to our preferred unit holders. Moving to our segment details, GDSO segment product margin increased $11.4 million in the quarter to $199.3 million.
Product margin from gasoline distribution increased $10.9 million to $136.7 million, primarily reflecting higher fuel margins year-over-year. On a cents per gallon basis, fuel margin increased by $0.06 to $0.41 in Q1 2026 from $0.35 in Q1 2025. Station operations product margin, which includes convenience store and prepared food sales, sundries, and rental income, increased $0.5 million to $62.6 million in the Q1 of 2026. Quarter-end, our GDSO portfolio of fueling stations and C-stores consisted of 1,513 sites, exclusive of the 68 sites under our Spring Partners Retail joint venture. Turning to our wholesale segment, first quarter product margin increased $60.5 million to $154.1 million.
Product margin from gasoline and gasoline blend stocks increased $44.1 million to $101.2 million, and product margin from distillates and other oils increased $16.4 million to $52.9 million. These increases in our wholesale segment product margin are primarily due to more favorable market conditions in gasoline and residual oil. We are pleased with the performance of the wholesale segment, which delivered strong results in the heightened commodity price volatility during the quarter. We do expect the current steep backwardation in the forward product pricing curve to increase the cost of carrying our hedged inventory in future periods, and we remain focused on disciplined inventory management. In our commercial segment, product margin increased $4.6 million to $11.7 million, primarily due to more favorable market conditions.
Operating expenses increased $2.5 million in the Q1 to $129.2 million, reflecting expenses associated with our GDSO and terminal operations. SG&A increased to $25.6 million to $99.3 million, primarily reflecting higher performance-based incentive compensation expense. We expect SG&A expenses to normalize in the remaining quarter of 2026. Interest expense was $35.5 million compared with $36 million in the same period of 2025. CapEx in the Q4 was $31.9 million, consisting of maintenance CapEx of $10 million and expansion CapEx of $21.9 million, primarily related to investments in our gasoline station business. For full year 2026, we expect maintenance CapEx in the range of $60 million to $70 million and expansion CapEx, excluding acquisitions, in the range of $75 million to $85 million.
Our current CapEx estimates depend in part on the timing of project completions, the availability of equipment and labor, weather, and any unforeseen events or opportunities that require additional maintenance or investment. Our balance sheet remains strong at March 31st, with leverage as defined in our credit agreement as funded debt to EBITDA at 3.1x an ample excess capacity in our credit facility. As of March 31st, we had $408.3 million borrowings outstanding on our working capital revolver and $103.5 million outstanding in our revolving credit facility. On our IR calendar this month, we'll be participating in the 23rd Annual Energy Infrastructure CEO & Investor Conference. For those of you participating, we look forward to seeing you. Let me turn the call back to Eric for his closing comments. Eric?
Thank you, Gregory. We delivered an exceptional quarter, and the entire Global Partners team executed at a high level across all segments. We also recognize that a portion of these results reflect market conditions shaped by the ongoing conflict, which continues to drive volatility across global energy markets. We are managing the remainder of the year with the same discipline that drove this quarter while planning for a range of scenarios as the conflict evolves. With that, Gregory, Mark, and I will be happy to take your questions. Operator, please open the line for Q&A.
Thank you. Thank you. Our first question comes from the line of Selman Akyol with Stifel. Please proceed with your question.
Thank you. First of all, congratulations on very nice results. That was very impressive.
Thank you, Selman.
Let me ask you this. Are you seeing any changes in customer patterns, any signs of demand destruction at all given the higher fuel prices yet?
Yeah, I mean, nothing noticeable in the quarter in March. You know, obviously one thing we track is average fill-ups and average gallons per fill-up, and we have seen some decline in that through March and April. Overall, I mean, the consumer continues to be pretty healthy. I do think obviously that, you know, higher gasoline prices will impact the share of wallet going forward. It's something we continue to lean in on promotions and loyalty on our in our C-store to drive customers into our stores. You know, depending on how long this prolong goes on, it could have a further impact on potential demand at the pump.
Got it. You know, nice uptick year-over-year in your fuel gallons, CPG. How's that going and given the volatility and I'm really kind of thinking, you know, March you had 1 month of the volatility, but, you know, you've seen certainly more of that in as we've gone into the second quarter. I'm just kinda wondering how CPG's holding up?
Yeah, Selman, it's Eric. Margins continue to show the same historic resiliency that they have. If there is a decline in volume, you know, margins historically have expanded, right? I, you know, I think that that is gonna hold true, and I think that that's what we're seeing now. Generally too, there's a lot of price volatility in the market, and so you're waking up, you know, certain days and the product prices are moving $0.15, $0.20, $0.30. To me, that volatility represents an opportunity. The amount of price changes that we're making, somebody quoted me internally here, we've made the same amount of price changes already that we typically make in one year.
Wow.
That's in the tens of thousands.
Wow, that's quite a stat. Thank you for sharing that.
Yeah.
In this environment, how do you think about acquisitions? Are they easier? Is it you'd rather pause and see how things shake out? Is there anything that's changing at this point?
I mean, we continue to look at everything that's out there. We're trying to be involved in every process that is out there. It'll be interesting to sort of see if anything or what gets done or what gets sold.
Gotcha. Are you seeing sellers' expectations come in at all?
you know, it's interesting. It's based more on cash flow and multiples, right?
multiples are still strong, right?
Got it. Yeah.
it's competitive.
Gotcha. You guys referenced sort of the higher carrying costs for inventories, like, at wholesale. I guess just in general. Is there any thoughts of carrying lower inventories given the carrying costs, or is that just cost of doing business and we're not having problem getting any product, so we'll keep inventories robust?
Yeah. Hey, Selman. Good morning, it's Mark.
Good morning.
That's actually, you know, and something that we've done historically. It's part of our playbook, and it does kind of highlight the benefit or the value of the storage capacity that we have, and we can tailor our inventory levels based on market conditions. As you might expect, when markets get extremely backwards, we're able to reduce inventories down significantly during that run up, capture additional margin, and then mitigate some of the risk associated with holding inventory. We're at a point now where we're, you know, we've drawn down inventories in this environment. We'll continue to manage them tightly. You know, on the flip side, if a market's contango, obviously we're building inventory.
That is a key risk mitigation lever that we're able to pull and really kind of tailor to the market conditions of the current environment.
Got it. Thank you for that. Let me just ask you one macro question, and I don't know if it's unanswerable or not, but So we're getting ready to go into this, the driving season, the summer driving season, sort of peak demand. U.S. has been selling down. You know, we've our exports are pretty robust. Do you think there's supply tightness out there, you know, as we get into the summer at all? Do you have any thoughts on kind of what that's gonna look like, this summer, just in general with everything going on?
Yeah. It's Mark again, Selman Akyol. I think, you know, if you look at inventories, and we just had this conversation yesterday, they're pretty low. You know, we've got a lot of exports leaving the Gulf, maybe some leaving New York. Imports for gasoline into PADD 1 have been very light. We've been drawing, you know, the U.S. has been drawing inventories pretty aggressively over the last, call it 6 weeks, maybe eight weeks. We're at a pretty low level heading into a key driving season. You know, some of it will depend on how long the current situation goes on.
Even if the conflict is resolved tomorrow, there's been a lot of damage done to worldwide to production and inventories are at a pretty low level across the board. It'll be interesting to see how that plays out. You know, I don't think an end to the war is gonna solve the problem immediately. The system's gonna take time. When I say system, I mean worldwide, but we're obviously specifically focused on PADD 1, and to a lesser degree, PADD 3. You know, I think you're gonna have some lasting impact to that, and we'll see how it plays out. There is some underlying fundamental strength in the market that I think we're gonna see play out for, you know, I might say through, at least through the end of the year.
It's Selman. It's Eric. I just wanna add one, I wanna add one other thing. It'll be interesting to see how countries position themselves vis-a-vis inventory and storage for moments like this, and if a lot of other countries look at storing crude or products in caverns or throughout the country and make sure that they have product on-hand and how that plays out into price.
Yeah. We've already seen comments.
Yeah. That's a big macro point, right?
Yeah
even if everything came back, it's just not, it's not gonna be the same as it was before, right? It'll be different. If, and if countries go and decide they want to build secure inventory that they can use in a market like this, you know, that's gonna put pressure on supply, 'cause it's gonna show up as increased demand.
Yeah. We've already seen comments coming out of Australia for that. All right. Well, guys, again, very nice quarter, and I'll leave it there. Thank you for your time.
Perfect.
Thanks, Selman.
Thank you. I will now turn the call back to Mr. Slifka for closing comments.
Thank you for joining us this morning. We look forward to keeping you updated on our progress. Thanks, everyone.
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.