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Good day, everyone, and welcome to the Global Partners First Quarter 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.
Good morning, everyone. Thank you for joining us. Today's call will include forward-looking statements within the meaning of federal securities sections 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 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. Over the last 5 months, we've acquired 29 terminals more than doubling our terminal network and total storage capacity from 9.9 million barrels to 21.3 million barrels. [indiscernible] approximately $212 million. Their locations in Massachusetts, Connecticut and New Jersey make these assets a perfect geographic and operational fit in our existing Northern terminal network. Linden and Woodbury, New Jersey each represent new markets for our business.
The New Haven terminal as gasoline and distillate capabilities to our Connecticut portfolio, allowing us to serve our wholesale customers as well as our extensive retail network. The Chelsea, Massachusetts terminal allows us to continue to serve the Boston market, replacing the capabilities of the nearby Revere terminal which we strategically divested for $150 million in 2022 to Link Logistics a Blackstone Company. With the divestment of our Revere terminal, this acquisition will allow us to continue to service our Boston area gasoline and distillate customers without disruption.
As you may know, we now operate 2 terminals in Chelsea, allowing us to offer a full slate of products, including biofuel, bunker fuels, commercial and industrial fuels, heating oil and diesel. We anticipate opportunities to invest in and optimize around these properties.
Turning to our December acquisition of 25 liquid energy terminals for Motiva. We're extremely pleased with the progress of the transition, which was completed ahead of schedule in March. These are extremely well-run high-value assets backed by a 25-year take-or-pay commitment from Motiva. We're excited about the ability to drive additional investment, expansion and operational efficiencies as we optimize these facilities.
Looking at our distribution. In April, the Board declared a quarterly cash distribution on our common units of $0.71 or $2.84 on an annualized basis. This distribution represents an 8.4% increase over the prior year period and is payable on May 15 to unitholders of record as of the close of business on May 9.
With that, now let me turn the call over to Greg for his financial review. Greg?
Thanks, Eric, and good morning, everyone. As we go through the numbers, please note that all comparisons will be the first quarter of 2023, unless otherwise noted. Adjusted EBITDA was $56 million in the first quarter of 2024 compared with $76 million in '23. We reported a net loss of $5.6 million in the quarter compared with net income of $29 million in 2023. Distributable cash flow was $15.8 million in the first quarter compared with $46.3 million in '23 and adjusted DCF was $16 million in Q1 versus $46.3 million in the same period in '23. LTM distribution cover as of March 31 was 1.6x or 1.5x after factoring in distributions to our preferred unitholders.
Turning to our segment details. GDSO product margin increased $4.2 million in the quarter to $187.7 million. Product margin from gasoline distribution increased $0.8 million to $121.6 million, primarily reflecting higher fuel margins year-over-year. On a cents per gallon basis, fuel margins increased $0.01 to $0.33 in Q1 '24 from $0.32 in Q1 '23, illustrating the resilience of our fuel margins despite wholesale gasoline prices increasing $0.66 from year-end '23 to 3 31.24 compared with $0.24 increase for the same period in 2023.
The first quarter of 2023 also benefited from a fall off in prices during the quarter as opposed to the first quarter of 2024, which had consistent increases in prices throughout the quarter. Station operations product margin, which includes convenience store prepared food sales, sundries and rental income, increased $3.4 million to $66.1 million in the first quarter as our team continues to execute well in our stores. At quarter end, we had a portfolio of 1,601 sites. In addition, we operated 64 sites under our Spring Partners retail joint venture.
Looking at the Wholesale segment. First quarter 2024 product margin decreased $3.7 million to $49.4 million. Product margin from gasoline and gasoline blend stocks increased $9.3 million to $29.7 million, largely due to the acquisition of the Motiva terminals. This was partially offset by less favorable market conditions in gasoline in the first quarter of '24 compared to the same period in '23. Product margin from distillates and other oils decreased $13 million to $19.7 million, primarily due to less favorable market conditions in residual oil.
As we mentioned in our press release, certain products in our Wholesale segment were negatively impacted by the timing of mark-to-market valuations, which we have seen largely recover quarter-to-date through April. Commercial segment product margin decreased $1.1 million to $7 million, primarily due to less favorable market conditions.
Looking at expenses. Operating expenses increased $11.8 million to $120.1 million in the first quarter, primarily related to the acquisition of the terminals from Motiva. SG&A expense increased $7.5 million in Q1 to $69.8 million, including acquisition costs related to the Motiva terminals acquisition and increases in wages and benefits and other SG&A expenses.
Interest expense was $29.7 million in the first quarter of 2024 compared with $22.1 million in '23. The increase was primarily due to the interest expense related to our 8.25% senior notes that we issued in January of '24 and to a $1.4 million write-off of deferred financing fees. Capex in the first quarter was $16.6 million, consisting of $11.7 million of maintenance CapEx and $4.9 million of expansion CapEx, primarily related to investments in our gasoline station business.
For the full year of 2024, we continue to expect maintenance capital expenditures in the range of $50 million to $60 million and expansion capital expenditures, excluding acquisitions in the range of $60 million to $70 million, relating primarily to our gas station and terminalling business. These current estimates depend in part on the timing of completion of projects, availability of equipment and workforce, whether and unanticipated events or opportunities requiring additional maintenance or investments.
Our balance sheet remains strong at 3/31 with leverage as defined in our credit agreement as funded debt to EBITDA at 3.26x and we continue to have ample excess capacity at our credit facilities. As of March 31, total borrowings outstanding under our credit agreement were $226 million, all of which were under our working capital revolver with 0 outstanding on our revolving credit facility.
I'd also like to highlight that on April 15, we fully redeemed all the outstanding Series A fixed to floating rate cumulative redeemable perpetual preferred units. This transaction was immediately accretive to distributable cash flow and at current interest rate is expected to be approximately $0.09 accretive per unit on an annual basis.
Now before I turn the call back to Eric for closing comments, let me review our upcoming Investor Relations calendar. This month, we'll be participating in the 21st Annual Energy Infrastructure Conference and in June, we'll be participating in the Stifel Cross Sector Insight Conference and the BofA Energy Credit Conference. If you're attending one of more of the events, we look forward to meeting with you.
Now let me turn the call back to Eric for closing comments.
Thanks, Greg. In closing, I want to acknowledge our team for their outstanding work and completing 2 significant acquisitions and integrations over the past 5 months. We have a terrific business, well-positioned assets and incredible people that I believe will continue to contribute in a meaningful way to shaping the future of the energy economy. Strategically, operationally and financially, we are well positioned for continued success.
With that, Greg, Mark and I will be happy to take your questions. Operator?
[Operator Instructions] Our first question comes from the line of Selman Akyol with Stifel.
I guess First, just starting off on the Motiva acquisition. Have you guys been able to add new customers down there? Or are you seeing any increase in throughput since you guys have acquired that?
Yes, Selman, it's Mark. Yes. We're effectively 4 months into the ownership of those terminals and operating those terminals. We completed a full cutover, including all systems, roughly the end of March. So it's taken us some time to fully transition those terminals. That being said, we have actively been working on adding new volume to the terminals, understanding what opportunities exist for us to optimize those terminals, what opportunities exist for us invest in those terminals. And there's a lot of positives there.
So our expectation is that as we move forward here, we will start to stream on new business. We will get a little bit more dialed in around where the opportunities to invest. So we're very encouraged what we've seen so far. And I think we're -- we will -- we are well on our way to starting to recognize those synergies. It will just take a little bit of time. I think by the end of the year, we will have quite a bit of new business through those terminals.
Got it. And so would you just say sort of performing in line with your expectations? Are you seeing more opportunity there than maybe when you initially thought or as I said, sort of in line?
It's probably too early to get -- I don't want to get too far ahead of ourselves. I would say that we're what we're looking at today for the near term is going to be in line with our expectations. I do think longer term, with all the investment opportunities and the optimization we can do around these assets, our hope is that we will exceed those expectations. And that seems like a reasonable expectation.
Yes. Selman, it's Eric. These are extremely well-located assets with lots of ways into and out of the assets with products. And we think that there are some real opportunities here just within the assets as they exist, but not only that, we think that there's a lot of expansion opportunities, as Mark mentioned that once we spend a little bit of time with them, we'll try to go get permits and expand particular assets that we think have unique values.
Got it. Any update on the JV and how it's performing and any growth expectations coming out of that?
Yes. We continue to be excited about the JV in operating in that area. I'd say the first quarter of the JV was a little lower than our expectations, really. Really horrible weather in the Houston market in January, you had a couple of days of frozen, you had no traffic in there. So weather definitely impacted the results down there in the first quarter. And then you also have a more competitive margin environment down there. than some other areas of the country.
But that said, we've invested in those sites. We've now finished a rebrand of those sites down there. We are very excited about they're operating very well. We've got a very strong partner down there and we continue to look for opportunities to grow that business.
Yes. Selman, it's Eric. In terms of growth, we're continuing to look at opportunities that exist down there. I would say there seems to be a stream of potential assets that may be for sale. So we're trying to look at everything in the market. And if we think there's something that will fit us down there, we'll try to go after. I do think that there is a potential for complementing those assets with our new terminals down there as well. And so we think that, that should hopefully give us a better position in terms of acquiring assets there.
Understood. And then you sort of touched on M&A, but is there anything more as you look beyond other markets that you're seeing as well that you can comment on?
Yes. I wouldn't say there's a steady stream of opportunities. And we'll just make sure we're looking at them and trying to figure out which ones really fit the company and the best way to drive the highest returns, right? So it's active.
Understood. And I realize dividend is always the Board's prerogative in consideration and you'll never front run them that I get. But that said, you guys have said you consistently have kind of been growing as you've been growing cash flows and doing acquisitions, et cetera. And then you also just highlighted that you redeemed the preferred A and that's $0.09 accretive to earnings. So would they consider that as well in terms of potential on a go-forward basis? Or should that just be looked at more in terms of seeing underlying growth in the business as opposed to financing?
Yes. I mean I guess -- it's Greg. I think the Board sort of issued a lot of confidence by increasing the distribution of penny this year. And an appreciation of where we positioned ourselves in the growth. We've continued to grow that distribution. Our coverage now is 1.5x on an LTM basis. we've been able to fully cover our LTM expansion CapEx with excess cash and also reinvest some of that cash lowering debt and putting in the company.
So we've been in a strong position from a distribution coverage standpoint. I think we're excited about the acquisitions. We do think they will continue to contribute to the bottom line for us. And so I can't speak to what the Board will do. But I think we are excited about the acquisitions and this should allow us to continue to grow our bottom line. And hopefully, that would lead to higher distribution at some point in the future.
I'll now turn the call back to Mr. Slifka for closing comments.
Thanks, everyone, for joining us this morning. We look forward to keeping you updated on our progress. Have a good day.
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.