Investing.com -- S&P Global Ratings has revised its outlook on Global Partners (NYSE: GLP ) L.P., a Northeast-based owner and operator of gas stations and convenience stores, to positive from stable. The decision comes in the wake of the company’s successful integration of liquid terminals acquired from Motiva Enterprises LLC and Gulf Oil Corp.

Global Partners’ issuer credit rating and issue-level rating on its senior notes due in 2027, 2029, and 2032 have been affirmed at ’B+’. The ’4’ recovery rating on the notes remains unchanged, indicating an expected average recovery of 40%.

The positive outlook reflects S&P Global Ratings’ expectation that Global Partners will reduce its adjusted leverage below 4x in 2025 and maintain it at that level long-term. The company’s successful integration of the acquired liquid terminals has diversified its cash flow stream and is expected to support continued deleveraging over the coming year.

In December 2023, Global Partners acquired 25 refined product terminals from Motiva for $305 million in cash, expanding its footprint in the Atlantic Coast, Southeast, and Texas. This acquisition, supported by a 25-year take-or-pay contract, increased Global Partners’ total shell capacity to 18.3 million barrels across 49 terminals. In the first quarter of 2024, the company further boosted its EBITDA by acquiring four additional terminals from Gulf Oil Corp.

Despite exposure to the competitive retail market environment and commodity price volatility, Global Partners is expected to expand volumes and deleverage over the next two years. S&P Global Ratings anticipates steady volume growth in 2025 and 2026 due to increased throughput from the newly acquired terminals.

The company’s wholesale segment volumes are expected to increase by more than 40% in 2025, reflecting the full-year contributions from its newly acquired liquid terminals. EBITDA in the range of $500 million-$515 million is forecasted for 2025 and 2026, incorporating approximately $100 million of lease-expense adjustments.

Global Partners faces significant working capital requirements, primarily funded using its $950 million working capital revolving credit facility (RCF). Excluding its working capital-related debt, the company’s debt to EBITDA is estimated to be in the 3.0x-3.5x range.

Despite facing competition from integrated oil companies, refineries, and independent fuel distributions across its business segments, Global Partners continues to expand through acquisitions and partnerships. For instance, in June 2023, the company expanded its network of convenience stores and gas stations through a joint venture with ExxonMobil (NYSE: XOM ), acquiring 64 stores in Houston.

S&P Global Ratings could revise its outlook on Global Partners to stable if its debt to EBITDA remains at or above 4x on a sustained basis. However, a rating upgrade could occur if the company achieves adjusted leverage of below 4x, including its working capital borrowings, and sustains its leverage at this level. This could be achieved through increased sales volumes, strengthened EBITDA, reduced debt using free cash flow, or strategic deleveraging efforts.

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