Did not listen to the call, but read the transcript. The CEO was the one who made that remark. No where was $40 million mentioned on the call, but if you go the 10-Q, it is noted that Gross Profit for wholesale motor fuel increased $20m and also the Gross Profit on retail motor fuel sales increased about $22m (from first quarter of 2015 to first quarter of 2016) - maybe this is where he got his $40m. The margins for wholesale increased from 9.6 to 11.4 cents, with retail increasing from 18.6 to 21.3 cents and merchandise margin increasing from 30.7 % to 31.7% (all 1st quarter 2015 compared to 1st quarter 2016). The margins for full year 2015 (from the 10-K) for each were 11.5 cents, 23.9 cents and 33% respectively, so the wholesale margin for the 1st Q of 2016 is right in line with the actual margin from 2015. Based on the fact that the first quarter wholesale margin was 9.6 cents in 2015 and the full year rose to 11.5 cents, would imply that margins improve as the year goes on.
Also, the analyst says the distribution coverage ratio is really only .7 - the only way you can get close to this figure is to compare Net Income to Distributions ($62m/$86.5m) when the correct measure is EBITDA to Distributions, which provided a 1.14 coverage for the quarter and 1.3 coerage for the trailing 12 months.
Finally, he states that the company could be in trouble next year with their debt coverants as maximum funded debt to EBITDA ratio will be 5.5 to 1.0. The company is allowed to have a ratio of 6.25 to 1 until the end of the first quarter 2017 and then all quarters after that the ratio goes to 5.5 to 1.0. If they make future acquistions the ratio increases to 6.0 to 1. Currently the ratio is 5.4 to 1. Well under the 6.25 to 1 and under, although barely, the 5.5 to 1. They basically have a year to improve the ratio (if needed), by either paying down some debt, increasing the EBITDA, issuieng additional units, etc. etc.