Delta Air Lines Just Showed Off Its Newest Plane. There Was a Giant Surprise In the Bathroom

Air travel’s getting worse for a lot of us. If you’re not shelling out the biggest bucks and sitting in the front of the plane, life in economy is more crowded, less fun, and frankly more of a drag.

That’s why airline passengers have been excited lately to see and hear the newest airplanes that Delta Air Lines will be flying over the next few years.

Delta held an unveiling ceremony this week in Atlanta, and reviewers were pretty excited. Among the features of the 75 new Airbus A220-100 airplanes that Delta will start flying, beginning in January:

  • Higher ceilings, and a sightly wider body than most single-aisle planes.
  • Seat back entertainment, which isn’t exactly groundbreaking, but with some competitors like Southwest and now American (and often United) no longer offer.
  • Some very high tech construction materials and methods, including the lightweight wings and electric brakes as opposed to hydraulic. “No more leaky hydraulic brake lines equals less maintenance,” as CNN reported.
  • A 3-2 seat configuration, instead of the 3-3 that most of us are used to on many single-aisle planes. That means only half as many middle seats.

Oh, and then there’s the bathrooms. There was a big surprise in the bathrooms.

A220 Lavatory

Each A220 has three bathrooms, but two of them come with something you almost never see on a commercial airline bathroom, even in first class on some of the most luxurious flights: a full-sized window.

“The engineers saw an opportunity to put one in and we said ‘go for it,'” Delta CEO Ed Bastian reportedly said at the unveiling ceremony before Delta employees and media last Monday.

Yes, this means that even the unlucky one-fifth of passengers sitting in middle seats can at least enjoy a window seat for a few minutes–while they’re doing whatever it is they’re doing in the bathrooms.

“The simple idea is to provide customers what it is they tell us they want. That means space, innovative technology and comfort. All of those things are evident in this plane,” Tim Mapes, Delta’s senior vice president and chief marketing officer Tim Mapes, said at the event.

The new planes are part of a big upgrade for Delta, which says it expects a lot more passengers. There were 4 billion air passengers in 2016; the International Air Transport Association expects twice as many by 2036, according to CNN.

There are quite a few jet models with lifespans of 20 or more years, so these A220s could very well still be flying then, according to Air & Space Magazine from the Smithsonian. 

Here are a few more pictures of the newest Delta airplane. But honestly, we’re most excited about the window in the bathroom.

Delta's Airbus A220

A220 Interior

A220 First Class

The Demands of the Google Walkout Explained

On Thursday, thousands of Google employees walked out on their jobs to protest how the tech giant handles sexual harassment complaints. The organizers, Claire Stapleton, Tanuja Gupta, Meredith Whittaker, Celie O’Neil-Hart, Stephanie Parker, Erica Anderson, and Amr Gaber, made their demands known at The Cut

Unlike the coal miners in the 1800s, every Google employee could find a new job and walk away. And there are literally millions of people who apply to work there every year and would happily take these jobs without Google conceding a single point. This puts Google in a much stronger position than these employees think. But, let’s go through the demands and talk about what would really happen in this situation.

1. An end to Forced Arbitration. 

Forced arbitration is unpopular–and for good reason. Arbitration is decidedly pro-employer. Employees who do recover in arbitration receive substantially less money than those who win in court, at least according to one study. However, going to court is risky and can be terribly expensive for both sides. While you might win the jackpot if you win a court case, you also may face a company who is far more willing to fight in order to prevent that jackpot and to prevent others from deciding to sue as well. 

Earlier this year, the Supreme Court ruled in favor of forced arbitration in Epic Systems Corp. v Lewis, so abandoning forced arbitration is unlikely to happen any time soon. The company has too much to lose and little to gain. 

The demands that people be allowed a witness is common in unionized organizations, where employees are allowed a union rep. This may be something the employees can win on. However, the chances of Google being able to swiftly deal with a sexual harassment case decreases if an employee is allowed to bring her attorney to any meetings. A co-worker or employee representative is much more likely to be allowed.

2. A commitment to end pay and opportunity inequity.

Importantly, this is not about fairness in opportunity, even though they use the phrase “opportunity inequity” this is about fairness in the outcome. They want, specifically,  “women of color at all levels of the organization.” Sounds lovely, but there simply aren’t as many women of color who want to do and are qualified for tech jobs as there are other people. When you demand women of color at every level, you’re seriously lowering the possibilities. This demand, if met, would require promotions and hiring based on skin color and gender rather than merit. Not something a smart company wants to do. It’s also illegal under federal law.

They also demand data on pay. As a supporter of transparency in pay, I can get behind this. But, I also give a caution–the employees may not like it when they see it. Once that data goes public within the company, it’s likely someone will leak it to the internet. Google employees will lose public support when it’s clear that the people whining about unfair pay are earning more than most people.

Internally, even with the data “masked” if you break it down far enough, employees will be able to figure out which line of data matches which co-worker. While I’m not opposed to that–it certainly keeps managers honest at raise time–Google employees should make sure that is what they want.

All the additional information, such as information on leaves of absences puts you into dicey privacy issues. While the organizers are probably thinking along the lines of seeing how having a baby impacts one’s career, people take leaves of absence for many other medical and personal reasons. Google would be wise to keep limits that could possibly expose confidential medical issues.

3. A publicly disclosed sexual harassment transparency report.

This sounds great! After all, this walkout was prompted by the $90 million severance package paid out to Andy Rubin, after he was accused of sexual harassment. Google admitted Rubin wasn’t the only person to leave–48 other people have been fired for sexual misconduct over the past two years.

However, if you start to include names on this report, you’ll find people far less willing to simply take severance packages and walk away. Rubin claims he’s innocent. Naturally, given his status, his departure was never going to remain confidential. A junior-level person, though, may not be willing to walk away quietly without a fight. And that means accusers’ names will come out as well. They would be wise to think through unintended consequences. 

If your goal is to punish and shame, transparent harassment reports are the way to go. If your goal is to get the harassers out of the company, confidentiality may be better. 

4. A clear, uniform, globally inclusive process for reporting sexual misconduct.

This demand is something every company, big or small, should implement. It should be simple for any employee, intern, or contractor, to file a complaint. There’s no reason a technologically advanced company like Google shouldn’t have this up and running.

That said, a reporting tool is only as good as the people using it. And it’s critical that all reports are thoroughly investigated.

5. Promote the Chief Diversity Officer to answer directly to the CEO  and appoint an Employee Representative to the Board.

These are demands that sound good on paper, but aren’t really something that plays out. A Chief Diversity Officer doesn’t have an equivalent role to the Chief Marketing Officer or the Chief Financial Officer. Elevating the position doesn’t change that. It’s important to remember the goal of the business is to be profitable–not to be diverse. And, for what it’s worth, universities have found that pouring money into diversity officers don’t actually increase faculty diversity. What does work is encouraging minorities to enroll in Ph.D. programs. 

Likewise, Google doesn’t create the tech ready workforce. The universities do. And the universities don’t create students ready to learn, the public schools do. If Google were interested in increasing minority representation they would put money into public schools. 

In a company the size of Google, an employee representative won’t be the solution that they expect. A single person to represent the employees is something that signals virtue but doesn’t likely help anything.

Even if Google concedes to all these demands (which they won’t) the changes will be superficial. 

SoftBank's mobile unit set to win listing approval on November 12: DealWatch

FILE PHOTO: People walk behind the logo of SoftBank Corp in Tokyo December 18, 2014. REUTERS/Toru Hanai/File Photo/File Photo

TOKYO (Reuters) – Japan’s SoftBank Group Corp (9984.T) is expected to win listing approval for its mobile unit from the Tokyo Stock Exchange on Nov. 12 and the listing date is likely to be Dec. 19, DealWatch reported on Friday citing unnamed sources.

JP Morgan (JPM.N) joins Nomura Holdings (8604.T), Goldman Sachs (GS.N), Mizuho Financial Group (8411.T), Deutsche Bank (DBKGn.DE) and the SMBC Nikko Securities unit of Sumitomo Mitsui Financial Group (8316.T) as joint global coordinators for the initial public offering, DealWatch reported.

SoftBank did not immediately respond to a request for comment.

The listing, which could be Japan’s biggest ever, will mark the transformation of SoftBank and its more than $93 billion Vision Fund into one of the world’s largest technology investors. It will also free up more cash for investments ranging from ride-sharing to solar energy.

Reporting by Sam Nussey; Editing by Susan Fenton and Edmund Blair

At Telematics crossroads, TomTom CEO plots next move

SAN FRANCISCO (Reuters) – Digital mapmaking company TomTom (TOM2.AS) will consider whether to go it alone or pursue partnerships if it sells a fleet management business which may account for more than half its current value, its chief executive told Reuters.

FILE PHOTO: TomTom navigation are seen in front of TomTom displayed logo in this illustration taken July 28, 2017. REUTERS/Dado Ruvic/File Photo

Dutch-based TomTom, which has a market capitalization of 1.75 billion euros ($2 billion), with no debt and 179 million euros in cash, hired Barclays in September to conduct a review of its “Telematics” division with an eye to possible sale.

Working out a fair price for the division, which helps businesses to save money by using software to monitor and improve the performance of their car and truck fleets, might not be straightforward, Chief Executive Harold Goddijn said.

Telematics, which had 43 million euros in sales in the third quarter, up 6 percent from a year ago, is “a bit of a mystery” for analysts, added Goddijn, one of the company founders.

The division has grown quietly but quickly in the shadow of a company better known to consumers for making satnav devices — a business in decline — and to analysts for serving up the digital maps built into iPhone’s Apple Maps app.

With Telematics expected to post core earnings of 60-70 million euros this year, valuations of the business range hugely, from 700 million euros to 1.4 billion euros. Sell-side analysts disagree about what multiple of earnings the business, which seems likely to extend its steady but not spectacular growth, will fetch.

Getting a good deal for Telematics would help to underpin the TomTom share price after recent volatility.

“If you look at the sum of the parts and the valuation and market cap, there is something not quite right and that needs to be better explained,” Goddijn said in an interview this week in San Francisco.

TomTom, set up in 1991, helped to pioneer navigation devices mounted on dashboards but now competes with German-owned HERE and with Google to sell digital maps integrated into the cars’ own software and control panels.

FILE PHOTO: Harold Goddijn, Chief Executive Officer of navigation systems maker TomTom, addresses the TMT 2006 Global Tech Media and Telecom Summit in Paris February 28, 2006. REUTERS/Mal Langsdon/File Photo

NEXT TURN?

Goddijn declined to say what TomTom will do with proceeds if Telematics is sold, despite the dramatic change a disposal would have on the company’s profile.

TomTom shares are down 7 percent year to date after Google Maps entered its key market, supplying navigation and traffic software to carmakers. Google has so far poached several TomTom clients including Renault and Volvo.

That’s part of a broader pattern of carmakers and tech firms teaming up as they prepare for a long, expensive transition toward self-driving vehicles.

This week alone it emerged that Ford and Volkswagen, and Volvo and Baidu (BIDU.O) are in talks on partnerships to develop and commercialize self-driving car technology, in which maps will play an important role.

“It’s not clear what the right economic model is going to be going forward for delivering the next generation of mapping content to the vehicle: is it best to be independent? Is it best to team up? It will take time to figure that out,” Goddijn said.

He said he was confident TomTom’s automotive software sales will continue to grow in the coming three years, but did not rule out a takeover or far-reaching partnership with a carmaker or larger technology firm.

Goddijn and TomTom’s three other founders hold a 44 percent stake in the Dutch company, which some investors fear means the company would never enter a deal that meant surrendering effective control.

“There’s always a big thing about founders and emotional attachments and what have you. I want to set the record straight,” Goddijn said.

“We will do whatever is right for the business and the people and the stakeholders and the customers like any other business, and we’ll look at how it will evolve. We’ll see.”

($1 = 0.8780 euros)

Reporting by Alexandria Sage; Writing by Toby Sterling in Amsterdam; Editing by Keith Weir

Carl Icahn sues Dell over plans to go public

FILE PHOTO — Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network’s Neil Cavuto show in New York, U.S. on February 11, 2014. REUTERS/Brendan McDermid/File Photo

(Reuters) – Activist investor Carl Icahn sued Dell Technologies on Thursday, alleging that the computer maker did not disclose financial information related to its plans to go public by buying back its tracking stock (DVMT.N).

Icahn, who owns 9.3 percent of Dell, called the proposed deal a “conflicted transaction that benefits the controlling stockholders, at the expense of the DVMT stockholders”.

Dell in July said it would pay $21.7 billion in cash and stock to buy back shares tied to its interest in software company VMware Inc (VMW.N), returning the company to the stock market without an initial public offering.

Icahn and other hedge fund investors have resisted the plan, saying the proposed deal massively undervalues the tracking stock.

“We believe this is a threat blatantly deployed in an attempt to coerce DVMT stockholders to vote in favor of the merger, or else risk the unknown consequences of the forced IPO conversion,” Icahn said on Thursday.

Both Dell and Icahn were not immediately available for comment.

Reporting by Vibhuti Sharma in Bengaluru; Editing by Saumyadeb Chakrabarty

Lime Is Shutting Down Some of Its Scooters Because They May Catch Fire

Lithium powers everything from the smartphone revolution to your city’s new e-mobility vehicles. But lithium batteries are subject to the occasional fire and Lime, the e-scooter startup, said Tuesday that one model of its scooters appeared to light up from time to time.

The model in question is made by Segway Ninebot—Lime uses several different models in its fast-growing fleet—and Lime says that only 0.01% of its overall fleet is affected by the problem. Lime and Segway Ninebot wrote software patches to prevent riders from using 2,000 at-risk scooters until the company could pick them up and repair them. Most of the scooters were in Los Angeles, San Diego, or Lake Tahoe, Calif.

The fire department responded to an e-scooter fire at Lime’s facilities in Lake Tahoe this August, the Washington Post reports, and a Lime mechanic told the Post that mechanics were concerned about the device’s safety.

Lime also preventing its charging contractors, known as “Juicers”, from recharging that model until further notice. Juicers earn fees for collecting scooters in the evening, charging them, and returning them in the morning to points designated by Lime.

E-scooter rental companies are also facing a new class action lawsuit in a Los Angeles court over injuries to users (which include fatalities), pedestrians and public nuisance claims.

China's finance ministry calls out Xiaomi over accounting errors

FILE PHOTO: Customers wait to pay at a Xiaomi store in Beijing, China June 21, 2018. REUTERS/Jason Lee/File Photo

BEIJING (Reuters) – Chinese authorities on Tuesday said smartphone maker Xioami Corp made errors in its accounting, sending the company’s Hong Kong-listed shares down amid a wider sell-off of China tech stocks.

Xiaomi was one of several internet firms named in the annual inspection by China’s Ministry of Finance. Other firms include e-commerce giant Suning.Com Co Ltd and online game developer Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co Ltd.

Xiaomi’s stock was down 4 percent on Tuesday morning.

The ministry in its report said Xiaomi had made tax errors on corporate gifts and had incorrectly recorded some corporate costs. The document noted that the firm has already rectified the errors.

It also noted that other companies had made efforts to evade taxes by shifting their profits overseas.

A Xiaomi spokeswoman declined to comment on the report.

The rebuke comes as the company is facing teething issues following its much-anticipated listing in July. Its stock is down more than 30 percent since the initial public offering (IPO) amid a wider sell off of China tech stocks that has also affected peers Alibaba Group Holding Ltd and Tencent Holdings Ltd.

It also comes as China is making revisions to its tax code and cracking down on evasion in a wide-scale cleanup that ensnared A-list movie star Fan Bingbing among others.

Despite its tumbling price, Xiaomi has reported healthy smartphone sales in 2018. Earlier this month it said it has already surpassed its full-year sales goal of 100 million handsets.

Reporting by Cate Cadell; Editing by Christopher Cushing

IBM’s Call for Code Prize Goes to a Team With ‘Clusterducks’

You know when you try to go online at a Starbucks or on an airplane, first you get a little popup that asks you to accept some terms before you can get to the internet? That popup window exists in a sort of netherworld between actual internet connection and being offline–you pick it up via Wi-Fi, but until you click a box, you’re not actually online. A team of five developers realized in that gray area was potentially a huge opportunity to save lives.

It’s an intractable problem during natural disasters: telecommunications networks and power grids are often damaged or overwhelmed; without them, first responders struggle to help survivors, coordinate evacuations, and even count the dead. Project Owl proposes an elegant solution: an AI-powered disaster coordination platform paired with a robust communication network that can reach people even when other connections are down. The key to making it all work? Those popup windows, which the team can beam out to people in hard-to-reach areas via buoys equipped with a low-frequency Wi-Fi network.

Now Project Owl has won IBM’s first ever Call for Code contest, which challenged developers across the world to build disaster relief technology using IBM and open-source software. More than 100,000 developers from 156 countries participated in the contest. A panel of judges including former President Bill Clinton selected Project Owl from a field of five finalists whose solutions ranged from using AI to speed up the rebuilding process after an earthquake to feeding firefighters live data during wildfires via sensors.

The winners were announced at an awards ceremony in San Francisco Monday night. The grand prize includes $200,000 and IBM’s pledge to help the team make their project a reality.

“The most important thing to me will be to deploy this for real,” says Angel Diaz, IBM’s Vice President of Developer Technology, Open Source & Advocacy, who was a leading force behind Call for Code. “Usually these hacks will be one and done, but no, we are going to make this real. We are going to deploy this.” In fact, the top 10 finalists will all have their projects officially sanctioned by the Linux Foundation.

After announcing the challenge in May, IBM hosted more than 300 hackathons and events in 50 cities across the globe, and offered its technology for free to all participating teams. Developers were also encouraged to use whatever existing technology they could find; the only requirement was that their creations work. “It has to be real, it has to work, because we’re going to take this into production. We’re not running a fantasy,” Diaz says.

Project Owl hopes to have their solution ready to help in hurricanes, floods, and fires by the end of the year.

Make Way for DuckLink

When the Project Owl teammates—developers Charlie Evans, Taraqur Rahman, Nick Feuer, Bryan Krouse, and Magus Pereira—accepted their prize on Monday night, many of them were seeing one another face to face for the first time. They live spread out around America, from North Carolina to Texas to New York. Most had only met on the Slack channel IBM set up for the contest.

The idea for Project Owl’s hardware originated with Pereira, a recent graduate from East Carolina University in Greenville, North Carolina. Pereira explained an idea he’d had—one which had previously won him a competition at his university.

“Since I’m in the Carolinas, we get a ton of hurricanes. A few years ago we had a hackathon to come up with a solution to help the community,” Pereira says. “For some reason I was just thinking about communication and I had buoys in my mind.” He created the “clusterduck,” a buoy with internet-of-things-type low-frequency connectivity that could form an ad-hoc communication network in areas hit hard by natural disaster.

Together Project Owl made the clusterducks real, and created a software platform around them to allow civilians to communicate with first responders in real time. The hardware/software solution works by harnessing low-power, long-range radio frequency called LoRa, the same technology that powers most internet of things devices. By combining LoRa units with Wi-Fi routers in waterproof buoys placed throughout a disaster area, Project Owl creates a network that can link back with any rescue operation running the Owl software. If you’re in an area with no internet or cellular service and you turn on your Wi-Fi, you’ll see Project Owl in the list of available networks. Click on it, and you’ll get that familiar Starbucks-like popup. But instead of asking you to agree to terms of service, it asks for crucial information like your name, location, how you are doing, what services you need, whether you need immediate assistance or for first responders to call family and friends to update them on your condition.

Project Owl/IBM

The team built the custom Owl software in four months. So far, they have tested it with EMS and government responders in simulated environments. It has not yet been used in an actual emergency. People in a disaster area with a Project Owl network will also need to pull up their Wi-Fi settings and select the correct network themselves; the popup won’t be available if people just try to connect to cellular service.

Still, the combination of a Wi-Fi popup with LoRa connectivity is an innovative idea. It allows you to use whatever device you already own to get onto an ad-hoc emergency communication network, without even having to click on a link or download an app, both of which are often impossible without a robust internet connection. Project Owl makes the most of very low-frequency connectivity to provide a lifeline to those who would have otherwise been cut off.

The clusterducks are also not very expensive to make—about $38 each, according to the developers. To cover a metropolitan area like San Juan, Puerto Rico, which is 77 square miles, Krouse says, would require a few hundred clusterducks, for a total cost of approximately $12,000. The idea would be to roll out clusterducks in hurricane- or flood-prone areas, so that they can be easily deployed when a disaster actually strikes. Relying on solar panels and battery packs, the clusterducks network could be turned on the moment they are needed and work off the grid. They could also be sent into a hard-hit area after the fact.

Project Owl/IBM

The Owl software can be used with or without the clusterduck networks. “The software itself is an incident management system. One of the things that makes it so great and useful is that you just talk to it. It’s a conversational experience,” says Krouse, who calls it a souped-up chatbot that uses just about every single IBM Watson API, as well as a custom natural-language AI. Owl stands for “Organization, Whereabouts, and Logistics.” First responders can coordinate from the Owl application, setting up incident zones, accessing data from FEMA and the Red Cross, as well as crowdsourced user data. People can text or call the Owl management system, or type into it directly from a computer or phone.

Call for Code and the Focus on Real Help

Technology, Silicon Valley denizens have often insisted, can save the world. But recent years have given rise to a growing realization that technology is not good by default, that it can break things as much as it can fix them. IBM’s facial recognition technology, for example, has come under increased scrutiny, and the company is currently facing a class-action lawsuit for age discrimination.

Call for Code is not an explicit attempt at making amends for any past wrongs, at least not according to its organizers. But the contest, and the enthusiastic response from more than 100,000 developers, comes amidst a wider tech backlash, and at least some self-examination from major tech companies and the people they employ.

When Alexander Gil Fuentes, the digital scholarship librarian at Columbia University, reached out to big tech companies like Microsoft and Google for partnerships after Hurricane Maria hit Puerto Rico, none of them were interested in helping with mapathons to help people on the ground have accurate maps.

“We thought it would be an easy sell—tech workers taking two hours to work on helping the Red Cross would improve staff morale, we thought. Alas, none of the companies bought it, and only universities stepped up to the plate,” Gil says.

That was a year ago. To Gil, Call for Code and similar hackathons for good, like the Mozilla Challenge, show the winds may be changing.

On Monday, Google announced it will grant $25 million next year to projects that “use AI to help address some of the world’s greatest social, humanitarian and environmental problems.” The company has recently come under fire for its privacy practices and its plans for a censored search engine in China. Microsoft, which faced an internal revolt for its work with ICE this summer, announced a $40 million program called AI for Humanitarian Action last month. And so on.

With IBM, meanwhile, the Project Owl team is busy preparing to get their solution to market and figuring out the how to turn the project into an actual business. They envision some kind of model, where Project Owl manufactures the clusterducks and sells them to an organization like FEMA, and then FEMA can rent them out to municipalities on an as-needed basis.

“It started as a discussion between us and the United Nations and the Linux Foundation,” says IBM’s Diaz. “The hope is that at the end of the day, when we put the winning solution into market, into Africa, India, the US or wherever it’s applicable, when we save one life, ten lives, 100 lives, if we save one life then this entire effort is worth it.”


More Great WIRED Stories

Baillie Gifford willing to invest more in Tesla: the Times

A man walks near a logo of Tesla outside its China headquarters at China Central Mall in Beijing, China July 11, 2018. REUTERS/Jason Lee

(Reuters) – Baillie Gifford & Co, one of the top shareholders of Tesla Inc, has said it would be willing to inject more cash into the electric carmaker, the Times reported bit.ly/2PwSpuu on Monday.

“If he (Tesla CEO Elon Musk) needs more capital we would be willing to back him,” the Times quoted Nick Thomas, a partner at Edinburgh-based Baillie Gifford, as saying.

Baillie Gifford is Tesla’s third-largest shareholder with a 7.72 percent stake. Elon Musk tops the list with about 20 percent ownership of the electric carmaker followed by T.Rowe Price Associates Inc, which owns about 10 percent, according to Refinitiv data.

The backing from Baillie Gifford comes days after Tesla reported a net profit of $311.5 million in the third quarter.

Tesla and Baillie Gifford did not immediately respond to requests seeking comments.

Reporting by Philip George in Bengaluru; Editing by Gopakumar Warrier

Buy The Dip With 10.5% Yield And 141% Coverage, Conviction Buy

Co-produced with Philip Mause and Julian Lin for High Dividend Opportunities.

Source note: All tables and images from Global Partners L.P.’s website, unless otherwise stated.

Global Partners L.P. (GLP) is a master limited partnership which has re-transformed itself toward a more defensive business model. Management have done a remarkable job by positioning their portfolio and expanding retail operations. Despite this, the stock remains under the radar with double-digit yield with no credit given to the recent transformation. Coupled with a huge coverage of 141% this is one of the safest 10% yielders out there. For income investors, the shares are a strong buy.

Note that GLP issues K-1 tax forms.

In The Family

GLP was founded in 1933 as a single truck heating oil distributor. Since then, it has grown through the acquisitions of gasoline stations, convenience stores, pipelines, and storage terminals. The company is still being run by the same family, with CEO Eric Slifka leading the company founded by his grandfather 83 years ago. Let’s now look at what the company looks like today.

Boston Globe: Eric Slifka heads up the company founded by his grandfather in 1933 with one oil truck

Business Overview

GLP is an MLP which engages in midstream logistics and marketing. This is one of the nation’s leading wholesale distributors of petroleum products. GLP also is one of the largest independent owners, suppliers and operators of gasoline stations and convenience stores in the Northeast. It also is one of the largest terminal networks of petroleum products and renewable fuels in the area.

By the numbers, the scale of GLP is seen below:

Understanding The Business Model

GLP has three notable business segments: Wholesale, commercial, and retail.

Their wholesale business involves purchasing, transporting, and reselling gasoline, crude oil, and other related products to customers such as gasoline distributors, home heating oil retailers, and refiners. GLP has huge market share with 9.8 million barrels of capacity in the Northeast:

We can see that in many of their markets, GLP has acquired a market leader position:

Their next segment is their commercial business. Here they sell and deliver unbranded gasoline, heating oils, and kerosene to customers such as government agencies, large commercial clients, and shipping companies. These contracts are acquired through aggressive bidding and GLP’s massive scale allows them to win better terms over lesser scale competitors.

GLP’s final and most important business segment is the gasoline distribution and station operations (retail). This is their most important segment which has been a source of large growth, and is the reason we previously mentioned that they have made a strong move toward acquiring a defensive business model. Revenues include retail gasoline sales, rental income, and convenience store sales. One can say that customers range from station operators, gasoline jobbers, and retail customers.

You might be wondering why is the retail gas station and convenience store model so appealing? The reason is simple: Consistency. As we can see below, their product margin has been consistently rising the past decade:

Their large scale is evidenced by their 1,500 stores based spread across 11 states:

GLP’s sites operate with a variety of brand names:

GLP’s retail business has clear strategic advantages:

  • They have stable, recurring income from their rental agreements with dealer leased and commissioned agents.
  • They are vertically integrated between supply, terminating, and gas station sites.

  • They own “best of breed” locations in the Northeast.

  • They are diversified across brands, site geography, and mode of operation.

In order to accelerate growth through acquiring more retail locations, GLP has been optimizing their real estate portfolio. Because they are mainly interested in simply operating gas stations and convenience stores, GLP has engaged in sale and lease back transactions with real estate investment trusts like Getty Realty (GTY), which transfer ownership of the underlying real estate in exchange for capital which can be used to accelerate growth. As we can see below, GLP has been very aggressive in growing their retail segment through M&A:

We can see below how their three segments stack up in contributing to the latest quarter’s product margins:

Transformation of the Company

GLP has dramatically evolved their business model to have more exposure to defensive sectors which are stable regardless of economic conditions:

The above chart is very impressive! The management of GLP has re-positioned the portfolio pretty well:

  1. Eight years ago, GLP had 50% of their margins based on wholesale distribution of distillates (of which is heating oil). This portion of revenues was very seasonal and can see fluctuations based on the weather. Now this percentage has gone down significantly – only to 10%! A significant improvement.

  2. Management has re-positioned itself into Gasoline Distribution – mainly gas stations – which make up today 49% of gross margins and Convenience Stores, which make up 26% of gross margins. These businesses tend to be more stable and recession resilient and less price sensitive to the price of crude oil and heating oil. Gasoline is necessary, even during periods of economic weakness – consumers still need to drive and fill up the tank.

  3. The end result of management’s efforts is that this is now a company with a vertically integrated refined products distribution system made up of their terminal network, wholesale market, and retail gasoline stations. Why is this important? This integrated model allows them to control the product margin at each step of the value chain.

Recent Financial Results

GLP had a very solid second quarter:

  • Earnings before interest, taxes, depreciation, and amortization (‘EBITDA’) was $53.1 million compared to $51.3 million last year.

  • Distributable cash flow (‘DCF’) was $21.0 million versus $21.8 million.

  • Adjusted EBITDA was $56.1 million vs. $53.7 million.

  • Gross profit was $149.3 million compared to $135.4 million, due to improved product margins in gasoline in the Wholesale segment and station operations.

GLP also continued their strategy to expand their retail gasoline business through their acquisitions of Champlain and Cheshire. These acquisitions added 136 sites including 62 owned properties consisting of gas stations and convenience stores.

Even more good news!

  1. GLP raised its full-year 2018 guidance with EBITDA to a range of $190 to $215 million compared with a prior range of $180 – $210 million – or by 3.4%.
  2. GLP also hiked the quarterly distribution in July from $0.4625 to $0.4750 per unit, or $1.90 per unit on an annualized basis – or by 2.7%.

A Solid Balance Sheet

First, we would like to point out that the balance sheet of GLP is unique and particularly solid. It consists mostly of real estate assets (gas stations and convenience stores), in addition to inventories. The breakdown in percentages is as follows:

  1. 44% of total assets consist of conservatively valued fixed assets (strategically located, non-replicable terminals and gas stations). This gives the company property REIT-like features.
  2. 38% of other assets are “current assets” consisting of cash, inventory, receivables, deposits and prepaid items.

About leverage, debt/EBITDA was approximately 4.1 times, which is considered on the lower side in the MLP space, especially if we factor in that a big portion of borrowing relates to financing inventories. Based on their latest 10-Q, they are able to borrow at relatively competitive rates at 4.1% for their secured loans and 6.7% for their un-secured loans.

One of the safest dividends is the one that has just been raised.

As discussed earlier, GLP just raised their quarterly distribution from $0.4625 to $0.4750 per share or by 2.6%. This is the first dividend raise since 2015. Note that in 2015, GLP had to reduce the dividend following the crash in oil prices. Today, the situation has changed as the company’s profitability does not rely much on the price of oil anymore. In fact, when oil price declines, this tends to increase demand for gasoline as people are willing to drive and travel more. This also tends to generate more convenience store sales as drivers have more money in their pockets. The re-positioning of the company by management was remarkable.

Big Distribution Coverage

GLP hiked its distribution by 2.7% in August 2018 because they are seeing strong financial results, but what is the actual coverage?

Trailing twelve month (‘TTM’) DCF is $143 million. Adjusted for the non-cash tax credit, TTM DCF is $90.5 million. Based on 33.8 million shares, this works out to $2.68 in DCF per share. This suggests that the current distribution is covered at 141%. This is very strong coverage considering that other MLPs frequently see coverage much lower, between 100% to 120% times.

IDR Structure

GLP has a general partner (‘GP’) which has ownership of incentive distribution rights (‘IDRs’). These basically mean that the GP is entitled to a portion of cash flows depending on the size of GLP’s distribution. We can see how the math works below:

Based on the current quarterly distribution of $0.475, we can compute the projected IDR payments as follows.

  1. For the first $0.4625 in distributions per share, the GP gets a 0.67% cut.
  2. For the next $0.015 in distributions per share up to $0.5375, the GP gets 13.67%. This comes out to about $0.005 per share or $169,000.

In other words, buyers of the common stock at this time would not really be impacted much by the IDRs despite the huge distribution payout. The distributions have to increase significantly to a level of $0.6625 per quarter for a yield of 14.6% based on the current price for the IDR payments to become significant.

Another way to look at it is that for a purchaser at this price, GLP has to pay more than 10% yield before any IDR kicks in. Therefore the GP has every incentive to keep increasing distributions in the future to be able to meaningfully share in the profits.

High Insider Ownership 22%

The General Partner, which holds a 0.67% general partner interest in the Partnership, is owned by affiliates of the Slifka family. As of June 30, 2018, affiliates of the General Partner, including its directors and executive officers and their affiliates, owned 7,377,738 common units, representing a 21.7% interest in the company.

The Chairman Eric Slifka himself owns 1.22 million shares (directly and indirectly) representing about 4% of the company’s shares.

This is a true family business that seems to be strongly aligned with the shareholders.

Valuation

Management has given guidance for full-year 2018 EBITDA of $190 million to $215 million. We have excluded from the calculations a $52.6 million tax credit which is a one-time non-recurrent income. We did valuations using two different methods:

  1. Price / “distributable cash flow” (or DCF) valuation: Based on our adjusted DCF of $2.68 per share, GLP trades at 6.8 times DCF. This is very cheap.
  2. EV/EBITDA valuation: With $613.8 million in common market cap (based on 33.8 million shares and $18.16 share price), and $66.8 million in preferred stocks, GLP trades at a EV/EBITDA multiple of 7.8. Note the EV/EBITDA ratio is a unique and important valuation ratio that takes “debt levels” into account. Again, the valuation in this case is particularly low and attractive.

Compared to Competitors

The main comparables to GLP are CrossAmerica Partners (CAPL) and Sunoco LP (SUN). As we can see below: GLP offers the best combination of valuation and distributable cash flow coverage:

(Chart by Authors)

Don’t just look at the yields! The valuation and dividend coverage are the most important metrics. GLP is much more attractively priced than both of its competitors. It’s 12% cheaper than CAPL, and 22% cheaper than SUN by looking at the DCF metric. Furthermore, the distribution has a significantly higher coverage of 141%. GLP is attractively priced with its high yield and high dividend coverage.

12-Month Price Target

GLP is very cheap here. Our conservative price target is at 7.8 times DCF, which works out to $20.7 per share and a 9.2% yield. This is roughly 15% upside for the stock price from here.

Risks

  • GLP has a defensive business model due to its retail operations of gasoline stations and convenience stores. Still, the business has some sensitivity to the price of crude and heating oils, which is due to its wholesale distribution of distillates. If oil prices were to drastically drop, GLP may see decreasing demand for this segment. On the positive side, this segment only contributes 6% of gross margins. Furthermore, a decline in oil prices should lead to greater business in their convenience stores and gas station segments.

  • GLP has little geographic diversification as its assets are mainly in the northeast. This makes them more exposed to dangers from natural disasters or regional government regulation. That said, their business has stood the test of time and we do not expect anything to change that.
  • GLP owns a large inventory of gasoline and refined products. In case of a fluctuation in price, this can result in losses. Having said that, management has a lot of experience in handling inventory and also has hedging in place. We do not believe this is a significant risk.
  • GLP is run by the family that founded the company, so it is a “family like” business. This has both advantages and risks. The advantage is that this family has a substantial ownership in the company which usually means that they will do their best to protect the business, their reputation, and their own money. On the negative side (and based on my experience with family run businesses), families tend to make more management mistakes than non-family run businesses. This is due to several reasons including the fact that the family member taking the decisions may not be necessarily the most qualified person to make these decisions, and/or may not always listen to advice. In the case of GLP, the current CEO has done a tremendous job re-organizing the company, and I believe that he has reached a point whereby he is not only highly knowledgeable of the business, but also a very well seasoned CEO.

Recent Pullback Creates a Buying Opportunity

GLP has hiked its distribution in August 2018 by 2.6%. Despite this, the stock has pulled back along with the general markets by over 13% creating a unique buying opportunity:

Bottom Line

Global Partners LP runs a highly profitable operation. It has a unique business model and benefits from its vertically integrated assets. This also is a defensive business model that can do well in good and in bad times.

I have always admired this company’s resilience and its generous dividend distributions. Today dividend investors have the chance to buy into this great company at incredibly low valuations. Not only the price has recently pulled back, but it also does not reflect either the magnificent transformation that management did or the resulting stronger outlook and guidance, offering a unique opportunity.

This is possibly one of the safest 10% yielders out there because of its high coverage of 141%. This could very well be one of the biggest winners in your high-yield portfolio.

Note: The common shares should go ex-dividend around the 8th of November or in less than two weeks.

Another High Conviction Buy: The Preferred Stocks

GLP recently issued approximately $66.8 million in 9.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units, which they used to reduce their debt levels.

We view GLP as a relatively defensive stock. However for income investors who are extra conservative, we recommend another Conviction Buy, the preferred stock of GLP:

Global Partners, L.P., 9.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (GLP.PA)

  • GLP-A has a par value of $25 per unit. It currently trades at $25.30/share.
  • The coupon is at 9.75% per annum.
  • It’s redeemable at the issuer’s option on or after 8/15/2023 at $25 per unit plus accrued dividends.
  • This is a perpetual Preferred Share with no stated maturity.
  • The shares are cumulative, and therefore, if for any reason they are suspended, the unpaid preferred dividends “accumulate” perpetually. This adds another layer of protection to preferred shareholders because this means that before the common dividends can be once again resumed, all accumulated preferred dividends must first be paid out.
  • The amount of the dividend is $2.4375 per annum or $0.609375 per quarter. It’s paid quarterly on the 1st of February, May, August and November each year. The ex-dividend is on the last business day of the previous month. So the next ex-dividend will be next Wednesday on October 31.
  • The most important feature: On and after 8/15/2023, the dividend will become based on a floating rate, calculated based on three-month LIBOR plus a spread of 6.774% per annum. This adds a big protection against rising interest rates. In today’s terms, with Libor being around 3%, the yield should be at 9.77% even if interest rates do not rise further.

GLP-A was trading at $26.30 a share just three months ago. Today it’s trading at around $25.50 for a yield of 9.7% creating a unique buying opportunity!

Global Partners (NYSE:<a href=


Source: Yahoo Finance

We believe this is one of the best preferred stocks in the market today to invest for the long term. The dividend is enormous compared to the relative lower risk level it carries. Plus because of its floating rate, it carries some protection against rising interest rates. The recent pullback has created an opportunity.

  • Advantage of the Common to the Preferred: More upside potential, and a great yield.
  • Advantage of the Preferred over the Common: Less upside potential, but less price volatility and still a huge dividend that is even safer than the common. Conservative investors are advised to buy this issue for the juicy yield and also for some upside potential.

Great stock! Great investing!

A note about diversification: To achieve an overall yield of 9% and optimal level of diversification, at High Dividend Opportunities, we always recommend a maximum allocation of 2% to 3% of the portfolio to individual high-yield stocks like GLP, and 5% allocation to high-yield exchange traded products (such as ETF, ETNs and CEFs), which are products that hold a large basket of stocks or bonds. As part of a risk management strategy, we do not recommend exceeding this allocation no matter how good the opportunity is.

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Disclosure: I am/we are long GLP, GLP.PA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.