Sprague Resources LP (“Sprague”) (NYSE: SRLP) today reported its
financial results for the second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
- Net sales were $1,278.3 million for the
second quarter of 2022, compared to net sales of $657.7 million for
the second quarter of 2021.
- GAAP net loss was $45.3 million for the
second quarter of 2022, compared to net loss of $45.6 million for
the second quarter of 2021.
- Adjusted gross margin* was $51.1
million for the second quarter of 2022, compared to adjusted gross
margin of $38.8 million for the second quarter of 2021.
- Adjusted EBITDA* was $7.0 million for
the second quarter of 2022, compared to adjusted EBITDA of $3.0
million for the second quarter of 2021.
"Sprague's solid second quarter results were driven by continued
strong execution across our portfolio of businesses. Global
tightness in commodity markets created opportunities to leverage
our supply and logistics expertise," said David Glendon, President
and Chief Executive Officer.
Refined Products
- Volumes in the Refined Products segment
increased 2% to 293.8 million gallons in the second quarter of
2022, compared to 289.5 million gallons in the second quarter of
2021.
- Adjusted gross margin in the Refined
Products segment increased $2.7 million, or 10%, to $29.9 million
in the second quarter of 2022, compared to $27.2 million in the
second quarter of 2021.
“Sales volume increases in gasoline led to stronger results
versus last year's second quarter," stated Mr. Glendon. "Despite
the challenges of a backwardated market, our teams kept customers
supplied while limiting inventories."
Natural Gas
- Natural Gas segment volumes decreased
7% to 10.9 million Bcf in the second quarter of 2022, compared to
11.7 million Bcf in the second quarter of 2021.
- Natural Gas adjusted gross margin
increased $8.5 million, or 311%, to $5.8 million for the second
quarter of 2022, compared to $(2.7) million for the second quarter
of 2021.
"Our Natural Gas business enjoyed continued healthy results by
optimizing our asset portfolio and logistical expertise in the
constrained Northeast markets," added Mr. Glendon.
Materials Handling
- Materials Handling adjusted gross
margin increased by $0.1 million, to $12.8 million for the second
quarter of 2022, compared to $12.7 million for the second quarter
of 2021.
"Materials Handling continued its steady contribution to our
overall results, leveraging our extensive infrastructure assets,"
concluded Mr. Glendon.
Quarterly Distribution
On July 25, 2022, the Board of Directors ("Board") of
Sprague’s general partner, Sprague Resources GP LLC, announced a
cash distribution of $0.4338 per unit for the quarter ended
June 30, 2022. The distribution will be paid on
August 10, 2022 to unitholders of record as of the close of
business on August 5, 2022.
2022 Guidance
As announced and described in our Form 8-K filing with the
Securities and Exchange Commission on June 2, 2022, Sprague, and
its general partner, Sprague Resources GP LLC, entered into an
Agreement and Plan of Merger with Sprague HP Holdings, LLC, a
wholly owned subsidiary of Hartree Partners, LP, and Sparrow HP
Merger Sub, LLC, pursuant to which Sparrow HP Merger Sub, LLC will
merge with and into the Partnership, with the Partnership surviving
as a direct wholly owned subsidiary of Sprague Resources GP LLC and
Hartree Partners, LP (the “Merger”).
In light of the proposed Merger, and as is customary during the
pendency of a merger, Sprague Resources LP will not be hosting a
conference call or providing financial guidance in conjunction with
our second quarter 2022 earnings release.
About Sprague Resources LPSprague Resources LP
is a master limited partnership engaged in the purchase, storage,
distribution and sale of refined petroleum products and natural
gas. Sprague also provides storage and handling services for a
broad range of materials.
*Non-GAAP Financial
MeasuresEBITDA, adjusted EBITDA, adjusted gross margin and
distributable cash flow are measures not defined by GAAP. Sprague
defines EBITDA as net income (loss) before interest, income taxes,
depreciation and amortization.
We define adjusted EBITDA as EBITDA increased for unrealized
hedging losses and decreased by unrealized hedging gains (in each
case with respect to refined products and natural gas inventory,
prepaid forward contracts and natural gas transportation
contracts), changes in fair value of contingent consideration,
adjusted for the impact of acquisition related expenses, and when
applicable, adjusted for the net impact of retroactive legislation
that reinstates an excise tax credit program available for certain
of our biofuel blending activities that had previously expired.
We define adjusted gross margin as net sales less cost of
products sold (exclusive of depreciation and amortization)
decreased by total commodity derivative gains and losses included
in net income (loss) and increased by realized commodity derivative
gains and losses included in net income (loss), in each case with
respect to refined products and natural gas inventory, prepaid
forward contracts and natural gas transportation contracts.
Adjusted gross margin has no impact on reported volumes or net
sales.
To manage Sprague's underlying performance, including its
physical and derivative positions, management utilizes adjusted
gross margin. Adjusted gross margin is also used by external users
of our consolidated financial statements to assess our economic
results of operations and its commodity market value reporting to
lenders. EBITDA and adjusted EBITDA are used as supplemental
financial measures by external users of our financial statements,
such as investors, trade suppliers, research analysts and
commercial banks to assess the financial performance of our assets,
operations and return on capital without regard to financing
methods, capital structure or historical cost basis; the ability of
our assets to generate sufficient revenue, that when rendered to
cash, will be available to pay interest on our indebtedness and
make distributions to our equity holders; repeatable operating
performance that is not distorted by non-recurring items or market
volatility; and, the viability of acquisitions and capital
expenditure projects.
Sprague believes that investors benefit from having access to
the same financial measures that are used by its management and
that these measures are useful to investors because they aid in
comparing its operating performance with that of other companies
with similar operations. The adjusted EBITDA and adjusted gross
margin data presented by Sprague may not be comparable to similarly
titled measures at other companies because these items may be
defined differently by other companies. Please see the attached
reconciliations of net income to adjusted EBITDA and operating
income to adjusted gross margin.
Sprague defines distributable cash flow as adjusted EBITDA less
cash interest expense (excluding imputed interest on deferred
acquisition payments), cash taxes, and maintenance capital
expenditures. Distributable cash flow calculations also reflect the
elimination of compensation expense expected to be settled with the
issuance of Partnership units, expenses related to business
combinations and other adjustments. Distributable cash flow is a
significant performance measure used by Sprague and by external
users of its financial statements, such as investors, commercial
banks and research analysts, to compare the cash generating
performance of the Partnership in relation to the cash
distributions expected to be paid to its unitholders.
With regard to guidance, reconciliation of non-GAAP adjusted
EBITDA to the closest corresponding GAAP measure (expected net
income (loss)) is not available without unreasonable efforts on a
forward-looking basis due to the inherent difficulty and
impracticality of forecasting certain amounts required by GAAP such
as unrealized gains and losses on derivative hedges, which can have
a significant and potentially unpredictable impact on our future
GAAP financial results.
Cautionary Statement Regarding Forward Looking
StatementsAny statements in this press release about
future expectations, plans and prospects for Sprague Resources LP
or about Sprague Resources LP’s future expectations, beliefs,
goals, plans or prospects, constitute forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934. Any statements that are not statements of historical fact
(including statements containing the words “believes,” “plans,”
“anticipates,” “expects,” “estimates” and similar expressions)
should also be considered forward-looking statements. These
forward-looking statements involve risks and uncertainties and
other factors that are difficult to predict and many of which are
beyond management’s control. Although Sprague believes that the
assumptions underlying these statements are reasonable, investors
are cautioned that such forward-looking statements are inherently
uncertain and involve risks that may affect our business prospects
and performance causing actual results to differ from those
discussed in the foregoing release. Such risks and uncertainties
include, by way of example and not of limitation: our ability to
complete the Merger in a timely manner, or at all; greater than
expected operating costs, customer loss, business disruption and
employee attrition as a result of the proposed Merger; diversion of
management time on the proposed Merger and changes in management
and other personnel before the closing of the Merger; the direct
and indirect effects of the COVID-19 global pandemic and other
public health developments on our business and those of our
business partners, suppliers and customers, including Sprague;
increased competition for our products or services; adverse weather
conditions; changes in supply or demand for our products or
services; nonperformance by major customers or suppliers; changes
in operating conditions and costs; changes in the level of
environmental remediation spending; potential equipment malfunction
and unexpected capital expenditures; our ability to complete
organic growth and acquisition projects; our ability to integrate
acquired assets; potential labor issues; the legislative or
regulatory environment; terminal construction/repair delays;
political and economic conditions; the impact of security risks
including terrorism, international hostilities and cyber-risk; and
the inability to amend or extend the maturity of our Credit
Agreement. . These are not all of the important factors that could
cause actual results to differ materially from those expressed in
forward looking statements. Other applicable risks and
uncertainties have been described more fully in Sprague’s most
recent Annual Report on Form 10-K filed with the U.S. Securities
and Exchange Commission (“SEC”) on March 4, 2022 and in the
Partnership's subsequent Form 10-Q, Form 8-K and other documents
filed with the SEC. Sprague undertakes no obligation and does not
intend to update any forward-looking statements to reflect new
information or future events. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release.
(Financial Tables Below)
Sprague Resources
LPSummary Financial DataThree and
Six Months Ended June 30, 2022 and
2021
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
($ in thousands) |
|
($ in thousands) |
Income
Statements Data: |
|
|
|
|
|
Net sales |
$ |
1,278,310 |
|
|
$ |
657,672 |
|
|
$ |
3,091,625 |
|
|
$ |
1,693,805 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of products sold (exclusive of depreciation
and amortization) |
|
1,261,935 |
|
|
|
659,803 |
|
|
|
2,991,013 |
|
|
|
1,584,585 |
|
Operating expenses |
|
22,092 |
|
|
|
19,148 |
|
|
|
45,327 |
|
|
|
38,379 |
|
Selling, general and administrative |
|
21,941 |
|
|
|
16,719 |
|
|
|
50,661 |
|
|
|
41,958 |
|
Depreciation and amortization |
|
8,049 |
|
|
|
8,258 |
|
|
|
16,175 |
|
|
|
16,741 |
|
Total operating costs and
expenses |
|
1,314,017 |
|
|
|
703,928 |
|
|
|
3,103,176 |
|
|
|
1,681,663 |
|
Other operating income |
|
— |
|
|
|
9,725 |
|
|
|
— |
|
|
|
9,725 |
|
Operating (loss) income |
|
(35,707 |
) |
|
|
(36,531 |
) |
|
|
(11,551 |
) |
|
|
21,867 |
|
Other (loss) income |
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
2 |
|
Interest income |
|
115 |
|
|
|
77 |
|
|
|
143 |
|
|
|
143 |
|
Interest expense |
|
(9,242 |
) |
|
|
(8,587 |
) |
|
|
(19,814 |
) |
|
|
(17,402 |
) |
(Loss) income before income
taxes |
|
(44,834 |
) |
|
|
(45,041 |
) |
|
|
(31,223 |
) |
|
|
4,610 |
|
Income tax (provision) benefit |
|
(461 |
) |
|
|
(562 |
) |
|
|
3,874 |
|
|
|
(1,433 |
) |
Net (loss)
income |
|
(45,295 |
) |
|
|
(45,603 |
) |
|
|
(27,349 |
) |
|
|
3,177 |
|
Limited partners'
interest in net (loss) income |
$ |
(45,295 |
) |
|
$ |
(45,603 |
) |
|
$ |
(27,349 |
) |
|
$ |
3,177 |
|
Net (loss) income per limited
partner unit: |
|
|
|
|
|
|
|
Common - basic |
$ |
(1.73 |
) |
|
$ |
(1.74 |
) |
|
$ |
(1.04 |
) |
|
$ |
0.13 |
|
Common - diluted |
$ |
(1.73 |
) |
|
$ |
(1.74 |
) |
|
$ |
(1.04 |
) |
|
$ |
0.13 |
|
Units used to compute
net income per limited partner unit: |
|
|
|
|
|
|
Common - basic |
|
26,236,612 |
|
|
|
26,226,255 |
|
|
|
26,235,585 |
|
|
|
25,066,494 |
|
Common - diluted |
|
26,236,612 |
|
|
|
26,226,255 |
|
|
|
26,235,585 |
|
|
|
25,066,494 |
|
Distribution declared per
unit |
$ |
0.4338 |
|
|
$ |
0.6675 |
|
|
$ |
0.8676 |
|
|
$ |
1.3350 |
|
Sprague Resources
LPVolume, Net Sales and Adjusted Gross Margin by
SegmentThree and Six Months Ended June 30,
2022 and 2021
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
($ and volumes in thousands) |
Volumes: |
|
|
|
|
|
|
Refined products (gallons) |
|
293,810 |
|
|
|
289,458 |
|
|
|
859,478 |
|
|
|
805,303 |
|
Natural gas (MMBtus) |
|
10,895 |
|
|
|
11,692 |
|
|
|
28,556 |
|
|
|
30,527 |
|
Materials handling (short tons) |
|
407 |
|
|
|
507 |
|
|
|
1,038 |
|
|
|
924 |
|
Materials handling (gallons) |
|
96,697 |
|
|
|
124,444 |
|
|
|
184,851 |
|
|
|
182,303 |
|
Net Sales: |
|
|
|
|
|
|
|
Refined products |
$ |
1,189,213 |
|
|
$ |
589,142 |
|
|
$ |
2,856,043 |
|
|
$ |
1,505,342 |
|
Natural gas |
|
70,510 |
|
|
|
51,360 |
|
|
|
196,354 |
|
|
|
153,935 |
|
Materials handling |
|
12,871 |
|
|
|
12,725 |
|
|
|
25,964 |
|
|
|
24,771 |
|
Other operations |
|
5,716 |
|
|
|
4,445 |
|
|
|
13,264 |
|
|
|
9,757 |
|
Total net sales |
$ |
1,278,310 |
|
|
$ |
657,672 |
|
|
$ |
3,091,625 |
|
|
$ |
1,693,805 |
|
Reconciliation of Operating Income to Adjusted Gross
Margin: |
|
|
|
|
|
|
Operating (loss) income |
$ |
(35,707 |
) |
|
$ |
(36,531 |
) |
|
$ |
(11,551 |
) |
|
$ |
21,867 |
|
Operating costs and expenses not allocated to operating
segments: |
|
|
|
|
|
|
Operating expenses |
|
22,092 |
|
|
|
19,148 |
|
|
|
45,327 |
|
|
|
38,379 |
|
Selling, general and administrative |
|
21,941 |
|
|
|
16,719 |
|
|
|
50,661 |
|
|
|
41,958 |
|
Depreciation and amortization |
|
8,049 |
|
|
|
8,258 |
|
|
|
16,175 |
|
|
|
16,741 |
|
Other Operating Income |
|
|
|
(9,725 |
) |
|
|
|
|
(9,727 |
) |
Change in unrealized (gain) loss on inventory |
|
(21,998 |
) |
|
|
5,369 |
|
|
|
(6,629 |
) |
|
|
(20,888 |
) |
Change in unrealized value on natural gas transportation
contracts |
|
56,673 |
|
|
|
35,592 |
|
|
|
98,596 |
|
|
|
56,711 |
|
Total adjusted gross margin: |
$ |
51,050 |
|
|
$ |
38,830 |
|
|
$ |
192,579 |
|
|
$ |
145,041 |
|
Adjusted Gross
Margin: |
|
|
|
|
|
|
|
Refined products |
$ |
29,868 |
|
|
$ |
27,165 |
|
|
$ |
83,994 |
|
|
$ |
78,198 |
|
Natural gas |
|
5,755 |
|
|
|
(2,725 |
) |
|
|
77,106 |
|
|
|
38,364 |
|
Materials handling |
|
12,799 |
|
|
|
12,694 |
|
|
|
25,929 |
|
|
|
24,770 |
|
Other operations |
|
2,628 |
|
|
|
1,696 |
|
|
|
5,550 |
|
|
|
3,709 |
|
Total adjusted gross margin |
$ |
51,050 |
|
|
$ |
38,830 |
|
|
$ |
192,579 |
|
|
$ |
145,041 |
|
Sprague Resources
LPReconciliation of Net Income to Non-GAAP
MeasuresThree and Six Months Ended June 30,
2022 and 2021
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
($ in thousands) |
|
($ in thousands) |
Reconciliation of net
income to EBITDA, Adjusted EBITDA and
Distributable Cash Flow: |
|
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(45,295 |
) |
|
$ |
(45,603 |
) |
|
$ |
(27,349 |
) |
|
$ |
3,177 |
|
Add/(deduct): |
|
|
|
|
|
|
|
Interest expense, net |
|
9,127 |
|
|
|
8,510 |
|
|
|
19,671 |
|
|
|
17,259 |
|
Tax provision |
|
461 |
|
|
|
562 |
|
|
|
(3,874 |
) |
|
|
1,433 |
|
Depreciation and
amortization |
|
8,049 |
|
|
|
8,258 |
|
|
|
16,175 |
|
|
|
16,741 |
|
EBITDA |
$ |
(27,658 |
) |
|
$ |
(28,273 |
) |
|
$ |
4,623 |
|
|
$ |
38,610 |
|
Add/(deduct): |
|
|
|
|
|
|
|
Change in unrealized (gain) loss
on inventory |
|
(21,998 |
) |
|
|
5,369 |
|
|
|
(6,629 |
) |
|
|
(20,888 |
) |
Change in unrealized value on
natural gas transportation contracts |
|
56,673 |
|
|
|
35,592 |
|
|
|
98,596 |
|
|
|
56,711 |
|
Gain on sale of fixed assets not
in the ordinary course of business and other operating income |
|
— |
|
|
|
(9,725 |
) |
|
|
— |
|
|
|
(9,727 |
) |
Other adjustments |
|
31 |
|
|
|
35 |
|
|
|
62 |
|
|
|
65 |
|
Adjusted
EBITDA |
$ |
7,048 |
|
|
$ |
2,998 |
|
|
$ |
96,652 |
|
|
$ |
64,771 |
|
Add/(deduct): |
|
|
|
|
|
|
|
Cash interest expense, net |
|
(7,672 |
) |
|
|
(6,664 |
) |
|
|
(16,902 |
) |
|
|
(14,031 |
) |
Cash taxes |
|
(3,440 |
) |
|
|
(694 |
) |
|
|
2,473 |
|
|
|
(1,677 |
) |
Maintenance capital expenditures |
|
(3,925 |
) |
|
|
(3,515 |
) |
|
|
(6,595 |
) |
|
|
(5,523 |
) |
Elimination of expense relating to incentive compensation and
directors fees expected to be paid in common units |
|
— |
|
|
|
185 |
|
|
|
— |
|
|
|
2,553 |
|
Other |
|
— |
|
|
|
(6 |
) |
|
|
— |
|
|
|
— |
|
Distributable cash
flow |
$ |
(7,989 |
) |
|
$ |
(7,696 |
) |
|
$ |
75,628 |
|
|
$ |
46,093 |
|
Investor Contact:Paul Scoff +1
800.225.1560investorrelations@spragueenergy.com
Grafico Azioni Sprague Resources (NYSE:SRLP)
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Da Mag 2024 a Giu 2024
Grafico Azioni Sprague Resources (NYSE:SRLP)
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