Sprague Resources (SRLP) 6 Nov 212021 Q3 Earnings call transcript

Good afternoon, everyone, and welcome to the Q3 2021 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. David Glendon, President and Chief Executive Officer.

Thank you, Kirby. welcome Resources’ and Conference Quarter everyone, Call. afternoon, to Third Sprague XXXX Good

any obligation are not risks Chief to on information reasonable I’d risk date, Long, Paul anticipated results, me These the to results today’s David filings Joining of our today XX-K forward-looking be differ forward-looking from predict. include or future XX-K, our may undertake expectations, listeners differ our to reflect and some results other Vice Sprague to statements. list statements and which new that and call believe will remind factors, to events. are which significantly and difficult to review update Scoff, President reports today’s Financial a Actual current SEC. with because General and as to Counsel. based current any are could of like statements that refer of does cause of our Please our and for XX-Q, Officer; we actual uncertainties our

can press the We very both using our pleased quarterly financial these third of results. supplement Reconciliations strong our GAAP quarter certain our I’m available to also Investor comparable and Relations earnings business section measures. measures measures which non-GAAP in non-GAAP of are our be website. describe found in release, of with our

logistical details upside price XXXX deliver saw several opportunities from customer review be a tightness to In minutes, current natural prosper markets quarter switching gas. theme capture. XXXX, capabilities. able that and opportunities the a winter, this seeing volatility few gas the asset attendant the contango vision, driven our with escalation core benefiting gas-to-oil while global and in and by policy, at in strong of take our led will the with capture structure, with change in to weather, past distribution business’ baseline opportunities plethora as customers distillates persist or tightness was our partner, can we periodically natural in optimization and the team as to our reconfiguration coupled of our to both in inventories market. third well asset we also in on our market structural times discussed While form markets. calls, realize The in specifically that base, These These ability serve one solid anticipate David I’ve will we’re positions franchise the every overall as our tomorrow’s of proprietary our as energy to new among is base the the Sprague needs results, markets approach recent of to business the capabilities. energy We consolidation present which may better those to

driven to cuts market made is a and and growth, incremental ours have potential. MLPs operating for most X.Xx recently a While defensive with well prospects ripe provides delivering finance in to positive great desire below on is invest while to covenant operations credit distributions in our cash ample X.Xx. million as facility announced by cash opportunities, flow. to an to go still the from current also projects, growth accretive see purposes, in offense we annually of The invest change of leverage our have level permanent $XX room larger We

further assets growth of exhibiting sales liquidity to projects. growth additional consider to expect provide for limited prospects also We

Hartree new to of broad the team and our business. for exciting network opportunities to exposure the Our evolution continues their surface

in businesses and/or consolidation our of regulations benefits shifting patterns realize existing to as expect demand and sales. tighter closures lead to also We asset

that more emerging like will which infrastructure substantial acquisition fuel Everett, on or the have sources, and in view. well existing biodiesel seeing Even these market years. often as market solar Mass positioned liquid reliance is more And their shift sell we opportunities as transition, Sprague alternative for last conversion more transition we ExxonMobil realizing embracing recently believe active we we’re dynamics. this it’s energy a example, renewable greatest are capitalize large Boston greenhouse for For Notably, to the long upon significantly and energy in just sellers use, to believed announced believe trends, the very efforts diesel fuels plans alternative reductions offers every immediate the the confront over are emission we’ve stakeholders sources, increased the renewable at whether that fuels the or the and misguided wind landscape. changes liquid now in versus potential gas terminal XXX to energy

continue capital emissions. costs states materially believe drop nature exorbitant compare electrification benefits gas residential commercial the higher and to some to we and biofuel GHG of the that in incent with not systems, in larger While greenhouse of do blends reductions limited heating

Sprague’s to several suited well We’re and seeing of extensive now which dynamic passing is Northeastern legislation this serve. use experience states renewables, and mandating infrastructure higher recognize

We’re support system lower from making capital to experience other to this In to our to displacing merely we’re higher own fuels capture systems bio solar, and larger our blends expand generation investments distribution customer provide demand. looking first-in-the-world our evolve across scale energy energy to tank extensive that use transitions. constructing can carbon solar

estate installations power an of environmental both in where community applications pending leverage economic solar extensive markets, the high-cost for our offers solar tank tops two have real and We that this benefit.

been continued in solar energy, a and see critical Ocean forward. installations. in the to Management Energy our deploying recent the film is process innovative to of see to be gulf panels part of Bureau positioned main advancements growth In of offshore the serving permitting thin expect We market, wind for going we’ve projects pleased the terminal infrastructure Searsport burgeoning these

use the our of at that prospects. digesters Sprague well gas Obviously, believe intriguing gas tankage that initial existing feedstock to several unique and our the sources actively analysis, locations and present terminal proximate renewable investigating to entering natural our this are on conversion of out we’re the natural advantages with and capabilities gas existing conversion to pipeline infrastructure round possesses nascent connections market. Based production. to tanks Finally, infrastructure for selected marketing facilities natural suited, for we

development efforts in benefits While sight long Hartree’s added growth in we prospects exciting shouldn’t network. Sprague’s leverage opportunities to tail continued core inherent advantages, our of of business, expertise and all present with the support, lose from these existing renewables extensive

Now I’d like for quarter call third Dave to over Long a to turn review the our of results. detailed Dave?

handling third quarter, increase marketing a SG&A in X% and Echoing while to result $X.X or realize policy, in $X.X which and of quarterly $X.X Sprague’s borrowing interest several offset costs. increased expenses third or Sprague’s million million quarter, as the for was million you, energy the year-over-year of primarily to by quarter by or tank million interest expenses decreased prior in taxes XX-month by well which coverage year. of as coverage $X.X $XX.X an $X.X EBITDA gross and our afternoon, in higher lower third future $X.X cash decreases everyone. to CapEx compared in third expenses. by primarily financial X.Xx. year, due in Sprague by cash solid million distribution in Sprague’s to to primarily the for of Since $X.X to Trailing was and $X.X compensation, adjusted an CapEx quarter comments, end XXXX, Operating third decreased terminals. quarter employee-related markets X%, Thank Dave, quarter million a third boiler adjusted more with increase by Quarterly $X.X X% X.Xx. or $X.X maintenance positions or to maintenance the EBITDA, third $XX.X by higher line, of increased a the down to EBITDA compared existing the than insurance, due coupled the of as was million the million Sprague emerging margin newly recorded increased of million a million, in insurance million was $X.X X% in the adjusted and QX to million repairs good million now were financial decrease discussion company results. principally XX% taxes, and million at below prior utilities XX% or materials opportunities distribution results incentive and fuel in growth distributable change quarterly investments the our increase to expense at ratio by $X.X due rates. flow in was distribution cash increased the Below net by quarter generating cash year-over-year. Dave’s incremental which

our balance to Turning sheet.

third the mentioned the was of permanent X.Xx quarter. end previously, As Dave Sprague’s leverage at

in We continue capacity have ample our credit excess to facility.

capital of capacity borrowing XX, September under acquisition was and XXXX, As our million. our $XXX working lines

decreased QX and market weaker considerable store there was volumes sales a the We’d of contango from by as which remind forward primarily Refined $XXX with accounts. purchase, factor. sales unchanged remains in Natural commodity gasoline, adjusted In $XX.X price a our volumes year-over-year, X% year. being XX% a last $X.X like that million. business for due In value Products, segments. again structure increased strong pandemic levels was Gas, hedge of the very year inventory. million, market terms guidance, the in decreased gross target inventory to contributing the due Sprague’s at recovery to XX% quarter million with by $XXX to to demand, to higher now year-over-year environment carrying full EBITDA XXXX, of to discussion affords for listeners margin million structure And In which economic by along or and particularly rising a in quarter new ongoing Adjusted increased

$XX.X compared the and third same four optimization like mark-to-market While adjusted point, due parties well prices tank million, basis was year bulk Sprague’s handling third Canadian which improvements the of of operation. deliveries $X.X a adjusted questions. call in wind for increase than asphalt as same and an to valuation a margin at and million At Materials at activity led million, was to or open year the deferral margin for this the gross decrease some $XX.X period million to ago. Handling, positions. higher rental of $XX.X gross considerable the The supply ago to lower XX% U.S. market lower quarter as as I’d principally opportunities, the volatility demand was operations Sprague’s period lower was

And there are Instructions] time. [Operator this continue. at Presenters, you no questions may

quarterly for we updating and Thank appreciate forward and you We Kirby, your today. interest, everyone, joining look next thanks, you, at the call. to

who everyone our call. much participated. to and This you Thank to conference so today’s concludes presenters

disconnect. now may day. great Have You a