Exhibit 99.2 |
2 Forward Looking and Cautionary Statements This presentation and oral statements made regarding the subjects of this presentation may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, or the Reform Act, which may include, but are not limited to, statements regarding our plans, objectives, expectations and intentions and other statements that are not historical facts, including statements identified by words such as "outlook," "intends," "plans," "estimates," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "anticipates," "foresees," or the negative version of these words or other comparable expressions. All statements addressing operating performance, events, or developments that the Partnership expects or anticipates will occur in the future, including statements relating to revenue growth and earnings or earnings per unit growth, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are based upon our current views and assumptions regarding future events and operating performance and are inherently subject to significant business, economic and competitive uncertainties and contingencies and changes in circumstances, many of which are beyond our control. The statements in this presentation are made as of the date of this presentation, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this presentation. Although the Partnership does not make forward-looking statements unless it believes it has a reasonable basis for doing so, the Partnership cannot guarantee their accuracy. Achieving the results described in these statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the factors discussed in this presentation and those described in the “Risk Factors” section of the Partnership’s Form 10-K filed on March 28, 2013, with the Securities and Exchange Commission as well as in the Partnership’s other filings with the Securities and Exchange Commission. No undue reliance should be placed on any forward-looking statements. |
• Lehigh Gas Partners LP (“LGP” or “Lehigh Gas”) is a leading wholesale distributor of motor fuels and owner and lessee of real estate related to retail fuel distribution. Its Predecessor was founded in 1992 and leasing sites primarily located in metropolitan and urban areas • Completed a $138 million Initial Public Offering on October 30, 2012 • Equity market capitalization of $372 million and enterprise value of $628 million as of 6/30/13 • As of 6/30/2013, distribute to 713 locations primarily in the Northeastern United States, Florida and Ohio sites and through eight sub-wholesalers • Distributed 310.4 million gallons of motor fuel in the period ending six months June 30, 2013 Lehigh Gas Overview Top 10 Distributor for (3) : (1) Includes $18 million exercise of over-allotment. (2) As of June 30, 2013. (3) Based on 2012 volume. Focused on distributing fuels to and owning 210 owned sites and 294 leased sites (2) Also distribute to 209 independent dealer (2) 3 (1) |
4 Lehigh Gas Portfolio Overview ) Dunmore Acquisition Express Lane Acquisition LGP Supplied (1) As of June 30 2013. Does not include the Rogers or Rocky Top portfolios. |
5 Lehigh Gas Operations Industry Value Chain Non-Qualifying Income Qualified MLP Income Wholesale Distribution Rental Income (Realty) • Stable cash flow • Margin per gallon • Limited commodity exposure • Multi-year contracts • Stable cash flow • Prime locations • Multi-year contracts Retail Distribution Concessions Rental Income (Personalty) Pipeline / Storage Wholesale Distributor Gasoline Station |
Investment Highlights • Stable Cash Flows from Rental Income and Wholesale Fuel Distribution • Prime Real Estate Locations in Areas with High Traffic • Long-Term Relationships with Major Integrated Oil Companies and Refiners • Established History of Completing and Integrating Acquisitions • Aligned Equity Ownership • Financial Flexibility to Pursue Acquisitions and Expansion Opportunities BP Station Union Centre Blvd., West Chester, OH (Metro Cincinnati) 6 |
7 • Gasoline consumption in the U.S. has proven to be stable, with growth in 52 of the last 66 years • Since 1985 gasoline consumption has increased from 2.5 to 3.2 billion barrels per year in 2012 (CAGR of 1%) Down years driven by historical external shocks or other unusual economic factors Except for the energy crisis of the late 1970s, declines were less than 3% in any given year • Since 1985, diesel consumption has increased from 0.4 to 0.9 billion barrels in 2011 (CAGR 2.9%) U.S. Motor Fuel Consumption (1) (1) Source: Energy Information Administration (EIA). (2) Petroleum Administration for Defense Districts (PADD). Historical Consumption of Gasoline in the U.S. Motor Fuel Consumption by PADD (2) |
Wholesale Industry Overview • Lessee dealers – Wholesale distributor owns or leases sites and leases or subleases sites to the lessee dealer • Independent dealer – Sites are owned by an independent dealer or leased by an independent dealer from a third party • Sub-wholesalers – Wholesale distributor sells to sub-wholesalers • Company operated stores – Wholesale distributor owns or leases sites and conducts the retail operations Classes of Trade Wholesale Business 8 • Wholesale motor fuel distribution consists of sales of branded and unbranded gasoline and diesel to retail gas station operators and other wholesale distributors • Wholesale marketing is fragmented and local • Product differentiation is achieved through branding gasoline, which can be sold at a premium price Exxon, Mobil, BP, Shell and Valero are considered premium brands • SG&A costs are mostly fixed with a small portion of variable costs • Wholesale fuels marketing has limited commodity exposure |
• Own or lease sites in prime locations and seek to enhance cash flow • Expand within and beyond core geographic markets through acquisitions • Serve as a preferred distributor and dedicated supplier • Increase motor fuel distribution business by expanding market share • Maintain strong relationships with major integrated oil companies and refiners • Manage risk and mitigate exposure to environmental liabilities Lehigh Gas Strategy 9 Shell Station Route 17, Hasbrouck Heights, NJ |
10 Lehigh Gas Operating Model (1) Lehigh Gas – Ohio, LLC (“LGO”). Independent Transportation Contractors Payment Terms / Discounts Payment for Fuel Motor Fuels Master Limited Partnership Lessee Dealer Independent Dealer LGO (1) (affiliate of LGP) Sub- Wholesaler Suppliers Wholesale Distribution and Rental Income Distribution / Rental Agreement Motor Fuels |
11 Stable Cash Flows: Wholesale Distribution (1) Wholesale Distribution Margin Per Gallon represents revenues from fuel sales minus costs from fuel sales (including amounts to affiliates) divided by the gallons of motor fuel distributed. (2) YE (Year End) represents twelve months ended December 31 of the applicable year and 2012 PF (Pro Forma) represents 2012 pro forma as presented on Form 8-K filed with the SEC on March 28, 2013. 1H 2013 represents annualized results for 1H 2013 (3) Excludes gallons of motor fuel distributed to sites classified as discontinued operations with respect to the periods presented for our predecessor. Stable cash flows from long-term wholesale motor fuel distribution contracts • Our supply agreements with independent dealers generally have 10-year terms • Lessee dealers generally have 3-year terms • LGO generally has a 15-year term LGP Predecessor LGP Predecessor Average $0.0534 $0.0600 $0.0722 $0.0662 $0.0700 $0.0710 $- $0.0100 $0.0200 $0.0300 $0.0400 $0.0500 $0.0600 $0.0700 $0.0800 YE 2009 YE 2010 YE 2011 YE 2011 PF 2012 1H 2013 Average Margin: $0.0655 438 519 532 562 591 621 0 150 300 450 600 750 YE 2009 YE 2010 YE 2011 YE 2011 PF 2012 1H 2013 (2)(3) (1)(2) Whole Distribution Margin Per Gallon Gallons of Motor Fuel Distributed |
Number of Sites Owned and Leased (2) Rental Income Per Site (1)(2) Stable cash flows from rental income associated with long-term leases • Lease agreements with lessee dealers generally have 3-year terms and had an average of 2.8 years remaining as of June 30, 2013 • LGO agreements have 15-year terms and had an average of 14.4 years remaining as of June 30 2013 Stable Cash Flows: Rental Income (1) Rental income is rental income from lessee dealers and from affiliates. (2) YE (Year End) represents twelve months ended December 31 of the applicable year and PF 2012 Pro Forma) represents 2012 pro forma as presented on Form 8-K filed with the SEC on March 28, 2013. 1H 2013 represents annualized results for the period ending June 30, 2013 for the purposes of average rent per site. $65.1 $57.5 $55.8 $68.7 $49.4 $81.5 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 YE 2009 YE 2010 YE 2011 YE 2011 PF 2012 1H 2013 LGP Predecessor 320 332 368 311 511 504 0 90 180 270 360 450 540 YE 2009 YE 2010 YE 2011 YE 2011 PF 2012 1H 2013 LGP Predecessor 12 |
13 Prime Real Estate Locations • We derive rental income from sites we own or lease that provide convenient fueling locations primarily in areas that are densely populated • We own or lease sites in nine states (1) • Limited availability of undeveloped real estate in our current locations presents a high barrier to entry for the development of competing sites • Due to prime locations, owned real estate sites have high alternate use values, which provides additional risk mitigation (1) As of June 30, 2013. (2) Source EIA. LGP Owned Sites by State (1) LGP Owned and Leased Sites by Area (1) Metropolitan / Urban Areas 87% Suburban / Rural Areas 13% Pennsylvania 35% New Jersey 29% Ohio 27% Florida 4% New York 2% Massachusetts 2% Kentucky 1% Over 60% of US gasoline consumption is in the Midwest and Northeast (2) |
Long-Term Relationships • One of the ten largest independent distributors by volume in the U.S. for Exxon, Mobil, and BP branded fuels Also distribute Shell, Valero, Sunoco, Chevron and Gulf-branded motor fuels • Prompt payment history and good credit standing with suppliers allow us to receive certain term discounts on fuel purchases, which increases wholesale profitability • Branded fuel is perceived by retail customers as higher quality and commands a price premium Brands Distributed Supplier % of Total Suppliers Since: ExxonMobil 42% 2002 BP 26% 2009 Shell 14% 2004 Valero 4% 2007 Chevron 5% 2012 Other Branded / Non-Branded 9% n/a Total 100% 14 ExxonMobil 42% BP 26% Shell 14% Chevron 5% Valero 4% Other Branded / Non-Branded 9% LGP Fuel Distribution by Brand (1) (1) For the Quarter ending June 30, 2013. Relationships shown began with our Predecessor. |
Established History of Acquisitions • We have grown primarily through acquisitions Since 2004, LGP and our Predecessor, have grown the business from 9 owned sites to 210 owned sites, as of June 30, 2013 We have completed twelve acquisitions that included 10+ sites per transaction • Majority of our sites were purchased from major integrated oil companies • Established history of quickly financing and closing acquisitions Wholesalers sell to 121,000 sites across the US (1) ~73% of convenience store operators which distributed retail fuel own 50 or fewer sites (1) Major Acquisitions Since 1/1/2009 Recent Sellers Convenience Store Operators with Retail Fuel Distribution Site Count (3) (1) Source: 2012 Association for Convenience & Fuel Retailing (NACS). (2) Motiva is a joint venture between Shell and Saudi Arabia Refining Company Inc. (3) Source: 2012 NACS Report. (2) 201-500 Sites, 6.7% 51-200 Sites, 6.8% 11-50 Sites, 9.7% 1 Site, 58.2% 2-10 Sites, 5.1% 500+ Sites, 13.5% 15 Express Lane 2012 48 $45.4 Exxon/Chevron FL Dunmore Oil Company 2012 24 $29.0 Exxon/Valero PA Motiva Enterprises (2) 2011 26 $30.4 Shell 30 NJ BP Products North America 2009 85 $68.4 BP 2 OH & KY Uni-Mart 2009 24 $12.1 BP 4 OH States Seller Year Sites Acquired Purchase Price ($MM) Brand Wholesale Supply Agreements • Wholesale marketing is fragmented and local, providing many acquisition opportunities |
• Announced two acquisitions during the third quarter of 2013 Rogers Petroleum (“Rogers”) – a 17 site portfolio in Tri-Cities, TN Region Rocky Top Markets, LLC (“Rocky Top”) – a 34 site portfolio in Knoxville, TN Region • Rogers portfolio purchase price of $21.1 million Portfolio sold 18.7 million gallons of fuel in 2012 Primarily unbranded sites • Rocky Top portfolio purchase price of $36.9 million Portfolio sold 34.1 million gallons of fuel in 2012 31 of 34 sites are Shell branded • Portfolios are geographically adjacent to each other Provides economies of scale in region and a platform to expand • The Partnership will lease the sites to LGO and supply fuel to the sites for a 15-year initial period • Since IPO, the Partnership has announced acquisitions of $132 million Overview of Rogers and Rocky Top Acquisitions 16 |
• Liability on portfolio at IPO retained by predecessor entities • Rigorous diligence process to identify any issues prior to acquisition • Escrow funds at closing for identified liabilities • Purchase insurance to protect against cost overruns for known liabilities and to protect against unknown conditions • Participate in state programs that provide funds to assist in remediation Risk Management Overview Environmental Commodity Credit Transportation • Purchase and deliver fuel on the same day • No overnight ownership of inventory • Daily collection and settlement procedures • Dealer credit card transactions routed through an LGP subsidiary • Outsource delivery of fuel to independent third party haulers • Lowers capital and labor needs and reduces liability exposure 17 |
Topper Group / LGC Common vs. Subordinated Unit Ownership Topper Group / LGC vs. Public Ownership Aligned Equity Ownership • Topper Group and LGC (1) retain approximately 54.1% ownership in LGP 92.3% of units owned by Topper Group and LGC (1) are subordinated • Lehigh Gas GP (the general partner) has a non-economic general partner interest in Lehigh • 45.9% of LGP held by public 18 Topper Group / LGC 54.1% Public 45.9% Common Unit Ownership 7.7% Subordinated Unit Ownership 92.3% (1) (1) (1) Lehigh Gas Corporation (LGC) is an entity in which Joe Topper holds a 100% ownership interest. |
Historical Performance Revenue (1) EBITDA (1)(2) Fuel Gross Profit (1) 19 $- $10.0 $20.0 $30.0 $40.0 $50.0 2009 2010 2011 2011 PF PF 2012 $27.9 $26.9 $34.4 $42.7 $45.6 LGP Predecessor LGP Predecessor LGP Predecessor (1) Based on the December 31, 2012 pro forma as presented on Form 8-K filed with the SEC on March 28, 2013. (2) PF 2012 EBITDA excludes approximately $7.7 million in expenses in selling, general, and administrative expenses related to our initial public offering and formation transactions and the two transactions closed at year end. See the 8-K filed with the SEC on March 25, 2013 for additional detail. |
Second Quarter Overview • Distributed 160.7 million gallons, a 4.4% increase relative to 2012 • Generated gross profit from fuel sales of $12 million, a 12.1% increase relative to 2012 • Generated adjusted EBITDA of $14.9 million, a 34.1% increase relative to 2012 • Distributable Cash Flow of $11.2 million or $0.75 per common unit • Increased the distribution 5.5% to $1.91 / unit on an annual basis Since IPO, distribution has increased a total of 9.1% • On May 13, increased credit facility by $75 million to $324 million $126 million in pro forma availability Amended certain financial covenants and other terms to provide greater flexibility for acquisitions • Committed to prudent acquisition strategy with conservative financial management Summary Second Quarter Metrics (Dollars in thousands, except as noted) Fuel Gross Profit 11,986 $ Gallons Distributed (millions) 160.7 Margin per Gallon ($) 0.075 $ Net Rental Income (revenue less expenses) 6,365 $ EBITDA 14,071 $ Non-Cash Equity Incentive Comp Expense 838 Adjusted EBITDA 14,897 $ Distributable Cash Flow (DCF) 11,224 $ DCF per Unit ($) 0.75 $ Distribution per Unit ($) 0.4775 $ Coverage (DCF / Distribution) 1.6x Distribution Increase Over Previous Quarter 5.5% 20 |
21 Investment Highlights • Stable Cash Flows from Rental Income and Wholesale Fuel Distribution • Prime Real Estate Locations in Areas with High Traffic • Long-Term Relationships with Major Integrated Oil Companies and Refiners • Established History of Completing and Integrating Acquisitions • Aligned Equity Ownership • Financial Flexibility to Pursue Acquisitions and Expansion Opportunities BP Station Main Street, Lebanon, OH |