Exhibit 99.1 |
2 Forward Looking and Cautionary Statements This presentation and oral statements made regarding the subjects of this presentation may contain forward-looking statements 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. 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 10, 2014, 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. |
3 • 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 Focused on distributing fuels to and owning and leasing sites primarily located in metropolitan and urban areas • Completed a $138 million Initial Public Offering on October 30, 2012 and a $91.4 million follow-on offering in December 2013. (1) • Equity market capitalization of $504.5 million and enterprise value of $754.2 million as of 3/31/14 • As of 3/31/2014, distribute to over 1,100 locations primarily in the Northeastern United States, Florida, Tennessee, Virginia and Ohio (2) 259 sites owned or leased and operated by Lehigh-Gas Ohio, LLC ; 85 sites owned or leased and operated by the Partnership; 238 sites operated by lessee dealers; 55 commission sites (2) Also distribute to 389 independent dealer sites and through 13 sub-wholesalers (2) • Distributed 637.8 million gallons of motor fuel in 2013 Lehigh Gas Overview Top 10 Distributor for (3) : (1) $138 million Includes $18 million exercise of over-allotment; $91.4 million of net proceeds. (2) As of March 31, 2014, pro forma for PMI acquisition. (3) Based on 2013 volume. |
4 Investment Highlights • Stable Cash Flows from Rental Income and Wholesale Fuel Distribution • Established History of Completing and Integrating Acquisitions • Long-Term Relationships with Major Integrated Oil Companies and Refiners • Prime Real Estate Locations in Areas with High Traffic • Financial Flexibility to Pursue Acquisitions and Expansion Opportunities • Aligned Equity Ownership BP Station Union Centre Blvd., West Chester, OH (Metro Cincinnati) |
5 Lehigh Gas Operations Industry Value Chain Pipeline / Storage Non-Qualifying MLP Income Retail Fuel Distribution (LGWS) Gasoline Station Wholesale Distributor Qualifying MLP Income Wholesale Distribution (LGW) Rental Income from Real Estate (LGPR) • Stable cash flow • Margin per gallon • Limited commodity exposure • Multi-year contracts • Stable cash flow • Prime locations • Multi-year contracts Inside Store Sales (LGWS) Rental Income from Equipment (LGWS) |
6 Lehigh Gas Portfolio Overview ) Sites Where Lehigh Gas Partners LP Supplies Wholesale Motor Fuels as of March 31, 2014 (1) (1) Pro forma for PMI acquisition |
7 • Own or lease sites in prime locations and seek to enhance cash flow • Expand within and beyond core geographic markets through acquisitions • Increase motor fuel distribution business by expanding market share • Maintain strong relationships with major integrated oil companies and refiners • Serve as a preferred distributor and dedicated supplier • Manage risk and mitigate exposure to environmental liabilities Shell Station Route 17, Hasbrouck Heights, NJ Lehigh Gas Strategy |
8 Wholesale Distribution Wholesale Distribution Lehigh Gas Operating Model (1) Lehigh Gas – Ohio, LLC (“LGO”). Rental Income Motor Fuels Independent Transportation Contractors Independent Dealer Lessee Dealer LGO (1) (affiliate of LGP) Payment Terms / Discounts Payment for Fuel Motor Fuels Sub- Wholesaler Commission Agents Suppliers Retail Distribution Rental Income Master Limited Partnership |
9 Stable Cash Flows Wholesale Distribution Cash Flows • Lessee dealer agreements generally have 3 year initial terms and a remaining term of 2.5 years as of December 31, 2013 • LGO supply agreement had a 15-year initial term at the time of the IPO and had a remaining term of approximately 13.8 years as of December 31, 2013 • Our wholesale supply agreements prohibit the purchase of motor fuel from other distributors Rental Income Cash Flows • Lease agreements with lessee dealers generally have a 3 year initial term and had an average remaining term of 2.5 years as of December 31, 2013 • Lease agreements with commission agents generally range from 5 to 10 years and had an average remaining term of 5.3 as of December 31, 2013 • LGO lease agreements had an average remaining term of approximately 14.1 years as of December 31, 2013 • Our lease agreements generally require the lessees to purchase their motor fuel from us LGP Predecessor (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 26, 2013. 1Q 2014 represents the quarter ending March 31, 2014. (3) Rental income is rental income from lessee dealers and from affiliates. Information shown in 1QA 2014 represents annualized rental income for the period ending March 31, 2014. Wholesale Distribution Margin Per Gallon (1)(2) Rental Income (2)(3) LGP Predecessor Average Margin: $0.0654 |
10 Prime Real Estate Locations • We own and lease sites that provide convenient fueling locations in areas of high consumer demand • We own or lease sites in fourteen states (1) Six of the states are in the top ten states for consumers of gasoline in the United States (2) Five of the states are in the top ten states for consumers of on-highway diesel fuel in the United States (2) • Limited availability of undeveloped real estate in many of our markets 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 March 31, 2014 pro forma for PMI acquisition (2) Source EIA. As of December 31, 2012 LGP Controlled Sites by State (1) |
11 Branded Fuel Suppliers • One of the ten largest independent distributors by volume in the U.S. for ExxonMobil, BP and Shell branded fuels Also distribute 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 LGP Fuel Distribution by Brand (1) Brands Distributed Supplier % of Total Motor Fuel Distributed ExxonMobil 43% BP 25% Shell 15% Chevron 5% Valero 4% Total 92% (1) As of December 31, 2013 |
12 Growth Through Acquisitions • Wholesale marketing remains a fragmented and local industry • Long history of successfully sourcing and executing acquisitions Predecessor completed over 12 acquisitions of 10 or more sites • We seek to acquire sites within our existing geographic markets to enhance efficiencies and in new markets with favorable demographic, economic and fuel market trends • Since our IPO, we have completed 5 major acquisitions for total consideration of $193.2 million Dunmore increased existing operating area in PA Remaining transactions added sites in scale in new markets in FL, TN and VA • Established relationships with oil majors, customers, industry contacts and brokers to source new acquisitions • Team dedicated to acquisitions Acquisitions Since Our IPO (1) Dunmore 24 29.0 Express Lane 47 45.2 Rogers 17 21.1 Rocky Top 33 36.9 PMI 85 61.0 Total 206 193.2 Total Consideration ($ million) Acquisition Sites Acquired (Fee & Leasehold) (1) Excludes non-c-store sites acquired in PMI acquisition. |
13 PMI Acquisition Overview • The Partnership acquired PMI, a Roanoke, VA headquartered distributor of petroleum products and owner and operator of convenience stores, on April 30, 2014, for net total consideration of $61 million • The company operates 85 convenience stores under the Stop in Food Stores brand • Sold 91 million gallons of motor fuel in 2013 • $93 million in non-fuel revenue at the sites • 50 sites are Shell branded, 22 Exxon branded • 9 co-located quick service restaurants • Petroleum products distribution segment distributes primarily motor fuels along with other petroleum products throughout Virginia, West Virginia, Tennessee and North Carolina • Distributed approximately 191 million gallons in 2013 • The Partnership divested the lubricants business at closing for $14 million (which is reflected in the net total consideration figure) • Transaction structured as stock acquisition with the Partnership’s taxable subsidiary acquiring the corporation • Expect to combine operations with Manchester acquisition and realize certain other efficiencies |
14 PMI Locations Dealer Site (no real estate control) Company Operated Site |
15 Atlas Acquisition Overview • The Partnership has entered into a purchase agreement to purchase wholesale supply and certain other assets from Atlas Oil Company for total consideration of $36.1 million • Assets to be purchased primarily consist of: • 53 wholesale supply contracts • 11 fee or leasehold sites • In addition, LGP is acquiring certain other short term financings assets associated with the acquired supply contracts • Assets are located in the metro Chicago area • Supply contracts are long term agreements with a weighted average term remaining of approximately 15 years • The fee and leasehold sites are currently leased to third party commission agents • All the sites are BP branded locations • Expect to close second quarter 2014 |
16 Commission Agent Independent Dealer Lessee Dealer Other Atlas Locations |
17 Capital Structure Overview • The Partnership completed in March the syndications of a new $450 million credit facility • New facility provides for increased financial and operational flexibility and extends the tenor to 5 years • Facility provides for flexibility to access additional forms of debt capital • $100 million accordion feature • Continuously evaluate other capital sources to ensure efficient capital structure Capitalization ($ in millions) Actual 3/31/2014 % of Book Cap EBITDA Multiple Cash 1.4 Long Term Debt 186.1 54.5% 3.1x Capital Lease Obligations 66.1 19.4% 1.1x Total Debt 252.2 73.9% 4.2x Partners' Capital 89.1 26.1% 1.5x Total Book Capitalization 341.3 100.0% 5.6x Equity Market Capitalization (3/31/2014) 504.5 8.3x Enterprise Value 754.2 12.4x 3/31/2014 Pro Forma LTM EBITDA 60.6 |
18 Distributions Distributions Since Our IPO (1) The 4 quarter of 2012 is for the period from October 31 through December 31, 2012. The DCF / unit includes $6.3 million, or $0.42 / unit, in fees and expenses related to our Initial Public Offering in October 2012. • Our primary business objective is to make quarterly cash distributions to our unitholders and, over time, to increase our quarterly cash distributions • Our success in the acquisitions market during the course of the last twelve months has enabled us to grow our distribution First quarter distribution of $0.5125 per unit ($2.05 annualized) represents a 17.1% increase from the initial distribution amount at the time of the IPO • Committed to a prudent, sustainable distribution growth rate Quarterly Distribution Per Unit 0.2948 $ 0.4525 $ 0.4775 $ 0.5025 $ 0.5125 $ 0.5125 $ Distribution Per Unit on Annualized Basis 1.75 $ 1.81 $ 1.91 $ 2.01 $ 2.05 $ 2.05 $ % increase from prior quarter - 3.4% 5.5% 5.2% 2.0% 0.0% Quarterly DCF / Unit 0.1328 $ 0.6198 $ 0.7449 $ 0.7316 $ 0.5833 $ 0.3870 $ Ratio of DCF / Per Unit Distribution 0.5x 1.4x 1.6x 1.5x 1.1x 0.8x 1st Quarter 2014 4th Quarter 2013 4th Quarter 2012¹ 1st Quarter 2013 2nd Quarter 2013 3rd Quarter 2013 th |
19 Aligned Equity Ownership • Chairman and CEO Joe Topper owns approximately 39% of LGP (1) Board member John B. Reilly, III owns approximately 5% of LGP to bring combined ownership of the two of them to approximately 44% (1) Approximately 92% of ownership interest of Topper and Reilly is in the form of subordinated units • Lehigh Gas GP (the general partner) has a non-economic general partner interest in Lehigh Topper & Reilly vs. Public Ownership Topper & Reilly Common vs. Subordinated Unit Ownership (1) (1) As of March 31, 2014 Reilly 5% Topper 39% Public 56% |
20 Investment Highlights BP Station Main Street, Lebanon, OH • Stable Cash Flows from Rental Income and Wholesale Fuel Distribution • Established History of Completing and Integrating Acquisitions • Long-Term Relationships with Major Integrated Oil Companies and Refiners • Prime Real Estate Locations in Areas with High Traffic • Financial Flexibility to Pursue Acquisitions and Expansion Opportunities • Aligned Equity Ownership |