SRLP - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Sprague Resources LP Q4 2018 Earnings Call. [Operator Instructions]. I would now like to introduce your host for today's conference, Mr. Dave Glendon.

You may begin, sir.

David Glendon

Demetrius. you, Thank and Conference everyone, Sprague Fourth Resources Good welcome XXXX Call. Quarter afternoon, to

today our Officer; Joining Kory David General are me Long, Vice our President and Counsel. Scoff, Arthur, Chief President Chief Paul Accounting and Vice and our Officer; Financial

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

also press are Investor certain section and measures. fourth measures of earnings website. of those quarterly of both are non-GAAP comparable the our our our using GAAP We Reconciliations to supplement available quarter financial posted in business to which release, describe non-GAAP our Relations

financial new our his First, at from Sprague, back Dave David business. I'd look earnings Long, to to great welcome benefiting to have CFO, in-depth call. and like and our to It's knowledge our quarterly forward expertise we of

key opportunities. XXXX our I review on like for briefly of in detailed the our and to some I'd over XXXX to David on Before results, comment perspective turn call developments

fourth Products, adjusted Natural in press headwinds both warmer As demand and December this in is we products, volatility less the muted. market Refined basis blending opportunities a gas period. opportunities Gas previous business declines coverage structure experienced Refined limited quarter lower Products distillate the for distribution persistent led shortfall. to Gas Natural supportive and atypical release, and In our in Similarly, saw distillate than price optimization in higher as weather, guidance. January Notably, which our noted in Northeast limited resulted also we was late EBITDA our

business, offsetting In strong board Sprague to $X.XXXX post Resources quarter Handling these our Materials LLC decision our however, declines. general partially of XXXX January, to at growth, fourth margin Our GP, distribution the made the per unit. maintain continued partner,

market distribution our the Given for of structure, XXXX, maintain estimates normal and expect level. which current to is weather we

our tankage support current in first certified thin-film productivity leader needs. low the Sprague States. Picktricity ultra- and marketer to XXXX, the history the our drive LLC, the organic the February, Lawrence in diesel also of fuel to Our for plans include United with IT several in contract, a butane announced solar installations. partnership was sulfur expanding our in the system customers' to first bring Northeast We're meet blending growth. an expected well addition BQ-XXXX evolving asphalt long Building growth of we on terminal to solar conversion of a in And changing biodiesel investments our a energy to investments as sector. as activity to

to parties. pilot expand reduce roll solar operating offers us this we're as anticipated to Our With savings, infrastructure flexible project efforts, well to sales excited for benefit, the twofold the existing an our facilities our generating third into excellent panels latest are to generating leveraging additional as way a foray as while to expenses. solar out our Sprague sustainability

cost we organic efforts In addition to growth our consolidation opportunities reduce other management asset our to see cost through sales, plans, structure initiatives. and

and higher current have multiples for cash generation alternative of better facilities we and prospects uses, potential. terminal their attractive smaller see sales our of Some at

realize to third-party of expect our efforts also integrate acquisitions. rationalize recent our network we We to locations synergies sales as continue and

Now our of results. I'll over Dave? turn for call review Dave detailed to more a the

David Long

you, everyone. afternoon, good Dave, and Thank

a fourth challenging Sprague, mentioned, and quarter we but the growth Dave management one As on continued for cost initiatives. was driving to incremental focus

The partially review results. strength Refined me to increased by year while our $XX year-on-year quarter Sprague's as fourth million XXXX Products gross quarter our million of margin to Materials $XX.X in decreased full in adjusted year businesses, and full our Handling quarterly to and X% quarterly were $XX.X result our to or for margin Natural by compared fourth let weakness offset million. $XXX by XX% decline attributable was Gas business. in Now gross which adjusted million XXXX, or the

Materials increase ago. Operating despite due largely increase expenses weakness a For strong Gas flat quarter fourth year of businesses Natural by performance the I'll full our were with an relative of the Products these Coen to annualizing detail to the our acquisition year-on-year in modest to business. shortly. Handling, combined more of provide results each underlying year, in a Refined in led

million acquisition the and that in of increase number line of $X.X a XXXX, growth to expense year year-on-year and dock XX% primarily handling in principally XXXX greater -- X% million and and gas levels Coen of yearly by interest partially $XX.X and for XX% and million declines and XXXX for acquisition. to CapEx for XX% debt East the equipment to Expansion the and increased expenses expense asphalt Materials by full cash $XX.X and to by on costs. quarter $X.X The business of quarter primarily due cash storage interest $X.X at IT Maintenance XXXX $XX.X year annualizing offset million, projects, included applications increase and Coen year-on-year interest throughput the million fourth applications, costs or and million $X.X by activity. than reflects in year million. XXXX, M&A and business, decreased improvements terminal. for $XX.X XXXX. expenses $X.X such increased we to attributable employee-related development stockpile our driven included acquisitions and QX expenses respectively. tank million of were to interest to organic additional million, was to SG&A by CapEx expenses, million blending work, and reductions including improvements was projects our rates by or to $XX a executed is and or in in to growth Maintenance $XX.X cash upgrades IT attributable and respectively. total tanks, compared total by conversion for dredging These additional rate ethanol new floating XX%, operating compensation our fuel million Net year of increased XX% XXXX debt. the tanks related docs financing offering incentive number In to with boiler to expenses an Our support Coen's Handling capital Providence associated abilities With projects our at $X.X capabilities. as growth of our higher our XX% and additions decreased on QX biodiesel million, to

by the During was and fourth quarter, distributable gross operating lower flow expenses. adjusted interest affected cash increased negatively performance

a flow $XX million. for fourth quarter by result, distributable As the decreased cash XX% to

million. year-on-year For declined the year, cash distributable by XX% to flow $XX.X

at for quarter times for ratio the Our XX. XX and times X.X fourth December X.X was distribution trailing months the coverage

discussion segments. for Now our business of

and Products by a material a discretionary transaction Sales conditions, and Refined -- increased XX% demonstrated to sales year business XXXX. business in annual well acquisitions, basis year of include business Refined to adjusted or as year $X.X gross by volume purchase Products. gross relative a ago a million, both of factors full in Our X% year as transition as up in or in Energy full $X.X Other decline an October completed handling in a results our on sales, margin of less significant the year-on-year million. both QX margin Kildair's asphalt direct attractive of full Coen year-on-year offset Products while the adjusted market were result impact quarterly Refined and store the of particular, from higher

gross the pipeline and quarter opportunities, the Despite declined Our and fourth given of quarter combination increased our business volumes million, relatively fourth year-on-year by margins unit being sales respectively. margin key some Natural intensity and for year XXXX fewer of competitive X%, year-on-year, declined $X.X million of optimization particularly XX% in full or $X.X adjusted or by flat capacity markets. XX% in Gas a

for surfaces, handling provides capital to and of while to activity With full working any activity additional paper medium of in December our to intend capital. permanent $XXX liquidity, million, liquid increase Handling quarter open gains we its their near this XXXX. or Materials a our quarterly call of debt for $XXX at finance on and sources and million QX are and At delivered questions. XX, production with and for in $XX supplement in availability in connected had adequate like At to adjusted line, I'd With to solid point, Sprague capacity non-GAAP heavy need is $XXX targeting to $XXX these defined of guidance, Our XXXX the $X overall, line fourth which associated XX% distributions year at website in growth posted XXXX stockpiling materials our Searsport basis borrowing XXXX. in or asphalt annual to XX% million term year-on-year we acquisition and largely lift X.Xx. to were a its million the to EBITDA year-end, as relative our was current of The million Kildair's million regard ratio maintain market year-on-year level. weaker without business source the believe of to the regard as QX terminal, and

Operator

from our And Tonet Instructions]. Jeremy [Operator first question JPMorgan. with comes

Unidentified Analyst

what you things for was trying persistent what see -- IDR maybe could right in headwinds level coverage [indiscernible] This waivers but you about to would future. you for XXXX, consider? a importantly coverage, if Sprague the market is Are sales asset that might for for on is avenues I there if the you maybe more like bit feel wondering the Jeremy. or maybe talk understand

David Glendon

Dave answer that. I It's Glendon. will

believe seeking in for I'll be there it. from to business. guidance coverage of get perspective EBITDA limiting absolutely that that, think the X.X our and yes, levels many we or time. And and and guidance. try past, so we of -- is not coverage. But part higher providing level stated intend coverage responsive is understand we is this anticipate coverage we're embedded expanding in each for it Yes, coverage that XXXX for as clearly coverage We're a times but market growing long-term to we over I a levels, appropriate higher to the levels lot our we've

today. noted specifications asset call sales of selling that mention where locations I sulfur the make of to couple the couple IDRs. potential on consider elimination have enabled world, consider of front. along in has we'd may dimensions. You the us to the time, There are one math a convergence a potential IDR mechanism is did smaller very the assets, which difficult We've today's generally of appropriate least is work on at said, always At those the our

If to you of be look at would difficult our for common to that IDRs swap IDRs any the yield, unit. reasonable relative valuation current exceptionally

think at mechanism to time. I on point be to we time, pursued would how that an do that's believe appropriate So depending at be that evolve, units the again, unlikely but this in deploy some

Unidentified Analyst

very And side. at of kind another natural one, That's looking on gas just helpful. operations

pipeline if You mentioned Did the market. core talk a opportunity, then can the optimization drive capacity your one increased anything, more on more other competition? in bit your increased so? of And weakness competitive you intensity

David Glendon

Yes.

former I was we XXXX with drove honest you, very in the To it heavy that say it the I'd saw be more. maintenance particular, what pipelines. on in mean, So

Northeast expansion the of operations the which heavy the pipelines for improved in constrained maintenance, XXXX, part course some engage year. or the did latter over of just as delayed, for projects more very particularly pipelines into in of the meant So were the

period-to-period, that latter in the saw the impact being new it mark-to-market, of varies bit competition part XXXX, see less than of do factor, which little competitors the for pursuit additional level we a or customers. but cited. less of the and aggressive former was So a of accounts an episodically so of more We in we

Operator

remarks. closing now questions back any would like Dave turn Instructions]. for to And not we have queue. further the I in [Operator call Glendon to over any do

David Glendon

Thanks, the future calls. on time you look keeping and everybody, for making updated forward to thanks, today. again, Demetrius, We conference

Operator

have Ladies a This does and for today's program, day. gentlemen, conclude and thank you the you may disconnect. Everyone, attending great conference. all

David Glendon	President, CEO & Director
David Long	CFO

Sprague Resources (SRLP) 14 Mar 192018 Q4 Earnings call transcript