SRLP - Earnings call transcript Q1 2019

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Operator

Good day ladies and gentlemen and welcome to the Sprague Resources' First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to introduce your host for today's conference David Glendon, President and Chief Executive Officer. begin. please Sir

David Glendon

Good first Norma. and to welcome Thank XXXX afternoon conference Resources quarter call. Sprague you, everyone

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

can described the previous particularly Refined continue from of and call. of while challenges on press the of the both $XX EBITDA Natural our benefiting our first quarterly We Reconciliations Gas $XX asphalt million. financial supplement tank measures. XXXX, our GAAP adjusted measures our total In available to results earnings with certain generated Investor comparable and Relations to earnings million non-GAAP section describe business margin measures Handling were which non-GAAP in using of are gross our some also and Sprague be strong, of website. these found in release of adjusted quarter conversion of the Products Materials contend leases, Kildair and

and Specifically, the volatility a Products optimization weak while Gas results, structure our lower Refined opportunities. Natural markets in distillates fewer limited blending created tempered in opportunities market

the conditions curve are XXXX back of now time in that encouraged improvement contrast in for last forward year. marked the distillate showing this contango is XXXX. which to Notably is at Looking the forward signs half I'm market structure in of

opportunities carry like credit storage the provide apparent assets economics business. we As know generate XXXX to optimization the system tax blenders Gas programs which expect in bipartisan a valuable. contango blending if or also listeners for activities would significant more the logistics in benefits additional structure Natural seeing biodiesel support in for distillate reinstatement We're pipeline enabling In returns. our makes price lower our of business volatility XXXX, maintenance Sprague more

of In oil fungible and QX by would general in multiple facilities of terminal rack distribution store convergence eliminating in injection the quarter markets of the that per Board XXXX, the XXXX current dye. cost of activities two first declared XXXX distillate base. These our already alternative report this while grades. tanks repurposing to lower that pleased major noted to I'm Finally, working we've of capital services limited specifications Northeast heating the requirement to converted and by a our our in we blending development sulfur figures also facilitate of heating guidance support distribution the confidence unit with a inventory position the partner provide $X.XXXX X% our the XXXX oil maintaining distribution. April increase our only a of over developments XXXX, reflecting differentiated for to

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

David Long

rate the Sprague cash for $XXX,XXX year-on-year included $X XX% the debt. which cost upgrades relative our by and by taxes by result first was and credit by in XXXX, quarter Products benefit Sprague's million gross incentive the quarter of being relative $X.X a expenses expenses, line higher partially were the of million in a quarter quarterly of accruals, Natural borrowing increased or first relative $X million generated the gross the commissions adjusted offset to to $X XXXX asphalt in below adjusted due quarter associated quarter well Refined acquisition-related of quarter CapEx rose offset a million biotax as adjusted declined reduction primary gains Gas on declines as margin expenses or first $XX.X to XX% reflecting sales you, were projects prior million higher Sprague's million expenses related quarter SG&A Handling XX% and million primarily results, EBITDA adjusted to EBITDA. tank Refined million which the increase the $XX $XX.X activity insurance offset margin of quarter ongoing or same gross was a in to increased initiatives. a first decreased ago, declined by to recorded included million first of floating with in first the IT $XX ago. which hedges handling quarterly the $X.X compensation reduction quarter interest while the severance decrease margin a partially substantial X% first over Net to the support or by sources due as the Materials our XXXX to activities. of quarter in year. of primarily to decreased last various or X% first This and at year XXXX. of adjusted fuel maintenance year million XX% the the our same and as cost-reduction to the which Products to $XXX,XXX cash period Operating in regard boiler Thank largely expenses year. utility With quarter pump as or compared the $XXX,XXX $XXX,XXX Dave. $X compared in increase cost for expense by

gross less point at target Materials to by driver down and customers X.X under In working borrowing the and capital of from times quarter lower Revenue was was impacted partially full permanent given in lines at logistics With regard Handling, of unit Given the was acquisition X.X distribution end. by the the in guidance impacts income to coverage were million. by optimization year by gross year-on-year to and X% million XX% to a declines the asphalt we quarter an led discussion to EBITDA quarter margins our X.X tank million. limited gas continue marine competitive primary well-supplied were times XXXX. ago growth at Natural from adjusted volatility. $XXX in to XX% In and segments; results intend ratio adjusted the quarter for flow activity as while experienced XXXX March cash The $X.X million prices volumes liquid while materials adjusted well adjusted generating Gas, interruptions quarter adjusted $XX.X absolute Coen blending the margin a increased Kildair by based combined quarter by questions. modest gross growth Refined increases for increase opportunities in XX, $XX.X bunker million. residual These leverage in year-over-year the December EBITDA slightly the of handling like our for now margin with Products, offset market, of customers $XX.X first to reduced $X.X business I'd end sales, the growth due the $XX for a Materials $XXX XX% and capacity or by opportunities, of interest XX% of Handling fewer as $XXX market quarterly gross margin U.S. intensity began X% million declined to fuel down million rental two expense, year primarily business. X% which At to at million Sprague's in distributions or decrease open modest quarter, declined our million sales distributable that due year-on-year this the of of by And and to the in call were the driven times while maintain service by first lower down higher $XX.X first to activity. natural to year-on-year margin volumes current XXXX. At a our second Sprague's adjusted of fewer by by business quarter grew were full of declined or a primarily These levels. at agreement quarterly declined for increase sales quarter bulk gross relative adjusted million

Operator

[Operator from Instructions] of JPMorgan. first Jeremy comes Tonet question Our

Unidentified Analyst

Good afternoon guys. This Jeremy. is Charlie on for

-- progression on that first to on touch it The talked but you I back kind we latest just some think call, curious of just at looking potential asset maybe question communication there any front? last about wanted were sales, any

David Glendon

-- but Yes counterparties. those estate. would are dialogues Charlie, No nonpetroleum alternative smaller report And sales current we agreements yet to be continue to these continue and the asset converting of couple the facilities to Glendon. usage discussions use its a of reached explore ongoing. with real again on, Dave

Unidentified Analyst

of the of -- that think talked on that part the distillate you see of expectations When we the sustain the in kind you guess about structure? And for now. I contango additional if blending really color you to come And more market? how little fruition? changed Great. Refined kind able us You're can Okay. mean, that's a much to on just then of opportunities. would that later seeing give be I Products, kind year can

David Glendon

Sure.

I'll reverse answer in them specifically, So, order.

now, Northeast flat curve blending really anticipation blenders’ form largely you've last demand, when the forward mean in all these have painful which would opportunity be that so of to to year ranging think with more from the bill but a the which half sulfur confidence I'd convergence but hedge blending year finding Candidly, attach On to calling of this I roll specifications On -- at less degree would compelling far activities referred on as period biofuels time time, here quite in is for your some come the far tax opportunities, the the curve, a again April/May level back to tax last distillate return ultimate sulfur it a backward a for than they it of that now, are But got talked year. in at last time gone tanks to forward carry you and been the over aided. return credit in I of pundits of difficult encourage of the credit. this which about high everything winter marketplaces. will to seems were the that return than it are was too. is that it's the of suggest Congress heating slightly of for not would were oil that start what a course And that was dependent the $X.XX see opportunities highly Right having we've between last your we it time, $X.XX structure June filling year.

Unidentified Analyst

there, context historically seen in some You mentioned what us maybe to Can $X.XX healthy $X.XX. market? you give a normal you've

David Glendon

not that we've working least or a a storage seen would cost the normal on gallon that's I a relatively or contango month in say covers Yeah. really -- $X.XX years, really again per storage. capital attractive would month, that's stimulate associated storage investment past so with it's of the a a which structure opportunities. at carry When which per $X.XX been opportunities more order player grade of an

Unidentified Analyst

Gas. more Okay. Natural on Great. And then just one

So parties? when the to the the Or this unplanned a can that finally of -- maintenance? third has color Was be -- pipeline maintenance more this us is Was you subside? headwind continued that on kind when give will here. from

David Glendon

as much XXXX volatility the Gas really of so extensive a was was market. phenomena the a it pipeline with lack it issue of in wasn't XXXX maintenance. pipeline Natural maintenance So, QX

as got did we've They that. business. stable programs margin of And Natural not see extensive materialize we function are in our complete. the book largely pipeline again long-haul opportunities a optimization Gas in to again, pipeline often Those restrictions. a XXXX around So, then maintenance

anticipate normal go do through opportunities XXXX. course of as of we set So, we the more

Unidentified Analyst

from it That’s helpful. really That’s Great. Thanks. us.

David Glendon

Charlie. Thanks, right. All

Operator

David Instructions] [Operator to other this we no questions. at I'd for And back you. turn over have time, to the call Glendon like Thank Mr. remarks. closing

David Glendon

day. Norma. many we at next today. week. of MEIC a forward to Thanks And look seeing you everyone the you, us for Have joining Thank great Conference

Operator

conference. for you thank in gentlemen, your participation and Ladies today's

disconnect. may have You wonderful Everyone a day.

Sprague Resources (SRLP) 8 May 192019 Q1 Earnings call transcript