SRLP - Earnings call transcript Q2 2019

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Operator

Good day ladies and gentlemen and welcome to the Sprague Resources' LP Q2 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference over to your host Mr. CEO. and President Glendon, David Sir, you begin. may

David Glendon

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

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

forward-looking does like to reasonable call include to today's events. date as statements based our of forward-looking some we update which Sprague are will current statements today's to expectations information remind not These believe new I'd obligation or that on of any undertake listeners any statements. to reflect and be future

results uncertainties differ are to reports current Actual because list could differ results may filings and significantly other for and anticipated actual XX-K to of of the refer review risks Please our our SEC. and factors which to cause that XX-Q, predict. risk with a difficult results our from

earnings non-GAAP We measures. supplement measures available also of in financial our comparable Investor our which Relations in Reconciliations section the of our release using our quarterly GAAP business measures to can be are press website. describe non-GAAP found both of certain these and

XXXX, in second third but $X.X nature cost Sprague in performed million. expectations. each our our efforts three our seasonal Also, total lower margin of adjusted quarter recent and reduction $XX.X EBITDA million The the In bearing of generates commercial businesses business of the gross second and results adjusted generated our fruit. quarters line with are

SG&A operating in we reductions and As to continue. our material trend relative year, we which the saw expenses expect to prior a

back in modest Notably, are half signs the improvement. remains distillate market the forward conditions that encouraged for curve of XXXX. I'm showing forward, Looking contango of

critical. product assets Northeast or system contango Sprague closures valuable. is storage make expected carry As to refined also and more more terminal like remaining repurposing listeners makes Recent structure storage of assets know,

our additional conventional provide we're this credit regarding for will the which significant We calendar year, would lower blenders' that enabling in benefits. follow business. continue optimistic for of past the and gas we natural biodiesel opportunities potentially expect to of economics reinstatement something action XXXX, logistic blending tax get generate optimization our business, to programs maintenance remainder distillate pipeline activities the In the more

Finally, XXXX, blending that working would the sulfur multiple to repurposing lower noted of requirement of Northeast eliminating this limited in also distillate activities products. convergence while alternative heating specifications services our store we facilitate markets by development oil capital the the in to grades of tanks costs and

figures the year inventory facilities in quarter to In enabling quarter, ago. fungible a us the for XXXX to current the second partner inventory guidance a Board factors levels additional increase In and our second of general declared the end our than distribution XXXX QX provide the over July These distillate distribution. XXXX, several $X.XXXX lower support a XX% X% quarter we position, our confidence of XXXX, converted a with maintaining per of base. distribution reflecting unit

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

David Long

to the to relative declined million X% compared business quarter a XXXX. year products materials while $XX.X Thank quarterly second good Dave, and afternoon handling natural gross ago. Sprague's was you, by million experienced everyone. refined or modest gas adjusted of flat Sprague's $X.X to segments margin declines, as and

increased Sprague's of adjusted by second million EBITDA quarter million X%. $X.X $X.X or

expenses. associated employee SG&A legal related X%, primarily related expenses costs and due decreased along in to due primarily decreased than modest cost million, margin acquisition employee $X.X reduction million reductions. offset the decline quarter, second to initiatives, ongoing by and audit, more was expenses our adjusted by $X.X by X% gross insurance, legal lower with or with or expenses. lower the As cost related in Operating

rate million. and debt. $X.X higher various which year-on-year related Net increased quarterly second by IT million X%, to our taxes million CapEx, by while million $X.X cash due interest quarter the in XX% included Sprague’s or floating million maintenance terminal increased million, expense to cash decreased interest to projects rates of $X.X $X.X or $X.X $X.X on by

higher cash times. in modestly times. distributable flow quarterly cash to second of Sprague’s $X.X negative quarter coverage generating declined coverage expense the interest due is distribution ratio for negative million, basis year-to-date distribution ratio taxes, to Primarily a On a X.XX a X.XX Sprague’s

working Sprague’s At December the times end XX, of down from while leverage under times acquisition X.X our is was quarter capacity end. $XXX lines at million the our permanent second capital quarter, and borrowing at X.X

$XXX at XXXX intend regard guidance, $XXX and levels. million to maintain to With continue million we of distributions adjusted current to to EBITDA year full target

volume discussion products, unit warmer a conditions $XX.X refined margin by to much primarily offset And decline. by in of quarter, to million declined volume somewhat the for year In now or adjusted margin a relative gross sales declined Adjusted to due ago. higher million business our X% April delivered in $X.X business X% our is the segments. realization

X% sales unit on-boarding quarter while adjusted customers, of result higher the by while by million. largely costs $X.X to margins In new or were volumes was of decline the competitive declined to intensity. year-over-year, for due margin natural the the volumes increased higher million pipeline $X.X gas, X% capacity and gross The in

given $XX.X lift quarter-on-quarter, U.S. in increased offset deliveries, handling, business million. timing materials the quarter slightly heavy bulk gross In material second Sprague's adjusted seasonal of reductions was activity. by margin handling

While activity crude modestly Kildair’s decline with contract. given of rail reduced by associated the exploration handling business the material

the for At to open call this I'd questions. point, like

Operator

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

open. line Your is

Unidentified Analyst

for This afternoon. Hey, good Charlie is Jeremy. on

talk kind of and XXXX kind question to Philadelphia to specifically third you term? implications about just was business, I'm your changes towards quarter longer related any structural refinery. of looking just First Energy maybe the of could Solutions if curious broadly

David Glendon

Charlie, Glendon. Hey, it's Sure. Dave

capacity. generally little swift reaction and how that of couple say, the have PES a quickly things. to the markets refined One speaking, pretty I So, that closure market even the surprising would the is has in a bit adapted actually absence products been of to

capacity therefore gasoline, other in absence to and ability one European, increase in say, should But some for having also to So the supplement extent cargoes the that. to we have of but accommodate that speaking, remarkable seen storage generally that, and storage a particularly short would refinery capacity. one, value I desolate pad of absence said increases that the pad

So trade I to it value the positive product turn a or space right around you values think started colonial what European line a forever, the back negative here. so pipeline to with refineries go that, line been colonial if quickly week values as then space shipping from reverted did for about to had negative it associated

of or it's so over gasoline all-time the So opening markets to been I me that and last for record cargos how US will the to Europe the surprising read month again course we an the set from Pat today quickly react. one

particular, of winter the lead But say as generally the the this to speaking increase premium slight in would I go that expect we U.S. values would I’d Northeast and a into in storage

Unidentified Analyst

helpful. certainly that’s Great

coming that Turning we’ve lately? coming of seen of of producers thinking Appalachian and business what reaction thinking other about high to and level to energy, thoughts got common kind out producers up about what some seeing kind on you any curious we’re

David Glendon

down. we’re in amount activity Yeah. producers taken I a drilling [indiscernible] our notch fracing that of hearing confirms the from has say and would the up what that activity

But to we’re trying quickly field it’s services in a business our would we higher seeing the months no Pennsylvania we’ve been levels business. ago. question that process -- our services the that business supplement have fuels in in and energy grow than anticipated price additional So remains Pennsylvania field certainly growing impact business energy to and on commercial at six less commodity

Unidentified Analyst

it you’ve then the right mentioned one in last one credit. me, the remarks and from All tax biodiesel lenders opening

potential resolution other I any think color could a you’ve mention? by maybe year about specifics sentiment you and [ph] end

David Glendon

challenge go-forward agreement the Yeah. -- carefully to, you and appears and [indiscernible] we am, to closer agreement. to bill I participating passed far watching It widespread it mean gets a certainly a can are than in it who on it. I finding retroactively think I are to being be been attach reinstated by find on people but basis. widespread it it has the There extenders

supportive. So on aisle of we’ve talked remain sides folks who to both the

in bill, finding but ability again You have lot must to the sponsors point attach of pass has of to it this time. got a the [indiscernible] legislation been the

Unidentified Analyst

Thank great. from right, All it you. me. That’s

David Glendon

Charlie. Thanks

Operator

showing gentlemen this wonderful for day. participation today’s does [Operator this a conclude have conference. you you. at no your and I'm question further Ladies Instructions] and time. Thank Thank

all may disconnect. You

Sprague Resources (SRLP) 7 Aug 192019 Q2 Earnings call transcript