Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Sprague Resources LP | srlpcapitalpr1-25x2017.htm |
| EX-2.1 - EXHIBIT 2.1 - Sprague Resources LP | srlpcapitalapa1-24x2017.htm |
| 8-K - FORM 8-K 1-25-2017 - Sprague Resources LP | form8-k.htm |
1
Sprague Resources LP
Capital Terminal Transaction
January 25, 2017
2
Safe Harbor
Forward-Looking Statements: Some of the statements in this presentation may contain forward-looking statements within
the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,”
“plan,” “estimate,” “anticipate,” “believe,” “will,” “project,” “budget,” “potential,” or “continue,” and similar references to future
periods. However, the absence of these words does not mean that a statement is not forward looking. Descriptions of our
objectives, goals, plans, projections, estimates, anticipated capital expenditures, cost savings, strategy for customer retention
and strategy for risk management and other statements of future events or conditions are also forward looking statements.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies,
projections, anticipated events and trends, the economy and other future conditions. Our actual future results and financial
condition may differ materially from those indicated in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and other factors that are difficult to predict and many of which are beyond management’s
control. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our
actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are
not limited to, increased competition for our products or services; changes in supply or demand for our products; changes in
operating conditions and costs; changes in the level of environmental remediation spending; potential equipment malfunction;
potential labor issues; the legislative or regulatory environment; terminal construction repair/delays; nonperformance by major
customers or suppliers; litigation, and political, economic and capital market conditions, including the impact of potential
terrorist acts and international hostilities. For a more detailed description of these and other risks and uncertainties, please
see the “Risk Factors” section in our most recent Annual Report on Form 10-K and/or most recent Form 10-Q, Form 8-K and
other items filed with the U.S. Securities and Exchange Commission and also available in the “Investor Relations” section of
our website www.spragueenergy.com.
Any forward-looking statement made by us in this presentation is based only on information currently available to us and
speaks only as of the date of this presentation. We undertake no obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time, whether as a result of new information, future developments or
otherwise.
3
Non-GAAP Financial Measures
Non-GAAP Financial Measures: To supplement the financial information presented in accordance with United States generally accepted
accounting principles (“GAAP”), Sprague’s management uses certain non-GAAP financial measurements to evaluate its results of operations
which include EBITDA, adjusted EBITDA, adjusted gross margin and distributable cash flow. Sprague believes that investors benefit from
having access to the same financial measures that are used by its management and that these measures are useful to investors because they
aid in comparing its operating performance with that of other companies with similar operations.
As EBITDA, adjusted EBITDA, adjusted gross margin and distributable cash flow are measures not prepared in accordance with GAAP they
should not be considered as alternatives to net income (loss), or operating income or any other measure of financial performance presented in
accordance with GAAP. Additionally, Sprague's calculations of non-GAAP measures may not be comparable to similarly titled measures of
other businesses because they may be defined differently by other companies.
You can find disclosures on our use of these non-GAAP measures, as well as reconciliations between GAAP and these non-GAAP measures,
in Sprague's "Non-GAAP Measures Quarterly Supplement" located in the Investor Relations section of Sprague’s website,
www.spragueenergy.com.
EBITDA
Sprague defines EBITDA as net income (loss) before interest, income taxes, depreciation and amortization. EBITDA is used as a supplemental
financial measure by external users of Sprague’s financial statements, such as investors, trade suppliers, research analysts and commercial
banks to assess:
• The financial performance of Sprague’s assets, operations and return on capital without regard to financing methods, capital structure or
historical cost basis;
• The ability of our assets to generate sufficient revenue, that when rendered to cash, will be available to pay interest on our indebtedness
and make distributions to our equity holders;
• Repeatable operating performance that is not distorted by non-recurring items or market volatility; and
• The viability of acquisitions and capital expenditure projects.
Expansion Capital Expenditures
Expansion capital expenditures are capital expenditures made to increase the long-term operating capacity of our assets or our operating
income whether through construction or acquisition of additional assets. Examples of expansion capital expenditures include the acquisition of
equipment and the development or acquisition of additional storage capacity, to the extent such capital expenditures are expected to expand
our operating capacity or our operating income.
4
Capital Terminal - Refined Products / Materials Handling
Terms
• On 1/25/2017, Sprague Resources LP (NYSE: SRLP) announced that its operating subsidiary, Sprague Operating
Resources LLC, entered an agreement to purchase the East Providence, RI refined product terminal asset of Capital
Terminal Company
• Purchase price of $23 million in cash, to be funded with cash on hand and credit facility borrowings
• Closing expected within thirty days
Asset overview and growth capital investments
• East Providence, RI terminal – 1 million barrels of deep water distillate storage
• $8 million investment will convert 500,000 barrels of East Providence storage to gasoline and ethanol service
• Investment backed by long term gasoline storage and handling agreement with multi-national branded supplier
• Ratable fee for service contract with minimum guarantees
• $3 million Providence terminal investment to optimize distillate storage and expand materials handling capabilities
• Transaction and associated expansion capital investments expected to generate $6 million in adjusted EBITDA annually as
minimum handling volumes increase over the first five years
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Sprague’s Enhanced Asset Base in Providence
Providence
• 500,000 barrels of storage
• Proprietary distillate marketing
• Liquid bulk materials handling services
• $3 million expansion capex investment planned for
2017
• Investment optimizes distillate storage in Providence
market and allows expanded materials handling
service at terminal
East Providence
• 1 million barrels of storage capacity
• $8 million expansion capex investment planned for
2017
• Upgrading half of storage capacity to gasoline and
ethanol storage service
• Investment backed by long term gasoline storage
and handling agreement with multi-national
branded supplier