Second Quarter 2022 Highlights
- Net sales were
$1,278.3 million for the second quarter of 2022, compared to net sales of$657.7 million for the second quarter of 2021. - GAAP net loss was
$45.3 million for the second quarter of 2022, compared to net loss of$45.6 million for the second quarter of 2021. - Adjusted gross margin* was
$51.1 million for the second quarter of 2022, compared to adjusted gross margin of$38.8 million for the second quarter of 2021. - Adjusted EBITDA* was
$7.0 million for the second quarter of 2022, compared to adjusted EBITDA of$3.0 million for the second quarter of 2021.
"Sprague's solid second quarter results were driven by continued strong execution across our portfolio of businesses. Global tightness in commodity markets created opportunities to leverage our supply and logistics expertise," said
Refined Products
- Volumes in the Refined Products segment increased 2% to 293.8 million gallons in the second quarter of 2022, compared to 289.5 million gallons in the second quarter of 2021.
- Adjusted gross margin in the Refined Products segment increased
$2.7 million , or 10%, to$29.9 million in the second quarter of 2022, compared to$27.2 million in the second quarter of 2021.
“Sales volume increases in gasoline led to stronger results versus last year's second quarter," stated
Natural Gas
- Natural Gas segment volumes decreased 7% to 10.9 million Bcf in the second quarter of 2022, compared to 11.7 million Bcf in the second quarter of 2021.
- Natural Gas adjusted gross margin increased
$8.5 million , or 311%, to$5.8 million for the second quarter of 2022, compared to$(2.7) million for the second quarter of 2021.
"Our Natural Gas business enjoyed continued healthy results by optimizing our asset portfolio and logistical expertise in the constrained Northeast markets," added
Materials Handling
- Materials Handling adjusted gross margin increased by
$0.1 million , to$12.8 million for the second quarter of 2022, compared to$12.7 million for the second quarter of 2021.
"Materials Handling continued its steady contribution to our overall results, leveraging our extensive infrastructure assets," concluded
Quarterly Distribution
On
2022 Guidance
As announced and described in our Form 8-K filing with the
In light of the proposed Merger, and as is customary during the pendency of a merger,
About
*Non-GAAP Financial Measures
EBITDA, adjusted EBITDA, adjusted gross margin and distributable cash flow are measures not defined by GAAP. Sprague defines EBITDA as net income (loss) before interest, income taxes, depreciation and amortization.
We define adjusted EBITDA as EBITDA increased for unrealized hedging losses and decreased by unrealized hedging gains (in each case with respect to refined products and natural gas inventory, prepaid forward contracts and natural gas transportation contracts), changes in fair value of contingent consideration, adjusted for the impact of acquisition related expenses, and when applicable, adjusted for the net impact of retroactive legislation that reinstates an excise tax credit program available for certain of our biofuel blending activities that had previously expired.
We define adjusted gross margin as net sales less cost of products sold (exclusive of depreciation and amortization) decreased by total commodity derivative gains and losses included in net income (loss) and increased by realized commodity derivative gains and losses included in net income (loss), in each case with respect to refined products and natural gas inventory, prepaid forward contracts and natural gas transportation contracts. Adjusted gross margin has no impact on reported volumes or net sales.
To manage Sprague's underlying performance, including its physical and derivative positions, management utilizes adjusted gross margin. Adjusted gross margin is also used by external users of our consolidated financial statements to assess our economic results of operations and its commodity market value reporting to lenders. EBITDA and adjusted EBITDA are used as supplemental financial measures by external users of our financial statements, such as investors, trade suppliers, research analysts and commercial banks to assess the financial performance of our 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.
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. The adjusted EBITDA and adjusted gross margin data presented by Sprague may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies. Please see the attached reconciliations of net income to adjusted EBITDA and operating income to adjusted gross margin.
Sprague defines distributable cash flow as adjusted EBITDA less cash interest expense (excluding imputed interest on deferred acquisition payments), cash taxes, and maintenance capital expenditures. Distributable cash flow calculations also reflect the elimination of compensation expense expected to be settled with the issuance of Partnership units, expenses related to business combinations and other adjustments. Distributable cash flow is a significant performance measure used by Sprague and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare the cash generating performance of the Partnership in relation to the cash distributions expected to be paid to its unitholders.
With regard to guidance, reconciliation of non-GAAP adjusted EBITDA to the closest corresponding GAAP measure (expected net income (loss)) is not available without unreasonable efforts on a forward-looking basis due to the inherent difficulty and impracticality of forecasting certain amounts required by GAAP such as unrealized gains and losses on derivative hedges, which can have a significant and potentially unpredictable impact on our future GAAP financial results.
Cautionary Statement Regarding Forward Looking Statements
Any statements in this press release about future expectations, plans and prospects for
(Financial Tables Below)
Summary Financial Data
Three and Six Months Ended
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Income Statements Data: | |||||||||||||||
Net sales | $ | 1,278,310 | $ | 657,672 | $ | 3,091,625 | $ | 1,693,805 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of products sold (exclusive of depreciation and amortization) | 1,261,935 | 659,803 | 2,991,013 | 1,584,585 | |||||||||||
Operating expenses | 22,092 | 19,148 | 45,327 | 38,379 | |||||||||||
Selling, general and administrative | 21,941 | 16,719 | 50,661 | 41,958 | |||||||||||
Depreciation and amortization | 8,049 | 8,258 | 16,175 | 16,741 | |||||||||||
Total operating costs and expenses | 1,314,017 | 703,928 | 3,103,176 | 1,681,663 | |||||||||||
Other operating income | — | 9,725 | — | 9,725 | |||||||||||
Operating (loss) income | (35,707 | ) | (36,531 | ) | (11,551 | ) | 21,867 | ||||||||
Other (loss) income | — | — | (1 | ) | 2 | ||||||||||
Interest income | 115 | 77 | 143 | 143 | |||||||||||
Interest expense | (9,242 | ) | (8,587 | ) | (19,814 | ) | (17,402 | ) | |||||||
(Loss) income before income taxes | (44,834 | ) | (45,041 | ) | (31,223 | ) | 4,610 | ||||||||
Income tax (provision) benefit | (461 | ) | (562 | ) | 3,874 | (1,433 | ) | ||||||||
Net (loss) income | (45,295 | ) | (45,603 | ) | (27,349 | ) | 3,177 | ||||||||
Limited partners' interest in net (loss) income | $ | (45,295 | ) | $ | (45,603 | ) | $ | (27,349 | ) | $ | 3,177 | ||||
Net (loss) income per limited partner unit: | |||||||||||||||
Common - basic | $ | (1.73 | ) | $ | (1.74 | ) | $ | (1.04 | ) | $ | 0.13 | ||||
Common - diluted | $ | (1.73 | ) | $ | (1.74 | ) | $ | (1.04 | ) | $ | 0.13 | ||||
Units used to compute net income per limited partner unit: | |||||||||||||||
Common - basic | 26,236,612 | 26,226,255 | 26,235,585 | 25,066,494 | |||||||||||
Common - diluted | 26,236,612 | 26,226,255 | 26,235,585 | 25,066,494 | |||||||||||
Distribution declared per unit | $ | 0.4338 | $ | 0.6675 | $ | 0.8676 | $ | 1.3350 |
Volume,
Three and Six Months Ended
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
($ and volumes in thousands) | |||||||||||||||
Volumes: | |||||||||||||||
Refined products (gallons) | 293,810 | 289,458 | 859,478 | 805,303 | |||||||||||
Natural gas (MMBtus) | 10,895 | 11,692 | 28,556 | 30,527 | |||||||||||
Materials handling (short tons) | 407 | 507 | 1,038 | 924 | |||||||||||
Materials handling (gallons) | 96,697 | 124,444 | 184,851 | 182,303 | |||||||||||
Refined products | $ | 1,189,213 | $ | 589,142 | $ | 2,856,043 | $ | 1,505,342 | |||||||
Natural gas | 70,510 | 51,360 | 196,354 | 153,935 | |||||||||||
Materials handling | 12,871 | 12,725 | 25,964 | 24,771 | |||||||||||
Other operations | 5,716 | 4,445 | 13,264 | 9,757 | |||||||||||
Total net sales | $ | 1,278,310 | $ | 657,672 | $ | 3,091,625 | $ | 1,693,805 | |||||||
Reconciliation of Operating Income to Adjusted Gross Margin: | |||||||||||||||
Operating (loss) income | $ | (35,707 | ) | $ | (36,531 | ) | $ | (11,551 | ) | $ | 21,867 | ||||
Operating costs and expenses not allocated to operating segments: | |||||||||||||||
Operating expenses | 22,092 | 19,148 | 45,327 | 38,379 | |||||||||||
Selling, general and administrative | 21,941 | 16,719 | 50,661 | 41,958 | |||||||||||
Depreciation and amortization | 8,049 | 8,258 | 16,175 | 16,741 | |||||||||||
Other Operating Income | (9,725 | ) | (9,727 | ) | |||||||||||
Change in unrealized (gain) loss on inventory | (21,998 | ) | 5,369 | (6,629 | ) | (20,888 | ) | ||||||||
Change in unrealized value on natural gas transportation contracts | 56,673 | 35,592 | 98,596 | 56,711 | |||||||||||
Total adjusted gross margin: | $ | 51,050 | $ | 38,830 | $ | 192,579 | $ | 145,041 | |||||||
Adjusted Gross Margin: | |||||||||||||||
Refined products | $ | 29,868 | $ | 27,165 | $ | 83,994 | $ | 78,198 | |||||||
Natural gas | 5,755 | (2,725 | ) | 77,106 | 38,364 | ||||||||||
Materials handling | 12,799 | 12,694 | 25,929 | 24,770 | |||||||||||
Other operations | 2,628 | 1,696 | 5,550 | 3,709 | |||||||||||
Total adjusted gross margin | $ | 51,050 | $ | 38,830 | $ | 192,579 | $ | 145,041 |
Reconciliation of Net Income to Non-GAAP Measures
Three and Six Months Ended
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Reconciliation of net income to EBITDA, Adjusted EBITDA and Distributable Cash Flow: | |||||||||||||||
Net (loss) income | $ | (45,295 | ) | $ | (45,603 | ) | $ | (27,349 | ) | $ | 3,177 | ||||
Add/(deduct): | |||||||||||||||
Interest expense, net | 9,127 | 8,510 | 19,671 | 17,259 | |||||||||||
Tax provision | 461 | 562 | (3,874 | ) | 1,433 | ||||||||||
Depreciation and amortization | 8,049 | 8,258 | 16,175 | 16,741 | |||||||||||
EBITDA | $ | (27,658 | ) | $ | (28,273 | ) | $ | 4,623 | $ | 38,610 | |||||
Add/(deduct): | |||||||||||||||
Change in unrealized (gain) loss on inventory | (21,998 | ) | 5,369 | (6,629 | ) | (20,888 | ) | ||||||||
Change in unrealized value on natural gas transportation contracts | 56,673 | 35,592 | 98,596 | 56,711 | |||||||||||
Gain on sale of fixed assets not in the ordinary course of business and other operating income | — | (9,725 | ) | — | (9,727 | ) | |||||||||
Other adjustments | 31 | 35 | 62 | 65 | |||||||||||
Adjusted EBITDA | $ | 7,048 | $ | 2,998 | $ | 96,652 | $ | 64,771 | |||||||
Add/(deduct): | |||||||||||||||
Cash interest expense, net | (7,672 | ) | (6,664 | ) | (16,902 | ) | (14,031 | ) | |||||||
Cash taxes | (3,440 | ) | (694 | ) | 2,473 | (1,677 | ) | ||||||||
Maintenance capital expenditures | (3,925 | ) | (3,515 | ) | (6,595 | ) | (5,523 | ) | |||||||
Elimination of expense relating to incentive compensation and directors fees expected to be paid in common units | — | 185 | — | 2,553 | |||||||||||
Other | — | (6 | ) | — | — | ||||||||||
Distributable cash flow | $ | (7,989 | ) | $ | (7,696 | ) | $ | 75,628 | $ | 46,093 |
Investor Contact:
+1 800.225.1560
investorrelations@spragueenergy.com
Source:
2022 GlobeNewswire, Inc., source