Sprague Sources LP stories first quarter 2021 outcomes

PORTSMOUTH, N.H., May 6, 2021 (GLOBE NEWSWIRE) – Sprague Resources LP ("Sprague") (NYSE: SRLP) today released its financial results for the first quarter ended March 31, 2021.

Highlights of the first quarter of 2021

Net sales were $ 1,036.1 million for the first quarter of 2021, compared to net sales of $ 959.9 million for the first quarter of 2020.
GAAP net income was $ 48.8 million for the first quarter of 2021, compared to net income of $ 46.7 million for the first quarter of 2020.
Adjusted gross margin * was $ 106.2 million for the first quarter of 2021, compared to the adjusted gross margin of $ 83.1 million for the first quarter of 2020.
Adjusted EBITDA * was $ 61.8 million for the first quarter of 2021, compared to an adjusted EBITDA of $ 42.4 million for the first quarter of 2020.

“Sprague's Adjusted EBITDA increased 46% year over year as our refined products and natural gas businesses took advantage of the slightly colder weather. At the same time, continued expense management efforts resulted in a 90% increase in distributable cash flow *, more than triple coverage for the quarter, ”said David Glendon, President and Chief Executive Officer.

Refined products

Volume in the Refined Products segment increased 7% to 515.8 million gallons in the first quarter of 2021, compared to 480.5 million gallons in the first quarter of 2020.
Adjusted gross margin in the Refined Products segment increased $ 15.2 million, or 43%, to $ 51.0 million in the first quarter of 2021, compared to $ 35.8 million in the first quarter of 2020.

"Colder temperatures and the associated increased demand resulted in improved results in our refined products business," said Glendon.

natural gas

The volume of the natural gas segment increased by 3% to 18.8 million Bcf in the first quarter of 2021 compared to 18.3 million Bcf in the first quarter of 2020.
Adjusted gross margin for natural gas increased $ 11.3 million, or 38%, to $ 41.1 million in the first quarter of 2021, compared to $ 29.8 million in the first quarter of 2020.

"Results for natural gas were strong due to the more typical winter weather and volatility, which opened up opportunities for our logistical capabilities," added Glendon.

Material handling

Adjusted gross margin for materials handling decreased $ 3.5 million in the first quarter of 2021 to $ 12.1 million from $ 15.6 million in the first quarter of 2020.

"Material handling decreased mainly due to the timing of the salt shipments," concluded Glendon.

2021 Guidance

In relation to Sprague's expected financial results for 2021 and assuming normal weather and market structure conditions, we expect the following:

Adjusted EBITDA is expected to be between $ 105 million and $ 120 million.

Quarterly distribution

On April 23, 2021, the board of directors of Sprague's general partner, Sprague Resources GP LLC, announced a cash distribution of $ 0.6675 per share for the quarter ended March 31, 2021, the same as the previous quarter. Distribution will be paid on May 10, 2021 to shareholders of record as of close of business on May 4, 2021.

Conference call on financial results

Management will review Sprague's financial results for the first quarter of 2021 in a conference call for analysts and investors today, May 6, 2021 at 1:00 p.m. EST.

Dial-in numbers:	(866) 516-2130 (US and Canada)
	(678) 509-7612 (International)
Participation code:	8146978

Participants can dial in up to 30 minutes before the call begins. The conference call can also be accessed live via a webcast link: https://edge.media-server.com/mmc/p/ab6xfiyo. This link is also available on the Investor Relations page of the Sprague website at www.spragueenergy.com under “Calendar of Events” and will be archived on the website for one year.

About Sprague Resources LP
Sprague Resources LP is a Master Limited Partnership engaged in the purchase, storage, distribution and sale of refined petroleum products and natural gas. Sprague also offers storage and handling services for a wide range of materials.

* *Non-GAAP Financial Measures
EBITDA, adjusted EBITDA, adjusted gross margin, distributable cash flow and distribution coverage are metrics that are not defined under GAAP. Sprague defines EBITDA as earnings before interest, taxes, depreciation and amortization.

We define adjusted EBITDA as adjusted EBITDA for unrealized hedging losses and reduced by unrealized hedging gains (each with regard to refined products and natural gas inventories, prepaid futures contracts and natural gas transport contracts), changes in the fair value of the contingent consideration, adjusted for the effects of acquisition-related expenses and, if necessary Adjusted for the net impact of retrospective legislation reintroducing an excise tax credit program that is available for certain of our previously expired biofuel blending activities.

We define Adjusted Gross Margin as net sales minus the cost of products sold (excluding depreciation), which is reduced by the total gains and losses on commodity derivatives in net income (loss) and increased by the realized gains and losses on commodity derivatives in net income (loss)) each relating to refined products and natural gas stocks, prepaid futures contracts and natural gas transportation contracts. The adjusted gross margin does not affect the reported volume or net sales.

Management uses the adjusted gross margin to control the underlying performance of Sprague, including its physical and derivative positions. The adjusted gross margin is also used by external users of our consolidated financial statements to assess our financial performance and the reporting of the commodity market value to lenders. EBITDA and Adjusted EBITDA are used by external users of our financial statements, such as investors, trade suppliers, research analysts, and commercial banks, as supplemental financial metrics to assess the financial performance of our assets, operations, and return on investment regardless of funding method. Capital structure or historical cost base; the ability of our assets to generate sufficient income available when cashed to pay interest on our debt and to make distributions to our shareholders; repeatable operating performance that is not distorted by one-off items or market volatility; and the feasibility of acquisitions and investment projects.

Sprague believes that investors benefit from having access to the same financial metrics used by management and that these metrics are useful to investors as they help benchmark operating performance against that of other companies with similar businesses. Adjusted EBITDA and Adjusted Gross Margin data presented by Sprague may not be comparable to metrics with similar titles at other companies because other companies may define these items differently. Please note 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 expenses (excluding imputed interest on deferred acquisition payments), cash taxes and maintenance investments. The distributable cash flow calculations also reflect the elimination of compensation expenses that are expected to be paid through the issuance of partnership shares, expenses related to business combinations, and other adjustments. Distributable cash flow is a key performance measure used by Sprague and outside users of its financial statements such as investors, commercial banks and research analysts to compare the partnership's cash generating performance in relation to the expected cash distributions of its shareholders.

Sprague also calculates the ratio of distributable cash flows to the total cash distribution reported for the period (Distribution Coverage Ratio) as it provides important information regarding the relationship between Sprague's financial operating performance and its ability to distribute cash. Sprague defines Distribution Coverage as the ratio of distributable cash flow to the quarterly distribution payable on all outstanding common and subordinated shares and incentive distributions.

For the purposes of the guidance, reconciling non-GAAP Adjusted EBITDA to the closest equivalent GAAP (expected net income (loss)) measure is not possible without undue effort under GAAP on a forward-looking basis due to the inherent difficulty and impracticability of forecasting certain required amounts such as unrealized gains and losses on derivative hedging transactions that could have a material and potentially unpredictable impact on our future GAAP financial results.

Cautionary Note Regarding Forward-Looking Statements
All statements in this press release about future expectations, plans and prospects for Sprague Resources LP or about the future expectations, beliefs, goals, plans or prospects of Sprague Resources LP are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements that are not historical facts (including, but not limited to, statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered 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 the control of management. Although Sprague believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and involve risks that could affect our business prospects and performance and could cause actual results may differ from those discussed in the previous press release. These risks and uncertainties include, by way of example and not limitation: increased competition for our products or services; adverse weather conditions; Changes in the supply or demand for our products or services; Non-performance by major customers or suppliers; Changes in operating conditions and costs; Changes in the amount of environmental remediation expenditure; possible equipment malfunctions and unexpected capital expenditures; our ability to complete organic growth and acquisition projects; our ability to integrate acquired assets; potential work problems; the legislative or regulatory environment; Delays in building / repairing terminals; political and economic conditions; and the impact of security risks such as terrorism, international hostilities and cyber risks. These are not all important factors that could cause actual results to differ materially from those expressed in any forward-looking statements. Other applicable risks and uncertainties were described in more detail in Sprague's most recent Annual Report on Form 10-K, filed with the SEC on March 5, 2021, and on Form 10-Q of Partnership 8-K and others below with the SEC filed documents. Sprague assumes no obligation and does not intend to update any forward-looking statements to reflect new information or future events. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

(Financial tables below)

Sprague Resources LP
Summary of financial data
Three months ended March 31, 2021 and 2020

	Three months to March 31
	2021			2020
	(unchecked)			(unchecked)
	($ in thousands)
Income statement data:
Net sales	$	1,036,134		$	959.879
Operating costs and expenses:
Cost of the products sold (excluding depreciation and Amortization)	924,782			850.020
Operating expenses	19,232			20,812
Sales general and administration	25.239			20,033
Depreciation	8,482			8,598
Total Cost of Ownership and Cost of Ownership	977.735			899.463
Operating profit	58,399			60,416
Different income	2			– –
Interest income	67			175
Interest expenses	(8,815		)	(11.286		)
Earnings before taxes	49,653			49,305
Income tax provision	(871		)	(2.571		)
Net income	48.782			46,734
Incentive distributions declared	– –			(2.072		)
Interest of the limited partners in the annual surplus	$	48.782		$	44,662
Annual surplus per limited partner:
Common – Basic	$	2.04		$	1.96
Common – diluted	$	2.04		$	1.95
Units for calculating the net income per limited partner unit:
Common – Basic	23,893,846			22,820,983
Common – diluted	23,893,846			22,871,748
Declared distribution per unit	$	0.6675		$	0.6675

Sprague Resources LP
Volume, net sales and adjusted gross margin by segment
Three months ended on March 31, 2021 and 2020

	Three months to March 31
	2021			2020
	(unchecked)			(unchecked)
	($ and volume in thousands)
Volumes:
Refined Products (Gallons)	515.845			480.486
Natural gas (MMBtus)	18,835			18,328
Material transport (short tons)	466			886
Material handling (gallons)	57,859			78,447
Net sales:
Refined products	$	916.201		$	841,942
natural gas	102,575			95,778
Material handling	12,046			15,557
Other operations	5.312			6.602
Total net sales	$	1,036,134		$	959.879
Reconciliation of the operating result to the adjusted gross margin:
Operating profit	$	58,399		$	60,416
Operating costs and expenses that are not allocated to the operating segments:
Operating expenses	19,232			20,812
Sales general and administration	25.239			20,033
Depreciation	8,482			8,598
Add / (subtract):
Change in unrealized (loss) profit from inventory	(26.257		)	(13,549		)
Change in the unrealized value of natural gas
Transport contracts	21,116			(13, 199		)
Adjusted gross margin overall:	$	106.211		$	83.111
Adjusted gross margin:
Refined products	$	51,033		$	35,792
natural gas	41,089			29,787
Material handling	12,076			15,581
Other operations	2.013			1,951
Total adjusted gross margin	$	106.211		$	83.111

Sprague Resources LP
Reconciliation of net income to non-GAAP measures
Three months ended on March 31, 2021 and 2020

	Three months to March 31
	2021			2020
	(unchecked)			(unchecked)
	($ in thousands)
Reconciliation of net earnings to EBITDA, adjusted
EBITDA and distributable cash flow:
Net income	$	48.782		$	46,734
Add / (subtract):
Net interest expense	8.748			11.111
Tax commission	871			2.571
Depreciation	8,482			8,598
EBITDA	$	66,883		$	69,014
Add / (subtract):
Change in unrealized (loss) profit from inventory	(26.257		)	(13,549		)
Change in the unrealized value for natural gas transport
contracts	21,116			(13, 199		)
Income from the sale of property, plant and equipment that is not part of the normal course of business, including income from insurance benefits	(2		)	– –
acquisition cost	– –			1
Other adjustments (1)	35			159
Adjusted EBITDA	$	61,775		$	42,426
Add / (subtract):
Cash interest expense, net	(7.367		)	(9.830		)
Cash taxes	(983		)	(3.061		)
Maintenance investment	(2.008		)	(2.763		)
Equity-based payment	– –			409
Eliminate expenses related to incentive payments and directors' fees that are expected to be paid in joint units	2,368			(168		)
Other	6th			1.187
Distributable cash flow	$	53,791		$	28,200