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Name | Symbol | Market | Type |
---|---|---|---|
Sprague Resources LP | NYSE:SRLP | NYSE | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 20.00 | 0 | 01:00:00 |
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
45-2637964
|
(State of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
o
|
|
|
|
|
Emerging growth company
|
o
|
|
|
|
|
Page
|
|
||
|
|
|
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
Item 1 — Condensed Consolidated Financial Statements
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,194
|
|
|
$
|
2,682
|
|
Accounts receivable, net
|
144,395
|
|
|
221,954
|
|
||
Inventories
|
249,101
|
|
|
318,899
|
|
||
Fair value of derivative assets
|
64,365
|
|
|
66,858
|
|
||
Other current assets
|
29,964
|
|
|
43,316
|
|
||
Total current assets
|
491,019
|
|
|
653,709
|
|
||
Property, plant and equipment, net
|
311,379
|
|
|
251,101
|
|
||
Intangibles, net
|
28,426
|
|
|
23,446
|
|
||
Other assets, net
|
80,174
|
|
|
13,668
|
|
||
Goodwill
|
85,655
|
|
|
70,550
|
|
||
Total assets
|
$
|
996,653
|
|
|
$
|
1,012,474
|
|
Liabilities and unitholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
62,276
|
|
|
$
|
138,358
|
|
Accrued liabilities
|
39,887
|
|
|
45,491
|
|
||
Fair value of derivative liabilities
|
71,041
|
|
|
95,339
|
|
||
Due to General Partner
|
6,886
|
|
|
14,218
|
|
||
Current portion of working capital facilities
|
22,332
|
|
|
153,603
|
|
||
Current portion of other obligations
|
6,343
|
|
|
4,190
|
|
||
Total current liabilities
|
208,765
|
|
|
451,199
|
|
||
Working capital facilities - less current portion
|
252,400
|
|
|
156,733
|
|
||
Acquisition facility
|
316,400
|
|
|
245,400
|
|
||
Other obligations - less current portion
|
41,725
|
|
|
16,955
|
|
||
Due to General Partner
|
1,623
|
|
|
1,269
|
|
||
Deferred income taxes
|
17,523
|
|
|
15,481
|
|
||
Total liabilities
|
838,436
|
|
|
887,037
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
||
Unitholders’ equity:
|
|
|
|
||||
Common unitholders - public (10,437,179 units and 9,207,473 units issued and outstanding as of September 30, 2017 and December 31, 2016, respectively)
|
206,868
|
|
|
175,314
|
|
||
Common unitholders - affiliated (12,106,348 and 2,034,378 units issued and outstanding as of September 30, 2017 and December 31, 2016, respectively)
|
(38,793
|
)
|
|
(4,518
|
)
|
||
Subordinated unitholders - affiliated (10,071,970 units issued and outstanding as of December 31, 2016)
|
—
|
|
|
(34,576
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(9,858
|
)
|
|
(10,783
|
)
|
||
Total unitholders’ equity
|
158,217
|
|
|
125,437
|
|
||
Total liabilities and unitholders’ equity
|
$
|
996,653
|
|
|
$
|
1,012,474
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales
|
$
|
491,393
|
|
|
$
|
422,779
|
|
|
$
|
1,922,826
|
|
|
$
|
1,623,173
|
|
Cost of products sold (exclusive of depreciation and amortization)
|
456,656
|
|
|
383,211
|
|
|
1,720,860
|
|
|
1,463,938
|
|
||||
Operating expenses
|
16,891
|
|
|
15,725
|
|
|
50,624
|
|
|
49,078
|
|
||||
Selling, general and administrative
|
17,559
|
|
|
19,735
|
|
|
63,472
|
|
|
62,099
|
|
||||
Depreciation and amortization
|
6,655
|
|
|
5,329
|
|
|
19,537
|
|
|
16,001
|
|
||||
Total operating costs and expenses
|
497,761
|
|
|
424,000
|
|
|
1,854,493
|
|
|
1,591,116
|
|
||||
Operating (loss) income
|
(6,368
|
)
|
|
(1,221
|
)
|
|
68,333
|
|
|
32,057
|
|
||||
Other (expense) income
|
—
|
|
|
(19
|
)
|
|
183
|
|
|
(114
|
)
|
||||
Interest income
|
75
|
|
|
40
|
|
|
247
|
|
|
379
|
|
||||
Interest expense
|
(7,170
|
)
|
|
(6,685
|
)
|
|
(22,604
|
)
|
|
(20,179
|
)
|
||||
(Loss) income before income taxes
|
(13,463
|
)
|
|
(7,885
|
)
|
|
46,159
|
|
|
12,143
|
|
||||
Income tax (provision) benefit
|
(853
|
)
|
|
(909
|
)
|
|
(3,768
|
)
|
|
(861
|
)
|
||||
Net (loss) income
|
(14,316
|
)
|
|
(8,794
|
)
|
|
42,391
|
|
|
11,282
|
|
||||
Incentive distributions declared
|
(1,024
|
)
|
|
(488
|
)
|
|
(2,620
|
)
|
|
(1,144
|
)
|
||||
Limited partners’ interest in net (loss) income
|
$
|
(15,340
|
)
|
|
$
|
(9,282
|
)
|
|
$
|
39,771
|
|
|
$
|
10,138
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per limited partner unit:
|
|
|
|
|
|
|
|
||||||||
Common - basic
|
$
|
(0.68
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
1.80
|
|
|
$
|
0.48
|
|
Common - diluted
|
$
|
(0.68
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
1.78
|
|
|
$
|
0.46
|
|
Subordinated - basic and diluted
|
N/A
|
|
|
$
|
(0.44
|
)
|
|
N/A
|
|
|
$
|
0.48
|
|
||
Units used to compute net income per limited partner unit:
|
|
|
|
|
|
|
|||||||||
Common - basic
|
22,543,527
|
|
|
11,229,805
|
|
|
22,093,578
|
|
|
11,189,987
|
|
||||
Common - diluted
|
22,543,527
|
|
|
11,229,805
|
|
|
22,368,432
|
|
|
11,506,830
|
|
||||
Subordinated - basic and diluted
|
N/A
|
|
|
10,071,970
|
|
|
N/A
|
|
|
10,071,970
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Distribution declared per unit
|
$
|
0.6225
|
|
|
$
|
0.5625
|
|
|
$
|
1.8225
|
|
|
$
|
1.6425
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income
|
$
|
(14,316
|
)
|
|
$
|
(8,794
|
)
|
|
$
|
42,391
|
|
|
$
|
11,282
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on interest rate swaps
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) arising in the period
|
410
|
|
|
460
|
|
|
699
|
|
|
(1,176
|
)
|
||||
Reclassification adjustment related to (loss) gain realized in income
|
(129
|
)
|
|
384
|
|
|
(13
|
)
|
|
1,182
|
|
||||
Net change in unrealized gain on interest rate swaps
|
281
|
|
|
844
|
|
|
686
|
|
|
6
|
|
||||
Tax effect
|
(3
|
)
|
|
(15
|
)
|
|
(10
|
)
|
|
—
|
|
||||
|
278
|
|
|
829
|
|
|
676
|
|
|
6
|
|
||||
Foreign currency translation adjustment
|
139
|
|
|
(925
|
)
|
|
249
|
|
|
(773
|
)
|
||||
Other comprehensive income (loss)
|
417
|
|
|
(96
|
)
|
|
925
|
|
|
(767
|
)
|
||||
Comprehensive (loss) income
|
$
|
(13,899
|
)
|
|
$
|
(8,890
|
)
|
|
$
|
43,316
|
|
|
$
|
10,515
|
|
|
Common-
Public |
|
Common-
Sprague Holdings |
|
Subordinated-
Sprague Holdings |
|
Incentive Distribution Rights
|
|
Accumulated
Other Comprehensive Loss |
|
Total
|
||||||||||||
Balance at December 31, 2015
|
$
|
189,483
|
|
|
$
|
(1,370
|
)
|
|
$
|
(18,989
|
)
|
|
$
|
—
|
|
|
$
|
(11,639
|
)
|
|
$
|
157,485
|
|
Net income
|
3,815
|
|
|
847
|
|
|
4,192
|
|
|
1,312
|
|
|
—
|
|
|
10,166
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
856
|
|
|
856
|
|
||||||
Unit-based compensation
|
1,820
|
|
|
404
|
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
4,224
|
|
||||||
Distributions paid
|
(19,894
|
)
|
|
(4,419
|
)
|
|
(21,878
|
)
|
|
(1,312
|
)
|
|
—
|
|
|
(47,503
|
)
|
||||||
Units issued with annual bonus
|
1,748
|
|
|
392
|
|
|
1,939
|
|
|
—
|
|
|
—
|
|
|
4,079
|
|
||||||
Units withheld for employee tax obligations
|
(1,658
|
)
|
|
(372
|
)
|
|
(1,840
|
)
|
|
—
|
|
|
—
|
|
|
(3,870
|
)
|
||||||
Balance at December 31, 2016
|
$
|
175,314
|
|
|
$
|
(4,518
|
)
|
|
$
|
(34,576
|
)
|
|
$
|
—
|
|
|
$
|
(10,783
|
)
|
|
$
|
125,437
|
|
Conversion of subordinated units to common units
|
—
|
|
|
(40,393
|
)
|
|
40,393
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net income
|
18,171
|
|
|
22,026
|
|
|
—
|
|
|
2,194
|
|
|
—
|
|
|
42,391
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
925
|
|
|
925
|
|
||||||
Unit-based compensation
|
763
|
|
|
925
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,688
|
|
||||||
Distributions paid
|
(18,252
|
)
|
|
(16,146
|
)
|
|
(5,817
|
)
|
|
(2,194
|
)
|
|
—
|
|
|
(42,409
|
)
|
||||||
Units issued related to Carbo acquisition
|
31,401
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,401
|
|
||||||
Units issued with annual bonus
|
161
|
|
|
210
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
371
|
|
||||||
Units withheld for employee tax obligations
|
(690
|
)
|
|
(897
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,587
|
)
|
||||||
Balance at September 30, 2017
|
$
|
206,868
|
|
|
$
|
(38,793
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,858
|
)
|
|
$
|
158,217
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities
|
|||||||
Net income
|
$
|
42,391
|
|
|
$
|
11,282
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization (includes amortization of deferred debt issuance costs)
|
23,881
|
|
|
18,961
|
|
||
Provision for doubtful accounts
|
(251
|
)
|
|
237
|
|
||
(Gain) loss on sale of assets
|
(101
|
)
|
|
106
|
|
||
Deferred income taxes
|
953
|
|
|
(69
|
)
|
||
Non-cash unit-based compensation
|
1,688
|
|
|
1,664
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
77,660
|
|
|
27,086
|
|
||
Inventories
|
73,944
|
|
|
(25,064
|
)
|
||
Other assets
|
14,040
|
|
|
13,949
|
|
||
Fair value of commodity derivative instruments
|
(19,813
|
)
|
|
95,121
|
|
||
Due to General Partner and affiliates
|
(6,977
|
)
|
|
(5,960
|
)
|
||
Accounts payable, accrued liabilities and other
|
(80,524
|
)
|
|
(30,218
|
)
|
||
Net cash provided by operating activities
|
126,891
|
|
|
107,095
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property, plant and equipment
|
(39,774
|
)
|
|
(11,436
|
)
|
||
Acquisitions, net of cash acquired
|
(72,184
|
)
|
|
(29,065
|
)
|
||
Proceeds from property insurance settlement and sale of assets
|
911
|
|
|
147
|
|
||
Net cash used in investing activities
|
(111,047
|
)
|
|
(40,354
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Net borrowings (payments) under credit agreements
|
35,003
|
|
|
(51,897
|
)
|
||
Net payments on other obligations
|
(1,977
|
)
|
|
(1,388
|
)
|
||
Debt issue costs
|
(4,483
|
)
|
|
(2,089
|
)
|
||
Distributions to unitholders
|
(42,409
|
)
|
|
(35,026
|
)
|
||
Foreign exchange on capital lease obligations
|
—
|
|
|
7
|
|
||
Units withheld for employee tax obligations
|
(1,587
|
)
|
|
(3,870
|
)
|
||
Net cash used in financing activities
|
(15,453
|
)
|
|
(94,263
|
)
|
||
Effect of exchange rate changes on cash balances held in foreign currencies
|
121
|
|
|
(3
|
)
|
||
Net change in cash and cash equivalents
|
512
|
|
|
(27,525
|
)
|
||
Cash and cash equivalents, beginning of period
|
2,682
|
|
|
30,974
|
|
||
Cash and cash equivalents, end of period
|
$
|
3,194
|
|
|
$
|
3,449
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
18,293
|
|
|
$
|
17,730
|
|
Cash paid for taxes
|
$
|
1,601
|
|
|
$
|
755
|
|
Non-cash consideration related to Carbo acquisition:
|
|
|
|
||||
Common units issued
|
$
|
31,401
|
|
|
—
|
|
|
Deferred consideration obligation
|
$
|
27,284
|
|
|
—
|
|
Inventories
|
$
|
3,220
|
|
Other current assets, net
|
69
|
|
|
Net assets remaining to be allocated
|
68,667
|
|
|
Net assets acquired
|
$
|
71,956
|
|
Property, plant and equipment
|
$
|
22,010
|
|
Accrued liabilities and other, net
|
(22
|
)
|
|
Net assets acquired
|
$
|
21,988
|
|
Inventory
|
$
|
286
|
|
Derivative assets
|
12,326
|
|
|
Intangibles
|
5,046
|
|
|
Total identifiable assets acquired
|
17,658
|
|
|
Derivative liabilities
|
(10,997
|
)
|
|
Net identifiable assets acquired
|
6,661
|
|
|
Goodwill
|
9,592
|
|
|
Net assets acquired
|
$
|
16,253
|
|
Inventories
|
$
|
632
|
|
Derivative and other current assets
|
658
|
|
|
Property, plant and equipment
|
9,247
|
|
|
Intangibles
|
5,300
|
|
|
Total identifiable assets acquired
|
15,837
|
|
|
Derivative and other current liabilities
|
(680
|
)
|
|
Net identifiable assets acquired
|
15,157
|
|
|
Goodwill
|
5,513
|
|
|
Net assets acquired
|
$
|
20,670
|
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
Fair value of interest rate swaps, net of tax
|
$
|
1,567
|
|
|
$
|
891
|
|
Cumulative foreign currency translation adjustment
|
(11,425
|
)
|
|
(11,674
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
$
|
(9,858
|
)
|
|
$
|
(10,783
|
)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Petroleum and related products
|
$
|
236,878
|
|
|
$
|
305,827
|
|
Asphalt
|
8,035
|
|
|
7,089
|
|
||
Coal
|
2,722
|
|
|
3,149
|
|
||
Natural gas
|
1,466
|
|
|
2,834
|
|
||
Inventories
|
$
|
249,101
|
|
|
$
|
318,899
|
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
Working capital facilities
|
$
|
274,732
|
|
|
$
|
310,336
|
|
Acquisition facility
|
316,400
|
|
|
245,400
|
|
||
Total credit agreement
|
591,132
|
|
|
555,736
|
|
||
Less: current portion of working capital facilities
|
(22,332
|
)
|
|
(153,603
|
)
|
||
Long-term portion
|
$
|
568,800
|
|
|
$
|
402,133
|
|
•
|
U.S. dollar revolving working capital facility of up to
$950.0 million
, subject to the Partnership's borrowing base limits, to be used by the Partnership for working capital loans and letters of credit;
|
•
|
Multicurrency revolving working capital facility of up to
$100.0 million
, subject to Kildair's borrowing base limits, to be used by Kildair for working capital loans and letters of credit;
|
•
|
Revolving acquisition facility of up to
$550.0 million
to be used for loans and letters of credit to fund capital expenditures and acquisitions and other general corporate purposes related to the Partnership’s current businesses; and
|
•
|
Subject to certain conditions, the U.S. dollar revolving working capital facility may be increased by
$250.0 million
and the multicurrency revolving working capital facility may be increased by
$220.0 million
, subject to a maximum increase for both facilities of
$270.0 million
in the aggregate. Additionally, subject to certain conditions, the revolving acquisition facility may be increased by
$200.0 million
.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Refined products
|
$
|
425,492
|
|
|
$
|
350,528
|
|
|
$
|
1,638,066
|
|
|
$
|
1,331,197
|
|
Natural gas
|
49,694
|
|
|
55,868
|
|
|
235,068
|
|
|
240,256
|
|
||||
Materials handling
|
11,395
|
|
|
11,304
|
|
|
34,118
|
|
|
35,848
|
|
||||
Other operations
|
4,812
|
|
|
5,079
|
|
|
15,574
|
|
|
15,872
|
|
||||
Net sales
|
$
|
491,393
|
|
|
$
|
422,779
|
|
|
$
|
1,922,826
|
|
|
$
|
1,623,173
|
|
Adjusted gross margin (1):
|
|
|
|
|
|
|
|
||||||||
Refined products
|
$
|
32,014
|
|
|
$
|
38,693
|
|
|
$
|
95,307
|
|
|
$
|
104,070
|
|
Natural gas
|
3,197
|
|
|
2,773
|
|
|
44,355
|
|
|
43,734
|
|
||||
Materials handling
|
11,395
|
|
|
11,305
|
|
|
34,118
|
|
|
35,826
|
|
||||
Other operations
|
1,897
|
|
|
1,985
|
|
|
5,800
|
|
|
6,257
|
|
||||
Adjusted gross margin
|
48,503
|
|
|
54,756
|
|
|
179,580
|
|
|
189,887
|
|
||||
Reconciliation to operating income (loss) (2):
|
|
|
|
|
|
|
|
||||||||
Add: unrealized gain (loss) on inventory derivatives (3)
|
(13,673
|
)
|
|
(14,636
|
)
|
|
15,374
|
|
|
(26,592
|
)
|
||||
Add: unrealized gain on prepaid forward contract derivatives (4)
|
667
|
|
|
120
|
|
|
907
|
|
|
1,161
|
|
||||
Add: unrealized (loss) gain on natural gas transportation contracts (5)
|
(760
|
)
|
|
(672
|
)
|
|
6,105
|
|
|
(5,221
|
)
|
||||
Operating costs and expenses not allocated to operating segments:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
(16,891
|
)
|
|
(15,725
|
)
|
|
(50,624
|
)
|
|
(49,078
|
)
|
||||
Selling, general and administrative
|
(17,559
|
)
|
|
(19,735
|
)
|
|
(63,472
|
)
|
|
(62,099
|
)
|
||||
Depreciation and amortization
|
(6,655
|
)
|
|
(5,329
|
)
|
|
(19,537
|
)
|
|
(16,001
|
)
|
||||
Operating (loss) income
|
(6,368
|
)
|
|
(1,221
|
)
|
|
68,333
|
|
|
32,057
|
|
||||
Other (expense) income
|
—
|
|
|
(19
|
)
|
|
183
|
|
|
(114
|
)
|
||||
Interest income
|
75
|
|
|
40
|
|
|
247
|
|
|
379
|
|
||||
Interest expense
|
(7,170
|
)
|
|
(6,685
|
)
|
|
(22,604
|
)
|
|
(20,179
|
)
|
||||
Income tax (provision) benefit
|
(853
|
)
|
|
(909
|
)
|
|
(3,768
|
)
|
|
(861
|
)
|
||||
Net (loss) income
|
$
|
(14,316
|
)
|
|
$
|
(8,794
|
)
|
|
$
|
42,391
|
|
|
$
|
11,282
|
|
(1)
|
The Partnership trades, purchases, stores and sells energy commodities that experience market value fluctuations. To manage the Partnership’s underlying performance, including its physical and derivative positions, management utilizes adjusted gross margin, which is a non-GAAP financial measure. Adjusted gross margin is also used by external users of the Partnership’s consolidated financial statements to assess the Partnership’s economic results of operations and its commodity market value reporting to lenders. In determining adjusted gross margin, the Partnership adjusts its segment results for the impact of unrealized hedging gains and losses with regard to refined products and natural gas inventory derivatives, prepaid forward contract derivatives and natural gas transportation contracts, which are not marked to market for the purpose of recording unrealized gains or losses in net income. These adjustments align the unrealized hedging gains and losses to the period in which the revenue from the sale of inventory, prepaid fixed forwards and the utilization of transportation contracts relating to those hedges is realized in net income. Adjusted gross margin has no impact on reported volumes or net sales.
|
(2)
|
Reconciliation of adjusted gross margin to operating income, the most directly comparable GAAP measure.
|
(3)
|
Inventory is valued at the lower of cost or net realizable value. The fair value of the derivatives the Partnership uses to economically hedge its inventory declines or appreciates in value as the value of the underlying inventory appreciates or declines, which creates unrealized hedging losses (gains) with respect to the derivatives that are included in net income.
|
(4)
|
The unrealized hedging gain (loss) on prepaid forward contract derivatives represents the Partnership’s estimate of the change in fair value of the prepaid forward contracts which are not recorded in net income until the forward contract is settled in the future (i.e., when the commodity is delivered to the customer). As these contracts are prepaid, they do not qualify as derivatives and changes in the fair value are therefore not included in net income. The fair value of the derivatives the Partnership uses to economically hedge its prepaid forward contracts declines or appreciates in value as the value of the underlying prepaid forward contract appreciates or declines, which creates unrealized hedging gains (losses) that are included in net income.
|
(5)
|
The unrealized hedging gain (loss) on natural gas transportation contracts represents the Partnership’s estimate of the change in fair value of the natural gas transportation contracts which are not recorded in net income until the transportation is utilized in the future (i.e., when natural gas is delivered to the customer), as these contracts do not qualify as derivatives. As the fair value of the natural gas transportation contracts decline or appreciate, the offsetting physical or financial derivative will also appreciate or decline creating unmatched unrealized hedging (losses) gains in net income as of each period end.
|
|
As of September 30, 2017
|
||||||||||||||
|
Fair Value
Measurement
|
|
Quoted
Prices in
Active
Markets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
62,367
|
|
|
$
|
—
|
|
|
$
|
62,367
|
|
|
$
|
—
|
|
Commodity swaps and options
|
173
|
|
|
—
|
|
|
173
|
|
|
—
|
|
||||
Commodity derivatives
|
62,540
|
|
|
—
|
|
|
62,540
|
|
|
—
|
|
||||
Interest rate swaps
|
1,825
|
|
|
—
|
|
|
1,825
|
|
|
—
|
|
||||
Total
|
$
|
64,365
|
|
|
$
|
—
|
|
|
$
|
64,365
|
|
|
$
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
70,692
|
|
|
$
|
—
|
|
|
$
|
70,692
|
|
|
$
|
—
|
|
Commodity swaps and options
|
112
|
|
|
—
|
|
|
112
|
|
|
—
|
|
||||
Commodity derivatives
|
70,804
|
|
|
—
|
|
|
70,804
|
|
|
—
|
|
||||
Interest rate swaps
|
235
|
|
|
—
|
|
|
235
|
|
|
—
|
|
||||
Currency swap derivative liabilities
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
71,041
|
|
|
$
|
—
|
|
|
$
|
71,041
|
|
|
$
|
—
|
|
|
As of December 31, 2016
|
||||||||||||||
|
Fair Value
Measurement |
|
Quoted
Prices in Active Markets Level 1 |
|
Significant
Other Observable Inputs Level 2 |
|
Significant
Unobservable Inputs Level 3 |
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
65,618
|
|
|
$
|
—
|
|
|
$
|
65,618
|
|
|
$
|
—
|
|
Commodity derivatives
|
65,618
|
|
|
—
|
|
|
65,618
|
|
|
—
|
|
||||
Interest rate swaps
|
1,240
|
|
|
—
|
|
|
1,240
|
|
|
—
|
|
||||
Total
|
$
|
66,858
|
|
|
$
|
—
|
|
|
$
|
66,858
|
|
|
$
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
94,875
|
|
|
$
|
—
|
|
|
$
|
94,875
|
|
|
$
|
—
|
|
Commodity swaps and options
|
103
|
|
|
—
|
|
|
103
|
|
|
—
|
|
||||
Commodity derivatives
|
94,978
|
|
|
—
|
|
|
94,978
|
|
|
—
|
|
||||
Interest rate swaps
|
336
|
|
|
—
|
|
|
336
|
|
|
—
|
|
||||
Other
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||
Total
|
$
|
95,339
|
|
|
$
|
—
|
|
|
$
|
95,339
|
|
|
$
|
—
|
|
|
As of September 30, 2017
|
||||||||||||||||||||||
|
|
|
|
|
Gross Amount Not Offset in
the Balance Sheet
|
|
|
||||||||||||||||
|
Gross Amount of
Recognized Assets/ Liabilities |
|
Gross
Amount Offset in the Balance Sheet |
|
Amount of
Assets/ Liabilities in the Balance Sheet |
|
Financial
Instruments
|
|
Cash
Collateral
Posted
|
|
Net Amount
|
||||||||||||
Commodity derivative assets
|
$
|
62,540
|
|
|
$
|
—
|
|
|
$
|
62,540
|
|
|
$
|
(4,141
|
)
|
|
$
|
(13
|
)
|
|
$
|
58,386
|
|
Interest rate swap derivative assets
|
1,825
|
|
|
—
|
|
|
1,825
|
|
|
—
|
|
|
—
|
|
|
1,825
|
|
||||||
Fair value of derivative assets
|
$
|
64,365
|
|
|
$
|
—
|
|
|
$
|
64,365
|
|
|
$
|
(4,141
|
)
|
|
$
|
(13
|
)
|
|
$
|
60,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivative liabilities
|
$
|
(70,804
|
)
|
|
$
|
—
|
|
|
$
|
(70,804
|
)
|
|
$
|
4,141
|
|
|
$
|
—
|
|
|
$
|
(66,663
|
)
|
Interest rate swap derivative liabilities
|
(235
|
)
|
|
—
|
|
|
(235
|
)
|
|
—
|
|
|
—
|
|
|
(235
|
)
|
||||||
Other liabilities
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Fair value of derivative liabilities
|
$
|
(71,041
|
)
|
|
$
|
—
|
|
|
$
|
(71,041
|
)
|
|
$
|
4,141
|
|
|
$
|
—
|
|
|
$
|
(66,900
|
)
|
|
As of December 31, 2016
|
||||||||||||||||||||||
|
|
|
|
|
|
|
Gross Amount Not Offset in
the Balance Sheet |
|
|
||||||||||||||
|
Gross Amount of
Recognized Assets/ Liabilities |
|
Gross
Amount Offset in the Balance Sheet |
|
Amount of
Assets/
Liabilities
in the
Balance Sheet
|
|
Financial
Instruments |
|
Cash
Collateral Posted |
|
Net Amount
|
||||||||||||
Commodity derivative assets
|
$
|
65,618
|
|
|
$
|
—
|
|
|
$
|
65,618
|
|
|
$
|
(2,154
|
)
|
|
$
|
(209
|
)
|
|
$
|
63,255
|
|
Interest rate swap derivative assets
|
1,240
|
|
|
—
|
|
|
1,240
|
|
|
—
|
|
|
—
|
|
|
1,240
|
|
||||||
Fair value of derivative assets
|
$
|
66,858
|
|
|
$
|
—
|
|
|
$
|
66,858
|
|
|
$
|
(2,154
|
)
|
|
$
|
(209
|
)
|
|
$
|
64,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivative liabilities
|
$
|
(94,978
|
)
|
|
$
|
—
|
|
|
$
|
(94,978
|
)
|
|
$
|
2,154
|
|
|
$
|
—
|
|
|
$
|
(92,824
|
)
|
Interest rate swap derivative liabilities
|
(336
|
)
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
||||||
Other liabilities
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
||||||
Fair value of derivative liabilities
|
$
|
(95,339
|
)
|
|
$
|
—
|
|
|
$
|
(95,339
|
)
|
|
$
|
2,154
|
|
|
$
|
—
|
|
|
$
|
(93,185
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Refined products contracts
|
$
|
(17,281
|
)
|
|
$
|
2,957
|
|
|
$
|
27,637
|
|
|
$
|
(2,176
|
)
|
Natural gas contracts
|
(908
|
)
|
|
(3,370
|
)
|
|
13,850
|
|
|
16,472
|
|
||||
Total
|
$
|
(18,189
|
)
|
|
$
|
(413
|
)
|
|
$
|
41,487
|
|
|
$
|
14,296
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||||||
|
Refined Products
(Barrels)
|
|
Natural Gas
(MMBTUs)
|
|
Refined Products
(Barrels)
|
|
Natural Gas
(MMBTUs)
|
||||
Long contracts
|
6,785
|
|
|
132,367
|
|
|
9,882
|
|
|
131,240
|
|
Short contracts
|
(10,051
|
)
|
|
(71,639
|
)
|
|
(13,940
|
)
|
|
(76,556
|
)
|
Interest Rate Swap Agreements
|
||||||
Beginning
|
|
Ending
|
|
Notional Amount
|
||
January 2017
|
|
January 2018
|
|
$
|
225,000
|
|
January 2018
|
|
January 2019
|
|
$
|
275,000
|
|
January 2019
|
|
January 2020
|
|
$
|
125,000
|
|
January 2020
|
|
January 2021
|
|
$
|
50,000
|
|
January 2021
|
|
January 2022
|
|
$
|
50,000
|
|
|
2017 Phantom Units
(OCF-based)
|
|
2016 Phantom Units
(OCF-based)
|
|
2015 Phantom Units
(TUR-based)
|
|||||||||||||||
|
Units
|
|
Weighted
Average
Grant Date
Fair Value
(per unit)
|
|
Units
|
|
Weighted
Average
Grant Date
Fair Value
(per unit)
|
|
Units
|
|
Weighted
Average Grant Date Fair Value (per unit) |
|||||||||
Nonvested at December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
166,900
|
|
|
$
|
17.52
|
|
|
141,000
|
|
|
$
|
31.58
|
|
Granted
|
132,977
|
|
|
26.62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Forfeited
|
(1,977
|
)
|
|
(26.60
|
)
|
|
(3,000
|
)
|
|
(17.52
|
)
|
|
(2,000
|
)
|
|
(31.58
|
)
|
|||
Vested
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Nonvested at September 30, 2017
|
131,000
|
|
|
$
|
26.62
|
|
|
163,900
|
|
|
$
|
17.52
|
|
|
139,000
|
|
|
$
|
31.58
|
|
|
Common Units
|
|
Subordinated
Units |
|||||
|
Public
|
|
Sprague
Holdings
|
|
Sprague
Holdings |
|||
Balance as of December 31, 2016
|
9,207,473
|
|
|
2,034,378
|
|
|
10,071,970
|
|
Conversion of subordinated units
|
—
|
|
|
10,071,970
|
|
|
(10,071,970
|
)
|
Units issued in connection with phantom and performance awards
|
89,315
|
|
|
—
|
|
|
—
|
|
Units issued in connection with employee bonus
|
8,840
|
|
|
—
|
|
|
—
|
|
Units issued in connection with Carbo acquisition
|
1,131,551
|
|
|
—
|
|
|
—
|
|
Balance as of September 30, 2017
|
10,437,179
|
|
|
12,106,348
|
|
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted average limited partner common units - basic
|
22,543,527
|
|
|
11,229,805
|
|
|
22,093,578
|
|
|
11,189,987
|
|
Dilutive effect of unvested phantom units
|
—
|
|
|
—
|
|
|
274,854
|
|
|
316,843
|
|
Weighted average limited partner common units - dilutive
|
22,543,527
|
|
|
11,229,805
|
|
|
22,368,432
|
|
|
11,506,830
|
|
|
Three Months Ended September 30, 2016
|
||||||||||||||
|
Common
|
|
Subordinated
|
|
IDR
|
|
Total
|
||||||||
|
(in thousands, except for per unit amounts)
|
||||||||||||||
Net loss
|
|
|
|
|
|
|
$
|
(8,794
|
)
|
||||||
Distributions declared
|
$
|
6,324
|
|
|
$
|
5,665
|
|
|
$
|
488
|
|
|
$
|
12,477
|
|
Assumed net loss from operations after distributions
|
(11,217
|
)
|
|
(10,054
|
)
|
|
—
|
|
|
(21,271
|
)
|
||||
Assumed net loss to be allocated
|
$
|
(4,893
|
)
|
|
$
|
(4,389
|
)
|
|
$
|
488
|
|
|
$
|
(8,794
|
)
|
Loss per unit - basic
|
$
|
(0.44
|
)
|
|
$
|
(0.44
|
)
|
|
|
|
|
||||
Loss per unit - diluted
|
$
|
(0.44
|
)
|
|
$
|
(0.44
|
)
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||
|
Common
|
|
Subordinated
|
|
IDR
|
|
Total
|
||||||||
|
(in thousands, except for per unit amounts)
|
||||||||||||||
Net income
|
|
|
|
|
|
|
$
|
11,282
|
|
||||||
Distributions declared
|
$
|
18,455
|
|
|
$
|
16,542
|
|
|
$
|
1,144
|
|
|
$
|
36,141
|
|
Assumed net income from operations after distributions
|
(13,119
|
)
|
|
(11,740
|
)
|
|
—
|
|
|
(24,859
|
)
|
||||
Assumed net income to be allocated
|
$
|
5,336
|
|
|
$
|
4,802
|
|
|
$
|
1,144
|
|
|
$
|
11,282
|
|
Income per unit - basic
|
$
|
0.48
|
|
|
$
|
0.48
|
|
|
|
|
|
||||
Income per unit - diluted
|
$
|
0.46
|
|
|
$
|
0.48
|
|
|
|
|
|
For the Quarter Ended
|
|
Payment Date
|
|
Per Unit
|
|
Common
|
|
Subordinated
|
|
IDR
|
|
DER
|
|
Total
|
||||||||||
December 31, 2016
|
|
February 14, 2017
|
|
$0.5775
|
|
$
|
6,544
|
|
|
$
|
5,817
|
|
|
$
|
597
|
|
|
$
|
802
|
|
|
$
|
13,760
|
|
March 31, 2017
|
|
May 15, 2017
|
|
$0.5925
|
|
$
|
13,357
|
|
|
$
|
—
|
|
|
$
|
742
|
|
|
$
|
—
|
|
|
$
|
14,099
|
|
June 30, 2017
|
|
August 11, 2017
|
|
$0.6075
|
|
$
|
13,696
|
|
|
$
|
—
|
|
|
$
|
854
|
|
|
$
|
—
|
|
|
$
|
14,550
|
|
September 30, 2017
(1)
|
|
November 13, 2017
|
|
$0.6225
|
|
$
|
14,039
|
|
|
$
|
—
|
|
|
$
|
1,024
|
|
|
$
|
—
|
|
|
$
|
15,063
|
|
(1)
|
On October 26, 2017, the Partnership declared a cash distribution of
$0.6225
per unit to be paid to unitholders of record on November 6, 2017.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
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.
|
•
|
EBITDA and adjusted EBITDA do not include interest expense. Because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and impacts our ability to generate profits and cash flows. Therefore, any measure that excludes interest expense may have material limitations;
|
•
|
EBITDA and adjusted EBITDA do not include depreciation and amortization expense. Because capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate profits, any measure that excludes depreciation and amortization expense may have material limitations;
|
•
|
EBITDA and adjusted EBITDA do not include provision for income taxes. Because the payment of income taxes is a necessary element of our costs, any measure that excludes income tax expense may have material limitations;
|
•
|
EBITDA and adjusted EBITDA do not reflect capital expenditures or future requirements for capital expenditures or contractual commitments;
|
•
|
EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and
|
•
|
EBITDA and adjusted EBITDA do not allow us to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss.
|
•
|
The economic results of our operations;
|
•
|
The market value of our inventory and natural gas transportation contracts for financial reporting to our lenders, as well as for borrowing base purposes; and
|
•
|
Repeatable operating performance that is not distorted by non-recurring items or market volatility.
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|||||||||||||
Net sales
|
$
|
491,393
|
|
|
$
|
422,779
|
|
|
$
|
68,614
|
|
|
16
|
%
|
Cost of products sold (exclusive of depreciation and amortization)
|
456,656
|
|
|
383,211
|
|
|
73,445
|
|
|
19
|
%
|
|||
Operating expenses
|
16,891
|
|
|
15,725
|
|
|
1,166
|
|
|
7
|
%
|
|||
Selling, general and administrative
|
17,559
|
|
|
19,735
|
|
|
(2,176
|
)
|
|
(11
|
)%
|
|||
Depreciation and amortization
|
6,655
|
|
|
5,329
|
|
|
1,326
|
|
|
25
|
%
|
|||
Total operating costs and expenses
|
497,761
|
|
|
424,000
|
|
|
73,761
|
|
|
17
|
%
|
|||
Operating income (loss)
|
(6,368
|
)
|
|
(1,221
|
)
|
|
(5,147
|
)
|
|
422
|
%
|
|||
Other income
|
—
|
|
|
(19
|
)
|
|
19
|
|
|
(100
|
)%
|
|||
Interest income
|
75
|
|
|
40
|
|
|
35
|
|
|
88
|
%
|
|||
Interest expense
|
(7,170
|
)
|
|
(6,685
|
)
|
|
(485
|
)
|
|
7
|
%
|
|||
Loss before income taxes
|
(13,463
|
)
|
|
(7,885
|
)
|
|
(5,578
|
)
|
|
71
|
%
|
|||
Income tax (provision) benefit
|
(853
|
)
|
|
(909
|
)
|
|
56
|
|
|
(6
|
)%
|
|||
Net loss
|
$
|
(14,316
|
)
|
|
$
|
(8,794
|
)
|
|
$
|
(5,522
|
)
|
|
63
|
%
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|||||||||||||
Net sales
|
$
|
1,922,826
|
|
|
$
|
1,623,173
|
|
|
$
|
299,653
|
|
|
18
|
%
|
Cost of products sold (exclusive of depreciation and amortization)
|
1,720,860
|
|
|
1,463,938
|
|
|
256,922
|
|
|
18
|
%
|
|||
Operating expenses
|
50,624
|
|
|
49,078
|
|
|
1,546
|
|
|
3
|
%
|
|||
Selling, general and administrative
|
63,472
|
|
|
62,099
|
|
|
1,373
|
|
|
2
|
%
|
|||
Depreciation and amortization
|
19,537
|
|
|
16,001
|
|
|
3,536
|
|
|
22
|
%
|
|||
Total operating costs and expenses
|
1,854,493
|
|
|
1,591,116
|
|
|
263,377
|
|
|
17
|
%
|
|||
Operating income
|
68,333
|
|
|
32,057
|
|
|
36,276
|
|
|
113
|
%
|
|||
Other income (expense)
|
183
|
|
|
(114
|
)
|
|
297
|
|
|
(261
|
)%
|
|||
Interest income
|
247
|
|
|
379
|
|
|
(132
|
)
|
|
(35
|
)%
|
|||
Interest expense
|
(22,604
|
)
|
|
(20,179
|
)
|
|
(2,425
|
)
|
|
12
|
%
|
|||
Income before income taxes
|
46,159
|
|
|
12,143
|
|
|
34,016
|
|
|
280
|
%
|
|||
Income tax (provision) benefit
|
(3,768
|
)
|
|
(861
|
)
|
|
(2,907
|
)
|
|
338
|
%
|
|||
Net income
|
$
|
42,391
|
|
|
$
|
11,282
|
|
|
$
|
31,109
|
|
|
276
|
%
|
(1)
|
Inventory is valued at the lower of cost or net realizable value. The fair value of the derivatives we use to economically hedge our inventory declines or appreciates in value as the value of the underlying inventory appreciates or declines, which creates unrealized hedging (losses) gains with respect to the derivatives that are included in net income.
|
(2)
|
The unrealized hedging gain (loss) on prepaid forward contract derivatives represents our estimate of the change in fair value of the prepaid forward contracts which are not recorded in net income until the forward contract is settled in the future (i.e., when the commodity is delivered to the customer). As these contracts are prepaid, they do not qualify as derivatives and changes in the fair value are therefore not included in net income. The fair value of the derivatives we use to economically hedge our prepaid forward contracts declines or appreciates in value as the value of the underlying prepaid forward contract appreciates or declines, which creates unrealized hedging gains (losses) that are included in net income.
|
(3)
|
The unrealized (gain) loss on natural gas transportation contracts represents our estimate of the change in fair value of the natural gas transportation contracts which are not recorded in net income until the transportation is utilized in the future (i.e., when natural gas is delivered to the customer), as these contracts are executory contracts that do not qualify as derivatives. As the fair value of the natural gas transportation contracts decline or appreciate, the offsetting physical or financial derivative will also appreciate or decline creating unmatched unrealized hedging losses (gains) in net income.
|
(4)
|
For a discussion of the non-GAAP financial measures EBITDA, adjusted EBITDA and adjusted gross margin, see “How Management Evaluates Our Results of Operations.”
|
(5)
|
As reported by the NOAA/National Weather Service for the New England oil home heating region over the period of 1981-2011.
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(in thousands, except adjusted unit gross margin)
|
|||||||||||||
Volumes:
|
|
|
|
|
|
|
|
|||||||
Refined products (gallons)
|
251,496
|
|
|
237,510
|
|
|
13,986
|
|
|
6
|
%
|
|||
Natural gas (MMBtus)
|
10,963
|
|
|
11,810
|
|
|
(847
|
)
|
|
(7
|
)%
|
|||
Materials handling (short tons)
|
603
|
|
|
764
|
|
|
(161
|
)
|
|
(21
|
)%
|
|||
Materials handling (gallons)
|
74,214
|
|
|
78,330
|
|
|
(4,116
|
)
|
|
(5
|
)%
|
|||
Net Sales:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
425,492
|
|
|
$
|
350,528
|
|
|
$
|
74,964
|
|
|
21
|
%
|
Natural gas
|
49,694
|
|
|
55,868
|
|
|
(6,174
|
)
|
|
(11
|
)%
|
|||
Materials handling
|
11,395
|
|
|
11,304
|
|
|
91
|
|
|
1
|
%
|
|||
Other operations
|
4,812
|
|
|
5,079
|
|
|
(267
|
)
|
|
(5
|
)%
|
|||
Total net sales
|
$
|
491,393
|
|
|
$
|
422,779
|
|
|
$
|
68,614
|
|
|
16
|
%
|
Adjusted Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
32,014
|
|
|
$
|
38,693
|
|
|
$
|
(6,679
|
)
|
|
(17
|
)%
|
Natural gas
|
3,197
|
|
|
2,773
|
|
|
424
|
|
|
15
|
%
|
|||
Materials handling
|
11,395
|
|
|
11,305
|
|
|
90
|
|
|
1
|
%
|
|||
Other operations
|
1,897
|
|
|
1,985
|
|
|
(88
|
)
|
|
(4
|
)%
|
|||
Total adjusted gross margin
|
$
|
48,503
|
|
|
$
|
54,756
|
|
|
$
|
(6,253
|
)
|
|
(11
|
)%
|
Adjusted Unit Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
0.127
|
|
|
$
|
0.163
|
|
|
$
|
(0.036
|
)
|
|
(22
|
)%
|
Natural gas
|
$
|
0.292
|
|
|
$
|
0.235
|
|
|
$
|
0.057
|
|
|
24
|
%
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(in thousands, except adjusted unit gross margin)
|
|||||||||||||
Volumes:
|
|
|
|
|
|
|
|
|||||||
Refined products (gallons)
|
994,518
|
|
|
978,264
|
|
|
16,254
|
|
|
2
|
%
|
|||
Natural gas (MMBtus)
|
44,677
|
|
|
44,799
|
|
|
(122
|
)
|
|
0
|
%
|
|||
Materials handling (short tons)
|
1,879
|
|
|
2,016
|
|
|
(137
|
)
|
|
(7
|
)%
|
|||
Materials handling (gallons)
|
301,896
|
|
|
234,738
|
|
|
67,158
|
|
|
29
|
%
|
|||
Net Sales:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
1,638,066
|
|
|
$
|
1,331,197
|
|
|
$
|
306,869
|
|
|
23
|
%
|
Natural gas
|
235,068
|
|
|
240,256
|
|
|
(5,188
|
)
|
|
(2
|
)%
|
|||
Materials handling
|
34,118
|
|
|
35,848
|
|
|
(1,730
|
)
|
|
(5
|
)%
|
|||
Other operations
|
15,574
|
|
|
15,872
|
|
|
(298
|
)
|
|
(2
|
)%
|
|||
Total net sales
|
$
|
1,922,826
|
|
|
$
|
1,623,173
|
|
|
$
|
299,653
|
|
|
18
|
%
|
Adjusted Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
95,307
|
|
|
$
|
104,070
|
|
|
$
|
(8,763
|
)
|
|
(8
|
)%
|
Natural gas
|
44,355
|
|
|
43,734
|
|
|
621
|
|
|
1
|
%
|
|||
Materials handling
|
34,118
|
|
|
35,826
|
|
|
(1,708
|
)
|
|
(5
|
)%
|
|||
Other operations
|
5,800
|
|
|
6,257
|
|
|
(457
|
)
|
|
(7
|
)%
|
|||
Total adjusted gross margin
|
$
|
179,580
|
|
|
$
|
189,887
|
|
|
$
|
(10,307
|
)
|
|
(5
|
)%
|
Adjusted Unit Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
0.096
|
|
|
$
|
0.106
|
|
|
$
|
(0.010
|
)
|
|
(9
|
)%
|
Natural gas
|
$
|
0.993
|
|
|
$
|
0.976
|
|
|
$
|
0.017
|
|
|
2
|
%
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||
|
(in thousands)
|
|
|
|
|
||||||||
Operating expenses
|
$
|
16,891
|
|
|
$
|
15,725
|
|
|
$
|
1,166
|
|
|
7%
|
Selling, general and administrative
|
$
|
17,559
|
|
|
$
|
19,735
|
|
|
$
|
(2,176
|
)
|
|
(11)%
|
Depreciation and amortization
|
$
|
6,655
|
|
|
$
|
5,329
|
|
|
$
|
1,326
|
|
|
25%
|
Interest expense, net
|
$
|
7,095
|
|
|
$
|
6,645
|
|
|
$
|
450
|
|
|
7%
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||
|
(in thousands)
|
|
|
|
|
||||||||
Operating expenses
|
$
|
50,624
|
|
|
$
|
49,078
|
|
|
$
|
1,546
|
|
|
3%
|
Selling, general and administrative
|
$
|
63,472
|
|
|
$
|
62,099
|
|
|
$
|
1,373
|
|
|
2%
|
Depreciation and amortization
|
$
|
19,537
|
|
|
$
|
16,001
|
|
|
$
|
3,536
|
|
|
22%
|
Interest expense, net
|
$
|
22,357
|
|
|
$
|
19,800
|
|
|
$
|
2,557
|
|
|
13%
|
•
|
U.S. dollar revolving working capital facility of up to $950.0 million, subject to the Partnership's borrowing base limits, to be used for working capital loans and letters of credit;
|
•
|
Multicurrency revolving working capital facility of up to $100.0 million, subject to the Partnership's borrowing base limits, to be used by Kildair for working capital loans and letters of credit;
|
•
|
Revolving acquisition facility of up to $550.0 million to be used for loans and letters of credit to fund capital expenditures and acquisitions and other general corporate purposes related to the Partnership’s current businesses; and
|
•
|
Subject to certain conditions, the U.S. dollar revolving working capital facilities may be increased by $250.0 million and the multicurrency revolving working capital facility may be increased by $220.0 million, subject to a maximum increase for both facilities of $270.0 million in the aggregate. Additionally, subject to certain conditions, the revolving acquisition facility may be increased by $200.0 million.
|
|
Capital Expenditures
|
||||||||||
|
Expansion
|
|
Maintenance
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Nine Months Ended September 30,
|
|
|
|
|
|
|
|||||
2017
(1)
|
$
|
23,422
|
|
|
$
|
7,884
|
|
|
$
|
31,306
|
|
2016
|
$
|
5,083
|
|
|
$
|
6,353
|
|
|
$
|
11,436
|
|
(1)
|
Excludes approximately $8.5 million of assets acquired in 2017 that were previously leased by the Partnership.
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
$
|
126,891
|
|
|
$
|
107,095
|
|
Net cash used in investing activities
|
$
|
(111,047
|
)
|
|
$
|
(40,354
|
)
|
Net cash used in financing activities
|
$
|
(15,453
|
)
|
|
$
|
(94,263
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Product Group
|
|
Primary Financial Hedging Instrument
|
Gasolines
|
|
NYMEX RBOB futures contract
|
Distillates
|
|
NYMEX Ultra Low Sulfur Diesel futures contract
|
Residual Fuel Oils
|
|
New York Harbor 1% Sulfur Residual Fuel Oil swaps contract
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
(in thousands)
|
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Refined products contracts
|
$
|
(17,281
|
)
|
|
$
|
2,957
|
|
|
$
|
27,637
|
|
|
$
|
(2,176
|
)
|
Natural gas contracts
|
(908
|
)
|
|
(3,370
|
)
|
|
13,850
|
|
|
16,472
|
|
||||
Total
|
$
|
(18,189
|
)
|
|
$
|
(413
|
)
|
|
$
|
41,487
|
|
|
$
|
14,296
|
|
|
As of September 30, 2017
|
||||||||||||||
|
Fair Value
Measurement |
|
Quoted
Prices in Active Markets Level 1 |
|
Significant
Other Observable Inputs Level 2 |
|
Significant
Unobservable Inputs Level 3 |
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
62,367
|
|
|
$
|
—
|
|
|
$
|
62,367
|
|
|
$
|
—
|
|
Commodity swaps and options
|
173
|
|
|
—
|
|
|
173
|
|
|
—
|
|
||||
Commodity derivatives
|
62,540
|
|
|
—
|
|
|
62,540
|
|
|
—
|
|
||||
Interest rate swaps
|
1,825
|
|
|
—
|
|
|
1,825
|
|
|
—
|
|
||||
Total
|
$
|
64,365
|
|
|
$
|
—
|
|
|
$
|
64,365
|
|
|
$
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
70,692
|
|
|
$
|
—
|
|
|
$
|
70,692
|
|
|
$
|
—
|
|
Commodity swaps and options
|
112
|
|
|
—
|
|
|
112
|
|
|
—
|
|
||||
Commodity derivatives
|
70,804
|
|
|
—
|
|
|
70,804
|
|
|
—
|
|
||||
Interest rate swaps
|
235
|
|
|
—
|
|
|
235
|
|
|
—
|
|
||||
Other
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
71,041
|
|
|
$
|
—
|
|
|
$
|
71,041
|
|
|
$
|
—
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
No.
|
|
Description
|
2.1* ***
|
|
|
|
|
|
2.2***
|
|
|
|
|
|
2.3***
|
|
|
|
|
|
2.4***
|
|
|
|
|
|
2.5***
|
|
|
|
|
|
2.6***
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation
|
*
|
Filed herewith.
|
**
|
Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K.
|
***
|
Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules to the Asset Purchase Agreements have been omitted. The registrant hereby agrees to furnish supplementally to the SEC, upon its request, any or all omitted schedules.
|
|
SPRAGUE RESOURCES LP
|
|
|
|
|
|
By:
|
Sprague Resources GP LLC,
|
|
|
Its General Partner
|
|
|
|
Date: November 7, 2017
|
|
/s/ Gary A. Rinaldi
|
|
|
Gary A. Rinaldi
Senior Vice President, Chief Operating Officer and Chief Financial Officer (on behalf of the registrant, and in his capacity as Principal Financial Officer)
|
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