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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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45-2637964
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Units Representing Limited Partner Interests
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SRLP
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New York Stock Exchange
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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•
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Increase our business with our existing assets and customers. We will make investments in our existing asset base to handle additional products and provide new services to customers. We also intend to win additional business by better serving customers' need for certainty of supply, reduced commodity price risk and high quality customer service.
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•
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Acquire additional terminals and marketing and distribution businesses that are accretive. We intend to grow our asset and customer base by acquiring additional marine and inland terminals (both refined products and materials handling) within and adjacent to the geographic markets we currently serve. We also intend to acquire additional refined products and natural gas marketing businesses that can leverage our existing investment in our logistics capabilities and customer service systems to further increase our cash flow.
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•
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Limit our exposure to commodity price risk and volatility. We take title to the products we sell in our refined products and natural gas segments, while our materials handling business does not take title to products and is operated predominantly under fixed-fee, multi-year contracts. We will continue to manage our exposure to commodity prices and seek to protect our sales margins by maintaining a balanced position in our purchases and sales through the use of derivatives and forward contracts. Our hedging activities are bounded by specific limits established by the board of directors of our General Partner, which are monitored and reported to senior management on a daily basis by our risk group.
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•
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Maintain our operational excellence. We intend to maintain our long history of safe, cost-effective operations and environmental stewardship by investing in the maintenance of our assets and providing training programs for our personnel. We will work diligently to meet environmental regulations and we will continue to enhance our safety programs as our business grows and operating conditions change.
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•
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Requiring capital expenditures to comply with environmental control requirements;
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•
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Requiring remedial action to mitigate releases of hydrocarbons, hazardous substances or wastes caused by our operations or attributable to former operators; and,
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•
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Curtailing the operations of facilities deemed in non-compliance with environmental laws and regulations.
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•
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Competition from other companies that sell refined products, natural gas and/or renewable fuels in the Northeast United States and eastern Canada;
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•
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Competition from other companies in the materials handling business;
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•
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Demand for refined products, natural gas and our materials handling services in the markets we serve;
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•
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Absolute price levels, and volatility of prices, of refined products and natural gas in both the spot and futures markets;
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•
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Seasonal variation in temperature, which affects demand for natural gas and refined products such as heating oil and residual fuel oil (to the extent that it is used for space heating); and
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•
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Prevailing economic and regulatory conditions.
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•
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The level of maintenance capital expenditures we make;
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•
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The level of operating and general and administrative expenses, including reimbursements to our General Partner and certain of its affiliates for services provided to us;
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•
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Fluctuations or changes in federal, state, local and foreign tax rates, including Canadian income and withholding tax rates;
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•
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The restrictions contained in our Credit Agreement (as defined herein), including borrowing base limitations and limitations on distributions;
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•
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Our debt service requirements;
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•
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The cost of acquisitions we make, if any;
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•
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Fluctuations in our working capital needs;
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•
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Our ability to access capital markets and to borrow under our Credit Agreement to make distributions to our unitholders; and
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•
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The amount of cash reserves established by our General Partner, if any.
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•
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Recession or other adverse economic conditions, including but not limited to, public health crises that reduce economic activity, affect the demand for travel (public and private), as well as impact costs of operation and availability of supply (including the recent coronavirus COVID-19 outbreak);
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•
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Unseasonably warm temperatures which would negatively impact demand for natural gas and refined products;
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•
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High prices caused by an increase in the market price of refined products or natural gas, higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline or other refined products or natural gas;
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•
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Increased conservation, technological advances and the availability of alternative energy, whether as a result of industry changes, governmental or regulatory actions or otherwise. For example, energy efficiency measures, including the installation of improved insulation and the development of more efficient furnaces and other heating devices and increased use of fuel efficient motor vehicles, have adversely affected demand for some of our products, particularly home heating oil and residual fuel oil; and,
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•
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Conversion from consumption of heating oil or residual fuel oil to natural gas as such switching and conversions could reduce our sales of heating oil and residual fuel oil.
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•
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Make cash distributions;
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•
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Incur indebtedness;
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•
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Create liens;
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•
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Make investments;
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•
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Engage in transactions with affiliates;
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•
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Make any material change to the nature of our business;
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•
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Dispose of assets; and
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•
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Merge with another company or sell all or substantially all of our assets.
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•
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Our ability to obtain additional financing, if necessary, for working capital, capital expenditures or other purposes may be impaired, or such financing may not be available on favorable terms;
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•
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Our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make required debt service payments;
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•
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We may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
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•
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Our flexibility in responding to changing business and economic conditions may be limited.
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•
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Mistaken assumptions about volumes, cash flows, net sales and costs, including synergies;
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•
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An inability to successfully integrate the businesses we acquire;
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•
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An inability to hire, train or retain qualified personnel to manage and operate our newly acquired assets;
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•
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The assumption of unknown liabilities;
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•
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Limitations on rights to indemnity from the seller;
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•
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Mistaken assumptions about the overall costs of equity or debt used to finance an acquisition;
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•
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The diversion of management’s and employees’ attention from other business concerns;
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•
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Unforeseen difficulties operating in new product areas or new geographic areas; and
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•
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Customer or key employee losses at the acquired businesses.
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•
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Damage to storage facilities and other assets caused by tornadoes, hurricanes, floods, earthquakes, fires, explosions, extreme weather conditions and other natural disasters;
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•
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Acts or threats of terrorism;
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•
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Unanticipated equipment and mechanical failures at our facilities;
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•
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Disruptions in supply infrastructure or logistics and other events beyond our control;
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•
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Operator error; and
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•
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Environmental pollution or other environmental issues.
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•
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Our General Partner is allowed to take into account the interests of parties other than us, such as its affiliates, including Axel Johnson, in resolving conflicts of interest, which has the effect of limiting its duty to our unitholders.
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•
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Affiliates of our General Partner, including Axel Johnson and Sprague Holdings, may engage in competition with us.
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•
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Neither our partnership agreement nor any other agreement requires Axel Johnson or Sprague Holdings to pursue a business strategy that favors us. Axel Johnson’s directors and officers have a fiduciary duty to make decisions in the best interests of the stockholders of Axel Johnson.
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•
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Some officers of our General Partner who provide services to us devote time to affiliates of our General Partner.
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•
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Our partnership agreement limits the liability of and reduces the duties owed by our General Partner to us and our common unitholders, and also restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty.
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•
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Except in limited circumstances, our General Partner has the power and authority to conduct our business without unitholder approval.
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•
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Our General Partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the creation, reductions or increases of cash reserves, each of which can affect the amount of cash that is available for distribution to our unitholders and to the holders of the incentive distribution rights.
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•
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Our General Partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces distributable cash flow. Such determination can affect the amount of distributable cash flow available to the holders of our common units and to the holders of the incentive distribution rights. Our partnership agreement does not limit the amount of maintenance capital expenditures that our General Partner can cause us to make.
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•
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Our partnership agreement and the services agreement allow our General Partner to determine, in good faith, the expenses that are allocable to us. Our partnership agreement and the services agreement do not limit the amount of expenses for which our General Partner and its affiliates may be reimbursed. These expenses include salary, incentive compensation and other amounts paid to persons, including affiliates of our General Partner, who perform services for us or on our behalf.
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•
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Our General Partner may cause us to borrow funds in order to permit the payment of cash distributions, including incentive distributions.
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•
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Our partnership agreement permits us to distribute up to $25.0 million as distributable cash flow, even if it is generated from sources that would otherwise constitute capital surplus, and this cash may be used to fund the incentive distributions.
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•
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Our partnership agreement does not restrict our General Partner from entering into additional contractual arrangements with any of its affiliates on our behalf.
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•
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Our General Partner intends to limit its liability regarding our contractual and other obligations.
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•
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Our General Partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if it and its affiliates own more than 80% of all outstanding common units.
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•
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Our General Partner controls the enforcement of obligations owed to us by our General Partner and its affiliates.
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•
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Our General Partner decides whether to retain separate counsel, accountants or others to perform services for us.
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•
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Sprague Holdings, or any transferee holding a majority of the incentive distribution rights, may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to the incentive distribution rights without the approval of the conflicts committee of the board of directors of our General Partner or unitholders. This election may result in lower distributions to common unitholders in certain situations.
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•
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How to allocate business opportunities among us and its other affiliates;
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•
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Whether to exercise its limited call right;
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•
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How to exercise its voting rights with respect to any units it owns;
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•
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Whether to exercise its registration rights with respect to any units it owns; and
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•
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Whether to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
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•
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Provides that whenever our General Partner makes a determination or takes, or declines to take, any other action in its capacity as our General Partner, our General Partner is required to make such determination, or take or decline to take such other action, in good faith and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law or any other law, rule or regulation, or at equity;
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•
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Provides that a determination, other action or failure to act by our General Partner, the board of directors of our General Partner or any committee thereof (including the conflicts committee) will be deemed to be in good faith unless our General Partner, the board of directors of our General Partner or any committee thereof believed such determination, other action or failure to act was adverse to the interests of the partnership;
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•
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Provides that our General Partner will not have any liability to us or our unitholders for decisions made in its capacity as a General Partner so long as it acted in good faith;
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•
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Provides that our General Partner and its officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our General Partner or its officers and directors, as the case may be, acted in bad faith or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
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•
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Provides that our General Partner will not be in breach of its obligations under the partnership agreement or its duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is:
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(1)
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Approved by the conflicts committee of the board of directors of our General Partner, although our General Partner is not obligated to seek such approval; or
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(2)
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Approved by the vote of a majority of the outstanding common units, excluding any common units owned by our General Partner and its affiliates.
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•
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Our unitholders’ proportionate ownership interest in us will decrease;
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•
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The amount of distributable cash flow on each unit may decrease;
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•
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The ratio of taxable income to distributions may increase;
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•
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The relative voting strength of each previously outstanding unit may be diminished; and
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•
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The market price of our common units may decline.
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•
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We were conducting business in a state but had not complied with that particular state’s partnership statute; or
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•
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Your right to act with other unitholders to remove or replace the general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitutes “control” of our business.
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Liquids Storage Terminals
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Number of
Storage Tanks
|
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Storage Tank
Capacity (Bbls)
|
|
Principal Products and Materials
|
||
**
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Sorel-Tracy Quebec, Canada
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27
|
|
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3,282,600
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refined products; asphalt, crude oil
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**
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Newington, NH: River Road
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29
|
|
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1,157,325
|
|
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refined products; asphalt; tallow
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**
|
Searsport, ME
|
17
|
|
|
1,140,700
|
|
|
refined products; caustic soda; asphalt
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*
|
Bridgeport, CT
|
11
|
|
|
1,120,600
|
|
|
refined products
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*
|
Albany, NY
|
9
|
|
|
1,103,600
|
|
|
refined products
|
**
|
South Portland, ME
|
24
|
|
|
910,484
|
|
|
refined products; asphalt; clay slurry
|
*
|
East Providence, RI
|
9
|
|
|
970,436
|
|
|
refined products
|
**
|
Bronx, NY
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18
|
|
|
907,500
|
|
|
refined products; asphalt
|
**
|
Newington, NH: Avery Lane
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12
|
|
|
722,000
|
|
|
refined products, asphalt
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*
|
Quincy, MA
|
8
|
|
|
574,000
|
|
|
refined products
|
*
|
New Haven, CT (1)
|
9
|
|
|
517,505
|
|
|
refined products
|
**
|
Providence, RI
|
4
|
|
|
484,000
|
|
|
refined products; asphalt
|
***
|
Everett, MA
|
4
|
|
|
317,600
|
|
|
asphalt
|
*
|
Quincy, MA: TRT (2)
|
4
|
|
|
304,200
|
|
|
refined products
|
*
|
Springfield, MA
|
10
|
|
|
268,200
|
|
|
refined products
|
***
|
Oswego, NY
|
3
|
|
|
209,800
|
|
|
asphalt
|
*
|
Lawrence, NY
|
8
|
|
|
148,000
|
|
|
refined products
|
*
|
Mount Vernon, NY
|
7
|
|
|
72,100
|
|
|
refined products
|
*
|
Stamford, CT
|
3
|
|
|
46,600
|
|
|
refined products
|
*
|
New Bedford, MA (3)
|
1
|
|
|
30,000
|
|
|
refined products
|
*
|
Inwood, NY
|
2
|
|
|
26,000
|
|
|
refined products
|
*
|
Washington, PA area - four locations
|
20
|
|
|
9,071
|
|
|
refined products
|
|
Total
|
239
|
|
|
14,322,321
|
|
|
|
|
Dry Storage Terminals
|
Number of Storage
Pads and Warehouses
|
|
Storage Capacity
(Square Feet)
|
|
Principal Products and Materials
|
|
**
|
Searsport, ME
|
2 warehouses;
|
|
90,000
|
|
|
break bulk; salt; petroleum coke;
|
|
|
15 pads
|
|
872,000
|
|
|
heavy lift
|
**
|
Newington, NH: River Road
|
3 pads
|
|
390,000
|
|
|
salt; gypsum
|
***
|
Portland, ME (4)
|
7 warehouses;
|
|
215,000
|
|
|
break bulk; dry bulk; coal;
|
|
|
3 pads
|
|
95,000
|
|
|
salt
|
**
|
South Portland, ME
|
3 pads
|
|
230,000
|
|
|
salt; coal
|
**
|
Providence, RI
|
1 pad
|
|
75,000
|
|
|
salt
|
|
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9 warehouses;
|
|
|
|
|
|
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Total
|
25 pads
|
|
1,967,000
|
|
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|
(1)
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These tanks are controlled via a storage and throughput agreement with an initial term through July 24, 2020.
|
(2)
|
Operating assets and real estate are leased from an unaffiliated third party through April 30, 2025.
|
(3)
|
Operating assets and real estate are leased from a subsidiary of Sprague Holdings through October 30, 2023.
|
(4)
|
One storage warehouse is leased from an unaffiliated third party and the balance of the property is owned by us.
|
•
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Our cash distribution policy may be affected by restrictions on distributions under our Credit Agreement as well as by restrictions in future debt agreements that we enter into. Specifically, our Credit Agreement contains financial tests and covenants that we must satisfy. Should we be unable to satisfy these restrictions or if we are otherwise in default under our Credit Agreement, we may be prohibited from making cash distributions notwithstanding our stated cash distribution policy.
|
•
|
Our General Partner has the authority to establish cash reserves for the prudent conduct of our business and for future cash distributions to our unitholders, and the establishment of or increase in those reserves could result in a reduction in cash distributions from levels we currently anticipate pursuant to our stated cash distribution policy.
|
•
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Under Section 17-607 of the Delaware Act we may not make a distribution if the distribution would cause our liabilities to exceed the fair value of our assets.
|
•
|
We may lack sufficient cash to make distributions to our unitholders due to a number of operational, commercial and other factors or increases in our operating costs, general and administrative expenses, principal and interest payments on our outstanding debt and working capital requirements.
|
•
|
If we make distributions out of capital surplus, as opposed to distributable cash flow, any such distributions would constitute a return of capital and would result in a reduction in the minimum quarterly distribution and the target distribution levels. We do not anticipate that we will make any distributions from capital surplus.
|
•
|
Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute cash to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of future indebtedness, applicable state partnership, limited liability company and corporate laws and other laws and regulations.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands, except unit data and operating data)
|
||||||||||||||||||
Statements of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
|
$
|
2,389,998
|
|
|
$
|
3,481,914
|
|
Cost of products sold (exclusive of depreciation and amortization)
|
3,228,003
|
|
|
3,445,385
|
|
|
2,602,788
|
|
|
2,179,089
|
|
|
3,188,924
|
|
|||||
Operating expenses
|
84,924
|
|
|
88,659
|
|
|
72,284
|
|
|
65,882
|
|
|
71,468
|
|
|||||
Selling, general and administrative
|
78,135
|
|
|
80,799
|
|
|
87,582
|
|
|
84,257
|
|
|
94,403
|
|
|||||
Depreciation and amortization
|
34,015
|
|
|
33,378
|
|
|
28,125
|
|
|
21,237
|
|
|
20,342
|
|
|||||
Total operating costs and expenses
|
3,425,077
|
|
|
3,648,221
|
|
|
2,790,779
|
|
|
2,350,465
|
|
|
3,375,137
|
|
|||||
Operating income
|
77,333
|
|
|
122,912
|
|
|
64,217
|
|
|
39,533
|
|
|
106,777
|
|
|||||
Other (expense) income
|
(378
|
)
|
|
293
|
|
|
108
|
|
|
(114
|
)
|
|
298
|
|
|||||
Interest income
|
555
|
|
|
577
|
|
|
339
|
|
|
388
|
|
|
456
|
|
|||||
Interest expense
|
(42,944
|
)
|
|
(38,931
|
)
|
|
(31,345
|
)
|
|
(27,533
|
)
|
|
(27,367
|
)
|
|||||
Income before income taxes
|
34,566
|
|
|
84,851
|
|
|
33,319
|
|
|
12,274
|
|
|
80,164
|
|
|||||
Income tax provision (1)
|
(3,310
|
)
|
|
(5,032
|
)
|
|
(3,822
|
)
|
|
(2,108
|
)
|
|
(1,816
|
)
|
|||||
Net income
|
$
|
31,256
|
|
|
$
|
79,819
|
|
|
$
|
29,497
|
|
|
$
|
10,166
|
|
|
$
|
78,348
|
|
Incentive distributions declared
|
(6,163
|
)
|
|
(7,879
|
)
|
|
(3,993
|
)
|
|
(1,742
|
)
|
|
(321
|
)
|
|||||
Limited partners’ interest in net income
|
$
|
25,093
|
|
|
$
|
71,940
|
|
|
$
|
25,504
|
|
|
$
|
8,424
|
|
|
$
|
78,027
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common—basic
|
$
|
1.10
|
|
|
$
|
3.17
|
|
|
$
|
1.15
|
|
|
$
|
0.40
|
|
|
$
|
3.71
|
|
Common—diluted
|
$
|
1.10
|
|
|
$
|
3.16
|
|
|
$
|
1.13
|
|
|
$
|
0.38
|
|
|
$
|
3.65
|
|
Weighted-average units used to compute net income per limited partner unit:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common—basic
|
22,736,916
|
|
|
22,728,218
|
|
|
22,208,964
|
|
|
11,202,427
|
|
|
10,975,941
|
|
|||||
Common—diluted
|
22,770,883
|
|
|
22,737,404
|
|
|
22,474,872
|
|
|
11,560,617
|
|
|
11,141,333
|
|
|||||
Subordinated—basic and diluted
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
10,071,970
|
|
|
10,071,970
|
|
|||||
Distributions declared per unit
|
$
|
2.67
|
|
|
$
|
2.66
|
|
|
$
|
2.46
|
|
|
$
|
2.22
|
|
|
$
|
1.98
|
|
Adjusted EBITDA (2)
|
$
|
105,551
|
|
|
$
|
102,005
|
|
|
$
|
109,230
|
|
|
$
|
110,197
|
|
|
$
|
113,348
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands, except operating data)
|
||||||||||||||||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
(65,365
|
)
|
|
$
|
158,979
|
|
|
$
|
57,042
|
|
|
$
|
131,744
|
|
|
$
|
287,613
|
|
Investing activities
|
(13,886
|
)
|
|
(16,855
|
)
|
|
(153,269
|
)
|
|
(44,897
|
)
|
|
(14,565
|
)
|
|||||
Financing activities
|
77,068
|
|
|
(141,315
|
)
|
|
100,286
|
|
|
(115,129
|
)
|
|
(245,965
|
)
|
|||||
Other Financial and Operating Data (unaudited):
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
$
|
14,292
|
|
|
$
|
17,249
|
|
|
$
|
46,955
|
|
|
$
|
15,986
|
|
|
$
|
14,899
|
|
Ten Year Average Heating Degree Days (3)
|
4,906
|
|
|
4,907
|
|
|
4,944
|
|
|
4,923
|
|
|
4,946
|
|
|||||
Heating Degree Days (3)
|
4,862
|
|
|
5,020
|
|
|
4,807
|
|
|
4,717
|
|
|
5,059
|
|
|||||
Variance from average heating degree days
|
(1
|
)%
|
|
2
|
%
|
|
(3
|
)%
|
|
(4
|
)%
|
|
2
|
%
|
|||||
Variance from prior period heating degree days
|
(3
|
)%
|
|
4
|
%
|
|
2
|
%
|
|
(7
|
)%
|
|
(4
|
)%
|
|||||
Total refined products volumes sold (barrels)
|
36,437
|
|
|
37,639
|
|
|
33,720
|
|
|
33,240
|
|
|
40,099
|
|
|||||
Variance from refined products volume from prior period
|
(3
|
)%
|
|
12
|
%
|
|
1
|
%
|
|
(17
|
)%
|
|
1
|
%
|
|||||
Total natural gas volumes sold (MMBtus)
|
62,266
|
|
|
60,385
|
|
|
61,883
|
|
|
61,732
|
|
|
56,894
|
|
|||||
Variance from natural gas volume from prior period
|
3
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|
9
|
%
|
|
5
|
%
|
|||||
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
5,386
|
|
|
$
|
7,530
|
|
|
$
|
6,815
|
|
|
$
|
2,682
|
|
|
$
|
30,974
|
|
Property, plant and equipment, net
|
348,039
|
|
|
349,846
|
|
|
350,059
|
|
|
251,101
|
|
|
250,909
|
|
|||||
Total assets
|
1,275,543
|
|
|
1,245,240
|
|
|
1,362,985
|
|
|
1,012,474
|
|
|
1,000,332
|
|
|||||
Total debt (including finance/capital lease obligations)
|
821,904
|
|
|
667,415
|
|
|
728,666
|
|
|
561,259
|
|
|
621,100
|
|
|||||
Total liabilities
|
1,181,761
|
|
|
1,108,264
|
|
|
1,231,151
|
|
|
887,037
|
|
|
842,847
|
|
|||||
Total unitholders’ equity
|
$
|
93,782
|
|
|
$
|
136,976
|
|
|
$
|
131,834
|
|
|
$
|
125,437
|
|
|
$
|
157,485
|
|
(1)
|
The Partnership is treated as a pass through entity for U.S. federal income tax purposes. For pass through entities, all income, expenses, gains, losses and tax credits generated flow through to their owners and, accordingly, do not result in a provision for income taxes in our financial statements. The Partnership’s Canadian entities are subject to Canadian income tax.
|
(2)
|
We define EBITDA as net income (loss) before interest, income taxes, depreciation and amortization. We define adjusted EBITDA as EBITDA adjusted for changes in unrealized gains (losses) with respect to refined products and natural gas inventory, prepaid forward contracts and natural gas transportation contracts, adjusted for changes in the fair value of contingent consideration, adjusted for the impact of acquisition related expenses, and adjusted for the impact of biofuel excise tax credits resulting from retroactive tax legislation changes that occurred in 2018. For a discussion of the non-GAAP financial measures EBITDA and adjusted EBITDA, please read “Non-GAAP Financial Measures” in Part II, Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
|
(3)
|
We use heating degree day amounts as reported by the NOAA Regional Climate Center. Prior to April 1, 2018, we reported degree day information utilizing the New England oil home heating region and for comparison purposes we used historical degree day information for the New England oil home heating region over the period of 1981-2010. Commencing April 1, 2018, we report degree day information for Boston and New York City (weighted equally) with a historical average for the same locations over the previous ten-year period. We made these changes to incorporate more recent average information and to better reflect the geographic locations of our customer base. All degree day amounts in this document have been revised to conform to this presentation.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net income
|
$
|
31,256
|
|
|
$
|
79,819
|
|
|
$
|
29,497
|
|
|
$
|
10,166
|
|
|
$
|
78,348
|
|
Add/(deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
42,389
|
|
|
38,354
|
|
|
31,006
|
|
|
27,145
|
|
|
26,911
|
|
|||||
Tax expense (benefit)
|
3,310
|
|
|
5,032
|
|
|
3,822
|
|
|
2,108
|
|
|
1,816
|
|
|||||
Depreciation and amortization
|
34,015
|
|
|
33,378
|
|
|
28,125
|
|
|
21,237
|
|
|
20,342
|
|
|||||
EBITDA
|
$
|
110,970
|
|
|
$
|
156,583
|
|
|
$
|
92,450
|
|
|
$
|
60,656
|
|
|
$
|
127,417
|
|
Add/(deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in unrealized gain (loss) on inventory (1)
|
12,814
|
|
|
(32,960
|
)
|
|
124
|
|
|
31,304
|
|
|
2,079
|
|
|||||
Change in unrealized value on prepaid forward contracts (2)
|
—
|
|
|
—
|
|
|
(1,076
|
)
|
|
(1,552
|
)
|
|
2,628
|
|
|||||
Change in unrealized value on natural gas transportation contracts (3)
|
(19,289
|
)
|
|
(19,114
|
)
|
|
10,441
|
|
|
18,612
|
|
|
(21,695
|
)
|
|||||
Other adjustments (4)
|
1,042
|
|
|
771
|
|
|
231
|
|
|
—
|
|
|
—
|
|
|||||
Biofuel excise tax credits (5)(6)
|
—
|
|
|
(4,022
|
)
|
|
4,022
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition related expenses (7)
|
14
|
|
|
747
|
|
|
3,038
|
|
|
1,177
|
|
|
2,919
|
|
|||||
Adjusted EBITDA
|
$
|
105,551
|
|
|
$
|
102,005
|
|
|
$
|
109,230
|
|
|
$
|
110,197
|
|
|
$
|
113,348
|
|
(1)
|
Inventory is valued at the lower of cost or net realizable value. The adjustment related to unrealized gain (loss) on inventory which is not included in net income (loss), represents the estimated difference between inventory valued at the lower of cost or net realizable value as compared to market values. 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 (loss).
|
(2)
|
Represents our estimate of the change in fair value of the prepaid forward contracts which are not recorded in net income (loss) 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 (loss). 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 in value.
|
(3)
|
Represents our estimate of the change in fair value of the natural gas transportation contracts which are not recorded in net income (loss) 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 (loss).
|
(4)
|
Represents the change in the fair value of the contingent consideration related to the 2017 Coen Energy acquisition and other expense.
|
(5)
|
On February 9, 2018, the U.S. federal government enacted legislation that reinstated an excise tax credit program available for certain of our biofuel blending activities. The program had expired on December 31, 2016 and was reinstated retroactively to January 1, 2017 through the end of 2017. With regard to this reinstatement, during the year 2018, we recorded excise tax credits of approximately $4.0 million that related to blending activities that occurred during the years ended December 31, 2017. We record the credit in the period the legislation was enacted as a reduction of cost of products sold (exclusive of depreciation and amortization) resulting in an increase in adjusted gross margin. This adjustment in the table above reflects the effect on our adjusted EBITDA had these credits been recorded in the period in which the blending activity took place.
|
(6)
|
On December 20, 2019, the U.S. federal government enacted legislation that reinstated an excise tax credit program available for certain of our biofuel blending activities retroactive to the beginning of 2018 and through 2022. During the year ended December 31, 2019, we recorded excise tax credits of approximately $4.4 million that related to
|
(7)
|
We incur expenses in connection with acquisitions and given the nature, variability of amounts, and the fact that these expenses would not have otherwise been incurred as part of our continuing operations, adjusted EBITDA excludes the impact of acquisition related expenses.
|
•
|
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.
|
•
|
New, stricter environmental laws and regulations are increasing the compliance cost of terminal operations, which could adversely affect our results of operations and financial condition. Our operations are subject to federal, state, local and foreign laws and regulations regulating product quality specifications, emissions in the air, discharges to land and water, and the generation, handling, treatment, and disposal of hazardous waste and other materials. The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment. Compliance with laws and regulations may increase our overall cost of business, including our capital cost to maintain and upgrade equipment and facilities.
|
•
|
Seasonality and weather conditions. Our financial results are impacted by seasonality in our businesses and are generally better during the winter months, primarily because a material part of our business consists of supplying heating oil, residual fuel oil and natural gas for space heating purposes during the winter. For example, over the 36-month period ended December 31, 2019, we generated an average of 73% of our total heating oil and residual fuel oil net sales during the months of November through March in the Northeast United States. In addition, weather conditions, particularly during these five months, have a significant impact on the demand for our products. Warmer-than-normal temperatures during these months in our areas of operations can decrease the total volume of heating oil, residual fuel oil and natural gas we sell and the adjusted gross margins realized on those sales, whereas colder-than-normal temperatures increase demand for those products and the associated adjusted gross margins.
|
•
|
Evolution of the shale gas industry in the Marcellus and Utica formations, among other U.S. regions, can have volatile effects on our financial results. Increased natural gas production can alter the supply and demand balance, price curves, and margin expectations of the Northeastern markets that we serve both in the near and over the long term. The amount of drilling and fracking operations can ebb and flow within these areas. In addition, technology-driven changes such as automated fueling or the use of electric fleets can impact the fuel and manual
|
•
|
Absolute price increase or decreases can impact demand and credit risk. Commodity prices in both our refined products and natural gas segments can vary sharply due to market conditions. As commodity product prices rise, we can experience reduced demand as customers engage in conservation efforts, are exposed to a higher level of credit risk to meet customer requirements, and incur increased working capital costs for holding inventory and accounts receivable. In a lower commodity price environment our customers are generally less prone to engage in conservation efforts, we experience lower credit risk, and working capital costs to hold inventory and finance accounts receivable.
|
•
|
The impact of the market structure on our hedging strategy. We typically hedge our exposure to commodity price moves with NYMEX futures contracts and "over the counter" or "OTC" swaps. In markets where futures prices are higher than spot prices (typically referred to as contango), we generate positive margins when rolling our inventory hedges to successive months. In markets where futures prices are lower than spot prices (typically referred to as backwardation), we realize losses when rolling our inventory hedges to successive months. In backwardated markets, we operate with lower inventory levels and, as a result, have reduced hedging and financing requirements, thereby limiting losses.
|
•
|
Energy efficiency, new technology and alternative fuels could reduce demand for our products. Increased conservation and technological advances have adversely affected the demand for heating oil and residual fuel oil. Consumption of residual fuel oil, in particular, has steadily declined in recent years, primarily due to customers converting from other fuels to natural gas, weak industrial demand and tightening of environmental regulations. Use of natural gas is expected to continue to displace other fuels, which we believe will favorably impact our natural gas volumes and margins.
|
•
|
Interest rates could rise. Interest rates could be higher than current levels, causing our financing costs to increase accordingly. During the 24 months ended December 31, 2019, we hedged approximately 46% of our floating-rate debt with fixed-for-floating interest rate swaps. Although higher interest rates could limit our ability to raise funds in the debt capital markets, we expect to remain competitive with respect to acquisitions and capital projects, as our competitors would face similar circumstances. As with other yield-oriented securities, our unit price is impacted by the level of our cash distributions and implied distribution yield. The distribution yield is often used by investors to compare and rank related yield-oriented securities for investment decision-making purposes. Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our common units, and a rising interest rate environment could have an adverse impact on our unit price and our ability to issue additional equity to make acquisitions, reduce debt or for other purposes.
|
|
Years Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
($ in thousands)
|
|||||||||||||
Net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
(268,723
|
)
|
|
(7
|
)%
|
Cost of products sold (exclusive of depreciation and amortization)
|
3,228,003
|
|
|
3,445,385
|
|
|
(217,382
|
)
|
|
(6
|
)%
|
|||
Operating expenses
|
84,924
|
|
|
88,659
|
|
|
(3,735
|
)
|
|
(4
|
)%
|
|||
Selling, general and administrative
|
78,135
|
|
|
80,799
|
|
|
(2,664
|
)
|
|
(3
|
)%
|
|||
Depreciation and amortization
|
34,015
|
|
|
33,378
|
|
|
637
|
|
|
2
|
%
|
|||
Total operating costs and expenses
|
3,425,077
|
|
|
3,648,221
|
|
|
(223,144
|
)
|
|
(6
|
)%
|
|||
Operating income
|
77,333
|
|
|
122,912
|
|
|
(45,579
|
)
|
|
(37
|
)%
|
|||
Other (expense) income
|
(378
|
)
|
|
293
|
|
|
(671
|
)
|
|
(229
|
)%
|
|||
Interest income
|
555
|
|
|
577
|
|
|
(22
|
)
|
|
(4
|
)%
|
|||
Interest expense
|
(42,944
|
)
|
|
(38,931
|
)
|
|
(4,013
|
)
|
|
10
|
%
|
|||
Income before income taxes
|
$
|
34,566
|
|
|
$
|
84,851
|
|
|
$
|
(50,285
|
)
|
|
(59
|
)%
|
Income tax provision
|
(3,310
|
)
|
|
(5,032
|
)
|
|
1,722
|
|
|
(34
|
)%
|
|||
Net income
|
$
|
31,256
|
|
|
$
|
79,819
|
|
|
$
|
(48,563
|
)
|
|
(61
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
Years Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
($ in thousands)
|
|||||||||||||
Net sales
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
|
$
|
916,137
|
|
|
32
|
%
|
Cost of products sold (exclusive of depreciation and amortization)
|
3,445,385
|
|
|
2,602,788
|
|
|
842,597
|
|
|
32
|
%
|
|||
Operating expenses
|
88,659
|
|
|
72,284
|
|
|
16,375
|
|
|
23
|
%
|
|||
Selling, general and administrative
|
80,799
|
|
|
87,582
|
|
|
(6,783
|
)
|
|
(8
|
)%
|
|||
Depreciation and amortization
|
33,378
|
|
|
28,125
|
|
|
5,253
|
|
|
19
|
%
|
|||
Total operating costs and expenses
|
3,648,221
|
|
|
2,790,779
|
|
|
857,442
|
|
|
31
|
%
|
|||
Operating income
|
122,912
|
|
|
64,217
|
|
|
58,695
|
|
|
91
|
%
|
|||
Other income
|
293
|
|
|
108
|
|
|
185
|
|
|
171
|
%
|
|||
Interest income
|
577
|
|
|
339
|
|
|
238
|
|
|
70
|
%
|
|||
Interest expense
|
(38,931
|
)
|
|
(31,345
|
)
|
|
(7,586
|
)
|
|
24
|
%
|
|||
Income before income taxes
|
$
|
84,851
|
|
|
$
|
33,319
|
|
|
$
|
51,532
|
|
|
155
|
%
|
Income tax provision
|
(5,032
|
)
|
|
(3,822
|
)
|
|
(1,210
|
)
|
|
32
|
%
|
|||
Net income
|
$
|
79,819
|
|
|
$
|
29,497
|
|
|
$
|
50,322
|
|
|
171
|
%
|
(1)
|
Inventory is valued at the lower of cost or net realizable value. The adjustment related to change in unrealized gain on inventory which is not included in net income (loss), represents the estimated difference between inventory valued at the lower of cost or net realizable value as compared to market values. 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 (loss).
|
(2)
|
Represents our estimate of the change in fair value of the prepaid forward contracts which are not recorded in net income (loss) 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 (loss). 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 in value.
|
(3)
|
Represents our estimate of the change in fair value of the natural gas transportation contracts which are not recorded in net income (loss) 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 (loss).
|
(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)
|
On February 9, 2018, the U.S. federal government enacted legislation that reinstated an excise tax credit program available for certain of our biofuel blending activities. The program had expired on December 31, 2016 and was reinstated retroactively to January 1, 2017 through the end of 2017. With regard to this reinstatement, during the year 2018, we recorded excise tax credits of approximately $4.0 million that related to blending activities that occurred during the years ended December 31, 2017. We record the credit in the period the legislation was enacted as a reduction of cost of products sold (exclusive of depreciation and amortization) resulting in an increase in adjusted gross margin. This adjustment in the table above reflects the effect on our adjusted EBITDA had these credits been recorded in the period in which the blending activity took place.
|
(6)
|
On December 20, 2019, the U.S. federal government enacted legislation that reinstated an excise tax credit program available for certain of our biofuel blending activities retroactive to the beginning of 2018 and through 2022. During the year ended December 31, 2019, we recorded excise tax credits of approximately $4.4 million that related to blending activities that occurred during the year ended December 31, 2018. We record the credit in the period the legislation was enacted as a reduction of cost of products sold (exclusive of depreciation and amortization) resulting in an increase in adjusted gross margin. We did not show an adjustment to our adjusted EBITDA related to this reinstatement as the timing was such that the 2018 Annual Report was filed prior to the legislative action. In contrast, for the 2018 reinstatement referenced in note (5) above, the legislative action was prior to the filing of the 2017 Annual Report and, therefore, warranted an adjustment to reflect the knowledge and impact of this enacted legislation.
|
(7)
|
We incur expenses in connection with acquisitions and given the nature, variability of amounts, and the fact that these expenses would not have otherwise been incurred as part of our continuing operations, adjusted EBITDA excludes the impact of acquisition related expenses.
|
(8)
|
Represents the change in the fair value of contingent consideration related to the 2017 Coen Energy acquisition and other expense.
|
(9)
|
We use heating degree day amounts as reported by the NOAA Regional Climate Center. Prior to April 1, 2018, we reported degree day information utilizing the New England oil home heating region and for comparison purposes we used historical degree day information for the New England oil home heating region over the period of 1981-2010. Commencing April 1, 2018, we report degree day information for Boston and New York City (weighted equally) with a historical average for the same locations over the previous ten-year period. We made these changes to incorporate more recent average information and to better reflect the geographic locations of our customer base. All degree day amounts in this document have been revised to conform to this presentation.
|
|
Years Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
($ and volumes in thousands, except adjusted unit gross margin)
|
|||||||||||||
Volumes:
|
|
|
|
|
|
|
|
|||||||
Refined products (gallons)
|
1,530,356
|
|
|
1,580,838
|
|
|
(50,482
|
)
|
|
(3
|
)%
|
|||
Natural gas (MMBtus)
|
62,266
|
|
|
60,385
|
|
|
1,881
|
|
|
3
|
%
|
|||
Materials handling (short tons)
|
2,496
|
|
|
2,627
|
|
|
(131
|
)
|
|
(5
|
)%
|
|||
Materials handling (gallons)
|
480,659
|
|
|
488,972
|
|
|
(8,313
|
)
|
|
(2
|
)%
|
|||
Net Sales:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
3,112,924
|
|
|
$
|
3,357,769
|
|
|
$
|
(244,845
|
)
|
|
(7
|
)%
|
Natural gas
|
307,952
|
|
|
332,038
|
|
|
(24,086
|
)
|
|
(7
|
)%
|
|||
Materials handling
|
56,655
|
|
|
57,509
|
|
|
(854
|
)
|
|
(1
|
)%
|
|||
Other operations
|
24,879
|
|
|
23,817
|
|
|
1,062
|
|
|
4
|
%
|
|||
Total net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
(268,723
|
)
|
|
(7
|
)%
|
Adjusted Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
150,124
|
|
|
$
|
150,965
|
|
|
$
|
(841
|
)
|
|
(1
|
)%
|
Natural gas
|
54,288
|
|
|
57,875
|
|
|
(3,587
|
)
|
|
(6
|
)%
|
|||
Materials handling
|
56,616
|
|
|
57,515
|
|
|
(899
|
)
|
|
(2
|
)%
|
|||
Other operations
|
6,904
|
|
|
7,319
|
|
|
(415
|
)
|
|
(6
|
)%
|
|||
Total adjusted gross margin
|
$
|
267,932
|
|
|
$
|
273,674
|
|
|
$
|
(5,742
|
)
|
|
(2
|
)%
|
Adjusted Unit Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
0.098
|
|
|
$
|
0.095
|
|
|
$
|
0.003
|
|
|
3
|
%
|
Natural gas
|
$
|
0.872
|
|
|
$
|
0.958
|
|
|
$
|
(0.086
|
)
|
|
(9
|
)%
|
|
Years Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
($ and volumes in thousands, except adjusted unit gross margin)
|
|||||||||||||
Volumes:
|
|
|
|
|
|
|
|
|||||||
Refined products (gallons)
|
1,580,838
|
|
|
1,416,240
|
|
|
164,598
|
|
|
12
|
%
|
|||
Natural gas (MMBtus)
|
60,385
|
|
|
61,883
|
|
|
(1,498
|
)
|
|
(2
|
)%
|
|||
Materials handling (short tons)
|
2,627
|
|
|
2,366
|
|
|
261
|
|
|
11
|
%
|
|||
Materials handling (gallons)
|
488,972
|
|
|
385,896
|
|
|
103,076
|
|
|
27
|
%
|
|||
Net Sales:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
3,357,769
|
|
|
$
|
2,455,577
|
|
|
$
|
902,192
|
|
|
37
|
%
|
Natural gas
|
332,038
|
|
|
331,669
|
|
|
369
|
|
|
—
|
%
|
|||
Materials handling
|
57,509
|
|
|
46,513
|
|
|
10,996
|
|
|
24
|
%
|
|||
Other operations
|
23,817
|
|
|
21,237
|
|
|
2,580
|
|
|
12
|
%
|
|||
Total net sales
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
|
$
|
916,137
|
|
|
32
|
%
|
Adjusted Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
150,965
|
|
|
$
|
142,467
|
|
|
$
|
8,498
|
|
|
6
|
%
|
Natural gas
|
57,875
|
|
|
65,060
|
|
|
(7,185
|
)
|
|
(11
|
)%
|
|||
Materials handling
|
57,515
|
|
|
46,512
|
|
|
11,003
|
|
|
24
|
%
|
|||
Other operations
|
7,319
|
|
|
7,658
|
|
|
(339
|
)
|
|
(4
|
)%
|
|||
Total adjusted gross margin
|
$
|
273,674
|
|
|
$
|
261,697
|
|
|
$
|
11,977
|
|
|
5
|
%
|
Adjusted Unit Gross Margin:
|
|
|
|
|
|
|
|
|||||||
Refined products
|
$
|
0.095
|
|
|
$
|
0.101
|
|
|
$
|
(0.006
|
)
|
|
(6
|
)%
|
Natural gas
|
$
|
0.958
|
|
|
$
|
1.051
|
|
|
$
|
(0.093
|
)
|
|
(9
|
)%
|
|
Years Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
($ in thousands)
|
|
|
|||||||||||
Operating expenses
|
$
|
84,924
|
|
|
$
|
88,659
|
|
|
$
|
(3,735
|
)
|
|
(4
|
)%
|
Selling, general and administrative expenses
|
$
|
78,135
|
|
|
$
|
80,799
|
|
|
$
|
(2,664
|
)
|
|
(3
|
)%
|
Depreciation and amortization
|
$
|
34,015
|
|
|
$
|
33,378
|
|
|
$
|
637
|
|
|
2
|
%
|
Interest expense, net
|
$
|
42,389
|
|
|
$
|
38,354
|
|
|
$
|
4,035
|
|
|
11
|
%
|
|
Years Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
($ in thousands)
|
|
|
|||||||||||
Operating expenses
|
$
|
88,659
|
|
|
$
|
72,284
|
|
|
$
|
16,375
|
|
|
23
|
%
|
Selling, general and administrative expenses
|
$
|
80,799
|
|
|
$
|
87,582
|
|
|
$
|
(6,783
|
)
|
|
(8
|
)%
|
Depreciation and amortization
|
$
|
33,378
|
|
|
$
|
28,125
|
|
|
$
|
5,253
|
|
|
19
|
%
|
Interest expense, net
|
$
|
38,354
|
|
|
$
|
31,006
|
|
|
$
|
7,348
|
|
|
24
|
%
|
|
Capital Expenditures
|
||||||||||
|
Expansion
|
|
Maintenance
|
|
Total
|
||||||
|
($ in thousands)
|
||||||||||
Years Ended December 31,
|
|
|
|
|
|
||||||
2019
|
$
|
6,474
|
|
|
$
|
7,818
|
|
|
$
|
14,292
|
|
2018 (1)
|
$
|
6,825
|
|
|
$
|
9,577
|
|
|
$
|
16,402
|
|
2017 (2)
|
$
|
26,870
|
|
|
$
|
11,521
|
|
|
$
|
38,391
|
|
(1)
|
Excludes approximately $0.8 million of land acquired in 2018 in connection with the 2017 Coen Energy acquisition.
|
(2)
|
Excludes approximately $8.6 million of assets acquired in 2017 that were previously leased by the Partnership.
|
|
Payments due by period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than
5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating lease obligations (1)
|
$
|
20,235
|
|
|
$
|
6,912
|
|
|
$
|
10,839
|
|
|
$
|
1,855
|
|
|
$
|
629
|
|
Finance lease obligations (including interest)
|
17,977
|
|
|
3,262
|
|
|
5,989
|
|
|
3,459
|
|
|
5,267
|
|
|||||
Credit facilities (including interest) (2)
|
855,914
|
|
|
475,686
|
|
|
380,228
|
|
|
—
|
|
|
—
|
|
|||||
Product purchases (3)
|
445,737
|
|
|
407,358
|
|
|
38,379
|
|
|
—
|
|
|
—
|
|
|||||
Transportation and storage (4)
|
45,887
|
|
|
25,967
|
|
|
18,591
|
|
|
1,329
|
|
|
—
|
|
|||||
Contingent consideration (including discount) (5)
|
8,000
|
|
|
8,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Deferred consideration (6)
|
28,003
|
|
|
3,818
|
|
|
7,636
|
|
|
7,636
|
|
|
8,913
|
|
|||||
Total
|
$
|
1,421,753
|
|
|
$
|
931,003
|
|
|
$
|
461,662
|
|
|
$
|
14,279
|
|
|
$
|
14,809
|
|
(1)
|
We have leases for a refined products terminal, refined products storage, maritime charters, office and plant facilities that are accounted for as operating leases.
|
(2)
|
Amounts include principal and interest on our working capital revolving credit facility and our acquisition line revolving credit facility at December 31, 2019. The Credit Agreement has a contractual maturity of April 27, 2021, and no scheduled principal payments are required prior to that date. However, we repay amounts outstanding and borrow funds based on our working capital requirements. Therefore, the current portion of the working capital revolving credit facility included in our Consolidated Balance Sheets is the amount we expect to pay down during the course of the year, and the long-term portion of the working capital revolving credit facility is the amount we expect to be outstanding during the entire year. Interest is calculated using the rates in effect as of December 31, 2019, and we assume a ratable payment of the current portion of the working capital revolving credit facility through the expiration date.
|
(3)
|
Product purchases include estimated purchase commitments for refined products and natural gas. The value of these future supply commitments, if not fixed in price, will fluctuate based on prevailing market prices. The prices at which we purchase refined products and natural gas are determined by reference to published market prices prevailing at the time of purchase. The value of our product purchase commitments were computed based on contractual prices.
|
(4)
|
Transportation and storage commitments include refined products throughput agreements at third-party terminals and natural gas pipeline transportation and storage agreements that have minimum usage requirements.
|
(5)
|
Contingent consideration payments are related to the Coen Energy acquisition. The amount is remeasured at fair value every reporting period with the change in fair value recorded in general and administrative expenses (see Note 14 - Other Obligations, of Part II, Item 8 of this Annual Report on Form 10-K). The actual amount ultimately paid out may be different depending on the level of achievement of certain operating milestones.
|
(6)
|
Deferred consideration payments are related to the Carbo acquisition (see Note 14 - Other Obligations, of Part II, Item 8 of this Annual Report on Form 10-K).
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(65,365
|
)
|
|
$
|
158,979
|
|
|
$
|
57,042
|
|
Net cash used in investing activities
|
$
|
(13,886
|
)
|
|
$
|
(16,855
|
)
|
|
$
|
(153,269
|
)
|
Net cash provided by (used in) financing activities
|
$
|
77,068
|
|
|
$
|
(141,315
|
)
|
|
$
|
100,286
|
|
•
|
A U.S. dollar revolving working capital facility of up to $950.0 million, subject to borrowing base limits, to be used for working capital loans and letters of credit;
|
•
|
A multicurrency revolving working capital facility of up to $100.0 million, subject to borrowing base limits, to be used for working capital loans and letters of credit;
|
•
|
A revolving acquisition facility of up to $550.0 million, subject to the acquisition facility borrowing base limits, 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 including the receipt of additional commitments from lenders, the ability to increase the U.S. dollar revolving working capital facility by $250.0 million and the multicurrency revolving working capital facility by $220.0 million, subject to a maximum combined 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.
|
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
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Refined products contracts
|
$
|
(26,194
|
)
|
|
$
|
54,616
|
|
|
$
|
12,856
|
|
Natural gas contracts
|
38,513
|
|
|
(1,353
|
)
|
|
(1,555
|
)
|
|||
Total
|
$
|
12,319
|
|
|
$
|
53,263
|
|
|
$
|
11,301
|
|
|
Fair Value
Measurement
|
|
Active
Markets
Level 1
|
|
Observable
Inputs
Level 2
|
|
Unobservable
Inputs
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
62,580
|
|
|
$
|
—
|
|
|
$
|
62,580
|
|
|
$
|
—
|
|
Commodity swaps and options
|
32,083
|
|
|
32,057
|
|
|
26
|
|
|
—
|
|
||||
Commodity derivatives
|
94,663
|
|
|
32,057
|
|
|
62,606
|
|
|
—
|
|
||||
Currency swaps
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Total derivative assets
|
$
|
94,678
|
|
|
$
|
32,057
|
|
|
$
|
62,621
|
|
|
$
|
—
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity exchange contracts
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity fixed forwards
|
16,017
|
|
|
—
|
|
|
16,017
|
|
|
—
|
|
||||
Commodity swaps and options
|
63,360
|
|
|
63,359
|
|
|
1
|
|
|
—
|
|
||||
Commodity derivatives
|
79,379
|
|
|
63,361
|
|
|
16,018
|
|
|
—
|
|
||||
Interest rate swaps
|
8,214
|
|
|
—
|
|
|
8,214
|
|
|
—
|
|
||||
Total derivative liabilities
|
$
|
87,593
|
|
|
$
|
63,361
|
|
|
$
|
24,232
|
|
|
$
|
—
|
|
|
Refined Products
|
|
Natural Gas
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||
At December 31
|
$
|
119
|
|
|
$
|
193
|
|
|
$
|
67
|
|
|
$
|
502
|
|
|
$
|
309
|
|
|
$
|
341
|
|
Average
|
127
|
|
|
54
|
|
|
85
|
|
|
381
|
|
|
358
|
|
|
223
|
|
||||||
High
|
461
|
|
|
193
|
|
|
545
|
|
|
657
|
|
|
740
|
|
|
421
|
|
||||||
Low
|
27
|
|
|
12
|
|
|
21
|
|
|
120
|
|
|
172
|
|
|
120
|
|
Name
|
|
Age
|
|
Position with our General Partner
|
|
Michael D. Milligan
|
|
56
|
|
|
Chairman of the Board of Directors
|
Beth A. Bowman
|
|
63
|
|
|
Director
|
C. Gregory Harper
|
|
55
|
|
|
Director
|
Ben J. Hennelly
|
|
49
|
|
|
Director
|
Gary A. Rinaldi
|
|
62
|
|
|
Director
|
Sally A. Sarsfield
|
|
60
|
|
|
Director
|
David C. Glendon*
|
|
54
|
|
|
President, Chief Executive Officer and Director
|
David C. Long*
|
|
46
|
|
|
Chief Financial Officer
|
Thomas F. Flaherty*
|
|
64
|
|
|
Vice President, Refined Products
|
Steven D. Scammon*
|
|
58
|
|
|
Vice President, Chief Risk Officer
|
Paul A. Scoff*
|
|
60
|
|
|
Vice President, General Counsel, Chief Compliance Officer and Secretary
|
Joseph S. Smith*
|
|
63
|
|
|
Vice President, Corporate Development & IT
|
James A. Therriault*
|
|
59
|
|
|
Vice President, Materials Handling
|
Burton S. Russell
|
|
64
|
|
|
Vice President, Operations
|
Brian W. Weego*
|
|
53
|
|
|
Vice President, Natural Gas
|
*
|
Indicates an “executive officer” for purposes of Item 401(b) of Regulation S-K.
|
THE NON-MANAGEMENT MEMBERS
OF THE BOARD OF DIRECTORS
|
Michael D. Milligan, Chairman
|
Beth A. Bowman
|
C. Gregory Harper
|
Ben J. Hennelly
|
Sally A. Sarsfield
|
Gary A. Rinaldi
|
David C. Glendon
|
President and Chief Executive Officer
|
David C. Long
|
Chief Financial Officer
|
Thomas F. Flaherty
|
Vice President, Refined Products
|
Steven D. Scammon
|
Vice President, Chief Risk Officer
|
Brian W. Weego
|
Vice President, Natural Gas
|
•
|
The compensation paid to our executives should be competitive with that paid to the executives of those companies with which we compete for executive talent so that we attract and retain a skilled and experienced management team.
|
•
|
Incentive compensation should be a material portion of total compensation so that our executives are properly motivated to achieve or exceed our financial and business goals.
|
•
|
Incentive compensation should align the interests of the executive team with those of the unitholders.
|
•
|
Base salary;
|
•
|
Annual cash incentive bonus;
|
•
|
Long-term equity incentive awards; and,
|
•
|
Other benefits, including retirement, health and welfare, and related benefits and, in certain instances, the use of a car or a car allowance.
|
Name
|
|
2018 Base Salaries
|
|
2019 Base Salaries
|
|
Percentage Increase
|
David C. Glendon
|
|
$371,413
|
|
$371,413
|
|
—%
|
Steven D. Scammon
|
|
$284,436
|
|
$284,436
|
|
—%
|
Thomas F. Flaherty
|
|
$272,695
|
|
$272,695
|
|
—%
|
Brian W. Weego
|
|
$265,720
|
|
$265,720
|
|
—%
|
David C. Long
|
|
$—
|
|
$255,000
|
|
N/A
|
Increase of Sprague Holdings
Operating Cash Flow Above Threshold
|
|
Percentage of Target
Phantom Units that Vest
|
0.0%
|
|
0%
|
5.2%
|
|
50%
|
4.9%
|
|
100%
|
32.1%
|
|
200%
|
|
|
2019 Long-Term Incentive Program
|
|||
Name
|
|
Target Number of Phantom Units Granted
|
|
Grant Date
Fair Value per Common Unit (1)
|
|
David C. Glendon
|
|
30,000
|
|
|
$15.04
|
David C. Long
|
|
8,000
|
|
|
$15.04
|
Thomas F. Flaherty
|
|
8,000
|
|
|
$15.04
|
Steven D. Scammon
|
|
7,500
|
|
|
$15.04
|
Brian W. Weego
|
|
8,000
|
|
|
$15.04
|
|
(1)
|
The value of the phantom performance awards is based on the grant date fair value of those common units, as calculated pursuant to FASB ASC Topic 718.
|
•
|
Our overall compensation levels are competitive with the market.
|
•
|
Our compensation mix is balanced among fixed components like salary and benefits, as well as annual incentives that reward overall company and individual performance.
|
•
|
Our long-term equity incentive program ties vesting to performance over a period of multiple years with common units paid out at the end of the applicable performance period if the pre-established goals are met. These programs were designed to encourage executives to focus on unitholder interests over the longer term. In contrast, the annual incentive bonus focuses on performance over the shorter term. The combination of both programs appropriately focuses our employees on both our short- and long-term performance.
|
•
|
The board of directors of our General Partner has retained an appropriate level of discretion to reduce annual incentive bonus payments if it determines that such adjustments would be appropriate based on our interests and the interests of our unitholders.
|
Name and Title
|
|
Year
|
|
Salary
($)(1)
|
|
Bonus
($) (2)
|
|
Stock
Awards
($)(3)(4)
|
|
Change in
Pension Value
Non-Qualified
Deferred
Compensation
Earnings
($)(5)
|
|
All
Other
Compensation
($)(6)
|
|
Total ($)
|
||||||
David C. Glendon
|
|
2019
|
|
371,307
|
|
|
—
|
|
|
502,400
|
|
|
N/A
|
|
|
24,080
|
|
|
897,787
|
|
President and Chief Executive Officer
|
|
2018
|
|
369,936
|
|
|
—
|
|
|
466,000
|
|
|
N/A
|
|
|
23,650
|
|
|
859,586
|
|
|
2017
|
|
363,993
|
|
|
310,000
|
|
|
502,740
|
|
|
N/A
|
|
|
23,220
|
|
|
1,199,953
|
|
|
David C. Long
Chief Financial Officer
|
|
2019
|
|
255,000
|
|
|
|
|
171,520
|
|
|
16,857
|
|
|
21,898
|
|
|
465,275
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Thomas F. Flaherty
|
|
2019
|
|
272,696
|
|
|
—
|
|
|
145,920
|
|
|
97,304
|
|
|
48,781
|
|
|
564,701
|
|
Vice President, Refined Products
|
|
2018
|
|
271,611
|
|
|
—
|
|
|
122,325
|
|
|
—
|
|
|
49,400
|
|
|
443,336
|
|
|
2017
|
|
267,248
|
|
|
115,000
|
|
|
133,000
|
|
|
89,002
|
|
|
48,720
|
|
|
652,970
|
|
|
Steven D. Scammon
|
|
2019
|
|
284,437
|
|
|
—
|
|
|
134,560
|
|
|
26,476
|
|
|
23,791
|
|
|
469,264
|
|
Vice President, Chief Risk Officer
|
|
2018
|
|
283,306
|
|
|
—
|
|
|
116,500
|
|
|
—
|
|
|
23,650
|
|
|
423,456
|
|
|
2017
|
|
279,118
|
|
|
110,000
|
|
|
126,350
|
|
|
13,621
|
|
|
23,220
|
|
|
552,309
|
|
|
Brian W. Weego
|
|
2019
|
|
265,721
|
|
|
|
|
|
145,920
|
|
|
25,978
|
|
|
22,851
|
|
|
460,470
|
|
Vice President, Natural Gas
|
|
2018
|
|
263,637
|
|
|
—
|
|
|
122,325
|
|
|
—
|
|
|
23,057
|
|
|
409,019
|
|
|
2017
|
|
255,958
|
|
|
115,000
|
|
|
133,000
|
|
|
13,172
|
|
|
22,179
|
|
|
539,309
|
|
|
(1)
|
Amounts in this column reflect all compensation earned by the Named Executive Officers during the fiscal year as base salary.
|
(2)
|
Amounts in this column for 2019 and 2018 reflect the fact that no cash amounts were paid under our annual incentive bonus program.
|
(3)
|
Amounts in this column reflect the grant date fair value for the performance based phantom awards computed in accordance with FASB ASC Topic 718, disregarding estimated forfeitures, which for Mr. Glendon was $451,200, for Mssrs. Long, Flaherty and Weego was $120,320 and for Mr. Scammon was $112,800. The values of the performance-based phantom units granted in 2019 at the grant date assuming that the highest level of performance conditions will be achieved for our Named Executive Officers are as follows: $902,400 for Mr. Glendon, $240,640 for Messrs. Long, Flaherty and Weego, and $225,600 for Mr. Scammon.
|
(4)
|
This column also reflects the grant date fair value of the common units granted to our named executive officers as a discretionary 2019 annual incentive bonus, which for Mssrs. Glendon and Long was $51,200, for Mssrs. Flaherty and Weego was $25,600, and for Mr. Scammon was $21,760.
|
(5)
|
Amounts in this column represent the actuarial increase, if any, in the present value of benefits under the DB Plan and the RRP determined by using interest rate and mortality rate assumptions consistent with those used in the Pension Benefits table below. Mr. Glendon does not participate in these plans. Negative values are not reported in this column and are instead indicated by use of a dash.
|
(6)
|
The amounts set forth in this column for 2019 represent: (i) 401(k) plan matching contributions; (ii) our contribution to the DC Plan; (iii) Named Executive Officer car allowance for Mr. Flaherty; and, (iv) other incidental payments. Although we typically make a contribution to the DC Plan equal to 5% of each Named Executive Officer’s base pay, we make a supplemental contribution of an additional 5% for Mr. Flaherty as a result of his age and years of service at the time of the adoption of the DC Plan, and, as such, the amount of his DC Plan contribution is double that of the other Named Executive Officers. For a quantification of these benefits, please see the table below. For more information regarding these benefits, please see the Other Benefits section of our Compensation Discussion and Analysis above.
|
Recipient
|
|
401(k) Plan Matching Contribution
($)
|
|
Defined Contribution Plan
($)
|
|
Car Allowance
($)
|
|
Other Incidental
($)
|
|
All Other Compensation Total
($)
|
David C. Glendon
|
|
10,080
|
|
14,000
|
|
—
|
|
—
|
|
24,080
|
David C. Long
|
|
9,149
|
|
12,749
|
|
—
|
|
—
|
|
21,898
|
Thomas F. Flaherty
|
|
9,512
|
|
27,269
|
|
12,000
|
|
—
|
|
48,781
|
Steven D. Scammon
|
|
9,791
|
|
14,000
|
|
—
|
|
—
|
|
23,791
|
Brian W. Weego
|
|
9,565
|
|
13,286
|
|
—
|
|
—
|
|
22,851
|
Name
|
|
Grant Date
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards (1)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(2)
|
|||||||||
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
||||||||||||
David C. Glendon
|
|
3/12/2019
|
|
—
|
|
|
30,000
|
|
|
60,000
|
|
|
—
|
|
|
451,200
|
|
David C. Long
|
|
3/12/2019
|
|
—
|
|
|
8,000
|
|
|
16,000
|
|
|
—
|
|
|
120,320
|
|
Thomas F. Flaherty
|
|
3/12/2019
|
|
—
|
|
|
8,000
|
|
|
16,000
|
|
|
—
|
|
|
120,320
|
|
Steven D. Scammon
|
|
3/12/2019
|
|
—
|
|
|
7,500
|
|
|
15,000
|
|
|
—
|
|
|
112,800
|
|
Brian W. Weego
|
|
3/12/2019
|
|
—
|
|
|
8,000
|
|
|
16,000
|
|
|
—
|
|
|
120,320
|
|
|
(1)
|
Amounts shown in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns represent the target and maximum settlement levels with respect to the performance-based phantom unit awards granted to our Named Executive Officers pursuant to our LTIP during 2019. The performance-based phantom unit awards do not have a threshold value. Vesting of the phantom units will be determined based on Sprague Holdings Operating Cash Flow performance during the performance period from January 1, 2019 through December 31, 2021. The performance-based phantom unit awards include a distribution equivalent right, which will be paid upon the settlement of the underlying phantom unit. For more information regarding the performance-based phantom unit awards, please see the Components of Compensation - Long-Term Equity Incentive Awards section of our Compensation Discussion and Analysis above.
|
(2)
|
The amounts in this column reflect the aggregate grant date fair value of awards granted to our Named Executive Officers in 2019 computed in accordance with FASB ASC Topic 718, disregarding estimated forfeitures. The grant date fair value of the phantom units issued pursuant to our long term equity incentive program was $15.04 per phantom unit. For a discussion of the valuation assumptions used in determining the grant date fair value of these awards see Note 20 - Equity-Based Compensation of the Notes to Consolidated Financial Statements included in this Annual Report.
|
|
|
Stock Awards
|
||||||||||
Name
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
other Rights
That Have Not
Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or Payout Value of
Unearned Shares,
Units or other
Rights That
Have Not Vested
($)(1)
|
||||
David C. Glendon
|
|
—
|
|
|
—
|
|
|
|
|
|
||
|
|
|
|
|
|
30,000
|
|
(2)
|
507,600
|
|
||
|
|
|
|
|
20,000
|
|
(3)
|
338,400
|
|
|||
David C. Long
|
|
—
|
|
|
—
|
|
|
|
|
|
||
|
|
|
|
|
|
8,000
|
|
(2)
|
135,360
|
|
||
|
|
|
|
|
—
|
|
(3)
|
—
|
|
|||
Thomas F. Flaherty
|
|
—
|
|
|
—
|
|
|
|
|
|
||
|
|
|
|
|
|
8,000
|
|
(2)
|
135,360
|
|
||
|
|
|
|
|
5,250
|
|
(3)
|
88,830
|
|
|||
Steven D. Scammon
|
|
—
|
|
|
—
|
|
|
|
|
|
||
|
|
|
|
|
|
7,500
|
|
(2)
|
126,900
|
|
||
|
|
|
|
|
5,000
|
|
(3)
|
84,600
|
|
|||
Brian W. Weego
|
|
—
|
|
|
—
|
|
|
|
|
|
||
|
|
|
|
|
|
8,000
|
|
(2)
|
135,360
|
|
||
|
|
|
|
|
5,250
|
|
(3)
|
88,830
|
|
|
(1)
|
Amounts represented assume a market value of $16.92 per common unit, the closing price of our common units on December 31, 2019.
|
(2)
|
Because these awards do not have a threshold value, these figures represent the target settlement level with respect to the performance-based phantom unit awards granted to our Named Executive Officers pursuant to our LTIP on March 12, 2019 based on our performance through December 31, 2019 as required by the Exchange Act. The number of phantom units that will ultimately vest will depend on our performance through the end of the three-year performance period ending December 31, 2021. These awards contain cash distribution equivalent rights that are paid out to the phantom unit holders at the time of settlement of the underlying phantom unit in the same form (cash or common units) as was delivered to our common unitholders at the time of the distribution. From the date of grant until December 31, 2018, all distributions delivered to common unitholders have been paid in cash.
|
Name
|
|
Plan Name
|
|
Number of
Years
Credited
Service
(#)(1)(2)
|
|
Present Value
of
Accumulated
Benefit
($)(3)
|
|
Payments
During 2018
Fiscal Year
($)
|
|
David C. Glendon
|
|
Axel Johnson Inc. Retirement Plan
|
|
—
|
|
—
|
|
|
—
|
|
|
Axel Johnson Inc. Retirement Restoration Plan
|
|
—
|
|
—
|
|
|
—
|
David C. Long
|
|
Axel Johnson Inc. Retirement Plan
|
|
5.6
|
|
60,231
|
|
|
—
|
|
|
Axel Johnson Inc. Retirement Restoration Plan
|
|
—
|
|
—
|
|
|
—
|
Thomas F. Flaherty
|
|
Axel Johnson Inc. Retirement Plan
|
|
20.4
|
|
834,883
|
|
|
—
|
|
|
Axel Johnson Inc. Retirement Restoration Plan
|
|
20.4
|
|
214,582
|
|
|
—
|
Steven D. Scammon
|
|
Axel Johnson Inc. Retirement Plan
|
|
3.0
|
|
110,552
|
|
|
—
|
|
|
Axel Johnson Inc. Retirement Restoration Plan
|
|
3.0
|
|
31,179
|
|
|
—
|
Brian W. Weego
|
|
Axel Johnson Inc. Retirement Plan
|
|
5.0
|
|
112,323
|
|
|
—
|
|
|
Axel Johnson Inc. Retirement Restoration Plan
|
|
—
|
|
—
|
|
|
—
|
|
(1)
|
Amounts in this column represent the number of years of credited service rounded to the nearest month and were frozen as of December 31, 2003.
|
(2)
|
Mr. Glendon was not eligible to participate in the DB Plan or the RRP as he was hired after January 1, 2003.
|
(3)
|
Amounts in this column represent the actuarial present value of each Named Executive Officer’s accumulated benefit under the DB Plan and the RRP as of December 31, 2019. In quantifying the present value of the accumulated benefit indicated above, we used the same assumptions used for financial reporting purposes under GAAP, except that retirement age was assumed to be the earliest time at which a participant may retire under the plan without any benefit reduction due to age. The material assumptions were as follows: (i) an estimated discount rate of 3.30% for the Axel Johnson Inc. Retirement Plan and an estimated discount rate of 3.20% for the Axel Johnson Inc. Retirement Restoration Plan; (ii) the Pri-2012 annuitant table and the MP-2019 mortality improvement scale applied from the Pri-2012 mortality table base year; and, (iii) expected long-term rate of return on plan assets of 6.25%.
|
1.1% of final average compensation
|
x
|
Credited service (up to 40 years, rounded to the
nearest month)
|
+
|
0.4% of final average compensation in excess of social security covered compensation
|
x
|
Credited service
(up to 35 years, rounded to the nearest month)
|
Name
|
|
Cash Severance ($)(1)
|
|
Outplacement
Support ($)(2)
|
|
Health and
Dental ($)(3)
|
|
Accelerated Equity ($)(4)
|
|
Total
Potential
Termination
Benefits ($)
|
|||||
David C. Glendon
|
|
|
|
|
|
|
|
|
|
|
|||||
Termination Without Cause
|
|
371,413
|
|
|
6,000
|
|
|
22,839
|
|
|
—
|
|
|
400,252
|
|
Retirement, Death, Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
297,807
|
|
|
297,807
|
|
David C. Long
|
|
|
|
|
|
|
|
|
|
|
|||||
Termination Without Cause
|
|
255,000
|
|
|
6,000
|
|
|
24,933
|
|
|
—
|
|
|
285,933
|
|
Retirement, Death, Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,415
|
|
|
79,415
|
|
Thomas F. Flaherty
|
|
|
|
|
|
|
|
|
|
|
|||||
Termination Without Cause
|
|
272,695
|
|
|
6,000
|
|
|
17,018
|
|
|
—
|
|
|
295,713
|
|
Retirement, Death, Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,415
|
|
|
79,415
|
|
Steven D. Scammon
|
|
|
|
|
|
|
|
|
|
|
|||||
Termination Without Cause
|
|
284,436
|
|
|
6,000
|
|
|
22,673
|
|
|
—
|
|
|
313,109
|
|
Retirement, Death, Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,452
|
|
|
74,452
|
|
Brian W. Weego
|
|
|
|
|
|
|
|
|
|
|
|||||
Termination Without Cause
|
|
265,720
|
|
|
6,000
|
|
|
18,661
|
|
|
—
|
|
|
290,381
|
|
Retirement, Death, Disability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,415
|
|
|
79,415
|
|
|
(1)
|
Amounts in this column reflect 12 months' worth of continued base salary severance based on each Named Executive Officer's base salary in effect as of December 31, 2019.
|
(2)
|
Amounts in this column reflect the estimated cost to us of providing outplacement services to the Named Executive Officers over a six-month period. The actual cost of such services could vary based on the individual needs of each Named Executive Officer and the outside provider of such services.
|
(3)
|
Amounts in this column reflect the value of continued health and dental benefits for a 12-month period based on the value of the benefits received by each individual as of December 31, 2019.
|
(4)
|
A prorated portion of the performance-based phantom units granted in each 2018 and 2019 will remain outstanding and eligible to vest based on actual performance, as determined following the end of the applicable performance period, in the event of a Named Executive Officer's separation from service due to a qualified retirement, death or Disability (as described below) prior to the completion of the applicable performance period. The performance periods applicable to the 2018 and 2019 awards will end on December 31, 2020 and December 31, 2021, respectively, and the number of phantom units that vest for each award will be based on performance through the last day of the applicable performance period. Based upon the performance metrics applicable to the 2018 phantom unit awards and using our performance through December 31, 2019, it is estimated that none of the phantom units granted in 2018 will vest following the end of the performance period, and accordingly no 2018 awards are included in the calculation of our Named Executive Officers' retirement or termination due to death or Disability on December 31, 2019. Actual payment under the 2018 phantom unit awards, assuming maximum performance, could total up to $676,800 for Mr. Glendon, $177,660 for Mr. Flaherty, $169,200 for Mr. Scammon, and $177,660 for Mr. Weego, calculated using the closing price of our common units on December 31, 2019, which was $16.92. Based upon the performance metrics applicable to the 2019 phantom unit awards and using our performance through December 31, 2019, it is estimated that the phantom units granted in 2019 will vest following the end of the performance period, and accordingly no 2019 awards are included in the calculation of our Named Executive Officers' retirement or termination due to death or Disability on December 31, 2019. Actual payment under the 2019 phantom unit awards assuming maximum performance could total up to $1,015,200 for Mr. Glendon, $270,720 each for Messrs. Long, Flaherty and Weego, and $253,800 for Mr. Scammon, calculated using the closing price of our common units on December 31, 2019, which was $16.92.
|
i.
|
Estimated wages and salaries based on all payroll payments, excluding group term life; and
|
ii.
|
Estimated target annual incentive bonus amounts for each employee.
|
Name (1)
|
|
Fees Earned or
Paid in Cash
($)(2)
|
|
Unit Awards
($)(3)
|
|
Total
($)
|
|
C. Gregory Harper
|
|
75,000
|
|
60,000
|
|
135,000
|
|
Beth A. Bowman
|
|
75,000
|
|
60,000
|
|
135,000
|
|
Ben J. Hennelly
|
|
70,000
|
|
60,000
|
|
130,000
|
|
Gary A. Rinaldi
|
|
60,000
|
|
60,000
|
|
120,000
|
|
|
(1)
|
Mr. Milligan and Ms. Sarsfield, as officers of Axel Johnson, and Mr. Glendon are not included in this table because they receive no separate compensation for their services as directors. The compensation received by Mr. Glendon as a Named Executive Officer is shown in the Summary Compensation Table.
|
(2)
|
The amounts in this column reflect the aggregate dollar amount of fees earned or paid in cash for fiscal year 2019, including annual retainer fees and chairmanship or membership fees. Ms. Bowman served on the Conflicts Committee (Chairman) and the Audit Committee, and Mr. Harper served on the Audit Committee (Chairman) and Conflicts Committee. Mr. Hennelly is a member of the Audit Committee and the Conflicts Committee.
|
(3)
|
Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Messrs. Harper and Hennelly and Ms. Bowman all received a fully vested grant of 3,483 common units valued at approximately $60,000 in October 2019. Please see Note 20 - Equity-Based Compensation in the Notes to our Consolidated Financial Statements for assumptions used in valuing our common units.
|
(4)
|
On December 31, 2019, none of our directors held outstanding, unvested equity awards.
|
•
|
each person known by us to be a beneficial owner of more than 5% of our outstanding units, including Sprague Holdings;
|
•
|
each of the directors of and nominees to our General Partner’s board of directors;
|
•
|
each of the named executive officers of our General Partner; and
|
•
|
all of the directors, director nominees and executive officers of our General Partner as a group.
|
Name of Beneficial Owner
|
Common Units
Beneficially
Owned
|
|
Percentage of
Common Units
Beneficially
Owned
|
|
Sprague Holdings LLC (1)(2)
|
12,227,498
|
|
|
53.5%
|
Axel Johnson (2)(3)
|
12,227,498
|
|
|
53.5%
|
Lexa International Corporation (2)(4)
|
12,227,498
|
|
|
53.5%
|
Antonia Ax:son Johnson (2)(5)
|
12,227,498
|
|
|
53.5%
|
Invesco Ltd. (6)
|
1,638,339
|
|
|
7.2%
|
Gary A. Rinaldi
|
113,843
|
|
|
*
|
David C. Glendon
|
110,173
|
|
|
*
|
Thomas E. Flaherty
|
36,662
|
|
|
*
|
Brian W. Weego
|
33,312
|
|
|
*
|
Steven D. Scammon
|
30,046
|
|
|
*
|
Michael D. Milligan
|
20,000
|
|
|
*
|
C. Gregory Harper
|
19,985
|
|
|
*
|
Beth A. Bowman
|
15,659
|
|
|
*
|
Sally A. Sarsfield
|
4,100
|
|
|
*
|
Ben J. Hennelly
|
3,483
|
|
|
*
|
All executive officers and directors of our
General Partner as a group (15 persons) |
509,995
|
|
(7)
|
2.2%
|
|
*
|
Represents less than 1%.
|
(1)
|
The address for this entity is 185 International Drive, Portsmouth, NH 03801.
|
(2)
|
Common units shown as beneficially owned by Axel Johnson, Lexa International Corporation and Antonia Ax:son Johnson reflect common units owned of record by Sprague Holdings. Sprague Holdings is a wholly-owned subsidiary of Axel Johnson and, as such, Axel Johnson may be deemed to share beneficial ownership of the units beneficially owned by Sprague Holdings and its subsidiaries, but disclaims such beneficial ownership. Axel Johnson is a wholly-owned subsidiary of Lexa International Corporation and, as such, Lexa International Corporation may be deemed to share beneficial ownership of the units beneficially owned by Sprague Holdings, but disclaims such beneficial ownership. Lexa International Corporation, through certain non-U.S. entities, is controlled by Antonia Ax:son Johnson and, as such, Antonia Ax:son Johnson may be deemed to share beneficial ownership of the units beneficially owned by Sprague Holdings, but disclaims such beneficial ownership.
|
(3)
|
The address for this entity is 155 Spring Street, 6th Floor, New York, NY 10012.
|
(4)
|
The address for this entity is 2410 Old Ivy Road, Suite 300, Charlottesville, VA 22903.
|
(5)
|
The address for this person is c/o Axel Johnson AB, Villagatan 6, SE-100 41 Stockholm, Sweden.
|
(6)
|
The address of Invesco is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309. Invesco reported shared voting power and shared dispositive power for 1,638,339 common units that are held by Invesco and/or its subsidiaries. Beneficial ownership reported is based solely on a Schedule 13G filed on February 13, 2020.
|
(7)
|
The address of each of the executive officers and directors is 185 International Drive, Portsmouth, NH 03801.
|
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of Securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
|
Plan Category
|
|
(a)(1)
|
|
(b)(2)
|
|
(c)
|
Equity compensation plans approved by security holders
|
|
387,689
|
|
—
|
|
446,156
|
Equity compensation plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
|
(1)
|
Awards in this column represent the total number of all performance-based phantom units granted under our LTIP and outstanding as of December 31, 2019. We have not granted any stock option awards.
|
(2)
|
The outstanding phantom units do not have an exercise price. As such, there is no weighted average exercise price to report for outstanding awards.
|
•
|
Any acquisition of any additional interests in any assets or businesses owned by Axel Johnson or its controlled affiliates at the time of the IPO but not contributed to us in connection with the IPO, including any replacements and natural extensions thereof;
|
•
|
Any investment in or acquisition of any assets or businesses primarily engaged in the businesses in which we are engaged as of the closing of the IPO and that do not operate primarily in the United States or Quebec, Ontario or the Maritimes, Canada;
|
•
|
Any investment in or acquisition of a minority non-controlling interest in any assets or businesses primarily engaged in the businesses described above; or
|
•
|
Any investment in or acquisition of any assets or businesses that Axel Johnson or its controlled affiliates, at the time of the closing of the IPO, are actively seeking to invest in or acquire, or have the right to invest in or acquire.
|
|
Fiscal 2019
|
|
Fiscal 2018
|
||||
Audit Fees (1)
|
$
|
2,345,000
|
|
|
$
|
3,160,300
|
|
Audit-Related Fees (2)
|
7,820
|
|
|
17,500
|
|
||
Tax Fees (3)
|
510,000
|
|
|
248,200
|
|
||
All Other Fees
|
—
|
|
|
2,700
|
|
||
Total
|
$
|
2,862,820
|
|
|
$
|
3,428,700
|
|
|
(1)
|
Audit fees consisted of the audit of our annual financial statements, reviews of our interim financial statements and services associated with SEC registration statements and other SEC matters.
|
(2)
|
Audit-related fees consisted of a renewable fuel energy regulatory audit.
|
(3)
|
Tax fees consisted of services related to tax compliance, the review of our partnership Form K-1, and research and consultation on other tax related matters.
|
(a)
|
Financial Statements, Financial Statement Schedules and Exhibits—The following documents are filed as part of this Annual Report on Form 10-K for the year ended December 31, 2019.
|
1.
|
Sprague Resources LP Audited Consolidated Financial Statements:
|
|
Page
|
2.
|
Financial Statement Schedules—No schedules are included because the required information is inapplicable or is presented in the Consolidated Financial Statements or related notes thereto.
|
3.
|
Exhibits:
|
Exhibit
No.
|
|
Description
|
|
|
|
2.1***
|
|
|
|
|
|
2.2***
|
|
|
|
|
|
2.3***
|
|
|
|
|
|
2.4***
|
|
|
|
|
|
2.5***
|
|
Exhibit
No.
|
|
Description
|
|
|
|
2.6***
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
3.6
|
|
|
|
|
|
3.7*
|
|
|
|
|
|
4.1*
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8†
|
|
10.9†
|
|
|
|
|
|
10.10†
|
|
|
|
|
|
10.11†
|
|
|
|
|
|
10.12†
|
|
|
|
|
|
10.13†
|
|
|
|
|
|
10.14†
|
|
|
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
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
|
†
|
Compensatory plan or arrangement.
|
*
|
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
|
|
|
By:
|
/s/ David C. Glendon
|
|
David C. Glendon
|
|
President, Chief Executive Officer
|
|
(On behalf of the registrant, and in his capacity as principal executive officer)
|
|
|
Date:
|
March 5, 2020
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Michael D. Milligan
|
|
|
|
March 5, 2020
|
Michael D. Milligan
|
|
Chairman of the Board of Directors
|
|
|
|
|
|
|
|
/s/ David C. Glendon
|
|
|
|
March 5, 2020
|
David C. Glendon
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ David C. Long
|
|
|
|
March 5, 2020
|
David C. Long
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Beth A. Bowman
|
|
|
|
March 5, 2020
|
Beth A. Bowman
|
|
Director
|
|
|
|
|
|
|
|
/s/ C. Gregory Harper
|
|
|
|
March 5, 2020
|
C. Gregory Harper
|
|
Director
|
|
|
|
|
|
|
|
/s/ Ben J. Hennelly
|
|
|
|
March 5, 2020
|
Ben J. Hennelly
|
|
Director
|
|
|
|
|
|
|
|
/s/ Gary A. Rinaldi
|
|
|
|
March 5, 2020
|
Gary A. Rinaldi
|
|
Director
|
|
|
|
|
|
|
|
/s/ Sally A. Sarsfield
|
|
|
|
March 5, 2020
|
Sally A. Sarsfield
|
|
Director
|
|
|
|
Page
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,386
|
|
|
$
|
7,530
|
|
Accounts receivable, net
|
281,527
|
|
|
269,908
|
|
||
Inventories
|
293,224
|
|
|
259,568
|
|
||
Fair value of derivative assets
|
77,871
|
|
|
153,438
|
|
||
Other current assets
|
63,705
|
|
|
8,888
|
|
||
Total current assets
|
721,713
|
|
|
699,332
|
|
||
Fair value of derivative assets long-term
|
16,807
|
|
|
12,344
|
|
||
Property, plant, and equipment, net
|
348,039
|
|
|
349,846
|
|
||
Intangibles, net
|
49,764
|
|
|
59,987
|
|
||
Other assets, net
|
24,183
|
|
|
8,694
|
|
||
Goodwill
|
115,037
|
|
|
115,037
|
|
||
Total assets
|
$
|
1,275,543
|
|
|
$
|
1,245,240
|
|
Liabilities and unitholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
147,577
|
|
|
$
|
197,995
|
|
Accrued liabilities
|
43,386
|
|
|
65,959
|
|
||
Fair value of derivative liabilities
|
74,154
|
|
|
90,151
|
|
||
Due to General Partner
|
5,653
|
|
|
7,688
|
|
||
Current portion of working capital facilities
|
437,184
|
|
|
154,318
|
|
||
Current portion of other obligations
|
13,858
|
|
|
7,044
|
|
||
Total current liabilities
|
721,812
|
|
|
523,155
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Working capital facilities - less current portion
|
—
|
|
|
130,680
|
|
||
Acquisition facility
|
374,600
|
|
|
376,100
|
|
||
Fair value of derivative liabilities long-term
|
13,439
|
|
|
12,015
|
|
||
Other obligations, less current portion
|
41,413
|
|
|
46,455
|
|
||
Operating lease liabilities, less current portion
|
11,850
|
|
|
—
|
|
||
Due to General Partner
|
2,445
|
|
|
2,093
|
|
||
Deferred income taxes
|
16,202
|
|
|
17,766
|
|
||
Total liabilities
|
1,181,761
|
|
|
1,108,264
|
|
||
Unitholders’ equity:
|
|
|
|
||||
Common unitholders - public (10,641,561 and 10,627,629 units issued and outstanding as of December 31, 2019 and 2018, respectively)
|
180,302
|
|
|
196,680
|
|
||
Common unitholders - affiliated (12,106,348 units issued and outstanding)
|
(66,832
|
)
|
|
(48,182
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(19,688
|
)
|
|
(11,522
|
)
|
||
Total unitholders’ equity
|
93,782
|
|
|
136,976
|
|
||
Total liabilities and unitholders’ equity
|
$
|
1,275,543
|
|
|
$
|
1,245,240
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
Cost of products sold (exclusive of depreciation and amortization)
|
3,228,003
|
|
|
3,445,385
|
|
|
2,602,788
|
|
|||
Operating expenses
|
84,924
|
|
|
88,659
|
|
|
72,284
|
|
|||
Selling, general and administrative
|
78,135
|
|
|
80,799
|
|
|
87,582
|
|
|||
Depreciation and amortization
|
34,015
|
|
|
33,378
|
|
|
28,125
|
|
|||
Total operating costs and expenses
|
3,425,077
|
|
|
3,648,221
|
|
|
2,790,779
|
|
|||
Operating income
|
77,333
|
|
|
122,912
|
|
|
64,217
|
|
|||
Other (expense) income
|
(378
|
)
|
|
293
|
|
|
108
|
|
|||
Interest income
|
555
|
|
|
577
|
|
|
339
|
|
|||
Interest expense
|
(42,944
|
)
|
|
(38,931
|
)
|
|
(31,345
|
)
|
|||
Income before income taxes
|
34,566
|
|
|
84,851
|
|
|
33,319
|
|
|||
Income tax provision
|
(3,310
|
)
|
|
(5,032
|
)
|
|
(3,822
|
)
|
|||
Net income
|
31,256
|
|
|
79,819
|
|
|
29,497
|
|
|||
Incentive distributions declared
|
(6,163
|
)
|
|
(7,879
|
)
|
|
(3,993
|
)
|
|||
Limited partners’ interest in net income
|
$
|
25,093
|
|
|
$
|
71,940
|
|
|
$
|
25,504
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit:
|
|
|
|
|
|
||||||
Common—basic
|
$
|
1.10
|
|
|
$
|
3.17
|
|
|
$
|
1.15
|
|
Common—diluted
|
$
|
1.10
|
|
|
$
|
3.16
|
|
|
$
|
1.13
|
|
Weighted average units used to compute net income per limited partner unit:
|
|
|
|
|
|
||||||
Common—basic
|
22,736,916
|
|
|
22,728,218
|
|
|
22,208,964
|
|
|||
Common—diluted
|
22,770,883
|
|
|
22,737,404
|
|
|
22,474,872
|
|
|||
|
|
|
|
|
|
||||||
Distribution declared per unit
|
$
|
2.67
|
|
|
$
|
2.66
|
|
|
$
|
2.46
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
31,256
|
|
|
$
|
79,819
|
|
|
$
|
29,497
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Unrealized gain (loss) on interest rate swaps
|
|
|
|
|
|
||||||
Net (loss) income arising in the period
|
(8,302
|
)
|
|
(253
|
)
|
|
1,884
|
|
|||
Reclassification adjustment related to gains realized in income
|
(90
|
)
|
|
(2,179
|
)
|
|
(173
|
)
|
|||
Net change in unrealized (gain) loss on interest rate swaps
|
(8,392
|
)
|
|
(2,432
|
)
|
|
1,711
|
|
|||
Tax effect
|
65
|
|
|
20
|
|
|
(14
|
)
|
|||
|
(8,327
|
)
|
|
(2,412
|
)
|
|
1,697
|
|
|||
Foreign currency translation adjustment
|
161
|
|
|
(240
|
)
|
|
216
|
|
|||
Other comprehensive (loss) income
|
(8,166
|
)
|
|
(2,652
|
)
|
|
1,913
|
|
|||
Comprehensive income
|
$
|
23,090
|
|
|
$
|
77,167
|
|
|
$
|
31,410
|
|
|
Common-
Public
|
|
Common-
Sprague
Holdings
|
|
Subordinated
Sprague
Holdings
|
|
Incentive Distribution Rights
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||||||
Balance as of 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
|
11,955
|
|
|
14,324
|
|
|
—
|
|
|
3,218
|
|
|
—
|
|
|
29,497
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,913
|
|
|
1,913
|
|
||||||
Unit-based compensation
|
1,034
|
|
|
1,240
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,274
|
|
||||||
Distributions paid
|
(25,198
|
)
|
|
(23,239
|
)
|
|
(5,817
|
)
|
|
(3,218
|
)
|
|
—
|
|
|
(57,472
|
)
|
||||||
Common units issued for Carbo Acquisition
|
31,401
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,401
|
|
||||||
Common units issued with annual bonus
|
161
|
|
|
210
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
371
|
|
||||||
Units withheld for employee tax obligations
|
(690
|
)
|
|
(897
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,587
|
)
|
||||||
Balance as of December 31, 2017
|
193,977
|
|
|
(53,273
|
)
|
|
—
|
|
|
—
|
|
|
(8,870
|
)
|
|
131,834
|
|
||||||
Net income
|
33,940
|
|
|
38,683
|
|
|
—
|
|
|
7,196
|
|
|
—
|
|
|
79,819
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,652
|
)
|
|
(2,652
|
)
|
||||||
Unit-based compensation
|
(419
|
)
|
|
(477
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(896
|
)
|
||||||
Distributions paid
|
(29,646
|
)
|
|
(31,779
|
)
|
|
—
|
|
|
(7,196
|
)
|
|
—
|
|
|
(68,621
|
)
|
||||||
Units withheld for employee tax obligations
|
(1,172
|
)
|
|
(1,336
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,508
|
)
|
||||||
Balance as of December 31, 2018
|
196,680
|
|
|
(48,182
|
)
|
|
—
|
|
|
—
|
|
|
(11,522
|
)
|
|
136,976
|
|
||||||
Net income
|
11,732
|
|
|
13,359
|
|
|
—
|
|
|
6,165
|
|
|
—
|
|
|
31,256
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,166
|
)
|
|
(8,166
|
)
|
||||||
Unit-based compensation
|
275
|
|
|
315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
590
|
|
||||||
Distributions paid
|
(28,385
|
)
|
|
(32,324
|
)
|
|
—
|
|
|
(6,165
|
)
|
|
—
|
|
|
(66,874
|
)
|
||||||
Balance as of December 31, 2019
|
$
|
180,302
|
|
|
$
|
(66,832
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(19,688
|
)
|
|
$
|
93,782
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
31,256
|
|
|
$
|
79,819
|
|
|
$
|
29,497
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization (includes amortization of deferred debt issue costs)
|
37,605
|
|
|
36,930
|
|
|
33,361
|
|
|||
Gain (loss) on sale of assets and insurance recoveries
|
340
|
|
|
(268
|
)
|
|
(231
|
)
|
|||
Changes in fair value of contingent consideration
|
1,188
|
|
|
677
|
|
|
168
|
|
|||
Provision for doubtful accounts
|
323
|
|
|
1,598
|
|
|
(206
|
)
|
|||
Non-cash unit-based compensation
|
590
|
|
|
(896
|
)
|
|
2,274
|
|
|||
Other
|
(146
|
)
|
|
94
|
|
|
63
|
|
|||
Deferred income taxes
|
(1,499
|
)
|
|
77
|
|
|
857
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(11,942
|
)
|
|
44,975
|
|
|
(94,454
|
)
|
|||
Inventories
|
(33,655
|
)
|
|
76,291
|
|
|
(12,247
|
)
|
|||
Other assets
|
(50,171
|
)
|
|
31,058
|
|
|
4,253
|
|
|||
Fair value of commodity derivative instruments
|
48,140
|
|
|
(116,329
|
)
|
|
24,812
|
|
|||
Due to/from General Partner and affiliates
|
(1,683
|
)
|
|
(3,124
|
)
|
|
(2,580
|
)
|
|||
Accounts payable, accrued liabilities and other
|
(85,711
|
)
|
|
8,077
|
|
|
71,475
|
|
|||
Net cash (used in) provided by operating activities
|
(65,365
|
)
|
|
158,979
|
|
|
57,042
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(14,292
|
)
|
|
(17,249
|
)
|
|
(46,955
|
)
|
|||
Proceeds from property insurance settlements and sale of assets
|
406
|
|
|
394
|
|
|
1,003
|
|
|||
Business acquisitions
|
—
|
|
|
—
|
|
|
(107,317
|
)
|
|||
Net cash used in investing activities
|
(13,886
|
)
|
|
(16,855
|
)
|
|
(153,269
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Net borrowings (payments) under credit agreements
|
150,380
|
|
|
(63,787
|
)
|
|
169,248
|
|
|||
Payments on finance/capital leases, term debt, and other obligations, net of change in exchange rate
|
(6,438
|
)
|
|
(6,136
|
)
|
|
(5,030
|
)
|
|||
Debt issue costs
|
—
|
|
|
(263
|
)
|
|
(4,873
|
)
|
|||
Distributions to unitholders
|
(66,874
|
)
|
|
(68,621
|
)
|
|
(57,472
|
)
|
|||
Repurchased units withheld for employee tax obligations
|
—
|
|
|
(2,508
|
)
|
|
(1,587
|
)
|
|||
Net cash provided by (used in) financing activities
|
77,068
|
|
|
(141,315
|
)
|
|
100,286
|
|
|||
Effect of exchange rate changes on cash balances held in foreign currencies
|
39
|
|
|
(94
|
)
|
|
74
|
|
|||
Net change in cash and cash equivalents
|
(2,144
|
)
|
|
715
|
|
|
4,133
|
|
|||
Cash and cash equivalents, beginning of period
|
7,530
|
|
|
6,815
|
|
|
2,682
|
|
|||
Cash and cash equivalents, end of period
|
$
|
5,386
|
|
|
$
|
7,530
|
|
|
$
|
6,815
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
38,771
|
|
|
$
|
35,174
|
|
|
$
|
25,781
|
|
Cash paid for taxes
|
$
|
8,057
|
|
|
$
|
4,139
|
|
|
$
|
1,689
|
|
Non-cash consideration related to acquisitions:
|
|
|
|
|
|
||||||
Common units issued - Carbo
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,401
|
|
Deferred consideration - Carbo
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,284
|
|
Contingent consideration - Coen
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,557
|
|
Assets acquired under finance/capital lease obligations
|
$
|
5,589
|
|
|
$
|
4,449
|
|
|
$
|
1,110
|
|
Non-cash asset retirement obligation and related asset
|
$
|
2,718
|
|
|
$
|
(139
|
)
|
|
$
|
4,447
|
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
•
|
The refined products segment purchases a variety of refined products, such as heating oil, diesel fuel, residual fuel oil, kerosene, jet fuel, and gasoline - primarily from refining companies, trading organizations and producers - and sells them to wholesale and commercial customers.
|
•
|
The natural gas segment purchases natural gas from natural gas producers and trading companies and sells and distributes natural gas to commercial and industrial customers.
|
•
|
The materials handling segment offloads, stores and prepares for delivery a variety of customer-owned products, including asphalt, clay slurry, salt, gypsum, crude oil, residual fuel oil, coal, petroleum coke, caustic soda, tallow, pulp and heavy equipment.
|
•
|
The other operations segment primarily includes the marketing and distribution of coal and certain commercial trucking activities.
|
Furniture and fixtures
|
5 to 10 years
|
Plant and machinery
|
5 to 30 years
|
Building and leasehold improvements
|
10 to 25 years
|
2.
|
Revenue
|
|
Years Ended December 31
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales:
|
|
|
|
|
|
||||||
Refined products
|
|
|
|
|
|
||||||
Distillates
|
$
|
2,514,010
|
|
|
$
|
2,686,833
|
|
|
$
|
1,873,782
|
|
Gasoline
|
298,633
|
|
|
320,168
|
|
|
280,891
|
|
|||
Heavy fuel oil and asphalt
|
300,281
|
|
|
350,768
|
|
|
300,904
|
|
|||
Total refined products
|
$
|
3,112,924
|
|
|
$
|
3,357,769
|
|
|
$
|
2,455,577
|
|
Natural gas
|
307,952
|
|
|
332,038
|
|
|
331,669
|
|
|||
Materials handling
|
56,655
|
|
|
57,509
|
|
|
46,513
|
|
|||
Other operations
|
24,879
|
|
|
23,817
|
|
|
21,237
|
|
|||
Net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
|
|
|
|
|
|
||||||
Net sales by Country:
|
|
|
|
|
|
||||||
United States
|
$
|
3,246,951
|
|
|
$
|
3,480,744
|
|
|
$
|
2,589,293
|
|
Canada
|
255,459
|
|
|
290,389
|
|
|
265,703
|
|
|||
Net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
3.
|
Leases
|
|
Operating
|
|
Finance
|
||||
ROU Assets:
|
|
|
|
||||
Other Assets, Net
|
$
|
18,270
|
|
|
$
|
—
|
|
Property, Plant and Equipment, Net
|
—
|
|
|
16,063
|
|
||
Total ROU Assets
|
$
|
18,270
|
|
|
$
|
16,063
|
|
|
|
|
|
||||
Lease Liabilities:
|
|
|
|
||||
Accrued Liabilities
|
$
|
6,772
|
|
|
$
|
—
|
|
Current Portion of Other Obligation
|
—
|
|
|
2,797
|
|
||
Other Obligations, Less Current Portion
|
—
|
|
|
13,584
|
|
||
Operating Lease Liabilities, Less Current Portion
|
11,850
|
|
|
—
|
|
||
Total Lease Liabilities
|
$
|
18,622
|
|
|
$
|
16,381
|
|
|
|
|
|
||||
Weighted Average Remaining Lease Term (Years)
|
3
|
|
|
6
|
|
||
Weighted Average Discount Rate
|
6.10
|
%
|
|
5.17
|
%
|
|
December 31, 2019
|
||
|
|
||
Cash paid for operating leases
|
$
|
6,279
|
|
ROU assets obtained in exchange for new lease liabilities
|
$
|
4,057
|
|
|
Operating
|
|
Finance
|
||||
2020
|
$
|
6,912
|
|
|
$
|
3,262
|
|
2021
|
6,985
|
|
|
3,121
|
|
||
2022
|
3,854
|
|
|
2,868
|
|
||
2023
|
1,125
|
|
|
2,174
|
|
||
2024
|
730
|
|
|
1,285
|
|
||
Thereafter
|
629
|
|
|
5,267
|
|
||
Total Lease Payments
|
20,235
|
|
|
17,977
|
|
||
Less: Interest
|
(1,613
|
)
|
|
(1,596
|
)
|
||
Total
|
$
|
18,622
|
|
|
$
|
16,381
|
|
|
|
||
2019
|
$
|
9,485
|
|
2020
|
5,816
|
|
|
2021
|
5,884
|
|
|
2022
|
2,943
|
|
|
2023
|
588
|
|
|
December 31, 2019
|
||
2020
|
$
|
29,658
|
|
2021
|
20,568
|
|
|
2022
|
16,850
|
|
|
2023
|
12,354
|
|
|
2024
|
11,358
|
|
|
Thereafter
|
46,902
|
|
|
Total Lease Receipts
|
$
|
137,690
|
|
4.
|
Accumulated Other Comprehensive Loss, Net of Tax
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Fair value of interest rate swaps, net of tax
|
$
|
(8,150
|
)
|
|
$
|
176
|
|
Cumulative foreign currency translation adjustment
|
(11,538
|
)
|
|
(11,698
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
$
|
(19,688
|
)
|
|
$
|
(11,522
|
)
|
5.
|
Accounts Receivable, Net
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accounts receivable, trade
|
$
|
274,014
|
|
|
$
|
262,912
|
|
Less allowance for doubtful accounts
|
(1,471
|
)
|
|
(2,066
|
)
|
||
Net accounts receivable, trade
|
272,543
|
|
|
260,846
|
|
||
Accounts receivable, other
|
8,984
|
|
|
9,062
|
|
||
Accounts receivable, net
|
$
|
281,527
|
|
|
$
|
269,908
|
|
|
Balance at
Beginning
of Period
|
|
Charged to
Expense
|
|
Charged (to)
from Another
Account
|
|
(Deductions)
|
|
Balance at
End of
Period
|
||||||||||
Balance, December 31, 2019:
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
2,066
|
|
|
$
|
323
|
|
|
$
|
(59
|
)
|
|
$
|
(859
|
)
|
|
$
|
1,471
|
|
Allowance for notes receivable
|
308
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
300
|
|
|||||
Total
|
$
|
2,374
|
|
|
$
|
323
|
|
|
$
|
(67
|
)
|
|
$
|
(859
|
)
|
|
$
|
1,771
|
|
Balance, December 31, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
2,014
|
|
|
$
|
1,598
|
|
|
$
|
8
|
|
|
$
|
(1,554
|
)
|
|
$
|
2,066
|
|
Allowance for notes receivable
|
531
|
|
|
—
|
|
|
(8
|
)
|
|
(215
|
)
|
|
308
|
|
|||||
Total
|
$
|
2,545
|
|
|
$
|
1,598
|
|
|
$
|
—
|
|
|
$
|
(1,769
|
)
|
|
$
|
2,374
|
|
Balance, December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
4,282
|
|
|
$
|
(207
|
)
|
|
$
|
11
|
|
|
$
|
(2,072
|
)
|
|
$
|
2,014
|
|
Allowance for notes receivable
|
641
|
|
|
—
|
|
|
(11
|
)
|
|
(99
|
)
|
|
531
|
|
|||||
Total
|
$
|
4,923
|
|
|
$
|
(207
|
)
|
|
$
|
—
|
|
|
$
|
(2,171
|
)
|
|
$
|
2,545
|
|
6.
|
Inventories
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Petroleum and related products
|
$
|
285,539
|
|
|
$
|
253,385
|
|
Coal
|
4,374
|
|
|
2,566
|
|
||
Natural gas
|
3,311
|
|
|
3,617
|
|
||
Inventories
|
$
|
293,224
|
|
|
$
|
259,568
|
|
7.
|
Other Current Assets
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Margin deposits with brokers
|
$
|
54,623
|
|
|
$
|
827
|
|
Prepaid software & fees
|
5,007
|
|
|
5,627
|
|
||
Other
|
4,075
|
|
|
2,434
|
|
||
Other current assets
|
$
|
63,705
|
|
|
$
|
8,888
|
|
8.
|
Property, Plant and Equipment, Net
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Plant, machinery, furniture and fixtures
|
$
|
423,722
|
|
|
$
|
416,398
|
|
Building and leasehold improvements
|
19,143
|
|
|
19,159
|
|
||
Land and land improvements
|
87,782
|
|
|
87,854
|
|
||
Construction in progress
|
9,906
|
|
|
9,308
|
|
||
Property, plant and equipment, gross
|
540,553
|
|
|
532,719
|
|
||
Less: accumulated depreciation
|
(192,514
|
)
|
|
(182,873
|
)
|
||
Property, plant and equipment, net
|
$
|
348,039
|
|
|
$
|
349,846
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Plant, machinery, furniture and fixtures
|
$
|
26,459
|
|
|
$
|
21,231
|
|
Building and leasehold improvements
|
962
|
|
|
962
|
|
||
Land and land improvements
|
251
|
|
|
251
|
|
||
Property, plant and equipment, gross
|
27,672
|
|
|
22,444
|
|
||
Less: accumulated amortization
|
(11,609
|
)
|
|
(9,849
|
)
|
||
Property, plant and equipment, net
|
$
|
16,063
|
|
|
$
|
12,595
|
|
9.
|
Intangibles, Net
|
|
As of December 31, 2019
|
||||||||||||
|
Remaining
Useful
Life (Years)
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Customer relationships
|
3 - 23
|
|
$
|
80,919
|
|
|
$
|
34,149
|
|
|
$
|
46,770
|
|
Non-compete agreements
|
2 - 3
|
|
11,191
|
|
|
8,420
|
|
|
2,771
|
|
|||
Other
|
1 - 3
|
|
2,543
|
|
|
2,320
|
|
|
223
|
|
|||
Intangible assets, net
|
|
|
$
|
94,653
|
|
|
$
|
44,889
|
|
|
$
|
49,764
|
|
|
As of December 31, 2018
|
||||||||||||
|
Remaining
Useful
Life (Years)
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Customer relationships
|
3 - 24
|
|
$
|
80,919
|
|
|
$
|
26,582
|
|
|
$
|
54,337
|
|
Non-compete agreements
|
1 - 4
|
|
11,191
|
|
|
6,103
|
|
|
5,088
|
|
|||
Other
|
1 - 4
|
|
2,543
|
|
|
1,981
|
|
|
562
|
|
|||
Intangible assets, net
|
|
|
$
|
94,653
|
|
|
$
|
34,666
|
|
|
$
|
59,987
|
|
10.
|
Other Assets, Net
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred debt issuance costs, net
|
$
|
4,745
|
|
|
$
|
8,335
|
|
ROU Assets
|
18,270
|
|
|
—
|
|
||
Other
|
1,168
|
|
|
359
|
|
||
Other assets, net
|
$
|
24,183
|
|
|
$
|
8,694
|
|
11.
|
Accrued Liabilities
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued product taxes
|
$
|
11,722
|
|
|
$
|
9,830
|
|
Customer prepayments and deposits
|
7,501
|
|
|
9,846
|
|
||
Operating lease liabilities
|
6,772
|
|
|
—
|
|
||
Accrued product costs
|
3,546
|
|
|
6,310
|
|
||
Margin deposits from brokers
|
—
|
|
|
28,529
|
|
||
Other
|
13,845
|
|
|
11,444
|
|
||
Accrued liabilities
|
$
|
43,386
|
|
|
$
|
65,959
|
|
12.
|
Credit Agreement
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Working capital facilities
|
$
|
437,184
|
|
|
$
|
284,998
|
|
Acquisition facility
|
374,600
|
|
|
376,100
|
|
||
Total credit agreement
|
811,784
|
|
|
661,098
|
|
||
Less: current portion of working capital facilities
|
(437,184
|
)
|
|
(154,318
|
)
|
||
Total long-term portion
|
$
|
374,600
|
|
|
$
|
506,780
|
|
•
|
A U.S. dollar revolving working capital facility of up to $950.0 million, subject to borrowing base limits, to be used for working capital loans and letters of credit;
|
•
|
A multicurrency revolving working capital facility of up to $100.0 million, subject to borrowing base limits, to be used for working capital loans and letters of credit,
|
•
|
A revolving acquisition facility of up to $550.0 million, subject to the acquisition facility borrowing base limits, 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 including the receipt of additional commitments from lenders, the ability to increase the U.S. dollar revolving working capital facility by $250.0 million and the multicurrency revolving working capital facility by $220.0 million, subject to a maximum combined 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.
|
13.
|
Related Party Transactions
|
14.
|
Other Obligations
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred consideration
|
$
|
19,432
|
|
|
$
|
21,779
|
|
Contingent consideration
|
—
|
|
|
6,532
|
|
||
Port Authority terminal obligations
|
5,761
|
|
|
6,365
|
|
||
Asset retirement obligation
|
5,300
|
|
|
3,481
|
|
||
Postretirement benefits
|
1,867
|
|
|
2,160
|
|
||
Other
|
9,053
|
|
|
6,138
|
|
||
Other obligations, long-term portion
|
$
|
41,413
|
|
|
$
|
46,455
|
|
2020
|
$
|
3,818
|
|
2021
|
3,818
|
|
|
2022
|
3,818
|
|
|
2023
|
3,818
|
|
|
2024
|
3,818
|
|
|
Thereafter
|
8,913
|
|
|
Total
|
28,003
|
|
|
Less amount representing interest
|
(6,223
|
)
|
|
Present value of payments
|
21,780
|
|
|
Less current portion
|
(2,348
|
)
|
|
Deferred consideration, long-term portion
|
$
|
19,432
|
|
|
Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
ARO - beginning of period
|
$
|
3,981
|
|
|
$
|
4,490
|
|
Change in estimates
|
2,718
|
|
|
(139
|
)
|
||
Accretion expense
|
(145
|
)
|
|
92
|
|
||
Payments of ARO
|
(495
|
)
|
|
(462
|
)
|
||
ARO - end of period
|
6,059
|
|
|
3,981
|
|
||
Less current portion
|
(759
|
)
|
|
(500
|
)
|
||
ARO - long-term
|
$
|
5,300
|
|
|
$
|
3,481
|
|
15.
|
Income Taxes
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
||||||
U.S. Federal income tax
|
$
|
(14
|
)
|
|
$
|
118
|
|
|
$
|
120
|
|
State and local income tax
|
45
|
|
|
95
|
|
|
231
|
|
|||
Foreign income taxes
|
4,778
|
|
|
4,742
|
|
|
2,614
|
|
|||
Total current income tax provision
|
4,809
|
|
|
4,955
|
|
|
2,965
|
|
|||
Deferred
|
|
|
|
|
|
||||||
U.S. Federal income tax
|
35
|
|
|
5
|
|
|
3
|
|
|||
State and local income tax
|
963
|
|
|
567
|
|
|
(188
|
)
|
|||
Foreign income taxes
|
(2,497
|
)
|
|
(495
|
)
|
|
1,042
|
|
|||
Total deferred income tax provision
|
(1,499
|
)
|
|
77
|
|
|
857
|
|
|||
Total income tax provision
|
$
|
3,310
|
|
|
$
|
5,032
|
|
|
$
|
3,822
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
25,646
|
|
|
$
|
69,283
|
|
|
$
|
18,517
|
|
Foreign
|
8,920
|
|
|
15,568
|
|
|
14,802
|
|
|||
Total income before income taxes
|
$
|
34,566
|
|
|
$
|
84,851
|
|
|
$
|
33,319
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Statutory U.S. Federal income tax
|
$
|
7,255
|
|
|
$
|
17,819
|
|
|
$
|
11,661
|
|
Partnership income not subject to tax
|
(5,348
|
)
|
|
(14,427
|
)
|
|
(6,360
|
)
|
|||
State and local income taxes, net of federal tax
|
995
|
|
|
662
|
|
|
46
|
|
|||
Foreign earnings taxed at higher (lower) rates
|
408
|
|
|
978
|
|
|
(1,525
|
)
|
|||
Total income tax provision
|
$
|
3,310
|
|
|
$
|
5,032
|
|
|
$
|
3,822
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Derivatives
|
$
|
1,161
|
|
|
$
|
—
|
|
Capital losses
|
466
|
|
|
466
|
|
||
Other
|
227
|
|
|
640
|
|
||
Total deferred tax assets
|
1,854
|
|
|
1,106
|
|
||
Valuation allowance
|
(466
|
)
|
|
(466
|
)
|
||
Net deferred tax assets
|
1,388
|
|
|
640
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Fixed assets
|
(17,222
|
)
|
|
(17,845
|
)
|
||
Other
|
(368
|
)
|
|
(561
|
)
|
||
Total deferred tax liabilities
|
(17,590
|
)
|
|
(18,406
|
)
|
||
Net deferred tax liabilities
|
$
|
(16,202
|
)
|
|
$
|
(17,766
|
)
|
16.
|
Retirement Plans
|
17.
|
Segment Reporting
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales:
|
|
|
|
|
|
||||||
Refined products
|
$
|
3,112,924
|
|
|
$
|
3,357,769
|
|
|
$
|
2,455,577
|
|
Natural gas
|
307,952
|
|
|
332,038
|
|
|
331,669
|
|
|||
Materials handling
|
56,655
|
|
|
57,509
|
|
|
46,513
|
|
|||
Other operations
|
24,879
|
|
|
23,817
|
|
|
21,237
|
|
|||
Net sales
|
$
|
3,502,410
|
|
|
$
|
3,771,133
|
|
|
$
|
2,854,996
|
|
Adjusted gross margin (1):
|
|
|
|
|
|
||||||
Refined products
|
$
|
150,124
|
|
|
$
|
150,965
|
|
|
$
|
142,467
|
|
Natural gas
|
54,288
|
|
|
57,875
|
|
|
65,060
|
|
|||
Materials handling
|
56,616
|
|
|
57,515
|
|
|
46,512
|
|
|||
Other operations
|
6,904
|
|
|
7,319
|
|
|
7,658
|
|
|||
Adjusted gross margin
|
267,932
|
|
|
273,674
|
|
|
261,697
|
|
|||
Reconciliation to operating income (2):
|
|
|
|
|
|
||||||
Add(deduct):
|
|
|
|
|
|
||||||
Change in unrealized (gain) loss on inventory (3)
|
(12,814
|
)
|
|
32,960
|
|
|
(124
|
)
|
|||
Change in unrealized value on prepaid forward contract (4)
|
—
|
|
|
—
|
|
|
1,076
|
|
|||
Change in unrealized value on natural gas transportation contracts (5)
|
19,289
|
|
|
19,114
|
|
|
(10,441
|
)
|
|||
Operating costs and expenses not allocated to operating segments:
|
|
|
|
|
|
||||||
Operating expenses
|
(84,924
|
)
|
|
(88,659
|
)
|
|
(72,284
|
)
|
|||
Selling, general and administrative
|
(78,135
|
)
|
|
(80,799
|
)
|
|
(87,582
|
)
|
|||
Depreciation and amortization
|
(34,015
|
)
|
|
(33,378
|
)
|
|
(28,125
|
)
|
|||
Operating income
|
77,333
|
|
|
122,912
|
|
|
64,217
|
|
|||
Other (expense) income
|
(378
|
)
|
|
293
|
|
|
108
|
|
|||
Interest income
|
555
|
|
|
577
|
|
|
339
|
|
|||
Interest expense
|
(42,944
|
)
|
|
(38,931
|
)
|
|
(31,345
|
)
|
|||
Income tax provision
|
(3,310
|
)
|
|
(5,032
|
)
|
|
(3,822
|
)
|
|||
Net income
|
$
|
31,256
|
|
|
$
|
79,819
|
|
|
$
|
29,497
|
|
(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 gains and losses with regard to refined products and natural gas inventory, prepaid forward contracts 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 adjustment related to unrealized gain on inventory which is not included in net income (loss), represents the estimated difference between the inventory valued at lower of cost or net realizable value as compared to market values. 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 (gains) with respect to the derivatives that are included in net income (loss).
|
(4)
|
Represents the Partnership’s estimate of the change in fair value of the prepaid forward contracts which are not recorded in net income (loss) 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 (loss). The fair value of the derivatives the Partnership uses to economically hedge its prepaid
|
(5)
|
Represents the Partnership’s estimate of the change in fair value of the natural gas transportation contracts which are not recorded in net income (loss) 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 (loss).
|
18.
|
Financial Instruments and Off-Balance Sheet Risk
|
|
As of December 31, 2019
|
||||||||||||||
|
Fair Value
Measurement
|
|
Quoted
Prices in
Active
Markets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
||||||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
62,580
|
|
|
$
|
—
|
|
|
$
|
62,580
|
|
|
$
|
—
|
|
Futures, swaps and options
|
32,083
|
|
|
32,057
|
|
|
26
|
|
|
—
|
|
||||
Commodity derivatives
|
94,663
|
|
|
32,057
|
|
|
62,606
|
|
|
—
|
|
||||
Currency swaps
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Total derivative assets
|
$
|
94,678
|
|
|
$
|
32,057
|
|
|
$
|
62,621
|
|
|
$
|
—
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity exchange contracts
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodity fixed forwards
|
16,017
|
|
|
—
|
|
|
16,017
|
|
|
—
|
|
||||
Futures, swaps and options
|
63,360
|
|
|
63,359
|
|
|
1
|
|
|
—
|
|
||||
Commodity derivatives
|
79,379
|
|
|
63,361
|
|
|
16,018
|
|
|
—
|
|
||||
Interest rate swaps
|
8,214
|
|
|
—
|
|
|
8,214
|
|
|
—
|
|
||||
Total derivative liabilities
|
$
|
87,593
|
|
|
$
|
63,361
|
|
|
$
|
24,232
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
7,590
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,590
|
|
|
As of December 31, 2018
|
||||||||||||||
|
Fair Value
Measurement
|
|
Quoted
Prices in
Active
Markets
Level 1
|
|
Significant
Other
Observable
Inputs
Level 2
|
|
Significant
Unobservable
Inputs
Level 3
|
||||||||
Derivative assets:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
42,893
|
|
|
$
|
—
|
|
|
$
|
42,893
|
|
|
$
|
—
|
|
Futures, swaps and options
|
120,258
|
|
|
120,231
|
|
|
27
|
|
|
—
|
|
||||
Commodity derivatives
|
163,151
|
|
|
120,231
|
|
|
42,920
|
|
|
—
|
|
||||
Interest rate swaps
|
2,629
|
|
|
—
|
|
|
2,629
|
|
|
—
|
|
||||
Currency swaps
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total derivative assets
|
$
|
165,782
|
|
|
$
|
120,231
|
|
|
$
|
45,551
|
|
|
$
|
—
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity fixed forwards
|
$
|
21,036
|
|
|
$
|
—
|
|
|
$
|
21,036
|
|
|
$
|
—
|
|
Futures, swaps and options
|
78,678
|
|
|
78,674
|
|
|
4
|
|
|
—
|
|
||||
Commodity derivatives
|
99,714
|
|
|
78,674
|
|
|
21,040
|
|
|
—
|
|
||||
Interest rate swaps
|
2,452
|
|
|
—
|
|
|
2,452
|
|
|
—
|
|
||||
Total derivative liabilities
|
$
|
102,166
|
|
|
$
|
78,674
|
|
|
$
|
23,492
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
8,402
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,402
|
|
|
As of December 31, 2019
|
||||||||||||||
|
|
|
Gross Amount Not Offset
in the Balance Sheet
|
|
Net
Amount
|
||||||||||
|
Gross Amounts of
Assets/ Liabilities in Balance Sheet |
Financial
Instruments
|
|
Cash
Collateral
Posted
|
|
||||||||||
Commodity derivative assets
|
$
|
94,663
|
|
|
$
|
(36,885
|
)
|
|
$
|
—
|
|
|
$
|
57,778
|
|
Currency swaps
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Fair value of derivative assets
|
$
|
94,678
|
|
|
$
|
(36,885
|
)
|
|
$
|
—
|
|
|
$
|
57,793
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivative liabilities
|
$
|
(79,379
|
)
|
|
$
|
36,885
|
|
|
$
|
31,303
|
|
|
$
|
(11,191
|
)
|
Interest rate swap derivative liabilities
|
(8,214
|
)
|
|
—
|
|
|
—
|
|
|
(8,214
|
)
|
||||
Fair value of derivative liabilities
|
$
|
(87,593
|
)
|
|
$
|
36,885
|
|
|
$
|
31,303
|
|
|
$
|
(19,405
|
)
|
|
As of December 31, 2018
|
||||||||||||||
|
|
|
Gross Amount Not Offset
in the Balance Sheet
|
|
Net
Amount
|
||||||||||
|
Gross Amounts of
Assets/ Liabilities in Balance Sheet |
Financial
Instruments
|
|
Cash
Collateral
Posted
|
|
||||||||||
Commodity derivative assets
|
$
|
163,151
|
|
|
$
|
(82,837
|
)
|
|
$
|
(28,529
|
)
|
|
$
|
51,785
|
|
Interest rate swap derivative assets
|
2,629
|
|
|
—
|
|
|
—
|
|
|
2,629
|
|
||||
Currency swaps
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Fair value of derivative assets
|
$
|
165,782
|
|
|
$
|
(82,837
|
)
|
|
$
|
(28,529
|
)
|
|
$
|
54,416
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivative liabilities
|
$
|
(99,714
|
)
|
|
$
|
82,837
|
|
|
$
|
20
|
|
|
$
|
(16,857
|
)
|
Interest rate swap derivative liabilities
|
(2,452
|
)
|
|
—
|
|
|
—
|
|
|
(2,452
|
)
|
||||
Fair value of derivative liabilities
|
$
|
(102,166
|
)
|
|
$
|
82,837
|
|
|
$
|
20
|
|
|
$
|
(19,309
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Refined products contracts
|
$
|
(26,194
|
)
|
|
$
|
54,616
|
|
|
$
|
12,856
|
|
Natural gas contracts
|
38,513
|
|
|
(1,353
|
)
|
|
(1,555
|
)
|
|||
Total
|
$
|
12,319
|
|
|
$
|
53,263
|
|
|
$
|
11,301
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||
|
Refined Products
(Barrels)
|
|
Natural Gas
(MMBTUs)
|
|
Refined Products
(Barrels)
|
|
Natural Gas
(MMBTUs)
|
Long contracts
|
8,332
|
|
168,818
|
|
8,796
|
|
132,030
|
Short contracts
|
(11,475)
|
|
(91,011)
|
|
(12,379)
|
|
(72,223)
|
|
Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Contingent consideration - beginning of year
|
$
|
8,402
|
|
|
$
|
9,725
|
|
Payments
|
(2,000
|
)
|
|
(2,000
|
)
|
||
Change in estimated fair value
|
1,188
|
|
|
677
|
|
||
Contingent consideration - end of year
|
$
|
7,590
|
|
|
$
|
8,402
|
|
Less current portion
|
(7,590
|
)
|
|
(1,870
|
)
|
||
Contingent consideration - long-term portion
|
$
|
—
|
|
|
$
|
6,532
|
|
19.
|
Commitments and Contingencies
|
20.
|
Equity and Equity-Based Compensation
|
•
|
Year ended December 31, 2019 - granted 180,638 OCF-based phantom units with a grant date fair value of $15.04 per unit and a performance period ending December 31, 2021.
|
•
|
Year ended December 31, 2018 - granted 143,981 OCF-based phantom units with a grant date fair value of $23.30 per unit and a performance period ending December 31, 2020.
|
•
|
Year ended December 31, 2017 - granted 132,977 OCF-based phantom units with a grant date fair value of $26.96 per unit and a performance period ending December 31, 2019.
|
•
|
Performance period ending December 31, 2019 - did not achieve minimum performance levels.
|
•
|
Performance period ending December 31, 2018 - did not achieve minimum performance levels.
|
•
|
Performance period ending December 31, 2017 - vested at a 195.5% level and as a result 271,748 units (vested market value of $7.0 million) were issued in January 2018 with 97,351 units withheld for employee tax obligations.
|
•
|
Performance period ending December 31, 2016 - vested at a 200% level and as a result 142,100 units (vested market value of $3.9 million) were issued in January 2017 with 52,785 units withheld for employee tax obligations.
|
|
2019 Awards
|
|
2018 Awards
|
|
2017 Awards
|
|||||||||||||||
|
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, 2018
|
—
|
|
|
$
|
—
|
|
|
123,186
|
|
|
$
|
23.30
|
|
|
119,996
|
|
|
$
|
26.96
|
|
Granted
|
180,638
|
|
|
15.04
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Forfeited
|
(17,107
|
)
|
|
(15.04
|
)
|
|
(12,193
|
)
|
|
(23.30
|
)
|
|
(5,831
|
)
|
|
(27.00
|
)
|
|||
Vested (end of performance period)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Nonvested at December 31, 2019
|
163,531
|
|
|
$
|
15.04
|
|
|
110,993
|
|
|
$
|
23.30
|
|
|
114,165
|
|
|
$
|
26.60
|
|
|
Common Units
|
|
|
|||||
|
Public
|
|
Sprague
Holdings
|
|
Subordinated
Units
|
|||
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 employee bonus
|
8,840
|
|
|
—
|
|
|
—
|
|
Units issued in connection with performance-based awards
|
89,315
|
|
|
—
|
|
|
—
|
|
Units issued in connection with Carbo acquisition
|
1,131,551
|
|
|
—
|
|
|
—
|
|
Director vested awards
|
9,360
|
|
|
—
|
|
|
—
|
|
Balance as of December 31, 2017
|
10,446,539
|
|
|
12,106,348
|
|
|
—
|
|
Units issued in connection with performance-based awards
|
174,397
|
|
|
—
|
|
|
—
|
|
Director vested awards
|
6,693
|
|
|
—
|
|
|
—
|
|
Balance as of December 31, 2018
|
10,627,629
|
|
|
12,106,348
|
|
|
—
|
|
Director vested awards
|
13,932
|
|
|
—
|
|
|
—
|
|
Balance as of December 31, 2019
|
10,641,561
|
|
|
12,106,348
|
|
|
—
|
|
21.
|
Earnings Per Unit
|
|
Years Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Weighted average limited partner common units - basic
|
22,736,916
|
|
|
22,728,218
|
|
|
22,208,964
|
|
Dilutive effect of unvested phantom units
|
33,967
|
|
|
9,186
|
|
|
265,908
|
|
Weighted average limited partner common units - dilutive
|
22,770,883
|
|
|
22,737,404
|
|
|
22,474,872
|
|
22.
|
Quarterly Financial Data (Unaudited)
|
|
Year Ended December 31, 2019
|
||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
|
(in thousands, except for per unit amounts)
|
||||||||||||||||||
Net sales
|
$
|
1,258,308
|
|
|
$
|
662,018
|
|
|
$
|
582,590
|
|
|
$
|
999,494
|
|
|
$
|
3,502,410
|
|
Net income (loss)
|
33,921
|
|
|
(4,778
|
)
|
|
(9,734
|
)
|
|
11,847
|
|
|
31,256
|
|
|||||
Limited partners' interest in net income (loss)
|
31,866
|
|
|
(6,833
|
)
|
|
(9,734
|
)
|
|
9,794
|
|
|
25,093
|
|
|||||
Net income (loss) per limited partner unit: (1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Common-basic
|
$
|
1.40
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
0.43
|
|
|
$
|
1.10
|
|
Common-diluted
|
$
|
1.40
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
0.43
|
|
|
$
|
1.10
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
|
(in thousands, except for per unit amounts)
|
||||||||||||||||||
Net sales
|
$
|
1,331,148
|
|
|
$
|
741,656
|
|
|
$
|
618,455
|
|
|
$
|
1,079,874
|
|
|
$
|
3,771,133
|
|
Net income (loss)
|
74,921
|
|
|
(13,195
|
)
|
|
(18,434
|
)
|
|
36,527
|
|
|
79,819
|
|
|||||
Limited partners' interest in net income (loss)
|
73,207
|
|
|
(15,250
|
)
|
|
(20,489
|
)
|
|
34,472
|
|
|
71,940
|
|
|||||
Net income (loss) per limited partner unit: (1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Common-basic
|
$
|
3.22
|
|
|
$
|
(0.67
|
)
|
|
$
|
(0.90
|
)
|
|
$
|
1.52
|
|
|
$
|
3.17
|
|
Common-diluted
|
$
|
3.21
|
|
|
$
|
(0.67
|
)
|
|
$
|
(0.90
|
)
|
|
$
|
1.51
|
|
|
$
|
3.16
|
|
(1)
|
Quarterly net income (loss) per limited partner unit amounts are stand-alone calculations and may not be additive to full year amounts due to rounding and changes in outstanding units.
|
23.
|
Partnership Distributions
|
|
|
|
|
|
|
Cash Distributed
|
||||||||||||||
For the Quarter Ended
|
|
Distribution Date
|
|
Per Unit
|
|
Common
|
|
IDR
|
|
DER
|
|
Total
|
||||||||
December 31, 2017
|
|
February 12, 2018
|
|
$0.6375
|
|
$
|
14,489
|
|
|
$
|
1,373
|
|
|
$
|
1,760
|
|
|
$
|
17,622
|
|
March 31, 2018
|
|
May 18, 2018
|
|
$0.6525
|
|
$
|
14,830
|
|
|
$
|
1,714
|
|
|
$
|
—
|
|
|
$
|
16,544
|
|
June 30, 2018
|
|
August 10, 2018
|
|
$0.6675
|
|
$
|
15,170
|
|
|
$
|
2,055
|
|
|
$
|
—
|
|
|
$
|
17,225
|
|
September 30, 2018
|
|
November 13, 2018
|
|
$0.6675
|
|
$
|
15,175
|
|
|
$
|
2,055
|
|
|
$
|
—
|
|
|
$
|
17,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
February 13, 2019
|
|
$0.6675
|
|
$
|
15,175
|
|
|
$
|
2,055
|
|
|
$
|
—
|
|
|
$
|
17,230
|
|
March 31, 2019
|
|
May 14, 2019
|
|
$0.6675
|
|
$
|
15,175
|
|
|
$
|
2,055
|
|
|
$
|
—
|
|
|
$
|
17,230
|
|
June 30, 2019
|
|
August 12, 2019
|
|
$0.6675
|
|
$
|
15,175
|
|
|
$
|
2,055
|
|
|
$
|
—
|
|
|
$
|
17,230
|
|
September 30, 2019
|
|
November 12, 2019
|
|
$0.6675
|
|
$
|
15,175
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,175
|
|
Section 1.1
|
Definitions 1
|
Section 1.2
|
Construction 15
|
Section 2.1
|
Formation 15
|
Section 2.2
|
Name 15
|
Section 2.3
|
Registered Office; Registered Agent; Principal Office; Other Offices 15
|
Section 2.4
|
Purpose and Business 16
|
Section 2.5
|
Powers 16
|
Section 2.6
|
Term 16
|
Section 2.7
|
Title to Partnership Assets 16
|
Section 3.1
|
Limitation of Liability 16
|
Section 3.2
|
Management of Business 16
|
Section 3.3
|
Outside Activities of the Limited Partners 17
|
Section 3.4
|
Rights of Limited Partners 17
|
Section 4.1
|
Certificates 18
|
Section 4.2
|
Mutilated, Destroyed, Lost or Stolen Certificates 18
|
Section 4.3
|
Record Holders 19
|
Section 4.4
|
Transfer Generally 19
|
Section 4.5
|
Registration and Transfer of Limited Partner Interests 19
|
Section 4.6
|
Transfer of the General Partner’s General Partner Interest 20
|
Section 4.7
|
Restrictions on Transfers 20
|
Section 4.8
|
Citizenship Certificates; Non-citizen Assignees 21
|
Section 4.9
|
Redemption of Partnership Interests of Non-citizen Assignees 22
|
Section 4.10
|
Special Provisions Relating to the Holders of Subordinated Units 22
|
Section 4.11
|
Special Provisions Relating to the Holders of IDR Reset Common Units 23
|
Section 5.1
|
Organizational Contributions 23
|
Section 5.2
|
Contributions by the General Partner and its Affiliates 24
|
Section 5.3
|
Contributions by Initial Limited Partners 24
|
Section 5.4
|
Interest and Withdrawal 24
|
Section 5.5
|
Capital Accounts 24
|
Section 5.6
|
Issuances of Additional Partnership Interests 26
|
Section 5.7
|
Conversion of Subordinated Units 27
|
Section 5.8
|
Limited Preemptive Right 27
|
Section 5.9
|
Splits and Combinations 27
|
Section 5.10
|
Fully Paid and Non-Assessable Nature of Limited Partner Interests 28
|
Section 5.11
|
Issuance of Common Units in Connection with Reset of Incentive Distribution Rights 28
|
Section 6.1
|
Allocations for Capital Account Purposes 29
|
Section 6.2
|
Allocations for Tax Purposes 35
|
Section 6.3
|
Distributions; Characterization of Distributions; Distributions to Record Holders 37
|
Section 6.4
|
Distributions from Distributable Cash Flow 37
|
Section 6.5
|
Distributions from Capital Surplus 39
|
Section 6.6
|
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels 39
|
Section 6.7
|
Entity-Level Taxation 40
|
Section 7.1
|
Management 40
|
Section 7.2
|
Replacement of Fiduciary Duties 42
|
Section 7.3
|
Certificate of Limited Partnership 42
|
Section 7.4
|
Restrictions on the General Partner’s Authority 42
|
Section 7.5
|
Reimbursement of the General Partner 42
|
Section 7.6
|
Outside Activities 43
|
Section 7.7
|
Indemnification 44
|
Section 7.8
|
Liability of Indemnitees 45
|
Section 7.9
|
Standards of Conduct and Modification of Duties 45
|
Section 7.10
|
Other Matters Concerning the General Partner and Indemnitees 47
|
Section 7.11
|
Purchase or Sale of Partnership Interests 47
|
Section 7.12
|
Registration Rights of the General Partner and its Affiliates 47
|
Section 7.13
|
Reliance by Third Parties 49
|
Section 8.1
|
Records and Accounting 49
|
Section 8.2
|
Fiscal Year 49
|
Section 8.3
|
Reports 50
|
Section 9.1
|
Tax Returns and Information 50
|
Section 9.2
|
Tax Elections 50
|
Section 9.3
|
Tax Controversies 50
|
Section 9.4
|
Withholding Tax Payments 51
|
Section 10.1
|
Admission of Limited Partners 52
|
Section 10.2
|
Admission of Successor General Partner 52
|
Section 10.3
|
Amendment of Agreement and Certificate of Limited Partnership 52
|
Section 11.1
|
Withdrawal of the General Partner 53
|
Section 11.2
|
Removal of the General Partner 54
|
Section 11.3
|
Interest of Departing General Partner and Successor General Partner 54
|
Section 11.4
|
Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages 55
|
Section 11.5
|
Withdrawal of Limited Partners 55
|
Section 12.1
|
Dissolution 56
|
Section 12.2
|
Continuation of the Business of the Partnership After Dissolution 56
|
Section 12.3
|
Liquidator 56
|
Section 12.4
|
Liquidation 57
|
Section 12.5
|
Cancellation of Certificate of Limited Partnership 57
|
Section 12.6
|
Return of Contributions 57
|
Section 12.7
|
Waiver of Partition 58
|
Section 12.8
|
Capital Account Restoration 58
|
Section 13.1
|
Amendments to be Adopted Solely by the General Partner 58
|
Section 13.2
|
Amendment Procedures 59
|
Section 13.3
|
Amendment Requirements 59
|
Section 13.4
|
Special Meetings 60
|
Section 13.5
|
Notice of a Meeting 60
|
Section 13.6
|
Record Date 60
|
Section 13.7
|
Adjournment 60
|
Section 13.8
|
Waiver of Notice; Approval of Meeting; Approval of Minutes 61
|
Section 13.9
|
Quorum and Voting 61
|
Section 13.10
|
Conduct of a Meeting 61
|
Section 13.11
|
Action Without a Meeting 61
|
Section 13.12
|
Right to Vote and Related Matters 62
|
Section 13.13
|
Voting of Incentive Distribution Rights 62
|
Section 14.1
|
Authority 63
|
Section 14.2
|
Procedure for Merger, Consolidation or Conversion 63
|
Section 14.3
|
Approval by Limited Partners 64
|
Section 14.4
|
Certificate of Merger 65
|
Section 14.5
|
Effect of Merger, Consolidation or Conversion 65
|
Section 15.1
|
Right to Acquire Limited Partner Interests 66
|
Section 16.1
|
Addresses and Notices 67
|
Section 16.2
|
Further Action 68
|
Section 16.3
|
Binding Effect 68
|
Section 16.4
|
Integration 68
|
Section 16.5
|
Creditors 68
|
Section 16.6
|
Waiver 68
|
Section 16.7
|
Counterparts 68
|
Section 16.8
|
Applicable Law; Forum, Venue and Jurisdiction 68
|
Section 16.9
|
Invalidity of Provisions 69
|
Section 16.10
|
Consent of Partners 69
|
Section 16.11
|
Facsimile Signatures 69
|
Section 16.12
|
Third Party Beneficiaries 69
|
TEN COM — as tenants in common
|
UNIF GIFT/ TRANSFERS MIN ACT
|
TEN ENT — as tenants by the entireties
|
(Cust) (Minor)
|
JT TEN — as joint tenants with right of survivorship and not as tenants in common
|
under Uniform gifts/Transfers to CD
Minors Act (State) |
•
|
Represents that the transferee has the capacity, power and authority to become bound by our partnership agreement;
|
•
|
Automatically becomes bound by the terms and conditions of our partnership agreement; and
|
•
|
Gives the consents, waivers and approvals contained in our partnership agreement.
|
Issuance of additional units
|
No approval right.
|
Amendment of our
partnership agreement
|
Certain amendments may be made by our general partner without the approval of the unitholders. Other amendments generally require the approval of a unit majority. See “—Amendment of Our Partnership Agreement.”
|
Merger of our partnership or the
sale of all or substantially all
of our assets
|
Unit majority in certain circumstances. See “—Merger, Sale or Other Disposition of Assets.”
|
Dissolution of our partnership
|
Unit majority. See “—Dissolution.”
|
Continuation of our business
upon dissolution
|
Unit majority. See “—Dissolution.”
|
Withdrawal of our general partner
|
Under most circumstances, the approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required for the withdrawal of our general partner prior to December 31, 2023 in a manner that would cause a dissolution of our partnership. See “—Withdrawal or Removal of Our General Partner.”
|
Removal of our general partner
|
Not less than 66 2/3% of the outstanding common units, voting as a single class, including units held by our general partner and its affiliates. See “—Withdrawal or Removal of Our General Partner.”
|
Transfer of the general partner interest
|
Our general partner may transfer all, but not less than all, of its general partner interest without a vote of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to, such person. The approval of a majority of the outstanding common units, excluding common units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to December 31, 2023. See “—Transfer of General Partner Interest.”
|
Transfer of incentive distribution rights
|
No approval right.
|
Reset of incentive distribution levels
|
No approval right.
|
Transfer of ownership interests
in our general partner
|
No approval right. See “—Transfer of Ownership Interests in Our General Partner.”
|
|
•
|
|
Arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of the partnership agreement or the duties, obligations or liabilities among unitholders or of limited partners to us, or the rights or powers of, or restrictions on, the unitholders or the partnership);
|
|
•
|
|
Brought in a derivative manner on our behalf;
|
|
•
|
|
Asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of us or our general partner, or owed by our general partner, to us or the limited partners;
|
|
•
|
|
Asserting a claim arising pursuant to any provision of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”); or
|
|
•
|
|
Asserting a claim governed by the internal affairs doctrine
|
|
•
|
|
To remove or replace our general partner;
|
|
•
|
|
To approve some amendments to our partnership agreement; or
|
|
•
|
|
To take other action under our partnership agreement;
|
|
•
|
|
Enlarge the obligations of any limited partner without its consent, unless approved by at least a majority of the type or class of limited partner interests so affected; or
|
|
•
|
|
Enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable to our general partner or any of its affiliates without the consent of our general partner, which consent may be given or withheld in its sole discretion.
|
|
•
|
|
A change in our name, the location of our principal place of business, our registered agent or our registered office;
|
|
•
|
|
The admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;
|
|
•
|
|
A change that our general partner determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that neither we nor any of our subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or taxed);
|
|
•
|
|
An amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, agents or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;
|
|
•
|
|
An amendment that our general partner determines to be necessary or appropriate for the creation, authorization or issuance of additional partnership interests or rights to acquire partnership interests, including any amendment that the board of directors of our general partner determines is necessary or appropriate in connection with:
|
|
-
|
|
The adjustments of the minimum quarterly distribution, first target distribution, second target distribution and third target distribution in connection with the reset of our incentive distribution rights as described under “Cash Distributions—Sprague Holdings’ Right to Reset Incentive Distribution Levels”; or
|
|
-
|
|
The implementation of the provisions relating to the right to reset the incentive distribution rights in exchange for common units;
|
|
•
|
|
Any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone;
|
|
•
|
|
An amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement;
|
|
•
|
|
Any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or other entity, as otherwise permitted by our partnership agreement;
|
|
•
|
|
A change in our fiscal year or taxable year and related changes;
|
|
•
|
|
Mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the merger or conveyance other than those it receives by way of the merger or conveyance; or
|
|
•
|
|
Any other amendments substantially similar to any of the matters described above.
|
|
•
|
|
Do not adversely affect in any material respect the limited partners considered as a whole or any particular class of limited partners;
|
|
•
|
|
Are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;
|
|
•
|
|
Are necessary or appropriate to facilitate the trading of partnership interests or to comply with any rule, regulation, guideline or requirement of any securities exchange on which partnership interests are or will be listed for trading;
|
|
•
|
|
Are necessary or appropriate for any action taken by our general partner relating to splits or combinations of units under the provisions of our partnership agreement; or
|
|
•
|
|
Are required to effect the intent expressed in the registration statement for our initial public offering or the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement.
|
|
•
|
|
The election of our general partner to dissolve us, if approved by the holders of units representing a unit majority;
|
|
•
|
|
There being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;
|
|
•
|
|
The entry of a decree of judicial dissolution of our partnership; or
|
|
•
|
|
The withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer of its general partner interest in accordance with our partnership agreement or withdrawal or removal following approval and admission of a successor.
|
|
•
|
|
The action would not result in the loss of limited liability under Delaware law of any limited partner; and
|
|
•
|
|
Neither our partnership nor any of our subsidiaries would be treated as an association taxable as a corporation or otherwise be taxable as an entity for U.S. federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed).
|
|
•
|
|
An affiliate of our general partner (other than an individual);
|
|
•
|
|
Another entity as part of the merger or consolidation of our general partner with or into another entity or the transfer by our general partner of all or substantially all of its assets to another entity; or
|
|
•
|
|
Another entity in connection with enforcement of a pledge of the general partner interest enforceable in support of indebtedness of us or our subsidiaries;
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•
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Represents that the transferee has the capacity, power and authority to become bound by our partnership agreement;
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•
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Automatically becomes bound by the terms and conditions of our partnership agreement; and
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•
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Gives the consents, waivers and approvals contained in our partnership agreement.
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•
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The highest price paid by our general partner or any of its affiliates for any partnership interests of the class purchased within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those partnership interests; and
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•
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The average of the daily closing prices of the partnership interests of the class purchased over the 20 trading days preceding the date three days before notice of exercise of the call right is first mailed.
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•
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Obtain proof of the nationality, citizenship or other related status of our limited partners (and their owners, to the extent relevant); and
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•
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Permit us to redeem the units held by any person whose nationality, citizenship or other related status creates substantial risk of cancellation or forfeiture of any property or who fails to comply with the procedures instituted by our general partner to obtain proof of the nationality, citizenship or other related status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.
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•
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Obtain proof of the U.S. federal income tax status of our limited partners (and their owners, to the extent relevant); and
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•
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Permit us to redeem the units held by any person whose tax status has or is reasonably likely to have a material adverse effect on the maximum applicable rates or who fails to comply with the procedures instituted by the general partner to obtain proof of the U.S. federal income tax status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.
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•
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Our general partner;
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•
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Any departing general partner;
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•
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Any person who directly or indirectly controls our general partner or any departing general partner;
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•
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Any person who is or was a director, officer or managing member of our general partner or any departing general partner or any of their respective controlling affiliates;
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•
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Any person who is or was serving as a director, officer or managing member of another person owing a fiduciary duty to us or any of our subsidiaries at the request of our general partner or any departing general partner; or
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•
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Any person designated by our general partner.
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•
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A current list of the name and last known address of each record holder;
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•
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Copies of our partnership agreement, our certificate of limited partnership, related amendments and any powers of attorney under which they have been executed;
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•
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Information regarding the status of our business and financial condition; and
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•
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Any other information regarding our affairs as our general partner determines in its sole discretion is just and reasonable.
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•
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First, to all common unitholders, pro rata, until we distribute for each common unit an amount equal to the minimum quarterly distribution for that quarter; and
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•
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Thereafter, in the manner described in “—Incentive Distribution Rights” below.
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•
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First, to all common unitholders, pro rata, until each unitholder receives a total of $0.474375 per unit for that quarter (the “first target distribution”);
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•
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Second, 85.0% to all common unitholders, pro rata, and 15.0% to the holders of incentive distribution rights, pro rata, until each unitholder receives a total of $0.515625 per unit for that quarter (the “second target distribution”);
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•
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Third, 75.0% to all common unitholders, pro rata, and 25.0% to the holders of incentive distribution rights, pro rata, until each unitholder receives a total of $0.61875 per unit for that quarter (the “third target distribution”); and
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•
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Thereafter, 50.0% to all common unitholders, pro rata, and 50.0% to the holders of incentive distribution rights, pro rata.
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•
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First, to all common unitholders, pro rata, until each unitholder receives an amount equal to 115.0% of the reset minimum quarterly distribution for that quarter;
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•
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Second, 85.0% to all common unitholders, pro rata, and 15.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for the quarter;
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•
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Third, 75.0% to all common unitholders, pro rata, and 25.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives an amount per unit equal to 150.0% of the reset minimum quarterly distribution for the quarter; and
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•
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Thereafter, 50.0% to all common unitholders, pro rata, and 50.0% to the holders of the incentive distribution rights, pro rata.
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•
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First, to all common unitholders, pro rata, until the minimum quarterly distribution is reduced to zero, as described below; and
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•
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Thereafter, we will make all distributions of cash from capital surplus as if they were from distributable cash flow.
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•
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The minimum quarterly distribution;
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•
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The target distribution levels; and
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•
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The initial unit price, as described below under “—Distributions of Cash Upon Liquidation.”
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•
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First, to our general partner to the extent of certain prior losses specially allocated to our general partner;
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•
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Second, to the common unitholders, pro rata, until the capital account for each common unit is equal to the sum of: (1) the initial unit price; and (2) the amount of the minimum quarterly distribution for the quarter during which our liquidation occurs;
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•
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Third, to all common unitholders, pro rata, until we allocate under this paragraph an amount per unit equal to: (1) the sum of the excess of the first target distribution per unit over the minimum quarterly distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions of cash from distributable cash flow in excess of the minimum quarterly distribution per unit that we distributed to the unitholders, pro rata, for each quarter of our existence;
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•
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Fourth, 85.0% to all common unitholders, pro rata, and 15.0% to the holders of the incentive distribution rights, until we allocate under this paragraph an amount per unit equal to: (1) the sum of the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions of cash from distributable cash flow in excess of the first target distribution per unit that we distributed 85.0% to the unitholders, pro rata, and 15.0% to the holders of the incentive distribution rights for each quarter of our existence;
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•
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Fifth, 75.0% to all common unitholders, pro rata, and 25.0% to the holders of the incentive distribution rights, until we allocate under this paragraph an amount per unit equal to: (1) the sum of the excess of the third target distribution per unit over the second target distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions of cash from distributable cash flow in excess of the second target distribution per unit that we distributed 75.0% to the unitholders, pro rata, and 25.0% to the holders of the incentive distribution rights for each quarter of our existence; and
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•
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Thereafter, 50.0% to all common unitholders, pro rata, and 50.0% to the holders of the incentive distribution rights.
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•
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First, to the holders of common units in proportion to the positive balances in their capital accounts (with corresponding special allocations to the holders of incentive distribution rights to reverse the effect of prior allocations of certain gains to such holders) until the capital accounts of the common unitholders have been reduced to zero; and
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•
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Thereafter, 100% to our general partner.
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Name
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State or Other Jurisdiction of Incorporation
|
Percent of Ownership
|
Sprague Operating Resources LLC
|
Delaware
|
100%
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Sprague Energy Solutions Inc.
|
Delaware
|
100%
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Sprague Connecticut Properties LLC
|
Delaware
|
100%
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Sprague Terminal Services LLC
|
Delaware
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100%
|
Sprague Co-op Member LLC
|
Delaware
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100%
|
Coen Transport LLC
|
Pennsylvania
|
100%
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Coen Energy LLC
|
Pennsylvania
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100%
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Sprague Natural Gas LLC
|
Delaware
|
100%
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Kildair Service ULC
|
Canada
|
99.2%
|
[0.8% owned by Sprague Co-op Member LLC]
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|
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Sprague Resources Canada ULC
|
Canada
|
100%
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Wintergreen Transport Corporation ULC
|
Canada
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100%
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Sprague Resources Finance Corp
|
Delaware
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100%
|
•
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Form S-8 No. 333-191923 pertaining to the Sprague Resources LP 2013 Long Term Incentive Plan; and
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•
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Form S-3 No. 333-200148 pertaining to Sprague Resources LP and Sprague Resources Finance Corp
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1.
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I have reviewed this annual report on Form 10-K of Sprague Resources LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 5, 2020
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|
/s/ DAVID C. GLENDON
|
David C. Glendon
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Sprague Resources LP;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 5, 2020
|
|
/s/ DAVID C. LONG
|
David C. Long
|
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
Date: March 5, 2020
|
|
/s/ DAVID C. GLENDON
|
David C. Glendon
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
Date: March 5, 2020
|
|
/s/ DAVID C. LONG
|
David C. Long
|
Chief Financial Officer
|
(Principal Financial Officer)
|