UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 21, 2014
Lehigh Gas Partners LP
(Exact name of registrant specified in its charter)
| Delaware | 001-35711 | 45-4165414 | ||
| (State or Other Jurisdiction Of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
645 West Hamilton Street, Suite 500
Allentown, PA 18101
(Address of principal executive offices, zip code)
(610) 625-8000
Registrant’s telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure |
On May 21, 2014, Lehigh Gas Partners LP (the “Company”) is presenting at the National Association of Publicly Trading Partnerships’ 2014 MLP Investor Conference in Ponte Vedra, Florida. The presentation and accompanying slide presentation for the event will be available on the Webcasts & Presentations page of the Company’s website at www.lehighgaspartners.com. The slide presentation for the event is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information in this Item 7.01 and Exhibit 99.1 attached hereto is intended to be furnished under Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Act, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits |
The following exhibit has been filed with this report:
| Exhibit No. |
Description | |
| 99.1 | Information in Presentation by Lehigh Gas Partners LP | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Lehigh Gas Partners LP | ||||||||
| By: | Lehigh Gas GP LLC its general partner | |||||||
| Dated: May 21, 2014 | By: | /s/ Frank M. Macerato | ||||||
| Name: | Frank M. Macerato | |||||||
| Title: | General Counsel, Secretary and Chief Compliance Officer | |||||||
3
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Information in Presentation by Lehigh Gas Partners LP | |
 Exhibit 99.1 |
 2
Forward Looking and Cautionary Statements
This
presentation
and
oral
statements
made
regarding
the
subjects
of
this
presentation
may
contain
forward-looking
statements
which
may
include,
but
are
not
limited
to,
statements
regarding
our
plans,
objectives,
expectations
and
intentions
and
other
statements
that
are
not
historical
facts,
including
statements
identified
by
words
such
as
"outlook,"
"intends,"
"plans,"
"estimates,"
"believes,"
"expects,"
"potential,"
"continues,"
"may,"
"will,"
"should,"
"seeks,"
"approximately,"
"predicts,"
"anticipates,"
"foresees,"
or
the
negative
version
of
these
words
or
other
comparable
expressions.
All
statements
addressing
operating
performance,
events,
or
developments
that
the
Partnership
expects
or
anticipates
will
occur
in
the
future,
including
statements
relating
to
revenue
growth
and
earnings
or
earnings
per
unit
growth,
as
well
as
statements
expressing
optimism
or
pessimism
about
future
operating
results,
are
forward-looking
statements.
The
forward-looking
statements
are
based
upon
our
current
views
and
assumptions
regarding
future
events
and
operating
performance
and
are
inherently
subject
to
significant
business,
economic
and
competitive
uncertainties
and
contingencies
and
changes
in
circumstances,
many
of
which
are
beyond
our
control.
The
statements
in
this
presentation
are
made
as
of
the
date
of
this
presentation,
even
if
subsequently
made
available
by
us
on
our
website
or
otherwise.
We
do
not
undertake
any
obligation
to
update
or
revise
these
statements
to
reflect
events
or
circumstances
occurring
after
the
date
of
this
presentation.
Although
the
Partnership
does
not
make
forward-looking
statements
unless
it
believes
it
has
a
reasonable
basis
for
doing
so,
the
Partnership
cannot
guarantee
their
accuracy.
Achieving
the
results
described
in
these
statements
involves
a
number
of
risks,
uncertainties
and
other
factors
that
could
cause
actual
results
to
differ
materially,
including
the
factors
discussed
in
this
presentation
and
those
described
in
the
“Risk
Factors”
section
of
the
Partnership’s
Form
10-K
filed
on
March
10,
2014,
with
the
Securities
and
Exchange
Commission
as
well
as
in
the
Partnership’s
other
filings
with
the
Securities
and
Exchange
Commission.
No
undue
reliance
should
be
placed
on
any
forward-looking
statements. |
 3
•
Lehigh Gas Partners LP (“LGP”
or “Lehigh Gas”) is a
leading wholesale distributor of motor fuels and owner
and lessee of real estate related to retail fuel distribution.
Its Predecessor was founded in 1992
Focused on distributing fuels to and owning and
leasing sites primarily located in metropolitan and
urban areas
•
Completed a $138 million Initial Public Offering on
October 30, 2012
and a $91.4 million follow-on offering
in December 2013.
(1)
•
Equity market capitalization of $504.5 million and
enterprise value of $754.2 million as of 3/31/14
•
As of 3/31/2014, distribute to over 1,100 locations
primarily in the Northeastern United States, Florida,
Tennessee, Virginia and Ohio
(2)
259 sites owned or leased and operated by
Lehigh-Gas Ohio, LLC
;
85 sites owned or leased
and operated by the Partnership; 238 sites
operated by lessee dealers; 55 commission
sites
(2)
Also distribute to 389 independent dealer sites
and through 13 sub-wholesalers
(2)
•
Distributed 637.8 million gallons of motor fuel in 2013
Lehigh Gas Overview
Top 10
Distributor for
(3)
:
(1)
$138 million Includes $18 million exercise of over-allotment; $91.4 million of
net proceeds. (2)
As of March 31, 2014, pro forma for PMI acquisition.
(3)
Based on 2013 volume. |
 4
Investment Highlights
•
Stable Cash Flows from Rental Income
and Wholesale Fuel Distribution
•
Established History of Completing and
Integrating Acquisitions
•
Long-Term Relationships with Major
Integrated Oil Companies and Refiners
•
Prime Real Estate Locations in Areas
with High Traffic
•
Financial Flexibility to Pursue
Acquisitions and Expansion
Opportunities
•
Aligned Equity Ownership
BP Station
Union Centre Blvd., West Chester, OH
(Metro Cincinnati) |
 5
Lehigh Gas Operations
Industry Value Chain
Pipeline / Storage
Non-Qualifying MLP Income
Retail Fuel Distribution
(LGWS)
Gasoline Station
Wholesale Distributor
Qualifying MLP Income
Wholesale Distribution
(LGW)
Rental Income from Real
Estate
(LGPR)
•
Stable cash flow
•
Margin per gallon
•
Limited commodity exposure
•
Multi-year contracts
•
Stable cash flow
•
Prime locations
•
Multi-year contracts
Inside Store Sales
(LGWS)
Rental Income from
Equipment
(LGWS) |
 6
Lehigh Gas Portfolio Overview
)
Sites Where Lehigh Gas Partners LP
Supplies Wholesale Motor Fuels as of
March 31, 2014
(1)
(1)
Pro forma for PMI acquisition |
 7
•
Own or lease sites in prime
locations and seek to enhance
cash flow
•
Expand within and beyond core
geographic markets through
acquisitions
•
Increase motor fuel distribution
business by expanding
market share
•
Maintain strong relationships
with major integrated oil
companies and refiners
•
Serve as a preferred distributor
and dedicated supplier
•
Manage risk and mitigate
exposure
to environmental
liabilities
Shell Station
Route 17, Hasbrouck Heights, NJ
Lehigh Gas Strategy |
 8
Wholesale Distribution
Wholesale Distribution
Lehigh Gas Operating Model
(1)
Lehigh Gas –
Ohio, LLC (“LGO”).
Rental Income
Motor Fuels
Independent
Transportation
Contractors
Independent
Dealer
Lessee
Dealer
LGO
(1)
(affiliate of LGP)
Payment Terms /
Discounts
Payment for Fuel
Motor Fuels
Sub-
Wholesaler
Commission
Agents
Suppliers
Retail Distribution
Rental Income
Master Limited Partnership |
 9
Stable Cash Flows
Wholesale Distribution Cash Flows
•
Lessee dealer agreements generally have 3 year initial terms
and a remaining term of 2.5 years as of December 31, 2013
•
LGO supply agreement had a 15-year initial term at the time
of the IPO and had a remaining term of approximately 13.8
years as of December 31, 2013
•
Our wholesale supply agreements prohibit the purchase of
motor fuel from other distributors
Rental Income Cash Flows
•
Lease agreements with lessee dealers generally have a 3
year initial term and had an average remaining term of 2.5
years as of December 31, 2013
•
Lease agreements with commission agents generally range
from 5 to 10 years and had an average remaining term of 5.3
as of December 31, 2013
•
LGO lease agreements had an average remaining term of
approximately 14.1 years as of December 31, 2013
•
Our lease agreements generally require the lessees to
purchase their motor fuel from us
LGP
Predecessor
(1)
Wholesale Distribution Margin Per Gallon represents revenues from fuel sales minus
costs from fuel sales (including amounts to affiliates) divided by the
gallons of motor fuel distributed. (2)
YE (Year End) represents twelve months ended December 31 of the applicable year and
2012 PF (Pro Forma) represents 2012 pro forma as presented on Form 8-K
filed with the SEC on March 26, 2013. 1Q 2014 represents the quarter
ending March 31, 2014. (3)
Rental income is rental income from lessee dealers and from affiliates.
Information shown in 1QA 2014 represents annualized rental income for the
period ending March 31, 2014. Wholesale
Distribution
Margin
Per
Gallon
(1)(2)
Rental Income
(2)(3)
LGP
Predecessor
Average Margin: $0.0654 |
 10
Prime Real Estate Locations
•
We own and lease sites that provide
convenient fueling locations in areas of
high consumer demand
•
We own or lease sites in fourteen states
(1)
Six of the states are in the top ten
states for consumers of gasoline in
the United States
(2)
Five of the states are in the top ten
states for consumers of on-highway
diesel fuel in the United States
(2)
•
Limited availability of undeveloped real
estate in many of our markets presents a
high barrier to entry for the development of
competing sites
•
Due to prime locations, owned real estate
sites have high alternate use values, which
provides additional risk mitigation
(1)
As of March 31, 2014 pro forma for PMI acquisition
(2)
Source EIA. As of December 31, 2012
LGP Controlled Sites by State
(1) |
 11
Branded Fuel Suppliers
•
One of the ten largest independent distributors by
volume in the U.S. for ExxonMobil, BP and Shell
branded fuels
Also distribute Valero, Sunoco, Chevron and
Gulf-branded motor fuels
•
Prompt payment history and good credit standing
with suppliers allow us to receive certain term
discounts on fuel purchases, which increases
wholesale profitability
•
Branded fuel is perceived by retail customers as
higher quality and commands a price premium
LGP Fuel Distribution by Brand
(1)
Brands Distributed
Supplier
% of Total Motor Fuel
Distributed
ExxonMobil
43%
BP
25%
Shell
15%
Chevron
5%
Valero
4%
Total
92%
(1)
As of December 31, 2013 |
 12
Growth Through Acquisitions
•
Wholesale marketing remains a fragmented and
local industry
•
Long history of successfully sourcing and
executing acquisitions
Predecessor completed over 12
acquisitions of 10 or more sites
•
We seek to acquire sites within our existing
geographic markets to enhance efficiencies and
in new markets with favorable demographic,
economic and fuel market trends
•
Since our IPO, we have completed 5 major
acquisitions for total consideration of $193.2
million
Dunmore increased existing operating
area in PA
Remaining transactions added sites in
scale in new markets in FL, TN and VA
•
Established relationships with oil majors,
customers, industry contacts and brokers to
source new acquisitions
•
Team dedicated to acquisitions
Acquisitions Since Our IPO
(1)
Dunmore
24
29.0
Express Lane
47
45.2
Rogers
17
21.1
Rocky Top
33
36.9
PMI
85
61.0
Total
206
193.2
Total
Consideration
($ million)
Acquisition
Sites Acquired
(Fee &
Leasehold)
(1)
Excludes non-c-store sites acquired in PMI acquisition.
|
 13
PMI Acquisition Overview
•
The Partnership acquired PMI, a Roanoke, VA headquartered distributor of petroleum
products and owner and operator of convenience stores, on April 30, 2014, for net total
consideration of $61 million
•
The company operates 85 convenience stores under the Stop in Food Stores brand
•
Sold 91 million gallons of motor fuel in 2013
•
$93 million in non-fuel revenue at the sites
•
50 sites are Shell branded, 22 Exxon branded
•
9 co-located quick service restaurants
•
Petroleum products distribution segment distributes primarily motor fuels along with
other petroleum products throughout Virginia, West Virginia, Tennessee and North
Carolina
•
Distributed approximately 191 million gallons in 2013
•
The Partnership divested the lubricants business at closing for $14 million (which is
reflected in the net total consideration figure)
•
Transaction structured as stock acquisition with the Partnership’s taxable subsidiary
acquiring the corporation
•
Expect to combine operations with Manchester acquisition and realize certain other
efficiencies |
 14
PMI Locations
Dealer Site (no real estate control)
Company Operated Site |
 15
Atlas Acquisition Overview
•
The Partnership has entered into a purchase agreement to purchase wholesale supply
and certain other assets from Atlas Oil Company for total consideration of $36.1 million
•
Assets to be purchased primarily consist of:
•
53 wholesale supply contracts
•
11 fee or leasehold sites
•
In addition, LGP is acquiring certain other short term financings assets associated with
the acquired supply contracts
•
Assets are located in the metro Chicago area
•
Supply contracts are long term agreements with a weighted average term remaining of
approximately 15 years
•
The fee and leasehold sites are currently leased to third party commission agents
•
All the sites are BP branded locations
•
Expect to close second quarter 2014 |
 16
Commission Agent
Independent Dealer
Lessee Dealer
Other
Atlas Locations |
 17
Capital Structure Overview
•
The Partnership completed in March the
syndications of a new $450 million credit
facility
•
New facility provides for increased financial
and operational flexibility and extends the
tenor to 5 years
•
Facility provides for flexibility to
access additional forms of debt capital
•
$100 million accordion feature
•
Continuously evaluate other capital sources
to ensure efficient capital structure
Capitalization
($ in millions)
Actual
3/31/2014
% of Book
Cap
EBITDA
Multiple
Cash
1.4
Long Term Debt
186.1
54.5%
3.1x
Capital Lease Obligations
66.1
19.4%
1.1x
Total Debt
252.2
73.9%
4.2x
Partners' Capital
89.1
26.1%
1.5x
Total Book Capitalization
341.3
100.0%
5.6x
Equity Market Capitalization (3/31/2014)
504.5
8.3x
Enterprise Value
754.2
12.4x
3/31/2014 Pro Forma LTM EBITDA
60.6 |
 18
Distributions
Distributions Since Our IPO
(1)
The
4
quarter
of
2012
is
for
the
period
from
October
31
through
December
31,
2012.
The
DCF / unit includes $6.3 million, or $0.42 / unit, in fees and expenses related to
our Initial Public Offering in October 2012.
•
Our primary business objective is to make
quarterly cash distributions to our unitholders
and, over time, to increase our quarterly cash
distributions
•
Our success in the acquisitions market during
the course of the last twelve months has
enabled us to grow our distribution
First quarter distribution of $0.5125 per
unit ($2.05 annualized) represents a
17.1% increase from the initial distribution
amount at the time of the IPO
•
Committed to a prudent, sustainable distribution
growth rate
Quarterly Distribution
Per Unit
0.2948
$
0.4525
$
0.4775
$
0.5025
$
0.5125
$
0.5125
$
Distribution Per Unit on
Annualized Basis
1.75
$
1.81
$
1.91
$
2.01
$
2.05
$
2.05
$
% increase from prior
quarter
-
3.4%
5.5%
5.2%
2.0%
0.0%
Quarterly DCF / Unit
0.1328
$
0.6198
$
0.7449
$
0.7316
$
0.5833
$
0.3870
$
Ratio of DCF / Per Unit
Distribution
0.5x
1.4x
1.6x
1.5x
1.1x
0.8x
1st
Quarter
2014
4th
Quarter
2013
4th
Quarter
2012¹
1st
Quarter
2013
2nd
Quarter
2013
3rd
Quarter
2013
th |
 19
Aligned Equity Ownership
•
Chairman and CEO Joe Topper owns approximately 39% of LGP
(1)
Board member John B. Reilly, III owns approximately 5% of LGP to
bring combined
ownership of the two of them to approximately 44%
(1)
Approximately 92% of ownership interest of Topper and Reilly is in the form of
subordinated units
•
Lehigh Gas GP (the general partner) has a non-economic general partner interest
in Lehigh Topper & Reilly vs. Public
Ownership
Topper & Reilly Common vs. Subordinated
Unit Ownership
(1)
(1)
As of March 31, 2014
Reilly
5%
Topper
39%
Public
56% |
 20
Investment Highlights
BP Station
Main Street, Lebanon, OH
•
Stable Cash Flows from Rental Income
and Wholesale Fuel Distribution
•
Established History of Completing and
Integrating Acquisitions
•
Long-Term Relationships with Major
Integrated Oil Companies and Refiners
•
Prime Real Estate Locations in Areas
with High Traffic
•
Financial Flexibility to Pursue
Acquisitions and Expansion
Opportunities
•
Aligned Equity Ownership |