in this issue fuel products distribution insight

FUEL PRODUCTS DISTRIBUTION INSIGHTMERGERS & ACQUISITIONS, PUBLIC & PRIVATE CAPITAL AND FINANCIAL ADVISORY SERVICES

IN THIS ISSUEFocus Topic: ESG and Access to CapitalRecent, Notable M&A TransactionsMacroeconomic IndicatorsDebt and Equity Market ConditionsWhat We’re Reading

INVESTMENT BANKING Fall 2021

FOR INSTITUTIONAL USE ONLY

FUEL PRODUCTS DISTRIBUTION INSIGHT Fall 2021

Deal spotlightPetroleum

Management, LLC

Offen Petroleum acquires portfolio of branded motor fuel dealer contracts from Petroleum Management, LLC and certain logistics assets of Pathfinder Transportation, LLC• Petroleum Management is an established wholesaler of branded motor fuels to dealers; Offen acquired the majority of the company’s assets in Colorado• Pathfinder Transportation distributes propane to customers in the Ozark region

Announced: 11/3/21

Parkland USA to acquire Parker’s Energy • Parker’s Energy is the wholesale fuel and marketing division of Parker’s Corp. (which owns and operates 70 c-stores in Georgia and South Carolina) and

supplies independent fueling stations across the Southeast and Mid-Atlantic regions

Announced: 11/1/21

World Fuel Services to acquire Flyer’s Energy, LLC • Flyers Energy, an Auburn, California based fuel and lubricants distributor, was founded in 1979 and serves nearly 12,000 commercial, industrial and

retail customers across 20 states in addition to operating 200 cardlock sites throughout the U.S; it is projected to distribute 850 million gallons of fuel in 2021

Announced: 10/28/21

Brad Hall & Associates acquire Classic Star Group LP and Ziptron Energy, Inc.• Classic Star Group is a petroleum distributor primarily serving dealer-operators of c-stores. Its branded fuel offerings include Chevron, Exxon, Mobil,

Shell, Texaco, Valero, Conoco and Phillips 66• Ziptron Energy, Inc. is a subsidiary of Classic Star Group; combined, the two companies distribute ~300 million gallons annually to commercial users

Announced: 10/4/21

RelaDyne acquired PPC Lubricants • PPC Lubricants is a lubricant distributor headquartered in Jonestown, Pennsylvania primarily operating in the Mid-Atlantic Region with 5 locations and

225 employees• The Drydene brand was relaunched by PPC in 2017 – it has ties back to the 1940s; it offers a full line of automotive, commercial and industrial lubricants

Announced: 9/22/21

Lykins Energy Solutions acquired by World Fuel Services, Colonial Oil Industries, Shipley Choice LLC• Classic Star Group is a petroleum distributor primarily supplying independent dealers; Ziptron Energy, Inc. is a subsidiary of Classic Star Group and

combined, the two companies distribute approximately 300 million gallons annually to commercial users

Announced: 10/1/21

2


3

John Veith, Director at Raymond James Investment Banking, recently participated on a panel at SIGMA’s Annual Conference to discuss the practical implications of ESG’s growing role in today’s business environment. In short, Mr. Veith discussed certain practical implications of addressing ESG concerns and effectively articulating your stakeholder-friendly approach. A strong ESG profile positively correlates with success in the M&A and capital markets. However, counterparties ultimately determine how sensitive capital allocation decisions are to ESG themes. In that light, being ESG-focused can create substantial value for a company by broadening its appeal to buyers and investors.

How your ESG profile could affect your access to capital

• Quantum of capital sought and the market from which it is sourced affects access

• Institutional investors active in public equity markets are already highly focused on ESG considerations

• ESG reporting is important in markets for syndicated loans and publicly-listed bonds as rating agencies and lender presentations feature discussions of ESG themes

• Focus on ESG has even given rise to new debt products, like “green bonds”

• Local commercial lenders may not require much ESG scrutiny

• However, we believe the ESG bar will eventually be raised for companies of all sizes

• Competition drives outcomes in transactions which requires that the most motivated counterparties are at the table

• Thoughtful ESG strategies should have access to the appropriate pool of buyers or investors; the robustness of a company’s ESG approach and accountability mechanisms can be a differentiator

• You do not to need to have ESG “figured out” before approaching the market, rather an ESG focus signals to the market a company is preparing for long-term success

• Acquirors with ESG goals of their own focus on a target’s impact on their progress

Preparing for a sale or recapitalization

Access to capital implications

Incorporating sustainable investing criteria into the investment selection process may result in investment performance deviating from other investment strategies or broad market benchmarks.

A precise definition of ESG continues to evolve, but consider it a broad umbrella term intended to encompass attitudes and expectations stakeholders have for companies across environmental, social, and governance issues. Stakeholders are increasingly interested in understanding a company’s values and specific actions taken tooperate in a socially responsible manner.

What is ESG?


4

Recent, notable M&A transactions

Source: Public company filings, press releases and Capital IQ.

Announced Date Acquiror Target Target Description

11/17/2021 DCC Propane Affordable Propane Gas Founded in 2004, Affordable Propane is a veteran-owned family business serving residential and commercial customers in Colorado.

11/12/2021 Heritage Petroleum LLC Allied Oil & Supply Allied Oil & Supply is a DEF and branded lubricants retailer that primarily operates in the Southwestern U.S.

11/3/2021 Offen Petroleum

Petroleum Management LLC (branded dealer supply contracts), Pathfinder Transportation LLC (logistics assets)

Petroleum Management, LLC is an established Colorado based motor fuel wholesaler that primarily operates within the state. Pathfinder Transportation is headquartered in Arkansas and distributes propane through its affiliate company, Tri-State propane.

11/1/2021 Parkland USA Parker’s Energy Parker’s Energy, the wholesale fuel and marketing division of Parker’s Corp, operates within the Southeast and Mid-Atlantic regions.

10/28/2021 World Fuel Corporation Flyers Energy, LLCBased in Auburn, California, Flyers Energy, LLC is a fuel and lubricant distributor serving both commercial and industrial customers. The company maintains a national fleet fueling network consisting of approximately 200 company operated cardlock sites.

10/13/2021 RelaDyne Enterprise Oil Co. Enterprise Oil Company is a fuel and lubricant distributor based in Chicago, Illinois that operates across the industrial, commercial and automotive segments.

10/6/2021 Gault Family Companies Rural Fuels Originally founded in 1947 as the Rural Gas Company, Rural Fuels is a Connecticut based residential propane and heating oil distributor and is the largest family-owned residential propane delivery business in the state.

10/4/2021 Brad Hall & Associates Classic Star Group LP and Ziptron Energy, Inc.

Classic Star Group LP, the parent company of Ziptron Energy, Inc., is a North Texas–based branded petroleum distributor. Combined, the two companies distribute approximately 300 million gallons annually to commercial end-users.

10/1/2021World Fuel CorporationColonial Oil IndustriesShipley Energy

Lykins Energy Solutions Lykins Energy Solutions is a fuel product distributor founded in 1948 and based in Milford, Ohio. The company offers propane,kerosene fuel, kerosene oil, electricity and automatic fill programs to residential, governmental, and commercial customers throughout Ohio, Kentucky and Indiana.

10/1/2021 Paraco Gas Warner’s Propane & Oil A family-owned company founded in 1994 and based in Gilbert, Pennsylvania, Warner’s Propane & Oil is a propane and heating oil retailer that serves both residential and commercial customers

9/22/2021 RelaDyne PPC Lubricants, Drydene

For more than 40 years, PPC Lubricants has been a premier Pennsylvania-based lubricants distributor serving states throughout the Mid-Atlantic region.Drydene, an industrial product brand with heritage dating back to the 1940s, is a national distributor of engine oils, DEF, transmission fluids, grease, metalworking fluids and more.



5

Recent, notable M&A transactions (cont’d)


Announced Date Acquiror Target Target Description

9/20/2021 Energy Distribution Partners ProGas ProGas is a propane retailer founded in 2000 that primarily operates in the Pittsburgh, Pennsylvania area and serves more than

3,500 residential and commercial customers.

9/20/2021 ThompsonGas, LLC Polar Gas Brighton, Colorado based Polar Gas is a locally owned and operated full-service propane company offering propane delivery, tanks, installation, and dispensers to residential and commercial customers throughout the Mountain region.

9/14/2021 ThompsonGas, LLC Timberline Gas LLC and affiliate companies' propane assets Timberline Gas LLC and is a propane retailer serving customers located throughout Montana, Wyoming, and North Dakota.

9/2/2021 Ferrellgas Partners, L.P. StarLite Propane Gas Corp. Founded in 1982, StarLite Propane Gas Corporation is a New York based propane distributor and service provider offering tank sale, installation, surveying, compliance, design and construction.

8/30/2021 HOP Energy, LLC Dominick Fuel Dominick Fuel is a Connecticut based, full-service heating fuels retailer founded in 1945. The family-owned company sells heating oil, diesel, and propane to both residential and commercial customers.

8/16/2021 Parkland Corp. Bradenton Fuel Oil, Inc With a 4.48-acre industrial site containing a 10,000 square foot warehouse and 90,000 gallons of fuel tank storage, Bradenton Fuel Oil, Inc. is an established commercial fuel distributor located in the Central West Florida region.

8/4/2021 Parkland Corp. Master Petroleum Based in Western Colorado, Master Petroleum is a commercial fuel distributor with 74 bobtails, 19 trailers, and seven bulk plants with a combined 1 million gallons of fuel storage.

7/23/2021 RelaDyne Alexis Oil Co., Global Industrial Solutions

Alexis Oil Co. and Global Industrial Solutions (collectively “Alexis/GIS”), is a lubricant and commercial fuels distributor and reliability services provider with customers throughout Southern California and Arizona.

5/27/2021 Energy Distribution Partners

Van Unen/Miersma(Sierra Propane and Windmill Propane)

One of the largest propane retailers in California, Van Unen/Miersma, operating as Sierra Propane and Windmill Propane, was founded in 1993 and serves more than 11,000 customers throughout the state.

5/6/2021 Offen Petroleum Business assets of Petromark, Inc.,Petromark Transportation

Petromark, Inc., a motor fuels wholesaler and Petromark Transportation, its affiliate trucking company, are based in Harrison, Arkansas. Petromark sells and distributes Shell, Phillips 66, and Valero fuel brands among others.

2/21/2021 Parkland Corp. Conrad & Bischoff Inc. Founded in 1959, Conrad and Bischoff Inc. is an established lubricant and fuel oil retailer, wholesaler, and distributor servingresidential and commercial customers throughout Utah, Montana, Wyoming, and Idaho.


6

Macroeconomic indicatorsReal GDP Growth

(seasonally adjusted annual rates)

Consumer Spending Growth(real PCE % change, seasonally adjusted at annual rates)

Purchasing Managers Index

0.0

2.0

4.0

6.0

8.0

Week Ended 11/20/21

0.20

Note: PMI Index figures above 50 indicate expansion

3.5% 1.4% 0.6% 3.6% 3.2% 1.7%

(6.9%)

(33.4%)

41.4%

3.4% 11.4% 12.0%

1.6%

(40.0%)

(20.0%)

0.0%

20.0%

40.0%

Q3'18

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q1'21

Q2'21

Q3'21

40.0

50.0

60.0

70.0

Oct-19 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21

October 202160.8

Weekly Jobless Claims(in millions)

Source: Bureau of Economic Analysis, St. Louis Federal Reserve, Bureau of Labor Statistics, Institute for Supply Management and Capital IQ.All data as of 11/29/21.

1.9% 0.9% 2.4% 3.2% 2.8% 1.9%

(5.1%)

(31.2%)

33.8%

4.5% 6.3% 6.7% 2.1%

(40.0%)

(20.0%)

0.0%

20.0%

40.0%

Q3'18

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q1'20

Q2'20

Q3'20

Q4'20

Q1'21

Q2'21

Q3'21


7

Macroeconomic indicators (cont’d)

West Texas Intermediate($ per barrel)

Inflation vs. 10-Year Treasury

Source: Bureau of Economic Analysis, St. Louis Federal Reserve, Bureau of Labor Statistics, Institute for Supply Management and Capital IQ.All data as of 11/29/21.

($40)

($20)

$0

$20

$40

$60

$80

$100

Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20 May-21 Nov-21

11/22/21 $76.74

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20 May-21 Nov-21

Inflation (CPI) 10-Year U.S. Treasury Yield

11/24/211.6%

October 20216.2%


8

Public company share price performance

10-year fuel distributor historical trading multiples (EV/EBITDA)(1)

Source: Capital IQ; data as of 11/29/21.(1) Median EV/LTM EBITDA multiple for PKI, SUN, GLP, CAPL, INT, SPB, UGI, SPH, SGU and SRLP.

6.9x

7.5x

9.5x

10.8x

9.7x

11.7x

10.5x

8.7x

10.6x

11.5x

10.1x

8.6x

6.2x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x

11/1/11 11/1/12 11/1/13 11/1/14 11/1/15 11/1/16 11/1/17 11/1/18 11/1/19 11/1/20 11/1/21

Median: 9.4x

11/29/217.5x

9.9x

8.9x8.3x

7.8x

8.9x

10.8x


9

Public company share price performanceFuel distributor trailing three-year stock price performance(1)

Inde

xed

Shar

e Pr

ice

Perfo

rman

ce(1

1/29

/201

8 =

100.

0)

(14.9%)

+77.5%

+25.6%

+83.8%

(5.6%)

+96.0%

+26.2%

+67.8%+56.6%

(14.6%)

Source: Capital IQ; share price as of 11/29/21.(1) Dividend adjusted share price performance.

+0.7%

0.0

50.0

100.0

150.0

200.0

250.0

Sunoco Global Sprague CrossAmerica Partners World Fuel Services Parkland

S&P 500 Star Group Superior Plus Suburban Propane UGI


10

Public company trading statisticsCurrent Price as a % of LTM High

LTM Dividend / Distribution Yield

EV / LTM EBITDA EV / 2021E EBITDA

93.5% 89.5% 89.5% 87.2% 85.3% 84.1% 84.0% 75.7%

66.9%

48.9%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

SUN UGI SPH SGU GLP CAPL SPB PKI INT SRLP

Median: 84.7% 16.9%

10.7% 9.7% 8.5% 8.3% 5.3% 5.2%

3.6% 3.1% 1.8%

0.0%

5.0%

10.0%

15.0%

20.0%

SRLP CAPL GLP SPH SUN SPB SGU PKI UGI INT

Median: 6.8%

15.6x

11.0x 9.7x8.0x 9.0x 8.6x 8.6x 8.6x

5.0x 4.0x

0.0x

4.0x

8.0x

12.0x

16.0x

20.0x

CAPL UGI PKI SRLP SUN SPH GLP SPB INT SGU

Median: 8.6x

15.2x

9.2x 8.2x 7.6x 7.5x 6.4x 6.1x5.3x

3.3x

0.0x

4.0x

8.0x

12.0x

16.0x

CAPL SGU GLP PKI SUN INT SPH UGI SGU SRLP

NM

Median: 7.5x

Source: Public company filings, Capital IQ, Wall Street equity research.Note: Share prices current as of 11/29/21. SUN = Sunoco LP, CAPL = CrossAmerica Partners LP, GLP = Global Partners LP, PKI = Parkland Fuel Corp., INT = World Fuel Services Corp., SRLP = Sprague Resources LP, SPH = Suburban Propane Partners, UGI = UGI Corp., Star Group LP = SGU and SPB = Superior Plus Corp.

Motor Fuel DistributorPropane / Heating Oil Distributor


11

Public company trading statistics (cont’d)

Net Debt / EBITDA 2021 Estimated Annual EBITDA Growth

Source: Public company filings, Capital IQ, Wall Street equity research.Note: Share prices current as of 11/29/21. SUN = Sunoco LP, CAPL = CrossAmerica Partners LP, GLP = Global Partners LP, PKI = Parkland Fuel Corp., INT = World Fuel Services Corp., SRLP = Sprague Resources LP, SPH = Suburban Propane Partners, UGI = UGI Corp., Star Group LP = SGU and SPB = Superior Plus Corp.

8.6x

5.0x

3.8x 3.5x 3.4x 3.2x

2.1x1.1x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

CAPL GLP SUN SPH PKI SPB UGI SGU SRLP INT

NM NM

Median: 3.5x

23.0%

15.3% 14.2% 11.4% 11.4%

6.6% 4.3% 2.9%

(6.1%)

(15.8%)(20.0%)

(10.0%)

0.0%

10.0%

20.0%

SUN PKI SGU INT SRLP CAPL SPB SPH GLP UGI

Median: 9.0%

Motor Fuel DistributorPropane / Heating Oil Distributor


12

Debt market outlookLeveraged Finance Volume ($B)

New-Issue First Lien Yield to MaturityAverage Discounted Spread of Leveraged Loans(1)

0

20

40

60

80

$0B

$50B

$100B

$150B

$200B

LBO Volume Number of Deals

L+0L+200L+400L+600L+800

L+1000L+1200L+1400L+1600

Middle Market Large Corporate

6.22%

4.75%2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 3Q21

Middle Market Large Corporate

Source: LCD Research.(1) Middle market defined as companies with less than $50 million in EBITDA. All data as of 11/29/21.


13

Debt market outlook (cont’d)

Source: LCD Research.(1) Middle market defined as companies with less than $50 million in EBITDA. All data as of 11/29/21.

Average Leverage Ratio Average LBO Equity Contribution

Middle Market Leverage Trends

4.8x5.0x 4.9x

5.1x5.4x

5.6x5.3x

4.9x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

5.0x

5.5x

6.0x

2013 2014 2015 2016 2017 2018 2019 202035.0%

40.0%

45.0%

50.0%

55.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

“Oil Price Jumps Above $80 and Natural Gas Races Higher, Turbocharged by Supply Shortages” | Amrutha Ramkumar, WSJOctober 11, 2021 – Oil prices are topping an index of raw materials by the biggest margin in more than a decade and expected to outpace copper this year by the largest amount since 2002. U.S. natural gas futures hit a nearly 13-year high on October 5, and prices could reach even higher if the winter is colder than expected

Read More

“Can Nuclear Fusion put the Brakes on Climate Change?” | Rivka Galchen, The New YorkerOctober 4, 2021 – With the accelerating climate crisis, the world needs an environmentally friendly and sustainable energy source that can provide enough power for the world’s needs. Fusion energy, an elusive, underfunded dream being chased by the world’s top scientists could be the key to bringing climate change to a halt.Read More

“Prepare for a Propane Sticker Shock” | Ryan Dezember, WSJOctober 25, 2021 – Propane prices heading into winter are the highest they have been in a decade, spelling bad news for millions of families in rural locations who rely on the fuel for heating. Even if this winter is 10% warmer than the forecast, households should expect an average 29% increase in their heating cost according to the EIA.Read More

“‘Turbocharged’ M&A market could hit a record $6 trillion by year end, says KPMG” | Karen Gilchrist, CNBCSeptember 28, 2021 – Global mergers and acquisitions have exceeded $4.3 trillion this year and are expected to break the $4.8 trillion record set in 2015. According to a September survey conducted by KPMG, 86% of CEOs indicated that acquisitions will be their main source of growth over the next three years.

Read More

14

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

What we’re reading

“The ESG Regulatory Whirlwind: Accountability on the Horizon” | Gina Miani, Meadow Hackett, Kristen Sullivan and Christine Robinson, Deloitte & Touche LLPJune 4, 2021 – In April, President Biden unveiled an enhanced nationally determined contribution (NDC2 ) for the U.S., vowing to reduce greenhouse gas emissions by more than 50% from 2005 levels by 2030. In the forthcoming environment, it will be increasingly important for companies to improve their ESG-related disclosures.Read More

“Future-Proofing Convenience Stores for Electric Vehicle Charging” | Fuels InstituteOctober 1, 2021 – In order to prepare for the addition of EV charging services, operators need to incorporate critical future infrastructure through efficient site design and careful planning. Preliminary steps include understanding federal, state and local requirements, as well as requesting a preliminary site power evaluation.Read More

https://www.wsj.com/articles/oil-price-jumps-above-80-and-natural-gas-races-higher-turbocharged-by-supply-shortages-11633943832

https://www.newyorker.com/magazine/2021/10/11/can-nuclear-fusion-put-the-brakes-on-climate-change

https://www.wsj.com/articles/prepare-for-propane-sticker-shock-11635026109

https://www.cnbc.com/2021/10/12/kpmg-on-global-ma-market-hitting-record-6-trillion-in-2021.html

https://dart.deloitte.com/USDART/home/publications/deloitte/heads-up/2021/esg-regulatory-accountability

https://www.fuelsinstitute.org/Research/Reports/Future-Proofing-Convenience-Stores-for-Electric-Ve

Learn how our deep industry expertise and commitment to each transaction can help you achieve your business objectives here.

SCOTT GARFINKELManaging Director & Group HeadNashville [email protected]

ROGER WOODMANManaging DirectorAtlanta [email protected]

JOHN VEITHDirectorNashville [email protected]

Your successis our business

Representative transactions

Has been acquired by

July 2020

Has acquired propane distribution and propane

terminal assets from

December 2018

Has sold its wholesale fuel and refined fuel terminal assets to

April 2018

Has completed its

business combination with

December 2020

Has sold its fueldistribution assets to

September 2017

Has sold its retail

convenience store assets to

July 2017

15

Deep and experienced team

Robust transaction experience(1)

7investmentbankers

4+equity researchanalysts

4+dedicated equity capital markets pros

Client focusOil Jobbers / WholesaleFuel Distributors

Propane and Heating Oil Marketers

Commercial Fuel & Lube Distributors

TerminalOperators

Convenience Retail

Merchandise / FoodserviceDistributors

Truck Stop & Travel Center Operators

Mobile Refueling

AlternativeFuelProviders

CarwashOperators

75+relevant industry transactions

>$12Btotal dealvalue

25+years focused onthe Industry

(1) Current as of November 2021.

https://www.raymondjames.com/corporations-and-institutions/investment-banking/industries-of-focus/convenience-store-and-fuel-products

Notes & DisclosuresThis material is not to be considered an offer or solicitation regarding the sale of any security. This material was prepared within Raymond James & Associates’ Investment Banking Department and is for information purposes only. This material is not a product of Raymond James & Associates’ Research Department; recipients of this report should not interpret the information herein as sufficient grounds for an investment decision or any other decision. The report shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities mentioned herein; past performance does not guarantee future results. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Raymond James & Associates, Inc., member of New York Stock Exchange / SIPC

in this issue fuel products distribution insight

Documents