Sprague’s revenue took a big hit in 2020
But Portsmouth energy company’s storage services helped income rise for the year
Portsmouth-based energy supplier and materials handling company Sprague Resources’ sales were off by a third – more than $1 billion – in 2020, but the company’s bottom line improved thanks to the value of its storage operations for the futures market and signing a contract to handle windmill components.
The company said the pandemic and warmer weather resulted in dramatically reduced sales as people drove less and there was a huge drop in heating demand, particularly on the commercial side.
Sales for the fourth quarter of 2020 were $627 million, compared to just short of $1 billion during the last quarter in 2019, the company said in its earnings report. Similarly, sales for the entire year totaled $2.3 billion, down from the previous year’s $3.5 billion.
Net income fell for the quarter as well, from $2.5 million (2 cents a share) compared to %11.8 million during the last quarter of the previous year, but for the year, net income rose more than $2.5 million to $33.8 million or $1.11 a share
How did this happen? You can credit contango. That is a situation when the future price of a commodity is higher than the expected spot price at the contract’s maturity. In such a situation storage of the commodity becomes more valuable.
There were other reasons as well. The company off a storage tank for $8 million that had a book value of $1 million. And its materials handling division – which was hurt because of softness in the paper market, which affected its it Searsport, Maine, facility – got a boast with a land-based windmill project. That could prove to be a lucrative business in the future, thanks to prospects of offshore wind projects planned for the Gulf of Maine.