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ALLENTOWN, Pa. -- Lehigh Gas Partners LP closed on its acquisition of 44 independent dealer supply contracts, five subjobber supply contracts and certain other assets from Manchester Marketing Inc., the company announced today during its 2013 fourth-quarter earnings call.
Lehigh Gas paid $10.7 million in cash, which was financed under the master limited partnership's (MLP) credit facility.
The acquired supply contracts are primarily for branded motor fuels, with the average remaining terms being approximately nine years. The sites are located in Richmond, Va.
"We are excited to enter the Richmond, Va., market," said Joseph Topper, chairman and CEO of the Allentown, Pa.-based company. "We will look to more acquisitions in the future."
Lehigh Gas is a wholesale distributor of motor fuels, and owner and lessee of real estate used in the retail distribution of motor fuels. The MLP was formed in October 2012 and owns or leases more than 500 sites in 11 states: Pennsylvania, New Jersey, Ohio, Florida, New York, Massachusetts, Kentucky, New Hampshire, Maine, Tennessee and Virginia.
Switching gears to Lehigh Gas' retail earnings, Topper reported that poor weather conditions in the fourth quarter ended Dec. 31-- especially in the Northeast -- had an effect on the company's earnings. Hence, gross fuel profits declined 23.3 percent year over year to $10.9 million.
Counteracting this decline were fuel sales revenues and rental income, which both increased in 2013's fourth quarter. "The generally rising motor-fuel price environment during the quarter was a headwind to our margins during the period," said Topper. "Despite the challenging environment in the quarter, our results indicate the stability of our business model, and we were pleased to announce our fourth consecutive quarterly distribution increase."
Companywide, Lehigh Gas earned a net income of $3.9 million for the quarter, compared to a $1-million loss during the same period in 2012.
Lehigh Gas Partners LP is affiliated with several major oil brands, including ExxonMobil, BP, Shell, Chevron, Sunoco and Valero.