PYPE - Sprague Resources: The Worst Is Still Coming

May, 12 2022 01:54 PM ETRACS NYSE Pickens Core Midstream Index ETN due August 20 2048

On the surface, it appears that Sprague Resources saw a strong start to 2022, with their adjusted EBITDA for the first quarter seeing a very impressive 45% increase year-on-year.
Although when digging deeper, this is not the case, with these results being materially boosted by unrealized gains that provided no tangible benefits.
They also saw a relatively large working capital draw that helped ease the pressure upon their very weak liquidity and strained credit facility, but obviously, this is merely temporary.
Given the normal seasonality in their financial performance and the downbeat outlook for the remainder of 2022 from management, it seems that a cash burn is very likely.
Following this grim outlook, it should not be surprising that I continue believing that my sell rating is appropriate.

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Company Name:	ETRACS NYSE Pickens Core Midstream Index ETN due August 20 2048
Stock Symbol:	PYPE
Market:	NYSE