NEWS RELEASE
Sunoco LP Announces Second Quarter 2016 Financial
and Operating Results
8/3/2016
- Generated Net Income of $72.1 million, Adjusted EBITDA of $164.0 million and Distributable Cash Flow, as
adjusted, of $92.2 million
- Increased quarterly distribution by 1.0 percent versus 1Q 2016 and 19.1 percent versus 2Q 2015
- Opened 6 new-to-industry locations with 23 currently under construction
- Completed acquisitions of retail and wholesale assets in Texas and New York
Conference Call Scheduled for 9:00 a.m. CT (10:00 a.m. ET) on Thursday, August 4
DALLAS, Aug. 3, 2016 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today announced
financial and operating results for the three-month period ended June 30, 2016.
Revenue totaled $4.1 billion, a decrease of 19.6 percent, compared to $5.1 billion in the second quarter of 2015. The
decline was the result of a 60.5 cent per gallon decrease in the average selling price of fuel partly offset by an
increase in retail merchandise sales.
Total gross profit was $580.6 million, compared to $545.2 million in the second quarter of 2015. Key drivers of the
increase were a higher total weighted average fuel margin, an increase in merchandise margin and the contribution
from third party acquisitions and new-to-industry locations opened during the last 12 months.
Income from operations was $124.2 million, versus $123.7 million in the second quarter of 2015, reflecting an
increase in gross profit offset by higher general and administrative and other operating expenses.
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Net income attributable to partners was $72.1 million, or $0.53 per diluted unit, versus $34.9 million, or $0.87 per
diluted unit, in the second quarter of 2015.
Adjusted EBITDA (1) for the quarter totaled $164.0 million, compared with $142.4 million in the second quarter of
2015. The favorable year-over-year comparison reflects stronger retail fuel and merchandise margins, the
contribution from third party acquisitions and new-to-industry locations opened during the last 12 months offset by
weaker wholesale margins.
Distributable cash flow attributable to partners (1), as adjusted, was $92.2 million, compared to $39.3 million a year
earlier.
On a weighted-average basis, fuel margin for all gallons sold increased to 13.8 cents per gallon, compared to 12.9
cents per gallon in the second quarter of 2015. The increase was primarily attributable to an increase in margins in
both the retail and wholesale segments.
Net income attributable to partners for the wholesale segment was $83.2 million compared to $30.7 million a year
ago. Adjusted EBITDA was $77.3 million, versus $61.5 million in the second quarter of last year. Total wholesale
gallons sold were 1,315.7 million, compared with 1,285.0 million in the second quarter of 2015, an increase of 2.4
percent. This includes gallons sold to consignment stores and third-party customers, including independent
dealers, fuel distributors and commercial customers. The Partnership earned 8.8 cents per gallon on these
volumes, compared to 8.6 cents per gallon a year earlier.
Net loss attributable to partners for the retail segment was $11.0 million compared to a net income of $4.2 million a
year ago. Adjusted EBITDA was $86.7 million, versus $80.9 million in the second quarter of last year. Total retail
gallons sold increased by 0.3 percent to 641.2 million gallons as a result of the contribution from third party
acquisitions and new-to-industry locations opened during the last 12 months. The Partnership earned 24.0 cents
per gallon on these volumes, compared to 21.4 cents per gallon a year earlier.
Total merchandise sales increased by 2.8 percent from a year ago to $576.6 million, reflecting the contribution from
third party acquisitions and new-to-industry locations opened during the last 12 months. Merchandise sales
contributed $187.3 million of gross profit with a retail merchandise margin of 32.5 percent, a 100 basis point
increase from the second quarter of 2015.
Same-store merchandise sales decreased by 1.8 percent, reflecting continued weakness in SUN's convenience store
operations in the Texas oil producing regions and inclement weather in May in Texas and on the East Coast. Same-
store fuel sales decreased by 2.8 percent as a result of weakness throughout the state of Texas, particularly lower
year-over-year activity in oil producing markets. In the Texas oil producing regions, same-store merchandise sales
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decreased by 15.6 percent, and same-store fuel sales declined 17.9 percent. Excluding the oil producing regions,
same-store sales increased by 0.6 percent, and same-store gallons decreased by 1.0 percent.
As of June 30, SUN operated approximately 1,340 convenience stores and retail fuel outlets along the East Coast, in
the Southwest and in Hawaii. Third party operated sites totaled approximately 5,600 locations.
SUN's other recent accomplishments include the following:
Completed the acquisition of retail locations serving the upstate New York market from Valentine Stores, Inc.,
including 18 company-operated convenience stores that sell approximately 20 million gallons of fuel annually.
Completed the acquisition of the "Rattlers" convenience store assets and wholesale fuel business from
Kolkhorst Petroleum, Inc. This includes 14 company-operated locations and wholesale fuel supply contracts
for a network of independent dealer-owned and dealer-operated locations in the Austin, Houston and Waco,
Texas markets totaling approximately 46 million gallons annually.
Entered into an agreement to purchase the fuels business of Emerge Energy Services LP (NYSE: EMES) for
$178.5 million, subject to working capital adjustments. This includes Dallas-based Direct Fuels LLC and
Birmingham-based Allied Energy Company LLC, which engage in the processing of transmix and the
distribution of refined fuels. These two processing plants have attached refined product terminals with over
800,000 barrels of storage capacity.
Entered into an agreement to purchase the convenience store, wholesale motor fuel distribution and
commercial fuels distribution businesses serving East Texas and Louisiana from Denny Oil Company, Inc. The
purchase agreement comprises six company-operated locations and approximately 127 supply contracts with
dealer-owned and dealer-operated sites and over 500 commercial customers.
Issued $800.0 million of 6.25% Senior Notes due 2021 through an upsized private offering that raised
proceeds, net of underwriter fees and expenses, of $789.4 million. The notes proceeds were used to repay
outstanding borrowings under the senior secured term loan facility.
SUN's segment results and other supplementary data are provided after the financial tables below.
Distribution Increase
On July 26, the Board of Directors of SUN's general partner declared a distribution for the second quarter of 2016 of
$0.8255 per unit, which corresponds to $3.3020 per unit on an annualized basis. This represents a 1.0 percent
increase compared to the distribution for the first quarter of 2016 and a 19.1 percent increase compared with the
second quarter of 2015. This is the Partnership's thirteenth consecutive quarterly increase. The distribution will be
paid on August 15 to unitholders of record on August 5.
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SUN's distribution coverage ratio for the second quarter was 0.93 times. The distribution coverage ratio on a trailing
12-month basis was 1.20 times.
Liquidity
At June 30, SUN had borrowings against its revolving line of credit of $675.0 million and other long-term debt of
$3.6 billion. Availability on the revolving credit facility after borrowings and letters of credit commitments was
$802.8 million. Net debt to Adjusted EBITDA, pro forma for acquisitions, was 5.2 times at the end of the second
quarter.
(1) Adjusted EBITDA and distributable cash flow are non-GAAP financial measures of performance that have limitations and should not be
considered as a substitute for net income. Please refer to the discussion and tables under "Reconciliations of Non-GAAP Measures" later in this
news release for a discussion of our use of Adjusted EBITDA and distributable cash flow, and a reconciliation to net income.
Earnings Conference Call
Sunoco LP management will hold a conference call on Thursday, August 4, at 9:00 a.m. CT (10:00 a.m. ET) to discuss
second quarter results and recent developments. To participate, dial 412-902-0003 approximately 10 minutes early
and ask for the Sunoco LP conference call. The call will also be accessible live and for later replay via webcast in the
Investor Relations section of Sunoco's website at www.SunocoLP.com under Events and Presentations.
Sunoco LP (NYSE: SUN) is a master limited partnership that operates approximately 1,340 retail fuel sites and
convenience stores (including APlus, Stripes, Aloha Island Mart and Tigermarket brands) and distributes motor fuel
to convenience stores, independent dealers, commercial customers and distributors located in more than 30 states
at approximately 6,900 sites. Our parent -- Energy Transfer Equity, L.P. (NYSE: ETE) -- owns Sunoco's general partner
and incentive distribution rights. For more information, visit the Sunoco LP website at www.SunocoLP.com
Forward-Looking Statements
This press release may include certain statements concerning expectations for the future that are forward-looking
statements as defined by federal law. Such forward-looking statements are subject to a variety of known and
unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond
management's control. An extensive list of factors that can affect future results are discussed in the Partnership's
Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange
Commission. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect
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new information or events.
The information contained in this press release is available on our website at www.SunocoLP.com
Qualified Notice
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and
nominees should treat 100 percent of Sunoco LP's distributions to non-U.S. investors as being attributable to
income that is effectively connected with a United States trade or business. Accordingly, Sunoco LP's distributions
to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
Contacts
Investors:
Scott Grischow, Senior Director – Investor Relations and Treasury
(469) 646-1188, scott.grischow@sunoco.com
Patrick Graham, Senior Analyst – Investor Relations and Finance
(469) 646-1328, patrick.graham@sunoco.com
Dennard-Lascar Associates
Anne Pearson
(210) 408-6321, apearson@dennardlascar.com
Media:
Jeff Shields, Communications Manager
(215) 977-6056, jeff.shields@sunoco.com
- Financial Schedules Follow –
SUNOCO LP
CONSOLIDATED BALANCE SHEETS
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(in thousands, except units)
(unaudited)
June 30, 2016 December 31, 2015
Assets
Current assets:
Cash and cash equivalents $ 83,175 $ 72,627
Advances to affiliates 365,536
Accounts receivable, net 385,678 308,285
Accounts receivable from affiliates 7,138 8,074
Inventories, net 496,829 467,291
Other current assets 57,655 46,080
Total current assets 1,030,475 1,267,893
Property and equipment, net 3,228,409 3,154,826
Other assets:
Goodwill 3,153,657 3,111,262
Intangible assets, net 1,277,309 1,259,440
Other noncurrent assets 71,704 48,398
Total assets
$ 8,761,554 $ 8,841,819
Liabilities and equity
Current liabilities:
Accounts payable $ 445,709 $ 433,988
Accounts payable to affiliates 22,660 14,988
Advances from affiliates 98,994
Accrued expenses and other current liabilities 302,299 307,939
Current maturities of long-term debt 5,694 5,084
Total current liabilities 875,356 761,999
Revolving line of credit 675,000 450,000
Long-term debt, net 3,514,261 1,502,531
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Deferred tax liability 668,188 694,383
Other noncurrent liabilities 168,771 170,169
Total liabilities 5,901,576 3,579,082
Commitments and contingencies (Note 11)
Equity:
Limited partners:
Common unitholders - public (49,588,960 units issued and outstanding as of June 30,
2016 and December 31, 2015) 1,763,151 1,768,890
Common unitholders - affiliated (45,750,826 units issued and outstanding as of June
30, 2016 and 37,776,746 units issued and outstanding as of December 31, 2015) 1,096,827 1,275,558
Class A unitholders - held by subsidiary (no units issued and outstanding as of June 30,
2016 and 11,018,744 units issued and outstanding as of December 31, 2015)
Class C unitholders - held by subsidiary (16,410,780 units issued and outstanding as of
June 30, 2016 and no units issued and outstanding as of December 31, 2015)
Total partners' capital 2,859,978 3,044,448
Predecessor equity 2,218,289
Total equity 2,859,978 5,262,737
Total liabilities and equity
$ 8,761,554 $ 8,841,819
The accompanying notes are an integral part of these consolidated financial statements.
SUNOCO LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except unit and per unit amounts)
(unaudited)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
2016 2015 2016 2015
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Revenues
Retail motor fuel $ 1,384,858 $ 1,649,199 $ 2,500,573 $ 3,016,855
Wholesale motor fuel sales to third parties 1,996,716 2,845,635 3,492,590 5,282,137
Wholesale motor fuel sales to affiliates 9,710 3,972 16,839 4,939
Merchandise 576,594 560,680 1,100,688 1,043,803
Rental income 22,575 20,534 44,699 40,316
Other 61,714 46,064 99,091 88,886
Total revenues 4,052,167 5,126,084 7,254,480 9,476,936
Cost of sales
Retail motor fuel 1,229,528 1,509,411 2,213,970 2,729,650
Wholesale motor fuel 1,842,464 2,686,740 3,194,308 5,031,539
Merchandise 389,303 383,869 747,018 718,791
Other 10,305 854 19,874 2,513
Total cost of sales 3,471,600 4,580,874 6,175,170 8,482,493
Gross profit 580,567 545,210 1,079,310 994,443
Operating expenses
General and administrative 73,723 65,941 118,914 106,200
Other operating 266,788 249,442 515,793 493,032
Rent 35,639 35,791 69,096 69,117
Loss on disposal of assets 1,501 178 2,715 147
Depreciation, amortization and accretion 78,724 70,200 156,790 136,943
Total operating expenses 456,375 421,552 863,308 805,439
Income from operations 124,192 123,658 216,002 189,004
Interest expense, net 50,587 21,198 78,276 29,175
Income before income taxes 73,605 102,460 137,726 159,829
Income tax expense 1,468 8,926 3,580 16,989
Net income and comprehensive income 72,137 93,534 134,146 142,840
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Less: Net income and comprehensive income attributable to
noncontrolling interest 847 1,693
Less: Preacquisition income allocated to general partner 57,820 89,208
Net income and comprehensive income attributable
to partners
$ 72,137 $ 34,867 $ 134,146 $ 51,939
Net income per limited partner unit:
Common (basic and diluted) $ 0.53 $ 0.87 $ 1.01 $ 1.31
Subordinated (basic and diluted) $ $ 0.87 $ $ 1.31
Weighted average limited partner units
outstanding:
Common units - public (basic) 49,588,960 20,036,329 49,588,960 20,036,329
Common units - public (diluted) 49,644,916 20,077,865 49,644,916 20,077,865
Common units - affiliated (basic and diluted) 45,750,826 4,858,330 41,807,600 4,460,589
Subordinated units - affiliated 10,939,436 10,939,436
Cash distribution per common unit $ 0.8255 $ 0.6934 $ 1.6428 $ 1.3384
The accompanying notes are an integral part of these consolidated financial statements.
Key Operating Metrics
The following information is intended to provide investors with a reasonable basis for assessing our historical
operations but should not serve as the only criteria for predicting our future performance. We operate our business
in two primary operating divisions, wholesale and retail, both of which are included as reportable segments.
Key operating metrics set forth below are presented as of and for the three months ended June 30, 2016 and 2015
and have been derived from our historical consolidated financial statements.
The following table sets forth, for the periods indicated, information concerning key measures we rely on to gauge
our operating performance (in thousands, except gross profit per gallon):
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For the Three Months Ended June 30,
2016 2015
Wholesale Retail Total Wholesale Retail Total
Revenues
Retail motor fuel $ $ 1,384,858 $ 1,384,858 $ $ 1,649,199 $ 1,649,199
Wholesale motor fuel sales to third parties 1,996,716 1,996,716 2,845,635 2,845,635
Wholesale motor fuel sales to affiliates 9,710 9,710 3,972 3,972
Merchandise 576,594 576,594 560,680 560,680
Rental income 19,137 3,438 22,575 11,485 9,049 20,534
Other 7,281 54,433 61,714 6,270 39,794 46,064
Total revenues $ 2,032,844 $ 2,019,323 $ 4,052,167 $ 2,867,362 $ 2,258,722 $ 5,126,084
Gross profit
Retail motor fuel $ $ 155,330 $ 155,330 $ $ 139,788 $ 139,788
Wholesale motor fuel 163,962 163,962 162,867 162,867
Merchandise 187,291 187,291 176,811 176,811
Rental and other 25,006 48,978 73,984 16,926 48,818 65,744
Total gross profit $ 188,968 $ 391,599 $ 580,567 $ 179,793 $ 365,417 $ 545,210
Net income (loss) and comprehensive
income (loss) attributable to partners $ 83,171 $ (11,034) $ 72,137 $ 30,657 $ 4,210 $ 34,867
Adjusted EBITDA attributable to partners (2) $ 77,338 $ 86,660 $ 163,998 $ 61,457 $ 76,953 $ 138,410
Distributable cash flow attributable to partners,
as adjusted (2) $ 92,225 $ 39,293
Operating Data
Total motor fuel gallons sold:
Retail 641,198 641,198 639,148 639,148
Wholesale 1,315,728 1,315,728 1,285,041 1,285,041
Motor fuel gross profit (cents per
gallon) (1):
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Retail 24.0 21.4
Wholesale 8.8 8.6
Volume-weighted average for all gallons 13.8 12.9
Retail merchandise margin 32.5% 31.5%
(1) Excludes the impact of inventory fair value adjustments consistent with the definition of Adjusted EBITDA.
(2) We define EBITDA as net income before net interest expense, income tax expense and depreciation, amortization and accretion expense. We
define Adjusted EBITDA to include adjustments for non-cash compensation expense, gains and losses on disposal of assets, unrealized gains
and losses on commodity derivatives and inventory fair value adjustments. We define distributable cash flow as Adjusted EBITDA less cash
interest expense including the accrual of interest expense related to our 2020 and 2023 Senior Notes that is paid on a semi-annual basis,
current income tax expense, maintenance capital expenditures, and other non-cash adjustments. Further adjustments are made to
distributable cash flow for certain transaction-related and non-recurring expenses that are included in net income.
We believe EBITDA, Adjusted EBITDA, and distributable cash flow are useful to investors in evaluating our operating
performance because:
Adjusted EBITDA is used as a performance measure under our revolving credit facility;
securities analysts and other interested parties use such metrics as measures of financial performance, ability
to make distributions to our unitholders and debt service capabilities;
our management uses them for internal planning purposes, including aspects of our consolidated operating
budget, and capital expenditures; and
distributable cash flow provides useful information to investors as it is a widely accepted financial indicator
used by investors to compare partnership performance, and as it provides investors an enhanced perspective
of the operating performance of our assets and the cash our business is generating.
EBITDA, Adjusted EBITDA and distributable cash flow are not recognized terms under GAAP and do not purport to
be alternatives to net income (loss) as measures of operating performance or to cash flows from operating activities
as a measure of liquidity. EBITDA, Adjusted EBITDA and distributable cash flow have limitations as analytical tools,
and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.
Some of these limitations include:
they do not reflect our total cash expenditures, or future requirements for, capital expenditures or
contractual commitments;
they do not reflect changes in, or cash requirements for, working capital;
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they do not reflect interest expense or the cash requirements necessary to service interest or principal
payments on our revolving credit facility or term loan;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash
requirements for such replacements; and
because not all companies use identical calculations, our presentation of EBITDA, Adjusted EBITDA and
distributable cash flow may not be comparable to similarly titled measures of other companies.
The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow
for the three months ended June 30, 2016 and 2015 (in thousands):
For the Three Months Ended June 30,
2016 2015
Wholesale Retail Total Wholesale Retail Total
Net income (loss) and comprehensive
income (loss) $ 83,171 $ (11,034) $ 72,137 $ 90,894 $ 2,640 $ 93,534
Depreciation, amortization and accretion 17,423 61,301 78,724 15,459 54,741 70,200
Interest expense, net 16,241 34,346 50,587 5,313 15,885 21,198
Income tax expense (benefit) 606 862 1,468 (262) 9,188 8,926
EBITDA $ 117,441 $ 85,475 $ 202,916 $ 111,404 $ 82,454 $ 193,858
Non-cash stock compensation expense 2,796 583 3,379 1,121 1,275 2,396
Loss (gain) on disposal of assets (351) 1,852 1,501 (11) 189 178
Unrealized loss on commodity
derivatives 5,570 5,570 786 786
Inventory fair value adjustment (48,118) (1,250) (49,368) (51,843) (3,002) (54,845)
Adjusted EBITDA $ 77,338 $ 86,660 $ 163,998 $ 61,457 $ 80,916 $ 142,373
Adjusted EBITDA attributable
to noncontrolling interest 3,963 3,963
Adjusted EBITDA attributable to
partners $ 77,338 $ 86,660 $ 163,998 $ 61,457 $ 76,953 $ 138,410
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Cash interest expense (3) 47,819 15,088
Income tax expense (benefit) (current) 288 (259)
Maintenance capital expenditures 23,944 4,074
Preacquisition earnings 82,914
Distributable cash flow
attributable to partners $ 91,947 $ 36,593
Transaction-related expense 278 2,700
Distributable cash flow
attributable to partners, as
adjusted
$ 92,225 $ 39,293
(3)
Reflects the Partnership's cash interest paid less the cash interest paid on our VIE debt of $4.0 million during the three months ended
June 30, 2015.
Capital Spending
SUN's gross capital expenditures for the second quarter were $74.2 million, which included $50.3 million for growth
capital and $23.9 million for maintenance capital. Approximately $24.7 million of the growth capital spent was for
the construction of new-to-industry sites, of which six were opened in the second quarter, with 23 currently under
construction.
SUN expects capital spending for the full year 2016, excluding acquisitions, to be within the following ranges ($ in
millions)
Growth Maintenance
Low High Low High
$380 $400 $100 $110
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Growth capital spending includes the construction of at least 35 new-to-industry sites that SUN expects to complete
in 2016.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sunoco-lp-
announces-second-quarter-2016-financial-and-operating-results-300308938.html
SOURCE Sunoco LP
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