Sunoco LP Announces 1Q 2015 Financial and Operating Results and 8th Consecutive Distribution Increase


- Distribution increased 7.5% versus 4Q 2014, 28.5% versus 1Q 2014 levels
- Gallons sold increased 40% versus 1Q 2014 volume
- Adjusted EBITDA up 179%, Distributable Cash Flow up 111% versus 1Q 2014
- Demonstrates continued execution of growth strategy and increases liquidity by $250 million
Conference Call Scheduled for 10:00 a.m. ET (9:00 a.m. CT) on May 7

HOUSTON, May 6, 2015 /PRNewswire/ -- Sunoco LP (NYSE: SUN) today announced financial and operating results for the three months ended March 31, 2015 and provided an update on recent developments.

Adjusted EBITDA(1) totaled $43.7 million as compared to adjusted EBITDA in the first quarter of 2014 to $15.7 million.  Distributable cash flow(1) for the quarter was $29.6 million, compared to $14.0 million a year ago.

Revenue was $1.1 billion, down 7.1 percent compared to $1.2 billion in the same period last year. The decline was the result of significantly lower retail and wholesale motor fuel prices, mostly offset by a 40 percent increase in gallons sold, the contribution of merchandise sales from the MACS and Aloha stores and higher rental income.

Total gross profit was $87.0 million, compared to $22.1 million in the first quarter of 2014.  Key drivers of the increase were the MACS and Aloha acquisitions along with organic growth in gallons sold.

Net income attributable to partners was $17.1 million, or $0.44 per diluted unit, compared to $10.1 million, or $0.46 per diluted unit, in the first quarter of 2014.

On a weighted average basis, fuel margin for all gallons sold increased to 8.8 cents per gallon, compared to 4.0 cents per gallon a year earlier.  Sales of retail gallons by MACS and Aloha -- and a change in the wholesale fuel customer mix related to the MACS and Aloha acquisitions -- drove most of the margin increase.  At March 31, SUN operated 155 retail convenience stores and fuel outlets in Virginia, Hawaii, Tennessee, Maryland and Georgia.

Affiliate customers included 663 Stripes® and Sac-N-Pac™ convenience stores operated by a subsidiary of our parent company, Energy Transfer Partners, L.P. (NYSE: ETP), as well as sales of motor fuel to ETP subsidiaries for resale under consignment arrangements at approximately 85 independently operated convenience stores.  Motor fuel gallons sold to affiliates during the first quarter increased 9.5 percent from a year ago to 304.3 million gallons. SUN realized 3.0 cents per gallon gross profit on these gallons, which totaled $9.1 million in the period versus $8.4 million in the same period a year ago.

Third-party customers included 731 independent dealers under long-term fuel supply agreements, 59 independently operated consignment locations and approximately 1,600 other commercial customers.  Total gallons sold to third parties increased year-over-year by 50.8 percent to 234.7 million gallons.  Gross profit on these gallons was $25.2 million, or 9.7 cents per gallon, compared to $8.8 million, or 5.7 cents per gallon, in the prior-year period.

Retail gallons sold by MACS and Aloha locations during the first quarter totaled 67.8 million gallons.  Gross profit on these gallons was $21.2 million, or 31.9 cents per gallon. Merchandise sales from these locations totaled $47.5 million and contributed $12.7 million of gross profit.

The Partnership announced on April 1 the acquisition of a 31.58 percent equity interest in Sunoco, LLC, from an affiliate of ETP in a transaction valued at approximately $816 million.  SUN paid $775 million in cash and issued to ETP 795,482 new SUN units valued at $40.8 million.

On May 4, 2015, the Board of Directors of SUN's general partner declared a distribution for the first quarter of 2015 of $0.645 per unit, which corresponds to $2.58 per unit on an annualized basis.  This represents a 7.5 percent increase compared to the distribution for the fourth quarter of 2014 and a 29 percent increase compared with the first quarter of 2014.  This is the eighth consecutive quarterly increase. The distribution will be paid on May 29 to unitholders of record on May 19. SUN achieved a 1.2 times distribution coverage ratio for the quarter.

SUN's gross capital expenditures for the first quarter were $37.2 million, which includes $2.9 million in maintenance capital. Of the $34.3 million in growth capital, $26.1 million was for purchase and leaseback transactions for six Stripes stores, and $5.4 million related to growth in the dealer business, including new dealer supply contracts.

The Partnership currently expects capital spending for the full year 2015, excluding future acquisitions but including the additional capital spending related to our equity interest in Sunoco LLC to be within the following ranges (in millions):

Capital Spending Expectations

Growth

 

Maintenance

Low

High

 

Low

High

$180

$230

 

$15

$25

Included in the above growth capital spending estimate is the purchase and leaseback of 30 to 40 new convenience stores that Stripes plans to build in 2015.

On April 1, SUN issued $800 million of 6.375% Senior Notes due 2023 through a private offering that raised net proceeds of $789.2 million.  The majority of the notes proceeds were used to fund the purchase of the above-mentioned interest in Sunoco LLC and a small portion was used to repay outstanding borrowings under its senior secured revolving credit facility.

As of March 31, 2015, SUN had borrowings against its revolving credit facility of $684.8 million and $11.8 million in standby letters of credit, leaving unused availability of $553.4 million.  Net debt to Adjusted EBITDA, pro forma for acquisitions, was 3.9 times.

Additionally, on April 10, SUN increased its existing revolving credit facility by $250 million to $1.5 billion.  The facility matures in 2019.

First Quarter 2015 Earnings Conference Call

Sunoco LP management will hold a conference call on Thursday, May 7, at 10:00 a.m. ET (9:00 a.m. CT) to discuss first 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.  A telephone replay will be available through May 14 by calling 201-612-7415 and using the access code 13608202#.

About Sunoco LP

Sunoco LP (NYSE: SUN) is a master limited partnership (MLP) that primarily distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors. SUN also operates more than 150 convenience stores and retail fuel sites. SUN conducts its business through wholly owned subsidiaries, as well as through its 31.58 percent interest in Sunoco, LLC, in partnership with an affiliate of its parent company, Energy Transfer Partners .  While primarily engaged in natural gas, natural gas liquids, crude oil and refined products transportation, ETP also operates a retail and fuel distribution business through its interest in Sunoco, LLC, as well as wholly owned subsidiaries, Sunoco, Inc. and Stripes LLC that operate approximately 1,100 convenience stores and retail fuel sites.  For more information, visit the Sunoco LP website at www.SunocoLP.com.

Forward-Looking Statements

This news release contains "forward-looking statements" which may describe Sunoco LP's ("SUN") objectives, expected results of operations, targets, plans, strategies, costs, anticipated capital expenditures, potential acquisitions, new store openings and/or new dealer locations, management's expectations, beliefs or goals regarding proposed transactions between ETP and SUN, the expected timing of those transactions and the future financial and/or operating impact of those transactions, including the anticipated integration process and any related benefits, opportunities or synergies.  These statements are based on current plans, expectations and projections and involve a number of risks and uncertainties that could cause actual results and events to vary materially, including but not limited to: execution, integration, environmental and other risks related to acquisitions (including drop-downs) and our overall acquisition strategy; competitive pressures from convenience stores, gasoline stations, other non-traditional retailers and other wholesale fuel distributors located in SUN's markets; dangers inherent in storing and transporting motor fuel; SUN's ability to renew or renegotiate long-term distribution contracts with customers; changes in the price of and demand for motor fuel; changing consumer preferences for alternative fuel sources or improvement in fuel efficiency; competition in the wholesale motor fuel distribution industry; seasonal trends; severe or unfavorable weather conditions; increased costs; SUN's ability to make and integrate acquisitions; environmental laws and regulations; dangers inherent in the storage of motor fuel; reliance on suppliers to provide trade credit terms to adequately fund ongoing operations; acts of war and terrorism; dependence on information technology systems; SUN's and ETP's ability to consummate any proposed transactions, or to satisfy the conditions precedent to the consummation of such transactions; successful development and execution of integration plans; ability to realize anticipated synergies or cost-savings and the potential impact of the transactions on employee, supplier, customer and competitor relationships; and other unforeseen factors. For a full discussion of these and other risks and uncertainties, refer to the "Risk Factors" section of SUN's and ETP's most recently filed annual reports on Form 10-K. These forward-looking statements are based on and include our estimates as of the date hereof. Subsequent events and market developments could cause our estimates to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if new information becomes available, except as may be required by applicable law.

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, Director of Investor Relations and Treasury
(361) 884-2463, scott.grischow@susser.com

Anne Pearson
Dennard-Lascar Associates
(210) 408-6321, apearson@dennardlascar.com

Media:

Jeff Shields, Communications Manager
(215) 977-6056, jpshields@sunocoinc.com

Jessica Davila-Burnett, Public Relations Director
(361) 654-4882, jessica.davila-burnett@susser.com

- Financial Schedules Follow -

 

Balance Sheets

SUNOCO LP

CONSOLIDATED BALANCE SHEETS

(in thousands, except units) (unaudited)

       
 

December 31, 2014

 

March 31, 2015

Assets

     

Current assets:

     

Cash and cash equivalents

$

67,151

   

$

50,971

 

Accounts receivable, net

64,082

   

65,704

 

Receivables from affiliates (MACS: $3,484 at December 31, 2014 and $4,173 at March 31, 2015)

36,716

   

33,511

 

Inventories, net

48,646

   

52,683

 

Other current assets

8,546

   

9,051

 

Total current assets

225,141

   

211,920

 

Property and equipment, net (MACS: $45,340 at December 31, 2014, and $44,947 at March 31, 2015)

905,465

   

927,760

 

Other assets:

     

Goodwill

863,458

   

864,088

 

Intangible assets, net

172,108

   

169,579

 

Deferred income taxes

14,893

   

20,969

 

Other noncurrent assets (MACS: $3,665 at December 31, 2014 and March 31, 2015)

16,416

   

16,089

 

Total assets

$

2,197,481

   

$

2,210,405

 

Liabilities and equity

     

Current liabilities:

     

Accounts payable (MACS: $6 at December 31, 2014 and March 31, 2015)

95,932

   

106,916

 

Accounts payable to affiliates

3,112

   

2,605

 

Accrued expenses and other current liabilities (MACS: $484 at December 31, 2014 and March 31, 2015)

41,881

   

45,531

 

Current maturities of long-term debt (MACS: $8,422 at December 31, 2014, and $8,389 at March 31, 2015)

13,757

   

13,749

 

Total current liabilities

154,682

   

168,801

 

Revolving line of credit

683,378

   

684,775

 

Long-term debt (MACS: $48,029 at December 31, 2014, and $47,514 at March 31, 2015)

173,383

   

171,412

 

Other noncurrent liabilities (MACS: $1,190 at December 31, 2014 and March 31, 2015)

49,306

   

49,396

 

Total liabilities

1,060,749

   

1,074,384

 

Commitments and contingencies (Note 12)

     

Partners' capital:

     

Limited partner interest:

     

Common unitholders - public (20,036,329 units issued and outstanding at December 31, 2014 and March 31, 2015)

874,688

   

873,116

 

Common unitholders - affiliated (4,062,848 units issued and outstanding at December 31, 2014 and March 31, 2015)

31,378

   

32,254

 

Subordinated unitholders - affiliated (10,939,436 units issued and outstanding at December 31, 2014 and March 31, 2015)

236,310

   

235,449

 

Total partners' capital

1,142,376

   

1,140,819

 

Noncontrolling interest

(5,644)

   

(4,798)

 

Total equity

1,136,732

   

1,136,021

 

Total liabilities and equity

$

2,197,481

   

$

2,210,405

 

Parenthetical amounts represent assets and liabilities attributable to consolidated variable interest entities of Mid-Atlantic Convenience Stores, LLC (MACS) as of December 31, 2014 and March 31, 2015.

Operations and Income Statements

SUNOCO LP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except unit and per unit amounts)

(unaudited)

 
 

Three Months Ended

 

March 31, 2014

   

March 31, 2015

 

Predecessor

   

Successor

Revenues

       

Retail motor fuel sales

$

     

$

160,761

 

Wholesale motor fuel sales to third parties

444,566

     

413,847

 

Wholesale motor fuel sales to affiliates

766,090

     

487,500

 

Merchandise sales

     

47,519

 

Rental income

3,923

     

13,362

 

Other income

2,008

     

6,739

 

Total revenues

1,216,587

     

1,129,728

 

Cost of sales

       

Retail motor fuel cost of sales

     

139,564

 

Wholesale motor fuel cost of sales to third parties

435,723

     

388,632

 

Wholesale motor fuel cost of sales to affiliates

757,723

     

478,418

 

Merchandise cost of sales

     

34,825

 

Other

1,021

     

1,240

 

Total cost of sales

1,194,467

     

1,042,679

 

Gross profit

22,120

     

87,049

 

Operating expenses

       

General and administrative

4,870

     

10,873

 

Personnel

     

11,211

 

Other operating

2,034

     

16,609

 

Rent

249

     

4,111

 

Gain on disposal of assets

     

(266)

 

Depreciation, amortization and accretion

3,326

     

17,566

 

Total operating expenses

10,479

     

60,104

 

Income from operations

11,641

     

26,945

 

Interest expense, net

(1,502)

     

(8,197)

 

Income before income taxes

10,139

     

18,748

 

Income tax expense

(7)

     

(830)

 

Net income and comprehensive income

10,132

     

17,918

 

Less: Net income and comprehensive income attributable to noncontrolling interest

     

846

 

Net income and comprehensive income attributable to partners

$

10,132

     

$

17,072

 

Net income per limited partner unit:

       

Common (basic and diluted)

$

0.46

     

$

0.44

 

Subordinated (basic and diluted)

$

0.46

     

$

0.44

 

Weighted average limited partner units outstanding:

       

Common units - public

10,938,053

     

20,036,329

 

Common units - affiliated

79,308

     

4,062,848

 

Subordinated units - affiliated

10,939,436

     

10,939,436

 
         

Cash distribution per unit

$

0.5021

     

$

0.6450

 

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.

Beginning in late 2014, with the acquisition of MACS, we began operating our business in two primary operating segments, wholesale and retail, both of which are included as reportable segments. As a result, the Predecessor periods operated as one segment, wholesale, and the Successor period operated with our wholesale and retail segments.

The following table sets forth, for the periods indicated, information concerning key measures we rely on to gauge our operating performance by segment (in thousands, except for selling price and gross profit per gallon):

Key Operating Metrics
 

Three Months Ended March 31,

 

2014

   

2015

 

Predecessor

   

Successor

       

Wholesale

Retail

Total

Revenues

           

Retail motor fuel sales (1)

$

     

$

 

$

160,761

 

$

160,761

 

Wholesale motor fuel sales to third parties

444,566

     

413,847

 

 

413,847

 

Wholesale motor fuel sales to affiliates

766,090

     

487,500

 

 

487,500

 

Merchandise sales

     

 

47,519

 

47,519

 

Rental income

3,923

     

7,524

 

5,838

 

13,362

 

Other income

2,008

     

4,200

 

2,539

 

6,739

 

Total revenue

1,216,587

     

913,071

 

216,657

 

1,129,728

 

Gross profit

           

Retail motor fuel

     

 

21,197

 

21,197

 

Wholesale motor fuel to third parties

8,843

     

25,215

 

 

25,215

 

Wholesale motor fuel to affiliates

8,366

     

9,082

 

 

9,082

 

Merchandise

     

 

12,694

 

12,694

 

Rental

3,923

     

7,524

 

5,838

 

13,362

 

Other

988

     

2,960

 

2,539

 

5,499

 

Total gross profit

$

22,120

     

$

44,781

 

$

42,268

 

$

87,049

 
             

Net income attributable to partners (2)

$

10,132

     

$

10,751

 

$

6,321

 

$

17,072

 

Adjusted EBITDA attributable to partners (2) (3)

$

15,674

     

$

25,104

 

$

14,592

 

$

39,696

 
             

Distributable cash flow attributable to partners (2) (3)

$

14,037

         

$

29,570

 
             

Operating Data:

           

Total motor fuel gallons sold:

           

Retail

       

67,834

 

67,834

 

Wholesale third-party

155,595

     

234,715

   

234,715

 

Wholesale affiliated

277,796

     

304,304

   

304,304

 

Motor fuel gross profit (cents per gallon):

           

Retail

       

31.9

¢

 

Wholesale third-party

5.7

¢

   

9.7

¢

   

Wholesale affiliated

3.0

¢

   

3.0

¢

   

Volume-weighted average for all gallons

4.0

¢

       

8.8

¢

Retail merchandise margin

       

26.7

%

 

 

The following tables present a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow by segment (in thousands):

Reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow
 

Three Months Ended March 31,

 

2014

   

2015

 

Predecessor

   

Successor

       

Wholesale

Retail

Total

             

Net income

$

10,132

     

$

10,751

 

$

7,167

 

$

17,918

 

Depreciation, amortization and accretion

3,326

     

11,950

 

5,616

 

17,566

 

Interest expense, net

1,502

     

2,402

 

5,795

 

8,197

 

Income tax expense

7

     

1,069

 

(239)

 

830

 

EBITDA

14,967

     

26,172

 

18,339

 

44,511

 

Non-cash stock based compensation

707

     

120

 

75

 

195

 

(Gain) loss on disposal of assets

     

19

 

(285)

 

(266)

 

Unrealized loss on commodity derivatives

     

1,174

 

 

1,174

 

Inventory fair value adjustments

     

(2,381)

 

426

 

(1,955)

 

Adjusted EBITDA

$

15,674

     

$

25,104

 

$

18,555

 

$

43,659

 

Adjusted EBITDA attributable to noncontrolling interest

     

 

3,963

 

3,963

 

Adjusted EBITDA attributable to partners

15,674

     

25,104

 

14,592

 

39,696

 

Cash interest expense (4)

1,406

         

7,129

 

Current income tax expense

68

         

133

 

Maintenance capital expenditures

163

         

2,864

 

Distributable cash flow attributable to partners

$

14,037

         

$

29,570

 

 

To view the original version on PR Newswire, visit:https://www.prnewswire.com/news-releases/sunoco-lp-announces-1q-2015-financial-and-operating-results-and-8th-consecutive-distribution-increase-300079127.html

SOURCE Sunoco LP

Partner With Us