Susser Petroleum Partners LP Reports Second
Quarter 2013 Results
8/7/2013
HOUSTON, Aug. 7, 2013 /PRNewswire/ -- Susser Petroleum Partners LP (NYSE: SUSP), a wholesale
distributor of motor fuels, today reported financial and operating results for the second quarter ended June 30,
2013.
Net income for the quarter was $9.7 million, or $0.44 per unit. Adjusted EBITDA
(1)
totaled $12.8 million, and
distributable CASH flow
(1)
was $11.9 million. Total revenue for the quarter was $1,118.1 million.
"We are pleased to announce the first increase in our quarterly distribution rate since our IPO," said Sam L.
Susser , Chairman and Chief Executive Officer. "Even with the increase, our distribution coverage for the
quarter was a very healthy 1.2 times. We anticipate continued growth in fuel volumes and rental income for
the foreseeable future, which should position us for additional distribution increases in the future."
The analysis below compares actual results for the three- and six-month periods ended June 30, 2013 to pro
forma results for the comparable periods in 2012. The pro forma results reflect revenues and gross margins as
if the Partnership had completed its initial public offering and related transactions and had been operating as an
independent entity under its current contractual arrangements with affiliates since January 1, 2012. Please refer
to the section below titled, "Factors Affecting Comparability and Explanation of Pro Forma Results" for
additional information.
Second Quarter 2013 Compared to Pro Forma Second Quarter 2012
Revenue for the second quarter totaled $1,118.1 million, a 2.8 percent increase compared to $1,087.6 million
(pro forma) in the comparable period of 2012. The increase was driven by a 5.4 percent increase in gallons
sold, partially offset by a decline in the selling price per gallon. In the second quarter of 2013, 67.2 percent of
revenues were generated from motor fuel sales to affiliates, 32.5 percent were from motor fuel sales to other
third parties, and 0.3 percent came from rental and other income.
Gross PROFIT for the quarter totaled $17.0 million, a 20.7 percent increase compared to pro forma gross
PROFIT of $14.0 million in the second quarter of 2012. On a weighted average basis, fuel margin for all
gallons sold increased to 3.6 cents per gallon in the second quarter of 2013 compared to a pro forma 3.4 cents
per gallon in the prior-year period.
Affiliate customers as of June 30, 2013 include 567 Stripes® convenience stores operated by our parent
company, Susser Holdings Corporation (NYSE: SUSS), as well as SUSS' sales of motor fuel under
consignment arrangements at approximately 90 independently operated convenience stores. Motor fuel gallons
sold to affiliates during the second quarter increased 8.0 percent versus the prior-year period to 264.1 million
gallons. Gross PROFIT on these gallons totaled $7.9 million, or 3.0 cents per gallon, versus a pro forma $7.3
million in the comparable three-month period last year, or 3.0 cents per gallon.
Third-party customers of SUSP include approximately 488 independent dealers under long-term fuel supply
agreements and approximately 1,800 other commercial customers as of June 30, 2013. Total gallons of motor
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fuel sold to third parties increased year-over-year by 0.3 percent, to 124.9 million gallons, for the quarter.
Gross PROFIT on these gallons was $6.1 million, or 4.9 cents per gallon, compared to $5.2 million, or 4.2
cents per gallon, in the prior-year period on a pro forma basis.
YTD 2013 Compared to Pro Forma YTD 2012
Revenue for the first six months of 2013 totaled $2,199.3 million, a 1.6 percent increase compared to pro forma
revenue of $2,164.1 million in the first half of 2012. Gross PROFIT for the period totaled $32.5 million, an
18.0 percent increase compared to pro forma gross profit of $27.6 million in the prior-year period. Total
gallons of motor fuel sold to affiliates and to third parties increased year-over-year by 6.9 percent and 0.9
percent, to 515.2 million gallons and 240.8 million gallons, respectively, for the first half. On a weighted
average basis, fuel margin for all gallons sold increased to 3.6 cents per gallon in the first six months of 2013
from 3.4 cents per gallon pro forma in the comparable period of 2012.
CAPITAL Spending and Financing
SUSP completed purchase and leaseback transactions for six Stripes convenience stores during the second
quarter for $21.2 million and two more so far in the third quarter for $6.7 million. Since its initial public
offering in September 2012, SUSP has completed the purchase and leaseback of 22 Stripes stores for a
cumulative cost of $89.7 million, including post-completion true-up.
Including the Stripes store purchases, SUSP's gross capital expenditures for the second quarter were $30.0
million, which included $0.2 million for maintenance capital. At June 30, SUSP had borrowings against its
revolving line of credit of $84.8 million and other long-term debt of $97.0 million, a portion of which was
collateralized by $95.9 million of marketable securities.
2013 Guidance
SUSP's management team is adjusting the following previously issued guidance for 2013. Please refer to
disclosures below regarding forward-looking statements.
New FY 2013
Guidance
Previous FY 2013
Guidance
First Half 2013 Actual
Motor Fuel Gallons (billions) (a) 1.45 - 1.60 1.45 - 1.60 0.76
Fuel Margin (cents/gallon) (a) 3.4 - 3.6 3.3 - 3.5 3.6
New Stripes stores expected to be purchased by SUSP (b)25 - 30 25 - 35 12
New Wholesale dealer and consignment sites (c) 28 - 40 25 - 40 15
Maintenance Capital Spending (millions) $1 - $3 $1 - $3 $0.3
Expansion Capital Spending (millions) (d) $95-$135 $95-$135 $57.6
(a) Includes affiliated and third-party gallons and fuel margin.
(b) Based on Susser Holdings Corporation guidance of 28 - 30 new Stripes stores to be built in 2013.
(c) Does not reflect existing wholesale consignment and dealer site closures, which are typically lower volume locations than new sites.
(d) Expansion capital includes Stripes store purchases. The Partnership does not provide guidance on potential acquisitions.
(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 "Key Operating Metrics" later in this news release for a discussion of our use of
Adjusted EBITDA and distributable cash flow, and reconciliation to net income for the periods presented.
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Quarterly Distribution
SUSP announced today that the Board of Directors of its general partner has approved its quarterly distribution
for the second quarter of 2013 of $0.4528 per unit. This amount corresponds to $1.8112 per unit on an
annualized basis and represents a 3.5 percent increase compared to the distribution for the previous quarter.
The total distribution amount of approximately $9.9 million is being paid from distributable cash flow of $11.9
million for the quarter.
The distribution will be paid on August 29, 2013 to unitholders of record on August 19, 2013. Immediately
prior to the distribution, there will be 21,878,872 units outstanding, including all of the Partnership's common
and subordinated units.
Second Quarter Earnings Conference Call
Susser's management team will hold a conference call today at 10:00 a.m. ET (9:00 a.m. CT) to discuss second
quarter 2013 results for both Susser Holdings Corporation and Susser Petroleum Partners LP. To participate in
the call, dial 480-629-9770 10 minutes early and ask for the Susser conference call. The call will also be
accessible live and for later replay via webcast in the Investor Relations section of Susser Holdings' web site at
www.susser.com and Susser Petroleum Partners' web site at www.susserpetroleumpartners.com under Events
and Presentations. A telephone replay will be available through August 14 by calling 303-590-3030 and using
the pass code 4630288#.
Factors Affecting Comparability and Explanation of Pro Forma Results
SUSP completed its initial public offering of common units representing limited partner interests on September
25, 2012. Reported results of operations for the three- and six-month periods ending June 30, 2012 reflect the
results of Susser Petroleum Company LLC, the Partnership's "Predecessor". Prior to September 25, 2012, the
Predecessor did not charge intercompany gross profit on motor fuel sales to Susser Holdings' Stripes
convenience stores. Additionally, not all of the wholesale operations of the Predecessor were contributed to
SUSP, such as consignment location fuel sales and the fuel transportation assets and operations. As a result,
actual operating results are not comparable on a period-to-period basis.
Selected supplemental pro forma information is being provided, which reflects certain SUSP results as if the
current structure and contracts had been in place on January 1, 2012. The pro forma results show actual gallons
sold but reflect revenues and gross margins as if the Partnership had completed its initial public offering and
related transactions and had been operating as an independent entity under its current contractual arrangements
with affiliates since January 1, 2012. Additional details regarding our pro forma adjustments are included in
the attached tables. Management believes the pro forma presentation provides investors with a more relevant
comparison to historical and future periods as opposed to actual results.
About Susser Petroleum Partners LP
Houston-based Susser Petroleum Partners LP is a publicly-traded partnership formed by Susser Holdings
Corporation to engage in the primarily fee-based wholesale distribution of motor fuels to Susser Holdings and
third parties. Susser Petroleum Partners distributes over 1.5 billion gallons of motor fuel annually from major
oil companies and independent refiners to Susser Holdings' Stripes convenience stores, independently operated
consignment locations, convenience stores and retail fuel outlets operated by independent operators and other
commercial customers in Texas, New Mexico, Oklahoma and Louisiana.
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Forward-Looking Statements
This news release contains "forward-looking statements." These statements are based on current plans and
expectations and involve a number of risks and uncertainties that could cause actual results and events to vary
materially, including but not limited to: Susser Holdings' business strategy, operations and conflicts of interest
with us; our ability to renew or renegotiate our long-term distribution contracts with our customers; changes in
the price of and demand for the motor fuel that we distribute; our dependence on two principal suppliers;
competition in the wholesale motor fuel distribution industry; seasonal trends; increased costs; our ability to
make acquisitions; environmental laws and regulations; dangers inherent in the storage of motor fuel; our
reliance on SHC for transportation services; and other unforeseen factors. For a full discussion of these and
other risks and uncertainties, refer to the "Risk Factors" section of the Partnership's most recently filed annual
report on Form 10-K and subsequent quarterly filings. 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 Susser Petroleum Partners' distributions to non-U.S. investors as being
attributable to income that is effectively connected with a United States trade or business. Accordingly, Susser
Petroleum Partners' distributions to non-U.S. investors are subject to federal income tax withholding at the
highest applicable effective tax rate.
Financial statements follow
Pro Forma Results
The following presentation compares actual first half and second quarter 2013 results to the pro forma revenues
and gross profit for SUSP in the first half and second quarter of 2012, had the transactions and contracts related
to the IPO occurred as of January 1, 2012. Specifically, the following pro forma schedules give effect to:
the contribution by our Predecessor to us of substantially all of the assets and operations comprising its
wholesale motor fuel distribution business (other than its motor fuel consignment business and
transportation assets and substantially all of its accounts receivable and payable);
the contribution by SUSS and our Predecessor to us of certain convenience store properties;
our entry into a fuel distribution contract with SUSS, pursuant to which we receive (i) a fixed profit
margin (averaging three cents) on the motor fuel distributed to SUSS for its Stripes convenience stores,
instead of no margin historically reflected in our Predecessor financial statements and (ii) a fixed profit
margin (averaging three cents) on all volumes sold to SUSS for its independently operated consignment
locations, instead of the variable and higher margin received by our Predecessor under consignment
contracts; and
our entry into the SUSS Transportation Contract and the elimination of revenues and costs associated
with the transportation business that were included in our Predecessor's results of operations.
As used in the following table, "affiliates" refers to sales to SUSS for its Stripes convenience stores and
independently operated consignment locations; "third-party" refers to sales to independently operated dealer
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supply locations and other commercial customers.
Three Months Ended Six Months Ended
June 30,
2012
June 30,
2013
June 30,
2012
June 30,
2013
Pro Forma Actual Pro Forma Actual
(in thousands, except for gross profit per gallon)
Revenues:
Motor fuel sales to third parties $372,899 $363,318 $724,744 $710,822
Motor fuel sales to affiliates 712,738 751,304 1,435,234 1,482,031
Rental income 840 2,276 1,679 3,905
Other income 1,098 1,207 2,450 2,506
Total revenue 1,087,575 1,118,105 2,164,107 2,199,264
Gross profit:
Motor fuel sales to third parties 5,225 6,078 10,038 11,875
Motor fuel sales to affiliates 7,333 7,934 14,456 15,352
Rental income 840 2,276 1,679 3,905
Other 651 668 1,380 1,380
Total gross profit $14,049 $16,956 $27,553 $32,512
Operating Data:
Motor fuel gallons sold:
Third-party dealers and other commercial customers124,599 124,943 238,526 240,773
Affiliated gallons 244,428 264,098 481,869 515,150
Total gallons sold 369,027 389,041 720,395 755,923
Motor fuel gross profit cents per gallon:
Third-party 4.2 ¢ 4.9 ¢ 4.2 ¢ 4.9 ¢
Affiliated 3.0 ¢ 3.0 ¢ 3.0 ¢ 3.0 ¢
Volume-weighted average for all gallons 3.4 ¢ 3.6 ¢ 3.4 ¢ 3.6 ¢
Susser Petroleum Partners LP
Consolidated Statements of Operations
Unaudited
Three Months Ended Six Months Ended
June 30,
2012
June 30,
2013
June 30,
2012
June 30,
2013
Predecessor Predecessor
(in thousands, except unit and per unit amounts)
Revenues:
Motor fuel sales to third parties $ 466,743 $363,318 $905,543 $ 710,822
Motor fuel sales to affiliates 616,727 751,304 1,247,171 1,482,031
Rental income 1,355 2,276 2,719 3,905
Other income 1,686 1,207 3,731 2,506
Total revenues 1,086,511 1,118,105 2,159,164 2,199,264
Cost of sales:
Motor fuel cost of sales to third parties 455,173 357,240 886,861 698,947
Motor fuel cost of sales to affiliates 616,727 743,370 1,247,171 1,466,679
Other 431 539 1,069 1,126
Total cost of sales 1,072,331 1,101,149 2,135,101 2,166,752
Gross profit 14,180 16,956 24,063 32,512
Operating expenses:
General and administrative 3,153 3,649 5,801 7,548
Other operating 2,203 568 3,639 1,199
Rent 1,110 300 2,180 504
Loss (gain) on disposal of assets (75) 72 36 94
Depreciation, amortization and accretion1,892 1,837 3,776 3,658
Total operating expenses 8,283 6,426 15,432 13,003
Income from operations 5,897 10,530 8,631 19,509
Interest expense, net (92) (766) (180) (1,449)
Income before income taxes 5,805 9,764 8,451 18,060
Income tax expense (2,102) (84) (3,074) (153)
Net income and comprehensive income $ 3,703 $9,680 $ 5,377 $ 17,907
Net income per limited partner unit:
Common $0.44 $ 0.82
Subordinated $0.44 $ 0.82
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Limited partner units outstanding:
Common units - public 10,925,000 10,925,000
Common units - affiliated 14,436 14,436
Subordinated units - affiliated 10,939,436 10,939,436
Cash distribution per unit $0.4528 $ 0.8903
Susser Petroleum Partners LP
Consolidated Balance Sheets
December 31,
2012
June 30,
2013
(unaudited)
(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 6,752 $ 16,488
Accounts receivable, net of allowance for doubtful accounts of $103 at December 31, 2012, and $286 at June 30, 201333,008 40,246
Receivables from affiliates 59,543 51,256
Inventories, net 2,981 22,369
Other current assets 821 1,416
Total current assets 103,105 131,775
Property and equipment, net 68,173 123,251
Other assets:
Marketable securities 148,264 95,893
Goodwill 12,936 12,936
Intangible assets, net 23,131 22,011
Other noncurrent assets 191 398
Total assets $ 355,800 $ 386,264
Liabilities and unitholders' equity
Current liabilities:
Accounts payable $ 88,884 $ 119,535
Accrued expenses and other current liabilities 1,101 4,608
Current maturities of long-term debt 24 24
Total current liabilities 90,009 124,167
Revolving line of credit 35,590 84,800
Long-term debt 149,241 96,928
Deferred tax liability, long-term portion 152 164
Other noncurrent liabilities 2,476 2,305
Total liabilities 277,468 308,364
Commitments and contingencies:
Unitholders' equity:
Susser Petroleum Partners LP unitholders' equity:
Common unitholders - public (10,925,000 units issued and outstanding) 210,462 210,247
Common unitholders - affiliated (14,436 units issued and outstanding) (175) (175)
Subordinated unitholders - affiliated (10,939,436 units issued and outstanding) (131,955) (132,172)
Total unitholders' equity 78,332 77,900
Total liabilities and unitholders' equity $ 355,800 $ 386,264
Key Operating Metrics
The following table sets forth, for the periods indicated, information concerning key measures we rely on to
gauge our operating performance. Historical results include our Predecessor's results of operations. 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.
Three Months Ended Six Months Ended
June 30,
2012 (1)
June 30,
2013
June 30,
2012 (1)
June 30,
2013
Predecessor Predecessor
(in thousands, except for selling price and gross profit per gallon)
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Revenues:
Motor fuel sales to third parties (2) $ 466,743 $ 363,318 $ 905,543 $ 710,822
Motor fuel sales to affiliates (2) 616,727 751,304 1,247,171 1,482,031
Rental income 1,355 2,276 2,719 3,905
Other income 1,686 1,207 3,731 2,506
Total revenue 1,086,511 1,118,105 2,159,164 2,199,264
Gross profit:
Motor fuel gross profit to third parties (2) 11,570 6,078 18,682 11,875
Motor fuel gross profit to affiliates (2) 7,934 15,352
Rental income 1,355 2,276 2,719 3,905
Other 1,255 668 2,662 1,380
Total gross profit 14,180 16,956 24,063 32,512
Net income $ 3,703 $ 9,680 $ 5,377 $ 17,907
Adjusted EBITDA (3) $ 8,048 $ 12,840 $ 13,012 $ 24,067
Distributable cash flow (3) $ 11,907 $ 22,342
Operating Data:
Total motor fuel gallons sold:
Third-party 153,565 124,943 295,147 240,773
Affiliated gallons 215,462 264,098 425,249 515,150
Average wholesale selling price per gallon $ 2.94 $ 2.87 $ 2.99 $ 2.90
Motor fuel gross profit cents per gallon (2):
Third-party 7.5 ¢ 4.9 ¢ 6.3 ¢ 4.9 ¢
Affiliated ¢ 3.0 ¢ ¢ 3.0 ¢
Volume-weighted average for all gallons 3.1 ¢ 3.6 ¢ 2.6 ¢ 3.6 ¢
(1) Results represent Predecessor.
(2)
For the second quarter and first half of 2012, affiliated sales only include sales to Stripes convenience stores, for which our Predecessor historically received
no margin, and third-party motor fuel sales and gross profit cents per gallon includes the motor fuel sold directly to independently operated consignment
locations, as well as sales to third-party dealers and other commercial customers. Following our IPO on September 25, 2012, we sell fuel to SUSS for both
Stripes convenience stores and SUSS' independently operated consignment locations at a fixed profit margin of approximately three cents per gallon, and
these sales are classified as affiliated sales.
(3)
We define EBITDA as net income before net interest expense, income tax expense and depreciation and amortization expense. Adjusted EBITDA further
adjusts EBITDA to reflect certain other non-recurring and non-cash items. We define distributable cash flow as Adjusted EBITDA less cash interest expense,
cash state franchise tax expense, maintenance capital expenditures, and other non-cash adjustments. Adjusted EBITDA and distributable cash flow are not
financial measures calculated in accordance with GAAP.
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;
they are used by our management 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, 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. EBITDA, Adjusted
EBITDA and distributable cash flow have limitations as analytical tools, and one should not consider them 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;
they do not reflect interest expense, or the cash requirements necessary to service interest or principal
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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:
Three Months Ended Six Months Ended
June 30,
2012
June 30,
2013
June 30,
2012
June 30,
2013
Predecessor Predecessor
(in thousands)
Net income $ 3,703 $9,680 $ 5,377 $17,907
Depreciation, amortization and accretion 1,892 1,837 3,776 3,658
Interest expense, net 92 766 180 1,449
Income tax expense 2,102 84 3,074 153
EBITDA 7,789 12,367 12,407 23,167
Non-cash stock-based compensation 334 401 569 806
Loss (gain) on disposal of assets and impairment charge(75) 72 36 94
Adjusted EBITDA $ 8,048 $12,840 $ 13,012 $24,067
Cash interest expense 671 1,258
State franchise tax expense (cash) 72 141
Maintenance capital expenditures 190 326
Distributable cash flow $11,907 $22,342
Contacts:Susser Petroleum Partners LP
Mary Sullivan, Chief Financial Officer
(832) 234-3600, msullivan@susser.com
Dennard ? Lascar Associates, LLC
Anne Pearson, Senior Vice President
(210) 408-6321, apearson@dennardlascar.com
Ben Burnham, Vice President
(773) 599-3745, bburnham@dennardlascar.com
SOURCE Susser Petroleum Partners LP
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