SusserPetroleumPartnersLPReportsSecond
Quarter2014Results
8/8/2014
-Gallonssoldincreased19%
-Distributablecashflowincreased15%
-3.5%sequentialincreaseindistributiondeclared
-FirstIDRpaymentapproved
HOUSTON, Aug. 8, 2014 /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,
2014.
Net income for the quarter was $9.6 million, or $0.43 per unit, compared to $9.7 million, or $0.44 per unit, in
the second quarter of 2013. Adjusted EBITDA(1) totaled $15.6 million and distributable cash flow(1) was
$13.7 million, versus $12.8 million and $11.9 million, respectively, for the prior-year period.
Revenue for the second quarter totaled $1.4 billion, a 22.8 percent increase compared to $1.1 billion in the
comparable period in 2013. The increase was driven by an 18.7 percent increase in gallons sold and a 90.8
percent increase in rental income. In the second quarter, 62.7 percent of revenues were generated from motor
fuel sales to affiliates, 36.9 percent were from motor fuel sales to other third-parties, and 0.4 percent came from
rental and other income.
Gross profit for the quarter totaled $22.2 million, a 30.9 percent increase compared to $17.0 million in the
second quarter of last year. On a weighted average basis, fuel margin for all gallons sold increased to 3.7 cents
per gallon, compared to 3.6 cents per gallon in the prior-year period.
Affiliate customers as of June 30 included 636 Stripes® and Sac-N-Pac™ convenience stores operated by our
parent company, Susser Holdings Corporation (NYSE: SUSS), as well as sales of motor fuel to SUSS for resale
under consignment arrangements at approximately 86 independently operated convenience stores. Motor fuel
gallons sold to affiliates during the second quarter increased 11.0 percent versus the prior-year period to 293.2
million gallons. Gross profit on these gallons totaled $8.7 million, or 3.0 cents per gallon, versus $7.9 million,
or 3.0 cents per gallon, in the comparable three-month period last year.
Third-party customers of SUSP included 521 independent dealers under long-term fuel supply agreements, 17
independently operated consignment locations and approximately 1,900 other commercial customers. Total
gallons sold to third parties increased year-over-year by 34.9 percent to 168.6 million gallons. Gross profit on
these gallons was $8.3 million, or 4.9 cents per gallon, compared to $6.1 million, or 4.9 cents per gallon, in the
prior-year period.
"We are pleased to report solid results for the Partnership for the second quarter of 2014, with a 19 percent
year-over-year increase in fuel gallons sold and a 31 percent increase in total gross profit," said Rocky B.
Dewbre , President and Chief Executive Officer. "As a result of this robust performance, we are able to
announce our fifth consecutive increase in our quarterly distribution to unit holders, which increased by 3.5%
from last quarter and 14.8% over the prior year, and also our first incentive distribution payment to Susser
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Holdings, the owner of our IDRs.
"Our Gainesville Fuel and Sac-N-Pac™/3W Warren Fuels acquisitions continue to contribute to our year-over-
year growth, and with the support of the strong Texas economy, we continue to experience robust volume from
sales to Stripes®.
"Susser Holdings is on track to close the proposed merger with a subsidiary of Energy Transfer Partners, L.P.
("ETP") in the third quarter, and we believe we are well positioned to take advantage of this opportunity to
further accelerate our growth." Dewbre said.
YTD2014ComparedtoYTD2013
Revenue for the first six months of 2014 totaled $2.6 billion, a 17.2 percent increase compared to the first half
of 2013. Gross profit for the period increased 36.3 percent year-over-year to $44.3 million. For the first half of
the year, total gallons of motor fuel sold to affiliates and to third parties increased, year-over-year, by 10.8
percent and 34.6 percent, to 571.0 million gallons and 324.2 million gallons, respectively. On a weighted
average basis, fuel margin for all gallons sold increased to 3.8 cents per gallon in the first six months of 2014
from 3.6 cents per gallon in the comparable 2013 period. Adjusted EBITDA for the first six months of 2014
was $31.2 million compared to $24.1 million for 2013, and distributable cash flow was $27.7 million and $22.3
million for the six month 2014 and 2013 periods, respectively.
NewDealerUpdate
Eleven new contracted dealer sites were added in the second quarter, and three sites were discontinued for a
total of 624 third-party dealer and SUSS consignment locations as of June 30. Including the 19 dealer sites
acquired in the first quarter, SUSP added 38 new and acquired dealer sites in the first half, and expects to add a
total of 50 to 65 dealer and consignment sites for the full year.
CapitalSpendingandFinancing
SUSP completed drop down transactions for six Stripes® convenience stores during the second quarter, and
three more so far in the third quarter bring the year to date total to 16. Since its initial public offering in
September 2012, SUSP has completed the purchase and leaseback of 49 newly built and acquired stores for a
cumulative cost of $204.1 million.
Including the Stripes® store purchases, SUSP's gross capital expenditures for the second quarter were $36.7
million, which included $36.5 million for growth capital and $0.2 million for maintenance capital. At June 30,
SUSP had borrowings against its revolving line of credit of $232.2 million and other long-term debt of $4.1
million. Availability on the revolving credit facility after borrowings and letters of credit commitments was
$156.9 million.
(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 reconciliation to net income for the periods presented.
QuarterlyDistribution
SUSP announced today that the Board of Directors of its general partner has declared its quarterly distribution
for the second quarter of 2014 of $0.5197 per unit. This amount corresponds to $2.08 per unit on an annualized
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basis and represents a 3.5 percent increase compared to the distribution for the first quarter of 2014. With this
distribution announcement, we have achieved the "second target distribution" level per our limited partnership
agreement, and therefore our Board has approved an incentive distribution payment to Susser Holdings, the
owner of our IDRs, of approximately $64,000. The total distribution amount of approximately $11.5 million,
including the IDR payment, is being paid from distributable cash flow of $13.7 million for the quarter and
reflects a distribution coverage ratio of 1.19 times.
The distribution will be paid on August 29, 2014 to unitholders of record on August 19, 2014. Immediately
prior to the distribution, there are expected to be 21,960,200 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 11:00 a.m. ET (10:00 a.m. CT) to discuss
second quarter 2014 results for both Susser Holdings Corporation and Susser Petroleum Partners LP. To
participate in the call, dial 719-457-2689 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 15 by calling 719-457-
0820 and using the pass code 5051315#.
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 approximately 1.7 billion gallons of motor fuel annually
from major oil companies and independent refiners to Susser Holdings' Stripes® and Sac-N-Pac™ 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, Kansas and
Louisiana.
Forward-Looking Statements
This news release contains "forward-looking statements." These statements are based on current plans,
expectations and the anticipated timing and impact of Susser Holdings Corporation's acquisition by ETP and
related transactions 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; the timing and form of any "drop down" transactions between us and ETP; 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; 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; our ability to
make acquisitions; environmental laws and regulations; dangers inherent in the storage of motor fuel; our
reliance on SUSS for transportation services; reliance of our suppliers to provide trade credit terms to
adequately fund our ongoing operations; acts of war and terrorism; dependence on our information technology
systems; 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
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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.
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
Financial statements follow
SusserPetroleumPartnersLP
ConsolidatedStatementsofOperationsandComprehensiveIncome
Unaudited
ThreeMonthsEnded SixMonthsEnded
June30,
2013
June30,
2014
June30,
2013
June30,
2014
(in thousands, except unit and per unit amounts)
Revenues:
Motor fuel sales to third parties $ 366,110 $ 507,575 $ 722,872 $ 952,141
Motor fuel sales to affiliates 751,304 862,549 1,482,031 1,628,639
Rental income 2,276 4,343 3,905 8,266
Other income 1,207 1,558 2,506 3,566
Total revenues 1,120,897 1,376,025 2,211,314 2,592,612
Cost of sales:
Motor fuel cost of sales to third parties 360,032 499,246 710,997 934,969
Motor fuel cost of sales to affiliates 743,370 853,811 1,466,679 1,611,534
Other 539 765 1,126 1,786
Total cost of sales 1,103,941 1,353,822 2,178,802 2,548,289
Gross profit 16,956 22,203 32,512 44,323
Operating expenses:
General and administrative 3,649 5,372 7,548 10,242
Other operating 568 1,761 1,199 3,795
Rent 300 284 504 533
Loss (gain) on disposal of assets 72 (36) 94 (36)
Depreciation, amortization and accretion 1,837 3,333 3,658 6,659
Total operating expenses 6,426 10,714 13,003 21,193
Income from operations 10,530 11,489 19,509 23,130
Interest expense, net (766) (1,774) (1,449) (3,276)
Income before income taxes 9,764 9,715 18,060 19,854
Income tax expense (84) (120) (153) (127)
Net income and comprehensive income $ 9,680 $ 9,595 $ 17,907 $ 19,727
Net income per limited partner unit:
Common (basic) $ 0.44 $ 0.43 $ 0.82 $ 0.90
Common (diluted) $ 0.44 $ 0.43 $ 0.82 $ 0.89
Subordinated (basic and diluted) $ 0.44 $ 0.43 $ 0.82 $ 0.90
Weighted average limited partner units outstanding (diluted):
Common units - public 10,925,000 10,966,981 10,925,000 10,965,066
Common units - affiliated 14,436 79,308 14,436 79,308
Subordinated units - affiliated 10,939,436 10,939,436 10,939,436 10,939,436
Cash distribution per unit $ 0.4528 $ 0.5197 $ 0.8903 $ 1.0218
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SusserPetroleumPartnersLP
ConsolidatedBalanceSheets
December
31,
2013
June30,
2014
unaudited
(in thousands, except
units)
Assets
Current assets:
Cash and cash equivalents $8,150 $6,769
Accounts receivable, net of allowance for doubtful accounts of $323 at December 31, 2013, and $528 at June 30, 2014 69,005 74,212
Receivables from affiliates 49,879 51,727
Inventories, net 11,122 38,971
Other current assets 66 710
Total current assets 138,222 172,389
Property and equipment, net 180,127 239,590
Other assets:
Marketable securities 25,952
Goodwill 22,823 22,823
Intangible assets, net 22,772 24,292
Other noncurrent assets 188 259
Total assets $390,084 $459,353
Liabilitiesandequity
Current liabilities:
Accounts payable $110,432 $128,464
Accrued expenses and other current liabilities 11,427 12,960
Current maturities of long-term debt 525 525
Total current liabilities 122,384 141,949
Revolving line of credit 156,210 232,240
Long-term debt 29,416 3,536
Deferred tax liability, long-term portion 222 207
Other noncurrent liabilities 2,159 2,192
Total liabilities 310,391 380,124
Commitments and contingencies:
Partners' equity:
Limited partners:
Common unitholders - public (10,936,352 units issued and outstanding at December 31, 2013 and 10,941,456 units issued and
outstanding at June 30, 2014)
210,269 210,038
Common unitholders - affiliated (79,308 units issued and outstanding at December 31, 2013 and at June 30, 2014) 1,562 1,556
Subordinated unitholders - affiliated (10,939,436 units issued and outstanding at December 31, 2013 and June 30, 2014) (132,138) (132,365)
Total equity 79,693 79,229
Total liabilities and equity $390,084 $459,353
KeyOperatingMetrics
The following table sets forth, for the periods indicated, information concerning key measures we rely on to
gauge our operating performance. 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,
2013
June30,
2014
June30,
2013
June30,
2014
(in thousands, except for selling price and gross profit per gallon)
Revenues:
Motor fuel sales to third parties (1) $ 366,110 $ 507,575 $ 722,872 $ 952,141
Motor fuel sales to affiliates 751,304 862,549 1,482,031 1,628,639
Rental income 2,276 4,343 3,905 8,266
Other income 1,207 1,558 2,506 3,566
Total revenue (1) 1,120,897 1,376,025 2,211,314 2,592,612
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Gross profit:
Motor fuel gross profit to third parties 6,078 8,329 11,875 17,172
Motor fuel gross profit to affiliates 7,934 8,738 15,352 17,105
Rental income 2,276 4,343 3,905 8,266
Other 668 793 1,380 1,780
Total gross profit $ 16,956 $ 22,203 $ 32,512 $ 44,323
Net income $ 9,680 $ 9,595 $ 17,907 $ 19,727
Adjusted EBITDA (2) $ 12,840 $ 15,563 $ 24,067 $ 31,237
Distributable cash flow (2) $ 11,905 $ 13,653 $ 22,340 $ 27,690
OperatingData:
Total motor fuel gallons sold:
Third-party 124,943 168,574 240,773 324,169
Affiliated gallons 264,098 293,217 515,150 571,013
Average wholesale selling price per gallon$ 2.87 $ 2.97 $ 2.92 $ 2.88
Motor fuel gross profit (cents per gallon):
Third-party 4.9 ¢ 4.9 ¢ 4.9 ¢ 5.3 ¢
Affiliated 3.0 ¢ 3.0 ¢ 3.0 ¢ 3.0 ¢
Volume-weighted average for all gallons3.6 ¢ 3.7 ¢ 3.6 ¢ 3.8 ¢
(1)
In December 2013, we revised our presentation of fuel taxes on motor fuel sales at our consignment locations to present such fuel taxes gross in motor fuel
sales. Prior years' motor fuel sales have been adjusted to reflect this revision which also affects average wholesale selling price.
(2)
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. EBITDA, 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 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 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 payments on our revolving credit facility or
term loans;
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 tables present a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow:
ThreeMonthsEnded SixMonthsEnded
June30,
2013
June30,
2014
June30,
2013
June30,
2014
Net income $ 9,680 $ 9,595 $17,907 $19,727
Depreciation, amortization and accretion 1,837 3,333 3,658 6,659
Interest expense, net 766 1,774 1,449 3,276
Income tax expense 84 120 153 127
EBITDA 12,367 14,822 23,167 29,789
Non-cash stock based compensation 401 777 806 1,484
Loss (gain) on disposal of assets and impairment charge72 (36) 94 (36)
Adjusted EBITDA $ 12,840 $ 15,563 $24,067 $31,237
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Cash interest expense 671 1,644 1,258 3,050
State franchise tax expense (cash) 72 105 141 173
Maintenance capital expenditures 192 161 328 324
Distributable cash flow $ 11,905 $ 13,653 $22,340 $27,690
SOURCE Susser Petroleum Partners LP
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