NEWS RELEASE
Sunoco LP Announces First Quarter 2016 Financial
and Operating Results
5/5/2016
- Generated Adjusted EBITDA of $158.9 million
- Completed final dropdown of the remaining wholesale fuel and retail marketing assets from ETP in March
- Increased quarterly distribution by 2.0 percent versus 4Q 2015, 26.7 percent versus 1Q 2015
- Maintained a cash coverage ratio of 1.14 times during 1Q and 1.30 times on a trailing 12-month basis
- Achieved same store merchandise sales growth of 2.8 percent
- Opened four new-to-industry locations with six under construction
Conference Call Scheduled for 9:00 a.m. CT (10:00 a.m. ET) on Thursday, May 5
HOUSTON, May 5, 2016 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today announced
financial and operating results for the three-month period ended March 31, 2016.
Adjusted EBITDA (1) for the quarter totaled $158.9 million, compared with $128.2 million in the first quarter of
2015. The favorable year-over-year comparison primarily reflects stronger retail and wholesale fuel margins as well
as increased merchandise sales and merchandise margins. A full quarter's contribution from the Partnership's
acquisition of the remaining 68.42 percent interest in Sunoco, LLC and the retail marketing assets from Energy
Transfer Partners, L.P. (NYSE: ETP) is included in the first quarter results and the comparable period from the prior
year. Comparable period results from the prior year also include a full quarter's contribution from the July 2015
Susser Holdings Corporation and April 2015 Sunoco, LLC dropdowns.
Distributable cash flow attributable to partners(1), as adjusted, was $111.5 million, compared to $30.5 million a year
earlier, and distributable cash flow per common unit was $1.17.
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Revenue was $3.2 billion, a decrease of 25.6 percent, compared to $4.3 billion in the first quarter of 2015. The
decrease was the result of a 60-cent per-gallon decrease in the average selling price of fuel as well as a 2.4%
decrease in total gallons sold.
Total gross profit was $498.7 million, compared to $441.1 million in the first quarter of 2015. Key drivers of the
increase were higher fuel margins, an increase in merchandise gross margin as well as the impact of acquisitions
made and new-to-industry sites opened during 2015.
Income from operations was $91.8 million, versus $65.3 million in the first quarter of 2015, reflecting an increase in
gross profit partly offset by increases in operating and depreciation expenses.
Net income was $62.0 million, or $0.47 per diluted unit, versus $49.3 million, or $0.44 per diluted unit, in the first
quarter of 2015, reflecting an increase in operating income partly offset by an increase in interest expense.
On a weighted-average basis, fuel margin for all gallons sold in the first quarter increased to 14.7 cents per gallon,
compared to 12.4 cents per gallon in the first quarter of 2015. The increase was primarily attributable to favorable
margins in supply and trading activity partly offset by rapidly rising refined product costs experienced toward the
end of the first quarter.
Adjusted EBITDA for the wholesale segment was $102.2 million in the first quarter of 2016 versus $82.0 million in
the first quarter of 2015. Total wholesale gallons sold in the first quarter were 1,232.6 million, compared with
1,296.6 million in the first quarter of 2015, a decrease of 4.9 percent. This includes gallons sold to consignment
stores and third-party customers, including independent dealers, fuel distributors and commercial customers. The
Partnership earned 11.4 cents per gallon on these volumes, compared to 9.6 cents per gallon a year earlier.
Adjusted EBITDA for the retail segment was $56.7 million in the first quarter of 2016 versus $46.2 million in the first
quarter of last year. Total retail gallons sold increased by 3.2 percent to 608.1 million gallons as a result of
acquisitions made and new-to-industry sites opened during 2015. The Partnership earned 21.3 cents per gallon on
these volumes, compared to 18.6 cents per gallon a year earlier.
Merchandise sales in the first quarter increased by 8.5 percent from a year ago to $524.1 million, reflecting
acquisitions made and new-to-industry sites opened during 2015. Merchandise sales contributed $166.4 million of
gross profit from a retail merchandise margin of 31.7 percent.
Same store merchandise sales increased by 2.8 percent, reflecting strong performance across all of SUN's
convenience store operations, while same store fuel sales declined 1.0 percent, as a result of inclement weather on
the East Coast and lower year-over-year activity in oil producing regions in South and West Texas. In these oil
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producing regions, same store merchandise sales decreased by 13.3 percent, and same store fuel sales declined
16.0 percent. Excluding these oil producing regions, same store sales increased by 5.9 percent and same store fuel
sales increased by 1.1 percent. Both same store merchandise sales and same store fuel sales benefited from a leap
day in the first quarter by approximately 1.1 percent.
As of March 31, SUN operated approximately 1,315 convenience stores and retail fuel outlets along the East Coast,
in the Southwest and in Hawaii. Third party operated locations totaled 5,525 locations.
SUN's other recent accomplishments include the following:
The completion of the final dropdown, which included the remaining 68.42% interest in Sunoco, LLC and the
retail marketing assets from ETP for approximately $2.2 billion in cash, including working capital adjustments,
and the issuance to ETP of 5,710,922 SUN common units valued at approximately $194.0 million. The
transaction closed on March 31, 2016. In connection with the closing of the acquisition SUN:
Entered into a $2.035 billion senior secured term loan facility to fund a portion of the cash consideration
for the acquisition; and
Completed its previously announced sale of 2,263,158 SUN common units to Energy Transfer Equity,
L.P. (NYSE: ETE) and received $64.5 million in proceeds which were used to repay borrowings under
SUN's revolving credit facility.
On April 4, SUN 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 its senior secured term loan facility.
SUN's segment results and other supplementary data are provided after the financial tables below.
Distribution Increase
On April 25, the Board of Directors of SUN's general partner declared a distribution for the first quarter of 2016 of
$0.8173 per unit, which corresponds to $3.2692 per unit on an annualized basis. This represents a 2.0 percent
increase compared to the distribution for the fourth quarter of 2015 and a 26.7 percent increase compared with
the first quarter of 2015. This is the Partnership's 12th consecutive quarterly increase. The distribution will be paid
on May 16 to unitholders of record on May 6.
SUN achieved a 1.14 times distribution coverage ratio for the first quarter. The distribution coverage ratio on a
trailing 12-month basis was 1.30 times.
Liquidity
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At March 31, 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
$802.7 million. Net debt to Adjusted EBITDA, pro forma for acquisitions, was 5.4 times at quarter end.
(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, May 5, at 9:00 a.m. CT (10:00 a.m. ET) 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.
Sunoco LP (NYSE: SUN) is a master limited partnership that operates approximately 1,300 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 30 states at
approximately 6,800 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
new information or events.
The information contained in this press release is available on our website at www.SunocoLP.com
Qualified Notice
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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
(361) 884-2463, scott.grischow@sunoco.com
Patrick Graham, Senior Analyst – Investor Relations and Finance
(610) 833-3776, patrick.graham@sunoco.com
Dennard-Lascar Associates
Anne Pearson
(210) 408-6321, apearson@dennardlascar.com
Media:
Jeff Shields, Communications Manager
(215) 977-6056, jpshields@sunocoinc.com
- Financial Schedules Follow –
SUNOCO LP
CONSOLIDATED BALANCE SHEETS
(in thousands, except units)
(unaudited)
March 31, 2016 December 31, 2015
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Assets
Current assets:
Cash and cash equivalents $ 76,529 $ 72,627
Advances to affiliates 386,327 365,536
Accounts receivable, net 317,568 308,285
Receivables from affiliates 1,565 8,074
Inventories, net 344,459 467,291
Other current assets 70,807 46,080
Total current assets 1,197,255 1,267,893
Property and equipment, net 3,161,953 3,154,826
Other assets:
Goodwill 3,109,258 3,111,262
Intangible assets, net 1,271,488 1,259,440
Other noncurrent assets 62,688 48,398
Total assets
$ 8,802,642 $ 8,841,819
Liabilities and equity
Current liabilities:
Accounts payable $ 393,776 $ 433,988
Accounts payable to affiliates 11,031 14,988
Accrued expenses and other current liabilities 261,617 307,939
Current maturities of long-term debt 4,824 5,084
Total current liabilities 671,248 761,999
Revolving line of credit 675,000 450,000
Long-term debt, net 3,517,912 1,502,531
Deferred tax liability 684,082 694,383
Other noncurrent liabilities 170,806 170,169
Total liabilities 5,719,048 3,579,082
Commitments and contingencies
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Partners' capital:
Limited partner interest:
Common unitholders - public (49,588,960 units issued and outstanding as of March
31, 2016 and December 31, 2015) 1,764,698 1,768,890
Common unitholders - affiliated (45,750,826 units issued and outstanding as of
March 31, 2016 and 37,776,746 units issued and outstanding as of December 31,
2015) 1,318,896 1,305,350
Class A unitholders - held by subsidiary (no units issued and outstanding as of March
31, 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 March 31, 2016 and no units issued and outstanding as of December 31, 2015)
Total partners' capital 3,083,594 3,074,240
Predecessor equity 2,188,497
Total equity 3,083,594 5,262,737
Total liabilities and equity
$ 8,802,642 $ 8,841,819
SUNOCO LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except unit and per unit amounts)
(unaudited)
For the Three Months Ended March 31,
2016 2015
Revenues
Retail motor fuel sales $ 1,115,715 $ 1,367,656
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Wholesale motor fuel sales to third parties 1,495,874 2,436,502
Wholesale motor fuel sales to affiliates 7,129 644
Merchandise sales 524,094 483,123
Rental income 22,124 19,782
Other 37,377 34,681
Total revenues 3,202,313 4,342,388
Cost of sales
Retail motor fuel cost of sales 984,442 1,258,550
Wholesale motor fuel cost of sales 1,351,844 2,306,165
Merchandise cost of sales 357,715 334,922
Other 9,569 1,659
Total cost of sales 2,703,570 3,901,296
Gross profit 498,743 441,092
Operating expenses
General and administrative 45,191 44,934
Other operating 249,005 230,774
Rent 33,457 33,326
Loss (gain) on disposal of assets 1,214 (31)
Depreciation, amortization and accretion 78,066 66,743
Total operating expenses 406,933 375,746
Income from operations 91,810 65,346
Interest expense, net 27,689 7,977
Income before income taxes 64,121 57,369
Income tax expense 2,112 8,063
Net income and comprehensive income 62,009 49,306
Less: Net income and comprehensive income attributable to noncontrolling interest 846
Less: Preacquisition income allocated to general partner 31,388
Net income and comprehensive income attributable to partners
$ 62,009 $ 17,072
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Net income per limited partner unit:
Common (basic and diluted) $ 0.47 $ 0.44
Subordinated (basic and diluted) $ $ 0.44
Weighted average limited partner units outstanding:
Common units - public (basic) 49,588,960 20,036,329
Common units - public (diluted) 49,610,314 20,074,000
Common units - affiliated (basic and diluted) 37,864,373 4,062,848
Subordinated units - affiliated 10,939,436
Cash distribution per unit $ 0.82 $ 0.65
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 March 31, 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):
For the Three Months Ended March 31,
2016 2015
Wholesale Retail Total Wholesale Retail Total
Revenues
Retail motor fuel sales $ $ 1,115,715 $ 1,115,715 $ $ 1,367,656 $ 1,367,656
Wholesale motor fuel sales to
third parties 1,495,874 1,495,874 2,436,502 2,436,502
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Wholesale motor fuel sales to
affiliates 7,129 7,129 644 644
Merchandise sales 524,094 524,094 483,123 483,123
Rental income 18,720 3,404 22,124 11,509 8,273 19,782
Other income 5,941 31,436 37,377 5,612 29,069 34,681
Total revenue $ 1,527,664 $ 1,674,649 $ 3,202,313 $ 2,454,267 $ 1,888,121 $ 4,342,388
Gross profit
Retail motor fuel $ $ 131,273 $ 131,273 $ $ 109,106 $ 109,106
Wholesale motor fuel 151,159 151,159 130,981 130,981
Merchandise 166,379 166,379 148,201 148,201
Rental and other 23,367 26,565 49,932 15,565 37,239 52,804
Total gross profit $ 174,526 $ 324,217 $ 498,743 $ 146,546 $ 294,546 $ 441,092
Net income (loss) and
comprehensive income
(loss) attributable to
partners $ 86,019 $ (24,010) $ 62,009 $ 41,584 $ (24,512) $ 17,072
Adjusted EBITDA attributable to
partners (2) $ 102,228 $ 56,659 $ 158,887 $ 82,008 $ 45,309 $ 127,317
Distributable cash flow
attributable to partners, as
adjusted (2) $ 111,520 $ 30,454
Operating Data
Total motor fuel gallons sold:
Retail 608,141 608,141 589,096 589,096
Wholesale 1,232,599 1,232,599 1,296,575 1,296,575
Motor fuel gross profit (cents per
gallon) (1):
Retail 21.3¢ 18.6¢
Wholesale 11.4¢ 9.6¢
Volume-weighted average for all
gallons 14.7¢ 12.4¢
Retail merchandise margin 31.7% 30.7%
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(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;
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 March 31, 2016 and 2015 (in thousands):
For the Three Months Ended March 31,
2016 2015
Wholesale Retail Total Wholesale Retail Total
Net income (loss) and comprehensive income
(loss) $ 86,019 $ (24,010) $ 62,009 $ 66,100 $ (16,794) $ 49,306
Depreciation, amortization and accretion 16,853 61,213 78,066 18,791 47,952 66,743
Interest expense, net 12,128 15,561 27,689 1,002 6,975 7,977
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Income tax expense (benefit) (748) 2,860 2,112 1,041 7,022 8,063
EBITDA $ 114,252 $ 55,624 $ 169,876 $ 86,934 $ 45,155 $ 132,089
Non-cash stock compensation expense 2,369 815 3,184 430 928 1,358
Loss (gain) on disposal of assets (446) 1,660 1,214 159 (190) (31)
Unrealized loss (gain) on commodity
derivatives (2,725) (2,725) 1,406 1,406
Inventory fair value adjustment (11,222) (1,440) (12,662) (6,921) 262 (6,659)
Adjusted EBITDA $ 102,228 $ 56,659 $ 158,887 $ 82,008 $ 46,155 $ 128,163
Adjusted EBITDA attributable to noncontrolling
interest 846 846
Adjusted EBITDA attributable to
partners $ 102,228 $ 56,659 $ 158,887 $ 82,008 $ 45,309 $ 127,317
Cash interest expense (3) 26,449 7,129
Income tax expense (current) 2,120 133
Maintenance capital expenditures 19,628 2,864
Preacquisition earnings 87,621
Distributable cash flow attributable to
partners $ 110,690 $ 29,570
Transaction-related expense 830 884
Distributable cash flow attributable to
partners, as adjusted
$ 111,520 $ 30,454
(3) Reflects the Partnership's cash interest paid less the cash interest paid on our VIE debt of $0.7 million during the three months ended
March 31, 2015.
Capital Spending
SUN's gross capital expenditures for the first quarter were $96.2 million, which included $76.6 million for growth
capital and $19.6 million for maintenance capital. Approximately $23.8 million of the growth capital spend was for
the construction of new-to-industry sites of which four were opened in the first quarter with six currently under
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construction.
SUN expects capital spending for the full year 2016, excluding acquisitions, to be within the following ranges ($ in
millions)
Growth Maintenance
Low High Low High
$390 $420 $100 $110
Growth capital spending includes the construction of 35 to 40 new-to-industry sites that SUN anticipates building in
2016.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sunoco-lp-
announces-first-quarter-2016-financial-and-operating-results-300263436.html
SOURCE Sunoco LP
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