Sunoco LP Announces Third Quarter 2020 Financial and Operating Results


- Generated Net Income of $100 million, Adjusted EBITDA(1) of $189 million and Distributable Cash Flow(1), as adjusted of $139 million
- Current quarter cash coverage of 1.61 times and trailing twelve months coverage of 1.56 times with leverage of 3.93 times at the end of the third quarter
- Expects full year 2020 Adjusted EBITDA to be at or above $740 million

DALLAS, Nov. 4, 2020 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today reported financial and operating results for the three-month period ended September 30, 2020.

Financial and Operational Highlights

For the three months ended September 30, 2020, net income was $100 million versus net income of $66 million in the third quarter of 2019. 

Adjusted EBITDA(1) for the quarter totaled $189 million compared with $192 million in the third quarter of 2019. This year-over-year decrease reflects lower volumes mostly offset by higher reported fuel margins of 12.1 cents per gallon and lower total operating expenses of $112 million as a result of cost reduction measures.  

Distributable Cash Flow, as adjusted(1), for the quarter was $139 million, compared to $133 million a year ago.

The Partnership sold 1.9 billion gallons in the third quarter, down 12% from the third quarter of 2019.  On a weighted-average basis, fuel margin for all gallons sold was 12.1 cents per gallon for the third quarter compared to 11.6 cents per gallon a year ago.

Distribution and Coverage

On October 26, 2020, the Board of Directors of SUN's general partner declared a distribution for the third quarter of 2020 of $0.8255 per unit, which corresponds to $3.3020 per unit on an annualized basis. The distribution will be paid on November 19, 2020 to common unitholders of record on November 6, 2020.  Current quarter cash coverage was 1.61 times and trailing twelve months coverage was 1.56 times. 

Liquidity and Leverage

At September 30, 2020, SUN had borrowings of $87 million against its revolving credit facility and other long-term debt of $2.9 billion.  The Partnership maintained ample liquidity of $1.4 billion at the end of the quarter under its $1.5 billion revolving credit facility that matures in July 2023 and has no debt maturities prior to 2023.  SUN's leverage ratio of net debt to Adjusted EBITDA, calculated in accordance with its credit facility, was 3.93 times at the end of the third quarter compared to 4.51 times at the end of the third quarter of 2019.

Capital Spending

SUN's gross capital expenditures for the third quarter were $20 million, which included $14 million for growth capital and $6 million for maintenance capital. 

2020 Business Outlook

The Partnership expects full year 2020 adjusted EBITDA to be at or above $740 million. SUN expects 2020 growth capital expenditures of at least $75 million, maintenance capital expenditures of $30 million and operating expenses(2) in a range of $460 to $475 million. 

SUN's segment results and other supplementary data are provided after the financial tables below.

Earnings Conference Call

Sunoco LP management will hold a conference call on Thursday, November 5, at 8:00 a.m. CT (9:00 a.m. ET) to discuss results and recent developments.  To participate, dial 877-407-6184 (toll free) or 201-389-0877 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 Webcasts and Presentations.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states as well as refined product transportation and terminalling assets. SUN's general partner is owned by Energy Transfer Operating, L.P., a wholly owned subsidiary of Energy Transfer LP (NYSE: ET).

Forward-Looking Statements

This news 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.  In addition to the risks and uncertainties previously disclosed, the Partnership has also been, or may in the future be, impacted by new or heightened risks related to the COVID-19 pandemic and the recent decline in commodity prices, and we cannot predict the length and ultimate impact of those risks.  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

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, Vice President – Investor Relations and Treasury
(214) 840-5660, scott.grischow@sunoco.com

Derek Rabe, CFA, Manager – Investor Relations, Strategy and Growth
(214) 840-5553, derek.rabe@sunoco.com

Media:
Alexis Daniel, Manager – Communications
(214) 981-0739, alexis.daniel@sunoco.com

 

– Financial Schedules Follow –

 

 

Balance Sheets

SUNOCO LP

CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(unaudited)







September 30,
2020


December 31,
2019

Assets




Current assets:




  Cash and cash equivalents

$

63



$

21


  Accounts receivable, net

252



399


  Receivables from affiliates

6



12


  Inventories, net

327



419


  Other current assets

39



73


Total current assets

687



924






Property and equipment

2,192



2,134


Accumulated depreciation

(776)



(692)


  Property and equipment, net

1,416



1,442


Other assets:




  Finance lease right-of-use assets, net

3



29


  Operating lease right-of-use assets, net

527



533


  Goodwill

1,555



1,555






  Intangible assets

900



906


  Accumulated amortization

(298)



(260)


  Intangible assets, net

602



646


  Other noncurrent assets

196



188


  Investment in unconsolidated affiliate

137



121


  Total assets

$

5,123



$

5,438


Liabilities and equity




Current liabilities:




  Accounts payable

$

286



$

445


  Accounts payable to affiliates

124



49


  Accrued expenses and other current liabilities

225



219


  Operating lease current liabilities

19



20


  Current maturities of long-term debt

6



11


Total current liabilities

660



744


Operating lease noncurrent liabilities

528



530


Revolving line of credit

87



162


Long-term debt, net

2,877



2,898


Advances from affiliates

135



140


Deferred tax liability

96



109


Other noncurrent liabilities

105



97


Total liabilities

4,488



4,680


Commitments and contingencies




Equity:




  Limited partners:




    Common unitholders
       (83,089,063 units issued and outstanding as of September 30, 2020 and
        82,985,941 units issued and outstanding as of December 31, 2019)

635



758


    Class C unitholders - held by subsidiaries
       (16,410,780 units issued and outstanding as of September 30, 2020 and
        December 31, 2019)




Total equity

635



758


Total liabilities and equity

$

5,123



$

5,438


 

 

Statement of Operations and Comprehensive Income

SUNOCO LP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Dollars in millions, except per unit data)

(unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2020


2019


2020


2019

Revenues:








Motor fuel sales

$

2,711



$

4,225



$

7,869



$

12,174


Non motor fuel sales

60



69



185



217


Lease income

34



37



103



107


Total revenues

2,805



4,331



8,157



12,498


Cost of sales and operating expenses:








Cost of sales

2,497



4,039



7,383



11,567


General and administrative

28



40



87



101


Other operating

68



79



219



236


Lease expense

16



15



46



45


Loss (gain) on disposal of assets and impairment charges

(1)



(4)



7



46


Depreciation, amortization and accretion

50



45



142



137


Total cost of sales and operating expenses

2,658



4,214



7,884



12,132


Operating income

147



117



273



366


Other income (expense):








Interest expense, net

(43)



(45)



(131)



(130)


Other income (expense), net







3


Equity in earnings of unconsolidated affiliate

1





3




Income before income taxes

105



72



145



239


Income tax expense

5



6



16



9


Net income and comprehensive income

$

100



$

66



$

129



$

230










Net income per common unit:








Common units - basic

$

0.97



$

0.57



$

0.85



$

2.09


Common units - diluted

$

0.96



$

0.57



$

0.84



$

2.07










Weighted average common units outstanding:








Common units - basic

83,056,365



82,749,644



83,033,556



82,734,526


Common units - diluted

83,770,034



83,649,898



83,668,835



83,512,121










Cash distributions per unit

$

0.8255



$

0.8255



$

2.4765



$

2.4765


 

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.

The key operating metrics by segment and accompanying footnotes set forth below are presented for the three months ended September 30, 2020 and 2019 and have been derived from our historical consolidated financial statements.

 

Key Operating Metrics

Three Months Ended September 30,


2020



2019


Fuel
Distribution
and Marketing


All Other


Total



Fuel
Distribution
and Marketing


All Other


Total


(dollars and gallons in millions, except gross profit per gallon)

Revenues:













  Motor fuel sales

$

2,600



$

111



$

2,711




$

4,041



$

184



$

4,225


  Non motor fuel sales

14



46



60




14



55



69


  Lease income

30



4



34




31



6



37


Total revenues

$

2,644



$

161



$

2,805




$

4,086



$

245



$

4,331


Gross profit (1):













  Motor fuel sales

$

224



$

13



$

237




$

195



$

22



$

217


  Non motor fuel sales

11



26



37




10



28



38


  Lease

30



4



34




31



6



37


Total gross profit

$

265



$

43



$

308




$

236



$

56



$

292


Net income (loss) and comprehensive income (loss)

$

107



$

(7)



$

100




$

57



$

9



$

66


Adjusted EBITDA (2)

$

177



$

12



$

189




$

161



$

31



$

192


Operating Data:













Total motor fuel gallons sold





1,853








2,110


Motor fuel gross profit cents per gallon (3)





12.1

¢







11.6

¢

 

The following table presents a reconciliation of Adjusted EBITDA to net income and Adjusted EBITDA to Distributable Cash Flow, as adjusted, for the three months ended September 30, 2020 and 2019:

Reconciliation of Adjusted EBITDA to net income and Adjusted EBITDA to Distributable Cash Flow

Three Months Ended September 30,


2020


2019


(in millions)

Adjusted EBITDA




  Fuel distribution and marketing

$

177



$

161


  All other

12



31


  Total Adjusted EBITDA

189



192


  Depreciation, amortization and accretion

(50)



(45)


  Interest expense, net

(43)



(45)


  Non-cash unit-based compensation expense

(4)



(4)


  Gain on disposal of assets and impairment charges

1



4


  Unrealized gain on commodity derivatives

6



1


  Inventory adjustments

11



(26)


  Equity in earnings of unconsolidated affiliate

1




  Adjusted EBITDA related to unconsolidated affiliate

(2)



(1)


  Other non-cash adjustments

(4)



(4)


  Income tax expense

(5)



(6)


Net income and comprehensive income

$

100



$

66






Adjusted EBITDA (2)

$

189



$

192


  Adjusted EBITDA related to unconsolidated affiliate

2



1


  Distributable cash flow from unconsolidated affiliate

(2)



(1)


  Cash interest expense

41



43


  Current income tax expense

3



3


  Maintenance capital expenditures

6



13


Distributable Cash Flow

139



133


  Transaction-related expenses




Distributable Cash Flow, as adjusted (2)

$

139



$

133






Distributions to Partners:




Limited Partners

$

69



$

68


General Partners

18



18


  Total distributions to be paid to partners

$

87



$

86


Common Units outstanding - end of period

83.1



82.8


Distribution coverage ratio (4)

1.61x


1.55x

 

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