Sunoco LP Announces Third Quarter 2022 Financial and Operating Results

Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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, as adjusted, and a reconciliation to net income.

A reconciliation of non-GAAP forward looking information to corresponding GAAP measures cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amounts due to a variety of factors, including the unpredictability of commodity price movements and future charges or reversals outside the normal course of business which may be significant.

Assets

Current assets:

  Cash and cash equivalents

  Accounts receivable, net

  Receivables from affiliates

  Inventories, net

  Other current assets

Total current assets

Property and equipment

Accumulated depreciation

  Property and equipment, net

Other assets:

  Finance lease right-of-use assets, net

  Operating lease right-of-use assets, net

  Goodwill

  Intangible assets

  Accumulated amortization

    Intangible assets, net

  Other noncurrent assets

  Investment in unconsolidated affiliate

Total assets

$                    6,574

$                    5,815

Liabilities and equity

Current liabilities:

  Accounts payable

  Accounts payable to affiliates

  Accrued expenses and other current liabilities

  Operating lease current liabilities

  Current maturities of long-term debt

Total current liabilities

Operating lease noncurrent liabilities

Revolving line of credit

Long-term debt, net

Advances from affiliates

Deferred tax liability

Other noncurrent liabilities

Total liabilities

Commitments and contingencies

Equity:

  Limited partners:

     Common unitholders

       (83,763,300 units issued and outstanding as of September 30, 2022 and

        83,670,950 units issued and outstanding as of December 31, 2021)

    Class C unitholders - held by subsidiaries

       (16,410,780 units issued and outstanding as of September 30, 2022 and

        December 31, 2021)

Total equity

Total liabilities and equity

$                    6,574

$                    5,815

Revenues:

  Motor fuel sales

  Non motor fuel sales

  Lease income

Total revenues

Cost of sales and operating expenses:

  Cost of sales

  General and administrative

  Other operating

  Lease expense

  Gain on disposal of assets

  Depreciation, amortization and accretion

Total cost of sales and operating expenses

Operating income

Other income (expense):

  Interest expense, net

  Equity in earnings of unconsolidated affiliate

  Loss on extinguishment of debt

Income before income taxes

  Income tax expense

Net income and comprehensive income

$                    83

$                 104

$                 420

$                 424

Net income per common unit:

  Basic

  Diluted

Weighted average common units outstanding:

  Basic

  Diluted

Cash distributions per common unit

Revenues:

Motor fuel sales

Non motor fuel sales

Lease income

Total revenues

Cost of Sales:

Motor fuel sales

Non motor fuel sales

Lease

Total cost of sales

Net income and comprehensive income

Adjusted EBITDA (1)

Operating Data:

Total motor fuel gallons sold

Motor fuel gross profit cents per gallon (2)

           13.9 ¢

           11.3 ¢

Segment Adjusted EBITDA

  Fuel distribution and marketing

  All other

     Consolidated Adjusted EBITDA

  Depreciation, amortization and accretion

  Interest expense, net

  Non-cash unit-based compensation expense

  Gain on disposal of assets

  Unrealized loss on commodity derivatives

  Inventory adjustments

  Equity in earnings of unconsolidated affiliate

  Adjusted EBITDA related to unconsolidated affiliate

  Other non-cash adjustments

  Income tax expense

Net income and comprehensive income

Adjusted EBITDA (1)

  Adjusted EBITDA related to unconsolidated affiliate

  Distributable cash flow from unconsolidated affiliate

  Cash interest expense

  Current income tax expense

  Maintenance capital expenditures

Distributable Cash Flow

Transaction-related expenses

Distributable Cash Flow, as adjusted (1)

Distributions to Partners:

Limited Partners

General Partners

  Total distributions to be paid to partners

Common Units outstanding - end of period

(1) Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion expense, allocated non-cash compensation expense, unrealized gains and losses on commodity derivatives and inventory adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations, such as gain or loss on disposal of assets and non-cash impairment charges. We define Distributable Cash Flow, as adjusted, as Adjusted EBITDA less cash interest expense, including the accrual of interest expense related to our long-term debt which is paid on a semi-annual basis, current income tax expense, maintenance capital expenditures and other non-cash adjustments.

We believe Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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, as adjusted, 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.

Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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. Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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;SUN

• 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 senior notes;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; and

• as not all companies use identical calculations, our presentation of Adjusted EBITDA and Distributable Cash Flow, as adjusted, may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA reflects amounts for the unconsolidated affiliate based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliate. Adjusted EBITDA related to unconsolidated affiliate excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliate, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliate. We do not control our unconsolidated affiliate; therefore, we do not control the earnings or cash flows of such affiliate. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliate as an analytical tool should be limited accordingly. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent changes in lower of cost or market reserves on the Partnership's inventory. These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period.

(2) Excludes the impact of inventory adjustments consistent with the definition of Adjusted EBITDA.

(3) The distribution coverage ratio for a period is calculated as the non-GAAP measure of Distributable Cash Flow, as adjusted, divided by distributions expected to be paid to partners of Sunoco LP in respect of such a period.