Sunoco LP Announces Third Quarter 2023 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.

SUNOCO LP
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)

September 30,
2023

December 31,
2022

ASSETS

Current assets:

Cash and cash equivalents

$                      256

$                        82

Accounts receivable, net

1,145

890

Accounts receivable from affiliates

10

15

Inventories, net

909

821

Other current assets

162

175

Total current assets

2,482

1,983

Property and equipment

2,924

2,796

Accumulated depreciation

(1,103)

(1,036)

Property and equipment, net

1,821

1,760

Other assets:

Finance lease right-of-use assets, net

9

9

Operating lease right-of-use assets, net

509

524

Goodwill

1,599

1,601

Intangible assets, net

554

588

Other non-current assets

267

236

Investment in unconsolidated affiliates

126

129

Total assets

$                   7,367

$                   6,830

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$                      991

$                      966

Accounts payable to affiliates

114

109

Accrued expenses and other current liabilities

350

310

Operating lease current liabilities

21

21

Total current liabilities

1,476

1,406

Operating lease non-current liabilities

514

528

Revolving credit facility

647

900

Long-term debt, net

3,169

2,671

Advances from affiliates

104

116

Deferred tax liability

162

156

Other non-current liabilities

115

111

Total liabilities

6,187

5,888

Commitments and contingencies

Equity:

Limited partners:

Common unitholders
   (84,065,099 units issued and outstanding as of September 30, 2023 and
    84,054,765 units issued and outstanding as of December 31, 2022)

1,180

942

Class C unitholders - held by subsidiaries
   (16,410,780 units issued and outstanding as of September 30, 2023 and
    December 31, 2022)

—

—

Total equity

1,180

942

Total liabilities and equity

$                   7,367

$                   6,830

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,

2023

2022

2023

2022

REVENUES:

Motor fuel sales

$               6,173

$               6,468

$             17,019

$             19,423

Non-motor fuel sales

109

90

295

282

Lease income

38

36

113

106

Total revenues

6,320

6,594

17,427

19,811

COST OF SALES AND OPERATING EXPENSES:

Cost of sales

5,793

6,261

16,211

18,703

General and administrative

30

29

92

86

Other operating

93

86

262

250

Lease expense

18

16

51

47

(Gain) loss on disposal of assets

4

(3)

(8)

(8)

Depreciation, amortization and accretion

44

55

141

151

Total cost of sales and operating expenses

5,982

6,444

16,749

19,229

OPERATING INCOME

338

150

678

582

OTHER INCOME (EXPENSE):

Interest expense, net

(56)

(49)

(162)

(135)

Other income, net

—

—

7

—

Equity in earnings of unconsolidated affiliates

1

1

4

3

INCOME BEFORE INCOME TAXES

283

102

527

450

Income tax expense

11

19

27

30

NET INCOME AND COMPREHENSIVE INCOME

$                  272

$                    83

$                  500

$                  420

NET INCOME PER COMMON UNIT:

Basic

$                 2.99

$                 0.76

$                 5.20

$                 4.32

Diluted

$                 2.95

$                 0.75

$                 5.14

$                 4.27

WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING:

Basic

84,064,445

83,763,064

84,061,363

83,728,153

Diluted

85,132,733

84,831,037

85,037,289

84,769,526

CASH DISTRIBUTIONS PER UNIT

$               0.8420

$             0.8255

$             2.5260

$             2.4765

Three Months Ended September 30,

2023

2022

Fuel
Distribution
and
Marketing

All Other

Total

Fuel
Distribution
and
Marketing

All Other

Total

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

Revenues:

Motor fuel sales

$          6,000

$          173

$     6,173

$           6,270

$          198

$     6,468

Non-motor fuel sales

45

64

109

29

61

90

Lease income

35

3

38

35

1

36

Total revenues

$          6,080

$          240

$     6,320

$           6,334

$          260

$     6,594

Cost of sales:

Motor fuel sales

$          5,593

$          162

$     5,755

$           6,062

$          170

$     6,232

Non-motor fuel sales

13

25

38

2

27

29

Lease

—

—

—

—

—

—

Total cost of sales

$          5,606

$          187

$     5,793

$           6,064

$          197

$     6,261

Net income and comprehensive income

$        272

$          83

Adjusted EBITDA ⁽¹⁾

$              226

$             31

$        257

$              250

$             26

$        276

Operating data:

Motor fuel gallons sold

2,124

1,986

Motor fuel profit cents per gallon ⁽²⁾

         13.0 ¢

         13.9 ¢

Three Months Ended
September 30,

2023

2022

(in millions)

Net income and comprehensive income

$                   272

$                     83

Depreciation, amortization and accretion

44

55

Interest expense, net

56

49

Non-cash unit-based compensation expense

4

4

(Gain) loss on disposal of assets

4

(3)

Unrealized (gain) loss on commodity derivatives

(1)

23

Inventory adjustments

(141)

40

Equity in earnings of unconsolidated affiliates

(1)

(1)

Adjusted EBITDA related to unconsolidated affiliates

2

2

Other non-cash adjustments

7

5

Income tax expense

11

19

Adjusted EBITDA ⁽¹⁾

$                   257

$                   276

Adjusted EBITDA ⁽¹⁾

$                   257

$                   276

Adjusted EBITDA related to unconsolidated affiliates

(2)

(2)

Distributable cash flow from unconsolidated affiliates

2

2

Cash interest expense

(54)

(46)

Current income tax expense

(8)

(24)

Maintenance capital expenditures

(14)

(11)

Distributable Cash Flow

181

195

Transaction-related expenses

—

1

Distributable Cash Flow, as adjusted ⁽¹⁾

$                   181

$                   196

Distributions to Partners:

Limited Partners

$                     71

$                     69

General Partners

19

18

Total distributions to be paid to partners

$                     90

$                     87

Common Units outstanding - end of period

84.1

83.8

⁽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 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;

•

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 affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliates 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 affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates 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.