DALLAS, Aug. 7, 2019 /PRNewswire/ -- Sunoco LP (NYSE:
SUN) ("SUN" or the "Partnership") today reported financial and
operating results for the three-month period ended June 30, 2019.
Net income for the quarter was $55
million versus net income of $68
million in the second quarter of 2018.
Adjusted EBITDA(1) totaled $152 million compared with $140 million in the second quarter of 2018.
Results were supported by an increase in the Partnership's fuel
volumes and lower operating expenses.
Distributable Cash Flow, as adjusted(1), was
$101 million, compared to
$106 million a year ago. This
year-over-year decrease reflects higher Adjusted EBITDA offset by
higher interest expense and maintenance capital expenditures.
Net income, Adjusted EBITDA and Distributable Cash Flow, as
adjusted, included a one-time expense of approximately $8 million related to a reserve for an open
contractual dispute.
Recent Accomplishments and Other Developments
- Sold a record high 2.05 billion gallons in the second quarter,
up 4% from the second quarter of 2018. On a weighted-average basis,
fuel margin for all gallons sold was 9.1
cents per gallon, or 9.4 cents
per gallon excluding the one-time expense of approximately
$8 million this quarter.
- Reported current quarter cash coverage of 1.17 times and
trailing twelve months coverage of 1.35 times. Excluding the
one-time expense of approximately $8
million this quarter, SUN's distribution coverage ratio for
the second quarter was 1.26 times and trailing twelve months
coverage was 1.37 times. SUN's leverage ratio of net debt to
Adjusted EBITDA, calculated in accordance with its credit facility,
was 4.20 times at the end of the second quarter(2).
- Closed on the joint venture with Energy Transfer LP (NYSE: ET)
("Energy Transfer") on a diesel fuel pipeline to West Texas. Energy Transfer will operate the
pipeline for the joint venture, which will transport diesel fuel
from Hebert, Texas to a terminal
in the Midland, Texas area. The
pipeline is expected to have an initial capacity of 30,000 barrels
per day and was successfully commissioned in August 2019. SUN expects its cash investment to
be approximately $50 million.
Distribution
On July 25, 2019, the Board of
Directors of SUN's general partner declared a distribution for the
second quarter of 2019 of $0.8255 per
unit, which corresponds to $3.3020
per unit on an annualized basis. The distribution will be paid on
August 14, 2019 to common unitholders
of record on August 6, 2019.
Liquidity
At June 30, SUN had borrowings of
$117 million against its revolving
line of credit and other long-term debt of $2.9 billion. In the second quarter of
2019, SUN did not issue any common units through its at-the-market
equity program.
Capital Spending
SUN's gross capital expenditures for the second quarter were
$31 million, which included
$25 million for growth capital and
$6 million for maintenance
capital.
Excluding acquisitions, SUN expects to spend at least
$100 million on growth capital,
including approximately $5 million of
growth capital toward the pipeline joint venture with Energy
Transfer, and approximately $40
million on maintenance capital for the full year 2019.
SUN's segment results and other supplementary data are provided
after the financial tables below.
(1)
|
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.
|
(2)
|
Excluding the
one-time expense of approximately $8 million this quarter, SUN's
leverage ratio of net debt to Adjusted EBITDA, calculated in
accordance with SUN's credit facility, was 4.16 times at the end of
the second quarter.
|
Earnings Conference Call
Sunoco LP management will hold a conference call on Thursday, August 8, at 9:30 a.m. CT (10:30 a.m.
ET) to discuss second quarter 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 Events 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 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
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, Growth and Strategy
(214) 840-5553, derek.rabe@sunoco.com
Media:
Alexis Daniel, Manager –
Communications
(214) 981-0739, alexis.daniel@sunoco.com
– Financial Schedules Follow –
SUNOCO
LP
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
|
(in millions,
except units)
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
36
|
|
|
$
|
56
|
|
Accounts receivable,
net
|
|
573
|
|
|
374
|
|
Receivables from
affiliates
|
|
2
|
|
|
37
|
|
Inventories,
net
|
|
410
|
|
|
374
|
|
Other current
assets
|
|
77
|
|
|
64
|
|
Total current
assets
|
|
1,098
|
|
|
905
|
|
|
|
|
|
|
Property and
equipment
|
|
2,074
|
|
|
2,133
|
|
Accumulated
depreciation
|
|
(635)
|
|
|
(587)
|
|
Property and
equipment, net
|
|
1,439
|
|
|
1,546
|
|
Other
assets:
|
|
|
|
|
Lease right-of-use
assets, net
|
|
536
|
|
|
—
|
|
Goodwill
|
|
1,558
|
|
|
1,559
|
|
|
|
|
|
|
Intangible
assets
|
|
914
|
|
|
915
|
|
Accumulated
amortization
|
|
(235)
|
|
|
(207)
|
|
Intangible assets,
net
|
|
679
|
|
|
708
|
|
Other non-current
assets
|
|
160
|
|
|
161
|
|
Total
assets
|
|
$
|
5,470
|
|
|
$
|
4,879
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
530
|
|
|
$
|
412
|
|
Accounts payable to
affiliates
|
|
24
|
|
|
149
|
|
Accrued expenses and
other current liabilities
|
|
306
|
|
|
299
|
|
Operating lease
current liabilities
|
|
21
|
|
|
—
|
|
Current maturities of
long-term debt
|
|
6
|
|
|
5
|
|
Total current
liabilities
|
|
887
|
|
|
865
|
|
Operating lease
non-current liabilities
|
|
520
|
|
|
—
|
|
Revolving line of
credit
|
|
117
|
|
|
700
|
|
Long-term debt,
net
|
|
2,878
|
|
|
2,280
|
|
Advances from
affiliates
|
|
80
|
|
|
24
|
|
Deferred tax
liability
|
|
90
|
|
|
103
|
|
Other non-current
liabilities
|
|
119
|
|
|
123
|
|
Total
liabilities
|
|
4,691
|
|
|
4,095
|
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
Limited
partners:
|
|
|
|
|
Common
unitholders
|
|
|
|
|
|
|
(82,749,333 units issued and
outstanding as of June 30, 2019 and 82,665,057 units issued and
outstanding as of December 31, 2018)
|
|
779
|
|
|
784
|
|
Class C unitholders -
held by subsidiaries
|
|
|
|
|
|
|
(16,410,780 units issued and
outstanding as of June 30, 2019 and December 31, 2018)
|
|
—
|
|
|
—
|
|
Total
equity
|
|
779
|
|
|
784
|
|
Total liabilities and
equity
|
|
$
|
5,470
|
|
|
$
|
4,879
|
|
SUNOCO
LP
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in millions,
except unit and per unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
4,366
|
|
|
$
|
4,507
|
|
|
$
|
7,949
|
|
|
$
|
8,058
|
|
Non motor fuel
sales
|
74
|
|
|
66
|
|
|
148
|
|
|
242
|
|
Lease
income
|
35
|
|
|
34
|
|
|
70
|
|
|
56
|
|
Total
revenues
|
4,475
|
|
|
4,607
|
|
|
8,167
|
|
|
8,356
|
|
Cost of sales and
operating expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
4,206
|
|
|
4,297
|
|
|
7,528
|
|
|
7,750
|
|
General and
administrative
|
34
|
|
|
34
|
|
|
61
|
|
|
69
|
|
Other
operating
|
73
|
|
|
86
|
|
|
157
|
|
|
184
|
|
Lease
expense
|
16
|
|
|
19
|
|
|
30
|
|
|
34
|
|
Loss on disposal of
assets and impairment charges
|
2
|
|
|
2
|
|
|
50
|
|
|
5
|
|
Depreciation,
amortization and accretion
|
47
|
|
|
41
|
|
|
92
|
|
|
90
|
|
Total cost of sales and
operating expenses
|
4,378
|
|
|
4,479
|
|
|
7,918
|
|
|
8,132
|
|
Operating
income
|
97
|
|
|
128
|
|
|
249
|
|
|
224
|
|
Other
expenses:
|
|
|
|
|
|
|
|
Interest expense,
net
|
43
|
|
|
36
|
|
|
85
|
|
|
70
|
|
Loss on extinguishment
of debt and other, net
|
(6)
|
|
|
—
|
|
|
(3)
|
|
|
109
|
|
Income from continuing
operations before income taxes
|
60
|
|
|
92
|
|
|
167
|
|
|
45
|
|
Income tax expense
(benefit)
|
5
|
|
|
(2)
|
|
|
3
|
|
|
29
|
|
Income from continuing
operations
|
55
|
|
|
94
|
|
|
164
|
|
|
16
|
|
Loss from discontinued
operations, net of income taxes
|
—
|
|
|
(26)
|
|
|
—
|
|
|
(263)
|
|
Net income (loss)
and comprehensive income (loss)
|
$
|
55
|
|
|
$
|
68
|
|
|
$
|
164
|
|
|
$
|
(247)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common unit - basic:
|
|
|
|
|
|
|
|
Continuing operations
- common units
|
$
|
0.44
|
|
|
$
|
0.91
|
|
|
$
|
1.51
|
|
|
$
|
(0.29)
|
|
Discontinued
operations - common units
|
0.00
|
|
|
(0.32)
|
|
|
0.00
|
|
|
(3.05)
|
|
Net income (loss) -
common units
|
$
|
0.44
|
|
|
$
|
0.59
|
|
|
$
|
1.51
|
|
|
$
|
(3.34)
|
|
Net income (loss)
per common unit - diluted:
|
|
|
|
|
|
|
|
Continuing operations
- common units
|
$
|
0.43
|
|
|
$
|
0.90
|
|
|
$
|
1.50
|
|
|
$
|
(0.29)
|
|
Discontinued
operations - common units
|
0.00
|
|
|
(0.32)
|
|
|
0.00
|
|
|
(3.05)
|
|
Net income (loss) -
common units
|
$
|
0.43
|
|
|
$
|
0.58
|
|
|
$
|
1.50
|
|
|
$
|
(3.34)
|
|
Weighted average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units -
basic
|
82,742,323
|
|
|
82,494,976
|
|
|
82,726,842
|
|
|
86,104,411
|
|
Common units -
diluted
|
83,509,987
|
|
|
82,947,669
|
|
|
83,455,021
|
|
|
86,569,372
|
|
|
|
|
|
|
|
|
|
Cash distributions
per unit
|
$
|
0.8255
|
|
|
$
|
0.8255
|
|
|
$
|
1.6510
|
|
|
$
|
1.6510
|
|
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. Our financial statements reflect two reportable
segments, Fuel Distribution and Marketing and All Other.
The key operating metrics and accompanying footnotes set forth
below are presented for the three months ended June 30, 2019 and 2018 and have been derived from
our historical consolidated financial statements.
|
Three Months Ended
June 30,
|
|
2019
|
|
|
2018
|
|
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
|
$
|
4,193
|
|
|
$
|
173
|
|
|
$
|
4,366
|
|
|
|
$
|
4,304
|
|
|
$
|
203
|
|
|
$
|
4,507
|
|
Non motor fuel
sales
|
16
|
|
|
58
|
|
|
74
|
|
|
|
15
|
|
|
51
|
|
|
66
|
|
Lease
income
|
31
|
|
|
4
|
|
|
35
|
|
|
|
31
|
|
|
3
|
|
|
34
|
|
Total
revenues
|
$
|
4,240
|
|
|
$
|
235
|
|
|
$
|
4,475
|
|
|
|
$
|
4,350
|
|
|
$
|
257
|
|
|
$
|
4,607
|
|
Gross profit
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
171
|
|
|
$
|
19
|
|
|
$
|
190
|
|
|
|
$
|
204
|
|
|
$
|
23
|
|
|
$
|
227
|
|
Non motor fuel
sales
|
13
|
|
|
31
|
|
|
44
|
|
|
|
18
|
|
|
31
|
|
|
49
|
|
Lease
|
31
|
|
|
4
|
|
|
35
|
|
|
|
31
|
|
|
3
|
|
|
34
|
|
Total gross
profit
|
$
|
215
|
|
|
$
|
54
|
|
|
$
|
269
|
|
|
|
$
|
253
|
|
|
$
|
57
|
|
|
$
|
310
|
|
Income (loss) from
continuing operations
|
39
|
|
|
16
|
|
|
55
|
|
|
|
101
|
|
|
(7)
|
|
|
94
|
|
Loss from discontinued
operations, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(26)
|
|
|
(26)
|
|
Net income (loss) and
comprehensive income (loss)
|
$
|
39
|
|
|
$
|
16
|
|
|
$
|
55
|
|
|
|
$
|
101
|
|
|
$
|
(33)
|
|
|
$
|
68
|
|
Adjusted EBITDA
(2)
|
$
|
119
|
|
|
$
|
33
|
|
|
$
|
152
|
|
|
|
$
|
132
|
|
|
$
|
8
|
|
|
$
|
140
|
|
Distributable Cash
Flow, as adjusted (2)
|
|
|
|
|
$
|
101
|
|
|
|
|
|
|
|
$
|
106
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor fuel gallons
sold
|
|
|
|
|
2,054
|
|
|
|
|
|
|
|
1,977
|
|
Motor fuel gross profit
cents per gallon (3)
|
|
|
|
|
9.1
|
¢
|
|
|
|
|
|
|
9.9
|
¢
|
The following table presents a reconciliation of Adjusted EBITDA
to net income, and Adjusted EBITDA to Distributable Cash Flow, as
adjusted:
|
Three Months Ended
June 30,
|
|
|
|
2019
|
|
2018
|
|
Change
|
|
(in
millions)
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
Fuel distribution and
marketing
|
$
|
119
|
|
|
$
|
132
|
|
|
$
|
(13)
|
|
All other
|
33
|
|
|
8
|
|
|
25
|
|
Total
|
152
|
|
|
140
|
|
|
12
|
|
Depreciation,
amortization and accretion
|
(47)
|
|
|
(41)
|
|
|
(6)
|
|
Interest expense,
net
|
(43)
|
|
|
(36)
|
|
|
(7)
|
|
Non-cash compensation
expense
|
(3)
|
|
|
(3)
|
|
|
—
|
|
Loss on disposal of
assets and impairment charges (4)
|
(2)
|
|
|
(40)
|
|
|
38
|
|
Loss on extinguishment
of debt and other, net
|
6
|
|
|
—
|
|
|
6
|
|
Unrealized loss on
commodity derivatives
|
(3)
|
|
|
—
|
|
|
(3)
|
|
Inventory
adjustments
|
4
|
|
|
32
|
|
|
(28)
|
|
Other non-cash
adjustments
|
(4)
|
|
|
(3)
|
|
|
(1)
|
|
Income before income
tax (expense) benefit (4)
|
60
|
|
|
49
|
|
|
11
|
|
Income tax (expense)
benefit (4)
|
(5)
|
|
|
19
|
|
|
(24)
|
|
Net income and
comprehensive income
|
$
|
55
|
|
|
$
|
68
|
|
|
$
|
(13)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
152
|
|
|
$
|
140
|
|
|
$
|
12
|
|
Cash interest
expense
|
41
|
|
|
34
|
|
|
7
|
|
Current income tax
expense (benefit) (4)
|
4
|
|
|
(5)
|
|
|
9
|
|
Transaction-related
income taxes
|
—
|
|
|
10
|
|
|
(10)
|
|
Maintenance capital
expenditures
|
6
|
|
|
2
|
|
|
4
|
|
Distributable Cash
Flow
|
101
|
|
|
99
|
|
|
2
|
|
Transaction-related
expenses (4)
|
—
|
|
|
7
|
|
|
(7)
|
|
Distributable Cash
Flow, as adjusted
|
$
|
101
|
|
|
$
|
106
|
|
|
$
|
(5)
|
|
|
|
|
|
|
|
Distributions to
Partners:
|
|
|
|
|
|
Limited
Partners
|
$
|
68
|
|
|
$
|
68
|
|
|
|
General
Partner
|
18
|
|
|
18
|
|
|
|
Total distributions to
be paid to partners
|
$
|
86
|
|
|
$
|
86
|
|
|
|
Common Units
outstanding – end of period
|
82.7
|
|
|
82.5
|
|
|
|
Distribution coverage
ratio (5)
|
1.17x
|
|
1.24x
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes
depreciation, amortization and accretion.
|
(2)
|
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, Series
A Preferred distribution, 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;
|
|
•
|
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
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.
|
(3)
|
Includes other
non-cash adjustments and excludes the impact of inventory
adjustments consistent with the definition of Adjusted
EBITDA.
|
(4)
|
Includes amounts from
discontinued operations for the three months ended June 30,
2018.
|
(5)
|
The distribution
coverage ratio for a period is calculated as Distributable Cash
Flow attributable to partners, as adjusted, divided by
distributions expected to be paid to partners of Sunoco LP in
respect of such a period.
|
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SOURCE Sunoco LP