DALLAS, May 11, 2020 /PRNewswire/ -- Sunoco LP
(NYSE: SUN) ("SUN" or the "Partnership") today reported financial
and operating results for the three-month period ended March 31, 2020.
"Our employees have been working on the front lines to continue
to serve our country, communities and customers," said Joe Kim, CEO of Sunoco LP. "Our best
wishes go out to those affected by COVID-19 and I would like to
personally thank our employees and fuel distribution partners for
their dedication during this unprecedented time. We have
built a resilient business model to withstand various headwinds.
We started the year on solid footing and delivered strong
first quarter results even with the onset of the pandemic in
March. We will continue to take proactive steps to manage
through the crisis and ensure a stable, long-term future for
Sunoco."
Financial and Operational Highlights
For the three months ended March 31,
2020, net loss was $128
million versus a net income of $109
million in the first quarter of 2019. The net loss
includes approximately $227 million
of non-cash inventory adjustments resulting from the decline in the
price of RBOB.
Adjusted EBITDA(1) for the quarter totaled
$209 million compared with
$153 million in the first quarter of
2019. This year-over-year increase reflects higher reported fuel
margins of 13.1 cents per gallon
driven by a decline in the price of RBOB and the receipt of a
$13 million annual make-up payment
under the fuel supply agreement with 7-Eleven, Inc. Adjusted
EBITDA also included an increase in non motor fuel sales gross
profit related to an $18 million
favorable legal settlement and an increase in other operating
expense related to current expected credit losses of approximately
$16 million.
Distributable Cash Flow, as adjusted(1), for the
quarter was $159 million, compared to
$99 million a year ago.
The Partnership sold 1.9 billion gallons in the first quarter,
down 2% from the first quarter of 2019. On a weighted-average
basis, fuel margin for all gallons sold was 13.1 cents per gallon for the first quarter
compared to 9.9 cents per gallon a
year ago.
Distribution and Coverage
On April 2, 2020, the Board of
Directors of SUN's general partner declared a distribution for the
first 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
May 19, 2020 to common unitholders of
record on May 7, 2020. Current
quarter cash coverage was 1.84 times and trailing twelve months
coverage was 1.49 times.
Liquidity and Leverage
At March 31, 2020, SUN had
borrowings of $265 million against
its revolving credit facility and other long-term debt of
$2.9 billion. The Partnership
maintained ample liquidity of $1.2
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 4.39 times at the end of the first quarter.
Capital Spending
SUN's gross capital expenditures for the first quarter were
$41 million, which included
$36 million for growth capital and
$5 million for maintenance
capital.
2020 Business Outlook
The Partnership revised its 2020 capital guidance by reducing
full year growth capital expenditures to approximately $75 million and maintenance capital expenditures
to $30 million. SUN also began
efforts in the second quarter to reduce total operating
expenses(2) by $55 to
$70 million over the remainder of the
year. SUN lowered 2020 full year operating expense guidance
to a range of $460 to $475 million. The combination of
unprecedented declines in fuel demand and a volatile commodity
price environment will affect the Partnership's outlook for full
year 2020 fuel volumes and margins. As a result, SUN is
withdrawing its previous guidance on 2020 fuel volume, margin and
adjusted EBITDA.
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)
|
Operating expenses
include general and administrative, other operating and lease
expenses.
|
Earnings Conference Call
Sunoco LP management will hold a conference call on Tuesday, May 12, 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 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 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 sharp 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, 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
(Dollars in
millions)
(unaudited)
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
31
|
|
|
$
|
21
|
|
Accounts receivable,
net
|
|
162
|
|
|
399
|
|
Receivables from
affiliates
|
|
11
|
|
|
12
|
|
Inventories,
net
|
|
182
|
|
|
419
|
|
Other current
assets
|
|
83
|
|
|
73
|
|
Total current
assets
|
|
469
|
|
|
924
|
|
|
|
|
|
|
Property and
equipment
|
|
2,170
|
|
|
2,134
|
|
Accumulated
depreciation
|
|
(720)
|
|
|
(692)
|
|
Property and
equipment, net
|
|
1,450
|
|
|
1,442
|
|
Other
assets:
|
|
|
|
|
Finance lease
right-of-use assets, net
|
|
27
|
|
|
29
|
|
Operating lease
right-of-use assets, net
|
|
537
|
|
|
533
|
|
Goodwill
|
|
1,555
|
|
|
1,555
|
|
|
|
|
|
|
Intangible
assets
|
|
905
|
|
|
906
|
|
Accumulated
amortization
|
|
(274)
|
|
|
(260)
|
|
Intangible assets,
net
|
|
631
|
|
|
646
|
|
Other noncurrent
assets
|
|
173
|
|
|
188
|
|
Investment in
unconsolidated affiliate
|
|
135
|
|
|
121
|
|
Total
assets
|
|
$
|
4,977
|
|
|
$
|
5,438
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
162
|
|
|
$
|
445
|
|
Accounts payable to
affiliates
|
|
27
|
|
|
49
|
|
Accrued expenses and
other current liabilities
|
|
171
|
|
|
219
|
|
Operating lease
current liabilities
|
|
20
|
|
|
20
|
|
Current maturities of
long-term debt
|
|
12
|
|
|
11
|
|
Total current
liabilities
|
|
392
|
|
|
744
|
|
Operating lease
noncurrent liabilities
|
|
535
|
|
|
530
|
|
Revolving line of
credit
|
|
265
|
|
|
162
|
|
Long-term debt,
net
|
|
2,896
|
|
|
2,898
|
|
Advances from
affiliates
|
|
139
|
|
|
140
|
|
Deferred tax
liability
|
|
109
|
|
|
109
|
|
Other noncurrent
liabilities
|
|
95
|
|
|
97
|
|
Total
liabilities
|
|
4,431
|
|
|
4,680
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Limited
partners:
|
|
|
|
|
Common
unitholders
(83,017,163 units issued and outstanding as of March
31, 2020 and
82,985,941 units issued and outstanding as of
December 31, 2019)
|
|
546
|
|
|
758
|
|
Class C unitholders -
held by subsidiaries
(16,410,780 units issued and outstanding as of March
31, 2020 and
December 31, 2019)
|
|
—
|
|
|
—
|
|
Total
equity
|
|
546
|
|
|
758
|
|
Total liabilities and
equity
|
|
$
|
4,977
|
|
|
$
|
5,438
|
|
SUNOCO
LP
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Dollars in millions,
except per unit data)
(unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
Motor fuel
sales
|
|
$
|
3,166
|
|
|
$
|
3,583
|
|
Non motor fuel
sales
|
|
71
|
|
|
74
|
|
Lease
income
|
|
35
|
|
|
35
|
|
Total
revenues
|
|
3,272
|
|
|
3,692
|
|
Cost of sales and
operating expenses:
|
|
|
|
|
Cost of
sales
|
|
3,164
|
|
|
3,322
|
|
General and
administrative
|
|
34
|
|
|
27
|
|
Other
operating
|
|
95
|
|
|
84
|
|
Lease
expense
|
|
14
|
|
|
14
|
|
Loss on disposal of
assets and impairment charges
|
|
2
|
|
|
48
|
|
Depreciation,
amortization and accretion
|
|
45
|
|
|
45
|
|
Total cost of sales and
operating expenses
|
|
3,354
|
|
|
3,540
|
|
Operating income
(loss)
|
|
(82)
|
|
|
152
|
|
Other income
(expense):
|
|
|
|
|
Interest expense,
net
|
|
(44)
|
|
|
(42)
|
|
Other income (expense),
net
|
|
—
|
|
|
(3)
|
|
Equity in earnings of
unconsolidated affiliate
|
|
1
|
|
|
—
|
|
Income (loss) before
income taxes
|
|
(125)
|
|
|
107
|
|
Income tax expense
(benefit)
|
|
3
|
|
|
(2)
|
|
Net income (loss)
and comprehensive income (loss)
|
|
$
|
(128)
|
|
|
$
|
109
|
|
|
|
|
|
|
Net income (loss)
per common unit:
|
|
|
|
|
Common units -
basic
|
|
$
|
(1.78)
|
|
|
$
|
1.08
|
|
Common units -
diluted
|
|
$
|
(1.78)
|
|
|
$
|
1.07
|
|
|
|
|
|
|
Weighted average
common units outstanding:
|
|
|
|
|
Common units -
basic
|
|
83,013,768
|
|
|
82,711,188
|
|
Common units -
diluted
|
|
83,013,768
|
|
|
83,380,167
|
|
|
|
|
|
|
Cash distributions
per unit
|
|
$
|
0.8255
|
|
|
$
|
0.8255
|
|
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
March 31, 2020 and 2019 and have been
derived from our historical consolidated financial statements.
|
Three Months Ended
March 31,
|
|
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
|
$
|
3,039
|
|
|
$
|
127
|
|
|
$
|
3,166
|
|
|
|
$
|
3,442
|
|
|
$
|
141
|
|
|
$
|
3,583
|
|
Non motor fuel
sales
|
11
|
|
|
60
|
|
|
71
|
|
|
|
19
|
|
|
55
|
|
|
74
|
|
Lease
income
|
30
|
|
|
5
|
|
|
35
|
|
|
|
32
|
|
|
3
|
|
|
35
|
|
Total
revenues
|
$
|
3,080
|
|
|
$
|
192
|
|
|
$
|
3,272
|
|
|
|
$
|
3,493
|
|
|
$
|
199
|
|
|
$
|
3,692
|
|
Gross profit
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
(6)
|
|
|
$
|
27
|
|
|
$
|
21
|
|
|
|
$
|
258
|
|
|
$
|
27
|
|
|
$
|
285
|
|
Non motor fuel
sales
|
11
|
|
|
41
|
|
|
52
|
|
|
|
17
|
|
|
33
|
|
|
50
|
|
Lease
|
30
|
|
|
5
|
|
|
35
|
|
|
|
32
|
|
|
3
|
|
|
35
|
|
Total gross
profit
|
$
|
35
|
|
|
$
|
73
|
|
|
$
|
108
|
|
|
|
$
|
307
|
|
|
$
|
63
|
|
|
$
|
370
|
|
Net income (loss) and
comprehensive income (loss)
|
$
|
(157)
|
|
|
$
|
29
|
|
|
$
|
(128)
|
|
|
|
$
|
137
|
|
|
$
|
(28)
|
|
|
$
|
109
|
|
Adjusted EBITDA
(2)
|
$
|
160
|
|
|
$
|
49
|
|
|
$
|
209
|
|
|
|
$
|
118
|
|
|
$
|
35
|
|
|
$
|
153
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total motor fuel
gallons sold
|
|
|
|
|
1,898
|
|
|
|
|
|
|
|
1,941
|
|
Motor fuel gross profit
cents per gallon (3)
|
|
|
|
|
13.1
|
¢
|
|
|
|
|
|
|
9.9
|
¢
|
The following table presents a reconciliation of Adjusted EBITDA
to net income (loss) and Adjusted EBITDA to Distributable Cash
Flow, as adjusted, for the three months ended March 31, 2020 and 2019:
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
|
(in
millions)
|
Adjusted
EBITDA:
|
|
|
|
Fuel distribution and
marketing
|
$
|
160
|
|
|
$
|
118
|
|
All other
|
49
|
|
|
35
|
|
Total Adjusted
EBITDA
|
209
|
|
|
153
|
|
Depreciation,
amortization and accretion
|
(45)
|
|
|
(45)
|
|
Interest expense,
net
|
(44)
|
|
|
(42)
|
|
Non-cash unit-based
compensation expense
|
(4)
|
|
|
(3)
|
|
Loss on disposal of
assets and impairment charges
|
(2)
|
|
|
(48)
|
|
Unrealized gain
(loss) on commodity derivatives
|
(6)
|
|
|
6
|
|
Inventory
adjustments
|
(227)
|
|
|
93
|
|
Equity in earnings of
unconsolidated affiliate
|
1
|
|
|
—
|
|
Adjusted EBITDA
related to unconsolidated affiliate
|
(2)
|
|
|
—
|
|
Other non-cash
adjustments
|
(5)
|
|
|
(7)
|
|
Income tax (expense)
benefit
|
(3)
|
|
|
2
|
|
Net income (loss)
and comprehensive income (loss)
|
$
|
(128)
|
|
|
$
|
109
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$
|
209
|
|
|
$
|
153
|
|
Adjusted EBITDA related
to unconsolidated affiliate
|
2
|
|
|
—
|
|
Distributable cash flow
from unconsolidated affiliate
|
(2)
|
|
|
—
|
|
Cash interest
expense
|
43
|
|
|
40
|
|
Current income tax
expense
|
2
|
|
|
12
|
|
Maintenance capital
expenditures
|
5
|
|
|
4
|
|
Distributable Cash
Flow
|
159
|
|
|
97
|
|
Transaction-related
expenses
|
—
|
|
|
2
|
|
Distributable Cash
Flow, as adjusted (2)
|
$
|
159
|
|
|
$
|
99
|
|
|
|
|
|
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
|
83.0
|
|
|
82.7
|
|
Distribution coverage
ratio (4)
|
1.84x
|
|
|
1.15x
|
|
____________________
|
(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.
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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:
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- 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.
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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.
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(3)
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Includes other
non-cash adjustments and excludes the impact of inventory
adjustments consistent with the definition of Adjusted
EBITDA.
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(4)
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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