DALLAS, May 8, 2019 /PRNewswire/ -- Sunoco LP (NYSE:
SUN) ("SUN" or the "Partnership") today reported financial and
operating results for the three-month period ended March 31, 2019.
Net income was $109 million versus
net loss of $315 million in the first
quarter of 2018. Results include a non-cash $47 million write-down on assets held for sale
offset by $93 million of non-cash inventory adjustments.
Adjusted EBITDA(1) totaled $153 million compared with $109 million in the first 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
$99 million, compared to $85 million a year ago. This year-over-year
increase reflects higher Adjusted EBITDA partially offset by higher
cash interest expense and current income tax expense.
Recent Accomplishments and Other Developments
- Reported current quarter cash coverage of 1.15 times and
trailing twelve months coverage of 1.36 times. SUN's leverage ratio
of net debt to Adjusted EBITDA, calculated in accordance with its
credit facility, was 4.24 times at the end of the first
quarter.
- Closed the private offering of $600
million in aggregate principal amount of 6.000% senior notes
due 2027 on March 14, 2019. Net
proceeds from this offering were used to repay a portion of the
outstanding borrowings under SUN's existing $1.5 billion revolving credit facility.
- Signed a non-binding letter of intent to enter into a joint
venture on a diesel fuel pipeline to West
Texas. Energy Transfer LP (NYSE: ET) ("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 is
anticipated to be in service before the end of 2019.
Distribution
On April 25, 2019, the Board of
Directors of SUN's general partner declared a distribution for the
first 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 May 15, 2019 to common
unitholders of record on May 7,
2019.
Liquidity
At March 31, SUN had borrowings of
$150 million against its revolving
line of credit and other long-term debt of $2.9 billion. In the first 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 first quarter were
$26 million, which included
$22 million for growth capital and
$4 million for maintenance
capital.
Excluding acquisitions and expected capital commitment to the
pipeline joint venture with Energy Transfer, SUN expects to spend
approximately $90 million on growth
capital and approximately $45 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.
|
Earnings Conference Call
Sunoco LP management will hold a conference call on Thursday, May 9, at 9:30
a.m. CT (10:30 a.m. ET) to
discuss first 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
that distributes motor fuel to approximately 10,000 convenience
stores, independent dealers, commercial customers and distributors
located in more than 30 states. SUN's general partner is owned by
Energy Transfer Operating, L.P., a 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:
Alyson Gomez, Director –
Communications
(214) 840-5641, alyson.gomez@sunoco.com
– Financial Schedules Follow –
SUNOCO
LP
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
(in millions,
except units)
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
23
|
|
|
$
|
56
|
|
Accounts receivable,
net
|
|
490
|
|
|
374
|
|
Receivables from
affiliates
|
|
2
|
|
|
37
|
|
Inventories,
net
|
|
392
|
|
|
374
|
|
Other current
assets
|
|
75
|
|
|
64
|
|
Assets held for
sale
|
|
28
|
|
|
—
|
|
Total current
assets
|
|
1,010
|
|
|
905
|
|
|
|
|
|
|
Property and
equipment
|
|
2,066
|
|
|
2,133
|
|
Accumulated
depreciation
|
|
(604)
|
|
|
(587)
|
|
Property and
equipment, net
|
|
1,462
|
|
|
1,546
|
|
Other
assets:
|
|
|
|
|
Lease right-of-use
assets, net
|
|
542
|
|
|
—
|
|
Goodwill
|
|
1,560
|
|
|
1,559
|
|
|
|
|
|
|
Intangible
assets
|
|
915
|
|
|
915
|
|
Accumulated
amortization
|
|
(221)
|
|
|
(207)
|
|
Intangible assets,
net
|
|
694
|
|
|
708
|
|
Other non-current
assets
|
|
155
|
|
|
161
|
|
Total
assets
|
|
$
|
5,423
|
|
|
$
|
4,879
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
482
|
|
|
$
|
412
|
|
Accounts payable to
affiliates
|
|
30
|
|
|
149
|
|
Accrued expenses and
other current liabilities
|
|
225
|
|
|
299
|
|
Operating lease
current liabilities
|
|
24
|
|
|
—
|
|
Current maturities of
long-term debt
|
|
6
|
|
|
5
|
|
Total current
liabilities
|
|
767
|
|
|
865
|
|
Operating lease
non-current liabilities
|
|
527
|
|
|
—
|
|
Revolving line of
credit
|
|
150
|
|
|
700
|
|
Long-term debt,
net
|
|
2,879
|
|
|
2,280
|
|
Advances from
affiliates
|
|
81
|
|
|
24
|
|
Deferred tax
liability
|
|
90
|
|
|
103
|
|
Other non-current
liabilities
|
|
120
|
|
|
123
|
|
Total
liabilities
|
|
4,614
|
|
|
4,095
|
|
Commitments and
contingencies (Note 12)
|
|
|
|
|
Equity:
|
|
|
|
|
Limited
partners:
|
|
|
|
|
Common
unitholders
|
|
|
|
|
|
|
(82,725,202 units issued and outstanding as of March 31, 2019
and 82,665,057 units issued and outstanding as of December 31,
2018)
|
|
809
|
|
|
784
|
|
Class C unitholders -
held by subsidiaries
|
|
|
|
|
|
|
(16,410,780
units issued and outstanding as of March 31, 2019 and December 31,
2018)
|
|
—
|
|
|
—
|
|
Total
equity
|
|
809
|
|
|
784
|
|
Total liabilities and
equity
|
|
$
|
5,423
|
|
|
$
|
4,879
|
|
SUNOCO
LP
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
|
(in millions,
except unit and per unit amounts)
|
Revenues:
|
|
|
|
Motor fuel
sales
|
$
|
3,583
|
|
|
$
|
3,551
|
|
Non motor fuel
sales
|
74
|
|
|
176
|
|
Lease
income
|
35
|
|
|
22
|
|
Total
revenues
|
3,692
|
|
|
3,749
|
|
Cost of sales and
operating expenses:
|
|
|
|
Cost of
sales
|
3,322
|
|
|
3,453
|
|
General and
administrative
|
27
|
|
|
35
|
|
Other
operating
|
84
|
|
|
98
|
|
Lease
expense
|
14
|
|
|
15
|
|
Loss on disposal of
assets and impairment charges
|
48
|
|
|
3
|
|
Depreciation,
amortization and accretion
|
45
|
|
|
49
|
|
Total cost of sales and
operating expenses
|
3,540
|
|
|
3,653
|
|
Operating
income
|
152
|
|
|
96
|
|
Other
expenses:
|
|
|
|
Interest expense,
net
|
42
|
|
|
34
|
|
Loss on extinguishment
of debt and other
|
3
|
|
|
109
|
|
Income (loss) from
continuing operations before income taxes
|
107
|
|
|
(47)
|
|
Income tax expense
(benefit)
|
(2)
|
|
|
31
|
|
Income (loss) from
continuing operations
|
109
|
|
|
(78)
|
|
Loss from discontinued
operations, net of income taxes
|
—
|
|
|
(237)
|
|
Net income (loss)
and comprehensive income (loss)
|
$
|
109
|
|
|
$
|
(315)
|
|
|
|
|
|
Net income (loss)
per common unit - basic:
|
|
|
|
Continuing operations
- common units
|
$
|
1.08
|
|
|
$
|
(1.11)
|
|
Discontinued
operations - common units
|
0.00
|
|
|
(2.63)
|
|
Net income (loss) -
common units
|
$
|
1.08
|
|
|
$
|
(3.74)
|
|
Net income (loss)
per common unit - diluted:
|
|
|
|
Continuing operations
- common units
|
$
|
1.07
|
|
|
$
|
(1.11)
|
|
Discontinued
operations - common units
|
0.00
|
|
|
(2.63)
|
|
Net income (loss) -
common units
|
$
|
1.07
|
|
|
$
|
(3.74)
|
|
Weighted average
limited partner units outstanding:
|
|
|
|
Common units -
basic
|
82,711,188
|
|
|
89,753,950
|
|
Common units -
diluted
|
83,380,167
|
|
|
90,271,751
|
|
|
|
|
|
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. Our financial statements reflect two reportable
segments, fuel distribution & marketing and all other.
The key operating metrics and accompanying footnotes set forth
below are presented for the three months ended March 31, 2019 and 2018 and have been derived
from our historical consolidated financial statements.
|
Three Months Ended
March 31,
|
|
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
|
$
|
3,442
|
|
|
$
|
141
|
|
|
$
|
3,583
|
|
|
|
$
|
3,106
|
|
|
$
|
445
|
|
|
$
|
3,551
|
|
Non motor fuel
sales
|
19
|
|
|
55
|
|
|
74
|
|
|
|
14
|
|
|
162
|
|
|
176
|
|
Lease
income
|
32
|
|
|
3
|
|
|
35
|
|
|
|
19
|
|
|
3
|
|
|
22
|
|
Total
revenues
|
$
|
3,493
|
|
|
$
|
199
|
|
|
$
|
3,692
|
|
|
|
$
|
3,139
|
|
|
$
|
610
|
|
|
$
|
3,749
|
|
Gross profit
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
258
|
|
|
$
|
27
|
|
|
$
|
285
|
|
|
|
$
|
161
|
|
|
$
|
44
|
|
|
$
|
205
|
|
Non motor fuel
sales
|
17
|
|
|
33
|
|
|
50
|
|
|
|
10
|
|
|
59
|
|
|
69
|
|
Lease
|
32
|
|
|
3
|
|
|
35
|
|
|
|
19
|
|
|
3
|
|
|
22
|
|
Total gross
profit
|
$
|
307
|
|
|
$
|
63
|
|
|
$
|
370
|
|
|
|
$
|
190
|
|
|
$
|
106
|
|
|
$
|
296
|
|
Income (loss) from
continuing operations
|
137
|
|
|
(28)
|
|
|
109
|
|
|
|
(58)
|
|
|
(20)
|
|
|
(78)
|
|
Loss from discontinued
operations, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(237)
|
|
|
(237)
|
|
Net income (loss) and
comprehensive income (loss)
|
$
|
137
|
|
|
$
|
(28)
|
|
|
$
|
109
|
|
|
|
$
|
(58)
|
|
|
$
|
(257)
|
|
|
$
|
(315)
|
|
Adjusted EBITDA
(2)
|
$
|
118
|
|
|
$
|
35
|
|
|
$
|
153
|
|
|
|
$
|
80
|
|
|
$
|
29
|
|
|
$
|
109
|
|
Distributable Cash
Flow, as adjusted (2)
|
|
|
|
|
$
|
99
|
|
|
|
|
|
|
|
$
|
85
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total motor fuel
gallons sold (3)
|
|
|
|
|
1,941
|
|
|
|
|
|
|
|
1,857
|
|
Motor fuel gross profit
cents per gallon (3) (4)
|
|
|
|
|
9.9
|
¢
|
|
|
|
|
|
|
10.5
|
¢
|
The following table presents a reconciliation of Adjusted EBITDA
to net income (loss), and Adjusted EBITDA to Distributable Cash
Flow, as adjusted:
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
Change
|
|
(in
millions)
|
Segment Adjusted
EBITDA
|
|
|
|
|
|
Fuel distribution and
marketing
|
$
|
118
|
|
|
$
|
80
|
|
|
$
|
38
|
|
All other
|
35
|
|
|
29
|
|
|
6
|
|
Total
|
153
|
|
|
109
|
|
|
44
|
|
Depreciation,
amortization and accretion (3)
|
(45)
|
|
|
(49)
|
|
|
4
|
|
Interest expense, net
(3)
|
(42)
|
|
|
(36)
|
|
|
(6)
|
|
Non-cash compensation
expense (3)
|
(3)
|
|
|
(3)
|
|
|
—
|
|
Loss on disposal of
assets and impairment charges (3)
|
(48)
|
|
|
(26)
|
|
|
(22)
|
|
Loss on extinguishment
of debt and other (3)
|
(3)
|
|
|
(129)
|
|
|
126
|
|
Unrealized gain on
commodity derivatives (3)
|
6
|
|
|
—
|
|
|
6
|
|
Inventory adjustments
(3)
|
93
|
|
|
26
|
|
|
67
|
|
Other non-cash
adjustments
|
(4)
|
|
|
(3)
|
|
|
(1)
|
|
Income (loss) before
income tax expense (3)
|
107
|
|
|
(111)
|
|
|
218
|
|
Income tax benefit
(expense) (3)
|
2
|
|
|
(204)
|
|
|
206
|
|
Net income (loss)
and comprehensive income (loss)
|
$
|
109
|
|
|
$
|
(315)
|
|
|
$
|
424
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
153
|
|
|
109
|
|
|
44
|
|
Cash interest expense
(3)
|
40
|
|
|
34
|
|
|
6
|
|
Current income tax
expense (3)
|
12
|
|
|
468
|
|
|
(456)
|
|
Transaction-related
income taxes (5)
|
—
|
|
|
(480)
|
|
|
480
|
|
Maintenance capital
expenditures (3)
|
4
|
|
|
3
|
|
|
1
|
|
Distributable Cash
Flow
|
$
|
97
|
|
|
$
|
84
|
|
|
$
|
13
|
|
Transaction-related
expenses (3)
|
2
|
|
|
3
|
|
|
(1)
|
|
Series A Preferred
distribution
|
—
|
|
|
(2)
|
|
|
2
|
|
Distributable Cash
Flow, as adjusted
|
$
|
99
|
|
|
$
|
85
|
|
|
$
|
14
|
|
|
|
|
|
|
|
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 (6)
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1.15x
|
|
|
1.00x
|
|
|
|
|
|
|
|
|
|
|
(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
|
•
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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;
|
•
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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 amounts from
discontinued operations for the three months ended March 31,
2018.
|
(4)
|
Includes other
non-cash adjustments and excludes the impact of inventory
adjustments consistent with the definition of Adjusted
EBITDA.
|
(5)
|
Transaction-related
income taxes primarily related to the 7-Eleven
Transaction.
|
(6)
|
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