DALLAS, Nov. 4, 2020 /PRNewswire/ -- Sunoco LP (NYSE:
SUN) ("SUN" or the "Partnership") today reported financial and
operating results for the three-month period ended September 30, 2020.
Financial and Operational Highlights
For the three months ended September 30,
2020, net income was $100
million versus net income of $66
million in the third quarter of 2019.
Adjusted EBITDA(1) for the quarter totaled
$189 million compared with
$192 million in the third quarter of
2019. This year-over-year decrease reflects lower volumes mostly
offset by higher reported fuel margins of 12.1 cents per
gallon and lower total operating expenses of $112 million as a result of cost reduction
measures.
Distributable Cash Flow, as adjusted(1), for the
quarter was $139 million, compared to
$133 million a year ago.
The Partnership sold 1.9 billion gallons in the third quarter,
down 12% from the third quarter of 2019. On a
weighted-average basis, fuel margin for all gallons sold was
12.1 cents per gallon for the third
quarter compared to 11.6 cents per
gallon a year ago.
Distribution and Coverage
On October 26, 2020, the Board of
Directors of SUN's general partner declared a distribution for the
third 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
November 19, 2020 to common
unitholders of record on November 6,
2020. Current quarter cash coverage was 1.61 times and
trailing twelve months coverage was 1.56 times.
Liquidity and Leverage
At September 30, 2020, SUN had
borrowings of $87 million against its
revolving credit facility and other long-term debt of $2.9 billion. The Partnership maintained
ample liquidity of $1.4 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
3.93 times at the end of the third quarter compared to 4.51
times at the end of the third quarter of 2019.
Capital Spending
SUN's gross capital expenditures for the third quarter were
$20 million, which included
$14 million for growth capital and
$6 million for maintenance
capital.
2020 Business Outlook
The Partnership expects full year 2020 adjusted EBITDA to be at
or above $740 million. SUN expects
2020 growth capital expenditures of at least $75 million, maintenance capital expenditures of
$30 million and operating
expenses(2) in a range of $460 to $475
million.
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 Thursday, November 5, 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 Webcasts 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 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, Strategy and Growth
(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)
|
|
|
|
|
|
|
September
30,
2020
|
|
December
31,
2019
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
63
|
|
|
$
|
21
|
|
Accounts receivable,
net
|
252
|
|
|
399
|
|
Receivables from
affiliates
|
6
|
|
|
12
|
|
Inventories,
net
|
327
|
|
|
419
|
|
Other current
assets
|
39
|
|
|
73
|
|
Total current
assets
|
687
|
|
|
924
|
|
|
|
|
|
Property and
equipment
|
2,192
|
|
|
2,134
|
|
Accumulated
depreciation
|
(776)
|
|
|
(692)
|
|
Property and
equipment, net
|
1,416
|
|
|
1,442
|
|
Other
assets:
|
|
|
|
Finance lease
right-of-use assets, net
|
3
|
|
|
29
|
|
Operating lease
right-of-use assets, net
|
527
|
|
|
533
|
|
Goodwill
|
1,555
|
|
|
1,555
|
|
|
|
|
|
Intangible
assets
|
900
|
|
|
906
|
|
Accumulated
amortization
|
(298)
|
|
|
(260)
|
|
Intangible assets,
net
|
602
|
|
|
646
|
|
Other noncurrent
assets
|
196
|
|
|
188
|
|
Investment in
unconsolidated affiliate
|
137
|
|
|
121
|
|
Total
assets
|
$
|
5,123
|
|
|
$
|
5,438
|
|
Liabilities and
equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
286
|
|
|
$
|
445
|
|
Accounts payable to
affiliates
|
124
|
|
|
49
|
|
Accrued expenses and
other current liabilities
|
225
|
|
|
219
|
|
Operating lease
current liabilities
|
19
|
|
|
20
|
|
Current maturities of
long-term debt
|
6
|
|
|
11
|
|
Total current
liabilities
|
660
|
|
|
744
|
|
Operating lease
noncurrent liabilities
|
528
|
|
|
530
|
|
Revolving line of
credit
|
87
|
|
|
162
|
|
Long-term debt,
net
|
2,877
|
|
|
2,898
|
|
Advances from
affiliates
|
135
|
|
|
140
|
|
Deferred tax
liability
|
96
|
|
|
109
|
|
Other noncurrent
liabilities
|
105
|
|
|
97
|
|
Total
liabilities
|
4,488
|
|
|
4,680
|
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Limited
partners:
|
|
|
|
Common unitholders
(83,089,063 units issued and outstanding as of
September 30, 2020 and
82,985,941 units issued and outstanding as of
December 31, 2019)
|
635
|
|
|
758
|
|
Class C unitholders -
held by subsidiaries
(16,410,780 units issued and outstanding as of
September 30, 2020 and
December 31, 2019)
|
—
|
|
|
—
|
|
Total
equity
|
635
|
|
|
758
|
|
Total liabilities and
equity
|
$
|
5,123
|
|
|
$
|
5,438
|
|
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,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
2,711
|
|
|
$
|
4,225
|
|
|
$
|
7,869
|
|
|
$
|
12,174
|
|
Non motor fuel
sales
|
60
|
|
|
69
|
|
|
185
|
|
|
217
|
|
Lease
income
|
34
|
|
|
37
|
|
|
103
|
|
|
107
|
|
Total
revenues
|
2,805
|
|
|
4,331
|
|
|
8,157
|
|
|
12,498
|
|
Cost of sales and
operating expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
2,497
|
|
|
4,039
|
|
|
7,383
|
|
|
11,567
|
|
General and
administrative
|
28
|
|
|
40
|
|
|
87
|
|
|
101
|
|
Other
operating
|
68
|
|
|
79
|
|
|
219
|
|
|
236
|
|
Lease
expense
|
16
|
|
|
15
|
|
|
46
|
|
|
45
|
|
Loss (gain) on
disposal of assets and impairment charges
|
(1)
|
|
|
(4)
|
|
|
7
|
|
|
46
|
|
Depreciation,
amortization and accretion
|
50
|
|
|
45
|
|
|
142
|
|
|
137
|
|
Total cost of sales
and operating expenses
|
2,658
|
|
|
4,214
|
|
|
7,884
|
|
|
12,132
|
|
Operating
income
|
147
|
|
|
117
|
|
|
273
|
|
|
366
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(43)
|
|
|
(45)
|
|
|
(131)
|
|
|
(130)
|
|
Other income
(expense), net
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Equity in earnings of
unconsolidated affiliate
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
Income before income
taxes
|
105
|
|
|
72
|
|
|
145
|
|
|
239
|
|
Income tax
expense
|
5
|
|
|
6
|
|
|
16
|
|
|
9
|
|
Net income and
comprehensive income
|
$
|
100
|
|
|
$
|
66
|
|
|
$
|
129
|
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
Net income per
common unit:
|
|
|
|
|
|
|
|
Common units -
basic
|
$
|
0.97
|
|
|
$
|
0.57
|
|
|
$
|
0.85
|
|
|
$
|
2.09
|
|
Common units -
diluted
|
$
|
0.96
|
|
|
$
|
0.57
|
|
|
$
|
0.84
|
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
Weighted average
common units outstanding:
|
|
|
|
|
|
|
|
Common units -
basic
|
83,056,365
|
|
|
82,749,644
|
|
|
83,033,556
|
|
|
82,734,526
|
|
Common units -
diluted
|
83,770,034
|
|
|
83,649,898
|
|
|
83,668,835
|
|
|
83,512,121
|
|
|
|
|
|
|
|
|
|
Cash distributions
per unit
|
$
|
0.8255
|
|
|
$
|
0.8255
|
|
|
$
|
2.4765
|
|
|
$
|
2.4765
|
|
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
September 30, 2020 and 2019 and have
been derived from our historical consolidated financial
statements.
|
Three Months Ended
September 30,
|
|
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
|
$
|
2,600
|
|
|
$
|
111
|
|
|
$
|
2,711
|
|
|
|
$
|
4,041
|
|
|
$
|
184
|
|
|
$
|
4,225
|
|
Non motor fuel
sales
|
14
|
|
|
46
|
|
|
60
|
|
|
|
14
|
|
|
55
|
|
|
69
|
|
Lease
income
|
30
|
|
|
4
|
|
|
34
|
|
|
|
31
|
|
|
6
|
|
|
37
|
|
Total
revenues
|
$
|
2,644
|
|
|
$
|
161
|
|
|
$
|
2,805
|
|
|
|
$
|
4,086
|
|
|
$
|
245
|
|
|
$
|
4,331
|
|
Gross profit
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
224
|
|
|
$
|
13
|
|
|
$
|
237
|
|
|
|
$
|
195
|
|
|
$
|
22
|
|
|
$
|
217
|
|
Non motor fuel
sales
|
11
|
|
|
26
|
|
|
37
|
|
|
|
10
|
|
|
28
|
|
|
38
|
|
Lease
|
30
|
|
|
4
|
|
|
34
|
|
|
|
31
|
|
|
6
|
|
|
37
|
|
Total gross
profit
|
$
|
265
|
|
|
$
|
43
|
|
|
$
|
308
|
|
|
|
$
|
236
|
|
|
$
|
56
|
|
|
$
|
292
|
|
Net income (loss) and
comprehensive income (loss)
|
$
|
107
|
|
|
$
|
(7)
|
|
|
$
|
100
|
|
|
|
$
|
57
|
|
|
$
|
9
|
|
|
$
|
66
|
|
Adjusted EBITDA
(2)
|
$
|
177
|
|
|
$
|
12
|
|
|
$
|
189
|
|
|
|
$
|
161
|
|
|
$
|
31
|
|
|
$
|
192
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total motor fuel
gallons sold
|
|
|
|
|
1,853
|
|
|
|
|
|
|
|
2,110
|
|
Motor fuel gross
profit cents per gallon (3)
|
|
|
|
|
12.1
|
¢
|
|
|
|
|
|
|
11.6
|
¢
|
The following table presents a reconciliation of Adjusted EBITDA
to net income and Adjusted EBITDA to Distributable Cash Flow, as
adjusted, for the three months ended September 30, 2020 and 2019:
|
Three Months Ended
September 30,
|
|
2020
|
|
2019
|
|
(in
millions)
|
Adjusted
EBITDA
|
|
|
|
Fuel distribution and
marketing
|
$
|
177
|
|
|
$
|
161
|
|
All other
|
12
|
|
|
31
|
|
Total Adjusted
EBITDA
|
189
|
|
|
192
|
|
Depreciation,
amortization and accretion
|
(50)
|
|
|
(45)
|
|
Interest expense,
net
|
(43)
|
|
|
(45)
|
|
Non-cash unit-based
compensation expense
|
(4)
|
|
|
(4)
|
|
Gain on disposal of
assets and impairment charges
|
1
|
|
|
4
|
|
Unrealized gain on
commodity derivatives
|
6
|
|
|
1
|
|
Inventory
adjustments
|
11
|
|
|
(26)
|
|
Equity in earnings of
unconsolidated affiliate
|
1
|
|
|
—
|
|
Adjusted EBITDA
related to unconsolidated affiliate
|
(2)
|
|
|
(1)
|
|
Other non-cash
adjustments
|
(4)
|
|
|
(4)
|
|
Income tax
expense
|
(5)
|
|
|
(6)
|
|
Net income and
comprehensive income
|
$
|
100
|
|
|
$
|
66
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$
|
189
|
|
|
$
|
192
|
|
Adjusted EBITDA
related to unconsolidated affiliate
|
2
|
|
|
1
|
|
Distributable cash
flow from unconsolidated affiliate
|
(2)
|
|
|
(1)
|
|
Cash interest
expense
|
41
|
|
|
43
|
|
Current income tax
expense
|
3
|
|
|
3
|
|
Maintenance capital
expenditures
|
6
|
|
|
13
|
|
Distributable Cash
Flow
|
139
|
|
|
133
|
|
Transaction-related
expenses
|
—
|
|
|
—
|
|
Distributable Cash
Flow, as adjusted (2)
|
$
|
139
|
|
|
$
|
133
|
|
|
|
|
|
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
|
83.1
|
|
|
82.8
|
|
Distribution coverage
ratio (4)
|
1.61x
|
|
1.55x
|
|
|
___________________________
|
(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.
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We believe Adjusted
EBITDA and Distributable Cash Flow, as adjusted, are useful to
investors in evaluating our operating performance
because:
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- 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. 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.
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(3)
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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