DALLAS, May 6, 2021 /PRNewswire/ -- Sunoco LP (NYSE:
SUN) ("SUN" or the "Partnership") today reported financial and
operating results for the three-month period ended March 31, 2021.
The Partnership's solid first quarter results demonstrate the
durability of its business and management's capacity to navigate
difficult operating conditions as SUN faced the combined challenges
in the quarter from persistently rising commodity prices, ongoing
impacts of COVID-19, and the effects of Winter Storm Uri.
For the three months ended March 31,
2021, net income was $154
million versus a net loss of $128
million in the first quarter of 2020.
Adjusted EBITDA(1) for the quarter was $157 million compared with $209 million in the first quarter of 2020. The
decline in Adjusted EBITDA(1) reflects lower reported
fuel volume and margins partially offset by a decline in total
operating expenses(3).
Distributable Cash Flow, as adjusted(1), for the
quarter was $108 million, compared to
$159 million a year ago.
Volumes and Margins
The Partnership sold 1.76 billion gallons of fuel in the first
quarter of 2021 versus 1.90 billion in the first quarter of
2020, a 7.5% decline. Fuel margin for all gallons sold
was 10.3 cents per gallon for the
quarter compared to 13.1 cents per
gallon a year ago. Fuel margin for the first quarter of 2021
included an $18.5 million annual
make-up payment under the fuel supply agreement with 7-Eleven, Inc.
versus a $12.8 million annual make-up
payment in first quarter of 2020. SUN expects volumes to
continue to improve through the remainder of the year with
increased economic activity.
Brownsville, Texas Refined
Products Terminal
During the quarter, the Partnership advanced its midstream
diversification strategy with the development of a refined products
terminal at the Port of Brownsville. The greenfield terminal,
with 560,000 barrels of storage, will provide supply flexibility to
SUN's existing fuel distribution business in South Texas, and position SUN to sell into the
growing fuels export market to Mexico. SUN expects the terminal to be in
service by the second quarter of 2022 with a total investment of
approximately $55 million of which
approximately $40 million will be
invested in 2021.
Distribution and Coverage
On April 22, 2021, the Board of
Directors of SUN's general partner declared a distribution for the
first quarter of 2021 of $0.8255 per
unit, or $3.3020 per unit on an
annualized basis. The distribution will be paid on
May 19, 2021 to common unitholders of
record on May 11, 2021. SUN's
current quarter cash coverage was 1.25 times and trailing
twelve months coverage was 1.35 times.
Liquidity and Leverage
At March 31, 2021, SUN had
$381 million of borrowings against
its revolving credit facility and other long-term debt of
$2.7 billion. The Partnership
maintained ample liquidity of approximately $1.1 billion at the end of the quarter under
its $1.5 billion revolving credit
facility that matures in July 2023. SUN's leverage ratio of
net debt to Adjusted EBITDA(1), calculated in accordance
with its credit facility, was 4.42 times at the end of the
first quarter compared to 4.39 times at the end of the first
quarter of 2020.
Capital Spending
SUN's total capital expenditures for the first quarter were
$18 million, which included
$13 million for growth capital and
$5 million for maintenance
capital. For the full-year 2021, SUN continues to expect
maintenance capital expenditures of approximately $45 million. With the addition of
$40 million for the Brownsville terminal, SUN now expects 2021
growth capital expenditures of $150
million, compared to prior guidance of at least $120 million.
2021 Business Outlook Reaffirmed
The Partnership continues to expect full-year 2021 Adjusted
EBITDA(1)(2) of $725 to
$765 million. SUN expects 2021 fuel
volumes of 7.25 to 7.75 billion gallons, fuel margins of 11.0 to
12.0 cents per gallon, and operating
expenses(3) of $440 to
$450 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)
|
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.
|
(3)
|
Operating expenses
include general and administrative, other operating and lease
expenses.
|
Earnings Conference Call
Sunoco LP management will hold a conference call on Thursday, May 6, at 9:00
a.m. CT (10:00 a.m. ET) to
discuss results and recent developments. To participate, dial
877-407-6184 (toll free) or 201-389-0877 approximately 10
minutes before the scheduled start time 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 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)
|
|
|
March 31,
2021
|
|
December
31,
2020
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
95
|
|
|
$
|
97
|
|
Accounts receivable,
net
|
410
|
|
|
295
|
|
Receivables from
affiliates
|
11
|
|
|
11
|
|
Inventories,
net
|
430
|
|
|
382
|
|
Other current
assets
|
54
|
|
|
62
|
|
Total current
assets
|
1,000
|
|
|
847
|
|
|
|
|
|
Property and
equipment
|
2,235
|
|
|
2,231
|
|
Accumulated
depreciation
|
(838)
|
|
|
(806)
|
|
Property and
equipment, net
|
1,397
|
|
|
1,425
|
|
Other
assets:
|
|
|
|
Finance lease
right-of-use assets, net
|
13
|
|
|
3
|
|
Operating lease
right-of-use assets, net
|
526
|
|
|
536
|
|
Goodwill
|
1,564
|
|
|
1,564
|
|
|
|
|
|
Intangible
assets
|
894
|
|
|
894
|
|
Accumulated
amortization
|
(320)
|
|
|
(306)
|
|
Intangible assets,
net
|
574
|
|
|
588
|
|
Other noncurrent
assets
|
172
|
|
|
168
|
|
Investment in
unconsolidated affiliate
|
134
|
|
|
136
|
|
Total
assets
|
$
|
5,380
|
|
|
$
|
5,267
|
|
Liabilities and
equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
427
|
|
|
$
|
267
|
|
Accounts payable to
affiliates
|
62
|
|
|
79
|
|
Accrued expenses and
other current liabilities
|
239
|
|
|
282
|
|
Operating lease
current liabilities
|
19
|
|
|
19
|
|
Current maturities of
long-term debt
|
7
|
|
|
6
|
|
Total current
liabilities
|
754
|
|
|
653
|
|
Operating lease
noncurrent liabilities
|
528
|
|
|
538
|
|
Revolving line of
credit
|
381
|
|
|
—
|
|
Long-term debt,
net
|
2,680
|
|
|
3,106
|
|
Advances from
affiliates
|
130
|
|
|
125
|
|
Deferred tax
liability
|
103
|
|
|
104
|
|
Other noncurrent
liabilities
|
106
|
|
|
109
|
|
Total
liabilities
|
4,682
|
|
|
4,635
|
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Limited
partners:
|
|
|
|
Common
unitholders (83,349,233 units
issued and outstanding as of March 31, 2021 and
83,333,631 units issued and outstanding
as of December 31, 2020)
|
698
|
|
|
632
|
|
Class C unitholders -
held by subsidiaries (16,410,780 units issued and outstanding as of March
31, 2021 and December 31,
2020)
|
—
|
|
|
—
|
|
Total
equity
|
698
|
|
|
632
|
|
Total liabilities and
equity
|
$
|
5,380
|
|
|
$
|
5,267
|
|
SUNOCO
LP
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Dollars in millions,
except per unit data)
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
Motor fuel
sales
|
$
|
3,363
|
|
|
$
|
3,166
|
|
Non motor fuel
sales
|
73
|
|
|
71
|
|
Lease
income
|
35
|
|
|
35
|
|
Total
revenues
|
3,471
|
|
|
3,272
|
|
Cost of sales and
operating expenses:
|
|
|
|
Cost of
sales
|
3,120
|
|
|
3,164
|
|
General and
administrative
|
24
|
|
|
34
|
|
Other
operating
|
61
|
|
|
95
|
|
Lease
expense
|
15
|
|
|
14
|
|
Loss on disposal of
assets
|
—
|
|
|
2
|
|
Depreciation,
amortization and accretion
|
47
|
|
|
45
|
|
Total cost of sales
and operating expenses
|
3,267
|
|
|
3,354
|
|
Operating income
(loss)
|
204
|
|
|
(82)
|
|
Other income
(expense):
|
|
|
|
Interest expense,
net
|
(41)
|
|
|
(44)
|
|
Equity in earnings of
unconsolidated affiliate
|
1
|
|
|
1
|
|
Loss on extinguishment
of debt
|
(7)
|
|
|
—
|
|
Income (loss) before
income taxes
|
157
|
|
|
(125)
|
|
Income tax
expense
|
3
|
|
|
3
|
|
Net income (loss)
and comprehensive income (loss)
|
$
|
154
|
|
|
$
|
(128)
|
|
|
|
|
|
Net income (loss)
per common unit:
|
|
|
|
Basic
|
$
|
1.61
|
|
|
$
|
(1.78)
|
|
Diluted
|
$
|
1.60
|
|
|
$
|
(1.78)
|
|
|
|
|
|
Weighted average
common units outstanding:
|
|
|
|
Basic
|
83,342,828
|
|
|
83,013,768
|
|
Diluted
|
84,141,261
|
|
|
83,013,768
|
|
|
|
|
|
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, 2021 and 2020 and have been
derived from our historical consolidated financial statements.
|
Three Months Ended
March 31,
|
|
2021
|
|
|
2020
|
|
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
|
$
|
3,252
|
|
|
$
|
111
|
|
|
$
|
3,363
|
|
|
|
$
|
3,039
|
|
|
$
|
127
|
|
|
$
|
3,166
|
|
Non motor fuel
sales
|
14
|
|
|
59
|
|
|
73
|
|
|
|
11
|
|
|
60
|
|
|
71
|
|
Lease
income
|
33
|
|
|
2
|
|
|
35
|
|
|
|
30
|
|
|
5
|
|
|
35
|
|
Total
revenues
|
$
|
3,299
|
|
|
$
|
172
|
|
|
$
|
3,471
|
|
|
|
$
|
3,080
|
|
|
$
|
192
|
|
|
$
|
3,272
|
|
Gross profit
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Motor fuel
sales
|
$
|
273
|
|
|
$
|
8
|
|
|
$
|
281
|
|
|
|
$
|
(6)
|
|
|
$
|
27
|
|
|
$
|
21
|
|
Non motor fuel
sales
|
11
|
|
|
24
|
|
|
35
|
|
|
|
11
|
|
|
41
|
|
|
52
|
|
Lease
|
33
|
|
|
2
|
|
|
35
|
|
|
|
30
|
|
|
5
|
|
|
35
|
|
Total gross
profit
|
$
|
317
|
|
|
$
|
34
|
|
|
$
|
351
|
|
|
|
$
|
35
|
|
|
$
|
73
|
|
|
$
|
108
|
|
Net income (loss) and
comprehensive income (loss)
|
$
|
162
|
|
|
$
|
(8)
|
|
|
$
|
154
|
|
|
|
$
|
(157)
|
|
|
$
|
29
|
|
|
$
|
(128)
|
|
Adjusted EBITDA
(2)
|
$
|
153
|
|
|
$
|
4
|
|
|
$
|
157
|
|
|
|
$
|
160
|
|
|
$
|
49
|
|
|
$
|
209
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total motor fuel
gallons sold
|
|
|
|
|
1,756
|
|
|
|
|
|
|
|
1,898
|
|
Motor fuel gross
profit cents per gallon (3)
|
|
|
|
|
10.3
|
¢
|
|
|
|
|
|
|
13.1
|
¢
|
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 March
31, 2021 and 2020:
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
|
(in
millions)
|
Adjusted
EBITDA
|
|
|
|
Fuel distribution and
marketing
|
$
|
153
|
|
|
$
|
160
|
|
All other
|
4
|
|
|
49
|
|
Total Adjusted
EBITDA
|
157
|
|
|
209
|
|
Depreciation,
amortization and accretion
|
(47)
|
|
|
(45)
|
|
Interest expense,
net
|
(41)
|
|
|
(44)
|
|
Non-cash unit-based
compensation expense
|
(4)
|
|
|
(4)
|
|
Loss on disposal of
assets
|
—
|
|
|
(2)
|
|
Loss on extinguishment
of debt
|
(7)
|
|
|
—
|
|
Unrealized gain (loss)
on commodity derivatives
|
5
|
|
|
(6)
|
|
Inventory
adjustments
|
100
|
|
|
(227)
|
|
Equity in earnings of
unconsolidated affiliate
|
1
|
|
|
1
|
|
Adjusted EBITDA
related to unconsolidated affiliate
|
(2)
|
|
|
(2)
|
|
Other non-cash
adjustments
|
(5)
|
|
|
(5)
|
|
Income tax
expense
|
(3)
|
|
|
(3)
|
|
Net income (loss)
and comprehensive income (loss)
|
$
|
154
|
|
|
$
|
(128)
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$
|
157
|
|
|
$
|
209
|
|
Adjusted EBITDA
related to unconsolidated affiliate
|
(2)
|
|
|
(2)
|
|
Distributable cash
flow from unconsolidated affiliate
|
2
|
|
|
2
|
|
Cash interest
expense
|
40
|
|
|
43
|
|
Current income tax
expense
|
4
|
|
|
2
|
|
Maintenance capital
expenditures
|
5
|
|
|
5
|
|
Distributable Cash
Flow
|
108
|
|
|
159
|
|
Transaction-related
expenses
|
—
|
|
|
—
|
|
Distributable Cash
Flow, as adjusted (2)
|
$
|
108
|
|
|
$
|
159
|
|
|
|
|
|
Distributions to
Partners:
|
|
|
|
Limited
Partners
|
$
|
69
|
|
|
$
|
69
|
|
General
Partners
|
18
|
|
|
18
|
|
Total distributions to
be paid to partners
|
$
|
87
|
|
|
$
|
87
|
|
Common Units
outstanding - end of period
|
83.3
|
|
|
83.0
|
|
Distribution coverage
ratio (4)
|
1.25x
|
|
|
1.84x
|
|
___________________________
|
(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, 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 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
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.
(3)
|
Excludes the impact
of inventory adjustments consistent with the definition of Adjusted
EBITDA.
|
(4)
|
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