Sunoco LP Announces Third Quarter 2020 Financial and Operating Results
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, December 31,
2020 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 635 758
(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)
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 All Other Total Fuel All Other Total
Distribution Distribution
and Marketing and Marketing
(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.
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.
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.
View original content to download multimedia:http://www.prnewswire.com/news-releases/sunoco-lp-announces-third-quarter-2020-financial-and-operating-results-301166636.html
SOURCE Sunoco LP
