Sunoco LP Announces First Quarter Financial and Operating Results
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, December 31,
2019 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 All Other Total Fuel All Other Total
Distribution Distribution
and and
Marketing Marketing
(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) 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
-- 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.
(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
