Sunoco LP Announces Fourth Quarter and Full Year 2020 Financial and Operating Results
DALLAS, Feb. 17, 2021 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today reported financial and operating results for the three- and twelve-month periods ended December 31, 2020.
For the three months ended December 31, 2020, net income was $83 million versus $83 million in the fourth quarter of 2019.
Adjusted EBITDA((1)) for the quarter totaled $159 million compared with $168 million in the fourth quarter of 2019. This year-over-year decrease reflects lower reported fuel volume and margins partially offset by a decline in operating expenses((2)).
Distributable Cash Flow, as adjusted((1)), for the quarter was $97 million, compared to $120 million a year ago.
The Partnership sold 1.8 billion gallons in the fourth quarter of 2020, down 12% from the fourth quarter of 2019. Fuel margin for all gallons sold was 9.2 cents per gallon for the quarter compared to 9.9 cents per gallon a year ago. In the fourth quarter of 2020, fuel margin included approximately $8 million of one-time write-offs associated with prior period fuel tax and inventory related items. In addition, fourth quarter margin included an unfavorable timing impact of approximately $9 million related to SUN's inventory valuation and associated hedges. For the full year 2020, the impact of this inventory valuation and hedging activity resulted in approximately $2 million of margin favorability.
For the twelve months ended December 31, 2020, net income was $212 million versus $313 million in 2019.
Adjusted EBITDA((1)) for the full year 2020 totaled $739 million, up 11% from $665 million a year ago. This year-over-year increase reflects higher reported fuel margins of 11.9 cents per gallon compared to 10.1 cents per gallon a year ago and a 11% decline in operating expenses((2) )partially offset by a 13% reduction in gallons sold to 7.1 billion.
Distributable Cash Flow, as adjusted((1)), for the full year 2020 was $517 million, compared to $453 million a year ago.
Recent Accomplishments and Business Outlook
-- Generated record Adjusted EBITDA of $739 million in 2020, up 11% from
full year 2019, and continued to strengthen leverage and coverage
metrics with leverage of 4.18 times and trailing twelve months coverage
of 1.50 times at the end of 2020.
-- Completed a private offering of $800 million 4.500% Senior Notes due
2029 on November 9, 2020. SUN used the proceeds from the offering to
fund the cash tender offer for its 4.875% Senior Notes due 2023. SUN
redeemed the remaining 4.875% Senior Notes due 2023 on January 15, 2021.
-- Acquired a terminal in New York on December 15, 2020 for approximately
$12 million plus working capital adjustments. The acquisition was
funded with cash on hand and amounts available on SUN's revolving credit
facility. The approximately 350,000 barrel refined products waterborne
terminal is consistent with SUN's strategy of expanding the midstream
portfolio and providing further income diversification and stability.
SUN expects the acquisition to be accretive to unitholders in the first
year.
-- The Partnership expects full year 2021 Adjusted EBITDA to be between
$725 and $765 million. SUN expects 2021 fuel volumes to be between 7.25
and 7.75 billion gallons, fuel margins to be between 11.0 and 12.0 cents
per gallon, operating expenses((2)) in a range of $440 to $450 million,
growth capital expenditures of at least $120 million, and maintenance
capital expenditures of approximately $45 million.
Distribution and Coverage
On January 28, 2021, the Board of Directors of SUN's general partner declared a distribution for the fourth 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 February 19, 2021 to common unitholders of record on February 8, 2021. Current quarter cash coverage was 1.13 times and trailing twelve months coverage was 1.50 times.
Liquidity and Leverage
At December 31, 2020, SUN had no borrowings against its revolving credit facility and other long-term debt of $3.1 billion. The Partnership maintained ample liquidity of approximately $1.5 billion at the end of the quarter under its $1.5 billion revolving credit facility that matures in July 2023 and has no Senior Notes maturities prior to 2026. SUN's leverage ratio of net debt to Adjusted EBITDA, calculated in accordance with its credit facility, was 4.18 times at the end of the fourth quarter compared to 4.61 times at the end of the fourth quarter of 2019.
Capital Spending
SUN's gross capital expenditures for the fourth quarter were $45 million, which included $25 million for growth capital and $20 million for maintenance capital. For the full year 2020, the Partnership spent $124 million on gross capital expenditures, which included $89 million on growth capital and $35 million on maintenance capital.
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, February 18, 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)
December 31, December 31,
2020 2019
---
Assets
Current assets:
Cash and cash equivalents $
97 $
21
Accounts receivable, net 295 399
Receivables from affiliates 11 12
Inventories, net 382 419
Other current assets 62 73
Total current assets 847 924
Property and equipment 2,231 2,134
Accumulated depreciation (806) (692)
Property and equipment, net 1,425 1,442
Other assets:
Finance lease right-of-use assets, net 3 29
Operating lease right-of-use assets, net 536 533
Goodwill 1,564 1,555
Intangible assets, net 588 646
Other noncurrent assets 168 188
Investment in unconsolidated affiliate 136 121
Total assets $
5,267 $
5,438
Liabilities and equity
Current liabilities:
Accounts payable $
267 $
445
Accounts payable to affiliates 79 49
Accrued expenses and other current liabilities 282 219
Operating lease current liabilities 19 20
Current maturities of long-term debt 6 11
Total current liabilities 653 744
Operating lease non-current liabilities 538 530
Revolving line of credit - 162
Long-term debt, net 3,106 2,898
Advances from affiliates 125 140
Deferred tax liability 104 109
Other noncurrent liabilities 109 97
Total liabilities 4,635 4,680
Commitments and contingencies
Equity:
Limited partners:
Common unitholders 632 758
(83,333,631 units issued and outstanding as of December 31, 2020 and
82,985,941 units issued and outstanding as of December 31, 2019)
Class C unitholders - held by subsidiary -
(16,410,780 units issued and outstanding as of December 31, 2020 and
December 31, 2019)
Total equity 632 758
Total liabilities and equity $
5,267 $
5,438
SUNOCO LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in millions, except per unit data)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
---
2020 2019 2020 2019
---
Revenues:
Motor fuel sales $
2,463 $
4,002 $
10,332 $
16,176
Non motor fuel sales 55 61 240 278
Lease income 35 35 138 142
Total revenues 2,553 4,098 10,710 16,596
Cost of sales and operating expenses:
Cost of sales 2,271 3,813 9,654 15,380
General and administrative 25 35 112 136
Other operating 56 68 275 304
Lease expense 15 16 61 61
Loss (gain) on disposal of assets and impairment charges (5) 22 2 68
Depreciation, amortization and accretion 47 46 189 183
Total cost of sales and operating expenses 2,409 4,000 10,293 16,132
Operating income 144 98 417 464
Other income (expense):
Interest expense, net (44) (43) (175) (173)
Other income (expense), net 2 2 3
Equity in earnings of unconsolidated affiliate 2 2 5 2
Loss on extinguishment of debt (13) (13)
Income before income taxes 91 57 236 296
Income tax expense (benefit) 8 (26) 24 (17)
Net income and comprehensive income $
83 $
83 $
212 $
313
Net income per common unit:
Common units - basic $
0.78 $
0.76 $
1.63 $
2.84
Common units - diluted $
0.77 $
0.75 $
1.61 $
2.82
Weighted average limited partner units outstanding:
Common units - basic 83,147,345 82,813,411 83,062,159 82,755,520
Common units - diluted 83,912,647 83,713,959 83,716,464 83,551,962
Cash distribution per unit $
0.8255 $
0.8255 $
3.30 $
3.30
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 and years ended December 31, 2020 and 2019 and have been derived from our historical consolidated financial statements.
Three Months Ended December 31,
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 $
2,361 $
102 $
2,463 $
3,846 $
156 $
4,002
Non motor fuel sales 8 46 54 13 48 61
Lease income 38 (3) 35 37 (2) 35
Total revenues $
2,407 $
145 $
2,552 $
3,896 $
202 $
4,098
Gross profit (1):
Motor fuel sales $
198 $
14 $
212 $
193 $
20 $
213
Non motor fuel sales 13 22 35 13 24 37
Lease 38 (3) 35 37 (2) 35
Total gross profit $
249 $
33 $
282 $
243 $
42 $
285
Net income and comprehensive income $
97 $
(14) $
83 $
57 $
26 $
83
Adjusted EBITDA (2) $
157 $
2 $
159 $
147 $
21 $
168
Operating Data:
Total motor fuel gallons sold 1,829 2,087
Motor fuel gross profit cents per gallon (3) 9.2 ¢ 9.9 ¢
Year Ended December 31,
2020 2019
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 $
9,930 $
402 $
10,332 $
15,522 $
654 $
16,176
Non motor fuel sales 54 186 240 62 216 278
Lease income 127 11 138 131 11 142
Total revenues $
10,111 $
599 $
10,710 $
15,715 $
881 $
16,596
Gross profit (1):
Motor fuel sales $
691 $
73 $
764 $
817 $
89 $
906
Non motor fuel sales 48 106 154 53 115 168
Lease 127 11 138 131 11 142
Total gross profit $
866 $
190 $
1,056 $
1,001 $
215 $
1,216
Net income and comprehensive income $
208 $
4 $
212 $
290 $
23 $
313
Adjusted EBITDA (2) $
654 $
85 $
739 $
545 $
120 $
665
Operating Data:
Total motor fuel gallons sold 7,094 8,193
Motor fuel gross profit cents per gallon (3) 11.9 ¢ 10.1 ¢
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 and years ended December 31, 2020 and 2019:
Three Months Ended Year Ended
December 31,
December 31,
2020 2019 2020 2019
(in millions) (in millions)
Adjusted EBITDA
Fuel distribution and marketing $
157 $
147 $
654 $
545
All other 2 21 85 120
Total Adjusted EBITDA 159 168 739 665
Depreciation, amortization and accretion (47) (46) (189) (183)
Interest expense, net (44) (43) (175) (173)
Non-cash unit-based compensation expense (3) (3) (14) (13)
(Loss) gain on disposal of assets and impairment charges 5 (22) (2) (68)
Loss on extinguishment of debt (13) (13)
Unrealized gain (loss) on commodity derivatives (6) 1 (6) 5
Inventory adjustments 44 8 (82) 79
Equity in earnings of unconsolidated affiliate 2 2 5 2
Adjusted EBITDA related to unconsolidated affiliate (3) (3) (10) (4)
Other non-cash adjustments (3) (5) (17) (14)
Income tax (expense) benefit (8) 26 (24) 17
Net income and comprehensive income $
83 $
83 $
212 $
313
Adjusted EBITDA (2) $
159 $
168 $
739 $
665
Adjusted EBITDA related to unconsolidated affiliate 3 3 10 4
Distributable cash flow from unconsolidated affiliate (3) (3) (10) (4)
Cash interest expense 42 41 168 166
Current income tax expense (benefit) (41) 19 (22)
Transaction-related income taxes 31 31
Maintenance capital expenditures 20 17 35 40
Distributable Cash Flow 97 120 517 450
Transaction-related expenses 3
Distributable Cash Flow, as adjusted (2) $
97 $
120 $
517 $
453
Distributions to Partners:
Limited Partners $
69 $
69 $
274 $
273
General Partners 18 18 71 72
Total distributions to be paid to partners $
87 $
87 $
345 $
345
Common Units outstanding - end of period 83.3 83.0 83.3 83.0
Distribution coverage ratio (4) 1.13x 1.39x 1.50x 1.32x
___________________________
(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 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.
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SOURCE Sunoco LP
