DALLAS, Feb. 21, 2018 /PRNewswire/ --
- Closed on strategic divestiture of convenience stores to 7-Eleven, Inc. and completed refinancing and equity repurchase initiatives
- Reduced debt by over $2 billion
- Refinanced $2.2 billion of senior notes
- Repurchased over 17 million common limited partner units
- Redeemed $300 million of Series A Preferred units
- Maintained quarterly distribution of 82.55 cents and reported current quarter cash coverage of 1.03 times
- Cash coverage of 1.15 times for the trailing twelve months
- Generated fourth quarter Net Income of $232 million, Adjusted EBITDA(1) of $158 million and Distributable Cash Flow(1), as adjusted, of $106 million
- Net income and Adjusted EBITDA results include approximately $25 million of transaction costs related to the retail divestiture
Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today announced financial and operating results for the three- and twelve-month period ended December 31, 2017.
Revenue totaled $3.0 billion, an increase of 4.8 percent, compared to $2.8 billion in the fourth quarter of 2016. The increase was the result of the average selling price of fuel being 25 cents per gallon higher than last year.
Total gross profit decreased to $277 million, compared to $296 million in the fourth quarter of 2016, as a result of lower motor fuel gross profits.
Income from continuing operations was $221 million, including $17 million of intangible impairment charges, versus a loss of $122 million in the fourth quarter of 2016, which included $227 million of goodwill impairment charges.
Income from discontinued operations, net of income taxes, was $11 million, including $23 million of goodwill impairment charges, versus a loss from discontinued operations, net of income taxes, of $463 million in the fourth quarter of 2016, which included $446 million of goodwill and intangibles impairment charges.
Net income was $232 million, or $2.01 per diluted unit, versus a net loss of $585 million, or ($6.32) per diluted unit, in the fourth quarter of 2016.
Adjusted EBITDA for the quarter totaled $158 million, compared with $154 million in the fourth quarter of 2016.
Distributable Cash Flow, as adjusted, was $106 million, compared to $63 million a year ago. This year-over-year increase reflects higher Adjusted EBITDA, decreased maintenance capital spend and a cash tax benefit compared to a cash tax expense a year ago.
On a weighted-average basis, fuel margin for all gallons sold was 15.3 cents per gallon, compared to 14.3 cents per gallon in the fourth quarter of 2016. The 1.0 cent per gallon increase was attributable to higher margins in the wholesale segment.
Net income for the wholesale segment was $47 million compared to $63 million a year ago. Adjusted EBITDA was $90 million, versus $78 million in the fourth quarter of last year. Total wholesale gallons sold were 1,346 million, compared to 1,359 million in the fourth quarter of 2016, a decrease of 1.0 percent. The Partnership earned 11.1 cents per gallon on these volumes, compared to 9.0 cents per gallon a year earlier.
Net income for the retail segment was $185 million compared to a net loss of $648 million a year ago. Adjusted EBITDA was $68 million, versus $76 million in the fourth quarter of last year. Total retail gallons sold were flat with a year ago at 626 million gallons. The Partnership earned 24.2 cents per gallon on these volumes, compared to 25.7 cents per gallon a year earlier.
Total merchandise sales increased by 0.5 percent from a year ago to $568 million(2), reflecting an increase in merchandise and restaurant sales across the Texas oil producing regions. Merchandise sales contributed $173 million of gross profit(3) with a retail merchandise margin of 30.6 percent, an increase of 0.7 percentage points from the fourth quarter of 2016.
Same-store merchandise sales decreased by 0.8 percent and same store gallons decreased by 1.4 percent during the fourth quarter, reflecting weakness across the East Coast. In the Texas oil producing regions, same-store merchandise sales increased by 11.2 percent, and same-store gallons increased 4.8 percent.
SUN's recent accomplishments include the following:
- Closed the strategic divestiture of convenience stores in the continental United States to 7-Eleven, Inc. on January 23, 2018 for gross proceeds of approximately $3.2 billion
- Completed the following refinancing and equity repurchase initiatives:
- Closed the private offering of $2.2 billion of new senior notes on January 23, 2018, comprised of $1.0 billion in aggregate principal amount of 4.875% senior notes due 2023, $800 million in aggregate principal amount of 5.500% senior notes due 2026 and $400 million in aggregate principal amount of 5.875% senior notes due 2028. Proceeds from this offering were used to redeem in full amounts owed under existing senior notes
- Repaid in full and terminated the term loan agreement and paid down all outstanding amounts owed under the revolving credit facility
- Redeemed $300 million of Series A Preferred Units held by Energy Transfer Equity for an aggregate redemption amount of approximately $313 million
- Repurchased 17,286,859 Sunoco common units owned by Energy Transfer Partners for aggregate cash consideration of approximately $540 million at a 10-day volume weighted average price of $31.2376 per unit
- Entered into a commission agent arrangement for the 207 West Texas sites on December 5, 2017 with conversion expected to occur in the first quarter of 2018
SUN's segment results and other supplementary data are provided after the financial tables below.
FY 2017 Compared to FY 2016
Revenue for the full year 2017 totaled $11.7 billion, a 17.4 percent increase compared to full year 2016. Gross profit for this period decreased 4.2 percent year-over-year to $1.1 billion.
Income from continuing operations was $326 million for the full year 2017 compared to $56 million in 2016. General and administrative expenses decreased $15 million from 2016 to $140 million. Other operating expenses increased $1 million from 2016 to $375 million and rent expenses were flat at $81 million.
Loss from discontinued operations, net of income taxes, was $177 million compared to a loss from discontinued operations, net of income taxes, of $462 million in the full year 2016.
Net income attributable to partners for the full year 2017 totaled $149 million compared to a net loss attributable to partners of $406 million a year ago. Adjusted EBITDA attributable to partners was $732 million, compared to $665 million for the 2016 period, and distributable cash flow, as adjusted was $473 million, versus $390 million for 2016.
Wholesale gallons sold to third parties increased by 2.5 percent to 5.4 billion gallons. Retail gallons sold increased by 0.4 percent to 2.5 billion gallons. On a weighted-average basis, fuel margin for all gallons sold increased to 15.2 cents per gallon for the full year 2017, versus 14.4 cents per gallon in the full year 2016.
Total merchandise sales increased by 2.7 percent from full year 2016 to $2.3 billion(4). Merchandise sales contributed $737 million of gross profit(5) with a retail merchandise margin of 31.6 percent, 0.1 percent increase from full year 2016.
Distribution
On January 24, 2018, the Board of Directors of SUN's general partner declared a distribution for the fourth quarter of 2017 of $0.8255 per unit, which corresponds to $3.3020 per unit on an annualized basis. The distribution was paid on February 14 to unitholders of record on February 6.
SUN's distribution coverage ratio for the fourth quarter was 1.03 times. The distribution coverage ratio on a trailing 12-month basis was 1.15 times.
Liquidity
At December 31, SUN had borrowings against its revolving line of credit of $765 million and other long-term debt of $3.6 billion. Availability on the revolving credit facility after borrowings and letters of credit commitments was $726 million. In the fourth quarter of 2017, SUN did not issue any common units through its at-the-market equity program. The leverage ratio of debt to Adjusted EBITDA, calculated in accordance with SUN's credit facility, was 5.58 times at the end of the fourth quarter.
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(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) |
Includes $426 million in merchandise sales from discontinued operations. |
|
(3) |
Includes $128 million in merchandise gross profit from discontinued operations. |
|
(4) |
Includes $1.8 billion in merchandise sales from discontinued operations. |
|
(5) |
Includes $552 million in merchandise gross profit from discontinued operations. |
Earnings Conference Call
Sunoco LP management will hold a conference call on Thursday, February 22, at 9:30 a.m. CT (10:30 a.m. ET) to discuss fourth 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 9,200 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states. SUN's general partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE).
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, Senior Director – Investor Relations and Treasury
(214) 840-5660, [email protected]
Derek Rabe, CFA, Senior Analyst – Investor Relations and Finance
(214) 840-5553, [email protected]
Media:
Alyson Gomez, Director – Communications
(214) 840-5641, [email protected]
Jeamy Molina, Senior Manager – PR & Communications
(214) 840-5594, [email protected]
– Financial Schedules Follow –
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SUNOCO LP | |||||||
|
CONSOLIDATED BALANCE SHEETS | |||||||
|
(unaudited) | |||||||
|
December 31, |
December 31, | ||||||
|
(in millions, except units) | |||||||
|
Assets |
|||||||
|
Current assets: |
|||||||
|
Cash and cash equivalents |
$ |
28 |
$ |
103 |
|||
|
Accounts receivable, net |
541 |
539 |
|||||
|
Receivables from affiliates |
155 |
3 |
|||||
|
Inventories, net |
426 |
423 |
|||||
|
Other current assets |
81 |
73 |
|||||
|
Assets held for sale |
3,313 |
177 |
|||||
|
Total current assets |
4,544 |
1,318 |
|||||
|
Property and equipment, net |
1,557 |
1,584 |
|||||
|
Other assets: |
|||||||
|
Goodwill |
1,430 |
1,550 |
|||||
|
Intangible assets, net |
768 |
775 |
|||||
|
Other noncurrent assets |
45 |
63 |
|||||
|
Assets held for sale |
— |
3,411 |
|||||
|
Total assets |
$ |
8,344 |
$ |
8,701 |
|||
|
Liabilities and equity |
|||||||
|
Current liabilities: |
|||||||
|
Accounts payable |
$ |
559 |
$ |
616 |
|||
|
Accounts payable to affiliates |
206 |
109 |
|||||
|
Accrued expenses and other current liabilities |
368 |
372 |
|||||
|
Current maturities of long-term debt |
6 |
5 |
|||||
|
Liabilities associated with assets held for sale |
75 |
— |
|||||
|
Total current liabilities |
1,214 |
1,102 |
|||||
|
Revolving line of credit |
765 |
1,000 |
|||||
|
Long-term debt, net |
3,519 |
3,509 |
|||||
|
Advances from affiliates |
85 |
87 |
|||||
|
Deferred tax liability |
389 |
643 |
|||||
|
Other noncurrent liabilities |
125 |
116 |
|||||
|
Liabilities associated with assets held for sale |
— |
48 |
|||||
|
Total liabilities |
6,097 |
6,505 |
|||||
|
Commitments and contingencies (Note 13) |
|||||||
|
Equity: |
|||||||
|
Limited partners: |
|||||||
|
Series A Preferred unitholders - affiliated (12,000,000 units issued and outstanding as of December 31, 2017 and no units issued and outstanding as of December 31, 2016) |
300 |
— |
|||||
|
Common unitholders (99,667,999 units issued and outstanding as of December 31, 2017 and 98,181,046 units issued and outstanding as of December 31, 2016) |
1,947 |
2,196 |
|||||
|
Class C unitholders - held by subsidiary (16,410,780 units issued and outstanding as of December 31, 2017 and December 31, 2016) |
— |
— |
|||||
|
Total equity |
2,247 |
2,196 |
|||||
|
Total liabilities and equity |
$ |
8,344 |
$ |
8,701 |
|||
|
SUNOCO LP | |||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||||||
|
(unaudited) | |||||||||||
|
Year Ended December 31, | |||||||||||
|
2017 |
2016 |
2015 | |||||||||
|
(dollars in millions, except unit and per unit amounts) | |||||||||||
|
Revenues: |
|||||||||||
|
Retail motor fuel |
$ |
1,577 |
$ |
1,338 |
$ |
1,540 |
|||||
|
Wholesale motor fuel sales to third parties |
9,278 |
7,812 |
10,104 |
||||||||
|
Wholesale motor fuel sales to affiliates |
55 |
62 |
20 |
||||||||
|
Merchandise |
571 |
541 |
544 |
||||||||
|
Rental income |
89 |
88 |
81 |
||||||||
|
Other |
153 |
145 |
141 |
||||||||
|
Total revenues |
11,723 |
9,986 |
12,430 |
||||||||
|
Cost of sales: |
|||||||||||
|
Retail motor fuel cost of sales |
1,420 |
1,175 |
1,340 |
||||||||
|
Wholesale motor fuel cost of sales |
8,798 |
7,278 |
9,740 |
||||||||
|
Merchandise cost of sales |
386 |
363 |
365 |
||||||||
|
Other |
11 |
14 |
5 |
||||||||
|
Total cost of sales |
10,615 |
8,830 |
11,450 |
||||||||
|
Gross profit |
1,108 |
1,156 |
980 |
||||||||
|
Operating expenses: |
|||||||||||
|
General and administrative |
140 |
155 |
126 |
||||||||
|
Other operating |
375 |
374 |
372 |
||||||||
|
Rent |
81 |
81 |
79 |
||||||||
|
Loss on disposal of assets and impairment charge |
114 |
225 |
1 |
||||||||
|
Depreciation, amortization and accretion |
169 |
176 |
150 |
||||||||
|
Total operating expenses |
879 |
1,011 |
728 |
||||||||
|
Operating income |
229 |
145 |
252 |
||||||||
|
Interest expense, net |
209 |
161 |
67 |
||||||||
|
Income (loss) from continuing operations before income taxes |
20 |
(16) |
185 |
||||||||
|
Income tax expense (benefit) |
(306) |
(72) |
29 |
||||||||
|
Income from continuing operations |
326 |
56 |
156 |
||||||||
|
Income (loss) from discontinued operations, net of income taxes |
(177) |
(462) |
38 |
||||||||
|
Net income (loss) and comprehensive income (loss) |
149 |
(406) |
194 |
||||||||
|
Less: Net income and comprehensive income attributable to noncontrolling interest |
— |
— |
4 |
||||||||
|
Less: Preacquisition income allocated to general partner |
— |
— |
103 |
||||||||
|
Net income (loss) and comprehensive income (loss) attributable to partners |
$ |
149 |
$ |
(406) |
$ |
87 |
|||||