DALLAS, Nov. 6, 2019 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today reported financial and operating results for the three-month period ended September 30, 2019.
Net income for the quarter was $66 million versus net income of $112 million in the third quarter of 2018.
Adjusted EBITDA(1) totaled $192 million compared with $208 million in the third quarter of 2018. Distributable Cash Flow, as adjusted(1), was $133 million, compared to $149 million a year ago. Net income, Adjusted EBITDA and Distributable Cash Flow, as adjusted, in 2018 included a one-time cash benefit of approximately $25 million related to a settlement with a fuel supplier. Excluding the 2018 one-time cash benefit, the year-over-year increase in Adjusted EBITDA and Distributable Cash Flow was supported by growth in the Partnership's fuel volumes to a record high 2.11 billion gallons combined with lower operating expenses(2).
Recent Accomplishments and Other Developments
- Sold a record high 2.11 billion gallons in the third quarter, up 5% from the third quarter of 2018. On a weighted-average basis, fuel margin for all gallons sold was 11.6 cents per gallon.
- Reported current quarter cash coverage of 1.55 times and trailing twelve months coverage of 1.30 times. SUN's leverage ratio of net debt to Adjusted EBITDA, calculated in accordance with its credit facility, was 4.51 times at the end of the third quarter.
- Commissioned the J.C. Nolan diesel pipeline and completed the first deliveries in early August. The joint venture will continue to benefit Sunoco LP's financial results while also further diversifying operations outside of fuel distribution.
- Remained cost disciplined, with operating expenses(2) of $134 million in the third quarter, down 4% from the third quarter of 2018.
Distribution
On October 25, 2019, the Board of Directors of SUN's general partner declared a distribution for the third 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 November 19, 2019 to common unitholders of record on November 5, 2019.
Liquidity
At September 30, 2019, SUN had borrowings of $154 million against its revolving line of credit and other long-term debt of $2.9 billion. In the third quarter of 2019, SUN did not issue any common units through its at-the-market equity program.
Capital Spending and Other Investments
SUN's gross capital expenditures for the third quarter were $46 million, which included $33 million for growth capital and $13 million for maintenance capital.
Excluding acquisitions, SUN expects to spend at least $115 million on growth capital for the full year 2019, including approximately $10 million of growth capital toward the pipeline joint venture with Energy Transfer. With an additional $45 million investment on the pipeline joint venture, SUN expects total investment in 2019 to be approximately $160 million.
SUN expects to spend approximately $40 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. |
(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 7, at 9:30 a.m. CT (10:30 a.m. ET) to discuss third 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 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 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, [email protected]
Derek Rabe, CFA, Manager – Investor Relations, Growth and Strategy
(214) 840-5553, [email protected]
Media:
Alexis Daniel, Manager – Communications
(214) 981-0739, [email protected]
– Financial Schedules Follow –
SUNOCO LP | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited) | |||||||
September 30, | December 31, | ||||||
(in millions, except units) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13 | $ | 56 | |||
Accounts receivable, net | 450 | 374 | |||||
Receivables from affiliates | 4 | 37 | |||||
Inventories, net | 422 | 374 | |||||
Other current assets | 86 | 64 | |||||
Total current assets | 975 | 905 | |||||
Property and equipment | 2,101 | 2,133 | |||||
Accumulated depreciation | (663) | (587) | |||||
Property and equipment, net | 1,438 | 1,546 | |||||
Other assets: | |||||||
Lease right-of-use assets, net | 572 | — | |||||
Goodwill | 1,557 | 1,559 | |||||
Intangible assets | 915 | 915 | |||||
Accumulated amortization | (249) | (207) | |||||
Intangible assets, net | 666 | 708 | |||||
Other non-current assets | 177 | 161 | |||||
Investment in unconsolidated affiliate | 112 | — | |||||
Total assets | $ | 5,497 | $ | 4,879 | |||
Liabilities and equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 456 | $ | 412 | |||
Accounts payable to affiliates | 70 | 149 | |||||
Accrued expenses and other current liabilities | 243 | 299 | |||||
Operating lease current liabilities | 21 | — | |||||
Current maturities of long-term debt | 13 | 5 | |||||
Total current liabilities | 803 | 865 | |||||
Operating lease non-current liabilities | 521 | — | |||||
Revolving line of credit | 154 | 700 | |||||
Long-term debt, net | 2,906 | 2,280 | |||||
Advances from affiliates | 141 | 24 | |||||
Deferred tax liability | 93 | 103 | |||||
Other non-current liabilities | 117 | 123 | |||||
Total liabilities | 4,735 | 4,095 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Limited partners: | |||||||
Common unitholders (82,750,201 units issued and outstanding as of September 30, 2019 and 82,665,057 units issued and outstanding as of December 31, 2018) | 762 | 784 | |||||
Class C unitholders - held by subsidiaries (16,410,780 units issued and outstanding as of September 30, 2019 and December 31, 2018) | — | — | |||||
Total equity | 762 | 784 | |||||
Total liabilities and equity | $ | 5,497 | $ | 4,879 | |||
SUNOCO LP | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in millions, except unit and per unit amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Motor fuel sales | $ | 4,225 | $ | 4,662 | $ | 12,174 | $ | 12,720 | |||||||
Non motor fuel sales | 69 | 64 | 217 | 306 | |||||||||||
Lease income | 37 | 35 | 107 | 91 | |||||||||||
Total revenues | 4,331 | 4,761 | 12,498 | 13,117 | |||||||||||
Cost of sales and operating expenses: | |||||||||||||||
Cost of sales | 4,039 | 4,428 | 11,567 | 12,178 | |||||||||||
General and administrative | 40 | 34 | 101 | 103 | |||||||||||
Other operating | 79 | 86 | 236 | 270 | |||||||||||
Lease expense | 15 | 20 | 45 | 54 | |||||||||||
Loss (gain) on disposal of assets and impairment charges | (4) | (8) | 46 | (3) | |||||||||||
Depreciation, amortization and accretion | 45 | 42 | 137 | 132 | |||||||||||
Total cost of sales and operating expenses | 4,214 | 4,602 | 12,132 | 12,734 | |||||||||||
Operating income | 117 | 159 | 366 | 383 | |||||||||||
Other expenses: | |||||||||||||||
Interest expense, net | 45 | 35 | 130 | 105 | |||||||||||
Loss on extinguishment of debt and other, net | — | — | (3) | 109 | |||||||||||
Income from continuing operations before income taxes | 72 | 124 | 239 | 169 | |||||||||||
Income tax expense | 6 | 10 | 9 | 39 | |||||||||||
Income from continuing operations | 66 | 114 | 230 | 130 | |||||||||||
Loss from discontinued operations, net of income taxes | — | (2) | — | (265) | |||||||||||
Net income (loss) and comprehensive income (loss) | $ | 66 | $ | 112 | $ | 230 | $ | (135) | |||||||
Net income (loss) per common unit - basic: | |||||||||||||||
Continuing operations - common units | $ | 0.57 | $ | 1.16 | $ | 2.09 | $ | 0.84 | |||||||
Discontinued operations - common units | 0.00 | (0.03) | 0.00 | (3.12) | |||||||||||
Net income (loss) - common units | $ | 0.57 | $ | 1.13 | $ | 2.09 | $ | (2.28) | |||||||
Net income (loss) per common unit - diluted: | |||||||||||||||
Continuing operations - common units | $ | 0.57 | $ | 1.15 | $ | 2.07 | $ | 0.83 | |||||||
Discontinued operations - common units | 0.00 | (0.03) | 0.00 | (3.12) | |||||||||||
Net income (loss) - common units | $ | 0.57 | $ | 1.12 | $ | 2.07 | $ | (2.29) | |||||||
Weighted average limited partner units outstanding: | |||||||||||||||
Common units - basic | 82,749,644 | 82,506,279 | 82,734,526 | 84,891,853 | |||||||||||
Common units - diluted | 83,649,898 | 83,084,713 | 83,512,121 | 85,373,976 | |||||||||||
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. Our financial statements reflect two reportable segments, Fuel Distribution and Marketing and All Other.
The key operating metrics and accompanying footnotes set forth below are presented for the three months ended September 30, 2019 and 2018 and have been derived from our historical consolidated financial statements.