Sunoco LP Announces 1Q 2015 Financial and Operating Results and 8th Consecutive Distribution Increase

HOUSTON, May 6, 2015 /PRNewswire/ -- Sunoco LP (NYSE: SUN) today announced financial and operating results for the three months ended March 31, 2015 and provided an update on recent developments.

Adjusted EBITDA⁽¹⁾ totaled $43.7 million as compared to adjusted EBITDA in the first quarter of 2014 to $15.7 million.  Distributable cash flow⁽¹⁾ for the quarter was $29.6 million, compared to $14.0 million a year ago.

Revenue was $1.1 billion, down 7.1 percent compared to $1.2 billion in the same period last year. The decline was the result of significantly lower retail and wholesale motor fuel prices, mostly offset by a 40 percent increase in gallons sold, the contribution of merchandise sales from the MACS and Aloha stores and higher rental income.

Total gross profit was $87.0 million, compared to $22.1 million in the first quarter of 2014.  Key drivers of the increase were the MACS and Aloha acquisitions along with organic growth in gallons sold.

Net income attributable to partners was $17.1 million, or $0.44 per diluted unit, compared to $10.1 million, or $0.46 per diluted unit, in the first quarter of 2014.

On a weighted average basis, fuel margin for all gallons sold increased to 8.8 cents per gallon, compared to 4.0 cents per gallon a year earlier.  Sales of retail gallons by MACS and Aloha -- and a change in the wholesale fuel customer mix related to the MACS and Aloha acquisitions -- drove most of the margin increase.  At March 31, SUN operated 155 retail convenience stores and fuel outlets in Virginia, Hawaii, Tennessee, Maryland and Georgia.

Affiliate customers included 663 Stripes^® and Sac-N-Pac™ convenience stores operated by a subsidiary of our parent company, Energy Transfer Partners, L.P. (NYSE: ETP), as well as sales of motor fuel to ETP subsidiaries for resale under consignment arrangements at approximately 85 independently operated convenience stores.  Motor fuel gallons sold to affiliates during the first quarter increased 9.5 percent from a year ago to 304.3 million gallons. SUN realized 3.0 cents per gallon gross profit on these gallons, which totaled $9.1 million in the period versus $8.4 million in the same period a year ago.

Third-party customers included 731 independent dealers under long-term fuel supply agreements, 59 independently operated consignment locations and approximately 1,600 other commercial customers.  Total gallons sold to third parties increased year-over-year by 50.8 percent to 234.7 million gallons.  Gross profit on these gallons was $25.2 million, or 9.7 cents per gallon, compared to $8.8 million, or 5.7 cents per gallon, in the prior-year period.

Retail gallons sold by MACS and Aloha locations during the first quarter totaled 67.8 million gallons.  Gross profit on these gallons was $21.2 million, or 31.9 cents per gallon. Merchandise sales from these locations totaled $47.5 million and contributed $12.7 million of gross profit.

The Partnership announced on April 1 the acquisition of a 31.58 percent equity interest in Sunoco, LLC, from an affiliate of ETP in a transaction valued at approximately $816 million.  SUN paid $775 million in cash and issued to ETP 795,482 new SUN units valued at $40.8 million.

On May 4, 2015, the Board of Directors of SUN's general partner declared a distribution for the first quarter of 2015 of $0.645 per unit, which corresponds to $2.58 per unit on an annualized basis.  This represents a 7.5 percent increase compared to the distribution for the fourth quarter of 2014 and a 29 percent increase compared with the first quarter of 2014.  This is the eighth consecutive quarterly increase. The distribution will be paid on May 29 to unitholders of record on May 19. SUN achieved a 1.2 times distribution coverage ratio for the quarter.

SUN's gross capital expenditures for the first quarter were $37.2 million, which includes $2.9 million in maintenance capital. Of the $34.3 million in growth capital, $26.1 million was for purchase and leaseback transactions for six Stripes stores, and $5.4 million related to growth in the dealer business, including new dealer supply contracts.

The Partnership currently expects capital spending for the full year 2015, excluding future acquisitions but including the additional capital spending related to our equity interest in Sunoco LLC to be within the following ranges (in millions):

Included in the above growth capital spending estimate is the purchase and leaseback of 30 to 40 new convenience stores that Stripes plans to build in 2015.

On April 1, SUN issued $800 million of 6.375% Senior Notes due 2023 through a private offering that raised net proceeds of $789.2 million.  The majority of the notes proceeds were used to fund the purchase of the above-mentioned interest in Sunoco LLC and a small portion was used to repay outstanding borrowings under its senior secured revolving credit facility.

As of March 31, 2015, SUN had borrowings against its revolving credit facility of $684.8 million and $11.8 million in standby letters of credit, leaving unused availability of $553.4 million.  Net debt to Adjusted EBITDA, pro forma for acquisitions, was 3.9 times.

Additionally, on April 10, SUN increased its existing revolving credit facility by $250 million to $1.5 billion.  The facility matures in 2019.

First Quarter 2015 Earnings Conference Call

Sunoco LP management will hold a conference call on Thursday, May 7, at 10:00 a.m. ET (9:00 a.m. CT) to discuss first quarter results and recent developments.  To participate, dial 412-902-0003 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.  A telephone replay will be available through May 14 by calling 201-612-7415 and using the access code 13608202#.

About Sunoco LP

Sunoco LP (NYSE: SUN) is a master limited partnership (MLP) that primarily distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors. SUN also operates more than 150 convenience stores and retail fuel sites. SUN conducts its business through wholly owned subsidiaries, as well as through its 31.58 percent interest in Sunoco, LLC, in partnership with an affiliate of its parent company, Energy Transfer Partners.  While primarily engaged in natural gas, natural gas liquids, crude oil and refined products transportation, ETP also operates a retail and fuel distribution business through its interest in Sunoco, LLC, as well as wholly owned subsidiaries, Sunoco, Inc. and Stripes LLC that operate approximately 1,100 convenience stores and retail fuel sites.  For more information, visit the Sunoco LP website at www.SunocoLP.com.

Forward-Looking Statements

This news release contains "forward-looking statements" which may describe Sunoco LP's ("SUN") objectives, expected results of operations, targets, plans, strategies, costs, anticipated capital expenditures, potential acquisitions, new store openings and/or new dealer locations, management's expectations, beliefs or goals regarding proposed transactions between ETP and SUN, the expected timing of those transactions and the future financial and/or operating impact of those transactions, including the anticipated integration process and any related benefits, opportunities or synergies.  These statements are based on current plans, expectations and projections and involve a number of risks and uncertainties that could cause actual results and events to vary materially, including but not limited to: execution, integration, environmental and other risks related to acquisitions (including drop-downs) and our overall acquisition strategy; competitive pressures from convenience stores, gasoline stations, other non-traditional retailers and other wholesale fuel distributors located in SUN's markets; dangers inherent in storing and transporting motor fuel; SUN's ability to renew or renegotiate long-term distribution contracts with customers; changes in the price of and demand for motor fuel; changing consumer preferences for alternative fuel sources or improvement in fuel efficiency; competition in the wholesale motor fuel distribution industry; seasonal trends; severe or unfavorable weather conditions; increased costs; SUN's ability to make and integrate acquisitions; environmental laws and regulations; dangers inherent in the storage of motor fuel; reliance on suppliers to provide trade credit terms to adequately fund ongoing operations; acts of war and terrorism; dependence on information technology systems; SUN's and ETP's ability to consummate any proposed transactions, or to satisfy the conditions precedent to the consummation of such transactions; successful development and execution of integration plans; ability to realize anticipated synergies or cost-savings and the potential impact of the transactions on employee, supplier, customer and competitor relationships; and other unforeseen factors. For a full discussion of these and other risks and uncertainties, refer to the "Risk Factors" section of SUN's and ETP's most recently filed annual reports on Form 10-K. These forward-looking statements are based on and include our estimates as of the date hereof. Subsequent events and market developments could cause our estimates to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if new information becomes available, except as may be required by applicable law.

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, Director of Investor Relations and Treasury
(361) 884-2463, [email protected]

Anne Pearson
Dennard-Lascar Associates
(210) 408-6321, [email protected]

Media:

Jeff Shields, Communications Manager
(215) 977-6056, [email protected]

Jessica Davila-Burnett, Public Relations Director
(361) 654-4882, [email protected]

- Financial Schedules Follow -

Parenthetical amounts represent assets and liabilities attributable to consolidated variable interest entities of Mid-Atlantic Convenience Stores, LLC (MACS) as of December 31, 2014 and March 31, 2015.

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.

Beginning in late 2014, with the acquisition of MACS, we began operating our business in two primary operating segments, wholesale and retail, both of which are included as reportable segments. As a result, the Predecessor periods operated as one segment, wholesale, and the Successor period operated with our wholesale and retail segments.

The following table sets forth, for the periods indicated, information concerning key measures we rely on to gauge our operating performance by segment (in thousands, except for selling price and gross profit per gallon):

The following tables present a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow by segment (in thousands):

SOURCE Sunoco LP