Sunoco LP(US:SUN)2025-02-14 18:59Distribution and Cash Flow - The company is required to distribute all available cash to unitholders, which may limit its ability to grow and make acquisitions [233]. - The partnership agreement allows the General Partner to determine the amount and timing of distributions, potentially affecting cash available for unitholders [232]. - Cost reimbursements to the General Partner will reduce cash available for distribution to unitholders [232]. - The amount of cash available for distribution depends primarily on cash flow, not solely on profitability, which may lead to distributions during net losses [247]. - Unitholders may have liability to repay distributions if they are deemed impermissible under Delaware law [248]. - The partnership is subject to entity-level Texas franchise tax, which could reduce cash available for distribution [259]. - Changes in U.S. federal income tax laws could negatively impact the value of investments in common units [263]. - Subsidiaries treated as corporations for tax purposes may incur corporate-level taxes, reducing cash available for distribution [265]. - Unitholders will owe taxes on allocated taxable income even if no cash distributions are received [266]. - The IRS may challenge the partnership's tax positions, which could adversely impact the market for common units and reduce cash available for distribution to unitholders [271]. Governance and Control - Energy Transfer controls the General Partner and appoints all officers and directors, leading to potential conflicts of interest [228]. - The General Partner has limited liability regarding obligations, which may result in the company incurring nonrecourse debt [229]. - Common unitholders have limited voting rights and cannot easily remove the General Partner without significant support [240]. - The partnership agreement restricts voting rights for unitholders owning 20% or more of outstanding common units [246]. - Unitholders may be required to sell their common units at an undesirable time or price if the General Partner exercises its limited call right [243]. - The partnership agreement permits the issuance of additional units without unitholder approval, which could dilute existing distributions [234]. - The partnership agreement allows the issuance of additional units without unitholder approval, potentially diluting existing ownership interests [244]. Financial Performance - Total segment profit increased to $2,098 million in 2024 from $1,365 million in 2023, a change of $733 million [349]. - Fuel Distribution segment profit decreased to $1,187 million in 2024 from $1,225 million in 2023, a decline of $38 million [351]. - Pipeline Systems segment profit surged to $535 million in 2024 from $3 million in 2023, an increase of $532 million [352]. - Terminals segment profit rose to $376 million in 2024 from $137 million in 2023, an increase of $239 million [354]. - Motor fuel gallons sold increased by 261 million gallons, totaling 8,578 million gallons in 2024 compared to 8,317 million gallons in 2023 [351]. - Segment Adjusted EBITDA is used as a key performance measure for evaluating segment profitability and is a basis for internal financial reporting [347]. - Segment Adjusted EBITDA for Fuel Distribution increased to $908 million in 2024 from $865 million in 2023, an increase of $43 million [351]. - Segment Adjusted EBITDA for Pipeline Systems increased to $377 million in 2024 from $11 million in 2023, an increase of $366 million [352]. Debt and Financing - The company may face increased vulnerability to adverse economic conditions due to its debt levels and covenants [225]. - Total long-term debt increased to $7,484 million in 2024 from $3,580 million in 2023, reflecting the acquisition of NuStar [371]. - As of December 31, 2024, the balance on the Credit Facility was $203 million, with $1.25 billion in unused availability [372]. - The Partnership issued $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032 on April 30, 2024 [373]. - The Partnership redeemed NuStar's subordinated notes totaling $403 million and repaid NuStar's credit facility totaling $455 million during Q2 2024 [374]. - The net proceeds from the recent financing transaction were used to repay certain outstanding indebtedness and fund the redemption of NuStar's preferred units [373]. - The Partnership does not maintain any off-balance sheet arrangements for credit enhancement or hedging transactions [380]. Taxation - Tax-exempt entities investing in common units may face unrelated business taxable income, which could result in adverse tax consequences [270]. - Non-U.S. unitholders will be subject to U.S. federal income taxes and withholding on income effectively connected with a U.S. trade or business [282]. - The income tax expense for 2024 was $175 million, an increase of $139 million from 2023, primarily due to a taxable gain recognized on the sale of convenience stores [346]. - The partnership recorded unfavorable inventory adjustments of $86 million and $114 million for the years ended December 31, 2024 and 2023, respectively, which decreased net income for those periods [343]. - The increase in equity in earnings of unconsolidated affiliates for the year ended December 31, 2024, was primarily due to the formation of ET-S Permian effective July 1, 2024 [344]. - Unrealized gains and losses on commodity derivatives reflect changes in fair value, impacted by notional amounts and commodity price changes [342]. Assets and Compliance - Current assets for the Guarantor Issuer Group were $2.225 billion, while non-current assets totaled $11.119 billion as of December 31, 2024 [378]. - The Partnership's long-term liabilities, including long-term debt, amounted to $8.244 billion as of December 31, 2024 [378]. - The Partnership is in compliance with all financial covenants as of December 31, 2024 [372]. - The Partnership had a position of 0.3 million barrels in fuel hedging with an aggregated unrealized loss of $3.8 million at December 31, 2024 [379].