Sunoco LP(SUN) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements detail the company's financial position, performance, and cash flows for the period Consolidated Financial Statements Financial statements show total assets of $14.43 billion, with a significant decrease in net income year-over-year Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,482 | $2,465 | | Total Assets | $14,428 | $14,375 | | Total Current Liabilities | $1,630 | $1,947 | | Long-term Debt, net | $7,803 | $7,484 | | Total Liabilities | $10,331 | $10,307 | | Total Equity | $4,097 | $4,068 | Consolidated Statement of Operations Highlights (in millions, except per unit data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $10,569 | $11,673 | | Operating Income | $499 | $447 | | Net Income | $293 | $731 | | Net Income per Common Unit (Basic) | $1.55 | $6.43 | Consolidated Statement of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $399 | $216 | | Net cash (used in) provided by investing activities | ($350) | $727 | | Net cash used in financing activities | ($27) | ($746) | Notes to Consolidated Financial Statements Notes detail major acquisitions like Parkland and TanQuid, debt structure, and segment performance - Announced a definitive agreement to acquire Parkland Corporation in a cash and equity transaction valued at approximately $9.1 billion, expected to close in Q4 2025[30] - Entered into an agreement to acquire TanQuid, which owns 16 fuel terminals in Europe, for approximately €500 million, with the transaction expected to close in the second half of 2025[35] - In March 2025, the Partnership issued $1.0 billion of 6.250% senior notes due 2033 and used the proceeds to repay $600 million of notes due 2025 and borrowings under its Credit Facility[49] Segment Adjusted EBITDA (in millions) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Fuel Distribution | $426 | $463 | | Pipeline Systems | $349 | $53 | | Terminals | $137 | $46 | | Total | $912 | $562 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, focusing on major acquisitions and segment performance drivers Recent Developments This section details significant strategic acquisitions and the impact of new tax legislation - Announced a definitive agreement to acquire Parkland Corporation in a cash and equity transaction valued at approximately $9.1 billion, expected to close in Q4 2025[97] - Entered an agreement to acquire TanQuid for approximately €500 million, which includes 15 fuel terminals in Germany and one in Poland, with the deal expected to close in H2 2025[103] - The "One Big Beautiful Bill Act" was signed into law on July 4, 2025, permanently reinstating 100% bonus depreciation, which is anticipated to defer a significant portion of the Partnership's corporate subsidiaries' U.S. federal income taxes[106] Results of Operations Consolidated Adjusted EBITDA grew significantly, driven by acquisitions, despite a drop in net income due to a prior-year gain Consolidated Adjusted EBITDA (in millions) | Period | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $454 | $320 | $134 | | Six Months Ended June 30 | $912 | $562 | $350 | - The decrease in net income for H1 2025 to $293 million from $731 million in H1 2024 was primarily due to the absence of the $598 million gain on the West Texas Sale that occurred in April 2024[114] - Pipeline Systems segment Adjusted EBITDA increased by $296 million for H1 2025, driven by the NuStar acquisition and a $95 million increase in Adjusted EBITDA from the ET-S Permian joint venture[114][132] - Terminals segment Adjusted EBITDA increased by $91 million for H1 2025, primarily due to contributions from the NuStar and Zenith European terminals acquisitions[114][134] Liquidity and Capital Resources The company maintains strong liquidity through cash from operations and its credit facility to fund capital expenditures - As of June 30, 2025, the company had $116 million in cash and cash equivalents and $1.24 billion of available borrowing capacity on its Credit Facility[136] - Net cash provided by operating activities increased to $399 million for the six months ended June 30, 2025, compared to $216 million for the same period in 2024[140] - The company projects approximately $150 million in maintenance capital expenditures and at least $400 million in growth capital for the full year 2025[149] Quantitative and Qualitative Disclosures about Market Risk The company is exposed to interest rate risk on variable-rate debt and commodity price risk on fuel inventories - The company is subject to interest rate risk on its $206 million of outstanding borrowings under the Credit Facility as of June 30, 2025[160] - The company faces commodity price risk on its approximately $1.15 billion of fuel inventory and uses derivative instruments to hedge this risk, holding a position of 3.2 million barrels with an aggregate unrealized gain of $4 million at June 30, 2025[161] Controls and Procedures Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[164] - There have been no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[165] PART II - OTHER INFORMATION Legal Proceedings The company is not party to any litigation expected to have a material adverse impact on its business - The company does not believe it is party to any litigation that will have a material adverse impact on its financial condition or operations[167] Risk Factors There have been no material changes to the risk factors previously disclosed in prior SEC filings - There have been no material changes from the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2024, and the Q1 2025 Form 10-Q[169] Unregistered Sales of Equity Securities and Use of Proceeds The company issued common units as partial consideration for an acquisition via a private placement - On May 29, 2025, the Partnership issued 251,646 common units valued at approximately $13 million as partial consideration for an acquisition[171] - The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as it did not involve a public offering[171] Exhibits This section lists key agreements and certifications filed as exhibits with the Form 10-Q - Lists key agreements filed as exhibits, including the Arrangement Agreement for the Parkland Corporation acquisition and amendments to the Third Amended and Restated Credit Agreement[173][175]