Sunoco LP(SUN) - 2024 Q1 - Quarterly Results

Sunoco LP First Quarter 2024 Financial and Operating Results Financial and Operational Highlights Sunoco LP reported a strong first quarter for 2024, with significant year-over-year growth in net income, Adjusted EBITDA, and Distributable Cash Flow. The Partnership saw a 9% increase in fuel gallons sold, although the fuel margin per gallon slightly decreased compared to the same period in 2023 Q1 2024 Key Financial Metrics (vs. Q1 2023) (in millions) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $230 million | $141 million | +63.1% | | Adjusted EBITDA | $242 million | $221 million | +9.5% | | Distributable Cash Flow, as adjusted | $176 million | $160 million | +10.0% | Q1 2024 Key Operational Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Fuel Gallons Sold | 2.1 billion | ~1.93 billion | +9.0% | | Fuel Margin per Gallon | 11.7 cents | 12.9 cents | -1.2 cents | Distribution The Partnership announced a 4% increase in its quarterly distribution, reflecting continued confidence in the business. The new distribution is $0.8756 per unit, payable in May 2024 - The Board of Directors declared a quarterly distribution of $0.8756 per unit, a 4% increase from the previous quarter[3] - The distribution will be paid on May 20, 2024, to unitholders of record as of May 13, 2024[3] Liquidity, Leverage and Credit As of March 31, 2024, Sunoco maintained a solid liquidity position with approximately $870 million available under its revolving credit facility. The leverage ratio stood at 3.7x, and the Partnership received credit rating upgrades from both S&P and Moody's - At the end of Q1 2024, SUN had long-term debt of $3.8 billion and liquidity of approximately $870 million[4] - The leverage ratio (net debt to Adjusted EBITDA) was 3.7 times at quarter-end[4] - Credit ratings were upgraded by S&P Global Ratings to BB+ and by Moody's Ratings to Ba1 in May 2024[4] Capital Spending Total capital expenditures for the first quarter of 2024 amounted to $41 million, with the majority allocated to growth initiatives Q1 2024 Capital Expenditures (in millions) | Category | Amount | | :--- | :--- | | Growth Capital | $27 million | | Maintenance Capital | $14 million | | Total | $41 million | Recent Developments The Partnership was highly active with strategic transactions, including the completion of the NuStar Energy L.P. and Zenith Energy terminal acquisitions, and the divestiture of 204 convenience stores to 7-Eleven. To support these activities, SUN issued $1.5 billion in unsecured notes and amended its revolving credit facility - Acquisitions: Completed the acquisition of NuStar Energy L.P. (May 3) and liquid fuels terminals from Zenith Energy in Europe (March 13)[8] - Divestiture: Completed the sale of 204 convenience stores to 7-Eleven, Inc. for approximately $1.0 billion on April 16, 2024[8] - Financing: Issued $1.5 billion in unsecured notes to fund NuStar-related repayments and amended its revolving credit facility to an unsecured $1.5 billion facility maturing in 2029[8] Revised 2024 Business Outlook Following recent acquisitions and divestitures, Sunoco has revised its full-year 2024 guidance. The Partnership now expects Adjusted EBITDA to be in the range of $1.46 billion to $1.52 billion, incorporating contributions from the NuStar acquisition Full Year 2024 Adjusted EBITDA Guidance (in millions/billions) | Component | Guidance Range | | :--- | :--- | | Legacy SUN | $975 million to $1 billion | | Prorated NuStar | $480 million to $520 million | | Total Combined | $1.46 billion to $1.52 billion | - The revised guidance excludes the impact from synergies or transaction-related expenses[13] Financial Statements and Supplemental Data Consolidated Balance Sheets As of March 31, 2024, total assets increased to $7.4 billion from $6.8 billion at year-end 2023, primarily driven by an increase in cash and assets held for sale. Total liabilities also rose to $6.3 billion, with long-term debt increasing to nearly $3.8 billion Selected Balance Sheet Data (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $215 | $29 | | Assets held for sale | $511 | $0 | | Total assets | $7,392 | $6,826 | | Long-term debt, net | $3,795 | $3,580 | | Total liabilities | $6,271 | $5,848 | | Total equity | $1,121 | $978 | Consolidated Statements of Operations For the first quarter of 2024, Sunoco's total revenues grew to $5.5 billion. Operating income saw a substantial increase to $297 million from $199 million in Q1 2023, leading to a 63% rise in net income to $230 million and a diluted EPS of $2.26 Q1 2024 Statement of Operations Highlights (in millions, except per unit data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $5,499 | $5,362 | | Operating Income | $297 | $199 | | Net Income | $230 | $141 | | Diluted EPS | $2.26 | $1.41 | Key Operating Metrics In Q1 2024, total motor fuel gallons sold increased to 2.105 billion from 1.930 billion year-over-year. However, the motor fuel profit margin decreased to 11.7 cents per gallon from 12.9 cents. The Fuel Distribution and Marketing segment remained the primary driver of Adjusted EBITDA Q1 2024 Operating Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Motor fuel gallons sold (millions) | 2,105 | 1,930 | | Motor fuel profit (cents per gallon) | 11.7¢ | 12.9¢ | Adjusted EBITDA by Segment (in millions) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Fuel Distribution and Marketing | $219 | $195 | | All Other | $23 | $26 | | Total | $242 | $221 | Reconciliation of Non-GAAP Measures The report provides a detailed reconciliation from GAAP Net Income to non-GAAP measures like Adjusted EBITDA and Distributable Cash Flow (DCF). For Q1 2024, Net Income of $230 million was adjusted for items such as depreciation, interest, and a significant inventory valuation adjustment of ($130) million to arrive at an Adjusted EBITDA of $242 million. DCF, as adjusted, was $176 million Q1 2024 Reconciliation Summary (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $230 | $141 | | Depreciation, amortization and accretion | $43 | $48 | | Interest expense, net | $63 | $53 | | Inventory valuation adjustments | ($130) | ($29) | | Other adjustments | $25 | $10 | | Adjusted EBITDA | $242 | $221 | | Cash interest, tax, maintenance capex, etc. | ($71) | ($62) | | Distributable Cash Flow, as adjusted | $176 | $160 | - A supplemental disclosure shows the pro-forma DCF impact of the NuStar acquisition. While SUN's legacy DCF was $176 million, NuStar's calculated DCF for the same period was $94 million, providing insight into the combined entity's cash generation potential[24][25]