SUN
Sunoco Lp
NYSE
10-Q: Sunoco LP Reports Strong First Quarter 2024 Results Amidst Strategic Acquisitions and Divestitures
Sentiment:
Quarterly Report
9 May 2024 11:56 AM
Sunoco LP's first quarter 2024 results show increased net income and Adjusted EBITDA, driven by higher fuel sales volumes and strategic acquisitions, alongside a significant divestiture.
Better than expected
Net income and Adjusted EBITDA both increased year-over-year, indicating better than expected financial performance.
The company's motor fuel sales volume increased by 9%, demonstrating strong operational performance.
Capital raise
The Partnership issued $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032 in a private offering on April 30, 2024.
The net proceeds from the offering were used to repay NuStar's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses in connection with the merger.
Summary
- Sunoco LP reported a net income of $230 million for the first quarter of 2024, compared to $141 million in the same period of 2023.
- Adjusted EBITDA increased to $242 million, up from $221 million in the first quarter of 2023.
- The increase in Adjusted EBITDA was primarily due to a $25 million increase in motor fuel sales profit and an $11 million increase in non-motor fuel and lease profit.
- Motor fuel sales volume increased by 9% year-over-year.
- The company completed the acquisition of liquid fuel terminals in Amsterdam and Bantry Bay for $185 million on March 13, 2024.
- Sunoco also completed the sale of 204 convenience stores to 7-Eleven for approximately $1.0 billion on April 16, 2024.
- The company issued approximately 50.6 million common units in connection with the acquisition of NuStar Energy L.P. on May 3, 2024.
- Sunoco assumed approximately $3.4 billion in debt and $800 million in preferred units in the NuStar acquisition.
- The company's fuel inventory balance included lower of cost or market reserves of $100 million as of March 31, 2024, compared to $230 million as of December 31, 2023.
- Favorable inventory valuation adjustments of $130 million increased net income for the quarter.
Sentiment
Score: 8
Explanation: The document presents a positive outlook with strong financial results, strategic acquisitions, and a significant divestiture. While there are some risks and increased costs, the overall tone is optimistic and indicates growth.
Positives
- Sunoco's net income and Adjusted EBITDA both increased year-over-year.
- Motor fuel sales volumes saw a significant increase of 9%.
- The company successfully completed strategic acquisitions of liquid fuel terminals.
- The sale of convenience stores generated significant cash proceeds.
- The NuStar acquisition expands Sunoco's infrastructure with pipelines and storage facilities.
- Favorable inventory valuation adjustments positively impacted net income by $130 million.
Negatives
- Interest expense increased due to higher debt levels and interest rates.
- Operating costs increased by $15 million due to recent acquisitions.
- Cash flow from operating activities decreased by $40 million year-over-year.
- The company had an unrealized loss of $4.8 million on commodity derivatives.
Risks
- The company is exposed to fluctuations in crude oil and refined product prices.
- Changes in demand for motor fuels could impact revenue.
- The company faces competition in the wholesale motor fuel distribution and retail store industry.
- Environmental regulations and potential liabilities could lead to significant expenses.
- The company is subject to interest rate risk on its variable rate debt.
- The integration of recent acquisitions presents operational and financial risks.
- The company's operations are subject to various legal and regulatory requirements in the U.S., Mexico and Europe.
- The company is exposed to political and economic instability in foreign operations.
Future Outlook
The company expects to utilize its credit facility and cash from operations to fund growth capital expenditures and working capital needs for 2024, but may issue debt or equity securities as needed.
Management Comments
- Management uses Adjusted EBITDA for internal planning purposes, including aspects of our consolidated operating budget and capital expenditures.
- Management believes it is unlikely that the outcome of known legal matters would have a material adverse impact on our financial condition, results of operations or cash flows.
Industry Context
The report reflects a trend of consolidation in the energy infrastructure sector, with Sunoco expanding its footprint through strategic acquisitions while also streamlining its retail operations. The results are influenced by broader market conditions, including fuel price volatility and demand fluctuations.
Comparison to Industry Standards
- Sunoco's performance is comparable to other midstream energy companies that have also seen increased activity in acquisitions and divestitures.
- Companies like Energy Transfer, which owns Sunoco's general partner, have also been active in strategic acquisitions to expand their infrastructure.
- The increase in motor fuel sales volume aligns with general trends in fuel consumption, although the profit per gallon is subject to market volatility.
- The company's debt levels are typical for companies in the midstream sector, which often rely on debt financing for acquisitions and capital projects.
- The inventory valuation adjustments are a common factor in the energy sector, reflecting the impact of price fluctuations on LIFO inventory.
Stakeholder Impact
- Shareholders will benefit from increased net income and Adjusted EBITDA.
- Employees may experience changes due to acquisitions and divestitures.
- Customers will see changes in service offerings due to the expanded infrastructure.
- Suppliers will be impacted by changes in purchasing patterns.
- Creditors will be affected by the company's debt management and capital structure.
Next Steps
- The company will integrate the newly acquired NuStar assets into its operations.
- Sunoco will continue to manage its debt and capital structure.
- The company will monitor market conditions and adjust its strategies as needed.
- The company will pay a quarterly distribution of $0.8756 per common unit on May 20, 2024.
Related Party Transactions
- The company has fee-based commercial agreements with Energy Transfer affiliates for pipeline, terminalling, and storage services.
- Sunoco also has agreements with Energy Transfer subsidiaries for the purchase and sale of fuel.
- Accounts receivable from affiliates were $26 million as of March 31, 2024.
- Accounts payable to affiliates were $170 million as of March 31, 2024.
- Advances from affiliates were $98 million as of March 31, 2024.
Key Dates
- 2024-03-13: Acquisition of liquid fuels terminals in Amsterdam and Bantry Bay completed.
- 2024-04-16: Sale of 204 convenience stores to 7-Eleven completed.
- 2024-04-30: Issuance of $1.5 billion in senior notes.
- 2024-05-02: Common units outstanding reported as 84,453,339 and Class C units as 16,410,780.
- 2024-05-03: Acquisition of NuStar Energy L.P. completed.
- 2024-05-20: Declared distribution payment date.
Keywords
Motor Fuel, Fuel Distribution, Acquisition, Divestiture, Adjusted EBITDA, Pipeline, Terminals, Convenience Stores, Inventory, Refined Products
SUN
Sunoco Lp
NYSE
Sector: Energy
Filings with Classifications
Better than expected
29 May 2025 7:00 AM
Merger Announcement
- The transaction offers a 25% premium to Parkland shareholders based on recent trading prices.
- It provides flexible consideration options, including immediate cash liquidity and participation in future upside via SunocoCorp units.
- The deal is expected to generate significant annual run-rate synergies of US$250 million, indicating improved financial performance for the combined entity.
- The creation of SunocoCorp offers a more tax-efficient structure for non-U.S. and institutional investors, enhancing shareholder value.
Capital raise
29 May 2025 7:00 AM
Merger Announcement
- Committed bridge financing is in place for the cash portion of the acquisition.
Worse than expected
28 May 2025 9:29 PM
Acquisition Update
- The unaudited pro forma net income attributable to limited partners for the full year ended December 31, 2024, shows a loss of $(262) million, which is a negative financial outcome for the combined entity.
Capital raise
28 May 2025 9:29 PM
Acquisition Update
- Sunoco has secured a $2.65 billion 364-day bridge term loan to fund the cash consideration for the Parkland Acquisition.
- In connection with the Parkland Acquisition, Sunoco would issue $1 billion in preferred units.
- Sunoco would issue $1.7 billion in aggregate principal amount of senior notes for the Parkland Acquisition.
- SunocoCorp (a wholly-owned subsidiary of SunocoCorp) is expected to issue 51,442,494 common units to Parkland shareholders as part of the acquisition consideration.
Capital raise
28 May 2025 9:25 PM
Acquisition Update
- Sunoco has secured a $2.65 billion 364-day bridge term loan to fund the proposed cash consideration for the Parkland Acquisition.
- In connection with the Parkland Acquisition, Sunoco would issue $1 billion in preferred units.
- In connection with the Parkland Acquisition, Sunoco would issue $1.7 billion aggregate principal amount of senior notes.
Worse than expected
28 May 2025 9:25 PM
Acquisition Update
- The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024, shows a net loss attributable to limited partners of $(262) million, which is a negative financial outcome for the combined entity on a pro forma basis.
- The pro forma basic net income (loss) per limited partner unit for the year ended December 31, 2024, is also negative at $(1.40).
Worse than expected
8 May 2025 4:25 PM
Quarterly Report
- Net income decreased compared to the same period last year, primarily due to increased operating expenses, depreciation, and interest expense.
Capital raise
8 May 2025 4:25 PM
Quarterly Report
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration of the Parkland acquisition.
- The transaction is expected to be funded using cash on hand and amounts available under the Partnership's Credit Facility.
Capital raise
6 May 2025 8:50 AM
Merger Announcement
- The $2.6 billion cash consideration is supported by a fully committed bridge facility.
- Sunoco expects to permanently finance this through a combination of senior notes and preferred equity prior to close.
- The transaction includes the creation of SUNCorp, a new publicly traded vehicle, to support growth and attract a new investor base.
Better than expected
6 May 2025 7:12 AM
Earnings Release
- Adjusted EBITDA and Distributable Cash Flow were significantly higher than the same quarter last year.
Capital raise
5 May 2025 9:45 PM
Merger Announcement
- Sunoco has secured debt financing commitments of $7.55 billion to fund the acquisition.
- The transaction involves the issuance of new SUNCorp Units to Parkland shareholders.
Delay expected
5 May 2025 9:43 PM
Merger Announcement
- The Effective Time does not occur on or prior to February 4, 2026, or such later date as may be agreed to in writing by the parties (the Outside Date ) (provided that the Outside Date may be extended by either party for 90 days following February 4, 2026 if certain required regulatory approvals have not yet been obtained).
Capital raise
5 May 2025 9:21 AM
Merger Announcement
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
- The bridge loan is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Capital raise
5 May 2025 8:36 AM
Merger Announcement
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
- The bridge facility is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Capital raise
20 March 2025 5:03 PM
Debt Offering Announcement
- Sunoco LP is conducting a private offering of $1 billion in senior notes due 2033.
- The offering was upsized from an initial $750 million.
- The proceeds will be used to repay existing indebtedness.
Capital raise
20 March 2025 8:06 AM
Current Report on Form 8-K
- Sunoco LP announced a private offering of $750 million in senior notes due 2033.
- The company intends to use the net proceeds from the offering to repay indebtedness, including redeeming in full NuStar Logistics, L.P.'s 5.750% senior notes due 2025 and repaying a portion of the outstanding borrowings under Sunoco's revolving credit facility.
- The Notes Offering is not conditioned on the consummation of the acquisition of the German and Polish terminalling assets.
Capital raise
14 February 2025 1:59 PM
Annual Results
- The company has the ability to further incur additional debt under its Credit Facility and the indentures governing its senior notes.
- The company may issue debt or equity securities prior to that time as it deems prudent to provide liquidity for new capital projects or other partnership purposes.
Better than expected
11 February 2025 7:21 AM
Earnings Release
- The company's net income, Adjusted EBITDA, and Distributable Cash Flow all significantly increased compared to the previous year.
- The company is targeting a distribution growth rate of at least 5% for 2025, indicating confidence in future performance.
- The company anticipates strong Adjusted EBITDA growth in 2025.
Better than expected
27 January 2025 7:18 AM
Distribution Announcement
- The company announced a 1.25% increase in the quarterly distribution, which is better than the previous quarter.
- The company also announced a target of at least 5% distribution growth for 2025, which is a positive outlook for investors.
Worse than expected
7 November 2024 12:04 PM
Quarterly Report
- The company's net income decreased significantly due to unfavorable inventory valuation adjustments and increased expenses, indicating worse than expected results.
Worse than expected
6 November 2024 8:04 AM
Quarterly Report
- The net income decreased significantly from $272 million to $2 million year-over-year, indicating a substantial decline in profitability despite improvements in other areas.
Capital raise
8 August 2024 11:59 AM
Quarterly Report
- Sunoco issued $1.5 billion in senior notes in April 2024 to fund the NuStar acquisition and related transactions.
- The company may issue debt or equity securities prior to the end of 2024 as deemed prudent to provide liquidity for new capital projects or other partnership purposes.
Better than expected
8 August 2024 11:59 AM
Quarterly Report
- The company's net income and adjusted EBITDA were significantly better than the same period last year due to the gain on the West Texas sale and the positive impact of acquisitions.
Better than expected
7 August 2024 7:36 AM
Quarterly Report
- The company reported a record net income of $501 million, significantly higher than the $87 million reported in the same quarter last year.
- Adjusted EBITDA, excluding transaction-related expenses, was $400 million, exceeding the $250 million reported in the same quarter last year.
- Distributable Cash Flow, as adjusted, was $295 million, up from $175 million in the prior year's second quarter.
Better than expected
9 May 2024 11:56 AM
Quarterly Report
- Net income and Adjusted EBITDA both increased year-over-year, indicating better than expected financial performance.
- The company's motor fuel sales volume increased by 9%, demonstrating strong operational performance.
Capital raise
9 May 2024 11:56 AM
Quarterly Report
- The Partnership issued $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032 in a private offering on April 30, 2024.
- The net proceeds from the offering were used to repay NuStar's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses in connection with the merger.
Capital raise
8 May 2024 7:27 AM
Quarterly Report
- The company issued $1.5 billion in unsecured notes on April 30, 2024.
- The proceeds from this offering will be used to fund the repayment of NuStar's credit and receivables facilities, and redeem NuStar's preferred equity and subordinated notes.
Better than expected
8 May 2024 7:27 AM
Quarterly Report
- The company reported a record first quarter net income of $230 million, significantly higher than the $141 million reported in the same period last year.
- Adjusted EBITDA for the quarter was $242 million, up from $221 million in the first quarter of 2023.
- The company increased its full-year Adjusted EBITDA guidance to $1.46 billion to $1.52 billion.
Better than expected
3 May 2024 4:45 PM
Merger Announcement
- The acquisition is expected to be immediately accretive to distributable cash flow per LP unit, growing to greater than 10% accretion by the third year following close.
- The company also expects to realize at least $150 million of expense and commercial synergies and at least $50 million per year of additional cash flow from refinancing activity.
Capital raise
30 April 2024 4:47 PM
Debt Offering Announcement
- Sunoco LP completed a private offering of $1.5 billion in senior notes.
- The offering included $750 million in 7.000% Senior Notes due 2029 and $750 million in 7.250% Senior Notes due 2032.
- Net proceeds were approximately $1.485 billion after deducting discounts and commissions.
- The funds will be used to repay NuStar Energy debt, redeem NuStar's preferred units, and cover offering expenses related to the merger.
Capital raise
30 April 2024 4:45 PM
Debt Offering Announcement
- Sunoco LP completed a private offering of $1.5 billion in senior notes.
- The net proceeds will be used to repay NuStar's debt, redeem NuStar's preferred units, and cover offering expenses.
Capital raise
16 April 2024 7:06 PM
Debt Offering Announcement
- Sunoco LP has priced a private offering of $1.5 billion in senior notes.
- The offering includes $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032.
- The proceeds will be used to refinance debt and redeem preferred units of NuStar Energy in connection with the pending merger.
Capital raise
16 April 2024 6:59 PM
Debt Offering Announcement
- Sunoco has priced a private offering of $1.5 billion in senior notes.
- The offering is split into $750 million of 7.000% notes due 2029 and $750 million of 7.250% notes due 2032.
- The proceeds will be used to refinance NuStar's debt and preferred units, and to fund the merger.
Capital raise
16 April 2024 8:36 AM
Current Report on Form 8-K
- Sunoco is conducting a private offering of $1.5 billion in senior notes due 2029 and 2032.
- The proceeds will be used to repay NuStar Energy's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses related to the pending merger.
- The offering is not contingent on the completion of the NuStar Merger.
Capital raise
16 April 2024 8:34 AM
Debt Offering Announcement
- Sunoco is conducting a private offering of $1.5 billion in senior notes.
- The notes are split into $750 million due in 2029 and $750 million due in 2032.
Capital raise
16 February 2024 12:21 PM
Partnership Agreement Details
- The partnership agreement authorizes the issuance of an unlimited number of additional partnership interests without unitholder approval.
- The document mentions that the partnership may fund acquisitions through the issuance of additional common units or other partnership interests.
Worse than expected
14 February 2024 9:43 AM
Quarterly Report
- The company reported a net loss for the fourth quarter of 2023, compared to a net income in the same period of 2022.
- The company's net income for the full year 2023 decreased compared to 2022.
Capital raise
22 January 2024 5:26 PM
Merger Announcement
- Sunoco has secured a $1.6 billion 364-day bridge term loan to refinance NuStar's existing debt.
- The transaction is an all-equity deal, with NuStar unitholders receiving Sunoco units.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.