Sunoco LP Announces Second Quarter Financial and Operating Results

Adjusted EBITDA and Distributable Cash Flow, as adjusted, are non-GAAP financial measures of performance that have limitations and should not be considered as a substitute for net income. Please refer to the discussion and tables under "Reconciliations of Non-GAAP Measures" later in this news release for a discussion of our use of Adjusted EBITDA and Distributable Cash Flow, as adjusted, and a reconciliation to net income.

Assets

Current assets:

  Cash and cash equivalents

  Accounts receivable, net

  Receivables from affiliates

  Inventories, net

  Other current assets

  Assets held for sale

Total current assets

Property and equipment, net

Other assets:

  Goodwill

  Intangible assets, net

  Other noncurrent assets

Total assets

Liabilities and equity

Current liabilities:

  Accounts payable

  Accounts payable to affiliates

  Accrued expenses and other current liabilities

  Current maturities of long-term debt

  Liabilities associated with assets held for sale

Total current liabilities

Revolving line of credit

Long-term debt, net

Advances from affiliates

Deferred tax liability

Other noncurrent liabilities

Total liabilities

Commitments and contingencies (Note 14)

Equity:

  Limited partners:

    Series A Preferred unitholder - affiliated (no units issued and outstanding as of June 30, 2018 and 12,000,000     units issued and outstanding as of December 31, 2017)

    Common unitholders (82,498,849 units issued and outstanding as of June 30, 2018 and 99,667,999 units     issued and outstanding as of December 31, 2017)

    Class C unitholders - held by subsidiary (16,410,780 units issued and outstanding as of June 30, 2018 and     December 31, 2017)

Total equity

Total liabilities and equity

Revenues:

  Motor fuel sales

  Rental income

  Other

Total revenues

Cost of sales:

  Motor fuel cost of sales

  Other

Total cost of sales

Gross profit

Operating expenses:

  General and administrative

  Other operating

  Rent

  Loss on disposal of assets and impairment charges

  Depreciation, amortization and accretion

Total operating expenses

Operating income (loss)

Other expenses:

  Interest expense, net

  Loss on extinguishment of debt and other

Income (loss) from continuing operations before income taxes

Income tax expense (benefit)

Income (loss) from continuing operations

Loss from discontinued operations, net of income taxes

Net income (loss) and comprehensive income (loss)

Net income (loss) per limited partner unit - basic:

  Continuing operations - common units

  Discontinued operations - common units

  Net income (loss) - common units

Net income (loss) per limited partner unit - diluted:

  Continuing operations - common units

  Discontinued operations - common units

  Net income (loss) - common units

Weighted average limited partner units outstanding:

  Common units - basic

  Common units - diluted

Cash distributions per unit

Revenues:

Motor fuel sales

Rental income

Other

Total revenues

Gross profit:

Motor fuel sales

Rental

Other

Total gross profit

Income (loss) from continuing operations

Loss from discontinued operations, net of taxes

Net income (loss) and comprehensive income (loss)

Adjusted EBITDA (2)

Distributable Cash Flow, as adjusted (2)

Operating Data:

Motor fuel gallons sold (3)

Motor fuel gross profit cents per gallon (1) (3)

¢

¢

Segment Adjusted EBITDA

  Fuel distribution and marketing

  All other

    Total

  Depreciation, amortization and accretion (3)

  Interest expense, net (3)

  Non-cash compensation expense (3)

  Loss on disposal of assets and impairment charges (3)

  Unrealized loss on commodity derivatives (3)

  Inventory fair value adjustments (3)

  Other non-cash adjustments

Income (loss) before income tax (expense) benefit (3)

  Income tax benefit (3)

Net income (loss) and comprehensive income (loss)

Adjusted EBITDA

  Cash interest expense (3)

  Current income tax expense (benefit) (3)

  Transaction-related income taxes (4)

  Maintenance capital expenditures (3)

Distributable Cash Flow

  Transaction-related expenses (3)

  Series A Preferred distribution

Distributable Cash Flow, as adjusted

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(1)           Includes other non-cash adjustments and excludes the impact of inventory fair value adjustments consistent with the definition of Adjusted EBITDA.

(2)          Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion expense, allocated non-cash compensation expense, unrealized gains and losses on commodity derivatives and inventory fair value adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations, such as gain or loss on disposal of assets and non-cash impairment charges. We define Distributable Cash Flow, as adjusted, as Adjusted EBITDA less cash interest expense, including the accrual of interest expense related to our long-term debt which is paid on a semi-annual basis, Series A Preferred distribution, current income tax expense, maintenance capital expenditures and other non-cash adjustments.

We believe Adjusted EBITDA and Distributable Cash Flow, as adjusted, are useful to investors in evaluating our operating performance because:

•           Adjusted EBITDA is used as a performance measure under our revolving credit facility;

•           securities analysts and other interested parties use such metrics as measures of financial performance, ability to make distributions to our unitholders and debt service capabilities;

•           our management uses them for internal planning purposes, including aspects of our consolidated operating budget, and capital expenditures; and

•           Distributable Cash Flow, as adjusted, provides useful information to investors as it is a widely accepted financial indicator used by investors to compare partnership performance, and as it provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

Adjusted EBITDA and Distributable Cash Flow, as adjusted, are not recognized terms under GAAP and do not purport to be alternatives to net income (loss) as measures of operating performance or to cash flows from operating activities as a measure of liquidity. Adjusted EBITDA and Distributable Cash Flow, as adjusted, have limitations as analytical tools, and one should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:

•           they do not reflect our total cash expenditures, or future requirements for capital expenditures or contractual commitments;

•           they do not reflect changes in, or cash requirements for, working capital;

•           they do not reflect interest expense or the cash requirements necessary to service interest or principal payments on our revolving credit facility or term loan;

•           although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; and

•           as not all companies use identical calculations, our presentation of Adjusted EBITDA and Distributable Cash Flow, as adjusted, may not be comparable to similarly titled measures of other companies.

(3)        Includes amounts from discontinued operations.

(4)        Transaction-related income taxes primarily related to the 7-Eleven Transaction.