Sunoco LP Announces Fourth Quarter and Full Year 2023 Financial and Operating Results

Delivers record full year 2023 financial and operating results
Reports fourth quarter volume of over 2.2 billion gallons, highest in the Partnership's history
Reaffirms full year 2024 Adjusted EBITDA⁽¹⁾⁽²⁾ guidance of $975 million to $1 billion
Announced a series of definitive agreements in January to:
- Acquire NuStar Energy L.P.
- Acquire European liquid fuels terminals from Zenith Energy
- Divest 204 convenience stores to 7-Eleven, Inc.

DALLAS, Feb. 14, 2024 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today reported financial and operating results for the quarter and year ended December 31, 2023.

Financial and Operational Highlights

For the fourth quarter of 2023, net loss was $106 million compared to net income of $55 million in the fourth quarter of 2022.

Adjusted EBITDA⁽¹⁾ for the fourth quarter of 2023 was $236 million compared to $238 million in the fourth quarter of 2022.

Distributable Cash Flow, as adjusted⁽¹⁾, for the fourth quarter of 2023 was $148 million compared to $153 million in the fourth quarter of 2022.

The Partnership sold over 2.2 billion gallons of fuel in the fourth quarter of 2023, an increase of 11% from the fourth quarter of 2022. Fuel margin for all gallons sold was 12.3 cents per gallon for the fourth quarter of 2023 compared to 12.8 cents per gallon in the fourth quarter of 2022.

For the year ended December 31, 2023, net income was $394 million compared to $475 million in 2022.

Adjusted EBITDA⁽¹⁾ for the year ended December 31, 2023 totaled $964 million, an increase of 5% compared to $919 million in 2022.

Distributable Cash Flow, as adjusted⁽¹⁾, for the year ended December 31, 2023 was $664 million, compared to $650 million in 2022.

For the year ended December 31, 2023, the Partnership sold approximately 8.3 billion gallons of fuel, an increase of 8% from the year ended December 31, 2022. Fuel margin for all gallons sold was 12.7 cents per gallon for the year ended December 31, 2023 compared to 12.8 cents per gallon for the year ended December 31, 2022.

Distribution

On January 25, 2024, the Board of Directors of SUN's general partner declared a distribution for the fourth quarter of 2023 of $0.8420 per unit, or $3.3680 per unit on an annualized basis. The distribution will be paid on February 20, 2024 to common unitholders of record on February 7, 2024.

Liquidity and Leverage

At December 31, 2023, SUN had approximately $400 million of borrowings against its revolving credit facility and other long-term debt of $3.2 billion. The Partnership maintained liquidity of approximately $1.1 billion at the end of the quarter under its $1.5 billion revolving credit facility. SUN's leverage ratio of net debt to Adjusted EBITDA⁽¹⁾, calculated in accordance with its credit facility, was 3.7 times at the end of the fourth quarter.

Capital Spending

SUN's total capital expenditures for the fourth quarter were $83 million, which included $50 million for growth capital and $33 million for maintenance capital. For the full year 2023, growth capital expenditures were $145 million and maintenance capital expenditures were $70 million.

Recent Developments

On January 22, 2024, the Partnership announced its entry into a definitive agreement to acquire NuStar Energy L.P. in an all equity unit-for-unit exchange valued at $7.3 billion. The transaction is expected to close in the second quarter of 2024, subject to customary closing conditions.
On January 11, 2024, the Partnership announced that it will acquire liquid fuels terminals in Amsterdam, Netherlands and Bantry Bay, Ireland from Zenith Energy for €170 million including working capital. The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions.
On January 11, 2024, SUN announced its entry into a definitive agreement for the sale of 204 convenience stores to 7-Eleven, Inc. for approximately $1.0 billion. The transaction is expected to close in the middle of 2024, subject to customary closing conditions.

2024 Business Outlook

The Partnership expects full year 2024 Adjusted EBITDA⁽¹⁾⁽²⁾ to be between $975 million and $1 billion. This guidance range excludes the impact of the pending acquisition of NuStar Energy L.P.

SUN's segment results and other supplementary data are provided after the financial tables below.

(1) 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.

(2) A reconciliation of non-GAAP forward looking information to corresponding GAAP measures cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amounts due to a variety of factors, including the unpredictability of commodity price movements and future charges or reversals outside the normal course of business which may be significant.

Earnings Conference Call

Sunoco LP management will hold a conference call on Wednesday, February 14, 2024, at 9:00 a.m. Central time (10:00 a.m. Eastern time) to discuss results and recent developments. To participate, dial 877-407-6184 (toll free) or 201-389-0877 approximately 10 minutes before the scheduled start time and ask for the Sunoco LP conference call. The call will also be accessible live and for later replay via webcast in the Investor Relations section of Sunoco's website at www.sunocolp.com under Webcasts and Presentations.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 40 U.S. states and territories as well as refined product transportation and terminalling assets. SUN's general partner is owned by Energy Transfer LP (NYSE: ET).

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. An extensive list of factors that can affect future results are discussed in the Partnership's Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.sunocolp.com

Contacts

Investors:

Scott Grischow, Treasurer, Senior Vice President – Finance
(214) 840-5660, scott.grischow@sunoco.com

Media:

Alexis Daniel, Manager – Communications
(214) 981-0739, alexis.daniel@sunoco.com

– Financial Schedules Follow –

SUNOCO LP
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)

December 31,
2023

December 31,
2022

ASSETS

Current assets:

Cash and cash equivalents

$ 29

$ 82

Accounts receivable, net

856

890

Accounts receivable from affiliates

Inventories, net

889

821

Other current assets

133

175

Total current assets

1,927

1,983

Property and equipment

2,970

2,796

Accumulated depreciation

(1,134)

(1,036)

Property and equipment, net

1,836

1,760

Other assets:

Operating lease right-of-use assets, net

506

524

Goodwill

1,599

1,601

Intangible assets, net

544

588

Other non-current assets

290

245

Investments in unconsolidated affiliates

124

129

Total assets

$ 6,826

$ 6,830

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$ 828

$ 966

Accounts payable to affiliates

170

109

Accrued expenses and other current liabilities

353

310

Operating lease current liabilities

Total current liabilities

1,373

1,406

Operating lease non-current liabilities

511

528

Long-term debt, net

3,580

3,571

Advances from affiliates

102

116

Deferred tax liabilities

166

156

Other non-current liabilities

116

111

Total liabilities

5,848

5,888

Commitments and contingencies

Equity:

Limited partners:

Common unitholders (84,408,014 and 84,054,765 units issued and outstanding as of December 31, 2023
and 2022, respectively)

978

942

Class C unitholders - held by subsidiary (16,410,780 units issued and outstanding as of December 31,
2023 and 2022)

—

Total equity

978

942

Total liabilities and equity

$ 6,826

$ 6,830

SUNOCO LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in millions, except per unit data)
(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

Revenues:

Motor fuel sales

$ 5,506

$ 5,793

$ 22,525

$ 25,216

Non motor fuel sales

392

370

Lease income

151

143

Total revenues

5,641

5,918

23,068

25,729

Cost of sales and operating expenses:

Cost of sales

5,492

5,647

21,703

24,350

General and administrative

126

120

Other operating

356

338

Lease expense

Loss (gain) on disposal of assets

(5)

(7)

(13)

Depreciation, amortization and accretion

187

193

Total cost of sales and operating expenses

5,684

5,822

22,433

25,051

Operating income (loss)

(43)

635

678

Other income (expense):

Interest expense, net

(55)

(47)

(217)

(182)

Other income, net

—

Equity in earnings of unconsolidated affiliates

Income (loss) before income taxes

(97)

430

501

Income tax expense (benefit)

(4)

Net income (loss) and comprehensive income (loss)

$ (106)

$ 55

$ 394

$ 475

Net income (loss) per common unit:

Common units - basic

$ (1.50)

$ 0.42

$ 3.70

$ 4.74

Common units - diluted

$ (1.50)

$ 0.42

$ 3.65

$ 4.68

Weighted average limited partner units outstanding:

Common units - basic

84,139,599

83,836,166

84,081,083

83,755,378

Common units - diluted

84,139,599

84,925,646

85,093,497

84,803,698

Cash distribution per unit

$ 0.8420

$ 0.8255

$ 3.3680

$ 3.3020

Key Operating Metrics

The following information is intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.

The key operating metrics by segment and accompanying footnotes set forth below are presented for the three months and years ended December 31, 2023 and 2022 and have been derived from our historical consolidated financial statements.

Three Months Ended December 31,

2023

2022

Fuel
Distribution
and
Marketing

All Other

Total

Fuel
Distribution
and
Marketing

All Other

Total

(dollars and gallons in millions, except profit per gallon)

Revenues:

Motor fuel sales

$ 5,354

$ 152

$ 5,506

$ 5,630

$ 163

$ 5,793

Non motor fuel sales

Lease income

Total revenues

$ 5,428

$ 213

$ 5,641

$ 5,692

$ 226

$ 5,918

Cost of sales:

Motor fuel sales

$ 5,324

$ 140

$ 5,464

$ 5,477

$ 139

$ 5,616

Non motor fuel sales

Lease

—

Total cost of sales

$ 5,331

$ 161

$ 5,492

$ 5,480

$ 167

$ 5,647

Net income (loss) and comprehensive income (loss)

$ (106)

$ 55

Adjusted EBITDA ⁽¹⁾

$ 210

$ 26

$ 236

$ 183

$ 55

$ 238

Operating Data:

Total motor fuel gallons sold

2,202

1,979

Motor fuel profit cents per gallon ⁽²⁾

12.3 ¢

12.8 ¢

Year Ended December 31,

2023

2022

Fuel
Distribution
and
Marketing

All Other

Total

Fuel
Distribution
and
Marketing

All Other

Total

(dollars and gallons in millions, except profit per gallon)

Revenues:

Motor fuel sales

$ 21,908

$ 617

$ 22,525

$ 24,508

$ 708

$ 25,216

Non motor fuel sales

148

244

392

140

230

370

Lease income

139

151

132

143

Total revenues

$ 22,195

$ 873

$ 23,068

$ 24,780

$ 949

$ 25,729

Cost of sales:

Motor fuel sales

$ 21,007

$ 572

$ 21,579

$ 23,585

$ 634

$ 24,219

Non motor fuel sales

124

104

131

Lease

—

Total cost of sales

$ 21,034

$ 669

$ 21,703

$ 23,612

$ 738

$ 24,350

Net income and comprehensive income

$ 394

$ 475

Adjusted EBITDA ⁽¹⁾

$ 853

$ 111

$ 964

$ 807

$ 112

$ 919

Operating Data:

Total motor fuel gallons sold

8,342

7,720

Motor fuel profit cents per gallon⁽²⁾

12.7 ¢

12.8 ¢

The following table presents a reconciliation of Adjusted EBITDA to net income and Adjusted EBITDA to Distributable Cash Flow, as adjusted, for the three months and years ended December 31, 2023 and 2022:

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

(dollars in millions)

Net income (loss) and comprehensive income (loss)

$ (106)

$ 55

$ 394

$ 475

Depreciation, amortization and accretion

187

193

Interest expense, net

217

182

Non-cash unit-based compensation expense

(Gain) loss on disposal of assets

(5)

(7)

(13)

Unrealized (gain) loss on commodity derivatives

(10)

(21)

Inventory adjustments

227

114

(5)

Equity in earnings of unconsolidated affiliates

(1)

(5)

(4)

Adjusted EBITDA related to unconsolidated affiliates

Other non-cash adjustments

Income tax expense (benefit)

(4)

Adjusted EBITDA

$ 236

$ 238

$ 964

$ 919

Adjusted EBITDA ⁽¹⁾

$ 236

$ 238

$ 964

$ 919

Adjusted EBITDA related to unconsolidated affiliates

(2)

(3)

(10)

Distributable cash flow from unconsolidated affiliates

Cash interest expense

(53)

(47)

(210)

(176)

Current income tax (expense) benefit

(4)

(6)

(23)

Transaction-related income taxes

—

(42)

Maintenance capital expenditures

(33)

(70)

(54)

Distributable Cash Flow

145

152

658

647

Transaction-related expenses

Distributable Cash Flow, as adjusted ⁽¹⁾

$ 148

$ 153

$ 664

$ 650

Distributions to Partners:

Limited Partners

$ 71

$ 69

$ 284

$ 277

General Partners

Total distributions to be paid to partners

$ 90

$ 87

$ 360

$ 349

Common Units outstanding - end of period

84.4

84.1

84.4

84.1

___________________________

⁽¹⁾

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 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 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, current income tax expense, maintenance capital expenditures and other non-cash adjustments. For Distributable Cash Flow, as adjusted, certain transaction-related adjustments and non-recurring expenses are excluded.

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 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 senior notes;

•

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.

Adjusted EBITDA reflects amounts for the unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliates as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent changes in lower of cost or market reserves on the Partnership's inventory. These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period.

⁽²⁾

Excludes the impact of inventory adjustments consistent with the definition of Adjusted EBITDA.

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SOURCE Sunoco LP

Sunoco LP Announces Fourth Quarter and Full Year 2023 Financial and Operating Results

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