(Sunoco, 6.May.2021) — Sunoco LP (NYSE: SUN) reported financial and operating results for the three-month period ended 31 March 2021.
The Partnership’s solid first quarter results demonstrate the durability of its business and management’s capacity to navigate difficult operating conditions as SUN faced the combined challenges in the quarter from persistently rising commodity prices, ongoing impacts of COVID-19, and the effects of Winter Storm Uri.
For the three months ended 31 March 2021, net income was $154mn versus a net loss of $128mn in the first quarter of 2020.
Adjusted EBITDA for the quarter was $157mn compared with $209mn in the first quarter of 2020. The decline in Adjusted EBITDA reflects lower reported fuel volume and margins partially offset by a decline in total operating expenses.
Distributable Cash Flow, as adjusted, for the quarter was $108mn, compared to $159mn a year ago.
Volumes and Margins
The Partnership sold 1.76 billion gallons of fuel in the first quarter of 2021 versus 1.90 billion in the first quarter of 2020, a 7.5% decline. Fuel margin for all gallons sold was 10.3 cents per gallon for the quarter compared to 13.1 cents per gallon a year ago. Fuel margin for the first quarter of 2021 included an $18.5mn annual make-up payment under the fuel supply agreement with 7-Eleven, Inc. versus a $12.8mn annual make-up payment in first quarter of 2020. SUN expects volumes to continue to improve through the remainder of the year with increased economic activity.
Brownsville, Texas Refined Products Terminal
During the quarter, the Partnership advanced its midstream diversification strategy with the development of a refined products terminal at the Port of Brownsville. The greenfield terminal, with 560,000 barrels of storage, will provide supply flexibility to SUN’s existing fuel distribution business in South Texas, and position SUN to sell into the growing fuels export market to Mexico. SUN expects the terminal to be in service by the second quarter of 2022 with a total investment of approximately $55mn of which approximately $40mn will be invested in 2021.
Distribution and Coverage
On 22 April 2021, the Board of Directors of SUN’s general partner declared a distribution for the first quarter of 2021 of $0.8255 per unit, or $3.3020 per unit on an annualized basis. The distribution will be paid on 19 May 2021 to common unitholders of record on 11 May 2021. SUN’s current quarter cash coverage was 1.25 times and trailing twelve months coverage was 1.35 times.
Liquidity and Leverage
At 31 March 2021, SUN had $381mn of borrowings against its revolving credit facility and other long-term debt of $2.7bn. The Partnership maintained ample liquidity of approximately $1.1bn at the end of the quarter under its $1.5bn revolving credit facility that matures in July 2023. SUN’s leverage ratio of net debt to Adjusted EBITDA, calculated in accordance with its credit facility, was 4.42 times at the end of the first quarter compared to 4.39 times at the end of the first quarter of 2020.
SUN’s total capital expenditures for the first quarter were $18mn, which included $13mn for growth capital and $5mn for maintenance capital. For the full-year 2021, SUN continues to expect maintenance capital expenditures of approximately $45mn. With the addition of $40mn for the Brownsville terminal, SUN now expects 2021 growth capital expenditures of $150mn, compared to prior guidance of at least $120mn.
2021 Business Outlook Reaffirmed
The Partnership continues to expect full-year 2021 Adjusted EBITDA of $725mn to $765mn. SUN expects 2021 fuel volumes of 7.25 to 7.75 billion gallons, fuel margins of 11.0 to 12.0 cents per gallon, and operating expenses(3) of $440mn to $450mn.
Earnings Conference Call
Sunoco LP management will hold a conference call on Thursday, 6 May at 9:00 a.m. CT (10:00 a.m. ET) 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 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.