Filing identity and period
The supplied filing is the Form 10-K of Susser Petroleum Partners LP (NYSE: SUSP), for the fiscal year ended December 31, 2013, filed March 14, 2014. It is not a Sunoco LP filing; confirm the issuer before relying on this summary.
SUSP is a wholesale motor-fuel distributor and property lessor, not a retail-store operator. Its largest customer is Susser Holdings Corporation (SUSS), which also controls SUSP’s general partner. The 2012 comparison includes predecessor results before the September 2012 IPO and is not fully comparable with 2013.
Financial and operating highlights
| Metric | 2013 | Prior comparison / context |
|---|---|---|
| Revenue | $4.493 billion | Up 4.0% from $4.321 billion in 2012; fuel taxes and fuel costs make reported revenue large relative to the fee-based economics. |
| Gross profit | $71.0 million | Up 37.8% from $51.5 million. Gross profit per gallon averaged 3.7 cents, versus 2.8 cents in historical 2012; comparison is affected by the IPO and accounting classification changes. |
| Net income | $37.0 million; $1.69 per limited-partner unit | 2012 net income was $17.6 million and $0.42 per unit. The periods differ in tax treatment and predecessor/partnership composition. |
| Adjusted EBITDA | $51.9 million | Versus $31.7 million in 2012; non-GAAP measure and not a substitute for GAAP earnings or cash flow. |
| Distributable cash flow | $47.7 million | 2012 was $10.5 million, but includes only the post-IPO period; not a like-for-like annual comparison. |
| Operating cash flow | $50.7 million | Versus $16.5 million in 2012; working capital and the post-IPO business structure affect comparability. |
| Capital spending | $116.3 million, including $115.5 million of expansion capital and $0.8 million of maintenance capital | Expansion spending included $104.2 million for SUSS store purchase-and-leasebacks. |
| Cash and marketable securities | $8.2 million cash; $26.0 million marketable securities | At December 31, 2013; securities collateralized the term loan and were intended for future capital spending. |
| Debt and revolving availability | $186.2 million total debt; $233.8 million unused revolver availability | $156.2 million drawn on the $400 million revolver; $25.9 million term loan was collateralized by securities. The Partnership reported covenant compliance. |
| Distributions | $1.8441 per unit declared for 2013 | Minimum quarterly distribution is $0.4375 per unit. A $0.4851 distribution for Q4 2013 was paid in February 2014. |
Material changes and management outlook
- Total fuel volumes rose 8.4% to 1.571 billion gallons. Affiliate gallons increased 18.4% to 1.053 billion, while third-party gallons declined 7.6% to 517.8 million; figures are affected by reclassification of SUSS consignment volumes.
- Affiliate fuel sales earned a contractual margin of about 3 cents per gallon after the IPO, unlike the predecessor’s historical zero-margin affiliate sales. This materially affects year-over-year gross profit comparisons.
- Rental income increased to $10.1 million from $5.0 million, mainly following sale-and-leaseback transactions. SUSP had completed 33 of its option transactions for Stripes stores by year-end, with $10.7 million annualized rent from those properties.
- SUSS planned 27–33 new store openings in 2014 and expected to sell 25–33 newly constructed stores to SUSP. These are SUSS plans, not a quantified SUSP earnings or distribution forecast. SUSP also reported completing the Gainesville Fuel contribution in 2013.
- The revolver commitment increased from $250 million to $400 million in December 2013. Approximately $182.1 million of debt carried variable rates; a one-percentage-point rate increase would raise annual interest expense by about $1.8 million, based on year-end debt.
- There is no clear numerical SUSP guidance for 2014 revenue, earnings, cash flow, or distributions. Management said available liquidity sources were expected to meet short- and long-term needs, subject to operating performance and access to financing.
Risks, contingencies, and unusual items
- Customer concentration is substantial: SUSS represented approximately 66% of 2013 revenue, 45% of gross profit, and 67% of gallons sold. Its distribution contract has no minimum volume obligation.
- Supplier concentration is also material: Valero supplied approximately 34% and Chevron 17% of 2013 motor-fuel purchases. The Chevron agreement expires in August 2014; the Valero agreement expires in July 2018. Renewal on similar terms is not assured.
- Fuel distribution is competitive and low-margin; results are exposed to fuel demand, supplier discounts, seasonality, weather, regional concentration, customer credit, and transportation continuity. SUSS arranges transportation for deliveries.
- Debt covenants and variable interest rates may constrain distributions and growth. The minimum quarterly distribution is not guaranteed; SUSP requires about $9.6 million per quarter to pay the stated minimum on outstanding units.
- Related-party dependence and conflicts merit attention: SUSS controls the general partner, provides transportation and personnel, and received fuel payments, reimbursements, distributions, and property-sale proceeds. SUSP reimbursed affiliates $13.6 million for allocated overhead and other expenses in 2013.
- SUSP reported no known material environmental liabilities at contributed sites and no material litigation expected to affect results. It recorded a $105,000 long-term environmental remediation reserve; SUSS’s indemnity for pre-IPO environmental conditions expires in September 2015. Dealer obligations for possible branding-incentive repayments are not recorded as probable, but SUSP could be responsible if a dealer defaults.
- Reported 2013 income tax expense was $0.44 million, compared with $5.03 million in 2012, partly because SUSP is generally a pass-through entity after the IPO. Partnership tax status and the limit on non-qualifying income remain important to cash flows and investor tax treatment.
- Fuel-tax presentation was revised to report consignment fuel taxes gross. The change increased prior-year reported sales and cost of sales but did not affect gross profit, net income, balance sheets, or cash flows.
Important facts for investors to verify
- Confirm the issuer: the document covers Susser Petroleum Partners LP, not Sunoco LP.
- Review the audited statements and notes for the 2012 predecessor-to-partnership transition, fuel-tax reclassification, and non-GAAP reconciliations.
- Assess SUSS’s financial health, purchasing volumes, contract terms, supplier renewals, and the economics of future store sale-and-leasebacks.
- Verify current debt balances, revolver availability, covenant headroom, interest-rate exposure, and the use and collateral status of marketable securities.
- Evaluate whether operating cash flow can support expansion spending, debt service, and distributions; distributions are discretionary and not guaranteed.