Filing and reporting period
The supplied filing is Susser Petroleum Partners LP’s unaudited Form 10-Q for the three months ended March 31, 2014, compared with Q1 2013. This does not match the requested company name, Sunoco LP; verify the issuer before relying on this summary.
Susser Petroleum Partners distributes motor fuel and other petroleum products, principally in Texas and nearby states. A substantial portion of its business is with affiliate Susser Holdings Corporation (SUSS).
Key financial results
| Metric | Q1 2013 | Q1 2014 | Change |
|---|---|---|---|
| Total revenue | $1,090.4 million | $1,216.6 million | +11.6% |
| Gross profit | $15.6 million | $22.1 million | +42.2% |
| Operating income | $9.0 million | $11.6 million | +29.6% |
| Net income | $8.2 million | $10.1 million | +23.2% |
| Net income per limited partner unit | $0.38 | $0.46 | Increased |
| Adjusted EBITDA (non-GAAP) | $11.2 million | $15.7 million | Increased |
| Distributable cash flow (non-GAAP) | $10.4 million | $14.0 million | Increased |
| Operating cash flow | $17.1 million | $(34.2) million | Turned negative |
Motor fuel volume rose to 433.4 million gallons from 366.9 million. Average wholesale selling price declined to $2.79 per gallon from $2.96; volume-weighted fuel gross profit increased to 4.0 cents per gallon from 3.6 cents. Higher volumes, third-party margin gains, acquisitions and increased rental income contributed to gross-profit growth. Operating expenses rose 59.3% to $10.5 million, including higher G&A, operating costs and depreciation.
Financial position, liquidity and distributions
- At March 31, 2014, cash was $6.0 million, total assets $454.2 million and total liabilities $374.3 million.
- Total debt was $234.1 million: $230.0 million outstanding on the revolving facility and approximately $4.1 million in other notes. The $25.9 million term loan outstanding at year-end was repaid during the quarter. Revolver availability was $159.1 million, including $10.9 million in standby letters of credit; the partnership reported compliance with financial covenants.
- Operating cash outflow reflected higher fuel inventory and a temporary increase in receivables following implementation of new logistics software. Management said these timing issues were resolved in the first 30 days of Q2.
- Capital expenditures and intangible purchases totaled $31.2 million. Expansion capital included $27.5 million for store purchase-and-leaseback transactions with SUSS.
- The partnership declared a $0.5021-per-unit distribution, totaling $11.0 million, payable May 30, 2014. It reported a prior-quarter payment of $10.7 million. Distributions are not a legal obligation and depend on available cash and reserves.
Material developments, outlook and risks
- On April 27, 2014, SUSS agreed to be acquired by Energy Transfer Partners, L.P. (ETP), subject to shareholder, regulatory and other customary conditions. ETP would also acquire SUSS’s general partner interest, incentive distribution rights and approximately 50.2% of Susser Petroleum Partners’ units. The filing gives no completion date.
- Management said liquidity sources, including operating cash, revolver borrowings and potential debt or unit issuance, were expected to meet short- and long-term needs, but noted financing availability and terms are not assured. No specific earnings or volume guidance was provided.
- Principal disclosed risks include dependence on SUSS and two principal suppliers, fuel-price and demand changes, contract renewals, competition, weather and seasonality, acquisition execution, regulation, operational hazards, trade-credit availability, IT dependence and variable interest rates. A one-percentage-point change in floating rates would change annualized interest expense by approximately $2.3 million at quarter-end debt levels.
- The partnership reported no legal proceedings. It disclosed no impairment charge in Q1 and no material internal-control changes. A prior-period presentation revision increased Q1 2013 motor-fuel sales and cost of sales by $9.3 million each, with no effect on gross profit or net income.
Important facts to verify
- Confirm whether this Susser Petroleum Partners LP filing is the intended filing for the requested Sunoco LP.
- Confirm the status and final terms of the proposed ETP–SUSS merger and its implications for control, distribution rights and related-party arrangements.
- Track working-capital normalization after the logistics-software implementation, cash generation and revolver usage.
- Review debt covenant headroom, floating-rate exposure and the sustainability of distributions relative to cash flow and capital spending.
- Assess the scale and returns of affiliate transactions, acquisitions and store purchase-and-leaseback investments.