Sunoco LP has announced financial and operating results for the three-month period ended Sept. 30, 2016.
Revenue totaled $4.1 billion, a decrease of 16.3%, compared to $4.9 billion in the third quarter of 2015. The decline was the result of a 47.1-cent per gallon decrease in the average selling price of fuel partly offset by increased merchandise sales and additional gallons sold.
Total gross profit was $577.4 million, compared to $524.8 million in the third quarter of 2015. Key drivers of the increase were higher wholesale motor fuel and merchandise profits partly offset by a decrease in retail motor fuel gross profit.
Income from operations was $104.2 million, versus $93.4 million in the third quarter of 2015, reflecting increased gross profit, partly offset by increased general and administrative and other operating expenses. The increase in general and administrative expenses was primarily related to relocation costs and associated expenses incurred with the opening of a corporate office in Dallas, while the increase in other operating expenses was driven by operating more stores on a year-over-year basis.
Net income attributable to partners was $44.6 million, or 24-cent per diluted unit, versus $27.5 million, or 30-cent per diluted unit, in the third quarter of 2015.
Adjusted EBITDA for the quarter totaled $188.9 million, compared with $253.7 million in the third quarter of 2015. The unfavorable year-over-year comparison reflects lower fuel margins in both the retail and wholesale segments.
Distributable cash flow attributable to partners, as adjusted, was $124.1 million, compared to $112.4 million a year earlier.
On a weighted-average basis, fuel margin for all gallons sold decreased to 15.6 cents per gallon, compared to 18.6 cents per gallon in the third quarter of 2015. The decrease was primarily attributable to increased product costs experienced during the third quarter.
Net income attributable to partners for the wholesale segment was $47.3 million compared to a net income of $2.6 million a year ago. Adjusted EBITDA was $87.9 million, versus $107.0 million in the third quarter of last year. Total wholesale gallons sold were 1,371.2 million, compared with 1,308.8 million in the third quarter of 2015, an increase of 4.8%. This includes gallons sold to consignment stores and third-party customers, including independent dealers, fuel distributors and commercial customers. The Partnership earned 10 cents per gallon on these volumes, compared to 12.5 cents per gallon a year earlier.
Net loss attributable to partners for the retail segment was $2.8 million compared to a net income of $24.9 million a year ago. Adjusted EBITDA was $101.1 million, versus $146.7 million in the third quarter of last year. Total retail gallons sold increased by 1.8% to 651.4 million gallons as a result of the contribution from third party acquisitions and new-to-industry locations opened during the last 12 months. The Partnership earned 27.5 cents per gallon on these volumes, compared to 31.2 cents per gallon a year earlier.
Total merchandise sales increased by 2.7% from a year ago to $605.3 million, reflecting the contribution from third party acquisitions and new-to-industry locations opened during the last 12 months. Merchandise sales contributed $192.3 million of gross profit with a retail merchandise margin of 31.8%, a 40 basis point increase from the third quarter of 2015.
Same-store merchandise sales decreased by 2.1%, reflecting continued weakness in SUN’s convenience store operations in Texas, particularly in the oil producing regions.
Same-store fuel sales decreased by 3.5% as a result of weakness throughout the state of Texas, particularly lower year-over-year activity in oil producing markets. In the Texas oil producing regions, same-store merchandise sales decreased by 13%, and same-store fuel sales declined 13.7%. Excluding the oil producing regions, same-store sales decreased by 0.4%, and same-store gallons decreased by 2.3%.
As of Sept. 30, SUN operated approximately 1,345 convenience stores and retail fuel outlets along the East Coast, in the Southwest and in Hawaii. Third party operated sites totaled 5,600 locations.
SUN’s other recent accomplishments include the following:
Completed the acquisition of the fuels business from Emerge Energy Services LP for $171.5 million. The fuels business includes two transmix processing plants with attached refined product terminals located in the Birmingham, Ala. and greater Dallas metro areas and engages in the processing of transmix and the distribution of refined fuels. These two processing plants have attached refined product terminals with over 800,000 barrels of storage capacity.
Completed the previously announced acquisition of the convenience store, wholesale motor fuel distribution and commercial fuels distribution businesses serving East Texas and Louisiana from Denny Oil Company for approximately $54.6 million plus inventory on hand at closing, subject to closing adjustments. The acquisition includes six company-operated locations and approximately 127 supply contracts with dealer-owned and dealer-operated sites and over 500 commercial customers. This transaction closed in the fourth quarter on Oct. 12, 2016.