“We are pleased to be reporting such favorable results of Susser Petroleum Partners for the first time as a publicly traded partnership and to be announcing our first quarterly distribution,” says Susser CEO.
Susser Petroleum Partners LP (SUSP or the Partnership), reported financial and operating results for the third quarter ended Sept. 30, 2012.
Pro Forma Results of Operations
SUSP completed its initial public offering of common units representing limited partnership interests on Sept. 25, 2012, and is providing certain actual and pro forma results for the three- and nine- month periods ended Sept. 30, 2011 and 2012.
The pro forma results show actual gallons sold but reflect revenues and gross margins as if the Partnership had completed its initial public offering and related transactions and had been operating as an independent entity under its current contractual arrangements with affiliates since Jan. 1, 2011.
Management believes the pro forma presentation provides investors with a more relevant comparison to historical and future periods as opposed to actual results.
For the third quarter of 2012, pro forma total revenue increased 12% to $1.1 billion compared to $993.3 million in the third quarter of 2011. The increase was driven primarily by an 11% increase in total gallons sold and a 0.9% increase in the average selling price per gallon.
Of the total third quarter pro forma revenues, 66.6% was from motor fuel sales to affiliates, 33.2% was from motor fuel sales to other third-parties, 0.1% came from rental income, and 0.1% was from other income.
Affiliate customers as of Sept. 30, 2012 include 552 Stripes convenience stores operated by parent company Susser Holdings Corp. (SUSS), as well as SUSS’ sales of motor fuel under consignment arrangements at 88 of its independently operated convenience stores.
Total gallons of motor fuel sold to affiliates during the full third quarter increased 8.2% versus the prior-year period to 247.6 million gallons. Pro forma gross profit on motor fuel sold to affiliates totaled $7.4 million versus $6.9 million in the comparable three-month period last year. Both periods’ pro forma gross profit reflects the contracted margin of three cents per gallon (CPG) for fuel sold to Stripes stores and consignment locations.
Third-party customers of SUSP include 484 independent dealers under long-term fuel supply agreements and approximately 1,300 commercial customers. Total gallons of motor fuel sold to third parties increased year-over-year by 17.4% to 119.8 million gallons for the quarter. Pro forma gross profit on motor fuel sold to these third-party customers was $5.6 million, or 4.7 CPG, compared to $4.5 million, or 4.4 CPG, in the prior-year period.
Pro forma total gross profit increased by 14.8% to $14.6 million for the third quarter of 2012 compared to the prior-year period. On a weighted average basis, pro forma fuel margin for all gallons sold increased from 3.4 CPG in the third quarter of 2011 to 3.6 CPG in the most recent quarter.
Reported Financial Results
Net income for the full quarter was $3.6 million, which includes the results of Susser Petroleum Company LLC, the accounting predecessor, from July 1, 2012 through Sept. 24, 2012 and the Partnership for the six-day period from Sept. 25, 2012 to Sept. 30, 2012.
Limited partners’ interest in net income subsequent to the closing of the initial public offering on Sept. 25, representing a six-day period, was $574,000, or $0.03 per common unit.
Adjusted EBITDA totaled $7.7 million for the full quarter. For the six-day period of SUSP operations, Adjusted EBITDA was $666,000 and distributable cash flow was $644,000. Adjusted EBITDA and distributable cash flow are non-GAAP financial measures.
Concurrent with the IPO, SUSP entered into a $250 million revolving credit facility agreement with a syndicate of banks and a $180.7 million term loan and security agreement. A portion of the $206 million IPO proceeds were invested in short-term marketable securities, which will be used to pre-fund capital expenditures. At Sept. 30, unused availability on the SUSP revolver was $237.2 million. At the end of September, SUSP reported $195.5 million of cash and marketable securities on the balance sheet, and its total debt outstanding was $181.8 million, for net debt less cash and marketable securities of ($13.7) million.
“We are pleased to be reporting such favorable results of Susser Petroleum Partners for the first time as a publicly traded partnership and to be announcing our first quarterly distribution,” said Sam Susser, chairman and CEO. “The Partnership is off to a strong start, with robust year-over-year growth in fuel volumes and revenues, reflecting the strength of the Texas economy. We anticipate further opportunities for substantial growth, both through new stores at the Stripes chain and through new relationships with independent dealers and commercial customers, as well as through growing rental income from the purchase and lease-back of newly constructed Stripes stores.”
SUSP also announced that the board of directors of its general partner has approved its first quarterly distribution for the third quarter of 2012 of $0.0285 per unit. This prorated amount corresponds to six days of its minimum quarterly cash distribution of $0.4375 per unit, or $1.75 on an annualized basis. The total distribution amount of approximately $624,000 is being paid from distributable cash flow of $644,000 for the six-day period.
The proration period is from the closing date of SUSP’s initial public offering on Sept. 25 through the end of the quarter on Sept. 30. The distribution will be paid Nov. 29 to unit-holders of record on Nov. 19. Immediately prior to the distribution there will be 21,878,872 units outstanding, including all of the Partnership’s common and subordinated units.