Susser Petroleum Partners LP (SUSP), a wholesale distributor of motor fuels, reported financial and operating results for its 2013 third quarter, representing the three months ended Sept. 30, 2013.
Net income for the quarter was $9.6 million, or $0.43 per diluted unit. Adjusted EBITDA totaled $13.8 million, and distributable cash flow was $12.7 million. Total revenue for the quarter was $1,163.7 million.
“As a result of another solid quarter of growth in distributable cash flow, we’re pleased to announce our second consecutive distribution increase,” said Sam Susser, chairman of the Board of Directors of the general partner of SUSP. “Fuel volumes remain strong, and we added 10 new Stripes convenience store locations to our real estate portfolio through purchase leaseback transactions. SUSP now owns 30 Stripes stores. The Gainesville Fuel business was contributed to SUSP on September 6, and the integration of that business is off to a very good start.”
The discussion and analysis below compares actual results for the three- and nine-month periods ended Sept. 30, 2013 to pro forma results for the comparable periods in 2012. The pro forma results 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, 2012. Please refer to the section below titled, “Factors Affecting Comparability and Explanation of Pro Forma Results” for additional information.
Third Quarter 2013 Compared to Pro Forma Third Quarter 2012
Revenue for the third quarter of 2013 totaled $1,163.7 million, a 4.6% increase compared to $1,112.9 million (pro forma) in the comparable period of 2012. The increase was driven by an 8.8% increase in gallons sold, partially offset by a decline in the selling price per gallon. In the third quarter, 66.7% of revenues were generated from motor fuel sales to affiliates, 33% were from motor fuel sales to other third parties, and 0.3% came from rental and other income. Third quarter results reflect the contribution of the Gainesville Fuel business to SUSP from SUSS on Sept. 6.
Gross profit for the quarter totaled $18.4 million, a 26% increase compared to pro forma gross profit of $14.6 million in the third quarter of 2012. On a weighted average basis, fuel margin for all gallons sold increased to 3.7 cents per gallon in the third quarter of 2013 compared to a pro forma 3.6 cents per gallon in the prior-year period.
Affiliate customers as of Sept. 30, 2013 included 576 Stripes convenience stores operated by parent company Susser Holdings Corp. (SUSS), as well as approximately 90 independently-operated convenience stores, through which SUSS sells fuel through consignment arrangements. Motor fuel gallons sold to affiliates during the third quarter increased 8.5% versus the prior-year period to 268.6 million gallons. Gross profit on these gallons totaled $8.1 million, or 3.0 cents per gallon, versus a pro forma $7.4 million, or 3.0 cents per gallon, in the comparable three-month period last year.
Third-party customers of SUSP included approximately 490 independent dealers under long-term fuel supply agreements, approximately 10 independently operated consignment locations and approximately 1,850 other commercial customers as of Sept. 30, 2013. Total sales of motor fuel to third parties increased year-over-year by 9.3% for the quarter, to 131.0 million gallons. Gross profit on these gallons was $6.8 million, or 5.2 cents per gallon, compared to $5.6 million, or 4.7 cents per gallon, in the prior-year period on a pro forma basis.
YTD 2013 Compared to Pro Forma YTD 2012
Revenue for the first nine months of 2013 totaled $3,363.0 million, a 2.6% increase compared to pro forma revenue of $3,277.0 million in the first nine months of 2012. Gross profit for the period totaled $50.9 million, a 20.8% increase compared to pro forma gross profit of $42.2 million in the prior-year period. Total sales of motor fuel to affiliates increased year-over-year by 7.4% to 783.7 million gallons, and sales to third parties increased by 3.7% to 371.7 million gallons. On a weighted average basis, fuel margin for all gallons sold increased to 3.6 cents per gallon in the first nine months of 2013 from 3.5 cents per gallon pro forma in the comparable period of 2012.
Capital Spending and Financing
SUSP completed purchase and leaseback transactions for 10 Stripes convenience stores during the third quarter for $39.5 million. No additional purchase and leaseback transactions have been completed so far in the fourth quarter. Since its initial public offering in Sept.2012, SUSP has completed the purchase and leaseback of 30 Stripes stores for a cumulative cost of $121.0 million, including post-completion true-up.
Including the Stripes store purchases, SUSP’s gross capital expenditures for the third quarter were $43.9 million, which included $0.2 million for maintenance capital. At Sept. 30, SUSP had borrowings against its revolving line of credit of $142.8 million and other long-term debt of $41.9 million, a portion of which was collateralized by $37.9 million of marketable securities.