Gallons sold increased 18%.
Susser Petroleum Partners LP (SUSP), a wholesale distributor of motor fuels, has reported financial and operating results for the first quarter ended March 31, 2014.
Net income for the quarter was $10.1 million, or $0.46 per unit, compared to $8.2 million, or $0.38 per unit, in the first quarter of 2013. Adjusted EBITDA totaled $15.7 million and distributable cash flow was $14.0 million, versus $11.2 million and $10.4 million, respectively, for the prior-year period.
Revenue for the first quarter totaled $1.2 billion, an 11.6% increase compared to $1.1 billion in the comparable period in 2013. The increase was driven by an 18.1% increase in gallons sold. In the first quarter of 2014, 63.0% of revenues were generated from motor fuel sales to affiliates, 36.5% were from motor fuel sales to other third-parties, and 0.5% came from rental and other income.
Gross profit for the quarter totaled $22.1 million, a 42.2% increase compared to $15.6 million in the first quarter of last year. On a weighted average basis, fuel margin for all gallons sold increased to 4.0 cents per gallon, compared to 3.6 cents per gallon in the prior-year period.
Affiliate customers as of March 31 include 629 Stripes and Sac-N-Pac convenience stores operated by parent company, Susser Holdings Corp. (SUSS), as well as SUSS’ sales of motor fuel under consignment arrangements at approximately 90 independently operated convenience stores. Motor fuel gallons sold to affiliates during the first quarter increased 10.7% versus the prior-year period to 277.8 million gallons. Gross profit on these gallons totaled $8.4 million, or three cents per gallon, versus $7.4 million, or three cents per gallon, in the comparable three-month period last year.
Third-party customers of SUSP include approximately 520 independent dealers under long-term fuel supply agreements, 13 independently operated consignment locations and approximately 1,900 other commercial customers. Total gallons sold to third parties increased year-over-year by 34.3% to 155.6 million gallons. Gross profit on these gallons was $8.8 million, or 5.7 cents per gallon, compared to $5.8 million, or five cents per gallon, in the prior-year period.
“Results from the Partnership continued to be robust for the first quarter of 2014, with an 18% year-over-year increase in fuel gallons sold and a 42% increase in gross profit,” said Rocky Dewbre, president and CEO. “The year-on-year growth was largely driven by the Gainesville Fuel and Sac-N-Pac/3W Warren Fuels acquisitions, and the growth in Stripes gallons supported by a robust Texas economy. As a result, we are pleased to announce our fourth consecutive increase in our quarterly distribution.
“We’re excited about the new opportunities ahead of us that are expected to result from the recently announced transaction in which Susser Holdings Corp., the owner of our general partner, will be acquired by Energy Transfer Partners, L.P. That transaction is expected to close in the third quarter. ETP has announced that it plans to begin dropping down Susser Holdings and its own Sunoco convenience store and fuel distribution assets to SUSP, which is expected to diversify our cash flows and accelerate our growth,” Dewbre said. Any future material drop downs will be subject to market conditions and the approval of SUSP’s conflicts committee.
New Dealer Update
Some 27 new contracted dealer sites were added in the first quarter, including 19 acquired in conjunction with the Sac-N-Pac/3W Warren Fuels Acquisition, and two sites were discontinued for a total of 616 third party dealer and SUSS consignment locations as of March 31. In addition to the 19 acquired dealer sites, Susser expects to add 28 to 45 new wholesale branded dealers in 2014.
Capital Spending and Financing
SUSP completed drop down transactions for seven Stripes convenience stores during the first quarter and two more so far in the second quarter. Since its initial public offering in September 2012, SUSP has completed the purchase and leaseback of 42 newly built stores for a cumulative cost of $169.6 million.
Including the Stripes store purchases, SUSP’s gross capital expenditures for the first quarter were $31.4 million, which included $31.2 million for growth capital and $0.2 million for maintenance capital. At March 31, SUSP had borrowings against its revolving line of credit of $230.0 million and other long-term debt of $4.1 million. Availability on the revolving credit facility after borrowings and letters of credit commitments, was $159.1 million.
Quarterly Distribution
SUSP has announced that the Board of Directors of its general partner has approved its quarterly distribution for the first quarter of 2014 of $0.5021 per unit. This amount corresponds to $2.01 per unit on an annualized basis and represents a 3.5% increase compared to the distribution for the previous quarter. The total distribution amount of approximately $11.0 million is being paid from distributable cash flow of $14.0 million for the quarter and reflects a distribution coverage ratio of 1.27 times. This distribution is 14.8% greater than the $0.4375 per unit paid in May 2013.
The distribution will be paid on May 30, 2014 to unit holders of record on May 20, 2014. Immediately prior to the distribution, there are expected to be 21,960,200 units outstanding, including all of the Partnership’s common and subordinated units.