Gallons sold increases 40% versus 1Q 2014 volume.
Sunoco LP (SUN) announced financial and operating results for the three months ended March 31, 2015 and provided an update on recent developments.
Adjusted EBITDA totaled $43.7 million as compared to adjusted EBITDA in the first quarter of 2014 to $15.7 million. Distributable cash flow for the quarter was $29.6 million, compared to $14.0 million a year ago.
Revenue was $1.1 billion, down 7.1% compared to $1.2 billion in the same period last year. The decline was the result of significantly lower retail and wholesale motor fuel prices, mostly offset by a 40% increase in gallons sold, the contribution of merchandise sales from the MACS and Aloha stores and higher rental income.
Total gross profit was $87.0 million, compared to $22.1 million in the first quarter of 2014. Key drivers of the increase were the MACS and Aloha acquisitions along with organic growth in gallons sold.
Net income attributable to partners was $17.1 million, or $0.44 per diluted unit, compared to $10.1 million, or $0.46 per diluted unit, in the first quarter of 2014.
On a weighted average basis, fuel margin for all gallons sold increased to 8.8 cents per gallon, compared to 4.0 cents per gallon a year earlier. Sales of retail gallons by MACS and Aloha—and a change in the wholesale fuel customer mix related to the MACS and Aloha acquisitions—drove most of the margin increase. At March 31, SUN operated 155 retail convenience stores and fuel outlets in Virginia, Hawaii, Tennessee, Maryland and Georgia.
Affiliate customers included 663 Stripes and Sac-N-Pac convenience stores operated by a subsidiary of parent company, Energy Transfer Partners L.P. (ETP), as well as sales of motor fuel to ETP subsidiaries for resale under consignment arrangements at approximately 85 independently operated convenience stores. Motor fuel gallons sold to affiliates during the first quarter increased 9.5% from a year ago to 304.3 million gallons. SUN realized 3.0 cents per gallon gross profit on these gallons, which totaled $9.1 million in the period versus $8.4 million in the same period a year ago.
Third-party customers included 731 independent dealers under long-term fuel supply agreements, 59 independently operated consignment locations and approximately 1,600 other commercial customers. Total gallons sold to third parties increased year-over-year by 50.8% to 234.7 million gallons. Gross profit on these gallons was $25.2 million, or 9.7 cents per gallon, compared to $8.8 million, or 5.7 cents per gallon, in the prior-year period.
Retail gallons sold by MACS and Aloha locations during the first quarter totaled 67.8 million gallons. Gross profit on these gallons was $21.2 million, or 31.9 cents per gallon. Merchandise sales from these locations totaled $47.5 million and contributed $12.7 million of gross profit.
The Partnership announced on April 1 the acquisition of a 31.58% equity interest in Sunoco LLC, from an affiliate of ETP in a transaction valued at approximately $816 million. SUN paid $775 million in cash and issued to ETP 795,482 new SUN units valued at $40.8 million.
On May 4, 2015, the Board of Directors of SUN’s general partner declared a distribution for the first quarter of 2015 of $0.645 per unit, which corresponds to $2.58 per unit on an annualized basis. This represents a 7.5% increase compared to the distribution for the fourth quarter of 2014 and a 29% increase compared with the first quarter of 2014. This is the eighth consecutive quarterly increase. The distribution will be paid on May 29 to unitholders of record on May 19. SUN achieved a 1.2 times distribution coverage ratio for the quarter.
SUN’s gross capital expenditures for the first quarter were $37.2 million, which includes $2.9 million in maintenance capital. Of the $34.3 million in growth capital, $26.1 million was for purchase and leaseback transactions for six Stripes stores, and $5.4 million related to growth in the dealer business, including new dealer supply contracts.