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Sunoco LP Announces Third Quarter Financial and Operating Results
DALLAS, Nov. 7, 2017 /PRNewswire via COMTEX/ -- Copyright (C) 2017 PR Newswire. All rights reserved

-- Maintained quarterly distribution of 82.55 cents and reported current quarter cash coverage of 1.28 times

-- Generated Net Income of $138 million, Adjusted EBITDA(1) of $199 million and Distributable Cash Flow(1), as adjusted, of $132 million

-- Decreased leverage ratio to 5.59 times at the end of the third quarter, with available liquidity of $847 million

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Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today announced financial and operating results for the three-month period ended September 30, 2017.

Revenue totaled $2.6 billion, an increase of 17.9 percent, compared to $2.2 billion in the third quarter of 2016. The increase was the result of the average wholesale selling price of fuel being 25 cents per gallon higher than last year and additional wholesale gallons sold.

Total gross profit increased to $251 million, compared to $192 million in the third quarter of 2016, primarily as a result of higher rental and other gross profits.

Income from continuing operations was $132 million, versus $33 million in the third quarter of 2016. General and administrative expenses decreased $15 million from the third quarter of 2016 to $30 million due to decreases in costs associated with relocation, employee termination, and lower contract labor and professional fees since the company substantially completed its transition to its Dallas office during 2016. Other operating expenses decreased $1 million from the third quarter of 2016 to $49 million.

Income from discontinued operations, net of income taxes, was $6 million including a $44 million impairment charge, versus income from discontinued operations, net of income taxes, of $12 million in the third quarter of 2016.

Net income was $138 million, or $1.08 per diluted unit, versus $45 million, or $0.24 per diluted unit, in the third quarter of 2016.

Adjusted EBITDA for the quarter totaled $199 million, compared with $189 million in the third quarter of 2016. The year-over-year increase reflects increased rental and other gross profits and increased gallons sold in wholesale operations.

Distributable Cash Flow, as adjusted, was $132 million, compared to $124 million a year ago. This year-over-year increase reflects higher Adjusted EBITDA and decreased maintenance capital spend partly offset by increased cash interest expense, an income tax expense compared to a tax benefit last year and a preferred distribution in this year's third quarter.

On a weighted-average basis, fuel margin for all gallons sold was 14.9 cents per gallon, compared to 15.6 cents per gallon in the third quarter of 2016. The 0.7 cents per gallon decrease was primarily attributable to lower margins in the retail segment.

Net income for the wholesale segment was $92 million compared to $40 million a year ago primarily due to the impact of inventory valuation adjustments. Adjusted EBITDA was $87 million, versus $81 million in the third quarter of last year. Total wholesale gallons sold were 1,388 million, compared to 1,371 million in the third quarter of 2016, an increase of 1.2 percent as a result of strength in the Southwest geography. The Partnership earned 10.0 cents per gallon on these volumes, compared to 10.0 cents per gallon a year earlier.

Net income for the retail segment was $46 million compared to a net income of $5 million a year ago. Adjusted EBITDA was $112 million, versus $108 million in the third quarter of last year. Total retail gallons sold increased by 0.8 percent to 656 million gallons primarily due to increased gallons sold across SUN's Southwest geography. The Partnership earned 25.3 cents per gallon on these volumes, compared to 27.5 cents per gallon a year earlier.

Total merchandise sales increased by 2.1 percent from a year ago to $618 million(2), reflecting an increase in merchandise and restaurant sales across the Texas oil producing regions. Merchandise sales contributed $198 million of gross profit(3) with a retail merchandise margin of 32.1 percent, an increase of 0.3 percentage points from the third quarter of 2016.

Same-store merchandise sales decreased by 0.1 percent and same store gallons decreased by 2.0 percent during the third quarter, reflecting weakness across the East Coast. In the Texas oil producing regions, same-store merchandise sales increased by 10.7 percent, and same-store gallons increased 8.3 percent.

As of September 30, 2017, SUN operated 1,346 convenience stores and retail fuel outlets along the East Coast, in the Southwest and in Hawaii. Third party wholesale customers and sites totaled 7,898.

SUN's segment results and other supplementary data are provided after the financial tables below.

Distribution

On October 26, 2017 the Board of Directors of SUN's general partner declared a distribution for the third quarter of 2017 of $0.8255 per unit, which corresponds to $3.3020 per unit on an annualized basis. The distribution will be paid on November 14 to unitholders of record on November 7.

SUN's distribution coverage ratio for the third quarter was 1.28 times. The distribution coverage ratio on a trailing 12-month basis was 1.04 times.

Liquidity

At September 30, SUN had borrowings against its revolving line of credit of $644 million and other long-term debt of $3.6 billion. Availability on the revolving credit facility after borrowings and letters of credit commitments was $847 million. In the third quarter of 2017, SUN did not issue any common units through its at-the-market equity program. The leverage ratio of debt to Adjusted EBITDA, calculated in accordance with SUN's credit agreements, including the revolving credit facility and Term Loan, was 5.59 times at the end of the third quarter.

-- Adjusted EBITDA and Distributable Cash Flow, as adjusted, are non-GAAP financial measures of performance that have limitations and should not be considered as a substitute for net income. Please refer to the discussion and tables under "Reconciliations of Non-GAAP Measures" later in this news release for a discussion of our use of Adjusted EBITDA and Distributable Cash Flow, as adjusted, and a reconciliation to net income.

-- Includes $599 million in merchandise sales from discontinued operations.

-- Includes $193 million in merchandise gross profit from discontinued operations.

Earnings Conference Call

Sunoco LP management will hold a conference call on Wednesday, November 8, at 9:30 a.m. CT (10:30 a.m. ET) to discuss third quarter results and recent developments. To participate, dial 201-389-0877 approximately 10 minutes early and ask for the Sunoco LP conference call. The call will also be accessible live and for later replay via webcast in the Investor Relations section of Sunoco's website at www.SunocoLP.com under Events and Presentations.

Sunoco LP (NYSE: SUN) is a master limited partnership that operates 1,346 convenience stores and retail fuel sites and distributes motor fuel to 7,898 convenience stores, independent dealers, commercial customers and distributors located in 30 states. Our parent -- Energy Transfer Equity, L.P. (NYSE: ETE) -- owns SUN's general partner and incentive distribution rights.

Forward-Looking Statements

This press release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. An extensive list of factors that can affect future results are discussed in the Partnership's Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.SunocoLP.com

Qualified Notice

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat 100 percent of Sunoco LP's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Sunoco LP's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Contacts

Investors: Scott Grischow, Senior Director - Investor Relations and Treasury (214) 840-5660, scott.grischow@sunoco.com

Derek Rabe, CFA, Senior Analyst - Investor Relations and Finance (214) 840-5553, derek.rabe@sunoco.com

Media: Alyson Gomez, Director - Communications (469) 646-1758, alyson.gomez@sunoco.com

Jeamy Molina, Senior Manager - PR & Communications (469) 646-1776, jeamy.molina@sunoco.com

Financial Schedules Follow -

Key Operating Metrics

The following information is intended to provide investors with a reasonable basis for assessing our historical operations but should not serve as the only criteria for predicting our future performance. We operate our business in two primary operating divisions, wholesale and retail, both of which are included as reportable segments.

Key operating metrics set forth below are presented as of and for the three months ended September 30, 2017 and 2016 and have been derived from our historical consolidated financial statements.

The operating results for the discontinued operations are shown in the retail operations segment for the purposes of presenting the key operating metrics.

The following table sets forth, for the periods indicated, information concerning key measures we rely on to gauge our operating performance:

The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow for the three months ended September 30, 2017 and 2016:

Capital Spending

SUN's gross capital expenditures for the third quarter were $41 million, which included $31 million for growth capital and $10 million for maintenance capital.

Excluding acquisitions, SUN expects to spend approximately $150 million on growth capital and approximately $70 million on maintenance capital for the full year 2017.

Growth capital spending includes the rebuilding of locations SUN is operating on the Indiana Toll Road.

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SOURCE Sunoco LP

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