HOUSTON -- Stronger retail and wholesale fuel margins as well as increased merchandise sales and merchandise margins led Sunoco LP to “favorable” adjusted EBITDA for first-quarter 2016 of $158.9 million, compared with $128.2 million in first-quarter 2015.
On March 31, Sunoco LP completed the final dropdown from parent Energy Transfer Partners LP (ETP), which included the remaining 68.42% interest in Sunoco LLC and the retail marketing assets, for approximately $2.2 billion. A full quarter's contribution from the partnership's acquisition of the remaining 68.42% interest in Sunoco LLC and the retail marketing assets from ETP is included in the first-quarter results and the comparable period from the prior year.
Comparable period results from the prior year also include a full quarter's contribution from the July 2015 Susser Holdings Corp. and April 2015 Sunoco LLC dropdowns.
Revenue was $3.2 billion, a decrease of 25.6%, compared to $4.3 billion in first-quarter 2015. The decrease was the result of a 60-cent per-gallon decrease in the average selling price of fuel as well as a 2.4% decrease in total gallons sold.
Total gross profit was $498.7 million, compared to $441.1 million in first-quarter 2015. Key drivers of the increase were higher fuel margins, an increase in merchandise gross margin as well as the impact of acquisitions made and new-to-industry (NTI) sites opened during 2015.
Income from operations was $91.8 million, versus $65.3 million in first-quarter 2015, reflecting an increase in gross profit partly offset by increases in operating and depreciation expenses.
Net income was $62 million, versus $49.3 million in first-quarter 2015, reflecting an increase in operating income partly offset by an increase in interest expense.
On a weighted-average basis, fuel margin for all gallons sold in the first quarter increased to 14.7 cents per gallon, compared to 12.4 cents per gallon in first-quarter 2015.
Adjusted EBITDA for the wholesale segment was $102.2 million in first-quarter 2016 versus $82 million in first-quarter 2015. Total wholesale gallons sold in the first quarter were 1,232.6 million, compared with 1,296.6 million in first-quarter 2015, a decrease of 4.9%.
This includes gallons sold to consignment stores and third-party customers, including independent dealers, fuel distributors and commercial customers. The partnership earned 11.4 cents per gallon on these volumes, compared to 9.6 cents per gallon a year earlier.
Adjusted EBITDA for the retail segment was $56.7 million in first-quarter 2016 versus $46.2 million in the first quarter of last year. Total retail gallons sold increased by 3.2% to 608.1 million gallons as a result of acquisitions made and NTI sites opened during 2015. The partnership earned 21.3 cents per gallon on these volumes, compared to 18.6 cents per gallon a year earlier.
Merchandise sales in the first quarter increased by 8.5% from a year ago to $524.1 million, reflecting acquisitions made and NTI sites opened during 2015. Merchandise sales contributed $166.4 million of gross profit from a retail merchandise margin of 31.7%.
Same-store merchandise sales increased by 2.8%, reflecting strong performance across all of SUN's convenience-store operations, while same-store fuel sales declined 1.0%, as a result of inclement weather on the East Coast and lower year-over-year activity in oil producing regions in South and West Texas. In these oil producing regions, same-store merchandise sales decreased by 13.3%, and same-store fuel sales declined 16%. Excluding these oil producing regions, same-store sales increased by 5.9% and same store fuel sales increased by 1.1%. Both same-store merchandise sales and same-store fuel sales benefited from a leap day in the first quarter by approximately 1.1%.
As of March 31, Sunoco LP operated approximately 1,315 convenience stores and retail fuel outlets along the East Coast, in the Southwest and in Hawaii. Third-party operated locations totaled 5,525 locations.
In other company news, Sunoco has appointed Thomas R. Miller as chief financial officer of Sunoco GP LLC, the general partner of Sunoco, effective May 9, 2016.
Houston-based Sunoco LP is a master limited partnership (MLP) that operates approximately 1,300 retail fuel sites and convenience stores (including APlus, Stripes, Aloha Island Mart and Tigermarket brands) and distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors located in 30 states at approximately 6,800 sites. Its parent, Energy Transfer Equity LP, owns Sunoco's general partner and incentive distribution rights.
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