HOUSTON -- Its acquisitions of the MACS-Tigermarket and Aloha Petroleum deals led Sunoco LP to a tripling of EBITDA in its fourth quarter, with near-record fuel margins also fanning its red-hot cash-flow engine.
During Houston-based Sunoco's investor call, Bob Owens, CEO, said earnings before interest, taxes, depreciation and amortization (EBITDA) was $65.5 million, compared to $14.1 million in fourth-quarter 2013. Distributable cash flow was $51.1 million, with approximately 70% coming from its purchase of Mid-Atlantic Convenience Stores (MACS), which included the Tigermarket c-stores, and Aloha Petroleum.
"Our gross profit increased by 365% for the quarter and gallons sold increased by 46% over the same period last year," Owens said, detailing the two acquisitions--Aloha in Hawaii in December 2014 and MACS in Virginia, Maryland, Tennessee and Georgia in October 2014, the first "dropdown" of assets from its parent company, Dallas-based Energy Transfer Partners (ETP), to Sunoco.
The company reported net income for the quarter of $30.1 million, compared to $9.5 million in fourth-quarter 2013.
Revenue in the fourth quarter was $1.3 billion, up approximately 20% compared to $1.1 billion in the comparable period last year. The increase was primarily the result of the contribution of $39.3 million of merchandise sales from the MACS and Aloha convenience stores, along with a 46% increase in gallons sold--a number partly offset by the effect of a 55-cent-per-gallon decrease in the average selling price per gallon of fuel.
Total gross profit for the latest quarter was $93.2 million, compared to $20 million in fourth-quarter 2013.
Along with MACS and Aloha, key drivers of the increase were organic growth in gallons sold and favorable fuel margins.
On a weighted average basis, fuel margin for all gallons sold increased to 13 cents per gallon, compared to 3.8 cents per gallon a year earlier. Sales of retail gallons, a change in the wholesale-fuel customer mix and increased fuel margins resulting from declining crude oil prices drove most of the margin increase.
"When we look at the fourth quarter and the full year of 2014, we're really pleased with the performance across the company and to highlight some of those standout metrics, fuel volumes increased during the quarter by 46% over prior year, driven largely by acquisitions," Owens said. "But excluding the acquisitions, [Sunoco's] existing [locations] still delivered a strong 13% growth in gallons for the quarter."
Growth in gallons also includes affiliated sales to 30 new Stripes stores and the 47 Sac-N-Pac stores acquired last year that are supplied by Sunoco LP, said Mary Sullivan, CFO for Sunoco. The Stripes chain, which is part of ETP's retail marketing segment, consists of more than 660 convenience stores, and it is Sunoco's largest wholesale fuel customer.
"We expect to realize further gallon growth in 2015 as Stripes plans to build an additional 35 to 40 stores," she said. "Stripes' Texas markets are among the fastest growing in the U.S. in terms of population, job creation and economic activity."
Although falling oil prices are affecting the rig count and the economic activity in the Eagle Ford Shale and Permian Basin areas, Sullivan said "there is enough diversification through the system that we were able to take advantage of lower fuel prices for consumers in our other regions."
Average fuel margin for all gallons sold for the quarter on weighted average basis increased by about 9 cents to an average of 13 cents per gallon, reflecting partly the new mix of gallons as well as the record fuel margins we saw in the quarter, she said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.