HOUSTON -- When discussing Sunoco LP’s first-quarter performance on the company’s latest earnings call, CEO Bob Owens acknowledged “challenging market dynamics” within the industry; however, the Houston-based company delivered “solid” results, including the eighth consecutive period of distribution increase, he said.
Driving Sunoco’s continued growth is a variety of factors. The recent acquisitions of Aloha Petroleum and Mid-Atlantic Convenience Stores (MACS) have played a part, but Owens outlined a number of other aspects contributing to the company’s success, today and beyond.
1. A diverse business model. Owens repeatedly highlighted Sunoco’s diversity, both from a geographic and business asset standpoint. Because the company has assets on the retail and wholesale side, it’s possible to survive and thrive in a less-than-ideal fuel environment.
“If you look at the direction of crude oil pricing, we make good money at high crude oil prices and we make good money at low crude oil prices,” he said.
“Although many other [master limited partnership] MLPs are hurt by global commodity prices, oil prices, our business is generally agnostic to the absolute price of oil,” Owens continued. “We believe strongly that our diversity in channels of trade and geography, as well as asset mix, makes us a much more stable investment during periods of volatility.”
2. Convenience growth. Owens also highlighted that the fact that merchandise sales from Sunoco-operated convenience stores were some of the fastest growing markets in the United States, adding that this “also helped stabilize our business.”
The company is optimistic about the potential of its c-store properties thanks to shifting consumer dynamics.
“People are increasingly comfortable purchasing an array of products, specifically prepared food, in convenience stores,” said Owens, pointing to successful programs already in place at Stripes, Aloha and Sunoco locations.
The performance of the Laredo Taco Co. program at Stripes locations inherited from Susser is a prime example of consumers’ willingness to purchase food at c-stores, he said.
“The growth has been exceeding GDP growth and we expect that to continue,” he said. “There is a very long runway as people manage one of their dearest resources: time. We think convenience and convenience stores continue to be a really attractive business.”
3. A smart acquisition strategy. When discussing the success with MACS and Aloha, Owens said the acquisitions checked “all our boxes” in terms of attractive candidates: they had strong assets, were located in attractive markets with lots of demand and Sunoco was able to acquire them at a good price. The success of these transactions aren’t just promising for Sunoco’s current bottom-line, but for the company’s overall acquisition strategy.
“I’m pleased to say both Aloha and Mac’s performance are exceeding expectations,” he said. “In addition to diversifying the asset mix, they have created a great foundation from which to expand the retail business as we move forward.”
Although Owens promised Sunoco will continue to seek out new opportunities to grow through acquisition, he said the company would continue to practice the level-headed approach used for MACS, Aloha and others.
“We’re looking at a number of different possibilities and we will look at a lot more than we’ll pull the trigger on,” said Owens. “We’re only going to make a deal if it makes sense for our unit-holders.”
Sunoco LP, formerly Susser Petroleum Partners LP, is an MLP that distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors. It is majority owned and managed by Energy Transfer Partners LP (ETP), which also owns Sunoco Inc. and Stripes LLC.
Click here for details on Sunoco LP's quarterly performance. And click here for analysis of ETP's plans.
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