November 10, 2016 [OPIS] - Sunoco LP reported third-quarter adjusted EBITDA of $188.9 million, down from $253.7 million in the year-ago period. The unfavorable year-over-year comparison reflects lower fuel margins in both the retail and the wholesale segments, the partnership said.
On a weighted-average basis, fuel margin for all gallons sold decreased to 15.6cts/gal, compared to 18.6cts/gal in the prior year. Sunoco attributed the decline primarily to increased product costs.
Revenue totaled $4.1 billion, down 16.3% compared to $4.9 billion in the third quarter of last year. Sunoco said the decline resulted from a 47.1cts/gal decrease in the average selling price of fuel that was partially offset by
higher merchandise sales and an increase in fuel volume sold.
Total gross profit was $577.4 million, up from $524.8 million in the year-ago period. The company linked the increase to higher wholesale motor fuel and merchandise profits partly offset by a decline in retail motor fuel gross profit.
Sunoco’s wholesale segment saw an increase in 3Q net income to $47.3 million from $2.6 million last year. The partnership wholesaled 1.37 billion gal, up from 1.31 billion gal, a 4.8% year-over-year increase. The volume includes sales to consignment stores, independent dealers, fuel distributors and commercial customers. The partnership earned 10cts/gal at wholesale, versus 12.5cts/gal a year earlier.
The retail segment lost $2.8 million, versus net income of $24.9 million a year ago. Sunoco said it retailed 651.4 million gal, up 1.8% as a result of third-party acquisitions and new-to-industry locations opened over the last 12 months. The partnership earned 27.5cts/gal at retail, down from 31.2cts/gal a year earlier.
Sunoco reported a 2.7% increase in third-quarter merchandise sales to $605.3 million, reflecting third-party acquisitions and new-to-industry locations opened in the last 12 months. Merchandise sales contributed $192.3 million in gross profit with a retail merchandise margin of 31.8%, a 40-basis-point increase from the prior year.
However, same-store merchandise sales dropped 2.1%, due to continued weakness in Sunoco’s convenience store operations in Texas, particularly oil-producing regions, the partnership said. Same-store fuel sales declined 3.5% also due to economics those areas. Without the slump in oil-producing regions, same-store sales decreased by 0.4% and same-store gallons declined by 2.3%.
Sunoco LP is a master limited partnership that operates about 1,345 c-stores and retail fuel outlets along the East Coast, in the Southwest and in Hawaii. The partnership distributes motor fuel to about 6,900 c-stores, independent dealers, commercial customers and distributors in more than 30 states. Its parent, Energy Transfer Equity LP, owns Sunoco’s general partner and incentive distribution rights.
