SUSSER HOLDINGS CORPORATION 
By HOUSTON, May 7, 2014 /PRNewswire/ -- Susser Petroleum Partners LP (NYSE: SUSP), a wholesale distributor of motor fuels, today reported financial and operating results for the first quarter ended March 31, 2014.
Net income for the quarter was $10.1 million, or $0.46 per unit, compared to $8.2 million, or $0.38 per unit, in the first quarter of 2013. Adjusted EBITDA((1)) totaled $15.7 million and distributable cash flow((1)) was $14.0 million, versus $11.2 million and $10.4 million, respectively, for the prior-year period.
Revenue for the first quarter totaled $1.2 billion, an 11.6% increase compared to $1.1 billion in the comparable period in 2013. The increase was driven by an 18.1% increase in gallons sold. In the first quarter of 2014, 63.0% of revenues were generated from motor fuel sales to affiliates, 36.5% were from motor fuel sales to other third-parties, and 0.5% came from rental and other income.
Gross profit for the quarter totaled $22.1 million, a 42.2% increase compared to $15.6 million in the first quarter of last year. On a weighted average basis, fuel margin for all gallons sold increased to 4.0 cents per gallon, compared to 3.6 cents per gallon in the prior-year period.
Affiliate customers as of March 31 include 629 Stripes(®) and Sac-N-Pac((TM)) convenience stores operated by our parent company, Susser Holdings Corporation (NYSE: SUSS), as well as SUSS' sales of motor fuel under consignment arrangements at approximately 90 independently operated convenience stores. Motor fuel gallons sold to affiliates during the first quarter increased 10.7% versus the prior-year period to 277.8 million gallons. Gross profit on these gallons totaled $8.4 million, or 3.0 cents per gallon, versus $7.4 million, or 3.0 cents per gallon, in the comparable three-month period last year.
Third-party customers of SUSP include approximately 520 independent dealers under long-term fuel supply agreements, 13 independently operated consignment locations and approximately 1,900 other commercial customers. Total gallons sold to third parties increased year-over-year by 34.3% to 155.6 million gallons. Gross profit on these gallons was $8.8 million, or 5.7 cents per gallon, compared to $5.8 million, or 5.0 cents per gallon, in the prior-year period.
"Results from the Partnership continued to be robust for the first quarter of 2014, with an 18 percent year-over-year increase in fuel gallons sold and a 42 percent increase in gross profit," said Rocky B. Dewbre, President and Chief Executive Officer. "The year-on-year growth was largely driven by the Gainesville Fuel and Sac-N-Pac/3W Warren Fuels acquisitions, and the growth in Stripes gallons supported by a robust Texas economy. As a result, we are pleased to announce our fourth consecutive increase in our quarterly distribution.
"We're excited about the new opportunities ahead of us that are expected to result from the recently announced transaction in which Susser Holdings Corporation, the owner of our general partner, will be acquired by Energy Transfer Partners, L.P. That transaction is expected to close in the third quarter. ETP has announced that it plans to begin dropping down Susser Holdings and its own Sunoco convenience store and fuel distribution assets to SUSP, which is expected to diversify our cash flows and accelerate our growth," Dewbre said. Any future material drop downs will be subject to market conditions and the approval of SUSP's conflicts committee.
New Dealer Update
27 new contracted dealer sites were added in the first quarter including 19 acquired in conjunction with the Sac-N-Pac/3W Warren Fuels Acquisition, and two sites were discontinued for a total of 616 third party dealer and SUSS consignment locations as of March 31. In addition to the 19 acquired dealer sites, Susser expects to add 28 to 45 new wholesale branded dealers in 2014.
Capital Spending and Financing
SUSP completed drop down transactions for seven Stripes convenience stores during the first quarter and two more so far in the second quarter. Since its initial public offering in September 2012, SUSP has completed the purchase and leaseback of 42 newly built stores for a cumulative cost of $169.6 million.
Including the Stripes store purchases, SUSP's gross capital expenditures for the first quarter were $31.4 million, which included $31.2 million for growth capital and $0.2 million for maintenance capital. At March 31, SUSP had borrowings against its revolving line of credit of $230.0 million and other long-term debt of $4.1 million. Availability on the revolving credit facility after borrowings and letters of credit commitments, was $159.1 million.
(1) Adjusted
EBITDA and
distributable
cash flow
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,
and
reconciliation
to net
income for
the periods
presented.
Quarterly Distribution
SUSP announced today that the Board of Directors of its general partner has approved its quarterly distribution for the first quarter of 2014 of $0.5021 per unit. This amount corresponds to $2.01 per unit on an annualized basis and represents a 3.5 percent increase compared to the distribution for the previous quarter. The total distribution amount of approximately $11.0 million is being paid from distributable cash flow of $14.0 million for the quarter and reflects a distribution coverage ratio of 1.27 times. This distribution is 14.8% greater than the $0.4375 per unit paid in May 2013.
The distribution will be paid on May 30, 2014 to unitholders of record on May 20, 2014. Immediately prior to the distribution, there are expected to be 21,960,200 units outstanding, including all of the Partnership's common and subordinated units.
First Quarter Earnings Conference Call
Susser's management team will hold a conference call today at 10:00 a.m. ET (9:00 a.m. CT) to discuss first quarter 2014 results for both Susser Holdings Corporation and Susser Petroleum Partners LP. To participate in the call, dial 480-629-9819 10 minutes early and ask for the Susser conference call. The call will also be accessible live and for later replay via webcast in the Investor Relations section of Susser Holdings' web site at www.susser.com and Susser Petroleum Partners' web site at www.susserpetroleumpartners.com under Events and Presentations. A telephone replay will be available through May 14 by calling 303-590-3030 and using the pass code 4680249#.
Houston-based Susser Petroleum Partners LP is a publicly traded partnership formed by Susser Holdings Corporation to engage in the primarily fee-based wholesale distribution of motor fuels to Susser Holdings and third parties. Susser Petroleum Partners distributes approximately 1.6 billion gallons of motor fuel annually from major oil companies and independent refiners to Susser Holdings' Stripes® and Sac-N-Pac convenience stores, independently operated consignment locations, convenience stores and retail fuel outlets operated by independent operators and other commercial customers in Texas, New Mexico, Oklahoma and Louisiana.
Forward-Looking Statements
This news release contains "forward-looking statements." These statements are based on current plans expectations and the expected timing and impact of Susser Holdings Corporation's acquisition by Energy Transfer Partners and related transactions and involve a number of risks and uncertainties that could cause actual results and events to vary materially, including but not limited to: Susser Holdings' business strategy, operations and conflicts of interest with us; our ability to renew or renegotiate our long-term distribution contracts with our customers; changes in the price of and demand for the motor fuel that we distribute; our dependence on two principal suppliers; changing consumer preferences for alternative fuel sources or improvement in fuel efficiency; competition in the wholesale motor fuel distribution industry; seasonal trends; severe or unfavorable weather conditions; increased costs; our ability to make acquisitions; environmental laws and regulations; dangers inherent in the storage of motor fuel; our reliance on SHC for transportation services; reliance of our suppliers to provide trade credit terms to adequately fund our ongoing operations; acts of war and terrorism; dependence on our information technology systems; and other unforeseen factors. For a full discussion of these and other risks and uncertainties, refer to the "Risk Factors" section of the Partnership's most recently filed annual report on Form 10-K and subsequent quarterly filings. These forward-looking statements are based on and include our estimates as of the date hereof. Subsequent events and market developments could cause our estimates to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if new information becomes available, except as may be required by applicable law.
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 Susser Pertroluem Partners' distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Susser Petroleum Partners' distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
Contacts: Susser Petroleum Partners LP
Mary Sullivan, Chief Financial Officer
(832) 234-3600, msullivan@susser.com
Dennard -- Lascar Associates, LLC
Anne Pearson, Senior Vice President
(210) 408-6321, apearson@dennardlascar.com
Ben Burnham, Vice President
(773) 599-3745, bburnham@dennardlascar.com
Financial statements follow
Susser Petroleum Partners LP
Consolidated Statements of Operations and Comprehensive Income
Unaudited
Three Months Ended
------------------
March 31, March 31,
2013 2014
---- ----
(in thousands,
except unit and
per unit amounts)
Revenues:
Motor fuel sales to third
parties $356,762 $444,566
Motor fuel sales to affiliates 730,727 766,090
Rental income 1,629 3,923
Other income 1,299 2,008
----- -----
Total revenues 1,090,417 1,216,587
Cost of sales:
Motor fuel cost of sales to
third parties 350,965 435,723
Motor fuel cost of sales to
affiliates 723,309 757,723
Other 587 1,021
--- -----
Total cost of sales 1,074,861 1,194,467
--------- ---------
Gross profit 15,556 22,120
Operating expenses:
General and administrative 3,899 4,870
Other operating 631 2,034
Rent 204 249
Loss on disposal of assets 22 -
Depreciation, amortization and
accretion 1,821 3,326
----- -----
Total operating expenses 6,577 10,479
----- ------
Income from operations 8,979 11,641
Interest expense, net (683) (1,502)
Income before income taxes 8,296 10,139
Income tax expense (69) (7)
Net income and comprehensive
income $8,227 $10,132
====== =======
Net income per limited partner unit:
Common (basic and diluted) $0.38 $0.46
Subordinated (basic and
diluted) $0.38 $0.46
Weighted average limited partner units
outstanding:
Common units - public 10,925,000 10,938,053
Common units - affiliated 14,436 79,308
Subordinated units -
affiliated 10,939,436 10,939,436
Cash distribution per unit $0.4375 $0.5021
Susser Petroleum Partners LP
Consolidated Balance Sheets
December 31, March 31,
2013 2014
---- ----
unaudited
(in thousands, except
units)
Assets
Current assets:
Cash and cash
equivalents $8,150 $5,957
Accounts
receivable, net of
allowance for
doubtful accounts
of $323 at
December 31, 2013,
and $457 at March
31, 2014 69,005 97,875
Receivables from
affiliates 49,879 60,086
Inventories, net 11,122 35,805
Other current
assets 66 329
--- ---
Total current
assets 138,222 200,052
Property and
equipment, net 180,127 206,144
Other assets:
Marketable
securities 25,952 -
Goodwill 22,823 22,823
Intangible assets,
net 22,772 24,954
Other noncurrent
assets 188 190
--- ---
Total assets $390,084 $454,163
======== ========
Liabilities and equity
Current liabilities:
Accounts payable $110,432 $123,017
Accrued expenses
and other current
liabilities 11,427 15,177
Current maturities
of long-term debt 525 525
--- ---
Total current
liabilities 122,384 138,719
Revolving line of
credit 156,210 230,000
Long-term debt 29,416 3,543
Deferred tax
liability, long-
term portion 222 193
Other noncurrent
liabilities 2,159 1,827
----- -----
Total liabilities 310,391 374,282
------- -------
Commitments and contingencies:
Partners' equity:
Limited partners:
Common unitholders
-public
(10,936,352 units
issued and
outstanding at
December 31, 2013
and 10,941,456
units issued and
outstanding at
March 31, 2014) 210,269 210,364
Common unitholders
-affiliated
(79,308 units
issued and
outstanding at
December 31, 2013
and at March 31,
2014) 1,562 1,559
Subordinated
unitholders -
affiliated
(10,939,436 units
issued and
outstanding at
December 31, 2013
and March 31,
2014) (132,138) (132,042)
-------- --------
Total equity 79,693 79,881
------ ------
Total liabilities
and equity $390,084 $454,163
======== ========
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 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.
Three Months Ended
------------------
March 31, March 31,
2014
2013
----
(in thousands, except for selling
price
and gross profit per gallon)
Revenues:
Motor fuel sales
to third parties
(1) $356,762 $444,566
Motor fuel sales
to affiliates 730,727 766,090
Rental income 1,629 3,923
Other income 1,299 2,008
----- -----
Total revenue (1) 1,090,417 1,216,587
Gross profit:
Motor fuel gross
profit to third
parties 5,797 8,843
Motor fuel gross
profit to
affiliates 7,418 8,366
Rental income 1,629 3,923
Other 712 988
--- ---
Total gross profit $15,556 $22,120
Net income $8,227 $10,132
Adjusted EBITDA
(2) $11,227 $15,674
Distributable cash
flow (2) $10,435 $14,037
Operating Data:
Total motor fuel
gallons sold:
Third-party 115,831 155,595
Affiliated gallons 251,052 277,796
Average wholesale
selling price per
gallon $2.96 $2.79
Motor fuel gross
profit (cents per
gallon):
Third-party 5.0¢ 5.7¢
Affiliated 3.0¢ 3.0¢
Volume-weighted
average for all
gallons 3.6¢ 4.0¢
(1) In December 2013,
we revised our
presentation of
fuel taxes on
motor fuel sales
at our
consignment
locations to
present such fuel
taxes gross in
motor fuel sales.
Prior years'
motor fuel sales
have been
adjusted to
reflect this
revision.
(2) We define EBITDA
as net income
before net
interest expense,
income tax
expense and
depreciation and
amortization
expense. Adjusted
EBITDA further
adjusts EBITDA to
reflect certain
other non-
recurring and
non-cash items.
We define
distributable
cash flow as
Adjusted EBITDA
less cash
interest expense,
cash state
franchise tax
expense,
maintenance
capital
expenditures, and
other non-cash
adjustments.
Adjusted EBITDA
and distributable
cash flow are not
financial
measures
calculated in
accordance with
GAAP.
We believe EBITDA,
Adjusted EBITDA
and distributable
cash flow are
useful to
investors in
evaluating our
operating
performance
because:
Adjusted EBITDA is
used as a
performance
measure under our
revolving credit
facility;
securities
analysts and
other interested
parties use such
metrics as
measures of
financial
performance,
ability to make
distributions to
our unitholders
and debt service
capabilities;
they are used by
our management
for internal
planning
purposes,
including aspects
of our
consolidated
operating budget,
and capital
expenditures; and
distributable
cash flow
provides useful
information to
investors as it
is a widely
accepted
financial
indicator used by
investors to
compare
partnership
performance, as
it provides
investors an
enhanced
perspective of
the operating
performance of
our assets and
the cash our
business is
generating.
EBITDA, Adjusted
EBITDA and
distributable
cash flow are not
recognized terms
under GAAP and do
not purport to be
alternatives to
net income (loss)
as measures of
operating
performance or to
cash flows from
operating
activities as a
measure of
liquidity.
EBITDA, Adjusted
EBITDA and
distributable
cash flow have
limitations as
analytical tools,
and one should
not consider them
in isolation or
as substitutes
for analysis of
our results as
reported under
GAAP. Some of
these limitations
include:
they do not
reflect our total
cash
expenditures, or
future
requirements, for
capital
expenditures or
contractual
commitments;
they do not
reflect changes
in, or cash
requirements for,
working capital;
they do not
reflect interest
expense, or the
cash requirements
necessary to
service interest
or principal
payments on our
revolving credit
facility or term
loans;
although
depreciation and
amortization are
non-cash
charges, the
assets being
depreciated and
amortized will
often have to be
replaced in the
future, and
EBITDA and
Adjusted EBITDA
do not reflect
cash requirements
for such
replacements; and
because not all
companies use
identical
calculations, our
presentation of
EBITDA, Adjusted
EBITDA and
distributable
cash flow may not
be comparable to
similarly titled
measures of other
companies.
The following tables present a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow:
Three Months
Ended
-------------
March March
31, 31,
2013 2014
---- ----
(in
thousands)
Net income $8,227 $10,132
Depreciation, amortization
and accretion 1,821 3,326
Interest expense, net 683 1,502
Income tax expense 69 7
--- ---
EBITDA 10,800 14,967
Non-cash stock based
compensation 405 707
Loss on disposal of assets
and impairment charge 22 -
Adjusted EBITDA $11,227 $15,674
Cash interest expense 587 1,406
State franchise tax expense
(cash) 69 68
Maintenance capital
expenditures 136 163
Distributable cash flow $10,435 $14,037
===== =====
SOURCE Susser Petroleum Partners LP
