Sunoco LP Announces Second Quarter 2020 Financial and Operating Results

Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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, as
adjusted, and a reconciliation to net income.

(2)

Operating expenses include general and administrative, other operating and lease expenses.

SUNOCO LP
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)

June 30,
 2020

December 31,
2019

Assets

Current assets:

Cash and cash equivalents

$

33

$

21

Accounts receivable, net

270

399

Receivables from affiliates

6

12

Inventories, net

283

419

Other current assets

50

73

Total current assets

642

924

Property and equipment

2,188

2,134

Accumulated depreciation

(749)

(692)

Property and equipment, net

1,439

1,442

Other assets:

Finance lease right-of-use assets, net

26

29

Operating lease right-of-use assets, net

522

533

Goodwill

1,555

1,555

Intangible assets

906

906

Accumulated amortization

(289)

(260)

Intangible assets, net

617

646

Other noncurrent assets

184

188

Investment in unconsolidated affiliate

136

121

Total assets

$

5,121

$

5,438

Liabilities and equity

Current liabilities:

Accounts payable

$

296

$

445

Accounts payable to affiliates

29

49

Accrued expenses and other current liabilities

242

219

Operating lease current liabilities

19

20

Current maturities of long-term debt

12

11

Total current liabilities

598

744

Operating lease noncurrent liabilities

524

530

Revolving line of credit

158

162

Long-term debt, net

2,894

2,898

Advances from affiliates

138

140

Deferred tax liability

94

109

Other noncurrent liabilities

97

97

Total liabilities

4,503

4,680

Commitments and contingencies

Equity:

Limited partners:

Common unitholders

   (83,040,781 units issued and outstanding as of June 30, 2020 and

    82,985,941 units issued and outstanding as of December 31, 2019)

618

758

Class C unitholders - held by subsidiaries

   (16,410,780 units issued and outstanding as of June 30, 2020 and 

     December 31, 2019)

—

—

Total equity

618

758

Total liabilities and equity

$

5,121

$

5,438

SUNOCO LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in millions, except per unit data)
(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenues:

Motor fuel sales

$

1,992

$

4,366

$

5,158

$

7,949

Non motor fuel sales

54

74

125

148

Lease income

34

35

69

70

Total revenues

2,080

4,475

5,352

8,167

Cost of sales and operating expenses:

Cost of sales

1,722

4,206

4,886

7,528

General and administrative

25

34

59

61

Other operating

56

73

151

157

Lease expense

16

16

30

30

Loss on disposal of assets and impairment charges

6

2

8

50

Depreciation, amortization and accretion

47

47

92

92

Total cost of sales and operating expenses

1,872

4,378

5,226

7,918

Operating income

208

97

126

249

Other income (expense):

Interest expense, net

(44)

(43)

(88)

(85)

Other income (expense), net

—

6

—

3

Equity in earnings of unconsolidated affiliate

1

—

2

—

Income before income taxes

165

60

40

167

Income tax expense

8

5

11

3

Net income and comprehensive income

$

157

$

55

$

29

$

164

Net income (loss) per common unit:

Common units - basic

$

1.65

$

0.44

$

(0.12)

$

1.51

Common units - diluted

$

1.64

$

0.43

$

(0.12)

$

1.50

Weighted average common units outstanding:

Common units - basic

83,030,286

82,742,323

83,022,027

82,726,842

Common units - diluted

83,598,730

83,509,987

83,022,027

83,455,021

Cash distributions per unit

$

0.8255

$

0.8255

$

1.6510

$

1.6510

Three Months Ended June 30,

2020

2019

Fuel
Distribution
and
Marketing

All Other

Total

Fuel
Distribution
and
Marketing

All Other

Total

(dollars and gallons in millions, except gross profit per gallon)

Revenues:

Motor fuel sales

$

1,930

$

62

$

1,992

$

4,193

$

173

$

4,366

Non motor fuel sales

20

34

54

16

58

74

Lease income

29

5

34

31

4

35

Total revenues

$

1,979

$

101

$

2,080

$

4,240

$

235

$

4,475

Gross profit (1):

Motor fuel sales

$

275

$

19

$

294

$

171

$

19

$

190

Non motor fuel sales

13

17

30

13

31

44

Lease

29

5

34

31

4

35

Total gross profit

$

317

$

41

$

358

$

215

$

54

$

269

Net income (loss) and comprehensive income (loss)

$

161

$

(4)

$

157

$

39

$

16

$

55

Adjusted EBITDA (2)

$

160

$

22

$

182

$

119

$

33

$

152

Operating Data:

Total motor fuel gallons sold

1,515

2,054

Motor fuel gross profit cents per gallon (3)

13.5

¢

9.1

¢

Three Months Ended June 30,

2020

2019

(in millions)

Adjusted EBITDA

Fuel distribution and marketing

$

160

$

119

All other

22

33

Total Adjusted EBITDA

182

152

Depreciation, amortization and accretion

(47)

(47)

Interest expense, net

(44)

(43)

Non-cash unit-based compensation expense

(3)

(3)

Loss on disposal of assets and impairment charges

(6)

(2)

Unrealized loss on commodity derivatives

—

(3)

Inventory adjustments

90

4

Equity in earnings of unconsolidated affiliate

1

—

Adjusted EBITDA related to unconsolidated affiliate

(3)

—

Other non-cash adjustments

(5)

2

Income tax expense

(8)

(5)

Net income and comprehensive income

$

157

$

55

Adjusted EBITDA (2)

$

182

$

152

Adjusted EBITDA related to unconsolidated affiliate

3

—

Distributable cash flow from unconsolidated affiliate

(3)

—

Cash interest expense

42

41

Current income tax expense

14

4

Maintenance capital expenditures

4

6

Distributable Cash Flow

122

101

Transaction-related expenses

—

—

Distributable Cash Flow, as adjusted (2)

$

122

$

101

Distributions to Partners:

Limited Partners

$

69

$

68

General Partners

18

18

Total distributions to be paid to partners

$

87

$

86

Common Units outstanding - end of period

83.0

82.7

Distribution coverage ratio (4)

1.41x

1.17x

___________________________

(1)

Excludes depreciation, amortization and accretion.

(2)

Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion
expense, allocated non-cash compensation expense, unrealized gains and losses on commodity derivatives and inventory
adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core
operations, such as gain or loss on disposal of assets and non-cash impairment charges. We define Distributable Cash Flow,
as adjusted, as Adjusted EBITDA less cash interest expense, including the accrual of interest expense related to our long-term
debt which is paid on a semi-annual basis, Series A Preferred distribution, current income tax expense, maintenance capital
expenditures and other non-cash adjustments.

We believe Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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;
• our management uses them for internal planning purposes, including aspects of our consolidated operating budget, and capital expenditures; and
• Distributable Cash Flow, as adjusted, provides useful information to investors as it is a widely accepted financial indicator used by investors to compare partnership performance, and as it provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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. Adjusted EBITDA and Distributable Cash Flow, as adjusted, 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 loan;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; and
• as not all companies use identical calculations, our presentation of Adjusted EBITDA and Distributable Cash Flow, as adjusted, may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA reflects amounts for the unconsolidated affiliate based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliate.
Adjusted EBITDA related to unconsolidated affiliate excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such
as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliate, such
exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliate. We do not control our unconsolidated affiliate;
therefore, we do not control the earnings or cash flows of such affiliate. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliate as an analytical tool should be
limited accordingly. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent changes in lower of cost or market reserves on the Partnership's inventory.
These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period.

(3)

Includes other non-cash adjustments and excludes the impact of inventory adjustments consistent with the definition of Adjusted
EBITDA.

(4)

The distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided
by distributions expected to be paid to partners of Sunoco LP in respect of such a period.