Sunoco Spills the Beans: Big Beat, Higher Payout, & Brighter Outlook

Zinger Key Points
  • Sunoco exceeds revenue consensus, sells over 2.1 billion gallons of fuel.
  • Adjusted distributable cash flow rises to $176 million; EPS surpasses consensus at $2.26.

Sunoco LP SUN shares are trading higher after it reported first-quarter FY24 revenues of $5.50 billion, which exceeded the consensus of $5.23 billion.

The partnership sold over 2.1 billion gallons of fuel (+9% Y/Y), with the fuel margin for all gallons sold at 11.7 cents per gallon (vs 12.9 cents per gallon in the prior year quarter).

Adjusted distributable cash flow of $176 million was higher than $160 million a year ago.

Adjusted EBITDA increased to $242 million from $221 million a year ago. EPS of $2.26 surpassed the consensus of $1.22.

Total capital expenditures were $41 million, including $27 million for growth capital and $14 million for maintenance capital.

Distribution: On May 3, Sunoco quarterly increased distribution by 4% to $0.8756 per unit, payable on May 20 to unitholders of record as of May 13.

As of March-end, the company had a long-term debt of $3.8 billion. The partnership maintained liquidity of approximately $870 million at the end of the quarter under its $1.5 billion revolving credit facility.  

Outlook: Sunoco revised FY24 guidance for adjusted EBITDA to $1.46 billion to $1.52 billion, reflecting NuStar and Zenith acquisitions and divestiture.

In January 2024, the company disclosed a deal for selling 204 convenience stores to 7-Eleven for around $1 billion, including customary fuel and merchandise inventory adjustments

The NuStar deal is projected to boost Sunoco’s stability and credit profile and expects to realize at least $150 million in expenses and commercial synergies

Investors can gain exposure to the stock via InfraCap MLP ETF AMZA and Global X MLP ETF MLPA.

Price Action: Sunoco shares are trading up by 0.22% at $55.71 at the last check Wednesday. 

Photo via Shutterstock

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