Sources: Refuel Owner Explores $1.5-Billion-Plus Sale Of Convenience-Store Operator

Sunoco LP SUN reported a third-quarter 2024 loss of 26 cents per unit, which missed the Zacks Consensus Estimate for earnings of $1.53 per unit. The reported figure also declined from the year-ago quarter’s earnings of $2.95 per unit.

Total quarterly revenues of $5.75 billion missed the Zacks Consensus Estimate of $5.97 billion. The top line also decreased from $6.32 billion reported in the year-ago quarter.

Weak quarterly results can be attributed to increased operating costs and higher general and administrative expenses.

Sunoco LP Price, Consensus and EPS Surprise

Sunoco LP price-consensus-eps-surprise-chart | Sunoco LP Quote

Segmental Performance

Sunoco posts financial results under three reportable segments — Fuel Distribution, Pipeline Systems and Terminals.

Fuel Distribution: Adjusted EBITDA in the segment increased to $253 million from $234 million in the comparable period of 2023. The segment benefited from higher motor fuel sales and improved fuel margin per gallon compared to the previous year.

Pipeline Systems: The unit reported adjusted EBITDA of $136 million compared with $2 million in the prior-year quarter. This figure included one-time transaction-related expenses worth $11 million. The increase was primarily driven by the acquisition of NuStar.

Terminals: The segment reported adjusted EBITDA of $67 million, up from $21 million reported in the corresponding period of 2023. The rise was primarily due to the recent acquisitions of NuStar, Zenith European and Zenith Energy terminals across the East Coast and Midwest.

In terms of volume, the partnership sold 2.1 billion gallons of fuel in the reported quarter, up 1% from the prior-year quarter’s level. The figure also beat our estimate of 2 billion gallons.

Motor fuel gross profit per gallon was 12.8 cents compared with the year-ago level of 12.5 cents.

Sunoco reported a total operating income of $107 million, which decreased from $338 million in the prior-year quarter.

For the quarter ended Sept. 30, 2024, the net income was $2 million compared with $272 million in the third quarter of 2023.

Distributable Cash Flow

The adjusted distributable cash flow totaled $349 million, up from the year-ago level of $181 million.

Expenses & Capital Expenditure

The total cost of sales and operating expenses amounted to $5.64 billion, down from $5.98 billion a year ago.

The partnership incurred a capital expenditure of $93 million, comprising $67 million in growth capital and $26 million in maintenance capital.

Balance Sheet

As of Sept. 30, 2024, Sunoco had cash and cash equivalents of $116 million and a net long-term debt of $7.26 billion.

SUN’s Zacks Rank and Key Picks

Currently, SUN carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the energy sector are Archrock Inc. AROC, The Williams Companies, Inc. WMB and FuelCell Energy FCEL. Archrock presently sports a Zacks Rank #1 (Strong Buy), while The Williams Companies and FuelCell Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States. It focuses on midstream natural gas compression, provides natural gas contract compression services, and generates stable fee-based revenues.

The Williams Companies is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transporting natural gas and natural gas liquids. Boasting a widespread pipeline system of more than 33,000 miles, Williams is one of the largest domestic transporters of natural gas by volume.

FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.

Zacks Investment Research

Energy stocks were higher in premarket activity Wednesday as the Energy Select Sector SPDR Fund was up 1.6% recently.

The United States Oil Fund was down 2% and the United States Natural Gas Fund was 2% higher.

Front-month US West Texas Intermediate crude oil was 2.5% lower at $70.20 per barrel at the New York Mercantile Exchange. Global benchmark North Sea Brent crude oil lost 2.4% to $73.71 per barrel. Natural gas futures were up 2.1% at $2.725 per 1 million British Thermal Units.

Northern Oil and Gas shares were up over 3.5% after the company reported an increase in Q3 revenue.

California Resources shares advanced by nearly 6% after the company reported higher Q3 adjusted earnings and revenue.

Sunoco shares were down 0.5% after the company reported that it swung to a Q3 net loss as revenue fell during the period.

Sunoco LP shares are trading lower after it reported third-quarter revenues of $5.75 billion, which missed the consensus of $6.508 billion.

Adjusted distributable cash flow of $349 million was higher than $181 million a year ago. Adjusted EBITDA increased to $456 million from $257 million a year ago.

The Fuel Distribution segment sold around 2.1 billion gallons of fuel (+1% year over year), with the fuel margin for all gallons sold at 12.8 cents per gallon versus 12.5 cents per gallon in the prior year quarter.

Adjusted EBITDA for the Fuel Distribution segment increased to $253 million compared to $234 million in the prior year quarter. Loss per share of $0.26 missed the EPS consensus of $1.55.

Total capital expenditures were $93 million, including $67 million for growth capital and $26 million for maintenance capital.

Distribution: On October 28, Sunoco declared a distribution of $0.8756 per unit, payable on November 19, to unitholders of record as of November 8.

As of September 30, the company had long-term debt of about $7.3 billion and approximately $1.4 billion in liquidity remaining on its $1.5 billion revolving credit facility.

Investors can gain exposure to the stock via InfraCap MLP ETF and Alerian MLP ETF .

Price Action: Sunoco shares are down 2.37% at $52.00 premarket at the last check Wednesday.

Photo via Shutterstock

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