May 5, 2017 [OPIS] - Sunoco LP reported sharply lower, first-quarter net income of $1 million, or ($0.22) per diluted unit, down from $62 million, or $0.47 per diluted unit, in the first quarter of last year.
The partnership posted first-quarter adjusted EBITDA of $155 million, down year over year from $159 million.
The unfavorable comparison reflects decreased wholesale motor fuel gross profit contribution and increased total operating expenses, Sunoco said in an announcement.
On a weighted average basis, the first-quarter fuel margin for all gallons sold decreased to 14.5cts/gal, compared to 14.7cts/gal in the first quarter last year. Sunoco attributed the decrease primarily to lower margins in the wholesale segment.
Net income for the wholesale segment was $42 million, compared to $87 million a year ago. Sunoco wholesaled 1.31 billion gal, up 6.5% as a result of growth in the Southwest and unbranded business, as well as contribution from the Emerge acquisition. However, the wholesale business earned 10.6cts/gal, compared to 11.4cts/gal a year earlier.
Sunoco widened its net loss to $41 million in the retail segment, from a net loss of $25 million a year ago. The partnership retailed 595 million gal, a decline of 2.1% resulting from lower demand across its operating territory, particularly along the East Coast. Its retail margin inched up to 23.1cts/gal from 21.3cts/gal a year earlier.
Store merchandise sales for the quarter rose 3.1% year over year to $540 million, due to third-party acquisitions and new-to-industry locations opened in the last 12 months. Merchandise sales contributed $170 million of gross profit with a retail merchandise margin of 31.6%, a slight decline of 0.1 percentage points from the first quarter last year.
Same-store merchandise sales decreased by 1.1% in the quarter, reflecting weakness in the c-store and restaurant operations in Texas, but partly offset by growth in Sunoco’s East Coast and Hawaiian operations. Same-store gallons declined by 5.7% due to weakness throughout the partnership’s retail geography, the partnership said.
As of March 31, 2017, Sunoco operated 1,355 convenience stores and retail fuel outlets along the East Coast, in the Southwest and in Hawaii, and had 7,825 third-party wholesale customers.
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