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Sunoco LP (SUN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid operating results: Adjusted EBITDA $458M, DCF as adjusted $310M, net income $207M; revenue was $5.18B with diluted EPS $1.21 .
  • Versus S&P Global consensus, SUN missed on revenue ($5.18B vs $5.58B) and Primary EPS ($1.176 vs $1.247), while EBITDA was essentially in-line ($455M vs $455M)*.
  • Strategic catalysts dominated: definitive agreement to acquire Parkland for ~$9.1B and TanQuid for ~€500M; management reiterated confidence in FY25 guidance and raised the quarterly distribution 1.25% .
  • Fuel Distribution benefited from a $32M 7‑Eleven makeup payment and stronger cents-per-gallon margin; midstream faced refinery reliability headwinds but remained robust .

What Went Well and What Went Wrong

  • What Went Well

    • “2025 is off to a good start… we remain on track to achieve our full year financial guidance” (Adjusted EBITDA $458M; DCF as adjusted $310M) .
    • Fuel Distribution margin improved to 11.5¢/gal and included a $32M 7‑Eleven makeup payment, supporting segment EBITDA of $220M .
    • Terminals and Pipeline Systems strength from NuStar and prior European acquisitions: Terminals EBITDA $66M with 620kbpd throughput; Pipeline EBITDA $172M with ~1.3MMbpd throughput .

  • What Went Wrong

    • Top-line and EPS missed consensus (revenue and Primary EPS below Street), with higher interest expense ($121M vs $63M YoY) and sharply higher D&A ($156M vs $43M YoY) weighing on GAAP earnings .
    • Pipeline throughput dipped QoQ (~1.3MMbpd vs ~1.4MMbpd in Q4) due to reliability challenges at feeder refineries .
    • Fuel volumes declined YoY largely from the West Texas asset sale, with lease profit down $9M, partially offset by expense reductions and profit-per-gallon optimization .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Billions)$5.499 $5.269 $5.179
Net Income ($USD Millions)$230 $141 $207
Diluted EPS ($USD)$2.26 $0.75 $1.21
Adjusted EBITDA ($USD Millions)$242 $439 $458
Distributable Cash Flow, as adjusted ($USD Millions)$176 $261 $310
Gross Profit Margin %8.47%*11.86%*12.30%*
EBITDA Margin %6.22%*9.20%*8.79%*
Net Income Margin %4.18%*2.68%*4.00%*

Values with asterisks retrieved from S&P Global.

Versus Estimates (S&P Global):

MetricQ1 2025 ActualQ1 2025 ConsensusSurprise
Revenue ($USD Billions)$5.179 $5.579*-$0.400B (Miss)*
Primary EPS ($USD)$1.176*$1.247*-$0.071 (Miss)*
EBITDA ($USD Millions)~$455*~$455*In-line*
Primary EPS - # of Estimates4*
Revenue - # of Estimates2*

Values marked with asterisks retrieved from S&P Global.

Segment Breakdown (Q1 2025):

SegmentAdjusted EBITDA ($MM)Segment Profit ($MM)Volume/Throughput
Fuel Distribution$220 $361 2,087MM gallons; 11.5¢/gal
Pipeline Systems$172 $174 ~1,258kbpd
Terminals$66 $118 ~620kbpd

Key KPIs and Balance Sheet:

KPIQ1 2025
DCF Coverage (trailing 12‑mo, qualitative)Management highlighted strong coverage (1.9x)
Leverage (Net Debt/Adjusted EBITDA)4.1x
Long-term Debt~$7.7B
Revolver AvailabilityNo borrowings outstanding on $1.5B facility
Capex (Total / Growth / Maintenance)$101M / $75M / $26M
Distribution per Unit (Quarterly, Q1)$0.8976

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$1.90B–$1.95B (Dec-2024) On track; reiterated confidence Maintained
Total Operating ExpensesFY 2025$900M–$925M (Dec-2024) Running below OpEx guidance (qualitative) Positive variance
Growth CapexFY 2025≥$400M (Dec-2024) No change signaled Maintained
Maintenance CapexFY 2025~$150M (Dec-2024) No change signaled Maintained
Distribution Growth TargetFY 2025≥5% Q1 increase of 1.25%; target reaffirmed Maintained/Executing

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Portfolio diversification (midstream + fuel)Midstream added via NuStar; JV formation; balanced growth Continued midstream and European assets; strong segment contributions Parkland acquisition (fuel), TanQuid (terminals) to broaden geography and cash flow base Expanding scope and balance
Fuel margin optimization12.8¢/gal, expenses down post West Texas sale 10.6¢/gal, volumes ~2.2B gallons; expense discipline 11.5¢/gal, $32M 7‑Eleven makeup payment Sustained optimization; support from contracts
Midstream throughput and reliability~1.2MMbpd; transaction-related expenses ~1.4MMbpd; segment EBITDA $188M ~1.3MMbpd; some refinery reliability headwinds QoQ Strong base with transient headwinds
Expense discipline/inflationCost control narrative begins OpEx guidance set; reiterated discipline “Below OpEx guidance”; inflation managed Improving vs guidance
European strategyZenith terminals noted European terminals contribution rising TanQuid acquisition to scale EU terminals Strategic expansion in EU terminals
Capital allocation & leverage4.0x leverage; capex steady 4.1x leverage; distribution increased 4.1x leverage; refinancing, no revolver draw Balanced with growth + deleveraging path

Management Commentary

  • CFO on guidance and balance sheet: “We remain on track to achieve our full year financial guidance… leverage at the end of the quarter was 4.1x” .
  • COO on segment performance: “Fuel Distribution… margin was $0.1105 per gallon… results included the benefit of $32M from the 7‑Eleven makeup payment” and “Pipeline… performed well even with headwinds… reliability challenges at refineries” .
  • CEO on positioning: “Our business model performs well in volatile environments… pipeline and terminal assets provide long-term stable income… we fully expect to deliver another record year” .
  • Strategy expansion: Parkland “powerful industrial logic and excellent financial benefits”; TanQuid adds stable, fee-based EU terminals .

Q&A Highlights

  • Capital allocation post-Parkland: “Best projects win” across segments/geographies, favoring near-term cash-to-benefit and cross-segment synergy opportunities .
  • Portfolio mix: Target a diversified, balanced portfolio over time; Parkland pursued for accretion and industrial logic, with intent to maintain balance between midstream and fuel distribution longer term .
  • Clarifications: Management focused Q&A away from Parkland specifics to first-quarter results and TanQuid; reiterated flexibility in growth capital pacing .

Estimates Context

  • Q1 2025 results vs S&P Global consensus: revenue $5.179B actual vs $5.579B consensus (miss); Primary EPS $1.176 actual vs $1.247 consensus (miss); EBITDA ~$455M actual vs ~$455M consensus (in-line)*.
  • Estimate implications: Street likely lowers revenue/EPS near-term given higher interest expense and D&A drag, while EBITDA estimates appear well calibrated to the operating run-rate*.

Values marked with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Stock likely reacts more to M&A catalysts (Parkland, TanQuid) and distribution increases than to modest top-line/EPS misses; EBITDA resiliency and fee-based midstream/terminal mix supports downside protection .
  • Earnings quality: EBITDA strength masked by higher interest and D&A from a larger asset base; focus on cash generation (DCF as adjusted $310M) and coverage to evaluate distribution safety .
  • Fuel Distribution: Margin optimization and contractual support (7‑Eleven take-or-pay) drove strong cents-per-gallon despite volume headwinds from the West Texas sale; watch sustainability of makeup payments .
  • Midstream/Terminals: Temporary refinery reliability issues aside, throughput and EBITDA remain robust; EU terminal expansion adds stable, fee-based cash flows .
  • Guidance: FY25 Adjusted EBITDA range maintained; OpEx tracking below guidance is a positive; monitor capex deployment pace and post-close leverage trajectory .
  • M&A integration: Parkland synergy target ($250M run-rate by Year 3) and accretion claim are key; watch regulatory/process milestones and financing mix effects on leverage and distribution growth .
  • Positioning: SUN remains both an offensive (growth, optimization) and defensive (infrastructure cash flows) equity; continued distribution growth supports total return thesis .
Notes:
- Values marked with asterisks retrieved from S&P Global.