Sunoco LP ((SUN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Sunoco LP Reports Record Year Amidst Challenges in Fuel Distribution
Sunoco LP’s latest earnings call conveyed a largely positive sentiment, celebrating a record year characterized by robust financial performance and successful integration of acquisitions. The company reflected optimism for 2025, despite encountering some hurdles in the fourth quarter, notably within its fuel distribution and terminal segments.
Record Annual Results
Sunoco LP proudly announced a record year, achieving an adjusted EBITDA of $1.56 billion, marking a substantial 62% increase compared to 2023. This milestone underscores the company’s strong financial health and strategic execution over the past year.
Successful NuStar Acquisition
The acquisition of NuStar, completed in May 2024, significantly bolstered Sunoco’s financial outlook. The integration brought about a revised adjusted EBITDA guidance range of $1.51 billion to $1.57 billion, with anticipated synergies of $50 million, highlighting the strategic value of the acquisition.
Strong Liquidity Position
Sunoco concluded 2024 with a robust liquidity position, maintaining $1.3 billion on its revolving credit facility. The company also achieved a leverage target of 4.1 times within just five months following the NuStar acquisition, reflecting disciplined financial management.
Growth in Distribution
The company declared a distribution of $0.8865 per unit, which is a 1.25% increase over the previous quarter. Sunoco aims for at least a 5% growth in distributions this year, demonstrating its commitment to returning value to its stakeholders.
Positive Outlook for 2025
Looking ahead, Sunoco expressed confidence in achieving its 2025 adjusted EBITDA guidance range of $1.9 to $1.95 billion. The company expects continued growth in distributions, leveraging its strong financial foundation.
Fourth Quarter Fuel Distribution Decline
Despite the annual successes, Sunoco faced challenges in the fourth quarter, with the fuel distribution segment’s adjusted EBITDA falling to $192 million, down from $253 million the previous quarter and $209 million in Q4 2023.
Decreased Margin in Fuel Distribution
The fuel distribution margin also saw a decline, reporting at 10.6 cents per gallon in Q4 2024, a drop from 12.8 cents per gallon last quarter and 11.8 cents per gallon in the same period the previous year.
Terminal Segment Decline
Similarly, the terminal segment’s adjusted EBITDA decreased to $61 million, down from $70 million in the third quarter, indicating some operational challenges in this area.
Guidance and Future Expectations
In its forward-looking guidance, Sunoco highlighted its record year with a significant boost in financial metrics. The fourth quarter saw an adjusted EBITDA of $446 million, excluding $7 million in one-time transaction expenses. The partnership allocated $74 million to growth capital and $58 million to maintenance capital, resulting in a distributable cash flow of $261 million. Sunoco maintains a strong liquidity position and is confident in meeting its 2025 financial targets.
In conclusion, Sunoco LP’s earnings call reflected an overall positive sentiment about its financial achievements and strategic initiatives. Despite the challenges faced in the fuel distribution and terminal segments, the company remains optimistic about its future prospects, driven by strong liquidity and strategic acquisitions.
