SUN Sunoco LP

SUNOCO LP

CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(unaudited)

June 30,
2024

December 31,
2023

ASSETS

Current assets:

Cash and cash equivalents

$                  226

$                    29

Accounts receivable, net

1,018

856

Accounts receivable from affiliates

33

20

Inventories, net

1,040

889

Other current assets

127

133

Total current assets

2,444

1,927

Property and equipment

9,873

2,970

Accumulated depreciation

(1,027)

(1,134)

Property and equipment, net

8,846

1,836

Other assets:

Operating lease right-of-use assets, net

479

506

Goodwill

1,484

1,599

Intangible assets, net

716

544

Other non-current assets

372

290

Investment in unconsolidated affiliates

124

124

Total assets

$             14,465

$               6,826

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$               1,104

$                  828

Accounts payable to affiliates

114

170

Accrued expenses and other current liabilities

613

353

Operating lease current liabilities

32

22

Current maturities of long-term debt

76

—

Total current liabilities

1,939

1,373

Operating lease non-current liabilities

488

511

Long-term debt, net

7,304

3,580

Advances from affiliates

94

102

Deferred tax liabilities

117

166

Other non-current liabilities

193

116

Total liabilities

10,135

5,848

Commitments and contingencies

Equity:

Limited partners:

Common unitholders
   (135,997,962 units issued and outstanding as of June 30, 2024 and
    84,408,014 units issued and outstanding as of December 31, 2023)

4,330

978

Class C unitholders - held by subsidiaries
   (16,410,780 units issued and outstanding as of June 30, 2024 and
    December 31, 2023)

—

—

Total equity

4,330

978

Total liabilities and equity

$             14,465

$               6,826

SUNOCO LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per unit data)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Revenues

$               6,174

$               5,745

$             11,673

$             11,107

Cost of Sales and Operating Expenses:

Cost of sales

5,609

5,431

10,624

10,418

Operating expenses

134

87

222

169

General and administrative

134

33

170

62

Lease expense

17

17

35

33

Loss (gain) on disposal of assets and impairment charges

52

(13)

54

(12)

Depreciation, amortization and accretion

78

49

121

97

Total cost of sales and operating expenses

6,024

5,604

11,226

10,767

Operating Income

150

141

447

340

Other Income (Expense):

Interest expense, net

(95)

(53)

(158)

(106)

Equity in earnings of unconsolidated affiliates

2

1

4

3

Gain on West Texas Sale

598

—

598

—

Loss on extinguishment of debt

(2)

—

(2)

—

Other, net

(3)

7

(2)

7

Income before Income Taxes

650

96

887

244

Income tax expense

149

9

156

16

Net Income

$                  501

$                    87

$                  731

$                  228

Net Income per Common Unit:

Basic

$                 3.88

$                 0.79

$                 6.43

$                 2.21

Diluted

$                 3.85

$                 0.78

$                 6.37

$                 2.19

Weighted Average Common Units Outstanding:

Basic

117,271,408

84,060,866

100,848,078

84,059,797

Diluted

118,054,858

85,034,268

101,657,076

84,998,777

Cash Distributions per Unit

$             0.8756

$             0.8420

$             1.7512

$           1.6840

SUNOCO LP

SUPPLEMENTAL INFORMATION

(Dollars and units in millions)

(unaudited)

Three Months Ended June 30,

Net income

$                  501

$                    87

Depreciation, amortization and accretion

78

49

Interest expense, net

95

53

Non-cash unit-based compensation expense

4

4

Loss (gain) on disposal of assets and impairment charges

52

(13)

Loss on extinguishment of debt

2

—

Unrealized (gains) losses on commodity derivatives

(6)

1

Inventory valuation adjustments

32

57

Equity in earnings of unconsolidated affiliates

(2)

(1)

Adjusted EBITDA related to unconsolidated affiliates

3

3

Gain on West Texas Sale

(598)

—

Other non-cash adjustments

10

1

Income tax expense

149

9

Adjusted EBITDA ⁽¹⁾

320

250

Transaction-related expenses⁽³⁾

80

—

Adjusted EBITDA⁽¹⁾, excluding transaction-related expenses⁽³⁾

$                  400

$                  250

Adjusted EBITDA ⁽¹⁾

$                  320

$                  250

Adjusted EBITDA related to unconsolidated affiliates

(3)

(3)

Distributable cash flow from unconsolidated affiliates

2

1

Cash interest expense

(89)

(52)

Current income tax expense

(217)

(8)

Transaction-related income taxes

199

—

Maintenance capital expenditures

(26)

(15)

Distributable Cash Flow

186

173

Transaction-related expenses and adjustments ⁽³⁾

109

2

Distributable Cash Flow, as adjusted ⁽¹⁾

$                  295

$                  175

Distributions to Partners:

Limited Partners

$                  119

$                    71

General Partner

36

19

Total distributions to be paid to partners

$                  155

$                    90

Common Units outstanding - end of period

136.0

84.1

(1) Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion expense, allocated non-cash compensation expense, unrealized gains and losses on commodity derivatives and inventory valuation adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations, such as gains or losses on disposal of assets and non-cash impairment charges. We define Distributable Cash Flow as Adjusted EBITDA less cash interest expense, including the accrual of interest expense related to our long-term debt which is paid on a semi-annual basis, current income tax expense, maintenance capital expenditures and other non-cash adjustments. For Distributable Cash Flow, as adjusted, certain transaction-related adjustments and non-recurring expenses are excluded.

We believe Adjusted EBITDA and Distributable Cash Flow, as adjusted, are useful to investors in evaluating our operating performance because:

•  Adjusted EBITDA is used as a performance measure under our revolving credit facility;

•  securities analysts and other interested parties use such metrics as measures of financial performance, ability to make distributions to our unitholders and debt service capabilities;

•  our management uses them for internal planning purposes, including aspects of our consolidated operating budget, and capital expenditures; and

•  Distributable Cash Flow, as adjusted, provides useful information to investors as it is a widely accepted financial indicator used by investors to compare partnership performance, and as it provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

Adjusted EBITDA and Distributable Cash Flow, as adjusted, are not recognized terms under GAAP and do not purport to be alternatives to net income as measures of operating performance or to cash flows from operating activities as a measure of liquidity. Adjusted EBITDA and Distributable Cash Flow, as adjusted, have limitations as analytical tools, and one should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:

•  they do not reflect our total cash expenditures, or future requirements for capital expenditures or contractual commitments;

•  they do not reflect changes in, or cash requirements for, working capital;

•  they do not reflect interest expense or the cash requirements necessary to service interest or principal payments on our revolving credit facility or senior notes;

•  although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; and

•  as not all companies use identical calculations, our presentation of Adjusted EBITDA and Distributable Cash Flow, as adjusted, may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA reflects amounts for the unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliates as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly. Inventory valuation adjustments that are excluded from the calculation of Adjusted EBITDA represent changes in lower of cost or market reserves on the Partnership's inventory. These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period.

(2) Excludes the impact of inventory valuation adjustments consistent with the definition of Adjusted EBITDA.

(3) For the three months ended June 30, 2024, SUN incurred $80 million of transaction-related expenses. For the calculation of Distributable Cash Flow, as adjusted, transaction-related expenses and adjustments include these transaction-related expenses, as well as $29 million of Distributable Cash Flow attributable to the operations of NuStar for April 1, 2024 through the acquisition date, which represents amounts distributable to SUN's common unitholders (including the holders of the common units issued in the NuStar acquisition) with respect to the second quarter 2024 distribution.

SUNOCO LP

SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT

(Tabular dollar amounts in millions)

(unaudited)

Three Months Ended

June 30,

2024

2023

Segment Adjusted EBITDA:

Fuel Distribution

$              245

$              226

Pipeline Systems

53

3

Terminals

22

21

Adjusted EBITDA

$              320

$              250

Transaction-related expenses

80

—

Adjusted EBITDA, excluding transaction-related expenses

$              400

$              250

Three Months Ended

June 30,

2024

2023

Motor fuel gallons sold

2,189

2,080

Motor fuel profit cents per gallon⁽¹⁾

             11.8 ¢

             11.9 ¢

Fuel profit

$            230

$            198

Non-fuel profit

44

39

Lease profit

30

37

Fuel Distribution segment profit⁽²⁾

$            304

$            274

Expenses

$              96

$            111

Segment Adjusted EBITDA

$            245

$            226

Transaction-related expenses

1

—

Segment Adjusted EBITDA, excluding transaction-related expenses

$            246

$            226

(1) Excludes the impact of inventory valuation adjustments consistent with the definition of Adjusted EBITDA.

(2) For the three months ended June 30, 2024, Fuel Distribution segment profit reconciles to Segment Adjusted EBITDA by subtracting expenses of $96 million, and unrealized gains on commodity derivatives of $6 million and adding non-cash unit-based compensation of $4 million, inventory valuation adjustments of $30 million and other of $9 million. For the three months ended June 30, 2023, Fuel Distribution segment profit reconciles to Segment Adjusted EBITDA by subtracting expenses of $111 million, and adding non-cash unit-based compensation of $4 million, unrealized losses on commodity derivatives of $1 million, inventory valuation adjustments of $51 million, and other of $7 million.

Three Months Ended

June 30,

2024

2023

Pipelines throughput (barrels/day)

1,264

—

Pipeline Systems segment profit⁽¹⁾

$              172

$                  1

Expenses

$              121

$                  1

Segment Adjusted EBITDA

$                53

$                  3

Transaction-related expenses

58

—

Segment Adjusted EBITDA, excluding transaction-related expenses

$              111

$                  3

(1) For the three months ended June 30, 2024, Pipeline Systems segment profit reconciles to Segment Adjusted EBITDA by subtracting expenses of $121 million and other of $1 million and adding Adjusted EBITDA related to unconsolidated affiliates of $3 million. For the three months ended June 30, 2023, Pipeline Systems segment profit reconciles to Segment Adjusted EBITDA by subtracting expenses of $1 million and adding Adjusted EBITDA related to unconsolidated affiliates of $3 million.

Three Months Ended

June 30,

2024

2023

Throughput (barrels/day)

638

409

Terminal segment profit⁽¹⁾

$                89

$                39

Expenses

$                68

$                25

Segment Adjusted EBITDA

$                22

$                21

Transaction-related expenses

21

—

Segment Adjusted EBITDA, excluding transaction-related expenses

$                43

$                21

(1) For the three months ended June 30, 2024, Terminals segment profit reconciles to Segment Adjusted EBITDA by subtracting expenses of $68 million and other of $1 million and adding inventory valuation adjustments of $2 million. For the three months ended June 30, 2023, Terminals segment profit reconciles to Segment Adjusted EBITDA by subtracting expenses of $25 million and adding inventory valuation adjustments of $6 million and other of $1 million.