ETP Dropdown of Retail Assets Underway

DALLAS — Energy Transfer Partners LP (ETP) has begun the process of "dropping down" several assets to its subsidiary Sunoco LP, including its entire retail division, the company revealed during its 2014 fiscal fourth-quarter earnings call Thursday.

ETP had 6,650 retail locations as of Dec. 31, including 1,251 company-operated sites. These convenience stores and gas stations operate under the Stripes, Sac-N-Pac, Sunoco and APlus banners.

Next up is the dropdown of the legacy Sunoco wholesale business, which should be completed within the next 30 to 60 days. ETP expects its entire retail division to be dropped down to Sunoco LP with 24 to 30 months, said Martin Salinas Jr., chief financial officer.

RETAIL STRONG

ETP's retail division had a strong 2014 fourth quarter, with adjusted EBITDA more than tripling to $295 million. Also nearly tripling was its merchandise sales, which increased by $347 million to a total of $489 million.

Motor fuel sales were also quite strong, exceeding company expectations. Total gallons sold improved by more than 600 million gallons to 1.9 billion gallons, and motor fuel gross margins doubled to 20.7 cents per gallon.

"We had a retail division that hit it out of the park," said Salinas. "We expect another strong quarter for our retail division [in 2015's first quarter]."

Companywide, ETP reported adjusted EBITDA of $1.28 billion for its most recent quarter, an increase of $296 million year over year for the master limited partnership.

Although low gas prices are a concern for some pipeline companies, "we see a once-in-a-lifetime opportunity to deliver for our shareholders," said Jamie Welch, group chief financial officer and head of business development for the ETP family of companies.