Sunoco LP Seeks More Acquisitions

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Sunoco LP Seeks More Acquisitions


HOUSTON — Now that its Mid-Atlantic Convenience Stores LLC (MACS), Tigermarket and Aloha Petroleum Ltd. acquisitions have been fully integrated into the business, Sunoco LP is on the hunt for new retail assets, President and CEO Robert Owens revealed during Thursday's 2014 fiscal fourth-quarter earnings call.

"We plan to continue our expansion in 2015 through additional asset contributions from [parent company Energy Transfer Partners LP], through purchase and sale leasebacks of Stripes stores, and through organic growth of new stores within our existing retail footprint," said Owens. "In addition, we will continue to look for opportunistic acquisitions like the Aloha assets."

Owens did not share specifics about any potential acquisition targets during the conference call, but the chief executive did add that he is "excited about growth prospects in 2015 and beyond," and he believes the master limited partnership has a "great foundation for further growth in the c-store business."

In terms of organic growth plans, Sunoco LP Chief Financial Officer Mary Sullivan said the company is interested in expanding in Tennessee, where a majority of its Tigermarket stores are located, and in Texas, where Stripes stores are located.

Although Stripes stores are currently owned by parent company Energy Transfer Partners, it plans to "drop down" its entire retail division to Sunoco LP in the next 24 to 30 months. In fact, Owens said 50 convenience stores have already been converted to the Sunoco brand in the Lone Star State, with more to come.

Energy Transfer Partners 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.

"We had a goal in 2014 to become a leading wholesale and retail platform in the United States," the CEO said. "We are positioned well in the near term and long term."


The retail acquisitions led Sunoco LP's earnings to more than triple from $9.5 million in 2013's fourth quarter to $30.1 million for the quarter ended Dec. 31.

Adjusted EBITDA totaled $65.5 million, two-thirds of which was attributed to MACS and Aloha Petroleum. Owens said he was very impressed, in particular, with Aloha Petroleum's earnings considering the acquisition closed in December and only two weeks of data could be included in the latest quarterly results.

Revenues in the most recent quarter rose 20 percent to $1.3 billion, primarily from the contribution of $39.3 million of merchandise sales from MACS and Aloha Petroleum.

Total gross profit for Sunoco LP's 2014 fourth quarter increased to $93.2 million, more than quadruple the $20 million achieved in the year-ago period. 

Fuel margins for all gallons sold rose significantly year over year from 3.8 cents per gallon to 13 cents per gallon.

"Sunoco LP delivered outstanding results in the fourth quarter, led primarily by strength in motor fuel margins, as well as growth in gallons sold and strong merchandise performance from the convenience stores and fuel outlets we recently added to our portfolio," Owens concluded. 

As of Dec. 31, Houston-based Sunoco LP operated 153 convenience stores and gas stations in Virginia, Hawaii, Maryland and Georgia.