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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission File Number: 001-35653
SUNOCO LP
(Exact name of registrant as specified in its charter) 
Delaware30-0740483
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
8111 Westchester Drive, Suite 400, Dallas, Texas 75225
(Address of principal executive offices, including zip code)
(214) 981-0700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Units Representing Limited Partner InterestsSUNNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging Growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes       No  ý
The registrant had 83,757,333 common units representing limited partner interests and 16,410,780 Class C units representing limited partner interests outstanding at April 29, 2022.



SUNOCO LP
FORM 10-Q
TABLE OF CONTENTS
 

i


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
SUNOCO LP
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
March 31,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$104 $25 
Accounts receivable, net725 526 
Receivables from affiliates13 12 
Inventories, net704 534 
Other current assets478 95 
Total current assets2,024 1,192 
Property and equipment2,572 2,581 
Accumulated depreciation(943)(914)
Property and equipment, net1,629 1,667 
Other assets:
Finance lease right-of-use assets, net9 9 
Operating lease right-of-use assets, net517 517 
Goodwill1,568 1,568 
Intangible assets902 902 
Accumulated amortization(372)(360)
Intangible assets, net530 542 
Other noncurrent assets196 188 
Investment in unconsolidated affiliate132 132 
Total assets$6,605 $5,815 
Liabilities and Equity
Current liabilities:
Accounts payable$705 $515 
Accounts payable to affiliates77 59 
Accrued expenses and other current liabilities275 291 
Operating lease current liabilities19 19 
Current maturities of long-term debt 6 
Total current liabilities1,076 890 
Operating lease noncurrent liabilities522 521 
Revolving line of credit1,012 581 
Long-term debt, net2,668 2,668 
Advances from affiliates121 126 
Deferred tax liability155 114 
Other noncurrent liabilities107 104 
Total liabilities5,661 5,004 
Commitments and contingencies (Note 10)
Equity:
Limited partners:
Common unitholders
(83,688,670 units issued and outstanding as of March 31, 2022 and
83,670,950 units issued and outstanding as of December 31, 2021)
944 811 
Class C unitholders - held by subsidiaries
(16,410,780 units issued and outstanding as of March 31, 2022 and
December 31, 2021)
  
Total equity944 811 
Total liabilities and equity$6,605 $5,815 
 
The accompanying notes are an integral part of these consolidated financial statements.
1


SUNOCO LP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Dollars in millions, except per unit data)
(unaudited)
Three Months Ended March 31,
20222021
Revenues:
Motor fuel sales
$5,277 $3,363 
Non motor fuel sales
90 73 
Lease income
35 35 
Total revenues5,402 3,471 
Cost of sales and operating expenses:
Cost of sales
4,972 3,120 
General and administrative
27 24 
Other operating
81 61 
Lease expense
16 15 
Depreciation, amortization and accretion
47 47 
Total cost of sales and operating expenses5,143 3,267 
Operating income259 204 
Other income (expense):
Interest expense, net(41)(41)
Equity in earnings of unconsolidated affiliate1 1 
Loss on extinguishment of debt (7)
Income before income taxes219 157 
Income tax expense3 3 
Net income and comprehensive income$216 $154 
Net income per common unit:
Basic
$2.35 $1.61 
Diluted
$2.32 $1.60 
Weighted average common units outstanding:
Basic
83,682,902 83,342,828 
Diluted
84,729,202 84,141,261 
Cash distributions per unit$0.8255 $0.8255 

The accompanying notes are an integral part of these consolidated financial statements.
2


SUNOCO LP
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in millions)
(unaudited)
Balance at December 31, 2021$811 
Cash distribution to unitholders
(88)
Unit-based compensation
5 
Net income
216 
Balance at March 31, 2022$944 
Balance at December 31, 2020$632 
Cash distribution to unitholders
(88)
Unit-based compensation
4 
Other
(4)
Net income
154
Balance at March 31, 2021$698 
 
The accompanying notes are an integral part of these consolidated financial statements.
3


SUNOCO LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net income$216 $154 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion47 47 
Amortization of deferred financing fees2 1 
Loss on extinguishment of debt  7 
Non-cash unit-based compensation expense5 4 
Deferred income tax41 (1)
Inventory valuation adjustment(120)(100)
Equity in earnings of unconsolidated affiliate(1)(1)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net(199)(115)
Receivables from affiliates(1) 
Inventories, net(50)52 
Other assets(134) 
Accounts payable215 168 
Accounts payable to affiliates18 (17)
Accrued expenses and other current liabilities(16)(43)
Other noncurrent liabilities (4)
Net cash provided by operating activities23 152 
Cash flows from investing activities:
Capital expenditures(26)(18)
Deposit for acquisition(264) 
Distributions from unconsolidated affiliate in excess of cumulative earnings1 3 
Proceeds from disposal of property and equipment4 6 
Net cash used in investing activities(285)(9)
Cash flows from financing activities:
Payments on long-term debt(2)(438)
Revolver borrowings1,445 472 
Revolver repayments(1,014)(91)
Distributions to unitholders(88)(88)
Net cash provided by (used in) financing activities341 (145)
Net increase (decrease) in cash and cash equivalents79 (2)
Cash and cash equivalents at beginning of period25 97 
Cash and cash equivalents at end of period$104 $95 
Supplemental disclosure of non-cash investing activities:
Change in note payable to affiliate$(4)$6 

The accompanying notes are an integral part of these consolidated financial statements.
4


SUNOCO LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(unaudited)
1.Organization and Principles of Consolidation
As used in this document, the terms “Partnership,” “SUN,” “we,” “us,” and “our” should be understood to refer to Sunoco LP and our consolidated subsidiaries, unless the context clearly indicates otherwise.
We are a Delaware master limited partnership. We are managed by our general partner, Sunoco GP LLC ( our “General Partner”), which is owned by Energy Transfer LP (“Energy Transfer”). As of March 31, 2022, Energy Transfer owned 100% of the limited liability company interests in our General Partner, 28,463,967 of our common units, which constitutes a 28.4% limited partner interest in us, and all of our incentive distribution rights ("IDRs").
The consolidated financial statements are composed of Sunoco LP, a publicly traded Delaware limited partnership, and its wholly‑owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Certain items have been reclassified for presentation purposes to conform to the accounting policies of the consolidated entity. These reclassifications had no material impact on operating income, net income and comprehensive income, the balance sheets or statements of cash flows.
2.Summary of Significant Accounting Policies
Interim Financial Statements
The accompanying interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Pursuant to Regulation S-X, certain information and disclosures normally included in the annual financial statements have been condensed or omitted. The interim consolidated financial statements and notes included herein should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission ("SEC") on February 18, 2022.
Significant Accounting Policies
As of March 31, 2022, there have been no changes in the Partnership's significant accounting policies from those described in the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 18, 2022.
Motor Fuel and Sales Taxes
Certain motor fuel and sales taxes are collected from customers and remitted to governmental agencies either directly by the Partnership or through suppliers. The Partnership’s accounting policy for wholesale direct sales to dealers, distributors and commercial customers is to exclude the collected motor fuel tax from sales and cost of sales.
For retail locations where the Partnership holds inventory, including commission agent locations, motor fuel sales and motor fuel cost of sales include motor fuel taxes. Such amounts were $71 million and $76 million for the three months ended March 31, 2022 and 2021, respectively. Merchandise sales and cost of merchandise sales are reported net of sales tax in the consolidated statements of operations and comprehensive income.

3.Accounts Receivable, net
Accounts receivable, net, consisted of the following:
March 31,
2022
December 31,
2021
(in millions)
Accounts receivable, trade$590 $428 
Credit card receivables50 37 
Vendor receivables for rebates and branding37 35 
Other receivables51 28 
Allowance for expected credit losses(3)(2)
Accounts receivable, net$725 $526 
5


4.Inventories, net 
Fuel inventories are stated at the lower of cost or market using the last-in-first-out (“LIFO”) method. As of March 31, 2022 and December 31, 2021, the Partnership’s fuel inventory balance included lower of cost or market reserves of zero and $121 million, respectively. The fuel inventory replacement cost was $112 million higher than the fuel inventory balance as of March 31, 2022. For the three months ended March 31, 2022 and 2021, the Partnership’s consolidated statements of operations and comprehensive income did not include any material amounts of income from the liquidation of LIFO fuel inventory. For the three months ended March 31, 2022 and 2021, the Partnership's cost of sales included favorable inventory adjustments of $120 million and $100 million, respectively.
Inventories, net, consisted of the following:
March 31,
2022
December 31,
2021
(in millions)
Fuel$694 $526 
Other10 8 
Inventories, net$704 $534 
5.Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
March 31,
2022
December 31,
2021
(in millions)
Wage and other employee-related accrued expenses$14 $23 
Accrued tax expense124 152 
Accrued insurance21 22 
Accrued interest expense52 31 
Dealer deposits21 21 
Accrued environmental expense7 7 
Other36 35 
Total$275 $291 
6.Long-Term Debt 
Long-term debt consisted of the following:
March 31,
2022
December 31,
2021
(in millions)
Sale leaseback financing obligation $85 $91 
2018 Revolver1,012 581 
6.000% Senior Notes Due 2027
600 600 
5.875% Senior Notes Due 2028
400 400 
4.500% Senior Notes Due 2029
800 800 
4.500% Senior Notes Due 2030
800 800 
Finance leases9 9 
Total debt3,706 3,281 
Less: current maturities 6 
Less: debt issuance costs26 26 
Long-term debt, net$3,680 $3,249 
Revolving Credit Agreement
As of March 31, 2022, the balance on the 2018 Revolver was $1.0 billion, and $6 million in standby letters of credit were outstanding. The unused availability on the 2018 Revolver at March 31, 2022 was $0.5 billion. The weighted average interest rate on
6


the total amount outstanding at March 31, 2022 was 2.40%. The Partnership was in compliance with all financial covenants at March 31, 2022.
On April 7, 2022, we entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and a letter of credit issuer (the “Credit Agreement”). The maturity date of the Credit Agreement was extended to April 7, 2027 from July 27, 2023.
Fair Value of Debt
The estimated fair value of debt is calculated using Level 2 inputs. The fair value of debt as of March 31, 2022 is estimated to be approximately $3.6 billion, based on outstanding balances as of the end of the period using current interest rates for similar securities. 
7.Other Noncurrent Liabilities
Other noncurrent liabilities consisted of the following:
March 31,
2022
December 31,
2021
 (in millions)
Reserve for underground storage tank removal$80 $79 
Accrued environmental expense, long-term12 12 
Other15 13 
Total$107 $104 
8.Related-Party Transactions
We are party to fee-based commercial agreements with various affiliates of Energy Transfer for pipeline, terminalling and storage services. We also have agreements with subsidiaries of Energy Transfer for the purchase and sale of fuel.
Our investment in the J.C. Nolan pipeline (a joint venture with Energy Transfer) was $132 million and $132 million as of March 31, 2022 and December 31, 2021, respectively. In addition, we recorded income on the unconsolidated joint venture of $1 million for each of the three months ended March 31, 2022 and 2021.
Summary of Transactions
Related party transactions with affiliates for the three months ended March 31, 2022 and 2021 were as follows (in millions):
Three Months Ended March 31,
20222021
Motor fuel sales to affiliates$5 $2 
Bulk fuel purchases from affiliates$540 $333 
Significant affiliate balances included on the consolidated balance sheets are as follows:
Net advances from affiliates were $121 million and $126 million as of March 31, 2022 and December 31, 2021, respectively, related to treasury services agreements with Energy Transfer.
Net accounts receivable from affiliates were $13 million and $12 million as of March 31, 2022 and December 31, 2021, respectively, which are primarily related to motor fuel sales to affiliates.
Net accounts payable to affiliates were $77 million and $59 million as of March 31, 2022 and December 31, 2021, respectively, attributable to operational expenses and bulk fuel purchases.
9.Revenue
Disaggregation of Revenue
We operate our business in two primary segments, Fuel Distribution and Marketing and All Other. We disaggregate revenue within the segments by channels.
7


The following table depicts the disaggregation of revenue by channel within each segment:
Three Months Ended March 31,
20222021
(in millions)
Fuel Distribution and Marketing Segment
Distributor $2,407 $1,615 
Dealer1,054 679 
Unbranded wholesale1,263 668 
Commission agent403 290 
Non motor fuel sales41 14 
Lease income32 33 
Total5,200 3,299 
All Other Segment
Motor fuel
150 111 
Non motor fuel sales49 59 
Lease income3 2 
Total202 172 
Total revenue$5,402 $3,471 
Contract Balances with Customers
The balances of the Partnership’s contract assets and contract liabilities as of March 31, 2022 and December 31, 2021 are as follows:
March 31, 2022December 31, 2021
(in millions)
Contract balances
Contract assets$168 $157 
Accounts receivable from contracts with customers$637 $463 
Contract liabilities$ $ 
Costs to Obtain or Fulfill a Contract
For the three months ended March 31, 2022 and 2021, the Partnership recognized $7 million and $4 million, respectively, of amortization on capitalized costs incurred to obtain contracts.
10.Commitments and Contingencies
Litigation
We have at various points and may in the future become involved in various legal proceedings arising out of our operations in the normal course of business. These proceedings would be subject to the uncertainties inherent in any litigation, and we regularly assess the need for accounting recognition or disclosure of these contingencies. We would expect to defend ourselves vigorously in all such matters. Based on currently available information, we believe it is unlikely that the outcome of known matters would have a material adverse impact on our financial condition, results of operations or cash flows.
Lessee Accounting
The details of the Partnership's operating and finance lease liabilities are as follows:
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March 31,
Lease Term and Discount Rate20222021
Weighted-average remaining lease term (years)
Operating leases2223
Finance leases2921
Weighted-average discount rate (%)
Operating leases6 %6 %
Finance leases4 %5 %
Three Months Ended March 31,
Other information20222021
(in millions)
Cash paid for amount included in the measurement of lease liabilities
Operating cash flows from operating leases$(12)$(13)
Operating cash flows from finance leases$ $ 
Financing cash flows from finance leases$ $ 
Leased assets obtained in exchange for new finance lease liabilities$ $9 
Leased assets obtained in exchange for new operating lease liabilities$8 $5 
Maturity of lease liabilities (as of March 31, 2022)
Operating leasesFinance leasesTotal
(in millions)
2022 (remainder)$37 $ $37 
202348  48 
202447  47 
202547  47 
202646  46 
Thereafter778 16 794 
Total lease payment1,003 16 1,019 
Less: interest462 7 469 
Present value of lease liabilities$541 $9 $550 
Lessor Accounting
The Partnership leases or subleases a portion of its real estate portfolio to third party companies as a stable source of long-term revenue. Our lessor and sublease portfolio consists mainly of operating leases with convenience store operators. At this time, most lessor agreements contain 5-year terms with renewal options to extend and early termination options based on established terms specific to the individual agreement.
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11.Income Tax Expense
As a partnership, we are generally not subject to federal income tax and most state income taxes. However, the Partnership conducts certain activities through corporate subsidiaries which are subject to federal and state income taxes.
Our effective tax rate differs from the statutory rate primarily due to Partnership earnings that are not subject to U.S. federal and most state income taxes at the Partnership level. A reconciliation of income tax expense from continuing operations at the U.S. federal statutory rate of 21% to net income tax expense is as follows:
Three Months Ended March 31,
20222021
(in millions)
Income tax expense at statutory federal rate$46 $33 
Partnership earnings not subject to tax(44)(31)
State and local tax, net of federal benefit1 1 
Net income tax expense$3 $3 
12.Partners' Capital
As of March 31, 2022, Energy Transfer and its subsidiaries owned 28,463,967 common units, which constitutes a 28.4% limited partner interest in the Partnership. As of March 31, 2022, our wholly-owned consolidated subsidiaries owned 16,410,780 Class C units representing limited partner interests in the Partnership (the “Class C Units”) and the public owned 55,224,703 common units.
Common Units
The change in our outstanding common units for the three months ended March 31, 2022 was as follows: 
Number of Units
Number of common units at December 31, 2021
83,670,950 
Vested phantom units exercised17,720 
Number of common units at March 31, 2022
83,688,670 
Allocation of Net Income
Our Partnership Agreement contains provisions for the allocation of net income and loss to the unitholders. For purposes of maintaining partner capital accounts, the Partnership Agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect to incentive cash distributions, which are allocated 100% to Energy Transfer.

The calculation of net income allocated to the partners was as follows (in millions):
Three Months Ended March 31,
20222021
Attributable to Common Units
Distributions $69 $69 
Distributions less than net income127 65 
Limited partners' interest in net income$196 $134 
Cash Distributions
Our Partnership Agreement sets forth the calculation used to determine the amount and priority of cash distributions that the common unitholders receive.
Cash distributions paid or declared during 2022 were as follows:
Limited Partners
Payment DatePer Unit DistributionTotal Cash DistributionDistribution to IDR Holders
(in millions, except per unit amounts)
May 19, 2022$0.8255 $69 $18 
February 18, 2022$0.8255 $69 $18 
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13.Segment Reporting
Our financial statements reflect two reportable segments, Fuel Distribution and Marketing and All Other.
We report Adjusted EBITDA by segment as a measure of segment performance. We define Adjusted EBITDA as earnings before net interest expense, income tax expense and depreciation, amortization and accretion expense, non-cash unit-based compensation expense, gains and losses on disposal of assets and non-cash impairment charges, unrealized gains and losses on commodity derivatives, inventory adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations. Inventory 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.
The following table presents financial information by segment for the three months ended March 31, 2022 and 2021: 
Three Months Ended March 31,
20222021
Fuel Distribution and MarketingAll OtherIntercompany EliminationsTotalsFuel Distribution and MarketingAll OtherIntercompany EliminationsTotals
(in millions)
Revenue
Motor fuel sales$5,127 $150 $5,277 $3,252 $111 $3,363 
Non motor fuel sales41 49 90 14 59 73 
Lease income32 3 35 33 2 35 
Intersegment sales536  (536)— 282  (282)— 
Total revenue5,736 202 (536)5,402 3,581 172 (282)3,471 
Gross profit (1)
Motor fuel329 10 339 273 8 281 
Non motor fuel29 27 56 11 24 35 
Lease32 3 35 33 2 35 
Total gross profit390 40 430 317 34 351 
Total operating expenses143 28 171 109 38 147 
Operating income (loss)247 12 259 208 (4)204 
Interest expense, net(37)(4)(41)(37)(4)(41)
Loss on extinguishment of debt   (7) (7)
Equity in earnings of unconsolidated affiliate1  1 1  1 
Income (loss) from operations before income taxes211 8 219 165 (8)157 
Income tax expense1 2 3 3  3 
Net income (loss) and comprehensive income (loss)$210 $6 $216 $162 $(8)$154 
Depreciation, amortization and accretion42 5 47 40 7 47 
Interest expense, net37 4 41 37 4 41 
Income tax expense1 2 3 3  3 
Non-cash unit-based compensation expense5  5 4  4 
Loss on extinguishment of debt   7  7 
Unrealized gain on commodity derivatives(9) (9)(5) (5)
Inventory adjustments(120) (120)(100) (100)
Equity in earnings of unconsolidated affiliate(1) (1)(1) (1)
Adjusted EBITDA related to unconsolidated affiliate2  2 2  2 
Other non-cash adjustments7  7 5  5 
Adjusted EBITDA$174 $17 $191 $153 $4 $157 
Capital expenditures$24 $2 $26 $17 $1 $18 
Total assets as of March 31, 2022 and
December 31, 2021, respectively
$5,565 $1,040 $6,605 $4,825 $990 $5,815 
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________________________________
(1)    Excludes depreciation, amortization and accretion.
14.Net Income per Common Unit
A reconciliation of the numerators and denominators of the basic and diluted net income per common unit computations is as follows:
Three Months Ended March 31,
20222021
(in millions, except units and per unit amounts)
Net income and comprehensive income$216 $154 
Less:
Incentive distribution rights
18 18 
Distributions on nonvested phantom unit awards
2 2 
Limited partners interest in net income
$196 $134 
Weighted average common units outstanding:
Basic
83,682,902 83,342,828 
Dilutive effect of nonvested phantom unit awards
1,046,300 798,433 
Diluted
84,729,202 84,141,261 
Net income per common unit:
Basic
$2.35 $1.61 
Diluted
$2.32 $1.60 

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15. Subsequent Event
On April 1, 2022, we completed the previously announced acquisition of a transmix processing and terminal facility in Huntington, Indiana from Gladieux Capital Partners, LLC for $264 million. The funding for this acquisition was made on March 31, 2022. The facility is the largest transmix plant in North America with a processing capacity of 23,000 barrels per day and onsite product storage of approximately 750,000 barrels.
As of March 31, 2022, the Partnership's consolidated balance sheet included a cash deposit of $264 million in other current assets related to this acquisition.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included elsewhere in this report. Additional discussion and analysis related to the Partnership is contained in our Annual Report on Form 10-K including the audited financial statements for the fiscal year ended December 31, 2021 included therein.
Adjusted EBITDA is a non-GAAP financial measure of performance that has limitations and should not be considered as a substitute for net income or other GAAP measures. Please see “Key Measures Used to Evaluate and Assess Our Business” below for a discussion of our use of Adjusted EBITDA in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and a reconciliation to net income for the periods presented.
Cautionary Statement Regarding Forward-Looking Statements

Some of the information in this Quarterly Report on Form 10-Q , may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Statements using words such as “believe,” “plan,” “expect,” “anticipate,” “intend,” “forecast,” assume,” “estimate,” “continue,” “position,” “predict,” “project,” “goal,” “strategy,” “budget,” “potential,” “will” and other similar words or phrases are used to help identify forward-looking statements, although not all forward-looking statements contain such identifying words. Descriptions of our objectives, goals, targets, plans, strategies, costs, anticipated capital expenditures, expected cost savings and benefits are also forward-looking statements. These forward-looking statements are based on our current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements, including:
our ability to make, complete and integrate acquisitions from affiliates or third-parties;
business strategy and operations of Energy Transfer LP ("Energy Transfer") and its conflicts of interest with us;
changes in the price of and demand for the motor fuel that we distribute and our ability to appropriately hedge any motor fuel we hold in inventory;
our dependence on limited principal suppliers;
competition in the wholesale motor fuel distribution and retail store industry;
changing customer preferences for alternate fuel sources or improvement in fuel efficiency;
volatility of fuel prices or a prolonged period of low fuel prices and the effects of actions by, or disputes among or between, oil producing countries with respect to matters related to the price or production of oil;
impacts of world health events, including the coronavirus ("COVID-19") pandemic, escalating global trade tensions and the conflict between Russia and Ukraine and resulting expansion of sanctions and trade restrictions;
the possibility of cyber and malware attacks;
changes in our credit rating, as assigned by rating agencies;
a deterioration in the credit and/or capital markets;
general economic conditions;
environmental, tax and other federal, state and local laws and regulations;
the fact that we are not fully insured against all risks incident to our business;
dangers inherent in the storage and transportation of motor fuel;
our ability to manage growth and/or control costs;
our reliance on senior management, supplier trade credit and information technology; and
our partnership structure, which may create conflicts of interest between us and Sunoco GP LLC, our general partner (our “General Partner”), and its affiliates, and limits the fiduciary duties of our General Partner and its affiliates.
All forward-looking statements, express or implied, are expressly qualified in their entirety by the foregoing cautionary statements.
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Many of the foregoing risks and uncertainties are, and could be, heightened by the COVID-19 pandemic and any further worsening of the global business and economic environment. New factors that could impact forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties described or referenced in this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2021 occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.
You should not put undue reliance on any forward-looking statements. When considering forward-looking statements, please review the risks described or referenced under the heading “Item 1A. Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021. The list of factors that could affect future performance and the accuracy of forward-looking statements is illustrative but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this report are based on, and include, our estimates as of the filing of this report. We anticipate that subsequent events and market developments will cause our estimates to change. However, we specifically disclaim any obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law, even if new information becomes available in the future.
Overview
As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, the terms “Partnership,” “SUN,” “we,” “us,” or “our” should be understood to refer to Sunoco LP and our consolidated subsidiaries, unless the context clearly indicates otherwise.
We are a Delaware master limited partnership primarily engaged in the distribution of motor fuels to independent dealers, distributors, and other customers and the distribution of motor fuels to end customers at retail sites operated by commission agents. In addition, we receive rental income through the leasing or subleasing of real estate used in the retail distribution of motor fuels. As of March 31, 2022, we operated 78 retail stores located in Hawaii and New Jersey.
We are managed by Sunoco GP LLC, our General Partner, which is owned by Energy Transfer. As of March 31, 2022, Energy Transfer owned 100% of the limited liability company interests in our General Partner, all of our incentive distribution rights and approximately 34.0% of our common units, which constitutes a 28.4% limited partner interest in us.
We believe we are one of the largest independent motor fuel distributors by gallons in the United States and one of the largest distributors of Chevron, Texaco, ExxonMobil, and Valero branded motor fuel in the United States. In addition to distributing motor fuel, we also distribute other petroleum products such as propane and lubricating oil.
We purchase motor fuel primarily from independent refiners and major oil companies and distribute it across approximately 40 states throughout the East Coast, Midwest, South Central and Southeast regions of the United States, as well as Hawaii, to:
78 company-owned and operated retail stores;
525 independently operated commission agent locations where we sell motor fuel to retail customers under commission arrangements with such operators;
6,760 retail stores operated by independent operators, which we refer to as “dealers” or “distributors,” pursuant to long-term distribution agreements; and
2,321 other commercial customers, including unbranded retail stores, other fuel distributors, school districts, municipalities and other industrial customers.
Our retail stores operate under several brands, including our proprietary brands APlus and Aloha Island Mart, and offer a broad selection of food, beverages, snacks, grocery and non-food merchandise, motor fuels and other services.
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Recent Developments
    On April 7, 2022, we entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and a letter of credit issuer (the “Credit Agreement”). The maturity date of the Credit Agreement was extended to April 7, 2027 from July 27, 2023.
On April 1, 2022, we completed the previously announced acquisition of a transmix processing and terminal facility in Huntington, Indiana from Gladieux Capital Partners, LLC for $264 million. The funding for this acquisition was made on March 31, 2022. The facility is the largest transmix plant in North America with a processing capacity of 23,000 barrels per day and onsite product storage of approximately 750,000 barrels.
Key Measures Used to Evaluate and Assess Our Business
Management uses a variety of financial measurements to analyze business performance, including the following key measures:
Motor fuel gallons sold. One of the primary drivers of our business is the total volume of motor fuel sold through our channels. Fuel distribution contracts with our customers generally provide that we distribute motor fuel at a fixed, volume-based profit margin or at an agreed upon level of price support. As a result, gross profit is directly tied to the volume of motor fuel that we distribute. Total motor fuel gross profit dollars earned from the product of gross profit per gallon and motor fuel gallons sold are used by management to evaluate business performance.
Gross profit per gallon. Gross profit per gallon is calculated as the gross profit on motor fuel (excluding non-cash inventory adjustments as described under "Adjusted EBITDA" below) divided by the number of gallons sold, and is typically expressed as cents per gallon. Our gross profit per gallon varies amongst our third-party relationships and is impacted by the availability of certain discounts and rebates from suppliers. Retail gross profit per gallon is heavily impacted by volatile pricing and intense competition from retail stores, supermarkets, club stores and other retail formats, which varies based on the market.
Adjusted EBITDA. Adjusted EBITDA, as used throughout this document, is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion expense, allocated non-cash unit-based compensation expense, unrealized gains and losses on commodity derivatives and inventory adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations, such as gain or loss on disposal of assets and non-cash impairment charges. Inventory 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.
Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP, read “Key Operating Metrics and Results of Operations” below.
We believe Adjusted EBITDA is 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 Adjusted EBITDA as a measure of financial performance; and
our management uses Adjusted EBITDA for internal planning purposes, including aspects of our consolidated operating budget, and capital expenditures;
Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance. Adjusted EBITDA has limitations as an analytical tool, and one should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
it does 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 may not be comparable to similarly titled measures of other companies.
Adjusted EBITDA reflects amounts for the unconsolidated affiliate based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliate. Adjusted EBITDA related to unconsolidated affiliate excludes the same items with respect to the unconsolidated affiliate 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 affiliate, such exclusion should not be understood to imply
16


that we have control over the operations and resulting revenues and expenses of such affiliate. We do not control our unconsolidated affiliate; therefore, we do not control the earnings or cash flows of such affiliate. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliate as an analytical tool should be limited accordingly.
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Key Operating Metrics and Results of Operations
The following information is intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance.
Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021
The following table sets forth, for the periods indicated, information concerning key measures we rely on to gauge our operating performance:
Three Months Ended March 31,
20222021
Fuel Distribution and MarketingAll OtherTotalFuel Distribution and MarketingAll OtherTotal
(dollars and gallons in millions, except gross profit per gallon)
Revenues:
Motor fuel sales$5,127 $150 $5,277 $3,252 $111 $3,363 
Non motor fuel sales41 49 90 14 59 73 
Lease income32 35 33 35 
Total revenues$5,200 $202 $5,402 $3,299 $172 $3,471 
Gross profit (1):
Motor fuel sales$329 $10 $339 $273 $$281 
Non motor fuel sales29 27 56 11 24 35 
Lease32 35 33 35 
Total gross profit$390 $40 $430 $317 $34 $351 
Net income (loss) and comprehensive income (loss)$210 $$216 $162 $(8)$154 
Adjusted EBITDA (2)$174 $17 $191 $153 $$157 
Operating Data:
Total motor fuel gallons sold1,769 1,756 
Motor fuel gross profit cents per gallon (3)12.4 ¢10.3 ¢
________________________________
(1)    Excludes depreciation, amortization and accretion.
(2)    We define Adjusted EBITDA, which is a non-GAAP financial measure, as described above under “Key Measures Used to Evaluate and Assess Our Business.”
(3)    Excludes the impact of inventory adjustments consistent with the definition of Adjusted EBITDA.














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The Partnership’s results of operations are discussed on a consolidated basis below. Those results are primarily driven by the fuel distribution and marketing segment, which is the Partnership’s only significant segment. To the extent that results of operations are significantly impacted by discrete items or activities within the all other segment, such impacts are specifically attributed to the all other segment in the discussion and analysis below.
In the discussion below, the analysis of the Partnership’s primary revenue generating activities are discussed in the analysis of Adjusted EBITDA, and other significant items impacting net income are analyzed separately.
The following table presents a reconciliation of Adjusted EBITDA to net income for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021Change
(in millions)
Adjusted EBITDA
Fuel distribution and marketing$174 $153 $21 
All other17 13 
Total Adjusted EBITDA191 157 34 
Depreciation, amortization and accretion(47)(47)— 
Interest expense, net(41)(41)— 
Non-cash unit-based compensation expense(5)(4)(1)
Loss on extinguishment of debt— (7)
Unrealized gain on commodity derivatives
Inventory adjustments120 100 20 
Equity in earnings of unconsolidated affiliate— 
Adjusted EBITDA related to unconsolidated affiliate(2)(2)— 
Other non-cash adjustments(7)(5)(2)
Income tax expense(3)(3)— 
Net income and comprehensive income$216 $154 $62 
The following discussion of results compares the operations for the three months ended March 31, 2022 and 2021.
Adjusted EBITDA. Adjusted EBITDA for the three months ended March 31, 2022 was $191 million, an increase of $34 million from the three months ended March 31, 2021. The increase is primarily attributable to the following changes:
an increase in the gross profit on motor fuel sales of $36 million, primarily due to a 19.6% increase in gross profit per gallon sold and a 0.8% increase in gallons sold for the three months ended March 31, 2022 compared to the three months ended March 31, 2021; and
an increase in non motor fuel sales and lease gross profit of $21 million, primarily due to an increase in storage tanks and terminals gross profit for the three months ended March 31, 2022. This increase was primarily a result of the 2021 fourth quarter acquisition of refined product terminals; partially offset by
an increase in operating costs of $23 million. These expenses include other operating expense, general and administrative expense and lease expense. The increase was primarily due to higher costs as a result of the 2021 fourth quarter acquisition of refined product terminals, higher employee costs, credit card processing fees, environmental costs, maintenance costs, acquisition costs and higher expected credit losses.
Non-Cash Unit-Based Compensation Expense. Non-cash unit-based compensation expense was $5 million for the three months ended March 31, 2022 compared to $4 million for the three months ended March 31, 2021, a slight increase due to award activity and valuation of unit grants.
Unrealized Gain on Commodity Derivatives. The unrealized gains and losses on our commodity derivatives represent the changes in fair value of our commodity derivatives. The change in unrealized gains and losses between periods is impacted by the notional amounts and commodity price changes on our commodity derivatives. Additional information on commodity derivatives is included in “Item 3. Quantitative and Qualitative Disclosures about Market Risk” below.
Inventory Adjustments. Inventory adjustments represent changes in lower of cost or market reserves using the last-in-first-out ("LIFO") method on the Partnership’s inventory. These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period. For the three months ended March 31, 2022 and 2021, an increase in fuel prices
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reduced lower of cost or market reserve requirements for the periods by $120 million and $100 million, respectively, creating a favorable impact to net income.
Liquidity and Capital Resources
Liquidity
Our principal liquidity requirements are to finance current operations, to fund capital expenditures, including acquisitions from time to time, to service our debt and to make distributions. We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our revolving credit facility and the issuance of additional long-term debt or partnership units as appropriate given market conditions. We expect that these sources of funds will be adequate to provide for our short-term and long-term liquidity needs.
Our ability to meet our debt service obligations and other capital requirements, including capital expenditures and acquisitions, will depend on our future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal part of our business, depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. In addition, any of the risks described or referenced under the heading “Item 1A. Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 may also significantly impact our liquidity.
As of March 31, 2022, we had $104 million of cash and cash equivalents on hand and borrowing capacity of $0.5 billion under the Amended and Restated Credit Agreement among the Partnership, as borrower, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, collateral agent, swingline lender and a line of credit issuer (the "2018 Revolver"). The Partnership was in compliance with all financial covenants at March 31, 2022. Based on our current estimates, we expect to utilize capacity under the 2018 Revolver, along with cash from operations, to fund our announced growth capital expenditures and working capital needs for 2022; however, we may issue debt or equity securities prior to that time as we deem prudent to provide liquidity for new capital projects or other partnership purposes.
Cash Flows
    Our cash flows may change in the future due to a number of factors, some of which we cannot control. These factors include regulatory changes, the price of products and services, the demand for such products and services, margin requirements resulting from significant changes in commodity prices, operational risks, the successful integration of our acquisitions and other factors.
For the Three Months Ended March 31,
20222021
(in millions)
Net cash provided by (used in)
Operating activities
$23 $152 
Investing activities
(285)(9)
Financing activities
341 (145)
Net increase (decrease) in cash and cash equivalents$79 $(2)