Sunoco Lp · NYSE:SUN
Sunoco Lp — Susser Holdings — Investor Day (March 2013)
73 slides from Sunoco Lp's investor day presentation, Mar 21, 2013
Slide 1: Susser Holdings Corporation / Susser Petroleum Partners Analyst Day
Susser Holdings Corporation Susser Petroleum Partners Analyst Day March 21, 2013
Slide 2: Safe Harbor
Safe Harbor Some of the statements in this presentation constitute “forward-looking statements” about Susser Holdings Corporation that involve risks, uncertainties and assumptions, including without limitation, our discussion and analysis of our financial condition and results of operations. These f
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Slide 4: Current Company Overview
Current Company Overview Retail stores in Texas, Oklahoma and New Mexico 562 retail sites 11th largest company operated C-store chain in the U.S. $976 million of merchandise sales 1.4 billion gallons distributed (FY2012) 557 retail sites with fuel >580 contracted wholesale branded site
Slide 5: Platform Was Built by Acquisition Before 2000
Platform Was Built by Acquisition Before 2000 Pre-2000 Acquisitions 1988 26 stores Santa Santa Fe Fe Tulsa Tulsa 1992 27 stores Oklahom Oklahomaa City City Albuquerque Albuquerque 1995 105 stores Am Amarillo arillo Law Lawton ton Oklahoma Oklahoma New New Mexico Mexico 1996 10 stores Lub
Slide 6: Coastal/Tex-Mart Stores Acquired (2001)
Coastal/Tex-Mart Stores Acquired (2001) • Boosted store count by ~80% Santa Santa Fe Fe Tulsa Tulsa Albuquerque Albuquerque Oklahom Oklahomaa City City • Expanded presence in South Am Amarillo arillo Texas, particularly in the Rio Law Lawton ton Oklahoma Oklahoma New New Mexico Mexico Gr
Slide 7: 2001–2007 Began New Store Building Program
2001–2007 Began New Store Building Program Free Cash Flow Invested in Growth Santa Santa Fe Fe Tuls Tulsaa Albuque Ok Oklahom lahomaa City City • Expanded our new big box store Albuquerque rque Am Amarillo arillo Law Lawton ton building program to include LTC Oklahoma Oklahoma Oklahoma Okl
Slide 8: Town & Country Acquisition – November 2007
Town & Country Acquisition – November 2007 A Unique Asset • High volume sites with a solid Tuls food service business Santa Santa Fe Fe Tulsaa Albuque Albuquerque rque Ok Oklahom lahomaa City City • Doubled EBITDA Am Amarillo arillo Law Lawton ton Oklahoma Oklahoma • 5 new markets New New
Slide 9: 2008-2012 Big Box Build-Out
2008-2012 Big Box Build-Out • Filled in our existing footprint • Began to establish presence in the Houston market Santa Santa Fe Fe Tulsa Tulsa • Larger kitchens and more Oklahoma Oklahoma City City Albuquerque Albuquerque seating for LTC Amarillo Amarillo Lawton Lawton Oklahoma Oklahoma
Slide 10: Combined Susser Footprint
Combined Susser Footprint 562 Retail Santa Santa Fe Fe Tulsa Tulsa 490 Wholesale Supply Oklahoma Oklahoma City City Albuquerque Albuquerque Amarillo Amarillo Wholesale Lawton Lawton Oklahoma Oklahoma Oklahoma Oklahoma 91 Consignment New New Mexico Mexico Lubbock Lubbock >1,600 Commerci
Slide 11: Widening the Gap
Widening the Gap (in 000’s, based on LTM data) Average Per-Store Merchandise Sales $1,792 $1,800 $1,661 $1,540 $1,488 $1,500 $1,437 $1,270 $1,200 $1,142 $1,134$1,150 $1,088 $1,075 $1,055 $999 $991 $1,001 $1,015 $1,015 $954 $958 $928 $898 $900 $856 $778 $742 $600 $300 2005 2006 2007 2008 2009 2010 20
Slide 12: Widening the Gap
Widening the Gap (in 000’s, based on LTM data) Average Per-Store Gallons 1,578 1,600 1,491 1,421 1,388 1,400 1,355 1,319 1,306 1,289 1,269 1,255 1,243 1,230 1,186 1,200 1,152 1,114 1,117 1,000 888 859 854 869 869 821 836 806 800 600 400 2005 2006 2007 2008 2009 2010 2011 2012 SUSS PTRY CASY Note: An
Slide 13: EBITDAR Has Tripled Since 2006 IPO
EBITDAR Has Tripled Since 2006 IPO EBITDAR Fuel Neutral EBITDAR (1) (2) (in millions) +8% (in millions) $230 $225 +13% +31% $200 +11% $200 +8% $175 $170 +26% +7% +54% +73% $150 $140 $229 -11% $220 $213 $125 $195 $176 $110 $163 +18% $163 $100 $151 $145 +24% $129 $80 $75 $98 $84 $84 $68 $50 $50 2006 2
Slide 14: SUSS Wholesale Segment
SUSS Wholesale Segment Rocky Dewbre
Slide 15: Motor Fuel Industry Supply Chain
Motor Fuel Industry Supply Chain Pipeline/Storage/Terminals Valero Drilling/Pumping Chevron Conoco Station Flint Hills Tanker Truck Crude GoPetro or 3rd Party Storage Transport Tank Refinery Our Customers Stripes, Valero Wholesale Exxon Dealers Conoco and other Chevron Commercial Texaco Customers Sh
Slide 16: Retail and Wholesale Locations
Retail and Wholesale Locations 16
Slide 17: SUSS Wholesale Segment Overview
SUSS Wholesale Segment Overview Largest non-refining motor fuel distributor in Texas 1.4 Billion Gallons Sold LTM 562 Stripes® stores 91 contracted consignment locations Commercial 490 contracted branded dealers 11% > 1,600 unbranded commercial customers Scalable wholesale platform Hig
Slide 18: Third-Party Supply Dealer Customer Types
Third-Party Supply Dealer Customer Types (22% of 2012 volume) Supply Dealers • We sell fuel to dealer by the truckload at cost plus a fixed markup • Dealer owns fuel inventory at location and dealer sets retail price • $1.2 million of net rental income in 2012 18
Slide 19: Third-Party Consignment Dealer Customer Types
Third-Party Consignment Dealer Customer Types (8% of 2012 volume) Consignment Dealers • SUSP supplies fuel to SUSS, who then supplies to consignment dealers • SUSP collects cost +3 cent fee • SUSS owns fuel in tanks • SUSS sets retail price and keeps gross profit, pays dealer a commission for sell
Slide 20: Our Other Commercial Customers Profile
Our Other Commercial Customers Profile (11% of total 2012 volume) Over 1,600 unbranded customers Unbranded convenience stores Sub-jobber/fuel distributors Commercial end-users including E&P, agricultural, construction and trucking companies School districts and municipalities Spot custom
Slide 21: Wholesale Segment Spin-off: SUSP IPO
Wholesale Segment Spin-off: SUSP IPO Successfully executed public offering of wholesale distribution business in September 2012 Establishes FMV of wholesale distribution business tied to our stable cash flow ($685 million as of 3/18/13 @ $31.30/unit) Creates strategic vehicle for growth Impr
Slide 22: Post-MLP Organization Structure
Post-MLP Organization Structure Susser Holdings Corporation and What Remains at the subsidiaries (“Parent”) Parent? Common Units Retail operations Subordinated Units 100% Ownership Stripes® c-stores Interest Incentive Distribution Rights (NASDAQ: SUSS) Sale of motor fuel at consignment locatio
Slide 23: Differentiation between SUSP and SUSS Wholesale Segment
Differentiation between SUSP and SUSS Wholesale Segment SUSP SUSS WHOLESALE SEGMENT Operations include: Operations include: Fuel sales to Affiliates under 10 year 100% of SUSP Operations supply contract at 3 cent fixed margin: Consignment fuel business at 91 562 Stripes® stores locations
Slide 24: Key Investment Highlights – SUSP
Key Investment Highlights – SUSP STABILITY VISIBLE GROWTH Long-term, fee-based contracts Embedded growth with Parent 10-year fixed fee contract with the 75 Stripes® store dropdown option Parent (14 completed to date) 5-year average remaining term 25-35 currently expected in 2013 contract
Slide 25: Our Strong, Long-Term Supplier Relationships
Our Strong, Long-Term Supplier Relationships Key Brands Overview Valuable supply contracts with major oil companies and refiners More than 20 branded and unbranded suppliers Long-term relationships with suppliers 2012 Volumes by Supplier provides attractive terms and ability to grow Others Val
Slide 26: Stable & Growing Operating and Financial Performance
Stable & Growing Operating and Financial Performance Historical Gallons Sold Pro Forma (1) Fuel Gross Profit 1,800 $60 1,448 $50.2 1,500 1,312 $50 $44.5 1,233 Gallons (millions) 1,202 $ millions 1,096 $39.1 1,200 $40 $35.1 892 900 $30 600 $20 300 $10 0 $0 2007 2008 2009 2010 2011 2012 2009 2010 2011
Slide 27: Susser Petroleum Partners Strategy
Susser Petroleum Partners Strategy Increasing motor fuel volumes through growth in the number of Stripes® convenience stores and volumes of motor fuel sold at SHC’s existing Stripes® Grow Through convenience stores Relationship with SHC Executing sale and leaseback arrangements with SHC that pro
Slide 28: Why Do Customers Choose Susser?
Why Do Customers Choose Susser? Solid reputation (integrity, financially sound, etc.) Choice of quality brands - more than competitors Competitive pricing Reliable supply of product Willingness to invest capital in projects Use of technology makes it easy to do business Value-added pro
Slide 29: Selected New Business Locations
Selected New Business Locations Hickory Slough Market Pearland - Chevron Ice Box #4969 – Exxon Port Arthur Heights Mobil 29
Slide 30: Expanding our Transportation Capacity and Capability
Expanding our Transportation Capacity and Capability (SUSS Operations) 1,800 Gallons Hauled by Carriers • Expanded to 24/7 1,600 dispatch in 2012 1,400 • Increased private fleet GALLONS (MILLIONS) 1,200 from 21 to 54 trucks in 1,000 Common Carriers Proprietary Fleet the last 4 years 800 600 • Privat
Slide 31: Current Technology Initiatives
Current Technology Initiatives Customer PDI TMW GoPetro Sales Mobile Portal Enterprise Systems Fleet Force Devices In-Cab Comm Enhancements MLP Logistics CRM Smart Phone Real-Time Status Electronic Entity Support Asset Tracking Customer Care Tablet Forms 31
Slide 32: Technology Future State
Technology Future State Customers In-Truck Mobile Mobile Access Communications Logistics and Customer Care Sales Teams and Brand Managers Technology 32
Slide 33: Our Business in Perspective
Our Business in Perspective In 2012 we sold 178,781 loads of motor fuel or 20 loads/hour 24/7/365 Susser’s carriers drive an estimated 15 million miles every year, which is the equivalent to 600 times around the Earth 33
Slide 34: Retail Business Review
Retail Business Review Steve DeSutter
Slide 35: Growing Retail in Several Dimensions
Growing Retail in Several Dimensions Leveraging our unique connection with key stakeholders Team members, suppliers, customers …combined with our technology platform …and growing markets Deliver consistent top tier performance Same store sales growth while protecting margins Reduce ope
Slide 36: Average Fuel Gallons Sold per Store Continue to Grow
Average Fuel Gallons Sold per Store Continue to Grow Average Fuel Gallons Sold per Retail Store 1,600 Key Drivers Strategy: Protect and grow volume 1,500 Favorable market conditions/trends (Thousands of gallons) 1,400 New stores built for volume 1,300 +6% Expansion of diesel +5% +2% Dedica
Slide 37: Retail Fuel Margin
Retail Fuel Margin 25¢ (cents per gallon) 23.2 Key Drivers 21.8 Strategy: Competitive retail 5.5 20¢ 18.4 5.5 price on every corner 17.8 Market volatility favors 4.3 15¢ 13.7 14.8 4.2 14.6 stronger margin 2.7 2.9 3.5 Shift in product mix – higher 10¢ margin in diesel 16.3 Communication is a
Slide 38: 5-Year Average Fuel Margins
5-Year Average Fuel Margins 20.0 19.3¢ 19.3¢ 18.0 Gross Profit 3.0 4.6 Markup to SUSP 16.0 Cents per Gallon 14.0 4.6 Credit Card 12.0 10.0 8.0 14.7 6.0 11.7 Net CPG 4.0 2.0 0.0 Without MLP Impact Including MLP Impact 38
Slide 39: Technology Demo
High Visibility to Fuel/Volume Movements Technology Demo 39
Slide 40: Average Merchandise Sales per Store Continue to Grow
Average Merchandise Sales per Store Continue to Grow Average Merchandise Sales per Store Key Drivers $1,800 Strategy: Drive customer $1,700 count and transaction size $1,600 Favorable market conditions $1,500 New store development ($000’s) $1,400 +8% builds brand identity +8% $1,300 +4% Leve
Slide 41: Technology Demo
Locating Performance Hotspots Technology Demo 41
Slide 42: Consistent Merchandise Margin Performance
Consistent Merchandise Margin Performance (% of merchandise sales) 38% Key Drivers Competitive store-specific 36% 36.8% pricing to drive traffic 36.2% 36.3% 36.0% 34% 35.9% 35.6% 35.7% Supplier offers Capital invested in higher 32% margin revenue-generating equipment, e.g.: 30% 33.9% Ice mak
Slide 43: Proprietary Offering Driving GP Growth
Proprietary Offering Driving GP Growth Annual Gross Profit Dollars (All Store) $340 $320 $300 $millions $280 $331 $260 $298 $240 $271 $261 $251 $220 $200 2008 2009 2010 2011 2012 43
Slide 44: Sales-Driven Culture
Sales-Driven Culture Store #9657 Category Management Educated, passionate success-driven team Data-driven decision making Store-specific plan-o-grams Store #7121 on key categories led by designated category captains Space to opportunity Store-specific pricing 44
Slide 45: Fanatic About Hot, Fresh & Delicious
Fanatic About Hot, Fresh & Delicious Authentic and Value Priced Our culture: prepare and serve great food Made from scratch Create customer trial Build lunch & dinner Market basket impact 45
Slide 46: Innovation Driving Sales and Customer Interest
Innovation Driving Sales and Customer Interest Product Innovation Sales By Year (Same Store) $10 $8 $ millions $6 $4 $2 $0 2009 2010 2011 2012 46
Slide 47: New Revenue Generating Equipment Supports Foodservice Growth
New Revenue Generating Equipment Supports Foodservice Growth Expanded merchandising space for hot and cold items Allows for hot grab-and-go items to be separated from the LTC counter, reducing congestion Provides space for healthier options e.g. – salads, yogurt parfaits Installed in all n
Slide 48: LTC Customers Visit Stripes 40% More Often
LTC Customers Visit Stripes 40% More Often Famous for Tacos Number of LTC Food Units Sold Annually 100 +11% 90 +14% 80 +11% +10% Millions of Units 70 +58% 60 50 +26% 40 +33% 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 48
Slide 49: Store Labor Expense Management
Store Labor Expense Management Same Store Direct Store Labor Expense 14.4% (% of merchandise sales) Key Drivers 14.2% #1 operating controllable 14.2% 14.1% expense line 14.0% 14.1% Challenges 13.8% 13.9% Offsetting wage inflation 13.6% 13.5% Competing with the oil patch 13.4% 13.2% Food se
Slide 50: Schedule Builder and Labor Optimization
Optimizing Schedule Labor Builder and Speed and Labor of Service Exchange Stripes Schedule Builder Designed to manage labor efficiency Shows managers where hours should be scheduled based on customer flow Significantly reduces manager time working on schedules Employees get schedule via emai
Slide 51: Schedule Demand Matching to Labor
Matching ScheduleDemand toLabor Builder and Available Labor Exchange Stripes Labor Exchange – In Development Connects stores requesting additional labor to employees seeking extra hours Employees will automatically top the list, based on geography and personal preference e.g. – time of day, we
Slide 52: Carefully Controlling Other Operating Expenses
Carefully Controlling Other Operating Expenses Other Operating Expense Before Credit Cards (% of merchandise sales) Key Drivers 13.50% 13.4% Utility expense down 27% on a per-store basis since 2008 13.00% 12.8% Benefiting from inexpensive natural gas 12.50% Cash shortage down 23% on 12.00% a p
Slide 53: Alignment of Performance Based Incentives
Alignment of Performance Based Incentives Continuous Improvement of OER Performance % of Store Base Represented by OER Index Groups Key Drivers 60% Operations Excellence program seeks constant 50% improvement People 40% % of Store Base Systems Customers 30% 2012 Q4 Financial 20% 2010 Q1
Slide 54: Real Estate Development
Real Estate Development E.V. “Chip” Bonner
Slide 55: New Stores Delivering ~20% Unlevered ROI
New Stores Delivering ~ 20% Unlevered ROI New Store Returns Unlevered ROI Levered ROI 30% 100% 88% 25% 25% 24% 23% 80% 69% 20% 60% 15% 40% 10% 26% 20% 5% 0% 0% 12-24 (19) 25-36 (13) >36 (101) 12-24 (19) 25-36 (13) >36 (101) Months Open (# Stores) Months Open (# Stores) Unlevered ROI = Store incremen
Slide 56: Real Estate Summary
Real Estate Summary As of December 30, 2012 Controlled by Operating: Fee Leased Franchisee Total Sites Retail - Stripes 262 297 - 559 Wholesale - Stripes operated 8 - - 8 Wholesale- 3rd party operated (1) 55 34 490 579 Total Operating Sites (2) 325 323 490 1,138 Non-Operating: Land Bank / In Develop
Slide 57: Finance
Finance Mary Sullivan
Slide 58: Consolidated Financial Strength and Flexibility
Consolidated Financial Strength and Flexibility Provides Opportunity for Growth Reducing Leverage 5.0 4.5 Net Debt to 4.0 3.5 Adjusted EBITDA $206mm net proceeds from SUSP 3.0 2.5 IPO Sept. 2012 2.0 1.5 Reduced net debt to EBITDA to 0.9X 1.0 0.5 - $286mm consolidated cash and 12/07(1) 12/08 12
Slide 59: Refinancing Opportunity
Refinancing Opportunity Range of Potential Impacts ($ millions) Debt Amount Interest Rate Annualized Interest Current bonds outstanding 425 8.5% 36 Call premium 18 Interest due 5/15 18 Refinancing fees 2-5 Total cash required on 5/15 463 - 466 Cash at 12/30 (excl SUSP) 279 Estimated cash to use for
Slide 60: Incentive Distribution Rights – A Hypothetical Example
Incentive Distribution Rights --A Hypothetical Example Hypothetical Annual Distribution/ Unit $ 2.00 $ 2.50 $ 3.00 Hypothetical # Units outstanding 20,000 20,000 20,000 Hypothetical Total Distribution $ 40,000 $ 50,000 $ 60,000 Annual Percent Distribution Allocated to Up To (a) Unitholders $1.750 10
Slide 61: SUSS – Still a Great Buy But Requires Some Homework
SUSS – Still a Great Buy But Requires Some Homework SUSS SUSS (dollars and shares in millions) Consolidated SUSP "Retail" Stock Price @ 3/18 $ 46.32 $ 31.30 Shares Outstanding (diluted) 21.4 21.9 Market Cap 991 685 648 (b) Total Debt 607 185 422 Cash/Marketable Securities 434 155 279 Net Debt 173 30
Slide 62: Appendix
Appendix
Slide 63: Existing Stores Continue to Grow
Existing Stores Continue to Grow 144 Stores Opened Prior to 2000 (in millions) Merchandise Sales Merchandise Gross Profit $200 $65 $180 $60 $55 $160 $50 $140 $45 $120 $40 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012 Fuel Gallons 4-Wall Cash Flow 135 $45 $40 130 $35
Slide 64: New Stores Driving Cash Flow Growth
New Stores Driving Cash Flow Growth Town & Legacy Country Stores (Prior Stores Stores to 2000) Acquired Built (2) All Stores # of Stores (1) 144 154 146 559 Avg. Building Sq. Ft. 2.6K 3.5K 5.2K 3.6K Avg. Lot Sq. Ft. 21K 50-60K 50-100K 50K Avg. Annual Merch Sales (000‟s) $1,344 $1,911 $2,466 $1,792 A
Slide 65: 2012 Retail Growth
2012 Retail Growth Lubbock – 4,800 Midland – 4,800 Houston – 6,844 Edinburg – 4,800 New Retail Store Growth Houston – 6,844 2009 2010 2011 2012 2013 E 15 14 19 25 29-35 65
Slide 66: Leading Market Position in Highly Attractive Markets
Leading Market Position in Highly Attractive Markets Leading c-store operator in core Hispanic Population by Market markets 95% 100% 89% 75% 57% Core markets experiencing rapid 50% 44% 35% 34% 37% 32% population growth and increasing 25% 16% highway traffic 0% (2) Laredo Rio Corpus Midland- San
Slide 67: Energy Prices & Rig Count
Energy Prices & Rig Count U.S. Natural Gas Average Monthly Texas Rig WTI Crude Oil Spot Price (Henry Hub Spot Price) Count $150 $13 1,000 $12 $130 $11 900 $10 $9 800 $110 $8 700 $7 $90 $6 600 $5 $70 $4 500 $3 $50 $2 400 $1 $30 $0 300 ____________________ Source: U.S. Crude Oil Prices and U.S. Natura
Slide 68: Recent Texas Headlines
Recent Texas Headlines Area to see $28bn bonanza…investing est $28bn in Eagle Ford in 2013, 27% of industry‟s 2013 capital investment in lower 48 states will go to the Eagle Ford – San Antonio Express News 12/9/12 Houston is expected to add the most households of any U.S. metropolitan area over the
Slide 69: Partial List of Sources for Economic Data
Partial List of Sources for Economic Data http://www.window.state.tx.us/ http://www.texasahead.org/economy/tracking/ http://www.dallasfed.org/ http://texaseconomicdevelopmentguide.com/ http://recenter.tamu.edu/ http://texascenter.tamiu.edu/ http://www.ccredc.com/ http://www.mcallened
Slide 70: Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR
Susser Holdings Corporation Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR Fiscal Year Ended December 31, December 30, December 28, January 3, January 2, January 1, December 30, 2006 2007 2008 2010 2011 2012 2012 Net income attributable to Susser Holdings Corporation $
Slide 71: Reconciliation of Adjusted EBITDAR to Fuel Neutral Adjusted EBITDAR
Susser Holdings Corporation Reconciliation of Adjusted EBITDAR to Fuel Neutral Adjusted EBITDAR December 31, December 30, December 28, January 3, January 2, January 1, December 30, 2006 2007 2008 2010 2011 2012 2012 Adjusted EBITDAR, Actual (1) $ 67,980 $ 84,168 $ 145,316 $ 129,186 $ 162,635 $ 212,7
Slide 72: Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR
Susser Holdings Corporation Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR Three Months Ended January 1, December 30, 2012 2012 Net income attributable to Susser Holdings Corporation $ 5,299 $ 10,589 Net income attributable to noncontrolling interest 10 4,283 Depreciati
Slide 73: Susser Petroleum Partners Reconciliation to EBITDA and Distributable Cash Flow
Susser Petroleum Partners Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Distributable Cash Flow Susser Petroleum Company LLC Susser Petroleum Susser Petroleum Predecessor Predecessor Partners LP Partners LP Dec 31, Through From Dec 31, 2011 September 24, 2012 September 25, 2012 2012 Ne