Sunoco Lp · NYSE:SUN
Sunoco Lp — Susser Petroleum Partners — Q1 2014 Earnings Presentation
54 slides from Sunoco Lp's earnings presentation, May 2014
Slide 1: Susser Petroleum Partners LP May 2014
Susser Petroleum Partners LP May 2014
Slide 2: Safe Harbor
Safe Harbor Some of the statements in this presentation constitute “forward-looking statements” about Susser Petroleum Partners and/or Susser Holdings Corporation that involve risks, uncertainties and assumptions, including without limitation, our discussion and analysis of our financial condition a
Slide 3: Evolution of Our Business – Past and Present
Evolution of Our Business – Past and Present Wholesale Dealer Site Retail Stripes Site 3
Slide 4: Evolution of Our Business – Future
Evolution of Our Business – Future April 27, 2014 - Susser Holdings (SUSP parent) agreed to be purchased by Energy Transfer Partners, L.P. (ETP) April 28 – Joint announcement and investor conference call* SUSP will remain a separate, publicly-traded MLP ETP will own the general partner and I
Slide 5: Current Susser Footprint
Current Susser Footprint Oklahoma % . o, New Mexico + $e & + é 4 Louisiana store locations @ retail: G strives @ retail: Crome @ wholesale
Slide 6: We are a Key Player in the Motor Fuels Value Chain
We are a Key Player in the Motor Fuels Value Chain Motor Fuels Value Chain Crude Oil Refining Storage and Wholesale Retail Production Transportation Distribution We operate within the wholesale distribution segment of the Motor Fuels Value Chain We generate a profit margin by distributing motor
Slide 7: Diverse and Stable Sources of Cash Flow
Diverse and Stable Sources of Cash Flow Gallons Sold by Channel (1) We distribute 1.6 billion gallons of Commercial motor fuel annually to: 632 Stripes® and Sac-N-Pac ® 14% convenience stores (exclusive supplier) ~100 third party consignment Third-Party 19% 59% locations Dealer ~520 third-pa
Slide 8: 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 2014 Volumes by Supplier suppliers provides attractive terms and ability to grow Others Val
Slide 9: SUSP: Stable & Growing Operating and Financial Performance
SUSP: Stable & Growing Operating and Financial Performance Gallons Sold (1) Fuel Gross Profit (1) 1,571 1,637 61.9 1,600 1,448 $60 1,312 57.9 1,233 50.2 Gallons (millions) ($ in millions) 1,200 $45 44.5 39.1 $30 800 $15 400 $0 0 2010 2011 2012 2013 2014 Q1 2010 2011 2012 2013 2014 Q1 LTM LTM Stripes
Slide 10: Recent Results
Recent Results 2014 Q1 Highlights: Grew gallons by 18% over Q1 2013 Gross profit increased by 42% over Q1 2013 Gross profit margin increased from 3.6 cents to 4.0 cents/gallon Added 27 new contracted dealers 8 organic 19 acquired (Sac-N-Pac/3W Warren Fuels) $15.7mm Adjusted EBITDA, u
Slide 11: SUSP Distributable Cash Flow
SUSP Distributable Cash Flow Distributions Grown by 3.5% Last Four Quarters While Increasing Coverage DCF and Distributions / Unit Distribution Coverage $0.70 1.30 $0.64 $0.60 $0.58 $0.58 1.27X $0.54 1.25 1.23X $0.50 $0.48 1.22X $0.45 1.19X 1.20 1.20X $0.40 1.18X 1.15 $0.30 1.14X $0.49 $0.50 $0.44 $
Slide 12: Delivering Organic Growth
Delivering Organic Growth 2012 2013 2014 Q1 Total Gallons Growth 10.5% 8.4% 18.1% Retail Same Store 6.6% 3.0% 1.9% Merchandise Sales Growth New Stripes® Stores 25 29 2* New Wholesale Contracted 39 32 8* Dealer Sites New Jobs Created ~800 ~1,000 * Excludes 47 retail stores and 19 dealer sites acquire
Slide 13: Organic Wholesale Customer Growth
Organic Wholesale Customer Growth Amigo Mart #2 Zippy’s Zippy’s Food Food Mart Mart Houston, TX Killeen, Killeen, TX TX Fresh Start #1 Porter, TX Edge Mart One Stop Bucker Katy, TX Dallas, TX New Wholesale Growth 2009 2010 2011 2012 2013 2014 E *Excluding Sac-N-Pac Acquisition 27 20 21 39 32 28-45*
Slide 14: Delivering Growth through Acquisitions
Delivering Growth through Acquisitions Acquired Gainesville Fuel, Inc. in September 2013 60 million diesel gallons annual volume Customers are oil & gas producers in North Texas and Oklahoma 2014 expected accretion: SUSP: $0.05 to $0.10 distributable cash flow per unit SUSS: $0.03 to $0.
Slide 15: Strategic Flexibility to Pursue Acquisitions
Strategic Flexibility to Pursue Acquisitions Highly fragmented industry dominated by single store operators Oklahoma 2,648 Continued consolidation of 911 smaller, less efficient players New Mexico We supply ~5% of convenience stores in our Dallas Louisiana existing markets Texas 15,191 More
Slide 16: SUSP - Multiple Drivers of Growth
SUSP - Multiple Drivers of Growth Rapid Stripes motor fuel volume growth Dropdown and Existing locations Organic Growth New locations Through Significant sale/leaseback opportunities with 75 store option Relationship with SUSS Rental income Built-in distributable cash flow growth at the
Slide 17: Our Parent – Susser Holdings Corporation
Our Parent – Susser Holdings Corporation One of largest combined retail / wholesale footprints in the fast-growing Southwest >1,200 locations (retail, consignment and contracted branded dealers, including SUSP) Strong financial position: $1.1 B merchandise sales LTM Q1 ‘14 $166 mm Adjusted
Slide 18: Our Parent – Superior Track Record and Market Position
Our Parent – Superior Track Record and Market Position Locations Susser vs. the Industry (1) 1,248 1200 1,138 1,171 Cigarettes % of 1,106 Average Store Size Merchandise Sales 1000 915 957 891 884 616 591 (square feet) 35% 32.8% 800 565 579 4,000 692 3,800 665 431 625 640 637 639 387 372 390 3,500 30
Slide 19: Fuel Margin History – Pro Forma for MLP
Fuel Margin History – Pro Forma for MLP Retail Margin per Gallon(1) SUSP Avg Margin per Gallon(2) (cents per gallon) (cents per gallon) 25¢ 4.0¢ 23.2 19.9 - 22.6 0.8 19.9 PF 3.5¢ 16.9 Rpt 20¢ 5.5 18.4 21.5 5.5 19.0 PF 3.0¢ - 3.0 16.0 Rpt 4.3 2.5¢ 14.6 15¢ - 5.5 3.0 3.5 2.0¢ 3.7 3.8 3.4 3.5 10¢ 5.5 3
Slide 20: Our Parent – Embedded Growth
Our Parent – Embedded Growth Prudent Organic Growth Accelerating Retail Store Growth Accelerating new store openings with our largest New Stores Opened(1) 35 customer, SUSS 29 30 New stores generate 2-3x the 25 25 average store cash flow upon 20 maturity after 3-4 years 17 17 15 12 New stores
Slide 21: Our Parent – Embedded Growth
Our Parent – Embedded Growth Prudent Organic Growth Retail Motor Fuel Gallons Sold (in millions) Retail strategies to drive 1,200 fuel volume growth 1,000 936 963 853 786 Superior facilities and real 800 677 720 736 estate 600 457 Expansion of diesel and capital 400 395 investment in fuel disp
Slide 22: Highly Attractive, Growing Markets
Highly Attractive, Growing Markets Texas Market Long-Term Job Growth (1) Texas economy outperforming U.S. Ranked #1 for job growth Michigan (121, 000) Relatively strong housing market California Lower unemployment than the U.S. (446,000) Strongest Texas markets benefiting from increased oi
Slide 23: Key Investment Highlights – SUSP
Key Investment Highlights – SUSP STABILITY VISIBLE GROWTH Long-term, fee-based contracts Embedded growth with Parent 75 Stripes® store dropdown option (42 10-year fixed fee contract with the completed since IPO) Parent 9 in 2014 5-year average remaining term History of strong growth in
Slide 24: over 75 years…
Helping communities grow and thrive for over 75 years… 24
Slide 25: Appendix
Appendix
Slide 26: Real Estate Summary
Real Estate Summary As of March 31, 2013 Controlled by Operating: Fee Leased Franchisee Total Sites Retail 304 326 - 630 Wholesale- SPC 9 26 35 Wholesale- SUSP 87 12 522 621 Stripes stores owned by SUSP (1) (40) (40) Total Operating Sites 400 324 522 1,246 Non-Operating: Office / Warehouse 14 8 - 22
Slide 27: Key Financial Results
Key Financial Results ` Fiscal Year 2011 2012 2013 2013 Q1 2014 Q1 Merchandise Same Store Sales Growth 6.0% 6.6% 3.0% 4.2% 1.9% Merchandise Margin, Net of Shortages 33.7% 33.9% 33.9% 33.1% 33.9% Retail Average Per-Store Gallons Growth 4.9% 5.8% 5.8% 4.1% 2.0% / 4.2% (w/wo SNP) Retail Fuel Margin (CP
Slide 28: Retail Growth
Retail Growth Spring – 6,844 sq. ft. Carrizo Springs– 6,844 sq. ft. Del Rio – 6,844 sq. ft. Plus Lube Center Rosenburg– 6,844 sq. ft. Karnes City – 6,844 sq. ft. New Retail Store Growth Plus Truck Diesel Island 2009 2010 2011 2012 2013 2014 E 15 14 19 25 29 27-33* *Excluding Sac-N-Pac Acquisition 28
Slide 29: Proprietary Restaurant Service Differentiates Susser
Proprietary Restaurant Service Differentiates Susser 404 locations with a restaurant concept 367 Laredo Taco Company® locations Authentic Mexican food catering to both Hispanic and non-Hispanic customers Wide variety of delicious, spicy food at a great value Foodservice drives higher-than-
Slide 30: Widening the Gap
Widening the Gap (in 000’s, based on LTM data) Average Per-Store Merchandise Sales $1,882 $1,889 $1,792 $1,800 $1,661 $1,540 $1,488 $1,500 $1,437 $1,270 $1,230 $1,223 $1,230 $1,237$1,241 $1,217 $1,214 $1,172 $1,173 $1,200 $1,142 $1,127 $1,150 $1,134 $1,142 $1,070 $1,088 $1,075 $1,055 $999 $991 $1,00
Slide 31: Delivering Best in Class Volume Growth
Delivering Best in Class Volume Growth (in 000’s, based on LTM data) Average Per-Store Gallons 1,856 1,847 1,855 1,820 1,817 1,825 1,819 1,830 1,797 1,800 1,763 1,725 1,669 1,578 1,600 1,491 1,421 1,388 1,400 1,355 1,319 1,306 1,289 1,269 1,255 1,2431,230 1,186 1,200 1,152 1,114 1,117 1,080 1,058 1,
Slide 32: Retail Quarterly Volatility Consistent on LTM Basis, Wholesale Margins Even More Stable
Retail Quarterly Volatility Consistent on LTM Basis, Wholesale Margins Even More Stable Quarterly Fuel Margin – Cents per Gallon (1) 35.0¢ 31.2 32.4 5 year: 30.0¢ 27.7 Pro 24.8 24.1 25.0¢ 22.8 Actual Forma 20.1 21.2 21.2 19.7 19.6 18.6 20.0¢ 17.6 16.0 Low = 11.1¢ 11.1¢ 15.2 15.0 15.3 15.0¢ 13.3 11.9
Slide 33: Fuel Margin History
Fuel Margin History Before credit Card Fees After Deducting Credit Card Fees Retail Fuel Margin Retail Fuel Margin, net of Credit Cards As Reported As Reported Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD 2006 9.3 15.4 21.1 9.2 13.7 2006 6.6 12.0 17.5 7.5 10.8 2007 12.0 17.3 15.9 14.1 14.8 2007 9.6 14.8 13.4 11.
Slide 34: Fuel Margin History
Fuel Margin History Wholesale Third Party Fuel Margin (2) Total Consolidated Fuel Margin Total Consolidated Fuel Margin, net of Credit Cards Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD 2006 4.8 5.9 6.9 4.8 5.6 2006 7.0 10.3 13.4 6.9 9.4 2006 5.7 8.7 11.8 6.0 8.1 2007 3.9 5.3 6.4 6.4 5.5 2007 7.7
Slide 35: Post-MLP Organization Structure
Post-MLP Organization Structure Susser Holdings Corporation and subsidiaries (“Parent”) What is at the Parent? Common Units Retail operations Subordinated Units 100% Ownership Stripes® c-stores Interest Incentive Distribution Rights (NYSE: SUSS) Sale of motor fuel at consignment locations Ow
Slide 36: Omnibus Agreement Summary
Omnibus Agreement Summary SUSP has an exclusive distribution agreement to distribute all motor fuel volumes purchased by SUSS on existing Stripes® and consignment locations for 10 years at a fixed profit margin of 3¢ per gallon Fuel Distribution The 75 c-stores under the Sale / Leaseback Option
Slide 37: Tracking the Texas Economy
Tracking the Texas Economy Key Economic Indicators Yearly Totals Median Sales Price Value of Active Gasoline Diesel Existing Auto Crude Oil Natural Gas Oil & Gas (Millions of (Millions of Single Sales Net Packages Produced Produced Drilling Taxed Taxed Family Value Taxed Year (Millions) (Millions) R
Slide 38: Tracking the Texas Economy
Tracking the Texas Economy Key Economic Indicators Monthly Totals Median Sales Price Value of Value of Active Gasoline Diesel Existing Auto Cigarette Crude Oil Natural Gas Oil & Gas (Millions of (Millions of Single Sales Net Packages Produced Produced Drilling Taxed Taxed Family Value Taxed Month/Ye
Slide 39: Texas Employment by Industry
39 Source: Texas A&M Real Estate Center Transportation, Warehousing, Government & Utilities Manufacturing Trade Education Government & Health Services Texas Employment by Industry Professional Information Business Services Share of Employment in Texas Texas Employment Growth (April 2013– April 2014)
Slide 40: Susser Holdings Corporation 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 Twelve Months Ended January 3, January 2, January 1, December 30, December 29, March 31, March 30, 2010 2011 2012 2012 2013 2013 2014 Net income and comprehensive income attribu
Slide 41: Susser Petroleum Partners Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Distributable Cash Flow
Susser Petroleum Partners Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Distributable Cash Flow Year Ended Three Months Ended December 31, December 31, December 31, Mar 31, Mar 31, 2011 2012 2013 2013 2014 Predecessor (in thousands) Net income $ 10,598 $ 17,570 $ 37,027 $ 8,227 $ 10,13
Slide 42: Energy Transfer Partners Investor Conference Call: Acquisition of Susser Holdings Corporation
ENERGY TRANSFER PARTNERS INVESTOR CONFERENCE CALL Acquisition of Susser Holdings Corporation Monday, April 28th, 2014
Slide 43: Legal Disclaimer
LEGAL DISCLAIMER IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC In connection with the proposed business combination transaction between Energy Transfer Partners, L.P. (“ETP”) and Susser Holdings Corp. (“Susser”). ETP plans to file with the U.S. Securities and Exchange Commission (the “
Slide 44: Introductions
INTRODUCTIONS Speakers: Martin Salinas Chief Financial Officer, ETP Jamie Welch Group Chief Financial Officer & Head of Corp. Development, ETE Bob Owens President & Chief Executive Officer, Sunoco Participants: Kelcy Warren Chief Executive Officer & Chairman, ETP Sam L. Susser Chairman & Chief Execu
Slide 45: Transaction Terms
TRANSACTION TERMS • Energy Transfer Partners, L.P. (“ETP”) will acquire 100% of Susser Holdings Corp. (“SUSS”) outstanding common stock for a total consideration of approximately $1.8 billion • Acquisition of SUSS shares funded with ETP common units (50%) and cash (50%) – On a 50/50 basis, considera
Slide 46: Transaction Matrix
TRANSACTION MATRIX Action Plan Why Susser? • Full integration is expected to take place in several • Susser’s business model capitalizes on the strong steps: economy and favorable demographic trends in Texas and surrounding states – Acquisition of SUSS • Ability to leverage Susser’s demonstrated ret
Slide 47: Illustrative Transaction Summary
ILLUSTRATIVE TRANSACTION SUMMARY Step 1: Step 2: Step 3: ETP acquires Susser Holdings Dropdown of all retail assets to SUSP SUSP GP and IDR interests moved to ETE • ETP acquires 100% of Susser for $80.25 per share • Over time, ETP’s retail assets contributed to SUSP in • ETP distributes SUSP GP and
Slide 48: Susser Business Overview
SUSSER BUSINESS OVERVIEW One of Largest Combined Susser Holdings • Retail Operations Retail / Wholesale Footprints in the Corporation • Sale of Motor Fuel Fast Growing Southwest (“SUSS”) at Consignment Locations C-Stores 630 100% interest Common Units • Owned Properties Contracted Dealers 616 Subord
Slide 49: Combination of Two Highly Complementary Businesses Will Create a Stronger and More Diversified Retail Platform
COMBINATION OF TWO HIGHLY COMPLEMENTARY BUSINESSES WILL CREATE A STRONGER AND MORE DIVERSIFIED RETAIL PLATFORM Sunoco Susser • Established East Coast and Southeast • One of the largest retail/wholesale footprints presence with over 5,000 branded sites, in the fast growing Southwest capitalizing on a
Slide 50: Combination Provides Significant Scale and Increases Geographic & Product Diversity
COMBINATION PROVIDES SIGNIFICANT SCALE AND INCREASES GEOGRAPHIC & PRODUCT DIVERSITY Operated Sites Sunoco Susser Total Owned1), company operated 553 630 1,183 Owned(1), dealer operated 576 90 665 Dealer & Distributor operated 4,023 526 4,549 Total sites 5,152 1,246 6,398 Key Business Metrics Sunoco
Slide 51: Integration Considerations
INTEGRATION CONSIDERATIONS • Achieve buying power synergies related to fuel, convenience merchandise and other procurement activities – Sunoco will be able to capitalize on its fuel sourcing expertise over a much larger portfolio • The addition of Susser to the Sunoco network broadens Sunoco's geogr
Slide 52: Significant, Tangible Annual Synergies Have Been Identified
SIGNIFICANT, TANGIBLE ANNUAL SYNERGIES HAVE BEEN IDENTIFIED Synergy opportunities are $70 $13 expected to well exceed $70 million annually G&A / Shared Services $17 Model Large Contract Purchases, Improved Margin in Prepared Food, Systems Optimization $35 Fuel Procurement, Convenience Merchandise $5
Slide 53: Illustrative Transaction Timeline
Illustrative Transaction Timeline TIMING AND STEPS 3 - 4 months expected timing from announcement to closing ~6 weeks • Subject to Susser shareholder vote & April 2014 customary regulatory approvals 3Q 2014: Week of April 28th 3 – 4 weeks Distribute Sign Merger Proxy to Agreement Shareholders Acquis
Slide 54: Conclusion
CONCLUSION • “Smart” transaction for ETP – Anticipated drop downs of the existing Sunoco and Susser retail businesses into SUSP provide a clear path for ETP to segregate the retail business into a dedicated vehicle with its own independent access to capital to support its growth strategy – Expected
Susser Petroleum Partners — Q1 2014 Earnings Presentation on 6ix