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Sunoco (SUN) Q3 Earnings Miss on Lower Motor Fuel Sales

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Sunoco LP (SUN - Free Report) reported third-quarter 2019 earnings per unit from continuing operations of 57 cents, missing the Zacks Consensus Estimate of 81 cents. Moreover, the bottom line plunged from the year-ago level of $1.15.

Quarterly operating revenues of the partnership totaled $4,331 million, missing the Zacks Consensus Estimate of $4,399 million. Also, the figure declined from $4,761 million recorded in the prior-year quarter.

The weak third-quarter results were due to lower profits from both the segments of the partnership, attributed to decline in motor fuel gross profit per gallon. The negatives were partially offset by higher fuel selling volumes in the quarter under review.

Sunoco LP Price, Consensus and EPS Surprise

Sunoco LP Price, Consensus and EPS Surprise

Sunoco LP price-consensus-eps-surprise-chart | Sunoco LP Quote

Segmental Performance

The partnership reports financial statements through two reportable segments — Fuel Distribution and Marketing, and All Other.

Fuel Distribution and Marketing: Total gross profit from the segment decreased to $236 million from $261 million in the comparable period of 2018, primarily due to lower Motor fuel sales, partially offset by higher Non-motor fuel sales.

All Other: This unit reported gross profit of $56 million compared with $72 million in the comparable period of 2018. The year-over-year decline was attributed to lower Motor and Non-motor fuel sales.

In terms of volumes, the partnership sold a record high of 2.11 billion gallons of fuel in the reported quarter, up 5.3% year over year. Motor fuel gross profit per gallon was recorded at 11.6 cents in the quarter, lower than the year-ago level of 12.7 cents.

Distribution

For the quarter ended Sep 30, 2019, Sunoco declared a quarterly cash distribution of 82.55 cents per unit, or $3.3020 on an annualized basis. Markedly, this distribution is flat on a sequential basis.

Expenses

Total expenses in the reported quarter decreased to $4,214 million from $4,602 million in the year-ago period. The decline in total expenses is mainly attributed to lower costs related to sale.

Capital Expenditure

The partnership incurred gross capital expenditure of $46 million in the quarter under review, including $33 million of growth capital and $13 million of maintenance capital.

Balance Sheet

As of Sep 30, 2019, Sunoco had cash and cash equivalents of $13 million, and a long-term debt (including revolving credit) of $3,060 million. Its debt-to-capitalization ratio was 80.1%.

Guidance

Sunoco expects full-year 2019 operating expenses to be lower than the previous guided figure of $540 million. In 2019, the partnership is planning to allocate around $115 million for growth purposes and $40 million for maintenance.

Zacks Rank and Stocks to Consider

Currently, Sunoco has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are World Fuel Services Corporation (INT - Free Report) , CNX Resources Corporation (CNX - Free Report) , and Contango Oil & Gas Company (MCF - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

World Fuel Services’ 2019 earnings per share are expected to rise 18% year over year.

CNX Resources’ 2019 earnings per share have witnessed three upward movements and no downward revision in the past 30 days.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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