SUN Sunoco LP

(1)

Adjusted EBITDA and Distributable Cash Flow, as adjusted, are non-GAAP financial measures of performance that have limitations and should not be considered as a substitute for net income. Please refer to the discussion and tables under "Reconciliation of Non-GAAP Measures" later in this news release for a discussion of our use of Adjusted EBITDA and Distributable Cash Flow, as adjusted, and a reconciliation to net income.

(2)

A reconciliation of non-GAAP forward looking information to corresponding GAAP measures cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amounts due to a variety of factors, including the unpredictability of commodity price movements and future charges or reversals outside the normal course of business which may be significant.

SUNOCO LP

CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(unaudited)

March 31,
2024

December 31,
2023

ASSETS

Current assets:

Cash and cash equivalents

$                       215

$                         29

Accounts receivable, net

893

856

Accounts receivable from affiliates

26

20

Inventories, net

953

889

Other current assets

125

133

Assets held for sale

511

—

Total current assets

2,723

1,927

Property and equipment

2,820

2,970

Accumulated depreciation

(960)

(1,134)

Property and equipment, net

1,860

1,836

Other assets:

Operating lease right-of-use assets, net

422

506

Goodwill

1,461

1,599

Intangible assets, net

523

544

Other non-current assets

278

290

Investment in unconsolidated affiliates

125

124

Total assets

$                    7,392

$                    6,826

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$                    1,022

$                       828

Accounts payable to affiliates

170

170

Accrued expenses and other current liabilities

302

353

Operating lease current liabilities

23

22

Liabilities associated with assets held for sale

130

—

Total current liabilities

1,647

1,373

Operating lease non-current liabilities

431

511

Long-term debt, net

3,795

3,580

Advances from affiliates

98

102

Deferred tax liabilities

181

166

Other non-current liabilities

119

116

Total liabilities

6,271

5,848

Commitments and contingencies

Equity:

Limited partners:

Common unitholders
   (84,428,109 units issued and outstanding as of March 31, 2024 and
    84,408,014 units issued and outstanding as of December 31, 2023)

1,121

978

Class C unitholders - held by subsidiaries
   (16,410,780 units issued and outstanding as of March 31, 2024 and
    December 31, 2023)

—

—

Total equity

1,121

978

Total liabilities and equity

$                    7,392

$                    6,826

SUNOCO LP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Dollars in millions, except per unit data)

(unaudited)

Three Months Ended March 31,

2024

2023

REVENUES:

Motor fuel sales

$               5,366

$               5,239

Non-motor fuel sales

95

86

Lease income

38

37

Total revenues

5,499

5,362

COST OF SALES AND OPERATING EXPENSES:

Cost of sales

5,015

4,987

General and administrative

36

29

Other operating

88

82

Lease expense

18

16

Loss on disposal of assets

2

1

Depreciation, amortization and accretion

43

48

Total cost of sales and operating expenses

5,202

5,163

OPERATING INCOME

297

199

OTHER INCOME (EXPENSE):

Interest expense, net

(63)

(53)

Other income, net

1

—

Equity in earnings of unconsolidated affiliates

2

2

INCOME BEFORE INCOME TAXES

237

148

Income tax expense

7

7

NET INCOME AND COMPREHENSIVE INCOME

$                  230

$                  141

NET INCOME PER COMMON UNIT:

Basic

$                 2.29

$                 1.43

Diluted

$                 2.26

$                 1.41

WEIGHTED AVERAGE COMMON UNITS OUTSTANDING:

Basic

84,424,748

84,058,716

Diluted

85,259,238

84,970,826

CASH DISTRIBUTIONS PER UNIT

$             0.8756

$             0.8420

Three Months Ended March 31,

2024

2023

Fuel
Distribution
and
Marketing

All Other

Total

Fuel
Distribution
and
Marketing

All Other

Total

(dollars and gallons in millions, except profit per gallon)

Revenues:

Motor fuel sales

$            5,234

$            132

$       5,366

$            5,103

$            136

$       5,239

Non-motor fuel sales

40

55

95

29

57

86

Lease income

35

3

38

34

3

37

Total revenues

$            5,309

$            190

$       5,499

$            5,166

$            196

$       5,362

Cost of sales:

Motor fuel sales

$            4,865

$            124

$       4,989

$            4,835

$            125

$       4,960

Non-motor fuel sales

7

19

26

4

23

27

Lease

—

—

—

—

—

—

Total cost of sales

$            4,872

$            143

$       5,015

$            4,839

$            148

$       4,987

Net income and comprehensive income

$          230

$          141

Adjusted EBITDA ⁽¹⁾

$               219

$              23

$          242

$               195

$              26

$          221

Operating data:

Motor fuel gallons sold

2,105

1,930

Motor fuel profit cents per gallon ⁽²⁾

           11.7 ¢

           12.9 ¢

Three Months Ended March 31,

2024

2023

(in millions)

Net income and comprehensive income

$                    230

$                    141

Depreciation, amortization and accretion

43

48

Interest expense, net

63

53

Non-cash unit-based compensation expense

4

5

Loss on disposal of assets

2

1

Unrealized (gains) losses on commodity derivatives

13

(11)

Inventory valuation adjustments

(130)

(29)

Equity in earnings of unconsolidated affiliates

(2)

(2)

Adjusted EBITDA related to unconsolidated affiliates

3

3

Other non-cash adjustments

9

5

Income tax expense

7

7

Adjusted EBITDA ⁽¹⁾

$                    242

$                    221

Adjusted EBITDA ⁽¹⁾

$                    242

$                    221

Adjusted EBITDA related to unconsolidated affiliates

(3)

(3)

Distributable cash flow from unconsolidated affiliates

3

3

Cash interest expense

(54)

(51)

Current income tax expense

(3)

(3)

Maintenance capital expenditures

(14)

(8)

Distributable Cash Flow

171

159

Transaction-related expenses

5

1

Distributable Cash Flow, as adjusted ^{(1) (3)}

$                    176

$                    160

Distributions to Partners ⁽³⁾:

Limited Partners

$                    119

$                      71

General Partner

36

19

Total distributions to be paid to partners

$                    155

$                      90

Common Units outstanding - end of period

84.4

84.1

⁽¹⁾

Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization and accretion expense, allocated non-cash compensation expense, unrealized gains and losses on commodity derivatives and inventory valuation adjustments, and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations, such as gains or losses on disposal of assets and non-cash impairment charges. We define Distributable Cash Flow as Adjusted EBITDA less cash interest expense, including the accrual of interest expense related to our long-term debt which is paid on a semi-annual basis, current income tax expense, maintenance capital expenditures and other non-cash adjustments. For Distributable Cash Flow, as adjusted, certain transaction-related adjustments and non-recurring expenses are excluded.

We believe Adjusted EBITDA and Distributable Cash Flow, as adjusted, are 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 such metrics as measures of financial performance, ability to make distributions to our unitholders and debt service capabilities;

•

our management uses them for internal planning purposes, including aspects of our consolidated operating budget, and capital expenditures; and

•

Distributable Cash Flow, as adjusted, provides useful information to investors as it is a widely accepted financial indicator used by investors to compare partnership performance, and as it provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

Adjusted EBITDA and Distributable Cash Flow, as adjusted, are not recognized terms under GAAP and do not purport to be alternatives to net income as measures of operating performance or to cash flows from operating activities as a measure of liquidity. Adjusted EBITDA and Distributable Cash Flow, as adjusted, have limitations as analytical tools, and one should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:

•

they do not reflect our total cash expenditures, or future requirements for capital expenditures or contractual commitments;

•

they do not reflect changes in, or cash requirements for, working capital;

•

they do 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 and Distributable Cash Flow, as adjusted, may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA reflects amounts for the unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliates 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 affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly. Inventory valuation 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.

⁽²⁾

Excludes the impact of inventory valuation adjustments consistent with the definition of Adjusted EBITDA.

⁽³⁾

The Partnership's Distributable Cash Flow, as adjusted, for the three months ended March 31, 2024 does not include the consolidated results of NuStar, because the NuStar merger occurred after the end of the reporting period. However, because the NuStar merger closed prior to the record date for the first quarter 2024 distribution, the distributions reported above reflect the impact of the SUN common units issued in connection with the merger.

Some investors and other users of SUN's financial information may compare Distributable Cash Flow, as adjusted, to the distributions to be paid by the Partnership for the respective quarter. To aid in such comparison, the Partnership is supplementing the information above with the following, which reflects separate historical data for (i) the Partnership and its legacy unitholders and (ii) NuStar and its legacy unitholders. NuStar's results for the three months ended March 31, 2024 do not represent the historical or future performance of SUN. Furthermore, Distributable Cash Flow, as adjusted, for NuStar reported below is calculated based on SUN's methodology for calculating such measure and therefore may not be consistent with the approach that NuStar historically used to calculate a similar measure in its standalone reporting prior to the merger.

Three Months Ended
March 31, 2024

(in millions)

Distributable Cash Flow, as adjusted:

SUN

$                               176

NuStar (calculated based on SUN's methodology)

94

Distributions related to legacy SUN unitholders

Limited Partners

$                                 74

General Partner

22

Incremental distributions related to SUN common units issued in connection with the NuStar
acquisition

Limited Partners

$                                 45

General Partner

14