Sunoco LP (SUN) shares took a dip in premarket trading on Wednesday after the company reported third-quarter revenue that missed analysts’ expectations. Despite strong growth in adjusted distributable cash flow and EBITDA, the revenue shortfall dampened investor enthusiasm.
Sunoco’s third-quarter revenue reached $5.75 billion, falling short of the consensus estimate of $6.508 billion. However, the company saw positive developments in other key metrics. Adjusted distributable cash flow climbed to $349 million, a significant improvement from $181 million in the same period last year. Adjusted EBITDA also saw a substantial increase, rising to $456 million from $257 million in the prior year.
The Fuel Distribution segment, a key driver of Sunoco’s performance, saw a 1% year-over-year increase in fuel sales, reaching 2.1 billion gallons. The fuel margin for all gallons sold stood at 12.8 cents per gallon, slightly higher than the 12.5 cents per gallon recorded in the previous year’s quarter. This positive trend contributed to an increase in Adjusted EBITDA for the segment, which reached $253 million compared to $234 million in the prior year.
However, the company’s earnings per share (EPS) came in at a loss of $0.26, missing the consensus estimate of $1.55. Total capital expenditures for the quarter amounted to $93 million, including $67 million for growth capital and $26 million for maintenance capital.
Sunoco declared a distribution of $0.8756 per unit on October 28, payable on November 19, to unitholders of record as of November 8. As of September 30, the company’s long-term debt stood at approximately $7.3 billion. Sunoco also had $1.4 billion in liquidity remaining on its $1.5 billion revolving credit facility.
Investors seeking exposure to Sunoco’s stock can consider ETFs like InfraCap MLP ETF (AMZA) and Alerian MLP ETF (AMLP). At the time of writing, Sunoco shares were down 2.37% at $52.00 in premarket trading.
While the missed revenue target has impacted Sunoco’s share price, the company’s strong performance in other areas, including adjusted distributable cash flow and EBITDA, provides a positive outlook for the future. The company’s robust fuel distribution segment, coupled with its ongoing capital investments, could drive further growth in the coming quarters.
