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Sunoco Logistics Partners L.P. Reports Operating Results (10-Q)

November 04, 2010 | About:
10qk

10qk

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Sunoco Logistics Partners L.P. (SXL) filed Quarterly Report for the period ended 2010-09-30.

Sunoco Logistics Partners L.p. has a market cap of $2.66 billion; its shares were traded at around $80.58 with a P/E ratio of 16.9 and P/S ratio of 0.5. The dividend yield of Sunoco Logistics Partners L.p. stocks is 5.7%. Sunoco Logistics Partners L.p. had an annual average earning growth of 13% over the past 10 years.SXL is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Net income was $194.0 million for the third quarter 2010 as compared with $48.5 million for the third quarter 2009. Net income for the 2010 period included a $128.5 million non-cash gain on the Partnerships acquisition of additional interests in Mid-Valley and West Texas Gulf. The gain resulted from an adjustment to record its previous ownership interest at fair value in accordance with acquisition accounting rules. The remaining $17.0 million increase is primarily related to higher lease acquisition results driven primarily by contango profits in 2010 and increased earnings associated with the Partnerships acquisitions and organic growth capital in 2009 and 2010. These increases were partially offset by an increase in interest expense, related to the issuance of the $500 million Senior Notes in the first quarter of 2010, higher depreciation expense related to acquisitions and capital spending, and income tax expense.

Net income was $287.8 million for the nine-month period ended September 30, 2010 as compared with $196.0 million for the comparable period in 2009. The increase in net income from the prior period included a $128.5 million non-cash gain in connection with the acquisitions of additional interests in Mid-Valley and West Texas Gulf. The resulting increase was partially offset by lower lease acquisition driven primarily by reduced contango profits and the absence of a $6.8 million non-recurring tariff adjustment that occurred in the second quarter of 2009. Higher interest expense and increased depreciation and amortization expense associated with acquisitions and organic growth projects further offset the increase in net income.

In February 2010, the Operating Partnership issued $250.0 million of 5.50 percent Senior Notes and $250.0 million of 6.85 percent Senior Notes, due February 15, 2020 and February 15, 2040, respectively (2020 and 2040 Senior Notes). The 2020 and 2040 Senior Notes are redeemable, at a make-whole premium, and are not subject to sinking fund provisions. The 2020 and 2040 Senior Notes contain various covenants limiting the Operating Partnerships ability to incur certain liens, engage in sale/leaseback transactions, or merge, consolidate or sell substantially all of its assets. The net proceeds from the 2020 and 2040 Senior Notes were used to repay in full the $201.2 million promissory note issued in connection with our repurchase and exchange of our general partners IDR interests, to repay outstanding borrowings under the $395 million Credit Facility and to pre-fund future growth projects.

Net cash provided by operating activities for the nine months ended September 30, 2010 was $88.1 million compared with $37.6 million of net provided by operating activities for the first nine months of 2009. Net cash provided by operating activities in 2010 related primarily to net income of $159.4 million (excluding a $128.5 million non-cash gain in connection with the acquisitions of additional interests in Mid-Valley and West Texas Gulf). Also contributing to net cash provided by operating activities was non-cash charges of depreciation and amortization of $44.9 million offset by a $115.7 million increase in working capital. The increase in working capital was primarily the result of increases in contango inventory positions. The net cash used in operating activities in 2009 related to net income of $196.0 million and non-cash charges of depreciation and amortization of $35.3 million, offset by a $186.8 million increase in working capital. The increase in working capital was the result of increases in accounts receivable and contango inventory positions, partially offset by an increase in accounts payable.

Net cash provided by financing activities for the first nine months of 2010 was $268.0 million compared with $121.2 million net cash provided by financing activities for the first nine months of 2009. Net cash provided by financing activities for the first nine months of 2010 resulted from the net proceeds of $494.0 million from the issuance of $500 million senior notes, net proceeds of $143.6 million related to the Partnerships August 2010 equity offering and $100 million of proceeds from the July 2010 promissory note with Sunoco, Inc. These sources of cash were partially offset by $201.2 million repayment of the promissory notes issued in connection with the repurchase and exchange of the general partners incentive distribution rights; $119.2 million net repayment of the Partnerships credit facilities; and $138.1 million in quarterly distributions to the limited and general partners. Net cash provided by financing activities for the first nine months of 2009 resulted from $173.3 million issuance of senior notes and $109.5 million public offering completed in April and May of 2009. The net proceeds from these sources were partially offset by $126.5 million in distributions paid to limited partners and the general partner and $33.4 million net repayment of the Partnerships credit facilities.

Expansion capital expenditures for the nine months ended September 30, 2010 were $331.1 million compared to $143.5 million for the first nine months of 2009. During 2010, the Partnership acquired a butane blending business from Texon L.P. for $140.0 million plus inventory, as well as $91.6 million for additional ownership interests in Mid-Valley, West Texas Gulf and West Shore. Expansion capital for 2010 also includes construction projects to expand services at the Partnerships refined products terminals, increase tankage at the Nederland facility and to expand upon the Partnerships refined products platform in the southwest United States. Management expects to invest approximately $145 million to $160 million in expansion capital projects in 2010, excluding major acquisitions.

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