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DALLAS -- Energy Transfer Partners LP (ETP), parent of Sunoco Inc. and future parent of the Stripes convenience store chain, is starting to reap the rewards of its acquisition of the Mid-Atlantic Convenience Stores (MACS) chain.
The MACS retail network is “fitting in nicely with our existing footprint and is performing as expected,” ETP Chief Financial Officer Martin Salinas reported today during the company's first-quarter 2014 earnings call (click here for related story). He added that it was a “tremendous quarter” for ETP’s retail segment.
As CSNews Online previously reported, private equity firm Catterton Partners sold MACS to a division of Sunoco for an undisclosed sum in October 2013. Richmond, Va.-based MACS operates convenience stores and gas stations in Maryland, Delaware, Virginia and Washington, D.C. In addition to 71 company-owned stores, MACS also has 230 dealer-operated sites. All 301 convenience stores and gas stations were included in the acquisition.
Although severe winter weather reduced miles driven and the Easter holiday fell into the second quarter, ETP saw margin increases that were driven largely by the fact that gas was about 10 cents per gallon less this year compared to last year, Bob Owens, President and CEO of Sunoco, said during the call.
"There were a number of things that happened, particularly in the Northeast around the weather, transportation and some both planned and unplanned downtime with refineries," Owens explained. "Our assets were well positioned to take advantage of that and we did."
Specifically, segment-adjusted EBITDA (earnings before income taxes, depreciation and amortization) for the retail marketing segment increased in Q1 compared to the same period last year, primarily due to the favorable supply, wholesale and trading margin of $31 million and additional margin of $26 million as a result of the MACS acquisition.
In addition, New York Harbor ethanol prices were favorable and resulted in increased margin of $22 million, while a tight supply resulted in a favorable retail distillate margin of $11 million.
"The favorable impact of these variances on margin was partially offset by an increase in operating expenses of $18 million, primarily driven by the MACS acquisition in October 2013," the company stated.
Companywide, ETP was very pleased with its first-quarter earnings and reported adjusted EBITDA of $1.21 billion, an increase of $250 million over the year-ago period.
Distributable cash flow attributable to the partners of ETP for the three months ended March 31 totaled $629 million, an increase of $253 million over the same period last year. Income from continuing operations for Q1 was $467 million, an increase of $65 million over the year-ago period.