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Form 8-K Sunoco LP For: Feb 24

February 25, 2016 6:24 AM EST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Act of 1934

Date of Report (Date of Earliest Event Reported):

February 25, 2016 (February 24, 2016)

 

Commission file number: 001-35653

SUNOCO LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

30-0740483

(State or other jurisdiction of 
incorporation or organization)

(IRS Employer 
Identification No.)

555 East Airtex Drive

Houston, Texas 77073

(Address of principal executive offices, including zip codes)

Registrant’s telephone number, including area code: (832) 234-3600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02 Results of Operations and Financial Condition.

 

The following information is furnished under Item 2.02, “Results of Operations and Financial Condition.” This information, including the information contained in Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

On February 24, 2016, Sunoco LP issued a news release announcing its financial results for the fourth fiscal quarter and full year ended December 31, 2015 and providing access information for an investor conference call to discuss those results. A copy of the news release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated by reference into this Item 2.02. The conference call will be available for replay approximately 60 days following the date of the call at www.sunocolp.com, or by telephone through March 3, 2016, by following the telephonic replay instructions provided in the news release

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

 

 

 

 

 

 

Exhibit Number

 

Exhibit Description

 

99.1

 

News Release of Sunoco LP, dated February 24, 2016.

 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

SUNOCO LP

 

By

Sunoco GP LLC, its general partner

Date:  February 25, 2016

By:

/s/ Leta McKinley

 

 

Leta McKinley

 

 

Vice President, Controller and Principal Accounting Officer

 

 

Exhibit 99.1

 

News Release

 

Sunoco LP Announces 4Q and Full Year 2015 Financial and Operating Results

 

 

·

Distribution increased 7.5 percent versus 3Q 2015, 33.6 percent versus 4Q 2014 levels

 

·

A record 40 new Stripes stores opened in 2015, 10 currently under construction

 

·

Completed dropdown acquisitions have significantly increased Partnership’s EBITDA and distributable cash flow

 

·

Final dropdown of the remaining wholesale fuel and retail marketing assets from ETP expected to close in March 2016

 

Conference Call Scheduled for 9:00 a.m. CT (10:00 a.m. ET) on Thursday, February 25

HOUSTON, February 24, 2016 - Sunoco LP (NYSE: SUN) (“SUN” or the “Partnership”) today announced financial and operating results for the three- and twelve-month periods ended December 31, 2015.  

 

Adjusted EBITDA (1) attributable to partners for the quarter totaled $112.2 million, compared with $65.5 million in the fourth quarter of 2014.  The favorable year-over-year comparison primarily reflects the acquisitions of 31.58 percent of Sunoco, LLC in April and Susser Holdings Corp. in July, both of which were acquired from SUN’s affiliate, Energy Transfer Partners, L.P. (NYSE: ETP).  All fourth quarter 2014 and full year 2014 figures and comparisons represent as previously reported results for the fourth quarter and full year 2014 and do not reflect any retrospective adjustments for the Sunoco LLC and Susser Holdings acquisitions which were accounted for as transactions between entities under common control.

 

Distributable cash flow (1) attributable to partners, as adjusted, for the quarter was $90.1 million, compared to $51.1 million a year earlier, and distributable cash flow per common unit was $1.03.  

 

Revenue was $3.7 billion for the quarter, up 184.6 percent compared to $1.3 billion in the fourth quarter of 2014. The increase was the result of the contribution of merchandise and retail fuel sales from the Susser’s Stripes® convenience store chain and the wholesale fuel distribution sales and rental income from SUN’s interest in Sunoco, LLC on a consolidated basis, partly offset by the impact of a 37-cent per gallon decrease in the average selling price of fuel.

 

Total gross profit was $333.2 million for the quarter, compared to $93.2 million in the fourth quarter of 2014.  Key drivers of the increase were the contribution from the previously mentioned acquisitions, which resulted in higher-margin retail fuel gallons and merchandise being added to the overall sales mix.


 

Exhibit 99.1

 

 

Net income attributable to partners was $7.8 million for the quarter, or ($0.13) per diluted unit, versus $30.1 million, or $0.83 per diluted unit, in the fourth quarter of last year.

 

On a weighted-average basis, excluding non-controlling interest, fuel margin for all gallons sold in the fourth quarter increased to 15.1 cents per gallon, compared to 13.0 cents per gallon a year ago.  The margin increase was driven by the addition of higher-margin retail gallons sold at Stripes, which were partly offset by the wholesale gallons sold through Sunoco, LLC.

 

Adjusted EBITDA attributable to partners from the wholesale segment was $57.9 million in the fourth quarter.  Excluding the non-controlling interest, total wholesale gallons sold in the fourth quarter were 651.8 million, compared with 546.4 million in the fourth quarter of 2014, an increase of 19.3 percent.  This includes gallons sold to affiliate-operated convenience stores, consignment stores and third-party customers, including independent dealers, fuel distributors and commercial customers.

 

As a result of the Susser acquisition, which converted affiliate volumes to retail volumes, motor fuel gallons sold to affiliates decreased 72.5 percent from a year ago to 84.0 million gallons during the fourth quarter of 2015, excluding the non-controlling interest.  Affiliate customers for the quarter included Sunoco R&M retail fuel and convenience store sites operated by a subsidiary of ETP. All affiliate gallons are sold to Sunoco’s retail fuel and convenience stores at a fixed margin of 4.0 cents per gallon.

 

Other third-party wholesale fuel volumes, excluding non-controlling interest, increased from a year ago by 135.1 percent to 567.7 million gallons related to the acquisition of 31.58 percent of Sunoco, LLC.  Gross profit on these gallons was 12.1 cents per gallon, compared to 17.6 cents per gallon a year earlier, driven by a change in customer mix related to the acquisition of the interest in Sunoco, LLC.  

 

Adjusted EBITDA attributable to partners related to the retail segment was $54.3 million in the fourth quarter.  Total retail gallons sold increased by 488.0 percent to 354.0 million gallons as a result of the acquisition of Susser. The Partnership earned 22.4 cents per gallon on these volumes, compared to 44.5 cents per gallon a year earlier.  The addition of lower-margin retail volumes at Stripes drove most of this decrease.

 

Merchandise sales increased by 918.8 percent to $400.4 million from a year ago and contributed $132.7 million of gross profit, reflecting the contribution from the Stripes stores.  

 

Retail gallons sold by Stripes locations during the fourth quarter totaled 291.4 million gallons.  Gross profit on these gallons was $52.0 million, or 17.9 cents per gallon.  Merchandise sales from these locations totaled $343.6 million and contributed $118.9 million of gross profit.  On a same-store sales basis, Stripes store merchandise sales decreased by 1.1 percent and fuel sales declined 4.9 percent, primarily reflecting


 

Exhibit 99.1

 

lower year-over-year activity in oil patch markets in South and West Texas.  Excluding markets that are directly impacted by oil drilling activity declines, the Stripes business achieved a 4.0 percent increase in merchandise sales and a 0.6 percent decrease in fuel sales volumes on a same-store basis.  As of December 31, SUN operated 725 convenience stores and retail fuel outlets in Texas, New Mexico and Oklahoma primarily under its Stripes brand.

 

SUN also operates approximately 175 convenience stores and fuel outlets in Georgia, Tennessee, Virginia, Maryland and Hawaii, primarily under the MACS, Tigermarket and Aloha Island Mart brands. On a same store sale basis, these stores saw growth of 12.5 percent in merchandise sales and a 0.9 percent decline in fuel gallons for the quarter.  

 

SUN’s other recent accomplishments include the following:

 

·

In November, SUN announced the dropdown of the remaining wholesale fuel and retail marketing assets from ETP for approximately $2.226 billion.  The transaction is expected to close in March 2016.  A significant portion of the consideration for the transaction will be provided by a $2.035 billion term loan due October 2019, which was fully underwritten by Credit Suisse, Bank of America Merrill Lynch, Compass Bank, Mizuho Bank and Toronto Dominion. The terms of the term loan will substantially mirror SUN's existing $1.5 billion revolving credit facility.

 

·

In conjunction with the dropdown, a group of private investors and Energy Transfer Equity, L.P. (NYSE: ETE) committed to purchase $750 million of SUN common units in an unregistered private placement at a gross price of $31.00 per unit, prior to adjustments.  The private placement closed and funded in December, with the exception of ETE’s portion, which will fund at the closing of the dropdown transaction.  The proceeds of the private placement were used to repay borrowing under SUN’s revolving credit facility and for general partnership purposes.

 

·

On December 16, a wholly owned subsidiary of SUN completed the acquisition of a wholesale fuel distribution business serving the Northeastern United States from Alta East Inc. for $57 million plus the value of inventory on hand at closing.  

 

SUN’s segment results and other supplementary data are provided after the financial tables shown below.

FY 2015 Compared to FY 2014

Revenue for the full year 2015 totaled $16.9 billion, a 213.0 percent increase compared to full year 2014.  Gross profit for this period increased 752.8 percent year-over-year to $1.5 billion.


 

Exhibit 99.1

 

Total motor fuel volumes sold to affiliates, excluding the non-controlling interest, decreased by 70.6 percent to 346.4 million gallons as a result of the Susser acquisition, which converted affiliate volumes to retail volumes. Wholesale gallons sold to third parties, excluding the non-controlling interest, increased by 214.2 percent to 2.4 billion gallons. Retail gallons sold increased by 1,595.8 percent to 1.4 billion gallons.  On a weighted-average basis, fuel margin for all gallons sold, excluding the non-controlling interest, increased to 15.1 cents per gallon for the full year 2015, versus 7.0 cents per gallon in the full year 2014.

Net income attributable to partners for the full year 2015 totaled $87.2 million, a 53.8 percent increase compared to full year 2014. Adjusted EBITDA attributable to partners was $444.1 million, compared to $122.3 million for the 2014 period, and distributable cash flow, as adjusted was $272.2 million, versus $92.5 million for 2014.

Distribution Increase

On January 26, the Board of Directors of SUN’s general partner declared a distribution for the fourth quarter of 2015 of $0.8013 per unit, which corresponds to $3.2052 per unit on an annualized basis.  This represents a 7.5 percent increase compared to the distribution for the third quarter of 2015 and a 33.6 percent increase compared with the fourth quarter of 2014. This is the Partnership’s 11th consecutive quarterly increase. The distribution was paid on February 16 to unitholders of record on February 5.

SUN achieved a 1.04 times distribution coverage ratio for the fourth quarter. The coverage ratio was negatively impacted by the private placement completed in December.  SUN achieved a 1.37 times coverage ratio for the 12 months ended December 31, 2015.

Liquidity

At December 31, 2015, SUN had borrowings against its $1.5 billion revolving credit facility of $450.0 million and $22.5 million in standby letters of credit, leaving unused availability of $1,027.5 million.  Net debt to Adjusted EBITDA, pro forma for the 31.58 percent of Sunoco, LLC and Susser Holdings Corp. acquisitions, was 4.1 times at year-end.

(1)

Adjusted EBITDA and distributable cash flow 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 "Reconciliations of Non-GAAP Measures" later in this news release for a discussion of our use of Adjusted EBITDA and distributable cash flow, and a reconciliation to net income.


 

Exhibit 99.1

 

Earnings Conference Call

Sunoco LP management will hold a conference call on Thursday, February 25, at 9:00 a.m. CT (10:00 a.m. ET) to discuss fourth quarter and full year results and recent developments.  To participate, dial 412-902-0003 approximately 10 minutes early and ask for the Sunoco LP conference call. The call will also be accessible live and for later replay via webcast in the Investor Relations section of Sunoco’s website at www.SunocoLP.com under Events and Presentations.  

About Sunoco LP

Sunoco LP (NYSE: SUN) is a master limited partnership that operates approximately 900 convenience stores and retail fuel sites and distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors located in more than 30 states at approximately 6,800 sites, both directly and through our 31.58 percent interest in Sunoco, LLC, owned in partnership with Energy Transfer Partners, L.P. (NYSE: ETP). Our parent -- Energy Transfer Equity (NYSE: ETE) -- owns SUN's general partner and incentive distribution rights.  ETP owns a 36.4% limited partner interest. For more information, visit the Sunoco LP website at www.SunocoLP.com

Forward-Looking Statements

This press release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnership’s Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.SunocoLP.com

Qualified Notice

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat 100 percent of Sunoco LP's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Sunoco LP's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.


 

Exhibit 99.1

 

Contacts

Investors:

Scott Grischow, Director of Investor Relations and Treasury

(361) 884-2463, [email protected]

Anne Pearson

Dennard-Lascar Associates

(210) 408-6321, [email protected]

Media:

Jeff Shields, Communications Manager

(215) 977-6056, [email protected]

 

– Financial Schedules Follow –

 


 

Exhibit 99.1

 

Sunoco LP

Consolidated Balance Sheets

(unaudited)

 

 

 

December 31,

2014

 

 

December 31,

2015

 

 

 

(in thousands, except units)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

125,426

 

 

$

61,783

 

Advances from affiliates

 

 

396,376

 

 

 

234,509

 

Accounts receivable, net

 

 

257,065

 

 

 

259,993

 

Receivables from affiliates

 

 

4,941

 

 

 

8,074

 

Inventories, net

 

 

440,294

 

 

 

416,504

 

Other current assets

 

 

60,178

 

 

 

33,288

 

Total current assets

 

 

1,284,280

 

 

 

1,014,151

 

Property and equipment, net

 

 

2,081,126

 

 

 

2,397,266

 

Other assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

1,854,436

 

 

 

1,821,864

 

Intangible assets, net

 

 

893,455

 

 

 

965,904

 

Other noncurrent assets

 

 

35,568

 

 

 

48,398

 

Total assets

 

$

6,148,865

 

 

$

6,247,583

 

Liabilities and equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

383,496

 

 

$

401,231

 

Accounts payable to affiliates

 

 

56,969

 

 

 

14,988

 

Accrued expenses and other current liabilities

 

 

291,047

 

 

 

254,298

 

Current maturities of long-term debt

 

 

13,772

 

 

 

5,084

 

Total current liabilities

 

 

745,284

 

 

 

675,601

 

Revolving line of credit

 

 

683,378

 

 

 

450,000

 

Long-term debt, net

 

 

408,826

 

 

 

1,502,531

 

Deferred tax liability

 

 

378,953

 

 

 

431,327

 

Other noncurrent liabilities

 

 

89,268

 

 

 

93,709

 

Total liabilities

 

 

2,305,709

 

 

 

3,153,168

 

Commitments and contingencies:

 

 

 

 

 

 

 

 

Partners' capital:

 

 

 

 

 

 

 

 

Limited partner interest:

 

 

 

 

 

 

 

 

Common unitholders - public (20,036,329 units issued and outstanding as of

   December 31, 2014 and 49,588,960 units issued and outstanding as of

   December 31, 2015)

 

 

874,688

 

 

 

1,768,890

 

Common unitholders - affiliated (4,062,848 units issued and outstanding as of

   December 31, 2014 and 37,776,746 units issued and outstanding as of

   December 31, 2015)

 

 

27,459

 

 

 

1,305,350

 

Subordinated unitholders - affiliated (10,939,436 units issued and outstanding as of December 31, 2014 and no units issued or outstanding as of

December 31, 2015)

 

 

 

 

 

 

Class A unitholders - held by subsidiary (no units issued or outstanding as of

   December 31, 2014 and 11,018,744 units issued and outstanding as of

   December 31, 2015)

 

 

 

 

 

 

Total partners' capital

 

 

902,147

 

 

 

3,074,240

 

Predecessor equity

 

 

2,946,653

 

 

 

 

Noncontrolling interest

 

 

(5,644

)

 

 

20,175

 

Total equity

 

 

3,843,156

 

 

 

3,094,415

 

Total liabilities and equity

 

$

6,148,865

 

 

$

6,247,583

 

 



 

Exhibit 99.1

 

Sunoco LP

Consolidated Statements of Operations and Comprehensive Income

(unaudited)

 

 

 

Predecessor

 

 

 

Successor

 

 

 

Year ended

December 31,

2013

 

 

January 1, 2014

through

August 31, 2014

 

 

 

September 1, 2014 through

December 31, 2014

 

 

Year ended

December 31,

2015

 

 

 

(dollars in thousands, except unit and per unit amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail motor fuel sales

 

$

 

 

$

 

 

 

$

1,298,804

 

 

$

3,247,545

 

Wholesale motor fuel sales to third parties

 

 

1,502,786

 

 

 

1,275,422

 

 

 

 

4,235,415

 

 

 

10,104,193

 

Wholesale motor fuel sales to affiliates

 

 

2,974,122

 

 

 

2,200,394

 

 

 

 

772,338

 

 

 

1,832,606

 

Merchandise sales

 

 

 

 

 

 

 

 

 

472,604

 

 

 

1,595,674

 

Rental income

 

 

10,060

 

 

 

11,690

 

 

 

 

21,642

 

 

 

71,730

 

Other

 

 

5,611

 

 

 

4,683

 

 

 

 

24,556

 

 

 

83,599

 

Total revenues

 

 

4,492,579

 

 

 

3,492,189

 

 

 

 

6,825,359

 

 

 

16,935,347

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail motor fuel cost of sales

 

 

 

 

 

 

 

 

 

1,159,974

 

 

 

2,916,569

 

Wholesale motor fuel cost of sales

 

 

4,419,004

 

 

 

3,429,169

 

 

 

 

4,962,227

 

 

 

11,486,480

 

Merchandise cost of sales

 

 

 

 

 

 

 

 

 

320,282

 

 

 

1,068,933

 

Other

 

 

2,611

 

 

 

2,339

 

 

 

 

1,792

 

 

 

5,201

 

Total cost of sales

 

 

4,421,615

 

 

 

3,431,508

 

 

 

 

6,444,275

 

 

 

15,477,183

 

Gross profit

 

 

70,964

 

 

 

60,681

 

 

 

 

381,084

 

 

 

1,458,164

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

16,814

 

 

 

17,075

 

 

 

 

46,280

 

 

 

166,689

 

Other operating

 

 

3,187

 

 

 

4,964

 

 

 

 

225,905

 

 

 

677,207

 

Rent

 

 

1,014

 

 

 

729

 

 

 

 

28,451

 

 

 

92,949

 

Loss (gain) on disposal of assets and impairment charge

 

 

324

 

 

 

(39

)

 

 

 

(394

)

 

 

2,050

 

Depreciation, amortization and accretion

 

 

8,687

 

 

 

10,457

 

 

 

 

60,335

 

 

 

201,019

 

Total operating expenses

 

 

30,026

 

 

 

33,186

 

 

 

 

360,577

 

 

 

1,139,914

 

Income (loss) from operations

 

 

40,938

 

 

 

27,495

 

 

 

 

20,507

 

 

 

318,250

 

Interest expense, net

 

 

(3,471

)

 

 

(4,767

)

 

 

 

(10,935

)

 

 

(87,575

)

Income (loss) before income taxes

 

 

37,467

 

 

 

22,728

 

 

 

 

9,572

 

 

 

230,675

 

Income tax expense

 

 

(440

)

 

 

(218

)

 

 

 

(69,677

)

 

 

(47,070

)

Net income (loss) and comprehensive income (loss)

 

 

37,027

 

 

 

22,510

 

 

 

 

(60,105

)

 

 

183,605

 

Less: Net income and comprehensive income

   attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

1,043

 

 

 

53,783

 

Less: Preacquisition income (loss) allocated to general partner

 

 

 

 

 

 

 

 

 

(95,381

)

 

 

42,584

 

Net income and comprehensive income attributable

   to partners

 

$

37,027

 

 

$

22,510

 

 

 

$

34,233

 

 

$

87,238

 

Net income per limited partner unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common - basic and diluted

 

$

1.69

 

 

$

1.02

 

 

 

$

0.85

 

 

$

1.11

 

Subordinated - basic and diluted

 

$

1.69

 

 

$

1.02

 

 

 

$

0.85

 

 

$

1.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average limited partner units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units - public (basic)

 

 

10,884,950

 

 

 

10,944,309

 

 

 

 

20,493,065

 

 

 

24,550,388

 

Common units - public (diluted)

 

 

10,906,794

 

 

 

10,969,437

 

 

 

 

20,499,447

 

 

 

24,572,126

 

Common units - affiliated (basic and diluted)

 

 

79,308

 

 

 

79,308

 

 

 

 

79,308

 

 

 

15,703,525

 

Subordinated units - affiliated (basic and diluted)

 

 

10,939,436

 

 

 

10,939,436

 

 

 

 

10,939,436

 

 

 

10,010,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distribution per unit

 

$

1.84

 

 

$

1.02

 

 

 

$

1.15

 

 

$

2.89

 



 

Exhibit 99.1

 

Key Operating Metrics

The following tables set forth key operating metrics as of and for the periods indicated and have been derived from our audited historical consolidated financial statements. For the year ended December 31, 2014, we have combined the Predecessor Period and the Successor Period and presented the unaudited financial data on a combined basis for comparative purposes. This combination does not comply with generally accepted accounting principles or the rules for unaudited pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our financial results. The impact from “push down” accounting related to the ETP Merger resulted in a $4.1 million decrease in depreciation expense, offset by a $3.9 million increase in amortization expense.

The accompanying footnotes to the following four key operating metrics tables can be found immediately preceeding our pro forma results of operations table.

 

 

 

Year Ended December 31,

 

 

 

 

2013

 

 

 

2014

 

 

 

2015

 

 

 

 

Total

 

 

 

Wholesale (2)

 

 

Retail (2)

 

 

Total (1)

 

 

 

Wholesale

 

 

Retail

 

 

Total

 

 

 

 

(dollars and gallons in thousands, except motor fuel pricing and gross profit per gallon)

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail motor fuel sales

 

$

 

 

 

$

 

 

$

1,298,804

 

 

$

1,298,804

 

 

 

$

 

 

$

3,247,545

 

 

$

3,247,545

 

 

Wholesale motor fuel sales

   to third parties

 

 

1,502,786

 

 

 

 

5,510,837

 

 

 

 

 

 

5,510,837

 

 

 

 

10,104,193

 

 

 

 

 

 

10,104,193

 

 

Wholesale motor fuel sales

   to affiliates

 

 

2,974,122

 

 

 

 

2,972,732

 

 

 

 

 

 

2,972,732

 

 

 

 

1,832,606

 

 

 

 

 

 

1,832,606

 

 

Merchandise sales

 

 

 

 

 

 

 

 

 

472,604

 

 

 

472,604

 

 

 

 

 

 

 

1,595,674

 

 

 

1,595,674

 

 

Rental income

 

 

10,060

 

 

 

 

26,459

 

 

 

6,873

 

 

 

33,332

 

 

 

 

51,599

 

 

 

20,131

 

 

 

71,730

 

 

Other income

 

 

5,611

 

 

 

 

2,215

 

 

 

27,024

 

 

 

29,239

 

 

 

 

27,674

 

 

 

55,925

 

 

 

83,599

 

 

Total revenues

 

$

4,492,579

 

 

 

$

8,512,243

 

 

$

1,805,305

 

 

$

10,317,548

 

 

 

$

12,016,072

 

 

$

4,919,275

 

 

$

16,935,347

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail motor fuel

 

$

 

 

 

$

 

 

$

138,830

 

 

$

138,830

 

 

 

$

 

 

$

330,976

 

 

$

330,976

 

 

Wholesale motor fuel

 

 

57,904

 

 

 

 

92,173

 

 

 

 

 

 

92,173

 

 

 

 

450,319

 

 

 

 

 

 

450,319

 

 

Merchandise

 

 

 

 

 

 

 

 

 

152,322

 

 

 

152,322

 

 

 

 

 

 

 

526,741

 

 

 

526,741

 

 

Rental and other

 

 

13,060

 

 

 

 

34,002

 

 

 

24,438

 

 

 

58,440

 

 

 

 

74,339

 

 

 

75,789

 

 

 

150,128

 

 

Total gross profit

 

$

70,964

 

 

 

$

126,175

 

 

$

315,590

 

 

$

441,765

 

 

 

$

524,658

 

 

$

933,506

 

 

$

1,458,164

 

 

Net income attributable

   to limited partners (6)

 

$

37,027

 

 

 

$

85,850

 

 

$

(29,107

)

 

$

56,743

 

 

 

$

38,440

 

 

$

48,798

 

 

$

87,238

 

 

Adjusted EBITDA

   attributable to partners (6,7)

 

$

51,884

 

 

 

$

136,646

 

 

$

114,418

 

 

$

251,064

 

 

 

$

192,099

 

 

$

251,990

 

 

$

444,089

 

 

Distributable cash flow

   attributable to partners, as adjusted (6,7)

 

$

47,678

 

 

 

 

 

 

 

 

 

 

 

$

98,658

 

 

 

 

 

 

 

 

 

 

 

$

272,232

 

 

Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total motor fuel gallons sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

 

 

 

 

 

 

 

 

 

441,377

 

 

 

441,377

 

 

 

 

 

 

 

 

1,414,326

 

 

 

1,414,326

 

 

Wholesale (3)

 

 

517,775

 

 

 

 

2,180,320

 

 

 

 

 

 

 

2,180,320

 

 

 

 

5,131,417

 

 

 

 

 

 

 

5,131,417

 

 

Wholesale contract affiliated (4)

 

 

1,053,259

 

 

 

 

1,122,664

 

 

 

 

 

 

 

1,122,664

 

 

 

 

1,096,807

 

 

 

 

 

 

 

1,096,807

 

 

Motor fuel gross profit

   cents per gallon (5):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

 

 

 

 

 

 

 

 

 

35.2¢

 

 

 

35.2¢

 

 

 

 

 

 

 

 

23.9¢

 

 

 

23.9¢

 

 

Wholesale (3)

 

5.1¢

 

 

 

 

10.6¢

 

 

 

 

 

 

 

10.6¢

 

 

 

 

9.4¢

 

 

 

 

 

 

 

9.4¢

 

 

Wholesale contract affiliated (4)

 

3.0¢

 

 

 

 

3.3¢

 

 

 

 

 

 

 

3.3¢

 

 

 

 

4.0¢

 

 

 

 

 

 

 

4.0¢

 

 

Volume-weighted average

   for all gallons

 

3.7¢

 

 

 

 

 

 

 

 

 

 

 

 

11.3¢

 

 

 

 

 

 

 

 

 

 

 

 

11.3¢

 

 

Retail merchandise margin

 

 

 

 

 

 

 

 

 

 

 

32.2

%

 

 

 

 

 

 

 

 

 

 

 

33.0

%

 

 

 

 

 

 


 

Exhibit 99.1

 

The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow:

 

 

 

Year Ended December 31,

 

 

 

2013

 

 

 

2014

 

 

 

2015

 

 

 

Total

 

 

 

Wholesale (2)

 

 

Retail (2)

 

 

Total (1)

 

 

 

Wholesale

 

 

Retail

 

 

Total

 

 

 

(in thousands)

 

Net income (loss) and

   comprehensive income (loss)

 

$

37,027

 

 

 

$

(86,571

)

 

$

48,976

 

 

$

(37,595

)

 

 

$

134,333

 

 

$

49,272

 

 

$

183,605

 

Depreciation, amortization,

   and accretion

 

 

8,687

 

 

 

 

34,971

 

 

 

35,821

 

 

 

70,792

 

 

 

 

67,780

 

 

 

133,239

 

 

 

201,019

 

Interest expense, net

 

 

3,471

 

 

 

 

7,362

 

 

 

8,340

 

 

 

15,702

 

 

 

 

54,296

 

 

 

33,279

 

 

 

87,575

 

Income tax expense

 

 

440

 

 

 

 

67,978

 

 

 

1,917

 

 

 

69,895

 

 

 

 

4,321

 

 

 

42,749

 

 

 

47,070

 

EBITDA

 

 

49,625

 

 

 

 

23,740

 

 

 

95,054

 

 

 

118,794

 

 

 

 

260,730

 

 

 

258,539

 

 

 

519,269

 

Non-cash compensation expense

 

 

1,935

 

 

 

 

5,119

 

 

 

3,798

 

 

 

8,917

 

 

 

 

4,016

 

 

 

1,687

 

 

 

5,703

 

Loss (gain) on disposal of assets

   & impairment charge

 

 

324

 

 

 

 

(309

)

 

 

(124

)

 

 

(433

)

 

 

 

1,440

 

 

 

610

 

 

 

2,050

 

Unrealized (gains) losses on

   commodity derivatives

 

 

 

 

 

 

(1,166

)

 

 

 

 

 

(1,166

)

 

 

 

1,848

 

 

 

 

 

 

1,848

 

Inventory fair value adjustments (9)

 

 

 

 

 

 

176,710

 

 

 

16,733

 

 

 

193,443

 

 

 

 

77,849

 

 

 

6,981

 

 

 

84,830

 

Adjusted EBITDA

 

 

51,884

 

 

 

 

204,094

 

 

 

115,461

 

 

 

319,555

 

 

 

 

345,883

 

 

 

267,817

 

 

 

613,700

 

Adjusted EBITDA attributable

   to noncontrolling interest

 

 

 

 

 

 

67,448

 

 

 

1,043

 

 

 

68,491

 

 

 

 

153,783

 

 

 

15,827

 

 

 

169,610

 

Adjusted EBITDA attributable

   to partners

 

 

51,884

 

 

 

 

136,646

 

 

 

114,418

 

 

 

251,064

 

 

 

 

192,100

 

 

 

251,990

 

 

 

444,090

 

Cash interest expense (8)

 

 

3,090

 

 

 

 

 

 

 

 

 

 

 

 

12,029

 

 

 

 

 

 

 

 

 

 

 

 

76,213

 

Income tax expense (current)

 

 

302

 

 

 

 

 

 

 

 

 

 

 

 

3,275

 

 

 

 

 

 

 

 

 

 

 

 

(18,353

)

Maintenance capital expenditures

 

 

814

 

 

 

 

 

 

 

 

 

 

 

 

5,196

 

 

 

 

 

 

 

 

 

 

 

 

34,559

 

Preacquisition earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

138,076

 

 

 

 

 

 

 

 

 

 

 

 

85,556

 

Distributable cash flow attributable

   to partners

 

$

47,678

 

 

 

 

 

 

 

 

 

 

 

$

92,488

 

 

 

 

 

 

 

 

 

 

 

$

266,115

 

Transaction-related expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,170

 

 

 

 

 

 

 

 

 

 

 

 

6,118

 

Distributable cash flow attributable

   to partners, as adjusted

 

$

47,678

 

 

 

 

 

 

 

 

 

 

 

$

98,658

 

 

 

 

 

 

 

 

 

 

 

$

272,233

 

 


 

Exhibit 99.1

 

The following tables set forth key operating metrics as of and for the periods indicated and have been derived from our audited historical consolidated financial statements. For the three months ended December 31, 2014, the figures represent as previously reported results and do not reflect retrospective adjustments for the Sunoco LLC and Susser Holdings acquisitions which were accounted for as transactions between entities under common control.

 

 

 

Three Months Ended December 31,

 

 

 

 

2014

 

 

 

2015

 

 

 

 

Total (10)

 

 

 

Wholesale

 

 

Retail

 

 

Total

 

 

 

 

(dollars and gallons in thousands, except motor fuel pricing and gross profit per gallon)

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail motor fuel sales

 

$

168,000

 

 

 

$

 

 

$

709,050

 

 

$

709,050

 

 

Wholesale motor fuel sales

   to third parties

 

 

500,215

 

 

 

 

2,082,452

 

 

 

 

 

 

2,082,452

 

 

Wholesale motor fuel sales

   to affiliates

 

 

617,732

 

 

 

 

441,460

 

 

 

 

 

 

441,460

 

 

Merchandise sales

 

 

39,277

 

 

 

 

 

 

 

400,367

 

 

 

400,367

 

 

Rental income

 

 

 

 

 

 

 

17,273

 

 

 

256

 

 

 

17,529

 

 

Other income

 

 

16,398

 

 

 

 

9,796

 

 

 

13,972

 

 

 

23,768

 

 

Total revenues

 

$

1,341,622

 

 

 

$

2,550,981

 

 

$

1,123,645

 

 

$

3,674,626

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail motor fuel

 

$

24,786

 

 

 

$

 

 

$

74,174

 

 

$

74,174

 

 

Wholesale motor fuel

 

 

42,783

 

 

 

 

86,539

 

 

 

 

 

 

86,539

 

 

Merchandise

 

 

10,213

 

 

 

 

 

 

 

132,665

 

 

 

132,665

 

 

Rental and other

 

 

15,402

 

 

 

 

25,750

 

 

 

14,090

 

 

 

39,840

 

 

Total gross profit

 

$

93,184

 

 

 

$

112,289

 

 

$

220,929

 

 

$

333,218

 

 

Net income attributable

   to limited partners (6)

 

$

30,111

 

 

 

$

418

 

 

$

7,337

 

 

$

7,755

 

 

Adjusted EBITDA

   attributable to partners (6,7,11)

 

$

65,486

 

 

 

$

57,924

 

 

$

54,252

 

 

$

112,176

 

 

Distributable cash flow

   attributable to partners, as adjusted (6,7)

 

$

51,114

 

 

 

 

 

 

 

 

 

 

 

$

90,109

 

 

Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total motor fuel gallons sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

60,247

 

 

 

 

 

 

 

 

354,028

 

 

 

354,028

 

 

Wholesale (3)

 

 

241,516

 

 

 

 

1,241,019

 

 

 

 

 

 

 

1,241,019

 

 

Wholesale contract affiliated (4)

 

 

304,872

 

 

 

 

266,006

 

 

 

 

 

 

 

266,006

 

 

Motor fuel gross profit

   cents per gallon (5):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

44.5¢

 

 

 

 

 

 

 

 

22.4¢

 

 

 

22.4¢

 

 

Wholesale (3)

 

17.6¢

 

 

 

 

9.8¢

 

 

 

 

 

 

 

9.8¢

 

 

Wholesale contract affiliated (4)

 

3.0¢

 

 

 

 

4.0¢

 

 

 

 

 

 

 

4.0¢

 

 

Volume-weighted average

   for all gallons

 

13.0¢

 

 

 

 

 

 

 

 

 

 

 

 

11.4¢

 

 

Retail merchandise margin

 

 

26.0

%

 

 

 

 

 

 

 

33.1

%

 

 

 

 

 

 


 

Exhibit 99.1

 

The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and distributable cash flow:

 

 

 

Three Months Ended December 31,

 

 

 

2014

 

 

 

2015

 

 

 

Total (10)

 

 

 

Wholesale

 

 

Retail

 

 

Total

 

 

 

(in thousands)

 

Net income (loss) and

   comprehensive income (loss)

 

$

30,893

 

 

 

$

3,142

 

 

$

8,608

 

 

$

11,750

 

Depreciation, amortization,

   and accretion

 

 

12,502

 

 

 

 

20,017

 

 

 

36,875

 

 

 

56,892

 

Interest expense, net

 

 

6,636

 

 

 

 

23,073

 

 

 

6,810

 

 

 

29,883

 

Income tax expense

 

 

2,114

 

 

 

 

3,349

 

 

 

65

 

 

 

3,414

 

EBITDA

 

 

52,145

 

 

 

 

49,581

 

 

 

52,358

 

 

 

101,939

 

Non-cash compensation expense

 

 

778

 

 

 

 

1,654

 

 

 

520

 

 

 

2,714

 

Loss (gain) on disposal of assets

   & impairment charge

 

 

2,670

 

 

 

 

371

 

 

 

148

 

 

 

519

 

Unrealized (gains) losses on

   commodity derivatives

 

 

(1,226

)

 

 

 

(1,078

)

 

 

 

 

 

(1,078

)

Inventory fair value adjustments (9)

 

 

11,119

 

 

 

 

45,344

 

 

 

5,205

 

 

 

50,549

 

Adjusted EBITDA

 

 

65,486

 

 

 

 

95,872

 

 

 

58,231

 

 

 

154,103

 

Adjusted EBITDA attributable

   to noncontrolling interest

 

 

 

 

 

 

37,948

 

 

 

3,979

 

 

 

41,927

 

Adjusted EBITDA attributable

   to partners

 

 

65,486

 

 

 

 

57,924

 

 

 

54,252

 

 

 

112,176

 

Cash interest expense (8)

 

 

6,255

 

 

 

 

 

 

 

 

 

 

 

 

26,577

 

Income tax expense (current)

 

 

3,003

 

 

 

 

 

 

 

 

 

 

 

 

(18,763

)

Maintenance capital expenditures

 

 

4,332

 

 

 

 

 

 

 

 

 

 

 

 

15,929

 

Preacquisition earnings (11)

 

 

782

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributable cash flow attributable

   to partners

 

$

51,114

 

 

 

 

 

 

 

 

 

 

 

$

88,433

 

Transaction-related expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,676

 

Distributable cash flow attributable

   to partners, as adjusted

 

$

51,114

 

 

 

 

 

 

 

 

 

 

 

$

90,109

 

 

(1)

Reflects combined results of the Predecessor Period from January 1, 2014 through August 31, 2014, and the Successor Period from September 1, 2014 to December 31, 2014. The impact in the Successor Period from “push down” accounting related to the ETP Merger resulted in a $4.1 million decrease in depreciation expense, offset by a $3.9 million increase in amortization expense.

(2)

Reflects MACS and Sunoco LLC wholesale operations and MACS and Susser retail operations, beginning September 1, 2014.

(3)

Reflects all wholesale transactions excluding those pursuant to the Susser Distribution Contract for January 1, 2014 through August 31, 2014 and the Sunoco Inc. Distribution Contract for all periods presented at set margins as dictated by the agreements.

(4)

Reflects transactions pursuant to the Susser and Sunoco Inc. Distribution Contracts at set margins as dictated by agreements. Susser Distribution Contract included during predecessor period only.

(5)

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

(6)

Excludes the noncontrolling interest results of operations related to our consolidated variable interest entities (“VIEs”) and Sunoco LLC.

(7)

We define EBITDA as net income before net interest expense, income tax expense and depreciation, amortization and accretion expense. Adjusted EBITDA further adjusts EBITDA to reflect certain other non-recurring and non-cash items. Effective September 1, 2014, as a result of the ETP Merger and to conform the method by which we measure our business to that of ETP’s operations, we define Adjusted EBITDA to also include adjustments for unrealized gains and losses on commodity derivatives and inventory fair value adjustments. We define distributable cash flow as Adjusted EBITDA less


 

Exhibit 99.1

 

cash interest expense, including the accrual of interest expense related to our 2020 and 2023 Senior Notes that is paid on a semi-annual basis, current income tax expense, maintenance capital expenditures, and other non-cash adjustments.  

Further adjustments are made to distributable cash flow for certain transaction-related and non-recurring expenses that are included in net income.

We believe EBITDA, Adjusted EBITDA and distributable cash flow 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 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.

EBITDA, Adjusted EBITDA and distributable cash flow are not recognized terms under GAAP and do not purport to be alternatives to net income (loss) as measures of operating performance or to cash flows from operating activities as a measure of liquidity. EBITDA, Adjusted EBITDA and distributable cash flow 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 term loan;

 

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and

as not all companies use identical calculations, our presentation of EBITDA, Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies.

(8)

Reflects the partnership’s cash interest paid less the cash interest paid on our VIE debt of $9.1 million and $2.1 million during the year ended December 31, 2015, and the three months ended December 31, 2015, respectively.

(9)

Due to the change in fuel prices, we recorded a $193.4 million, $84.8 million, $11.1 million and $50.5 million write-down of the value of fuel inventory during the years ended December 31, 2014 and 2015 and the three months ended December 31, 2014 and 2015, respectively.

(10)

For the three months ended December 31, 2014, the figures represent as previously reported results and do not reflect retrospective adjustments for the Sunoco LLC and Susser Holdings acquisitions which were accounted for as transactions between entities under common control.  Additionally, we began presenting key operating metrics by segment beginning as of January 1, 2015.

(11)

Beginning on January 1, 2015, we present Adjusted EBITDA attributable to partners. Previously the impact of noncontrolling interest was adjusted to DCF.



 

Exhibit 99.1

 

Pro Forma Results of Operations

We have provided below certain supplemental pro forma information for the year ended December 31, 2015. The pro forma information gives effect to the 68.42% noncontrolling interest in Sunoco LLC. Pursuant to our 31.58% membership interest in Sunoco LLC, the Partnership’s pro forma information reflects only that equity interest in Sunoco LLC and excludes the 68.42% noncontrolling interest in Sunoco LLC.

Management believes the pro forma presentation is useful to investors because it provides investors comparable operating data to support our Adjusted EBITDA and distributable cash flow attributable to partners.

 

 

 

Three Months ended

December 31, 2015

 

 

Year ended

December 31, 2015

 

 

 

Pro Forma

 

 

 

(unaudited)

 

 

 

(in thousands except gross profit per gallon)

 

Gross profit:

 

 

 

 

 

 

 

 

Retail gross profit

 

$

74,174

 

 

$

330,976

 

Wholesale gross profit

 

 

52,332

 

 

 

255,181

 

Total fuel gross profit

 

$

126,506

 

 

$

586,157

 

Operating Data:

 

 

 

 

 

 

 

 

Motor fuel gallons sold:

 

 

 

 

 

 

 

 

Retail

 

 

354,028

 

 

 

1,414,326

 

Wholesale

 

 

567,746

 

 

 

2,356,325

 

Wholesale contract affiliated

 

 

84,005

 

 

 

346,372

 

Total fuel gallons

 

 

1,005,779

 

 

 

4,117,023

 

Motor fuel gross profit cents per gallon (1):

 

 

 

 

 

 

 

 

Retail

 

22.4¢

 

 

23.9¢

 

Wholesale

 

12.1¢

 

 

11.5¢

 

Wholesale contract affiliated

 

4.0¢

 

 

4.0¢

 

Volume-weighted average for all gallons

 

15.1¢

 

 

15.1¢

 

 

 

(1)

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

 

 

Capital Spending

SUN's gross capital expenditures, excluding the non-controlling interest, for the fourth quarter were $107.2 million, which included $91.3 million for growth capital and $15.9 million for maintenance capital.  For the full year, SUN invested $232.7 million in growth capital and $34.6 million for maintenance capital. $56.9 million of growth capital was invested in new-to-industry Stripes stores opened between August 1 and December 31, 2015.

We currently expect capital spending for the full year 2016, excluding acquisitions, to be within the following ranges ($ in millions):

Growth

Maintenance

Low

High

Low

High

$390

$420

$100

$110

Growth capital spending includes the construction of 35 to 40 new-to-industry sites that SUN anticipates building in 2016.

 



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