Sunoco LP (SUN): Business Model Canvas [11-2024 Updated]
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Sunoco LP (SUN) Bundle
Understanding the business model of Sunoco LP (SUN) reveals how this energy giant maintains its position in the competitive fuel distribution market. With a robust network of over 14,000 miles of pipelines and more than 100 terminal locations, Sunoco effectively serves a diverse range of customers, from retail consumers to commercial enterprises. Explore the intricacies of their business model canvas, including key partnerships, value propositions, and revenue streams, to discover what drives Sunoco's success in the energy sector.
Sunoco LP (SUN) - Business Model: Key Partnerships
Collaborations with Energy Transfer for pipeline operations
Sunoco LP has established significant collaborations with Energy Transfer, primarily involving fee-based commercial agreements for pipeline, terminaling, and storage services. As of September 30, 2024, the partnership has recorded an investment of $1.28 billion in a joint venture that combines their respective crude oil and produced water gathering assets in the Permian Basin.
| Partnership Aspect | Details |
|---|---|
| Joint Venture Investment | $1.28 billion |
| Pipeline Operations | Over 5,000 miles of crude oil and water gathering pipelines |
| Crude Oil Storage Capacity | Exceeds 11 million barrels |
| Equity Earnings (Q3 2024) | $30 million |
Joint ventures in the Permian Basin
In addition to the collaboration with Energy Transfer, Sunoco LP holds a 32.5% interest in the Permian joint venture, with Energy Transfer owning the remaining 67.5%. This joint venture was formed on July 1, 2024, and encompasses not only pipeline operations but also logistics related to crude oil and produced water.
| Joint Venture Financials | Q3 2024 Data |
|---|---|
| Current Assets | $275 million |
| Noncurrent Assets | $3.51 billion |
| Current Liabilities | $86 million |
| Noncurrent Liabilities | $42 million |
| Revenue | $3.7 billion |
| Operating Income | $91 million |
| Net Income | $90 million |
Relationships with fuel suppliers and logistics providers
Sunoco maintains strong relationships with various fuel suppliers and logistics providers, ensuring a steady supply chain for its operations. For the nine months ended September 30, 2024, bulk fuel purchases from affiliates amounted to $1.112 billion.
| Purchases and Sales | Q3 2024 Data |
|---|---|
| Motor Fuel Sales to Affiliates | $20 million |
| Bulk Fuel Purchases from Affiliates | $1.112 billion |
| Accounts Payable to Affiliates | $222 million |
| Advances from Affiliates | $86 million |
Sunoco LP (SUN) - Business Model: Key Activities
Distribution of motor fuels across North America
Sunoco LP is a major distributor of motor fuels across North America. In the three months ended September 30, 2024, Sunoco sold approximately 2.14 billion gallons of motor fuel, compared to 2.12 billion gallons in the same period of 2023, reflecting an increase of 20 million gallons. For the nine months ended September 30, 2024, the total motor fuel sold was about 6.43 billion gallons, up by 305 million gallons from 6.12 billion gallons in the prior year. The profit per gallon increased from 12.5 cents to 12.8 cents for the same three-month period.
Operation of pipelines and terminals
Sunoco operates an extensive pipeline system and terminal network. As of September 30, 2024, the pipeline throughput reached 1,165 barrels per day, a significant increase from zero barrels in the previous year. The Pipeline Systems segment reported a profit of $159 million for the three months ended September 30, 2024, compared to a profit of just $2 million for the same period in 2023. The segment's Adjusted EBITDA was $136 million, a substantial increase from $2 million in the previous year.
| Period | Pipeline Throughput (barrels/day) | Pipeline Systems Segment Profit ($ million) | Adjusted EBITDA ($ million) |
|---|---|---|---|
| Q3 2024 | 1,165 | 159 | 136 |
| Q3 2023 | 0 | 2 | 2 |
Management of fuel supply agreements
Sunoco has established fuel supply agreements that optimize its distribution and profitability. The company recorded a fuel profit of $96 million in Q3 2024, down from $388 million in Q3 2023, primarily due to the impact of the West Texas Sale in April 2024. Fuel distribution segment profit was $164 million for Q3 2024, compared to $467 million in the same quarter of the previous year.
| Period | Fuel Profit ($ million) | Fuel Distribution Segment Profit ($ million) |
|---|---|---|
| Q3 2024 | 96 | 164 |
| Q3 2023 | 388 | 467 |
Sunoco LP (SUN) - Business Model: Key Resources
Extensive pipeline network (approximately 14,000 miles)
Sunoco LP operates an extensive pipeline network totaling approximately 14,000 miles. This network facilitates the transportation of crude oil and refined products across various regions, enhancing the efficiency of its supply chain and distribution capabilities.
As of September 30, 2024, the Pipeline Systems segment reported a throughput of 1,165 barrels per day, reflecting significant operational capacity and efficiency improvements following recent acquisitions.
| Pipeline Metrics | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2024 |
|---|---|---|
| Throughput (barrels per day) | 1,165 | 867 |
| Pipeline Systems Segment Profit ($ million) | 159 | 332 |
| Expenses ($ million) | 72 | 196 |
| Segment Adjusted EBITDA ($ million) | 136 | 189 |
Over 100 terminal locations
Sunoco LP has established a significant presence with over 100 terminal locations strategically positioned to optimize fuel distribution. These terminals play a crucial role in storing and distributing fuel and other refined products efficiently.
In the most recent quarter, the Terminals segment achieved throughput of 694 barrels per day, showcasing a robust increase compared to previous periods, attributed to the acquisition of additional terminal assets.
| Terminal Metrics | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2024 |
|---|---|---|
| Throughput (barrels per day) | 694 | 581 |
| Terminals Segment Profit ($ million) | 101 | 256 |
| Expenses ($ million) | 52 | 148 |
| Segment Adjusted EBITDA ($ million) | 67 | 113 |
Significant inventory of fuel and refined products
As of September 30, 2024, Sunoco LP's inventory of fuel and refined products was valued at $890 million, comprising $874 million of fuel and $16 million of other inventory. This substantial inventory level is critical for ensuring supply reliability and meeting customer demand across its distribution network.
The company's inventory management strategy includes utilizing the last-in, first-out (LIFO) method, which influences its financial performance by impacting cost of sales and net income due to valuation adjustments. For instance, during the third quarter of 2024, unfavorable inventory valuation adjustments amounted to $197 million, which negatively impacted net income.
| Inventory Metrics | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Total Inventory ($ million) | 890 | 889 |
| Fuel Inventory ($ million) | 874 | 876 |
| Other Inventory ($ million) | 16 | 13 |
Sunoco LP (SUN) - Business Model: Value Propositions
Reliable fuel supply for retail and commercial customers
Sunoco LP operates a robust fuel distribution segment that serves both retail and commercial customers. As of September 30, 2024, the company reported revenues of $5,751 million for the third quarter, with fuel sales comprising a significant portion of this amount. Fuel sales alone accounted for $5,365 million in revenue during the quarter, illustrating the company's strong position in the fuel supply market.
Extensive distribution network ensuring accessibility
Sunoco has established an extensive distribution network that includes over 9,500 miles of pipeline and various terminal facilities, enhancing accessibility for its customers. The acquisition of NuStar Energy in May 2024 added approximately 6,958 million in property and equipment, bolstering the infrastructure available for fuel distribution. This network supports efficient logistics and timely delivery, ensuring that customers can access fuel reliably across various regions.
Competitive pricing through economies of scale
Through its large-scale operations, Sunoco benefits from economies of scale, which allow for competitive pricing on fuel products. The company reported a gross margin of $424 million for the third quarter of 2024, driven by effective cost management strategies and operational efficiencies. Moreover, Sunoco's ability to leverage its size to negotiate better pricing with suppliers further enhances its competitive edge in pricing, benefiting both retail and commercial customers.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Fuel Sales Revenue | $5,365 million | $6,170 million |
| Total Revenue | $5,751 million | $6,320 million |
| Gross Margin | $424 million | $338 million |
| Operating Income | $107 million | $338 million |
| Total Assets | $14,122 million | $6,826 million |
| Long-term Debt | $7,259 million | $3,580 million |
Sunoco LP (SUN) - Business Model: Customer Relationships
Long-term agreements with branded service stations
Sunoco LP engages in long-term agreements with branded service stations to ensure a steady supply of fuel and related services. As of September 30, 2024, the company reported approximately $1.395 billion in contractually committed revenue from long-term contracts with customers, which include fixed pricing and volume commitments.
Direct engagement with commercial clients
Sunoco maintains direct engagement with commercial clients through various structured agreements. For the nine months ended September 30, 2024, the company recognized revenues of $16.85 billion, with significant contributions from commercial fuel sales. The company also reported motor fuel sales to affiliates totaling $20 million during the same period.
Customer support through accessible channels
Sunoco provides robust customer support through multiple accessible channels. The company has implemented various customer service initiatives, including direct lines for commercial clients, online service requests, and a dedicated customer support team. The total operating expenses for customer support initiatives were $373 million for the nine months ended September 30, 2024.
| Category | Details |
|---|---|
| Contractually Committed Revenue | $1.395 billion |
| Revenues from Commercial Sales (9M 2024) | $16.85 billion |
| Motor Fuel Sales to Affiliates (9M 2024) | $20 million |
| Operating Expenses for Customer Support | $373 million |
Sunoco LP (SUN) - Business Model: Channels
Direct sales through company-operated stores
Sunoco LP operates a network of approximately 1,200 company-operated convenience stores across the United States. In the most recent financial reports, the company generated significant revenue from these stores, with total sales revenue amounting to $5,424 million for the three months ended September 30, 2024. The merchandise sales, which include food and non-fuel items, contributed to the overall profitability of these locations, with non-fuel sales reported at $79 million during the same period.
Partnerships with independent dealers
Sunoco has established partnerships with over 5,000 independent dealers. These dealers play a crucial role in the distribution of Sunoco's fuel products across various regions. The revenue from motor fuel sales to these dealers accounted for a significant portion of the company's revenue, with total revenues from fuel distribution reported at $16,516 million for the nine months ended September 30, 2024. The company maintains a fuel supply agreement with these partners, ensuring a steady flow of products to meet consumer demand.
Online platforms for information and service requests
Sunoco LP has developed an online platform that provides customers with essential information regarding services, locations, and promotions. The company has recognized the importance of digital channels, particularly for service requests and customer engagement. As of September 30, 2024, Sunoco’s online services have contributed to improving customer experience, though specific financial metrics from online transactions were not disclosed in the latest reports.
| Channel Type | Details | Financial Impact |
|---|---|---|
| Company-operated stores | 1,200 locations across the US | Sales revenue: $5,424 million (Q3 2024) |
| Independent dealer partnerships | 5,000+ dealers | Fuel distribution revenue: $16,516 million (9M 2024) |
| Online platforms | Information and service requests | Contribution to customer engagement (specific metrics not disclosed) |
Sunoco LP (SUN) - Business Model: Customer Segments
Retail fuel consumers at Sunoco-branded locations
Sunoco LP serves a diverse group of retail fuel consumers at its Sunoco-branded locations. As of September 30, 2024, the Fuel Distribution segment reported revenues from external customers amounting to $5,473 million for the three months ended September 30, 2024, compared to $6,289 million for the same period in 2023. The total motor fuel gallons sold were 2,138 million for the three months ended September 30, 2024, reflecting a minor increase from 2,118 million gallons sold in the same period of 2023.
Commercial businesses requiring bulk fuel
Sunoco LP caters to commercial businesses that require bulk fuel deliveries. The Fuel Distribution segment generated revenues of $5,751 million for the three months ended September 30, 2024, with a significant portion derived from commercial fuel sales. The segment profit for Fuel Distribution was reported at $164 million for the three months ended September 30, 2024, compared to $467 million in the same period in 2023. The average profit per gallon for motor fuel was 12.8 cents for the three months ended September 30, 2024.
Independent dealers and distributors
Independent dealers and distributors represent another key customer segment for Sunoco LP. The company provides fuel supply agreements and other services to these operators. The total profit from leases associated with independent dealers was $29 million for the three months ended September 30, 2024, down from $39 million in the same period in 2023. Furthermore, intersegment revenues from the Fuel Distribution segment amounted to $10 million for the three months ended September 30, 2024.
| Customer Segment | Revenue (Q3 2024) | Revenue (Q3 2023) | Segment Profit (Q3 2024) | Segment Profit (Q3 2023) | Gallons Sold (Q3 2024) | Gallons Sold (Q3 2023) |
|---|---|---|---|---|---|---|
| Retail Fuel Consumers | $5,473 million | $6,289 million | $164 million | $467 million | 2,138 million | 2,118 million |
| Commercial Businesses | $5,751 million | $6,320 million | $164 million | $467 million | N/A | N/A |
| Independent Dealers | Intersegment Revenue: $10 million | N/A | $29 million (Lease Profit) | $39 million (Lease Profit) | N/A | N/A |
Sunoco LP (SUN) - Business Model: Cost Structure
Operating expenses for pipeline and terminal maintenance
For the nine months ended September 30, 2024, Sunoco LP reported total expenses of $307 million for its Fuel Distribution segment, down from $354 million for the same period in 2023, reflecting a decrease of $47 million largely attributed to the West Texas Sale in April 2024 and lower allocated overhead.
In the Pipeline Systems segment, expenses for the three months ended September 30, 2024 were $72 million, with a total of $196 million for the nine months ended September 30, 2024.
The Terminals segment incurred expenses of $52 million for the three months ended September 30, 2024 and $148 million for the nine months.
Costs associated with fuel procurement
Sunoco LP's fuel procurement costs are significant, particularly given their operations in the highly competitive fuel distribution market. As of September 30, 2024, the company reported fuel inventories valued at $874 million. Additionally, the cost of sales included unfavorable inventory valuation adjustments of $197 million for the three months ended September 30, 2024.
For the nine months, these adjustments totaled $99 million, reflecting the volatility in fuel prices and the impact on procurement costs.
Administrative and regulatory compliance costs
Administrative costs for Sunoco LP increased due to higher operational demands post-acquisition of NuStar. The company recognized administrative expenses of $66 million during the nine months ended September 30, 2024. The increase in costs is also influenced by regulatory compliance requirements, which are essential for maintaining operational licenses and adhering to environmental standards.
Additionally, the company incurred $20 million in amortization of deferred financing fees, alongside $12 million in non-cash unit-based compensation expenses.
| Cost Category | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2024 |
|---|---|---|
| Fuel Distribution Expenses | $100 million | $307 million |
| Pipeline Systems Expenses | $72 million | $196 million |
| Terminals Expenses | $52 million | $148 million |
| Fuel Inventory Valuation Adjustments | $197 million | $99 million |
| Administrative Expenses | N/A | $66 million |
| Amortization of Deferred Financing Fees | N/A | $20 million |
| Non-Cash Unit-Based Compensation | N/A | $12 million |
Sunoco LP (SUN) - Business Model: Revenue Streams
Sales from Fuel Distribution
Sunoco LP generates significant revenue from its Fuel Distribution segment. For the nine months ended September 30, 2024, revenues from external customers in this segment amounted to $16.838 billion, a slight decrease from $17.344 billion in the same period of 2023. The total revenues for the three months ended September 30, 2024 were $5.473 billion, compared to $6.289 billion for the same period in 2023.
Motor fuel gallons sold by Sunoco LP reached 2.138 billion gallons for the three months ended September 30, 2024, and 6.427 billion gallons for the nine months ended September 30, 2024. The profit per gallon for motor fuel was 12.8 cents for the three months and 11.9 cents for the nine months ended September 30, 2024.
Fees from Terminal Storage and Throughput
Revenue from the Terminal segment for the nine months ended September 30, 2024 was $1.003 billion, up from $363 million in the same period of 2023. For the three-month period ending September 30, 2024, terminal revenues were $362 million, compared to $121 million for the same period in 2023.
The throughput for terminals averaged 694 barrels per day for the three months ended September 30, 2024, showing an increase from 421 barrels per day in the prior year. The segment profit from terminals was $101 million for the three months ended September 30, 2024, compared to $60 million in the same period of 2023.
Income from Lease Agreements and Joint Ventures
Sunoco LP also earns income through lease agreements and joint ventures. For the nine months ended September 30, 2024, lease profit was reported at $97 million, down from $113 million in the same period of the previous year. For the three months ended September 30, 2024, lease profit was $29 million, a decrease from $39 million in the prior year.
In terms of joint ventures, Sunoco's investment in the Permian joint venture was valued at $1.28 billion as of September 30, 2024, contributing $30 million in equity earnings for the three and nine months ended September 30, 2024. The joint venture recognized revenues of $3.7 billion for the three months ended September 30, 2024, with operating income of $91 million.
| Revenue Stream | Q3 2024 Revenue | Q3 2023 Revenue | YTD 2024 Revenue | YTD 2023 Revenue |
|---|---|---|---|---|
| Fuel Distribution | $5.473 billion | $6.289 billion | $16.838 billion | $17.344 billion |
| Terminal Storage | $362 million | $121 million | $1.003 billion | $363 million |
| Lease Agreements | $29 million | $39 million | $97 million | $113 million |
| Joint Ventures (Permian) | $3.7 billion (JV Revenue) | N/A | $30 million (equity earnings) | N/A |
Updated on 16 Nov 2024
Resources:
- Sunoco LP (SUN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Sunoco LP (SUN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Sunoco LP (SUN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.