Sunoco Misses on Q2 Earnings & Revenues, Raises Distribution

Sunoco LP SUN reported second-quarter 2025 earnings of 33 cents per unit, which missed the Zacks Consensus Estimate of $1.68. The bottom line also declined from the year-ago quarter’s level of $3.85 per unit.

Total quarterly revenues of $5.39 billion missed the Zacks Consensus Estimate of $5.62 billion. The top line also decreased from $6.17 billion reported in the year-ago quarter.

The weaker-than-expected quarterly results can be attributed to lower contribution from the Fuel Distribution segment due to reduced motor fuel profit per gallon.

Sunoco LP Price, Consensus and EPS Surprise

Sunoco LP price-consensus-eps-surprise-chart | Sunoco LP Quote

Distribution Hike

For the second quarter of 2025, the board of directors of Sunoco's general partner declared a distribution of $0.9088 per unit, or $3.6352 on an annualized basis, marking a sequential increase of 1.25%.

The distribution will be paid on Aug. 19, 2025, to common unitholders of record as of Aug. 8, 2025. The partnership is targeting a distribution growth rate of at least 5% for 2025 and plans to announce future increases on a quarterly basis.

Segmental Performance

Sunoco posts financial results under three reportable segments — Fuel Distribution, Pipeline Systems and Terminals.

Fuel Distribution: Adjusted EBITDA in the segment declined to $206 million from $245 million in the comparable period of 2024. The segment was affected by lower fuel profits and higher expenses.

Pipeline Systems: The unit reported adjusted EBITDA of $177 million, up from $53 million in the year-ago quarter. The segment was aided by the acquisition of NuStar. A decline in operating costs also contributed to the segment’s performance.

Terminals: The segment reported adjusted EBITDA of $71 million, up from $22 million reported in the corresponding period of 2024. The rise was primarily due to the acquisition of NuStar. Throughput volumes for the segment came in at 692 thousand barrels per day, compared with 638 thousand barrels per day in the second quarter of 2024.

In terms of volume, the partnership sold 2.19 billion gallons of fuel in the reported quarter. The figure was lower than our estimate of 2.21 billion gallons.

Motor fuel gross profit per gallon was 10.5 cents compared with the year-ago level of 11.8 cents.

Sunoco reported a total operating income of $203 million, higher than $150 million in the prior-year quarter.

For the quarter that ended on June 30, 2025, the net income was $86 million compared with $501 million in the second quarter of 2024.

Distributable Cash Flow

The adjusted distributable cash flow totaled $300 million, compared with the year-ago level of $295 million.

Expenses & Capital Expenditure

The total cost of sales and operating expenses was $5.19 billion, down from $6.02 billion a year ago.

The partnership incurred a capital expenditure of $160 million, comprising $120 million in growth capital and $40 million in maintenance capital.

Balance Sheet

As of June 30, 2025, Sunoco had cash and cash equivalents of $116 million and a net long-term debt of $7.8 billion.

Outlook

Sunoco has reaffirmed its full-year 2025 adjusted EBITDA to be in the range of $1.90-$1.95 billion. For 2025, the partnership aims to meet its distribution growth target of at least 5%.

SUN’s Zacks Rank & Key Picks

Currently, SUN carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the energy sector are Antero Midstream Corporation AM, Galp Energia SGPS SA GLPEY and Enbridge Inc. ENB, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1(Strong Buy) stocks here.

Antero Midstream generates stable cash flow by providing midstream services under long-term contracts with Antero Resources. The company’s higher dividend yield, compared to its sub-industry peers, makes it an attractive choice for investors who seek consistent returns.

Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly the Mopane discovery in the Orange Basin, offshore Namibia. After the initial exploration phase, Galp estimated that the Mopane prospect could hold nearly 10 billion barrels of oil. This discovery allows Galp to diversify its global presence, with the potential to become a significant oil producer in the region.

Enbridge is a leading midstream energy firm that operates an extensive crude oil and liquids transportation network spanning 18,085 miles, along with a gas transportation network covering 71,308 miles. The company has a stable business model supported by take-or-pay contracts, protecting it against commodity price volatility.

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This article originally published on Zacks Investment Research (zacks.com).

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