Sunoco (SUN) risk factors, FY2025 10-K

Risks Related to Our Structure

1. 01Cash distributions are not guaranteed and may fluctuate with our performance and other external factors68% rewritten
2. 02Changes in U.S. administrative policy, including the imposition of or increases in tariffs on steel and/or other raw materials, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on us78% rewritten
3. 03on steel and/or other raw materials could increase our growth project costs, which may impact the profitability of new projects and our maintenance capital expenditures, potentially in excess of budgeted amountsNew
4. 04Our business could be negatively impacted by the inflationary pressures which may decrease our operating margins and increase working capital investments required to operate our business31% rewritten
5. 05General economic, financial, and political conditions, including the impact of tariffs, may materially adversely affect our results of operations and financial condition48% rewritten
6. 06In addition, volatility in the capital markets resulting from tariff announcements could also limit our ability to access capital on favorable terms, which could have an adverse impact on our ability to finance new projects and/or acquisitionsNew
7. 07Our financial condition and results of operations are influenced by changes in the prices of motor fuel, crude oil, refinery feedstock or refined petroleum products, which may adversely impact our margins, our customers’ financial condition and the availability of trade credit
8. 08Significant increases in wholesale motor fuel prices could impact us as some of our customers may have insufficient credit to purchase motor fuel from us at their historical volumes. Higher prices for motor fuel may also reduce our access to trade credit support or cause it to become more expensive46% rewritten
9. 09The industries in which we operate are subject to seasonal trends, which may cause our operating costs to fluctuate, affecting our cash flow
10. 10The dangers inherent in the storage and transportation of motor fuel, crude oil, refinery feedstock, refined petroleum products and anhydrous ammonia could cause disruptions in our operations and could expose us to potentially significant losses, costs or liabilities
11. 11Our pipelines, fuel storage terminals and refinery are subject to operational and business risks which may adversely affect our financial condition, results of operations, cash flows and ability to make distributions to our unitholders36% rewritten
12. 12Negative events or developments associated with our branded suppliers could have an adverse impact on our revenues
13. 13Severe weather, which may increase in frequency and intensity due to climate change, could adversely affect our business by damaging our suppliers’ or our customers’ facilities or communications networks
14. 14The wholesale motor fuel distribution industry is characterized by intense competition and fragmentation. Failure to effectively compete could result in lower margins
15. 15The convenience store industry is highly competitive and impacted by new entrants. Failure to effectively compete could result in lower sales and lower margins
16. 16We do not own all of the land on which our retail service stations are located, and we lease certain facilities and equipment, and we are subject to the possibility of increased costs to retain necessary land use which could disrupt our operations
17. 17Our investment in the Burnaby Refinery is subject to operational risks, including commodity price and pricing pressure and environment, health and safety hazards. If any of the operational risks materialize our financial condition or results of operations could be materially and adversely affectedNew
18. 18used in connection with our operations could be significant, given the complexities of addressing releases occurring in marine environments or along populated coastlines. Such incidents could result in significant disruptions to offshore shipping activities and impede our ability to operate in any affected areasNew
19. 19We face a variety of risks related to our entry into the refinery business following the completion of the Parkland AcquisitionNew
20. 20Future litigation could adversely affect our financial condition and results of operations
21. 21Because we depend on our senior management’s experience and knowledge of our industry, we could be adversely affected were we to lose key members of our senior management team
22. 22We compete with other businesses in our market with respect to attracting and retaining qualified employees
23. 23We are not fully insured against all risks incident to our business
24. 24Terrorist attacks and threatened or actual war may adversely affect our business37% rewritten
25. 25Cybersecurity attacks, data breaches and other disruptions affecting us, or our service providers, could materially and adversely affect our business, operations, reputation, and financial results
26. 26We rely on our information systems to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business
27. 27Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or vendor data, whether as a result of cybersecurity attacks or otherwise, or to comply with applicable regulations relating to data security and privacy
28. 28We rely on our suppliers to provide trade credit terms to adequately fund our ongoing operations
29. 29Increases in power prices could adversely affect operating expenses and our ability to make distributions to our unitholders
30. 30We depend on cash flow generated by our subsidiaries
31. 31An impairment of goodwill and intangible assets could reduce our earnings39% rewritten
32. 32If we are unable to make acquisitions on economically acceptable terms from third parties, our future growth and ability to increase distributions to unitholders will be limited22% rewritten
33. 33Acquisitions are subject to substantial risks that could adversely affect our financial condition and results of operations and reduce our ability to make distributions to unitholders
34. 34We could be subject to liabilities from our assets that predate our acquisition of those assets, but that are not covered by indemnification rights we have against the sellers of the assets
35. 35The Inflation Reduction Act of 2022 could accelerate the transition to a low carbon economy and could impose new costs on our operations66% rewritten
36. 36Our operations are subject to federal, state, provincial and local laws and regulations, in North America, the Greater Caribbean and Europe, relating to the environment, health, safety and security that require us to make substantial expenditures84% rewritten
37. 37Further, as discussed above, with the acquisition of the Burnaby Refinery located in BC, we are subject to a number of additional regulatory and environmental requirements in Canada, which may increase our costs of compliance and, in turn, have a material adverse impact on our results of operationsNew
38. 38Our operations are subject to a series of risks related to climate change60% rewritten
39. 39A climate-related decrease in demand for crude oil could negatively affect our business
40. 40Increased attention to environmental, social and governance (“ESG”) matters and conservation measures may adversely impact our business36% rewritten
41. 41Sunoco is subject to federal laws related to the RFS35% rewritten
42. 42Sunoco is subject to federal, state and local laws and regulations that govern the product quality specifications of refined petroleum products it purchases, stores, transports, and sells to its distribution customers
43. 43We operate assets outside of the United States, which exposes us to different legal and regulatory requirements and additional risk
44. 44Disputes regarding a failure to maintain product quality specifications or other claims related to the operation of our assets and the services we provide to our customers may result in unforeseen expenses and could result in the loss of customers
45. 45The swaps regulatory provisions of the Dodd-Frank Act and the rules adopted thereunder could have an adverse effect on our ability to use derivative instruments to mitigate the risks of changes in commodity prices and interest rates and other risks associated with our business
46. 46If third-party pipelines and other facilities interconnected to our fuel storage terminals and transmix processing facilities become partially or fully unavailable to transport refined products, our revenues could be adversely affected
47. 47We may be unable to obtain or renew permits necessary for our current or proposed operations, which could inhibit our ability to conduct or expand our business
48. 48Certain of our interstate common carrier pipelines are subject to regulation by the FERC and the STB, which could have an adverse impact on our ability to recover the full cost of operating our pipelines and the revenue we are able to receive from those operations
49. 49The third parties on whom we rely for transportation services to our fuel storage terminals and transmix processing facilities are subject to complex federal, state, and other laws that could adversely affect our financial condition and results of operations
50. 50Our debt levels may impair our financial condition and our ability to make distributions on our Series A Preferred Units, common units and Class D Units21% rewritten
51. 51Increases in interest rates could reduce the amount of cash we have available for distributions as well as the relative value of those distributions to yield-oriented investors, which could cause a decline in the market value of our common units26% rewritten
52. 52Our existing debt agreements have substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to pay distributions to our unitholders
53. 53Our General Partner has limited its liability regarding our obligations
54. 54Our General Partner may approve the issuance of partnership securities and specify the terms of such partnership securities
55. 55Cost reimbursements due to our General Partner and its affiliates for services provided to us or on our behalf will reduce cash available for distribution to our unitholders. The amount and timing of such reimbursements will be determined by our General Partner
56. 56Our Partnership Agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions75% rewritten
57. 57including borrowings under our Credit Facility and the issuance of debt and equity securities, to fund our acquisitions and expansion capital requirements. To the extent we are unable to finance growth externally, our cash distribution policy may significantly impair our ability to growNew
58. 58Our Partnership Agreement limits the liability and duties of our General Partner and restricts the remedies available to us and our common unitholders for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty if we were a Delaware corporation47% rewritten
59. 59faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumptionNew
60. 60Holders of our common units have limited voting rights and are not entitled to elect our General Partner or its directors
61. 61Even if holders of our common units are dissatisfied, they cannot easily remove our General Partner without its and SunocoCorp’s consent67% rewritten
62. 62Our General Partner interest or the control of our General Partner may be transferred to a third party without unitholder consent33% rewritten
63. 63Our General Partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price
64. 64We may issue additional units without unitholder approval, which would dilute existing unitholder ownership interests
65. 65The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by Energy Transfer23% rewritten
66. 66Our Partnership Agreement restricts the voting rights of unitholders owning 20% or more of our outstanding common units
67. 67The amount of cash we have available for distribution to holders of our units depends primarily on our cash flow and not solely on profitability, which may prevent us from making cash distributions during periods when we record net income
68. 68Unitholders may have liability to repay distributions
69. 69Our Partnership Agreement limits the forum, venue and jurisdiction of claims, suits, actions or proceedings
70. 70The NYSE does not require a publicly traded partnership like us to comply with certain corporate governance requirements
71. 71Detail of Tax Risks to Unitholders
72. 72The anticipated after-tax economic benefit of an investment in our units depends largely on our being treated as a partnership for U.S. federal income tax purposes
73. 73The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis63% rewritten
74. 74If the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect directly from us taxes (including any applicable penalties and interest) resulting from such audit adjustments, in which case our cash available for distribution to our unitholders might be substantially reduced
75. 75We have subsidiaries that are treated as corporations for U.S. federal income tax purposes and are subject to corporate-level income taxes
76. 76Our unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us
77. 77Tax gain or loss on the disposition of our common units could be more or less than expected
78. 78Tax-exempt entities face unique tax issues from owning common units that may result in adverse tax consequences to them
79. 79If the IRS contests the U.S. federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to our unitholders
80. 80We treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could result in a unitholder owing more tax and may adversely affect the value of the common units
81. 81We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction. The IRS may challenge these methods or the resulting allocations, and such a challenge could adversely affect the value of our common units
82. 82Unitholders will likely be subject to state and local taxes and return filing requirements in states where they do not live as a result of investing in our common units36% rewritten
83. 83unitholder who is not a resident of the jurisdiction. Withholding, the amount of which may be greater or less than a particular unitholder’s income tax liability to the jurisdiction, generally does not relieve a nonresident unitholder from the obligation to file an income tax returnNew
84. 84Unitholders may be subject to limitations on their ability to deduct interest expense we incur
85. 85Certain U.S. federal income tax consequences of the ownership of our Series A Preferred Units, including treatment of distributions as guaranteed payments for the use of capital, are uncertainNew
86. 86Our treatment of distributions on our Series A Preferred Units as guaranteed payments for the use of capital means that such distributions will not be eligible for the 20% deduction for qualified business incomeNew