SunocoCorp (SUNC) risk factors, FY2025 10-K

Risks Related to Our Structure

1. 01Index to Financial Statements
2. 02Our sole material asset is limited partnership interests in, and control of, Sunoco and, accordingly, we are dependent upon distributions or other payments from Sunoco in order to pay taxes and other expenses, satisfy our liabilities and make distributions to our unitholders
3. 03The amount of any dividends or distributions to be paid by us are not guaranteed
4. 04Although we have no material assets other than our ownership of Sunoco Class D Units (which are economically equivalent to the Sunoco Common Units), the rights of our common unitholders are different than the rights of holders of Sunoco Common Units
5. 05Our Common Unitholders are not beneficiaries of and will have no right to enforce the terms of the Omnibus Agreement or Delegation Agreement
6. 06The amount of cash Sunoco has available for distribution to holders of its units depends primarily on its cash flow and not solely on profitability, which may prevent it from making cash distributions during periods when it records net income
7. 07If we cease to control Sunoco, we may become an investment company under the Investment Company Act of 1940
8. 08Sunoco’s Cash distributions are not guaranteed and may fluctuate with Sunoco’s performance and other external factors
9. 09Changes 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 Sunoco
10. 10Sunoco’s business could be negatively impacted by the inflationary pressures which may decrease its operating margins and increase working capital investments required to operate its business
11. 11General economic, financial, and political conditions, including the impact of tariffs, may materially adversely affect Sunoco’s results of operations and financial condition
12. 12Sunoco’s 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 its margins, its customers’ financial condition and the availability of trade credit
13. 13Significant increases in wholesale motor fuel prices could impact Sunoco as some of its customers may have insufficient credit to purchase motor fuel from it at their historical volumes. Higher prices for motor fuel may also reduce Sunoco’s access to trade credit support or cause it to become more expensive
14. 14could have a material adverse effect on its business, financial condition, results of operations and cash available for distribution to its unitholders, including SunocoCorp
15. 15The industries in which Sunoco operates are subject to seasonal trends, which may cause its operating costs to fluctuate, affecting its cash flow
16. 16The dangers inherent in the storage and transportation of motor fuel, crude oil, refinery feedstock, refined petroleum products and anhydrous ammonia could cause disruptions in Sunoco’s operations and could expose it to potentially significant losses, costs or liabilities
17. 17Sunoco’s pipeline, fuel storage terminals and refinery are subject to operational and business risks which may adversely affect its financial condition, results of operations, cash flows and ability to make distributions to its unitholders, including SunocoCorp
18. 18Negative events or developments associated with Sunoco’s branded suppliers could have an adverse impact on its revenues
19. 19Severe weather, which may increase in frequency and intensity due to climate change, could adversely affect Sunoco’s business by damaging its suppliers’ or its customers’ facilities or communications networks
20. 20The wholesale motor fuel distribution industry is characterized by intense competition and fragmentation. Failure to effectively compete could result in lower margins
21. 21The convenience store industry is highly competitive and impacted by new entrants. Failure to effectively compete could result in lower sales and lower margins
22. 22Sunoco does not own all of the land on which its retail service stations are located, and it leases certain facilities and equipment, and it is subject to the possibility of increased costs to retain necessary land use which could disrupt its operations
23. 23Following the Parkland Acquisition, Sunoco owns and operates the Burnaby Refinery, which produces and supplies fuel within the Lower Mainland in Canada
24. 24Sunoco faces a variety of risks related to its entry into the refinery business following the completion of the Parkland Acquisition
25. 25Future litigation could adversely affect Sunoco’s financial condition and results of operations
26. 26Because Sunoco depends on its senior management’s experience and knowledge of the industry in which it operates, Sunoco could be adversely affected were Sunoco to lose key members of its senior management team
27. 27Sunoco competes with other businesses in its market with respect to attracting and retaining qualified employees
28. 28Sunoco is not fully insured against all risks incident to its business
29. 29Terrorist attacks and threatened or actual war may adversely affect Sunoco’s business
30. 30Cybersecurity attacks, data breaches and other disruptions affecting Sunoco, or its service providers, could materially and adversely affect its business, operations, reputation, and financial results
31. 31Sunoco relies on its information systems to manage numerous aspects of its business, and a disruption of these systems could adversely affect its business
32. 32Sunoco’s business and its 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
33. 33Sunoco relies on its suppliers to provide trade credit terms to adequately fund its ongoing operations
34. 34Increases in power prices could adversely affect operating expenses and Sunoco’s ability to make distributions to its unitholders, including SunocoCorp
35. 35Sunoco depends on cash flow generated by its subsidiaries
36. 36An impairment of goodwill and intangible assets could reduce Sunoco’s earnings
37. 37If Sunoco is unable to make acquisitions on economically acceptable terms from third parties, its future growth and ability to increase distributions to unitholders will be limited
38. 38Acquisitions are subject to substantial risks that could adversely affect Sunoco’s financial condition and results of operations and reduce its ability to make distributions to unitholders
39. 39Sunoco could be subject to liabilities from its assets that predate its acquisition of those assets, but that are not covered by indemnification rights it has against the sellers of the assets
40. 40The Inflation Reduction Act of 2022 could accelerate the transition to a low carbon economy and could impose new costs on Sunoco’s operations
41. 41Sunoco’s operations are subject to federal, state and local laws and regulations, in North America, the Greater Caribbean and Europe, relating to the environment, health, safety and security that require it to make substantial expenditures
42. 42payments, which could have a material adverse impact on its business, liquidity, results of operations and cash available for distribution to its unitholders, including SunocoCorp
43. 43Sunoco’s operations are subject to a series of risks related to climate change
44. 44A climate-related decrease in demand for crude oil could negatively affect Sunoco’s business
45. 45Increased attention to environmental, social and governance (“ESG”) matters and conservation measures may adversely impact Sunoco’s business
46. 46Sunoco is subject to federal laws related to the RFS
47. 47Sunoco 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
48. 48Sunoco operates assets outside of the United States, which exposes it to different legal and regulatory requirements and additional risk
49. 49Disputes regarding a failure to maintain product quality specifications or other claims related to the operation of Sunoco’s assets and the services it provides to its customers may result in unforeseen expenses and could result in the loss of customers
50. 50The swaps regulatory provisions of the Dodd-Frank Act and the rules adopted thereunder could have an adverse effect on Sunoco’s ability to use derivative instruments to mitigate the risks of changes in commodity prices and interest rates and other risks associated with its business
51. 51If third-party pipelines and other facilities interconnected to Sunoco’s fuel storage terminals and transmix processing facilities become partially or fully unavailable to transport refined products, its revenues could be adversely affected
52. 52Sunoco may be unable to obtain or renew permits necessary for its current or proposed operations, which could inhibit its ability to conduct or expand its business
53. 53Certain of Sunoco’s interstate common carrier pipelines are subject to regulation by the FERC and the Surface Transportation Board (“STB”), which could have an adverse impact on its ability to recover the full cost of operating its pipelines and the revenue it is able to receive from those operations
54. 54The third parties on whom Sunoco relies for transportation services to its fuel storage terminals and transmix processing facilities are subject to complex federal, state, and other laws that could adversely affect its financial condition and results of operations
55. 55Sunoco’s debt levels may impair its financial condition and its ability to make distributions on Sunoco Series A Preferred Units, Sunoco Common Units and Sunoco Class D Units
56. 56Increases in interest rates could reduce the amount of cash Sunoco has 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 the Sunoco Common Units and in turn, our common units
57. 57Sunoco’s existing debt agreements have substantial restrictions and financial covenants that may restrict its business and financing activities and its ability to pay distributions to its unitholders, including SunocoCorp
58. 58risks associated with an investment in Sunoco
59. 59The tax treatment of publicly traded partnerships or our investment in Sunoco could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis
60. 60Sunoco has subsidiaries that are treated as corporations for U.S. federal income tax purposes and are subject to corporate-level income taxes
61. 61SunocoCorp Manager may approve the issuance of our securities and specify the terms of such securities
62. 62Cost reimbursements due to SunocoCorp Manager 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 SunocoCorp Manager
63. 63Our Company Agreement does not require us to distribute cash to our unitholders
64. 64The Company Agreement limits the liability and duties of SunocoCorp Manager and restricts the remedies available to us and our unitholders for actions taken by SunocoCorp Manager that might otherwise constitute breaches of fiduciary duty if we were a Delaware corporation
65. 65Our unitholders have limited voting rights and are not entitled to vote, and generally have no control over how SunocoCorp Manager votes the Sunoco Class D Units held by us
66. 66Our common unitholders are not entitled to elect SunocoCorp Manager or its directors. Even if our common unitholders are dissatisfied, they will not be able to remove SunocoCorp Manager
67. 67SunocoCorp Manager may transfer its managing member interest to a third party without the consent of our common unitholders
68. 68SunocoCorp Manager has a limited call right that may require our unitholders to sell their common units at an undesirable time or price
69. 69We may issue additional limited liability company interests without the approval of our common unitholders, which would dilute the existing ownership interests of our unitholders
70. 70We cannot predict the impact the indirect control by Energy Transfer may have on the trading price for our common units
71. 71The Company Agreement restricts the voting rights of our unitholders owning 20% or more of any outstanding class of our units
72. 72Our unitholders may have liability to repay distributions
73. 73The Company Agreement limits the forum, venue and jurisdiction of claims, suits, actions or proceedings
74. 74As a “controlled company,” we are not required to comply with certain NYSE corporate governance requirements
75. 75Taxable gain or loss on the sale of our common units could be more or less than expected
76. 76We may be subject to a 1% U.S. federal excise tax in connection with redemptions of our common units