Sunoco LP (SUN) Cash Flow Statement

The wide quarterly swings in OCF/NI, from as high as 5.40 in 2025Q2 to negative in 2024Q2, suggest that working capital changes and non-cash items heavily influence cash generation. In 2026Q1, net income of $644M produced only $474M in operating cash flow, implying a significant accrual build-up that reversed in the following quarter. Investors should monitor whether the recent improvement in conversion is sustainable or merely a timing effect.

The FCF trajectory shows a clear recovery from the negative FCF in 2024Q2 and 2024Q4, with 2026Q2 marking the strongest quarter in the series. However, FCF margins remain modest, peaking at 6.4% in 2026Q2, and are highly sensitive to fuel price volatility and working capital swings. The recent improvement appears driven by stronger operating cash flow rather than capex discipline, as capex has remained relatively stable.

With CapEx/Revenue ranging from 0.7% to 3.0%, Sunoco's capital spending is minimal compared to its revenue, which is typical for a fuel distribution business. The absolute capex has increased from $41M in 2024Q1 to $173M in 2026Q2, but this remains small relative to the $14.3B revenue in 2026Q2. This suggests that most of the company's cash flow is available for distribution or debt reduction, though the recent uptick in capex may indicate growth investments.

The large swings in working capital, particularly the -$232M in 2025Q1 and +$126M in 2024Q1, highlight the company's sensitivity to fuel price movements and payment timing. These swings are a primary reason why operating cash flow can deviate sharply from net income, as seen in 2026Q1 when a negative working capital change reduced OCF. Investors should expect continued volatility in cash flow metrics due to these dynamics.

Across the ten quarters, dividends have consistently ranged from $91M to $249M, while buybacks have been zero, and acquisition activity has been sporadic. In 2026Q2, dividends consumed about 21% of operating cash flow, and when combined with capex, they absorbed nearly all of the FCF. This suggests that the company is prioritizing shareholder distributions, but the sustainability of this depends on maintaining stable cash generation.

The cumulative gap of $1.81B between operating cash flow and net income is largely attributable to depreciation and amortization, which totaled over $1.6B in the period. This suggests that the company's earnings quality is high, as cash generation consistently outpaces reported profits. However, the gap is not uniform, and investors should be aware that working capital swings can temporarily distort this relationship.