Sunoco LP Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Successfully completed acquisition of Parkland Corporation ($9B transaction), creating largest independent fuel distributor in Americas. Parkland acquisition immediately accretive to distributable cash flow, expects over $250M in synergies by 2028, $40M annual cash savings from financing.
• Third quarter adjusted EBITDA $496M, distributable cash flow $326M. Distribution increased to $0.9202 per common unit. Balance sheet strong with $1.5B revolving credit facility undrawn, leverage 3.9x.
• Operational results strong across all segments; fuel distribution growth driven by capital deployment strategy, midstream operations stable. Parkland integration ongoing, expected to deliver accretive value.

Segment Performance

• Fuel Distribution: Adjusted EBITDA was $238 million (excluding $6 million of transaction-related expenses) compared to $214 million in the second quarter and $253 million in the third quarter of last year. Volumes were 2.3 billion gallons during the quarter, up 5% from last quarter and 7% compared to the third quarter of last year. Reported margin was $0.107 per gallon.
• Pipeline Systems: Adjusted EBITDA was $182 million, compared to $177 million in the second quarter and $147 million in the third quarter of last year. Segment throughput was 1.3 million barrels per day.
• Terminals: Adjusted EBITDA was $76 million, compared to $73 million in the second quarter and $70 million in the third quarter of last year. Segment throughput was 656,000 barrels per day, down from previous quarters.

Guidance

• Intend to provide formal 2026 guidance for combined company early next year. Prior to Parkland acquisition, on track for 2025 adjusted EBITDA guidance. Expect free cash flow over $1 billion annually post-Parkland, with over 50% increase vs stand-alone case.

Risks

• Impact of Hurricane Melissa on Caribbean operations, but minimal material impact expected on fourth quarter and 2026 results. Market volatility, interest rate changes, refinery closures, and government shutdowns could affect fuel demand and business performance.

Question and Answer

Q: Spiro Dounis on synergies from Parkland acquisition, asking about above $250M synergy potential, nature (commercial/cost) and cadence.

A: Karl Fails responds on material synergies on expense and commercial sides, plans executed post-closing, expect more details in 2026 guidance.

Q: Spiro Dounis on SUNC dividend equivalency, minimal taxes for at least 5 years.

A: Scott Grischow states no change to 2-year dividend equivalency, intention to keep SUNC distribution similar, minimize corporate taxes via capital deployment.

Q: Justin Jenkins on distribution growth potential beyond 5%.

A: Joseph Kim states foundation of capital allocation is growing cash flow, better position post-Parkland, will provide 2026 guidance early next year.

Q: Justin Jenkins on Hurricane Melissa impact on Caribbean.

A: Austin Harkness states Jamaica is 1 of 25 jurisdictions, no material impact to fourth quarter or 2026 results, but notes human impact.

Q: Theresa Chen on West Coast terminaling assets and Burnaby Refinery profitability.

A: Karl Fails states refinery team delivering, well positioned to take advantage of West Coast market shifts, pipeline projects create opportunities.

Q: Elias Jossen on 2025 guidance not including Parkland, and 2026 guidance components.

A: Joseph Kim states reason for not updating 2025 guide is recent Parkland and TanQuid closures, early 2026 guidance to include base business and synergies.

Q: Ned Baramov on fuel distribution prospects amid weaker demand.

A: Austin Harkness states legacy business outperformed broader segment, fundamentals strong, well positioned to continue EBITDA growth.

Q: Ned Baramov on growth capital investment areas.

A: Karl Fails states growth capital spread across segments, including smaller to medium-sized optimization projects in pipelines and terminals.