Sunoco LP Q1 FY2026 earnings call

• Started 2026 strong with adjusted EBITDA of $867 million, including a one-time gain on inventory sale. • Closed Tankwood acquisition, making Sunoco Germany's largest independent terminal operator, expected to be accretive to distributable cash flow. • Spent $106 million on growth capital and $93 million on maintenance capital. • Declared a distribution of 98.99 cents per common unit, a 6.25% increase. • Parkland acquisition integration ongoing, balance sheet back to target, delivering synergies. • Refining team completed turnaround on budget. • Continued growth efforts with various acquisitions and projects

Fuel distribution segment: adjusted EBITDA was $538 million (excluding $9 million of transaction expenses), up from previous periods; distributed 3.8 billion gallons, up 15% vs last quarter and 82% vs Q1 2025; reported margin 17 cents per gallon. Pipeline system segment: adjusted EBITDA $179 million, throughput 1.3 million barrels per day. Terminal segment: adjusted EBITDA $107 million, throughput around 1 million barrels per day. Refining segment: adjusted EBITDA $43 million, refinery throughput 22,000 barrels per day with a $10 million benefit from inventory reduction efforts

• Confident of delivering full year EBITDA guidance even without the one-time inventory gain. • The established practice is not to give guidance after the first quarter unless there's a major acquisition, but expects to capture upside while protecting downside. • Expect to complete over $500 million of bolt-on acquisitions in 2026, which are immediately accretive while maintaining balance sheet target

• Volatile market due to events in the Middle East, which can cause costs and prices to rise and fall dramatically, disrupting normal supply patterns. • Inventory levels are a trade-off between supply reliability and return on capital, and market conditions can affect inventory management and related gains

Q: Regarding the inventory gain, how does inventory level fluctuate with commodity prices?

A: Inventory decisions are a trade-off between supply reliability and return on capital. Use derivatives to hedge inventory. In periods of high prices and steep backwardation, draw inventory; in contango, build. The $100 million gain was sized by market conditions but is a responsible level to operate at going forward.

Q: On the distribution, how does it play into capital allocation?

A: The 5% step-up was not dependent on inventory optimization. Past investments paid off, base business is resilient, DCF has grown, and the step-up with continued quarterly increases is valued by unit holders. We're confident in achieving goals despite not updating guidance after first quarter.

Q: Impact of Middle East conflict on business and demand?

A: The business shines during volatility, e.g., supplying Hawaii from U.S. Gulf Coast via Panama Canal. Margins compress on way up but widen disproportionately on way down. No evidence of demand destruction yet.

Q: M&A outlook with current macro environment?

A: View M&A the same as outlined, have $200 million bulked on M&A already this year, $500 million plus on acquisition is reasonable, in good position for long-term growth.

Q: Update on Burnaby refinery operations and capturing elevated margins?

A: Turnaround completed on time and budget, restarted into higher cracks. Refinery is a foundational piece, outperforming assumptions. Synergies from Parkland acquisition are ongoing, on pace to hit synergy targets.

Q: Midstream capital spending and 7-Eleven implications?

A: Midstream portfolio is liked, current plan is small to midsize projects. Supply agreement with 7-Eleven is rock-solid. Volatile backdrop makes M&A both harder and easier, but Sunoco is in good position with scale and synergies.

Q: Interplay between Burnaby refining margins and fuel distribution margins?

A: Use internal transfer prices, not necessarily that high refinery cracks mean low fuel distribution margins; sometimes both can be higher together. Burnaby turnaround spending included in maintenance capex and some growth capex