SUN - Earnings call 4 2023

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Operator

Greetings and welcome to Sunoco LP's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Scott Grischow. Thank you.

You may begin.

Scott Grischow

morning, good and you, everyone. Thank

statements Chief with On materially contain obligation operations other Kim, Chief as assumptions members morning Harkness, financial forward-looking Bramhall, SEC performance. Joe of the release call these differ that this LP's partnership's to the Operations these Commercial President will and Dylan Fails, statements could of call no Sunoco undertakes future earnings and a on for Please Karl and and the our are events. Officer; partnership regarding results the include Austin our the and team. Today's me subsequent Chief refer Officer; Officer; Financial based update management Officer; Chief Actual Executive expectations factors. list filings to with well as

call, measure. we adjusted. flow cash measures, website for of discuss and certain a the LP also as EBITDA adjusted will Sunoco non-GAAP reconciliation including financial During financial distributable Please to refer today's each

year The has allowed XXXX coupled deliver history each discipline financial a year. stable lay combination of we with to a the yet business, expectations and strong record on us again base was out a proven of for the partnership.

period were $X.XXX fourth an looking quarter, quarter was Total gallon EBITDA fourth year. to of ago. quarter $XXX sold per a fourth X.X quarter like from the Fuel expenses to of the year The compared million for from increase quarter a highlights. ago. gallons the up $XXX year. I would per operating million, fourth same billion $X in and $X.XXX partnership to over XX% XXXX last at margin million all for gallon some year compared last start was sold by year full gallons fourth our Adjusted the $XXX million

$XX fourth of coverage $XXX with an distributable a million XX, On of of a unitholders. spent in our we XXXX, distribution, growth unit distribution secure consistent adjusted current quarter. the in ratio support capital. million last stability maintenance continues history growing flow X.Xx. quarter, and of and of quarter declared our cash quarter million for $XXX compared Fourth During the to results and to quarter capital January $XX The delivering we as $X.XXX million per business fourth was yielding

Turning to end the our approximately of fourth revolving credit outstanding the leaving long-term our approximately balance we $XXX of Xx. the sheet. X.Xx, $X.X Leverage had liquidity. At billion the below on quarter, target was the quarter of end facility at million of

the was guidance We a for expectations year met reinforcing in expectations. partnership. Full of our exceeded over $XXX in a the the volume versus largest delivering EBITDA As prior billion reported I million, gallons, volume year record X% Deal earlier, history. on X.X adjusted the increase year. XXXX XXXX or our and was mentioned metrics, further record versus X% XXXX's was up partnership's

continued operating at strong with margins levels. $X.XXX flat $XXX revised per remain gallon, XXXX to line in expenses Fuel were our range. million, guidance to Total

to of leverage coverage maintain elements capital balance sheet. a support key our year our Finally, strategy of distribution full of our and allocation ratio ratio protect secure and X.Xx X.Xx,

to wrap like of I'd in announced reviewing the January. by strategic transactions comments series we up my briefly

fund end working European million, of revolving plan for of XXX our product the on credit with transaction from capital. Zenith this EUR terminals by first it X close facility. the acquisition the Energy including to and availability First, We quarter

to the our acquisition be accretive year. unitholders the expect We in to first

future materially us billion. is reduce in will $X for of leverage, divestiture favorably This marketing X-Eleven allow West growth. Texas quarter close approximately to Sunoco to the positioning the second for and expected transaction of our Next, assets XXXX, to

of $X.X billion. at an valued And NuStar Energy, finally, transaction the acquisition all-equity

in acquisition this close mid-XXXX. expect We will

on to performance our Karl will recent With the and on I announcements. additional commentary over thoughts call fourth walk quarter some that, turn to our through

Karl Fails

Scott. Thanks, strength, both continued the When at efficient operations. quarter off capping you We expense consistent full record and year. quarter, volume everyone. growth, and delivered look by strong were the margin supported another discipline another year, Good morning, our results

margins. with Starting

years, we same margins This in the efficient quarter don't continued themes and see continued of those execution our and changing of past all the many breakeven of past the few have contributed higher mainly any strategies. we optimization profit of look to gross forward. few prices factors fuel years, as margins, volatility expanded These in

volumes, up the year. to of from capital deployed. fourth in XX% were comes this quarter from third versus The relative to the in of continued we the growth years fourth good execution primarily quarter up year respect X% volume With last about quarter and prior on

quarter our in above quarter consecutive volume billion gallons. and the highest X the quarter third history This marks

As the last outpace to I and call, when to tangible gasoline that U.S. is another pointed compared sector, clear out overall our it delivering demand, our growth diesel is results. we continue on sign

managing remain even continue and discipline Consistent one strengths, guidance for slightly firmly in grow. third as of only our and fourth results within full expenses. were core our our they quarter to that the from the as quarter demonstrate expenses remains to our we up Turning year

we're XXXX, to good For off a start.

a to to evidence base as year we for factors performance this this, same place our to year in the and strong. remains remain contributed overall continuation that last was business and of the we Our expect expect beyond. XXXX of be XXXX same

long on guarantees great added in the announcements, the long-term with me Let terminals in customers of perspective and useful give Zenith recent They have are strategic starting life. a These acquisition you of high-quality, their Europe. assets. couple Europe our a some position

operations. provide the XX% think water. comes network Coast East cost East and our to our increased optionality they of supply Caribbean to it When value of to us locations, our us customers. about and deliver additional optimize Coast you Additionally, supplied are gives roughly vast European when by our terminals opportunities increased these supply with Adding

the opportunity a over Puerto ago combination strong midstream deal a The with growth. a Our announced overall that assets of for platform business similar in fuel distribution with were deal year we Rico. thoughts around provide also value create this the to to

strengthens portfolio ago. diversifies about in We rationale has excited investor that Next, out month of to here be high-quality cannot our together. presentation we acquisition a company. Sitting strategic weeks and the bring a acquisition opportunity the this for our more X NuStar. our asset later, NuStar laid these companies

getting very process We with have on and integration have a detailed NuStar in planning begun motion. working that

company weeks are the business closing acquisition As second laid and of out new in looking open a our geography, will this we the lines terms expected for and few we quarter. opportunities operations, to up in forward ago,

capital are and provide our few deliver of We boost This transactions these integrate projects and deliver expenses. really on growth, We strategy successfully disciplined that profit growth, our remain acquisitions the is past continuation over a While remain to returns. a we EBITDA we that years. are. who they focused gross and in deployed on attractive our complete optimizing

turn will for that, closing to I With over thoughts. it Joe

Joseph Kim

a Karl. year morning, SUN. We're Thanks, X.X months already Good very everyone. it's busy into and for been XXXX,

announcements, let the into perspective. together take it me our opportunity all bring to and Given recent put it

fourth is and First XXXX strong. and foremost, both record current and overall for another our was DCF. We quarter had an EBITDA year business outstanding

our very EBITDA XXXX December expect in this announced factoring of year. announce we're to acquisition. appropriate, base business the distribution sale Europe and line, assets April. foundation remains be that even Zenith The in year increase to we're positioned we forward, financial our provided Bottom we after confident guidance our and solid. marketing Texas record another remains Thus, in Looking in another West the

compelling a same: maintaining stability, strong balance Moving remains in focus enhancing going growth investment resulting our recent and a and the to more on improving announcement. a forward. larger SUN's importantly, strategic sheet, more

for synergized provide the in income optimization, Our opportunities. multiple. of It at will The X supply speak increased actions a addition stable mid-single-digit upcoming example themselves. future of good Europe a acquisition tuck-in and a growth terminals is

sheet The material income West marketing to assets stand-alone optimize announced streams, the for sale basis. accretive on our an of growth of transaction our position balance demonstrates ability provide a our and Texas unitholders for portfolio

be liquidity Financially, attractive. cash profile, our And growth highly it forward. our flows, step enhances our diversifies our opportunities. another It finally, will acquisition the is and trading boost big credit improves NuStar

back We XX months. expect XX% within year XX balance Xx than expected greater of is a and our leverage to in to to X our be accretion sheet target

it's in With time all strategic moves for now us motion, to execute. these set

and results. a creating of for have history ourselves delivering value proven positioned have to of stakeholders, we our We our record on build

remarks. prepared our concludes that Operator,

You may for line the open questions.

Operator

[Operator first with Spiro question Dounis from Instructions] Our comes Citi.

Unknown Analyst

This is Chad on for Spiro.

wanted touch Just I on starting to deal. the NuStar off, the just with synergies

push a time million could of of line us about more opportunities that Are $XXX there? question those like or target you a you opportunities a what curious, Just feasibility above kind could give sense currently?

Karl Fails

million X really of we weeks I think you caught we this at our least said $XXX is about And Chad, talked -- that ago this Yes, Karl. synergies. when in

and $XXX a So figure that. number that. to to I whether issue. some time and line think time out is And to able more it's early we surpass line definitely out be be a a too million take our to really, laid But will on probably how solid it's goal categorize will work,

just probably NuStar work that going not upside is in already probably about. that return, has bed think need forward there's more combination side can some move able we're on. once do on to on think at think later I to of I the And well we And dig upside that to excited we some commercial they've us growth the of and in understand in maybe to the that's capital put find as to area process be we're being area good that get probably we have a a can where the we that able I where will pipe and there's optimization expense projects really as ideas. the then

Unknown Analyst

at, like guess of larger this makes it the company, growth remains transaction, of and be just M&A a Okay. post strategy. kind And Understood. sense. sounds looking That the will a obviously I part

of past in plays curious appetite transactions that going of on kind you that growth just how do expect for of kind forward? component seen M&A the tuck-in So larger that Or the the M&A we've resemble into

Joseph Kim

this Joe. Chad, is

continue but the the about going of on for distribution I midstream possibilities. And all do done a to than in Europe multiple. above. mid-single-digit the there's the acquisition, side we've The to successful it's the so that. I really answer various think us, excited be been all we're think highly acquisitions, different tuck-in both To synergized smaller historically, have opportunities Those and to going do is lot a for field NuStar, we're at us, side geographies.

sure the all -- make more on is organic one is side, getting getting understands thing I want synergies and it. one the On the out of to that The NuStar Street the Priority that

move to deploy. those capital, we are have organic with on have separate organic some resources But in we the And December, we're at outlined maybe the continuing plan to properly we resource short-term resources. some forward that So that same time, the our plans. --

As to in we this to resource far as short-term a we'll it's M&A, question. a -- a done it's continue can do rapidly, position that. get resource other we be And think and

If acquisitions. credit large as over where there are that. far profile, jump opportunities double-digit our As to we're going improve for accretion all we us

Operator

comes Securities. Mosca Robert [Operator with question Instructions] from Our Mizuho next

Robert Mosca

Looking at NuStar's Midwest footprint.

potential investment opportunities be or areas on I alluded as you've greater I'm a any you think a most or then And that in fuel there from organic method side geography. appropriate kind its you to which the view establish of could involvement in springboard specific presence? wondering distribution interested to whether growth for the perspective? whether to by are

Karl Fails

And specific parts stock a outline is too that us system. other of It's interesting it's the this little thing an right, probably Karl. open Rob, early Yes, system. about to that system, for

that more time transit some little pipeline So than a even flexibility provides systems.

in investing it's distributing our and the own I whether fashions, be brands going capital there's business that in to opportunities partnering just working we're So branded areas. where capital unbranded with build business an brand even or either other deploying or on to multiple probably think we're those

we to similar really X our a have NuStar I is it's we those. the Joe's we these of strategy we for front, last we're platform as with do the continue that that M&A years. well, of do to can on or grow, key all at we X things bigger kind the That's And that above. question just think done to have the looking I think we've

of kind options. think I portfolio different as potential of growth we're look those our So going to all at pieces

Robert Mosca

with terminal the Appreciate for when that, the assets? East profile could contract you Karl. on of us capacity And the that supply use could European And on scale optimization you greater remind Coast?

Karl Fails

profile? East Coast contract The

Robert Mosca

profile. contract terminal European the Sorry,

Karl Fails

Yes. Really, those terminals are now. pretty contracted well

in our So there those to don't is, assets. going component, time in, is necessarily ourselves. all third parties terminals strategy We with general we've be we come favor that want some to acquired

any fill space. we option the empty so really have to And

I So look in, there well pretty probably to a will we're are the but both today. contracted think that near are at some roll off assets filling in that going contracts future

Operator

question Our from is Selman with Stifel. next Akyol

Unknown Analyst

in if on This I how are of for on light Tyler there viewing NuStar is you now? wondering any was IDRs if the the Selman. was color acquisition news,

Joseph Kim

Tyler, this is changed. nothing's is Joe. The simple answer

value to create ET is definitely them. Our goal all for stakeholders, is our one of and

I the our prime this we've that people transaction, where for shows our our good example for a for NuStar this NuStar think history credits. stakeholders, is value hold our It's unitholders. think, and that created is is for SUN unitholders, all good for good I general partners, good

path our exactly is the So same.

Unknown Analyst

a be run the to strength there to look was Appreciate that, good that if good billion of is recent wanted anything Joe. driving sort going Also rate it know at forward? volume would or $X

Karl Fails

Yes.

the growing my over successful years, talked little that bit that's And I capital. remarks. at prepared last of volume. deploying I about been seen pointed like out, you've successful as think our been couple really -- in at we've we've a I

capital So our update the that it's Europe or updated NuStar with updated release, when and West reaffirmed to think of this guidance also a million to to asset at guidance Texas pre billion, components EBITDA also I I we're EBITDA closer same guidance the of volume I those January, $XXX NuStar we the we be our then to announcements time. the $X earnings reaffirmed for little, whether the And margin we do that, think until the get think and guidance. in the we And impacts. wait components obviously, of we'll or close, all going and need the

goal Specifically, volume. to I volume, on think is our to continue our grow

able should done branded good deploying we when areas year, we has some both right? finding that post that NuStar. give later unbranded. team pull on the if anything, give opportunities, the the clearly, into should and continue. I that for of of at think we'll in And fold And and the year And XXXX. accelerate guidance in a close we'll to our at again, be in in of NuStar that think job I that we We'll capital, end those guidance

Operator

like of the to call end the comments. session. Scott to the reached have We for now turn Grischow back question-and-answer closing I would over

Scott Grischow

Well, today. thanks, everyone, joining for us call on the

follow-up for As always, we're questions. available

good any feel everyone. free Have reach time. to at please So Thanks, out a day.

Operator

conference. This concludes today's

we your lines disconnect may You and for you your at participation. this time, thank

Sunoco (SUN) 14 Feb 242023 Q4 Earnings call transcript