SUN - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the Sunoco LP's Fourth Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Scott Grischow, Senior Vice President of Finance. Scott, you may begin.

Scott Grischow

Thank you, and good morning, everyone.

Brian me Executive are Operating Financial Officer; Harkness, Commercial with LP's Kim, Officer; Officer. call Officer; Chief Chief Sales President Karl Officer; the this Bramhall, Joe morning Sunoco Austin and On Dylan Chief Chief Hand, Fails, Chief

partnership's events. could obligation Today's the subsequent differ list based refer the undertakes forward-looking no materially, update earnings well assumptions contain financial these release on and will these of with as that include and operations call and to our our performance. to factors. statements a expectations the Please statements regarding future Actual results as for SEC partnership filings

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

The The capped growth. foundation a terminal Sunoco. our stability, record integration business In year and strengthened of network, stable distributable fourth for on with off adjusted opportunities approximately for Distribution capital. partnership growth and the enhanced excluding $XXX our capital pipeline our strong Fuel quarter the a increased and our financial million, million transaction million $XX spent of EBITDA was onetime and $XXX million of million. quarter, delivered expenses. quarter on as adjusted Fourth We fourth cash $X flow $XX maintenance

was coverage Our end X.Xx. quarter at trailing the ratio XX-month of the

some from XXXX highlights our key to year Turning full performance.

to billion, how was a to to expenses, adjusted increase record $X.XX take I'd representing now these annual we EBITDA, review transaction-related excluding moment Our like XXXX. XX% achieved results. a compared

of West the million to Sunoco operations. adjusted EBITDA the Texas an assets legacy our range this the $X strategic business strength for XXXX us core of $XXX after April, began allowed to guidance of we with First, in billion. Even our maintain divestiture guidance

of that of integration adjusted $XX Next, $X.XX guidance pleased May, coupled of including high and to strong approximately billion our acquisition our EBITDA at to $X.XX of in with I'm report an closed execution efficient billion, adjusted delivered a we synergies. results on the end upwards result process, and in operational the million focus early revised discipline. expense that XXXX we to a as be range range NuStar ongoing

remains we Our approximately and $X.X the last end on of Leverage sheet end remaining liquidity strong. of revolving to of the liquidity X.Xx, balance was At credit position had year at XXXX, quarter. billion our the flat facility.

As X position accomplished a XX we within policy. put targeted increase reminder, leverage over months when to an elements at within of target us on in a being to last our focus declared January we end, that XX, distribution, unit a our this which we XX allocation per goal post-close, on has acquisition, We $X.XXXX closing. other X.XX% quarter. To following the Xx announced NuStar back months capital

performance This a typical puts increases. implement ahead in distribution quarter strong the partnership of the position timing financial to X this increase for

announced As of January, growth least are distribution a X% targeting we late this year. we in at

future a We basis. increases expect announce to on quarterly

continued for and path financial provide increases. long-term distribution track record accretive delivering a outlook growth strong of Our clear

in to I $X.XX by would range XXXX ability are meet conclude we like to to billion. $X.X of confident that stating billion our EBITDA guidance adjusted our

unitholders. growth strong, while of and our us record build remains growing targeting balance track enabling secure sheet position to distribution a financial Our a on accretive and maintaining our healthy for

I walk through our that, turn on additional Karl to thoughts quarter performance. it to over now some With will fourth

Karl Fails

Good morning, Thanks, Scott. everyone.

significantly our Our portfolio Sunoco as finished results and we out strengthened flows. year quarter record cash our a grew for this

business delivering X With portfolio. our set materially to XXXX and of to performance XXXX and Each the we our strong assets, between Fuel our demonstrated asset are the guidance. of mix contribute now addition NuStar in balanced up a segments Distribution midstream on have our

fourth quarter our was on $XXX million perspective versus with last more results some million $XXX the Reported margin and up quarter compared million XXXX. fourth and X% Adjusted gallon X.X was our $XXX segment. last full quarter last EBITDA $X.XXX to per segment. share billion year quarter year. and of versus quarter X% Fuel XXXX. compared down fourth of quarter and quarter distributed $X.XXX for me gallon Starting in Distribution by to Let per last fourth We of for gallons, per $X.XXX gallon quarter the the the

perspective. in me the fourth put Let quarter results

lower the our quarter presenting quarter, second good look Texas year, that the I and quarter adjust profit with consistent our the is maximize past, opportunities. being the results retail gross and some higher business segment to provides. basis and of quarters shared As of margin of what performance others higher for our have results in in in optimization last market you West margin reinforcing sale very fourth at this fourth were the the the were volume quarter. strategy results our This When

year, we with and full strength Distribution new and Texas the West the fuel When reported segment transmix of the the apparent. a even of million sale set record the margin Fuel EBITDA, to segment. back step adjusted our volume at and we $XXX is Terminal look movement We more of processing of over even

third another we in line that dynamics much and deliver market XXXX, in best The as year, were to last capabilities than for While entered record fourth place our year. same year. results the stronger and us quarter quarter was last internal is thing with second are

understand around for companies products starting the and sector to going to Many sell that resiliency market be decades. distribute this continue we global a we understood the demand. of are have We refined product in for that is and believe the the while, in to think

$X for fourth million $XXX million In quarter the adjusted Systems of our quarter. the was Pipeline excluding $XXX million, segment, expenses, transaction to compared third EBITDA in

as demand the X.X volumes region. as systems strong million operations This in our increased nearly well refinery of per barrels in represents the result more consistent On seasonal side, as all of major we Mid-Con day volume performance reported across increases throughput. pipeline a growth

was some by financial true-ups. contractual addition, performance supported In our

to expect Energy move venture joint performance that Permian make increases combined into progress Our and XXXX. this on continues will the to integrating as with we strengthen we quarter, systems continue with seen Transfer

For well. full continue as the year a looking XXXX are assets in will perform and forward to are of contributions we whole, to a our segment confident having

for relative decreases reliable last income this operations, seasonal the Taking a and and step on $XX and looking Moving We positioned some are we XXX,XXX our day year, EBITDA around fourth quarter. third with Terminals stable throughput segment. of delivered Adjusted quarter. and million, to in consistent for $XX expenses million entire at the to back $X the per to reported segment excluding barrels of XXXX. was compared quarter transaction million well

the from grow that well deliver market made. That year. Before growth in will of bit capabilities range I confidence our a the we conditions that in a by XXXX. our In variety our and returns $X.X EBITDA to business more and me will to to investments in December, have adjusted proven of perform talk is wrap let confidence our up, asset supported in portfolio a shared of we for billion $X.XX represents a and optimize the we base. organization assets guidance of little billion The strong about our

focus ago ensuring it good as discipline, months execution, deliver about when and remains just larger capital same: you. shared deploy. today optimization on Even X we expense with we returns and operational that feel the this as commercial did business, profit a we portfolio We with strong guidance creativity we our of strong

it I over to turn will Joe? now to his thoughts. final share Joe

Joseph Kim

Within healthy, XXXX. financially came we and few that Thanks, very year a into very a the there the Karl. highlights year stronger we strong to year, Good point started. morning, are We I everyone. bigger want eventful and We out. where delivered finished a than

acquisition. integration headliner. is was done. home a run acquisition This The The was NuStar obviously the

within have have after value-creating less first our Our bottom to we already And months. but in goals Synergies accretion also to year ability are balance year. was than holders, disciplined, flowing year ownership. sheet shown obviously were our delivered to equity our double-digit acquisition for achieved line. growth thus, deliver of biggest date, X the This the we

support that couple insightful a are this. Here of metrics

to profile since credit had improve. rating We've our credit multiple continues First, XXXX. upgrade

DCF continues our unit common Second, to per grow.

constituent And X the continue unit fact, to these to an expect of both is trajectory. grow for metrics only on DCF years. we upward last the In importantly, AMZI SUN consecutive most per common

of NuStar assets addition provides segments. we business stable the strong income Strategically, the X diversification now have

fundamentals expect the to a another year. we to be remain in XXXX we all record forward, X to attractive very We're beyond. for and expect XXXX Looking segments strong off and start,

inflation final We've ability as commodity as one environments results such reputation defensive a well play thought. gained and deliver Let given finish pandemics. our midstream the environments solid macro volatile as in sector, strong with within even a challenging to as me thoughtful

differentiate positively to think well challenges. it's fully future expect deserved, we and within I ourselves

that other economies we we and let's play. the also But will a U.S. growth that move products distribute and to continue also to are recognize decades fuel The the come. for world across

We consolidator. have positioned to be ourselves a

identifying on We track strong have record delivering value-creating growth. and a of

We has targeted that And at for percentage X% third finally, increase X%, year growth for the up least with financial X% in this now performance, outlook with This annual year. increase. then resulted equally an row unitholders. strong a strong is started have a distribution our stepped our as coupled we we and in a have

over quarterly basis, period. a to on XXXX, to positions a grow ability for Our us accretively increase distributions but only multiyear not

Operator, that remarks. concludes our prepared

for questions. line You may the open

Operator

The Instructions] Justin is Jenkins today Raymond with first of from question line [Operator the James.

Justin Jenkins

out fourth Karl, if on outlook on like impacted to had maybe of to gasoline Distribution in the XXXX, I'd and that I would opportunities opening we maybe both that in maybe and for that your guys? and for unpack on And maybe share your in of quarter could Fuel diesel impact XXXX you business fourth It results. volatility you tariffs early your Anything if and lot I and ask on or for you fuel does generate thoughts lack business a XQ trends? here like how look else then distribution hit but that call thoughts early wanted but some just quarter prices sneak remarks,

Austin Harkness

Yes, Justin, this Austin. is

I to make reference in reference of couple quick results into a your CPG performance question, but and and the notes going of get -- Just the housekeeping outlook and in forward. kind to I trends want

when business we've margins. his CPG divestiture move moved in about to out segment as just remarks, Karl of $X.XX of to as shared, worth reporting alluded in and to something it terminals, reminder, was forward. a we fuel mix Texas That's of the prepared As keep the into going distribution trans West mind and reported the

independently. a And separately, that business as the and we variables the of I target the were is certainly we've we those manage which number lens shared optimized interpret in margin, about results maybe volume way or either don't think kind versus fuel or really business think that profit we the specific the one to helpful around is the past, really way a of

Now If at that fourth tracks overall, it the and said, right? the look how quarter. looking business, there. describe were back with elements we take results, XXXX All very closely we step strong was a the quarter at a

shared in variability. you we've So to there's and happened, business. we prepared what talked in in -- we to over Karl quarter-to-quarter grow, right? that's and period, the when XXXX, his variability going the past, had about we're But And a look remarks at mentioned quarter-to-quarter exactly be consistently So XX-month right? going

X% fact, fourth adjusted EBITDA benefit quarter year-over-year a And to without fact QX, quarters take for the West so record levy X XXXX you our just for when maybe they you that as for Texas think In and close up is I business the followed our right? criticism QX that's was against the segment. consecutive months. X whole, of the in And harshest can year results

strong ever as business. Distribution Fuel our So are the as underlying for fundamentals

of Regarding share. there's for a and beyond, our outlook XXXX couple things I'd

products to First, demand be last seeing of the in couple stabilization on signs remain environment and of refined Breakevens and elevated, based macro continues some recovery we're EIA prints. constructive. for

And has stronger Sunoco and specifically, position we now of in a asset at terms under business never foundation scale. our the base strength the Looking XXXX and from acquisition with of a had entered belts, momentum. our NuStar

and the really positioned that with take business our in you but mean, when I so is track commercial beyond. XXXX record And growth not of teams execution, combined just for well

Joseph Kim

this Justin, is Joe.

about question me your Let take half the back of tariffs.

couple everybody are but It's exactly knows, everything early. we undetermined a know. is that it's things play still to how still As there do out of going

manage this think track period. equal, we good higher all higher very our tariffs higher scenario, And record prices. strong that inflationary scale, I within commercial variables is of have to mean of situation. know off a pays In a and First ability we expenses really our the capabilities results inflation SUN, our in demonstrated

The second volatility. that thing that we uncertainty leads know to is

of a out dropped confident commodity do was week, continuous fast feel example put environments, we we see we Whenever out, we last for the tariffs, Again, back XXXX. news think an we about remain our week high and news and distinguish commodity it going-forward saw for right and XXXX line I ourselves, to early we basis. skyrocket, opportunity came And to the Canada as is and The on involved feel on popped good very prices really Mexico about came very expect volatility that. out to and well then we this last bottom that guidance very down. beyond. going a confident as it

Justin Jenkins

of spent? of growth guess for some how be I you growth versus least Awesome. growth Super Maybe I And do long to us cadence on expect maybe think years? you that understand help CapEx $XXX is at CapEx the if million. helpful. how CapEx second question, run could,

Karl Fails

Yes, CapEx. first big related I'll customers growth on the about. is of is a of up assets commercial synergies couple extract some It's of make really new side that a NuStar projects. I not our maybe to Distribution or our the to CapEx optimization to what of our Really, talked we've There's Karl. optimization pieces Justin. lot either Fuel in synergies It's the capital, of made point up call particularly the of signing growth some business

some little other additional of in flexibility projects our saw flex for 'XX than opportunities. guidance. that 'XX original of 'XX. slippage I up are have in capital was you, spend We there we our have had to We've guidance. accounted numbers. a So into down already our you some as mean, we But that those that lighter flexibility and

roll we that can more of example, up we growth If capital. those, For M&A adjust think opportunities. that there's

cash we point the side on from shorter maybe final the and the some because capital to compared companies. think spend we're EBITDA the I flow that then when collecting those of the is time when flexibility, And is between or midstream other the

I about would expect unit continued growth. I our mean, So we've you growth. common see to DCF per talked

to M&A, I synergies that the it's us think growth of putting delivered that that. and bed have extracting combination capital

Operator

line from question next of with the The Chen is Theresa Barclays.

Theresa Chen

teams refined on stability on basis own some Can at On the their indicating there I by the demand previous bullishness you your outlook or share on outlook. demand please? wanted comments touch into to of your have decade. calls, assets refining recent for on earnings macro and product been go-forward refined comments least next product management your a across

Joseph Kim

know, our Theresa, we've long-term sector. you this Theresa, on refined the view about Joe. is of been very bullish as product the consistent attractiveness

one market, believe the the and I undervalued. gas under be and future lot fundamentals matter, on strong the somewhat and lately, could the impact outlook of makes sector -- investor has a it, looked that on natural focus However, And of too. I been but strong it get sense, overlooked AI reasons

refined comes from and and from transportation comes world, renewables. energy another products the also know that renewable, we you of distribute XX% across Currently over X%

last dominating transition a EVs headlines, be energy place in the And years, major do attempt that over decades. any change we within sound driving the making decades know will it like all X-plus decade. over to consumers news all any However, and foundational takes the

around around will positioned said, it. now come. SUN direction EV decades to discussions also fuel refined to capitalize recent as back With specifically, There And believe I this. to for And rolling anybody for and the dramatically. policy well of Even subsidies that that economy decades U.S. all we're on can strongly products standards. as continue and the examples right highlights really are of kind the policy change pendulum CAFE elimination also

Theresa Chen

just to just Pipeline go-forward then the be on forecasting related? how segment, provide a primarily on more trip you that step And basis? related would cadence, volume some the EBITDA able think should then uplift on that segment And was we details recently, the the up? about And this we saw

Karl Fails

We some Karl in from when is This EBITDA Pipeline really, was the think, Systems segment Theresa. quarter quarter highlighted Yes, that help bet fourth basis. are what additional do our I segment higher. in on and the you added MVCs Yes, volumes strong again. can the performance

couple are think that. I contributions to there a of

to pipeline systems and had markets, tied to Our really major versus you QX few growth in overall And kind quarter our contributed of volumes, from Permian Pipeline JV, are third strength in Systems I absence you you of so then addition, seasonal downtime some to already referenced, of saw in of fourth the think And the step our sequential really up QX. which some any on fourth refineries then feed quarter. agricultural the that quarter. a

comment to X, hey, earlier result Distribution, other we on we're similar be. segments of by think comments our result multiply and that, Fuel our what The and a don't it forecasting annual only going that's take to and on take quarterly I any Austin's say, will

inland I think XX-month some these pipeline asset to seasonal we like we be there's now because operating a be look or to puts and we But strong X have or and under think our systems. always our forward. with belt different going them months base, going it's downtime are in contributor over demand going of systems especially a at on going MVCs feed different rolling that all the contracts basis refineries, segment takes, be there that we on of to

Operator

Dounis next are questions from line with The Citi. the of Spiro

Spiro Dounis

the Joe, the a at language of distribution around wanted go from and at picked to is X% some December. component I comments in least least some growth, your on that up to quickly back of change slight

And since so what's growth to then? mechanism what's changed above kind the that just And of curious X%? accelerate

Joseph Kim

what repeat I I'll Joe. say Hey, constantly. Spiro. It's

have common of is really and more I distribution. unit. One per to one delivered, confidence. Xth our That's continue. per said, prepared why years And growing DCF a so the about talked importantly, in of expect And my allocation we trend that common remarks, consecutive we foundations We much like to stable of of unit. priorities growing our just maintain DCF top I capital more

lease accretively a just up other X% going we So a our still business our tariffs feel forward that we ability while fundamentals us in to right February good, is are reinforcement gave with X% looking 'XX. our questions that in or to We to managing there really and just XXXX. the X%, the stating, putting we really stepping things, from confident guidance on comps feel in of sheet, grow to Fast more the confident and we're confident. deliver December now, even balance all for around as have

I and So -- floor should least, I a this start should you way XXXX. probably increase think the leases, the XXXX, the be, you on this not multiyear for take X% away basis. that takeaway should whole we think is a that distribution for we're just take And quarterly administering at is would

Spiro Dounis

color that. Helpful Got on it. it. Got

one, just of to a Second going maybe bit here. cleanup a item

a I could explicitly to Maybe we typically what the guide you the quarter impact understand degree I to don't know help think first that just last over is payment makeup XQ? few see X-Eleven it. us when feature years. has been

Austin Harkness

Yes. it's This million. $XX is Austin. higher to approaching It's and trending a approximately year, last be than little going

Operator

Tonet the [Operator Instructions] of Your from next line with question JPMorgan. is Jeremy

Noah Katz

Katz for is This Noah on Jeremy.

look recently, guys Caribbean. going Europe on spoken completed the these forward. accretive touch like? Portland, what the opportunities to potential is opportunity does size any but Maine, and set about wanted in the Products you've I M&A both in What the And opportunities? Terminal First, Refined you know acquisition of of this I future most

Karl Fails

is Karl. Noah, this Yes,

year, met we about similar us And the think As deals cash in acquire it valuation a Europe last of use year the them then and both were those the stable for couple have areas did and Peerless that are or our to but used United Puerto here's year criteria. we you assets. synergy States. the it over ago. those Whether the in in paid Caribbean how that the interesting think here that we potential mentioned, a flows, we ultimately deal little has criteria opportunities, Zenith we recent And use a earlier and of grapes to in has Europe Rico I target has deal in both whether then this a we whether growth

whenever the a new step Now markets. is like that, density smaller don't potential little those you synergy take a have just you geography in because into a

both to look future possibility we our As done, what you for we've And of we've did in scheme the years, we're been deal increases but the only for company, a to very our acquired. over just able that interested years, areas Peerless that able flavor EBITDA that a And double growth, X.X synergies. I in. give big double about the been we are of those or little to things we've guess, X whole in of that we already wasn't

And and there's Europe so both we the opportunities think in in Caribbean.

but might on profitable building comment right look where the even we comes the in most assets and at highly one season now, assets it's expanding. There that be fuel difficult in some NuStar, with valuable Europe. a as also and One of United in States, parallel our low-carbon network. California, most least have that stringent more are those highly with bought environments the California we our that And with of you a

possibility terminal And exists same we think so Europe. as network in we build that our

Noah Katz

-- crude with contribution ET? updated and Do results? impact provide on And you update on incremental water as any to thoughts the you a JV follow-up, produced or or have any on details can EBITDA guys

Karl Fails

Yes.

combining I those aren't growth. think mentioned already the the And X just progress. third it I that's into a mean, provides to fourth my more And we comments become unlocked systems complete, we're But the between prepared happy the mean platform X with bigger will then as super quarter is remarks in systems we've they're even is growth XXXX, exciting integration apparent. it. go all expect value by I'd activities for thing but in the a sequential seen I of I line couple some bottom quarter. from

So we're excited beyond. as we to look 'XX and

Operator

Scott remarks. time. this to Grischow I the floor for would further There back at are to no like questions closing turn

Scott Grischow

on call today. the us joining for Thanks

lot in look for XXXX great we to things As of a Sunoco. there forward are to said,

have So your I any out you to tuning appreciate Thanks if reach please for questions. feel in always support. free and

Operator

conclude you thank This We teleconference. participation. today's does for your

this You time. may your at disconnect lines now

Sunoco (SUN) 11 Feb 252024 Q4 Earnings call transcript