Sunoco LP(US:SUN)2023-02-15 17:47Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2022 was $238 million, a 20% increase from $198 million in Q4 2021 [10] - Full year 2022 adjusted EBITDA reached $919 million, up 22% from the previous year [11] - Distributable cash flow as adjusted for Q4 2022 was $153 million, compared to $143 million in Q4 2021, yielding a coverage ratio of 1.8x [48] - The full year coverage ratio improved to 1.9x, up from 1.6x in 2021 [11] Business Line Data and Key Metrics Changes - The partnership sold 2 billion gallons in Q4 2022, a 5% increase from the same quarter last year [10] - Fuel margin for all gallons sold was $0.128 per gallon, compared to $0.12 per gallon a year ago [10] Market Data and Key Metrics Changes - Operating expenses for Q4 2022 totaled $138 million, an increase of $15 million from the same period last year [48] - The company maintained a strong liquidity position with approximately $600 million available on its credit facility and a leverage ratio of 3.8x, below the target of 4.0x [49] Company Strategy and Development Direction - The company aims to maintain secure distributions, protect its balance sheet, and pursue disciplined investment and growth opportunities [50] - The recent acquisition of Peerless Oil & Chemicals is expected to provide growth opportunities and synergies that are ahead of schedule [16][28] - The company is focused on capital deployment to strengthen and vertically integrate its midstream and fuel distribution business [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience amid economic and geopolitical volatility, expecting solid results regardless of market conditions [18][20] - The company reaffirmed its 2023 adjusted EBITDA guidance of between $850 million and $900 million [33] - Management noted that breakeven margins are expected to remain elevated, contributing to a strong outlook for 2023 [37][72] Other Important Information - The company declared a distribution of $0.8255 per unit, consistent with the previous quarter, reflecting the stability of its business [4] - The company has a proven track record of performance through various economic conditions, which supports its strategic initiatives [18] Q&A Session Summary Question: What are the thoughts on distribution going forward? - Management indicated that the foundation remains secure distributions, a strong balance sheet, and growth, with discussions about distribution increases being possible at the appropriate time [21][27] Question: Can you provide more detail on the Peerless acquisition and its synergies? - Management highlighted that the Peerless acquisition fits well into their strategy, with stable margins and volumes, and potential for growth through new customer sign-ups and expansion into neighboring Caribbean islands [45][28] Question: What is keeping margins elevated in the current market? - Management noted that margin performance is supported by price volatility and higher breakeven margins, which are expected to continue [71][72] Question: Can you discuss the M&A environment? - Management characterized the M&A environment as similar to 2022, with ongoing opportunities for value buys that bring material synergies [62] Question: What impact did the Colonial pipeline leak have? - Management stated that the leak had no material impact on operations due to a diverse supply network [63] Question: What are the volume trends in early 2023? - Management observed stagnation in volume growth on a seasonal basis, which is not expected to materially impact overall performance [64]