Sunoco LP(US:SUN)2026-02-17 16:02Financial Data and Key Metrics Changes - The partnership achieved record adjusted EBITDA of $706 million in Q4, excluding approximately $60 million of one-time transaction expenses [5] - For the full year 2025, adjusted EBITDA reached a record $2.12 billion, a 36% increase over the prior year [6] - Q4 distributable cash flow, as adjusted, was $442 million, with a trailing twelve-month coverage ratio finishing at 1.9x [5][6] Business Line Data and Key Metrics Changes - Fuel distribution segment adjusted EBITDA was $391 million in Q4, up from $238 million in the previous quarter and $192 million in Q4 of 2024 [9] - Pipeline system segment adjusted EBITDA for Q4 was $187 million, consistent with Q4 of last year [12] - Terminal segment adjusted EBITDA for Q4 was $87 million, compared to $76 million in Q3 and $61 million in Q4 of 2024 [13] - New refining segment adjusted EBITDA for Q4 was $41 million, reflecting approximately two months of operations following the Parkland transaction [14] Market Data and Key Metrics Changes - The company distributed 3.3 billion gallons in Q4, up 44% versus the previous quarter and up 54% versus Q4 of last year [9] - Canadian refined product demand has been flat to slightly up over the last couple of years, contrasting with the U.S. market [28][29] - Strong demand in the Caribbean, particularly in markets like Guyana, which has experienced over 20% GDP growth in the last three years [31] Company Strategy and Development Direction - The company aims for an annual distribution growth rate of at least 5% over the next several years, supported by a strong financial position and disciplined capital allocation [6][21] - The integration of Parkland is progressing well, with expectations of realizing $125 million of the total $250 million annual synergy target in 2026 [15] - The company is positioned as both a defensive play and an attractive growth story, with a focus on bolt-on acquisitions across its expanded footprint [20][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the legacy Sunoco business and the expected strong performance of all segments in 2026 [17][19] - The company is well-positioned to navigate macro challenges such as inflation and market volatility, with a strong track record of delivering results [18] - Management highlighted the importance of maintaining a healthy balance sheet while pursuing growth opportunities [7][21] Other Important Information - The company declared a distribution of $0.9317 per common unit for both Sunoco LP common units and SunocoCorp shares, marking a 1.25% increase over the prior quarter [5] - The company has a strong liquidity position with $2.5 billion available under its revolving credit facility at the end of the year [6] Q&A Session Summary Question: Demand trends across the footprint pro forma Parkland - Management noted that U.S. demand has been flat to slightly off, but Sunoco outperformed those trends due to effective capital deployment [26] Question: Outlook for bolt-on M&A - Management indicated that the $500 million annual target for bolt-on acquisitions is a floor and could be exceeded, with opportunities across the entire footprint [41][42] Question: Impact of greenhouse gases endangerment finding - Management stated that in the short run, there is no effect on Sun, but long-term, it is bullish for refined products [49] Question: Distribution growth potential beyond 5% - Management emphasized a multiyear growth strategy, with confidence in continued growth of DCF per common unit and cash flows [50][51] Question: Synergy target for Parkland acquisition - Management expressed optimism about exceeding the synergy target, with a focus on delivering synergies quickly [60][61]