Sunoco LP(US:SUN)2023-11-01 18:15Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $257 million for Q3 2023, down from $276 million in the same quarter last year [60] - Distributable cash flow as adjusted was $181 million, compared to $196 million in Q3 2022, resulting in a current quarter coverage ratio of 2x and a trailing 12-month coverage ratio of 1.9x [40] - The leverage ratio at the end of the quarter was 3.9x, with $647 million outstanding on the revolving credit facility and approximately $847 million of liquidity available [4] Business Line Data and Key Metrics Changes - Fuel volumes for the quarter were 2.1 billion gallons, up 7% from the third quarter of last year, marking the highest volume quarter in the company's history [60][63] - Fuel margin on all gallons sold was $0.13 per gallon, compared to $0.139 per gallon a year ago [60] - Total operating expenses for Q3 were $141 million, an increase of $10 million from the same period last year, attributed to the Peerless and Zenith acquisitions [60] Market Data and Key Metrics Changes - The company is outpacing the sector in market share growth, with volume growth driven by both acquisitions and organic investments [43][49] - The overall demand in the market is flat to slightly below last year, which supports higher breakeven margins [55] Company Strategy and Development Direction - The company focuses on three pillars: maintaining a secure distribution with annual growth, protecting the balance sheet, and pursuing disciplined investment in growth opportunities [5] - The company aims to grow both organically and through acquisitions, with a strong emphasis on optimizing gross profit and managing expenses [10][11] - The company is positioned to increase distributions next year while maintaining strong coverage and leverage ratios [11][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong results in various macro environments, regardless of fuel demand fluctuations or geopolitical uncertainties [47] - The company expects to grow and have another strong year in 2024, with industry fundamentals remaining supportive [67] - Management highlighted the importance of expense discipline and gross profit optimization as key strengths [44][66] Other Important Information - The company completed a $500 million offering of senior notes due 2028, which improved liquidity and reduced interest expenses [4] - The company experienced some business impact from the wildfires in Maui, but overall results were not materially affected [96] Q&A Session Questions and Answers Question: Can you talk about the distribution increase factors? - Management indicated that the capital allocation strategy, balance sheet protection, and growth opportunities are key factors in determining distribution increases [31][52] Question: Any updates on the Peerless acquisition? - Management noted that the acquisition has already contributed positively to EBITDA and that they are optimistic about future growth from this asset [15][32] Question: What is the company's long-term outlook on EBITDA and distribution growth? - Management plans to provide insights on 2024 and beyond in the upcoming December investor presentation, emphasizing confidence in industry fundamentals [80]