Sunoco LP(US:SUN)2024-02-14 16:45Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2023 was $236 million, a slight decrease from $238 million in Q4 2022 [5] - Full year 2023 adjusted EBITDA reached $964 million, representing a 5% increase compared to the previous year [6] - Total operating expenses for Q4 2023 were $145 million, up $7 million from the same period last year [5] - Full year operating expenses totaled $550 million, consistent with revised guidance [6] - Distributable cash flow for Q4 2023 was $148 million, down from $153 million in Q4 2022, with a coverage ratio of 1.6 times [37] Business Line Data and Key Metrics Changes - The partnership sold over 2.2 billion gallons in Q4 2023, an 11% increase from the same quarter last year [5] - Fuel margin for all gallons sold was $0.123 per gallon, compared to $0.128 per gallon a year ago [5] - Full year deal volume was over 8.3 billion gallons, an 8% increase from 2022, marking the largest reported in the partnership's history [6] Market Data and Key Metrics Changes - The company reported a leverage ratio of 3.7 times at the end of Q4 2023, below the long-term target of 4 times [13] - The company had approximately $400 million outstanding on its revolving credit facility, leaving about $1.1 billion of liquidity [13] Company Strategy and Development Direction - The company aims to improve stability, enhance growth, and maintain a strong balance sheet, positioning itself for future growth [20] - The acquisition of NuStar Energy, valued at $7.3 billion, is expected to diversify cash flows and enhance growth opportunities [7][21] - The divestiture of West Texas marketing assets for approximately $1 billion is anticipated to close in Q2 2024, allowing for reduced leverage [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the base business and financial foundation, expecting 2024 to be another record year [44] - The company anticipates that the same factors contributing to performance in 2023 will continue into 2024 [41] - Management highlighted the importance of executing the integration of NuStar and capturing synergies [42] Other Important Information - The acquisition of two European product terminals from Zenith Energy for €170 million is expected to close by the end of Q1 2024 and is projected to be accretive to unitholders in the first year [14] - The company plans to announce a distribution increase in April 2024 [44] Q&A Session Summary Question: Synergies with the NuStar deal - Management indicated that the target for synergies is at least $150 million, with potential for upside through capital deployment in high-return projects [23][24] Question: Future M&A appetite - Management stated that both tuck-in acquisitions and larger M&A opportunities will be pursued, depending on the potential for double-digit accretion [25][26] Question: Growth opportunities in NuStar's Midwest footprint - Management noted it is too early to outline specific growth opportunities but emphasized a flexible approach to leveraging the acquired assets [29][30] Question: Volume strength and future run-rate - Management reaffirmed guidance for EBITDA and indicated that volume growth is expected to continue, with updates to guidance planned closer to the NuStar close [54][55]