Sunoco LP

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Thank you and good morning, everyone. On the call with me this morning are Joe Kim, Sunoco LP's President and Chief Executive Officer, Karl Fails, Chief Operations Officer, Dylan Bramhall, Chief Financial Officer, and other members of the management team. A reminder that today's call will contain forward-looking statements that are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the partnership's future operations and financial performance, including expectations and assumptions related to the impact of the COVID-19 pandemic. Actual results could differ materially and the partnership undertakes no obligation to update these statements based on subsequent events. Please refer to our earnings release as well as our filings with the SEC for a list of these factors. During today's call, we will also discuss the non-GAAP financial measures including adjusted EBITDA and distributable cash flow as adjusted. Please refer to the SNOCO LP website for reconciliation of each financial measure. I'd like to begin today's call by reviewing the financial and operating results for the third quarter of 2020. For the third quarter of 2020, the partnership recorded net income of $100 million. Adjusted EBITDA was $189 million compared to $192 million in the third quarter of 2019. Volumes have recovered materially off their mid-April lows, with third quarter volumes of 1.9 billion gallons of 22% from the second quarter. Strengthen our fuel margins continued into the third quarter with fuel margin of 12.1 cents per gallon. Karl will elaborate on margins and volumes in more detail in his remarks. Lease income of $34 million was flat to last quarter. Non-motor fuel sales gross profit was $37 million, up from the $30 million we reported in the second quarter. Higher merchandise sales and credit card fees contributed to this sequential increase. Total operating expenses for the third quarter increased to $112 million from $97 million in the second quarter as a result of increased fuel volume. However, we continue to deliver on our cost reduction initiative. In comparison to the third quarter of last year, we are down $22 million, which is a 16% decrease. Moving on to capital, we spent $14 million on growth projects and $6 million on maintenance capital in the third quarter. We expect to spend at least $75 million in growth capital for the full year and approximately $30 million in maintenance capital. Third quarter distributable cash flows adjusted was $139 million, yielding a very strong coverage ratio of 1.6 times for both the third quarter and the trailing 12-month period. On October 26th, We declared an 82.55 cents per unit distribution. This is the 18th consecutive quarter of a distribution at this level. On the balance sheet, our long-term debt decreased by $95 million to just under $3 billion. Our liquidity remained strong, with $1.4 billion remaining under our revolving credit facility and no debt maturities prior to 2023. We ended the quarter with a leverage reading of 3.9 times. Finally, on October 31st, we signed a definitive asset purchase agreement for the purchase of a waterborne terminal in upstate New York for less than $20 million. The acquisition of the 350,000 barrel refined products terminal is consistent with our strategy of expanding our midstream portfolio to provide additional income, diversification, and stability. We expect to close on the acquisition before the end of the year. and we'll fund the transaction with cash on hand and amounts available on our credit facility. The acquisition was done at a very attractive synergized multiple and we expect the acquisition to be accretive to our unit holders in the first year. I would like to conclude my remarks by stating that we laid out a plan in March of this year to address the COVID-19 pandemic and we have executed on that plan. Sunoco is on strong financial footing as we close out 2020 and enter 2021. I will now turn the call over to Karl.

Thanks Scott and good morning everyone. Our third quarter results continue to demonstrate the strength of our business model and provide insight into the coming quarters. As Scott mentioned, our third quarter volumes were down 12% compared to the third quarter of last year. Our volume recovery showed continued improvement relative to what we saw in the second quarter. To put our volumes in context, they were in line with the preliminary implied demand numbers published by the EIA and stronger than retail demand numbers published by OPUS. While the pace of continued recovery in fuel demand has slowed, there are still encouraging signs that we see in our demand data. First, as I mentioned in last quarter's call, our normal seasonal pattern is for average daily volume to rise each month from the beginning of the year to a peak in August at the end of the summer. We saw this play out in our third quarter volumes. The second promising trend is that our October volumes remain around 12% off of last year's volume numbers, even with a more difficult comparison last year. If you recall, the JC Nolan pipeline started up in the third quarter of last year, and by fourth quarter, volumes had ramped up considerably. The dramatic fall in crude prices in early 2020 resulted in a substantial reduction in drilling activity in the Permian Basin. While our diesel sales from volumes shipped on J.C. Nolan have recovered since the lows in the second quarter, they still remain below 50% of the levels at the end of last year. Taking out the J.C. Nolan impact on our total volumes, our October volume would be off around 10% from last year. Our geographic diversity helps us weather the larger impacts we have seen in West Texas and Hawaii. When these areas recover, our business will be even stronger. We continued to deliver higher margins in the third quarter, primarily attributable to higher break-evens for many operators across the industry. Even though our Bob price ended the quarter about the same level as it started, there was significant volatility during the quarter which provided added strength to the margin. The average retail price for gasoline during the third quarter remained below the five-year average. As we entered the fourth quarter, the margin strength continued in October and we expect it to remain strong for the duration of the year. As we think about the margin environment this year, it has been materially better than our historical average. The first quarter was boosted by the dramatic fall in gasoline prices, and the second and third quarters have been supported by the higher industry breakevens driven by the associated reductions in fuel demand. We believe that as long as volumes remain below last year's levels and the breakevens remain higher, that margins will be supported above historical averages. This is even more relevant for companies like Sunoco with scale and the ability to control cost. If volume returns more rapidly and margins are not as high, we are good with this scenario too. While these market forces provide a favorable landscape for our gross profit optimization strategies, we have also delivered on optimizing our expenses. As expected, our expenses rose this quarter relative to the second quarter with an increase in volumes. On a year-over-year basis, however, they were down 16%, compared to the third quarter of 2019. We are well on our way to deliver on our commitment to reduce 2020 expenses to the range of $460 to $475 million. We acted swiftly and have delivered on expense and capital discipline. I will now turn it over to Joe to share some closing thoughts.