Sunoco LP

assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the call over to your host, Scott Grisho. You may begin.

Thank you, and good morning, everyone. On the call with me this morning are Joe Kim, Sunoco LP's President and Chief Executive Officer, Carl Fales, Chief Operations Officer, Dylan Bramhall, Chief Financial Officer, and other members of the management team. 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 certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. Please refer to the Sunoco LP website for a reconciliation of each financial measure. I will now turn the call over to Dylan to discuss the second quarter results. Thanks, Scott.

In the second quarter, Sunoco continued to showcase the strength of its business model with strong financial results in a period of increasing commodity prices. For the second quarter of 2021, the partnership recorded net income of $166 million. Adjusted EBITDA was $201 million compared to $182 million in the second quarter of 2020. Volumes were 1.93 billion gallons, a sequential increase of approximately 10% from the first quarter as the reopening trend in the US took off in Q2. Year-over-year volumes increased approximately 28%. Fuel margin was $0.113 per gallon versus $0.135 per gallon in the second quarter of 2020, which Carl will hit on further in his remarks. Total operating expenses in the second quarter were up slightly compared to the first quarter at $102 million versus $100 million, and were up from $97 million in the second quarter of 2020. Second quarter distributable cash flow, as adjusted, was $145 million, yielding a current quarter coverage ratio of 1.67 times and a trailing 12-month coverage ratio of 1.41 times, consistent with our long-term target of 1.4 times. On July 22nd, we declared an 82.55 cents per unit distribution, the same as last quarter. We continue to maintain a stable and secure distribution for our unit holders which remains the number one pillar behind our capital allocation strategy. Leverage at the end of the quarter was 4.27 times, which we expect to continue to decline towards our 4.0 target as the year progresses. Our 2021 full year EBITDA guidance remains unchanged from the original guidance which we provided in December 2020. For the full year 21, we expect adjusted EBITDA between $725 and $765 million. Operating expense guidance is unchanged at $440 to $450 million. And while we expect higher second half operating expenses, we are trending toward the low end of the full year range. We continue to expect maintenance capital of approximately $45 million and target growth capital expenditures of $150 million in 2021. Next, I'd like to spend a few minutes on the meaningful expansion to our midstream business that we announced yesterday. To recap, We announced two terminal transactions that will not only help diversify and strengthen our core fuel distribution business, but will also provide a platform for growth in the markets served by these assets. The New Star assets consist of eight largely refined product terminals, seven of which are on the East Coast, and one is just south of Chicago. These assets have approximately 14.8 million barrels of storage and are accessed via pipeline, truck, rail, and marine vessels. We expect the $250 million purchase price to result in a sub-seven times multiple on expected EBITDA including synergies in the second year of ownership. The Cato Terminal is a gasoline and distillate terminal with 140,000 barrels of storage located in Salisbury, Maryland and has access via truck and marine vessels. We expect the $5.5 million purchase price to result in a sub-six times multiple on expected EBITDA including synergies in the second year of ownership. Both of these transactions are expected to be immediately accretive to unit holder value. The second quarter's strong results and the announced acquisitions demonstrate our commitment to maintaining Sunoco's solid financial footing and increasing value to our stakeholders through our strategy of disciplined capital investment. With that, I will now turn the call over to Carl to walk through some additional thoughts on the announced acquisitions, fuel gross profit, and expenses.