Sunoco LP

Greetings and welcome to Sunoco LP's fourth quarter 2021 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now turn the conference over to your host, Scott Grishow. 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 Snoqualmie website for reconciliation of each financial measure. Before I turn the call over to Dylan, I want to briefly cover the results for the fourth quarter of 2021. The partnership recorded net income of $100 million compared to $83 million in the fourth quarter of 2020. Adjusted EBITDA was $198 million compared to $159 million in the fourth quarter of 2020. The partnership sold 1.9 billion gallons in the fourth quarter, up 3% from the fourth quarter of last year. Fuel margin for all gallons sold was 12 cents per gallon, compared to 9.2 cents per gallon a year ago. Total fourth quarter operating expenses of $123 million were higher on a year-over-year basis. Fourth quarter distributable cash flow as adjusted was $143 million, compared to $97 million in the fourth quarter of 2020. yielding a coverage ratio of 1.7 times. The coverage ratio for the full year 2021 was 1.6 times. Finally, on January 26th, we declared an 82.55 cent per unit distribution, consistent with last quarter. The durability of our business and history of delivering results continues to support a stable and secure distribution for our unit holders. I will now turn the call over to Dylan to discuss the full-year results and our outlook for 2022. Thanks, Scott.

Before I walk you through our 2021 full-year results and accomplishments, I'd like to make a few comments on our recently announced acquisition of a 23,000-barrel-a-day transmit facility in Huntington, Indiana. This acquisition represents another really exciting opportunity to continue to build out our midstream asset base with a low-risk, solid return deployment of capital. Our strong distribution coverage and balance sheet continue to allow Sun to invest in these types of opportunities, which will contribute additional value to our stakeholders for years to come. Now, shifting over to our full year 2021 results and accomplishments, we recorded adjusted EBITDA of $754 million, above the midpoint of our 2021 guidance range and up 2% from 2020. Distributable cash flow is adjusted with $542 million, up 5% versus the prior year. We improved our already strong distribution coverage ratio to 1.6 times, up from 1.5 times in 2020 and 1.3 times in 2019. Our balance sheet and liquidity position remains strong with leverage at the end of the year of 4.17 times and availability on our credit facility of approximately $930 million. Finally, our strong financial position allowed us to take advantage of a diversified set of growth opportunities in 2021 including the acquisition of nine refined products terminals and the construction of a greenfield terminal in Brownsville, Texas. With all of these accomplishments as the backdrop, we entered 2022 poised to continue to deliver strong results. In December, we provided guidance for 2022 adjusted EBITDA of between $770 and $810 million. Underpinning this guidance are the following assumptions. Fuel volumes in a range of 7.7 to 8.1 billion gallons annual fuel margin between 10.5 and 11.5 cents per gallon, total operating expenses of between $490 and $500 million, maintenance capital of $50 million, and growth capital of approximately $150 million. The free cash flow generating capability of our operations allows us to focus on the pillars of our capital allocation strategy. First, to maintain stable and secure distribution for our unit holders, second, to protect our balance sheet through debt pay down when prudent, and third, to pursue disciplined investment in our growth opportunities like the acquisition which we announced today. We will be financially disciplined with a target coverage ratio of at least 1.4 times and a target leverage ratio of 4.0 times. Sunoco's consistent financial results throughout commodity cycles have become a hallmark of our partnership, and we expect 2022 will bring more of the same. With that, I'll now turn the call over to Carl to walk through some additional thoughts on volumes, expenses, and our outlook for 2022. Carl?