Sunoco LP

Greetings and welcome to Sunoco LP's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Grishow, Vice President of Investor Relations. Thank you, Scott.

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 their non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. Please refer to the Snoop LP website for reconciliation of each financial measure. I will now turn the call over to Dylan to discuss first quarter results and our outlook for the remainder of 2022. Thanks, Scott.

Before I walk through our first quarter results and accomplishments, I'd like to start by thanking our employees for their efforts in delivering excellent financial results this quarter. against one of the most difficult macro backdrops in recent history. The team did an outstanding job of executing on our strategies in the face of a rapid increase in oil and gas prices, which resulted in the partnership reporting one of its strongest first quarters on record. Moving on to M&A, we closed on our third acquisition in the past six months with the addition of the Gladio Energy Assets to the Sunoco portfolio on March 31, 2022. This acquisition demonstrates our continued commitment to expand our midstream asset base with low risk, solid return capital deployment. As a reminder, we expect a sub seven times EBITDA multiple on this investment, which combined with our ability to finance with a mix of low cost revolver borrowing and cash from operations, results in very strong accretion to our unit holders. Regarding guidance, the 2022 adjusted EBITDA of between $770 million and $810 million provided in early December excluded the impact of the Gladio Energy acquisition, and we remain confident in that range for the legacy Sunoco business. We are adding $25 million to this range to reflect the acquisition, which results in updated guidance of $795 to $835 million. Now shifting over to our first quarter 2022 results, the partnership recorded net income of $216 million. Adjusted EBITDA was $191 million compared to $157 million in the first quarter of 2021. Volumes were approximately 1.8 billion gallons, an increase of 1% versus the first quarter of 2021. Fuel margin was 12.4 cents per gallon versus 10.3 cents per gallon in the first quarter of 2021. Fuel margin results include the benefit of the 7-11 makeup payment of $13 million. Total operating expenses in the first quarter were $124 million, up from $100 million in Q1 of last year and essentially flat to Q4. This increase was primarily driven by the New Star Terminal acquisitions and some additional costs that we reinstituted over 2021 that had been temporarily cut during the onset of the COVID pandemic. First quarter distributable cash flow, as adjusted, was $142 million, yielding a current quarter coverage ratio of 1.63 times. and a trailing 12 months coverage ratio of 1.66 times. On April 26, we declared an 82.55 cent per unit distribution, consistent with 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 4.35 times, which includes a significant increase in working capital associated with higher commodity prices for our fuel inventory. We expect leverage to trend down toward our target throughout the year and could see an acceleration of this deleveraging if commodity prices decline from current levels. In early April, we closed our amended and restated $1.5 billion credit facility. The maturity date was extended out five years to April 2027 and has substantially similar terms as the previous facility. First quarter's strong results, the recently closed acquisitions, and the successful extension of our revolving credit facility demonstrate our commitment to maintaining Sunoco's solid financial foundation and to increase value to our stakeholders through a strategy of disciplined capital investment and balance sheet management. With that, I'll now turn the call over to Carl to walk through some additional thoughts on the first quarter performance and recent growth initiatives. Carl?