Sunoco LP

Hello, and welcome to the Sunoco third quarter 2022 conference call. At this time, all participants are listed in a remote. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Scott Grishow. Please go ahead.

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. 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 will now turn the call over to Dylan to discuss the third quarter results, our outlook for the remainder of 2022, and our recently announced peerless oil and chemical acquisition.

Thanks, Scott. We reported very strong third quarter results. The steep and persistent decline in commodity prices and continued volatility enabled strong margin capture. The meaningful capital that has been deployed over the past year is delivering strong returns and we continue to find new attractive opportunities to invest capital both organically and through acquisitions. Our balance sheet is strong with leverage below our four times target, and we continue to generate meaningful cash flow for redeployment. Sunoco's consistent financial results throughout commodity cycles and various macro environments are a hallmark of our partnership, and we expect a solid finish to 2022. Moving on to Q3 results, the partnership recorded net income of $83 million, an adjusted EBITDA of $276 million, compared to $104 million and $198 million, respectively, in the third quarter of 2021. Volumes were approximately 2 billion gallons, up about 1% year over year. Fuel margin was 13.9 cents per gallon versus 11.3 cents per gallon in the third quarter of 2021. The fuel margin benefited from some timing impacts that added approximately 1.3 cents per gallon. Total operating expenses in the third quarter were $131 million, up from $113 million in the third quarter of last year. This increase was primarily driven by our deployment of growth capital, namely the New Star and Gladio Energy acquisitions, and bringing the Brownsville Terminal into operation. Third quarter distributable cash flow, as adjusted, was $196 million, yielding a current quarter coverage ratio of 2.2 times and a trailing 12-month coverage ratio of 1.8 times. On October 25th, we declared an 82.55 cent per unit distribution consistent with last quarter. Leverage at the end of the quarter was 3.7 times, a decrease from the second quarter reflecting higher EBITDA and lower revolver borrowings. We expect to maintain leverage near our long-term target of 4.0 times as the year concludes. In Q3, we began gasoline blending operations in New York Harbor at our Linden Terminal, which contribute to some of the strength in the quarter. Earlier, I mentioned some timing impacts to fuel margin, which are primarily related to this activity. Due to commodity market structure and inventory balances, approximately $25 million of margin was accelerated from the fourth quarter, benefiting the third quarter. Therefore, from a margin perspective, it will make sense to look at the second half of 2022 in its entirety. As a result of the strong performance year to date and our expectations for the remainder of the year, we are again increasing our full year 2022 adjusted EBITDA guidance to $845 to $865 million, excluding the recently announced peerless oil and chemical acquisition. This $70 million acquisition expands our operations into the Caribbean and will be immediately accretive to unit holder value. An expected five to six times EBITDA multiple, including synergies, This transaction demonstrates our continued ability to deploy capital at attractive valuations while expanding and diversifying our core operations. 2022 is closing on a strong note and further demonstrates the continued effectiveness of our capital allocation strategy to enhance unit holder value. The three foundational pillars are one, maintaining a stable and secure distribution for our unit holders. Second, protecting our balance sheet through debt pay down when prudent, and third, disciplined investment, and growth opportunities. With that, I will now turn the call over to Carl to walk through some operational details underpinning our third quarter results, the remainder of 2022, and the attractive opportunity that we see in Puerto Rico. Carl?