Sunoco LP

Greetings and welcome to the Sunoco LP's first quarter 2023 on your 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 Rachel, SVP, Finance, and Treasurer.

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 certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. Please refer to the Sunoco LP website for reconciliation of each financial measure. I'd like to start the call by looking at some of our first quarter highlights. Sunoco delivered a record first quarter with adjusted EBITDA of $221 million compared to $191 million a year ago, an increase of 16%. The partnership sold 1.9 billion gallons in the first quarter, up 9% from the first quarter of last year. Fuel margin for all gallons sold was 12.9 cents per gallon, compared to 12.4 cents per gallon a year ago. Fuel margin results include the benefit of the 7-11 makeup payment of $24 million. Total first quarter operating expenses were $127 million, an increase of $3 million from the same period last year. We spent $29 million of growth capital in the first quarter and $8 million in maintenance capital. First quarter distributable cash flows adjusted was $160 million compared to $142 million in the first quarter of 2022, yielding a current quarter coverage ratio of 1.8 times and a trailing 12-month coverage ratio of 1.9 times. On April 24th, we declared an 84.2 cent per unit distribution, a 2% increase over last quarter. We plan to evaluate future distribution increases annually in the first quarter, balancing our financial metric targets and investment and growth opportunities. Turning to the balance sheet, at the end of the first quarter, we had $800 million outstanding on our revolving credit facility, leaving approximately $700 million of liquidity. Leverage at the end of the quarter was 3.6 times, down from 3.8 times last quarter. Finally, yesterday we completed the acquisition of 16 terminals from Zenith Energy. Located across the East Coast and Midwest, these terminals have connections with the Colonial, Buckeye, Laurel, and Energy Transfer pipelines. The partnership expects the acquisition to be accretive to unit holders in the first year of ownership. Strong results in cash flow generation over the past few years has allowed us to continue to execute on our capital allocation strategy. With leverage at or below our long-term target and strong distribution coverage, we're able to reinvest capital back into our business through organic growth and acquisitions. The result has been increased distributable cash flow per unit that enables us to increase distribution to our unit holders. Sunoco's financial stability, distribution yield, and growth prospects make our equity a compelling value proposition. With that, I will now turn the call over to Carl to walk through some additional thoughts on our first quarter performance and recent growth initiatives.