Sunoco LP

Thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the Sunoco and Sunoco Corp Q2 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. We do ask that you limit questions to one and one follow-up. It is now my pleasure to turn the call over to Scott Grischow, Senior Vice President of Finance. Please go ahead.

Thank you. Good morning, everyone. On the call with me this morning are Joe Kim, President and Chief Executive Officer, Karl Fails, Chief Operating Officer, Austin Harkness, Chief Commercial Officer, Brian Hand, Chief Sales Officer, and Dylan Bramhall, Chief Financial Officer. Today's call will contain forward-looking statements that include expectations and assumptions regarding Sunoco LP's future operations and financial performance. Actual results could differ materially and we undertake 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 SNOCO LP website for reconciliation of each financial measure. The partnership continues a strong momentum in 2026 with second quarter adjusted EBITDA of $996 million, excluding approximately $14 million of one-time transaction expenses. Based on our first half results and our confidence in the outlook for the second half of the year, we raised our adjusted EBITDA guidance range to be between $3.5 and $3.7 billion, an increase of $400 million from our original guidance range. Joe will provide more detail in his remarks, but this increase reflects the strength of our portfolio in realizing the value of recent acquisitions. Second quarter distributable cash flow as adjusted was $608 million. On July 27th, we declared a distribution of just over $1 per common unit for both Sunoco LP common units and Sunoco Corp shares. This represents a quarterly increase of 1.25% from the prior quarter and over 10% versus the second quarter of 2025. Our business continues to generate strong cash flows, resulting in a trailing 12-month coverage ratio of 2.1 times. Our balance sheet liquidity position remains strong. We had $2.3 billion in availability under our revolving credit facility at the end of the quarter and leverage was approximately 3.7 times below our long-term target. Finally, we spent $125 million on growth capital and $77 million on maintenance capital. I want to wrap up my comments by stating that our financial position is stronger than ever. Our balance sheet is below our long-term target and our distribution is comfortably on pace to meet our multi-year growth rate of at least 5%. Our proven history of executing on highly accretive acquisitions, both larger transactions and bolt-on opportunities, combined with our quick spend, quick return, organic growth projects will continue to create a positive feedback loop, resulting in increased cash flows to be redeployed across our capital allocation strategy. We are confident this will provide top-tier returns for our investors in the coming years. With that, I'll turn it over to Karl to walk through some additional thoughts on our second quarter performance.

Thanks, Scott. Good morning, everyone. In his remarks on our first quarter call, Joe highlighted that we are both a defensive play as we distinguish ourselves in challenging environments and a proven growth play. Both are on full display in our second quarter results. Let me walk through our segment performance for the quarter and how each segment contributed to the outstanding overall result. In addition, each segment remains well positioned to contribute meaningfully toward achieving our increased 2026 EBITDA guidance. Starting with our fuel distribution segment. Adjusted EBITDA was $516 million excluding $12 million of transaction expenses. This compares to $538 million last quarter and $214 million in the second quarter of 2025, both excluding transaction expenses. Remember that our first quarter results included the 7-11 makeup payment and the $92 million one-time benefit of inventory reduction. The very strong performance this quarter demonstrates the strength in our much larger and diverse fuel distribution portfolio and the successful execution of our ongoing gross profit optimization and growth strategies. We distributed 4.1 billion gallons, up 9% versus last quarter and up 89% versus the second quarter of last year. We continue to deliver volume increases and outperform industry benchmarks as a result of the effective use of capital, both organic and roll-up acquisitions. In addition, during periods of market uncertainty like the second quarter, our commercial teams find opportunities to supply additional customers as we grow our reputation as a reliable fuel supplier in the markets in which we operate. Reported margin for the quarter was 17.1 cents per gallon compared to 17 cents per gallon last quarter and 10.5 cents per gallon for the second quarter of 2025. We saw a return of significant market volatility during the quarter with periods of sharp increases in price followed by declining prices near the end of the quarter. As we have mentioned many times, this volatility coupled with the continued presence of higher breakeven margins provides a strong foundation for our fuel distribution business. Once you add on our proven track record of growth, you can see why we remain very excited about this part of our business. In our pipeline system segment, adjusted EBITDA for the second quarter was $190 million compared to $179 million last quarter and $177 million in the second quarter of 2025. On the volume side, we reported 1.3 million barrels per day of throughput, up 4% from last quarter and up 9% from the same quarter last year. This segment continues to optimize the use of our assets to provide steady and stable income. Moving on to our terminal segment, adjusted EBITDA for the second quarter was $115 million, excluding $2 million of transaction expenses. This compares to $107 million last quarter and $73 million in the second quarter of last year, excluding transaction expenses. We reported 1.1 million barrels per day of throughput, up 5% from last quarter and 52% from the same quarter last year. Growth in both earnings and volumes in this segment were supported by a full quarter of the Tankwood acquisition. This segment continues to deliver stable results that predictably and accretively grow as we add to the portfolio. Turning to our refinery segment, adjusted EBITDA for the second quarter was $175 million compared to $43 million last quarter. Refinery throughput was 57,000 barrels per day compared to 22,000 barrels per day last quarter, which was reduced as a result of our planned turnaround. With refining margin for the quarter over $40 per barrel and operating expenses under $10 per barrel, the contribution from this segment was very strong. While the continued outperformance of the refinery segment has contributed to our increase in full year guidance, it is only one component of an outstanding first half and what will be another outstanding full year. Before I wrap up, I wanted to highlight our continued growth. Contributions and synergies from our Parkland acquisition are ahead of schedule. Our bolt-on acquisition strategy continues to demonstrate our track record of buying businesses and getting more out of them than the previous ownership. We continue to focus on quick-hitting, high-return organic capital projects. All of these contribute to DCF per LP unit growth. We expect to maintain this strong momentum into the second half of the year and into 2027. I will now turn it over to Joe to share his final thoughts. Joe?