Q4 2025 Sunoco LP Earnings Call

February 17, 2026

Operator: Good day, and thank you for standing by. Welcome to the Sunoco LP and the Sunoco Corp LLC Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Grischow, Senior Vice President of Finance. Please go ahead.

Operator: Good day, and thank you for standing by. Welcome to the Sunoco LP and the Sunoco Corp LLC Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Grischow, Senior Vice President of Finance. Please go ahead.

Speaker #1: Good day, and thank you for standing by. Welcome to the Sunoco LP and Sunoco Corp LLC fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your speaker today, Scott Grischow, Senior Vice President of Finance. Please go ahead.

Speaker #2: Thank you, and 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.

Scott Grischow: Thank you, and 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 Sunoco LP website for a reconciliation of each financial measure.

Speaker #2: Today's call will contain forward-looking statements that include expectations and assumptions regarding Sunoco LP's future operations and financial performance.

Speaker #1: 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 .

Speaker #1: Please refer to the Sunoco LP website for a reconciliation of each financial measure before reviewing our fourth quarter and full year 2025 financial results .

Scott Grischow: Before reviewing our Q4 and full year 2025 financial results, I'd like to take a moment to briefly discuss some changes to our financial reporting format, which is included in today's earnings release. First, we have incorporated Parkland's legacy operations into our three segments and have also added a fourth reporting segment for our newly added refining operations. Second, today's and future earnings releases will include select financial information for Sunoco Corp LLC, which we will refer to by its New York Stock Exchange ticker symbol of SUNC. As a reminder, SUNC's only asset is its limited partner interest in Sunoco LP. Because of its limited partner interest in Sun, SUNC consolidates Sunoco LP into its financial statements. Accordingly, on today's call and future calls, we do not intend to cover SUNC's results.

Speaker #1: I'd like to take a moment to briefly discuss some changes to our financial reporting format, which is included in today's earnings release. First, we have incorporated Parkland's legacy operations into our three segments and have also added a fourth reporting segment for our newly added refining operations.

Speaker #1: Second , today's and future earnings releases will include select financial information for Sunoco Corp. , LLC , which we will refer to by its New York Stock Exchange ticker symbol of sun , sea .

Speaker #1: As a reminder, Sun's only asset is its limited partner interest in Sunoco LP because of its limited partner interest in Sun.

Speaker #1: Sun . See consolidates . Sunoco LP into its financial statements Accordingly , on today's call on future calls , we do not intend to cover Sun Ce's results Instead , we have included a schedule in our earnings release .

Scott Grischow: Instead, we have included a schedule in our earnings release that reconciles SUNC's distribution from SUN with SUNC's distributable cash flow, as well as a summarized consolidating balance sheet. SUNC began trading shortly after we closed the Parkland transaction and will be an attractive option to invest in Sunoco, especially for investors outside of the United States, institutional investors, and in personal retirement accounts. We expect minimal corporate income taxes at SUNC for at least 5 years, which will allow for the SUNC distribution to remain very similar to the Sunoco LP distribution for this period of time. Moving to this quarter's results, the Q4 marked the end of a transformative and record-setting year for Sunoco. We closed the Parkland transaction on 31 October 2025, and our team is now fully engaged in integration efforts that are progressing well.

Speaker #1: That reconciles Sun Ce's distribution from Sun with Sun Ce's distributable cash flow, as well as a summarized consolidated balance sheet. Sun began trading shortly after we closed the Parkland transaction and will be an attractive option to invest in Sunoco, especially for outside of the United States institutional investors and in personal retirement accounts.

Speaker #1: We expect minimal corporate income taxes at sunset for at least five years , which will allow for the sun CE distribution to remain very similar to the Sunoco LP distribution for this period of time .

Speaker #1: Moving to this quarter's results , the fourth quarter marked the end of a transformative and record setting year for Sunoco . We closed the parkland transaction on October 31st , and our team is now fully engaged in integration efforts that are progressing well .

Speaker #1: The partnership delivered record adjusted EBITDA of $706 million in the fourth quarter , excluding approximately $60 million of one time transaction expenses Karl will discuss the segment performance in his remarks .

Scott Grischow: The partnership delivered record Adjusted EBITDA of $706 million in Q4, excluding approximately $60 million of one-time transaction expenses. Karl will discuss the segment performance in his remarks. However, this consolidated result reflects the ongoing strength of our operations and the contribution from the Parkland acquisition. During the quarter, we spent $130 million on growth capital and $103 million on maintenance capital. Q4 Distributable Cash Flow, as adjusted, was $442 million. On 27 January, we declared a distribution of $0.9317 per common unit for both Sunoco LP common units and Sunoco Corp shares. This represents a 1.25% increase over the prior quarter and marks our fifth consecutive quarterly distribution increase.

Speaker #1: However , this consolidated result reflects the ongoing strength of our operations and the contribution from the parkland acquisition . During the quarter , we spent $130 million on growth capital and $103 million on maintenance capital Fourth quarter distributable cash flow as adjusted , was $442 million .

Speaker #1: On January 27th, we declared a distribution of $0.931, or $0.07 per common unit, for both Sunoco LP common units and Sunoco Corp. shares. This represents a 1.25% increase over the quarter and marks our fifth consecutive quarterly distribution increase.

Speaker #1: Our trailing 12-month coverage ratio finished the year at a strong 1.9 times. We continue to see a multiyear path for an annual distribution growth rate of at least 5%.

Scott Grischow: Our trailing twelve-month coverage ratio finished the year at a strong 1.9 times. We continue to see a multi-year path for an annual distribution growth rate of at least 5%.... Looking at the full year 2025, Adjusted EBITDA, excluding transaction-related expenses, came in at a record $2.12 billion, a 36% increase over the prior year. This record year reflected solid underlying growth in our base business, a full year of contribution from our NuStar acquisition, and approximately 2 months from Parkland. Our balance sheet and liquidity position remained strong. We had $2.5 billion in availability under our revolving credit facility at the end of the year, and leverage at the end of the quarter was approximately 4x, in line with our long-term target.

Speaker #1: Looking at the full year 2025 adjusted EBITDA , excluding transaction related expenses , came in at a record $2.12 billion , a 36% increase over the prior year .

Speaker #1: This record year reflected solid underlying growth in our base business, a full year of contribution from our new acquisition, and approximately two months from Parkland.

Speaker #1: Our balance sheet and liquidity position remained strong . We had $2.5 billion in availability under our revolving credit facility at the end of the year , and leverage at the end of the quarter was approximately four times in line with our long term target In summary , our financial position continues to be stronger than at any time in Sunoco LP history , which we believe will provide us with continued flexibility to balance pursuing high return growth opportunities .

Scott Grischow: In summary, our financial position continues to be stronger than at any time in Sunoco LP's history, which we believe will provide us with continued flexibility to balance pursuing high return growth opportunities, maintaining a healthy balance sheet, and targeting a secure and growing distribution for our unitholders. With that, I will turn it over to Karl to walk through some additional thoughts on our Q4 performance.

Speaker #1: Maintaining a healthy balance sheet, and targeting a secure and growing distribution for our unitholders. With that, I will turn it over to Karl to walk through some additional thoughts on our fourth quarter performance.

Speaker #2: Thanks, Scott. Good morning, everyone. Our results this quarter cap another record year for Sunoco as we meaningfully expanded our operations and significantly grew our cash flows with the addition of the Parkland and Tank, Wood assets.

Karl Fails: Thanks, Scott. Good morning, everyone. Our results this quarter cap another record year for Sunoco, as we meaningfully expanded our operations and significantly grew our cash flows. With the addition of the Parkland and Tankwood assets, we now operate a diversified footprint spanning 32 countries and territories, and have become the largest independent fuel distributor in the Americas. Each of our segments delivered strong performance in 2025 and are well positioned to contribute meaningfully toward achieving our 2026 guidance. Let me share some more perspective on our Q4 results by segment, as well as some thoughts on our 2026 guidance we released last month. Starting with our fuel distribution segment, Adjusted EBITDA was $391 million, excluding $59 million of transaction expenses.

Speaker #2: We now operate a diversified footprint spanning 32 countries and territories , and have become the largest independent fuel distributor in the Americas Each of our segments delivered strong performance in 2025 and are well positioned to contribute meaningfully toward achieving our 2026 guidance .

Speaker #2: Let me share some more perspective on our fourth quarter results by segment , as well as some thoughts on our 2026 guidance . We released last month Starting with our fuel distribution segment , adjusted EBITDA was $391 million , excluding $59 million of transaction expenses .

Speaker #2: This compares to $238 million last quarter and $192 million in the fourth quarter of 2020 . For both , excluding transaction expenses , this growth reflects continued strength in our legacy .

Karl Fails: This compares to $238 million last quarter, and $192 million in Q4 2024, both excluding transaction expenses. This growth reflects continued strength in our legacy Sunoco operations, coupled with two months of contribution from Parkland. We distributed 3.3 billion gallons, up 44% versus last quarter and up 54% versus the fourth quarter of last year. We continue to see volume growth in our legacy Sunoco business, with an increase of more than 2% over prior year, compared to a relatively flat US demand profile. This growth is a result of effectively deployed capital via our growth capital plan and roll-up M&A transactions. We have begun the work to optimize our volumes in Canada and the Caribbean as we implement our gross profit optimization approach that we have evolved over the years.

Speaker #2: Sunoco operations, coupled with two months of contribution from Parkland. We distributed 3.3 billion gallons, up 44% versus last quarter and up 54% versus the fourth quarter of last year.

Speaker #2: We continued to see volume growth in our legacy Sunoco business, with an increase of more than 2% over the prior year, compared to a relatively flat U.S. demand profile.

Speaker #2: This growth is a result of effectively deployed capital via our growth capital plan and roll-up M&A transactions. We have begun the work to optimize our volumes in Canada and the Caribbean as we implement our gross profit optimization approach that we have evolved over the years.

Speaker #2: Reported margin for the quarter was 17.7 cents per gallon , compared to 10.7 cents per gallon last quarter and 10.6 cents per gallon for the fourth quarter of 2020 .

Karl Fails: Reported margin for the quarter was 17.7 cents per gallon, compared to 10.7 cents per gallon last quarter, and 10.6 cents per gallon for the Q4 of 2024. The much higher margin is a result of the addition of the legacy Parkland business to our portfolio, that consists of higher-margin geographies and channels. We have also begun the process of evaluating the channels of operation in each geography to ensure the business is matched with the appropriate channel to optimize return on capital. When we step back and look at our fuel distribution business, we have a proven track record of delivering results in the US, and the Parkland assets easily fit into our business strategy there. The Caribbean business is proving to be just as good as we thought.

Speaker #2: The much higher margin is a result of the addition of the legacy Parkland business to our portfolio, which consists of higher-margin geographies and channels. We have also begun the process of evaluating the channels of operation in each geography to ensure the business is matched with the appropriate channel to optimize return on capital.

Speaker #2: When we step back and look at our fuel distribution business . We have a proven track record of delivering results in the US and the parkland assets easily fit into our business strategy .

Speaker #2: There . The Caribbean business is proving to be just as good as we thought . Stable income with the opportunity for growth , especially when it couples with our scale and supplying our East Coast business from the water in Canada .

Karl Fails: Stable income with the opportunity for growth, especially when it couples with our scale in supplying our East Coast business from the water. In Canada, as we dig into the operation, the business is even better than we expected, with higher stability and higher margins than our US business, which we have proven is very stable. When you put the pieces together, the business is strong, and we're confident that we will continue to grow both fuel profit and EBITDA in this segment growing forward. That confidence comes from a foundation of strong underlying businesses with good industry fundamentals. Higher break-even margins and market volatility continue to support our fuel profit. Adding on our proven gross profit optimization approach, quick and thoughtful channel management evaluations, and our capital deployment strategy only increases our optimism.

Speaker #2: As we dig into the operation, the business is even better than we expected, with higher stability and higher margins than our U.S. business, which we have proven is very stable.

Speaker #2: When you put the pieces together, the business is strong, and we are confident that we will continue to grow both fuel profit and EBITDA in the segment going forward. That confidence comes from a foundation of strong underlying businesses with good industry fundamentals.

Speaker #2: Higher break margins and market volatility continue to support our fuel profit. Adding on our proven gross profit optimization approach, quick and thoughtful channel management evaluations, and our capital deployment strategy only increases our optimism.

Speaker #2: The final layer comes from the greater scale enhanced geographic diversity and improved supply optionality , delivering synergies and enabling continued EBITDA growth . We are very excited about the future of our fuel distribution business and our pipeline system segment Adjusted EBITDA for the fourth quarter was $187 million , compared to $182 million in the third quarter and $193 million in the fourth quarter of 2020 .

Karl Fails: The final layer comes from the greater scale, enhanced geographic diversity, and improved supply optionality, delivering synergies and enabling continued EBITDA growth. We are very excited about the future of our fuel distribution business. In our pipeline system segment, Adjusted EBITDA for the fourth quarter was $187 million, compared to $182 million in the third quarter, and $193 million in the fourth quarter of 2024, excluding transaction expenses. On the volume side, we reported 1.4 million barrels per day of throughput, up from the third quarter and consistent with fourth quarter of last year. Like last year, the fourth quarter was our strongest quarter of the year, with seasonal strength in our agricultural-supported markets, as well as good performance across the rest of the system. Moving on to our terminal segment.

Speaker #2: For excluding transaction expenses on the volume side , we reported 1.4 million barrels per day of throughput , up from the third quarter and consistent with fourth quarter of last year Like last year , the fourth quarter was our strongest quarter of the year with seasonal strength in our agricultural supported markets , as well as good performance across the rest of the system Moving on to our terminal segment , adjusted EBITDA for the fourth quarter was $87 million .

Karl Fails: Adjusted EBITDA for Q4 was $87 million. This compares to $76 million in Q3, and $61 million in Q4 2024, all excluding the impact of transaction expenses. We reported around 715,000 barrels per day of throughput, which is up from both last quarter and the fourth quarter of last year. Earnings and volumes in this segment were boosted by the inclusion of terminals income from our Parkland acquisition. This segment continues to deliver stable results, and we're looking forward to the positive addition of our recently closed Tankwood acquisition in Q1…. Turning to our new refining segment. Adjusted EBITDA for Q4 was $41 million, excluding $1 million of transaction expenses.

Speaker #2: This compares to $76 million in the third quarter and $61 million in the fourth quarter of 2020 . For all , excluding the impact of transaction expenses , we reported around 715,000 barrels per day of throughput , which is up from both last quarter and the fourth quarter of last year Earnings and volumes in this segment were boosted by the inclusion of terminals , income from our parkland acquisition This segment continues to deliver stable results , and we're looking forward to the positive addition of our recently closed tank .

Speaker #2: Acquisition in the first quarter. Turning to our new refining segment, adjusted EBITDA for the fourth quarter was $41 million, excluding $1 million of transaction expenses.

Speaker #2: This reflects approximately two months of operations following the close of the Parkland transaction at the end of October. Refinery performance was much improved in 2025 compared to previous years, and we look forward to that trend continuing under our ownership.

Karl Fails: This reflects approximately two months of operations following the close of the Parkland transaction at the end of October. Refinery performance was much improved in 2025 compared to previous years, and we look forward to that trend continuing under our ownership. As we have stated before, the refinery is an important piece of the supply chain, supporting our market-leading fuel distribution business in Western Canada. Our goal is to stabilize and improve operations regardless of what the market crack provides in terms of earnings. Before I wrap up, let me talk a little bit more about 2026. In early January, we shared our full year guidance.

Speaker #2: As we have stated before, the refineries are an important piece of the supply chain supporting our market-leading fuel distribution business in Western Canada.

Speaker #2: Our goal is to stabilize and improve operations regardless of what the market provides in terms of earnings. Before I wrap up, let me talk a little bit more about 2026.

Speaker #2: In early January , we shared our full year guidance on the last call . We highlighted our confidence in the highly accretive value parkland brings to our operations and the guidance reflects this confidence with an adjusted EBITDA range of 3.1 to $3.3 billion supporting that EBITDA guidance were a few assumptions First , that we would close on our tank would acquisition in the first quarter and we accomplished that in January Second , we expect to realize $125 million of the total , $250 million annual synergy target in 2026 , and as Scott mentioned earlier , the integration is going well and we are well on track to deliver on synergies Third , the guidance includes the planned 50 day maintenance turnaround at the refinery that began in late January Turning to capital allocation , we expect maintenance capital to be in the 400 to $450 million range , consistent with our much larger footprint and the refinery turnaround in the first quarter .

Karl Fails: On the last call, we highlighted our confidence in the highly accretive value Parkland brings to our operations, and the guidance reflects this confidence with an Adjusted EBITDA range of $3.1 to 3.3 billion. Supporting that EBITDA guidance were a few assumptions. First, that we would close on our Tankwood acquisition in Q1, and we accomplished that in January. Second, we expect to realize $125 million of the total $250 million annual synergy target in 2026. And as Scott mentioned earlier, the integration is going well, and we are well on track to deliver on synergies. Third, the guidance includes a planned 50-day maintenance turnaround at the refinery that began in late January.

Karl Fails: Turning to capital allocation, we expect maintenance capital to be in the $400 to $450 million range, consistent with our much larger footprint and the refinery turnaround in Q1. Additionally, we continue to see very attractive opportunities to grow our business. This will come from a portfolio of at least $600 million of generally quick spend, quick return capital projects, as well as acquisitions, which we included an expected floor on for the first time. To summarize, 2025 was another record year for Sunoco, and we are well positioned for another record year in 2026. Our outlook is supported by disciplined expense management, a proven strategy of optimizing gross profit, and effectively and accretively deploying capital. We enter the year with strong momentum and confidence in our ability to deliver sustained value for our investors.

Speaker #2: Additionally , we continue to see very attractive opportunities to grow our business This will come from a portfolio of at least $600 million of generally quick spend , quick return capital projects , as well as acquisitions , which we included in expected floor on for the first time to summarize , 2025 was another record year for Sunoco and we are well positioned for another record year in 2026 .

Speaker #2: Our outlook is supported by disciplined expense management, a proven strategy of optimizing gross profit effectively, and creatively deploying capital. We entered the year with strong momentum and confidence in our ability to deliver sustained value for our investors.

Speaker #2: I will now turn it over to Joe to share his final thoughts. Joe.

Karl Fails: I will now turn it over to Joe to share his final thoughts. Joe?

Speaker #3: Thanks, Karl. Good morning, everyone. We came into 2025 financially healthy, and we finished the year bigger and stronger than where we started.

Joe Kim: Thanks, Karl. Good morning, everyone. We came into 2025 financially healthy, and we finished the year bigger and stronger than where we started. Within a very eventful year, there are a few highlights I want to point out. First, our legacy Sunoco business remains resilient. All segments performed well in 2025, and we delivered on our guidance. And more importantly, we expect continued strong performance. All segments are off to a good start, and independently, 2026 would have been another record year for Sunoco legacy assets. Second, we expect the Parkland acquisition to be a home run. Karl and Scott have already discussed the material progress we've made on creating value for our stakeholders, but I think it's worthwhile to take a step back and look at the bigger picture.

Speaker #3: Within a very eventful year, there are a few highlights I want to point out. First, our legacy Sunoco business remains resilient.

Speaker #3: All segments performed well in 2025, and we delivered on our guidance. More importantly, we expect continued strong performance. All segments are off to a good start and independently.

Speaker #3: 2026 would have been another record year for Sunoco legacy assets. Second, we expect the Parkland acquisition to be a home run. Carl and Scott have already discussed the material progress we've made on creating value for our stakeholders, but I think it's worthwhile to take a step back and look at the bigger picture.

Speaker #3: The parkland acquisition will be another example of our ability to deliver on value-creating growth. Year after year, there is growth, and there is value-creating growth.

Joe Kim: The Parkland acquisition will be another example of our ability to deliver on value-creating growth year after year. There is growth, and there's value-creating growth. We delivered value-creating growth for our unitholders. Let me provide a couple of examples. First, our DCF for common unit continues to grow. Sunoco is the only AMZI constituent to grow DCF for common unit for each of the last eight years, and we expect this to continue. Second, our credit profile continues to improve. We are already ahead of schedule with our leverage back to 4x. Our balance sheet is in a very good position. I'll finish with a final thought. We have earned a solid reputation as a defensive play within the midstream sector, given our ability to deliver strong results in volatile commodity environments, as well as macro challenges such as inflation and even pandemics.

Speaker #3: We delivered value creating growth for our unit holders . Let me provide a couple of examples First , our DCF per common unit continues to grow Sunoco is the only AMC constituent to grow DCF per common unit for each of the last eight years .

Speaker #3: And we expect this to continue. Second, our credit profile continues to improve. We are already ahead of schedule with our leverage back to four times. Our balance sheet is in a very good position. I'll finish with the final thought.

Speaker #3: We have earned a solid reputation as a defensive play within the midstream sector. Given our ability to deliver strong results in volatile commodity environments, as well as macro challenges such as inflation and even pandemics, I think it is well deserved. We remain well positioned to differentiate ourselves within future challenges.

Joe Kim: I think it is well-deserved, and we remain well positioned to differentiate ourselves within future challenges. But, let's also recognize that we're an attractive growth play. The products that we move and distribute will continue to fuel the US and other economies across the world for decades to come. We have positioned ourselves as a consolidator. With the addition of Parkland and Tankwood, we're now a bigger company. In our case, bigger means more scale. More scale equates to more synergies, and more synergies mean continued value-creating growth. We have a strong track record of identifying and delivering on growth. Thus, we stated in our January guidance that we have at least $500 million of bolt-on acquisition opportunities each year for the foreseeable future. This is beyond our growth capital.

Speaker #3: But let's also recognize that we're an attractive growth play. The products that we move and distribute will continue to fuel the U.S. and other economies across the world for decades to come.

Speaker #3: We have positioned ourselves as a consolidator with the addition of parkland and tanquilut . We're now a bigger company . In our case , bigger means more scale , more scale equates to more synergies and more synergies mean continued value creating growth .

Speaker #3: We have a strong track record of identifying and delivering on growth. Thus, we stated in our January guidance that we have at least $500 million of bolt-on acquisition opportunities each year for the foreseeable future.

Speaker #3: This is beyond our growth capital . Simply put , we are uniquely positioned as both a thoughtful defensive play as well as an attractive growth story As a result , we have never reduced our distribution , but instead we have increased our distributions for the last three years with parkland and other investments .

Joe Kim: Simply put, we are uniquely positioned as both a thoughtful defensive play as well as an attractive growth story. As a result, we have never reduced our distribution, but instead we have increased our distribution for the last three years. With Parkland and other investments, we're in an even better position to continue distribution growth for both Sun and SunC unitholders. Expect a minimum of 5% annual growth in 2026, and continued growth over a multi-year period. Operator, that concludes our prepared remarks. You may open the line for questions.

Speaker #3: We're in an even better position to continue distribution growth for both Sun and SON unit holders. Expect a minimum of 5% annual growth in 2026, and continued growth over a multi-year period. Operator, that concludes our prepared remarks.

Speaker #3: You may open the line for questions.

Speaker #4: As a reminder, to ask a question, please press star one ( *1 ) on your telephone and wait for your name to be announced.

Karl Fails: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.

Speaker #4: To withdraw your question, please press star one. Once again, our first question comes from the line of Theresa Chen from Barclays.

Operator: ... Our first question comes from the line of Teresa Chen from Barclays.

Speaker #5: Good morning . Maybe beginning with the fundamentals of the fuel distribution business . How's demand trending across your footprint ? Pro forma parkland .

Theresa Chen: Good morning. Maybe beginning with the fundamentals of the fuel distribution business. How is demand trending across your footprint pro forma Parkland? And on the 17.7 cents per gallon metric, can you walk us through the drivers of the result this quarter here, and how much of that performance was driven by structural versus maybe more transient factors in your view? And from your perspective, is this CPG sustainable over the medium to long term, or what would you consider as a good run rate or a normalized CPG? And to completely close this loop, is there a specific CPG level that underlies your $250 million synergy target as well?

Speaker #5: And on the 17.7 cent per gallon metric , can you walk us through the drivers of the result this quarter here ? And how much of that performance was driven by structural versus maybe more transient factors , in your view ?

Speaker #5: And from your perspective, is this CPG sustainable over the medium to long term, or what would you consider as a good run rate or normalized CPG?

Speaker #5: And to completely close this loop, is there a specific CPG level that underlies your $250 million synergy target as well?

Speaker #6: Yeah . Hey , Theresa , this is Austin Let me maybe start in sort of reverse order , answering your question . So starting with CPG , you know , as you pointed out , as a result of the transaction , our margin profile has evolved higher You know , whether to put stock in 17.7 as and pegging that as the new water line .

Austin Harkness: Yeah. Hey, hey, Teresa, this is Austin. You know, let me maybe start in sort of reverse order, answering your question. So, you know, starting with CPG, you know, as you pointed out, as a result of the transaction, our margin profile has evolved higher. You know, whether to put stock in 17.7 as and pegging that as the new waterline, I think, you know, is, you know, probably it's directionally accurate and in terms of direction and magnitude. But with precision, I think, you know, we've always said a couple of caveats. One, there's gonna be quarter-to-quarter variability in our CPG numbers.

Speaker #6: I think you know is is , you know , probably it's directionally accurate . And in terms of direction and magnitude . But with precision , I think , you know , we've always said a couple of caveats .

Speaker #6: One , there's going to be quarter to quarter variability in our CPG numbers . And then second , you know , as Carl shared in his prepared remarks , as a result of this acquisition , we're going to be breaking out and executing against our playbook on gross profit optimization and channel management .

Austin Harkness: And then second, you know, as Karl shared in his prepared remarks, as a result of this acquisition, we're gonna be breaking out and executing against our playbook on gross profit optimization and channel management. And so for those reasons, there might be movement in both our volume and CPG numbers, independent of what the market might afford. You know, and in terms of, you know, do we have a specific number in mind? You know, historically, we haven't. You know, we don't target or solve for a CPG number. What we solve for, you know, as we've shared in the past, is fuel profit and sustained EBITDA growth over time.

Speaker #6: And so for those reasons , there might be movement in both our volume and CPG numbers , independent of what the market might afford , you know , and in terms of , you know , do we have a specific number in mind ?

Speaker #6: You know , historically we haven't you know , we don't target or solve for CPG number . What we solve for , you know , as we've shared in the past , is , is fuel profit .

Speaker #6: And sustained EBITDA growth over time . And so so with that said , you know , in terms of drivers , it might make sense to walk through the different geographic regions in our kind of newly expanded portfolio .

Austin Harkness: And so, with that said, you know, in terms of drivers, it might make sense to walk through the different geographic regions in our kind of newly expanded portfolio now, and what's driving that. Because essentially, what we found is, you know, Parkland had more street margin exposure in their portfolio than the legacy Sunoco business. And we've always said we're very specific and selective in where we want that street margin exposure and the geographies that Parkland had exposure to, we really like. So, starting with the US business, I think the story is pretty familiar. You know, demand from an EIA standpoint has been flat to slightly off toward the end of the year on a year-over-year basis. Obviously, Sunoco outperformed those trends, given our deployment of growth capital.

Speaker #6: Now . And what's driving that ? Because essentially what you're going to what we found is , you know , parkland more street margin exposure in their portfolio than the legacy Sunoco business .

Speaker #6: And we've always said we were very specific and selective in where we want that street margin exposure, and the geographies that Parkland had exposure to.

Speaker #6: We really like . So so starting with the US business , I think the story is pretty familiar . You know , demand from an EIA standpoint has been flat to slightly off toward the end of the year .

Speaker #6: On a year over year basis . Obviously , Sunoco outperformed those trends given our deployment of growth capital . And then on the margin side , you know , we continue to see a bullish margin environment buoyed by elevated breakevens .

Austin Harkness: And then on the margin side, you know, we continue to see a bullish margin environment buoyed by elevated break evens. And so, you know, if demand, you know, moves one way or the other relative to trend, if it exceeds trend, we're well positioned to participate in that environment. If it underperforms trend, obviously, as we've seen in the past, you guys know that that creates a pretty bullish margin environment for us to operate in. And so, so we feel really good about the US business. And then turning to Canada, you know, as we shared in, and Joe and Karl shared in the prepared remarks, we're really excited about the Canadian business, and the closer we get to it, the more we like it. And that's for a couple reasons.

Speaker #6: And so , you know , if demand , you know , moves one way or the other relative to trend , if it exceeds trend , we're well positioned to participate in that environment .

Speaker #6: If it underperforms trend, obviously, as we've seen in the past, you guys know that that creates a pretty bullish margin environment for us to operate in.

Speaker #6: And so so we feel really good about the US business . And and then turning to Canada , you know , as we shared in Joe and Carl shared in the prepared remarks , we're really excited about the Canadian business .

Speaker #6: And the closer we get to it , the more we like it . And and that's for a couple reasons . If you think about demand , you know , from a trend standpoint , Canada , Canadian refined product demand tends to mirror that in the US , albeit on a relative basis .

Austin Harkness: If you think about demand, you know, from a trend standpoint, Canada, Canadian refined product demand tends to mirror that in the US. Albeit on a relative basis, it's been stronger in recent years. So you know, where the US has been flat to slightly off on a year-over-year basis, Canada has been flat to slightly up over the last couple of years. And the margin environment is actually very strong. So where we have street margin exposure in Canada, are markets that structurally look and feel very similar to the West Coast in the US and the Northeast, where you have high barriers to entry, highly regulated markets, high real estate costs, high labor costs. And if you followed our story, you know that those things are highly correlated with strong margin environments. So we feel really good about the business.

Speaker #6: It's been stronger in recent years . So , you know , where the US has been flat to slightly off on a year over year basis .

Speaker #6: Canada has been flat to slightly up over the last couple of years , and the margin environment is actually very strong . So where we have street margin exposure in Canada , our markets that structurally look and feel very similar to the West Coast and the US and the northeast , where you have high barriers to entry , highly regulated markets , high real estate costs , high labor costs .

Speaker #6: And if you followed our story, you know that those things are highly correlated with strong margin environments. So we feel really good about the business, and overall, the Canadian business is going to be an outstanding addition to the portfolio.

Austin Harkness: Overall, the Canadian business is gonna be an outstanding addition to our portfolio. Then moving on to the Caribbean. Man, we continue to be really excited about the Caribbean. I think, you know, it's important to remember that we talk about the Caribbean as if it's this singular, monolithic region. The reality is, we deliver refined products to 25 different jurisdictions in the region, 22 of which we have onshore business in. And so each of those are gonna come with their own specific volume and demand, or volume and margin profiles. What I will say largely is, volume is very strong in the region.

Speaker #6: And then moving on to to the Caribbean . We continue to be really excited about the Caribbean . I think , you know , it's important to remember that we talk about the Caribbean as if it's this singular , monolithic region .

Speaker #6: The reality is, we deliver refined products to 25 different jurisdictions in the region, 22 of which we have onshore business in. And so, each of those are going to come with their own specific volume and demand, or volume and margin profiles.

Speaker #6: What I will say largely is volume is very strong in the region . A lot of that's driven by markets where we've exposure , like in South America , where , for example , a country like Guyana , where we're the major share player , has had 20 plus percent GDP growth over the last three years .

Austin Harkness: A lot of that's driven by markets where we have exposure, like in South America, where, for example, a country like Guyana, where we're the major share player, has had 20+% GDP growth over the last three years. And Suriname is likely up next, given the offshore oil discoveries in both of those countries. But across the region, we've seen strong demand. And then on the margin side of things, you know, the markets kind of fall into one of two categories. What we've seen is there's highly regulated pricing environments, which has actually had the result of stabilizing margins higher for all participants in those markets.

Speaker #6: And Suriname is likely up next , given that the offshore oil discoveries in both of those countries , but across the region , we've seen strong demand .

Speaker #6: And then on the margin side of things , you know , the markets kind of fall into one of two categories . What we've seen is there's highly regulated pricing environments , which has actually had the result of stabilizing margins higher for all participants in those markets .

Speaker #6: And then there’s the more kind of free market, open competition markets where our share, our global supply chain, and our scale allow us to enjoy a significant margin advantage over other participants in the market.

Austin Harkness: And then there's the more kind of free market, open competition, markets where our share, our global supply chain, and our scale allow us to enjoy and command a significant margin advantage over other participants in the market. So just to wrap it all up, I think overall, you know, I think we've proven over the years the consistency and resiliency of the fuel distribution segment and our ability to grow EBITDA year over year. And now with our addition of the Canadian business and the Caribbean business, we're better positioned than ever in the segment to continue to grow EBITDA going forward.

Speaker #6: So , so just to wrap it all up , I think overall , you know , I think we've proven over the years the consistency and resiliency of of the fuel distribution segment and our ability to grow EBITDA year over year .

Speaker #6: And now, with our addition of the Canadian business and the Caribbean business, we're better positioned than ever in the segment to continue to grow.

Speaker #6: EBITDA going forward

Speaker #5: Thank you for that detailed answer, Austin. Maybe turning to the infrastructure outlook, can you walk us through the pro forma terminaling portfolio?

Theresa Chen: Thank you for that detailed answer, Austin. Maybe turning to the infrastructure outlook, can you walk us through the pro forma terminaling portfolio post-integration of Parkland and Tankwood? And how do the assets now position you across the Atlantic and Pacific basins amid evolving product flows? And where do you see the most attractive growth opportunities from here within your portfolio?

Speaker #5: Post-integration of Parkland and Tank Wood, how did the assets now position you across the Atlantic and Pacific basins amid evolving product flows?

Speaker #5: And where do you see the most attractive growth opportunities from here within your portfolio?

Speaker #2: Yeah , Teresa , this is Karl . Yeah , we've got , as you point out , across the geographies that Austin just talked about in each one of those geographies .

Karl Fails: Yeah, Teresa, this is Karl. Yeah, we've got our, as you point out across the geographies that Austin just talked about, in each one of those geographies, and then if you add Europe in, into the mix, we have, critical infrastructure in, in each of those markets. And I think it varies by market, but our general approach and view is, in many of those markets, I'd say the, the Caribbean is probably the easiest one to think about, our infrastructure really supports and is foundational for our fuel distribution business. In other markets, take, Europe. You know, we don't have a fuel distribution business yet, but the assets that we've picked up are highly utilized and in very important infrastructure in the supply chain of those markets.

Speaker #2: And then if you add Europe into the mix, we have critical infrastructure in each of those markets. And I think it varies by market.

Speaker #2: But our general approach and view is, in many of those markets—I'd say the Caribbean is probably the easiest one to think about.

Speaker #2: Our infrastructure really supports and is foundational for our fuel distribution business and other markets . Take Europe , you know , we don't have a fuel distribution business yet , but the assets that we've picked up are highly utilized and very important infrastructure to in the supply chain of those markets .

Speaker #2: And then we have other geographies, whether it's in the West Coast or in the Northeast, where our terminal and pipeline network supports other people’s moving product around, as well as our own business.

Karl Fails: And then we have other geographies, whether it's in the West Coast or in the Northeast, where our terminal and pipeline network supports other people's moving product around, as well as our own business. And so I think we have examples of each ends of that spectrum. And we've talked about the opportunity for this vertical integration between our fuel distribution business and our assets. But we've also talked about how all parties are welcome, and we have customers because our overall approach is to fully utilize the assets that we have. So as we go forward, I think the same playbook is applicable. We think there's more runway to go. I think there's more opportunity, whether it's through kind of quick-hitting capital projects that we've talked about or additional M&A opportunities to grow that footprint.

Speaker #2: And so, I think we have examples at each end of that spectrum. And we've talked about the opportunity for this vertical integration between our fuel distribution business and our assets.

Speaker #2: But we've also talked about how all parties are welcome. And we have customers because our overall approach is to fully utilize the assets that we have.

Speaker #2: So as we go forward , I think the same playbook is applicable . We think there's more runway to go . I think there's there's more opportunity , whether it's through kind of quick hitting capital projects that we've talked about or additional M&A opportunities to grow that footprint

Speaker #5: Thank you

Theresa Chen: Thank you.

Speaker #4: Thank you. One moment for our next question. Our next question comes from the line of Jeremy Tonet from J.P. Morgan Securities LLC.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jeremy Tonet from JP Morgan Securities LLC.

Speaker #7: Hey , good morning . This is Eli on for Jeremy . Just wanted to start on the outlook for bolt on M&A , which I know you touched on in opening remarks .

[Analyst] (J.P. Morgan Securities LLC): Hey, good morning. This is Eli on for Jeremy. Just wanted to start on the outlook for bolt-on M&A, which I know you touched on in opening remarks. I'm not sure if this has historically been part of forward guidance, but if we think about the $500 million annual target with respect to your guide, should we think about sort of execution there as upside to the guide and the long-term outlook? I know you guys executed a roll-up earlier in the year, so just thinking about contributions from that and any overall strategy with respect to guidance. Thanks.

Jeremy Tonet: Hey, good morning. This is Eli on for Jeremy. Just wanted to start on the outlook for bolt-on M&A, which I know you touched on in opening remarks. I'm not sure if this has historically been part of forward guidance, but if we think about the $500 million annual target with respect to your guide, should we think about sort of execution there as upside to the guide and the long-term outlook? I know you guys executed a roll-up earlier in the year, so just thinking about contributions from that and any overall strategy with respect to guidance. Thanks.

Speaker #7: I'm not sure if this is historically been part of forward guidance , but if we think about the 500 million annual target with respect to guide Should we think about sort of execution there as upside to the guide and the long term outlook ?

Speaker #7: I know you guys executed a roll up earlier in the year . So just thinking about contributions from that and and the overall strategy with with respect to guidance , thanks , Eli .

Joe Kim: Hey, Eli, this is Joe. I, like I said in my prepared remarks, I think we have a highly attractive long-term growth story. The foundation of that is we're in a very good financial position. We've invested wisely, and our free cash flow continues to grow, so we have more dollars to spend on growth on a going forward basis. And as Carl and Austin talked about, the Parkland acquisition and with our entry into Europe, we've greatly expanded our scale and our geography. So, you know, not too long ago, we were basically a US-only business. Now we have investment opportunities in US, Canada, Greater Caribbean, and Europe. The US is gonna still remain our foundation. Like, for example, last year, we did over 10 small bolt-on acquisitions in the US alone.

Speaker #3: This is Joe . I like I said in my prepared remarks , I think we have a highly attractive long term growth story for the foundation of that is we're in a very good financial position .

Speaker #3: We've invested wisely in our free cash flow; it continues to grow, so we have more dollars to spend on growth on a going-forward basis.

Speaker #3: And as Karl and Austin talked about, the Parkland acquisition, and with our entry into Europe, we've greatly expanded our scale and our geography.

Speaker #3: So , you know , not too long ago , we were basically a US only business . Now we have investment opportunities in US , Canada , Greater Caribbean and Europe .

Speaker #3: The US is going to still remain our foundation . Like for example , last year we did over ten small bolt on acquisitions in the US alone And we could have probably done a lot more , but we kind of slowed down because we had the parkland acquisition .

Joe Kim: And we could have probably done a lot more, but we kind of slowed down because we had the Parkland acquisition we were closing on. So the runway of doing these, you know, we gave the guidance of $500 million. We could probably do that alone in the US. Then you add on Canada, Greater Caribbean, and you add on Europe, you can see why we think that, that providing guidance of doing at least $500 million, we think is a floor and is very reasonable for us for next year and for multiple years to come. On the valuation standpoint, you know, the landscape hasn't changed that much for us.

Speaker #3: We're closing on . So the runway of doing these , you know , we gave the guidance of $500 million . We could probably do that alone in the US .

Speaker #3: Then you add on Canada , Greater Caribbean , and you add on Europe , you can see why we think that that providing guidance of doing at least 500 million , we think is a floor is very reasonable for us for next year and for multiple years to come .

Speaker #3: On the valuation standpoint , you know , the landscape hasn't changed that much for us . We think the valuations are are still highly attractive .

Joe Kim: We think the valuations are still highly attractive, and the reason why we believe that, because we're one of the very few, maybe only company in this sector, that can bring material synergies to the table. So valuations remains in the same ballpark, but as we get bigger and we have more scale, we remain efficient, being a low-cost provider, we get advantage economics. That's why we felt very comfortable this year, providing a bolt-on guidance for our investors. As far as, you know, you mentioned a question about guidance. Here's the way I think you should, or you should think about it. If we do more than, you know, materially more than $500 million in 2026, yeah, that gives us some upside for 2026. It depends on the timing of that.

Speaker #3: And the reason why we believe that is because we're one of the very few, maybe only, companies in this sector that can bring material synergies to the table.

Speaker #3: So valuations remain in the same ballpark . But as we get bigger and we have more scale , we remain efficient . Being a low cost provider , we get we get advantage economics .

Speaker #3: That's why we felt very comfortable this year , providing a bolt on , bolt on guidance for for our investors . As far as the you know , you mentioned the question about guidance .

Speaker #3: Here's the way I think you should. You should think about it. If we do more than materially more than $500,000,000 in 2026.

Speaker #3: Yeah , that gives us some upside for 26 . It depends on the timing of that . But I think the way you should think about it is that that's the floor and that's the sustainable floor on a multi-year basis , which gives us kind of a year after year growth in our story

Joe Kim: But I think the way you should think about it is that, that's the floor and that's a sustainable floor on a multi-year basis, which gives us kind of a year after year, growth in our story.

Speaker #7: Awesome . Appreciate the color there . And then , you know , thinking about the impact of these bolt ons . Maybe with respect to the sun , sea dividend and sun distribution equivalents .

[Analyst] (J.P. Morgan Securities LLC): Awesome. Appreciate the color there. And then, you know, thinking about the impact of these bolt-ons, maybe with respect to the SUNC dividend and Sun distribution equivalents, you know, I know you extended that equivalence recently, but if we think about sort of these bolt-ons helping avoid any tax, tax leakage, you know, has the team considered extending that guidance? Again, I know you already extended it, but just, in the context of Sun and SUNC, the way they trade, you know, just thinking about the long-term kind of tax protection there. Thanks.

Jeremy Tonet: Awesome. Appreciate the color there. And then, you know, thinking about the impact of these bolt-ons, maybe with respect to the SUNC dividend and Sun distribution equivalents, you know, I know you extended that equivalence recently, but if we think about sort of these bolt-ons helping avoid any tax, tax leakage, you know, has the team considered extending that guidance? Again, I know you already extended it, but just, in the context of Sun and SUNC, the way they trade, you know, just thinking about the long-term kind of tax protection there. Thanks.

Speaker #7: I know you extended that equivalence recently , but if we think about sort of these bolt ons helping avoid any tax tax leakage , you know , has the team considered extending that guidance ?

Speaker #7: Again ? I know you already extended it , but just in the context of sun and sun . See , the way they trade , you know , just thinking about the the long term kind of tax protection there .

Speaker #7: Thanks .

Speaker #1: Yeah . This is Scott . You know , in our , our investor materials that we published last year , we talked about the fact that we expect minimal corporate income taxes for at least five years .

Dylan Bramhall: ... Yeah, Eli, this is Scott. You know, in our investment materials that we published last year, we talked about the fact that we expect minimal corporate income taxes for at least five years. A lot of that was predicated on our outlook for the business itself, and certainly continuing to invest in the business, either through acquisitions or growth capital, will help us manage that tax profile going forward. So as we sit here today, there's really no change to that minimal corporate income taxes for at least five years, which again has given us confidence that the distribution between SUNC and Sunoco LP will continue for that period of time.

Speaker #1: A lot of that was predicated on our outlook for the business itself . And certainly continuing to to invest in the business , either through acquisitions or growth capital will help us manage that tax profile going forward .

Speaker #1: So as we sit here today , there's really no change to that . That minimal corporate income taxes for at least five years , which again , has given us confidence that the distribution between sun , sea and and Sunoco LP will continue for that period of time .

Joe Kim: Eli, let me add one other thing to that. I think one of your, where you're going with the question is that we gave the five-year, at least five years, with, I would say, probably a modest assumption of growth. We believe we're gonna grow materially. So any type of material growth on top of that will put us in an even a better position on a going-forward basis.

Speaker #3: Let me add one other thing to that . I think one of your where you're going with the question is , is that we gave the five year , at least five years with , I would say , probably a modest assumption of growth .

Speaker #3: We believe we're going to grow materially. So any type of material growth on top of that will put us in a better position on a going-forward basis.

Speaker #7: Great . Thanks guys

[Analyst]: Great. Thanks, guys.

Joe Kim: Great. Thanks, guys.

Speaker #4: Thank you . As a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced .

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question comes from the line of Selman Akyol from Stifel.

Speaker #4: To withdraw your question, please press star one. Once again, our next question comes from the line of Zelman Akyol from Stifel.

Speaker #8: Thank you . Good morning . So just a point of clarification real quick on the 500 million in bolt on acquisitions . Would that all be US based or would that be across your entire footprint now ?

Selman Akyol: Thank you. Good morning. So just a point of clarification real quick. On the $500 million in bolt-on acquisitions, would that all be US-based, or would that be across your entire footprint now?

Joe Kim: Selman, it'll be across the whole footprint. I guess the point I was trying to make earlier is that the US is kind of the foundation, and on a US alone, we may be able to do that just on US alone. But the way we're gonna look at it is, best projects win. So now we get to choose between US, Caribbean, Europe, Canada, and then, so the best projects is the ones we're gonna take, we're gonna look at first. But in totality, it's the whole kind of global perspective.

Speaker #3: I'll miss Joe . It'll be across the whole whole whole footprint . I guess the point I was trying to make earlier is , is that the US is kind of the foundation and on a US alone , we may be able to do that just on us alone .

Speaker #3: But the way we're going to look at it is Best projects win . So now we get to choose between us , Caribbean , Europe , Canada and then .

Speaker #3: So the best projects are the ones we're going to take . We're going to look at first , but but in totality , it's the it's the whole kind of global perspective .

Speaker #8: Got it. And then, last week, there was a rescission on the greenhouse gases endangerment finding—so, rolling back sort of greenhouse gases as a threat to public health.

Selman Akyol: Got it. And then, last week, there was a rescission on the greenhouse gases Endangerment Finding. So rolling back sort of greenhouse gases as a threat to public health. Can you guys just talk about how that may be impacting you or what you think that might do?

Speaker #8: Can you guys just talk about how that may be impacting you, or what you think that might do?

Speaker #3: Yeah, it's early stages, so more clarity is going to come out in the future. But here are some initial thoughts in the short run.

Joe Kim: Yeah. It's early stages, so more clarity is gonna come out in the future. But here's some initial thoughts. In the short run, short run, there's no effect on Sun. Longer term, it is bullish for refined products, all other variables equal. Additionally, anytime there's any legislation that creates potentially state-by-state specs and add complexity, that's always gonna be good for Sun. We thrive in those environments whenever there's complexity, and we have the team and scale to source from all different areas, so that's gonna be bullish for us. On a personal level, and I think I speak for many people, the elimination of the annoying start-stop engine cutoff function, I think is gonna be a really good development.

Speaker #3: Short run . There's no effect on sun longer term it is bullish for refined products . All other variables equal . Additionally , any time there's any legislation that creates potentially state by state specs and add complexity , that's always going to be good for son .

Speaker #3: We thrive in those environments. Whenever there's complexity and we have the team in scale to source from all different areas. So that's going to be bullish for us on a personal level.

Speaker #3: And I think I speak for many people, the elimination of the annoying start-stop engine cutoff function, I think, is going to be a really good development.

Speaker #8: Okay . And then last one for me and you've kind of teased it up several times where you talk about distribution , growth of at least 5% and then , you know , listening to all your comments , things seem to be going exceedingly well .

Selman Akyol: Okay. And then last one for me. And you've kind of teased it up several times where you talk about distribution growth of at least 5%. And then, you know, listening to all your comments, things seem to be going exceedingly well. Your outlook seems to be very confident and very bright. So what does it actually take to see something on the plus side of 5%?

Speaker #8: Your outlook seems to be very confident and very bright. So, what does it actually take to see something? On the plus side of 5%?

Speaker #3: Yes . You know , here's the the most important takeaway . We have a multiyear growth in distribution for this year . You know , we raised the 2% three years ago 4% 4% two years ago .

Joe Kim: Yeah, Selman, you know, here's the most important takeaway: We have a multiyear growth in distribution. For this year, you know, we raised it 2% three years ago, 4%, 4% two years ago, and we raised a little bit over 5% last year. And this year, we stated at a minimum 5%. As far as an exact amount, we haven't determined that yet, but the takeaway is it's gonna be on a multiyear basis. We're in a really good position. You know, it's not just distribution. We're gonna take care of our balance sheet. We're gonna remain a growth company. So, we fully...

Speaker #3: And we raised a little bit over 5% last year. And this year, we stated at a minimum 5%. As far as an exact amount, we haven't determined that yet.

Speaker #3: But then but then the takeaway is it's going to be on a multi-year basis . We're in a really good position . You know , we're it's not just distribution .

Speaker #3: We're going to take care of our balance sheet. We're going to remain a growth company. So we fully—you can tell from our results, and you can tell from the guidance.

Joe Kim: You can tell from our results, and you can tell from the guidance, you can tell from the tone of this call, we think that we're gonna continue to grow our business, and we're gonna grow DCF per common unit. Our cash flows are gonna expand. We're in a very good position from a capital allocation standpoint. We're gonna have more dollars to deploy to all three areas. The exact allocation, that's our job, to optimize that, to make sure that we don't just take care of the short run, but for the long run. So, stay tuned. As the year goes on, we'll provide more clarity as to the exact allocation, but the takeaway should be the number is growing, so we're gonna have more options to deploy that in all three areas.

Speaker #3: You can tell from the tone of this call . We think that we're going to continue to grow our business , and we're going to grow DCF per common unit .

Speaker #3: Our cash flows are going to expand . We're in a very good position from a capital allocation standpoint . We're going to have more dollars to , to to deploy to all three areas .

Speaker #3: The exact allocation . That's our job to optimize that , to make sure that we don't just take care of the short run , but for the long run .

Speaker #3: So , so stay tuned . We'll get we'll as the year goes on , we'll provide more clarity as to the exact allocation .

Speaker #3: But the takeaway should be the numbers growing . So we're going to have more options to deploy that in all three areas .

Speaker #8: All right . Thank you very much .

Selman Akyol: All right. Thank you very much.

Speaker #4: Thank you. One moment for our next question. Our next question comes from the line of Elvira Scotto from RBC Capital Markets.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Elvira Scotto from RBC Capital Markets.

Speaker #9: Hey , good morning on M&A . I have a couple questions on M&A . I guess first , where do you see the greatest opportunity ?

Dylan Bramhall: Hey, good morning. On M&A, I have a couple questions on M&A. I guess first, where do you see the greatest opportunity? Is it terminal fuel distribution? And then my second question on M&A is: Is there a gating item on M&A? You talked about sort of a $500 million floor. You've become a much bigger, more diversified company. I mean, is there a ceiling or anything that would, you know, keep you from doing, you know, more substantial M&A?

Elvira Scotto: Hey, good morning. On M&A, I have a couple questions on M&A. I guess first, where do you see the greatest opportunity? Is it terminal fuel distribution? And then my second question on M&A is: Is there a gating item on M&A? You talked about sort of a $500 million floor. You've become a much bigger, more diversified company. I mean, is there a ceiling or anything that would, you know, keep you from doing, you know, more substantial M&A?

Speaker #9: Is it is it terminals fuel distribution . And then my second question on M&A is is there a gating item on M&A . You talk about sort of a $500 million floor .

Speaker #9: You've become a much bigger , more diversified company . I mean , is there a ceiling or anything that would , you know , keep you from doing more substantial M&A ?

Speaker #3: Hey , of ours , Joe , as far as the the greater opportunity , the answer is all of the above . We're going to grow our midstream business .

Joe Kim: ... Yeah, Elvira, it's Joe. As far as the greater opportunity, the answer is all of the above. We're gonna grow our midstream business, we're gonna grow our fuel distribution business, and we're gonna grow in all the geographies that we're in right now. So, that's the position that we like being in, where we're not, you know, so focused on a single geography or so focused on a single segment of our business. And the way we're gonna do it is that we have growing growth capital. You know, some of the Parkland acquisitions that we acquired, for example, like in Guyana, Suriname, we've already have three terminal projects in the works in those markets. So we're gonna get some natural growth from being in the right market with the right business.

Speaker #3: We're going to grow our fuel distribution business. And we're going to grow in all the geographies that we're in right now. So that's the position that we like being in.

Speaker #3: Where we're not we're not you know , so focused on a single geography or so focused on a single segment of our business and the way we're going to do it is , is that we have growing growth capital .

Speaker #3: You know , some of the parkland acquisitions that that that we acquired , for example , like in Guyana , Suriname , we've already had three terminal projects in the works in those markets .

Speaker #3: So we're going to get some natural growth from being in the right market with the right business from a from a decision between which ones .

Joe Kim: From a decision between which one, I always go back to capital discipline and choosing the best projects. And we've got a wide range of opportunities, and we'll pick the best projects. As far as your question about a gating item or a ceiling, probably a little bit of clarification on the guidance we gave. We said at least $500 million of bolt-on acquisition. That's not saying that we think that's a target acquisition number. And, you know, based on the fact that we're already back to our 4x leverage within three or four months, two months, so we're gonna take care of our balance sheet. If we were... You know, I think after the Parkland transaction, we said we'll be back between 12 to 18 months.

Speaker #3: I always go back to capital discipline and choosing the best projects, and we’ve got a wide, wide range of opportunities, and we’ll pick the best projects.

Speaker #3: As far as your question about gating item or ceiling, probably a little bit of clarification on the guidance we gave. We said at least $500 million of bolt-on acquisitions.

Speaker #3: That's not saying that we think that's a target acquisition number . And , you know , based on the fact that we're already back to our forex leverage within 3 or 4 months , two months .

Speaker #3: So, we're going to take care of our balance sheet. If we were, you know, I think after the Parkland transaction, we said we'll be back between 12 to 18 months.

Speaker #3: Well we got back a lot quicker . So now we're in a better position to grow on a going forward basis . 500 is , I thought was a pretty low bar for us to at least give the street that these bolt on acquisitions aren't just sporadic , that we may pick up , you know , a few this year , maybe a few a couple of years from now .

Joe Kim: Well, we got back a lot quicker, so now we're in even a better position to grow on a going-forward basis. 500, as I thought, was a pretty low bar for us to at least give the street that these bolt-on acquisitions aren't just sporadic, that we may pick up, you know, a few this year, maybe a few, a couple of years from now. They're ratable in the fact that US is a super highly fragmented market on the fuel distribution side, so we have ample opportunities. As far as Canada and the Greater Caribbean, it's not as fragmented as the US, but there's plenty of opportunities. And I keep emphasizing, scale matters in this business.

Speaker #3: They're readable. And the fact that the U.S. is a super, highly fragmented market on the fuel distribution side. So we have ample opportunities as far as Canada and the greater Caribbean.

Speaker #3: It's not as fragmented as the US , but there's plenty of opportunities . And I keep emphasizing skill matters in this business . Whenever you're the biggest player with the most efficiencies , regardless of what the what the market valuation is , we have an opportunity to take a turn or two or more down from that acquisition so that becomes highly attractive to us .

Joe Kim: Whenever you're the biggest player with the most efficiencies, regardless of what the, what the market valuation is, we have an opportunity to take a turn or two or more down from that acquisition, so that becomes highly attractive to us. So I would give guidance to the street that we think that $500 million of bolt-on acquisitions. This doesn't include growth capital, this doesn't include bigger opportunistic acquisitions. But as a baseline, I think you should view us as that we have a solid layer of organic growth capital, and we have a solid layer of bolt-on M&A.

Speaker #3: So I would . Give guidance to Street that we think that 500 million of bolt on acquisitions , this doesn't include growth capital .

Speaker #3: This doesn't include bigger opportunistic acquisition . But as a baseline , I think you should view us as that . We have a solid layer of organic growth capital , and we have a solid layer of of of bolt on M&A

Speaker #9: Thank you . That's that's very helpful . And then my next question is now that you've closed on parkland , you know , you've had it for a few months , how do you feel about your synergy target .

[Analyst]: Thank you. That's very helpful. And then my next question is, now that you've closed on Parkland, you know, you've had it for a few months, how do you feel about your synergy target? And, you know, you have a very good track record of exceeding these targets on your acquisitions. So, you know, do you think there's a possibility of exceeding your target here?

Joe Kim: Thank you. That's very helpful. And then my next question is, now that you've closed on Parkland, you know, you've had it for a few months, how do you feel about your synergy target? And, you know, you have a very good track record of exceeding these targets on your acquisitions. So, you know, do you think there's a possibility of exceeding your target here?

Speaker #9: And you know you have a very good track record of of of you know , exceeding these targets on your acquisitions . So , you know , do you think you think there's a possibility of exceeding your target here ?

Speaker #2: Yeah . Elvira , this is Carl . Yeah . We're we're very excited about parkland . I think Austin gave a good rundown of of the various geographies from a fuel distribution side .

Karl Fails: Yeah, Elvira, this is Karl. Yeah, we're very excited about Parkland. I think Austin gave a good rundown of the various geographies from a fuel distribution side, and I'd say from the other parts of the business that we picked up, I think we're equally excited. Yeah, I think our past history would show if you were deciding to take the over or the under, I would take the over on us delivering on our synergies also. I think our main focus is delivering on the synergies quickly, and so for us to deliver in 2026, $125 million, clearly we'll be ramping up through the year. Some of those activities already started in Q4.

Speaker #2: And I'd say, from the other parts of the business that we picked up, I think we're equally excited. Yeah, I think our past history would show, if you were deciding to take the over or the under, I would take the over on us delivering on our synergies.

Speaker #2: Also , I think our main focus is delivering on the synergies quickly . And so for us to be to deliver in year in 2026 , $125 million , clearly , we'll be ramping up through the year .

Speaker #2: Some of those activities already started in the fourth quarter. And so we should exit the year well north of that $125 million on a run rate basis.

Karl Fails: And so we should exit the year well north of that $125 million on a run rate basis. But the other thing that's super important is the base business, and so our view on how strong that base business is and the sustainability of that going forward is just as important. And so it's really the combination of those factors that gives us confidence in the 2026 guidance, and then going forward in 2027 and 2028. So, you know, Joe mentioned in his last answer, the two metrics that we look at in totality that are the most important, it's really where our leverage sits, and are we, you know, delivering on our commitments on growing the DCF per LP unit. And we're very confident in those for this year and beyond.

Karl Fails: But the other thing that's super important is the base business, and so our view on how strong that base business is and the sustainability of that going forward is just as important. And so it's really the combination of those factors that gives us confidence in the 2026 guidance, and then going forward in 2027 and 2028. So, you know, Joe mentioned in his last answer, the two metrics that we look at in totality that are the most important, it's really where our leverage sits, and are we, you know, delivering on our commitments on growing the DCF per LP unit. And we're very confident in those for this year and beyond. And I guess the bottom line is, I think, NuStar was a home run acquisition, and Parkland is going to be another home run acquisition for us.

Speaker #2: But the other thing that's super important is the base business. And so our view on how strong that base business is, and the sustainability of that going forward, is just as important.

Speaker #2: And so it's really the combination of those factors that gives us confidence in the '26 guidance. And then going forward in '27 and '28.

Speaker #2: So, you know, Joe mentioned in his last answer the two metrics that we look at in totality that are the most important.

Speaker #2: It's really where our leverage sits . And are we , you know , delivering on our commitments , on growing the DCF per LP unit .

Speaker #2: And we're very confident in those for this year and beyond. And I guess, bottom line is, I think NuStar was a home run acquisition, and Parkland is going to be another home run acquisition for us.

Karl Fails: And I guess the bottom line is, I think, NuStar was a home run acquisition, and Parkland is going to be another home run acquisition for us.

Speaker #9: Great. Thank you very much.

[Analyst]: Great. Thank you very much.

Karl Fails: Great. Thank you very much.

Speaker #10: Thanks .

Karl Fails: Thanks.

Speaker #4: Thank you . At this time I would now like to turn the conference back over to Scott Grischow for closing remarks

Operator: Thank you. At this time, I would now like to turn the conference back over to Scott Grischow for closing remarks.

Speaker #1: Thanks for joining us on the call today . There are a lot of exciting things to look forward to in 2026 for Sunoco , and we look forward to updating you across the year In the meantime , please feel free to reach out if you have any questions .

Joe Kim: Thanks for joining us on the call today. There are a lot of exciting things to look forward to in 2026 for Sunoco, and we look forward to updating you across the year. In the meantime, please feel free to reach out if you have any questions. Thanks for tuning in, and we appreciate your support.

Scott Grischow: Thanks for joining us on the call today. There are a lot of exciting things to look forward to in 2026 for Sunoco, and we look forward to updating you across the year. In the meantime, please feel free to reach out if you have any questions. Thanks for tuning in, and we appreciate your support.

Speaker #1: Thanks for tuning in, and we appreciate your support.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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