Greetings, and welcome to Sunoco LP's Third Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. A 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. I would now like to turn the conference over to your host, Scott Grischow, Senior Vice President of Finance and Investor Relations. Thank you. You may begin. Thank you, and good morning, everyone. On the call with me this morning are Joe Kim, Sunoco LP's President and Chief Executive Officer, Karl Fails, Chief Operating Officer, Dylan Bramhall, Chief Financial Officer, and other members of the management team. Today's call will contain forward-looking statements that 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 their 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. The third quarter brought a continuation of Sunoco's strong financial performance throughout 2023. The partnership generated Adjusted EBITDA of $257 million, compared to $276 million a year ago. Fuel volumes for the quarter were 2.1 billion gallons, up 7% from the third quarter of last year. Fuel margin on all gallons sold was 13 cents per gallon, compared to 13.9 cents per gallon a year ago. Total third quarter operating expenses were $141 million, an increase of $10 million from the same period last year. This year-over-year increase was attributable to the Peerless and Zenith acquisitions. During the third quarter, we spent $31 million of growth capital and $14 million in maintenance capital. Third quarter Distributable Cash Flow, as adjusted, was $181 million, compared to $196 million in the third quarter of 2022, yielding a current quarter coverage ratio of two times and a trailing 12 months coverage ratio of 1.9 times. On 20 October, we declared an $0.842 per unit distribution, consistent with last quarter. As you may recall, we increased our distribution by 2% in the first quarter of 2023, and we will determine our next distribution increase next year in the first quarter. Turning to the balance sheet, at the end of the third quarter, we had $647 million outstanding on our revolving credit facility, leaving approximately $847 million of liquidity. Leverage at the end of the quarter was 3.9 times. In September, we completed an offering of $500 million of 7% senior notes due 2028. We used the net proceeds from the offering to repay a portion of the outstanding borrowings on our revolving credit facility. This notes offering not only improved our liquidity position, but it also allowed us to achieve a savings in interest expense, given the difference between the current cost of borrowing on the revolving credit facility and the fixed rate on the new notes. Finally, as a result of our strong performance year to date and our outlook for the remainder of the year, we are increasing our EBITDA guidance for the full year 2023 to be above $935 million. This represents a $20 million increase to the top end of the revised guidance range we issued in May, further demonstrating our ability to continue to grow cash flow year after year in any environment. The reliability and free cash flow generation of our operations allows us to remain consistent in our capital allocation strategy and focus on our three pillars. First, to maintain a secure distribution with annual growth. Second, to protect our balance sheet. And third, to pursue disciplined investment and growth opportunities. We are confident that this framework will continue to deliver strong returns to our unitholders. With that, I will now turn the call over to Karl to walk through some additional thoughts on our third quarter performance. Thanks, Scott. Good morning, everyone. We delivered another strong quarter, supported by continued strength in margins, volume growth, expense discipline, efficient operations, and accretive acquisitions. When you step back and look at our business, it continues to perform quarter after quarter. The fundamentals are sound. We have put ourselves in a solid financial position, and we have the strategies to take advantage of market opportunities. Our volumes this quarter were up about 7% versus the third quarter of last year. The continued growth in volume relative to prior years comes from the contribution from our capital deployed, both organic and through acquisitions, as well as demand growth in some geographies. This quarter marks the highest volume quarter in our history and the second consecutive quarter where our volumes were above the two billion gallon mark. When you compare this to various reports on U.S. demand, it is clear that we are outpacing the sector and picking up market share, another sign that our growth is delivering tangible results. This is all occurring as we grow in our existing geographies and enter new markets. As we look to the end of the year, we expect that volume in the fourth quarter would see a normal seasonal decline sequentially, but our relative position in the market will remain strong. With respect to margins, the strong margin performance of the last few years continued in the third quarter as we delivered margins of $0.13 per gallon. There's no extraordinary story to share for this quarter. The continued combination of increased market volatility, higher breakeven margins, and our gross profit optimization strategies delivered strong margins, even with some rising prices the first half of the quarter. Looking forward to the fourth quarter, we expect the same fundamental factors to remain in place. However, just like with volume, our margins are often seasonally lower when compared to the third quarter. Even with some variability quarter to quarter, as we have said many times, when you look at our business over a full year period, we continue to deliver strong and growing results. I want to briefly touch on the devastating wildfires experienced on the island of Maui in August. We have three sites that were impacted by the fires, and clearly, there has been some additional business impact as a result of reduced travel to the island, though overall, it is not material to our results. More importantly, we are very grateful that all our employees are safe, though many of them experienced traumatic impacts to their homes and families. We are extremely proud of our team in Hawaii and how they have been able to pivot from worrying about the impacts on their own lives and livelihoods and find ways to help their neighbors and contribute to the community response. Thank you to all of them. Turning to expenses. Consistent discipline in managing our expenses remains one of our core strengths, and our third quarter results firmly demonstrate that as they were basically flat to the second quarter. Even with the increase in our EBITDA guidance for the full year, we expect our expenses to be in the range that we shared in May. Moving on to maintenance and growth capital. Both of these also remain in line with our revised 2023 guidance we provided in May. If we look at our overall growth profile, we have deployed approximately $1.3 billion of growth, acquisition, and working capital since the beginning of 2021. Our growth strategy has been focused on adding fuel distribution and midstream assets. On the acquisition side, we've been able to identify businesses that fit into our strategy and execute on those results. We find businesses where we can add value to the fuel supply chain, grow volume, reduce supply costs, or expand margin. We optimize expenses and utilize our balance sheet and capital discipline to invest in the acquired businesses in ways that unlock value. We look at integrating our fuel distribution business with midstream assets, even where that might appear to be a step out, like our transmix or Puerto Rico acquisitions. At the core, the strategy is the same. I already talked about how we are growing our fuel volume. We are also now one of the largest refined product terminal operators in the United States and the largest transmix operator. These represent high-quality infrastructure assets that will continue to have value for decades to come in any energy transition scenario, while also supporting our growing fuel distribution portfolio. Simply put, our acquisitions and subsequent operational results speak for themselves. Before turning the time over to Joe, I will end on this: Sunoco remains a growth company. I talk a lot about the stability of our base business, the strong market foundation, our expense discipline, and gross profit optimization. Ultimately, those are all tools that both deliver results in our current business and enable us to continue to grow. We will do that through investing in high-return organic projects and focusing on making accretive acquisitions at attractive transaction multiples, which will deliver immediate results for our stakeholders and ultimately drive continued appreciation in our unit price. Joe? Thanks, Karl. Good morning, everyone. We delivered a very strong third quarter. Although 2023 is not quite over, I want to provide some perspective on this year as a whole. On a macro level, fuel distribution has remained highly attractive within the energy sector. The combination of higher breakeven margins and commodity volatility has supported strong earnings for select companies that can optimize gross profit and manage expenses. Obviously, this is what Sunoco does well. In addition, our growth in the terminal business has enhanced our overall portfolio, providing further stability and growth opportunities. As a result, we're on pace for another record year. As Scott mentioned, we increased our EBITDA guidance for the full year 2023. We expect more of the same in 2024. This December, we'll provide a new investor presentation, which will include our formal 2024 guidance and business outlook. I'd like to preview a few key themes. We expect to grow and have another strong year in 2024. We expect industry fundamentals to remain supportive, and we expect the continuation of our proven track record of optimizing our business in various macro environments. Regardless of one's outlook on fuel demand, inflation, recession risk, and geopolitical uncertainty, we expect our stable portfolio to deliver strong results in various environments. With our increasing cash flow, we expect to grow both organically and through acquisition. The opportunity set remains ample and attractive. And finally, we're in a position to increase our distribution again next year. All of this while maintaining strong coverage and leverage ratios. Operator, that concludes our prepared remarks. You may open the line for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. We ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from Theresa Chen with Barclays. Please proceed with your question. Good morning, and thank you for taking my questions. I wanted to go back to the comments about Sunoco, being and remaining a growth company. Karl, to your comments about, gaining market share, in these tumultuous, volatile markets, can you talk about if this is, primarily driven by the acquisitions? Or how have you been able to organically grow market share? Yeah, Theresa, thanks for the question. If you think about the components and kind of the contributions to our market share growth, I think you hit on the two biggest. So, from an acquisition standpoint, clearly the biggest difference in volume, third quarter this year versus third quarter last year, is our acquisition of Peerless at the end of last year. But in addition, there are investments that we've made, both in growth capital, and I'd say generically in working capital, in growing our business. And that's why signing new customers to long-term agreements, and then I think finding opportunities to take advantage of market demand. Whether that's, you know, through consolidating our supply and selling that through various wholesale channels, and coupling that with additional branded growth, where we spend growth capital. So it, it's really a combination of both of those. I, I'd say, probably a little more towards the acquisitions, but I would not discount the growth that we've had, coming from the investments in growth capital and working capital. Got it. And on the M&A landscape, can you talk about what you're seeing as far as evolution of valuation, assets coming to market that you're interested in? How is that changing? And, particularly to midstream assets outside of wholesale distribution and on the infrastructure side, are there opportunities where it may make sense to invest along with your parent? Hey, Theresa, it's Joe. Assessing the M&A landscape, I would probably put it this way: I know for probably the last two or three years, I've said pretty much the same thing, that the opportunities out there looks robust. Looking forward probably to, you know, this year and to next year, I would expect it to be exactly the same or maybe even better. So the situation that we're in right now is, I think people like Sunoco, with a strong balance sheet, we bring synergies to the table. I think we're very well situated whenever opportunities come up. And trying to separate out between fuel distribution and midstream, we like both sectors, and some of the acquisitions we've done actually is not one or the other, it's actually both. So we're equally interested in both. I think if there's an opportunity that pops up, Sunoco alone or with Energy Transfer, we're in a really good position to take advantage of that. And when the right opportunity comes up, we'll take advantage of it. Thank you. Our next question comes from Spiro Dounis with Citi. Please proceed with your question. Thanks, operator. Morning, team. Joe, I want to come back, to your comment around the distribution increase. You sound pretty constructive once again, as we head into next year, and so just wondering if you could remind us some of the factors that you and the board will be looking at when you determine what the right size of that distribution increase could be. Hey, Spiro, this is Scott. I'll take that one, and maybe Joe can follow up if necessary. But I think there's really three factors primarily that come into play when we evaluate the distribution and increases moving forward. And those are really staying true to our capital allocation strategy, right? We wanna ensure surety of the distribution moving forward. We want to continue to protect the balance sheet and operate at or below our long-term leverage target, and we want to be in a continued position to grow the company. So I think those are the three primary factors. And then subsequent to that, I think we wanna ensure ongoing growth opportunities in the distribution, right? So sizing it to where each year we can continue to evaluate future growth opportunities and distribution increases. You know, as Joe said, we're in a position to with our announcement in 2024 to talk about another distribution increase. I think as we sit here today, you should expect something at or above the 2% that we announced earlier this year. Well, thanks for that, Scott. Second question, maybe just going to Peerless. Just curious if you guys can update us on any potential opportunities coming out of that asset. I think you've owned it for almost a year now, and it sounded like you were pretty excited about what you'd be able to sort of string out of there under your new ownership. So one, any update there? And as we think about the size and magnitude, whether it be CapEx or EBITDA contribution, how should we be thinking about that? Yeah, Spiro, this is Karl. You know, that asset was, call it roughly, you know, somewhere in the 10 to low teens EBITDA when we purchased it, and we've already been able to increase that really through deploying working capital, optimizing our supply, spending some capital. We've introduced the Sunoco brand to the island. So, we're very happy with the results we've achieved and what the team down there has done and with our strategy and our balance sheet and our ability to deploy capital. From the overall company standpoint, you know, even doubling that business down there isn't super material, but we think it's more an example of how we're looking at continued growth as we go into new geographies, that we're not just gonna, you know, live with an acquisition that we make, that we're gonna use that as a base and a foundation for further growth. So I don't know that we have a growth plan I can share with you that's gonna materially change our profile in the Caribbean, but clearly, we're gonna continue to grow and look for opportunities, whether that be acquisitions or deploying continuing to deploy growth capital. Got it. Helpful color, guys. Thanks for the time. Yeah. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Our next question comes from John Royall, with JP Morgan. Please proceed with your question. Hi, good morning. Thanks for taking my question. So, my first question is, you started the year with a $0.12 view on fuel margin, and you're tracking much closer to $0.13 now and, you know, maybe a little bit ticking down in 4Q. But your commentary at the time, when you put out the guidance, was understandably about the relationship between margin and volume. If you were higher on margin, you'd probably be lower on volume, and clearly you're a good amount higher on both. So my question is just high-level. What do you think has led to the better than expected environment in margin? How much of it do you think is sustainable, such that maybe we should expect, you know, sort of a closer to a $0.13 level going forward, for example? Yeah, John, thanks for the question. It, it's definitely, something that we think about and I think is worth highlighting on our results. So, you know, going back to last year when we put our guidance together, we, we did, do as you said, link the volume and margin together and said, "Hey, let's really look at gross profit." And then we, we said for each individual component of that, we said, "Hey, we think this is the fat part of the curve." And as we fast forward to, to where we are today, I think that relationship continues. But, but if you go down a level, I think it's insightful to it kind of adds to a comment that Joe made in, in his prepared remarks about select companies being able to take advantage of certain market conditions. So the relationship between volume and margin really is a market related phenomenon, right? Where if volumes are flat to declining, that's gonna provide support for higher breakeven margins, and then things like inflation or supply chain problems, or some of the things we've seen over the last few years, contribute to that higher breakeven margin. That's remained true this year, right? If you look at most market data, whether it's EIA or other sources of demand, overall demand this year is flat to maybe even more recently, it's slightly below last year. So that provides continued support on the margin side. With our scale, we're able to take advantage of that higher breakeven margin. And then the thing that we've delivered on, probably in excess of what our original guide was last year, is our growth. And so I talked about in my prepared remarks, and I think, you know, Theresa's question was really about how do we, you know, where does that growth and market share come from? And so that's where our added volume isn't coming from some tailwind in the market. It's really due to us deploying capital and growing, and then we're able to take advantage of that higher breakeven margin to really out-deliver in both areas. Great. Thank you. And, Karl, you answered my second question without even getting asked, so I will turn it over. Thank you. Yeah. Our next question comes from Selman Akyol with Stifel. Please proceed with your question. Thank you. I guess I just wanted to follow up on Spiro's questions in terms of sort of return of capital. A couple questions there. Number one is, when you, Scott, you outlined the things you consider. I was just curious, do you guys or the board have a goal or what you think the appropriate coverage ratio is to run this business with? Yeah, Selman, you know, we've talked as part of our capital allocation strategy to be at or above 1.4 times on the coverage ratio. So that, that's, you know, the general area that we're kind of targeting for the long term and where we'd like to see the coverage, and how we think about any distribution increases. Got it. And then also within there, when you guys talk with the board, is there consideration of any repurchases? You know, you know, buybacks have obviously been a part of a return of capital discussion. I think, you know, we see a lot of options to create unitholder value, but view distribution increases as providing, you know, flexibility to our unitholders and ensuring confidence in the future. Doesn't mean we haven't contemplated buybacks in the past. As you know, we did do one as part of the 7-Eleven transaction proceeds back in 2018. So they have entered the discussion, but we see distribution increases as providing the biggest return, and I think the most confidence in our growth ability. It's Selman, it's Joe. I'll add one other thing to what Scott said, is also, we like our growth potential. We know, we obviously, it's a balanced approach between securing growing distributions and maintaining a really strong balance sheet. But just as importantly as the other two, is that we look at the landscape, and we see growth opportunities, both from an acquisition and from an organic capital standpoint. And we think that we can do that at a reasonable value with significant synergies. So we think we can create value for our stakeholders on that particular area. Got it. Then let me just ask this, and if I look back over your balance sheet, and I mean, and I go back to like 2021, you know, you guys had cash less than $100 million consistently, even as I go back over the model, back to 2015. And as I look back over the last several quarters, you know, you're running cash well above that, and you ended this quarter with $250 million in cash. Your receivables, receivables are up nicely as well. Is there something. You guys want to hang on to more cash, or is there something changing in the business? Is there any thoughts on just why all the cash on the balance sheet? Yeah, Selman, I'll take that. This is Scott. That cash balance that you saw at the end of the third quarter, and I think at the end of the second quarter was also around $240 million. Those were book cash balances. They were not bank cash, so there is obviously a timing element there. We obviously manage cash to the lowest level possible, redeploying that towards debt pay down on a revolving credit facility and obviously reinvesting in the business and acquisition. So that cash is not being trapped or held for the long term. It's being put back to the balance sheet or to growth. Okay, thank you very much. Our final question comes from Ned Baramov with Wells Fargo. Please proceed with your question. Hey, guys. Good morning. Thanks for taking the question. Given the resilience of your business and the well-documented interplay between volumes and margins, is there a thought to provide a longer-term base forecast on EBITDA and/or distribution growth, as opposed to your typical one-year forward update that you provide in December? Yes, Joe, good question. We're going to put out a December investor presentation, and I tried to highlight a few of the themes that in the prepared remarks, but let me try to be even clearer on this one. If you look at our business, and you look year-over-year for the last five years, you know, you've seen our balance sheet get better, you've seen our coverage grow, you've seen our EBITDA grow. And every time we've done a formal guidance in December, it's been a growth. What we haven't done and what we plan to do in December is really talk about our confidence in 2024, but go even further and talk even longer term about industry fundamentals and how Sunoco can position ourselves to thrive in those fundamentals on a far perspective. So if you're with a little bit of patience, we're, you know, December's right around the corner. We'll give some good insightful thought about 2024 and beyond. That's great. Thanks for that. I'm looking forward to the update in December. We've reached the end of the question-and-answer session. I'd now like to turn the call back over to Scott Grischow for closing comments. Well, thanks everyone for joining us on the call this morning. Please feel free to reach out with any follow-up questions, and we'll talk to everyone soon. Have a great day. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.