Greetings, and welcome to the Sunoco LP acquisition of NuStar LP call. At this time, all participants are in 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, Finance and Treasurer for Sunoco LP. Thank you, sir. You may begin. Good morning, and thank you for joining our call to discuss today's announcement of Sunoco LP acquiring NuStar Energy LP. A press release and presentation can be found on Sunoco's investor relations website, describing the highlights of this transaction. A link to a replay of this call will be available on Sunoco's website shortly after the call is completed. On the call with me this morning are Joe Kim, Sunoco LP's President and Chief Executive Officer, and Karl Fails, Chief Operating Officer. A reminder that today's call will contain forward-looking statements that include expectations and assumptions regarding today's announcement and 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 press release as well as our filings with the SEC for a list of these factors. Also, please refer to the additional legal disclosures in the press release and on slides two and three of the presentation. I'll begin today's discussion by providing the details of the acquisition and then turn it over to Joe to discuss why this transaction is a very compelling investment case for unit holders. As we announced, Sunoco will acquire 100% of the outstanding NuStar common units in a unit-for-unit exchange with a transaction value of $7.3 billion, including assumed debt. The combined company will have an enterprise value of nearly $16 billion. Each NuStar common unit will be exchanged for 0.4 Sunoco common units, representing a premium of 24% based upon the 30-day volume-weighted average prices of both NuStar and Sunoco as of January 19, 2024. We expect the transaction to generate at least 10% accretion to DCF per LP common unit in the third year after close and approximately 5% in the first year. We expect to realize at least $150 million of annual synergies by the third year after close. We plan to refinance NuStar's Series A, B, and C preferred equity, subordinated notes, and outstanding borrowings on their credit and receivables financing facilities through a fully committed bridge facility that we expect to permanently refinance through a notes offering. We anticipate this refinancing activity will generate approximately $50 million of additional cash flow per year. In addition, we also plan to replace our existing $1.5 billion secured credit facility with an unsecured credit facility of the same size. The combined company will have a materially improved credit profile with greater scale and lower business risk. We expect to be at or below our 4x target leverage ratio within 12-18 months of close. Finally, the transaction is subject to customary regulatory approvals and a NuStar unit holder vote, and we expect to close in the second quarter of 2024. With that, I will now turn the call over to Joe. Thanks, Scott. Good morning, everyone. Today's announcement marks another milestone for Sunoco as we bring together two strong and stable companies. We would not be here today if not for the many talented and hardworking employees of both Sunoco and NuStar. We look forward to working with the NuStar team to take the combined company to new levels of success. When Sunoco became an MLP in 2012, we started off as a fuel, retail, and convenience company. In 2017, we made a strategic decision to divest a material portion of our retail business. This shift refocused us towards fuel distribution, logistics, and infrastructure. The evolution of our strategy enhanced both stability and growth while strengthening the balance sheet. The market rewarded us for executing on our strategy. As a result, Sunoco has consistently outperformed the overall market. As you analyze today's announcement, keep in mind that our strategy has not changed. It remains focused on improving stability, enhancing growth, and maintaining a strong balance sheet, resulting in a larger and, more importantly, a more compelling investment going forward. From a stability standpoint, the transaction will bring together two companies that are stable on their own. Sunoco has delivered superior performance over the last several years during some very challenging economic periods, while NuStar's fee-based pipeline and terminals business has generated attractive and consistent cash flow. Merging these assets not only creates greater scale, but also diversifies and vertically integrates our logistics supply chains, creating synergy opportunities. Turning to growth, we're very excited about the opportunities. We expect at least 10% accretion in year three, when at least $150 million of synergies will be realized. This builds from approximately a 5% accretion in the first year, which will benefit from $50 million of savings from refinancing higher-cost equity and debt within the NuStar capital structure. Our capital allocation strategy will also remain the same, but with significantly more cash flow. The expanded cash flow will be deployed across a larger set of assets. For example, we'll be able to accelerate attractive expansion opportunities within NuStar's ammonia system, and separately, we'll utilize NuStar's Midwest system to expand Sunoco's fuel distribution business. These are just two examples. As we move forward, we will provide more specific opportunities to share with you. The greater cash flow will also support continued distribution growth. Last year, we stated our confidence in executing on a multiyear distribution growth path. This transaction puts us in even a better place to deliver. As for financial foundation, we believe the higher EBITDA, larger asset base, and decreased business risk materially improves the credit profile. The pro forma company's metrics would reflect variables that are very similar to investment-grade companies. The sale of our West Texas assets to 7-Eleven, announced earlier this month, not only allows us to realize a very attractive sales multiple, it positions us well for this acquisition. The $750 million of estimated net proceeds will materially reduce leverage. And as Scott mentioned earlier, we expect to be at 4x leverage in 12-18 months following the closing of the transaction. Let me wrap up so that you can ask some questions. We believe this combination creates a stronger, more compelling investment case for the collective stakeholders. Bottom line, the pro forma company will be more stable, stronger financially, and better positioned for growth. Sunoco has a proven history of delivering on its commitments. The NuStar transaction will be another opportunity for us to reinforce and build on our record of delivering results. 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. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Spiro Dounis with Citi. Please proceed with your question. Thanks, operator. Morning, team, and congrats. Maybe just start off with what changes after this deal closes. Joe, you mentioned the last transformational transaction in 2017 really focused on fuels distribution. This seems pretty transformational as well. So as you think about capital allocation going forward and what competes for those dollars, you've been pretty successful with this M&A strategy, doing these smaller bolt-ons. Now you've got sort of more choices, and so I'm just curious, as you think about diverting capital to that M&A strategy and bolt-ons against what is now a bigger midstream suite of assets and opportunities, how do you parse that? Hey, Spiro. Hi, thank you. So as I said in my prepared remarks, our strategy remains the same, and I'll hit those points again. It's increased stability, it's a stronger financial foundation and enhanced growth. And kind of leading to your question on enhanced growth, you know, right off the bat, we're gonna have more cash flow, significantly more cash flow. We're gonna have a good balance sheet. And then I've put up two examples in the prepared remarks, the ammonia line, the Midwest system, but we know there's a lot more. So we're gonna have more cash, more cash to deploy the growth, but at the same time, you know, we've introduced two other things on the call, talking about, hey, we believe in the distribution growth path that we have that we stated last year. And then we also mentioned that we have a path to 4.0x leverage within 12-18 months. So the way to, I guess, the takeaway from all this is that more cash flow, more enhanced growth, but at the same time, we're solving for all three. Gotcha, appreciate that color, Joe. Second question, just on synergies. Was hoping for maybe a little bit more color around that, at least $150 million, and kind of how you plan on getting there. And really just kind of wanna focus in on, you know, if you can give us some examples of what you might consider to be low-hanging fruit, that you kind of capture pretty quickly, versus what might take a little bit more time to achieve. Yeah, Spiro, this is Karl. I think if you look at the synergies, it's really gonna be a combination of commercial opportunities, and expense optimization. So just a couple examples, on the commercial side. If you dial back to our acquisition of NuStar's East Coast assets a little over two years ago, right? We were able to kind of take our fuel distribution business on the East Coast and couple it with an expanded midstream presence on the East Coast. And you kind of get benefits going both ways, where having the fuel distribution business helps keep your midstream assets more full, and often, the midstream assets provide a foundation for additional growth or supply synergies on the fuel distribution side. So the East Coast, for example, we stood up a gasoline blending business in NuStar's Linden Terminal, and that's created more value for us, and then those midstream assets have continued to perform. So as you fast-forward to today, you look at NuStar's current, you know, the whole suite of refined products businesses, I think they're examples of both. So you go to the Midwest, I think Joe just mentioned that. You know, NuStar's pipeline system and networks, maybe in the Western Midwest, Sunoco doesn't have a huge fuel distribution footprint there, so having that asset base will provide a foundation for us to grow that fuel distribution business, which kind of feeds back on the midstream, should keep those assets more full. Then you go to maybe another part of the country in South Texas, right? We built our Brownsville terminal a couple years ago and have been working on kind of providing additional benefits to customers, primarily serving the export business in Mexico. Well, NuStar has a system, probably the premier system in that part of the country. And just to give you an example, currently, we've been bringing in our product into our Brownsville terminal on ships. Well, you know, this combination, we're probably going to utilize the NuStar pipeline and the other assets there more. And so again, that's where you'll get a benefit on the fuel distribution side, and we should get increased utilization in the midstream assets. I mean, I'm sure there are others, and as we work with the NuStar team, we'll be able to uncover some additional opportunities, but those are a couple examples. Helpful color call. Appreciate the time, guys. Congrats again. Thanks. Thanks. Thank you. Our next question comes from the line of Gabe Moreen with Mizuho Securities. Please proceed with your question. Hey, good morning, everyone. Congrats on the deal. Wanted to ask about how this also relates to fitting in with your parent company, Energy Transfer, and additional commercial opportunities with Energy Transfer. I know these, some of these assets also connect quite nicely, arguably, to ET's assets. I'm just wondering how you see commercial synergies and maybe partnering with ET accruing there, and is that a consideration in this transaction, too? Hey, Gabe, this is Joe. I think the first thing to state is that this is a Sunoco deal. It is a compelling deal for Sunoco. It makes us more stable, stronger. So, that's the starting point. As far as looking for other opportunities to optimize this transaction, you know, be it Energy Transfer or anybody else, or internally within Sunoco, we're gonna look at every avenue to get the most out of this deal. But for now, I think the key point that you should take away is that this is a Sunoco deal. Thanks, Joe. And you mentioned, I think, Karl, you mentioned in the remarks about getting to IG, and is that an explicit goal at this point for the pro forma company? And if so, do you kind of have a timeline in mind that that may occur? Yeah. Gabe, this is Scott. You know, I think the, you know, simplification of the balance sheet, the diversification of the business for this combination puts us in a very strong position, that we think the rating agencies have taken note of. Moody's had published a report earlier this morning saying we were on watch for an upgrade at the closing of the transaction. So I think, you know, the combined scale, the increased scale, the strong financial pro forma metrics, the reduced business risks improve the credit profile and give us the option to seriously consider the benefits of the path to investment grade. So right now, I don't want to say it's something that we're targeting, you know, on a specific timeline, but I think what this acquisition does for us is give us that option in the future. Got it. Thanks, guys. Thank you. Our next question comes from the line of Elvira Scotto with RBC Capital Markets. Please proceed with your question. Hey, good morning. One question that I had is, given the ownership interest that ET has in Sunoco and owning the GP, are there any, you know, potential FTC issues with this deal? Or is this just viewed as, you know, like you said before, strictly a Sunoco deal and that shouldn't come into play? Yeah, Elvira, this is Scott. You know, I think if you take a look at the combined assets of our organizations, you know, they're very complementary and that there's very little geographic or market overlap that you may typically see in mergers that have historically been of interest to the Commission. I think we're optimistic given these facts, and look forward to working with them collaboratively to answer any questions that they have. Okay, great. Thanks a lot. And then, just given this acquisition, do you... kind of, when you look at growth going forward, is, do you think this is gonna be more organic growth, or do you still see kind of acquisition opportunity out there? And then just a quick follow-up. The European terminals acquisition that you announced, recently, how does that fit in with this acquisition, if at all? Sure. Well, let me start, Elvira. As far as on a going-forward basis, when you asked the question about the kind of separation between organic growth and M&A, it's gonna be both. You know, we like—I think, you know, for a long time, we've always said that we like to have the option of both, and then they kind of compete against one another for capital. So going forward, we're gonna have, you know, significantly more cash flow. Our capital allocation strategy is gonna remain the same. So, you know, going forward, we're gonna use both avenues, and if the M&A market provides like, you know, another deal, that's 10% accretive, sure, we'll go after that. But then, and, but I think the way to think about it is a continuation of that strategy. Karl, why don't you touch on the Europe acquisition? Yeah, sure. You know, if you think about the European terminal acquisition that we announced a few weeks ago, it's really a continuation of that same growth strategy that Joe was talking about. Again, I'll go back to a deal we did earlier with Peerless that we announced a little over a year ago. You know, at that time, we talked about how it was a combination, again, this kind of integration between fuel distribution and midstream assets, and that when we really look at those kind of deals or transactions, you know, we're looking at our overall strategy of... Do we have synergies between those? Are they good assets, and are they high quality on a standalone basis? Is it really a platform for additional growth? That was true in Peerless, and then I think if you go forward to our European assets, the same is true, right? We have a big part of our fuel distribution footprint is on the East Coast, and a lot of that is supplied by water. And so having a terminal in kind of the ARA footprint in Europe, where you know, it's kind of the premier trading hub of all liquid fuels in Europe, makes sense, as we optimize our supply network into the East Coast. And then if you look at both Europe and Ireland as... or sorry, the Amsterdam and the Irish assets on a standalone basis, they're great assets with good customer base, well contracted. And so it kind of fits into that same strategy. If you can extend into the deal we're talking about today with NuStar, I think it's all the same strategy. Great. Thank you very much. Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Selman Akyol with Stifel. Please proceed with your question. Thank you. Good morning. Just a point of clarification, is the $50 million in financing or refinancing synergies, is that part of the $150 million or is that in addition to the $150 million? Selman, this is Scott. Yeah, that is in addition to the $150 million in commercial and expense. Got it. Synergy. Okay, great. And then can you maybe, and I know this has sort of been asked, but can you parse out that $150 million any better? Or just, you know, this is what we expect from public costs, this is what we expect from commercial, this is what we see more organic. Is there any way to define that a little bit better? Yeah, Selman, I think it's a little too early to break that out with clarity. Here's the only additional color I could add on top of you know, some of the examples I gave on the commercial side, is that we feel confident that there are opportunities kind of across the spectrum, right? Both in expenses and on the commercial side. I'll just give you one example, again, harking back to the deal that we did for NuStar's East Coast assets, right? We had some of both in that deal. I think there were some kind of, even though that was an asset deal, there were a few G&A-related synergies. There were some operating cost optimization as we folded that into how we run our assets. And then there were some of the commercial synergies that we, that I already talked about. So we feel definitely on the larger scale, that all of those will be in play. Got it. And then you talked a couple times about how this accelerates and, better positions the company longer term for growth. Is there any comments, or should we look for distribution growth to accelerate in the future, along with this? Yeah, Selman, you know, last April, when we increased our distribution, we stated at that point in time that that was not a one-time increase, that we were confident that there was a clear path to future distribution increases on a multi-year basis. And I think when you look at this acquisition that we announced today, this puts us even in an even better position to contemplate further increases going forward. So I think it's only enhanced the story regarding distribution increases, just we now have more cash flow to allocate towards that. All right. Thank you very much. Thank you. Our next question comes from the line of John Royall with JP Morgan. Please proceed with your question. Hi, good morning. Thanks for taking my question, and congratulations. So, how should we think of the use of proceeds from the Seven & i transaction in light of this transaction, given there's obviously no cash in the NuStar deal? Should we think of it as just lowering the pro forma leverage of the deal overall? Just trying to understand how this set of three transactions announced in January connect to each other. Yeah, John, this is Scott. You know, the proceeds from that transaction, when we actually put the press release out a couple weeks ago, stated that it materially reduced our leverage and put us in a position for future growth. So you should think of the proceeds from that transaction, putting us in even more beneficial position to hit that 4x leverage target within 12-18 months. Okay. And then, can you talk about the integration back into crude oil pipelines and terminals, whereas, you've, you know, typically been more focused on the refined product value chain in your legacy business? Can you just talk a little bit about stepping into the crude side and what it could mean for your broader business? Yeah, John, this is Karl. I think you hit on one of the biggest benefits for us, is really the diversification of income streams, right? Is as we extend beyond kind of our traditional refined products portfolio, I think we're doing that on the crude side. Ammonia is another example of that. I think Joe already talked about that in his prepared remarks. So while we're not currently in those businesses, you know, there are ties to the refined products business that we're very familiar with, and you know, kind of overall refining profitability and supply and demand balances in the United States. So we follow those markets closely and are excited to have assets that are gonna be able to provide value for a broader customer base, you know, moving a broader suite of products. So then, I guess the only other thought I'd add is, if you think of the core competencies of some of our commercial teams in terms of buying and selling and distributing and moving liquid fuels, you know, we think we're gonna be able to bring that to play. And then, not the least of which is, you know, NuStar has a good commercial team that are running those assets, and we look forward to working with them as we go forward. Great. Thank you. Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Grischow for any final comments. Well, thanks for joining us on today's call. We're very excited about today's announcement and the benefits the acquisition will bring to Sunoco and our unitholders going forward. We look forward to catching up with everyone soon. Have a great day. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.