Sunoco LP (NYSE:SUN) Q3 2022 Earnings Conference Call November 1, 2022 10:00 AM ET

Company Participants

Scott Grischow - VP, IR & Treasury

Joseph Kim - President, CEO & Director

Dylan Bramhall - CFO

Karl Fails - EVP & COO

Conference Call Participants

Elvira Scotto - RBC Capital Markets

Robert Mosca - Mizuho Securities

Operator

Hello, and welcome to the Sunoco Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Scott Grischow. Please go ahead.

Scott Grischow

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 Operations Officer; Dylan Bramhall, Chief Financial Officer; and other members of the management team.

Today's call will contain forward-looking statements that are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the partnership's future operations and financial performance. Actual results could differ materially, and the partnership undertakes no obligation to update these statements based on subsequent events. Please refer to our earnings release as well as our filings with the SEC for a list of these factors. During today's call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted. Please refer to the Sunoco LP website for a reconciliation of each financial measure.

I will now turn the call over to Dylan to discuss the third quarter results and our outlook for the remainder of 2022 and our recently announced Peerless Oil & Chemicals acquisition.

Dylan Bramhall

Thanks, Scott. We reported very strong third quarter results. The steep and persistent decline in commodity prices and continued volatility enabled strong margin capture. The meaningful capital that has been deployed over the past year is delivering strong returns, and we continue to find new attractive opportunities to invest capital, both organically and through acquisitions.

Our balance sheet is strong with leverage below our 4x target, and we continue to generate meaningful cash flow for redeployment. Sunoco's consistent financial results through our commodity cycles in various macro environments are a hallmark of our partnership, and we expect a solid finish to 2022.

Moving on to Q3 results, the partnership recorded net income of $83 million and adjusted EBITDA of $276 million, compared to $104 million and $198 million, respectively in the third quarter of 2021. Volumes were approximately 2 billion gallons, up about 1% year-over-year. Fuel margin was $0.139 per gallon versus $0.113 per gallon in the third quarter of 2021. The fuel margin benefited from some timing impacts that added approximately $0.013 per gallon.