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    SUN
    Earnings call· Jun 2026(Q2 FY26)

    Sunoco Q2 FY26 earnings call SUN

    Aug 4, 2026 Source

    Executive summary

    Sunoco LP Q2 FY26 — Raised FY26 Adjusted EBITDA Guidance and Strong Segment Performance

    Sunoco LP delivered a strong second quarter, driven by robust performance across all four business segments and the successful integration of recent acquisitions. The company raised its full-year adjusted EBITDA guidance, reflecting confidence in its diversified portfolio and ability to leverage market volatility. Management emphasized its strong balance sheet, commitment to multi-year distribution growth, and continued focus on accretive bolt-on acquisitions and organic growth projects.

    Highlights

    5

    • Q2 FY26 Adjusted EBITDA was $996 million, excluding $14 million of one-time transaction expenses.

    • Raised FY26 Adjusted EBITDA guidance range to $3.5 billion - $3.7 billion, an increase of $400 million from original guidance.

    • Fuel Distribution segment Adjusted EBITDA was $516 million, with distributed volumes up 89% YoY to 4.1 billion gallons.

    • Refinery segment Adjusted EBITDA was $175 million, significantly up from $43 million last quarter, with throughput of 57,000 bbl/d.

    • Trailing 12-month distribution coverage ratio of 2.1x, with a quarterly distribution increase of 1.25% QoQ and over 10% YoY.

    Concerns

    3

    • Market volatility

    • Middle East conflict supply chain impacts

    • Flat price volatility impacting fuel distribution margins

    Guidance & targets

    3
    CategoryTargetConfidence
    Adjusted EBITDA
    $3.5 billion - $3.7 billion
    high materiality
    High
    Bolt-on acquisitions
    surpass $500 million
    medium materiality
    High
    Distribution growth rate
    at least 5%
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Fuel Distribution
    Strong performance demonstrating strength in a larger and diverse fuel distribution portfolio and successful execution of gross profit optimization and growth strategies. Outperforming industry benchmarks.
    Adjusted EBITDA (Q1 FY26): $538 millionAdjusted EBITDA (Q2 FY25): $214 millionDistributed volumes: 4.1 billion gallonsReported margin: $0.171 per gallonReported margin (Q1 FY26): $0.17 per gallonReported margin (Q2 FY25): $0.105 per gallon
    		—up 89% (volumes)up 9% (volumes)$516 million (Adjusted EBITDA)
    Pipeline Systems
    Continues to optimize the use of assets to provide steady and stable income.
    Adjusted EBITDA (Q1 FY26): $179 millionAdjusted EBITDA (Q2 FY25): $177 millionThroughput: 1.3 million barrels per day
    		—up 9% (throughput)up 4% (throughput)$190 million (Adjusted EBITDA)
    Terminals
    Growth in both earnings and volumes supported by a full quarter of the TanQuid acquisition. Delivers stable results that predictably and accretively grow.
    Adjusted EBITDA (Q1 FY26): $107 millionAdjusted EBITDA (Q2 FY25): $73 millionThroughput: 1.1 million barrels per day
    		—up 52% (throughput)up 5% (throughput)$115 million (Adjusted EBITDA)
    Refinery
    Very strong contribution due to high refining margins and low operating expenses. Outperformance contributed to full-year guidance increase. Throughput was reduced last quarter due to a planned turnaround.
    Adjusted EBITDA (Q1 FY26): $43 millionThroughput: 57,000 barrels per dayThroughput (Q1 FY26): 22,000 barrels per dayRefining margin: over $40 per barrelOperating expenses: under $10 per barrel
    		———$175 million (Adjusted EBITDA)

    Operational metrics

    17
    Adjusted EBITDA
    $996 million
    Q2 FY26

    Company-wide adjusted EBITDA for the quarter.

    Distributable cash flow as adjusted
    $608 million
    Q2 FY26

    Company-wide distributable cash flow as adjusted for the quarter.

    Trailing 12-month coverage ratio
    2.1x
    trailing 12-month

    Coverage ratio for distributions.

    Revolving credit facility availability
    $2.3 billion
    end of Q2 FY26

    Available liquidity under the revolving credit facility.

    Leverage
    3.7x
    end of Q2 FY26

    Leverage ratio, which is below the long-term target of 4x.

    Growth capital spend
    $125 million
    Q2 FY26

    Capital expenditure for growth projects.

    Maintenance capital spend
    $77 million
    Q2 FY26

    Capital expenditure for maintenance.

    Distribution per common unit
    just over $1up 1.25% QoQ, up over 10% YoY
    Q2 FY26

    Quarterly distribution declared for common units and shares.

    Fuel Distribution one-time benefit
    $92 million
    Q1 FY26

    One-time benefit from inventory reduction in the first quarter.

    Refinery nameplate capacity
    55,000
    current

    The Burnaby refinery's nameplate capacity, which was exceeded in Q2 FY26.

    Organic capital projects
    $600 million plus
    current

    Total value of quick-hitting, good return organic capital projects.

    Refined product demand
    roughly flatYoY
    YTD

    EIA data suggests demand is roughly flat despite flat price volatility.

    Gasoline demand
    low to mid-single digits downYoY
    YTD

    Gasoline demand in Canada.

    ULSD demand
    roughly flatYoY
    YTD

    ULSD demand in Canada.

    Demand
    low to mid-single digits up
    YTD

    Overall demand in the Caribbean region.

    Cash tax expense
    —
    FY26

    Increased due to strong performance, particularly in legacy Parkland operations and refining. Expected to be lower in the second half of the year.

    Synergized M&A multiples
    mid-single-digit type
    current

    Target multiples for inorganic growth opportunities, which are considered highly accretive.

    Industry KPIs

    4
    MetricValueDetails
    Pipeline throughput storage1.3 millionbbl/d
    Sanctioned expansion backlog$500 millionUSD
    FCF shareholder distributionsjust over $1USD/unit
    Distributable cash flow per unit share$608 millionUSD

    Orderbook & backlog

    1
    Bolt-on acquisitions authorization$500 millionannual

    expected to surpass

    Multi-year guidance for bolt-on acquisitions, expected to be surpassed in 2026 and future years.

    Deals & partnerships

    3
    ParklandAcquisition of assets including the Burnaby refinery and fuel distribution business.

    One of the three larger acquisitions that opened up a broader investment universe.

    TanQuidAcquisition supporting growth in the Terminals segment.

    One of the three larger acquisitions that opened up a broader investment universe.

    NuStarAcquisition of midstream assets.

    One of the three larger acquisitions that opened up a broader investment universe.

    Risks & headwinds

    3
    Market volatilityQ2 FY26, ongoing

    Periods of sharp increases in price followed by declining prices near the end of the quarter; flat price is back on the rise.

    Mitigation: Leveraging scale, diversity, and commercial capabilities; effective use of capital; reputation as a reliable fuel supplier; diversified portfolio.

    Middle East conflict supply chain impactsongoing

    Continued disruption, albeit at slightly less volatile levels than earlier in Q2.

    Mitigation: No long-term impairment to business or opportunity set observed; leveraging scale and geographic capabilities to respond to dislocations.

    Flat price volatility impacting fuel distribution marginsQ3 FY26

    Flat price back on the rise creates a headwind to the margin picture.

    Mitigation: Well-positioned with diversity, scale, and geographic exposure to perform well regardless of macroeconomic environment; focus on fuel profit and EBITDA growth overall.

    What to watch in Q3 FY26

    5

    FY26 Adjusted EBITDA

    FY26
    CurrentRaised guidance to $3.5B-$3.7B
    TargetAchievement within or above the raised guidance range

    Why it matters

    This is the primary financial target and a key indicator of overall business performance and successful integration of acquisitions.

    Based on our first half results and our confidence in the outlook for the second half of the year, we raised our adjusted EBITDA guidance range to be between $3.5 billion and $3.7 billion, an increase of $400 million from our original guidance range.

    Q&A highlights

    6

    Are there incremental M&A or organic growth opportunities given the positive backdrop and balance sheet capacity?

    Joe Kim reiterated that the $500M annual bolt-on target is modest, with recent acquisitions expanding the investment universe geographically (US, Canada, Caribbean, Europe) and by sector (fuel distribution, midstream). Karl Fails added that organic projects also benefit from the larger footprint, citing examples like new tank builds and pipeline connections.

    “If you look at our last 3 bigger acquisitions, NuStar, Parkland and TanQuid, these are big financial wins for us. And obviously, we've delivered on synergies, and we're going to continue to deliver on synergies. But beyond the base business, these acquisitions open up a far broader universe for us to invest in.”

    asked by Justin Jenkins · answered by Joseph Kim

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Acquisitions and Growth

    Recent acquisitions, including NuStar, Parkland, and TanQuid, have significantly expanded Sunoco's geographic footprint and operational capabilities. These acquisitions have opened up a broader universe for both organic and inorganic growth across North America, the Caribbean, and Europe. The company's strategy emphasizes quick-hitting, high-return organic capital projects and accretive bolt-on acquisitions, leveraging its proven ability to deliver synergies.

    02

    Refining Segment Contribution

    The Refinery segment delivered a very strong quarter, driven by high refining margins and efficient operations. Management noted that while strong crack spreads enhance overall upside, the diversified portfolio ensures robust performance even when refining margins are less favorable. The Burnaby refinery, in particular, ran above its nameplate capacity of 55,000 bbl/d, co-processing low-carbon feedstocks, contributing significantly to the increased full-year guidance.

    03

    Fuel Distribution Resilience

    The Fuel Distribution segment demonstrated strong performance despite market volatility🌐, benefiting from its larger and more diverse portfolio. The company's commercial teams effectively capitalized on market uncertainties to secure additional customers, reinforcing its reputation as a reliable fuel supplier. Distributed volumes continue to outperform industry benchmarks, a result of effective capital deployment and strategic roll-up acquisitions.

    04

    Capital Allocation Philosophy

    Sunoco LP maintains a strong balance sheet, with leverage below its long-term target of 4x, providing substantial flexibility for capital allocation. The company targets mid-single-digit synergized multiples on inorganic growth, which are highly accretive and contribute to sustained distributable cash flow per unit growth. This approach creates a 'flywheel' effect, generating increasing free cash flow that can be redeployed into further growth initiatives and distribution increases.

    05

    Market Dynamics and Demand

    Despite flat price volatility, refined product demand in the U.S. remained roughly flat year-over-year, indicating surprising consumer resilience. In contrast, Canada experienced a slight decline in gasoline demand (low to mid-single digits), while the Caribbean region saw low to mid-single-digit growth. Sunoco's own volumes consistently exceeded these regional trends, driven by strategic growth capital deployment and effective synergy capture from acquisitions.

    AI-generated summary of the company’s earnings call. Not investment advice.