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    SUNC
    Earnings call· Mar 2026(Q1 FY26)

    SunocoCorp Q1 FY26 earnings call SUNC

    May 5, 2026 Source

    Executive summary

    Sunoco LP Q1 FY26 — Strong Performance Driven by Acquisitions and Inventory Optimization

    Sunoco LP delivered a strong first quarter, significantly benefiting from the full integration of the Parkland acquisition and strategic inventory optimization, which generated a $102 million gain. Despite market volatility stemming from Middle East events and a planned refinery turnaround, the company achieved substantial growth in adjusted EBITDA and distributable cash flow. Management expressed high confidence in meeting full-year EBITDA guidance and committed to continued accretive growth and a growing distribution for unitholders.

    Highlights

    5

    • Adjusted EBITDA reached $867 million, excluding $9 million in transaction expenses.

    • Distributable cash flow as adjusted was $535 million for the quarter.

    • Quarterly distribution increased by 6.25% to $0.9899 per common unit, representing over a 10% increase year-over-year.

    • Fuel distribution volumes grew 82% year-over-year to 3.8 billion gallons, boosted by the Parkland acquisition and legacy business growth.

    • The Tankwood acquisition closed, expected to be immediately accretive to distributable cash flow per common unit in 2026.

    Concerns

    2

    • Market volatility stemming from Middle East events led to dramatic cost and price increases and disrupted supply patterns.

    • Refinery throughput was reduced to 22,000 barrels per day due to a planned 50-day maintenance turnaround.

    Guidance & targets

    7
    CategoryTargetConfidence
    Tankwood acquisition accretion
    immediately accretive
    medium materiality
    High
    Multiyear distribution growth rate
    at least 5%
    high materiality
    High
    Long-term leverage target
    4x
    high materiality
    High
    Parkland acquisition accretion
    10% plus accretion
    high materiality
    High
    Bolt-on acquisitions
    over $500 million
    medium materiality
    High
    Parkland acquisition in-year synergies
    $125 million
    medium materiality
    High
    Parkland acquisition synergy run rate
    $250 million plus
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Fuel Distribution
    Strong performance reflecting continued strength in legacy operations, full quarter of Parkland operations, and ongoing gross profit optimization. Includes a one-time $92 million benefit from inventory reduction.
    Adjusted EBITDA (Q4 FY25): $391 million (excluding transaction expenses)Adjusted EBITDA (Q1 FY25): $220 millionDistributed volumes: 3.8 billion gallonsDistributed volumes (Q4 FY25): 3.3 billion gallonsDistributed volumes (Q1 FY25): 2.09 billion gallonsLegacy Sunoco volume growth: almost 6% over prior yearReported margin: $0.17 per gallonReported margin (Q4 FY25): $0.177 per gallonReported margin (Q1 FY25): $0.115 per gallonInventory reduction benefit: $92 million
    		—82%—$538 million
    Pipeline Systems
    Continues to provide steady and stable income. Throughput slightly down QoQ from seasonal strength, slightly up YoY.
    Adjusted EBITDA (Q4 FY25): $187 millionAdjusted EBITDA (Q1 FY25): $172 millionThroughput: 1.3 million barrels per day
    		———$179 million
    Terminals
    Growth in earnings and volumes supported by the inclusion of Tankwood and a full quarter of legacy Parkland operations. Delivers stable, accretive results.
    Adjusted EBITDA (Q4 FY25): $87 millionAdjusted EBITDA (Q1 FY25): $66 millionThroughput: around 1 million barrels per day
    		———$107 million
    Refining
    Includes a $10 million benefit from inventory reduction. Throughput was down due to a planned 50-day maintenance turnaround. Refining margin was strong during periods of operation and continues into Q2.
    Adjusted EBITDA (Q4 FY25): $41 millionInventory reduction benefit: $10 millionRefinery throughput: 22,000 barrels per dayRefinery throughput (Q4 FY25): 50,000 barrels per dayPlanned maintenance turnaround: 50 days, completed on time and on budget
    		———$43 million

    Operational metrics

    13
    Adjusted EBITDA
    $867 million
    Q1 FY26

    The partnership started off 2026 with a strong quarter, delivering adjusted EBITDA of $867 million, excluding approximately $9 million of onetime transaction expenses.

    Inventory reduction gain
    $102 million
    Q1 FY26

    The first quarter benefited from a onetime gain on a sale of inventory of approximately $102 million. Karl Fails later referred to this as 'this $100 million was sized and impacted by the higher prices'.

    Growth capital expenditure
    $106 million
    Q1 FY26

    During the quarter, we spent $106 million on growth capital

    Maintenance capital expenditure
    $93 million
    Q1 FY26

    and $93 million maintenance capital.

    Distributable cash flow as adjusted
    $535 million
    Q1 FY26

    First quarter distributable cash flow as adjusted was $535 million.

    Distribution per common unit
    $0.98996.25% increase QoQ; 10% increase YoY vs Q1 FY25
    Q1 FY26

    On April 21, we declared a distribution of $0.9899 per common unit for both Sunoco LP common units and Sunoco Corp. shares. This 6.25% increase represents a onetime step-up of 5% and a quarterly increase of 1.25%. This distribution represents an increase of over 10% versus the first quarter of 2025

    Trailing 12-month coverage ratio
    1.9x
    TTM

    Our trailing 12-month coverage ratio was 1.9x

    Revolving credit facility availability
    $2.2 billion
    Q1 FY26 end

    We had $2.2 billion in availability under our revolving credit facility at the end of the quarter

    Leverage ratio
    approximately 4xin line with long-term target
    Q1 FY26 end

    and leverage at the end of the quarter was approximately 4x, in line with our long-term target.

    Fuel distribution volume growth
    almost 6%over prior year
    Q1 FY26

    We continue to see volume growth in our legacy Sunoco business with an increase of almost 6% and over prior year compared to a relatively flat U.S. demand profile.

    RBOB futures increase
    over $1.60
    Q1 FY26

    For reference, RBOB futures increased over $1.60 a gallon during the quarter

    Diesel futures increase
    over $2
    Q1 FY26

    with diesel futures increasing over $2 a gallon.

    Bolt-on M&A
    almost $200 million
    YTD FY26

    already this year, we have almost $200 million of bolt-on M&A that are either closed or signed are going to be closed in the very near future.

    Industry KPIs

    4
    MetricValueDetails
    Pipeline throughput storage1.3 millionbarrels per day
    FCF shareholder distributions$0.9899USD/unit
    Take or pay contract structurerock solid
    Distributable cash flow per unit share$535 millionUSD

    Deals & partnerships

    4
    Parkland CorporationAcquisition of Parkland's Canadian and U.S. assets

    Benefited from a full quarter of operations from Parkland. Significant progress on integration, delivering on synergies (expense and commercial).

    TankwoodAcquisition of a terminal operator in Europeover $500 million

    Closed on January 16. Makes Sunoco Germany's largest independent terminal operator with a network of 16 assets across Germany and Poland.

    UnknownMulti-island acquisition in the Caribbean

    One of several bolt-on acquisitions completed in 2026.

    UnknownVarious smaller fuel distribution bolt-on acquisitions in the U.S.

    Part of the almost $200 million in bolt-on M&A closed or signed YTD 2026.

    Risks & headwinds

    3
    Market volatility due to Middle East eventsQ1 FY26, ongoing

    Costs and prices rose dramatically and at times fell and went back up. Normal supply patterns were disrupted.

    Mitigation: Leveraging scale, supply chain optionality, and logistics capabilities to adapt and create value (e.g., re-routing supply for Hawaii). Expectation that flat price volatility is bullish for margins in the long run.

    Margin compression experienced with dramatic increases in commodity pricesQ1 FY26

    RBOB futures increased over $1.60 a gallon; diesel futures increased over $2 a gallon during the quarter.

    Mitigation: Expectation that margins widen disproportionately when flat prices come off, leading to a net bullish margin environment. Refinery performance can help offset this.

    Potential for consumer demand destruction due to high fuel pricesFuture

    Not observed yet.

    Mitigation: If demand destruction occurs, it creates a strong margin environment as retailers respond by taking price.

    What to watch in Q2 FY26

    5

    Parkland acquisition synergy realization

    Next quarter (Q2 FY26) and beyond
    CurrentOn track for $125M in-year synergies for FY26; run rate of $250M+ expected.
    TargetContinued progress towards $125M in-year and $250M+ run rate.

    Why it matters

    Synergies are a key driver of accretion from the significant Parkland acquisition and underpin future distribution growth.

    Our guidance was based on $125 million of in-year synergies and to be able to hit that number, we needed to exit the year much higher than that, and we're still on pace with that and expect that to continue and us to the final kind of run rate of $250 million plus, we feel very comfortable with, and that should be a floor.

    Q&A highlights

    8

    Clarification on the $102M inventory gain, whether the current inventory level is sustainable, and if it fluctuates with commodity prices.

    Karl Fails explained that inventory management is a trade-off between supply reliability and return on capital, actively managed with derivatives. The $102M gain was a larger step due to recent growth, but the new level is sustainable, and there's no symmetric risk if prices fall.

    “The level that we reduce our inventory, too, we feel is responsible and we could stay there for a long time some of those minor optimizations that I talked about base to market conditions, yes, we'll continue to do regularly. But this $100 million was sized and impacted by the higher prices, but it's something that we would have done regardless to manage our business. And it does differ from some of the other companies that have reported so far in the quarter, talking about timing-related inventory impacts because like I said, we're confident we can operate at this level going forward, and there is no symmetric risk if and when prices fall, that this gain is reversed.”

    asked by Justin Jenkins · answered by Karl Fails

    2 min read5 chapters

    Detailed Narrative

    01

    Inventory Optimization Strategy

    Sunoco LP proactively optimized its inventory levels in Q1 FY26, resulting in a one-time📎 gain of $102 million. This strategy involved reducing inventory to unlock cash for future growth, particularly after the Parkland acquisition and during an elevated commodity price environment. Management confirmed this new inventory level is sustainable and does not carry symmetric risk if prices fall.

    02

    Market Volatility and Operational Resilience

    Despite significant market volatility🌐 caused by Middle East events, including dramatic cost and price increases and supply disruptions, Sunoco LP delivered strong results. The company leveraged its scale, supply chain optionality, and logistics capabilities to adapt, such as sourcing fuel for Hawaii from the U.S. Gulf Coast via the Panama Canal. This resilience highlights its ability to create value in challenging environments.

    03

    Refinery Turnaround and Performance

    The Burnaby Refinery completed a planned 50-day maintenance turnaround on time and on budget, which began in late January. While throughput was reduced to 22,000 barrels per day during this period, the refinery restarted into a strong margin environment, outperforming initial assumptions for the Parkland acquisition. An updated indicator crack spread is now posted on the company's website for market clarity.

    04

    M&A and Growth Strategy

    Sunoco LP continues its aggressive growth strategy, targeting over $500 million in bolt-on acquisitions for 2026, in addition to the Tankwood acquisition. The company has expanded its geographic footprint to include the U.S., Canada, Latin America, Greater Caribbean, and Europe, providing diverse investment opportunities. Management views its scale and midstream assets as competitive advantages in pursuing accretive M&A.

    05

    Parkland Integration Progress

    The integration of the Parkland acquisition is progressing well, with the balance sheet returning to the long-term target leverage of 4x. The company is on track to deliver $125 million in in-year synergies for FY26 and expects to achieve a run rate of $250 million plus in synergies, leading to over 10% accretion before the year 3 commitment.

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