SunocoCorp LLC Unit’s M&A Strategy Shift and Volatility Outlook Clash in 2026 Q2 Earnings Call

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Date of Call: Aug 4, 2026

Guidance:

• Adjusted EBITDA guidance raised to $3.5B-$3.7B, an increase of $400M from original range.
• Expect to materially exceed initial Adjusted EBITDA guidance and deliver eighth consecutive year of EBITDA growth.
• Expect continued growth, with multi-year guidance of at least $500M a year of bolt-on acquisitions expected to be surpassed in 2026 and future years.

Business Commentary:

Strong Financial Performance and Guidance Increase:

• Sunoco LP reported second quarter Adjusted EBITDA of $996 million, excluding $14 million of one-time transaction expenses, and raised its full-year guidance to between $3.5 billion and $3.7 billion.
• The increase reflects the strength of their portfolio and the value realized from recent acquisitions.

Fuel Distribution Segment Growth:

• The Fuel Distribution segment reported Adjusted EBITDA of $516 million, with throughput of 4.1 billion gallons, up 9% from last quarter and 89% from the same quarter last year.
• This growth is due to effective use of capital, both organic and through roll-up acquisitions, and the company's ability to supply additional customers during market uncertainty.

Pipeline Systems and Refinery Segment Performance:

• The Pipeline Systems segment reported Adjusted EBITDA of $190 million, with throughput up 4% from last quarter and 9% from the previous year.
• The Refinery segment reported a strong Adjusted EBITDA of $175 million, with throughput of 57,000 barrels per day, compared to 22,000 barrels per day last quarter.
• The strong performance in the Refinery segment is attributed to high refining margins and effective management of the portfolio to capitalize on strong crack spreads.

Bolt-on M&A and Organic Growth Strategy:

• Sunoco LP expects to exceed its multi-year guidance of $500 million a year for bolt-on acquisitions in 2026 and beyond.
• The company focuses on quick-hitting, high-return organic capital projects, such as new tank builds and pipeline connections, to drive further growth.

Sentiment Analysis:

Overall Tone: Positive

• "Our partnership continued the strong momentum in 2026 with second quarter Adjusted EBITDA of $996 million... we raised our Adjusted EBITDA guidance range." "We are confident this will provide top-tier returns for our investors in the coming years." "Our financial position is stronger than ever." "We expect continued growth."

Q&A:

• Question from Justin Jenkins (Raymond James): How is progress against your bolt-on M&A targets? Are you seeing any incremental opportunities there or also for more incremental organic growth in this macro?
  Response: Bolt-on acquisition target of $500M/year is a modest bar; expect to exceed it in 2026 and beyond, supported by expanded geographic footprint from recent acquisitions. Organic projects also provide growth via quick-hitting, high-return capital projects.

• Question from Justin Jenkins (Raymond James): What should we think about for the drivers that you’ve assumed in the new range for the back half of this year relative to obviously the strong first half you’ve already put up here?
  Response: Strong performance across all four segments; increased guidance range is driven by Refinery segment uncertainty, using forward curve as a starting point. Upside exists, and every scenario is expected to result in an outstanding year.

• Question from Theresa Chen (Barclays): How are you thinking about the long-term earnings power of the Burnaby refinery and your general outlook for West Coast refining margins?
  Response: Burnaby has performed above expectations; focus is on increasing reliability and decreasing operating expenses. It is the best way to supply current markets, but the company will evaluate options as markets evolve.

• Question from Theresa Chen (Barclays): What are you seeing in terms of the trend of fuel distribution CPG margins so far in the third quarter and demand across your footprint?
  Response: Demand has been resilient: U.S. flat, Canada softer, Caribbean up low-mid single digits. Margin profile has evolved higher; specific CPG margin volatile quarter-to-quarter, but team focuses on fuel profit and EBITDA growth overall.

• Question from Gabe Moreen (Mizuho): How do you look at the cash flow from the Burnaby refinery? Is it supporting the distribution or being reinvested?
  Response: High crack spreads create more Distributable Cash Flow, supporting confidence in multi-year distribution increases. If refinery performs elevated for extended period, allows for more distribution growth, better balance sheet management, or allocation to accretive growth projects.

• Question from Gabe Moreen (Mizuho): Does the company consider acquiring North American pipelines, and can it bring value to those assets?
  Response: Company is highly competitive for refined product assets (pipeline, Terminals, Fuel Distribution) due to ability to bring material synergies to the table.

• Question from Gabe Moreen (Mizuho): Should we assume current cash and book tax rates are about where you'll be going forward?
  Response: Cash tax expense stepped up due to strong business performance; for full year 2026, expect back half cash tax expense to be under first half levels.

• Question from Chad (Citigroup): Have you seen any supply chain impacts that could be longer lasting across your footprint due to volatile commodity environment and Middle East conflict?
  Response: No long-term lasting impacts seen; disruptions slightly less volatile. Company leverages scale and geography to create value from market dislocations.

• Question from Eli (JP Morgan): Where do you see the most attractive returns in your M&A pipeline across Europe vs. North America and the Caribbean?
  Response: Opportunities exist in all regions (Europe, North America, Caribbean) across Fuel Distribution and midstream sectors; will pursue where synergies are greatest and valuations are right.

• Question from Eli (JP Morgan): How should we think about the inorganic opportunity set and return thresholds for larger acquisitions versus hiking the distribution?
  Response: Inorganic roll-ups with mid-single-digit synergized multiples are highly accretive and a priority; will allocate material free cash flow to inorganic growth while also having plenty left for distribution increases, creating a positive feedback loop.

• Question from Ned Baramov (Wells Fargo): How sustainable is the Burnaby refinery's rate above nameplate capacity over multiple quarters?
  Response: Sustainable operation is the goal; refinery ran full after a turnaround and co-processes low-carbon feedstocks. Philosophy is to prioritize long-term reliability over short-term quarterly gains.

Contradiction Point 1

M&A Focus and Pipeline

Shift from broad strategic M&A to purely bolt-on acquisitions.

Justin Jenkins (Raymond James) - Justin Jenkins (Raymond James)

2026Q2: The $500 million annual bolt-on acquisition target is a 'modest bar.' The company expects to exceed $500 million in bolt-ons in 2026 and beyond. - [Joe Kim](CEO)

How is progress against your bolt-on M&A targets, and are there any incremental opportunities? - Chad (Citigroup) [for Spiro Dounis]

2026Q1: The M&A outlook and target of over $500 million annually in bolt-ons remain unchanged. Recent acquisitions have expanded geographic reach, and the company is well-positioned for accretive growth. - [Joseph Kim](CEO)

Contradiction Point 2

Volatility's Impact on M&A

Contradiction on whether volatility is a headwind or a tailwind for M&A execution.

Eli (JP Morgan, on for Jeremy Tonet) - Eli (JP Morgan, on for Jeremy Tonet)

2026Q2: The company sees opportunities in all regions... Growth will be dictated by where synergies are greatest and valuations are right. - [Joe Kim](CEO)

Where do you see the most attractive M&A returns geographically (Europe vs. North America/Caribbean), and how do you weigh inorganic M&A against hiking the distribution? - Gabriel Moreen (Mizuho)

2026Q1: Volatility may make transactions harder overall but could be more opportunistically favorable for Sunoco due to its scale and global footprint. - [Joseph Kim](CEO)

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