Sunoco Q2 Earnings Call Highlights
Key Points
- Interested in Sunoco LP? Here are five stocks we like better.
- Sunoco raised its 2026 adjusted EBITDA guidance to $3.5 billion–$3.7 billion, $400 million above its initial range, after reporting second-quarter adjusted EBITDA of $996 million.
- Second-quarter performance benefited from broad-based segment growth: pipeline and terminals EBITDA increased year over year, while refinery EBITDA surged to $175 million as throughput recovered from a planned turnaround.
- Sunoco increased its quarterly distribution by 1.25% sequentially and more than 10% year over year, with 2.1-times distribution coverage, leverage of about 3.7 times and $2.3 billion of revolver availability.
Sunoco (NYSE:SUN) raised its 2026 adjusted EBITDA guidance after reporting second-quarter results supported by higher contributions across its fuel distribution, pipeline, terminals and refining businesses.
The partnership reported adjusted EBITDA of $996 million for the second quarter, excluding approximately $14 million of one-time transaction expenses. It increased its full-year adjusted EBITDA outlook to a range of $3.5 billion to $3.7 billion, up $400 million from its original guidance range.
Senior Vice President of Finance Scott Grischow said second-quarter distributable cash flow as adjusted was $608 million. Sunoco declared a quarterly distribution of just over $1 per common unit for both Sunoco LP common units and SunocoCorp shares on July 27, representing a 1.25% sequential increase and an increase of more than 10% from the second quarter of 2025.
Sunoco’s trailing 12-month distribution coverage ratio was 2.1 times, while leverage stood at approximately 3.7 times, below its long-term target. The company ended the quarter with $2.3 billion available under its revolving credit facility. It spent $125 million on growth capital and $77 million on maintenance capital during the quarter.
Segment results
Fuel Distribution adjusted EBITDA totaled $516 million, excluding $12 million of transaction expenses, compared with $538 million in the prior quarter and $214 million in the year-earlier period, also excluding transaction expenses. Chief Operating Officer Karl Fails noted that first-quarter results had included a 7-Eleven makeup payment and a $92 million one-time inventory-reduction benefit.
Fuel distribution volumes reached 4.1 billion gallons, rising 9% from the first quarter and 89% from a year earlier. Reported margin was 17.1 cents per gallon, compared with 17.0 cents in the first quarter and 10.5 cents in the second quarter of 2025.
Fails said market volatility returned during the quarter, including sharp price increases followed by declines toward the end of the period. He said Sunoco’s commercial teams have found opportunities to supply additional customers during uncertain market conditions.
- Pipeline System adjusted EBITDA was $190 million, versus $179 million in the first quarter and $177 million a year earlier. Throughput was 1.3 million barrels per day, up 4% sequentially and 9% year over year.
- Terminals adjusted EBITDA was $115 million, excluding $2 million of transaction expenses, compared with $107 million in the prior quarter and $73 million a year earlier. Throughput was 1.1 million barrels per day, up 5% sequentially and 52% from a year earlier, aided by a full quarter of contributions from the TanQuid acquisition.
- Refinery adjusted EBITDA rose to $175 million from $43 million in the first quarter. Throughput increased to 57,000 barrels per day from 22,000 barrels per day after a planned turnaround reduced first-quarter activity. Refining margin exceeded $40 per barrel while operating expenses were below $10 per barrel, according to Fails.
Guidance and refining outlook
President and Chief Executive Officer Joe Kim said Sunoco expects to materially exceed its initial 2026 EBITDA guidance and deliver its eighth consecutive year of EBITDA growth. He said the company expects the Fuel Distribution segment to perform in the second half at a level comparable with its first-half performance, while its pipeline and terminal businesses continue to provide reliability and stability.
Kim said the revised guidance range is primarily driven by uncertainty around refining results. Sunoco uses the forward curve for refining crack spreads as a starting point, he said, but noted that actual market outcomes can differ from forward pricing. He added that the company sees potential upside if market conditions remain favorable.
On the Burnaby refinery acquired through Parkland, Fails said Sunoco evaluated the acquisition based on mid-cycle economics and has focused on improving reliability and reducing operating expenses per barrel. He described Burnaby as part of a broader integrated British Columbia business that includes fuel distribution operations. The refinery ran above its 55,000-barrel-per-day nameplate capacity during the quarter on a combined basis, including low-carbon feedstocks, though Fails said the company would not sacrifice long-term reliability for short-term quarterly gains.
Growth plans and market conditions
Kim said Sunoco expects to exceed its multiyear target of at least $500 million annually in bolt-on acquisitions during 2026. He said the NuStar, Parkland and TanQuid acquisitions expanded the company’s investment opportunities across the United States, Canada, the Caribbean and Europe, in both fuel distribution and midstream operations.
The company also cited smaller organic projects, including new customer connections, terminal tank construction and pipeline connections. Fails said these projects generally emphasize quick returns, including projects in the $20 million to $30 million range.
Chief Commercial Officer Austin Harkness said U.S. refined-product demand has been roughly flat year over year, based on Energy Information Administration data, despite fuel-price volatility. Canadian gasoline demand was down low- to mid-single digits year over year, while ultra-low sulfur diesel demand was roughly flat, he said. Across Sunoco’s Caribbean markets, demand was up low- to mid-single digits overall.
Harkness said Sunoco has not identified supply-chain disruptions that suggest a long-term impact from product-market disruptions or Middle East conflict. He said the company has used its expanded footprint to respond to market dislocations, including moving diesel by rail from the Midwest to Mid-Atlantic markets and supplying Hawaii from the Burnaby refinery.
Grischow said cash tax expense increased during the first half due to stronger business performance, particularly in legacy Parkland refining operations, but said cash tax expense in the second half should be lower than the first-half level.
About Sunoco (NYSE:SUN)
Sunoco LP (NYSE: SUN) is an independent master limited partnership that specializes in the distribution and marketing of transportation fuels and related products. The company operates through two primary segments: wholesale fuel distribution and retail marketing. In wholesale distribution, Sunoco supplies branded fuels to distributors, commercial customers and resellers across the United States. Its retail marketing arm operates a network of company‐owned and franchised Sunoco branded service stations and convenience stores, providing gasoline, diesel, ethanol blends and lubricants to consumers.
Sunoco's product portfolio extends beyond traditional fuels to include biofuels, specialty chemicals and on‐road diesel treated to meet ultra‐low sulfur requirements.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
Source MarketBeat
