SunocoCorp LLC
05/07/2026 | Press release | Distributed by Public on 05/07/2026 12:42
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
(Tabular dollar amounts, except per gallon data, are in millions)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included elsewhere in this report. Additional discussion and analysis related to the Company is contained in our Annual Report on Form 10-K, including the audited consolidated financial statements for the fiscal year ended December 31, 2025 included therein.
Adjusted EBITDA is a non-GAAP financial measure of performance that has limitations and should not be considered as a substitute for net income or other GAAP measures. Please see "Key Measure Used to Evaluate and Assess Our Business" below for a discussion of our use of Adjusted EBITDA in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and a reconciliation to net income for the periods presented.
Cautionary Statement Regarding Forward-Looking Statements
Some of the information in this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 21E of the Exchange Act. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Statements using words such as "believe," "plan," "could," "expect," "anticipate," "intend," "forecast," "assume," "estimate," "continue," "position," "predict," "project," "goal," "strategy," "budget," "potential," "will" and other similar words or phrases are used to help identify forward-looking statements, although not all forward-looking statements contain such identifying words. Descriptions of our objectives, goals, targets, plans, strategies, costs, anticipated capital expenditures, expected cost savings and benefits are also forward-looking statements. These forward-looking statements are based on our current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements, including:
•Sunoco's ability to integrate acquisitions from affiliates or third parties, including the ability to successfully integrate Parkland's business;
•business strategy and operations of Energy Transfer and its conflicts of interest with Sunoco and us;
•changes in the price of and demand for the motor fuel that Sunoco distributes and its ability to appropriately hedge any motor fuel it holds in inventory;
•Sunoco's dependence on limited principal suppliers;
•competition in the wholesale motor fuel distribution and retail store industry;
•changing customer preferences for alternate fuel sources or improvement in fuel efficiency;
•volatility of fuel prices or a prolonged period of low fuel prices and the effects of actions by, or disputes among or between, oil producing countries with respect to matters related to the price or production of oil;
•any acceleration of the domestic and/or international transition to a low carbon economy as a result of policy changes or otherwise;
•the possibility of cyber and malware attacks;
•changes in Sunoco's credit rating, as assigned by rating agencies;
•a deterioration in the credit and/or capital markets, including as a result of recent increases in cost of capital resulting from Federal Reserve policies and changes in financial institutions' policies or practices concerning businesses linked to fossil fuels;
•general economic conditions, including sustained periods of inflation, supply chain disruptions, new, increased and reciprocal tariffs and associated central bank monetary policies;
•environmental, tax and other federal, state and local laws and regulations;
•the macroeconomic, regulatory or other potential effects of a prolonged government shutdown;
•changes to, and the application of, regulation of tariff rates and operational requirements related to our joint ventures' and subsidiaries' interstate and intrastate pipelines, including the impact on the raw materials;
•political and economic conditions and events in the U.S. and in foreign oil, natural gas and NGL producing countries, including embargoes, political and regulatory changes implemented by the Trump Administration and foreign investments, continued hostilities in the Middle East, including the Israel-Hamas conflict, conflict with Iran and other sustained military
campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, including most recently in Venezuela, Central America and China and acts of terrorism or sabotage;
•the fact that Sunoco is not fully insured against all risks incident to our business;
•dangers inherent in the storage and transportation of motor fuel;
•our ability to manage growth and/or control costs;
•Sunoco's ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to our financial results and to successfully integrate acquired businesses;
•Sunoco's reliance on senior management, supplier trade credit and information technology; and
•our governance structure, which may create conflicts of interest between us and SunocoCorp Manager and its affiliates, and limits the fiduciary duties of SunocoCorp Manager and its affiliates.
All forward-looking statements, expressed or implied, are expressly qualified in their entirety by the foregoing cautionary statements.
Many of the foregoing risks and uncertainties are, and will be, heightened by any further worsening of the global business and economic environment. New factors that could impact forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties described or referenced in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026 occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.
You should not put undue reliance on any forward-looking statements. When considering forward-looking statements, please review the risks described or referenced under the heading "Part II - Item 1A. Risk Factors" herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026. The list of factors that could affect future performance and the accuracy of forward-looking statements is illustrative but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this report are based on, and include, our estimates as of the filing of this report. We anticipate that subsequent events and market developments will cause our estimates to change. However, we specifically disclaim any obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law, even if new information becomes available in the future.
In addition to risks and uncertainties in the ordinary course of business that are common to all businesses, important factors that are specific to our structure, our industry and our company could materially impact our future performance and results of operations.
Overview
As used in this Management's Discussion and Analysis of Financial Condition and Results of Operations, the terms "Company," "SunocoCorp," "we," "us" or "our" should be understood to refer to SunocoCorp LLC, including its consolidated subsidiary Sunoco.
The terms "Partnership" or "Sunoco" should be understood to refer to Sunoco and its consolidated subsidiaries.
SunocoCorp is a Delaware publicly traded limited liability company that owns a direct limited partnership interest in Sunoco in the form of Sunoco Class D Units, all of which are held by SunocoCorp. SunocoCorp's only cash-generating assets are the Sunoco Class D Units. SunocoCorp is managed by SunocoCorp Manager, which is controlled by Energy Transfer.
Sunoco is a Delaware master limited partnership. Sunoco is managed by Sunoco GP, which is owned by Energy Transfer. SunocoCorp currently holds the rights to appoint and remove the directors of the Sunoco GP Board. As of March 31, 2026, Energy Transfer owned 100% of the membership interest in Sunoco GP, 28,463,967 Sunoco Common Units and all of Sunoco's IDRs.
Recent Developments
TanQuid Acquisition
On January 16, 2026, the Partnership completed the previously announced acquisition of TanQuid for €206 million ($239 million ) and assumed debt with a fair value of €298 million ($346 million as of January 16, 2026). TanQuid owns and operates 15 fuel terminals in Germany and one fuel terminal in Poland. The transaction was funded using cash on hand and amounts available under the Partnership's Credit Facility.
Other Acquisitions
In the first quarter of 2026, the Partnership completed other acquisitions for total cash consideration of approximately $50 million, plus working capital. These transactions were accounted for as asset acquisitions.
Regulatory Update
OECD Pillar Two Global Minimum Tax
The acquisition of Parkland brought Sunoco into the scope of the Pillar Two global minimum tax regime. Several jurisdictions in which Sunoco now operates have enacted legislation implementing the Organization for Economic Co-operation and Development ("OECD") Pillar Two global minimum tax framework. These rules generally impose a 15% minimum top-up tax on the profits of large multinational enterprises. Sunoco estimates its Pillar Two global minimum tax expense to be immaterial in 2026 and has not accrued any current tax expense related to Pillar Two during the three months ended March 31, 2026.
On January 5, 2026, the OECD released new guidance that provides relief for U.S. parented multinationals and establishes a side-by-side framework for the U.S. tax system to coexist with Pillar Two global minimum tax. Effective for fiscal years beginning on or after January 1, 2026, U.S. parented multinationals would be exempt from the main charging provisions of Pillar Two. Sunoco will continue to estimate and potentially accrue Pillar Two global minimum tax until the relevant jurisdictions in which Sunoco operates enact the side-by-side framework into law.
Interstate Common Carrier Regulation
In December 2020, the FERC issued an order setting the indexed rate at PPI-FG plus 0.78% during the five-year period commencing July 1, 2021 and ending June 30, 2026. The FERC received requests for rehearing of its December 17, 2020 order and on January 20, 2022, granted rehearing and modified the oil index. Specifically, for the five-year period commencing July 1, 2021 and ending June 30, 2026, FERC-regulated liquids pipelines charging indexed rates were permitted to adjust their indexed ceilings annually by PPI-FG minus 0.21%. The FERC directed liquids pipelines to recompute their ceiling levels for July 1, 2021 through June 30, 2022, as well as the ceiling levels for the period July 1, 2022 through June 30, 2023, based on the new index level. Where an oil pipeline's filed rates exceeded its ceiling levels, the FERC ordered such oil pipelines to reduce the rate to bring it into compliance with the recomputed ceiling level to be effective March 1, 2022. Some parties sought rehearing of the January 20, 2022 order with the FERC, which was denied by the FERC on May 6, 2022. Certain parties appealed the January 20 and May 6 orders. On July 26, 2024, the D.C. Circuit ruled in LEPA v. FERC that the FERC violated the Administrative Procedure Act because the January 20, 2022 order modified the index without following notice and comment. As a result, the D.C. Circuit vacated the January 20, 2022 order and on September 17, 2024, the FERC reinstated the index level established by its original December 17, 2020 order, directed pipelines to file an informational filing to show their recomputed ceiling levels reflecting the reinstated index level and stated that pipelines could file to prospectively increase their indexed rates to their recomputed levels. On October 17, 2024, the FERC issued a Supplemental Notice of Proposed Rulemaking ("Supplemental NOPR") that proposed a reduction to the then- effective index by one percent.
On November 20, 2025, the FERC withdrew the Supplemental NOPR and confirmed that the PPI-FG-0.78% index established in its December 17, 2020 order will remain in effect through June 30, 2026. On the same day, the FERC issued an Order Denying Rehearing of the Reinstatement Order and Granting Remedial Relief ("Remedial Relief Order"), which granted remedial relief to liquids pipelines for the period of March 1, 2022 to September 17, 2024 (the "Locked-In Period"), when the lower index was effective under the order vacated by the D.C. Circuit in LEPA v. FERC, but only if such pipelines charged the maximum rate allowed under the applicable index ceiling during the relevant time period. Parties have since filed requests for clarification or rehearing, as well as court appeals, to determine whether pipelines may recover rate differences in other scenarios. Those requests and appeals remain pending.
Also on November 20, 2025, the FERC issued a Notice of Proposed Rulemaking on the 2026 Five-Year Oil Pipeline Index ("2026 Index NOPR"), proposing to use the Producer Price Index for Finished Goods (PPI-FG) minus 1.42% as the index level beginning July 1, 2026 to June 30, 2031. The NOPR proceeded through the standard notice-and-comment process, with comments submitted in late 2025 and early 2026, and remains pending final Commission action.
On December 18, 2025, the FERC issued an Order Denying Petition for Emergency Relief ("Emergency Relief Order Denial"), which denied a petition requesting emergency relief from invoices issued by a liquid pipeline company to recover amounts of indexed rates for the Locked-In Period and explained that, consistent with the Remedial Relief Order, pipelines that charged the maximum rates permitted under the FERC's now-vacated January 20, 2022 rehearing order during the Locked-In Period may invoice shippers to recover the amounts that would have been chargeable under the December 17, 2020 order.
In January 2026, multiple shippers have filed petitions for review at the D.C. Circuit challenging the FERC's November 20, 2025 orders, including, the (i) Remedial Relief Order, (ii) Order Terminating Supplemental NOPR, and (iii) Emergency Relief Order Denial. These appeals are pending.
Separately, on December 15, 2022, the FERC issued a Proposed Policy Statement on Oil Pipeline Affiliate Committed Service, which addresses whether a contract for committed transportation service complies with the Interstate Commerce Act ("ICA") where the only shipper to obtain the committed service is an affiliate of the regulated entity. If adopted, the proposed policy statement would create a rebuttable presumption that affiliate contracts are unduly discriminatory and not just and reasonable in certain circumstances and require a pipeline to produce additional evidentiary support for affiliate contracts rates and terms. This follows a trend of increased scrutiny by the FERC on affiliated contracts across all industries regulated by the FERC. The FERC has taken no further action on the proposed policy statement.
Regulation of Intrastate Crude Oil and Products Pipelines
In addition to federally regulated body oversight, various states, including Colorado, Kansas, Louisiana, North Dakota and Texas, maintain commissions focused on the rates and practices of common carrier pipelines offering services within their borders. Although the applicable state statutes and regulations vary, they generally require that intrastate pipelines publish tariffs setting forth all rates, rules and regulations applying to intrastate service, and generally require that pipeline rates and practices be just, reasonable and nondiscriminatory.
Shippers may challenge tariff rates, rules and regulations on our pipelines. In most instances, state commissions have not initiated investigations of the rates or practices of pipelines in the absence of shipper complaints. There are no pending challenges or complaints regarding our tariffs or tariff rates.
In addition, as noted above, the rates, terms and conditions for shipments of crude oil or petroleum products on Sunoco's pipelines could be subject to regulation by the FERC under the ICA and the Energy Policy Act of 1992 ("EPAct of 1992") if the crude oil or petroleum products are transported in interstate or foreign commerce whether by its pipelines or other means of transportation. Since Sunoco does not control the entire transportation path of all crude oil or petroleum products shipped on our pipelines, FERC regulation could be triggered by our customers' transportation decisions.
Regulation of Interstate Ammonia Pipelines
Our ammonia pipeline is subject to regulation by the Surface Transportation Board (the "STB") pursuant to the ICA applicable to such pipelines (which differs from the ICA applicable to interstate liquids pipelines). Under that regulation, the ammonia pipeline's rates, classifications, rules and practices related to the interstate transportation of anhydrous ammonia must be reasonable and, in providing interstate transportation, the ammonia pipeline may not subject a person, place, port or type of traffic to unreasonable discrimination. Similar to the crude and refined products pipelines, the rates for transportation services on the ammonia pipeline are required to be in a tariff which is posted publicly on Sunoco's website, however, that tariff is not required to be on file with the STB. The STB does not prescribe an indexing approach similar to the EPAct of 1992 but rates under the STB must be reasonable and the pipeline may not subject a person, place, port or type of traffic to unreasonable discrimination.
Key Measure Used to Evaluate and Assess Our Business
Adjusted EBITDA, as used throughout this document, is defined as net income before net interest expense, income tax expense, depreciation, amortization and accretion expense, non-cash compensation expense, gains and losses on disposal of asset, non-cash impairment charges, losses on extinguishment of debt, unrealized gains and losses on commodity derivatives, inventory valuation adjustments, certain foreign currency transaction gains and losses and certain other operating expenses reflected in net income that we do not believe are indicative of ongoing core operations. Inventory valuation adjustments that are excluded from the calculation of Adjusted EBITDA represent changes in lower of cost or market reserves on the Partnership's inventory; these amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period.
Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP, read "Key Operating Metrics and Results of Operations" below.
We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because:
•Adjusted EBITDA is used as a performance measure under our Credit Facility;
•securities analysts and other interested parties use Adjusted EBITDA as a measure of financial performance; and
•our management uses Adjusted EBITDA for internal planning purposes, including aspects of our consolidated operating budget and capital expenditures.
Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance. Adjusted EBITDA has limitations as an analytical tool, and one should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
•it does not reflect interest expense or the cash requirements necessary to service interest or principal payments on our Credit Facility or senior notes;
•although depreciation, amortization and accretion are non-cash charges, the assets being depreciated, amortized and accreted will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; and
•as not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Adjusted EBITDA reflects amounts for the unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliates as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, amortization, accretion and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. Sunoco does not control its unconsolidated affiliates; therefore, Sunoco does not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly.
Results of Operations
Change in Reporting Entity
SunocoCorp was previously named NuStar GP Holdings, LLC and was a consolidated subsidiary of Sunoco. SunocoCorp's name was changed in 2025 in anticipation of the restructuring changes that occurred in connection with the Parkland Acquisition. Upon the consummation of the Parkland Acquisition, SunocoCorp became the primary beneficiary of Sunoco based on (i) SunocoCorp's rights to appoint and remove the directors of Sunoco GP Board and (ii) SunocoCorp's economic interest in Sunoco held via 100% of the Sunoco Class D Units; accordingly, management concluded that SunocoCorp should consolidate Sunoco. Given SunocoCorp's consolidation of its previous parent (Sunoco) upon the consummation of the Parkland Acquisition, management of the Company concluded that the restructuring constituted a change in reporting entity under Accounting Standards Codification Topic 250 ("ASC 250"), because the consolidated financial statements of the Company are, in effect, the statements of a different reporting entity. Accordingly, the Company's consolidated financial statements prior to the Parkland Acquisition have been retrospectively restated to reflect the consolidation of Sunoco for all periods, and Sunoco's equity prior to the Parkland Acquisition is reflected as "predecessor equity" in the Company's consolidated financial statements for those periods. Accordingly, the results of operations included herein also reflect the consolidation of Sunoco for all periods.
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Segment Adjusted EBITDA: | |||||||||||||||||
| Fuel Distribution | $ | 529 | $ | 220 | $ | 309 | |||||||||||
| Pipeline Systems | 179 | 172 | 7 | ||||||||||||||
| Terminals | 107 | 66 | 41 | ||||||||||||||
| Refinery | 43 | - | 43 | ||||||||||||||
| Adjusted EBITDA (consolidated) | $ | 858 | $ | 458 | $ | 400 | |||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Reconciliation of net income to Adjusted EBITDA: | |||||||||||||||||
| Net income | $ | 605 | $ | 207 | $ | 398 | |||||||||||
| Depreciation, amortization and accretion | 286 | 156 | 130 | ||||||||||||||
| Interest expense, net | 201 | 121 | 80 | ||||||||||||||
| Non-cash unit-based compensation expense | 6 | 4 | 2 | ||||||||||||||
| (Gain) loss on disposal of assets and impairment charges | (1) | 3 | (4) | ||||||||||||||
| Loss on extinguishment of debt | 1 | 2 | (1) | ||||||||||||||
| Unrealized (gains) losses on commodity derivatives | 56 | (1) | 57 | ||||||||||||||
| Inventory valuation adjustments | (444) | (61) | (383) | ||||||||||||||
| Equity in earnings of unconsolidated affiliates | (42) | (32) | (10) | ||||||||||||||
| Adjusted EBITDA related to unconsolidated affiliates | 69 | 50 | 19 | ||||||||||||||
| Other non-cash adjustments | 47 | 11 | 36 | ||||||||||||||
| Income tax expense (benefit) | 74 | (2) | 76 | ||||||||||||||
| Adjusted EBITDA (consolidated) | $ | 858 | $ | 458 | $ | 400 | |||||||||||
Net Income. For the three months ended March 31, 2026 compared to the same period last year, net income increased by $398 million, or approximately 192%, primarily due to higher Segment Adjusted EBITDA from multiple segments, with the most significant increases driven by the Parkland Acquisition and other acquisitions; these increases were partially offset by increases in depreciation, amortization and accretion and interest expense. These increases and decreases are discussed further below.
Adjusted EBITDA (consolidated). For the three months ended March 31, 2026 compared to the same period last year, Adjusted EBITDA increased primarily due to the Parkland Acquisition and other acquisitions.
Additional information on changes impacting net income and comprehensive income (loss) and Adjusted EBITDA for the three months ended March 31, 2026 compared to the same period last year is available below and in "Segment Operating Results."
Depreciation, Amortization and Accretion. For the three months ended March 31, 2026 compared to the same period last year, depreciation, amortization and accretion increased primarily due to additional depreciation and amortization from assets recently placed in service and from recent acquisitions.
Interest Expense, net. For the three months ended March 31, 2026 compared to the same period last year, interest expense increased primarily due to an increase in average total long-term debt, including debt assumed in the Parkland Acquisition.
Unrealized (Gains) Losses on Commodity Derivatives. The unrealized gains and losses on our commodity derivatives represent the changes in fair value of our commodity derivatives. The change in unrealized gains and losses between periods is impacted by the notional amounts and commodity price changes on our commodity derivatives. Additional information on commodity derivatives is included in "Item 3. Quantitative and Qualitative Disclosures about Market Risk" below.
Inventory Valuation Adjustments. Inventory valuation adjustments represent changes in lower of cost or market reserves using the LIFO method on the Partnership's inventory. These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period. For the three months ended March 31, 2026 and 2025, the Partnership's cost of sales included favorable LIFO inventory valuation adjustments of $444 million and $61 million, respectively, which increased net income.
Adjusted EBITDA Related to Unconsolidated Affiliates and Equity in Earnings of Unconsolidated Affiliates. See additional information in "Supplemental Information on Unconsolidated Affiliates" and "Segment Operating Results."
Income Tax Expense (Benefit). For the three months ended March 31, 2026 compared to the same period last year, income tax expense increased primarily due to increased corporate earnings from recent acquisitions.
Supplemental Information on Unconsolidated Affiliates
The following table presents financial information related to unconsolidated affiliates:
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Equity in earnings of unconsolidated affiliates | |||||||||||||||||
| J.C. Nolan | $ | 2 | $ | 2 | $ | - | |||||||||||
| ET-S Permian | 37 | 30 | 7 | ||||||||||||||
| SARA | 1 | - | 1 | ||||||||||||||
| Isla | 3 | - | 3 | ||||||||||||||
| Other | (1) | - | (1) | ||||||||||||||
| Total equity in earnings of unconsolidated affiliates | $ | 42 | $ | 32 | $ | 10 | |||||||||||
|
Adjusted EBITDA related to unconsolidated affiliates(1):
|
|||||||||||||||||
| J.C. Nolan | $ | 3 | $ | 3 | $ | - | |||||||||||
| ET-S Permian | 53 | 47 | 6 | ||||||||||||||
| SARA | 5 | - | 5 | ||||||||||||||
| Isla | 6 | - | 6 | ||||||||||||||
| Other | 2 | - | 2 | ||||||||||||||
| Total Adjusted EBITDA related to unconsolidated affiliates | $ | 69 | $ | 50 | $ | 19 | |||||||||||
| Distributions received from unconsolidated affiliates: | |||||||||||||||||
| J.C. Nolan | $ | 3 | $ | 2 | $ | 1 | |||||||||||
| ET-S Permian | 56 | 116 | (60) | ||||||||||||||
| SARA | - | - | - | ||||||||||||||
| Isla | 2 | - | 2 | ||||||||||||||
| Other | - | - | - | ||||||||||||||
| Total distributions received from unconsolidated affiliates | $ | 61 | $ | 118 | $ | (57) | |||||||||||
(1)These amounts represent our proportionate share of the Adjusted EBITDA of our unconsolidated affiliates and are based on our equity in earnings or losses of our unconsolidated affiliates adjusted for our proportionate share of the unconsolidated affiliates' interest, depreciation, amortization, accretion, non-cash items and taxes.
Segment Operating Results
We evaluate segment performance based on Segment Adjusted EBITDA, which we believe is an important performance measure of the core profitability of our operations. This measure represents the basis of our internal financial reporting and is one of the performance measures used by senior management in deciding how to allocate capital resources among business segments.
The following tables identify the components of Segment Adjusted EBITDA, which is calculated as follows:
•Segment profit, operating expenses and selling, general and administrative expenses. These amounts represent the amounts included in our consolidated financial statements that are attributable to each segment.
•Adjusted EBITDA related to unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliates as those excluded from the calculation of Segment Adjusted EBITDA, such as interest, taxes, depreciation, amortization, accretion and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates.
The following analysis of segment operating results includes a measure of segment profit. Segment profit is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA. Segment profit is similar to the GAAP measure of gross profit, except that segment profit excludes charges for depreciation, amortization and accretion. The most directly comparable measure to segment profit is gross profit.
The following table presents a reconciliation of segment profit to gross profit:
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Fuel Distribution segment profit | $ | 1,236 | $ | 361 | $ | 875 | |||||||||||
| Pipeline Systems segment profit | 184 | 174 | 10 | ||||||||||||||
| Terminals segment profit | 225 | 118 | 107 | ||||||||||||||
| Refinery segment profit | 44 | - | 44 | ||||||||||||||
| Total segment profit | 1,689 | 653 | 1,036 | ||||||||||||||
| Depreciation, amortization and accretion, excluding corporate and other | 284 | 156 | 128 | ||||||||||||||
| Gross profit | $ | 1,405 | $ | 497 | $ | 908 | |||||||||||
In addition, for the Fuel Distribution segment, the following section includes information on the components of segment profit by sales type, which components are included in order to provide additional disaggregated information to facilitate the analysis of segment profit and Segment Adjusted EBITDA. These components of segment profit are calculated consistent with the calculation of segment profit; therefore, these components also exclude charges for depreciation, amortization and accretion.
Fuel Distribution
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Motor fuel gallons sold (millions) | 3,796 | 2,087 | 1,709 | ||||||||||||||
|
Motor fuel profit cents per gallon (1)
|
17.0 | ¢ | 11.5 | ¢ | (11.3) | ¢ | |||||||||||
| Fuel profit | $ | 1,044 | $ | 297 | $ | 747 | |||||||||||
| Non-fuel profit | 153 | 35 | 118 | ||||||||||||||
| Lease profit | 39 | 29 | 10 | ||||||||||||||
| Fuel Distribution segment profit | $ | 1,236 | $ | 361 | $ | 875 | |||||||||||
| Unrealized (gains) losses on commodity risk management activities | 54 | (1) | 55 | ||||||||||||||
|
Expenses, excluding non-cash unit-based compensation expense (2)
|
(391) | (92) | (299) | ||||||||||||||
| Adjusted EBITDA related to unconsolidated affiliates | 8 | - | 8 | ||||||||||||||
| Inventory valuation adjustments | (398) | (58) | (340) | ||||||||||||||
| Other | 20 | 10 | 10 | ||||||||||||||
| Segment Adjusted EBITDA | $ | 529 | $ | 220 | $ | 309 | |||||||||||
(1) Excludes the impact of inventory valuation adjustments consistent with the definition of Adjusted EBITDA.
(2) Includes operating expenses, general and administrative and lease expense.
Volumes. For the three months ended March 31, 2026 compared to the same period last year, volumes increased primarily due to the Parkland Acquisition.
Segment Adjusted EBITDA. For the three months ended March 31, 2026 compared to the same period last year, Segment Adjusted EBITDA related to our Fuel Distribution segment increased due to the net impact of the following:
•an increase of $590 million in segment profit (excluding unrealized gains and losses on commodity risk management activities and inventory valuation adjustments) primarily due to the Parkland Acquisition and other acquisitions, as well as a favorable impact from a one-time gain on sale of inventory in the current period; and
•an increase of $8 million in Adjusted EBITDA related to unconsolidated affiliates from the Parkland Acquisition; partially offset by
•an increase of $299 million in expenses primarily due to the Parkland Acquisition.
Pipeline Systems
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Pipelines throughput (thousand barrels per day) | 1,291 | 1,258 | 33 | ||||||||||||||
| Pipeline Systems segment profit | $ | 184 | $ | 174 | $ | 10 | |||||||||||
|
Expenses, excluding non-cash unit-based compensation expense (1)
|
(61) | (53) | (8) | ||||||||||||||
| Adjusted EBITDA related to unconsolidated affiliates | 56 | 50 | 6 | ||||||||||||||
| Other | - | 1 | (1) | ||||||||||||||
| Segment Adjusted EBITDA | $ | 179 | $ | 172 | $ | 7 | |||||||||||
(1) Includes operating expenses, general and administrative and lease expense.
Volumes. For the three months ended March 31, 2026 compared to the same period last year, the increase in throughput volumes reflected the impact of refinery turnarounds in the prior period and overall increased market demand in 2026.
Segment Adjusted EBITDA. For the three months ended March 31, 2026 compared to the same period last year, Segment Adjusted EBITDA related to our Pipeline Systems segment increased due to the net impact of the following:
•a $10 million increase in segment profit primarily due to refinery turnarounds and contract expirations in the prior period, improved butane blending, and overall increased market demand; and
•a $6 million increase in Adjusted EBITDA related to ET-S Permian; partially offset by
•an $8 million increase in expenses primarily due to higher utility costs, maintenance costs and corporate allocations.
Terminals
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Throughput (thousand barrels per day) | 1,013 | 620 | 393 | ||||||||||||||
| Terminals segment profit | $ | 225 | $ | 118 | $ | 107 | |||||||||||
|
Expenses, excluding non-cash unit-based compensation expense (1)
|
(74) | (49) | (25) | ||||||||||||||
| Inventory valuation adjustments | (44) | (3) | (41) | ||||||||||||||
| Segment Adjusted EBITDA | $ | 107 | $ | 66 | $ | 41 | |||||||||||
(1) Includes operating expenses, general and administrative and lease expense.
Volumes. For the three months ended March 31, 2026 compared to the same period last year, volumes increased due to recently acquired assets.
Segment Adjusted EBITDA. For the three months ended March 31, 2026 compared to the same period last year, Segment Adjusted EBITDA related to our Terminals segment increased due to the net impact of the following:
•a $66 million increase in segment profit (excluding inventory valuation adjustments) primarily due to the acquisitions of Parkland and TanQuid; partially offset by
•a $25 million increase in expenses primarily due to the acquisitions of Parkland and TanQuid.
Refinery
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| Crude utilization | 38 | % | - | 38 | % | ||||||||||||
| Composite utilization | 40 | % | - | 40 | % | ||||||||||||
| Crude throughput (thousand barrels per day) | 21 | - | 21 | ||||||||||||||
| Bio-feedstock throughput (thousand barrels per day) | 1 | - | 1 | ||||||||||||||
|
Refinery segment profit (1)
|
$ | 44 | $ | - | $ | 44 | |||||||||||
| Unrealized losses on commodity risk management activities | 2 | - | 2 | ||||||||||||||
|
Expenses, excluding non-cash unit-based compensation expense (2)
|
(6) | - | (6) | ||||||||||||||
| Adjusted EBITDA related to unconsolidated affiliates | 5 | - | 5 | ||||||||||||||
| Inventory valuation adjustments | (2) | - | (2) | ||||||||||||||
| Segment Adjusted EBITDA | $ | 43 | $ | - | $ | 43 | |||||||||||
(1) Refinery segment profit includes $61 million of production costs, supply and logistics, and terminal operating costs for the three months ended March 31, 2026.
(2) Includes operating expenses, general and administrative and lease expense.
Volumes. For the three months ended March 31, 2026 compared to the same period last year, volumes increased due to recently acquired assets.
Segment Adjusted EBITDA. For the three months ended March 31, 2026 compared to the same period last year, Segment Adjusted EBITDA related to our Refinery segment increased due to the Parkland Acquisition.
Liquidity and Capital Resources
Parent Company Only
The principal sources of SunocoCorp's cash flow are distributions we receive from our investment in Sunoco Class D Units. The amount of cash that Sunoco distributes to its unitholders, including SunocoCorp, each quarter is based on earnings from its business activities and the amount of available cash, as discussed below.
For a period of two years following October 31, 2025, Sunoco will ensure that SunocoCorp unitholders receive distributions on a per unit basis that are equivalent to the per unit distributions to Sunoco unitholders.
Liquidity
Our principal liquidity requirements are to finance current operations, to fund capital expenditures, including acquisitions from time to time, to service our debt and to make distributions. We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under the Credit Facility and the issuance of additional long-term debt or partnership units as appropriate given market conditions. We expect that these sources of funds will be adequate to provide for our short-term and long-term liquidity needs.
Our ability to meet our debt service obligations and other capital requirements, including capital expenditures and acquisitions, will depend on our future operating performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. As a normal part of our business, depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. In addition, any of the risks described or referenced under the heading "Part II - Item 1A. Risk Factors" herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 may also significantly impact our liquidity.
As of March 31, 2026, we had $718 million of cash and cash equivalents on hand and borrowing capacity of $2.22 billion on the Credit Facility. The Partnership was in compliance with all financial covenants at March 31, 2026. Based on our current estimates, we expect to utilize capacity under the Credit Facility, along with cash from operations, to fund our announced growth capital expenditures and working capital needs for 2026; however, we may issue debt or equity securities as we deem prudent to provide liquidity for new capital projects or other partnership purposes.
Cash Flows
Our cash flows may change in the future due to a number of factors, some of which we cannot control. These factors include regulatory changes, the price of products and services, the demand for such products and services, margin requirements resulting from significant changes in commodity prices, operational risks, the successful integration of our acquisitions and other factors.
Operating Activities
Changes in cash flows from operating activities between periods primarily result from changes in earnings, excluding the impacts of non-cash items and changes in operating assets and liabilities (net of effects of acquisitions and divestitures). Non-cash items include recurring non-cash expenses, such as depreciation, amortization and accretion expense and non-cash unit-based compensation expense. Cash flows from operating activities also differ from earnings as a result of non-cash charges that may not be recurring, such as impairment charges. Our daily working capital requirements fluctuate within each month, primarily in response to the timing of payments for motor fuels, motor fuels tax and rent.
Three months ended March 31, 2026 compared to three months ended March 31, 2025. Net cash provided by operating activities during 2026 was $454 million compared to $156 million for 2025, and net income was $605 million for 2026 and $207 million for 2025. The difference between net income and net cash provided by operating activities for the three months ended March 31, 2026 primarily consisted of net changes in operating assets and liabilities of $53 millionand non-cash items totaling $139 million.
The non-cash activity in 2026 and 2025 consisted primarily of depreciation, amortization and accretion of $286 million and $156 million, respectively, non-cash unit-based compensation expense of $6 million and $4 million, respectively, favorable inventory valuation adjustments of $444 million and $61 million, respectively, loss on extinguishment of debt of $1 million and $2 million, respectively, gain on disposal of assets and impairment charges of $1 million and loss on disposal of assets and impairment charges of $3 million, respectively, amortization of deferred financing fees of $9 million and $3 million, respectively, and deferred income tax expense of $56 million and deferred income tax benefit of $7 million, respectively. Net income also included equity in earnings of unconsolidated affiliates of $42 million and $32 million in 2026 and 2025, respectively.
Cash provided by operating activities included cash distributions received from unconsolidated affiliates that were deemed to be paid from cumulative earnings, which distributions were $41 million in 2026 and $85 million in 2025.
Investing Activities
Cash flows from investing activities primarily consist of capital expenditures, cash contributions to unconsolidated affiliates, cash amounts paid for acquisitions and cash proceeds from the sale or disposal of assets. Changes in capital expenditures between periods primarily result from increases or decreases in our growth capital expenditures to fund our construction and expansion projects.
Three months ended March 31, 2026 compared to three months ended March 31, 2025. Net cash used in investing activities during 2026 was $430 million compared to $101 million in 2025. Capital expenditures for 2026 were $199 million compared to $101 million for 2025. In 2026, we paid $194 million for the acquisition of TanQuid and $50 million in cash for other acquisitions. In 2025, we paid $12 million in cash for other acquisitions. Proceeds from disposal of property, plant and equipment were $3 million for both periods.
In 2026 and in 2025, we paid $10 million and $24 million in cash contributions to unconsolidated affiliates, respectively. Distributions from unconsolidated affiliates in excess of cumulative earnings were $20 million and $33 million for 2026 and 2025, respectively.
Financing Activities
Changes in cash flows from financing activities between periods primarily result from changes in the levels of borrowings and equity issuances, which are primarily used to fund our acquisitions and growth capital expenditures. Distributions increase between the periods based on increases in the number of common units outstanding or increases in the distribution rate.
Three months ended March 31, 2026 compared to three months ended March 31, 2025. Net cash used in financing activities during 2026 was $197 million compared to net cash provided in financing activities of $23 million in 2025.
During the three months ended March 31, 2026, we:
•borrowed $1.20 billion and repaid $1.21 billion in senior notes;
•borrowed $1.18 billion and repaid $1.06 billion under the Credit Facility;
•paid $15 million in loan origination costs;
•paid $248 million in distributions to noncontrolling interests; and
•paid $48 million in distributions to our common unitholders.
During the three months ended March 31, 2025, we:
•borrowed $1.00 billion and repaid $603 million in senior notes;
•borrowed $1.09 billion and repaid $1.30 billion under the Credit Facility;
•paid $12 million in loan origination costs; and
•paid $159 million in distributions to noncontrolling interests.
We intend to pay distributions to the holders of our common units on a quarterly basis. SunocoCorp's primary source of cash flow is its investment in Sunoco Class D units. The Sunoco Class D units provide dividend equalization rights for the period beginning on October 31, 2025 and ending December 31, 2027 (the "Equalization Period"); Sunoco shall ensure that SunocoCorp shall have cash necessary and sufficient to pay distributions on each SunocoCorp common unit for each quarter during the Equalization Period in an amount equal to 100% of the distributions paid by Sunoco on each Sunoco common unit during such quarter. For the quarter ended March 31, 2026, the Company declared a cash dividend of $0.9899 to be paid on May 20, 2026 to unitholders of record as of May 8, 2026.
Capital Expenditures
For the three months ended March 31, 2026, total capital expenditures on an accrual basis were $199 million, which included $106 million for growth capital and $93 million for maintenance capital. This includes the Partnership's proportionate share of capital expenditures related to its investments in ET-S Permian and J.C. Nolan of $13 million for growth capital.
We currently expect to spend between $400 million and $450 million in maintenance capital expenditures and at least $600 million in growth capital for the full year 2026. These amounts include the Partnership's proportionate share for joint ventures.
Description of Indebtedness
Our consolidated debt obligations, all of which are attributable to Sunoco or its subsidiaries, consisted of the following:
|
March 31, 2026 |
December 31, 2025 |
||||||||||
| Credit Facility | $ | 125 | $ | - | |||||||
|
6.000% Senior Notes due 2026 (1)
|
- | 500 | |||||||||
|
3.875% CAD senior notes due 2026 (2)
|
395 | 400 | |||||||||
|
Parkland 3.875% CAD senior notes due 2026 (1)
|
- | 37 | |||||||||
|
TanQuid 2.340% EUR senior notes due 2026 (2)
|
95 | - | |||||||||
|
6.000% senior notes due 2027 (1)
|
- | 600 | |||||||||
|
5.625% senior notes due 2027
|
550 | 550 | |||||||||
|
5.875% senior notes due 2027
|
499 | 499 | |||||||||
|
Parkland 5.875% senior notes due 2027 (1)
|
- | 1 | |||||||||
|
5.875% senior notes due 2028
|
400 | 400 | |||||||||
|
7.000% senior notes due 2028
|
500 | 500 | |||||||||
|
6.000% CAD senior notes due 2028
|
274 | 277 | |||||||||
|
Parkland 6.000% CAD senior notes due 2028 (1)
|
- | 14 | |||||||||
|
4.500% senior notes due 2029
|
800 | 800 | |||||||||
|
7.000% senior notes due 2029
|
750 | 750 | |||||||||
|
4.375% CAD senior notes due 2029
|
391 | 397 | |||||||||
|
Parkland 4.375% CAD senior notes due 2029 (1)
|
- | 40 | |||||||||
|
4.500% senior notes due 2029
|
790 | 790 | |||||||||
|
Parkland 4.500% senior notes due 2029 (1)
|
- | 10 | |||||||||
|
4.500% senior notes due 2030
|
800 | 800 | |||||||||
|
6.375% senior notes due 2030
|
600 | 600 | |||||||||
|
4.625% senior notes due 2030
|
798 | 798 | |||||||||
|
Parkland 4.625% senior notes due 2030 (1)
|
- | 2 | |||||||||
| TanQuid variable rate EUR senior notes due 2030 | 54 | - | |||||||||
|
5.625% senior notes due 2031
|
1,000 | 1,000 | |||||||||
|
5.375% senior notes due 2031
|
600 | - | |||||||||
|
7.250% senior notes due 2032
|
750 | 750 | |||||||||
|
6.625% senior notes due 2032
|
493 | 493 | |||||||||
|
Parkland 6.625% senior notes due 2032 (1)
|
- | 7 | |||||||||
|
6.250% senior notes due 2033
|
1,000 | 1,000 | |||||||||
|
5.875% senior notes due 2034
|
900 | 900 | |||||||||
|
5.625% senior notes due 2034
|
600 | - | |||||||||
| GoZone Bonds | 322 | 322 | |||||||||
| Lease-related financing obligations and other subsidiary debt | 539 | 233 | |||||||||
| Net unamortized premiums, discounts and fair value adjustments | (1) | 2 | |||||||||
| Deferred debt issuance costs | (92) | (83) | |||||||||
| Total debt | 13,932 | 13,389 | |||||||||
| Less: current maturities | 12 | 17 | |||||||||
| Total long-term debt, net | $ | 13,920 | $ | 13,372 | |||||||
(1) These senior notes were redeemed in March 2026. See additional information under "Recent Transactions."
(2) As of March 31, 2026, $490 million aggregate principal amount of senior notes due before March 31, 2027 were classified as long-term as management has the intent and ability to refinance the borrowings on a long-term basis.
Recent Transactions
In March 2026, the Partnership issued $600 million aggregate principal amount of 5.375% senior notes due 2031 and $600 million aggregate principal amount of 5.625% senior notes due 2034. These notes will mature on July 15, 2031 and July 15, 2034, respectively, and interest is payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2026. The Partnership used a portion of the net proceeds from this private offering to redeem in full its $500 million aggregate principal amount of 6.000% senior notes due 2026 and its $600 million aggregate principal amount of 6.000% senior notes due 2027.
In March 2026, the Partnership redeemed Parkland's remaining senior notes.
Credit Facility
As of March 31, 2026, the Partnership had $125 million outstanding borrowings on the Credit Facility, which matures on June 17, 2030, and $151 million standby letters of credit were outstanding. The unused availability on the Credit Facility as of March 31, 2026 was $2.22 billion. The weighted average interest rate on the total amount outstanding as of March 31, 2026 was 5.52%. The Partnership was in compliance with all financial covenants as of March 31, 2026.
Upon the closing of the NuStar Acquisition, the commitments under NuStar's receivables financing agreement were reduced to zero during a suspension period, for which the period end has not been determined. As of March 31, 2026, this facility had no outstanding borrowings.
Critical Accounting Estimates
The Company's critical accounting estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026. No significant changes have occurred subsequent to the Form 10-K filing.
SunocoCorp LLC published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 18:42 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]