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Sunoco LP (SUN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $6.032B and Adjusted EBITDA ex-transaction costs of $496M; revenue beat consensus while EPS missed. Revenue came in above S&P Global consensus ($6.032B actual vs $5.748B estimate), while Primary EPS trailed consensus (1.150 vs 1.347), and diluted EPS was $0.64 *.
  • Distribution increased 1.25% to $0.9202 per unit, marking the fourth consecutive quarterly raise; leverage improved to 3.9x with trailing 12-month coverage at 1.8x .
  • Parkland acquisition closed Oct 31; management set a synergy floor “over $250M” by 2028 and accelerated the leverage target to 4.0x within 12 months; free cash flow expected to exceed $1B annually near-term .
  • Near-term stock reaction catalysts: revenue beat, Parkland-close and synergy ramp, accelerated deleveraging, and sustained distribution growth .

What Went Well and What Went Wrong

What Went Well

  • Scale and strategic positioning: “We are now the largest fuel distributor in the Americas,” with >7B gallons contracted in the Atlantic Basin and a leading terminal footprint; FCF expected “over $1 billion a year in the near future” .
  • Midstream strength: Pipeline Systems Adjusted EBITDA rose to $182M (vs $147M ex-transactions YoY) on stronger throughput and lower costs; Terminals Adjusted EBITDA rose to $75M with favorable transmix margins and Portland terminal contribution .
  • Capital return: Distribution increased for the fourth straight quarter to $0.9202 and management reiterated the annual growth target of at least 5% for 2025; coverage ratio remained strong at 1.8x .

What Went Wrong

  • Fuel Distribution pressure: Segment Adjusted EBITDA fell to $232M from $253M YoY, driven by lower profit per gallon and higher expenses tied to acquisitions; margin moderated to 10.7¢/gal vs 12.8¢/gal YoY .
  • EPS miss vs consensus: Primary EPS lagged S&P Global consensus for Q3 2025 (1.150 vs 1.347), reflecting softer fuel-margin volatility compared to elevated levels last year *.
  • Lower terminal volumes: Terminals throughput declined to 656 kbpd (694 kbpd YoY), reflecting lower trading activity and customer transitions .

Financial Results

Consolidated Results – Sequential (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenues ($USD Billions)$5.179 $5.390 $6.032
Net Income ($USD Millions)$207 $86 $137
Diluted EPS ($USD)$1.21 $0.33 $0.64
Adjusted EBITDA ex-transaction ($USD Millions)$458 $464 $496
Distributable Cash Flow, as adjusted ($USD Millions)$310 $300 $326

Year-over-Year (Q3 2024 vs Q3 2025)

MetricQ3 2024Q3 2025
Revenues ($USD Billions)$5.751 $6.032
Net Income ($USD Millions)$2 $137
Diluted EPS ($USD)($0.26) $0.64
Adjusted EBITDA ex-transaction ($USD Millions)$470 $496
Distributable Cash Flow, as adjusted ($USD Millions)$349 $326

Consensus vs Actual (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Billions)$5.579*$5.539*$5.748*
Revenue Actual ($USD Billions)$5.179 $5.390 $6.032
Primary EPS Consensus Mean ($USD)1.247*1.371*1.347*
Primary EPS Actual ($USD)1.176*1.092*1.150*

Values marked with * retrieved from S&P Global.

Segment Breakdown and KPIs (oldest → newest)

Segment / KPIQ2 2025Q3 2024Q3 2025
Fuel Distribution – Segment Adj EBITDA ($MM)$206 $253 $232
Fuel Distribution – Gallons (MM)2,188 2,138 2,295
Fuel Distribution – Margin (¢/gal)10.5¢ 12.8¢ 10.7¢
Pipeline Systems – Segment Adj EBITDA ($MM)$177 $136 $182
Pipeline Systems – Throughput (kbpd)1,231 1,165 1,296
Terminals – Segment Adj EBITDA ($MM)$71 $67 $75
Terminals – Throughput (kbpd)692 694 656
Leverage (Net Debt / Adj EBITDA)4.2x —3.9x
Distribution per Unit ($)$0.9088 $0.8756 $0.9202
Capex ($MM) – Growth / Maintenance$120 / $40 —$115 / $42

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (ex-transaction)FY 2025$1.90B–$1.95B On track to achieve (no formal update) Maintained trajectory
Distribution GrowthFY 2025At least 5% Reiterated; Q3 distribution +1.25% to $0.9202 Maintained; executed quarterly raise
Leverage TargetNext 12 monthsPrior plan (May, unspecified)Back to ~4.0x within 12 months Accelerated timeframe
Parkland SynergiesThrough 2028—Floor set at >$250M by year 3 Established higher floor
Free Cash Flow OutlookNear-term—>$1B annually expected New outlook
TanQuid AcquisitionQ4 2025Pending close On track to close in Q4 2025 Maintained timetable
SUNC Dividend Equivalency / Taxes2 years / ≥5 yearsAnnounced in MayMinimal taxes for ≥5 years; dividend equivalency unchanged Maintained/clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Capital allocation & distributionsConsecutive quarterly increases; commitment to ≥5% 2025 growth Fourth consecutive raise; 1.8x coverage Sustained growth, strong coverage
Parkland acquisition & integrationDefinitive agreement; expected H2 close Closed Oct 31; synergy floor >$250M; integration underway Transition from planning to execution
Leverage4.1x (Q1); 4.2x (Q2) 3.9x; target 4.0x within 12 months Improving; accelerated target
Fuel margin & demand backdropQ1 11.5¢; Q2 10.5¢; volumes resilient despite West Texas sale 10.7¢; volumes +7% YoY; volatility tempered vs LY Normalizing margins; volume share gains
Midstream performancePipelines/Terminals uplift from NuStar/ET-S Permian Continued strength; throughput and transmix margins supportive Stable/positive

Management Commentary

  • “Scale is vital in our business, and we are now the largest fuel distributor in the Americas…we expect free cash flow to be over $1 billion a year in the near future.” – Joe Kim, CEO .
  • “You should expect…more details on [synergy] ramp through year three, where the 250-plus should be able to be delivered…we will show a double-digit accretion on a DCF per LP unit basis.” – Karl Fails, COO .
  • “This marks the fourth consecutive quarterly increase…consistent with an annual distribution growth rate of at least 5%.” – Scott Grischow, SVP Finance .
  • “Our transmix business continues to have a strong year…we expect to finish the year strong in our two midstream segments.” – Karl Fails, COO .

Q&A Highlights

  • Synergy cadence and upside: Management set a firm floor “over $250M” by year three, with both cost and commercial levers; further detail to come with early-2026 guidance .
  • Distribution trajectory: Stronger, larger, more stable platform post-Parkland supports multi-year distribution growth; specifics to be provided with guidance .
  • Caribbean hurricane impact: Largely limited to Jamaica; no material impact expected to Q4 results or 2026 .
  • West Coast opportunity set: Improved reliability at Burnaby refinery; positioned to benefit from potential import dynamics amid CA refinery closures .
  • Guidance timing: No update to 2025 included Parkland due to timing/precision; formal combined 2026 guidance early next year .

Estimates Context

  • Revenue beat: Q3 actual $6.032B vs S&P Global consensus $5.748B; sequential acceleration from Q2 ($5.390B) driven by broad strength and volumes *.
  • EPS context: Primary EPS came below consensus (1.150 vs 1.347), consistent with management’s commentary on tempered market volatility vs last year’s outsized fuel profit quarters *.
  • Implications: Models likely to revise higher on revenue/midstream resilience and Parkland synergy floor, while EPS paths will depend on fuel margins, integration costs, and cadence of synergy realization *.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue outperformance alongside midstream strength offsets fuel-margin normalization; the platform is delivering record Adjusted EBITDA ex-transaction costs ($496M) .
  • Distribution policy remains a key pillar; fourth consecutive increase and strong coverage (1.8x) support continued capital returns .
  • Parkland-close is a structural catalyst: synergy floor (> $250M), Atlantic Basin positioning, and scale advantages should lift DCF/unit and FCF >$1B annually .
  • Deleveraging path accelerated to ~4.0x within 12 months, improving financial flexibility heading into 2026 .
  • Watch integration cadence and fuel margins: EPS misses vs consensus can persist if volatility remains tempered and acquisition-related expenses run through; midstream stability is the offset .
  • Near-term narrative: Revenue beat, Parkland integration milestones, and guidance early next year are the key stock drivers .
  • Medium-term thesis: Scale plus assets drives supply-cost advantage and contracted demand in the Atlantic Basin; synergy realization and disciplined cap allocation underpin multi-year DCF growth .
Citations: Financials and segment data from Q3 2025 8-K/press release **[1552275_0001552275-25-000079_ex991sunerq32025.htm:0]** **[1552275_0001552275-25-000079_ex991sunerq32025.htm:7]** **[1552275_20251105DA15940:0]** **[1552275_20251105DA15940:8]**; Q2 2025 press release **[1552275_20250806DA45259:0]** **[1552275_20250806DA45259:8]**; Q1 2025 press release **[1552275_20250506DA80524:0]** **[1552275_20250506DA80524:6]**; Parkland-close press release **[1552275_20251103DA13480:0]** **[1552275_20251103DA13480:1]**; expected closing timing **[1552275_20251027DA07093:0]** **[1552275_20251027DA07093:4]**; call transcript remarks **[0001552275_2252081_1]** **[0001552275_2252081_12]** **[0001552275_2252131_1]** **[0001552275_2252131_12]** **[0001552275_2237022_1]** **[0001552275_2237022_11]**.