Sunoco NYSE: SUN reported record third-quarter adjusted EBITDA of $1.06 billion, excluding approximately $11 million in one-time transaction expenses, as its fuel distribution, terminals and refining operations benefited from acquisitions, market volatility and favorable refining conditions.
Third-quarter distributable cash flow as adjusted totaled $588 million. The company said it declared an approximately $1.015 quarterly distribution for both Sunoco LP common units and SunocoCorp shares on Oct. 22, representing a 1.25% increase from the prior quarter and more than 10% growth from the third quarter of 2025.
Senior Vice President of Finance Scott Grischow said Sunoco’s trailing 12-month coverage ratio was 2.1 times, while leverage stood at about 3.5 times, below its long-term target. The company ended the quarter with $2.3 billion of availability under its revolving credit facility. It spent $121 million on growth capital and $116 million on maintenance capital during the period.
Segment Results Driven by Fuel Distribution and Refining
Fuel distribution adjusted EBITDA reached $532 million, excluding $9 million of transaction expenses, compared with $516 million in the prior quarter and $238 million a year earlier. The company distributed approximately 4.2 billion gallons of fuel and recorded a fuel margin of $0.168 per gallon. Volumes rose slightly from the second quarter, while margin declined slightly.
Chief Operating Officer Karl Fails said market volatility, particularly in diesel, created opportunities for gross-profit optimization. He cited tight distillate inventories, global supply disruptions, refinery outages and fall maintenance activity as contributors to continued volatility.
“We do not manage the business for an individual quarterly volume or margin outcome,” Fails said. “Instead, we manage for total fuel profit, EBITDA, and returns on deployed capital.”
Pipeline systems generated adjusted EBITDA of $166 million, compared with $190 million in the second quarter and $182 million a year earlier. Throughput was approximately 1.3 million barrels per day, essentially unchanged from both comparison periods. Fails attributed the sequential decline to lower joint-venture contributions and the absence of Federal Energy Regulatory Commission clawbacks received during the first half of the year.
The terminals segment posted adjusted EBITDA of $124 million, excluding $2 million of transaction expenses, up from $115 million in the prior quarter and $76 million in the third quarter of 2025. Throughput was approximately 1 million barrels per day. The results were supported by Transmix processing and the company’s larger European network, according to Fails.
Meanwhile, the refinery segment generated adjusted EBITDA of $238 million, up from $175 million in the preceding quarter. Burnaby refinery throughput averaged 57,000 barrels per day, while refining margin exceeded $54 per barrel. Expenses remained below $10 per barrel for the second consecutive quarter.
Management Sees Record Year and Continued Growth
President and Chief Executive Officer Joe Kim said Sunoco expects to exceed the high end of its 2026 guidance range, though the company did not provide a revised numerical outlook during the call. He said 2026 is expected to be the company’s eighth consecutive year of EBITDA growth.
Kim said strong refining margins contributed to this year’s results, but maintained that Sunoco would have exceeded its January guidance even with refining crack spreads nearer mid-cycle levels. He said all four operating segments are performing well and that the company is positioned for another record year in 2027 even if refinery economics moderate.
Sunoco’s Parkland acquisition has contributed to approximately 25% growth in distributable cash flow per common unit in less than a year of ownership, Kim said. The company also recently completed its $600 million acquisition of Offen Petroleum, which adds about 2.5 billion gallons of annual fuel-distribution volume.
Fails said Offen expands Sunoco’s scale in the Midwest and Mountain West, complements its existing network and could create opportunities in supply, transportation and branded and unbranded fuel distribution. He also said the acquisition adds leadership talent to the larger organization.
Fuel Demand Mixed Across Markets
Chief Commercial Officer Austin Harkness said U.S. fuel demand has remained resilient despite price volatility. Based on Energy Information Administration data, he said diesel demand was roughly flat year over year while gasoline demand declined by low single digits.
In Canada, where Harkness said price volatility has been more pronounced, diesel and gasoline demand declined by low- to mid-single-digit percentages. However, he said margins in Canada remained strong. The Caribbean business, which spans more than 20 markets, continues to be a growth engine supported by both volume growth and margin expansion, he added.
Management emphasized that it does not attempt to forecast the precise point at which elevated fuel prices may materially affect demand. Instead, Harkness said the company’s scale, supply-chain optionality and logistics capabilities are intended to support performance across varying economic conditions.
Acquisition Strategy and Burnaby’s Role
Kim said Sunoco expects acquisitions and organic investments to remain part of its growth strategy. Earlier in the year, the company outlined a multiyear target of at least $500 million annually in bolt-on acquisitions. Kim said Sunoco expects approximately $1.5 billion in bolt-on acquisitions during 2026 and described the $500 million annual level as a “modest bar” for 2027 and beyond.
On the Burnaby refinery, Kim said Sunoco is not seeking to expand its refining exposure through standalone refinery purchases. He characterized the refinery as providing “asymmetrical upside” when refining margins are strong, while the company’s fuel distribution, pipeline and terminals businesses provide stable and growing income streams.
Grischow also said fuel-distribution operating expenses declined during the quarter because of Sunoco’s focus on being a low-cost operator and continuing Parkland integration efforts. While expenses may fluctuate quarter to quarter, he said the company expects an overall decline in 2027 compared with 2026.
About Sunoco (NYSE:SUN)
Sunoco LP NYSE: SUN is a master limited partnership focused primarily on the distribution and wholesale marketing of motor fuels. The company supplies gasoline, diesel and other refined products to independent fuel retailers, commercial customers, distributors and other end users, including customers operating under the Sunoco brand.
Sunoco's operations include fuel terminals, pipelines, transportation assets and other logistics infrastructure used to receive, store, blend and deliver petroleum products.
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