Greetings, and welcome to Sunoco LP Third Quarter 2019 Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. At this time I'll turn the conference over to Scott Grischow, Vice President of Investor Relations and Treasury. You may now begin.

Thank you and good morning everyone. On the call with me this morning are Joe Kim, Sunoco LP's President and Chief Executive Officer; Tom Miller, Chief Financial Officer; Karl Fails, Chief Operations Officer and other members of the management team. A reminder that today's call will contain forward-looking statements subject to risks, uncertainties and other factors that could cause actual results to differ materially. Please refer to our earnings release, as well as our filings with the SEC for a list of these factors. During today's call, we will also discuss certain non-GAAP financial measures including adjusted EBITDA and distributable cash flow as adjusted. Please refer to the Sunoco LP website for a reconciliation of each financial measure. Before I turn the call over to Tom, I will review this quarter's financial and operating results. For the quarter the partnership recorded net income of $66 million. Third quarter 2019 adjusted EBITDA was $192 million, compared with third quarter 2018 of $280 million. Third quarter 2018 results included a one-time cash benefit of approximately $25 million related to a settlement with a field supplier. If you remove this one-time benefit, this quarter's adjusted EBITDA would have increased to $192 million from $183 million a year ago. Third quarter distributable cash flow as adjusted was $133 million. On October 25, we declared an $0.8255 per unit distribution, the same as last quarter. Looking at our operational performance, fuel volume in the third quarter totaled a record high of 2.11 billion gallons up 5% from a year ago, driven by the contribution of our 2018 acquisitions, organic growth and gross profit optimization efforts. Fuel margin was $0.116 per gallon, excluding last year's $25 million one-time cash benefit, fuel margin increased by $0.002 per gallon from a year ago. I will now turn the call over to Tom.

Thanks Scott and good morning everyone. We delivered strong results in the third quarter. Let me put these results in context. We sold record volumes with margins above our annual guidance range. Although we're well into our gross profit optimization efforts, we still see tangible benefits. We continue to sign up new customers with long-term contracts that quickly deliver added EBITDA. And at the same time, we remain focused on controlling expenses that allow these strong results to drop to the bottom line. For the third quarter total operating expenses work $134 million down 4% from a year ago. For 2019, we expect to be well below our previous annual guidance of $540 million. Moving to capital, maintenance spend totaled $13 million for the quarter and we expect to be around $40 million for the year. Growth capital totaled $33 million in the quarter. For 2019, we expect to spend at least $115 million. When you factor in an additional investment in J.C. Nolan, of approximately $45 million, our 2019 investment in growth projects will total roughly $160 million. We continue to find and deliver high return organic investment opportunities. These organic fuel distribution investments have been done with attractive returns consistent with our historical fuel distribution roll up acquisitions. Looking forward, we expect to invest in additional organic projects while remaining within the confines of our financially disciplined framework. On the subject of leveraging coverage, our third quarter leverage was 4.5 times including the investment made in J.C. Nolan joint venture. As Scott mentioned earlier our DCF as adjusted was $133 million, yielding a third quarter coverage ratio of 1.5 with trailing 12 month coverage of 1.3. Finally, based on the strength of our year to date results and our expectations for the fourth quarter, we now project full year 2019 adjusted EBITDA to be at the high end or above our previously guided range of $610 million to $650 million. With that, I'll turn the call over to Joe for his closing thoughts. Joe?

Thanks Tom. Good morning everyone. We delivered a very strong third quarter. We had record volumes, strong margins while executing on tight cost controls. Our underlying business is strong. The resiliency of our business through different commodity environments has been highly evidenced since the 7-Eleven transaction. We have delivered quality results quarter after quarter and more importantly, we expect this to continue. Looking forward to the fourth quarter is off to a solid start. As Tom mentioned, we expect our 2019 EBITDA to be at the high end or above the original guidance. Moving on to growth we have identified and executed on attractive return projects within both the midstream and fuel distribution sectors. In the third quarter we completed our first delivery on the J.C. Nolan pipeline, and we're in the process of evaluating and finalizing more midstream projects in the future. Within fuel distribution, we continue to grow the Sunoco brand. We have ramped up our organic efforts, and we expect this to be a reputable part of our business going forward. We have balanced or increased in organic growth this year with fewer acquisitions. But let me be clear, we're still actively looking for acquisition. When the right opportunity comes at the right price, we'll act on it. Let me close by stating our results year-to-date have been very strong, and we will deliver on our 2019 targets. We expect next year to be just as strong. And we look forward to sharing our insights and our 2020 guidance this December. Operator, that concludes our prepared remarks, you may open the line for questions.

Thank you. At this time we'll be conducting a question-answer-session. [Operator Instructions] Thank you. Our first question is from the line of Sharon Lui with Wells Fargo. Please proceed with your question.

Hi, good morning. I'm just wondering if you could provide some color on what you're seeing in the M&A market today and whether you can comment on the recent Empire Petroleum deal whether that package is assets or of interest?

Hi, Sharon, this is Joe. Good morning. As far as the Empire deal and or any other deals that are out there, we don't comment on those. Obviously, we have a very capable M&A team that has opportunities to look at on most deals that come across our table. But as a rule, we don't comment on deals that are public. As far as your other question about what we're seeing in the M&A environment. For us, I think in the past I mentioned we have a really good pipeline of acquisition opportunities in the fuel distribution sector, and we still have that. And this year, we've chosen to focus on our organic growth. And if you kind of look back to 2018, after we came out of the 7-Eleven transaction, we relied heavily on our fuel distribution acquisitions to grow because as I said in the past, we're building that internal capability to do organic projects. Fast forward to this year and we've developed that capability. So we focus more on organic growth this year. But what we're seeing in the fuel distribution sector as far as opportunities, we think that's pretty much the same. And on the on the on the midstream side we did the AMID acquisition, less than a year ago, and that acquisition is doing great, and those opportunities we're still looking at, and we think some of those will start coming up in the future.

Okay, great. And I guess given your focus on organic spending. Do you anticipate for next year that the level of growth CapEx could be similar to this year?

Yeah. So again, I think like whenever you look at growth CapEx, I don't think you should look at it in a vacuum. I think you have to kind of look at it in totality. So I work backwards and then work forward. So in '18, we spent roughly about $70 million in growth capital. And we did about $300 million worth of roll up acquisition. In 2019, as Tom mentioned in the prepared remarks, we're anticipating roughly about 160 million. And year-to-date we haven't done any roll up acquisition. So for us, especially – even on the fuel distribution side, and the midstream side it's really a buy-build decision for us. We can either do an acquisition in fuel distribution or buy terminals, like we did with AMID or we can go out and build, like we did with J.C. Nolan or grow our organic growth. So next year, I think would be more like 2019 verses 2018. In December we'll provide guidance for that on a very specific basis.

Okay, great. Thank you.

Thank you.

Thank you. [Operator Instructions] Thank you. At this time, I'll turn the floor back to Scott Grischow for closing remarks.

Well, thanks, everyone for joining us on the call this morning. Please feel free to reach out to us with any follow up questions and we'll talk to everyone soon. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.