Dive Brief:
- Sunoco expects to surpass the $500 million in bolt-on acquisitions that it targeted earlier this year, President and CEO Joe Kim said in the company’s second-quarter earnings call on Tuesday.
- The company reported net income of $283 million and adjusted EBITDA of $996 million, excluding one-time transaction-related expenses, during the second quarter of this year, according to its earnings release.
- Multiple leaders emphasized during the earnings call that the strong first half has given the company additional cash flow that it can use in part on M&A.
Dive Insight:
Sunoco first mentioned the $500 million earmarked for 2026 acquisitions during its Q4 earnings call in February and noted during its Q1 call that it was on track to reach that level.
Now, Kim is calling that $500 million target “a modest bar” and suggesting that the company will exceed that both this year and in future years.
This is partly due to the fact that its acquisitions are paying off. Karl Fails, Sunoco’s chief operating officer, highlighted that the synergies from its 2025 acquisition of Parkland are ahead of schedule, noting, “our bolt-on acquisition strategy continues to demonstrate our track record of buying businesses and getting more out of them than the previous ownership.”
Accretive M&A can operate like a flywheel, Kim said, where acquisitions improve the company’s free cash flow, which can be used to finance further deals, among other uses.
Kim also noted that previous acquisitions expanded Sunoco’s footprint. Parkland, for example, operated in Canada and the Caribbean in addition to the U.S., and TanQuid, a German liquid petrochemical storage operator Sunoco also bought last year, boosted its presence in Europe. Deals like these bring the company to regions where it can not only grow organically, but also find new bolt-on additions.
“If you look at our last three bigger acquisitions: NuStar, Parkland, and Tanquid, these are big financial wins for us,” Kim said. “But beyond the base business, these acquisitions open up a far broader universe for us to invest in. We have geographic opportunities in the U.S., Canada, the Caribbean, and Europe.”
