Greeting and welcome to Sunoco LP's Second Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I'll now turn the conference over to Scott Grischow, Senior Director of Investor Relations and Treasury. Thank you, Mr. Grischow, you may begin.

Thank you. Before we begin our prepared remarks, I have a few of the usual items to cover. A reminder that today's call will contain forward-looking statements. These statements are based on management's beliefs, expectations and assumptions that may include comments regarding the Company's objectives, targets, plans, strategies, costs and anticipated capital expenditures, and anticipated timing for the completion of the announced and perspective retail divestment transactions. They are subject to the risks and uncertainties that could cause the actual results to differ materially as described more fully in the Company's filings with the SEC. During today's call we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow. Please refer to this quarter's news release for a reconciliation of each financial measure. Please note that the operating results, assets, and liabilities that are part of our retail divestitures have been moved into discontinued operations. As such the results presented on today's call are based on continuing operations and like otherwise noted. Additional detail on the result of operations associated with all discontinued operations will be included in our form 10Q for the quarterly period ended June 30, 2017 which will be filed later today. Also, a reminder that the information reported on this call speaks only to the Company's view as of today, August 9, 2017, so the time-sensitive information may no longer be accurate at the time of any replay. You will find information on the replay in this quarter's earnings release. On the call with me this morning are Bob Owens, Sunoco LP's Chief Executive Officer; Joe Kim, President and Chief Operating Officer; Tom Miller, Chief Financial Officer and other members of the management team. I would now like to turn the call over to Bob.

Thanks, Scott, Good morning everyone and thank you for joining us. This morning we will review the financial and operating results of the second quarter, along with other recent activities. I'd like to begin my comments by providing brief updates on the status of the various sales processes currently undergoing or ongoing. First, on the sale of approximately 1,110 company operated convenience stores and the trademarks and intellectual property of the Laredo Taco company and strikes to 7-Eleven which we announced on April 6, Sunoco is currently in typical and customary regulatory discussions with the Federal Trade Commission and we expect the transaction to close by the end of the fourth quarter of this year. Regarding the sale of Sunoco's West Texas assets, we are in the process of completing advanced stage discussions with final bidders at this time and we would expect the deal to close by the end of the fourth quarter of this year as well. We are seeking to maximize unit holder value in this transaction. We are cognizant tradeoff between the higher upfront cash and a purchase price and EBITDA which can be a long-term fuel supply and/or rental income. Finally, the sale of approximately 100 of Sunoco's retail assets to NRC which we announced at the beginning of the year. That process is ongoing as well. NRC has sold or under contract to sell approximately 35% to 40% of the initial 100 sites and is actively marketing roughly 20% more including active sites land bank and excess land. As a reminder, approximately 30% of the original 100 sites migrated to 7-Eleven and another 10% migrated to our West Texas sales process. So, in summary we remain on track to substantially exit the company operated retail convenience store space within the continental United States by…

Thanks Bob and good morning everyone. Before I discuss the financial results for the second quarter I want to address a couple of items around the sale of our continental U.S. retail business. we estimate the combined tax impact of the two deals to be a little more than 20% of gross proceeds. We won't know the effective tax rate until we reach an agreement for the West Texas assets. To a large extent the tax rate depends on the mix of cash proceeds and ongoing cash flow. Regarding the use of proceeds our first priority will be to reduce debt to a level between 4.5 and 4.75 times our post transaction adjusted EBITDA. The after-tax cash proceeds from the 7-Eleven transaction should more than cover debt reduction. Once we address leverage we will focus on addressing our distribution coverage. Our long-term distribution target is 1.1 times, there's a tradeoff between reducing equity and ongoing EBITDA. If we repurchase equity we would need to redeem the $300 million perpetual preferred securities held by energy transfer equity before we can buy back any common units. The preferred units can be redeemed at 101 any time during the first five years and at par after that. Given the ownership profile of the LTE units we would expect ETP to participate in any unit repurchase activity. In terms of our senior note the 7-Eleven agreement requires us to either have the note holders agree to modify various indenture covenants. These consents require a simple majority vote for each series or we can retire the notes using the call feature in our $600 million 2020 note and the make hold position for the other two notes, both of which have a face value of $800 million. Additionally, we will be required to obtain waivers…

Thank you, we will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Andrew Burd of JPMorgan. Please go ahead.

First question is for Tom, in the past you have talked about synergies and cost savings initiatives. On the P&L this quarter you reported 40 million of G&A and 46 million of OpEx, how much of the planned synergies are already reflected in the second quarter run rate or maybe a better question is what's remaining ahead and will the incremental savings impact the G&A or OpEx or both.

Well let's start with G&A, as you said we're $40 million and if you multiply that by four that was a 160, we think we’ll be below that, we think we're already below that in the cost that had previously been allocated between wholesale and retail due to GAAP rules have been allocated or charged off to the wholesale segment. On operating expenditures, we think the $46 million is probably like, I don't really have a feel at this time you know how much that's going to go up.

Okay, thank you and then probably another question for you Tom. Appreciate that you're not going to be disclosing the terms of the 7-Eleven supply agreement, definitely not before it closes but probably never. That said any context you could give us right now would be helpful and maybe a way to frame it is that historically Sunoco used the $0.03 to $0.04ish gallon for affiliate barrels back when you did that, and then you in the past quoted a third-party wholesale distribution indicative margin of about $0.06 to $0.08. Is it fair for us to assume that 7-Eleven would probably be somewhere between those two ranges and kind of if not, why not?

Yes Andy, this is Bob. I would answer it, as we've said in the past clearly this is a confidential agreement we have with a very large customer but I think if you look at the range that we've previously given people $0.06 to $0.08, and if you assume that a large customer might enjoy a favorable term but be around that range I think we wouldn't argue with you.

Thank you. Our next question is from Theresa Chen of Barclays, please go ahead.

I'd like to echo Andy's congratulations to Bob. Thank you for everything. Want to start on the negotiations for the 200 plus West Texas and New Mexico sites, can you give us any like early indication of what kind of valuation you're expecting. And then related to your comments about retaining EBITDA versus getting a higher purchase price, can we expect that the majority of these stores will enter into a similar agreement as you did with 7-Eleven?

Theresa this is Joe, first thing I'll say we're in the middle of negotiations, so I don’t think it will be the right time to talk on details about it but I think I'll echo what Tom said in the opening remarks that we're looking at this as the best way to create value for us and that mean taking more cash up front or retaining more EBITDA on the backside, so I think by the third quarter call we can talk in more detail about it but for now for negotiation purposes, I think I'll just leave it at that.

Got it, and in terms of the margin update and segment reorganization updates that will be disclosed at a later time, should we expect that later time to be before the transaction closes or do you want to get everything done and then talk about those two items?

Theresa this is Bob, I think it's unlikely it'll be before the close so we got as Joe said, we're in the middle of negotiations for the balance depending upon the deal we strike there that will obviously and we're into the weighted average margin I know we frustrated the market by outperforming in the wholesale segment quarter after quarter here and it’s frustrating for us as well but led us get though these negotiations. We do the arithmetic and give you a better guidance going forward.

And then on the point of the sustainability in margins and such, given the upward trend in, Bob, pretty much all the July can you help calibrate how much of the margin impact we should see this quarter versus Q2?

Well we don’t talk about margins while we are in the middle of the quarter, Theresa what I would tell you is when we look back 10 years, we revert to the main generally.

[Operator Instructions] And our next question is from Ben Brownlow of Raymond James. Please go ahead.

I don’t know if I would classify the outperformance in wholesale as a disappointment, so there was a definitely better than expect for number of quarters. The retail CPG, just one quick clarification, on the retail CPG that was reported the 29.2, I believe that included discounted ops. Do you have what that fuel margin was on a continuing ops basis?

No, look, when you think about it what we moved into discontinued ops are all the within the continental United States the company ops. What would remain would be Aloha petroleum and we are in the middle of deciding exactly how we are going to segment reporting going forward, but more to come on that.

[Operator Instructions] Thank you. We have no further questions in queue at this time. I would like to turn the conference back over to Mr. Owens for closing comments.

Thank you, operator, and thanks everyone for joining us this morning. And we will look forward to catch up in person at the upcoming investor conferences actually starting this next week with the city conference, MLP midstream infrastructure event that will take place in Las Vegas. Thanks very much.

Thank you, ladies and gentlemen this does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.