WHIPPANY, N.J., Nov. 9, 2023 /PRNewswire/ -- Suburban
Propane Partners, L.P. (NYSE:SPH), today announced earnings for its
full year and fourth quarter ended September
30, 2023.
Fiscal Year 2023 Results
Fiscal 2023 included 53 weeks of operations compared to 52 weeks
reported in the prior year.
Net income for fiscal 2023 was $123.8
million, or $1.94 per Common
Unit, compared to $139.7 million, or
$2.21 per Common Unit, in fiscal
2022.
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, as defined and reconciled below) was
$275.0 million for fiscal 2023,
compared to $291.0 million in the
prior year.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"Fiscal year 2023 was another year of strong performance in the
face of a challenging weather pattern and a persistent inflationary
environment, and we made significant advancements in our long-term
strategic growth initiatives with the expansion of our renewable
natural gas ("RNG") business. Despite an unseasonably warm winter,
particularly in our East coast and Midwest operating territories,
which reduced heat-related demand in the critical heating months,
our operating personnel remained focused on the things they can
control – safely delivering outstanding service when our customers
needed us most, effectively managing selling prices in a volatile
commodity price environment and controlling expenses. In addition,
we continued to do an excellent job executing on our customer base
growth and retention initiatives, acquired a well-run propane
business in a strategic market in the upper Northwest region, and
continued to foster our greenfield market expansion efforts in
several locations throughout the country – all in support of the
growth of our core propane business."
Mr. Stivala continued, "Through our wholly owned subsidiary,
Suburban Renewable Energy, we made strategic investments in the
buildout of our renewable energy platform; including the
acquisition of large-scale RNG production facilities, advancing the
engineering and construction of a new anaerobic digester facility
for RNG production in upstate New
York, and making additional investments in our
non-controlled affiliate, Oberon Fuels, to advance their efforts to
commercialize ultra-low carbon renewable fuels. Once capital is
deployed for gas upgrading equipment at our Columbus, Ohio RNG facility, and construction
is complete at the facility in upstate New York, our RNG platform is expected to
produce a run rate capacity of approximately 850,000 MMBtus per
year starting in fiscal 2025. And despite deploying nearly
$230.0 million on investments to
support our strategic growth initiatives and capital expansion in
our RNG platform in fiscal 2023, our total debt increased
$123.0 million compared to where we
ended fiscal 2022, as we were able to utilize excess cash flows to
manage our overall leverage profile and support growth in our
renewable energy platform."
Concluding his remarks, Mr. Stivala stated, "Our long-term
growth plan is to continue to foster the growth of our core propane
business, while making strategic investments in the energy
transition to lower carbon renewable energy alternatives. As
society transitions, Suburban Propane is leveraging our 95-year
legacy of an unwavering commitment to safety and excellence in
customer service, and our reputation as a trusted distributor of
energy to local communities in order to position the business for
long-term growth and sustainability in a lower carbon economy."
Retail propane gallons sold in fiscal 2023 of 396.4 million
gallons decreased 1.2% compared to the prior year, primarily due to
unseasonably warm and inconsistent temperatures throughout the
heating season, including near record warm temperatures during
January and February, which are the two most critical months for
heat-related demand. Average temperatures (as measured by
heating degree days) across all of the Partnership's service
territories for fiscal 2023 were 8% warmer than normal and 2%
cooler than the prior year. However, for the months of
January and February, average temperatures were 16% warmer than
normal and 11% warmer than the same period last year.
Average propane prices (basis Mont
Belvieu, Texas) for fiscal 2023 decreased 38.9% compared to
the prior year. Total gross margins of $839.0 million in fiscal 2023 increased
$49.7 million, or 6.3%, compared to
the prior year. Gross margins included a $3.7 million unrealized loss attributable to the
mark-to-market adjustment for derivative instruments used in risk
management activities in fiscal 2023, compared to a $27.9 million unrealized loss in the prior
year. These non-cash adjustments, which were reported in cost
of products sold, were excluded from Adjusted EBITDA for both
periods. Excluding the impact of the unrealized mark-to-market
adjustments, gross margin for fiscal 2023 increased $25.4 million, or 3.1%, compared to the prior
year, primarily due to higher propane unit margins and margin
contribution from the RNG assets acquired in December 2022, offset to an extent by lower
propane volumes sold. Excluding the impact of the unrealized
mark-to-market adjustments, propane unit margins for fiscal 2023
increased $0.04 per gallon, or 2.0%,
compared to the prior year.
Combined operating and general and administrative expenses of
$569.6 million for fiscal 2023
increased 8.7% compared to the prior year, primarily due to higher
payroll and benefit-related expenses, higher vehicle lease and
operating costs, operating and acquisition-related costs associated
with the RNG assets acquired in December
2022, as well as other inflationary effects on the
Partnership's operating costs. Acquisition-related costs of
$4.7 million during fiscal 2023 were
reported within general and administrative expenses, and were
excluded from Adjusted EBITDA.
On December 28, 2022, the
Partnership's wholly owned subsidiary, Suburban Renewable Energy,
LLC, acquired a platform of RNG producing assets from Equilibrium
Capital Group ("Equilibrium"), a leading sustainability-driven
asset management firm. The purchase price of
$190.0 million for two operating
facilities, along with transaction fees and expenses, was funded
with borrowings of approximately $113.7
million under the revolving credit facility, and the
assumption of $80.6 million of
outstanding green bonds.
As a result of the net borrowings to fund the RNG acquisition,
reduced in large part by the use of excess cash flow from operating
activities, the Partnership's Consolidated Leverage Ratio, as
defined in the Partnership's credit agreement, measured 4.28x for
the fiscal year ended September 30,
2023.
Fourth Quarter 2023 Results
Consistent with the seasonal nature of the propane business, the
Partnership typically reports a net loss for its fiscal fourth
quarter. The fourth quarter of fiscal 2023 included 14 weeks
of operations, compared to 13 weeks in the prior year fourth
quarter. Net loss for the fourth quarter of fiscal 2023 was
$20.9 million, or $0.33 per Common Unit, compared to a net loss of
$54.2 million, or $0.86 per Common Unit, in fiscal 2022. Net
loss for the fourth quarter of fiscal 2023 included a $17.5 million unrealized gain attributable to the
mark-to-market adjustment for derivative instruments used in risk
management activities, compared to a $26.5
million unrealized loss in the prior year. As noted
above, these non-cash adjustments, which were reported in cost of
products sold, were excluded from Adjusted EBITDA for both
periods. Adjusted EBITDA for the fourth quarter of fiscal
2023 was $3.0 million, compared to
$2.8 million in the fourth quarter of
fiscal 2022. Retail propane gallons sold of 65.0 million gallons
for the fourth quarter of fiscal 2023 increased 5.9% compared to
the prior year fourth quarter.
As previously announced on October 26,
2023, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.325 per
Common Unit for the three months ended September 30, 2023. On an annualized basis,
this distribution rate equates to $1.30 per Common Unit. The distribution is
payable on November 14, 2023 to
Common Unitholders of record as of November
7, 2023.
About Suburban Propane Partners, L.P.
Suburban Propane
Partners, L.P. ("Suburban Propane") is a publicly traded master
limited partnership listed on the New York Stock Exchange.
Headquartered in Whippany, New
Jersey, Suburban Propane has been in the customer service
business since 1928 and is a nationwide distributor of propane,
renewable propane, renewable natural gas ("RNG"), fuel oil and
related products and services, as well as a marketer of natural gas
and electricity and producer of and investor in low carbon fuel
alternatives, servicing the energy needs of approximately 1 million
residential, commercial, governmental, industrial and agricultural
customers through approximately 700 locations across 42
states. Suburban Propane is supported by three core pillars:
(1) Suburban Commitment – showcasing Suburban
Propane's 95-year legacy, and ongoing commitment to the highest
standards for dependability, flexibility, and reliability that
underscores Suburban Propane's commitment to excellence in customer
service; (2) SuburbanCares– highlighting continued
dedication to giving back to local communities across Suburban
Propane's national footprint; and (3) Go Green with Suburban Propane –
promoting the clean burning and versatile nature of propane and
renewable propane as a bridge to a green energy future and
investing in the next generation of innovative, renewable energy
alternatives. For additional information on Suburban Propane,
please visit www.suburbanpropane.com.
Forward-Looking Statements
This press release
contains certain forward-looking statements relating to future
business expectations and financial condition and results of
operations of the Partnership, based on management's current good
faith expectations and beliefs concerning future
developments. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those discussed or implied in such
forward-looking statements, including the following:
- The impact of weather conditions on the demand for propane,
fuel oil and other refined fuels, natural gas, renewable natural
gas ("RNG") and electricity;
- Volatility in the unit cost of propane, renewable propane,
fuel oil and other refined fuels, natural gas, RNG and electricity,
the impact of the Partnership's hedging and risk management
activities, and the adverse impact of price increases on volumes
sold as a result of customer conservation;
- The ability of the Partnership to compete with other
suppliers of propane, renewable propane, fuel oil, RNG and other
energy sources;
- The impact on the price and supply of propane, fuel oil and
other refined fuels from the political, military or economic
instability of the oil producing nations, including Russian
military action in Ukraine, global
terrorism and other general economic conditions, including the
economic instability resulting from natural disasters;
- The ability of the Partnership to acquire and maintain
sufficient volumes of, and the costs to the Partnership of
acquiring, reliably transporting and storing, propane, renewable
propane, fuel oil and other refined fuels;
- The ability of the Partnership to attract and retain
employees and key personnel to support the growth of our
business;
- The ability of the Partnership to retain customers or
acquire new customers;
- The impact of customer conservation, energy efficiency and
technology advances on the demand for propane, fuel oil and other
refined fuels, natural gas, RNG and electricity;
- The ability of management to continue to control expenses
and manage inflationary increases in fuel, labor and other
operating costs;
- Risks related to the Partnership's renewable fuel projects,
including the willingness of customers to purchase fuels generated
by the projects, the permitting, financing, construction,
development and operation of supporting facilities, the
Partnership's ability to generate a sufficient return on its
renewable fuel projects, the Partnership's dependence on
third-party partners to help manage and operate renewable fuel
investment projects, and increased regulation and dependence on
government funding for commercial viability of renewable fuel
investment projects;
- The generation and monetization of environmental attributes
produced by the Partnership's renewable fuel projects, changes to
legislation and/or regulations concerning the generation and
monetization of environmental attributes and any pricing volatility
in the open markets where environmental attributes are traded;
- The impact of changes in applicable statutes and government
regulations, or their interpretations, including those relating to
the environment and climate change, human health and safety laws
and regulations, derivative instruments, the sale or marketing of
propane and renewable propane, fuel oil and other refined fuels,
natural gas and electricity and other regulatory developments that
could impose costs and liabilities on the Partnership's
business;
- The impact of changes in tax laws that could adversely
affect the tax treatment of the Partnership for income tax
purposes;
- The impact of legal risks and proceedings on the
Partnership's business;
- The impact of operating hazards that could adversely affect
the Partnership's operating results to the extent not covered by
insurance;
- The Partnership's ability to make strategic acquisitions,
successfully integrate them and realize the expected benefits of
those acquisitions;
- The ability of the Partnership and any third-party service
providers on which it may rely for support or services to continue
to combat cybersecurity threats to their respective and shared
networks and information technology;
- The impact of current conditions in the global capital,
credit and environmental attribute markets, and general economic
pressures; and
- Other risks referenced from time to time in filings with the
Securities and Exchange Commission ("SEC") and those factors listed
or incorporated by reference into the Partnership's most recent
Annual Report under "Risk Factors."
Some of these risks and uncertainties are discussed in more
detail in the Partnership's Annual Report on Form 10-K for its
fiscal year ended September 24, 2022
and other periodic reports filed with the SEC. Readers are
cautioned not to place undue reliance on forward-looking
statements, which reflect management's view only as of the date
made. The Partnership undertakes no obligation to update any
forward-looking statement, except as otherwise required by
law.
Suburban Propane
Partners, L.P. and Subsidiaries Consolidated Statements
of Operations For the Three and Twelve Months Ended
September 30, 2023 and September 24, 2022 (in thousands,
except per unit amounts) (unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
September 30,
2023
|
|
|
September 24,
2022
|
|
|
September 30,
2023
|
|
|
September 24,
2022
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
191,160
|
|
|
$
|
204,984
|
|
|
$
|
1,232,138
|
|
|
$
|
1,313,556
|
|
Fuel oil and
refined fuels
|
|
|
9,774
|
|
|
|
11,416
|
|
|
|
92,127
|
|
|
|
95,157
|
|
Natural gas and
electricity
|
|
|
5,688
|
|
|
|
8,346
|
|
|
|
31,160
|
|
|
|
39,511
|
|
All
other
|
|
|
19,973
|
|
|
|
12,885
|
|
|
|
73,769
|
|
|
|
53,241
|
|
|
|
|
226,595
|
|
|
|
237,631
|
|
|
|
1,429,194
|
|
|
|
1,501,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
65,424
|
|
|
|
135,824
|
|
|
|
590,131
|
|
|
|
712,123
|
|
Operating
|
|
|
118,260
|
|
|
|
108,182
|
|
|
|
478,058
|
|
|
|
442,411
|
|
General and
administrative
|
|
|
21,720
|
|
|
|
16,794
|
|
|
|
91,574
|
|
|
|
81,756
|
|
Depreciation and
amortization
|
|
|
17,202
|
|
|
|
14,492
|
|
|
|
62,582
|
|
|
|
58,848
|
|
|
|
|
222,606
|
|
|
|
275,292
|
|
|
|
1,222,345
|
|
|
|
1,295,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
3,989
|
|
|
|
(37,661)
|
|
|
|
206,849
|
|
|
|
206,327
|
|
Interest expense,
net
|
|
|
18,795
|
|
|
|
15,101
|
|
|
|
73,393
|
|
|
|
60,658
|
|
Other, net
|
|
|
5,805
|
|
|
|
1,137
|
|
|
|
9,036
|
|
|
|
5,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
|
(20,611)
|
|
|
|
(53,899)
|
|
|
|
124,420
|
|
|
|
140,137
|
|
Provision for income
taxes
|
|
|
247
|
|
|
|
258
|
|
|
|
668
|
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(20,858)
|
|
|
$
|
(54,157)
|
|
|
$
|
123,752
|
|
|
$
|
139,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
|
(0.33)
|
|
|
$
|
(0.86)
|
|
|
$
|
1.94
|
|
|
$
|
2.21
|
|
Weighted average number
of Common Units
outstanding - basic
|
|
|
63,920
|
|
|
|
63,282
|
|
|
|
63,835
|
|
|
|
63,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
|
(0.33)
|
|
|
$
|
(0.86)
|
|
|
$
|
1.92
|
|
|
$
|
2.18
|
|
Weighted average number
of Common Units
outstanding - diluted
|
|
|
63,920
|
|
|
|
63,282
|
|
|
|
64,441
|
|
|
|
64,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
15,386
|
|
|
$
|
(24,306)
|
|
|
$
|
260,395
|
|
|
$
|
259,643
|
|
Adjusted EBITDA
(a)
|
|
$
|
3,002
|
|
|
$
|
2,799
|
|
|
$
|
275,025
|
|
|
$
|
291,026
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
65,006
|
|
|
|
61,368
|
|
|
|
396,393
|
|
|
|
401,322
|
|
Refined
fuels
|
|
|
2,444
|
|
|
|
2,289
|
|
|
|
19,103
|
|
|
|
22,767
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
3,687
|
|
|
$
|
4,599
|
|
|
$
|
19,755
|
|
|
$
|
20,058
|
|
Growth
|
|
$
|
7,876
|
|
|
$
|
6,449
|
|
|
$
|
25,194
|
|
|
$
|
24,294
|
|
|
|
(a)
|
EBITDA represents net
income before deducting interest expense, income taxes,
depreciation and amortization. Adjusted EBITDA represents EBITDA
excluding the unrealized net gain or loss on mark-to-market
activity for derivative instruments and other items, as applicable,
as provided in the table below. Our management uses EBITDA and
Adjusted EBITDA as supplemental measures of operating performance
and we are including them because we believe that they provide our
investors and industry analysts with additional information that we
determined is useful to evaluate our operating results.
|
EBITDA and Adjusted EBITDA are not recognized terms under
accounting principles generally accepted in the United States of America ("US GAAP") and
should not be considered as an alternative to net income or net
cash provided by operating activities determined in accordance with
US GAAP. Because EBITDA and Adjusted EBITDA as determined by
us excludes some, but not all, items that affect net income, they
may not be comparable to EBITDA and Adjusted EBITDA or similarly
titled measures used by other companies.
The following table sets forth our calculations of EBITDA and
Adjusted EBITDA:
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
September 30,
2023
|
|
|
September 24,
2022
|
|
|
September 30,
2023
|
|
|
September 24,
2022
|
|
Net (loss)
income
|
|
$
|
(20,858)
|
|
|
$
|
(54,157)
|
|
|
$
|
123,752
|
|
|
$
|
139,708
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
|
247
|
|
|
|
258
|
|
|
|
668
|
|
|
|
429
|
|
Interest expense,
net
|
|
|
18,795
|
|
|
|
15,101
|
|
|
|
73,393
|
|
|
|
60,658
|
|
Depreciation and
amortization
|
|
|
17,202
|
|
|
|
14,492
|
|
|
|
62,582
|
|
|
|
58,848
|
|
EBITDA
|
|
|
15,386
|
|
|
|
(24,306)
|
|
|
|
260,395
|
|
|
|
259,643
|
|
Unrealized
non-cash (gains) losses on changes in
fair value of derivatives
|
|
|
(17,496)
|
|
|
|
26,487
|
|
|
|
3,671
|
|
|
|
27,929
|
|
Pension
settlement charge
|
|
|
—
|
|
|
|
206
|
|
|
|
—
|
|
|
|
840
|
|
Equity in
earnings of unconsolidated affiliates
|
|
|
5,112
|
|
|
|
412
|
|
|
|
6,264
|
|
|
|
2,614
|
|
Acquisition-related costs
|
|
|
—
|
|
|
|
—
|
|
|
|
4,695
|
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
3,002
|
|
|
$
|
2,799
|
|
|
$
|
275,025
|
|
|
$
|
291,026
|
|
We also reference gross margins, computed as revenues less cost
of products sold as those amounts are reported on the consolidated
financial statements. Our management uses gross margin as a
supplemental measure of operating performance and we are including
it as we believe that it provides our investors and industry
analysts with additional information that we determined is
useful to evaluate our operating results. As cost of
products sold does not include depreciation and amortization
expense, the gross margin we reference is considered a non-GAAP
financial measure.
The unaudited financial information included in this document
is intended only as a summary provided for your convenience, and
should be read in conjunction with the complete consolidated
financial statements of the Partnership (including the Notes
thereto, which set forth important information) contained in its
Annual Report on Form 10-K to be filed by the Partnership with the
SEC. Such report, once filed, will be available on the public
EDGAR electronic filing system maintained by the SEC.
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SOURCE Suburban Propane Partners, L.P.