WHIPPANY, NJ, Aug 8, 2024
/PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE: SPH),
today announced earnings for its third quarter ended June 29, 2024.
Consistent with the seasonal nature of its business, the
Partnership typically experiences a net loss in the third quarter
of its fiscal year. Net loss for the third quarter of fiscal
2024 was $17.2 million, or
$0.27 per Common Unit, compared to a
net loss of $5.3 million, or
$0.08 per Common Unit, in the third
quarter of fiscal 2023. Adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA, as defined and
reconciled below) for the third quarter of fiscal 2024 was
$27.0 million, compared to
$33.0 million in the prior year third
quarter.
In announcing these results, President and Chief Executive
Officer, Michael A. Stivala said,
"Widespread unseasonably warm temperatures experienced during the
peak winter heating months in our fiscal 2024 second quarter
continued into the third quarter of fiscal 2024, with periods of
extreme heat in certain parts of the country. By contrast,
the prior year third quarter benefited from colder average
temperatures that generated a late burst of heat-related customer
demand from our residential customer base. However, incremental
volumes resulting from growth in certain counter-seasonal customer
segments, coupled with effective management of selling prices and
expenses, helped offset the impact of warmer weather. During
the third quarter, we completed two propane acquisitions in
strategic markets in Nevada and
Florida, investing more than
$12.0 million, while also reducing
debt by $10.5 million using excess
cash flows from operations."
Mr. Stivala continued, "In our renewable natural gas ("RNG")
operations, while overall revenues at our Stanfield, Arizona facility have been
negatively influenced by lower environmental attribute prices,
particularly in the California Low Carbon Fuel Standards market, we
remain focused on driving operational excellence, making
improvements in feedstock intake and production levels, and growing
revenue opportunities. During the fiscal 2024 third
quarter, operational enhancements have resulted in an increase in
feedstocks processed and increased levels of daily RNG injection at
the Stanfield facility.
Additionally, we are making excellent progress in advancing the
construction activities at our Columbus and Adirondack
facilities."
Mr. Stivala concluded, "We continue to execute on our long-term
strategic growth plans – investing in the growth of our core
propane business, driving operational excellence in the build out
of our renewable energy platform, and maintaining a disciplined
approach to deploying additional capital to foster the strength of
the balance sheet."
Retail propane gallons sold in the third quarter of fiscal 2024
of 71.7 million gallons decreased 8.6% compared to the prior year,
primarily due to warmer weather across most of the Partnership's
operating territories. Average temperatures (as measured by
heating degree days) across all of the Partnership's service
territories during the third quarter were 14% warmer than normal
and 10% warmer than the prior year third quarter.
Average propane prices (basis Mont
Belvieu, Texas) for the third quarter of fiscal 2024
increased 11.5% compared to the prior year third quarter.
Total gross margin of $160.2 million
for the third quarter decreased $8.0
million, or 4.7%, compared to the prior year third quarter,
primarily due to lower volumes sold, partially offset by higher
unit margins. Gross margin for the third quarter of fiscal 2024
included a $3.2 million unrealized
loss attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$3.0 million unrealized loss in the
prior year third quarter. 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 mark-to-market
adjustments, propane unit margins increased $0.07 per gallon, or 3.8%, compared to the prior
year third quarter.
Combined operating and general and administrative expenses of
$135.6 million for the third quarter
of fiscal 2024 decreased $2.1
million, or 1.6%, compared to the prior year third quarter,
primarily due to lower volume-related variable operating costs,
lower variable compensation, and cost savings and efficiencies
realized in our RNG operations, offset to an extent by an increase
in self-insurance accruals.
During the third quarter of fiscal 2024, the Partnership
utilized cash flows from operating activities to acquire two retail
propane businesses, to make additional investments in Oberon Fuels
and Independence Hydrogen, in support of the Partnership's
long-term strategic goals, and to repay $10.5 million in borrowings under the revolving
credit facility. The Total Consolidated Leverage Ratio, as
defined in the Partnership's credit agreement, for the twelve-month
period ending June 29, 2024 was
4.68x.
As previously announced on July 25,
2024, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.325 per
Common Unit for the three months ended June
29, 2024. On an annualized basis, this distribution
rate equates to $1.30 per Common
Unit. The distribution is payable on August
13, 2024 to Common Unitholders of record as of August 6, 2024.
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, capital expenditures, strategic investments,
project developments 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,
renewable propane, fuel oil and other refined fuels, natural gas,
renewable natural gas ("RNG") and electricity;
- The impact of climate change and potential climate change
legislation on the Partnership and demand for propane, fuel oil and
other refined fuels, 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 hostilities in
the Middle East, 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,
general economic conditions 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
and investments, 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 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, RNG and electricity, including the impact of recently
adopted and proposed changes to New
York law, 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 reputation and its 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;
- Risks related to the Partnership's plans to diversify its
business;
- 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 30, 2023
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
Nine Months Ended June 29, 2024 and June 24, 2023
(in thousands,
except per unit amounts)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
June 29,
2024
|
|
|
June 24,
2023
|
|
|
June 29,
2024
|
|
|
June 24,
2023
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
220,045
|
|
|
$
|
241,485
|
|
|
$
|
970,967
|
|
|
$
|
1,040,978
|
|
Fuel oil and refined
fuels
|
|
|
10,954
|
|
|
|
14,086
|
|
|
|
66,447
|
|
|
|
82,353
|
|
Natural gas and
electricity
|
|
|
5,322
|
|
|
|
4,926
|
|
|
|
20,528
|
|
|
|
25,472
|
|
All other
|
|
|
18,289
|
|
|
|
18,131
|
|
|
|
60,589
|
|
|
|
53,796
|
|
|
|
|
254,610
|
|
|
|
278,628
|
|
|
|
1,118,531
|
|
|
|
1,202,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
94,400
|
|
|
|
110,446
|
|
|
|
437,573
|
|
|
|
524,707
|
|
Operating
|
|
|
115,882
|
|
|
|
116,637
|
|
|
|
366,263
|
|
|
|
359,798
|
|
General and
administrative
|
|
|
19,759
|
|
|
|
21,142
|
|
|
|
71,400
|
|
|
|
69,854
|
|
Depreciation and
amortization
|
|
|
16,379
|
|
|
|
15,537
|
|
|
|
49,497
|
|
|
|
45,380
|
|
|
|
|
246,420
|
|
|
|
263,762
|
|
|
|
924,733
|
|
|
|
999,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
8,190
|
|
|
|
14,866
|
|
|
|
193,798
|
|
|
|
202,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
|
—
|
|
|
|
215
|
|
|
|
—
|
|
Interest expense,
net
|
|
|
18,429
|
|
|
|
18,733
|
|
|
|
56,540
|
|
|
|
54,598
|
|
Other, net
|
|
|
6,709
|
|
|
|
1,150
|
|
|
|
17,756
|
|
|
|
3,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
|
(16,948)
|
|
|
|
(5,017)
|
|
|
|
119,287
|
|
|
|
145,031
|
|
Provision for income
taxes
|
|
|
243
|
|
|
|
244
|
|
|
|
524
|
|
|
|
421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(17,191)
|
|
|
$
|
(5,261)
|
|
|
$
|
118,763
|
|
|
$
|
144,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
|
(0.27)
|
|
|
$
|
(0.08)
|
|
|
$
|
1.85
|
|
|
$
|
2.27
|
|
Weighted average number
of Common Units
outstanding - basic
|
|
|
64,394
|
|
|
|
63,926
|
|
|
|
64,297
|
|
|
|
63,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
|
(0.27)
|
|
|
$
|
(0.08)
|
|
|
$
|
1.83
|
|
|
$
|
2.25
|
|
Weighted average number
of Common Units
outstanding - diluted
|
|
|
64,394
|
|
|
|
63,926
|
|
|
|
64,747
|
|
|
|
64,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
17,860
|
|
|
$
|
29,253
|
|
|
$
|
225,324
|
|
|
$
|
245,009
|
|
Adjusted EBITDA
(a)
|
|
$
|
27,035
|
|
|
$
|
33,024
|
|
|
$
|
249,289
|
|
|
$
|
272,023
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
71,737
|
|
|
|
78,474
|
|
|
|
318,525
|
|
|
|
331,387
|
|
Refined
fuels
|
|
|
2,645
|
|
|
|
3,354
|
|
|
|
14,893
|
|
|
|
16,659
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
5,344
|
|
|
$
|
4,373
|
|
|
$
|
16,012
|
|
|
$
|
16,068
|
|
Growth
|
|
$
|
9,333
|
|
|
$
|
4,981
|
|
|
$
|
24,361
|
|
|
$
|
17,318
|
|
(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
|
|
|
Nine Months
Ended
|
|
|
|
June 29,
2024
|
|
|
June 24,
2023
|
|
|
June 29,
2024
|
|
|
June 24,
2023
|
|
Net (loss)
income
|
|
$
|
(17,191)
|
|
|
$
|
(5,261)
|
|
|
$
|
118,763
|
|
|
$
|
144,610
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
243
|
|
|
|
244
|
|
|
|
524
|
|
|
|
421
|
|
Interest expense,
net
|
|
|
18,429
|
|
|
|
18,733
|
|
|
|
56,540
|
|
|
|
54,598
|
|
Depreciation and
amortization
|
|
|
16,379
|
|
|
|
15,537
|
|
|
|
49,497
|
|
|
|
45,380
|
|
EBITDA
|
|
|
17,860
|
|
|
|
29,253
|
|
|
|
225,324
|
|
|
|
245,009
|
|
Unrealized non-cash
(gains) losses on changes in fair value of derivatives
|
|
|
3,161
|
|
|
|
2,960
|
|
|
|
8,079
|
|
|
|
21,167
|
|
Pension settlement
charge
|
|
|
550
|
|
|
|
—
|
|
|
|
550
|
|
|
|
—
|
|
Equity in losses of
unconsolidated affiliates
|
|
|
5,464
|
|
|
|
457
|
|
|
|
15,121
|
|
|
|
1,152
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
|
—
|
|
|
|
215
|
|
|
|
—
|
|
Acquisition-related
costs
|
|
|
—
|
|
|
|
354
|
|
|
|
—
|
|
|
|
4,695
|
|
Adjusted
EBITDA
|
|
$
|
27,035
|
|
|
$
|
33,024
|
|
|
$
|
249,289
|
|
|
$
|
272,023
|
|
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
Quarterly Report on Form 10-Q 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.