WHIPPANY, N.J., May 9, 2024
/PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE:SPH),
today announced earnings for its second quarter ended March 30, 2024.
Net income for the second quarter of fiscal 2024 was
$111.5 million, or $1.73 per Common Unit, compared to net income of
$104.5 million, or $1.63 per Common Unit, in the second quarter of
fiscal 2023. Adjusted earnings before interest, taxes, depreciation
and amortization (Adjusted EBITDA, as defined and reconciled below)
for the second quarter of fiscal 2024 was $147.0 million, compared to $149.0 million in the prior year second
quarter.
In announcing these results, President and Chief Executive
Officer, Michael A. Stivala said,
"The fiscal 2024 second quarter was characterized by an
inconsistent weather pattern and unseasonably warm weather across
much of our operating footprint. With the exception of a short
burst of extreme cold weather in mid-January, average temperatures
were warmer than the prior year, which negatively impacted customer
demand for heating purposes. In the markets where we experienced
cooler weather compared to the prior year, such as the southeast,
our volumes responded favorably. Our field operations once again
did an outstanding job managing the things they can control, which
is operating safely, managing our selling prices, controlling
expenses and executing on our customer base growth and retention
initiatives -- all of which helped mitigate the impact of warm
weather on volumes sold."
Mr. Stivala continued, "In our renewable natural gas ("RNG")
operations, average daily pipeline injected RNG at our facility in
Stanfield, Arizona has continued
to improve as we drive operating performance and enhance the
feedstock intake. We continue to advance our capital improvement
plans at the Columbus, Ohio
facility and the construction of our anaerobic digester facility
located at Adirondack Farms in upstate New York, and expect construction for both
facilities to be completed in the second half of calendar 2025.
While the fiscal 2024 heating season presented headwinds as a
result of warmer weather, we continue to focus on our strategic
growth initiatives – fostering the growth of our core propane
operations, steering operational excellence in our RNG business and
continuing to evaluate opportunities to make additional strategic
investments in lower carbon renewable energy alternatives."
Retail propane gallons sold in the second quarter of fiscal 2024
of 140.2 million gallons decreased 2.7% compared to the prior year,
primarily due to widespread warm weather throughout much of the
second quarter, aside from a two-week period of extreme cold
temperatures in mid-January 2024.
Average temperatures (as measured by heating degree days) across
all of the Partnership's service territories during the second
quarter were 8% warmer than normal and 4% cooler than the prior
year second quarter (which was heavily influenced by mid-January
heating degree days that were 33% colder than the prior year).
Average temperatures for the month of February were 1% warmer than
the prior year and on par for the warmest February on record;
followed by March which was 7% warmer than the prior year.
Average propane prices (basis Mont
Belvieu, Texas) for the second quarter of fiscal 2024
increased 2.8% compared to the prior year second quarter. Total
gross margin of $308.0 million for
the second quarter increased $13.1
million, or 4.4%, compared to the prior year second quarter.
Gross margin for the second quarter of fiscal 2024 included a
$5.9 million unrealized gain
attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$4.5 million unrealized loss in the
prior year second 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, total gross margin increased $2.7 million, or 0.9%, compared to the prior year
second quarter, primarily due to higher unit margins, which
increased $0.08 per gallon, more than
offsetting the lower volumes sold.
Combined operating and general and administrative expenses of
$154.4 million for the second quarter
of fiscal 2024 increased $1.2
million, or 0.8%, compared to the prior year second quarter,
primarily due to higher payroll and benefit-related expenses,
offset to an extent by lower volume-related variable operating
costs. In addition, included within general and administrative
expenses in the second quarter of the prior year were
acquisition-related fees and expenses of $3.4 million, which were excluded from Adjusted
EBITDA for the second quarter of fiscal 2023.
During the second quarter of fiscal 2024, the Partnership
utilized cash flows from operating activities to repay $32.3 million in outstanding debt. As a result of
this debt repayment, the Total Consolidated Leverage Ratio, as
defined in the Partnership's credit agreement, for the twelve-month
period ending March 30, 2024 improved
to 4.61x compared to 4.72x at the end of the first quarter of
fiscal 2024.
As previously announced on April 25,
2024, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.325 per
Common Unit for the three months ended March
30, 2024. On an annualized basis, this distribution rate
equates to $1.30 per Common Unit. The
distribution is payable on May 14,
2024 to Common Unitholders of record as of May 7, 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
Six Months Ended March 30, 2024 and March 25, 2023
(in thousands,
except per unit amounts)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
March 30,
2024
|
|
|
March 25,
2023
|
|
|
March 30,
2024
|
|
|
March 25,
2023
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
437,564
|
|
|
$
|
457,140
|
|
|
$
|
750,922
|
|
|
$
|
799,493
|
|
Fuel oil and refined
fuels
|
|
|
31,595
|
|
|
|
38,126
|
|
|
|
55,493
|
|
|
|
68,267
|
|
Natural gas and
electricity
|
|
|
8,713
|
|
|
|
11,856
|
|
|
|
15,206
|
|
|
|
20,546
|
|
All other
|
|
|
20,215
|
|
|
|
19,379
|
|
|
|
42,300
|
|
|
|
35,665
|
|
|
|
|
498,087
|
|
|
|
526,501
|
|
|
|
863,921
|
|
|
|
923,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
190,120
|
|
|
|
231,608
|
|
|
|
343,173
|
|
|
|
414,261
|
|
Operating
|
|
|
128,311
|
|
|
|
127,450
|
|
|
|
250,381
|
|
|
|
243,161
|
|
General and
administrative
|
|
|
26,071
|
|
|
|
25,700
|
|
|
|
51,641
|
|
|
|
48,712
|
|
Depreciation and
amortization
|
|
|
16,725
|
|
|
|
16,064
|
|
|
|
33,118
|
|
|
|
29,843
|
|
|
|
|
361,227
|
|
|
|
400,822
|
|
|
|
678,313
|
|
|
|
735,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
136,860
|
|
|
|
125,679
|
|
|
|
185,608
|
|
|
|
187,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt
extinguishment
|
|
|
215
|
|
|
|
—
|
|
|
|
215
|
|
|
|
—
|
|
Interest expense,
net
|
|
|
19,919
|
|
|
|
19,871
|
|
|
|
38,111
|
|
|
|
35,865
|
|
Other, net
|
|
|
5,194
|
|
|
|
1,106
|
|
|
|
11,047
|
|
|
|
2,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
|
|
111,532
|
|
|
|
104,702
|
|
|
|
136,235
|
|
|
|
150,048
|
|
Provision for income
taxes
|
|
|
32
|
|
|
|
225
|
|
|
|
281
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
111,500
|
|
|
$
|
104,477
|
|
|
$
|
135,954
|
|
|
$
|
149,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
1.73
|
|
|
$
|
1.63
|
|
|
$
|
2.12
|
|
|
$
|
2.35
|
|
Weighted average number
of Common Units
outstanding - basic
|
|
|
64,363
|
|
|
|
63,922
|
|
|
|
64,239
|
|
|
|
63,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
1.72
|
|
|
$
|
1.62
|
|
|
$
|
2.10
|
|
|
$
|
2.34
|
|
Weighted average number
of Common Units
outstanding - diluted
|
|
|
64,818
|
|
|
|
64,368
|
|
|
|
64,626
|
|
|
|
64,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
148,176
|
|
|
$
|
140,637
|
|
|
$
|
207,464
|
|
|
$
|
215,756
|
|
Adjusted EBITDA
(a)
|
|
$
|
147,022
|
|
|
$
|
148,957
|
|
|
$
|
222,254
|
|
|
$
|
238,999
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
140,243
|
|
|
|
144,149
|
|
|
|
246,788
|
|
|
|
252,913
|
|
Refined
fuels
|
|
|
6,992
|
|
|
|
7,742
|
|
|
|
12,248
|
|
|
|
13,305
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
5,577
|
|
|
$
|
5,974
|
|
|
$
|
10,668
|
|
|
$
|
11,695
|
|
Growth
|
|
$
|
8,969
|
|
|
$
|
7,278
|
|
|
$
|
15,028
|
|
|
$
|
12,337
|
|
(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
|
|
|
Six Months
Ended
|
|
|
|
March 30,
2024
|
|
|
March 25,
2023
|
|
|
March 30,
2024
|
|
|
March 25,
2023
|
|
Net income
|
|
$
|
111,500
|
|
|
$
|
104,477
|
|
|
$
|
135,954
|
|
|
$
|
149,871
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
32
|
|
|
|
225
|
|
|
|
281
|
|
|
|
177
|
|
Interest expense,
net
|
|
|
19,919
|
|
|
|
19,871
|
|
|
|
38,111
|
|
|
|
35,865
|
|
Depreciation and
amortization
|
|
|
16,725
|
|
|
|
16,064
|
|
|
|
33,118
|
|
|
|
29,843
|
|
EBITDA
|
|
|
148,176
|
|
|
|
140,637
|
|
|
|
207,464
|
|
|
|
215,756
|
|
Unrealized non-cash
(gains) losses on changes in
fair value of derivatives
|
|
|
(5,868)
|
|
|
|
4,501
|
|
|
|
4,918
|
|
|
|
18,207
|
|
Equity in losses of
unconsolidated affiliates
|
|
|
4,499
|
|
|
|
413
|
|
|
|
9,657
|
|
|
|
695
|
|
Loss on debt
extinguishment
|
|
|
215
|
|
|
|
—
|
|
|
|
215
|
|
|
|
—
|
|
Acquisition-related
costs
|
|
|
—
|
|
|
|
3,406
|
|
|
|
—
|
|
|
|
4,341
|
|
Adjusted
EBITDA
|
|
$
|
147,022
|
|
|
$
|
148,957
|
|
|
$
|
222,254
|
|
|
$
|
238,999
|
|
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.