WHIPPANY, N.J., Feb. 8, 2024 /PRNewswire/ -- Suburban
Propane Partners, L.P. (NYSE:SPH), today announced earnings for its
first quarter ended December 30,
2023.
Net income for the first quarter of fiscal 2024 was $24.5 million, or $0.38 per Common Unit, compared to net income of
$45.4 million, or $0.71 per Common Unit, in the fiscal 2023 first
quarter. Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, as defined and reconciled below) for
the first quarter of fiscal 2024 was $75.2
million, compared to $90.0
million in the prior year first quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"The fiscal 2024 first quarter was dominated by unseasonably warm
weather that persisted across the country, especially during the
critical last six weeks of the quarter, which negatively impacted
customer demand for heating purposes. Propane volumes were down
just 2.0% compared to the prior year first quarter, as the impact
of warmer weather was favorably offset by solid agricultural demand
from an active crop drying season, and positive customer base
trends and market expansion efforts over the past couple of
years. Our operations personnel are continuing to do an
excellent job managing our selling prices and expenses and, as more
seasonable weather arrived in the early part of the second quarter,
our business is very well positioned to meet increased
demand. There is still plenty of heating season ahead of
us."
Mr. Stivala continued, "In our renewable natural gas ("RNG")
operations, we have deployed capital to enhance the efficiency and
operating performance of our RNG production facility in
Stanfield, Arizona. We continue to
execute on our capital improvement plans at the Columbus, Ohio facility, which will include
the installation of RNG upgrade equipment, and we are advancing the
engineering and construction of our anaerobic digester facility
located at Adirondack Farms in upstate New York. In addition, we continue to develop
relationships with local feedstock providers to increase tipping
fee revenue and production capacity for all of our facilities, as
well as developing RNG offtake arrangements for Columbus and New
York once those facilities begin producing RNG."
Retail propane gallons sold in the first quarter of fiscal 2024
of 106.5 million gallons decreased 2.0% compared to the prior year,
primarily due to an inconsistent and warmer weather pattern that
adversely impacted heat-related demand. Average temperatures
(as measured by heating degree days) across all of the
Partnership's service territories during the first quarter were 9%
warmer than normal and 6% warmer than the prior year first quarter.
Average temperatures for the month of December, which is the most
critical month of the first quarter for heat-related demand, were
10% warmer than both normal and December
2022.
Average propane prices (basis Mont
Belvieu, Texas) for the first quarter of fiscal 2024
decreased 16.7% compared to the prior year first quarter.
Total gross margin of $212.8 million
for the fiscal 2024 first quarter decreased $2.0 million, or 0.9%, compared to the prior year
first quarter. Gross margin for the first quarter of fiscal 2024
included a $10.8 million unrealized
loss attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$13.7 million unrealized loss in the
prior year first 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 decreased $4.9 million, or 2.2%, compared to the prior year
first quarter, primarily due to lower propane volumes sold and
lower propane unit margins, offset to an extent by margin
contribution from the RNG assets acquired at the end of December
2022. Excluding the impact of the unrealized mark-to-market
adjustments, propane unit margins for the first quarter of fiscal
2024 decreased $0.05 per gallon, or
2.8%, compared to the prior year first quarter, primarily due to a
greater mix from the Partnership's commercial and industrial
customer base that tend to be less weather sensitive than our
residential customer base.
Combined operating and general and administrative expenses of
$147.6 million for the first quarter
of fiscal 2024 increased 6.4% compared to the prior year first
quarter, primarily due to higher payroll and benefit-related
expenses and operating costs associated with the RNG production
facilities. In addition, included within general and
administrative expenses in the first quarter of the prior year were
fees and expenses of $0.9 million
associated with the acquisition of the RNG assets, which were
excluded from Adjusted EBITDA for the first quarter of fiscal
2023.
Total debt outstanding as of December
2023 increased $54.8 million
compared to September 2023, due to
seasonal borrowings under the Partnership's revolving credit
facility to help fund working capital. The Consolidated
Leverage Ratio, as defined in the Partnership's credit agreement,
for the twelve-month period ending December
30, 2023 was 4.72x.
As previously announced on January 25,
2024, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.325 per
Common Unit for the three months ended December 30, 2023. On an annualized basis,
this distribution rate equates to $1.30 per Common Unit. The distribution is
payable on February 13, 2024 to
Common Unitholders of record as of February
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 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 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 Months Ended December 30,
2023 and December 24, 2022 (in thousands, except per unit
amounts) (unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
December 30,
2023
|
|
|
December 24,
2022
|
|
Revenues
|
|
|
|
|
|
|
Propane
|
|
$
|
313,358
|
|
|
$
|
342,353
|
|
Fuel oil and refined
fuels
|
|
|
23,898
|
|
|
|
30,141
|
|
Natural gas and
electricity
|
|
|
6,493
|
|
|
|
8,690
|
|
All other
|
|
|
22,085
|
|
|
|
16,286
|
|
|
|
|
365,834
|
|
|
|
397,470
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
153,053
|
|
|
|
182,653
|
|
Operating
|
|
|
122,070
|
|
|
|
115,711
|
|
General and
administrative
|
|
|
25,570
|
|
|
|
23,012
|
|
Depreciation and
amortization
|
|
|
16,393
|
|
|
|
13,779
|
|
|
|
|
317,086
|
|
|
|
335,155
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
48,748
|
|
|
|
62,315
|
|
Interest expense,
net
|
|
|
18,192
|
|
|
|
15,994
|
|
Other, net
|
|
|
5,853
|
|
|
|
975
|
|
|
|
|
|
|
|
|
Income before provision
for (benefit from) income taxes
|
|
|
24,703
|
|
|
|
45,346
|
|
Provision for (benefit
from) income taxes
|
|
|
249
|
|
|
|
(48)
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
24,454
|
|
|
$
|
45,394
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
0.38
|
|
|
$
|
0.71
|
|
Weighted average number
of Common Units
outstanding - basic
|
|
|
64,064
|
|
|
|
63,634
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
0.38
|
|
|
$
|
0.71
|
|
Weighted average number
of Common Units
outstanding - diluted
|
|
|
64,381
|
|
|
|
63,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
59,288
|
|
|
$
|
75,119
|
|
Adjusted EBITDA
(a)
|
|
$
|
75,232
|
|
|
$
|
90,042
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
Propane
|
|
|
106,545
|
|
|
|
108,764
|
|
Refined
fuels
|
|
|
5,256
|
|
|
|
5,563
|
|
Capital
expenditures:
|
|
|
|
|
|
|
Maintenance
|
|
$
|
5,091
|
|
|
$
|
5,721
|
|
Growth
|
|
$
|
6,059
|
|
|
$
|
5,059
|
|
|
|
(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
|
|
|
|
December 30,
2023
|
|
|
December 24,
2022
|
|
Net income
|
|
$
|
24,454
|
|
|
$
|
45,394
|
|
Add:
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes
|
|
|
249
|
|
|
|
(48)
|
|
Interest expense,
net
|
|
|
18,192
|
|
|
|
15,994
|
|
Depreciation and
amortization
|
|
|
16,393
|
|
|
|
13,779
|
|
EBITDA
|
|
|
59,288
|
|
|
|
75,119
|
|
Unrealized non-cash
losses on changes in fair value of derivatives
|
|
|
10,786
|
|
|
|
13,706
|
|
Equity in losses of
unconsolidated affiliates
|
|
|
5,158
|
|
|
|
282
|
|
Acquisition-related
costs
|
|
|
—
|
|
|
|
935
|
|
Adjusted
EBITDA
|
|
$
|
75,232
|
|
|
$
|
90,042
|
|
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.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-first-quarter-results-302056850.html
SOURCE Suburban Propane Partners, L.P.