Suburban Propane Partners, L.P. Announces Third Quarter Results
Rhea-AI Summary
Suburban Propane Partners (NYSE: SPH) reported a net loss of $17.2 million, or $0.27 per Common Unit, for Q3 fiscal 2024, compared to a net loss of $5.3 million in Q3 fiscal 2023. Adjusted EBITDA decreased to $27.0 million from $33.0 million year-over-year. The company faced challenges due to unseasonably warm temperatures, resulting in an 8.6% decrease in retail propane gallons sold. Despite this, SPH completed two propane acquisitions in Nevada and Florida, investing over $12.0 million, while reducing debt by $10.5 million. The company's RNG operations saw operational improvements, increasing feedstocks processed and daily RNG injection at the Stanfield facility. SPH maintained its quarterly distribution of $0.325 per Common Unit.
Positive
- Completed two strategic propane acquisitions in Nevada and Florida, investing over $12.0 million
- Reduced debt by $10.5 million using excess cash flows from operations
- Increased feedstocks processed and daily RNG injection at the Stanfield facility
- Maintained quarterly distribution of $0.325 per Common Unit ($1.30 annualized)
- Propane unit margins increased by $0.07 per gallon, or 3.8%, compared to the prior year third quarter
Negative
- Net loss increased to $17.2 million from $5.3 million year-over-year
- Adjusted EBITDA decreased to $27.0 million from $33.0 million year-over-year
- Retail propane gallons sold decreased by 8.6% due to warmer weather
- Total gross margin decreased by $8.0 million, or 4.7%, compared to the prior year third quarter
- RNG operations negatively impacted by lower environmental attribute prices, particularly in the California Low Carbon Fuel Standards market
News Market Reaction – SPH
On the day this news was published, SPH gained 0.18%, reflecting a mild positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
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
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
Mr. Stivala continued, "In our renewable natural gas ("RNG") operations, while overall revenues at our
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
Average propane prices (basis
Combined operating and general and administrative expenses of
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
As previously announced on July 25, 2024, the Partnership's Board of Supervisors declared a quarterly distribution of
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
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 inUkraine , 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 | 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 | 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 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.
FAQ
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