Suburban Propane Partners, L.P. Announces First Quarter Results
Rhea-AI Summary
Suburban Propane Partners (NYSE:SPH) reported Q1 fiscal 2025 results with net income of $19.4 million ($0.30 per Common Unit), down from $24.5 million ($0.38 per Common Unit) in Q1 fiscal 2024. Adjusted EBITDA remained flat at $75.3 million.
Retail propane gallons sold decreased 0.8% to 105.7 million gallons due to unseasonably warm temperatures and lower agricultural demand, partially offset by increased demand in the Southeast following Hurricanes Helene and Milton. The company completed a strategic $53.0 million propane acquisition in New Mexico and Arizona.
Total gross margin increased 6.3% to $226.2 million, including a $3.6 million unrealized gain from mark-to-market adjustments. Operating expenses rose 1.6% to $150.0 million. The company declared a quarterly distribution of $0.325 per Common Unit, equating to $1.30 annually.
Positive
- Strategic acquisition in New Mexico and Arizona for $53.0 million expanding service territory
- Gross margin increased 6.3% to $226.2 million
- Propane unit margins improved by 1.3%
- Received $3.0 million contingent consideration from Equilibrium Capital Group
Negative
- Net income decreased 20.8% to $19.4 million from $24.5 million year-over-year
- Retail propane gallons sold declined 0.8% to 105.7 million gallons
- Operating expenses increased 1.6% to $150.0 million
- Impairment charges of $19.8 million for investments in Independence Hydrogen and Oberon Fuels
- Net borrowings increased by $91.7 million under revolving credit facility
News Market Reaction
On the day this news was published, SPH declined 4.16%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Net income for the first quarter of fiscal 2025 was
In announcing these results, President and Chief Executive Officer Michael A. Stivala said, "Propane volumes in the first quarter of fiscal 2025 were marginally lower than the prior year first quarter as a combination of widespread unseasonably warm weather, especially during November 2024, and a less active crop drying season negatively impacted customer demand. Volumes during the quarter benefitted from increased demand in our Southeast operations for backup power generation and other applications in the aftermath of Hurricanes Helene and Milton, as well as from growth in our customer base resulting from the completion of a strategic propane acquisition during November, which further expanded our service territories in the Southwest. There is plenty of heating season ahead and, with more seasonable weather in the early part of the fiscal second quarter, our operations personnel are well-prepared to serve the increased demand when our customers need us most."
Mr. Stivala continued, "In our renewable natural gas ("RNG") operations, as a result of planned routine maintenance and regulatory compliance upgrades at our facility in
Retail propane gallons sold in the first quarter of fiscal 2025 of 105.7 million gallons decreased
Average propane prices (basis
Combined operating and general and administrative expenses of
During the first quarter of fiscal 2025, the Partnership recognized
During the first quarter of fiscal 2025, the Partnership acquired a well-run propane business in strategic markets in
Adjusted EBITDA for the first quarter of fiscal 2025 excludes impairment charges for the Partnership's investments in Independence Hydrogen, Inc. and Oberon Fuels, Inc. of
As previously announced on January 23, 2025, 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 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 changed priorities of the newU.S. presidential administration, 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 28, 2024 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 28, 2024 and December 30, 2023 (in thousands, except per unit amounts) (unaudited)
| ||||||||
Three Months Ended | ||||||||
December 28, 2024 | December 30, 2023 | |||||||
Revenues | ||||||||
Propane | $ | 330,283 | $ | 313,358 | ||||
Fuel oil and refined fuels | 17,661 | 23,898 | ||||||
Natural gas and electricity | 6,053 | 6,493 | ||||||
All other | 19,332 | 22,085 | ||||||
373,329 | 365,834 | |||||||
Costs and expenses | ||||||||
Cost of products sold | 147,162 | 153,053 | ||||||
Operating | 123,153 | 122,070 | ||||||
General and administrative | 26,853 | 25,570 | ||||||
Depreciation and amortization | 17,099 | 16,393 | ||||||
314,267 | 317,086 | |||||||
Operating income | 59,062 | 48,748 | ||||||
Interest expense, net | 19,612 | 18,192 | ||||||
Other, net | 19,467 | 5,853 | ||||||
Income before provision for income taxes | 19,983 | 24,703 | ||||||
Provision for income taxes | 563 | 249 | ||||||
Net income | $ | 19,420 | $ | 24,454 | ||||
Net income per Common Unit - basic | $ | 0.30 | $ | 0.38 | ||||
Weighted average number of Common Units | 64,497 | 64,064 | ||||||
Net income per Common Unit - diluted | $ | 0.30 | $ | 0.38 | ||||
Weighted average number of Common Units | 64,756 | 64,381 | ||||||
Supplemental Information: | ||||||||
EBITDA (a) | $ | 56,694 | $ | 59,288 | ||||
Adjusted EBITDA (a) | $ | 75,301 | $ | 75,232 | ||||
Retail gallons sold: | ||||||||
Propane | 105,739 | 106,545 | ||||||
Refined fuels | 4,367 | 5,256 | ||||||
Capital expenditures: | ||||||||
Maintenance | $ | 4,618 | $ | 5,091 | ||||
Growth | $ | 19,225 | $ | 6,059 | ||||
(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 following table sets forth our calculations of EBITDA and Adjusted EBITDA:
Three Months Ended | ||||||||
December 28, 2024 | December 30, 2023 | |||||||
Net income | $ | 19,420 | $ | 24,454 | ||||
Add: | ||||||||
Provision for income taxes | 563 | 249 | ||||||
Interest expense, net | 19,612 | 18,192 | ||||||
Depreciation and amortization | 17,099 | 16,393 | ||||||
EBITDA | 56,694 | 59,288 | ||||||
Unrealized non-cash (gains) losses on changes in fair value of derivatives | (3,634) | 10,786 | ||||||
Equity in losses and impairment charges for investments in unconsolidated affiliates | 22,241 | 5,158 | ||||||
Adjusted EBITDA | $ | 75,301 | $ | 75,232 | ||||
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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