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Name | Symbol | Market | Type |
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Suburban Propane | NYSE:SPH | NYSE | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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-1.47 | -7.00% | 19.5308 | 21.03 | 19.69 | 21.03 | 132,367 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction |
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(IRS Employer |
of Incorporation) |
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Identification No.) |
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following information, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
On May 9, 2024, the Partnership issued a press release (the “Press Release”) describing its Fiscal 2024 Second Quarter Financial Results. A copy of the Press Release has been furnished as Exhibit 99.1 to this Current Report.
Within the Press Release, we reference net income before deducting interest expense, income taxes, depreciation and amortization (“EBITDA”) which is considered a non-GAAP financial measure. Additionally, we discuss EBITDA excluding the unrealized net gain or loss from mark-to-market activity for derivative instruments and certain other items (“Adjusted EBITDA”). Our calculations of EBITDA and Adjusted EBITDA are presented in the Press Release furnished as Exhibit 99.1 to this Current Report.
We provide these non-GAAP financial measures because we believe that they provide the investment community with supplemental measures of operating performance. In addition, we believe that these non-GAAP financial measures provide useful information to investors and industry analysts to evaluate our operating results.
We also reference gross margins, computed as revenues less cost of products sold as those amounts are reported on the consolidated financial statements. Since cost of products sold does not include depreciation and amortization expense, the gross margin we reference is considered a non-GAAP financial measure. Given the nature of our business, the level of profitability in the retail propane, fuel oil, and natural gas and electricity businesses is largely dependent on the difference between retail sales price and product cost. Therefore, we discuss gross margins in order to provide investors and industry analysts with useful information to facilitate their understanding of the impact of the commodity prices on profitability.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
May 9, 2024 |
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SUBURBAN PROPANE PARTNERS, L.P. |
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By: |
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/s/ MICHAEL A. KUGLIN |
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Name: |
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Michael A. Kuglin |
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Title: |
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Chief Financial Officer |
Exhibit 99.1
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News Release Contact: Michael A. Kuglin Chief Financial Officer P.O. Box 206, Whippany, NJ 07981-0206 Phone: 973-503-9252 |
FOR IMMEDIATE RELEASE
Suburban Propane Partners, L.P.
Announces Second Quarter Results
Whippany, New Jersey, May 9, 2024 -- 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
1
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:
2
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.
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(more)
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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)
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Three Months Ended |
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Six Months Ended |
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March 30, 2024 |
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March 25, 2023 |
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March 30, 2024 |
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March 25, 2023 |
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Revenues |
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Propane |
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$ |
437,564 |
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$ |
457,140 |
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$ |
750,922 |
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$ |
799,493 |
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Fuel oil and refined fuels |
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31,595 |
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38,126 |
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55,493 |
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68,267 |
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Natural gas and electricity |
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8,713 |
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11,856 |
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15,206 |
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20,546 |
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All other |
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20,215 |
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19,379 |
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42,300 |
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35,665 |
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498,087 |
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526,501 |
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863,921 |
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923,971 |
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Costs and expenses |
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Cost of products sold |
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190,120 |
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231,608 |
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343,173 |
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414,261 |
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Operating |
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128,311 |
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127,450 |
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250,381 |
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243,161 |
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General and administrative |
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26,071 |
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25,700 |
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51,641 |
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48,712 |
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Depreciation and amortization |
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16,725 |
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16,064 |
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33,118 |
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29,843 |
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361,227 |
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400,822 |
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678,313 |
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735,977 |
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Operating income |
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136,860 |
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125,679 |
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185,608 |
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187,994 |
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Loss on debt extinguishment |
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215 |
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— |
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215 |
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— |
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Interest expense, net |
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19,919 |
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19,871 |
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38,111 |
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35,865 |
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Other, net |
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5,194 |
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1,106 |
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11,047 |
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2,081 |
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Income before provision for income taxes |
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111,532 |
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104,702 |
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136,235 |
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150,048 |
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Provision for income taxes |
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32 |
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225 |
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281 |
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177 |
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Net income |
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$ |
111,500 |
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$ |
104,477 |
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$ |
135,954 |
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$ |
149,871 |
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Net income per Common Unit - basic |
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$ |
1.73 |
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$ |
1.63 |
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$ |
2.12 |
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$ |
2.35 |
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Weighted average number of Common Units |
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64,363 |
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63,922 |
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64,239 |
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63,780 |
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Net income per Common Unit - diluted |
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$ |
1.72 |
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$ |
1.62 |
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$ |
2.10 |
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$ |
2.34 |
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Weighted average number of Common Units |
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64,818 |
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64,368 |
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64,626 |
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64,179 |
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Supplemental Information: |
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EBITDA (a) |
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$ |
148,176 |
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$ |
140,637 |
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$ |
207,464 |
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$ |
215,756 |
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Adjusted EBITDA (a) |
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$ |
147,022 |
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$ |
148,957 |
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$ |
222,254 |
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$ |
238,999 |
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Retail gallons sold: |
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Propane |
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140,243 |
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144,149 |
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246,788 |
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252,913 |
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Refined fuels |
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6,992 |
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7,742 |
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12,248 |
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13,305 |
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Capital expenditures: |
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Maintenance |
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$ |
5,577 |
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$ |
5,974 |
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$ |
10,668 |
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$ |
11,695 |
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Growth |
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$ |
8,969 |
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$ |
7,278 |
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$ |
15,028 |
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$ |
12,337 |
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(more)
5
(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:
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Three Months Ended |
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Six Months Ended |
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March 30, 2024 |
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March 25, 2023 |
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March 30, 2024 |
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March 25, 2023 |
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Net income |
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$ |
111,500 |
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$ |
104,477 |
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$ |
135,954 |
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$ |
149,871 |
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Add: |
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Provision for income taxes |
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32 |
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225 |
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281 |
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177 |
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Interest expense, net |
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19,919 |
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19,871 |
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38,111 |
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35,865 |
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Depreciation and amortization |
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16,725 |
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16,064 |
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33,118 |
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29,843 |
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EBITDA |
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148,176 |
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140,637 |
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207,464 |
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215,756 |
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Unrealized non-cash (gains) losses on changes in fair value of derivatives |
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(5,868 |
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4,501 |
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4,918 |
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18,207 |
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Equity in losses of unconsolidated affiliates |
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4,499 |
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413 |
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9,657 |
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695 |
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Loss on debt extinguishment |
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215 |
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— |
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215 |
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— |
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Acquisition-related costs |
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— |
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3,406 |
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— |
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4,341 |
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Adjusted EBITDA |
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$ |
147,022 |
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$ |
148,957 |
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$ |
222,254 |
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$ |
238,999 |
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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.
6
Document and Entity Information |
May 09, 2024 |
---|---|
Cover [Abstract] | |
Amendment Flag | false |
Entity Central Index Key | 0001005210 |
Document Type | 8-K |
Document Period End Date | May 09, 2024 |
Entity Registrant Name | SUBURBAN PROPANE PARTNERS LP |
Entity Incorporation State Country Code | DE |
Entity File Number | 1-14222 |
Entity Tax Identification Number | 22-3410353 |
Entity Address, Address Line One | 240 Route 10 West |
Entity Address, City or Town | Whippany |
Entity Address, State or Province | NJ |
Entity Address, Postal Zip Code | 07981 |
City Area Code | (973) |
Local Phone Number | 887-5300 |
Written Communications | false |
Soliciting Material | false |
Pre Commencement Tender Offer | false |
Pre Commencement Issuer Tender Offer | false |
Security 12b Title | Common Units |
Trading Symbol | SPH |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
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