SPH Suburban Propane

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

February 8, 2024

Commission File Number: 1-14222

 

SUBURBAN PROPANE PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

 

Delaware		22-3410353
(State or Other Jurisdiction		(IRS Employer
of Incorporation)		Identification No.)

240 Route 10 West

Whippany, New Jersey 07981

(973) 887-5300

(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)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	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
Common Units	SPH	New York Stock Exchange

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. ☐

 

 

 

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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 February 8, 2024, the Partnership issued a press release (the “Press Release”) describing its Fiscal 2024 First 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		Press Release of Suburban Propane Partners, L.P. dated February 8, 2024, describing the Fiscal 2024 First Quarter Financial Results.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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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.

February 8, 2024		SUBURBAN PROPANE PARTNERS, L.P.
		By:		/s/ MICHAEL A. KUGLIN
		Name:		Michael A. Kuglin
		Title:		Chief Financial Officer

 

 

 

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Exhibit 99.1

		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 First Quarter Results

 

Whippany, New Jersey, February 8, 2024 -- 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

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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:

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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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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

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(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.

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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.

 

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v3.24.0.1

Document and Entity Information	Feb. 08, 2024
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001005210
Document Type	8-K
Document Period End Date	Feb. 08, 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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