WHIPPANY, N.J., Nov. 15,
2018 /PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE:
SPH), a nationwide distributor of propane, fuel oil and related
products and services, as well as a marketer of natural gas and
electricity, today announced results for its full year and fourth
quarter ended September 29, 2018.
Fiscal Year 2018 Results
Fiscal 2018 included 52 weeks of operations compared to 53 weeks
reported in the prior year.
Net income for fiscal 2018 was $76.5
million, or $1.24 per Common
Unit, compared to $38.0 million, or
$0.62 per Common Unit, in fiscal
2017.
Net income and EBITDA (as defined and reconciled below) for
fiscal 2018 included a loss of $4.8
million from the sale of certain assets and operations in a
non-strategic market of the propane segment. Net income and
EBITDA for fiscal 2017 included a pension settlement charge of
$6.1 million and a loss on debt
extinguishment of $1.6 million.
Excluding the effects of the foregoing items and unrealized
(non-cash) mark-to-market adjustments on derivative instruments in
both years, Adjusted EBITDA (as defined and reconciled below)
increased $40.0 million, or 16.5%, to
$283.0 million in fiscal 2018 from
$243.0 million in the prior year.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"After back to back record warm winters in fiscal years 2016 and
2017, one of our goals coming into fiscal 2018 was to begin to
restore our balance sheet strength to best position the business
for long-term profitable growth. We are very pleased to
report that Adjusted EBITDA for fiscal 2018 improved $40 million, or 16.5%, compared to the prior year
and, as a result, we made significant strides toward our stated
goals. We put the excess cash flow to work, investing in the growth
of our propane operations through two strategic acquisitions in
attractive markets, pursuing investments in various "greenfield"
expansions in markets that we believe can provide enhanced growth
opportunities, and reducing indebtedness by $19 million. Our financial metrics continue
to get stronger -- with our leverage ratio improving to 4.36x and
distribution coverage greater than 1.3x at the end of fiscal
2018."
Mr. Stivala continued, "Along with the improvement in earnings,
we continued to take steps to support our long-term growth.
We made additional investments in our people and technology to
drive incremental operating efficiencies and to enhance the overall
customer experience, and we are continuing to make progress on our
customer base growth and retention initiatives. As we enter
fiscal 2019, we remain focused on strengthening our balance sheet,
building on the momentum from this past year, and continuing to
gain market share. We are well positioned, both operationally and
financially, to continue to provide the highest level of customer
service in every market we serve and to pursue strategic growth
opportunities in the coming fiscal year."
Concluding his remarks, Mr. Stivala said, "Finally, over this
past year we have had the honor of celebrating our 90th
year in business, providing innovation and leadership to the
propane industry, and dedicated service to the local communities we
serve nationwide. We are very proud of our heritage and the
influence we have had on the industry since the very
beginning."
Retail propane gallons sold in fiscal 2018 increased 19.2
million gallons, or 4.6%, to 440.0 million gallons. Sales of fuel
oil and other refined fuels of 31.0 million gallons in fiscal 2018
were essentially flat year over year. Average temperatures
(as measured by heating degree days) across all of the
Partnership's service territories for fiscal 2018 were 7% warmer
than normal and 8% cooler than the prior year. The cooler
temperatures compared to the prior year were experienced throughout
the majority of our service territories, which contributed to an
increase in customer demand for heating needs.
Revenues for fiscal 2018 of $1,344.4
million increased $156.5
million, or 13.2%, compared to the prior year, primarily due
to higher retail selling prices associated with higher wholesale
costs, combined with higher volumes sold.
Cost of products sold for fiscal 2018 of $592.6 million increased $116.0 million, or 24.3%, compared to the prior
year, primarily due to higher wholesale costs and higher volumes
sold. Average propane prices (basis Mont Belvieu, Texas) and fuel oil prices for
fiscal 2018 increased 36.0% and 29.5% compared to the prior year,
respectively. Cost of products sold for fiscal 2018 included
a $0.3 million unrealized (non-cash)
gain attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$6.3 million unrealized (non-cash)
gain in fiscal 2017. These unrealized gains are excluded from
Adjusted EBITDA for both periods in the table below.
Combined operating and general and administrative expenses of
$468.4 million for fiscal 2018 were
essentially flat compared to the prior year. Excluding the
charge in the prior year discussed above, expenses increased
$6.5 million, or 1.4%, compared to
the prior year due to higher variable operating costs attributable
to an increase in deliveries and other operational activities to
support higher customer demand, as well as higher variable
compensation associated with higher earnings.
Depreciation and amortization expense of $125.2 million for fiscal 2018 decreased
$2.7 million, or 2.1%, primarily due
to the acceleration of depreciation expense recorded in the prior
year for assets taken out of service. Net interest expense of
$77.4 million for fiscal 2018
increased $2.1 million, or 2.8%,
primarily due to an increase in benchmark interest rates and higher
average outstanding borrowings under the Partnership's revolving
credit facility. Nonetheless, the Partnership repaid approximately
$19.0 million under its revolver from
operating cash flows during fiscal 2018, which reduced outstanding
revolver borrowings to $143.6 million
at the end of the fiscal year, compared to $162.6 million at the end of fiscal
2017.
Fourth Quarter 2018 Results
Consistent with the seasonal nature of the propane and fuel oil
businesses, the Partnership typically reports a net loss for its
fiscal fourth quarter. The fourth quarter of fiscal 2018
included 13 weeks of operations, compared to 14 weeks in the prior
year fourth quarter. Net loss for the fourth quarter of
fiscal 2018 was $50.8 million, or
$0.83 per Common Unit, compared to a
net loss of $50.6 million, or
$0.83 per Common Unit, for the fourth
quarter of fiscal 2017. Net loss and EBITDA for the fourth quarter
of fiscal 2017 included a pension settlement charge of $6.1 million.
Excluding these items and the effects of unrealized (non-cash)
mark-to-market adjustments on derivative instruments used in risk
management activities in both quarters, Adjusted EBITDA for the
fourth quarter of fiscal 2018 amounted to a loss of $2.8 million, compared to a loss of $0.7 million for the fourth quarter of fiscal
2017. The year over year earnings comparison reflects the impact of
the extra week reported in fiscal 2017 on volumes sold. Retail
propane gallons sold of 64.8 million gallons in the fourth quarter
of fiscal 2018 decreased 5.8 million gallons, or 8.3%, compared to
the prior year fourth quarter.
As previously announced on October 25,
2018, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.60 per
Common Unit for the three months ended September 29, 2018. On an annualized basis,
this distribution rate equates to $2.40 per Common Unit. The distribution was paid
on November 13, 2018 to Common
Unitholders of record as of November 6,
2018.
Suburban Propane Partners, L.P. is a publicly-traded master
limited partnership listed on the New York Stock Exchange.
Headquartered in Whippany, New
Jersey, Suburban has been in the customer service business
since 1928. The Partnership serves the energy needs of
approximately 1.0 million residential, commercial, industrial and
agricultural customers through approximately 700 locations in 41
states.
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,
fuel oil and other refined fuels, natural gas and
electricity;
- Volatility in the unit cost of propane, fuel oil and other
refined fuels, natural gas 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, fuel oil 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, global terrorism and
other general economic conditions;
- The ability of the Partnership to acquire sufficient volumes
of, and the costs to the Partnership of acquiring, transporting and
storing, propane, fuel oil and other refined fuels;
- The ability of the Partnership to acquire and maintain
reliable transportation for its propane, fuel oil and other refined
fuels;
- The ability of the Partnership to retain customers or
acquire new customers;
- The impact of customer conservation, energy efficiency and
technology advances on the demand for propane, fuel oil and other
refined fuels, natural gas and electricity;
- The ability of management to continue to control
expenses;
- The impact of changes in applicable statutes and government
regulations, or their interpretations, including those relating to
the environment and climate change, derivative instruments and
other regulatory developments 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 proceedings on the Partnership's
business;
- The impact of operating hazards that could adversely affect
the Partnership's operating results to the extent not covered by
insurance;
- The Partnership's ability to make strategic acquisitions and
successfully integrate them;
- The impact of current conditions in the global capital and
credit markets, and general economic pressures;
- The operating, legal and regulatory risks the Partnership
may face; 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 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, 2017
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
Twelve Months Ended September 29, 2018 and September 30,
2017
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
September 29,
2018
|
|
|
September 30,
2017
|
|
|
September 29,
2018
|
|
|
September 30,
2017
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
162,979
|
|
|
$
|
167,559
|
|
|
$
|
1,153,323
|
|
|
$
|
1,011,078
|
|
Fuel oil and refined
fuels
|
|
|
9,106
|
|
|
|
8,514
|
|
|
|
91,520
|
|
|
|
78,126
|
|
Natural gas and
electricity
|
|
|
10,366
|
|
|
|
10,874
|
|
|
|
54,308
|
|
|
|
55,103
|
|
All other
|
|
|
10,467
|
|
|
|
10,159
|
|
|
|
45,262
|
|
|
|
43,579
|
|
|
|
|
192,918
|
|
|
|
197,106
|
|
|
|
1,344,413
|
|
|
|
1,187,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
85,407
|
|
|
|
73,935
|
|
|
|
592,630
|
|
|
|
476,661
|
|
Operating
|
|
|
92,049
|
|
|
|
103,826
|
|
|
|
402,181
|
|
|
|
410,665
|
|
General and
administrative
|
|
|
16,561
|
|
|
|
17,159
|
|
|
|
66,246
|
|
|
|
57,338
|
|
Depreciation and
amortization
|
|
|
30,629
|
|
|
|
32,182
|
|
|
|
125,222
|
|
|
|
127,938
|
|
|
|
|
224,646
|
|
|
|
227,102
|
|
|
|
1,186,279
|
|
|
|
1,072,602
|
|
Loss on sale of
business
|
|
|
—
|
|
|
|
—
|
|
|
|
4,823
|
|
|
|
—
|
|
Operating (loss)
income
|
|
|
(31,728)
|
|
|
|
(29,996)
|
|
|
|
153,311
|
|
|
|
115,284
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,567
|
|
Interest expense,
net
|
|
|
18,955
|
|
|
|
20,443
|
|
|
|
77,383
|
|
|
|
75,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for (benefit from)
income taxes
|
|
|
(50,683)
|
|
|
|
(50,439)
|
|
|
|
75,928
|
|
|
|
38,454
|
|
Provision for
(benefit from) income taxes
|
|
|
143
|
|
|
|
151
|
|
|
|
(606)
|
|
|
|
459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(50,826)
|
|
|
$
|
(50,590)
|
|
|
$
|
76,534
|
|
|
$
|
37,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
|
(0.83)
|
|
|
$
|
(0.83)
|
|
|
$
|
1.24
|
|
|
$
|
0.62
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
61,599
|
|
|
|
61,290
|
|
|
|
61,557
|
|
|
|
61,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
|
(0.83)
|
|
|
$
|
(0.83)
|
|
|
$
|
1.24
|
|
|
$
|
0.62
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
61,599
|
|
|
|
61,290
|
|
|
|
61,847
|
|
|
|
61,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
(1,099)
|
|
|
$
|
2,186
|
|
|
$
|
278,533
|
|
|
$
|
241,655
|
|
Adjusted EBITDA
(a)
|
|
$
|
(2,830)
|
|
|
$
|
(699)
|
|
|
$
|
283,046
|
|
|
$
|
243,045
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
64,754
|
|
|
|
70,582
|
|
|
|
439,955
|
|
|
|
420,770
|
|
Refined
fuels
|
|
|
3,140
|
|
|
|
3,644
|
|
|
|
31,045
|
|
|
|
30,895
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
3,155
|
|
|
$
|
2,846
|
|
|
$
|
13,226
|
|
|
$
|
11,275
|
|
Growth
|
|
$
|
3,899
|
|
|
$
|
3,318
|
|
|
$
|
19,675
|
|
|
$
|
16,893
|
|
(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
|
|
|
Twelve Months
Ended
|
|
|
|
September 29,
2018
|
|
|
September 30,
2017
|
|
|
September 29,
2018
|
|
|
September 30,
2017
|
|
Net (loss)
income
|
|
$
|
(50,826)
|
|
|
$
|
(50,590)
|
|
|
$
|
76,534
|
|
|
$
|
37,995
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes
|
|
|
143
|
|
|
|
151
|
|
|
|
(606)
|
|
|
|
459
|
|
Interest expense,
net
|
|
|
18,955
|
|
|
|
20,443
|
|
|
|
77,383
|
|
|
|
75,263
|
|
Depreciation and
amortization
|
|
|
30,629
|
|
|
|
32,182
|
|
|
|
125,222
|
|
|
|
127,938
|
|
EBITDA
|
|
|
(1,099)
|
|
|
|
2,186
|
|
|
|
278,533
|
|
|
|
241,655
|
|
Unrealized (non-cash)
(gains) losses on changes in fair value of derivatives
|
|
|
(1,731)
|
|
|
|
(8,985)
|
|
|
|
(310)
|
|
|
|
(6,277)
|
|
Pension settlement
charge
|
|
|
—
|
|
|
|
6,100
|
|
|
|
—
|
|
|
|
6,100
|
|
Loss on sale of
business
|
|
|
—
|
|
|
|
—
|
|
|
|
4,823
|
|
|
|
—
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,567
|
|
Adjusted
EBITDA
|
|
$
|
(2,830)
|
|
|
$
|
(699)
|
|
|
$
|
283,046
|
|
|
$
|
243,045
|
|
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
Annual Report on Form 10-K to be filed by the Partnership with the
United States Securities and Exchange Commission
("SEC"). Such report, once filed, will be available on
the public EDGAR electronic filing system maintained by the
SEC.
View original
content:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-full-year-and-fourth-quarter-results-300750755.html
SOURCE Suburban Propane Partners, L.P.