WHIPPANY, N.J., Feb. 3, 2022 /PRNewswire/ -- Suburban
Propane Partners, L.P. (NYSE: SPH), today announced earnings for
its first quarter ended December 25,
2021.
Net income for the first quarter of fiscal 2022 was $21.3 million, or $0.34 per Common Unit, compared to $38.0 million, or $0.61 per Common Unit, in the fiscal 2021 first
quarter. Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, as defined and reconciled below)
increased $6.5 million, or 8.1%, to
$86.5 million for the first quarter
of fiscal 2022, compared to $80.0
million in the prior year.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"Despite near record warm temperatures in the month of December,
and continuing challenges managing the business through the
COVID-19 pandemic, we delivered another solid quarter with an
increase in Adjusted EBITDA of more than 8% compared to the prior
year first quarter. Lower heat-related customer demand, and
inflationary factors driving higher operating expenses, were offset
by effective selling price management and prudent hedging and risk
management activities in a volatile commodity price environment.
The improvement in earnings is also a testament to the hard work
and dedication of our operations personnel in maintaining their
focus on delivering outstanding service to our customers, while
adhering to our protocols to protect the health and safety of our
customers and employees, and reflects positive results from our
customer base growth and retention initiatives."
Mr. Stivala continued, "With much of the heating season still
ahead, and with the arrival of more seasonable winter temperatures
in the early part of our fiscal second quarter, we are very
well-positioned to respond to increasing customer demand while, at
the same time, pursuing our strategic growth initiatives. We are
also happy with the progress that we are making with our
minority-owned subsidiary, Oberon Fuels, toward the
commercialization of low-carbon, renewable dimethyl ether, which,
as a blend with propane, will significantly reduce the carbon
intensity of already clean-burning propane."
Retail propane gallons sold in the first quarter of fiscal 2022
of 105.3 million gallons decreased 5.7% compared to the prior year,
primarily due to the adverse impact of widespread unseasonably warm
temperatures on heat-related customer demand, particularly during
the month of December 2021. According to the National Oceanic
and Atmospheric Administration, average temperatures (as measured
by heating degree days) across all of the Partnership's service
territories during the first quarter were 16% warmer than normal
and 3% warmer than the prior year. Average temperatures during the
month of December 2021, which is the
most critical month for heat-related demand in the first quarter,
was 14% warmer than normal and 5% warmer than December
2020.
Average propane prices (basis Mont
Belvieu, Texas) for the first quarter of fiscal 2022
increased 118.5% compared to the prior year and 7.1% compared to
the prior sequential quarter. Net income for the first
quarter of fiscal 2022 included a $33.5
million unrealized loss attributable to the mark-to-market
adjustment for derivative instruments used in risk management
activities, compared to a $4.9
million unrealized gain in the prior year. These
non-cash adjustments, which were reported in cost of products sold,
were excluded from Adjusted EBITDA for both periods in the table
below. Total gross margin for the first quarter of fiscal
2022 was $179.1 million, compared to
$201.8 million in the prior year.
Excluding the impact of the unrealized mark-to-market adjustments,
total gross margin of $212.6 million
for the first quarter of fiscal 2022 increased $15.6 million, or 7.9%, compared to the prior
year, primarily due to prudent margin management during a volatile
commodity price environment, as well as from the favorable impact
of commodity hedges that matured during the period. The
Partnership's hedging and risk management activities are intended
to reduce the effect of price volatility associated with forecasted
purchases of propane, and propane sold on a fixed price
basis. The commodity hedges that matured during the first
quarter of fiscal 2022 were principally comprised of net long
positions purchased in fiscal 2021 that were favorably impacted
from the significant rise in commodity
prices.
Combined operating and general and administrative expenses of
$125.5 million for the first quarter
of fiscal 2022 increased 8.1% compared to the prior year, primarily
due to higher payroll and benefit-related expenses and higher
vehicle lease and operating costs, as well as other inflationary
effects on the Partnership's operating
costs.
Total debt outstanding as of December
2021 was $73.4 million lower
than at the end of the first quarter of the prior year, and the
Consolidated Leverage Ratio for the twelve-month period ending
December 25, 2021 was
4.02x.
As previously announced on January 20,
2022, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.325 per
Common Unit for the three months ended December 25, 2021. On an annualized basis,
this distribution rate equates to $1.30 per Common Unit. The distribution is
payable on February 8, 2022 to Common
Unitholders of record as of February 1,
2022.
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, fuel oil and related products and services, as
well as a marketer of natural gas and electricity and an 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 41 states. Suburban Propane is supported by
three core pillars: (1) Suburban Commitment –
showcasing Suburban Propane's 90+ 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 developing the next generation of renewable
energy. 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:
- The impact of weather conditions on the demand for propane,
fuel oil and other refined fuels, natural gas and
electricity;
- The impact of the COVID-19 pandemic and the corresponding
government response, including the impact across the Partnership's
businesses on demand and operations, as well as on the operations
of the Partnership's suppliers, customers and other business
partners, and the effectiveness of the Partnership's actions taken
in response to these risks;
- 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, including the economic
instability resulting from natural disasters such as pandemics,
including the COVID-19 pandemic;
- 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 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 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 ability of the Partnership to continue to combat
cybersecurity threats to its networks and information
technology;
- 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 25, 2021
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 25, 2021 and December 26, 2020
(in thousands,
except per unit amounts)
(unaudited)
|
|
|
Three Months
Ended
|
|
|
|
December 25,
2021
|
|
|
December 26,
2020
|
|
Revenues
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
331,117
|
|
|
$
|
268,624
|
|
Fuel oil and refined
fuels
|
|
|
20,966
|
|
|
|
15,750
|
|
Natural gas and
electricity
|
|
|
9,223
|
|
|
|
6,876
|
|
All other
|
|
|
14,101
|
|
|
|
13,941
|
|
|
|
|
375,407
|
|
|
|
305,191
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
196,338
|
|
|
|
103,379
|
|
Operating
|
|
|
105,730
|
|
|
|
97,979
|
|
General and
administrative
|
|
|
19,798
|
|
|
|
18,130
|
|
Depreciation and
amortization
|
|
|
16,285
|
|
|
|
28,017
|
|
|
|
|
338,151
|
|
|
|
247,505
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
37,256
|
|
|
|
57,686
|
|
Interest expense,
net
|
|
|
15,299
|
|
|
|
18,135
|
|
Other, net
|
|
|
1,130
|
|
|
|
1,078
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for (benefit from) income taxes
|
|
|
20,827
|
|
|
|
38,473
|
|
(Benefit from)
provision for income taxes
|
|
|
(471)
|
|
|
|
496
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
21,298
|
|
|
$
|
37,977
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
0.34
|
|
|
$
|
0.61
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
63,032
|
|
|
|
62,544
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
0.34
|
|
|
$
|
0.61
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
63,309
|
|
|
|
62,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
52,411
|
|
|
$
|
84,625
|
|
Adjusted EBITDA
(a)
|
|
$
|
86,526
|
|
|
$
|
80,021
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
Propane
|
|
|
105,265
|
|
|
|
111,683
|
|
Refined
fuels
|
|
|
6,134
|
|
|
|
6,406
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
4,370
|
|
|
$
|
2,788
|
|
Growth
|
|
$
|
6,303
|
|
|
$
|
3,024
|
|
(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
|
|
|
|
December 25,
2021
|
|
|
December 26,
2020
|
|
Net income
|
|
$
|
21,298
|
|
|
$
|
37,977
|
|
Add:
|
|
|
|
|
|
|
|
|
(Benefit from)
provision for income taxes
|
|
|
(471)
|
|
|
|
496
|
|
Interest expense,
net
|
|
|
15,299
|
|
|
|
18,135
|
|
Depreciation and
amortization
|
|
|
16,285
|
|
|
|
28,017
|
|
EBITDA
|
|
|
52,411
|
|
|
|
84,625
|
|
Unrealized non-cash
losses (gains) on changes in fair value of derivatives
|
|
|
33,505
|
|
|
|
(4,855)
|
|
Equity in earnings of
unconsolidated affiliate
|
|
|
610
|
|
|
|
251
|
|
Adjusted
EBITDA
|
|
$
|
86,526
|
|
|
$
|
80,021
|
|
We also reference gross margins, computed as revenues less cost
of products sold as those amounts are reported on the condensed
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.