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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended December 30, 2023

 

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

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 of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

240 Route 10 West

Whippany, NJ 07981

(973) 887-5300

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

 

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

At February 5, 2024, there were 64,020,164 Common Units of Suburban Propane Partners, L.P. outstanding.

 

 


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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

INDEX TO FORM 10-Q

 

 

 

 

 

Page

 

 

PART I. FINANCIAL INFORMATION

 

1

 

 

 

 

 

ITEM 1.

 

FINANCIAL STATEMENTS (UNAUDITED)

 

1

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of December 30, 2023 and September 30, 2023

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three months ended December 30, 2023 and December 24, 2022

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended December 30, 2023 and December 24, 2022

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended December 30, 2023 and December 24, 2022

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Partners’ Capital for the three months ended December 30, 2023
and December 24, 2022

 

5

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

22

 

 

 

 

 

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

30

 

 

 

 

 

ITEM 4.

 

CONTROLS AND PROCEDURES

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

32

 

 

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

32

 

 

 

 

 

ITEM 1A.

 

RISK FACTORS

 

32

 

 

 

 

 

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

32

 

 

 

 

 

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

32

 

 

 

 

 

ITEM 4.

 

MINE SAFETY DISCLOSURES

 

32

 

 

 

 

 

ITEM 5.

 

OTHER INFORMATION

 

32

 

 

 

 

 

ITEM 6.

 

EXHIBITS

 

33

 

 

 

 

 

SignaturEs

 

34

 

 


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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements (“Forward-Looking Statements”) as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to future business expectations and predictions, project developments, and financial condition and results of operations of Suburban Propane Partners, L.P. (the “Partnership”). Some of these statements can be identified by the use of forward-looking terminology such as “prospects,” “outlook,” “believes,” “estimates,” “intends,” “may,” “will,” “should,” “could,” “anticipates,” “expects” or “plans” or the negative or other variation of these or similar words, or by discussion of trends and conditions, strategies or risks and uncertainties. These Forward-Looking Statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such Forward-Looking Statements (statements contained in this Quarterly Report identifying such risks and uncertainties are referred to as “Cautionary Statements”). The risks and uncertainties that could impact the Partnership’s results include, but are not limited to, 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 in Ukraine, 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 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;

 


Table of Contents

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 relating 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 Forward-Looking Statements are discussed in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report. Reference is also made to the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. On different occasions, the Partnership or its representatives have made or may make Forward-Looking Statements in other filings with the SEC, press releases or oral statements made by or with the approval of one of the Partnership’s authorized executive officers. 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 or Cautionary Statement, except as required by law. All subsequent written and oral Forward-Looking Statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements in this Quarterly Report and in future SEC reports. For a more complete discussion of specific factors which could cause actual results to differ from those in the Forward-Looking Statements or Cautionary Statements, see “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

 

 


Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

December 30,

 

 

September 30,

 

 

 

2023

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,280

 

 

$

3,514

 

Accounts receivable, less allowance for doubtful accounts of $4,966 and
   $
4,449, respectively

 

 

118,737

 

 

 

67,687

 

Inventories

 

 

60,970

 

 

 

61,828

 

Other current assets

 

 

35,654

 

 

 

30,973

 

Total current assets

 

 

221,641

 

 

 

164,002

 

Property, plant and equipment, net

 

 

643,220

 

 

 

646,054

 

Operating lease right-of-use assets

 

 

138,269

 

 

 

142,940

 

Goodwill

 

 

1,148,776

 

 

 

1,148,776

 

Other intangible assets, net

 

 

77,671

 

 

 

80,553

 

Other assets

 

 

90,026

 

 

 

88,150

 

Total assets

 

$

2,319,603

 

 

$

2,270,475

 

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

72,219

 

 

$

40,043

 

Accrued employment and benefit costs

 

 

33,733

 

 

 

45,138

 

Customer deposits and advances

 

 

112,195

 

 

 

127,311

 

Operating lease liabilities

 

 

33,471

 

 

 

33,562

 

Other current liabilities

 

 

57,955

 

 

 

61,764

 

Total current liabilities

 

 

309,573

 

 

 

307,818

 

Long-term borrowings

 

 

1,243,778

 

 

 

1,188,210

 

Accrued insurance

 

 

49,249

 

 

 

49,632

 

Operating lease liabilities

 

 

103,852

 

 

 

108,495

 

Other liabilities

 

 

63,263

 

 

 

69,964

 

Total liabilities

 

 

1,769,715

 

 

 

1,724,119

 

Commitments and contingencies

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

 

Common Unitholders (64,015 and 63,521 units issued and outstanding at
   December 30, 2023 and September 30, 2023, respectively)

 

 

560,386

 

 

 

557,023

 

Accumulated other comprehensive loss

 

 

(10,498

)

 

 

(10,667

)

Total partners’ capital

 

 

549,888

 

 

 

546,356

 

Total liabilities and partners’ capital

 

$

2,319,603

 

 

$

2,270,475

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit amounts)

(unaudited)

 

 

Three Months Ended

 

 

 

December 30,

 

 

December 24,

 

 

 

2023

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

 

Three Months Ended

 

 

 

December 30,

 

 

December 24,

 

 

 

2023

 

 

2022

 

Net income

 

$

24,454

 

 

$

45,394

 

Other comprehensive income:

 

 

 

 

 

 

Amortization of net actuarial losses and prior service
   credits into earnings

 

 

169

 

 

 

164

 

Other comprehensive income

 

 

169

 

 

 

164

 

Total comprehensive income

 

$

24,623

 

 

$

45,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Three Months Ended

 

 

 

December 30,

 

 

December 24,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

24,454

 

 

$

45,394

 

Adjustments to reconcile net income to net cash (used in) provided by operations:

 

 

 

 

 

 

Depreciation and amortization

 

 

16,393

 

 

 

13,779

 

Compensation costs recognized under Restricted Unit Plan

 

 

2,645

 

 

 

2,471

 

Other, net

 

 

5,950

 

 

 

714

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(51,050

)

 

 

(55,383

)

Inventories

 

 

858

 

 

 

(4,271

)

Other current and noncurrent assets

 

 

(2,944

)

 

 

(723

)

Accounts payable

 

 

32,594

 

 

 

47,160

 

Accrued employment and benefit costs

 

 

(11,551

)

 

 

(15,788

)

Customer deposits and advances

 

 

(15,116

)

 

 

(13,936

)

Contributions to defined benefit pension plan

 

 

 

 

 

(1,000

)

Other current and noncurrent liabilities

 

 

(15,008

)

 

 

(12,145

)

Net cash (used in) provided by operating activities

 

 

(12,775

)

 

 

6,272

 

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(11,150

)

 

 

(10,780

)

Investments in and acquisitions of businesses

 

 

(3,250

)

 

 

(4,354

)

Proceeds from sale of property, plant and equipment

 

 

486

 

 

 

743

 

Net cash (used in) investing activities

 

 

(13,914

)

 

 

(14,391

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from borrowings under revolving credit facility

 

 

148,400

 

 

 

140,600

 

Repayments of borrowings under revolving credit facility

 

 

(93,600

)

 

 

(106,700

)

Partnership distributions

 

 

(20,645

)

 

 

(20,471

)

Other, net

 

 

(3,541

)

 

 

(3,332

)

Net cash provided by financing activities

 

 

30,614

 

 

 

10,097

 

Net increase in cash, cash equivalents and restricted cash

 

 

3,925

 

 

 

1,978

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

14,074

 

 

 

4,100

 

Cash, cash equivalents and restricted cash at end of period

 

$

17,999

 

 

$

6,078

 

 

 

 

 

 

 

 

Less: restricted cash

 

 

11,719

 

 

 

 

Cash and cash equivalents, end of period

 

$

6,280

 

 

$

6,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in thousands)

(unaudited)

 

 

 

Three Months Ended December 30, 2023

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

Common

 

 

Comprehensive

 

 

Partners’

 

 

 

Common Units

 

 

Unitholders

 

 

(Loss)

 

 

Capital

 

Balance, beginning of period

 

 

63,521

 

 

$

557,023

 

 

$

(10,667

)

 

$

546,356

 

Net income

 

 

 

 

 

24,454

 

 

 

 

 

 

24,454

 

Other comprehensive income

 

 

 

 

 

 

 

 

169

 

 

 

169

 

Partnership distributions

 

 

 

 

 

(20,645

)

 

 

 

 

 

(20,645

)

Common Units issued under Restricted Unit Plan

 

 

494

 

 

 

(3,091

)

 

 

 

 

 

(3,091

)

Compensation costs recognized under Restricted Unit Plan

 

 

 

 

 

2,645

 

 

 

 

 

 

2,645

 

Balance, end of period

 

 

64,015

 

 

$

560,386

 

 

$

(10,498

)

 

$

549,888

 

 

 

 

Three Months Ended December 24, 2022

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

Common

 

 

Comprehensive

 

 

Partners’

 

 

 

Common Units

 

 

Unitholders

 

 

(Loss)

 

 

Capital

 

Balance, beginning of period

 

 

62,987

 

 

$

510,126

 

 

$

(12,596

)

 

$

497,530

 

Net income

 

 

 

 

 

45,394

 

 

 

 

 

 

45,394

 

Other comprehensive income

 

 

 

 

 

 

 

 

164

 

 

 

164

 

Partnership distributions

 

 

 

 

 

(20,471

)

 

 

 

 

 

(20,471

)

Common Units issued under Restricted Unit Plan

 

 

499

 

 

 

(2,732

)

 

 

 

 

 

(2,732

)

Compensation costs recognized under Restricted Unit Plan

 

 

 

 

 

2,471

 

 

 

 

 

 

2,471

 

Balance, end of period

 

 

63,486

 

 

$

534,788

 

 

$

(12,432

)

 

$

522,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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Table of Contents

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except unit and per unit amounts)

(unaudited)

1.
Partnership Organization and Formation

Suburban Propane Partners, L.P. (the “Partnership”) is a publicly traded Delaware limited partnership principally engaged, through its operating partnership and subsidiaries, in the retail marketing and distribution of propane, renewable propane, renewable natural gas (“RNG”), fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets and producer of and investor in low-carbon fuel alternatives. In addition, to complement its core marketing and distribution businesses, the Partnership services a wide variety of home comfort equipment, particularly for heating and ventilation. The publicly traded limited partner interests in the Partnership are evidenced by common units traded on the New York Stock Exchange (“Common Units”), with 64,015,004 Common Units outstanding at December 30, 2023. The holders of Common Units are entitled to participate in distributions and exercise the rights and privileges available to limited partners under the Third Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), as amended. Rights and privileges under the Partnership Agreement include, among other things, the election of all members of the Board of Supervisors and voting on the removal of the general partner.

Suburban Propane, L.P. (the “Operating Partnership”), a Delaware limited partnership, is the Partnership’s operating subsidiary formed to operate the propane business and assets. In addition, Suburban Sales & Service, Inc. (the “Service Company”), a subsidiary of the Operating Partnership, was formed to operate the service work and appliance and parts businesses of the Partnership. The Operating Partnership, together with its direct and indirect subsidiaries, accounts for substantially all of the Partnership’s assets, revenues and earnings. The Partnership, the Operating Partnership and the Service Company commenced operations in March 1996 in connection with the Partnership’s initial public offering.

Suburban Renewable Energy, LLC (“Suburban Renewable Energy”) is a wholly owned subsidiary of the Operating Partnership that was formed in January 2022. Suburban Renewable Energy serves as the platform for the Partnership’s investments in innovative, renewable energy technologies and businesses.

The general partner of both the Partnership and the Operating Partnership is Suburban Energy Services Group LLC (the “General Partner”), a Delaware limited liability company, the sole member of which is the Partnership’s Chief Executive Officer. Other than as a holder of 784 Common Units that will remain in the General Partner, the General Partner does not have any economic interest in the Partnership or the Operating Partnership.

The Partnership’s fuel oil and refined fuels, natural gas and electricity, services, and renewable energy businesses are structured as either limited liability companies that are treated as corporations or corporate entities (collectively referred to as the “Corporate Entities”) and, as such, are subject to corporate level U.S. income tax.

Suburban Energy Finance Corp., a direct 100%-owned subsidiary of the Partnership, was formed on November 26, 2003 to serve as co-issuer, jointly and severally with the Partnership, of the Partnership’s senior notes.

 

2.
Basis of Presentation

Principles of Consolidation. The condensed consolidated financial statements include the accounts of the Partnership, the Operating Partnership and all of its direct and indirect subsidiaries. All significant intercompany transactions and account balances have been eliminated. The Partnership consolidates the results of operations, financial condition and cash flows of the Operating Partnership as a result of the Partnership’s 100% limited partner interest in the Operating Partnership.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). They include all adjustments that the Partnership considers necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed. These financial statements should be read in conjunction with the financial statements included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Due to the seasonal nature of the Partnership’s operations, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

 

 

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Table of Contents

Fiscal Period. The Partnership uses a 52/53-week fiscal year which ends on the last Saturday in September. The Partnership’s fiscal quarters are generally thirteen weeks in duration. When the Partnership’s fiscal year is 53 weeks long, as was the case for fiscal 2023, the corresponding fourth quarter is fourteen weeks in duration.

Revenue Recognition. Revenue is recognized by the Partnership when goods or services promised in a contract with a customer have been transferred, and no further performance obligation on that transfer is required, in an amount that reflects the consideration expected to be received. Performance obligations are determined and evaluated based on the specific terms of the arrangements and the distinct products and services offered. Due to the nature of the retail business of the Partnership, there are no remaining or unsatisfied performance obligations as of the end of the reporting period, except for tank rental agreements, maintenance service contracts, fixed price contracts and budgetary programs, as described below. The performance obligation associated with sales of propane, fuel oil and refined fuels is met at the time product is delivered to the customer. Revenue from the sale of appliances and equipment is recognized at the time of sale or when installation is complete, as defined by the performance obligations included within the related customer contract. Revenue from repairs, maintenance and other service activities is recognized upon completion of the service. Revenue from the sale of natural gas and electricity is recognized based on customer usage as determined by meter readings for amounts delivered, an immaterial amount of which may be unbilled at the end of each accounting period.

The Partnership defers the recognition of revenue for annually billed tank rent, maintenance service contracts, fixed price contracts and budgetary programs where customer consideration is received at the start of the contract period, establishing contract liabilities which are disclosed as customer deposits and advances on the condensed consolidated balance sheets. Deliveries to customers enrolled in budgetary programs that exceed billings to those customers establish contract assets which are included in accounts receivable on the condensed consolidated balance sheets. The Partnership ratably recognizes revenue over the applicable term for tank rent and maintenance service agreements, which is generally one year, and at the time of delivery for fixed price contracts and budgetary programs.

The Partnership incurs incremental direct costs, such as commissions to its salesforce, to obtain certain contracts. These costs are expensed as incurred, consistent with the practical expedients issued by the Financial Accounting Standards Board (“FASB”), since the expected amortization period is one year or less. The Partnership generally determines selling prices based on, among other things, the current weighted average cost and the current replacement cost of the product at the time of delivery, plus an applicable margin. Except for tank rental agreements, maintenance service contracts, fixed price contracts and budgetary programs, customer payments for the satisfaction of a performance obligation are due upon receipt.

Revenues from the Partnership’s renewable energy platform, as described further in Note 4, “Investments in and Acquisitions of Businesses,” consist of in-take and off-take revenues. In-take revenues are generated from tipping fees charged to third parties who deliver feedstocks, including food and beverage waste, to the Partnership’s facilities. These feedstocks, as well as manure from dairy cattle, are then anaerobically digested and converted into RNG and fertilizer. Off-take revenues are generated through the sale of RNG and the related environmental attributes, including renewable identification numbers (“RINs”) and low carbon fuel standard (“LCFS”) credits that are generated from the production and distribution of RNG, and revenues generated from the sales of fertilizers and other byproducts produced in the RNG production process. Revenues from the Partnership’s renewable energy platform are reported within the “all other” segment (refer to Note 18, “Segment Information” for more information).

In-take revenues are recognized at the point in time when the feedstocks are delivered to the Partnership because that is when the performance obligations have been satisfied. Off-take revenues are recognized at the point in time when the Partnership delivers the RNG to the customer because that is when the performance obligations have been satisfied.

Fair Value Measurements. The Partnership measures certain of its assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants – in either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability.

The common framework for measuring fair value utilizes a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.

Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

 

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Table of Contents

Business Combinations. The Partnership accounts for business combinations using the acquisition method and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the Partnership, and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Identifiable intangible assets with finite lives are amortized over their useful lives. The results of operations of acquired businesses are included in the condensed consolidated financial statements from the acquisition date. The Partnership expenses all acquisition-related costs as incurred.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates have been made by management in the areas of RNG revenue recognition, self-insurance and litigation reserves, pension and other postretirement benefit liabilities and costs, valuation of derivative instruments, depreciation and amortization of long-lived assets, asset impairment assessments, tax valuation allowances, allowances for doubtful accounts, and purchase price allocation for acquired businesses. The Partnership uses Society of Actuaries life expectancy information when developing the annual mortality assumptions for the pension and postretirement benefit plans, which are used to measure net periodic benefit costs and the obligation under these plans. Actual results could differ from those estimates, making it reasonably possible that a material change in these estimates could occur in the near term.

Recently Issued Accounting Pronouncements. In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures” (“Topic 280”). This update will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Topic 280 will first be effective for the Partnership’s fiscal 2025 annual report and should be applied retrospectively to all prior periods presented in the financial statements. The Partnership is assessing the effect of this update on its condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes: Improvements to Income Tax Disclosures” (“Topic 740”). This update requires disclosure of specific categories and disaggregation of information in the income tax rate reconciliation table. Topic 740 also requires disclosure of disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The requirements of Topic 740 are effective for annual periods beginning after December 15, 2024, which will be the Partnership’s fiscal 2026 annual report. Early adoption is permitted and the amendments should be applied on a prospective basis with retrospective application also being permitted. The Partnership is assessing the effect of this update on its condensed consolidated financial statements and related disclosures.

 

3.
Disaggregation of Revenue

The following table disaggregates revenue for each customer type. See Note 18, “Segment Information” for more information on segment reporting wherein it is disclosed that the Partnership’s Propane, Fuel Oil and Refined Fuels and Natural Gas and Electricity reportable segments generated approximately 86%, 7% and 2%, respectively, of the Partnership’s revenue from its reportable segments for all periods presented. The propane segment contributes the majority of the Partnership’s revenue and the concentration of revenue by customer type for the propane segment is not materially different from the consolidated revenue.

 

Three Months Ended

 

 

December 30,

 

 

December 24,

 

 

2023

 

 

2022

 

Retail

 

 

 

 

 

Residential

$

195,895

 

 

$

218,123

 

Commercial

 

98,453

 

 

 

108,688

 

Industrial

 

31,746

 

 

 

35,378

 

Government

 

17,073

 

 

 

18,008

 

Agricultural

 

13,450

 

 

 

14,351

 

Wholesale

 

9,217

 

 

 

2,922

 

Total revenues

$

365,834

 

 

$

397,470

 

 

The Partnership recognized $37,474 and $37,115 of revenue during the three months ended December 30, 2023 and December 24, 2022, respectively, for annually billed tank rent, maintenance service contracts, fixed price contracts and budgetary programs where customer consideration was received at the start of the contract period, and which was included in contract liabilities as of the beginning of each

 

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Table of Contents

respective period. Contract assets of $6,119 and $4,844 relating to deliveries to customers enrolled in budgetary programs that exceeded billings to those customers were included in accounts receivable as of December 30, 2023 and September 30, 2023, respectively.

 

4.
Investments in and Acquisitions of Businesses

On December 28, 2022, Suburban Renewable Energy acquired a platform of RNG production assets from Equilibrium Capital Group (“Equilibrium”), a leading sustainability-driven asset management firm. In addition, the parties formed a partnership to serve as a long-term growth platform for the identification, development and operation of additional RNG projects, including an existing pipeline of identified RNG projects that are in various stages of development (the “RNG Acquisition”).

The following table presents unaudited pro forma combined financial information as if the aforementioned acquisition had occurred on September 25, 2022, the first day of the Partnership’s 2023 fiscal year:

 

 

Three Months Ended

 

 

 

December 30,

 

 

December 24,

 

 

 

2023

 

 

2022

 

Revenues

 

$

365,834

 

 

$

401,400

 

Net income

 

 

24,454

 

 

 

35,390

 

Suburban Renewable Energy owns a 25% equity stake in Independence Hydrogen, Inc. (“IH”) based in Ashburn, VA. IH is a veteran-owned and operated, privately held company developing a gaseous hydrogen ecosystem to deliver locally sourced hydrogen to local markets, with a primary focus on material handling and backup power applications.

During the third quarter of fiscal 2022, Suburban Renewable Energy announced an agreement to construct, own and operate a new biodigester system with Adirondack Farms, a family dairy farm located in Clinton County, New York, for the production of RNG. Construction of the assets began during the first quarter of fiscal 2023, and is expected to be completed during fiscal 2025.

The Operating Partnership owns a 38% equity stake in Oberon Fuels, Inc. (“Oberon”) based in San Diego, California and has also purchased certain secured convertible notes issued by Oberon. Oberon, a development-stage producer of low-carbon, renewable dimethyl ether (“rDME”) transportation fuel, is focused on the research and development of practical and affordable pathways to zero-emission transportation through its proprietary production process. Oberon’s rDME fuel is a low-carbon, zero-soot alternative to petroleum diesel, and when blended with propane can significantly reduce the carbon intensity of propane. Additionally, rDME is a carrier for hydrogen, making it easy to deliver this renewable fuel for the growing hydrogen fuel cell vehicle industry. During the first quarter of fiscal 2024, the Operating Partnership purchased one additional secured convertible note issued by Oberon.

The RNG Acquisition, investments and partnerships were made in line with the Partnership’s Go Green with Suburban Propane corporate pillar, which focuses on advocating for the clean-burning and versatile nature of propane and renewable propane as a solution to a lower carbon future and investing in innovative, renewable energy alternatives to lower greenhouse gas (“GHG”) emissions. The investments in IH and Oberon are being accounted for under the equity method of accounting and were included in “Other assets” within the condensed consolidated balance sheets, and the Partnership’s equity in their earnings were included in “Other, net” within the condensed consolidated statements of operations.

 

5.
Financial Instruments and Risk Management

Cash, Cash Equivalents and Restricted Cash. The Partnership considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. In accordance with the indenture, as amended, and loan agreement, as amended, governing the Green Bonds assumed in the RNG Acquisition (see Notes 4 and 10), the Partnership is required to maintain certain funds in various accounts that are held with a third-party trustee for debt service and other purposes. The amounts deposited in those accounts is considered Restricted Cash and is reported within other current assets (or other assets, as applicable). The balance classified as short-term included accounts for which the cash will be used within one year, and are related to interest payments as well as operating and maintenance activities for the RNG facility in Arizona. The balance classified as long-term represented cash held in a debt service fund for future debt repayments on the Green Bonds for which the first debt redemption payment is due on October 1, 2028. Refer to Note 6, “Selected Balance Sheet Information” for a reconciliation of cash, cash equivalents, and restricted cash. The carrying amount approximates fair value because of the short-term maturity of these instruments.

Derivative Instruments and Hedging Activities

Commodity Price Risk. Given the retail nature of its operations, the Partnership maintains a certain level of priced physical inventory to help ensure its field operations have adequate supply commensurate with the time of year. The Partnership’s strategy is to keep its

 

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physical inventory priced relatively close to market for its field operations. The Partnership enters into a combination of exchange-traded futures and option contracts and, in certain instances, over-the-counter options and swap contracts (collectively, “derivative instruments”) to hedge price risk associated with propane and fuel oil physical inventories, as well as future purchases of propane or fuel oil used in its operations, and to help ensure adequate supply during periods of high demand. In addition, the Partnership sells propane and fuel oil to customers at fixed prices, and enters into derivative instruments to hedge a portion of its exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. Under this risk management strategy, realized gains or losses on derivative instruments will typically offset losses or gains on the physical inventory once the product is sold or delivered as it pertains to fixed price contracts. All of the Partnership’s derivative instruments are reported on the condensed consolidated balance sheet at their fair values. In addition, in the course of normal operations, the Partnership routinely enters into contracts such as forward priced physical contracts for the purchase or sale of propane and fuel oil that qualify for and are designated as normal purchase or normal sale contracts. Such contracts are exempted from the fair value accounting requirements and are accounted for at the time product is purchased or sold under the related contract. The Partnership does not use derivative instruments for speculative trading purposes. Market risks associated with derivative instruments are monitored daily for compliance with the Partnership’s Hedging and Risk Management Policy which includes volume limits for open positions. Priced on-hand inventory is also reviewed and managed daily as to exposures to changing market prices.

On the date that derivative instruments are entered into, other than those designated as normal purchases or normal sales, the Partnership makes a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or other comprehensive income (“OCI”), depending on whether the derivative instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, the Partnership formally assesses, both at the hedge contract’s inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into earnings during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of cash flow hedges are recognized in earnings immediately. Changes in the fair value of derivative instruments that are not designated as cash flow hedges, and that do not meet the normal purchase and normal sale exemption, are recorded within earnings as they occur. Cash flows associated with derivative instruments are reported as operating activities within the condensed consolidated statement of cash flows.

Interest Rate Risk. A portion of the Partnership’s borrowings bear interest at prevailing interest rates based upon, at the Operating Partnership’s option, Secured Overnight Financing Rate (“SOFR”) plus an applicable margin or the base rate, defined as the higher of the Federal Funds Rate plus ½ of 1% or the agent bank’s prime rate, or SOFR plus 1%, plus the applicable margin. The applicable margin is dependent on the level of the Partnership’s total leverage (the ratio of total debt to income before deducting interest expense, income taxes, depreciation and amortization (“EBITDA”), as adjusted pursuant to the Credit Agreement). Therefore, the Partnership is subject to interest rate risk on the variable component of the interest rate. From time to time, the Partnership manages part of its variable interest rate risk by entering into interest rate swap agreements. The Partnership did not enter into any interest rate swap agreements during the first quarter of fiscal 2024 or in fiscal 2023.

Valuation of Derivative Instruments. The Partnership measures the fair value of its exchange-traded options and futures contracts using quoted market prices found on the New York Mercantile Exchange (the “NYMEX”) (Level 1 inputs); the fair value of its swap contracts using quoted forward prices and the fair value of its interest rate swaps using model-derived valuations driven by observable projected movements of the 3-month SOFR (Level 2 inputs); and the fair value of its over-the-counter options contracts using Level 3 inputs. The Partnership’s over-the-counter options contracts are valued based on an internal option model. The inputs utilized in the model are based on publicly available information as well as broker quotes. The significant unobservable inputs used in the fair value measurements of the Partnership’s over-the-counter options contracts are interest rate and market volatility.

 

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The following summarizes the fair value of the Partnership’s derivative instruments and their location in the condensed consolidated balance sheets as of December 30, 2023 and September 30, 2023, respectively:

 

 

 

As of December 30, 2023

 

 

As of September 30, 2023

 

Asset Derivatives

 

Location

 

Fair Value

 

 

Location

 

Fair Value

 

Derivatives not designated as
   hedging instruments:

 

 

 

 

 

 

 

 

 

 

Commodity-related derivatives

 

Other current assets

 

$

2,345

 

 

Other current assets

 

$

18,538

 

 

 

Other assets

 

 

 

 

Other assets

 

 

8

 

 

 

 

 

$

2,345

 

 

 

 

$

18,546

 

 

 

 

 

 

 

 

 

 

 

 

Liability Derivatives

 

Location

 

Fair Value

 

 

Location

 

Fair Value

 

Derivatives not designated as
   hedging instruments:

 

 

 

 

 

 

 

 

 

 

Commodity-related derivatives

 

Other current liabilities

 

$

3,118

 

 

Other current liabilities

 

$

2,427

 

 

 

Other liabilities

 

 

 

 

Other liabilities

 

 

4,784

 

 

 

 

 

$

3,118

 

 

 

 

$

7,211

 

 

The following summarizes the reconciliation of the beginning and ending balances of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

 

 

 

Fair Value Measurement Using Significant
Unobservable Inputs (Level 3)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

December 30, 2023

 

 

December 24, 2022

 

 

 

Assets

 

 

Liabilities

 

 

Assets

 

 

Liabilities

 

Beginning balance of over-the-counter options

 

$

 

 

$

806

 

 

$

222

 

 

$

3,408

 

Beginning balance realized during the period

 

 

 

 

 

(613

)

 

 

(46

)

 

 

(298

)

Contracts purchased during the period

 

 

 

 

 

 

 

 

 

 

 

 

Change in the fair value of outstanding contracts

 

 

 

 

 

25

 

 

 

(65

)

 

 

308

 

Ending balance of over-the-counter options

 

$

 

 

$

218

 

 

$

111

 

 

$

3,418

 

 

As of December 30, 2023 and September 30, 2023, the Partnership’s outstanding commodity-related derivatives had a weighted average maturity of approximately four and six months, respectively.

The effect of the Partnership’s derivative instruments on the condensed consolidated statements of operations for the three months ended December 30, 2023 and December 24, 2022 are as follows:

 

 

 

Three Months Ended December 30, 2023

 

 

Three Months Ended December 24, 2022

 

Derivatives Not Designated
as Hedging Instruments

 

Unrealized Gains (Losses)
 Recognized in Income

 

 

Unrealized Gains (Losses)
Recognized in Income

 

 

 

Location

 

Amount

 

 

Location

 

Amount

 

Commodity-related derivatives

 

Cost of products sold

 

$

(10,786

)

 

Cost of products sold

 

$

(13,706

)

 

 

The following table presents the fair value of the Partnership’s recognized derivative assets and liabilities on a gross basis and amounts offset on the condensed consolidated balance sheets subject to enforceable master netting arrangements or similar agreements:

 

 

 

As of December 30, 2023

 

 

As of September 30, 2023

 

 

 

 

 

 

 

 

 

Net amounts

 

 

 

 

 

 

 

 

Net amounts

 

 

 

 

 

 

 

 

 

presented in the

 

 

 

 

 

 

 

 

presented in the

 

 

 

Gross amounts

 

 

Effects of netting

 

 

balance sheet

 

 

Gross amounts

 

 

Effects of netting

 

 

balance sheet

 

Asset Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity-related derivatives

 

$

7,047

 

 

$

(4,702

)

 

$

2,345

 

 

$

35,339

 

 

$

(16,793

)

 

$

18,546

 

Liability Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity-related derivatives

 

$

7,820

 

 

$

(4,702

)

 

$

3,118

 

 

$

24,004

 

 

$

(16,793

)

 

$

7,211

 

 

The Partnership had $4,836 and $-0- posted cash collateral as of December 30, 2023 and September 30, 2023, respectively, with its brokers for outstanding commodity-related derivatives.

 

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Bank Debt, Green Bonds and Senior Notes. The fair value of the Revolving Credit Facility approximates the carrying value since the interest rates are adjusted quarterly to reflect market conditions. The fair values of the Senior Notes are based upon quoted market prices (a Level 1 input) and the fair value of the Green Bonds is based upon a valuation model (a Level 3 input). Senior Notes, Revolving Credit Facility and Green Bonds are defined below in Note 10 (“Long-Term Borrowings”) and the fair values of the Senior Notes and Green Bonds are as follows:

 

 

As of

 

 

 

December 30,

 

 

September 30,

 

 

 

2023

 

 

2023

 

5.875% Senior Notes due March 1, 2027

 

$

349,125

 

 

$

334,250

 

5.00% Senior Notes due June 1, 2031

 

 

586,918

 

 

 

541,658

 

5.50% Green Bonds due October 1, 2028 through October 1, 2033

 

 

66,131

 

 

 

63,031

 

 

 

$

1,002,174

 

 

$

938,939

 

 

6.
Selected Balance Sheet Information

Cash, Cash Equivalents and Restricted Cash. Restricted cash consists of amounts deposited in various bank accounts held by a trustee, as required for operating, maintenance and debt service purposes, all of which is stipulated in the loan agreement under the indenture to the Green Bonds. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that aggregates to the total shown on the condensed consolidated statements of cash flows:

 

 

 

As of

 

 

 

December 30,

 

 

September 30,

 

 

 

2023

 

 

2023

 

Cash and cash equivalents

 

$

6,280

 

 

$

3,514

 

Restricted cash included in other current assets

 

 

3,454

 

 

 

2,392

 

Restricted cash included in other assets (noncurrent)

 

 

8,265

 

 

 

8,168

 

Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows

 

$

17,999

 

 

$

14,074

 

Inventories. Inventories are stated at the lower of cost or market. Cost is determined using a weighted average method for propane, fuel oil and refined fuels and natural gas, and a standard cost basis for appliances, which approximates average cost. Inventories consist of the following:

 

 

As of

 

 

 

December 30,

 

 

September 30,

 

 

 

2023

 

 

2023

 

Propane, fuel oil and refined fuels and natural gas

 

$

57,471

 

 

$

58,565

 

Appliances

 

 

3,499

 

 

 

3,263

 

 

 

$

60,970

 

 

$

61,828

 

 

7.
Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is subject to an impairment review at a reporting unit level, on an annual basis as of the end of fiscal July of each year, or when an event occurs or circumstances change that would indicate potential impairment.

The Partnership has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing an impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform an impairment test.

Under an impairment test, the Partnership assesses the carrying value of goodwill at a reporting unit level based on an estimate of the fair value of the respective reporting unit. Fair value of the reporting unit is estimated using discounted cash flow analyses taking into consideration estimated cash flows in a ten-year projection period and a terminal value calculation at the end of the projection period. If the fair value of the reporting unit exceeds its carrying value, the goodwill associated with the reporting unit is not considered to be

 

12


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impaired. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized to the extent that the carrying amount exceeds the fair value, up to the amount of goodwill allocated to the reporting unit.

The carrying values of goodwill assigned to the Partnership’s operating segments are as follows:

 

 

 

 

 

Fuel oil and

 

 

Natural gas

 

 

 

 

 

 

 

 

 

Propane

 

 

refined fuels

 

 

and electricity

 

 

All other

 

 

Total

 

Balance as of September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

1,105,179

 

 

$

10,900

 

 

$

7,900

 

 

$

31,259

 

 

$

1,155,238

 

Accumulated adjustments

 

 

 

 

 

(6,462

)

 

 

 

 

 

 

 

 

(6,462

)

 

$

1,105,179

 

 

$

4,438

 

 

$

7,900

 

 

$

31,259

 

 

$

1,148,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2024 Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill acquired

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

1,105,179

 

 

$

10,900

 

 

$

7,900

 

 

$

31,259

 

 

$

1,155,238

 

Accumulated adjustments

 

 

 

 

 

(6,462

)

 

 

 

 

 

 

 

 

(6,462

)

 

 

$

1,105,179

 

 

$

4,438

 

 

$