Suburban Propane(SPH) - 2025 Q3 - Quarterly Results

Executive Summary & Key Highlights This section provides an overview of the company's recent financial performance and strategic initiatives Announcement of Third Quarter Results Suburban Propane Partners, L.P. announced its third-quarter fiscal 2025 results, reporting a net loss of $14.8 million, an improvement from the prior year's $17.2 million net loss, with Adjusted EBITDA remaining flat at $27.0 million Third Quarter Results Highlights | Metric | Q3 FY2025 | Q3 FY2024 | Change (YoY) | | :----------------------- | :-------- | :-------- | :----------- | | Net Loss | $(14.8) million | $(17.2) million | $(2.4) million | | Net Loss per Common Unit | $(0.23) | $(0.27) | $(0.04) | | Adjusted EBITDA | $27.0 million | $27.0 million | $0.0 million | CEO Commentary President and CEO Michael A. Stivala highlighted a solid counter-seasonal quarter despite warm temperatures and commodity price volatility, focusing on customer needs, managing prices and expenses, executing growth initiatives, reducing debt, and advancing renewable natural gas (RNG) projects - The company delivered a solid counter-seasonal quarter despite unseasonably warm temperatures and commodity price volatility, attributed to effective management of selling prices and expenses, and execution of customer base growth and retention initiatives[4] - Excess cash flows and proceeds from the At-the-Market (ATM) sales program were used to fund growth capital projects and reduce debt by $69 million[4] - In RNG operations, average daily injection was slightly down, and revenues were negatively impacted by lower prices for environmental attributes, with the company remaining focused on operational enhancements at its Stanfield, Arizona facility and advancing capital projects in upstate New York and Columbus, Ohio[4] Financial Performance Analysis This section details the consolidated financial results, gross margin, operating expenses, and non-GAAP measures for the reporting periods Consolidated Financial Results (Q3 FY2025 vs Q3 FY2024) For the third quarter of fiscal 2025, total revenues increased slightly to $260.2 million, primarily driven by higher propane revenues, with the net loss improving to $14.8 million and diluted EPS improving to $(0.23), while nine-month figures showed significant increases Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | | | | | | Propane | $226,890 | $220,045 | $1,082,429 | $970,967 | | Fuel oil & refined fuels | $9,721 | $10,954 | $60,746 | $66,447 | | Natural gas & electricity | $4,838 | $5,322 | $19,916 | $20,528 | | All other | $18,701 | $18,289 | $58,051 | $60,589 | | Total Revenues | $260,150 | $254,610 | $1,221,142 | $1,118,531 | | Costs & Expenses | | | | | | Cost of products sold | $99,559 | $94,400 | $489,083 | $437,573 | | Operating | $117,528 | $115,882 | $380,058 | $366,263 | | General & administrative | $18,737 | $19,759 | $75,501 | $71,400 | | Depreciation & amortization | $18,735 | $16,379 | $53,434 | $49,497 | | Total Costs & Expenses | $254,559 | $246,420 | $998,076 | $924,733 | | Operating Income | $5,591 | $8,190 | $223,066 | $193,798 | | Net (Loss) Income | $(14,835) | $(17,191) | $141,706 | $118,763 | | Net (Loss) Income per Common Unit - diluted | $(0.23) | $(0.27) | $2.17 | $1.83 | Gross Margin and Operating Expenses Total gross margin for Q3 FY2025 remained unchanged at $160.6 million, as steady propane volumes and unit margins offset an unrealized loss from derivative instruments, while combined operating and general and administrative expenses increased slightly by 0.5% due to higher payroll and benefits, partially offset by an insurance recovery Gross Margin and Operating Expenses Highlights (in millions) | Metric | Q3 FY2025 | Q3 FY2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Total Gross Margin | $160.6 | $160.6 | $0.0 | | Unrealized Loss (Derivatives) | $2.9 | $3.2 | $(0.3) | | Combined Operating & G&A Expenses | $136.3 | $135.7 | $0.6 (0.5%) | - Higher payroll and benefit-related costs were largely offset by a gain from an insurance recovery, contributing to the slight increase in operating and general and administrative expenses[6] Non-GAAP Financial Measures The report provides EBITDA and Adjusted EBITDA as supplemental measures of operating performance, reconciling them from net income, with Adjusted EBITDA for Q3 FY2025 flat at $27.0 million year-over-year, and increasing to $277.4 million from $249.3 million for the nine months EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net (loss) income | $(14,835) | $(17,191) | $141,706 | $118,763 | | Add: Provision for income taxes | $242 | $243 | $801 | $524 | | Add: Interest expense, net | $18,881 | $18,429 | $59,060 | $56,540 | | Add: Depreciation and amortization | $18,735 | $16,379 | $53,434 | $49,497 | | EBITDA | $23,023 | $17,860 | $255,001 | $225,324 | | Unrealized non-cash losses (gains) on changes in fair value of derivatives | $2,919 | $3,161 | $(1,459) | $8,079 | | Pension settlement charge | $450 | $550 | $450 | $550 | | Equity in losses and impairment charges for investments in unconsolidated affiliates | $627 | $5,464 | $23,372 | $15,121 | | Loss on debt extinguishment | — | — | — | $215 | | Adjusted EBITDA | $27,019 | $27,035 | $277,364 | $249,289 | - EBITDA and Adjusted EBITDA are non-GAAP measures used by management as supplemental indicators of operating performance, providing additional information for investors and industry analysts[17] Operational Review This section examines key operational metrics including propane sales, market conditions, and renewable natural gas activities Propane Sales and Market Conditions Retail propane gallons sold in Q3 FY2025 were consistent with the prior year, despite average temperatures being significantly warmer than normal but cooler than the prior year, while average propane prices increased by 4.7% year-over-year Propane Sales and Market Conditions | Metric | Q3 FY2025 | Q3 FY2024 | Change (YoY) | | :-------------------------- | :-------- | :-------- | :----------- | | Retail Propane Gallons Sold | 71.9 million | 71.7 million | 0.2 million (0.3%) | | Average Propane Prices (Mont Belvieu, TX) | +4.7% | N/A | +4.7% | - Average temperatures across service territories were 14% warmer than normal but 5% cooler than the prior year third quarter[4] Renewable Natural Gas (RNG) Operations RNG injection for Q3 FY2025 was slightly down compared to the prior year, with revenues negatively impacted by lower prices for environmental attributes, as the company actively implements operational enhancements and advances capital projects to increase RNG production - Average daily RNG injection for the third quarter was down slightly compared to the prior year third quarter[4] - Revenues from RNG injection were negatively impacted by lower prices for environmental attributes under the Renewable Fuel Standard[4] - The company is focused on implementing operational enhancements at its Stanfield, Arizona production facility and advancing capital projects for an anaerobic digester system in upstate New York and gas upgrade equipment in Columbus, Ohio[4] Capital Management & Shareholder Returns This section outlines the company's debt management strategies, leverage position, and quarterly distribution to unitholders Debt Management and Leverage During Q3 FY2025, the Partnership repaid $69.0 million in borrowings under its revolving credit facility, utilizing cash flows from operating activities and $8.1 million from its ATM program, resulting in an improved Consolidated Leverage Ratio of 4.33x Debt Management Highlights | Metric | Value | | :-------------------------- | :---------- | | Debt Repayment (Q3 FY2025) | $69.0 million | | ATM Program Proceeds (Q3 FY2025) | $8.1 million | | Consolidated Leverage Ratio (as of June 28, 2025) | 4.33x | Quarterly Distribution The Board of Supervisors declared a quarterly distribution of $0.325 per Common Unit for the three months ended June 28, 2025, equating to an annualized rate of $1.30 per Common Unit Quarterly Distribution | Metric | Value | | :-------------------------- | :------ | | Quarterly Distribution per Common Unit | $0.325 | | Annualized Distribution Rate | $1.30 | Company Profile This section describes Suburban Propane's business, market reach, and strategic pillars focused on customer service, community, and green energy Business Description Suburban Propane Partners, L.P. is a publicly traded master limited partnership, a nationwide distributor of various energy products and services, including propane, renewable propane, RNG, fuel oil, natural gas, and electricity, serving approximately 1 million customers across 42 states - Suburban Propane is a nationwide distributor of propane, renewable propane, renewable natural gas ("RNG"), fuel oil and related products and services, as well as a marketer of natural gas and electricity and producer of and investor in low carbon fuel alternatives[9] - The company services approximately 1 million residential, commercial, governmental, industrial and agricultural customers through approximately 700 locations across 42 states[9] Core Pillars and Strategic Focus Suburban Propane operates under three core pillars: Suburban Commitment (customer service excellence), SuburbanCares (community giving), and Go Green with Suburban Propane (promoting clean energy and investing in renewable alternatives) - Suburban Commitment: Showcasing almost 100-year legacy and ongoing commitment to dependability, flexibility, and reliability in customer service[10] - SuburbanCares: Highlighting dedication to giving back to local communities across its national footprint[10] - Go Green with Suburban Propane: Promoting propane and renewable propane as a bridge to a green energy future and investing in innovative, renewable energy alternatives[10] Risk Factors and Forward-Looking Statements This section identifies potential risks and uncertainties that could materially impact future financial results and operations Forward-Looking Statements and Risks This section contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, including weather conditions, commodity price volatility, competition, economic instability, regulatory changes, and risks associated with renewable fuel projects - Risks include the impact of weather conditions on demand for energy products, volatility in unit costs of fuels, and the ability to compete with other energy suppliers[12] - Economic volatility, geopolitical instability, and the ability to attract and retain employees and customers are also significant risks[12][14] - Specific risks related to renewable fuel projects include customer willingness to purchase, permitting, financing, operational challenges, dependence on third-party partners, and changes in government incentives and environmental attribute markets[14] Supplemental Information This section directs readers to the comprehensive financial statements and disclosures available in the official SEC filing Reference to Form 10-Q The unaudited financial information provided is a summary and should be read in conjunction with the complete consolidated financial statements, including notes, in the Partnership's Quarterly Report on Form 10-Q to be filed with the SEC