Suburban Propane(SPH) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, cash flows, and partners' capital, along with detailed notes explaining accounting policies, segment information, and specific financial items Condensed Consolidated Balance Sheets This section provides a snapshot of the Partnership's financial position, detailing assets, liabilities, and partners' capital at period-end Condensed Consolidated Balance Sheets as of June 28, 2025 and September 28, 2024 | Metric | June 28, 2025 ($ thousands) | September 28, 2024 ($ thousands) | | :-------------------------- | :-------------------------- | :------------------------------- | | Total assets | 2,314,602 | 2,272,761 | | Total liabilities | 1,668,492 | 1,725,701 | | Total partners' capital | 646,110 | 547,060 | | Cash and cash equivalents | 1,340 | 3,219 | | Goodwill | 1,157,827 | 1,151,252 | - Total assets increased by $41,841 thousand, while total liabilities decreased by $57,209 thousand, leading to a $99,050 thousand increase in total partners' capital from September 28, 2024, to June 28, 2025 Condensed Consolidated Statements of Operations (Three Months) This section details the Partnership's financial performance for the three-month periods, including revenues, expenses, and net loss Condensed Consolidated Statements of Operations for the three months ended June 28, 2025 and June 29, 2024 | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------------- | :--------- | | Revenues | 260,150 | 254,610 | 5,540 | 2.2% | | Costs and expenses | 254,559 | 246,420 | 8,139 | 3.3% | | Operating income | 5,591 | 8,190 | (2,599) | (31.7%) | | Net (loss) | (14,835) | (17,191) | 2,356 | (13.7%) | | Net (loss) per Common Unit - basic | (0.23) | (0.27) | 0.04 | (14.8%) | - The Partnership reported a reduced net loss of $(14,835) thousand for the three months ended June 28, 2025, compared to $(17,191) thousand in the prior year, despite a decrease in operating income[14] Condensed Consolidated Statements of Operations (Nine Months) This section presents the Partnership's financial results for the nine-month periods, showing revenues, expenses, and net income Condensed Consolidated Statements of Operations for the nine months ended June 28, 2025 and June 29, 2024 | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------------------- | :-------------------------- | :-------------------------- | :------------------- | :--------- | | Revenues | 1,221,142 | 1,118,531 | 102,611 | 9.2% | | Costs and expenses | 998,076 | 924,733 | 73,343 | 7.9% | | Operating income | 223,066 | 193,798 | 29,268 | 15.1% | | Net income | 141,706 | 118,763 | 22,943 | 19.3% | | Net income per Common Unit - basic | 2.18 | 1.85 | 0.33 | 17.8% | - For the nine months ended June 28, 2025, the Partnership achieved a 19.3% increase in net income to $141,706 thousand, driven by a 9.2% rise in total revenues and a 15.1% growth in operating income[18] Condensed Consolidated Statements of Comprehensive Income This section outlines the Partnership's comprehensive income, including net income and other comprehensive income components for the specified periods Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended June 28, 2025 and June 29, 2024 | Metric | Three Months Ended June 28, 2025 ($ thousands) | Three Months Ended June 29, 2024 ($ thousands) | Nine Months Ended June 28, 2025 ($ thousands) | Nine Months Ended June 29, 2024 ($ thousands) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :---------------------------------- | :---------------------------------- | | Net (loss) income | (14,835) | (17,191) | 141,706 | 118,763 | | Other comprehensive income | 333 | 719 | 100 | 1,057 | | Total comprehensive (loss) income | (14,502) | (16,472) | 141,806 | 119,820 | - Total comprehensive income for the nine months ended June 28, 2025, increased to $141,806 thousand from $119,820 thousand in the prior year, reflecting improved net income despite lower other comprehensive income[21] Condensed Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities for the nine-month periods Condensed Consolidated Statements of Cash Flows for the nine months ended June 28, 2025 and June 29, 2024 | Cash Flow Activity | Nine Months Ended June 28, 2025 ($ thousands) | Nine Months Ended June 29, 2024 ($ thousands) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Net cash provided by operating activities | 144,427 | 123,807 | | Net cash (used in) investing activities | (114,921) | (59,986) | | Net cash (used in) financing activities | (37,324) | (58,344) | | Net (decrease) increase in cash, cash equivalents and restricted cash | (7,818) | 5,477 | | Cash, cash equivalents and restricted cash at end of period | 12,696 | 19,551 | - Operating cash flow increased by $20,620 thousand, but a significant increase in cash used for investing activities (up $54,935 thousand) led to a net decrease in cash and cash equivalents for the nine months ended June 28, 2025[25] Condensed Consolidated Statements of Partners' Capital (Three Months) This section presents changes in partners' capital for the three-month periods, including net loss, distributions, and equity offerings Condensed Consolidated Statements of Partners' Capital for the three months ended June 28, 2025 and June 29, 2024 | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | 671,809 | 642,670 | | Net (loss) | (14,835) | (17,191) | | Partnership distributions | (21,112) | (20,815) | | Proceeds from ATM public offering | 8,079 | — | | Balance, end of period | 646,110 | 607,223 | - Partners' capital decreased by $25,699 thousand during the three months ended June 28, 2025, primarily due to net loss and partnership distributions, partially offset by proceeds from the ATM public offering[28] Condensed Consolidated Statements of Partners' Capital (Nine Months) This section details the changes in partners' capital for the nine-month periods, reflecting net income, distributions, and equity issuance Condensed Consolidated Statements of Partners' Capital for the nine months ended June 28, 2025 and June 29, 2024 | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | 547,060 | 546,356 | | Net income | 141,706 | 118,763 | | Partnership distributions | (62,896) | (62,266) | | Proceeds from ATM public offering | 16,867 | — | | Balance, end of period | 646,110 | 607,223 | - Partners' capital increased by $99,050 thousand for the nine months ended June 28, 2025, driven by net income and proceeds from the ATM public offering, despite partnership distributions[32] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Partnership Organization and Formation This note describes the Partnership's business activities and the formation of its renewable energy platform - Suburban Propane Partners, L.P. is a publicly traded Delaware limited partnership primarily engaged in the retail marketing and distribution of propane, renewable propane, fuel oil, refined fuels, natural gas, and electricity, and invests in low-carbon fuel alternatives[36] - Suburban Renewable Energy, LLC, formed in January 2022, serves as the platform for the Partnership's investments in innovative, renewable energy technologies and businesses[38] Note 2. Basis of Presentation This note outlines the accounting principles, revenue recognition policies, and impact of new accounting standards on the financial statements - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules and US GAAP, including all necessary adjustments for fair statement[43] - Revenue recognition follows FASB Topic 606, with revenue recognized when goods or services are transferred and performance obligations are satisfied[46][47] - New accounting standards (ASU 2023-07, 2023-09, 2024-03, 2025-01) will impact future disclosures on segment reporting, income taxes, and expense disaggregation, with the Partnership currently assessing their effects[57][58][59] Note 3. Disaggregation of Revenue This note provides a detailed breakdown of the Partnership's revenues by operating segment and customer type - The propane segment is the primary revenue driver, contributing approximately 89% of the Partnership's reportable segment revenue[62] Total Revenues by Customer Type (Three Months Ended) | Customer Type | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :------------ | :-------------------------- | :-------------------------- | | Residential | 127,911 | 125,910 | | Commercial | 81,947 | 79,294 | | Industrial | 26,730 | 27,629 | | Government | 11,990 | 10,754 | | Agricultural | 4,969 | 5,650 | | Wholesale | 6,603 | 5,373 | | Total revenues | 260,150 | 254,610 | Total Revenues by Customer Type (Nine Months Ended) | Customer Type | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :------------ | :-------------------------- | :-------------------------- | | Residential | 665,305 | 609,192 | | Commercial | 335,824 | 304,647 | | Industrial | 95,340 | 95,917 | | Government | 59,455 | 52,850 | | Agricultural | 28,057 | 31,405 | | Wholesale | 37,161 | 24,520 | | Total revenues | 1,221,142 | 1,118,531 | Note 4. Investments in and Acquisitions of Businesses This note details the Partnership's strategic investments and acquisitions, including renewable energy assets and impairment charges - Suburban Renewable Energy acquired RNG production assets for $190 million in December 2022 and recorded a $3 million increase in contingent consideration fair value in Q1 fiscal 2025[64] - The Partnership recorded other-than-temporary impairment charges of $9.6 million for its 25% equity stake in Independence Hydrogen (IH) and $10.2 million for its 38% equity stake in Oberon Fuels in Q1 fiscal 2025, reducing Oberon's value to $0[67][69] - In November 2024, the Partnership acquired a New Mexico propane retailer for $53 million, supporting its core propane business growth[71] Note 5. Financial Instruments and Risk Management This note describes the Partnership's use of derivative instruments to manage commodity price and interest rate risks - The Partnership uses exchange-traded futures and options, and over-the-counter options and swap contracts to hedge commodity price risk for propane and fuel oil, and to manage interest rate risk on variable borrowings[73][76] Fair Value of Derivative Instruments (Not Designated as Hedging Instruments) | Category | June 28, 2025 ($ thousands) | September 28, 2024 ($ thousands) | | :-------------------------- | :-------------------------- | :------------------------------- | | Asset Derivatives | 3,327 | 4,891 | | Liability Derivatives | 3,796 | 5,744 | Unrealized Gains (Losses) on Commodity-Related Derivatives Recognized in Cost of Products Sold | Period | Amount ($ thousands) | | :----------------------------------- | :------------------- | | Three Months Ended June 28, 2025 | (2,919) | | Three Months Ended June 29, 2024 | (3,161) | | Nine Months Ended June 28, 2025 | 1,459 | | Nine Months Ended June 29, 2024 | (8,079) | Note 6. Selected Balance Sheet Information This note provides detailed breakdowns of specific balance sheet accounts, including cash, cash equivalents, restricted cash, and inventories Cash, Cash Equivalents and Restricted Cash | Item | June 28, 2025 ($ thousands) | September 28, 2024 ($ thousands) | | :---------------------------------------------------------------- | :-------------------------- | :------------------------------- | | Cash and cash equivalents | 1,340 | 3,219 | | Restricted cash included in other current assets | 3,292 | 9,355 | | Restricted cash included in other assets (noncurrent) | 8,064 | 7,940 | | Total cash, cash equivalents, and restricted cash | 12,696 | 20,514 | Inventories | Item | June 28, 2025 ($ thousands) | September 28, 2024 ($ thousands) | | :--------------------------------------- | :-------------------------- | :------------------------------- | | Propane, fuel oil and refined fuels and natural gas | 56,451 | 52,284 | | Appliances | 3,968 | 3,146 | | Total | 60,419 | 55,430 | Note 7. Goodwill and Other Intangible Assets This note discusses the accounting for goodwill and other intangible assets, including impairment review and segment allocation - Goodwill is subject to annual impairment review at the reporting unit level, with fair value estimated using discounted cash flow analyses[84][86] Goodwill by Operating Segment (June 28, 2025) | Segment | Goodwill ($ thousands) | | :------------------------ | :--------------------- | | Propane | 1,114,230 | | Fuel oil and refined fuels | 4,438 | | Natural gas and electricity | 7,900 | | All other | 31,259 | | Total | 1,157,827 | - Other intangible assets, net, increased to $87,800 thousand as of June 28, 2025, from $74,500 thousand as of September 28, 2024, reflecting impacts from acquisitions[89] Note 8. Leases This note details the Partnership's operating lease arrangements, including right-of-use assets, lease liabilities, and future payment obligations - The Partnership leases property, plant, and equipment under operating leases, recognizing right-of-use assets and liabilities based on the present value of lease payments[90] Lease Information (Nine Months Ended June 28, 2025) | Metric | Value | | :----------------------------------- | :---------- | | Lease expense | $33,455 thousand | | Cash payments for operating leases | $33,700 thousand | | Right-of-use assets obtained | $9,256 thousand | | Weighted-average remaining lease term | 5.5 years | | Weighted-average discount rate | 6.3% | Future Minimum Lease Payments (Operating Leases) as of June 28, 2025 | Fiscal Year | Amount ($ thousands) | | :------------------ | :------------------- | | 2025 (remaining) | 10,968 | | 2026 | 39,637 | | 2027 | 28,959 | | 2028 | 23,173 | | 2029 | 16,644 | | 2030 and thereafter | 27,336 | | Total lease obligations | 122,668 | Note 9. Net Income Per Common Unit This note provides the calculation of basic and diluted net income per common unit, including factors affecting dilution Net Income Per Common Unit (Nine Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :----------------------------------- | :------------ | :------------ | | Net income per Common Unit - basic | $2.18 | $1.85 | | Net income per Common Unit - diluted | $2.17 | $1.83 | | Weighted average Common Units outstanding - diluted | 65,330 | 64,747 | - Diluted loss per unit for the three months ended June 28, 2025 and June 29, 2024, does not include unvested Restricted Units as their effect would be anti-dilutive[95] Note 10. Long-Term Borrowings This note details the Partnership's long-term debt structure, including Senior Notes, Green Bonds, and the Revolving Credit Facility Long-Term Borrowings as of June 28, 2025 | Item | Amount ($ thousands) | | :---------------------------------------------------------------- | :------------------- | | 5.875% Senior Notes due March 1, 2027 | 350,000 | | 5.00% Senior Notes due June 1, 2031 | 650,000 | | 5.50% Green Bonds due Oct 1, 2028-2033 (net of adjustment) | 69,298 | | Revolving Credit Facility, due March 15, 2029 | 163,600 | | Total long-term borrowings | 1,225,343 | - The Green Bonds' debt service coverage ratio covenant was eliminated effective May 2, 2025, with the Operating Partnership guaranteeing all payments due under the Green Bonds[102][103] - The Partnership was in compliance with all covenants and terms of the Senior Notes and the Credit Agreement as of June 28, 2025[109] Note 11. Distributions of Available Cash This note explains the Partnership's policy for quarterly distributions to unitholders based on available cash - The Partnership makes quarterly distributions equal to its Available Cash, as defined in the Partnership Agreement, after accounting for cash reserves[112] - A quarterly distribution of $0.325 per Common Unit ($1.30 annualized) was announced on July 24, 2025, for the third quarter of fiscal 2025[113] Note 12. Unit-Based Compensation Arrangements This note describes the various unit-based compensation plans, including Restricted Unit, Phantom Equity, and Long-Term Incentive Plans - The Restricted Unit Plan had 993,023 units outstanding at June 28, 2025, with compensation expense of $6.1 million for the nine months ended June 28, 2025[117][118] - The Phantom Equity Plan (PEP) and Long-Term Incentive Plan (LTIP) had liabilities of $10.7 million and $11.1 million, respectively, as of June 28, 2025[120][124] - Compensation expense for the DER Plan was $1.0 million for the nine months ended June 28, 2025[122] Note 13. Commitments and Contingencies This note outlines the Partnership's accrued liabilities for insurance claims and potential impacts from regulatory changes - Accrued insurance liabilities for self-insured general, product, workers' compensation, and automobile claims totaled $58.0 million as of June 28, 2025, with a corresponding receivable of $14.5 million[125] - The Partnership is assessing the impact of recent New York regulatory changes (GBL amendment and NY PSC UBP amendments) on its natural gas and electricity business, which could negatively affect customer retention[127] Note 14. Guarantees This note discloses the Partnership's residual value guarantees on operating leases, primarily for transportation equipment - The Partnership has residual value guarantees on certain operating leases, primarily for transportation equipment, with a maximum potential aggregate future payment of $42.6 million as of June 28, 2025[128][129] Note 15. Pension Plans and Other Postretirement Benefits This note provides information on the Partnership's pension and postretirement benefit plans, including net periodic benefit costs and contributions Net Periodic Benefit Costs (Nine Months Ended) | Benefit Type | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Pension Benefits | 1,585 | 3,297 | | Postretirement Benefits | (459) | (662) | - The Partnership expects to contribute $4.0 million to its defined benefit pension plan in fiscal 2025, with $3.0 million already contributed[130] - Estimated obligation to multi-employer pension plans was $18.9 million as of June 28, 2025, due to voluntary full withdrawal from certain plans[131] Note 16. Amounts Reclassified Out of Accumulated Other Comprehensive Income This note details the reclassifications from accumulated other comprehensive income to earnings for pension and postretirement benefits - Accumulated other comprehensive loss was $(6.0) million as of June 28, 2025, with reclassifications to earnings for pension benefits totaling $634 thousand and for postretirement benefits totaling $(534) thousand for the nine months ended June 28, 2025[133] Note 17. At-the-Market Public Offering This note describes the Partnership's at-the-market public offering of common units and the use of proceeds - On February 20, 2025, the Partnership entered an Equity Distribution Agreement to sell up to $100 million in Common Units through an at-the-market public offering[134] - During the nine months ended June 28, 2025, 903,112 Common Units were issued, generating net proceeds of $16.9 million, used for general partnership purposes including debt reduction and strategic growth[136] Note 18. Income Taxes This note explains the Partnership's income tax treatment, including partnership-level taxation and valuation allowances on deferred tax assets - For federal and most state income tax purposes, the Partnership's earnings are not subject to income tax at the partnership level, but its Corporate Entities are subject to U.S. corporate income tax[138][139] - A full valuation allowance has been provided against deferred tax assets (with exceptions) due to the unlikelihood of sufficient future taxable income to utilize these assets[139] Note 19. Segment Information This note provides financial data disaggregated by the Partnership's operating segments, including revenues and operating income - The Partnership operates in four segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity (all reportable), and 'All other' (including service business, RNG, and IH investment)[140][144] Revenues by Segment (Nine Months Ended) | Segment | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Propane | 1,082,429 | 970,967 | | Fuel oil and refined fuels | 60,746 | 66,447 | | Natural gas and electricity | 19,916 | 20,528 | | All other | 58,051 | 60,589 | | Total revenues | 1,221,142 | 1,118,531 | Operating Income (Loss) by Segment (Nine Months Ended) | Segment | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Propane | 343,372 | 301,487 | | Fuel oil and refined fuels | 6,023 | 7,617 | | Natural gas and electricity | 4,682 | 5,917 | | All other | (26,703) | (21,970) | | Corporate | (104,308) | (99,253) | | Total operating income | 223,066 | 193,798 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the Partnership's financial condition and results of operations, highlighting key factors influencing performance, a detailed comparison of financial results for the three and nine months ended June 28, 2025, and an analysis of liquidity and capital resources Executive Overview This overview summarizes the Partnership's key financial performance metrics and operational highlights for the recent fiscal quarter - Net loss for the third quarter of fiscal 2025 improved to $14.8 million ($0.23 per Common Unit) from $17.2 million ($0.27 per Common Unit) in the prior year[159] - Adjusted EBITDA for the third quarter of fiscal 2025 was $27.0 million, remaining flat compared to the prior year quarter[160] - Retail propane gallons sold in Q3 fiscal 2025 were 71.9 million, consistent with the prior year, despite average temperatures being 14% warmer than normal but 5% cooler than the prior year quarter[161][167] - The Consolidated Leverage Ratio improved to 4.33x for the twelve-month period ended June 28, 2025[164] Results of Operations and Financial Condition This section provides a detailed analysis of the Partnership's financial performance and condition over the reporting periods Three Months Ended June 28, 2025 Compared to Three Months Ended June 29, 2024 For the third fiscal quarter, total revenues increased slightly, driven by higher propane selling prices and volumes. However, operating income decreased due to higher costs of products sold and increased operating and depreciation expenses, partially offset by lower general and administrative expenses and improved net loss Revenues This subsection analyzes the revenue performance across different segments for the three-month periods Revenues (Three Months Ended) | Category | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase (Decrease) ($ thousands) | Percent Increase (Decrease) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Propane | 226,890 | 220,045 | 6,845 | 3.1% | | Fuel oil and refined fuels | 9,721 | 10,954 | (1,233) | (11.3%) | | Natural gas and electricity | 4,838 | 5,322 | (484) | (9.1%) | | All other | 18,701 | 18,289 | 412 | 2.3% | | Total revenues | 260,150 | 254,610 | 5,540 | 2.2% | - Propane revenues increased by 3.1% due to a 2.0% rise in average selling prices and a 0.2% increase in retail gallons sold[169] - Fuel oil and refined fuels revenues decreased by 11.3% due to a 7.3% drop in average selling prices and a 4.7% decrease in volumes sold[170] Cost of Products Sold This subsection examines the cost of products sold across segments and the impact of derivative instruments for the three-month periods Cost of Products Sold (Three Months Ended) | Category | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase (Decrease) ($ thousands) | Percent Increase (Decrease) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Propane | 87,044 | 81,327 | 5,717 | 7.0% | | Fuel oil and refined fuels | 5,943 | 7,402 | (1,459) | (19.7%) | | Natural gas and electricity | 2,950 | 2,446 | 504 | 20.6% | | All other | 3,622 | 3,225 | 397 | 12.3% | | Total cost of products sold | 99,559 | 94,400 | 5,159 | 5.5% | - Propane cost of products sold increased by 7.0% primarily due to higher average wholesale costs[178] - The net change in fair value of derivative instruments resulted in a $2.9 million unrealized non-cash loss in Q3 fiscal 2025, compared to a $3.2 million loss in Q3 fiscal 2024[175] Operating Expenses This subsection analyzes the changes in operating expenses for the three-month periods, including payroll and benefit costs Operating Expenses (Three Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :----------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | Operating expenses | 117,528 | 115,882 | 1,646 | 1.4% | - Operating expenses increased by 1.4% due to higher payroll and benefit-related costs, partially offset by an insurance recovery gain[182] General and Administrative Expenses This subsection details the changes in general and administrative expenses for the three-month periods, primarily due to compensation costs General and Administrative Expenses (Three Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Decrease ($ thousands) | Decrease (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | General and administrative expenses | 18,737 | 19,759 | (1,022) | (5.2%) | - General and administrative expenses decreased by 5.2% primarily due to lower variable compensation costs[184] Depreciation and Amortization This subsection analyzes the increase in depreciation and amortization expenses for the three-month periods, driven by new investments Depreciation and Amortization (Three Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | Depreciation and amortization | 18,735 | 16,379 | 2,356 | 14.4% | - Depreciation and amortization expense increased by 14.4% due to investments in RNG production facilities, a propane acquisition, and accelerated depreciation[186] Interest Expense, net This subsection details the net interest expense for the three-month periods, influenced by borrowings and interest rates Interest Expense, net (Three Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | Interest expense, net | 18,881 | 18,429 | 452 | 2.5% | - Net interest expense increased by 2.5% due to higher average outstanding borrowings under the Revolving Credit Facility, partially offset by lower benchmark interest rates[187] Other, net This subsection analyzes other net income and expenses for the three-month periods, including equity in losses from investments Other, net (Three Months Ended) | Item | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase (Decrease) ($ thousands) | Percent Increase (Decrease) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Equity in losses of IH | 547 | 474 | 73 | 15.4% | | Equity in losses of Oberon | 80 | 4,990 | (4,910) | (98.4%) | | Other (1) | 676 | 1,245 | (569) | (45.7%) | | Other, net | 1,303 | 6,709 | (5,406) | (80.6%) | - The significant decrease in 'Other, net' was primarily driven by a 98.4% reduction in equity in losses of Oberon[188] EBITDA and Adjusted EBITDA This subsection presents the calculation and comparison of EBITDA and Adjusted EBITDA for the three-month periods EBITDA and Adjusted EBITDA (Three Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | | EBITDA | 23,023 | 17,860 | | Unrealized non-cash losses on changes in fair value of derivatives | 2,919 | 3,161 | | Equity in losses and impairment charges for investments in unconsolidated affiliates | 627 | 5,464 | | Pension settlement charge | 450 | 550 | | Adjusted EBITDA | 27,019 | 27,035 | - Adjusted EBITDA remained relatively flat at $27.0 million for the third quarter of fiscal 2025 compared to the prior year[191] Nine Months Ended June 28, 2025 Compared to Nine Months Ended June 29, 2024 For the first nine months of fiscal 2025, the Partnership experienced strong revenue growth, particularly in propane, leading to a significant increase in operating income and net income. This was supported by higher volumes and selling prices, despite increased operating and general and administrative expenses Revenues This subsection analyzes the revenue performance across different segments for the nine-month periods Revenues (Nine Months Ended) | Category | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase (Decrease) ($ thousands) | Percent Increase (Decrease) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Propane | 1,082,429 | 970,967 | 111,462 | 11.5% | | Fuel oil and refined fuels | 60,746 | 66,447 | (5,701) | (8.6%) | | Natural gas and electricity | 19,916 | 20,528 | (612) | (3.0%) | | All other | 58,051 | 60,589 | (2,538) | (4.2%) | | Total revenues | 1,221,142 | 1,118,531 | 102,611 | 9.2% | - Propane revenues increased by 11.5% due to a 6.6% increase in retail gallons sold and a 3.1% increase in average selling prices[193] - All other segment revenues decreased by 4.2% due to reduced RNG injection from planned shutdowns for equipment upgrades and impacts from extremely cold ambient air temperatures[197] Cost of Products Sold This subsection examines the cost of products sold across segments and the impact of derivative instruments for the nine-month periods Cost of Products Sold (Nine Months Ended) | Category | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase (Decrease) ($ thousands) | Percent Increase (Decrease) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Propane | 429,795 | 370,289 | 59,506 | 16.1% | | Fuel oil and refined fuels | 36,628 | 44,587 | (7,959) | (17.9%) | | Natural gas and electricity | 11,346 | 10,724 | 622 | 5.8% | | All other | 11,314 | 11,973 | (659) | (5.5%) | | Total cost of products sold | 489,083 | 437,573 | 51,510 | 11.8% | - Propane cost of products sold increased by 16.1% due to higher average wholesale costs and increased volumes[199] - The net change in fair value of derivative instruments resulted in a $1.4 million unrealized non-cash gain in the first nine months of fiscal 2025, a significant improvement from an $8.1 million loss in the prior year[198] Operating Expenses This subsection analyzes the changes in operating expenses for the nine-month periods, including payroll and benefit costs Operating Expenses (Nine Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :----------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | Operating expenses | 380,058 | 366,263 | 13,795 | 3.8% | - Operating expenses increased by 3.8% primarily due to higher payroll and benefit-related costs, volume-related variable operating costs, and variable compensation[202] General and Administrative Expenses This subsection details the changes in general and administrative expenses for the nine-month periods, primarily due to compensation and legal costs General and Administrative Expenses (Nine Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | General and administrative expenses | 75,501 | 71,400 | 4,101 | 5.7% | - General and administrative expenses increased by 5.7% due to higher variable compensation costs and legal settlement costs[204] Depreciation and Amortization This subsection analyzes the increase in depreciation and amortization expenses for the nine-month periods, driven by new investments Depreciation and Amortization (Nine Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | Depreciation and amortization | 53,434 | 49,497 | 3,937 | 8.0% | - Depreciation and amortization expense increased by 8.0% due to additional investments in RNG production facilities, a propane acquisition, and accelerated depreciation[205] Loss on Debt Extinguishment This subsection reports the non-cash charge recognized from the write-off of unamortized debt origination costs - A non-cash charge of $0.2 million was recognized in fiscal 2024 due to the write-off of unamortized debt origination costs from refinancing the revolving credit facility[206] Interest Expense, net This subsection details the net interest expense for the nine-month periods, influenced by borrowings and interest rates Interest Expense, net (Nine Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase ($ thousands) | Increase (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------------------- | :----------- | | Interest expense, net | 59,060 | 56,540 | 2,520 | 4.5% | - Net interest expense increased by 4.5% due to higher average outstanding borrowings under the Revolving Credit Facility, partially offset by lower benchmark interest rates[207] Other, net This subsection analyzes other net income and expenses for the nine-month periods, including equity in losses and impairment charges from investments Other, net (Nine Months Ended) | Item | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | Increase (Decrease) ($ thousands) | Percent Increase (Decrease) | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Equity in losses of Oberon (1) | 12,278 | 13,531 | (1,253) | (9.3%) | | Equity in losses of IH (2) | 11,094 | 1,590 | 9,504 | 597.7% | | Contingent consideration from Equilibrium | (3,000) | — | (3,000) | — | | Other (3) | 1,127 | 2,635 | (1,508) | (57.2%) | | Other, net | 21,499 | 17,756 | 3,743 | 21.1% | - Other, net increased by 21.1%, primarily due to a significant increase in equity in losses of IH, which included a $9.6 million impairment charge in Q1 fiscal 2025[208][216] - Equity in losses of Oberon included a $10.2 million impairment charge in Q1 fiscal 2025[208] EBITDA and Adjusted EBITDA This subsection presents the calculation and comparison of EBITDA and Adjusted EBITDA for the nine-month periods EBITDA and Adjusted EBITDA (Nine Months Ended) | Metric | June 28, 2025 ($ thousands) | June 29, 2024 ($ thousands) | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | | EBITDA | 255,001 | 225,324 | | Unrealized non-cash (gains) losses on changes in fair value of derivatives | (1,459) | 8,079 | | Equity in losses and impairment charges for investments in unconsolidated affiliates | 23,372 | 15,121 | | Pension settlement charge | 450 | 550 | | Loss on debt extinguishment | — | 215 | | Adjusted EBITDA | 277,364 | 249,289 | - Adjusted EBITDA increased by 11.3% to $277.4 million for the nine months ended June 28, 2025, compared to $249.3 million in the prior year[210] Liquidity and Capital Resources This section analyzes the Partnership's cash flows, debt obligations, leverage ratio, and capital-raising activities Analysis of Cash Flows This subsection provides a detailed analysis of cash flows from operating, investing, and financing activities - Net cash provided by operating activities for the first nine months of fiscal 2025 was $144.4 million, up from $123.8 million in the prior year, primarily due to higher earnings[211] - Net cash used in investing activities significantly increased to $114.9 million, including $57.8 million for capital expenditures and $52.6 million for business acquisitions[212] - Net cash used in financing activities decreased to $37.3 million, reflecting partnership distributions, net borrowings under the Revolving Credit Facility, and $16.9 million from the ATM public offering[214] Summary of Long-Term Debt Obligations and Revolving Credit Facility This subsection summarizes the Partnership's long-term debt, including Senior Notes, Green Bonds, and the Revolving Credit Facility - Total long-term debt as of June 28, 2025, was $1,244.2 million, including Senior Notes, Green Bonds, and the Revolving Credit Facility[218] - The Green Bonds' debt service coverage ratio covenant was eliminated, and the Operating Partnership now guarantees all payments, curing prior non-compliance events[219] - Significant long-term debt maturities include $513.6 million in fiscal 2027 and $718.9 million thereafter[220] Total Consolidated Leverage Ratio This subsection presents the calculation and trend of the Partnership's total consolidated leverage ratio Total Consolidated Leverage Ratio | Metric | June 28, 2025 | September 28, 2024 | | :----------------------------------- | :------------ | :----------------- | | Total debt, less cash and cash equivalents | $1,242,905 | $1,228,426 | | Adjusted EBITDA for use in calculation | $287,223 | $258,234 | | Total Consolidated Leverage Ratio | 4.33 x | 4.76 x | - The Total Consolidated Leverage Ratio improved to 4.33x as of June 28, 2025, from 4.76x as of September 28, 2024[221] At-the-Market Public Offering This subsection details the issuance of common units through the at-the-market public offering and remaining availability - The Partnership issued 903,112 Common Units under its at-the-market public offering for net proceeds of $16.9 million during the nine months ended June 28, 2025[226] - Approximately $82.2 million in gross sale proceeds remains available under the Equity Distribution Agreement[227] Partnership Distributions This subsection reports the quarterly distributions declared for common unitholders - A quarterly distribution of $0.325 per Common Unit ($1.30 annualized) was declared for the third quarter of fiscal 2025, payable on August 12, 2025[229] Other Commitments This subsection outlines other significant financial commitments, including pension and insurance liabilities - As of June 28, 2025, the Partnership had a liability of $10.6 million for its defined benefit pension plan and $58.0 million in accrued insurance liabilities[230][231] Legal Matters This subsection refers to other sections for details on legal matters and contingencies - Refers to Item 1, Note 13 for details on legal matters and commitments and contingencies[232] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details the Partnership's exposure to market risks, specifically commodity price risk and interest rate risk, and outlines the strategies and instruments used to manage these exposures, including hedging activities and sensitivity analysis Commodity Price Risk This subsection describes how the Partnership manages exposure to fluctuations in propane and fuel oil prices through various hedging strategies - The Partnership manages commodity price risk through short-term pricing, forward fixed price purchase contracts, and derivative instruments (futures, options, and swaps) for propane and fuel oil[233][235] - Derivative instruments are used for hedging, not speculative trading, with realized gains/losses typically offsetting physical inventory gains/losses[235] Credit Risk This subsection explains the Partnership's approach to managing credit risk associated with its derivative contracts - Credit risk for exchange-traded contracts is minimal due to NYMEX guarantees, but the Partnership evaluates counterparties and sets credit limits for over-the-counter contracts[237] Interest Rate Risk This subsection details the Partnership's exposure to interest rate fluctuations on variable-rate borrowings and potential hedging strategies - The Partnership is exposed to interest rate risk on variable-rate borrowings (SOFR-based) and may use interest rate swap agreements to manage this risk, though none were active as of June 28, 2025[238] Derivative Instruments and Hedging Activities This subsection describes the accounting treatment for derivative instruments and their impact on the financial statements - All derivative instruments are reported at fair value on the balance sheet, with changes recorded in current period earnings or OCI depending on hedge designation and effectiveness[239] Sensitivity Analysis This subsection quantifies the potential impact of hypothetical market price changes on the fair value of derivative instruments - A hypothetical 10% adverse change in market prices for open derivative instruments as of June 28, 2025, would result in an estimated $0.2 million increase in potential future net losses[240] ITEM 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of the Partnership's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This subsection confirms the effectiveness of the Partnership's disclosure controls and procedures as of the reporting date - The Partnership's disclosure controls and procedures were evaluated and deemed effective as of June 28, 2025, providing reasonable assurance for timely and accurate reporting[241][242] Changes in Internal Control Over Financial Reporting This subsection reports on any material changes in the Partnership's internal control over financial reporting during the quarter - There have been no material changes in the Partnership's internal control over financial reporting during the quarter ended June 28, 2025[243] PART II. OTHER INFORMATION This section includes disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information ITEM 1. LEGAL PROCEEDINGS This section states that there are no legal proceedings to report - No legal proceedings are reported in this section[246] ITEM 1A. RISK FACTORS This section updates the risk factors, emphasizing risks related to current and future debt obligations that could limit distributions and financial flexibility, and risks associated with renewable fuel projects and investments, including potential impairment charges - Risks related to current and future debt obligations may limit the Partnership's ability to make distributions to Unitholders and impact financial flexibility[247][251] - The Green Bonds' debt service coverage ratio covenant was eliminated, and the Operating Partnership now guarantees all payments, mitigating a previous event of default[248][249] - Renewable fuel projects and investments face risks including customer adoption, operational constraints, financing, and dependence on government incentives, leading to impairment charges of $10.2 million for Oberon and $9.6 million for IH in Q1 fiscal 2025[252] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section states that there are no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds are reported[257] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section states that there are no defaults upon senior securities to report - No defaults upon senior securities are reported[258] ITEM 4. MINE SAFETY DISCLOSURES This section states that mine safety disclosures are not applicable - Mine safety disclosures are not applicable to the Partnership[259] ITEM 5. OTHER INFORMATION This section reports that no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by supervisors and executive officers during the quarter - Supervisors and executive officers did not adopt or terminate any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 28, 2025[260] ITEM 6. EXHIBITS This section lists the exhibits filed as part of the Quarterly Report, including the Equity Distribution Agreement and various certifications - Exhibits include the Equity Distribution Agreement (10.1) and certifications from the President and CEO, and CFO (31.1, 31.2, 32.1, 32.2)[264] SIGNATURES This section contains the authorized signatures for the Quarterly Report on Form 10-Q - The report was signed by Michael A. Kuglin, Chief Financial Officer, and Daniel S. Bloomstein, Vice President, Controller and Chief Accounting Officer, on August 7, 2025[266]