Suburban Propane(SPH) - 2026 Q1 - Quarterly Report

Financial Performance - Net income for the three months ended December 27, 2025, was $45,780, compared to $19,420 for the same period in 2024, reflecting a year-over-year increase of 135.5%[14] - Operating income rose to $67,651, an increase from $59,062, marking an increase of 14.5%[14] - Revenues decreased slightly to $370,386 from $373,329, a decline of about 0.8%[14] - For the three months ended December 27, 2025, total revenues were $370.386 million, a slight decrease from $373.329 million for the same period in 2024[54] - Operating income increased to $112.529 million for the three months ended December 27, 2025, compared to $104.331 million in the prior year, reflecting a growth of 7.8%[145] - Total gross margin for Q1 fiscal 2026 was $239.5 million, an increase of $13.4 million, or 5.9%, compared to the prior year[166] Assets and Liabilities - Total assets increased to $2,395,780, up from $2,296,274, representing a growth of approximately 4.3%[11] - Long-term borrowings increased to $1,322,505 from $1,211,745, an increase of approximately 9.2%[11] - Total current liabilities decreased to $272,639 from $302,820, a reduction of about 9.9%[11] - As of December 27, 2025, total cash, cash equivalents, and restricted cash amounted to $11,575 million, a decrease from $11,771 million as of September 27, 2025[76] - Total long-term debt as of December 27, 2025, was $1,345.2 million, compared to $1,323.3 million in the prior year[205] - Total debt as of December 27, 2025, is $1,345,245,000, an increase from $1,229,845,000 as of September 27, 2025[208] Cash Flow and Financing - Net cash used in operating activities for Q1 fiscal 2026 was $47.7 million, a significant decrease from net cash provided of $8.8 million in the prior year[199] - Net cash used in investing activities was $41.3 million, including $22.0 million for acquisitions and $19.8 million in capital expenditures[200] - Net cash provided by financing activities was $88.8 million, reflecting $115.4 million in net borrowings under the Revolving Credit Facility[202] - The weighted average interest rate for borrowings under the Revolving Credit Facility was approximately 6.27% as of December 27, 2025[106] Revenue Sources - The propane segment generated approximately 88% of the Partnership's total revenue, with residential sales contributing $203.742 million, up from $197.114 million in the prior year[53] - The Partnership recognized $41.250 million in revenue from annually billed contracts during the three months ended December 27, 2025, compared to $36.122 million in the same period of 2024[54] Acquisitions and Investments - Suburban Renewable Energy acquired RNG production assets for $190 million on December 28, 2022, with potential contingent consideration valued at $6.194 million based on future performance[55] - The Partnership acquired propane assets from a retailer in California for $14,000, with $13,269 paid as of December 27, 2025[62] - Another acquisition of propane assets was made for $10,000, with $8,704 paid as of December 27, 2025[63] Impairments and Charges - The Partnership recorded an other-than-temporary impairment charge of $9,595 for its investment in Independence Hydrogen, reducing its carrying value to an estimated fair value of $21,589[57] - The Partnership fully impaired its investment in Oberon Fuels, resulting in a charge of $10,213, bringing the carrying value down to $0[59] - A further impairment charge of $6,095 was recorded for another development-stage entity, also reducing its investment to $0[60] Operational Metrics - Retail propane gallons sold increased by 4.2% to 110.2 million gallons in Q1 fiscal 2026, driven by colder temperatures and contributions from recent acquisitions[165] - Average propane prices decreased by 14.0% compared to the prior year, impacting total revenues from propane distribution, which fell by $3.9 million, or 1.2%[166][175] Legal and Regulatory - The Partnership's operations are subject to legal proceedings, but it does not expect any material adverse effects on its financial condition from current litigation[125] - The Partnership's financial statements are prepared in accordance with SEC regulations and include necessary adjustments for fair presentation[35] Compensation and Employee Expenses - Compensation expense for the Restricted Unit Plan for the three months ended December 27, 2025, was $2,313[116] - Compensation expense recognized for the Long-Term Incentive Plan for the three months ended December 27, 2025, was $4,064[122] - Payroll and payroll benefit expenses increased to $88.741 million, compared to $84.773 million in the prior year, reflecting a rise of 4.1%[144] Strategic Initiatives - The long-term strategic growth plan focuses on expanding the core propane business while investing in lower carbon renewable energy alternatives[173] - The Partnership's business model includes a bundled product offering with a home warranty called EnergyGuard, aimed at enhancing customer retention[126]