Suburban Propane(SPH) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows Condensed Consolidated Balance Sheets Presents condensed consolidated balance sheets, detailing total assets, liabilities, and partners' capital, with period-over-period changes Balance Sheet Summary | Metric | December 30, 2023 (in thousands) | September 30, 2023 (in thousands) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Total Assets | $2,319,603 | $2,270,475 | | Total Liabilities | $1,769,715 | $1,724,119 | | Total Partners' Capital | $549,888 | $546,356 | - Total assets increased by $49.1 million, and total liabilities increased by $45.6 million from September 30, 2023, to December 30, 2023, primarily driven by increases in accounts receivable and long-term borrowings[11] Condensed Consolidated Statements of Operations Presents condensed consolidated statements of operations, detailing revenues, operating income, net income, and net income per common unit for the period Statements of Operations Summary | Metric | Three Months Ended Dec 30, 2023 (in thousands) | Three Months Ended Dec 24, 2022 (in thousands) | Change (%) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Revenues | $365,834 | $397,470 | -8.0% | | Operating income | $48,748 | $62,315 | -21.8% | | Net income | $24,454 | $45,394 | -46.2% | | Net income per Common Unit - basic | $0.38 | $0.71 | -46.5% | - Interest expense, net, increased by 13.7% from $15,994 thousand in the prior year to $18,192 thousand in the current quarter[14] Condensed Consolidated Statements of Comprehensive Income Details the condensed consolidated statements of comprehensive income, focusing on total comprehensive income for the reporting periods Comprehensive Income Summary | Metric | Three Months Ended Dec 30, 2023 (in thousands) | Three Months Ended Dec 24, 2022 (in thousands) | Change (%) | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Total comprehensive income | $24,623 | $45,558 | -46.0% | Condensed Consolidated Statements of Cash Flows Presents condensed consolidated statements of cash flows, outlining cash generated or used in operating, investing, and financing activities Cash Flow Summary | Metric | Three Months Ended Dec 30, 2023 (in thousands) | Three Months Ended Dec 24, 2022 (in thousands) | Change (YoY) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Net cash (used in) provided by operations | $(12,775) | $6,272 | Shift to outflow | | Net cash (used in) investing activities | $(13,914) | $(14,391) | -3.3% | | Net cash provided by financing activities | $30,614 | $10,097 | +203.2% | | Net increase in cash, cash equivalents | $3,925 | $1,978 | +98.4% | Condensed Consolidated Statements of Partners' Capital Details the condensed consolidated statements of partners' capital, including net income and partnership distributions affecting total capital Partners' Capital Summary | Metric | December 30, 2023 (in thousands) | December 24, 2022 (in thousands) | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | | Total Partners' Capital (End of Period) | $549,888 | $522,356 | | Net income | $24,454 | $45,394 | | Partnership distributions | $(20,645) | $(20,471) | Notes to Condensed Consolidated Financial Statements Provides detailed explanatory notes supporting the condensed consolidated financial statements, covering accounting policies and specific financial items 1. Partnership Organization and Formation Describes the Partnership's organization, primary business activities in energy distribution, and key details about its subsidiaries and outstanding units - 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 is an investor in low-carbon fuel alternatives[29] - Suburban Renewable Energy, LLC, a wholly owned subsidiary, serves as the platform for investments in innovative, renewable energy technologies and businesses[31] - As of December 30, 2023, there were 64,015,004 Common Units outstanding[29] 2. Basis of Presentation Outlines the basis of presentation for the unaudited consolidated financial statements, including accounting standards, fiscal year, and revenue recognition policies - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules and US GAAP, consolidating all direct and indirect subsidiaries[36] - The Partnership uses a 52/53-week fiscal year ending on the last Saturday in September, and interim results are not necessarily indicative of full-year performance due to the seasonal nature of operations[38][36] - Revenue from the renewable energy platform includes in-take revenues (tipping fees for feedstocks) and off-take revenues (sales of RNG, environmental attributes, and byproducts)[42] 3. Disaggregation of Revenue Provides a disaggregation of revenue by customer type and segment, highlighting the primary sources of the Partnership's total revenues Revenue by Customer Type | Customer Type | Three Months Ended Dec 30, 2023 (in thousands) | Three Months Ended Dec 24, 2022 (in thousands) | | :-------------- | :--------------------------------------------- | :--------------------------------------------- | | 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 propane segment generated approximately 86% of the Partnership's revenue from its reportable segments for all periods presented[50] 4. Investments in and Acquisitions of Businesses Details strategic investments and acquisitions, including the RNG production assets and equity stakes in renewable energy companies, aligning with sustainability goals - On December 28, 2022, Suburban Renewable Energy acquired a platform of RNG production assets from Equilibrium Capital Group and formed a partnership for future RNG projects[53] - The Partnership holds a 25% equity stake in Independence Hydrogen, Inc. (IH) and a 38% equity stake in Oberon Fuels, Inc., a producer of low-carbon, renewable dimethyl ether (rDME)[54][56] - These investments align with the Partnership's 'Go Green with Suburban Propane' corporate pillar, focusing on clean-burning fuels and renewable energy alternatives[57] 5. Financial Instruments and Risk Management Explains the Partnership's use of financial instruments and risk management strategies, including derivative contracts to hedge commodity price risk - The Partnership uses exchange-traded futures and option contracts, and over-the-counter options and swap contracts, to hedge price risk associated with propane and fuel oil physical inventories and future purchases[59][60] - Changes in the fair value of derivative instruments not designated as cash flow hedges resulted in an unrealized loss of $10.8 million for the three months ended December 30, 2023, recognized in cost of products sold[66] Derivative Instruments Fair Value | Derivative Type | Location (Dec 30, 2023) | Fair Value (in thousands) | | :---------------------- | :------------------------ | :------------------------ | | Asset Derivatives | Other current assets | $2,345 | | Liability Derivatives | Other current liabilities | $3,118 | 6. Selected Balance Sheet Information Provides selected balance sheet details, including cash and cash equivalents, restricted cash, and inventory composition for the reporting periods Cash and Restricted Cash | Metric | December 30, 2023 (in thousands) | September 30, 2023 (in thousands) | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | | Cash and cash equivalents | $6,280 | $3,514 | | Restricted cash (current) | $3,454 | $2,392 | | Restricted cash (noncurrent) | $8,265 | $8,168 | | Total cash, cash equivalents, and restricted cash | $17,999 | $14,074 | Inventory Details | Inventory Type | December 30, 2023 (in thousands) | September 30, 2023 (in thousands) | | :--------------- | :--------------------------------- | :--------------------------------- | | Propane, fuel oil, refined fuels, natural gas | $57,471 | $58,565 | | Appliances | $3,499 | $3,263 | | Total Inventories | $60,970 | $61,828 | 7. Goodwill and Other Intangible Assets Details the composition of goodwill by segment and other intangible assets, including customer relationships and non-compete agreements Goodwill by Segment | Segment | Goodwill (Dec 30, 2023, in thousands) | | :------------------------ | :------------------------------------ | | Propane | $1,105,179 | | Fuel oil and refined fuels | $4,438 | | Natural gas and electricity | $7,900 | | All other | $31,259 | | Total Goodwill | $1,148,776 | Intangible Assets Net Value | Intangible Asset | Net Value (Dec 30, 2023, in thousands) | | :----------------- | :------------------------------------- | | Customer relationships | $67,312 | | Non-compete agreements | $5,718 | | Other | $4,641 | | Total | $77,671 | 8. Leases Outlines lease-related financial information, including lease expense, cash payments, weighted-average lease term, and future minimum lease payments Lease Expense and Payments | Metric | Three Months Ended Dec 30, 2023 (in thousands) | Three Months Ended Dec 24, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Lease expense | $10,753 | $10,060 | | Cash payments for operating leases | $10,804 | $10,064 | - The weighted-average remaining lease term was 5.5 years as of December 30, 2023, with a weighted-average discount rate of 5.9%[79] - Total future minimum lease payments under non-cancelable operating leases as of December 30, 2023, amounted to $163,735 thousand[79] 9. Net Income Per Common Unit Presents basic and diluted net income per common unit, along with the corresponding weighted average common units outstanding for the periods Net Income Per Unit Details | Metric | Three Months Ended Dec 30, 2023 | Three Months Ended Dec 24, 2022 | | :--------------------------------------- | :------------------------------ | :------------------------------ | | Net income per Common Unit - basic | $0.38 | $0.71 | | Weighted average Common Units outstanding - basic (in thousands) | 64,064 | 63,634 | | Net income per Common Unit - diluted | $0.38 | $0.71 | | Weighted average Common Units outstanding - diluted (in thousands) | 64,381 | 63,933 | 10. Long-Term Borrowings Details the Partnership's long-term borrowings, including senior notes, green bonds, and revolving credit facility, along with covenant compliance and maturity schedules Long-Term Debt Overview | Debt Instrument | December 30, 2023 (in thousands) | September 30, 2023 (in thousands) | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | | 5.875% Senior Notes due March 1, 2027 | $350,000 | $350,000 | | 5.00% Senior Notes due June 1, 2031 | $650,000 | $650,000 | | 5.50% Green Bonds due Oct 1, 2028-2033 | $67,105 | $66,766 | | Revolving Credit Facility, due March 5, 2025 | $186,800 | $132,000 | | Total Long-Term Borrowings (net) | $1,243,778 | $1,188,210 | - The Partnership and Operating Partnership were in compliance with all covenants and terms of the Senior Notes and the Credit Agreement as of December 30, 2023[93] - Aggregate long-term debt maturities subsequent to December 30, 2023, include $186.8 million in fiscal 2025, $350.0 million in fiscal 2027, and $730.6 million thereafter[94] 11. Distributions of Available Cash Reports the announced quarterly distribution of available cash per Common Unit for the first quarter of fiscal 2024 - The Partnership announced a quarterly distribution of $0.325 per Common Unit, or $1.30 on an annualized basis, for the first quarter of fiscal 2024, payable on February 13, 2024[96] 12. Unit-Based Compensation Arrangements Details unit-based compensation arrangements, including compensation expense for various plans and the number of restricted units awarded Unit-Based Compensation Expense | Plan | Compensation Expense (Three Months Ended Dec 30, 2023, in thousands) | | :--------------------------------------- | :--------------------------------------------------- | | Restricted Unit Plan | $2,645 | | Phantom Equity Plan (PEP) | $2,019 | | Distribution Equivalent Rights Plan (DER Plan) | $375 | | Long-Term Incentive Plan (LTIP) | $2,462 | | Total | $7,501 | - During the three months ended December 30, 2023, 452,952 restricted units were awarded under the Restricted Unit Plan[100] 13. Commitments and Contingencies Outlines the Partnership's commitments and contingencies, including accrued self-insurance liabilities and the status of legal proceedings - Accrued liabilities for self-insurance (general and product, workers' compensation, and automobile claims) totaled $61.0 million as of December 30, 2023[107] - The Second Circuit Court of Appeals affirmed the dismissal of a putative class action suit against the Partnership's natural gas and electricity business[108] 14. Guarantees Reports on the maximum potential aggregate future payments under residual value guarantees for operating leases - The maximum potential aggregate future payments under residual value guarantees for operating leases was $39.4 million as of December 30, 2023[109] 15. Pension Plans and Other Postretirement Benefits Details net periodic benefit costs for pension and postretirement plans, including the estimated obligation to multi-employer pension plans Net Periodic Benefit Cost | Benefit Type | Net Periodic Benefit Cost (Three Months Ended Dec 30, 2023, in thousands) | | :------------- | :---------------------------------------------------------- | | Pension Benefits | $915 | | Postretirement Benefits | $(220) | - The estimated obligation to multi-employer pension plans (MEPPs) was $21.1 million as of December 30, 2023, due to voluntary full withdrawal[112] 16. Amounts Reclassified Out of Accumulated Other Comprehensive Income Presents amounts reclassified out of accumulated other comprehensive income (loss) and into earnings for the reporting periods Accumulated Other Comprehensive Income Reclassifications | Metric | December 30, 2023 (in thousands) | December 24, 2022 (in thousands) | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | | Accumulated Other Comprehensive Income (Loss) | $(10,498) | $(12,432) | | Reclassifications to earnings | $169 | $164 | 17. Income Taxes Explains the Partnership's income tax treatment, including corporate entity taxation and the provision of a full valuation allowance against deferred tax assets - The Partnership's earnings are generally not subject to income tax at the partnership level, but its Corporate Entities are subject to U.S. corporate income tax[114] - A full valuation allowance has been provided against most deferred tax assets due to the determination that it is more likely than not that sufficient future taxable income will not be available to utilize the assets[115] 18. Segment Information Provides financial information by reportable segment, including revenues and operating income (loss) for Propane, Fuel Oil, Natural Gas, and 'all other' businesses - The Partnership manages operations in four segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity (reportable segments), and 'all other' (service business, RNG businesses, and IH investment)[117][121] Segment Revenues and Operating Income | Segment | Revenues (Q1 FY2024, in thousands) | Operating Income (Loss) (Q1 FY2024, in thousands) | | :------------------------ | :--------------------------------- | :------------------------------------------------ | | Propane | $313,358 | $87,176 | | Fuel oil and refined fuels | $23,898 | $2,172 | | Natural gas and electricity | $6,493 | $1,568 | | All other | $22,085 | $(7,181) | | Corporate | N/A | $(34,987) | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Analyzes the Partnership's financial condition and results of operations, highlighting declines in net income and Adjusted EBITDA due to warmer weather and increased operating expenses Executive Overview Provides a high-level summary of key financial results, including net income, Adjusted EBITDA, retail volumes, gross margin, operating expenses, and debt levels Key Financial Metrics | Metric | Q1 FY2024 (in millions) | Q1 FY2023 (in millions) | Change (%) | | :-------------------- | :---------------------- | :---------------------- | :--------- | | Net income | $24.5 | $45.4 | -46.0% | | Net income per Common Unit | $0.38 | $0.71 | -46.5% | | Adjusted EBITDA | $75.2 | $90.0 | -16.5% | - Retail propane gallons sold decreased 2.0% year-over-year to 106.5 million gallons, primarily due to 9% warmer than normal and 6% warmer than prior year average temperatures across service territories[138] - Total gross margin decreased 0.9% to $212.8 million, including a $10.8 million unrealized loss on derivative instruments (compared to $13.7 million in prior year). Excluding mark-to-market adjustments, gross margin decreased 2.2%[139] - Combined operating and general and administrative expenses increased 6.4% to $147.6 million, driven by higher payroll, benefits, and operating costs from RNG production facilities[140] - Total debt outstanding increased $54.8 million from September 2023 due to seasonal borrowings, resulting in a Consolidated Leverage Ratio of 4.72x as of December 30, 2023[141] Product Costs and Supply Discusses trends in U.S. propane inventory levels and their impact on average posted propane prices during the reporting period - U.S. propane inventory levels at the end of December 2023 were 82.6 million barrels, 2.4% higher than December 2022 and 7.6% higher than the five-year average[128] - Higher inventory levels contributed to a 16.7% decline in average posted propane prices (Mont Belvieu, Texas basis) compared to the prior year first quarter[128] Seasonality Explains the seasonal nature of the Partnership's operations, with sales and operating profits concentrated during the peak heating season - Approximately two-thirds of retail propane volume and three-fourths of fuel oil volumes are sold during the peak heating season from October through March[129] - Sales and operating profits are concentrated in the first and second fiscal quarters, with lower operating profits or net losses expected from April through September[129] Weather Analyzes the impact of warmer-than-normal temperatures on heat-related demand for the Partnership's products during the quarter - Average temperatures across all service territories during Q1 FY2024 were 9% warmer than normal and 6% warmer than the prior year first quarter, negatively impacting heat-related demand[138] - December, the most critical month for heat-related demand, experienced temperatures 10% warmer than both normal and December 2022[145] Hedging and Risk Management Activities Describes the Partnership's use of derivative instruments to hedge commodity price risk for physical inventory and forecasted purchases, not for speculation - The Partnership uses propane forward, options, and swap agreements, as well as NYMEX futures and options contracts, to hedge price risk for physical inventory and forecasted purchases of propane and fuel oil[132] - Derivative instruments are not used for speculative trading purposes; risk management activities are monitored by an internal Commodity Risk Management Committee[132] Inflation and Other Cost Increases Addresses inflationary pressures impacting labor, transportation, operating costs, and equipment, and their potential effects on product costs and consumer demand - The Partnership is experiencing inflationary pressures on various goods and services, including labor, transportation costs, operating costs, and equipment[133] - These factors may continue to impact product costs, expenses, capital expenditures, and consumer demand[133] Critical Accounting Policies and Estimates Highlights critical accounting policies and estimates, including those for RNG revenue, self-insurance, pension liabilities, derivative valuation, and asset impairment - Management's estimates are critical in areas such as RNG revenue recognition, self-insurance and litigation reserves, pension and postretirement benefit liabilities, valuation of derivative instruments, and asset impairment assessments[135] Results of Operations and Financial Condition Provides a detailed analysis of the Partnership's results of operations and financial condition for the reporting period, comparing current and prior year performance Three Months Ended December 30, 2023 Compared to Three Months Ended December 24, 2022 Compares the Partnership's financial performance for the three months ended December 30, 2023, against the same period in the prior fiscal year Revenues Analyzes changes in revenues across segments, attributing decreases primarily to lower selling prices and volumes, and increases to the RNG Acquisition Revenue by Segment | Segment | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | Change (YoY) | | :------------------------ | :----------------------- | :----------------------- | :----------- | | Propane | $313,358 | $342,353 | -8.5% | | Fuel oil and refined fuels | $23,898 | $30,141 | -20.7% | | Natural gas and electricity | $6,493 | $8,690 | -25.3% | | All other | $22,085 | $16,286 | +35.6% | | Total revenues | $365,834 | $397,470 | -8.0% | - Propane revenues decreased primarily due to lower average retail selling prices (-7.2%) and lower volumes sold (-2.0%) from reduced heat-related demand[146] - Revenues in the 'all other' segment increased significantly due to the impact of the RNG Acquisition, which closed at the beginning of fiscal 2023 second quarter[149] Cost of Products Sold Examines the cost of products sold by segment, noting the impact of lower wholesale prices and unrealized losses on derivative instruments Cost of Products Sold by Segment | Segment | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | Change (YoY) | | :------------------------ | :----------------------- | :----------------------- | :----------- | | Propane | $127,772 | $149,840 | -14.7% | | Fuel oil and refined fuels | $16,721 | $22,372 | -25.3% | | Natural gas and electricity | $3,518 | $5,940 | -40.8% | | All other | $5,042 | $4,501 | +12.0% | | Total cost of products sold | $153,053 | $182,653 | -16.2% | - Lower average wholesale prices for propane (-16.7%) and fuel oil (-25.0%) contributed to the decrease in cost of products sold[153] - The net change in fair value of derivative instruments resulted in a $10.8 million unrealized non-cash loss in Q1 FY2024, a $2.9 million decrease compared to the prior year's $13.7 million loss[153] Operating Expenses Analyzes the increase in operating expenses, primarily driven by higher payroll, benefits, and costs associated with RNG production facilities Operating Expenses Summary | Metric | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | Change (YoY) | | :--------------- | :----------------------- | :----------------------- | :----------- | | Operating expenses | $122,070 | $115,711 | +5.5% | - The increase was primarily due to higher payroll and benefit-related costs, operating costs associated with RNG production facilities, and other inflationary effects, partially offset by lower fleet vehicle fuel costs[158] General and Administrative Expenses Examines the increase in general and administrative expenses, mainly attributed to higher payroll, benefit-related costs, and other inflationary factors General and Administrative Expenses Summary | Metric | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | Change (YoY) | | :-------------------------------- | :----------------------- | :----------------------- | :----------- | | General and administrative expenses | $25,570 | $23,012 | +11.1% | - The increase was primarily driven by higher payroll and benefit-related costs and other inflationary factors[160] Depreciation and Amortization Analyzes the increase in depreciation and amortization, primarily resulting from assets acquired through the RNG Acquisition Depreciation and Amortization Summary | Metric | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------- | :----------------------- | :----------- | | Depreciation and amortization | $16,393 | $13,779 | +19.0% | - The increase was primarily a result of depreciation and amortization from the tangible and intangible assets acquired through the RNG Acquisition[162] Interest Expense, net Examines the increase in net interest expense, driven by higher outstanding borrowings, benchmark interest rates, and the impact of Green Bonds Net Interest Expense | Metric | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | Change (YoY) | | :-------------------- | :----------------------- | :----------------------- | :----------- | | Interest expense, net | $18,192 | $15,994 | +13.7% | - The increase was due to a higher level of average outstanding borrowings under the Revolving Credit Facility (to fund the RNG Acquisition) and higher benchmark interest rates, as well as the impact of the Green Bonds[163] EBITDA and Adjusted EBITDA Presents net income, EBITDA, and Adjusted EBITDA, along with unrealized non-cash losses on changes in fair value of derivatives EBITDA and Adjusted EBITDA Reconciliation | Metric | Q1 FY2024 (in thousands) | Q1 FY2023 (in thousands) | | :--------------------------------------- | :----------------------- | :----------------------- | | Net income | $24,454 | $45,394 | | EBITDA | $59,288 | $75,119 | | Adjusted EBITDA | $75,232 | $90,042 | | Unrealized non-cash losses on changes in fair value of derivatives | $10,786 | $13,706 | Liquidity and Capital Resources Analyzes the Partnership's liquidity and capital resources, including cash flow movements, long-term debt obligations, partnership distributions, and other commitments Analysis of Cash Flows Provides an analysis of cash flows from operating, investing, and financing activities, highlighting significant shifts and funding sources - Net cash used in operating activities for Q1 FY2024 was $12.8 million, a shift from $6.3 million provided in the prior year, primarily due to lower earnings and higher interest expense[167] - Net cash used in investing activities was $13.9 million, including $11.2 million in capital expenditures and $3.2 million for additional investments[168] - Net cash provided by financing activities increased to $30.6 million, reflecting $54.8 million in net borrowings under the Revolving Credit Facility to fund working capital and capital expenditures[170] Summary of Long-Term Debt Obligations and Revolving Credit Facility Summarizes long-term debt obligations, including senior notes, green bonds, and the revolving credit facility, along with maturity schedules and leverage ratio - Total long-term debt as of December 30, 2023, was $1,267.4 million, including $350.0 million in 2027 Senior Notes, $650.0 million in 2031 Senior Notes, $80.6 million in Green Bonds, and $186.8 million outstanding under the Revolving Credit Facility[172] Debt Maturity Schedule | Fiscal Year | Long-Term Debt Maturities (subsequent to Dec 30, 2023, in millions) | | :------------ | :---------------------------------------------------------------- | | 2024 | $0 | | 2025 | $186.8 | | 2026 | $0 | | 2027 | $350.0 | | 2028 | $0 | | Thereafter | $730.6 | - The Total Consolidated Leverage Ratio for the twelve months ended December 30, 2023, was 4.72x, up from 4.28x at September 30, 2023[175] Partnership Distributions Reports the announced quarterly distribution per Common Unit for the first quarter of fiscal 2024 - A quarterly distribution of $0.325 per Common Unit was announced for Q1 FY2024, payable on February 13, 2024[177] Other Commitments Details other financial commitments, including liabilities for defined benefit pension plans, retiree health benefits, and self-insured claims - As of December 30, 2023, the Partnership had a liability of $18.5 million for its defined benefit pension plan and $4.6 million for accrued retiree health and life benefits[178] - Accrued insurance liabilities for self-insured claims amounted to $61.0 million as of December 30, 2023[179] Legal Matters Refers to Note 13, 'Commitments and Contingencies,' for detailed information regarding legal proceedings - Refer to Note 13, 'Commitments and Contingencies,' for details on legal proceedings[180] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Outlines the Partnership's exposure to market risks, including commodity price, credit, and interest rate risks, detailing management strategies and sensitivity analysis Commodity Price Risk Discusses the management of commodity price risk through supply contracts, fixed-price purchases, and derivative instruments, along with inventory levels - The Partnership manages commodity price risk using supply contracts, forward fixed-price purchase contracts, and derivative instruments (futures, options, swaps) for propane and fuel oil[182][184] - On-hand priced inventory typically does not exceed four to eight weeks of supply needs, depending on the time of year[183] Credit Risk Addresses credit risk exposure with over-the-counter derivative counterparties and the mitigation strategies employed through financial evaluation and credit limits - The Partnership is exposed to credit risk with over-the-counter derivative counterparties, which is mitigated by evaluating financial condition and establishing credit limits[186] Interest Rate Risk Explains exposure to interest rate risk on variable-rate borrowings, such as the Revolving Credit Facility, and the absence of interest rate swap agreements - The Partnership is subject to interest rate risk on its variable-rate borrowings, such as the Revolving Credit Facility, which bear interest based on SOFR plus an applicable margin[187] - No interest rate swap agreements were active as of December 30, 2023, to manage this risk[187] Derivative Instruments and Hedging Activities Describes the accounting treatment for derivative instruments, reporting them at fair value on the balance sheet with changes recognized in earnings or OCI - All derivative instruments are reported on the balance sheet at fair value, with changes recognized in current period earnings or Other Comprehensive Income (OCI) based on hedge designation and effectiveness[188] Sensitivity Analysis Provides a sensitivity analysis illustrating the potential increase in future net losses from a hypothetical adverse change in market prices for derivative instruments - A hypothetical 10% adverse change in market prices for open derivative instruments as of December 30, 2023, indicates an increase in potential future net losses of $3.4 million[189] ITEM 4. CONTROLS AND PROCEDURES Confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures States that management concluded the Partnership's disclosure controls and procedures were effective as of December 30, 2023 - The Partnership's management concluded that disclosure controls and procedures were effective as of December 30, 2023, providing reasonable assurance for timely and accurate financial reporting[191] Changes in Internal Control Over Financial Reporting Reports no material changes in the Partnership's internal control over financial reporting during the quarter ended December 30, 2023 - There have been no changes in the Partnership's internal control over financial reporting during the quarter ended December 30, 2023, that have materially affected or are reasonably likely to materially affect it[192] PART II. OTHER INFORMATION Presents other information including legal proceedings, risk factors, equity sales, and exhibits ITEM 1. LEGAL PROCEEDINGS Reports no new legal proceedings, directing readers to Note 13 for details on existing legal matters - No new legal proceedings are reported in this section; refer to Note 13, 'Commitments and Contingencies,' for details on existing legal matters[195] ITEM 1A. RISK FACTORS Directs readers to review comprehensive risk factors detailed in the Partnership's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 - Readers should carefully consider the risk factors discussed in Item 1A of the Partnership's Annual Report on Form 10-K for the fiscal year ended September 30, 2023[196] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Reports on deemed purchases of Common Units by the Partnership for income tax withholding purposes related to vested restricted units Common Units Purchased | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | | :------------------------------------ | :----------------------------------- | :--------------------------- | | October 29, 2023 through November 25, 2023 | 180,787 | $17.10 | - The shares purchased represent Common Units withheld from participants for income tax withholding purposes upon the vesting of restricted units[197] ITEM 3. DEFAULTS UPON SENIOR SECURITIES Confirms that no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities were reported[198] ITEM 4. MINE SAFETY DISCLOSURES States that mine safety disclosures are not applicable to the Partnership's operations - Mine safety disclosures are not applicable to the Partnership[199] ITEM 5. OTHER INFORMATION Indicates that no other information is reported in this section - No other information is reported in this section[200] ITEM 6. EXHIBITS Lists all exhibits filed as part of the Quarterly Report, including Sarbanes-Oxley Act certifications and XBRL documents - Exhibits include certifications from the President and CEO, and CFO, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[204] - XBRL Instance Document, Taxonomy Extension Schema, and Cover Page Interactive Data File are also filed as exhibits[204] SIGNATURES Contains the signatures of authorized officers, certifying the filing of the report - The report was signed by Michael A. Kuglin, Chief Financial Officer, and Daniel S. Bloomstein, Vice President, Controller and Chief Accounting Officer, on February 8, 2024[207]