Suburban Propane(US:SPH)2023-11-22 17:18Customer Base and Sales - As of September 30, 2023, the company served approximately 1.0 million customers and sold approximately 396.4 million gallons of propane and 19.1 million gallons of fuel oil and refined fuels[10]. - In fiscal 2023, approximately 96% of propane gallons sold were to retail customers, with 42% to residential, 38% to commercial, 10% to industrial, 6% to government, and 4% to agricultural customers[35]. - Retail propane volume is highly seasonal, with about two-thirds sold during the peak heating season from October to March[61]. - Sales of fuel oil and refined fuels in fiscal 2023 amounted to 19.1 million gallons, with 65% sold to residential customers[47]. - The retail propane industry is highly fragmented, with the ten largest retailers accounting for approximately 34% of total retail sales in the U.S.[45]. Renewable Energy Investments - The company focuses on strategic investments in renewable energy, including partnerships with companies like Oberon Fuels and Independence Hydrogen, to enhance its low-carbon fuel offerings[22][14]. - The company has taken a 38% equity stake in Oberon, a producer of low carbon rDME transportation fuel, and a 25% equity stake in IH, a start-up developing a low CI gaseous hydrogen ecosystem[77]. - The company has executed agreements to purchase and distribute renewable propane, offering a low CI alternative to traditional fuels[77]. - The Renewable Fuel Standard (RFS) mandates the use of renewable fuel in the transportation sector, which the company expects to generate RINs from its biofuel production[79]. - The Inflation Reduction Act includes tax credits and incentives for clean energy production, which the company's renewable energy products are expected to qualify for[80]. - The California Low Carbon Fuel Standard (CA LCFS) and similar programs allow the company to generate LCFS Credits from its renewable energy offerings[82]. - The company is positioned to benefit from state and federal programs aimed at reducing GHG emissions, which may require increased investments in clean energy[84]. Operational Efficiency and Technology - The company is committed to enhancing operational efficiencies through investments in technology infrastructure, focusing on areas such as route optimization and customer relationship management[26]. - Approximately 60% of residential customers receive propane through an automatic delivery system, utilizing proprietary technology for scheduling based on historical consumption and weather[32]. - The company emphasizes safety as a top priority and continues to invest in programs, technology, and training to improve safety throughout its operations[97]. - The company has implemented a Clawback Policy allowing recoupment of incentive compensation in the event of a material restatement of financial results[105]. - The company’s cybersecurity program is based on the NIST Cybersecurity Framework and is regularly reviewed by independent third parties[107]. Financial Performance - Total revenues for fiscal 2023 were $1,429,194, a decrease from $1,501,465 in fiscal 2022, representing a decline of approximately 4.8%[321]. - Operating income for fiscal 2023 was $206,849, compared to $206,327 in fiscal 2022, showing a slight increase of 0.3%[321]. - Net income for fiscal 2023 was $123,752, down from $139,708 in fiscal 2022, reflecting a decrease of about 11.4%[321]. - Adjusted EBITDA for fiscal 2023 was $275,025, compared to $291,026 in fiscal 2022, indicating a decline of approximately 5.5%[322]. - Retail gallons of propane sold in fiscal 2023 totaled 396,393, a decrease from 401,322 gallons sold in fiscal 2022, representing a decline of about 1.2%[321]. - Interest expense for Fiscal 2023 totaled $73.393 million, an increase from $60.658 million in Fiscal 2022, representing a rise of approximately 21%[323]. - The company reported unrealized non-cash losses on changes in fair value of derivatives amounting to $3.671 million for Fiscal 2023, compared to gains of $27.929 million in Fiscal 2022[323]. - The company incurred acquisition-related costs of $4.695 million in Fiscal 2023, compared to $840,000 in Fiscal 2022[323]. Supply Chain and Procurement - Crestwood Equity Partners L.P. and Targa Liquids Marketing and Trade LLC provided approximately 30% and 16% of total propane purchases, respectively, in fiscal 2023[38]. - The company expects to secure adequate propane supplies during fiscal 2024, despite potential disruptions from key suppliers[38]. - Approximately 86% of total propane purchases were from domestic suppliers, with 100% sourced from North America in fiscal 2023[38]. Workforce and Governance - The company has 3,240 full-time employees as of September 30, 2023, with 2,562 engaged in customer service center activities[108]. - The company has eight independent Supervisors on its Board, representing 88.9% of the total[102].