Suburban Propane (SPH) Q1 2026 Earnings Transcript

Core Insights - The fiscal 2026 heating season has started positively, with colder weather in the Northeast, Mid-Atlantic, and Midwest driving heat-related demand, which offset warmer temperatures in the West [1] - The company reported a 4% increase in volumes sold and an 11% increase in adjusted EBITDA for the first quarter compared to the previous year [4] Financial Performance - Net income for the first quarter was $46.6 million, or $0.70 per common unit, compared to $38 million, or $0.59 per common unit in the prior year [8] - Adjusted EBITDA for the first quarter was $83.4 million, an increase of $8.1 million or 10.8% year-over-year [9] - Retail propane gallons sold totaled 110.2 million gallons, a 4.2% increase compared to the prior year [9] Weather Impact - Average temperatures during the first quarter were 6% warmer than normal but 6% colder than the prior year [10] - In the Eastern US, temperatures were in line with normal and 12% cooler than the prior year, while the Western US experienced temperatures 24% warmer than normal [10] Commodity Prices and Inventory - Average wholesale propane prices for the first quarter were $0.66 per gallon, a 14% decrease compared to the prior year [10] - US propane inventories were reported at 89 million barrels, 34% higher than a year ago and 28% above historical averages [11] Operational Developments - The company has made operational enhancements at its Stanfield, Arizona facility, leading to increased RNG injection [5] - Capital spending for the quarter was $19.8 million, with $6.8 million allocated for RNG growth projects [13] Strategic Growth Initiatives - The company is focused on disciplined investment in growth, with $24 million allocated for the acquisition of two propane businesses in California and nearly $7 billion in growth CapEx for the quarter [6] - The consolidated leverage ratio improved to 4.57 times compared to 4.99 times the previous year [15] Distribution and Coverage - A quarterly distribution of $0.0325 per common unit was declared, equating to an annualized rate of $1.30 per common unit, with a distribution coverage of 2.19 times [17]