Suburban Propane(US:SPH)2025-02-06 19:31Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $75.3 million, essentially flat compared to the prior year [4][11] - Net income for Q1 2025 was $38 million or $0.59 per common unit, down from $40.4 million or $0.63 per common unit in the prior year [10] - Average wholesale propane prices increased by 15% to $0.77 per gallon compared to the prior year [12] - Total gross margin for Q1 decreased by $1 million or 0.5% to $222.5 million compared to the prior year [12] Business Line Data and Key Metrics Changes - Retail propane gallons sold were 105.7 million gallons, down 0.8% from the prior year, primarily due to lower heat-related demand [11] - The company experienced increased demand in the Southeast region following hurricanes, which offset some of the declines in other areas [4][11] - Renewable natural gas (RNG) injection was lower than the prior year due to a planned shutdown for maintenance [6] Market Data and Key Metrics Changes - Average temperatures during Q1 2025 were 7% warmer than normal, impacting propane demand [11] - November 2024 was one of the top five warmest Novembers on record, with temperatures 15% warmer than normal [11] Company Strategy and Development Direction - The company is focused on growing its core propane business and expanding its renewable energy platform through strategic investments [22][23] - Capital spending for fiscal 2025 is expected to range between $40 million and $45 million for propane operations and $35 million to $45 million for RNG projects [16] - The company has invested approximately $320 million in renewable fuels, hydrogen, and RNG over the past five years [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in handling increased demand due to colder weather and highlighted the operational readiness of the company [5][30] - The company expects to benefit from production tax credits starting January 1, 2025, which will contribute to cash flow [46] - Management acknowledged elevated leverage but indicated that it is within debt covenant requirements and expected to improve as growth projects come online [18][44] Other Important Information - The quarterly distribution was declared at $0.325 per common unit, equating to an annualized rate of $1.30 per common unit [21] - The company recognized $3 million of income related to contingent consideration from Equilibrium Capital Group [13] Q&A Session Summary Question: How is the system handling the colder weather and the pricing aspect? - Management stated that the platform is built for cold weather and has been effectively managing increased demand and pricing volatility [36][40] Question: Can you expand on the leverage and timing for production tax credits? - Management confirmed ample liquidity and explained that leverage metrics are influenced by past earnings and ongoing investments in growth projects, which are expected to improve as new facilities come online [44][46]