Suburban Propane(SPH) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The second quarter of fiscal 2025 saw a net income of $136.9 million or $2.11 per common unit, compared to $110.3 million or $1.71 per common unit in the prior year, marking a significant increase [12] - Adjusted EBITDA for the quarter was $175 million, an increase of $28 million or 19.1% compared to the prior year [12][14] - Retail propane gallons sold increased by 15.5% to 162 million gallons, primarily due to cooler temperatures and contributions from recent acquisitions [12][14] Business Line Data and Key Metrics Changes - Propane volumes increased by 15.5% compared to the prior year's second quarter, with the highest volume delivered in January 2025 since 2018 [7][12] - Renewable natural gas (RNG) operations saw average daily injection improve from the first quarter, although it was slightly down from the prior year's second quarter due to cold temperatures affecting production [8][9] Market Data and Key Metrics Changes - Average wholesale propane prices for the quarter were $0.90 per gallon, a 7.2% increase compared to the prior year [14] - U.S. propane inventories were 15% lower than March 2024 levels, contributing to price volatility in the market [14][23] Company Strategy and Development Direction - The long-term strategic growth plan focuses on growing the core propane business and investing in lower carbon renewable energy alternatives while maintaining balance sheet flexibility [11][25] - The company is actively pursuing opportunistic growth through acquisitions, with a strong pipeline of opportunities emerging as the market stabilizes [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the propane market's volatility and highlighted the importance of strong supplier relationships [28][29] - The company is optimistic about the future of propane as a reliable energy source and is well-positioned to capitalize on new market opportunities [33][34] Other Important Information - The company launched an At the Market (ATM) equity sales program to raise up to $100 million, with net proceeds of $8.8 million used to repay debt [10][11] - A quarterly distribution of $0.325 per common unit was declared, with a coverage ratio of 2.17 times for the trailing twelve months [20] Q&A Session Summary Question: How is Suburban positioning itself ahead of the non-heating season? - Management indicated that they have strong supply management practices and expect higher propane inventory levels to influence pricing [28][29] Question: What is Suburban's view on the propane M&A landscape? - The company noted a reduced number of buyers in the market, presenting a favorable opportunity for Suburban to pursue quality acquisitions [31][34] Question: What are the expectations regarding renewable energy regulations? - Management discussed the potential for improved credit values in the environmental attribute markets and emphasized operational excellence in their RNG platform [35][36]