Suburban Propane(US:SPH)2023-11-09 19:49Financial Data and Key Metrics Changes - Fiscal year 2023 adjusted EBITDA was $275 million, down from $291 million in the prior year, impacted by lower heat-related demand and inflationary pressures [51][52] - Total gross margin for fiscal 2023 increased by $25.5 million or 3.1% to $842.7 million, primarily due to higher propane unit margins and contributions from RNG assets [53] - Net income for fiscal 2023 was $138.4 million or $2.17 per common unit, compared to $171.1 million or $2.71 per common unit in the prior year [63] Business Line Data and Key Metrics Changes - Retail propane gallons sold in fiscal 2023 were 396 million gallons, a decrease of 1.2% compared to the prior year, attributed to warm temperatures during the heating season [64] - Propane unit margins increased by $0.04 per gallon or 2% compared to the prior year, due to effective price management during declining commodity prices [73] Market Data and Key Metrics Changes - Average wholesale propane prices for fiscal 2023 were $0.75 per gallon, which is 39% lower than the prior year [53] - U.S. propane inventories at the end of September 2023 were at 101 million barrels, 20% higher than September 2022 levels [65] Company Strategy and Development Direction - The company is committed to its core propane business while investing in renewable energy alternatives, including RNG and hydrogen production [12][49] - The long-term strategy focuses on building a growth platform that leverages the propane business to support investments in lower-carbon solutions [16][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from warm weather and inflation but highlighted organic growth in the customer base and margin expansion as positive indicators [33][51] - The company expects capital spending for propane operations to remain consistent with historical levels, while investments in RNG projects are projected to range between $25 million to $35 million [55] Other Important Information - The company declared a quarterly distribution of $0.325 per common unit for the fourth quarter of fiscal 2023, equating to an annualized rate of $1.30 per common unit [69] - Total capital spending for the year was $45 million, including $20 million for maintenance and $25 million for growth initiatives [67] Q&A Session Summary Question: Expectations for O&M growth and FY '24 - Management expects expenses to continue trending upward due to inflation, but the net increase is anticipated to be less than in previous years, driven by volumes [9] Question: Increase in equity earnings - The increase in equity earnings was related to Oberon, with no unusual factors affecting this [10] Question: Interest in scaling propane versus RNG - The company remains committed to its core propane business while also focusing on energy transition investments, including RNG and hydrogen [12][14]