Suburban Propane Partners, L.P. Announces Full Year and Fourth Quarter Results
WHIPPANY, N.J., Nov. 14, 2019 /PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE:SPH), a nationwide distributor of propane, fuel oil and related products and services, as well as a marketer of natural gas and electricity, today announced earnings for its full year and fourth quarter ended September 28, 2019.
Fiscal Year 2019 Results
Net income for fiscal 2019 was $68.6 million, or $1.11 per Common Unit, compared to $76.5 million, or $1.24 per Common Unit, in fiscal 2018.
Net income and EBITDA (as defined and reconciled below) for fiscal 2018 included a loss of $4.8 million from the sale of certain assets and operations in a non-strategic market of the propane segment. Excluding the effects of the foregoing item in the prior year and unrealized (non-cash) mark-to-market adjustments on derivative instruments in both years, Adjusted EBITDA (as defined and reconciled below) amounted to $275.0 million for fiscal 2019, compared to $283.0 million in the prior year.
In announcing these results, President and Chief Executive Officer Michael A. Stivala said, "We continued to make progress on our strategic growth initiatives during fiscal 2019 -- utilizing excess cash flow in a balanced way to invest more than $20 million in three well-run propane businesses, fostering our new market expansion activities and reducing debt by approximately $30 million. From an earnings perspective, we reported another solid year despite an erratic weather pattern with unseasonably warm weather in the most critical heating months. We also launched a brand refresh during fiscal 2019, called the Three Pillars of the Suburban Propane Experience, which focuses on the key elements of our time-honored brand: Suburban Propane's Commitment to Excellence, SuburbanCares and Go Green with Suburban Propane."
Concluding his remarks, Mr. Stivala said, "Our re-imagined brand elements emphasize our commitment to excellence for the safety and comfort of our customers, our devotion to safety and career development for our dedicated employees, our philanthropic efforts to give back to the communities we serve, and promotion of the inherent environmental benefits of using propane in multiple applications as a clean energy source for a sustainable future. Our business is very well positioned, both operationally and financially, to continue to build on our successes for the next phase of growth for Suburban Propane and our valued Unitholders."
Retail propane gallons sold in fiscal 2019 of 426.7 million gallons decreased 3% compared to the prior year, primarily due to an erratic and inconsistent weather pattern throughout fiscal year 2019 that negatively impacted customer demand. While average temperatures (as measured by heating degree days) across all of the Partnership's service territories for fiscal 2019 were 6% warmer than normal and 1% cooler than the prior year, average temperatures during the peak demand months of December and January were 4% and 10% warmer than the same months in the prior year, respectively.
Revenues for fiscal 2019 of $1,267.7 million decreased 5.7% compared to the prior year, primarily due to lower propane volumes sold, combined with lower retail selling prices associated with lower wholesale costs.
Cost of products sold for fiscal 2019 of $522.0 million decreased 11.9% compared to the prior year, primarily due to lower wholesale costs and lower volumes sold. Average propane prices (basis Mont Belvieu, Texas) decreased 32.8% compared to the prior year. Cost of products sold for fiscal 2019 included an $8.0 million unrealized (non-cash) loss attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $0.3 million unrealized (non-cash) gain in fiscal 2018. These unrealized items are excluded from Adjusted EBITDA for both periods in the table below.
Combined operating and general and administrative expenses of $474.0 million for fiscal 2019 increased 2.2% compared to the prior year, primarily due to higher payroll and benefit-related costs and higher vehicle repairs and maintenance costs, partially offset by lower bad debt expense.
During fiscal 2019, the Partnership reduced debt by $30.1 million, and completed three acquisitions of well-run propane operations for a total purchase price of $22.9 million in support of its strategic growth initiatives. As a result of the debt repayment, outstanding borrowings under the revolving credit facility were reduced to $113.5 million and the Consolidated Leverage Ratio improved to 4.34x as of September 2019.
Fourth Quarter 2019 Results
Consistent with the seasonal nature of the propane business, the Partnership typically reports a net loss for its fiscal fourth quarter. Net loss for the fourth quarter of fiscal 2019 was $51.1 million, or $0.82 per Common Unit, which was essentially flat compared to the fourth quarter of fiscal 2018. Excluding the effects of unrealized (non-cash) mark-to-market adjustments on derivative instruments used in risk management activities in both fiscal fourth quarters, Adjusted EBITDA for the fourth quarter of fiscal 2019 amounted to a loss of $1.4 million, reflecting an improvement of $1.4 million compared to the fourth quarter of fiscal 2018. Retail propane gallons sold of 63.7 million gallons in the fourth quarter of fiscal 2019 decreased 1.7% compared to the prior year fourth quarter.
As previously announced on October 24, 2019, the Partnership's Board of Supervisors had declared a quarterly distribution of $0.60 per Common Unit for the three months ended September 28, 2019. On an annualized basis, this distribution rate equates to $2.40 per Common Unit. The distribution was paid on November 12, 2019 to Common Unitholders of record as of November 5, 2019.
About Suburban Propane Partners, L.P.
Suburban Propane Partners, L.P. is a publicly-traded master limited partnership listed on the New York Stock Exchange. Headquartered in Whippany, New Jersey, Suburban has been in the customer service business since 1928. The Partnership serves the energy needs of approximately 1.0 million residential, commercial, industrial and agricultural customers through approximately 700 locations in 41 states.
Forward-Looking Statements
This press release contains certain forward-looking statements relating to future business expectations and financial condition and results of operations of the Partnership, based on management's current good faith expectations and beliefs concerning future developments. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such forward-looking statements, including the following:
-- The impact of weather conditions on the demand for propane, fuel oil and
other refined fuels, natural gas and electricity;
-- Volatility in the unit cost of propane, fuel oil and other refined
fuels, natural gas and electricity, the impact of the Partnership's
hedging and risk management activities, and the adverse impact of price
increases on volumes sold as a result of customer conservation;
-- The ability of the Partnership to compete with other suppliers of
propane, fuel oil and other energy sources;
-- The impact on the price and supply of propane, fuel oil and other
refined fuels from the political, military or economic instability of
the oil producing nations, global terrorism and other general economic
conditions;
-- The ability of the Partnership to acquire sufficient volumes of, and the
costs to the Partnership of acquiring, transporting and storing,
propane, fuel oil and other refined fuels;
-- The ability of the Partnership to acquire and maintain reliable
transportation for its propane, fuel oil and other refined fuels;
-- The ability of the Partnership to retain customers or acquire new
customers;
-- The impact of customer conservation, energy efficiency and technology
advances on the demand for propane, fuel oil and other refined fuels,
natural gas and electricity;
-- The ability of management to continue to control expenses;
-- The impact of changes in applicable statutes and government regulations,
or their interpretations, including those relating to the environment
and climate change, derivative instruments and other regulatory
developments on the Partnership's business;
-- The impact of changes in tax laws that could adversely affect the tax
treatment of the Partnership for income tax purposes;
-- The impact of legal proceedings on the Partnership's business;
-- The impact of operating hazards that could adversely affect the
Partnership's operating results to the extent not covered by insurance;
-- The Partnership's ability to make strategic acquisitions and
successfully integrate them;
-- The impact of current conditions in the global capital and credit
markets, and general economic pressures;
-- The operating, legal and regulatory risks the Partnership may face; and
-- Other risks referenced from time to time in filings with the Securities
and Exchange Commission ("SEC") and those factors listed or incorporated
by reference into the Partnership's Annual Report under "Risk Factors."
Some of these risks and uncertainties are discussed in more detail in the Partnership's Annual Report on Form 10-K for its fiscal year ended September 29, 2018 and other periodic reports filed with the SEC. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's view only as of the date made. The Partnership undertakes no obligation to update any forward-looking statement, except as otherwise required by law.
Suburban Propane Partners, L.P. and Subsidiaries
Consolidated Statements of Operations
For the Three and Twelve Months Ended September 28, 2019 and September 29, 2018
(in thousands, except per unit amounts)
(unaudited)
Three Months Ended Twelve Months Ended
September 28, September 29, September 28, September 29,
2019 2018 2019 2018
Revenues
Propane $
145,978 $
162,979 $
1,083,446 $
1,153,323
Fuel oil and refined fuels 8,656 9,106 92,084 91,520
Natural gas and electricity 6,679 10,366 45,206 54,308
All other 10,699 10,467 46,969 45,262
172,012 192,918 1,267,705 1,344,413
Costs and expenses
Cost of products sold 59,285 85,407 521,988 592,630
Operating 97,590 90,875 402,957 397,489
General and administrative 16,096 16,561 71,034 66,246
Depreciation and amortization 30,027 30,629 120,872 125,222
202,998 223,472 1,116,851 1,181,587
Loss on sale of business 4,823
Operating (loss) income (30,986) (30,554) 150,854 158,003
Interest expense, net 18,622 18,955 76,663 77,383
Other, net 1,175 1,174 4,702 4,692
(Loss) income before provision for (benefit from) (50,783) (50,683) 69,489 75,928
income taxes
Provision for (benefit from) income taxes 279 143 857 (606)
Net (loss) income $
(51,062) $
(50,826) $
68,632 $
76,534
Net (loss) income per Common Unit - basic $
(0.82) $
(0.83) $
1.11 $
1.24
Weighted average number of Common Units 62,077 61,599 61,992 61,557
outstanding - basic
Net (loss) income per Common Unit - diluted $
(0.82) $
(0.83) $
1.10 $
1.24
Weighted average number of Common Units 62,077 61,599 62,366 61,847
outstanding - diluted
Supplemental Information:
EBITDA (a) $
(2,134) $
(1,099) $
267,024 $
278,533
Adjusted EBITDA (a) $
(1,378) $
(2,830) $
275,032 $
283,046
Retail gallons sold:
Propane 63,666 64,754 426,745 439,955
Refined fuels 3,110 3,140 29,817 31,045
Capital expenditures:
Maintenance $
2,558 $
3,155 $
13,876 $
13,226
Growth $
8,137 $
3,899 $
21,102 $
19,675
(a) EBITDA represents net income
before deducting interest
expense, income taxes,
depreciation and amortization.
Adjusted EBITDA represents
EBITDA excluding the unrealized
net gain or loss on mark-to-
market activity for derivative
instruments and other items, as
applicable, as provided in the
table below. Our management uses
EBITDA and Adjusted EBITDA as
supplemental measures of
operating performance and we are
including them because we
believe that they provide our
investors and industry analysts
with additional information that
we determined is useful to
evaluate our operating results.
EBITDA and Adjusted EBITDA are not recognized terms under accounting principles generally accepted in the United States of America ("US GAAP") and should not be considered as an alternative to net income or net cash provided by operating activities determined in accordance with US GAAP. Because EBITDA and Adjusted EBITDA as determined by us excludes some, but not all, items that affect net income, they may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other companies.
The following table sets forth our calculations of EBITDA and Adjusted EBITDA:
Three Months Ended Twelve Months Ended
September 28, September 29, September 28, September 29,
2019 2018 2019 2018
Net (loss) income $
(51,062) $
(50,826) $
68,632 $
76,534
Add:
Provision for (benefit from) income taxes 279 143 857 (606)
Interest expense, net 18,622 18,955 76,663 77,383
Depreciation and amortization 30,027 30,629 120,872 125,222
EBITDA (2,134) (1,099) 267,024 278,533
Unrealized (non-cash) losses (gains) on changes 756 (1,731) 8,008 (310)
in fair value of derivatives
Loss on sale of business 4,823
Adjusted EBITDA $
(1,378) $
(2,830) $
275,032 $
283,046
The unaudited financial information included in this document is intended only as a summary provided for your convenience, and should be read in conjunction with the complete consolidated financial statements of the Partnership (including the Notes thereto, which set forth important information) contained in its Annual Report on Form 10-K to be filed by the Partnership with the United States Securities and Exchange Commission ("SEC"). Such report, once filed, will be available on the public EDGAR electronic filing system maintained by the SEC.
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SOURCE Suburban Propane Partners, L.P.
