WHIPPANY, N.J., Feb. 5, 2015 /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 first quarter ended December 27,
2014.
Net income for the first quarter of fiscal 2015 was $55.8 million, or $0.92 per Common Unit, compared to net income of
$58.7 million, or $0.97 per Common Unit, in the prior year first
quarter. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the first quarter of fiscal 2015
amounted to $108.6 million, compared
to $114.9 million in the prior year
first quarter.
Net income and EBITDA for the first quarters of fiscal 2015 and
2014 included expenses of $1.9
million and $2.5 million,
respectively, related to the ongoing integration of Inergy Propane.
Excluding the effects of these charges, as well as the unrealized
(non-cash) mark-to-market adjustments on derivative instruments in
both quarters, Adjusted EBITDA (as defined and reconciled below)
amounted to $101.0 million for the
first quarter of fiscal 2015, compared to Adjusted EBITDA of
$117.7 million in the prior year
first quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"The first quarter of fiscal 2015 was characterized by a rapidly
declining commodity price environment and unseasonably warm weather
throughout much of the quarter. In particular, the month of
December 2014 was one of the warmest
on record, thus negatively impacting volumes sold in the
quarter. The impact of lower volumes was somewhat offset by
higher margins resulting from the sharp decline in wholesale
product costs and savings in operating expenses."
Retail propane gallons sold in the first quarter of fiscal 2015
decreased approximately 23.4 million gallons, or 14.8%, to 134.5
million gallons compared to 157.9 million gallons in the prior year
first quarter. Sales of fuel oil and other refined fuels decreased
2.7 million gallons, to 11.3 million gallons compared to 14.0
million gallons in the prior year first quarter. According to
the National Oceanic and Atmospheric Administration, average
temperatures (as measured by heating degree days) across all of the
Partnership's service territories for the first quarter of fiscal
2015 were 8% warmer than normal and the prior year first quarter.
The unseasonably warm temperatures were experienced across
all of the Partnership's service territories, and were most
pronounced in its West Coast operations, where average temperatures
were 23% warmer than normal and 19% warmer than the prior year
first quarter. During the month of December, average
temperatures across all of the Partnership's service territories
were 15% warmer than normal and 21% warmer than December of the
prior year.
Revenues of $422.9 million
decreased $103.2 million, or 19.6%,
compared to the prior year first quarter, primarily due to lower
retail propane and fuel oil volumes sold and, to a lesser extent,
lower retail selling prices associated with lower wholesale product
costs. Average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices were
36.0% and 22.5% lower than the prior year first quarter,
respectively. Cost of products sold for the first quarter of fiscal
2015 of $187.9 million decreased
$92.6 million, or 33.0%, compared to
$280.5 million in the prior year
first quarter, primarily due to lower wholesale product costs and
lower volumes sold. Cost of products sold for the first quarter of
fiscal 2015 included a $9.5 million
unrealized (non-cash) gain attributable to the mark-to-market
adjustment for derivative instruments used in risk management
activities, compared to a $0.3
million unrealized (non-cash) loss in the prior year first
quarter. These unrealized gains and losses are excluded from
Adjusted EBITDA for both periods in the table below.
Combined operating and general and administrative expenses of
$126.4 million for the first quarter
of fiscal 2015 were $4.2 million, or
3.2%, lower than the prior year first quarter, primarily due to
operating efficiencies and synergies realized during the period
associated with the integration of Inergy Propane, including lower
headcount and lower vehicle count, as well as lower bad debt
expense. Depreciation and amortization expense of $32.6 million decreased $2.2 million, or 6.3%, as a result of accelerated
depreciation expense recorded in the prior year first quarter for
assets taken out of service due to integration activities. Net
interest expense of $20.0 million
decreased $1.2 million, or 5.7%,
primarily due to the refinancing of the Partnership's previously
outstanding $496.6 million in
aggregate principal amount of 7.5% Senior Notes due 2018 with
$525.0 million in aggregate principal
amount of 5.5% Senior Notes due 2024 completed during the third
quarter of fiscal 2014.
Mr. Stivala concluded, "With the lower commodity price
environment experienced during the first quarter of fiscal 2015, we
funded all working capital needs from cash on hand without the need
to borrow under our revolving credit facility, and ended the
quarter with $62.0 million of
cash. With the heart of the fiscal 2015 heating season still
ahead, our personnel are poised to react as the weather pattern
returns to more normal temperatures reflective of the season.
Additionally, as it relates to our ongoing integration efforts, we
continue to be focused on fine-tuning our operating model and cost
structure in order to maximize efficiencies, deliver excellence in
customer satisfaction and enhance the overall profitably of the
combined business."
As previously announced on January 22,
2015, the Partnership's Board of Supervisors has declared a
quarterly distribution of $0.8750 per
Common Unit for the three months ended December 27, 2014. On an annualized basis, this
distribution rate equates to $3.50
per Common Unit. The $0.8750 per
Common Unit distribution is payable on February 10, 2015 to Common Unitholders of record
as of February 3, 2015.
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 1.2 million residential, commercial, industrial and
agricultural customers through more than 710 locations in 41
states.
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 and natural gas, the impact of the Partnership's
hedging and risk management activities, and the adverse impact of
price increases on volumes as a result of customer
conservation;
- The cost savings expected from the Partnership's acquisition
of the retail propane operations formerly owned by Inergy, L.P.
(the "Inergy Propane Acquisition") may not be fully realized or
realized within the expected time frame;
- The costs of integrating the business acquired in the Inergy
Propane Acquisition into the Partnership's existing operations may
be greater than expected;
- 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 global warming, derivative instruments and
other regulatory developments on the Partnership's
business;
- The impact of changes in tax regulations 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, including but not limited to Inergy
Propane;
- 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 most recent
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 27, 2014
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
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For the Three
Months Ended December 27, 2014 and December 28, 2013
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
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|
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Three Months
Ended
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|
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|
|
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December 27,
2014
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December 28,
2013
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|
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Revenues
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|
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Propane
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|
$
354,650
|
|
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$
438,594
|
|
Fuel oil and
refined fuels
|
|
38,930
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|
|
54,268
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Natural gas
and electricity
|
|
15,967
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18,316
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All
other
|
|
13,397
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14,878
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|
|
|
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422,944
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|
|
526,056
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Costs and
expenses
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Cost of
products sold
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187,921
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|
|
280,526
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Operating
|
|
107,117
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|
|
113,313
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General and
administrative
|
|
19,309
|
|
|
17,335
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Depreciation
and amortization
|
|
32,629
|
|
|
34,827
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|
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|
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346,976
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446,001
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Operating
income
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75,968
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|
|
80,055
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Interest expense,
net
|
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19,999
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|
|
21,207
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|
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Income before
provision for income taxes
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|
55,969
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|
|
58,848
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Provision for income
taxes
|
|
162
|
|
|
177
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|
|
|
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Net income
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$
55,807
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$
58,671
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Net income per Common
Unit - basic
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$
0.92
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$
0.97
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Weighted average
number of Common Units outstanding - basic
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60,523
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|
60,389
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Net income per Common
Unit - diluted
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$
0.92
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$
0.97
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Weighted average
number of Common Units outstanding - diluted
|
|
60,796
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|
|
60,620
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Supplemental
Information:
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EBITDA (a)
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$
108,597
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$
114,882
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Adjusted EBITDA
(a)
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$
101,005
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$
117,708
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Retail gallons
sold:
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Propane
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134,534
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157,858
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Refined
fuels
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11,261
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13,997
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Capital
expenditures:
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Maintenance
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$
3,611
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$
5,035
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Growth
|
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$
4,324
|
|
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$
4,289
|
|
|
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(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 to evaluate our
operating results.
|
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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.
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The following table
sets forth our calculations of EBITDA and Adjusted
EBITDA:
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Three Months
Ended
|
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December 27,
2014
|
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December 28,
2013
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|
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|
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Net income
|
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$
55,807
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$
58,671
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Add:
|
|
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Provision for income taxes
|
|
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162
|
|
|
177
|
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Interest
expense, net
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19,999
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21,207
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Depreciation
and amortization
|
|
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32,629
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|
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34,827
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EBITDA
|
|
|
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108,597
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|
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114,882
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Unrealized (non-cash) (gains) losses on changes in fair value of
derivatives
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(9,505)
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290
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Integration-related costs
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1,913
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2,536
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Adjusted
EBITDA
|
|
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$
101,005
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$
117,708
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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 Quarterly Report on Form
10-Q 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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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-first-quarter-earnings-300031428.html
SOURCE Suburban Propane Partners, L.P.