WHIPPANY, N.J., Feb. 4, 2016 /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 26,
2015.
Net income for the first quarter of fiscal 2016 was $12.3 million, or $0.20 per Common Unit, compared to net income of
$55.8 million, or $0.92 per Common Unit, in the prior year first
quarter.
Net income and EBITDA for the first quarter of fiscal 2016
included a $3.0 million charge
related to the settlement of a product liability matter. Net income
and EBITDA for the first quarter of fiscal 2015 included
$1.9 million in expenses related to
the integration of Inergy Propane. Excluding the effects of the
foregoing items and unrealized (non-cash) mark-to-market
adjustments on derivative instruments in both years, Adjusted
EBITDA (as defined and reconciled below) amounted to $67.2 million for the first quarter of fiscal
2016, compared to Adjusted EBITDA of $101.0
million in the prior year first quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"Record warm temperatures throughout most of our service
territories clearly impacted customer demand in the first quarter
of fiscal 2016. Nonetheless, the strength of our balance
sheet and flexible nature of our operating model allow us to
effectively manage the short-term impact of the warm weather on
earnings."
Mr. Stivala added, "In an otherwise challenging environment for
the broader energy sector given the backdrop of sustained low
commodity prices, we are well positioned to continue to focus on
our growth initiatives, while also refining our business model. In
line with our business strategy, as announced on December 15, 2015, during the first quarter we
acquired the assets of Propane USA, which expands our presence in an already
strong market for Suburban and provides an opportunity to apply our
operating model to enhance overall returns."
Retail propane gallons sold in the first quarter of fiscal 2016
decreased 24.7 million gallons, or 18.4%, to 109.8 million gallons
compared to 134.5 million gallons in the prior year first quarter.
Sales of fuel oil and other refined fuels decreased 2.7 million
gallons, to 8.6 million gallons compared to 11.3 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 month of December 2015 and the first quarter of fiscal
2016 were the warmest on record. Overall, average
temperatures for the first quarter of fiscal 2016 were 25% warmer
than normal and 17% warmer than the prior year first
quarter.
Revenues of $275.9 million
decreased $147.1 million, or 34.8%,
compared to the prior year first quarter, primarily due to lower
retail propane and fuel oil volumes sold and lower retail selling
prices associated with lower wholesale product costs. Average
posted propane prices (basis Mont
Belvieu, Texas) and fuel oil prices were 44.8% and 41.0%
lower than the prior year first quarter, respectively. Cost of
products sold for the first quarter of fiscal 2016 of $92.5 million decreased $95.4 million, or 50.8%, compared to $187.9 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 2016
included a $1.2 million unrealized
(non-cash) loss attributable to the mark-to-market adjustment for
derivative instruments used in risk management activities, compared
to a $9.5 million unrealized
(non-cash) gain 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
$120.4 million for the first quarter
of fiscal 2016 were $6.1 million, or
4.8%, lower than the prior year first quarter, primarily due to
operating efficiencies resulting in continued savings in payroll
and benefit related expenses and vehicle expenses, as well as lower
variable costs based on volumes sold. Depreciation and
amortization expense of $31.6 million
decreased $1.0 million, or 3.0%,
primarily due to the acceleration of depreciation expense recorded
in the prior year first quarter for assets taken out of service.
Net interest expense of $18.9 million
decreased $1.1 million, or 5.5%,
primarily due to savings from the refinancing of certain of the
Partnership's senior notes completed in the second quarter of
fiscal 2015.
Mr. Stivala concluded, "From a liquidity perspective, once again
we funded all of our working capital needs, and the acquisition of
Propane USA, from cash on hand
without the need to borrow under our revolving credit facility
during the quarter, and ended the first quarter with $57.0 million of cash and access to approximately
$250.0 million of available borrowing
capacity. With much of the heating season still ahead, our people
continue to focus on the things they can control -- providing
superior customer service, driving operating efficiencies and
managing our cost structure."
As previously announced on January 21,
2016, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.8875 per
Common Unit for the three months ended December 26, 2015. On an annualized basis, this
distribution rate equates to $3.55
per Common Unit, an increase of 1.4% compared to the annualized
rate at the end of the prior year first quarter. The
distribution is payable on February 9,
2016 to Common Unitholders of record as of February 2, 2016.
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 1.1 million residential, commercial, industrial and
agricultural customers through 700 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, natural gas and electricity, 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 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 26, 2015
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 Months Ended December 26,
2015 and December 27, 2014 (in thousands, except per unit
amounts) (unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
December
26,
2015
|
|
|
December
27,
2014
|
|
Revenues
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
231,475
|
|
|
$
|
354,650
|
|
Fuel oil and refined
fuels
|
|
|
20,688
|
|
|
|
38,930
|
|
Natural gas and
electricity
|
|
|
11,674
|
|
|
|
15,967
|
|
All other
|
|
|
12,020
|
|
|
|
13,397
|
|
|
|
|
275,857
|
|
|
|
422,944
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
92,506
|
|
|
|
187,921
|
|
Operating
|
|
|
104,871
|
|
|
|
107,117
|
|
General and
administrative
|
|
|
15,498
|
|
|
|
19,309
|
|
Depreciation and
amortization
|
|
|
31,638
|
|
|
|
32,629
|
|
|
|
|
244,513
|
|
|
|
346,976
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
31,344
|
|
|
|
75,968
|
|
Interest expense,
net
|
|
|
18,893
|
|
|
|
19,999
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
|
|
12,451
|
|
|
|
55,969
|
|
Provision for income
taxes
|
|
|
185
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
12,266
|
|
|
$
|
55,807
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
0.20
|
|
|
$
|
0.92
|
|
Weighted average
number of Common Units outstanding - basic
|
|
|
60,745
|
|
|
|
60,523
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
0.20
|
|
|
$
|
0.92
|
|
Weighted average
number of Common Units outstanding - diluted
|
|
|
60,961
|
|
|
|
60,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
62,982
|
|
|
$
|
108,597
|
|
Adjusted EBITDA
(a)
|
|
$
|
67,192
|
|
|
$
|
101,005
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
Propane
|
|
|
109,764
|
|
|
|
134,534
|
|
Refined
fuels
|
|
|
8,565
|
|
|
|
11,261
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
4,686
|
|
|
$
|
3,611
|
|
Growth
|
|
$
|
8,266
|
|
|
$
|
4,324
|
|
|
|
(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.
|
|
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
|
|
|
|
December
26,
2015
|
|
|
December
27,
2014
|
|
Net income
|
|
$
|
12,266
|
|
|
$
|
55,807
|
|
Add:
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
185
|
|
|
|
162
|
|
Interest expense,
net
|
|
|
18,893
|
|
|
|
19,999
|
|
Depreciation and
amortization
|
|
|
31,638
|
|
|
|
32,629
|
|
EBITDA
|
|
|
62,982
|
|
|
|
108,597
|
|
Unrealized (non-cash)
losses (gains) on changes in
fair
value of derivatives
|
|
|
1,210
|
|
|
|
(9,505)
|
|
Product liability
settlement
|
|
|
3,000
|
|
|
|
-
|
|
Integration-related
costs
|
|
|
-
|
|
|
|
1,913
|
|
Adjusted
EBITDA
|
|
$
|
67,192
|
|
|
$
|
101,005
|
|
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-first-quarter-earnings-300214995.html
SOURCE Suburban Propane Partners, L.P.