WHIPPANY, N.J., Feb. 2,
2017 /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 24, 2016.
Net income for the first quarter of fiscal 2017 was $34.5 million, or $0.57 per Common Unit, compared to net income of
$12.3 million, or $0.20 per Common Unit, in the prior year first
quarter.
Adjusted EBITDA (as defined and reconciled below) increased
$17.1 million to $84.3 million for the first quarter of fiscal
2017, compared to $67.2 million in
the prior year first quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said, "We
are very pleased with our results for the first quarter of fiscal
2017 -- an increase of $17.1 million,
or 25%, in Adjusted EBITDA compared to the prior year first
quarter. The record warm temperatures from the fiscal 2016
heating season carried over into the first two months of the
quarter, which created a slow start to the winter. However,
when more seasonable and, in some areas, colder than normal,
temperatures arrived throughout much of our service territories in
mid- December, customer demand increased and our volumes responded
strongly."
Mr. Stivala continued, "Additionally, the steps we took during
fiscal 2016 to further streamline our operating model and drive
efficiencies resulted in cost savings in the first quarter of this
year. Accordingly, the improvement in Adjusted EBITDA resulted from
a combination of higher volumes sold, effective margin management
in a rising commodity price environment and lower expenses."
Retail propane gallons sold in the first quarter of fiscal 2017
of 118.6 million gallons increased 8.8 million gallons, or 8.1%,
compared to the prior year first quarter. Sales of fuel oil
and other refined fuels in the first quarter of fiscal 2017
increased 0.4 million gallons, or 5.2%, compared to 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 2017 were 14% warmer than normal, yet
11% cooler than the prior year first quarter. The cooler
temperatures arrived in December 2016
following a two month period of October and November 2016 that experienced temperatures that
were 31% warmer than normal.
Revenues in the first quarter of fiscal 2017 of $317.3 million increased $41.5 million, or 15.0%, compared to the prior
year first quarter, primarily due to higher volumes sold and higher
retail selling prices associated with higher wholesale product
costs. Average posted propane prices (basis Mont Belvieu, Texas) for the first quarter of
fiscal 2017 were 38.8% higher than the prior year first quarter.
Cost of products sold for the first quarter of fiscal 2017 of
$118.2 million increased $25.7 million, or 27.7%, compared to $92.5 million in the prior year first quarter,
primarily due to higher wholesale product costs and higher volumes
sold. Cost of products sold for the first quarter of fiscal 2017
included a $0.5 million unrealized
(non-cash) gain attributable to the mark-to-market adjustment for
derivative instruments used in risk management activities, compared
to a $1.2 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
$114.4 million for the first quarter
of fiscal 2017 were $6.0 million, or
5.0%, lower than the prior year first quarter, primarily due to
steps taken during the prior fiscal year to streamline operations
and reduce our cost structure, as well as continued operating
efficiencies identified in fiscal 2017. Additionally,
operating and general and administrative expenses in the prior year
first quarter included a $3.0 million
charge for a product liability claim. Depreciation and
amortization expense of $31.3 million
decreased $0.4 million, or 1.2%,
compared to the prior year first quarter. Net interest expense of
$18.8 million decreased marginally
compared to the prior year first quarter. During the first quarter
of fiscal 2017, the Partnership utilized cash on hand and
borrowings under its revolving credit facility to fund working
capital needs and ended the quarter with a modest increase of
$3.4 million in borrowings under the
revolver.
Mr. Stivala concluded, "As stated at the end of fiscal 2016, the
fundamentals of our business are strong and our approach toward
balance sheet management is a differentiator for us. With
increasing customer demand from cooler weather, coupled with our
continued focus on managing the things that we can control, we look
forward to building on the momentum created by our first quarter
performance. Our operations personnel will continue to focus
on delivering superior service to our customers, executing on our
growth and retention initiatives and seeking opportunities to
further drive operating efficiencies."
As previously announced on January 19,
2017, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.8875 per
Common Unit for the three months ended December 24, 2016. On an annualized basis, this
distribution rate equates to $3.55
per Common Unit. The distribution is payable on February 7, 2017 to Common Unitholders of record
as of January 31, 2017.
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 675 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 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 24, 2016
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 24, 2016 and December 26, 2015
(in thousands,
except per unit amounts)
(unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
December 24,
2016
|
|
|
December 26,
2015
|
|
Revenues
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
269,459
|
|
|
$
|
231,475
|
|
Fuel oil and refined
fuels
|
|
|
22,096
|
|
|
|
20,688
|
|
Natural gas and
electricity
|
|
|
13,067
|
|
|
|
11,674
|
|
All other
|
|
|
12,685
|
|
|
|
12,020
|
|
|
|
|
317,307
|
|
|
|
275,857
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
118,165
|
|
|
|
92,506
|
|
Operating
|
|
|
99,349
|
|
|
|
104,871
|
|
General and
administrative
|
|
|
15,047
|
|
|
|
15,498
|
|
Depreciation and
amortization
|
|
|
31,261
|
|
|
|
31,638
|
|
|
|
|
263,822
|
|
|
|
244,513
|
|
Operating
income
|
|
|
53,485
|
|
|
|
31,344
|
|
Interest expense,
net
|
|
|
18,831
|
|
|
|
18,893
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
|
|
34,654
|
|
|
|
12,451
|
|
Provision for income
taxes
|
|
|
165
|
|
|
|
185
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
34,489
|
|
|
$
|
12,266
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
0.57
|
|
|
$
|
0.20
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
61,042
|
|
|
|
60,745
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
0.56
|
|
|
$
|
0.20
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
61,232
|
|
|
|
60,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
84,746
|
|
|
$
|
62,982
|
|
Adjusted EBITDA
(a)
|
|
$
|
84,287
|
|
|
$
|
67,192
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
Propane
|
|
|
118,601
|
|
|
|
109,764
|
|
Refined
fuels
|
|
|
9,012
|
|
|
|
8,565
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
3,118
|
|
|
$
|
4,686
|
|
Growth
|
|
$
|
3,710
|
|
|
$
|
8,266
|
|
(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
|
|
December 24,
2016
|
|
December 26,
2015
|
Net income
|
$
|
34,489
|
|
$
|
12,266
|
Add:
|
|
|
|
|
|
Provision for income
taxes
|
|
165
|
|
|
185
|
Interest expense,
net
|
|
18,831
|
|
|
18,893
|
Depreciation and
amortization
|
|
31,261
|
|
|
31,638
|
EBITDA
|
|
84,746
|
|
|
62,982
|
Unrealized (non-cash)
(gains) losses on changes in
fair value of derivatives
|
|
(459)
|
|
|
1,210
|
Product liability
settlement
|
|
-
|
|
|
3,000
|
Adjusted
EBITDA
|
$
|
84,287
|
|
$
|
67,192
|
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-300400814.html
SOURCE Suburban Propane Partners, L.P.