WHIPPANY, N.J., Nov. 13, 2014 /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 results for its fourth quarter and fiscal year
ended September 27, 2014.
Fiscal Year 2014 Results
Net income amounted to $94.5
million, or $1.56 per Common
Unit, compared to $78.8 million, or
$1.35 per Common Unit, in fiscal
2013. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") amounted to $314.9
million, compared to $305.2
million in fiscal 2013.
Net income and EBITDA for fiscal 2014 included: (i) $12.3 million in expenses related to the ongoing
integration of Inergy Propane; and (ii) a loss on debt
extinguishment of $11.6 million. Net
income and EBITDA for fiscal 2013 included: (i) $10.6 million in expenses related to the
integration of Inergy Propane; (ii) $7.0
million in charges related to the Partnership's voluntary
withdrawal from multi-employer pension plans covering certain
employees acquired in the Inergy Propane acquisition; and (iii) a
loss on debt extinguishment of $2.1
million.
Excluding the effects of these charges, as well as the
unrealized (non-cash) mark-to-market adjustments on derivative
instruments in both years, Adjusted EBITDA (as defined and
reconciled below) amounted to $338.5
million in fiscal 2014, an increase of $9.2 million, or 2.8%, compared to Adjusted
EBITDA of $329.3 million in fiscal
2013.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"This year's heating season was one of the most challenging this
industry has ever experienced as a result of a combination of
industry-wide supply and logistics issues, rapidly rising wholesale
prices, harsh winter storms and, in many parts of the country,
sustained colder than normal temperatures. Thanks to the tremendous
effort of our employees to ensure the comfort and safety of our
customer base, we met these challenges head-on and finished the
year with nearly 3% growth in Adjusted EBITDA."
Mr. Stivala continued, "The challenging winter notwithstanding,
fiscal 2014 was a year of great accomplishments for the
Partnership. We continued to make significant progress towards
integrating the Inergy Propane business, as we successfully
executed our detailed integration plans for year two. Our
system conversion plans have been fully executed, we have completed
much of the physical blending activities for our operating
geographies and are now operating under one common business model
and one common brand. Additionally, we continued to focus on
strengthening our balance sheet with the opportunistic refinancing
of our previous 7.5% Senior Notes due 2018 with new 5.5% Senior
Notes due 2024, effectively extending maturities on this portion of
our debt by six years at a very attractive interest rate, and
reducing our cash interest requirements by more than $8 million annually. Despite the
significantly higher investment in working capital during the
fiscal 2014 heating season, we ended the year with $92.6 million of cash on hand."
Concluding his remarks, Mr. Stivala said, "We are very well
positioned as we enter fiscal 2015. With so much of our
integration efforts behind us, our employees are well-equipped to
leverage the strength of our operating structure to continue to
focus on the needs of our customer base. As we look ahead, we will
continue to fine-tune our operating model and cost structure in
order to enhance customer service and maximize the overall
profitability of the combined business."
Retail propane gallons sold for fiscal 2014 of 530.7 million
gallons decreased 3.9 million gallons, or 0.7%, from 534.6 million
gallons in fiscal 2013. Sales of fuel oil and other refined fuels
of 49.1 million gallons decreased 4.6 million gallons, or 8.6%,
from 53.7 million gallons in fiscal 2013. 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 fiscal 2014 were 3% colder
than normal and 7% colder than the prior year. However, the weather
pattern during the winter heating season (October 2013 through March
2014) was characterized by considerably colder than normal
temperatures in the Partnership's service territories in the east
and midwest regions, whereas the Partnership's service territories
in the west experienced unseasonably warm temperatures throughout
the period. In fact, average temperatures in the western
territories during this past winter heating season were 11% warmer
than normal and 6% warmer than the comparable period in the prior
year, which negatively impacted volumes sold in those territories.
Additionally, volumes sold during fiscal 2014 were adversely
affected by supply constraints resulting from industry-wide supply
shortages and logistics issues, as well as customer conservation
attributable to the significant rise in wholesale propane
prices.
Revenues for fiscal 2014 of $1,938.3
million increased $234.7
million, or 13.8%, compared to the prior year primarily due
to higher retail propane selling prices associated with higher
wholesale propane costs. Average posted propane prices (basis
Mont Belvieu, Texas) for fiscal
2014 were 24.8% higher than the prior year, and average posted
prices for fuel oil were 2.1% lower than the prior year.
Cost of products sold for fiscal 2014 of $1,080.7 million increased $218.8 million, or 25.4%, compared to
$861.9 million in the prior year,
primarily due to significantly higher wholesale propane costs and
higher transportation costs associated with extraordinary measures
taken by the Partnership during the winter heating season to help
ensure that adequate propane supplies were delivered to its
customer service centers to meet customer demand. Cost of
products sold for fiscal 2014 included a $0.3 million unrealized (non-cash) gain
attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$4.3 million unrealized (non-cash)
loss in the prior year. 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
$531.0 million for fiscal 2014 were
$3.3 million, or 0.6%, lower than
fiscal 2013, primarily due to continued operating efficiencies and
synergies realized as a result of the integration of Inergy
Propane, substantially offset by higher overtime and vehicle
expenses attributable to higher volumes sold and harsh weather
conditions in the Partnership's east and midwest service
territories, as well as higher provisions for potential
uncollectable accounts.
Depreciation and amortization expense of $136.4 million for fiscal 2014 increased
$6.0 million, or 4.6%, primarily due
to the acceleration of depreciation expense on assets taken out of
service as a result of integration activities. Net interest expense
of $83.3 million for fiscal 2014
decreased $12.1 million, or 12.7%,
primarily due to the reduction of $157.3
million in long-term borrowings during the fourth quarter of
fiscal 2013 and, to a lesser extent, the refinancing of our
$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.
Fourth Quarter 2014 Results
Consistent with the seasonal nature of the propane and fuel oil
businesses, the Partnership typically reports a net loss for its
fiscal fourth quarter. Net loss for the fourth quarter of fiscal
2014 of $54.7 million, or
$0.90 per Common Unit, improved by
$8.4 million, or $0.15 per Common Unit, compared to a net loss of
$63.1 million, or $1.05 per Common Unit, for the fourth quarter of
fiscal 2013.
Net loss and EBITDA for the fourth quarter of fiscal 2014
included $3.2 million in expenses
related to the ongoing integration of Inergy Propane. Net loss and
EBITDA for the fourth quarter of fiscal 2013 included: (i)
$4.6 million in expenses related to
the integration of Inergy Propane; (ii) a $1.0 million charge related to the Partnership's
voluntary withdrawal from multi-employer pension plans covering
certain employees acquired in the Inergy Propane acquisition; and
(iii) a loss on debt extinguishment of $2.1
million.
Excluding these items and the effects of unrealized (non-cash)
mark-to-market adjustments on derivative instruments used in risk
management activities in both quarters, Adjusted EBITDA for the
fourth quarter of fiscal 2014 improved to $4.5 million, compared to $1.9 million for the fourth quarter of fiscal
2013.
Retail propane gallons sold in the fourth quarter of fiscal 2014
decreased 2.3 million gallons, or 2.9%, to 76.0 million gallons
compared to 78.3 million gallons in the prior year fourth quarter.
Sales of fuel oil and other refined fuels decreased 0.8 million
gallons, to 5.5 million gallons during the fourth quarter of fiscal
2014. The decrease in propane volumes sold was primarily driven by
customer conservation; particularly in the non-residential segment,
offset to an extent by an increase in residential volumes sold.
As previously announced on October 23,
2014, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.8750 per
Common Unit for the three months ended September 27, 2014. On an annualized basis, this
distribution rate equates to $3.50
per Common Unit. The distribution was paid on November 10, 2014 to Common Unitholders of record
as of November 3, 2014.
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 Inergy
Propane Acquisition may not be fully realized or realized within
the expected timeframe;
- The revenue gained by the Partnership from
the Inergy Propane Acquisition may be lower than expected;
- The costs of the integration of 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 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 28, 2013
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 27, 2014 and September 28,
2013
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
September 27,
2014
|
|
|
September 28,
2013
|
|
September 27,
2014
|
|
|
September 28,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
197,569
|
|
|
$
193,003
|
|
$ 1,606,840
|
|
|
$ 1,357,102
|
Fuel oil and
refined fuels
|
|
19,796
|
|
|
22,990
|
|
194,684
|
|
|
208,957
|
Natural gas
and electricity
|
|
12,782
|
|
|
15,179
|
|
87,093
|
|
|
79,432
|
All
other
|
|
11,139
|
|
|
12,500
|
|
49,640
|
|
|
58,115
|
|
|
|
241,286
|
|
|
243,672
|
|
1,938,257
|
|
|
1,703,606
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
Cost of
products sold
|
|
121,544
|
|
|
121,630
|
|
1,080,750
|
|
|
861,905
|
Operating
|
|
105,354
|
|
|
109,875
|
|
466,389
|
|
|
469,496
|
General and
administrative
|
|
13,488
|
|
|
13,785
|
|
64,593
|
|
|
64,845
|
Depreciation
and amortization
|
|
35,298
|
|
|
37,037
|
|
136,399
|
|
|
130,384
|
|
|
|
275,684
|
|
|
282,327
|
|
1,748,131
|
|
|
1,526,630
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
|
(34,398)
|
|
|
(38,655)
|
|
190,126
|
|
|
176,976
|
Loss on debt
extinguishment
|
|
-
|
|
|
2,144
|
|
11,589
|
|
|
2,144
|
Interest expense,
net
|
|
20,166
|
|
|
22,143
|
|
83,261
|
|
|
95,427
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
(54,564)
|
|
|
(62,942)
|
|
95,276
|
|
|
79,405
|
Provision for income
taxes
|
|
156
|
|
|
177
|
|
767
|
|
|
607
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
(54,720)
|
|
|
$
(63,119)
|
|
$
94,509
|
|
|
$
78,798
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
(0.90)
|
|
|
$
(1.05)
|
|
$
1.56
|
|
|
$
1.35
|
Weighted average
number of Common Units outstanding - basic
|
|
60,495
|
|
|
60,356
|
|
60,481
|
|
|
58,378
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
(0.90)
|
|
|
$
(1.05)
|
|
$
1.56
|
|
|
$
1.34
|
Weighted average
number of Common Units outstanding - diluted
|
|
60,495
|
|
|
60,356
|
|
60,751
|
|
|
58,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
900
|
|
|
$
(3,762)
|
|
$
314,936
|
|
|
$
305,216
|
Adjusted EBITDA
(a)
|
|
$
4,502
|
|
|
$
1,941
|
|
$
338,502
|
|
|
$
329,253
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
76,040
|
|
|
78,265
|
|
530,743
|
|
|
534,621
|
|
Refined
fuels
|
|
5,476
|
|
|
6,271
|
|
49,071
|
|
|
53,710
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
5,185
|
|
|
$
1,981
|
|
$
18,158
|
|
|
$
8,282
|
|
Growth
|
|
$
3,224
|
|
|
$
4,675
|
|
$
11,894
|
|
|
$
19,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(more)
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 certain other items, as
applicable, as provided in the table below. Our management uses
EBITDA and Adjusted EBITDA as measures of liquidity and we are
including them because we believe that they provide our investors
and industry analysts with additional information to evaluate our
ability to meet our debt service obligations and to pay our
quarterly distributions to holders of our Common Units.
|
|
|
|
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 (i) our calculations of EBITDA and Adjusted EBITDA
and (ii) a reconciliation of Adjusted EBITDA, as so calculated, to
our net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
September 27,
2014
|
|
|
September 28,
2013
|
|
September 27,
2014
|
|
|
September 28,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
(54,720)
|
|
|
$
(63,119)
|
|
$
94,509
|
|
|
$
78,798
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
156
|
|
|
177
|
|
767
|
|
|
607
|
|
Interest
expense, net
|
|
20,166
|
|
|
22,143
|
|
83,261
|
|
|
95,427
|
|
Depreciation
and amortization
|
|
35,298
|
|
|
37,037
|
|
136,399
|
|
|
130,384
|
|
EBITDA
|
|
900
|
|
|
(3,762)
|
|
314,936
|
|
|
305,216
|
|
Unrealized
(non-cash) losses (gains) on changes in fair value of
derivatives
|
|
402
|
|
|
(2,015)
|
|
(306)
|
|
|
4,318
|
|
Integration-related costs
|
|
3,200
|
|
|
4,574
|
|
12,283
|
|
|
10,575
|
|
Multi-employer
pension plan withdrawal charge
|
|
-
|
|
|
1,000
|
|
-
|
|
|
7,000
|
|
Loss on debt
extinguishment
|
|
-
|
|
|
2,144
|
|
11,589
|
|
|
2,144
|
|
Adjusted
EBITDA
|
|
4,502
|
|
|
1,941
|
|
338,502
|
|
|
329,253
|
|
Add /
(subtract):
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
(156)
|
|
|
(177)
|
|
(767)
|
|
|
(607)
|
|
Interest
expense, net
|
|
(20,166)
|
|
|
(22,143)
|
|
(83,261)
|
|
|
(95,427)
|
|
Unrealized
(non-cash) (losses) gains on changes in fair value of
derivatives
|
|
(402)
|
|
|
2,015
|
|
306
|
|
|
(4,318)
|
|
Integration-related costs
|
|
(3,200)
|
|
|
(4,574)
|
|
(12,283)
|
|
|
(10,575)
|
|
Multi-employer
pension plan withdrawal charge
|
|
-
|
|
|
(1,000)
|
|
-
|
|
|
(7,000)
|
|
Gain on
disposal of property, plant and equipment, net
|
|
(181)
|
|
|
(652)
|
|
(521)
|
|
|
(3,543)
|
|
Compensation
cost recognized under Restricted Unit Plans
|
|
1,727
|
|
|
635
|
|
7,390
|
|
|
3,888
|
|
Changes in
working capital and other assets and liabilities
|
|
98,457
|
|
|
37,793
|
|
(23,815)
|
|
|
2,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
80,581
|
|
|
$
13,838
|
|
$
225,551
|
|
|
$
214,306
|
|
|
|
|
|
|
|
|
|
|
|
|
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.