WHIPPANY, N.J., Nov. 10, 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 results
for its full year and fourth quarter ended September 24, 2016.
Fiscal Year 2016 Results
Net income for fiscal 2016 was $14.4
million, or $0.24 per Common
Unit, compared to $84.4 million, or
$1.39 per Common Unit, in fiscal
2015.
Net income and EBITDA (as defined and reconciled below) for
fiscal 2016 included: (i) a $9.8
million gain from the sale of certain assets and operations
in a non-strategic market of the propane segment; (ii) a
$6.6 million charge related to the
Partnership's voluntary full withdrawal from a multi-employer
pension plan covering certain employees acquired in the 2012
acquisition of Inergy Propane; (iii) a $3.0
million charge related to the settlement of a product
liability matter; (iv) a pension settlement charge of $2.0 million; and (v) a loss on debt
extinguishment of $0.3
million.
Net income and EBITDA for fiscal 2015 included: (i) a loss on
debt extinguishment of $15.1 million;
(ii) $11.5 million in expenses
related to the integration of Inergy Propane; (iii) an $11.3 million charge related to the Partnership's
voluntary partial withdrawal from a multi-employer pension plan
covering certain employees acquired in the Inergy Propane
acquisition; and (iv) a pension settlement charge of $2.0 million.
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 $223.0 million in fiscal
2016, compared to Adjusted EBITDA of $334.0
million in fiscal 2015.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"Our results for fiscal 2016 reflect a challenging operating
environment stemming from record warm temperatures during the
heating season. While our volumes were impacted by the lack
of customer demand for heating needs, we relied on our flexible
cost structure and the strength of our balance sheet to help
mitigate some of the effect of lower volumes. Throughout the
fiscal year, we continued to focus on the things we can control --
providing exceptional customer service to our customer base, while
driving operating efficiencies and managing our cost
structure."
Mr. Stivala continued, "Notwithstanding the challenges resulting
from the record warm temperatures, fiscal 2016 had some notable
achievements that will provide further support for our long-term
strategic growth initiatives. Specifically, during the first
quarter we acquired the assets of Propane USA Distribution, LLC ("Propane USA"), which expanded our presence in an
already strong market for Suburban and provided an opportunity to
apply our operating model to enhance overall returns. During
the second quarter, we took steps to further improve our liquidity
position with the opportunistic refinancing of our revolving credit
facility which was scheduled to mature in January 2017. The
new facility improved our cost of capital, extended this facility's
maturity until 2021, and increased our available borrowing
capacity. Throughout the year, we made further refinements to
our operating footprint and business model to enhance our position
in several markets, and we extended our reach in certain strategic
markets."
Concluding his remarks, Mr. Stivala said, "Once again, we funded
all working capital needs, including the Propane USA acquisition, from cash on hand without the
need to borrow under our revolving credit facility, and ended the
year with more than $37.0 million of
cash. The fundamentals of our business haven't changed and we are
well positioned to continue to focus on our next phase of
growth. One of our greatest strengths is our people, and just
as they responded to the challenges of this past winter, they are
looking forward to the start of this new heating season and the
opportunity, once again, to demonstrate their unsurpassed
commitment to delivering the highest level of safety standards,
quality customer service and comfort in every market we serve."
Retail propane gallons sold in fiscal 2016 decreased 65.6
million gallons, or 13.7%, to 414.8 million gallons. Sales of fuel
oil and other refined fuels decreased 11.0 million gallons, or
26.3%, to 30.9 million gallons. According to the National Oceanic
and Atmospheric Administration, the winter of 2015-2016 was the
warmest on record in the contiguous United States. Average
temperatures (as measured by heating degree days) across all of the
Partnership's service territories for fiscal 2016 were 17% warmer
than normal and 15% warmer than the prior year. While
average temperatures were considerably warmer than the prior year
in nearly all service territories, California experienced cooler weather compared
to the prior year, which contributed to a 13% increase in propane
volumes sold in that market.
Revenues for fiscal 2016 of $1,046.1
million decreased $370.9
million, or 26.2%, compared to the prior year, primarily due
to the lower volumes sold, combined with lower retail selling
prices associated with lower wholesale costs.
Cost of products sold for fiscal 2016 of $362.0 million decreased $231.4 million, or 39.0%, compared to the prior
year, primarily due to lower wholesale propane costs and, to a
lesser extent, lower volumes sold. Average posted propane
prices (basis Mont Belvieu, Texas)
and fuel oil prices were 18.4% and 31.0% lower than the prior year,
respectively. Cost of products sold for 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
$1.9 million unrealized (non-cash)
gain for fiscal 2015. 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
$473.9 million for fiscal 2016 were
$38.6 million, or 7.5%, lower than
fiscal 2015. Excluding the impact of the items discussed
above in the computation of Adjusted EBITDA from both periods,
combined operating and general and administrative expenses
decreased 5.2% compared to the prior year, primarily due to savings
in payroll and benefit-related expenses from a lower headcount,
lower vehicle expenses stemming from a reduced vehicle count, as
well as lower volume-related variable costs and continued operating
efficiencies.
Depreciation and amortization expense of $129.6 million for fiscal 2016 decreased
$3.7 million, or 2.8%, primarily due
to the acceleration of depreciation expense recorded in the prior
year for assets taken out of service. Net interest expense of
$75.1 million for fiscal 2016
decreased $2.5 million, or 3.2%,
primarily due to savings from the refinancing of certain of the
Partnership's senior notes completed in the second quarter of
fiscal 2015 and the refinancing of the Partnership's revolving
credit facility during the second quarter of fiscal 2016.
Fourth Quarter 2016 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 2016 was $60.2 million, or
$0.99 per Common Unit, compared to a
net loss of $67.1 million, or
$1.11 per Common Unit, for the fourth
quarter of fiscal 2015.
Net loss and EBITDA for the fourth quarter of fiscal 2016
included a pension settlement charge of $2.0
million. Net loss and EBITDA for the fourth quarter of
fiscal 2015 included: (i) an $11.3
million charge related to the Partnership's voluntary
partial withdrawal from a multi-employer pension plan covering
certain employees acquired in the Inergy Propane acquisition; (ii)
$6.4 million in expenses related to
the integration of Inergy Propane; and (iii) a pension settlement
charge of $2.0 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 2016 amounted to a loss of $7.6 million, compared to Adjusted EBITDA of
$6.7 million for the fourth quarter
of fiscal 2015. The decrease in earnings was primarily due to lower
volumes sold, as described below, slightly lower average propane
margins and higher expenses resulting principally from an increase
in reserves for general liability matters and higher professional
services fees to support strategic
initiatives.
Retail propane gallons sold of 63.2 million gallons in the
fourth quarter of fiscal 2016 decreased 5.3 million gallons, or
7.7%, compared to the prior year fourth quarter. Although weather
during the fourth quarter typically has less of an impact on
volumes sold than it does during the heating season, volumes for
the fourth quarter of fiscal 2016 were adversely impacted by
average temperatures during September that were 26% warmer than
September 2015. Additionally, cooler spring temperatures in
fiscal 2016 resulted in increased deliveries during the third
quarter which, in turn, resulted in generally higher customer
inventories through the fourth quarter of fiscal 2016.
As previously announced on October 20,
2016, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.8875 per
Common Unit for the three months ended September 24, 2016. On an annualized basis,
this distribution rate equates to $3.55 per Common Unit. The distribution was paid
on November 8, 2016 to Common
Unitholders of record as of November 1,
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 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 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 and
Twelve Months Ended September 24, 2016 and September 26,
2015
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
|
|
September
24,
2016
|
|
|
September
26,
2015
|
|
|
September
24,
2016
|
|
|
September
26,
2015
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
132,156
|
|
|
$
|
142,455
|
|
|
$
|
884,169
|
|
|
$
|
1,176,980
|
|
Fuel oil and refined
fuels
|
|
|
6,798
|
|
|
|
11,096
|
|
|
|
68,759
|
|
|
|
127,495
|
|
Natural gas and
electricity
|
|
|
12,531
|
|
|
|
10,756
|
|
|
|
50,763
|
|
|
|
66,865
|
|
All other
|
|
|
9,530
|
|
|
|
10,037
|
|
|
|
42,420
|
|
|
|
45,639
|
|
|
|
|
161,015
|
|
|
|
174,344
|
|
|
|
1,046,111
|
|
|
|
1,416,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
56,941
|
|
|
|
57,594
|
|
|
|
361,953
|
|
|
|
593,380
|
|
Operating
|
|
|
97,009
|
|
|
|
116,501
|
|
|
|
412,756
|
|
|
|
444,251
|
|
General and
administrative
|
|
|
15,896
|
|
|
|
13,510
|
|
|
|
61,149
|
|
|
|
68,296
|
|
Depreciation and
amortization
|
|
|
32,540
|
|
|
|
34,706
|
|
|
|
129,616
|
|
|
|
133,294
|
|
|
|
|
202,386
|
|
|
|
222,311
|
|
|
|
965,474
|
|
|
|
1,239,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business
|
|
|
-
|
|
|
|
-
|
|
|
|
9,769
|
|
|
|
-
|
|
Operating (loss)
income
|
|
|
(41,371)
|
|
|
|
(47,967)
|
|
|
|
90,406
|
|
|
|
177,758
|
|
Loss on debt
extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
292
|
|
|
|
15,072
|
|
Interest expense,
net
|
|
|
18,703
|
|
|
|
18,991
|
|
|
|
75,086
|
|
|
|
77,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
|
(60,074)
|
|
|
|
(66,958)
|
|
|
|
15,028
|
|
|
|
85,052
|
|
Provision for income
taxes
|
|
|
165
|
|
|
|
179
|
|
|
|
588
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(60,239)
|
|
|
$
|
(67,137)
|
|
|
$
|
14,440
|
|
|
$
|
84,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
|
(0.99)
|
|
|
$
|
(1.11)
|
|
|
$
|
0.24
|
|
|
$
|
1.39
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
61,006
|
|
|
|
60,706
|
|
|
|
60,956
|
|
|
|
60,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
|
(0.99)
|
|
|
$
|
(1.11)
|
|
|
$
|
0.24
|
|
|
$
|
1.38
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
61,006
|
|
|
|
60,706
|
|
|
|
61,176
|
|
|
|
60,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
(8,831)
|
|
|
$
|
(13,261)
|
|
|
$
|
219,730
|
|
|
$
|
295,980
|
|
Adjusted EBITDA
(a)
|
|
$
|
(7,646)
|
|
|
$
|
6,651
|
|
|
$
|
223,043
|
|
|
$
|
334,039
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
63,231
|
|
|
|
68,515
|
|
|
|
414,776
|
|
|
|
480,372
|
|
Refined
fuels
|
|
|
3,246
|
|
|
|
4,538
|
|
|
|
30,878
|
|
|
|
41,878
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
2,856
|
|
|
$
|
4,744
|
|
|
$
|
16,559
|
|
|
$
|
19,353
|
|
Growth
|
|
$
|
3,257
|
|
|
$
|
5,468
|
|
|
$
|
21,815
|
|
|
$
|
21,860
|
|
(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
24,
2016
|
|
|
September
26,
2015
|
|
|
September
24,
2016
|
|
|
September
26,
2015
|
|
Net (loss)
income
|
|
$
|
(60,239)
|
|
|
$
|
(67,137)
|
|
|
$
|
14,440
|
|
|
$
|
84,352
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
165
|
|
|
|
179
|
|
|
|
588
|
|
|
|
700
|
|
Interest expense,
net
|
|
|
18,703
|
|
|
|
18,991
|
|
|
|
75,086
|
|
|
|
77,634
|
|
Depreciation and
amortization
|
|
|
32,540
|
|
|
|
34,706
|
|
|
|
129,616
|
|
|
|
133,294
|
|
EBITDA
|
|
|
(8,831)
|
|
|
|
(13,261)
|
|
|
|
219,730
|
|
|
|
295,980
|
|
Unrealized (non-cash)
losses (gains) on changes in
fair
value of derivatives
|
|
|
(815)
|
|
|
|
180
|
|
|
|
1,190
|
|
|
|
(1,855)
|
|
Gain on sale of
business
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,769)
|
|
|
|
-
|
|
Multi-employer pension
plan withdrawal charge
|
|
|
-
|
|
|
|
11,300
|
|
|
|
6,600
|
|
|
|
11,300
|
|
Product liability
settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
|
|
-
|
|
Pension settlement
charge
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
2,000
|
|
Loss on debt
extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
292
|
|
|
|
15,072
|
|
Integration-related
costs
|
|
|
-
|
|
|
|
6,432
|
|
|
|
-
|
|
|
|
11,542
|
|
Adjusted
EBITDA
|
|
$
|
(7,646)
|
|
|
$
|
6,651
|
|
|
$
|
223,043
|
|
|
$
|
334,039
|
|
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-full-year-and-fourth-quarter-results-300360164.html
SOURCE Suburban Propane Partners, L.P.